Consumer Benefits and Harms: Distinguishing Resale Price Maintenance that Benefits Consumers From Resale Price Maintenance that Harms Consumers; Public Workshops; Comment Request, 65856-65859 [E8-26404]

Download as PDF 65856 Federal Register / Vol. 73, No. 215 / Wednesday, November 5, 2008 / Notices hsrobinson on PROD1PC76 with NOTICES consumer perceptions versus actual experiences. Although consumer recollection may be imperfect, its invocation is a common and accepted practice in survey research. Moreover, the FTC is surveying consumers about their relatively recent experiences when exercising their FACT Act rights. Their recollections should be relatively fresh, and the FTC believes it is appropriate to rely on them in this consumer research. CDIA further asserted that the FTC’s reliance on consumers who have reported data to the FTC’s ID theft clearinghouse will skew the results because such consumers will not be representative of the general population. The FTC believes that reliance on consumers who have previously communicated with the agency is the only economically feasible means to generate a sample of identity theft victims and to gather information. The 2006 FTC Identity Theft Survey found that 3.7% of Americans had been victims of identity theft in the previous year. In order for a survey of the general population to reliably contact 4,000 identity theft victims,2 over 100,000 consumers would have to be surveyed. The cost of such a large survey would be prohibitive. Sending the survey only to consumers who have reported data to the FTC’s ID theft clearinghouse allows the FTC to reach the same number of identity theft victims for a fraction of the cost. The FTC acknowledges that the survey will not be representative of the general population, and will not attempt to project its results beyond consumers who have reported to the FTC. Instead, the Commission will use the survey to examine the kinds of problems, if any, that such consumers experience while exercising their FACTA rights. The FTC thus intends to utilize a survey sample from consumers who have previously communicated with the agency and not incur the cost and burden of finding a sample from the general population. Pursuant to the OMB regulations that implement the PRA (5 CFR Part 1320), the Commission is providing this second opportunity for public comment while seeking OMB clearance for the survey. All comments should be filed as prescribed in the ADDRESSES section above, and must be received on or before December 5, 2008. 1. Description of the collection of information and proposed use The Fair Credit Reporting Act (‘‘FCRA’’) provides identity theft 2 As explained further in the ensuing discussion of the proposed collection of information, staff anticipates mailing the survey to approximately 3,000 to 4,000 individuals. VerDate Aug<31>2005 17:24 Nov 04, 2008 Jkt 217001 victims with certain rights, such as the ability to place fraud alerts on their credit files, designed to assist them in avoiding or mitigating the harms they suffer as a result of the crime. The Commission intends to use consumer survey research to advance its understanding of the experiences of identity theft victims who interact with CRAs and who seek to avail themselves of their FCRA remedies. The consumer research will include focus group interviews of 30 consumers, to be followed by a pretesting phase consisting of phone interviews of another 30 consumers, and then mail surveys sent to individual consumers. The Commission seeks information from consumers who have been victims of identity theft and who have contacted one or more of the three nationwide CRAs for assistance. The information from consumers will be collected on a voluntary basis and will be kept anonymous. The FTC staff will identify consumers to be contacted for each phase of the research from a random selection of consumers who have communicated with the FTC’s Identity Theft Data Clearinghouse database between January 1, 2008 and May 30, 2008. Staff is seeking approximately 1,000 returned surveys because that input would enable it to project the results from the sample to the population from which the sample was drawn with a maximum error rate of 3%. Assuming a response rate of about 25%–30%, this would require staff to mail the survey to approximately 3,000– 4,000 individuals. Questions to identity theft victims in the research will address several topics, including but not limited to: their experiences when they contacted one or more CRAs and whether they received the required notice of rights from CRAs; their access to free credit reports; and their ability to place fraud alerts on their files, dispute inaccurate information, and block information due to identity theft. The results of the focus groups and mail surveys will assist the Commission in assessing the experiences of identity theft victims when they interact with CRAs. This assessment will help to inform and guide the FTC’s future efforts to enforce provisions of the FCRA and to educate consumers and the consumer reporting industry of their rights and obligations under the FCRA. 2. Estimated hours burden Absent public comments on the FTC’s previously stated burden analysis, the FTC is retaining and restating here for further comment its prior burden estimates. The FTC staff proposes to PO 00000 Frm 00037 Fmt 4703 Sfmt 4703 interview 30 consumers divided into three separate focus groups of 10 persons each, and estimates that each consumer will spend approximately one hour to participate. Thus, the estimated total burden imposed by the focus groups will be approximately 30 hours. Staff estimates that respondents to the mail survey will require, on average, approximately 8 minutes to answer the survey (based on anticipated variations among consumers when they interacted with CRAs). Staff will pretest the survey through phone interviews of approximately 30 respondents to ensure that all questions are easily understood. The pretest will total approximately 4 hours cumulatively (30 respondents x 8 minutes each). For the full survey, the staff intends to mail 3,000–4,000 surveys and anticipates receiving a response rate as high as 30% of the consumer recipients (i.e., 900–1,200 responses). Assuming 1,200 consumers respond to the survey, staff further estimates the final survey will require approximately 160 hours to complete (1,200 respondents × 8 minutes each). Thus, cumulative burden hours for the clearance would total 194 hours. 3. Estimated cost burden The cost per respondent should be negligible. Participation is voluntary and will not require start-up, capital, or labor expenditures by respondents. William Blumenthal, General Counsel. [FR Doc. E8–26405 Filed 11–4–08: 8:45 am] BILLING CODE 6750–01–S FEDERAL TRADE COMMISSION Consumer Benefits and Harms: Distinguishing Resale Price Maintenance that Benefits Consumers From Resale Price Maintenance that Harms Consumers; Public Workshops; Comment Request Federal Trade Commission. Notice of Public Workshops and Opportunity for Comment. AGENCY: ACTION: SUMMARY: The Federal Trade Commission (‘‘FTC’’ or ‘‘Commission’’) will hold a series of public Workshop sessions at one or more locations to explore how best to distinguish between uses of resale price maintenance (RPM)1 1 RPM is typically an agreement between a manufacturer and retailer setting the prices at which the retailer will resell the manufacturer’s goods to consumers. If the agreement requires the retailer to sell only at or above the price established by the manufacturer, it is said to be minimum RPM. Conversely, if the agreement requires the retailer to sell only at or below the price directed by the E:\FR\FM\05NON1.SGM 05NON1 hsrobinson on PROD1PC76 with NOTICES Federal Register / Vol. 73, No. 215 / Wednesday, November 5, 2008 / Notices that benefit consumers and those that do not, for purposes of enforcing Section 1 of the Sherman Act, 15 U.S.C. § 1, and Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45 (hereinafter ‘‘Sections 1 and 5’’). Among other things, the Workshops will examine when and whether particular market facts or conditions make it more or less likely that the use of RPM will be procompetitive or neutral, and when or whether RPM may harm competition and consumers. The FTC expects to focus on legal doctrines and jurisprudence, economic research (both theoretical and empirical), as well as business and consumer experiences. The FTC is soliciting public comment from lawyers, economists, marketing professionals, the business community, consumers groups, law enforcement officials, academics (including business and economic historians), and all other interested persons on three general subjects: (1) The legal, economic, and management principles relevant to the application of Sections 1 and 5 to RPM, including the administrability of current or potential antitrust or other rules for the application of these laws; (2) The business circumstances regarding the use of RPM that the FTC should examine in the upcoming Workshops, including examples of actual conduct; and (3) Empirical economic studies or analyses that might provide better guidance and assistance to the business and legal communities regarding RPM enforcement issues. With respect to the request for examples of real-world conduct, the FTC is soliciting discussions of the business reasons for, and the actual or likely competitive effects of, the use of RPM, including actual or likely efficiencies, as well as the theoretical underpinnings for whether the conduct had or has pro- or anticompetitive effects. When each individual Workshop session is announced, the FTC will solicit additional submissions regarding the topics to be covered at that particular session. The FTC encourages submissions from businesses or business consultants from a variety of unregulated and regulated markets, recognizing that market participants can offer unique insights into how RPM affects competition, and that the effects of RPM may differ depending on industry context and market structure. The FTC manufacturer, it is said to be maximum RPM. Thomas K. McCaw, Competition and ‘‘Fair Trade’’: History and Theory, 16 Res. In Econ. Theory 185, 186 (1996). VerDate Aug<31>2005 17:24 Nov 04, 2008 Jkt 217001 seeks this practical input to provide a real-world foundation of knowledge upon which to draw as the Workshops progress. Respondents are encouraged to respond on the basis of their actual experiences. The goal of these Workshops is to promote dialogue, learning, and consensus building among all interested parties with respect to the analysis of RPM under Sections 1 and 5, both for purposes of law enforcement and to provide practical guidance to businesses with respect to antitrust compliance. The FTC plans to hold four to six halfday Workshop sessions between January and March 2009. The FTC plans to publish a more detailed description of the topics to be discussed before each session and to solicit additional submissions about each topic. The sessions will be transcribed and placed on the public record. Any written comments received also will be placed on the public record. After the conclusion of the Workshops, the Commission may prepare a public report that incorporates the findings of the Workshops, as well as a description of other research that might be undertaken by the Commission or others. DATES: Any interested person may submit written comments responsive to any of the topics addressed in this Federal Register Notice. Respondents are encouraged to provide comments and requests to participate in the workshops as soon as possible, but in any event no later than the final Workshop session. However, to assist the FTC in planning the Workshop sessions, respondents are encouraged to provide initial comments regarding the three general questions raised in the Summary above, as well as requests to participate in the workshops, to the FTC on or before December 12, 2008. ADDRESSES: Interested parties are invited to submit written comments or requests to participate in the public workshop electronically or in paper form. Comments and requests should refer to ‘‘Resale Price Maintenance Workshop, P090400’’ to facilitate their organization. Please note that comments will be placed on the public record of this proceeding—including on the publicly accessible FTC website, at (https://www.ftc.gov/os/ publiccomments.shtm)—and therefore should not include any sensitive or confidential information. In particular, comments and requests should not include any sensitive personal information, such as an individual’s Social Security Number; date of birth; driver’s license number or other state PO 00000 Frm 00038 Fmt 4703 Sfmt 4703 65857 identification number, or foreign country equivalent; passport number; financial account number; or credit or debit card number. Comments and requests also should not include any sensitive health information, such as medical records or other individually identifiable health information. In addition, comments and requests should not include any ‘‘[t]rade secrets and commercial or financial information obtained from a person and privileged or confidential. . . .,’’ as provided in Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2) (2008). Comments and requests containing material for which confidential treatment is requested must be filed in paper form, must be clearly labeled ‘‘Confidential,’’ and must comply with FTC Rule 4.9(c).2 Because paper mail addressed to the FTC is subject to delay due to heightened security screening, please consider submitting your comments and requests in electronic form. Comments filed in electronic form should be submitted by using the following weblink: (https:// secure.commentworks.com/ftcresalepricemaintenanceworkshop/) (and following the instructions on the webbased form). To ensure that the Commission considers an electronic comment, you must file it on the webbased form at the weblink: (https:// secure.commentworks.com/ftcresalepricemaintenanceworkshop/). Additionally, you may inform the FTC of your desire to participate in the Workshop by emailing information regarding your interest in participation, as well as the issue(s) you might wish to address, to the FTC at rpmworkshop@ftc.gov. You may also visit the FTC website at https:// www.ftc.gov to read the Notice and the news release describing it. A comment or request filed in paper form should include the reference to ‘‘Resale Price Maintenance Workshop, P090400’’ both in the text and on the envelope, and should be mailed or delivered to the following address: Federal Trade Commission/Office of the Secretary, Room H-135 (Annex R), 600 Pennsylvania Avenue, NW, Washington, DC 20580. The FTC is requesting that any comment filed in paper form be sent by courier or overnight service, if 2 FTC Rule 4.2(d), 16 CFR 4.2(d). The comment or request must be accompanied by an explicit request for confidential treatment, including the factual and legal basis for the request, and must identify the specific portions of the comment or request to be withheld from the public record. The request for confidential treatment will be granted or denied by the Commission’s General Counsel, consistent with applicable law and the public interest. See FTC Rule 4.9(c), 16 CFR 4.9(c) (2008). E:\FR\FM\05NON1.SGM 05NON1 65858 Federal Register / Vol. 73, No. 215 / Wednesday, November 5, 2008 / Notices possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions. The Federal Trade Commission Act (‘‘FTC Act’’) and other laws the Commission administers permit the collection of public comments and requests to participate to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments and requests that it receives, whether filed in paper or electronic form. Comments and requests received will be available to the public on the FTC website, to the extent practicable, at (https://www.ftc.gov/os/ publiccomments.shtm). As a matter of discretion, the Commission makes every effort to remove home contact information for individuals from the public comments and requests to participate it receives before placing them on the FTC website. More information, including routine uses permitted by the Privacy Act, may be found in the FTC’s privacy policy, at (https://www.ftc.gov/ftc/privacy.shtm). The workshop will be open to the public, and there is no fee for attendance. For admittance to the building, all attendees will be required to show a valid photo identification, such as a driver’s license. Preregistration is not required for attendees, but persons desiring to participate as panelists must submit a request to participate and file a comment. Members of the public and press who cannot attend in person may view a live webcast of the workshop on the FTC’s website. The workshop will be transcribed, and the transcript will be placed on the public record. The workshop venue will be accessible to persons with disabilities. If you need an accommodation related to a disability, call Carrie McGlothin at (202) 326-3388. Such requests should include a detailed description of the accommodations needed and a way to contact you if we need more information. Please provide advance notice of any needs for such accommodations. hsrobinson on PROD1PC76 with NOTICES FOR FURTHER INFORMATION CONTACT: James C. Cooper, Deputy Director, Office of Policy Planning, 600 Pennsylvania Ave., N.W., Washington, DC 20580, telephone 202-326-3367, or John Yun, Staff Economist, Antitrust I Division, Bureau of Economics, 600 Pennsylvania Ave., N.W., Washington, DC 20580, telephone 202-326-2433; or by email at rpmworkshop@ftc.gov. Detailed agendas for the Workshops will be available on VerDate Aug<31>2005 17:24 Nov 04, 2008 Jkt 217001 the FTC Home Page (https:// www.ftc.gov). Section 1 of the Sherman Act condemns ‘‘every contract, combination, in the form of trust or otherwise, or conspiracy in restraint of trade and commerce among the several States, or with foreign nations,’’3 which includes violations of the Sherman Act.4 Although the FTC does not directly enforce Section 1 of the Sherman Act, Section 5 of the FTC Act condemns ‘‘unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce.’’5 In 1911, two U.S. Supreme Court decisions held, respectively, that RPM agreements were illegal as a matter of law (Dr. Miles);6 and that Section 1 of the Sherman Act prohibited restraints of trade that are ‘‘unreasonably restrictive of competitive conditions’’ (Standard Oil).7 Except to the extent that RPM was exempted from federal antitrust liability by the Fair Trade Laws from 1937 to 1975,8 minimum RPM was treated as per se illegal under the antitrust laws until the Supreme Court decided the Leegin9 case in June 2007.10 Leegin overruled the Dr. Miles decision, finding that the Court’s more recent decisions were inconsistent with rationales upon which Dr. Miles was based.11 The Court directed that the legality of minimum RPM would be determined under the rule of reason; however, the Court did not specify the contours of the rule of reason analysis that would be necessary or appropriate in all cases. Rather, it observed that: As courts gain experience considering the effects of these restraints by applying the rule of reason over the course of decisions, they can establish the litigation structure to ensure the rule operates to eliminate anticompetitive restraints from the SUPPLEMENTARY INFORMATION: 15 U.S.C. § 1. See Fed. Trade Comm’n v. Motion Picture Advert. Serv. Co., 344 U.S. 392, 394-95 (1953) (stating that Section 5 of the FTC Act ‘‘condemn[s] as ‘unfair methods of competition’ existing violations of ‘‘ the Sherman and Clayton Acts). 5 15 U.S.C. § 45 6 Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911). Subsequent cases referred to RPM as being per se illegal. 7 Standard Oil of New Jersey v. United States, 221 U.S. 1, 58 (1911) 8 McCraw, supra note 1, at 187. 9 Leegin Creative Leather Products, Inc. v. PSKS, Inc., 127 S. Ct. 2705 (2007). 10 The Supreme Court subjected maximum RPM to the rule of reason in 1997. State Oil Co. v. Khan, 522 U.S. 3 (1997). 11 Id. at 2712-25 (citing, inter alia, Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36 (1977) (‘‘GTE Sylvania’’); Business Electronics Corp. v. Sharp Electronics Corp., 485 U.S. 717 (1988); and State Oil Co. v. Khan, 522 U.S. 3 (1997)). 3 4 PO 00000 Frm 00039 Fmt 4703 Sfmt 4703 market and to provide more guidance to businesses. Courts can, for example, devise rules over time for offering proof, or even presumptions where justified, to make the rule of reason a fair and efficient way to prohibit anticompetitive restraints and to promote competitive ones. Id. at 2720. In the Nine West matter,12 the Commission recently confronted the Court’s lack of specificity, as follows: As it abandoned the per se prohibition of Dr. Miles, the Court cautioned that it was not declaring RPM to be per se legal. Leegin summarized some of the possible procompetitive and anticompetitive consequences of resale price maintenance. The Court explained that RPM might stimulate interbrand competition and have a procompetitive effect on competition, so that RPM does not meet the per se illegality standard of a practice that ‘‘always or almost always tends to restrict competition and decrease output.’’ At the same time, after reviewing the potential anticompetitive effects of RPM, the Court said, ‘‘[a]s should be evident, the potential anticompetitive consequences of vertical price restraints must not be ignored or underestimated.’’ In light of these potential adverse effects, the Court further observed that ‘‘[i]f the rule of reason were to apply to vertical price restraints, courts would have to be diligent in eliminating their anticompetitive uses from the market.’’ The Court’s comments about the possible harms of RPM, and its caution to lower courts ‘‘to be diligent in eliminating their anticompetitive uses from the market,’’ can usefully be understood in the context of the debate between the Leegin majority and the dissent about the wisdom of abandoning the per se ban of Dr. Miles. The dissent argued that the majority had slighted the potential anticompetitive consequences of RPM. The majority’s recitation of examples of some of the possible competitive harms and its call for ‘‘diligent’’ efforts by the lower courts to be attentive to these harms can be seen as an attempt to provide assurances that the Court foresaw a 12Nine West Group, Inc., Docket No. C-3937 (Apr. 11, 2000), Order Granting In Part Petition to Reopen and Modify Order Issued April 11, 2000 (May 6, 2008), available at: (https://www.ftc.gov/os/caselist/ 9810386/080506order.pdf.) E:\FR\FM\05NON1.SGM 05NON1 Federal Register / Vol. 73, No. 215 / Wednesday, November 5, 2008 / Notices hsrobinson on PROD1PC76 with NOTICES useful role for continued antitrust scrutiny of RPM. * * * At this early stage of the application of Leegin by the lower courts and the Commission, the Leegin factors can serve as helpful guides to begin an assessment of when RPM deserves closer scrutiny. Through the Commission’s own enforcement work, research, and external consultations such as workshops, we anticipate further refinements to this analysis, including the further specification of scenarios in which RPM poses potential hazards and those in which it does not. Nine West, supra n. 11 at 9-14 (citations omitted). By holding these Workshops, the FTC hopes to identify the market facts, circumstances, and conditions under which the use of RPM is likely to be procompetitive or benign, as opposed to anticompetitive and harmful to consumers. The Commission believes that an appropriate antitrust approach to RPM requires the means for distinguishing permissible from impermissible conduct in varied circumstances. Moreover, those means should provide reasonable guidance to businesses attempting to evaluate the legality of proposed conduct before undertaking it. The development of clear standards that both protect consumers and enable businesses to adopt strategies that comply with the antitrust laws presents some of the most complex issues facing the Commission, the courts, and the antitrust bar. Given this challenge—and because antitrust analysis must reflect the particular market facts and circumstances within which a restraint has been adopted—the FTC encourages commenters to describe actual examples of RPM that the FTC should consider in the context of the Workshop, discuss the business reasons for the conduct, and the actual or likely competitive effects of the conduct. Illustrative Questions for Consideration With Respect to the RPM Usages That the Commenter Discusses. Commenters should indicate whether responses would change if the conduct is an express RPM agreement or an RPM arrangement that achieves its outcome under a Colgate policy.13 Commenters 13 A manufacturer uses a Colgate policy when it does not ask retailers for any agreement regarding resale prices; rather, the manufacturer announces in advance that it will only sell its products to retailers that resell those products at or above the prices it specifies, and then enforces the policy by deciding unilaterally that it will refuse to make any future sales of its products to any retailer who has violated VerDate Aug<31>2005 17:24 Nov 04, 2008 Jkt 217001 should also indicate whether responses would differ if the arrangement were directed toward different industry levels (e.g., retail, wholesale, or manufacturer). 1. How should the structure of the market and the market shares of participants be taken into account in analyzing RPM? 2. Are there other specific market facts or circumstances that might have an impact on the likely competitive effects of RPM under the circumstances described? Without limiting the scope of this question, commenters are specifically invited to comment on the effect on marginal and inframarginal consumers. 3. What are the business reasons (e.g., management, marketing, financial, etc.) for the use of RPM? Are there alternative business strategies available to achieve the same results? What factors, including any cost savings, entered the decision to use RPM to achieve the desired result? 4. To what extent does uncertainty regarding the legality of RPM under state law affect the decision to use RPM? 5. What are the likely procompetitive and anticompetitive effects of RPM under the circumstances described? 6. What strategies might competitors use to respond to a loss of sales to a firm that uses RPM? 7. Under what market conditions is the use of RPM likely either to promote or hinder market entry by other manufacturers or retailers? 8. Are there industries where the use of RPM is prominent? 9. Are there any original theoretical, analytical or empirical studies on the nature or competitive effects of RPM or alternatives to RPM that should be brought to the attention of the Commission? 10. What tests or standards should courts or enforcement agencies use in assessing whether particular conduct violates Sections 1 or 5? Commenters are specifically requested to assess whether the test or standard applicable to a particular usage of RPM might vary based on particular market facts or circumstances. Additionally, are there particular market facts and circumstances where the approach established by the Court of Appeals for the District of Columbia Circuit in Polygram Holding, Inc. v. Fed. Trade Comm’n, 416 F. 3d (D.C. Cir. 2005), would or would not be appropriate? its pricing policies. These arrangements take their name from the Supreme Court’s decision in United States v. Colgate & Co., 250 U.S. 300, 307-8 (1919) (distinguishing Dr. Miles on the ground that the ‘‘unlawful combination [in that case] was effected through contracts which undertook to prevent dealers from freely exercising the right to sell’’). PO 00000 Frm 00040 Fmt 4703 Sfmt 4703 65859 By direction of the Commission. Donald S. Clark, Secretary. [FR Doc. E8–26404 Filed 11–4–08: 8:45 am] BILLING CODE 6750–01–S GENERAL SERVICES ADMINISTRATION Multiple Award Schedule Advisory Panel; Notification of Public Advisory Panel Meeting/SUBJECT≤ U.S. General Services Administration (GSA). ACTION: Notice. AGENCY: SUMMARY: The U.S. General Services Administration’s (GSA) Multiple Award Schedule Advisory Panel (MAS Panel), a Federal Advisory Committee, meeting scheduled for October 27, 2008 was cancelled. Dated: October 30, 2008. David A. Drabkin, Deputy Chief Acquisition Officer, Office of the Chief Acquisition Officer, General Services Administration. [FR Doc. E8–26323 Filed 11–04–08; 8:45 am] BILLING CODE 6820–EP–S DEPARTMENT OF HEALTH AND HUMAN SERVICES National Institute for Occupational Safety and Health; Decision To Evaluate a Petition To Designate a Class of Employees at the Linde Ceramics Plant, Tonawanda, NY, To Be Included in the Special Exposure Cohort National Institute for Occupational Safety and Health (NIOSH), Department of Health and Human Services (HHS). ACTION: Notice. AGENCY: SUMMARY: The Department of Health and Human Services (HHS) gives notice as required by 42 CFR 83.12(e) of a decision to evaluate a petition to designate a class of employees at the Linde Ceramics Plant, Tonawanda, New York, to be included in the Special Exposure Cohort under the Energy Employees Occupational Illness Compensation Program Act of 2000. The initial proposed definition for the class being evaluated, subject to revision as warranted by the evaluation, is as follows: Facility: Linde Ceramics Plant. Location: Tonawanda, New York. Job Titles and/or Job Duties: All employees. E:\FR\FM\05NON1.SGM 05NON1

Agencies

FEDERAL TRADE COMMISSION

[Federal Register Volume 73, Number 215 (Wednesday, November 5, 2008)]
[Notices]
[Pages 65856-65859]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-26404]


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FEDERAL TRADE COMMISSION


Consumer Benefits and Harms: Distinguishing Resale Price 
Maintenance that Benefits Consumers From Resale Price Maintenance that 
Harms Consumers; Public Workshops; Comment Request

AGENCY: Federal Trade Commission.

ACTION: Notice of Public Workshops and Opportunity for Comment.

-----------------------------------------------------------------------

SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'') will 
hold a series of public Workshop sessions at one or more locations to 
explore how best to distinguish between uses of resale price 
maintenance (RPM)\1\

[[Page 65857]]

that benefit consumers and those that do not, for purposes of enforcing 
Section 1 of the Sherman Act, 15 U.S.C. Sec.  1, and Section 5 of the 
Federal Trade Commission Act, 15 U.S.C. Sec.  45 (hereinafter 
``Sections 1 and 5''). Among other things, the Workshops will examine 
when and whether particular market facts or conditions make it more or 
less likely that the use of RPM will be procompetitive or neutral, and 
when or whether RPM may harm competition and consumers.
---------------------------------------------------------------------------

    \1\ RPM is typically an agreement between a manufacturer and 
retailer setting the prices at which the retailer will resell the 
manufacturer's goods to consumers. If the agreement requires the 
retailer to sell only at or above the price established by the 
manufacturer, it is said to be minimum RPM. Conversely, if the 
agreement requires the retailer to sell only at or below the price 
directed by the manufacturer, it is said to be maximum RPM. Thomas 
K. McCaw, Competition and ``Fair Trade'': History and Theory, 16 
Res. In Econ. Theory 185, 186 (1996).
---------------------------------------------------------------------------

    The FTC expects to focus on legal doctrines and jurisprudence, 
economic research (both theoretical and empirical), as well as business 
and consumer experiences. The FTC is soliciting public comment from 
lawyers, economists, marketing professionals, the business community, 
consumers groups, law enforcement officials, academics (including 
business and economic historians), and all other interested persons on 
three general subjects:
    (1) The legal, economic, and management principles relevant to the 
application of Sections 1 and 5 to RPM, including the administrability 
of current or potential antitrust or other rules for the application of 
these laws;
    (2) The business circumstances regarding the use of RPM that the 
FTC should examine in the upcoming Workshops, including examples of 
actual conduct; and
    (3) Empirical economic studies or analyses that might provide 
better guidance and assistance to the business and legal communities 
regarding RPM enforcement issues.
    With respect to the request for examples of real-world conduct, the 
FTC is soliciting discussions of the business reasons for, and the 
actual or likely competitive effects of, the use of RPM, including 
actual or likely efficiencies, as well as the theoretical underpinnings 
for whether the conduct had or has pro- or anticompetitive effects. 
When each individual Workshop session is announced, the FTC will 
solicit additional submissions regarding the topics to be covered at 
that particular session.
    The FTC encourages submissions from businesses or business 
consultants from a variety of unregulated and regulated markets, 
recognizing that market participants can offer unique insights into how 
RPM affects competition, and that the effects of RPM may differ 
depending on industry context and market structure. The FTC seeks this 
practical input to provide a real-world foundation of knowledge upon 
which to draw as the Workshops progress. Respondents are encouraged to 
respond on the basis of their actual experiences.
    The goal of these Workshops is to promote dialogue, learning, and 
consensus building among all interested parties with respect to the 
analysis of RPM under Sections 1 and 5, both for purposes of law 
enforcement and to provide practical guidance to businesses with 
respect to antitrust compliance. The FTC plans to hold four to six 
half-day Workshop sessions between January and March 2009. The FTC 
plans to publish a more detailed description of the topics to be 
discussed before each session and to solicit additional submissions 
about each topic. The sessions will be transcribed and placed on the 
public record. Any written comments received also will be placed on the 
public record. After the conclusion of the Workshops, the Commission 
may prepare a public report that incorporates the findings of the 
Workshops, as well as a description of other research that might be 
undertaken by the Commission or others.

DATES: Any interested person may submit written comments responsive to 
any of the topics addressed in this Federal Register Notice. 
Respondents are encouraged to provide comments and requests to 
participate in the workshops as soon as possible, but in any event no 
later than the final Workshop session. However, to assist the FTC in 
planning the Workshop sessions, respondents are encouraged to provide 
initial comments regarding the three general questions raised in the 
Summary above, as well as requests to participate in the workshops, to 
the FTC on or before December 12, 2008.

ADDRESSES: Interested parties are invited to submit written comments or 
requests to participate in the public workshop electronically or in 
paper form. Comments and requests should refer to ``Resale Price 
Maintenance Workshop, P090400'' to facilitate their organization. 
Please note that comments will be placed on the public record of this 
proceeding--including on the publicly accessible FTC website, at 
(https://www.ftc.gov/os/publiccomments.shtm)--and therefore should not 
include any sensitive or confidential information. In particular, 
comments and requests should not include any sensitive personal 
information, such as an individual's Social Security Number; date of 
birth; driver's license number or other state identification number, or 
foreign country equivalent; passport number; financial account number; 
or credit or debit card number. Comments and requests also should not 
include any sensitive health information, such as medical records or 
other individually identifiable health information. In addition, 
comments and requests should not include any ``[t]rade secrets and 
commercial or financial information obtained from a person and 
privileged or confidential. . . .,'' as provided in Section 6(f) of the 
FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2) 
(2008). Comments and requests containing material for which 
confidential treatment is requested must be filed in paper form, must 
be clearly labeled ``Confidential,'' and must comply with FTC Rule 
4.9(c).\2\
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    \2\ FTC Rule 4.2(d), 16 CFR 4.2(d). The comment or request must 
be accompanied by an explicit request for confidential treatment, 
including the factual and legal basis for the request, and must 
identify the specific portions of the comment or request to be 
withheld from the public record. The request for confidential 
treatment will be granted or denied by the Commission's General 
Counsel, consistent with applicable law and the public interest. See 
FTC Rule 4.9(c), 16 CFR 4.9(c) (2008).
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    Because paper mail addressed to the FTC is subject to delay due to 
heightened security screening, please consider submitting your comments 
and requests in electronic form. Comments filed in electronic form 
should be submitted by using the following weblink: (https://
secure.commentworks.com/ftc-resalepricemaintenanceworkshop/) (and 
following the instructions on the web-based form). To ensure that the 
Commission considers an electronic comment, you must file it on the 
web-based form at the weblink: (https://secure.commentworks.com/ftc-
resalepricemaintenanceworkshop/). Additionally, you may inform the FTC 
of your desire to participate in the Workshop by emailing information 
regarding your interest in participation, as well as the issue(s) you 
might wish to address, to the FTC at rpmworkshop@ftc.gov. You may also 
visit the FTC website at https://www.ftc.gov to read the Notice and the 
news release describing it.
    A comment or request filed in paper form should include the 
reference to ``Resale Price Maintenance Workshop, P090400'' both in the 
text and on the envelope, and should be mailed or delivered to the 
following address: Federal Trade Commission/Office of the Secretary, 
Room H-135 (Annex R), 600 Pennsylvania Avenue, NW, Washington, DC 
20580. The FTC is requesting that any comment filed in paper form be 
sent by courier or overnight service, if

[[Page 65858]]

possible, because U.S. postal mail in the Washington area and at the 
Commission is subject to delay due to heightened security precautions.
    The Federal Trade Commission Act (``FTC Act'') and other laws the 
Commission administers permit the collection of public comments and 
requests to participate to consider and use in this proceeding as 
appropriate. The Commission will consider all timely and responsive 
public comments and requests that it receives, whether filed in paper 
or electronic form. Comments and requests received will be available to 
the public on the FTC website, to the extent practicable, at (https://
www.ftc.gov/os/publiccomments.shtm). As a matter of discretion, the 
Commission makes every effort to remove home contact information for 
individuals from the public comments and requests to participate it 
receives before placing them on the FTC website. More information, 
including routine uses permitted by the Privacy Act, may be found in 
the FTC's privacy policy, at (https://www.ftc.gov/ftc/privacy.shtm).
    The workshop will be open to the public, and there is no fee for 
attendance. For admittance to the building, all attendees will be 
required to show a valid photo identification, such as a driver's 
license. Pre-registration is not required for attendees, but persons 
desiring to participate as panelists must submit a request to 
participate and file a comment. Members of the public and press who 
cannot attend in person may view a live webcast of the workshop on the 
FTC's website. The workshop will be transcribed, and the transcript 
will be placed on the public record.
    The workshop venue will be accessible to persons with disabilities. 
If you need an accommodation related to a disability, call Carrie 
McGlothin at (202) 326-3388. Such requests should include a detailed 
description of the accommodations needed and a way to contact you if we 
need more information. Please provide advance notice of any needs for 
such accommodations.

FOR FURTHER INFORMATION CONTACT: James C. Cooper, Deputy Director, 
Office of Policy Planning, 600 Pennsylvania Ave., N.W., Washington, DC 
20580, telephone 202-326-3367, or John Yun, Staff Economist, Antitrust 
I Division, Bureau of Economics, 600 Pennsylvania Ave., N.W., 
Washington, DC 20580, telephone 202-326-2433; or by email at 
rpmworkshop@ftc.gov. Detailed agendas for the Workshops will be 
available on the FTC Home Page (https://www.ftc.gov).

SUPPLEMENTARY INFORMATION: Section 1 of the Sherman Act condemns 
``every contract, combination, in the form of trust or otherwise, or 
conspiracy in restraint of trade and commerce among the several States, 
or with foreign nations,''\3\ which includes violations of the Sherman 
Act.\4\ Although the FTC does not directly enforce Section 1 of the 
Sherman Act, Section 5 of the FTC Act condemns ``unfair methods of 
competition in or affecting commerce, and unfair or deceptive acts or 
practices in or affecting commerce.''\5\ In 1911, two U.S. Supreme 
Court decisions held, respectively, that RPM agreements were illegal as 
a matter of law (Dr. Miles);\6\ and that Section 1 of the Sherman Act 
prohibited restraints of trade that are ``unreasonably restrictive of 
competitive conditions'' (Standard Oil).\7\ Except to the extent that 
RPM was exempted from federal antitrust liability by the Fair Trade 
Laws from 1937 to 1975,\8\ minimum RPM was treated as per se illegal 
under the antitrust laws until the Supreme Court decided the Leegin\9\ 
case in June 2007.\10\
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    \3\ 15 U.S.C. Sec.  1.
    \4\ See Fed. Trade Comm'n v. Motion Picture Advert. Serv. Co., 
344 U.S. 392, 394-95 (1953) (stating that Section 5 of the FTC Act 
``condemn[s] as `unfair methods of competition' existing violations 
of `` the Sherman and Clayton Acts).
    \5\ 15 U.S.C. Sec.  45
    \6\ Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 
373 (1911). Subsequent cases referred to RPM as being per se 
illegal.
    \7\ Standard Oil of New Jersey v. United States, 221 U.S. 1, 58 
(1911)
    \8\ McCraw, supra note 1, at 187.
    \9\ Leegin Creative Leather Products, Inc. v. PSKS, Inc., 127 S. 
Ct. 2705 (2007).
    \10\ The Supreme Court subjected maximum RPM to the rule of 
reason in 1997. State Oil Co. v. Khan, 522 U.S. 3 (1997).
---------------------------------------------------------------------------

    Leegin overruled the Dr. Miles decision, finding that the Court's 
more recent decisions were inconsistent with rationales upon which Dr. 
Miles was based.\11\ The Court directed that the legality of minimum 
RPM would be determined under the rule of reason; however, the Court 
did not specify the contours of the rule of reason analysis that would 
be necessary or appropriate in all cases. Rather, it observed that:
---------------------------------------------------------------------------

    \11\ Id. at 2712-25 (citing, inter alia, Continental T.V., Inc. 
v. GTE Sylvania, Inc., 433 U.S. 36 (1977) (``GTE Sylvania''); 
Business Electronics Corp. v. Sharp Electronics Corp., 485 U.S. 717 
(1988); and State Oil Co. v. Khan, 522 U.S. 3 (1997)).

 As courts gain experience considering the effects of these restraints 
by applying the rule of reason over the course of decisions, they can 
establish the litigation structure to ensure the rule operates to 
eliminate anticompetitive restraints from the market and to provide 
more guidance to businesses. Courts can, for example, devise rules over 
time for offering proof, or even presumptions where justified, to make 
the rule of reason a fair and efficient way to prohibit anticompetitive 
---------------------------------------------------------------------------
restraints and to promote competitive ones.

Id. at 2720.

    In the Nine West matter,\12\ the Commission recently confronted the 
Court's lack of specificity, as follows:

    \12\Nine West Group, Inc., Docket No. C-3937 (Apr. 11, 2000), 
Order Granting In Part Petition to Reopen and Modify Order Issued 
April 11, 2000 (May 6, 2008), available at: (https://www.ftc.gov/os/
caselist/9810386/080506order.pdf.)

 As it abandoned the per se prohibition of Dr. Miles, the Court 
cautioned that it was not declaring RPM to be per se legal. Leegin 
summarized some of the possible procompetitive and anticompetitive 
consequences of resale price maintenance. The Court explained that RPM 
might stimulate interbrand competition and have a procompetitive effect 
on competition, so that RPM does not meet the per se illegality 
standard of a practice that ``always or almost always tends to restrict 
competition and decrease output.'' At the same time, after reviewing 
the potential anticompetitive effects of RPM, the Court said, ``[a]s 
should be evident, the potential anticompetitive consequences of 
vertical price restraints must not be ignored or underestimated.'' In 
light of these potential adverse effects, the Court further observed 
that ``[i]f the rule of reason were to apply to vertical price 
restraints, courts would have to be diligent in eliminating their 
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anticompetitive uses from the market.''

 The Court's comments about the possible harms of RPM, and its caution 
to lower courts ``to be diligent in eliminating their anticompetitive 
uses from the market,'' can usefully be understood in the context of 
the debate between the Leegin majority and the dissent about the wisdom 
of abandoning the per se ban of Dr. Miles. The dissent argued that the 
majority had slighted the potential anticompetitive consequences of 
RPM. The majority's recitation of examples of some of the possible 
competitive harms and its call for ``diligent'' efforts by the lower 
courts to be attentive to these harms can be seen as an attempt to 
provide assurances that the Court foresaw a

[[Page 65859]]

useful role for continued antitrust scrutiny of RPM.

     * * *

 At this early stage of the application of Leegin by the lower courts 
and the Commission, the Leegin factors can serve as helpful guides to 
begin an assessment of when RPM deserves closer scrutiny. Through the 
Commission's own enforcement work, research, and external consultations 
such as workshops, we anticipate further refinements to this analysis, 
including the further specification of scenarios in which RPM poses 
potential hazards and those in which it does not.

Nine West, supra n. 11 at 9-14 (citations omitted).
    By holding these Workshops, the FTC hopes to identify the market 
facts, circumstances, and conditions under which the use of RPM is 
likely to be procompetitive or benign, as opposed to anticompetitive 
and harmful to consumers. The Commission believes that an appropriate 
antitrust approach to RPM requires the means for distinguishing 
permissible from impermissible conduct in varied circumstances. 
Moreover, those means should provide reasonable guidance to businesses 
attempting to evaluate the legality of proposed conduct before 
undertaking it. The development of clear standards that both protect 
consumers and enable businesses to adopt strategies that comply with 
the antitrust laws presents some of the most complex issues facing the 
Commission, the courts, and the antitrust bar.
    Given this challenge--and because antitrust analysis must reflect 
the particular market facts and circumstances within which a restraint 
has been adopted--the FTC encourages commenters to describe actual 
examples of RPM that the FTC should consider in the context of the 
Workshop, discuss the business reasons for the conduct, and the actual 
or likely competitive effects of the conduct.
Illustrative Questions for Consideration With Respect to the RPM Usages 
That the Commenter Discusses. Commenters should indicate whether 
responses would change if the conduct is an express RPM agreement or an 
RPM arrangement that achieves its outcome under a Colgate policy.\13\ 
Commenters should also indicate whether responses would differ if the 
arrangement were directed toward different industry levels (e.g., 
retail, wholesale, or manufacturer).
---------------------------------------------------------------------------

    \13\ A manufacturer uses a Colgate policy when it does not ask 
retailers for any agreement regarding resale prices; rather, the 
manufacturer announces in advance that it will only sell its 
products to retailers that resell those products at or above the 
prices it specifies, and then enforces the policy by deciding 
unilaterally that it will refuse to make any future sales of its 
products to any retailer who has violated its pricing policies. 
These arrangements take their name from the Supreme Court's decision 
in United States v. Colgate & Co., 250 U.S. 300, 307-8 (1919) 
(distinguishing Dr. Miles on the ground that the ``unlawful 
combination [in that case] was effected through contracts which 
undertook to prevent dealers from freely exercising the right to 
sell'').
---------------------------------------------------------------------------

    1. How should the structure of the market and the market shares of 
participants be taken into account in analyzing RPM?
    2. Are there other specific market facts or circumstances that 
might have an impact on the likely competitive effects of RPM under the 
circumstances described? Without limiting the scope of this question, 
commenters are specifically invited to comment on the effect on 
marginal and inframarginal consumers.
    3. What are the business reasons (e.g., management, marketing, 
financial, etc.) for the use of RPM? Are there alternative business 
strategies available to achieve the same results? What factors, 
including any cost savings, entered the decision to use RPM to achieve 
the desired result?
    4. To what extent does uncertainty regarding the legality of RPM 
under state law affect the decision to use RPM?
    5. What are the likely procompetitive and anticompetitive effects 
of RPM under the circumstances described?
    6. What strategies might competitors use to respond to a loss of 
sales to a firm that uses RPM?
    7. Under what market conditions is the use of RPM likely either to 
promote or hinder market entry by other manufacturers or retailers?
    8. Are there industries where the use of RPM is prominent?
    9. Are there any original theoretical, analytical or empirical 
studies on the nature or competitive effects of RPM or alternatives to 
RPM that should be brought to the attention of the Commission?
    10. What tests or standards should courts or enforcement agencies 
use in assessing whether particular conduct violates Sections 1 or 5? 
Commenters are specifically requested to assess whether the test or 
standard applicable to a particular usage of RPM might vary based on 
particular market facts or circumstances. Additionally, are there 
particular market facts and circumstances where the approach 
established by the Court of Appeals for the District of Columbia 
Circuit in Polygram Holding, Inc. v. Fed. Trade Comm'n, 416 F. 3d (D.C. 
Cir. 2005), would or would not be appropriate?

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. E8-26404 Filed 11-4-08: 8:45 am]
BILLING CODE 6750-01-S

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