1992ANNUAL REPORTU.S. FEDERAL TRADE COMMISSIONWASHINGTON, D.C.Annual Reportof theFederalTradeCommissionFor Fiscal Year Ended September 30, 1992For sale by the Superintendent of Documents,U.S. Government Printing Office, Washington, D.C.20402FEDERAL TRADE COMMISSION - 1992

JANET D. STEIGER, ChairmanMARY L. AZCUENAGA, CommissionerDEBORAH K. OWEN, CommissionerROSCOE B. STAREK, III, CommissionerDENNIS A. YAO, CommissionerDONALD S. CLARK, SecretaryEXECUTIVE OFFICES OF THE FEDERAL TRADE COMMISSIONPennsylvania Avenue at Sixth Street, N.W.Washington, D.C.20580Regional OfficesAtlanta, GeorgiaRoom 10001718 Peachtree Street, N.W.Zip Code:30367Phone:(404) 347-4837Denver, ColoradoSuite 15231961 Stout StreetZip Code:80294Phone:(303) 844-2272Boston, MassachusettsSuite 810101 Merrimac StreetZip Code:02114-4719Phone:(617) 424-5960Los Angeles, CaliforniaRoom 1320911000 Wilshire BoulevardZip Code:90024Phone:(310) 235-7890Chicago, IllinoisSuite 186055 East Monroe StreetZip Code:60603Phone:(312) 353-8156New York, New YorkSuite 1300150 William StreetZip Code:10038Phone:(212) 264-1207Cleveland, OhioSuite 520-A668 Euclid AvenueZip Code:44114Phone:(216) 522-4210San Francisco, CaliforniaSuite 570901 Market StreetZip Code:94103Phone: (415) 744-7920Dallas, TexasSuite 500100 N. Central ExpresswayZip Code:75201Phone:(214) 767-5503Seattle, Washington2806 Federal Building915 Second AvenueZip Code:98174Phone:(206) 220-6350FEDERAL TRADE COMMISSION1992 ANNUAL REPORTTable of ContentsPageSUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1MAINTAINING COMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1CONSUMER PROTECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1CONSUMER AND COMPETITION ADVOCACY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2ECONOMIC ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2ADMINISTRATION AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2MAINTAINING COMPETITION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4PREMERGER NOTIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4MERGERS AND JOINT VENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5HORIZONTAL RESTRAINTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8DISTRIBUTIONAL ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10SINGLE FIRM VIOLATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12CONSUMER PROTECTION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13ADVERTISING PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13SERVICE INDUSTRY PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14MARKETING PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15CREDIT PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17CONSUMER AND BUSINESS EDUCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18ECONOMIC ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19ANTITRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19CONSUMER PROTECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20EXECUTIVE DIRECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21AUTOMATED SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21INFORMATION SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22LIBRARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23PROCUREMENT AND GENERAL SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23BUDGET AND FINANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24HUMAN RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24REGIONAL OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24AppendixPART II CONSENT AGREEMENTS ACCEPTED ANDPUBLISHED FOR PUBLIC COMMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25MAINTAINING COMPETITION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25CONSUMER PROTECTION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26PART II CONSENT ORDERS ISSUED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29MAINTAINING COMPETITION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29CONSUMER PROTECTION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36PART III ADMINISTRATIVE COMPLAINTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46MAINTAINING COMPETITION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46CONSUMER PROTECTION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46PART III CONSENT AGREEMENTS ACCEPTED ANDPUBLISHED FOR PUBLIC COMMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48CONSUMER PROTECTION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48PART III CONSENT ORDERS ISSUED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49MAINTAINING COMPETITION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49CONSUMER PROTECTION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50INITIAL DECISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52MAINTAINING COMPETITION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52FINAL COMMISSION ORDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53MAINTAINING COMPETITION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53ORDER MODIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54MAINTAINING COMPETITION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54CONSUMER PROTECTION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55PRELIMINARY AND PERMANENT INJUNCTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56MAINTAINING COMPETITION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56CONSUMER PROTECTION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56CIVIL PENALTY ACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76MAINTAINING COMPETITION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76CONSUMER PROTECTION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77APPELLATE COURT DECISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89MAINTAINING COMPETITION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89viSUPREME COURT DECISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90MAINTAINING COMPETITION MISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90ECONOMIC REPORTS, WORKING PAPERS AND POLICY PAPERS . . . . . . . . . . . . . 91ECONOMIC REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91ECONOMIC WORKING PAPERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91MISCELLANEOUS ECONOMIC POLICY PAPERS . . . . . . . . . . . . . . . . . . . . . . . . . . 92CONSUMER AND COMPETITION ADVOCACY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93OFFICE OF CONSUMER AND COMPETITION ADVOCACY . . . . . . . . . . . . . . . . . 93FEDERAL AGENCIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93STATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96TABLE OF CASES LISTED IN THE APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101Annual Report 1992 / Page 1SUMMARYThe Federal Trade Commission enforces a variety of federal antitrust andconsumer protection laws.The Commission seeks to ensure that the nation'smarkets function competitively and are vigorous, efficient, and free of unduerestrictions.The Commission also works to enhance the smooth operation ofthe marketplace by eliminating acts or practices that are unfair or deceptive.In general, the Commission's efforts are directed toward stopping actions thatthreaten consumers' opportunities to exercise informed choice.Finally, theCommission undertakes economic analysis to support its law enforcementefforts and to contribute to the policy deliberations of the Congress, theExecutive Branch, other independent agencies, and state and local governmentswhen requested.In addition to carrying out its statutory enforcement responsibilities, theCommission advances the policies underlying Congressional mandates throughcost-effective nonenforcement activities, such as consumer education.Thisreport itemizes the Commission's accomplishments in fiscal year 1992.MAINTAININGCOMPETITIONThe Bureau of Competition and the Commission's ten regional officesassisted the Commission in fulfilling its mission of maintaining competition inthe U.S. economy.In fiscal year 1992, this included reviewing businesspractices in order to limit both private and governmental restraints on free andvigorous competition, thus ensuring that consumers have access to adequatesourcesofgoodsandservicesatreasonable,competitiveprices.TheCommission's enforcement of deregulation efforts helps in lowering costs andprices, lessening inflation, and increasing innovation.In the merger area, thenumber of Hart-Scott-Rodino premerger filings for fiscal year 1992 increasedby approximately 3.9% over the corresponding 1991 figures.In fiscal year1992, the Commission reviewed mergers in many sectors of the economy, andmeasures were taken to ensure compliance with Commission orders requiringdivestitures and prior approvals of acquisitions.Outside the merger enforcement area, the Commission continued effortstoeliminateprivateandpublicrestraintsoncompetition,maintainingcompetitioninthehealthcareindustryandchallenginganticompetitiveagreements among competitors, especially competitive restraints involvingprofessionals.CONSUMER PROTECTION The Bureau of Consumer Protection, assisted by the regional offices,continued its mission to maintain a well functioning marketplace that allowsconsumers to make informed decisions on how to spend their money.In fiscalyear 1992, the Commission obtained settlements in several cases involvingdeceptiveenvironmentalclaimsandissuedGuidesfortheUseofEnvironmental Marketing Claims to help reduce consumer confusion andprevent the false or misleading use of environmental terms such as recyclable,degradable, and ozone friendly.Several consentagreements approved by theCommission involved health claims for foods and nutritional supplements, suchas low sodium content, fat, and cholesterol.The Commission also issuedconsent orders in the health care service area, including providers of medicallysupervised diet programs and providers of infertility treatment services.In lawFederal Trade CommissionPage 2 / Annual Report 1992enforcement efforts directed at preventing fraud, the Commission took actionagainst investment scams and telemarketing fraud, obtaining thirty- six orderswith provision for redress or disgorgement.The enforcement of consumercredit laws resulted in many orders containing provisions for consumer redress,disgorgement, and civil penalties.The Commissiontook action against severalcredit superbureaus for furnishing consumer reports to various parties forimpermissible purposes.In enforcing Commission cease and desist orders,several significant civil penalty settlements were obtained with violators ofthose orders.The Commission filed its first enforcement actions under theOctane Posting Rule and worked closely with state and local officials to ensurecompliance with the Rule.Finally, the Office of Consumer and BusinessEducation produced more than forty-nine new and revised publications andworked with consumer, industry, and government representatives on consumereducation campaigns concerning weight loss products and programs, creditrepair scams, and advance fee loans.CONSUMER ANDCOMPETITION ADVOCACYA number of federal and state legislatures and regulatory bodies, includingthe Department of Justice, the Federal Aviation Administration, the FederalCommunications Commission, and the Food and Drug Administration, soughtthe Commission's advice on proposed legislation or regulatory matters.Topicsaddressed included advertising, antitrust, communications, health care, foodlabeling, occupational licensing, and transportation.ECONOMIC ANALYSIS Infiscalyear1992,Commissioneconomistsmadepolicyrecommendations and produced reports on topics of interest to the public.While direct support of enforcement, particularly antitrust, activities absorbedthe bulk of the resources of the Bureau of Economics, the Bureau was alsoresponsible for analyzing data and publishing information about the nation'sindustries, markets, and business firms.The Bureau conducted a number ofstudies on a broad range of antitrust, consumer protection, and regulatorytopics.This work resulted in published reports on horizontal mergers anddepartment store reference pricing.ADMINISTRATION ANDMANAGEMENTIn fiscal year 1992, support services to Commission staff focused on waysto improve staff productivity through the increased use of modern informationsystemstechnology.Alargepartofthiseffortwasdirectedatputtingorganizations on a computer network to allow multiple users easy access tocase-related information.The Commission's budget increased by thirteen workyears in fiscal year1992, and its recruitment program continued with selections of attorneys, legalinterns, law clerks, and economists.The Personnel Division worked to developand administer ongoing training and continuing education programs, and theProcurement and General Services Division started and completed numerousprojects to improve Commission facilities.The Information Services Division and other Commission organizationsresponded to almost forty-three thousand consumer complaints.The DivisionalsocontinuedtorespondtorequestsforrecordsundertheFreedomofSummaryAnnual Report 1992 / Page 3Information and Privacy Acts.In addition, approximately three million sevenhundredandeighteenthousandconsumerandbusinesspamphletsandbrochures were distributed through the Division.Federal Trade CommissionPage 4 / Annual Report 1992MAINTAINING COMPETITION MISSIONThe Maintaining Competition Mission is devoted to preventing unfairtrade practices and promoting competition through enforcement of the FederalTrade Commission Act, the Clayton Act, the Robinson-Patman Act, and theHart-Scott-Rodino Antitrust Improvements Act of 1976.The mission's purposeis the detection and elimination of antitrust law violations, including collusion,anticompetitive mergers, predatory single firm conduct, and injurious verticalagreements.The Bureau of Competition is primarily responsible for theMaintaining Competition Mission, with support from the Bureau of Economicsand the ten regional offices.The activities of the mission are divided into five major program areas:Premerger Notification, Mergers and Joint Ventures, Horizontal Restraints,Distributional Arrangements, and Single Firm Violations (focusing primarilyon monopolization, predation, and practices that may facilitate collusion).The Bureau of Competition is responsible for administering the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and for taking steps toensure compliance with the premerger notification program's statutoryrules.TheotherfourprogramareasreviewviolationsoftheantitrustlawsinindustriesinwhichtheCommissionhasparticularexpertiseincludingpetroleum, chemicals, natural resources, food, consumer goods, transportation,pharmaceuticals,andhealthcare.Inaddition,theCommissionreviewssuspected collusive behavior among licensed professionals and providesantitrustpolicy,programs,analyses,andstudiestoincreaseconsumerawareness and to further the understanding of the role of antitrust complianceand enforcement in a competitive economy.PREMERGERNOTIFICATIONThe Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act)requires persons meeting certain size requirements who are planning significantacquisitions to file notification with the Commission and the Department ofJustice and to delay consummation for a prescribed period of time.Thepremerger notification program was enacted to provide the two federal antitrustagencies with the opportunity to review proposed transactions and to takeenforcement action, if appropriate, to prevent consummation of transactionsthat violate the antitrust laws.The Commission, along with the Department ofJustice, is responsible for administering the program and taking steps to ensurecompliance with the program's requirements.The Premerger Notification Office received notifications for one thousandfive hundred and eighty-nine transactions during fiscal year 1992, a 3.9%increase over the number of transactions reported during fiscal year 1991.TheCommission opened twenty-six investigations to issue requests for additionalinformation.In addition, the premerger staff responded to approximately tenthousand inquiries regarding the application and interpretation of the HSR Actand premerger rules.On May 19, 1992, the Commission adopted a program designed to assiststates' antitrust review of proposed mergers reported to the federal antitrustauthorities under the HSR Act.Under the Premerger State Assistance Program,Maintaining CompetitionAnnual Report 1992 / Page 5which will operate in conjunction with the Voluntary Premerger DisclosureCompact of the National Association of Attorneys General, parties submittingadditional information and documentation under the second request provisionof the premerger rules may voluntarily waive the confidentiality protectionsunder the HSR Act allowing the Commission to disclose certain informationand materials concerning the merging parties and the transaction to stateantitrust officials.This program will permit the Commission to provide copiesof the second requests issued to the parties and redacted copies of third partysubpoenas, and disclose the waiting periods relevant to the transaction tointerested state antitrust officials.In addition, at the request of the state, theCommission would provide limited assistance in analyzing the merger.Inreturn,theparticipatingstateshaveagreedthattheywillnotdemandinformation from the merging parties during the HSR waiting periods as longas the merging parties provide specific information on the proposed transactionto a designated liaison state.Nine investigations remained open at the end of the year to reviewacquisitionsthatmayhaveviolatedthereportingandwaitingperiodrequirements of the HSR Act.Three of those investigations were openedduring fiscal year 1992.Commission attorneys, acting as Special Attorneys to the United StatesAttorney General under the Memorandum of Agreement adopted in fiscal year1991, filed three new complaints under Section 7A(g)(1) of the HSR Act.Thecomplaint in United States v. Atlantic Richfield Company alleged that AtlanticRichfield and U.F. Genetics, Inc. (UFG) failed to file notification before UFGacquired beneficial ownership in ARCO Seed Company.Separate consentjudgments required ARCO and UFG to pay civil penalties of $290,000 and$150,000, respectively.In United States v. Beazer PLC, the British generalconstruction company agreed to pay a civil penalty of $760,000 to settleallegations that it acquired stock in Koppers Company, Inc., valued in excessof $15 million, without notifying the federal antitrust agencies.In UnitedStates v. William F. Farley, the complaint alleged that Farley acquired stock inWest Point-Pepperell Inc., valued in excess of $15 million, without reportingand observing the required waiting period under the premerger rules.Courtproceedings are pending in the U.S. District Court in Chicago, Illinois.Under terms of a consent decree, General Cinema Corporation agreed topay a $950,000 civil penalty to settle allegations resulting from the acquisitionof stock in Cadbury Schweppes plc.The complaint, filed during fiscal year1991, and the final judgment were filed in U.S. District Court for the Districtof Columbia.MERGERS AND J OINTVENTURESThis program identifies and investigates those mergers, acquisitions, andjoint ventures that are likely to result in the lessening of actual or potentialcompetition, increase unilateral market power and lead to dominant firmbehavior, or increase the likelihood of coordinated interaction or collusion.The program's objective is to protect consumers by preventing mergers andacquisitions that threaten to restrict competition and result in higher prices orother forms of consumer harm in violation of Section 7 of the Clayton Act, orFederal Trade CommissionPage 6 / Annual Report 1992Section 5 of the Federal Trade Commission Act, and to prevent interlockingdirectorates that would violate Section 8 of the Clayton Act. For the first time ever, the Commission and the Department of Justicejointly issued merger guidelines to provide businesses and consumers with thestandards employed by the federal antitrust agencies to evaluate the competitiveeffectsofhorizontalmergersandacquisitions.Accordingtothe1992Horizontal Merger Guidelines, the analytical process used by the agencies todetermine whether a merger should be challenged consists of five components:marketdefinitionincludingproductandgeographicmarket,and/orconcentration; the likelihood of potential anticompetitive effects; market entry;efficiencies; and failing and exiting assets.The Guidelines reflect the currentstate of legal and economic thinking that sound merger enforcement canprevent anticompetitive mergers that threaten our free enterprise system and thewelfare of American consumers.The new horizontal guidelines update theCommission's 1982 Statement Concerning Horizontal Mergers and the 1984Department of Justice Merger Guidelines.Duringfiscalyear1992,theCommissioninitiatedfiveinitialphaseinvestigations and thirty-five full phase investigations, approved compulsoryprocess in twenty matters opened during the fiscal year, and continued to workon sixteen investigations carried over from earlier fiscal years. During fiscal year 1992, five new enforcement matters were initiated, andconsent orders requiring divestitures were accepted for public comment andmade final in each matter.The consent order in Hanson PLC/Beazer PLCrequires divestiture of Cencal Cement Company; the consent order in ServiceCorporationInternational/PierceBrothersHoldingCompanyrequiresdivestiture of four Pierce Brothers funeral homes in the State of California; theconsent order in Mannesmann, A.G. allows Mannesmann to acquire RapistanCorporation but requires it to divest The Bushman Company; the consent orderin Rohm and Haas Company/Union Oil Company of California requiresdivestiture of Unocal's Union Oil Architectural Acrylic Assets; and the consentorder in The Vons Companies, Inc. (Vons) requires divestiture of a San LuisObispo, California supermarket to settle allegations relating to the acquisitionof Williams Bros. supermarkets and Vons' sale of a store in the same market. Five proposed consent agreements placed on the public record for commentduring fiscal year 1991 were made final in 1992.The consent order in NipponSheet Glass Company, Ltd./Pilkington PLC/Libbey-Owens-Ford Companyprohibits certain agreements between the firms involving polished wired glassand float glass; the consent order in PepsiCo, Inc. requires PepsiCo, Inc. todivest Twin Ports Seven-Up Bottling Company within nine months to anacquirer preapproved by the Commission; the consent order in Sentinel Group,Inc. (Sentinel) requires Sentinel to divest three funeral homes in Georgia andArkansas;theconsentorderinAlphaAcquisitionCorporation(RWEAktiengesellschaft) (RWE)/Vista Chemical Company requires RWE to licenseits technology for the production of high purity alumina to a Commissionapprovedacquirer;andtheconsentorderinHoechstAktiengesellschaft(Hoechst AG), settling an administrative complaint that challenged the 1987acquisition of Celanese Corporation, prohibits the German company and itsMaintaining CompetitionAnnual Report 1992 / Page 7U.S. subsidiaries from entering into certain agreements that would frustrate thePolyplastics Company Ltd.'s ability to compete with Hoechst AG in themanufacture and sale of acetal in the United States. The Commission also accepted a consent order settling allegations in a 1991administrative complaint that challenged the proposed acquisition of St. JosephHospitalbyUniversityHealth,Inc.Undertermsoftheconsentorder,University Health, Inc. is prohibited from acquiring St. Joseph or any otheracute care hospital in the Augusta, Georgia market without prior Commissionapproval for a period of ten years. The Commission reversed an Administrative Law Judge's initial decision,and dismissed the complaint in Owens-Illinois, Inc./Brockway, Inc.TheCommission found that the acquisition of Brockway was unlikely to lead toanticompetitive behavior in the various relevant markets for food and beveragecontainers. The Commission heard oral arguments in two appeals from initial decisionswritten by Administrative Law Judges.In Textron, Inc., an AdministrativeLaw Judge dismissed the complaint challenging Textron's acquisition of AvdelPLC and ruled that the acquisition did not pose a threat to any product orgeographic market in the United States.In Coca-Cola Bottling Company of theSouthwest (CCSW), an Administrative Law Judge issued an initial decision infiscal year 1991 that dismissed the complaint challenging CCSW's acquisitionofcertainSanAntonio,TexasDrPepperBottlingCompanyassets.ACommission decision is pending in both matters. The federal district court for the District of Columbia dismissed Harold A.Honickman and the Dr Pepper/Seven-Up Companies, Inc.'s challenge of theCommission's denial of Honickman's request for approval to acquire thelicensing rights of the Seven-Up Brooklyn Bottling Company and Seven-Updistribution in portions of New York and Long Island.Prior approval isrequired by a 1991 consent order settling allegations relating to Honickman's1987 acquisition of Seven-Up Brooklyn Bottling Company, Inc. The District of Columbia Circuit Court of Appeals accepted the transferfrom a district court of a motion for a preliminary injunction brought byAdventistHealthSystem/West.Themotionseekstoenjointhe1991Commission order finding that the Commission has jurisdiction over assetacquisitions made by not-for-profit entities and remanding the administrativecomplaint challenging Adventist's acquisition of all the assets of Ukiah GeneralHospital.An oral argument on the preliminary injunction motion has beenscheduled for early in 1993.TheCommissionmodifieda1990consentorderwithT&NPLCtoeliminate the company's obligation to divest its remaining inventory of thinwallenginebearings.TheoriginalordersettledallegationsthatT&NPLC'sacquisition of J.P. Industries Inc. would substantially lessen competition andtend to create a monopoly in the manufacture and sale of thinwall and trimetalheavywall engine bearings in the United States. Finally, the Commission approved compliance reports received under thereporting provisions of forty-one orders, reviewed and approved applicationsto sell or license assets under the divestiture provisions of nine consent orders,Federal Trade CommissionPage 8 / Annual Report 1992and granted three firms' petitions to acquire assets under the prior approvalprovisions of orders.HORIZONTALRESTRAINTS During fiscal year 1992, the Commission opened forty-four initial phaseinvestigations to analyze and study business practices that seemed to includehorizontal restraints, such as price fixing and other anticompetitive agreementsamong competitors that may deny consumers access to the optimal variety,quantity, and quality of goods and services at competitive prices, and denysellers the opportunity to produce, distribute, and sell goods and services atprices they would select under competitive conditions. A particular focus of the program is the health care sector, which has beenmarked by rapidly rising costs.The Commission has used the antitrust laws tochallenge unlawful conspiracies among health care providers, such as pricefixing and coercive boycotts of cost containment programs or alternativeproviders.More generally, this program investigates other professionals suchaslawyersandaccountants,aswellasserviceindustries.Throughinvestigation, litigation, and negotiation, the Commission seeks to eliminateunlawful horizontal restraints on trade. In fiscal year 1992, the Commission initiated seven new enforcementmatters:six proposed consent agreements and one matter involving both courtand administrative complaints.Two proposed consent agreements placed onthe public record for comment and made final settled separate Commissionallegationsofcollusivebehavioramonghealthcareprofessionals.ThecomplaintinRobertoFojo,M.D.allegesthatheconspiredwithotherphysicians to withhold medical call services from the emergency room of aMiami, Florida medical center.The complaint in Debes Corporation allegesthatsixnursinghomesinRockford,Illinoisconspiredtoboycottnurseregistries in the area in an attempt to influence the prices charged for servicesby those registries.Both consent orders place restrictions on health careprofessionals entering into conspiracies to boycott others in the medicalprofession.Four other proposed consent agreements accepted for comment duringfiscalyear1992werependingfinalCommissionaction.TheIndustrialMultiple, a Los Angeles area multiple listing service, has agreed to settleallegations that it unreasonably restricted access to the multiple listing service,limited the contract options member brokers could offer to their clients, andreduced the likelihood of discount commissions or other price competitionamong brokers; Quality Trailer Products Corporation agreed not to solicitcompetitors to fix prices or to enter into any conspiracy with any competitor tofix prices; Realty Computer Associates, Inc. (Computer Listing Service) agreednot to interfere with certain business practices of its member brokers includingpublishingexclusiveagencylistings;andtheAmericanPsychologicalAssociation agreed not to restrict its members from using truthful advertisingand participating in certain patient referral services. The Commission used its authority under Section 13(b) of the Federal TradeCommission Act to seek injunctive relief against Abbott Laboratories (Abbott)for conspiring with others to fix, stabilize, or otherwise manipulate rebate bids,Maintaining CompetitionAnnual Report 1992 / Page 9and to guarantee an open market bidding system for a contract to provideformulatoinfantsinPuertoRicoundertheSpecialSupplementalFoodProgram for Women, Infants, and Children (WIC).A second count in the samecomplaint alleged that Abbott unilaterally provided information to competingbidders that it preferred an open market system.Complaints were also filedagainst American Home Products and Mead Johnson & Company charging thatthey each unilaterally acted to reduce uncertainty in the Puerto Rican WICprogram.In a separate administrative complaint, it was alleged that Abbottconspired with others to refrain from advertising to consumers through themass media.Settlements with American Home Products and Mead Johnson &Company require the companies to deliver 3.6 million pounds of infant formulato the U.S. Department of Agriculture, the agency which administers the WICprogram.Allegations regarding Abbott are pending in federal court and inadministrative proceedings at the Commission. Also during the year, the Commission finalized three proposed consentagreements accepted for comment in an earlier fiscal year:the consent orderagainst Connecticut Chiropractic Association prevents it from restrainingadvertisingofprofessionalservicestoconsumers;theconsentorderinSouthbank IPA, Inc. (Southbank) requires the dissolution of Southbank andprohibits the physician members from engaging in price fixing; and the consentorder against the Texas Board of Chiropractic Examiners prohibits it fromadopting and enforcing rules that prohibit its members from using truthfuladvertising. The allegations in the administrative complaint against Diran M. Seropian,M.D. were settled by a consent order that prohibits agreements to refuse to dealwith health care providers.The complaint alleged that Dr. Seropian, formerlyChief of Staff of Broward General Medical Center, conspired with its medicalstaff to prevent the Cleveland Clinic Foundation from establishing a competinghealth care facility in the area. The Commission adopted an Administrative Law Judge's (ALJ) initialdecision that upheld the complaint against Peterson Drug Company of NorthChili, New York.The ALJ ruled that the company illegally engaged in aboycott of New York State's cost containment program for prescription drugsin an effort to increase the reimbursement rate paid to pharmacists for filingprescriptions.This case was a companion case to the consent orders issued lastyear in Chain Pharmacy Association of New York State. The Court of Appeals for the Sixth Circuit affirmed in part and remandedin part the Commission's 1989 decision in Detroit Auto Dealers Association,Inc. which held that a dealer agreement on hours of operation was an illegalhorizontal restraint.In August 1992, the automobile dealers filed a petition forcertiorari; a Supreme Court decision on whether or not to accept the case ispending. The Supreme Court issued a decision in Ticor Title Insurance Companyreversing and remanding the decision of the Third Circuit.The court of appealshad vacated the Commission's order in its entirety and ruled that the companies'agreement to collectively set rates for title search and examination services wasprotected from antitrust scrutiny by the state action doctrine.The SupremeFederal Trade CommissionPage 10 / Annual Report 1992Court held that two of the states at issue did not actively supervise the activitiesof the companies.AttherequestoftheAmericanMedicalAssociation(AMA),theCommission modified a 1982 order to allow the AMA to provide its memberorganizationstheopportunitytoselectthemannerinwhichtheyreportcompliance with the certification provision of the order. The year ended with eighty five investigations open in the horizontalrestraints program examining potential unfair methods of competition includingproduct market restrictions, restraints on pricing, boycotts, and collusion amongcompetitors,individuals,andprofessionalorganizationsengagedintheproduction or distribution of chemicals, food, medical services, and otherproducts and services.DISTRIBUTIONALARRANGEMENTSThisprogramcoversrestrictionsonthedistributionofgoodsfrommanufacturers to consumers.Such practices can limit sources of supply orrestrict channels of distribution in ways that increase prices or reduce quality.Potentially unlawful conduct includes restrictions on resale prices (and otherterms of sale), as well as restrictions on the marketing decisions of firms in thedistribution chain.These practices may result from agreements (sought orcoerced) between suppliers and purchasers. In addition, the Commissioninvestigates discrimination in prices, terms of sale, advertising allowances, andother merchandising services that may deny competitive opportunities to firmsin the distribution chain and other practices that may injure consumers.During the fiscal year, the Commission opened nineteen new matters andexaminedpotentialantitrustconcernsinmorethanfiftyactivemattersinvolving alleged distributional practices in a variety of industries, includingmotion pictures, clothing, furniture, carbonated soft drinks, machine tools, andchildren's toys and games.In a consent order, Kreepy Krauly USA, Inc. settled allegations that thecompanyillegallyenteredintoagreementswithitsdealerstomaintainsuggested retail prices of its automatic swimming pool cleaning devices.Theconsent order prohibits the firm from entering into agreements with dealers tofix retail prices.At the request of Pioneer Electronics (USA) Inc. (Pioneer), theCommission reopened and modified a consent order to allow the company towithhold cooperative advertising allowances from dealers and to unilaterallyterminate dealers that advertise Pioneer products at prices other than thosesuggested by the company.After the Commission issued an order to showcause,the consent order was further modified to permit Pioneer to unilaterallyterminate dealers that sell products at prices lower than the Pioneer suggestedretail price. Administrative litigation under the Robinson-Patman Act is continuingagainst six book publishers, Harper & Row Publishers, Inc.; MacMillan Inc.;The Hearst Corporation; The Putnam Group; Simon & Schuster; and RandomHouse Inc., for alleged unlawful price discrimination against independentbookstores.Maintaining CompetitionAnnual Report 1992 / Page 11 At year's end, twenty investigations remain open examining allegations ofexclusivemarketingagreements,resalepricemaintenance,pricediscrimination, and discriminatory discounts by firms in a variety of industries.SINGLE FIRM VIOLATIONS Duringfiscalyear1992,theCommissionopenedthirteennewinvestigations involvingpotential single firm abuse of market power.Ininstances where a firm monopolizes a market or uses its market power in onemarket to affect another (tying), output can be reduced and prices can increaseabove the competitive level, thereby injuring consumers and misallocatingsociety's resources.When there are high entry barriers into the market, theseharmscanpersistforlongperiods.Theprogramfocusesoncasesofmonopolization or attempts to monopolize, tying arrangements, and processesto create or enhance market power. During fiscal year 1992, the Commission finalized two proposed consentagreements that were placed on the public record for comment in fiscal year1991.The consent order in Sandoz Pharmaceuticals Corporation (Sandoz)prohibits the company from engaging in an illegal tying arrangement thatrequired purchasers of clozapine (marketed exclusively by Sandoz) to alsopurchase patient monitoring services arranged by Sandoz through its ClozarilPatient Management System.The consent order in Nintendo of America Inc.prohibits the company from fixing the retail price at which dealers advertise orsell Nintendo home video game hardware, software, and related products. At the close of the year, twenty investigations remain open involvingmonopolization activities in a number of industries, including health careservices, industrial supplies and equipment, manufacturing, soft drinks, andphysician joint ventures.The Commission continued its efforts to engage in competition advocacyto promote the reduction of barriers to entry and the elimination of restraints onprocompetitive business conduct, and to provide legal and economic policyanalysis of issues related to single firm anticompetitive behavior.COMPLIANCE The Compliance Division supports the other programs in an effort toassure compliance with Commission orders to cease and desist from certainconduct, orders for divestiture, and other forms of relief. The Commission modified two of its prior orders.A 1982 order against theAmericanMedicalAssociationanda1975orderagainstU.S.PioneerElectronics Corporation were modified. The Ninth Circuit Court of Appeals affirmed a 1983 decision by the U.S.District Court in Oregon requiring Louisiana-Pacific Corporation to pay a $4million civil penalty for failure to divest a fiberboard plant required by a 1979Commission order.The civil penalty is the largest antitrust penalty awardedto the Commission.Since the Commission order in 1979, Louisiana-Pacificfiled two motions with the Commission to modify the order and sought reviewof Commission denials to modify the order, as well as a federal district court'simposition of the $4 million civil penalty.Federal Trade CommissionPage 12 / Annual Report 1992CONSUMER PROTECTION MISSIONThe Consumer Protection Mission is devoted to maintaining conditionsin the marketplace that allow consumers to make informed decisions on howto spend their money.To this end, it works to:increase the usefulness ofadvertising by ensuring that advertising is truthful and not misleading; reduceinstances of fraudulent or deceptive sales and marketing practices; and preventcreditors from engaging in unlawful practices in granting credit, maintainingcreditinformation,collectingdebts,andoperatingcreditsystems.TheCommission also conducts activities designed to educate consumers andbusinesses about their rights and responsibilities under the laws and regulationsit administers.Therearefivelawenforcementprogramareaswithinthemission:Advertising Practices, Service Industry Practices, Marketing Practices, CreditPractices, and Enforcement.The Bureau of Economics and the Office ofConsumer and Business Education support the five law enforcement programs.ADVERTISING PRACTICES Under the advertising practices program, the Commission works to ensurethat advertising claims are not false or misleading so consumers can makeinformed purchases on the basis of truthful information.In fiscal year 1992,theCommissionapprovedtwenty-twoconsentordersandacceptedfouradditional proposed consent agreements for public comment.In addition, twoadministrative complaints were issued by the Commission.Four of the consent orders involved environmental claims, includingbiodegradable claims for trash bags and two brands of disposable diapers, aswellasozone-friendlyclaimsforacleaningproduct.Fiveothercasesconcerned health claims for foods and nutritional supplements, such as lowsodium content, and low fat and cholesterol claims.The Commission issued an administrative complaint charging one of thecountry's largest producers of infomercials and eight other respondents withmaking false and unsubstantiated claims about the efficacy of a purportedcellulite treatment and baldness cure and challenging the independent televisionprogramformatoftheadvertising.Fourconsentorders,twoinvolvinginfomercials, settled allegations that claims for weight loss and baldnessproducts were false and unsubstantiated, with one infomercial respondentpaying $30,000 in redress.One other company agreed to settle allegations thatit deceptively and unfairly marketed 900 number information services tochildren.In two other cases, the Commission challenged efficacy claims for a coldand allergy treatment device, and for a wrinkle-removing cream, with the orderin the latter case requiring disgorgement of $100,000.In its first enforcementaction involving alleged violations of the statutory ban on television advertisingof smokeless tobacco products, the Commission challenged the use of atobacco product's name in connection with the sponsorship of televised truckand tractor pulling events.Consent orders with a major national advertiser andan advertising agency settled allegations that they had produced demonstrationads misrepresenting the comparative performance of the advertised car.TheConsumer ProtectionAnnual Report 1992 / Page 13ad agency and advertiser agreed to pay $150,000 each to the U.S. Treasury. Other advertising cases involved superiority claims for a high-octane gasoline,performance claims for two air-cleaning products, and efficacy claims forultrasonic pest control devices.TheCommissionissuedGuidesfortheUseofEnvironmentalMarketing Claims to help reduce consumer confusion and prevent the false ormisleading use of environmental terms such as recyclable, degradable, andenvironmentally friendly in the advertising and labeling of products in themarketplace.The goal of the Commission is to protect consumers and tobolster their confidence in environmental claims, and to reduce manufacturers'uncertainty about which claims might lead to Commission law enforcementactions, thereby encouraging marketers to produce and promote products thatare less harmful to the environment.TheCommissionapprovedstaffcommentsprovidedtotheU.S.Department of Agriculture and the Food and Drug Administration concerningimplementation of the Nutrition Labeling and Education Act of 1990, whichgoverns the nutritional labeling of food products.In addition, staff coordinatedwith the Environmental Protection Agency (EPA) the monitoring of theadvertising of lawn care pesticides.SERVICE INDUSTRYPRACTICESThe service industry practices program focuses on misrepresentations inthe sale of investment goods and services, deception in the advertising and saleof health care services, and deception and anticompetitive effects from the useof standards and certifications.In the investment fraud area, the Commissionfiled nine new cases in federal district court against investment scams involvingsales of wireless cable franchise lottery entries, rare coin investments, preciousgemstones, collectible postage stamps, and leveraged precious metals.Thesecompanies had estimated sales of over $55 million, and an estimated tenthousand customers were victimized by these firms.During fiscal year 1992,approximately $59 million recovered in investment fraud cases was distributedto fraud victims.The Commission also obtained judgments of more than $18million against other sellers of investment frauds.In the health care services area, a $21.5 million redress judgment wasobtained in a federal district court case against a chain of weight loss clinicsthat had falsely claimed that consumers could adjust their metabolism and loseup to one and a half pounds a day on its diet program.Consent orders were issued for three providers of medically-superviseddiet programs under which they would be required to qualify safety claims,have a reasonable basis for claims about the efficacy of their programs inhelping consumers to lose weight or maintain that weight loss, and makevarious disclosures in connection with any future maintenance success claims.Four additional consent orders were issued against providers of othertypesofhealthcareservicesprohibitingthefollowingpractices:misrepresenting or making unsubstantiated claims about success rates inachieving births or pregnancies; misrepresenting the results, recovery times orthe likelihood of serious adverse complications associated with any cosmeticsurgery procedure; misrepresenting the safety, efficacy, side effects, and risksFederal Trade CommissionPage 14 / Annual Report 1992of a wide variety of cosmetic surgery procedures; and requiring a reasonablebasis for claims regarding the efficacy, permanence or likely complications ofanysurgicalprocedurefortreatingbowel-relateddiseaseandtruerepresentations of the comparative success of this and other reconstructivesurgical procedures.In addition, investigations of major diet programs, hospital providers, andother health care services providers continued.Finally, a major consumereducation effort was announced with National Association of AttorneysGeneral (NAAG) and the Food and Drug Administration (FDA) to assistconsumers in selecting diet programs and products.MARKETING PRACTICES The fraudulent telemarketing of consumer goods and services is a primaryfocus of the marketing practices program.The Funeral Rule and FranchiseRule are also enforced under this program.The program's antifraud effortsyielded redress and disgorgement orders totalling over $26.7 million in twenty-three cases, and over $1.18 million was distributed to approximately sixtythousand victims of six fraudulent operations or disgorged to the U.S. Treasurybecause restitution was not feasible.A federal district court order entitles the Commission to recover more than$9 million in a case involving a company selling information about how topurchase repossessed or forfeited automobiles at auctions and how to obtaincredit cards secured by a savings account.A telemarketer of water filters wasordered to pay $7.5 million to settle allegations it misrepresented its product.A company that allegedly made false and misleading claims in the sale ofconsulting service franchises was ordered to pay over $3 million in consumerredress, plus interest and costs.An operator of a fraudulent employmentscheme was ordered to pay $2,343,506 in restitution.Another case against afraudulent telemarketer offering Florida timeshare resale services resulted inan order to pay over $1.5 million in consumer redress, and require defendantstoobtaina$1.5millionbondasapreconditionforeverresuminganytelemarketing business.In its pursuit of the support network that enables telemarketing fraudoperators to function, the Commission filed two additional complaints againsta total of fourteen defendants and initiated a number of other nonpublicinvestigations of such root operations.In addition, efforts to assure defendants'compliance with existing court orders necessitated initiation of civil contemptproceedings in several cases.Defendants in two cases were found to be in civilcontempt of prior court orders.The Commission obtained settlements in two Franchise Rule enforcementcases, filed complaints initiating four others, and opened a number of nonpublicinvestigations of Franchise Rule violations.In one case, a real estate franchisefirm was ordered to pay $27,500 in civil penalties to settle allegations that itfailed to provide all of the pre-purchase information required by the Rule.In Funeral Rule enforcement, the Commission obtained eight settlementsordering a total of $248,000 in civil penalties.Another settlement required$13,000 in consumer redress in addition to payment of a civil penalty.Apermanent injunction was obtained against one funeral home.One additionalConsumer ProtectionAnnual Report 1992 / Page 15complaint alleging violations of the Funeral Rule was filed in federal districtcourt.The Commission issued a consent order requiring $50,000 in consumerredress to settle allegations that claims made in an infomercial about theavailability of government grants to consumers wishing to start their ownbusinesses were false.Consent agreements were accepted for public commentin the first cases in which the Commission challenged rental car firms' failureto disclose certain mandatory charges through computerized reservationsystems.The Commission issued consent orders to two consumer electronicsstores,settlingallegationsthattheretailersfailedtomakethetextsofmanufacturers' warranties available to consumers prior to purchase.TheCommissionalsoissuedacomplaintagainstanationwidemarketerofautomobileservicecontractsforfailingtohonoritscontractsandmisrepresenting contract coverage.The Commission issued a complaint against a firm that allegedly madefalse and unsubstantiated claims about its ultrasonic pest control devices.Inaddition, a marketer of rodent control devices agreed to a cease and desist orderfor making false and unsubstantiated claims about its products.CREDIT PRACTICES The Commission enforces federal laws to ensure the privacy of creditreports, equal access to credit, fair debt collection practices, and truthfullending practices.Enforcement actions taken during fiscal year 1992 resultedin twelve consent orders containing provisions for consumer redress and/ordisgorgement which may amount to over $6.3 million.Seven civil penaltyjudgments ordering $610,000 were obtained, and consumer redress of over $1.4million was ordered.Three permanent injunctions were issued, and threeadditional complaints were filed in federal district court.Cases involving credit marketing scams and the Fair Credit Reporting Acthighlighted the program's agenda.The Commission took action against severalsuperbureausforfurnishingconsumerreportstovariouspartiesforimpermissible purposes.One of the nation's largest credit bureaus, whichmaintains credit information on approximately one hundred and seventymillion consumers, agreed to revise and streamline its procedures for ensuringthe accuracy of its credit reports and resolving disputes.A communications company agreed to pay $800,000 in consumer redressto settle allegations that it misrepresented the nature of its credit services andfailed to disclose essential cost information about its 900 telephone numbers.A federal district court ordered another company to pay $300,000 in consumerredress to settle allegations that it misrepresented that the gold card credit cardsit marketed were similar to Visa or MasterCard.Consumers had to make a callto a 900 number to obtain the cards, which could only be used to purchasemerchandise from the defendants' own catalogs.The Commission filed acomplaint in federal district court against a third company that allegedlydeceptively marketed gold cards and deceptively used 900 telephone numbers.Federal Trade CommissionPage 16 / Annual Report 1992A vacation broker agreed to settle allegations of marketing bogus $29certificates for travel to Hawaii.The defendant was ordered to turn over assets,valued at approximately $300,000, to the Commission for consumer redress.ENFORCEMENT Enforcement of the Commission's consumer protection cease and desistorders, the majority of Commission trade regulation rules, and special statutesgoverning practices such as the labeling of textile, wool, and fur products, is theresponsibility of this program.Efforts encompass investigations, periodiccompliance reviews, and, when warranted, rulemaking proceedings.Consumereducation and guidance to affected industries are also important to the successof this program.As consumers' concerns with the environment and health and safety haveincreased, so have deceptive claims.Twenty-seven of fifty-three compliancereportsandseveralcivilpenaltyinvestigationsdealtwiththeseissues.Compliance with cases involving fraudulent and deceptive land sales andinvestments is also a focus of the program.The Commission obtained a$675,000 civil penalty from a major subdivision developer to settle allegationsof deception in land sales.A civil penalty of $200,000 was received from acompany that allegedly deceptively marketed a sweepstakes package in eightstates.A $200,000 civil penalty settlement was obtained in a case involvingalleged misrepresentations of the performance of heat and smoke detectors.The Commission filed its first enforcement actions under the OctanePosting Rule (Octane Rule).Five complaints filed in federal district courtresulted in four permanent injunctions and civil penalties of $65,000.Inaddition, staff evaluated the first year results of an industry survey to assesscompliance with the Octane Rule.As a result of the survey and other researchefforts, several investigations of gasoline distributors and retailers for possibleviolations of the Octane Rule's certification and posting requirements wereinitiated.Further, in recognition that octane fraud occurs primarily at the localdistributor and retailer level, the program significantly increased its joint effortswith state and local officials.With the Commission's assistance, five statesconducted their own enforcement sweeps of gasoline distributors and retailers.Staff continued its survey of the marketing of various home insulationproducts, which generate $300 million in annual sales, to determine compliancewith the R-Value Rule.One result was the Commission's first civil penaltycase involving the mislabeling of expanded polystyrene.Staff also investigateda major home improvement retailer regarding alleged failures to advertise homeinsulation in accordance with the R-Value Rule.RulemakingproceedingstoamendtheMailOrderRuletoincludetelephoneordersandtheApplianceLabelingRuletostreamlineitsrequirements were continued.Additionally, the Commission obtained twoconsent decrees providing injunctive relief and a total of $110,000 in civilpenalties for noncompliance with the Mail Order Rule.In other areas, the Commission accepted a settlement resolving allegedCooling-Off Rule violations and providing for a $15,000 civil penalty.TheCommissionalsoacceptedthreesettlementsresolvingallegationsthatmanufacturers had violated the Textile Fiber Products Identification Act byConsumer ProtectionAnnual Report 1992 / Page 17failing to correctly identify the fiber content of their garments.The decreesrequire future compliance with the Act, and one required a $25,000 civilpenalty.A civil penalty of $10,000 was obtained in the first Care LabelingRule case to be litigated.Fifteen Used Car Rule complaints filed in federaldistrict court resulted in thirteen orders requiring injunctive relief and a total of$125,500 in civil penalty payments and in two permanent injunctions.The enforcement program also initiated the first steps in a regulatoryreform project whereby the Commission will review all of its rules and guidesto determine whether modification or rescission is needed.CONSUMER ANDBUSINESS EDUCATIONThe Office of Consumer and Business Education (OCBE) produced morethan forty-nine new and revised publications, some in Spanish, and the agencydistributed more than three million seven hundred thousand copies of itseducation materials.OCBE worked with the National Association of AttorneysGeneral (NAAG) and the Food and Drug Administration (FDA) to produce avideo released via satellite to seven hundred stations about weight loss productsand programs.As part of that weight loss campaign, OCBE, NAAG, and FDAproduced radio public service announcements (PSAs) and offered a freebrochure on the subject.OCBE produced eight radio PSAs voiced by the Chairman for NationalConsumers Week concerning high priority enforcement topics.Further, theOCBE worked with the American Association of Retired Persons (AARP) toproduce a video news release about credit repair scams.With NAAG, OCBEpublished classified ads in a top circulation tabloid to alert consumers aboutscams in the areas of credit repair and advance fee loans.Federal Trade CommissionPage 18 / Annual Report 1992ECONOMIC ACTIVITIESThe Bureau of Economics provides economic support to the Commission'santitrust and consumer protection missions, advises the Commission about theimpact of regulation on competition, and analyzes economic phenomena in theAmericanindustrialeconomyastheyrelatetoantitrustandconsumerprotection.In the competition area, economists offered advice on the economic meritsofpotentialantitrustactions.Theeconomistsattemptedtodistinguishsituations where the marketplace performed reasonably well from situationswherethemarketmightbeimprovedbyCommissionaction.Whenenforcement actions were initiated, economists worked to integrate economicanalysisintotheproceeding,toprovideexperttestimony,andtodeviseremedies that would improve market competition.In the consumer protection area, economists provided estimates of thebenefits and costs of alternative policy approaches.Potential consumerprotection actions were evaluated not only for their immediate impact, but alsofor their longer run effects on price, product variety, and overall consumerwelfare.The Bureau of Economics also analyzed data and published informationabout the nation's industries, markets, and business firms.In fiscal year 1992,economists conducted a number of studies on a broad array of topics inantitrust and consumer protection.ANTITRUST In the antitrust area, economists participated in all investigations ofalleged antitrust violations and in the presentation of cases in support ofcomplaints by providing economic background information.Economists alsoadvisedtheCommissiononallproposedantitrustactionsintermsofconducting economic studies of individual industries and gathered informationabout sales, assets, profits, and other financial matters from a cross-section ofU.S. corporations.The Bureau of Economics focused most of its efforts in thisarea.The Bureau also maintained a small research program in support of theCommission's antitrust activities.Economists in this program published areport on the price effects of horizontal mergers on three different industries:titanium dioxide, cement, and corrugated paperboard.The Bureau also participated in the Commission's competition advocacyprogram.Economists presented comments to: the Department of Justiceconcerning television network syndication rules; the Federal CommunicationsCommission about must-carry rules for cable TV, rules for advanced TV, andownership limits for TV networks; and the Federal Aviation Administration onrules for allocating airport slots.Economic ActivitiesAnnual Report 1992 / Page 19CONSUMER PROTECTION In the consumer protection area, economists evaluated proposals for fullphase investigations, consent negotiations, consent settlements, and complaints.In addition, economists routinely provided day-to-day guidance on individualmatters and made policy recommendations directly to the Commission.Bureau economists worked on reports on consumer protection topics ofinterest to the Commission, such as Department Store Reference Pricing inMetropolitan Washington, which was published in 1992.Economists alsosupportedtheCommission'sconsumerprotectionadvocacyprogrambyassisting in drafting comments to the Food and Drug Administration and theU.S. Department of Agriculture concerning nutrition claims and health claimson food labels.Federal Trade CommissionPage 20 / Annual Report 1992EXECUTIVE DIRECTIONTheOfficeoftheExecutiveDirectorprovidesadministrativeandmanagement support for the Commission as well as management direction forthe agency's ten regional offices.The Executive Director administers thesefunctionsthroughaseriesofdivisionsincludingPersonnel,BudgetandFinance, Procurement and General Services, Information Services, AutomatedSystems, and the Library.AUTOMATED SYSTEMS During 1992, The Automated Systems Division completed initiatives indirect support services, central services, office services, and communicationservices.In direct support services, the Litigation Support and Economic AnalysisBranch provided important document management and data analysis supportfor investigations in all three bureaus and several of the regional offices.Visual communications support for limited graphics and video services alsowas provided, and technical support was expanded to international boundariesas the Automated Systems Division provided support as well as equipment toCommission staff working on Eastern European project initiatives.In central systems support services, the Commission completed a majorredesign of the staff time and activity reporting system, reflecting commitmentto strategic concepts of an integrated corporate database and more useful datamanagement tools in the hands of the users.Integrated full text managementsoftware was selected and installed to create a foundation for delivering bettertext management and retrieval support for Commission staff.A number of improvements were made to existing systems on the centralPrimecomputer(ManagementInformationSystem(MIS),InformationRetrieval and Indexing System (IRIS), Office Budget Planning and Tracking(OBPT),OfficeoftheSecretaryControlandReporting(OSCAR),andPremerger) to increase productivity for staff.In addition, remote job entrycapability for file transfer was established, allowing electronic transfer ofpayroll and financial data between Denver's IBM and Headquarter's Prime.With this capability, the Commission converted to a state-of-the-art financialaccounting system, operated by the Department of Interior, and linked Budgetand Finance staff to the new financial system and the Treasury Department'sElectronic Certification System.Personnel Division staff were hooked up toanewPayroll-PersonnelSystemoperatedbytheGeneralServicesAdministration in Kansas City.The programming support services contractwas recompeted and awarded to NMI.New initiatives with long-range benefits that got underway includedresearch into integrated text/data/image processing to provide more efficientprocessing and manipulation of the Commission's major records managementworkload.CD-ROM technology was introduced in selected offices as a pilotproject.Plans were also put in place to support improved life cycle systemsmanagement.The development environment for application systems wassuccessfullyseparatedfromtheproductionenvironment,andaqualityExecutive DirectionAnnual Report 1992 / Page 21assurance program was initiated to improve testing and evaluation done priorto turning systems over to production.Several major, multi-year initiatives were also started.A decision wasmade and a migration plan put in place to shift the Commission's centralcomputing environment from proprietary operating systems to scalable, Unix-based open systems.This includes evolving to a platform of multiple centralprocessingunitsandserversbasedonprice/performance,redundancy,availability, and specialization considerations unique to the service beingperformed.An off-the-shelf, object-oriented package was chosen to begin toenable nontechnical clients to access information from the corporate databasestored in Oracle.A procurement action was started for a pilot project to verifythe productivity gains and increased service to users that may occur as a resultof integrating database, text management, and image processing technologies.In office services, approximately four hundred additional workstationswere connected to the Commission's upgraded local area networking system aspart of a goal to have the entire Commission, including its ten regional offices,interconnected through a single, high-performance networking system by theend of calendar 1993.All workstations were also upgraded with currentversions of core software.Strengthened procedures were put in place fordealing with PC viruses; every PC was scanned for viruses, which wereremoved if found, and every PC was outfitted with appropriate software to limitthepossibilityofnewvirusesreachingthePC.Also,aspartoftheCommission's computer security program, ongoing reminders were providedto Commission staff on copyright restrictions applicable to computer softwareand individual responsibilities for adhering to these laws.Finally,withrespecttocommunicationsservices,expandeddatacommunications capabilities were installed, including X.400 and commonlyused protocols (Xmodem, Ymodem, ZModem, and Kermit software).A LocalAreaNetwork(LAN)administrationprogramwasinitiated;ourfacilitymanagementprogramwasexpandedtoincludeLAN-relatedstaffingcategories; and a LAN Steering Committee was created.INFORMATION SERVICES The Information Services Division and the Automated Systems Divisionworked with representatives throughout the Commission to establish theframework and develop the operating processes for a text management system.That work will serve as the basis for computer programming and agencyoperating procedural changes in fiscal year 1993.Those changes will provideagency staff and the public with greater access to Commission records.The Information Services Division responded to eighteen thousand threehundred and eighty one consumer complaints and distributed approximatelythree million seven hundred and eighteen thousand consumer and businesseducation pamphlets and brochures.In addition, the Division responded tothousands of requests for the Commission's Environmental Guidelines, one ofthe most highly requested publications issued in recent years.LIBRARY TheLibrarymaintainedtheCommission'scomprehensiveresearchcollection in legal, business, and economic subjects and provided researchFederal Trade CommissionPage 22 / Annual Report 1992assistance to Commission staff and the public through a variety of informationsources and systems.During fiscal year 1992, the Library staff responded toover twelve thousand reference questions, processed over two thousand sixhundred interlibrary loan requests, and circulated over three thousand items.The Library enhanced its CD-ROM collection and conducted demonstrationsand provided support to promote effective Commission staff usage.The Information Center continued to train and assist Commission staff inthe use of personal computers, software, and the central computer systems.The Information Center increased its services by providing support in the useof the newly installed local area networks (LAN) and WordPerfect Office.The Information Center trained four hundred and forty six employees insixty six classes on thirty eight different topics, ranging from ComputerSecurity to Advanced WordPerfect.Four new courses were developed fornewly acquired software, including Zyindex, Paradox, WordPerfect Office, andLAN Overview.Administration of the training program was simplified by theaward of four blanket purchase agreements (BPA's) with training vendors.Thisenabled the Information Center to increase the variety of topics offered, providetraining when staff members need it, and more easily procure training in theregions.In addition to formal training and customer support, the InformationCenter conducted demonstrations of applications and published a number ofinstruction sheets on different software packages.PROCUREMENT ANDGENERAL SERVICESIn addition to providing daily administrative support to the Commission,the Division of Procurement and General Services completed several initiativesduring fiscal year 1992.These accomplishments included the awarding ofcontracts for: (1) programming support services; (2) economic analysis andconsultingservices;(3)consumerredressaccountadministration;(4)administrative support services for Eastern Europe interns to come to the U.S.;and (5) purchase of one hundred computers for headquarters and regionaloffices.Numerous projects to improve the Headquarters facility were eitherstarted or completed.These included: the seventh floor renovation under acyclical renovation program; lease renewal/competition actions for office spacein the 601 building and the Boston, San Francisco, Atlanta, and ChicagoRegionaloffices;theupgradeof35%oftheCommission'scopiersinWashington; construction of an outside dining area off the 7th floor cafeteria(completed); and construction of a break room in the print plant.BUDGET AND FINANCE The Commission spent its $82.7 million appropriation and used ninehundred and thirty nine workyears in fiscal year 1992.This was an increase ofthirteen workyears over the previous year, continuing the modest upwardgrowth that began in fiscal year 1990.Also, the Division of Budget andFinance completed the conversion to a new accounting system.HUMAN RESOURCES In fiscal year 1992, the agency conducted on-campus interviews at twentylaw schools, and hired eight law clerks, six summer legal interns, and sixeconomists.Numerous enhancements were made to the human resourcesExecutive DirectionAnnual Report 1992 / Page 23program including: streamlining the attorney recruitment process; establishinga time-off award to recognize employee excellence; implementing retirementplanning for mid-career employees; and establishing a periodic news bulletinaddressing human resource issues.REGIONAL OFFICES TheCommission'sregionalofficescontinuedtoplayakeyroleinfulfilling the agency's consumer protection and competition missions in fiscalyear 1992.In addition to engaging in the full range of enforcement andadvocacy activities, the regional offices provided a valuable outreach functionby responding to consumer complaints and inquiries, and maintaining contactswith state and local enforcement officials, trade associations, and consumergroups.Federal Trade CommissionPage 24 / Annual Report 1992APPENDIXPARTIICONSENTAGREEMENTSACCEPTEDANDPUBLISHED FOR PUBLIC COMMENTMAINTAININGCOMPETITION MISSIONAmerican Psychological AssociationThe American Psychological Association (APA) agreed not to restrict itsmembers from using truthful advertising and participating in certain patientreferralservices.Thecomplaintaccompanyingtheproposedconsentagreement alleged that the APA adopted provisions in its Ethical Principles thatprohibited its members from advertising truthful claims about their professionalservices and psychological care, from soliciting clients, and from joining anypatient referral service that charges or pays a participating psychologist basedon the number of patients referred.The complaint further alleged that theserestrictions deprived consumers of the benefits of competition in the deliveryof convenient psychological services, products, and costs.Although theproposed consent agreement would require the APA to eliminate any rules orguidelinesthatrestrictthedisseminationoftruthfuladvertisingorbanpayments by its members to patient-referral services, it would allow the APAto establish policies to detect deceptive representations, monitor the solicitationof testimonial endorsements from certain patients, and require consumerdisclosure whenever a psychologist has paid a fee for the referral of business.Industrial Multiple, TheTheAmericanIndustrialRealEstateAssociationanditswholly-ownedsubsidiary, The Industrial Multiple, agreed to settle allegations that theyadopted and enforced illegal membership restrictions on industrial real estatebrokers.Industrial Multiple is the sole multiple listing service (MLS) in theLos Angeles area that specializes in and distributes significant numbers ofindustrial property listings.The complaint accompanying the proposed consentagreement alleged that Industrial Multiple adopted policies that restrictedmembership to real estate brokers who were primarily engaged in industrial realestateandwhometaminimumnumberanddollaramountofpropertytransactions.The complaint also alleged that The Industrial Multiple prohibitedtheir brokers from accepting exclusive agency listings for property with lessthan five thousand square feet, required brokers to disclose the total agreedcommission involved in any transaction, and prevented brokers from acceptingcertain contractual terms that would allow the property owner to waive allcommission fees.Under terms of the proposed consent agreement, TheIndustrial Multiple and American Industrial Real Estate Association would beprohibited from, among other things, conditioning membership on the practiceslisted in the complaint and prohibiting any member from accepting a propertypublished in an exclusive agency listing.Realty Computer Associates, Inc. d/b/a Computer Listing ServicePart II Public Comment AppendixAnnual Report 1992 / Page 25Realty Computer Associates, Inc. agreed not to limit certain business practicesof its member brokers.Realty Computer Associates, Inc., which does businessin Missouri under the name Computer Listing Service, provides computerizedmultiple listings of available real estate properties in Clay and Platte Counties,Missouritomemberrealestatebrokers.Accordingtothecomplaintaccompanying the proposed consent agreement, Computer Listing Serviceconspired with its members to refuse to publish exclusive agency listings thatallow homeowners to waive all commissions or pay a reduced commissionwhenever the homeowner sells their properties without the assistance of abroker.The complaint further alleged that Computer Listing Service requiredits members to engage in real estate brokerage full time and to also maintain areal estate office in the Clay/Platte County service area.Finally, the complaintalleged the firm's restrictions on the delivery of real estate brokerage servicesand membership requirements have reduced consumers' ability to negotiatedifferent agreements beneficial to the sale of residential property and repressedcompetition from part-time brokers and from brokers located outside of theComputer Listing Service area.Quality Trailer Products CorporationUndertermsofaproposedconsentagreement,QualityTrailerProductsCorporation(QualityTrailer)agreedtorefrainfromconspiringwithcompetitors or from unilaterally urging competitors to fix prices.Accordingto a complaint issued with a proposed consent agreement, Quality Trailer ofAzle, Texas invited a competitor, American Marine Industries, basedinShreveport, Louisiana, to increase its prices for certain axle products.Thecomplaint further alleged that if American Marine Industries had accepted theinvitation to collude, the resulting agreement would have constituted anagreement in restraint of trade.The proposed consent agreement prohibits,among other things, Quality Trailer from suggesting, requesting, urging, oradvocating that a competitor raise, fix, or stabilize prices and from entering intoany agreement with any other manufacturer or seller of axle products to raise,fix, or stabilize prices or price levels.CONSUMER PROTECTIONMISSIONCDB Infotek,Inter-Fact, Inc.,I.R.S.C., Inc. d/b/a Information Resource Service CompanyThreesuperbureaus,firmsthatbuylargevolumesofcreditandotherinformation about consumers at discounted rates and then resell the data to low-volume buyers, agreed to settle allegations that they failed to adequately ensurethattheircustomershadalegallypermissiblepurposeforobtainingthesensitive information, among other violations of the Fair Credit Reporting Act.The proposed consent agreements settling the allegations require, among otherthings, that the firms take specific steps to protect the privacy of their reportsin the future.These steps include requirements that the respondents conductperiodic audits of customers who have more than one use for reports; obtainFederal Trade CommissionPage 26 / Annual Report 1992written certifications from new subscribers regarding the use of the reports theyexpect to order; and verify the identity of all subscribers to ensure that they areengaged in the business they purport to be and that they have permissiblepurposes for accessing the report.Dollar Rent-A-Car Systems, Inc.Dollar Rent-A-Car Systems, Inc. (Dollar) agreed to settle allegations that itfailed to disclose certain significant charges and limitations when providingprice quotations for its car rentals.The proposed consent agreement settling theallegations requires, among other things, that Dollar disclose to consumers inits ads the existence of any mandatory fuel charges, airport surcharges or othercharges not reasonably avoidable by consumers, or restrictions on a driver'sage,or,inthealternative,disclosethatthereareadditionalcharges.Inaddition, the proposed consent agreement requires that Dollar disclose toconsumers, via telephone or in person at any rental location, all fuel charges,charges for additional drivers or any geographic driving restrictions; anddisclosetoconsumersthroughitscomputerizedreservationsystemanymandatory fuel charges, other mandatory charges, or charges not reasonablyavoidable by consumers.Isaly Klondike Company, TheThe Isaly Klondike Company agreed to settle allegations that it made falseclaims about the fat and calorie content of its Klondike Lite frozen dessert barsand their effect on consumers' serum cholesterol levels.The proposed consentagreement would prohibit the company from misrepresenting the amount of fator any other nutrient or ingredient in any of its frozen food products in thefuture.Mobil Oil CorporationMobil Oil Corporation agreed to settle allegations that it made unsubstantiatedclaimsthatHeftyDegradableTrashBags,whendisposedofastrash,decompose and return to nature in a reasonably short period of time, and offera significant environmental benefit compared to other plastic bags.Theproposed consent agreement would prohibit unsubstantiated degradabilityclaims in the future.Nikki Fashions Ltd., Nicolina VarrichioneNikki Fashions and its owner, Nicolina Varrichione, agreed to settle allegationsthat they violated the Textile Fiber Products Identification Act and the WoolProducts Labeling Act by removing the country of origin and fiber contentlabels, and in some instances the care labels, from the garments they sold.Theproposed consent agreement would prohibit the company from future violationsof the Textile Fiber Products Identification and Wool Products Labeling Acts.Part II Public Comment AppendixAnnual Report 1992 / Page 27Pompeian, Inc.Pompeian,Inc.agreedtosettleallegationsthatitmadefalseandunsubstantiated claims regarding olive oil's superiority to vegetable oil inproviding health benefits to consumers.The proposed consent agreementwould prohibit the respondents from, among other things, representing thateating olive oil lowers cholesterol or is healthier for the heart than eatingvegetable oil unless the claims are substantiated by competent and reliablescientific evidence.Value Rent-A-CarValue Rent-A-Car (Value) agreed to settle allegations that it failed to disclosecertain significant charges and limitations when providing price quotations forits car rentals.The proposed consent agreement settling the Commissionallegations requires Value to disclose to consumers in its ads and via telephoneany airport surcharges or in the alternative, any additional charges; all chargesresulting from a driver's age that are applicable to the contemplated rental, orin the alternative, any additional charges; all geographic driving restrictions thatapply where rentals are advertised as having unlimited mileage; restrictions onthe unlimited mileage; and all mandatory charges, or charges that are notreasonably avoidable by the consumer, or in the alternative, any additionalcharges.Federal Trade CommissionPage 28 / Annual Report 1992PART II CONSENT ORDERS ISSUEDMAINTAININGCOMPETITION MISSIONConnecticut Chiropractic AssociationThe Connecticut Chiropractic Association (Association) agreed to delete fromits Ethical Code certain restrictions on advertising professional services toconsumers.The complaint accompanying the consent order alleged that theAssociation adopted an Ethical Code that prohibited its member chiropractorsfrom offering free services or discounted fees and from advertising theseservices to consumers and from advertising unusual expertise unless themembers met certain requirements.The complaint further alleged that theAssociationcoerceditsmemberstocomplywiththeEthicalCodebythreatening:(1)toinfluencehealthinsurancecompaniestoreducereimbursements to patients; (2) to report members to malpractice insurancecarriers; and (3) to expel members from the Association.According to thecomplaint, the Association's actions restrained competition in the State ofConnecticutbydeprivingconsumersoftruthfulinformationabouttheavailability, price, and quality of professional chiropractic services.Theconsent order requires the Association to amend its Ethical Code to drop theserestrictions while allowing the Association to continue to restrict members'claimsofspecializationiftheyhavenotmetstandardsestablishedbyarecognized chiropractic accrediting agency.Debes Corporation, Alma Nelson Manor, Inc.,Beverly Enterprises - Illinois, Inc., Beverly Enterprises, Inc.,Park Strathmoor Corporation, Neighbors, Inc., The,Fairview Plaza Limited Partnership, Yorkdale Health Center, Inc.SixRockford,Illinoisareanursinghomesandtwocorporationssettledallegations that they participated in a boycott of local nurse registries.ThecomplaintaccompanyingtheconsentorderallegedthattheeightfirmsconspiredtoboycotttheAlphaChristianRegistryafteritannouncedasubstantial increase in its prices to supply registered nurses, practical nurses,and nursing assistants on a temporary basis to nursing homes.According to thecomplaint, the firms later threatened to also boycott other nurse registries in theRockford area.The complaint names:Debes Corporation, Alma NelsonManor, Inc., Park Strathmoor Corporation, Beverly Enterprises, Inc., BeverlyEnterprises - Illinois, Inc., Fairview Plaza Limited Partnership, The Neighbors,Inc., and Yorkdale Health Center, Inc.The consent order prohibits each of theeight firms from threatening to refuse to use the services of any temporarynurse registry and from attempting to interfere with the prices charged by thoseregistries.Hanson PLCHanson PLC agreed to divest Cencal Cement Company (Cencal), a Californiacement importing company, to a Commission approved acquirer to settlePart II Orders Issued AppendixAnnual Report 1992 / Page 29allegations concerning Hanson PLC's subsidiary's, Kaiser Cement Company(Kaiser), proposed acquisition of Beazer PLC.According to the complaintissued with the consent order, the acquisition would lessen competition in themanufacture and sale of portland cement in a forty eight county northernCalifornia area and eliminate competition between Hanson PLC's subsidiary,Kaiser, and Cencal.Cencal, 50% owned by Beazer PLC, owns a deep-seacement import terminal located at the Port of Stockton, California.The consentorder permitted Hanson PLC's acquisition of Beazer PLC, but required thatHanson PLC either sell the 50% share of Cencal it acquired to SsangyongCement (Pacific), Inc. (Ssangyong), Cencal's other 50% owner, or acquireSsangyong's preacquisition interest and then divest the entire Cencal CementCompany to a Commission approved acquirer within twelve months.Inaddition to the divestiture, for a period of ten years Hanson PLC is prohibitedfrom acquiring any assets or more than 3% of the voting stock of any companythat manufactures, sells, or distributes cement in that forty-eight county area ofnorthern California without prior Commission approval.Kreepy Krauly, USA, Inc.Kreepy Krauly, USA, Inc., a manufacturer of automatic swimming poolcleaning devices, settled allegations that the company illegally entered intowritten agreements with its dealers concerning the retail prices at which itsproducts are sold.Under terms of the consent order, Kreepy Krauly, USA, Inc.is prohibited from entering into or enforcing such agreements with dealers orcoercing dealers to maintain or adhere to any resale price and, in addition, mustnotify its officers and distributors that dealers are free to set their own prices forthe products to be sold.Mannesmann, A.G.Mannesmann, A.G. agreed to settle allegations stemming from its proposedacquisition of Rapistan Corporation, a wholly owned subsidiary of Lear SieglerHoldings Corporation.The complaint accompanying the consent order allegedthat the acquisition would substantially reduce competition in the United Statesin the manufacture and sale of high-speed, light to medium duty conveyorsystems used to transport, divert, and sort cartons weighing less than seventyfive pounds.The complaint further alleged that the acquisition would eliminatecompetition between the two firms, permit Mannesmann, A.G. to acquire adominant market position, and increase the likelihood of collusion.Underterms of the consent order and the hold separate agreement, Mannesmann A.G.was permitted to acquire Rapistan Corporation's assets but was required todivest Mannesmann A.G.'s subsidiary, The Bushman Company, based inCincinnati, Ohio, to a Commission approved acquirer within twelve months.In addition, Mannesmann A.G. was required for ten years to obtain approvalbefore acquiring any business that manufactures and sells such conveyorsystems in the United States.Mannesmann A.G. submitted an application todivestTheBushmanCompanytoAlvey,Inc.,aSt.Louis,MissouriFederal Trade CommissionPage 30 / Annual Report 1992manufacturer of unit handling conveyor systems.That application is stillpending.Nintendo of America Inc.Nintendo of America Inc. (Nintendo) settled allegations that it obtainedagreements from some of its dealers to sell its home video game hardware atspecified price levels.According to the complaint accompanying the consentorder, Nintendo's resale price maintenance activities increased consumer pricesand restricted competition among retail dealers.The consent order prohibitsNintendo from fixing or controlling the retail price of any Nintendo product,coercing retailers into committing to sell products at predetermined prices,reducing the supply of products or imposing different credit terms to dealerswho sell Nintendo products at prices lower than those suggested by Nintendoor, for five years, terminating dealers for failure to sell at minimum suggestedprices.Also, for a period of five years, Nintendo would be required to placea disclaimer on any material in which it suggests resale prices stating that thedealer is free to determine the prices at which it will sell the Nintendo products.The consent order applies to all Nintendo products, including hardware andhome video game software.Nintendo of America Inc., a wholly ownedsubsidiary of Nintendo Company Ltd. of Kyoto, Japan, is based in Redmond,Washington.Nippon Sheet Glass Company, Ltd.Nippon Sheet Glass Company, Ltd. (Nippon) and Pilkington PLC agreed tosettle allegations that Nippon's 1990 acquisition of a 20% interest in Libbey-Owens-