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 {"text":"b'UNITED STATES OF AMERICA\\n\\nFederal Trade Commission\\nWASHINGTON, D.C. 20580\\n\\nJoshua S. Millard\\nAttorney, Division of Enforcement\\nPhone: (202) 326-2454\\nEmail: jmillard@ftc.gov\\n\\nAugust 26, 2019\\n\\nBeth Deisher\\nCoordinator, Anti-Counterfeiting Task Force\\nAnti-Counterfeiting Educational Foundation, Inc.\\nP.O. Box 903\\nSylvania, OH 43560\\nRe: Anti-Counterfeiting Educational Foundation, Inc. - Advisory Opinion\\nDear Ms. Deisher,\\nThis is in reply to your August 8, 2019 email to the staff of the Federal Trade\\nCommission (\\xe2\\x80\\x9cFTC\\xe2\\x80\\x9d) on behalf of Anti-Counterfeiting Educational Foundation, Inc. (\\xe2\\x80\\x9cACEF\\xe2\\x80\\x9d),\\nrequesting an opinion concerning the marking of the word \\xe2\\x80\\x9cCOPY\\xe2\\x80\\x9d on imitation numismatic\\nitems pursuant to the Rules and Regulations Under the Hobby Protection Act, 16 C.F.R. part 304\\n(\\xe2\\x80\\x9cHobby Rules\\xe2\\x80\\x9d).1 In your email, you requested a response to the following questions:\\n\\xe2\\x80\\x9cDoes the incusing of the word \\xe2\\x80\\x98COPY\\xe2\\x80\\x99 have to be part of the manufacturing\\nprocess or can it be applied later?\\xe2\\x80\\x9d\\n\\xe2\\x80\\x9cIf it can be applied later, can any entity or individual citizen apply the word\\n\\xe2\\x80\\x98COPY\\xe2\\x80\\x99 as long as it is in compliance with the requirements set forth in \\xc2\\xa7304.6?\\xe2\\x80\\x9d\\nYour email reported that members of the numismatic community have asked ACEF\\nwhether it would be legal for them to mark imitation U.S. coins identified in the marketplace\\nwith the word \\xe2\\x80\\x9ccopy.\\xe2\\x80\\x9d Additionally, you conveyed that some persons have suggested that ACEF\\nhave punches made to the specifications set forth in 16 C.F.R. \\xc2\\xa7 304.6 and offer to mark\\nimitation numismatic items as such as a service at coin shows.\\n\\n1\\n\\nAs defined in the Hobby Protection Act, 15 U.S.C. \\xc2\\xa7\\xc2\\xa7 2101-06 (\\xe2\\x80\\x9cHobby Act\\xe2\\x80\\x9d), an imitation\\nnumismatic item is \\xe2\\x80\\x9can item which purports to be, but in fact is not, an original numismatic item\\nor which is a reproduction, copy, or counterfeit of an original numismatic item.\\xe2\\x80\\x9d Id. \\xc2\\xa7 2106(4).\\nThe Hobby Act defines original numismatic items to include coins, tokens, paper money, and\\ncommemorative medals that have been part of a coinage or issue used in exchange or used to\\ncommemorate a person or event. See id. \\xc2\\xa7 2106(3).\\n\\n\\x0cMs. Beth Deisher\\nAnti-Counterfeiting Educational Foundation, Inc.\\nAugust 26, 2019\\nIn response to your questions, as discussed below, FTC staff opines that with respect to\\nunmarked imitation numismatic items found in commerce, entities other than the manufacturer\\nor importer may mark the word \\xe2\\x80\\x9ccopy\\xe2\\x80\\x9d on such items after their manufacture following the\\nmarking requirements set forth in 16 C.F.R. \\xc2\\xa7 304.6. However, such markings do not excuse\\nprior violations by entities required to comply with the Hobby Act and Hobby Rules.\\nThe Hobby Act requires manufacturers and importers of imitation numismatic items, as\\nwell as persons or entities engaged in \\xe2\\x80\\x9cthe sale in commerce\\xe2\\x80\\x9d of such items, to mark such items\\n\\xe2\\x80\\x9cplainly and permanently\\xe2\\x80\\x9d with the word \\xe2\\x80\\x9ccopy.\\xe2\\x80\\x9d 15 U.S.C. \\xc2\\xa7 2102(b).2 Consistent with the\\nHobby Act, the Hobby Rules establish, among other things: (1) the location of markings on\\nitems; (2) the sizes and dimensions of the letters and numerals to be used; and (3) how to mark\\nnonincusable and incusable items. 16 C.F.R. \\xc2\\xa7 304.6. Incusable items are those that can be\\nimpressed with a stamp.\\nAs to the timing of the \\xe2\\x80\\x9ccopy\\xe2\\x80\\x9d mark, the Hobby Act and Hobby Rules establish that\\nimitation numismatic items must be marked at least in the domestic manufacture of such items or\\nbefore the importation of such items into the United States for introduction into or distribution in\\ncommerce. 15 U.S.C. \\xc2\\xa7\\xc2\\xa7 2101(b), 2104; 16 C.F.R. \\xc2\\xa7 304.6. Failure to comply subjects violators\\nto liability in governmental and private actions.3 Accordingly, the marking of the word \\xe2\\x80\\x9ccopy\\xe2\\x80\\x9d\\nmust be part of the domestic manufacturing process for imitation numismatic items and must\\noccur prior to importation of such items made outside the United States. Persons engaged in the\\nsale in commerce of such items must also comply. 15 U.S.C. \\xc2\\xa7 2101(b); 16 C.F.R \\xc2\\xa7 304.3.\\nNotwithstanding the foregoing, the Hobby Act and the Hobby Rules do not prohibit\\nentities other than manufacturers and importers from subsequently marking unmarked imitation\\nnumismatic items as copies pursuant to the marking requirements of the Hobby Rules, 16 C.F.R.\\n\\xc2\\xa7 304.6. Indeed, the Hobby Act and the Hobby Rules contemplate that persons engaged in the\\nsale in commerce of such items will comply with the marking requirement prior to such sales, 15\\nU.S.C. \\xc2\\xa7 2101(b), 16 C.F.R. \\xc2\\xa7 304.3. However, later markings do not excuse prior violations by\\nentities required to comply with the Hobby Act and Hobby Rules. For example, if a coin owner\\nwho obtained an unmarked imitation 1932-S Washington Quarter from an importer discovers\\nthat it is a copy and chooses to mark it as a copy for purposes of identification, that marking\\nwould not relieve the importer from liability for failing to comply with the Hobby Act and\\nHobby Rules.\\nPlease note that this letter only expresses an opinion concerning laws enforceable by the\\nFederal Trade Commission. See 15 U.S.C. \\xc2\\xa7 2105 (provisions of Hobby Protection Act \\xe2\\x80\\x9care in\\n2\\n\\nIt is also a violation of the Hobby Act for a person to provide substantial assistance, or support,\\nto any manufacturer or importer or seller of imitation numismatic items if that person knows or\\nshould have known that the assisted or supported entity is violating the Hobby Act\\xe2\\x80\\x99s marking\\nrequirements. Id. \\xc2\\xa7 2102(d).\\n3\\nViolations of the Hobby Act are enforceable by the Commission as violations of the Federal\\nTrade Commission Act, 15 U.S.C. \\xc2\\xa7\\xc2\\xa7 2101(b), 2103, and also provide grounds for private suits\\nseeking injunctive relief and damages. Id. \\xc2\\xa7 2102.\\n\\n\\x0cMs. Beth Deisher\\nAnti-Counterfeiting Educational Foundation, Inc.\\nAugust 26, 2019\\naddition to, and not in substitution for or limitation of, the provisions of any other law of the\\nUnited States or of the law of any State\\xe2\\x80\\x9d).\\nIn accordance with Section 1.3(c) of the Commission\\xe2\\x80\\x99s Rules of Practice and Procedure,\\n16 C.F.R. \\xc2\\xa7 1.3(c), this is a staff opinion only and has not been reviewed or approved by the\\nCommission or by any individual Commissioner, and is given without prejudice to the right of\\nthe Commission later to rescind the advice and, where appropriate, to commence an enforcement\\naction.\\nIn accordance with Section 1.4 of the Commission\\xe2\\x80\\x99s Rules of Practice and Procedure, 16\\nC.F.R. \\xc2\\xa7 1.4, this response to your request for advice will be placed on the public record.\\nSincerely,\\n\/s\/\\nJoshua S. Millard\\nAttorney, Division of Enforcement\\n\\n\\x0c'","created_timestamp":"August 26, 2019","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-joshua-s-millard-staff-attorney-division-enforcement-bureau-consumer-protection\/hobby_rules_staff_opinion_letter_-_082619.pdf"}
-{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nBureau of Consumer Protection\\nDivision of Enforcement\\nHampton Newsome\\nDirect Dial: (202) 326-2889\\nFax: (202) 326-2558\\nEmail: hnewsome@ftc.gov\\n\\nJanuary 3, 2018\\n\\nMr. Clark R. Silcox, General Counsel\\nNational Electrical Manufacturers Association\\n1300 North 17th Street, Suite 900\\nRosslyn, Virginia 22209\\nDear Mr. Silcox:\\nThis staff opinion letter responds to your recent request for guidance regarding mercury\\xc2\\xad\\nrelated light bulb disclosures under the FTC\\' s Energy Labeling Rule (16 C.F.R. Part 305). The\\nRule(\\xc2\\xa7 305.15(b)) requires manufacturers to include an Environmental Protection Agency\\n(EPA) web address (\"epa.gov\/cfl\") on lamps containing mercury as well as on the packaging for\\nthose products. The EPA website provides consumers with information about the cleanup and\\ndisposal of mercury-containing bulbs. When the Commission issued these disclosure\\nrequirements in 2010 (75 Fed. Reg. 41696), the predominant mercury-containing bulbs on the\\nmarket were compact fluorescent lamps (\"CFLs\"). However, as your letter explains, other\\nmercury-containing bulbs have become available more recently, including induction lamps. As\\nyour letter suggests, the letters \"cfl\" in the URL mandated by the current Rule may be confusing\\nto some consumers using these newer, non-CFL bulb types.\\nYou are seeking guidance on whether, to minimize potential consumer confusion,\\nmanufacturers of these bulbs may use an alternative URL (\"epa.gov\/bulb\") to direct consumers\\nto the EPA inf01mation. Although the Rule specifies use of the \"epa.gov\/cfl\" address, we would\\nnot recommend enforcement action if manufacturers of non-CFL bulbs use your suggested\\nalternative address to connect consumers to the EPA website. The alternative URL would direct\\nconsumers to the same EPA information about lamp cleanup and disposal while avoiding\\npotential confusion created by the \" epa.gov\/cfl\" address. To that end, we have discussed this\\nissue with EPA staff, and they have created the alias web address \"epa.gov\/bulb\" to take\\nconsumers directly to \"epa.gov\/cfl.\" In the future , we will consider recommending Rule\\namendments that include this address as an option for manufacturers.\\nThe views expressed in this letter are those of FTC staff assigned to enforce the\\nCommission\\' s Energy Labeling Rule (16 C.F.R. Part 305). In accordance with Section l .3(c) of\\nthe Commission\\' s Rules of Practice and Procedure, 16 C.F.R. \\xc2\\xa7 1.3(c), this is a staff opinion only\\n\\n\\x0cPage 2\\nand has not been approved by the Commission or by any individual Commissioner. The advice\\nprovided in this letter is not binding upon the Commission and is given without prejudice to the\\nright of the Commission later to rescind the advice and, when appropriate, to commence an\\nenforcement proceeding. In conformance with Section 1.4 of the Commission\\'s Rules of\\nPractice, 16 C.F.R. \\xc2\\xa7 1.4, this letter is being placed on the public record. If you have any further\\nquestions, please contact me at (202) 326-2889.\\n\\n~~~\\nHampton Newsome\\nAttorney\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-hampton-newsome-staff-attorney-division-enforcement-bureau-consumer-protection\/nemaletter-1-03-2018.pdf"}
+{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nBureau of Consumer Protection\\nDivision of Enforcement\\nHampton Newsome\\nDirect Dial: (202) 326-2889\\nFax: (202) 326-2558\\nEmail: hnewsome@ftc.gov\\n\\nJanuary 3, 2018\\n\\nMr. Clark R. Silcox, General Counsel\\nNational Electrical Manufacturers Association\\n1300 North 17th Street, Suite 900\\nRosslyn, Virginia 22209\\nDear Mr. Silcox:\\nThis staff opinion letter responds to your recent request for guidance regarding mercury\\xc2\\xad\\nrelated light bulb disclosures under the FTC\\' s Energy Labeling Rule (16 C.F.R. Part 305). The\\nRule(\\xc2\\xa7 305.15(b)) requires manufacturers to include an Environmental Protection Agency\\n(EPA) web address (\"epa.gov\/cfl\") on lamps containing mercury as well as on the packaging for\\nthose products. The EPA website provides consumers with information about the cleanup and\\ndisposal of mercury-containing bulbs. When the Commission issued these disclosure\\nrequirements in 2010 (75 Fed. Reg. 41696), the predominant mercury-containing bulbs on the\\nmarket were compact fluorescent lamps (\"CFLs\"). However, as your letter explains, other\\nmercury-containing bulbs have become available more recently, including induction lamps. As\\nyour letter suggests, the letters \"cfl\" in the URL mandated by the current Rule may be confusing\\nto some consumers using these newer, non-CFL bulb types.\\nYou are seeking guidance on whether, to minimize potential consumer confusion,\\nmanufacturers of these bulbs may use an alternative URL (\"epa.gov\/bulb\") to direct consumers\\nto the EPA inf01mation. Although the Rule specifies use of the \"epa.gov\/cfl\" address, we would\\nnot recommend enforcement action if manufacturers of non-CFL bulbs use your suggested\\nalternative address to connect consumers to the EPA website. The alternative URL would direct\\nconsumers to the same EPA information about lamp cleanup and disposal while avoiding\\npotential confusion created by the \" epa.gov\/cfl\" address. To that end, we have discussed this\\nissue with EPA staff, and they have created the alias web address \"epa.gov\/bulb\" to take\\nconsumers directly to \"epa.gov\/cfl.\" In the future , we will consider recommending Rule\\namendments that include this address as an option for manufacturers.\\nThe views expressed in this letter are those of FTC staff assigned to enforce the\\nCommission\\' s Energy Labeling Rule (16 C.F.R. Part 305). In accordance with Section l .3(c) of\\nthe Commission\\' s Rules of Practice and Procedure, 16 C.F.R. \\xc2\\xa7 1.3(c), this is a staff opinion only\\n\\n\\x0cPage 2\\nand has not been approved by the Commission or by any individual Commissioner. The advice\\nprovided in this letter is not binding upon the Commission and is given without prejudice to the\\nright of the Commission later to rescind the advice and, when appropriate, to commence an\\nenforcement proceeding. In conformance with Section 1.4 of the Commission\\'s Rules of\\nPractice, 16 C.F.R. \\xc2\\xa7 1.4, this letter is being placed on the public record. If you have any further\\nquestions, please contact me at (202) 326-2889.\\n\\n~~~\\nHampton Newsome\\nAttorney\\n\\n\\x0c'","created_timestamp":"January 3, 2018","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-hampton-newsome-staff-attorney-division-enforcement-bureau-consumer-protection\/nemaletter-1-03-2018.pdf"}
 {"text":"b'UNITED STATES OF AMERICA\\n\\nFederal Trade Commission\\nWASHINGTON. D.C. 20580\\n\\nJock Chung\\nDivision of Enforcement\\nPhone: (202) 326-2984\\nEmail: jchung@ftc.gov\\n\\nDecember 14, 2017\\n\\nDonald S Stein, Esq.\\nGreenberg Traurig, LLP\\n2101 L Street, NW, Suite 1000\\nWashington, DC, 20037\\n\\nRe: Piirlin, LLC Advisory Opinion\\nDear Mr. Stein,\\nThis is in reply to your September 14, and October 27, 2017, letters on behalf of Plirlin,\\nLLC (\"Ptirlin\") requesting an opinion that Purlin\\'s bedding is not a product intended for uses\\nsubject to the Textile Products Identification Act, 15 U.S.C. \\xc2\\xa7 70 (the \"Textile Act\" or \"Act\"),\\nand its implementing regulations, the Rules and Regulations Under the Textile Fiber Products\\nIdentification Act, 16 C.F.R. Part 303 (the \"Textile Rules\" or \"Rules\"). You request\\nconfirmation that the Textile Act and Rules do not require Ptirlin to attach labels to its recyclable\\nbedding at the time it provides the bedding to institutions.\\nAs discussed below, based on the facts provided by Ptirlin, staff opines that Ptirlin\\'s\\nrecyclable bedding does not fall within the definition of \"household textile article\" in Section\\n70(g) of the Textile Act. Consequently, in our view, Ptirlin\\'s recyclable bedding is not covered\\nby the Textile Act or the Textile Rules, and Pfulin may provide its bedding to institutions\\nwithout labels.\\nAccording to your letters and statements to me, the issues present the following facts:\\nPtirlin offers woven recyclable bedding (sheets and pillowcases) made from polyester fiber to\\nhealthcare, hospitality, and similar institutions. It does not offer this product to individual\\nconsumers. This bedding is not washed, but after one use is disposed of through recycling.\\nPtirlin arranges for the bedding to be recycled into pellets, which are then extruded at high\\ntemperatures into sterilized fibers to be woven into hygienic recyclable fabric. Prior to recycling,\\nany labels on the bedding must be removed to prevent label ink from contaminating the fibers\\nproduced through recycling. According to Ptirlin, consumer recycling facilities cannot recycle\\nits bedding.\\nThe Textile Act prohibits the introduction into commerce of any misbranded \"textile fiber\\nproduct,\" where such a product is \"any household textile article made in whole or in part of yam\\n\\n\\x0cor fabric,\" or fiber, yam, or fabric to be used in a household textile article. 1 The Act defines\\n\"household textile articles\" as \"articles of wearing apparel, ... beddings, and other textile goods\\nof a type customarily used in a household regardless of where used in fact. \" 2 A product is \\xc2\\xb7\\nmisbranded if it is not labeled with required information prior to being produced in the form\\nintended for sale, delivery to, or for use by the \"ultimate consumer,\" 3 defined as \"a person who\\nobtains a textile fiber product by purchase or exchange with no intent to sell or exchange such\\ntextile fiber product in any form. \" 4\\nMost bedding, such as cotton bedding, is of a type customarily used in a household and\\nconsequently falls under the Textile Fiber Act, even when such bedding is used in an institution,\\nsuch as a hospital. However, Pilrlin\\'s recyclable bedding is offered exclusively to institutions,\\nand only they have access to Ptirlin\\'s recycling services. 5 Consequently, in our view, Pilrlin\\'s\\nrecyclable bedding is not a household textile article and therefore not covered by the Textile\\nAct\\'s or Rules\\' labeling requirements.\\nWe base this opinion on the specific facts. If, at any time, Ptirlin or any other entity,\\noffers similar recyclable bedding for household use, its bedding would fall within the Textile\\nAct\\'s definition of a household textile product and must be labeled pursuant to the Textile Act\\n\\xc2\\xb7\\nand Textile Rules. 6\\nIn accordance with Section 1.3(c) of the Commission\\'s Rules of Practice and Procedure,\\n16 C.F .R. \\xc2\\xa7 1.3(c), this is a staff opinion only and has not been reviewed or approved by the\\nCommission or by any individual Commissioner, and is given without prejudice to the right of\\nthe Commission later to rescind the advice and, where appropriate, to commence an enforcement\\naction.\\n\\n15 U.S.C. \\xc2\\xa7 70(h). The definition excludes products covered by the Wool Products Labeling Act of 1939, 15\\nU.S.C. 68 et seq.\\n2 The Act covers such articles even where they are used outside of the house. For example, the Commission has\\nrequired industrial work gloves and diving wetsuits to be labeled under the Textile Act. Magid Mfg. Co., Inc., 75\\nF.T.C. 808 (1969); Dive N\\' Surf, Inc., 114 F.T.C. 798 (1991).\\n3 15 U.S.C. 70a(d)(5).\\n4 15 U.S.C. 70(m). You also suggest that Ptirlin\\'s bedding is not intended for sale, delivery, or for use by the\\n\" ultimate consumer,\" and therefore Ptirlin could comply with the Rules merely by disclosing required information in\\nan invoice or other document, e.g., a package label, pursuant to Section 303.31. You assert that the institutions\\nbuying Ptirlin\\'s bedding are not \"ultimate consumers\" because, at the time they receive it, they intend to eventually\\nexchange it for new bedding. We disagree with this interpretation. The Act implicitly defines \" ultimate consumer\"\\nas a person who obtains a textile fiber product with no intent to sell or exchange it unused. Under the Act, for\\nexample, a manufacturer can provide unlabeled textile fiber products to a wholesaler who intends to sell the\\nproducts unused to retailers. Under Ptirlin\\'s contention, however, stores could sell unlabeled garments to be worn\\nby purchasers, as long as they intend to eventually sell or exchange the garments. This interpretation would obviate\\nthe Act.\\n5 In fact, because its recycling services are only available to Plirlin \\'s institutional customers, it would be deceptive to\\nrepresent its bedding as recyclable to consumers. See FTC v. AJM Packaging Corp., No. I: I 3-cv- 1510 (D.D.C. Oct.\\n1, 2013); see Green Guides, I 6 C.F.R. \\xc2\\xa7 260.12 (stating it would be deceptive to advertise a product as recyclable\\nwhen recycling facilit ies are unavailable to consumers or communities where the item is sold).\\n6 Pi.irlin has represented that its woven recyclable bedding is a unique product, and that it has a patent pending for\\nthis product.\\n1\\n\\n\\x0cIn accordance with Section 1.4 of the Commission\\'s Rules of Practice and Procedure, 16\\nC.F.R. \\xc2\\xa7 1.4, your request for advice, along with this response, will be placed on the public\\nrecord.\\n\\n-y~\\n\\n~~\\'(h~AA~\\nJock Chungvv--\\n\\n\\x0c'","created_timestamp":"December 14, 2017","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-jock-chung-staff-attorney-division-enforcement-bureau-consumer-protection\/purlin_staff_opinion_letter_final.pdf"}
-{"text":"b'UNITED STATES OF Al\\\\1ERICA\\n\\nFederal Trade Commission\\nWASHINGTON, D.C. 20580\\n\\nDivision of Financial Practices\\nBureau of Consumer Protection\\n\\nApril 7, 2016\\n\\nJeff Appel\\nDeputy Under Secretary\\nU.S. Department ofEducation\\nOffice of the Under Secretary\\n400 Maryland Ave, SW\\nWashington, DC 20202\\nDear Mr. Appel,\\nThis letter is in response to your request for a staff advisory opinion regarding the\\nFederal Trade Commission\\' s Trade Regulation Rule Concerning Preservation of\\nConsumers\\' Claims and Defenses, 16 C.P.R. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 433, commonly known as the Holder\\nRule. Specifically, you note that courts commonly allow consumers to assert time-barred\\nclaims defensively, even if they would not be able to assert such claims in an affirmative\\nlawsuit, and ask if such defensive claims would be permitted under the Holder Rule. As\\nexplained below, the Holder Rule would permit the time-barred claims or defenses\\nagainst the holder, if state law would permit the time-barred claims or defenses against\\nthe seller.\\nThe Holder Rule protects consumers who enter into credit contracts with a seller\\nof goods or services by preserving their right to assert claims and defenses against any\\nholder of the contract, even if the original seller subsequently assigns the contract to a\\nthird-party creditor. In particular, the Holder Rule requires sellers that arrange for or\\noffer credit to finance consumers\\' purchases to include in their credit contracts the\\nfollowing Notice:\\nANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO\\nALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT\\nAGAINST THE SELLER OF GOODS OR SERVICES OBTAINED\\n[PURSUANT HERETO OR] WITH THE PROCEEDS HEREOF. RECOVERY\\nHEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID\\nBY THE DEBTOR HEREUNDER.\\n16 C.P.R. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 433.2.\\nA creditor or assignee of the contract is thus subject to all claims or defenses that\\nthe consumer could assert against the seller. As you note in your request, the Guidelines\\nthat accompany the Holder Rule explain that \"claims and defenses\" are \"not given any\\nspecial definition by the Commission.. . . Appropriate statutes, decisions, and rules in\\n\\n\\x0ceach jurisdiction will control, and the pertinent rules oflaw and equity, including rules of\\nevidence, procedure, and statutes of limitations, will continue to apply.\" 1\\nThus, the Rule protects consumers\\' existing claims and defenses, and does not\\ncreate any new claims or defenses for the consumer. Accordingly, if a statute of\\nlimitations bars an affirmative lawsuit against a seller under state law, that law would\\ncontinue to apply. If, however, other applicable state law would still permit the claim\\nagainst the seller, then under the Holder Rule, the claim could be used as to subsequent\\nholders of the contract. Further, if state law allows consumers to assert time-barred\\nclaims as defenses against the seller, then the Holder Rule would allow consumers to\\nassert such defenses against subsequent holders as well.\\nPlease be advised that the views expressed in this letter are those of the FTC staff.\\nThey have not been reviewed, approved, or adopted by the Commission, and they are not\\nbinding upon the Commission. However, they do reflect the opinions of those staff\\ncharged with enforcement of the Holder Rule.\\n\\nSincerely,\\n\\nSv~\\nStephanie Rosenthal\\nChief of Staff, Division of Financial Practices\\nFederal Trade Commission\\nBureau of Consumer Protection\\n\\n1\\n\\nFTC, Guidelines on Trade Regulation Rule Concerning Preservation ofConsumers\\' Claims and\\nDefenses, 41 Fed. Reg. 20022 (May 14, 1976), available at\\nhttps:\/\/www.ftc.gov\/system\/files\/documents\/rules\/holder-rule\/760504hidcrule.pdf.\\n\\n2\\n\\n\\x0c'","created_timestamp":"May 14, 1976","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-stephanie-rosenthal-chief-staff-division-financial-practices-bureau-consumer-protection-jeff.s.department-education\/160407letter_dept_ed.pdf"}
+{"text":"b'UNITED STATES OF Al\\\\1ERICA\\n\\nFederal Trade Commission\\nWASHINGTON, D.C. 20580\\n\\nDivision of Financial Practices\\nBureau of Consumer Protection\\n\\nApril 7, 2016\\n\\nJeff Appel\\nDeputy Under Secretary\\nU.S. Department ofEducation\\nOffice of the Under Secretary\\n400 Maryland Ave, SW\\nWashington, DC 20202\\nDear Mr. Appel,\\nThis letter is in response to your request for a staff advisory opinion regarding the\\nFederal Trade Commission\\' s Trade Regulation Rule Concerning Preservation of\\nConsumers\\' Claims and Defenses, 16 C.P.R. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 433, commonly known as the Holder\\nRule. Specifically, you note that courts commonly allow consumers to assert time-barred\\nclaims defensively, even if they would not be able to assert such claims in an affirmative\\nlawsuit, and ask if such defensive claims would be permitted under the Holder Rule. As\\nexplained below, the Holder Rule would permit the time-barred claims or defenses\\nagainst the holder, if state law would permit the time-barred claims or defenses against\\nthe seller.\\nThe Holder Rule protects consumers who enter into credit contracts with a seller\\nof goods or services by preserving their right to assert claims and defenses against any\\nholder of the contract, even if the original seller subsequently assigns the contract to a\\nthird-party creditor. In particular, the Holder Rule requires sellers that arrange for or\\noffer credit to finance consumers\\' purchases to include in their credit contracts the\\nfollowing Notice:\\nANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO\\nALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT\\nAGAINST THE SELLER OF GOODS OR SERVICES OBTAINED\\n[PURSUANT HERETO OR] WITH THE PROCEEDS HEREOF. RECOVERY\\nHEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID\\nBY THE DEBTOR HEREUNDER.\\n16 C.P.R. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 433.2.\\nA creditor or assignee of the contract is thus subject to all claims or defenses that\\nthe consumer could assert against the seller. As you note in your request, the Guidelines\\nthat accompany the Holder Rule explain that \"claims and defenses\" are \"not given any\\nspecial definition by the Commission.. . . Appropriate statutes, decisions, and rules in\\n\\n\\x0ceach jurisdiction will control, and the pertinent rules oflaw and equity, including rules of\\nevidence, procedure, and statutes of limitations, will continue to apply.\" 1\\nThus, the Rule protects consumers\\' existing claims and defenses, and does not\\ncreate any new claims or defenses for the consumer. Accordingly, if a statute of\\nlimitations bars an affirmative lawsuit against a seller under state law, that law would\\ncontinue to apply. If, however, other applicable state law would still permit the claim\\nagainst the seller, then under the Holder Rule, the claim could be used as to subsequent\\nholders of the contract. Further, if state law allows consumers to assert time-barred\\nclaims as defenses against the seller, then the Holder Rule would allow consumers to\\nassert such defenses against subsequent holders as well.\\nPlease be advised that the views expressed in this letter are those of the FTC staff.\\nThey have not been reviewed, approved, or adopted by the Commission, and they are not\\nbinding upon the Commission. However, they do reflect the opinions of those staff\\ncharged with enforcement of the Holder Rule.\\n\\nSincerely,\\n\\nSv~\\nStephanie Rosenthal\\nChief of Staff, Division of Financial Practices\\nFederal Trade Commission\\nBureau of Consumer Protection\\n\\n1\\n\\nFTC, Guidelines on Trade Regulation Rule Concerning Preservation ofConsumers\\' Claims and\\nDefenses, 41 Fed. Reg. 20022 (May 14, 1976), available at\\nhttps:\/\/www.ftc.gov\/system\/files\/documents\/rules\/holder-rule\/760504hidcrule.pdf.\\n\\n2\\n\\n\\x0c'","created_timestamp":"April 7, 2016","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-stephanie-rosenthal-chief-staff-division-financial-practices-bureau-consumer-protection-jeff.s.department-education\/160407letter_dept_ed.pdf"}
 {"text":"b'COWAN\\nLIEBOW\\nLA\\'\\n\\nCowan, Liebowitz & Latman, P.c.\\n1133 Avenue of the Americas\\nNew Yorl<, NY 10036\\n(212) 79~9200 Tel\\n(212) 575-0671 Fax\\nwww.cll.com\\n\\nCJ. Erickson\\n(212) 790-9274\\ncje@cU.com\\n\\nMay 29, 2012\\n\\nBY FEDERAL EXPRESS\\n\\nFederal Trade Commission\\n6th Street and Pennsylvania Avenue, N.W.\\nWashington, D.C. 20580\\nAttention: Donald S. Clark, Esq., Secretary\\nRe:\\n\\nAdvisory Opinion Request of MJJ Brilliaut Jewelers, Inc.\\nMarking\/Advertising of Precious Metal Jewelry\\n\\nDear Secretary Clark:\\nOn behalf of our client MJJ BriJliant Jewelers, Inc., New York, New York (\"MJJ\" or the\\n\"Company\"), and as discussed with Federal Trade Commission Counsel via telephone\\nconference, [\\n.J\\nIn light of the expected solicitation of public comments governing proposed revisions to the\\nJewelry Guides, the Company believes it will be more beneficial to address these general issues\\nin concert with the comments of other interested parties. The Company does, however, seek\\nguidance on its proposed marking and advertising of certain products to ensure that its\\nprocedures are within the letter and intent of the existing Jewelry Guides. This request is\\nappropriate under the Commission\\'s Rules of Practice because the proposed marketing andlor\\nadvertising claims involve a novel question of fact or law for which there is no clear Commission\\nor court precedent.\\nProduct\\n\\nthe escalating cost of precious metals, notably gold, coupled with increasing demand,\\nhas resulted in an industry demand for more reasonably priced alternatives. MJJ has inve.sted\\n\\nJFK Aml\"ORT\\xc2\\xb7OFF[ClI \\xe2\\x80\\xa2 2016 LINDEN BIND. Surra 18, ELMONf, NY 11003 \\xe2\\x80\\xa2 (212) 790-.9200\\n\\n\\x0cCowan, Liebowitz & Latman, P.C.\\nFTC Bureau of Consumer Protection\\nMay 29, 2012\\nPage 2\\n\\nsignificant resources in developing an alternative alloy formulation that preserves the appearance\\nand functionality of gold at a more reasonable cost to consumers .. The proprietary alloy,\\nidentified as [\\nJ (hereinafter, the \"MJJ Alloy\"), and is\\ncomposed of [ ]% gold (periodic IJlement Au), [ )% silver (periodic element Ag), [ ]%\\n__ _palladi urn (neriodic elemenLP_a),_and_[_]O,-\\'\"-hase_metals.\\n\\nLaw\\nThe issue herein is whether MJJ Brilliant\\'s proposed use of the term \"gold\" as part of its\\nattempt to accurately identify the specific composition of the MJJ Alloy in jewelry is proper\\nunder Section 5 of the FTC Act, which declares \\'\\'unfair\\'\\' or \"deceptive acts or practices\"\\nunlawful. The Cotrunission\\'s Policy Statement on Deception! states that the Commission\\nanalyzes deceptive business practices under the following rubric:\\n1. There must be a representation, omission or practice that is likely to mislead the\\nconsumer. This includes the \"use of bait and switch techniques.\"\\n2. The practice is examined from the perspective of a reasonable person in the\\ncircumstances. If the practice \"is directed primarily to a particular group,\" such as\\nInternet users, \"the Commission examines reasonableness from the perspective of that\\ngroup.\"\\n3. The representation, omission or practice must be a material one, i.e\" it is likely to affect\\nthe consumer\\'s conduct or decision regarding the produce or service.\\nThus, an advertisement is \"deceptive\" if it includes material information that is false or\\nthat is likely to mislead a consumer acting reasonably under the circumstances. Likewise, an\\nadvertisement is deceptive if it omits material information, and that omission is likely to mislead\\na consumer acting reasonably under the circumstances. 2 Requiring accurate disclosure of\\nmaterial terms allows consumers to compare sirhilar services offered by one or multiple\\nproviders and weigh the different terms being offered in making decisions about what services to\\npurchase.\\nThe Commission has formulated guides for various industry products, which set forth the\\nCommission\\'s \"current thinking\" about claims for certain products. The Jewelry Guides, which\\n!\\n\\nFederal Trade Comm\\'n, Policy 8Mement on Deception (Oct. 14, 1983)\\nAssocs\" 103 F.T.C. at 175 (appending FTC Policy Statement on Deception).\\n\\n2 Cliffdale\\n\\n\\x0cCowan, Liebowitz & Latman, P.c.\\nFTC Bureau of Consumer Protection\\nMay 29,2012\\nPage 3\\nare found at 19 C.F.R. Part 23 (\"Jewelry Guides\"), are administrative interpretations of Section 5\\nof the FTC Act prohibiting \"unfair or deceptive\" statements or claims in a product\\'s marketing if\\nthat marketing misrepresents a product\\'s true composition. The underlying intent of these policy\\nstatements is to ensure that the representations in advertising \"will put consumers on notice that\\n____ ---.:th.e_p.I~t.Jl.<mtains..Jlertain-precious-metals,-thereb\\xc2\\xa5-putting_them-in-a-posith;>D-to-inquireof\\'-th~---- - - jeweler as to the relevant value of the different metals and the overall value of the product.,,3\\nSection 23.1 of the Jewelry Guides expressly states that \"It is unfair or deceptive to\\nmisrepresent the type, kind, grade, quality, quantity, metallic content, size, weight. .. or any other\\nmaterial aspect of an industry product.\" Note 2 to \\xc2\\xa7 23.1 further provides that \"To prevent\\ndeception, any qualifications or disclosures ... should be sufficiently clear and prominent.\" The\\nclear intent of the Jewelry Guides is to avoid deception of, or confusion among, consumer\\npurchasers offmished articles of jewelry by prohibiting use of the term \"gold\" as an adjective for\\nfinished jewelry. They cannot be read to preclude advertisers from using truthful and accurate\\nstatements of product content, nor can they be interpreted in a way that prohibits the use of new\\nmaterials developed and recognized throughout the industry subsequent to implementation of the\\nJewelry Guides.\\n\\nIndustry Standard and Pra1:tice\\nPrecious metal alloys have become common in the jewelry trade over the past several\\nyears due to the escalating price of precious metals. The industry is replete with examples of\\nadvertising, marketing and labeling to such an extent that consumers now require greater content\\ndetail and clarification of the items they are purchasing. Attached are examples of current\\nadvertisements that evidence this trend. None of these identify the finished item of jewelry as an\\narticle of \"gold,\" but rather provide content information to the consumer to avoid confusion and\\ndeception. We believe the truthful, accurate and complete description of product contents not\\nonly meets the requirements and intent of the Jewelry Guides, but is mandated by it. The failure\\nto disclose this information is inherently deceptive as the broad range and use of precious metal\\nalloys in the jewelry trade afford consumers no basis to assess the value of purchased\\nmerchandise.\\n\\n3 Guides for the Jewelry, Precious Metals, and Pewter Industries, 62 Fed. Reg. 16,673,\\n16,674 (Apr. 8, 1997).\\n\\n\\x0cCowan, Liebowitz & Latman, P.C.\\nFTC Bureau of Consumer Protection\\nMay 29, 2012\\nPage 4\\nMoreover, many of these products are the same color as 10kt., 14kt. and 18kt. gold. The\\nsimilar color, coupled with the high price point of these products, imply a precious metal content.\\nProhibiting a truthful disclosure of the actual precious metal content serves only to exacerbate\\nconsumer confusion by creating an inability to distinguish between gold alloys of between 1kt\\n_ ancllQJ,<:t. This is clearl)l an unintended.Qonsequence,anda.violationof-atieast-the-intent-of-the----\\xc2\\xb7\\nJewelry Guides.\\nThe Jewelry Guides were originally designed, in part, to prevent consumer deception and\\nconfusion when purchasing \"finished articles of gold jewelry. A standard was implemented to\\nprovide a threshold for which a consumer can be assured of obtaining a known value. The 10 kt.\\nminimum standard was implemented as the basis for identifying a \"finished product as \"gold.\"\\nProducts consisting of less than 10 kt. cannot, absent more, be identi\"fied as gold. The Jewelry\\nGuides do not, however, relate to, restrict or limit the use of gold in the construction of finished\\njewelry. In fact, in light of the introduction of new alloys which appear indistinguishable to the\\nconsumer in terms of look, color and feel, the Jewelry Guides must be read to permit accurate\\nand truthful content information.\\nIn addition, The FTC has previously acknowledged the value of harmonization of U.S.\\nand Canadian regulations applicable to trading partners in both jurisdictions. This stems from\\nFTC comments on the Canadian Guide to the Precious Metals Marking Act and Regulations.\\nThe U.S. and Canadian Guides are strikingly similar, both prohibiting a dealer from selling,\\nimporting or advertising any precious metal article in a manner which is false or misleading as to\\nthe precious metal content. The Canadian Guides do not restrict the use of the term \"gold,\" or\\nprohibit providing an assay report to identify the contents of a gold alloy article, if used in a nondeceptive and non-misleading manner. We believe the U.S. jewelry guides can be read\\nconsistently with the Canadian guides in allowing MJJ\\'s proposed marketing and advertising, as\\nset forth below.\\nMJJ Proposed Marketing and Product Stamping\\n\\nMJJ is aware that it cannot stamp or market its gold alloy jewelry with the traditional\\nkarat marking standard as the alloy is admittedly less than 10 karat fineness. The articles are,\\nhowever, constructed of an alloy consisting of the precious metal elements gold, silver and\\npalladium, with the appearance and feel of gold. Due to its unique new nlUlle and content, the\\ncomposition of the MJJ Alloy is not yet nnderstood within the industry or the public based on\\n\\n\\x0cCowan, Liebowitz & Latman, P.C.\\nFTC Bureau of Consumer Protection\\nMay 29,2012\\nPage 5\\n\\nname alone, As with other trademarked or newly created products, market recognition and\/or\\ncustomer understanding of the product is based primarily upon information supplied by the\\ntrademark\/patent owner or producer of the goods, Without such efforts, the consumer would be\\nunable to malee a well-informed decision as to the product. Our reading of the Jewelry Guides\\n. mandate\\xc2\\xa3.thtLl:lcQurateJdentificationof ihe.specificcomposition of the\\xc2\\xb7precious and-nQn-preciQus\\xc2\\xb7\\nmetals contained within the MJJ Alloy,\\nAs discussed, MJJ proposes to market its gold alloy jewelry by fully declaring the\\ncontents, By doing so it is not describing the item as a gold product, but identifying the contents\\nin an accurate, truthful, non-deceptive manner. Specifically, MJJ proposes use of the following\\nin advertising and marketing materials, and requests confirmation that each is acceptable:\\n(1)\\n\\nuse of the term: consisting of a proprietary alloy of gold, silver, and platinum,\\n\\n(2)\\n\\na link to a third party assay report identifying the precious metal content of the\\nfinished article. A representative report is attached.\\n\\n(3)\\n\\nidentification of the specific percentage content of all precious metals in the\\nfinished article,\\n\\n(4)\\n\\nstamping its merchandise with the company\\'s [\\n\\n1trademark.\\n\\nAll of the above are in compliance with the Jewelry Gnides as they do not misrepresent\\nthe advertised articles as gold and non-deceptively describe the items in a way that enables\\nconsumers to evaluate and compare the items against similar jewelry widely marketed and\\ndistributed to the public. As set forth above, we believe the proposed language eliminates\\nconsumer confusion,\\nConclusion\\n\\nIn light of the Commission\\'s clear jurisdiction and its enforcement activity in this area,\\nMJJ has exercised due care in seeking advance direction from the Commission on proposed\\nadvertising of its jewelry. Based on the foregoing, and in accordance with Section l.3(c) of the\\nCommission\\'s Rules of Practice and Procedure, 16 C,F.R, \\xc2\\xa7 1.3(c), we respectfully request that\\nthe Commission of FTC Staff issue an advisory opinion confirming that the marketing language\\nis in accordance with existing law, agency regulations and applicable guidelines governing\\n\\n\\x0cCowan, Liebowitz & Latman, P,C.\\nFTC BUl\\'eau of Consumer Protection\\nMay 29, 2012\\nPage 6\\n\\nprecious metal jewelry, as the proposed qualifying statements are accurate, truthful, and\\ncomplete, providing consumers with non\\xc2\\xb7deceptive information regarding the construction and\\nvalue of our client\\'s merchandise. Moreover, the proposed language does not mis-identify the\\nwholesale and retail products as gold, nor does it in any way misrepresent the constituent\\n__materials._\\n----- ---- - - - - - - - - - Should you have any questions or require additional information, please do not hesitate to\\ncontact our office.\\nSincerely,\\n\\nC.J. Erickson\\n\\ncc:\\n\\nMJJ Brilliant Jewelers\\n\\n\\x0c'","created_timestamp":"May 29, 2012","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/letter-reenah-l.kim-staff-attorney-division-enforcement-bureau-consumer-protection\/120807mjjbrilliantjewelersopinion.pdf"}
 {"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Marketing Practices\\n~\\nCraig Tregillus\\nctregillus@ftc.gov\\n\\nDirect Dial: (202) 326-2970\\nFacsimile: (202) 326-3395\\n\\nDecember 21, 2011\\nMs. Lynne Nelson, Compliance and Education Manager\\nOregon Mortuary & Cemetery Board\\n800 Oregon St., #430\\nPortland, OR 97232\\nDear Ms. Nelson:\\nYou have asked whether the Funeral Rule permits a funeral home to include a nondeclinable charge on its General Price List and Statement of Funeral Goods and Services Selected\\nfor disinfecting, washing and dressing remains in connection with an \\xe2\\x80\\x9cidentification viewing\\xe2\\x80\\x9d when\\nstate law does not require such a viewing. The purpose of this viewing is for a family member to\\nconfirm the identity of the deceased prior to direct cremation or immediate burial of the remains.\\nSection 453.4(b)(1)(ii) of the Rule prohibits a funeral provider from charging \\xe2\\x80\\x9cany fee as a\\ncondition to furnishing any funeral goods or funeral services to a person arranging a funeral other\\nthan the fees for (1) services of funeral director and staff, permitted by \\xc2\\xa7 453.2(b)(4)(iii)(C) (the\\n\\xe2\\x80\\x9cbasic services fee\\xe2\\x80\\x9d); (2) other funeral services and funeral goods selected by the purchaser; and (3)\\nother funeral goods or services required to be purchased, as explained on the itemized statement in\\naccordance with \\xc2\\xa7 453.3(d)(2).\\xe2\\x80\\x9d1 Section 453.2(b)(4)(iv) emphasizes that the basic services fee \\xe2\\x80\\x9cis\\nthe only funeral provider fee for services, facilities or unallocated overhead permitted by this part to\\nbe non-declinable, unless otherwise required by law.\\xe2\\x80\\x9d2\\nSection 453.3(d)(2), in turn, requires a funeral provider to \\xe2\\x80\\x9cidentify and briefly describe in\\nwriting on the statement of funeral goods and services selected . . . any legal, cemetery, or\\ncrematory requirement which the funeral provider represents to persons as compelling the purchase\\nof funeral goods or funeral services for the funeral which that person is arranging.\\xe2\\x80\\x9d3 This\\naffirmative disclosure is required by the Rule to prevent any misrepresentation prohibited by\\nSection 453.3(d)(1) \\xe2\\x80\\x9cthat federal, state or local laws, or particular cemeteries or crematories, require\\nthe purchase of any funeral goods or funeral services when such is not the case.\\xe2\\x80\\x9d4\\n\\n1\\n\\n16 C.F.R. \\xc2\\xa7 453.4(b)(1)(ii).\\n\\n2\\n\\n16 C.F.R. \\xc2\\xa7 453.2(b)(4)(iv).\\n\\n3\\n\\n16 C.F.R. \\xc2\\xa7 453.3(d)(2).\\n\\n4\\n\\n16 C.F.R. \\xc2\\xa7 453.3(d)(1).\\n\\n\\x0cMs. Lynne Nelson\\nPage 2 of 3\\n\\nThese provisions clearly prohibit a second, non-declinable fee for any purpose, including\\nan identification viewing, unless applicable law or the particular cemetery or crematory to be\\nused imposes such a requirement.5 As we understand your inquiry, no such external requirement\\nexists that would permit charges for disinfecting, washing and dressing remains in connection with\\nan identification viewing before a direct cremation or immediate burial.6\\nThe National Funeral Directors Association argues that a funeral provider should be able to\\ncharge a non-declinable fee for disinfecting, washing and dressing remains in connection with an\\nidentification viewing before a direct cremation or immediate burial because it is a \\xe2\\x80\\x9cpractical\\nnecessity\\xe2\\x80\\x9d for funeral providers to protect themselves from liability for cremating or immediately\\nburying the wrong body, or because it would be \\xe2\\x80\\x9cexcessively burdensome\\xe2\\x80\\x9d to be prevented from\\ndoing so.7 We do not find these arguments persuasive given the ready availability of reasonable\\nalternatives to such a requirement.8\\nFor example, a funeral provider could protect itself from liability in a variety of ways\\ndepending on the circumstances, including providing families with a digital photograph of the\\ndeceased for identification purposes,9 requiring families to provide a recent photograph to permit\\n\\n5\\n\\nStaff has previously stated that a non-declinable charge for an identification viewing\\nwould likely violate Section 453.4(b)(1) of the Rule if not required by law. Staff Opinion 97-4\\n(Oct. 31, 1997) available at http:\/\/www.ftc.gov\/ftc\/funerals\/opinions\/opinion97-4.pdf.\\n6\\n\\nThis opinion does not address the situation in many states and localities where a law,\\nregulation, or requirement of a cemetery or crematory imposes a duty on the funeral provider to\\nconduct an identification viewing.\\n7\\n\\nSection 453.4(b)(2)(ii) states that a funeral provider may \\xe2\\x80\\x9cfail[] to comply with a request\\nfor a combination of goods or services which would be impossible, impractical, or excessively\\nburdensome to provide.\\xe2\\x80\\x9d16 C.F.R. \\xc2\\xa7 453.4(b)(2)(ii). The Final Staff Compliance Guidelines for the\\noriginal Rule read this provision to allow a funeral provider to require and charge for embalming \\xe2\\x80\\x93\\neven in the absence of any state law embalming requirement \\xe2\\x80\\x93 for a funeral with a formal public\\nviewing in hot weather because such a viewing would be impractical absent the availability of\\nreasonable alternatives, such as refrigeration or the use of a sealed casket. 50 Fed. Reg. 28062,\\n28072-73 (July 9, 1985); see also FTC, Complying with the Funeral Rule (June 2004) 24, available\\nat http:\/\/business.ftc.gov\/documents\/bus05-complying-funeral-rule.pdf.\\n8\\n\\nAlthough the Rule does not address identification practices, the availability of a variety of\\nreasonable identification alternatives is highly relevant to the issues of practical necessity and\\nexcessive burden.\\n9\\n\\nThe NFDA and other experts have acknowledged that a digital photograph of the decedent\\nthat is positively identified by a family member is sufficient to protect a funeral provider from\\nliability for negligence.\\n\\n\\x0cMs. Lynne Nelson\\nPage 3 of 3\\nemployees to conduct and document the identification,10 or securing an identification waiver and\\nindemnification from family members.11 The availability of such alternatives undermines any\\nargument that disinfecting, washing and dressing remains in connection with an identification\\nviewing before a direct cremation or immediate burial is a practical necessity. For the same reason,\\nthe Rule prohibition of a separate non-declinable charge for those services cannot be excessively\\nburdensome.12\\nIt is therefore staff\\xe2\\x80\\x99s opinion that under the Funeral Rule a funeral provider may not require\\nand impose a separate special charge for disinfecting, washing and dressing remains in connection\\nwith an identification viewing before a direct cremation or immediate burial absent a state law,\\ncemetery or crematory requirement that is disclosed in writing on the provider\\xe2\\x80\\x99s statement of\\nfuneral goods and services selected. We note, however, that nothing in the Rule prevents a funeral\\nprovider from offering and charging clients for services that go beyond an identification viewing,\\nsuch as a private family viewing rather than a formal public viewing, so long as that service is\\nentirely optional and listed on the provider\\xe2\\x80\\x99s General Price List.\\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are now routinely\\nposted on the FTC website at http:\/\/business.ftc.gov\/content\/funeral-rule-opinions.\\nSincerely,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n(Revised: 12\/18\/12)\\n10\\n\\nThis alternative may suffice, for example, in cases where there are readily identifiable\\ndistinguishing features such as scars or tattoos.\\n11\\n\\nA waiver and indemnification may be sufficient whenever a family member is present\\nwith the deceased at the time of removal.\\n12\\n\\nNothing in the Rule prevents funeral providers from adding the cost of verifying and\\ndocumenting the identity of the deceased before a direct cremation or immediate burial to the basic\\nservices fee included in their prices for those two specialized services because identification is\\nequally important to \\xe2\\x80\\x9cvirtually all,\\xe2\\x80\\x9d if not all, of those two services. See Staff Opinion 07-2 (Mar.\\n21, 2007) at 2, available at http:\/\/www.ftc.gov\/ftc\/funerals\/opinions\/opinion07-2.pdf. Staff has\\npreviously determined that providers may reduce their standard basic services fee for direct\\ncremation and immediate burial to reflect the proportionate reduction for each of those services in\\nthe actual professional services they provide and the accompanying overhead. Staff Opinion 09-6\\n(Nov. 24, 2009), available at http:\/\/ftc.gov\/bcp\/edu\/microsites\/funerals\/opinions\/opinion09-6.pdf.\\nThus, a funeral provider may recover its identification costs simply by adding them to the reduced\\nbasic services fee that it includes in its prices for direct cremation and immediate burial.\\n\\n\\x0c\\x0c'","created_timestamp":"December 21, 2011","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-11-1\/opinion11-1.pdf"}
 {"text":"b\"UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\nBureau of Competition\\nMichael Bloom\\nAssistant Director for Policy & Coordination\\nDirect Dial\\n(202) 326-2475\\n\\nSeptember 15, 2010\\nMs. Joanne Lewers\\nDrinker Biddle & Reath LLP\\n1500 K St. N.W.\\nWashington, DC 20005\\nDear Ms. Lewers:\\nThis letter responds to your request for a staff Advisory Opinion on behalf of the Rx-360\\nInternational Pharmaceutical Supply Chain Consortium (\\xe2\\x80\\x9cRx-360\\xe2\\x80\\x9d). 1 Rx-360 seeks guidance\\nconcerning the law enforcement intentions of the Federal Trade Commission\\xe2\\x80\\x99s Bureau of\\nCompetition (\\xe2\\x80\\x9cBC\\xe2\\x80\\x9d) with respect to Rx-360\\xe2\\x80\\x99s proposed implementation of two supplier audit\\nprograms, the Rx-360 Audit Sharing Program and the Rx-360 Joint Auditing Program. Under\\neach of these programs, pharmaceutical manufacturers will be able to share information about\\nthe quality and safety of ingredients purchased from common suppliers (\\xe2\\x80\\x9cauditees\\xe2\\x80\\x9d). The\\nRx-360 Joint Auditing Program additionally will permit manufacturers to share the costs of\\nsponsoring quality and safety audits of common suppliers. Because it appears that the audit\\nprograms (1) do not require exchanges of competitively significant information, (2) contain\\nprotections to reduce Rx-360 members\\xe2\\x80\\x99 ability to use the programs for anticompetitive ends, (3)\\nprotect auditees from concerted misuse of the audit programs, and (4) are intended and likely to\\npromote efficiency, quality, and safety, FTC staff has no present intention to recommend to the\\nCommission that it challenge the implementation of either program.\\nIn forming this intention, we relied entirely on a review of the written materials and other\\nrepresentations you have given to FTC staff. Should there be information that we are unaware of\\nthat qualifies, modifies, or contradicts any of these materials or representations or that calls in to\\nquestion the conclusions we have drawn from them, or should the proposed activities materially\\nchange in the future, we may change our law enforcement recommendation accordingly.\\nSummary of Representations and Written Materials\\nWe understand that Rx-360 is a not-for-profit international consortium created by\\n\\n1\\n\\nLetter from Joanne Lewers, Counsel to Rx-360, to Donald S. Clark, Secretary of the\\nCommission, requesting an FTC staff Advisory Opinion (July 26, 2010).\\n1\\n\\n\\x0cmembers of the biotech and pharmaceutical industries and incorporated in the Commonwealth of\\nPennsylvania. Its mission, as you describe it, is to protect patient safety by assuring the quality\\nand safety of the supply chain, including the authenticity of materials within the supply chain.\\nAccording to your request letter, globalization of distribution for both drug components\\xe2\\x80\\x94\\nsuch as raw materials, active pharmaceutical ingredients (\\xe2\\x80\\x9cAPIs\\xe2\\x80\\x9d), and excipient ingredients\\xe2\\x80\\x94\\nand finished products has provided opportunities for the introduction of counterfeited,\\nadulterated, and contaminated materials. In turn, the growth and globalization of the\\npharmaceutical supply chain presents a challenge for manufacturers to monitor the quality and\\nsafety of production at their supplier sites, which for any given drug manufacturer may number in\\nthe hundreds or even thousands around the world.\\nYou state that FDA regulations and guidance require pharmaceutical manufacturers either\\nto perform on-site audits of suppliers or to test all lots of components shipped to a manufacturer\\nto ensure that suppliers meet the necessary standards for providing safe, high-quality materials.\\nAudits may be performed by a pharmaceutical manufacturer\\xe2\\x80\\x99s in-house auditors or by third-party\\nauditors hired by the pharmaceutical manufacturer. These audits focus on the quality, safety, and\\nauthenticity of ingredients in the pharmaceutical supply chain; they are not, and should be\\ndistinguished from, financial audits.\\nWe understand that primary responsibility for ensuring the quality and safety of\\npharmaceutical components rests with the finished product manufacturers. In this regard, drug\\nmanufacturers follow a risk-based approach to auditing, meaning that sites generally are audited\\nonce every several years. Sites that are deemed a \\xe2\\x80\\x9clow risk\\xe2\\x80\\x9d may be audited less often. Some\\nsuppliers, however, may receive a multitude of requests from finished product manufacturers to\\nconduct audits, many of which may be duplicative. As a result, some suppliers may spend\\nsignificant effort and resources making their facilities available for audits of facilities and\\nprocesses that may have only recently been examined by other manufacturers.\\nYou state that Rx-360 was formed in 2009 to provide a more cost-effective means of\\nconducting audits and using audit data. You further state that membership in Rx-360 is open to\\nany entity whose activities relate to the research, development, or manufacture of pharmaceutical\\nor biotechnology products. These include research-based pharmaceutical companies, generic\\npharmaceutical companies, biotechnology companies, and suppliers of ingredients, components,\\nand services to the pharmaceutical and biotechnology industries. Auditors and consultants are\\npermitted to participate in some Rx-360 Working Groups as \\xe2\\x80\\x9cObservers,\\xe2\\x80\\x9d assisting in the\\ndevelopment of Rx-360 standards. To avoid conflicts of interest, they will not be permitted to\\nparticipate in some other activities, such as the Auditor Qualification Working Group, which will\\nselect auditors for assignments. 2\\n\\n2\\n\\nRepresentations made by Joanne Lewers, Counsel to Rx-360, via e-mail to Theodore\\nGebhard (August 10, 2010).\\n2\\n\\n\\x0cAccording to your request letter, Rx-360 proposes to:\\no Share publicly-available information on proposed or new legislation and\\nregulation that impacts the pharmaceutical supply chain;\\no Share publicly-available information on counterfeits, cargo thefts, and adulterated\\nproducts in the pharmaceutical supply chain;\\no Develop voluntary standards for assuring the quality, safety, and authenticity of\\nsupplies and suppliers;\\no Develop and implement audit standards and audit training and certification\\nprograms;\\no Create or obtain the infrastructure necessary to share data regarding quality,\\nsafety, and authenticity of supplies and suppliers that could adversely impact\\npatient health or welfare; and\\no Fund the further development of new technologies for securing and detecting\\nadulteration in the supply chain.\\nYou state that these activities will require the sharing of information already within the\\npublic domain. But you further state that the activities will also require the sharing of certain\\nnon-public information\\xe2\\x80\\x94subject to certain confidentiality obligations (summarized below).\\nThus, Rx-360 will become a clearinghouse for both public and non-public information related to\\nthe global pharmaceutical supply chain.\\nThe Proposed Rx-360 Audit Programs\\nRx-360 intends to implement two audit programs. The Rx-360 Audit Sharing Program\\nwill allow Rx-360 members to share existing supplier quality and safety audits conducted by\\nRx-360 members or on their behalf. The Rx-360 Joint Auditing Program will allow Rx-360\\nmembers to conduct joint quality audits of pharmaceutical suppliers going forward.\\n(1) Rx-360 Audit Sharing Program\\nWe understand that participation in the Rx-360 Audit Sharing Program is entirely\\nvoluntary. Existing audit reports will be shared only following submission of the audit report to\\nRx-360 by the audit sponsor and with the consent of the audited supplier (the \\xe2\\x80\\x9cauditee\\xe2\\x80\\x9d).\\nProgram participants will be required to execute a confidentiality agreement with Rx-360 to\\nprotect each audited supplier from unwarranted disclosure of its confidential and proprietary\\ninformation. You have included a copy of that agreement in Appendix C of your request letter.\\nFurther, each existing audit report will be redacted by the auditee to protect trade secrets,\\nconfidential business information, and other competitively sensitive information. Redaction will\\nfollow the Rx-360 audit sharing redaction policy as set out in Appendix D to your request letter.\\nThe redacted reports will then be provided to the Rx-360 Secretariat. Once the Secretariat\\ndetermines that the report is appropriately redacted, the Secretariat will enter the audit report into\\n3\\n\\n\\x0ca secure database and set access permissions so that only Rx-360 members authorized by the\\nauditee can view the report. The report will be blinded as to audit sponsor, and there will be no\\nway for an Rx-360 member to identify which other members have been given access to the\\nreport. Audit reports will remain accessible to authorized members for up to 48 months from the\\ndate of the audit. At present, the duties of the Secretariat are performed by outside legal counsel.\\nYou state that the redacted audit reports may be used by those permitted access to help\\nmake unilateral decisions about which suppliers to select. This process is similar to what many\\ncompanies now accomplish through use of vendor questionnaires.\\n(2) Rx-360 Joint Auditing Program\\nWe understand that under the Rx-360 Joint Auditing Program, one or more Rx-360\\nmembers would be able to request that the Consortium sponsor the audit of a particular supplier.\\nYou describe the procedures for development and execution of audit plans in your request letter\\nand appendices, especially Appendices G and H, and other correspondence. In brief, you explain\\nthat an audit includes meetings with auditee management and other pertinent personnel, on-site\\nobservation of the auditee\\xe2\\x80\\x99s facilities and operations, and review of the auditee\\xe2\\x80\\x99s records and\\nprocedures. You further state that an audit focuses on such things as materials controls and\\nsupply chain security, calibration and validation of critical equipment, methods, and processes,\\nmanufacturing processes, and documentation and records systems. 3\\nYou state that the audit process begins when an individual Rx-360 member submits a\\nrequest to the Secretariat for a particular audit to be conducted. The Secretariat then surveys the\\nRx-360 membership to determine whether other members want to act as joint sponsors of the\\naudit. The identity of the original requesting sponsor and other participating sponsors initially\\nwould be known only to the Secretariat. The target supplier would then be contacted to request\\nan audit. At that time, the names of the requesting firms would be disclosed to the supplier. The\\nsupplier may either agree or decline to be audited. The supplier may also exclude any requesting\\ncompany from participating as a joint sponsor.\\nAccording to your letter, a third-party auditing firm would be engaged to conduct the\\naudit. The third-party auditor will be selected on the basis of objective minimum requirements.\\nThese selection standards would include, for example, an auditor\\xe2\\x80\\x99s prior experience, knowledge\\nof pertinent regulatory and best-practices requirements, and ability to communicate in written\\nand spoken English. Other minimum criteria are set out in Appendix F. The services agreement\\nwith the auditor will require that, among other things, the auditor maintain the confidentiality of\\ninformation learned in the course of performing services. The identity of each member\\ninterested in auditing a particular supplier would not be disclosed to other companies interested\\nin auditing that supplier.\\nWe understand that after conducting the audit, the auditor will categorize each of its\\n\\n3\\n\\nRepresentations made by Joanne Lewers, Counsel to Rx-360, via e-mail to Theodore\\nGebhard (August 11, 2010).\\n4\\n\\n\\x0cobservations as either \\xe2\\x80\\x9ccritical\\xe2\\x80\\x9d or \\xe2\\x80\\x9cother.\\xe2\\x80\\x9d A critical observation, as defined by Rx-360,\\nindicates a system failure that has produced or creates a significant risk of producing a product\\nthat is harmful to consumers or that may adversely affect the safety, identity, strength, or purity\\nof the product. You explain in your letter that critical observations require immediate corrective\\naction by the supplier, and will be immediately reported to the auditee and the audit sponsors\\xe2\\x80\\x94\\neven prior to issuance of a draft audit report.\\nFollowing an oral review of its findings with the supplier, the auditor will prepare a draft\\naudit report for review by the audit sponsors. The auditor will send the draft audit report to the\\nSecretariat, who in turn will forward a copy to each of the audit sponsors. You represent that to\\nensure fairness, the auditee will be permitted to contest the accuracy of any observations in the\\ndraft audit report, including critical observations. Resolution of disputes in this regard will be\\nmade by a decision of the majority of the joint sponsors of the audit. Those decisions will also\\ndetermine what is ultimately included in the final audit report and posted into the Rx-360\\ndatabase.\\nYou state that if the audit report identifies any critical observations, the Rx-360\\nSecretariat will choose a \\xe2\\x80\\x9clead sponsor\\xe2\\x80\\x9d to follow-up on implementation of corrective actions\\nwith the audited supplier. The lead sponsor will report its findings concerning corrective action\\nto the Secretariat, who in turn will report them to each of the other sponsors. Notwithstanding\\nthe above, Rx-360 will not approve or disqualify any supplier based on the findings of a joint\\naudit. Instead, each Rx-360 member that participates in a joint audit will independently utilize\\nthe audit findings. Each sponsor retains the right to decide on its own whether an observation\\nhas been properly classified as \\xe2\\x80\\x9ccritical.\\xe2\\x80\\x9d And each individual sponsor will be free to pursue\\ndirectly with the supplier any corrective actions it deems necessary.\\nYou explain that, at all times, the auditee will determine which Rx-360 members may\\nobtain access to the audit data. The auditee even may deny access to the audit report to one or\\nmore of the joint sponsors\\xe2\\x80\\x94an outcome considered unlikely except where the auditee\\ndetermines that a joint sponsor is to some extent a competitor of the auditee. Once the final audit\\nis completed and posted on the Rx-360 database, other members of Rx-360 will be able to\\npurchase access to it, again provided the auditee agrees to allow access to such companies. We\\nunderstand, however, that other suppliers will not have access to an audited supplier\\xe2\\x80\\x99s report.\\nYou also state that the Rx-360 programs are not the only means by which audits will be\\nconducted going forward. Instead, the Rx-360 programs are merely options for manufacturers to\\nconsider as part of their audit process. For example, members retain the option to conduct audits\\noutside of the Rx-360 program framework.\\nYou submit that none of the information that will be shared relates to costs or prices.\\nFurthermore, as a safeguard to ensure that there is no sharing of competitively significant\\ninformation, the Rx-360 Secretariat will review audit reports before they are shared to affirm that\\nany information regarding costs, product specifications, quantities, and any other information\\nthat may be considered competitively significant has been redacted from the report.\\n\\n5\\n\\n\\x0cFinally, you state that the Rx-360 Joint Auditing Program is expected to enable\\nmanufacturers and suppliers to achieve efficiencies by reducing costly, duplicative, and\\ndisruptive audits at common suppliers. These efficiencies, in turn, will enable manufacturers to\\nfocus their auditing resources on (1) other suppliers that produce product-specific components,\\n(2) new suppliers, and (3) suppliers that the manufacturer may not have previously been able to\\naudit in the past to the desired frequency. Suppliers also may enjoy cost savings insofar as the\\nnumber of on-site audits of their facilities is reduced.\\nAnalysis\\nThe Rx-360 audit programs feature the sharing of information among members, some or\\nall of whom may be competitors. 4 The exchange of competitively significant information among\\ncompetitors may facilitate anticompetitive ends, such as improving the ability of rivals to reach a\\nconsensus to limit competition. Group behavior by downstream firms, as here, also raises the\\npossibility of anticompetitive concerted action on the part of manufacturers against one or more\\nupstream suppliers. It is appropriate therefore to consider the risk that Rx-360\\xe2\\x80\\x99s proposed audit\\nprograms pose in respect to these possibilities. In so doing, we conclude that they do not raise\\nsignificant risk.\\nUnder the antitrust laws, the legality of information exchanges among competitors is\\ngoverned by the rule of reason. The rule of reason balances the potential for competitive harm\\nagainst efficiencies or other procompetitive effects, if any, that the information exchange\\ngenerates. 5 Among other factors, a rule of reason analysis may inquire into market structure and\\nthe nature of the exchanged information to assess whether the exchange is likely to reduce the\\nvigor of competition. 6 A rule of reason analysis, however, need not always go so far as to\\n\\n4\\n\\nWithout first performing a formal market definition exercise it is not possible to know\\nwhether or to what extent Rx-360 members are actual competitors in one or more relevant U.S.\\nmarkets. For purposes of this analysis, we assume that the members are competitors, at least\\nrespecting some relevant U.S. pharmaceutical markets.\\n5\\n\\nUnited States v. United States Gypsum Co., 438 U.S. 422, 441 n.16 (1978) (information\\nexchanges among competitors do not always produce anticompetitive effects, but can also have\\nprocompetitive consequences by increasing efficiency. Thus, such exchanges\\xe2\\x80\\x94when not\\nevidence of actual agreements to limit competition\\xe2\\x80\\x94should be subject to the rule of reason).\\n6\\n\\nId. See also United States v. Container Corp., 393 U.S. 333 (1969), where the Supreme\\nCourt condemned a price exchange agreement, without detailed proof of actual market effects,\\nlargely because of the nature of the information exchanged, the structure of the market, and the\\nabsence of a benign justification for the price information exchange.\\nThe Bureau\\xe2\\x80\\x99s analytical framework for evaluating agreements among competitors to\\nachieve joint goals is set out in the FTC\/DOJ Guidelines for Collaborations Among Competitors\\n(2000). Specifically, except where an agreement among competitors is per se unlawful, the\\nagencies ordinarily will not challenge collaborations where the effect is competitively benign or,\\non balance, procompetitive.\\n\\n6\\n\\n\\x0crequire a full scale market definition exercise. 7 Rather, as the Commission\\xe2\\x80\\x99s Polygram opinion\\nestablishes, under some circumstances it is appropriate to perform a \\xe2\\x80\\x9ctruncated rule of reason\\xe2\\x80\\x9d or\\n\\xe2\\x80\\x9cquick look\\xe2\\x80\\x9d in which the Commission considers the capacity of the conduct at issue to facilitate\\ncompetitive harm against its tendency or ability to further plausible and cognizable\\nprocompetitive ends, such as reducing costs. 8\\nBased on the information that you have provided us and as summarized above, it does not\\nappear that the Rx-360 audit programs involve practices of the kind that appear likely, even\\nabsent an efficiency justification, to restrict or facilitate restriction of competition and decrease\\noutput in any relevant market. To the contrary, the shared information may permit Rx-360\\nmembers to achieve cognizable efficiencies redounding to the public\\xe2\\x80\\x99s benefit. Our assessment\\nis based on a number of factors.\\nFirst, the goals of the audit programs do not appear to be either directly or indirectly\\nanticompetitive. Neither do they require exchanges of information about potentially\\ncompetitively significant parameters such as price, output rates, costs, or capacity. 9 Given the\\nabsence of information exchanges respecting a significant competitive parameter, Rx-360\\nmember collaborative efforts are not likely to facilitate marketplace coordination that limits\\ncompetitive vigor. 10\\nSecond, your procedures appear to contain several safeguards that further lessen risks of\\ncompetitive harm. For example, the identity of audit sponsors will be protected, even from each\\nother; audit reports will be redacted to exclude trade secrets, confidential business information,\\nand the audit sponsor\\xe2\\x80\\x99s name; the Rx-360 database will contain only those audit reports that both\\nthe audit sponsor(s) and the auditee have agreed to disclose to members on an individual basis;\\neach Rx-360 member that participates in a joint audit will independently utilize the audit\\nfindings; participation in Rx-360 is voluntary, and all members retain the option to sponsor\\naudits of suppliers independently of Rx-360; and outside legal counsel to Rx-360 will monitor,\\non an ongoing basis, members\\xe2\\x80\\x99 compliance with Rx-360\\xe2\\x80\\x99s antitrust \\xe2\\x80\\x9cPolicy & Guidance,\\xe2\\x80\\x9d a copy\\nof which you have provided with your request in Appendix B. Each of these features cabins the\\n\\n7\\n\\nThe FTC\/DOJ Horizontal Merger Guidelines provide a thorough description of a full\\nscale market definition exercise. See Horizontal Merger Guidelines: U.S. Department of Justice\\nand Federal Trade Commission (August 19, 2010),\\nhttp:\/\/www.ftc.gov\/os\/2010\/08\/100819hmg.pdf\\n8\\n\\nPolygram Holdings, Inc. 136 F.T.C. Decisions 310 (2003) (guided by the Supreme\\nCourt\\xe2\\x80\\x99s decision in California Dental Ass\\xe2\\x80\\x99n v. FTC, 526 U.S. 756 (1999)).\\n\\n9\\n\\nYour request letter states that neither the Audit Sharing Program nor the Joint Audit\\nProgram will require the obtaining or sharing of competitively significant data such as prices,\\noutput rates, costs, or other dimensions on which Rx-360 members compete in the marketplace.\\n10\\n\\nSee Section 3 of the Collaboration Guidelines, esp. section 3.31(b).\\n7\\n\\n\\x0caudit programs in ways that appear to reduce members\\xe2\\x80\\x99 ability to use the programs for\\nanticompetitive ends. 11\\nThird, auditees appear to be protected from possible concerted misuse of the audit\\nprograms. For example, as previously noted, audit reports are not accessible to any given\\nRx-360 member from the Rx-360 database unless the auditee has provided its approval of release\\nof the audit report to that member. Additionally, the audits themselves are conducted by thirdparty audit firms selected on the basis of objective standards related to an auditor\\xe2\\x80\\x99s capacity to\\nperform quality and safety audits. After an audit is completed, Rx-360 will have no role in\\napproving or disqualifying any supplier based on an audit\\xe2\\x80\\x99s results; rather, each Rx-360 member\\nwill render its own judgment on the audit report and determine whether the auditee needs to\\nmake adjustments in order to maintain a supply relationship with the member.\\nFourth and finally, there appear to be cognizable cost-savings associated with the audit\\nprograms, as well as consumer benefits. It appears that the Joint Audit Program will enable\\nmanufacturers to reduce the costs of duplicative audits at common suppliers and more\\nproductively allocate audit resources. For example, the Joint Audit Programs may allow\\nindividual manufacturers to refocus their resources on suppliers that produce product-specific\\ncomponents for those individual manufacturers. Suppliers too could enjoy cost savings by dint\\nof fewer independently-sponsored on-site audits. These savings, or at least some portion of\\nthem, may be passed through the pharmaceutical supply chain to consumers. In addition,\\nconsumers might be better assured of the quality and safety of the components and processes\\nused to manufacture pharmaceuticals.\\nConclusion\\nOn the basis of these features, FTC staff concludes that the Rx-360 audit programs likely\\ndo not raise significant competitive concerns. Staff believes that the nature of the shared data is\\nlikely competitively benign and, in any event, the programs are sufficiently cabined in other\\nrespects to eliminate substantially any risk that the shared data would facilitate anticompetitive\\neffects in either output or input markets. The programs appear, moreover, to have important,\\ncognizable cost-saving and safety enhancing features. For these reasons, BC staff has no present\\nintention to recommend that the Commission undertake an enforcement action against the\\nRx-360 audit programs upon their implementation. This opinion of FTC staff is predicated on\\nthe accuracy of the information that you have provided to us. In accordance with normal\\npractice, the Bureau of Competition reserves the right to reconsider the questions involved and,\\nwith notice to the requesting party, to rescind the opinion if actual conduct respecting the Rx-360\\naudit programs proves to be anticompetitive in any purpose or effect or if facts change\\nsignificantly in the future such that it would be in the public interest to bring an enforcement\\naction.\\n\\n11\\n\\nFor example, retention of independent decision-making lessens concerns about the\\npotential for competitive harm. See esp. section 3.34 of the Collaboration Guidelines.\\n8\\n\\n\\x0cThe views of FTC staff contained herein are provided as authorized by Rule 1.1(b) of the\\nCommission's Rules of Practice, 16 C.F.R. ' 1.1(b). Under Commission Rule 1.3(c), 16 C.F.R. '\\n1.3(c), the Commission is not bound by this staff opinion.\\nSincerely,\\n\\nMichael Bloom\\nAssistant Director for Policy & Coordination\\nBureau of Competition\\nFederal Trade Commission\\n600 Pennsylvania Ave. N.W.\\nWashington, D.C. 20580\\n\\n9\\n\\n\\x0c\"","created_timestamp":"September 15, 2010","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/rx-360-international-pharmaceutical-supply-chain-consortium\/100916bloomletter.pdf"}
-{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nBureau of Competition\\n\\nAPR - 9 2010\\n\\nMichael Bloom\\nAssistant Director for Policy & Coordination\\nDirect Dial\\n(202) 326-2475\\n\\nKelly Hnatt\\nWillkie Farr & Gallagher LLP\\n787 Seventh Ave.\\nNew York, NY 10019-6069\\nDear Ms. Hnatt:\\nThis letter responds to your request for a staff Advisory Opinion concerning the law\\nenforcement intentions of the Federal Trade Commission\\'s (\"FTC\" or the \"Commission\")\\nBureau of Competition (\"BC\") with respect to the American Institute of Certified Public\\nAccountants\\' (\"AICPA\") proposed expansion of its \"independence rule.\"t For the reasons\\ndiscussed below, FTC staffhas no present intention to recommend to the FTC that it challenge\\nadoption of the expanded independence rule as it has been described to staff. This present\\nintention relies entirely on a review of the written materials you have provided to FTC staff,\\nother representations you have made, and an interview with Securities and Exchange\\nCommission (\"SEC\") officials to whom you directed FTC staff. Should there be information\\nthat we are unaware of that qualifies, modifies, or contradicts any of this information or calls in\\nto question the conclusions we have drawn from it, or should the independence rule or its\\nimplementation change in the future, we may change our law enforcement recommendation\\naccordingly.\\nSignificantly, we cannot conclude, on the facts before us, that competitive concerns with\\nrespect to AICP A\\'s expansion of its independence rule can be wholly ruled out. Application of\\nthe expanded independence rule could, at least in principle, produce anticompetitive effects in\\nsome geographic markets, and facts necessary to evaluate that possibility are lacking.\\nNonetheless, we find that the aggregate benefits of the independence rule expansion are likely to\\nbe substantial, while the anticompetitive consequences, if any, are speculative and likely to be\\nlocalized. Thus, our present intention is not to recommend a challenge to the expansion of the\\nindependence rule; however, we will be attentive to any customer complaints to the effect that\\nimplementation of the expanded rule by a specific AICP A-member network has\\nanticompetitively limited available supply of accounting services or otherwise caused\\nanti competitive outcomes. Ifwe receive well-founded complaints of that kind, they could result\\nin our recommendation to the Commission to challenge the lawfulness of specific AICP Amember networks or our reconsideration of our decision not to recommend that the Commission\\nchallenge the expanded AICP A independence rule.\\n\\n1.\\n\\nLetter from Kelly M. Hnatt to Donald S. Clark requesting an FTC staff Advisory Opinion\\n(April 2, 2010). (\"Hnatt Letter\")\\n\\n\\x0cSummary of Representations and Written Materials\\nBased on the representations you have made and the written materials you have provided,\\nwe understand the following to be accurate:\\n\\xe2\\x80\\xa2\\n\\nAICPA is a national, professional organization of certified public accountants, with\\napproximately 350,000 members.2 Nearly forty percent of AICPA\\'s members perform\\naudit services for clients. 3 Membership in AICPA is voluntary.4\\n\\n\\xe2\\x80\\xa2\\n\\nAICP A has developed a Code of Professional Conduct (\"Code\") that governs all AICP A\\nmembers. 5 The Code is interpreted and enforced by AICPA\\'s Professional Ethics\\nExecutive Committee (\"PEEC\"t A member\\'s violation of the Code may result in\\nexpulsion from the organization.?\\n\\n\\xe2\\x80\\xa2\\n\\nThe Code addresses various ethics principles relevant to the accounting profession,\\nincluding: independence, integrity, and objectivity; compliance with applicable\\nstandards; responsibilities to clients; and other matters affecting the reputation of the\\nprofession. 8\\n\\n\\xe2\\x80\\xa2\\n\\nSome of AICPA\\'s members have formed \"networks.,,9 A network is a collaborative\\nenterprise that, among other things, can assist small network member-firms to achieve\\nsome efficiencies of size and scope. 10\\n\\n\\xe2\\x80\\xa2\\n\\nAccounting networks exist in a variety of forms. 11 PEEC defines a network as an\\nassociation of entities that includes one or more firms that cooperate for the purpose of\\nenhancing the firms\\' capabilities to provide professional services and whose members\\npossess one or more of the following characteristics: common brand name; common\\n\\n2.\\n\\nHnatt Letter at 2.\\n\\n3.\\n\\nId.\\n\\n4.\\n\\nId.\\n\\n5.\\n\\nId.\\n\\n6.\\n\\nId.\\n\\n7.\\n\\nId.\\n\\n8.\\n\\nId.\\n\\n9.\\n\\nId. at 4.\\n\\n10.\\n\\nId.\\n\\nII.\\n\\nId.\\n2\\n\\n\\x0ccontrol; sharing of profits or costs; common business strategy; the sharing of significant\\nprofessional resources; and common quality control policies and procedures. 12 The\\nextent of economic integration across accounting networks can vary significantly. 13\\n\\xe2\\x80\\xa2\\n\\nThe business basis for the formation of networks is to enable AICPA members to\\ncompete more effectively by enhancing their marketing efforts and allowing them to gain\\naccess to new markets; improving the quality and efficiency of services by leveraging the\\nprofessional skills of other firms; and providing a referral network for clients that need\\nnon-attest services that their auditors cannot provide. 14 The formation of networks\\npermits smaller and medium-sized firms to compete for the business of larger\\ncompanies. 15 This business is currently dominated by the \"Big Four\" accounting firms. 16\\n\\n\\xe2\\x80\\xa2\\n\\nUnder AICPA\\'s Code, members are obligated to adhere to \"independence\" standards. 1?\\nIndependence has two components: independence of mind (also referred to as\\nindependence in fact), and independence in appearance. 18 The purpose of the\\nindependence standard is to assure that a CPA performing an audit or other attest service\\nacts with objectivity and professional skepticism when performing that service.\\nIndependence is therefore fundamental to the reliability of auditors\\' reports and to\\ninvestors\\' confidence in financial statements. 19 Reliable financial statements reduce\\ninvestor, prospective creditor, and others\\' risk with respect to evaluating the financial\\nhealth of business entities. 20\\n\\n\\xe2\\x80\\xa2\\n\\nAICPA members perform many professional services, including audit services. 21 An\\naudit of a client\\'s financial statements concludes with an opinion by the auditor on the\\nfairness of the client\\'s financial statements, in all material respects, with regard to the\\nclient\\'s financial position, results of operations, and cash flows. 22 The auditor opines\\n\\n12.\\n\\nPEEC Interpretation No. 101-17, \"Networks and Network Firms.\" See Exhibit D.\\n\\n13.\\n\\nHnatt Letter at 4.\\n\\n14.\\n\\nId. at 4.\\n\\n15.\\n\\nId.\\n\\n16.\\n\\nId.\\n\\n17.\\n\\nId. at 2.\\n\\n18.\\n\\nId. at 3.\\n\\n19.\\n\\nId.\\n\\n20.\\n\\nId. at 9.\\n\\n21.\\n\\nId. at 4.\\n\\n22.\\n\\nId. at 3.\\n\\n3\\n\\n\\x0cwhether the client\\'s financial statements are presented in conformity with generally\\naccepted accounting principles (\"GAAP,,).23 Audits are conducted in accordance with\\ngenerally accepted auditing standards (\"GAAS,,).24\\n\\xe2\\x80\\xa2\\n\\nAICPA members also perform non-audit services. 25 Non-audit services may include,\\namong other things, performing management functions; making management decisions;\\npreparing source documents used to generate the client\\'s financial statements;\\nauthorizing, executing, or consummating transactions; exercising authority on behalf of\\nthe client; having custody of client assets; serving as a director or officer of the client;\\nbeing a lender to the client; supervising client employees; and performing tax,\\nbookkeeping, payroll, or consulting services. 26\\n\\n\\xe2\\x80\\xa2\\n\\nAdherence to AICPA\\'s current independence rules generally requires that.a member\\nperforming audit services for a given client not have performed certain non-audit services\\nfor that client during the period covered by the financial statements and during the period\\nof the professional engagement (e.g., when performing the audit).27 Prohibited non-audit\\nservices include performing management functions or making management decisions for\\nthe client; preparation or review of client financial statements or other documents that\\nwould be inputs to a subsequent audit; authorizing, executing, or consummating\\ntransactions on behalf of the client; exercising authority on behalf of the client; having\\ncustody of client assets; serving as a director or officer of the client; being a non-financial\\ninstitution lender to the client; and supervising client employees. 28\\n\\n\\xe2\\x80\\xa2\\n\\nIn general, a failure of independence due to an auditor\\'s furnishing prohibited non-audit\\nservices to a client during the period covered by the financial statement or during the\\naudit cannot be purged. 29 If, however, a failure of independence would result solely from\\na prospective auditor having a financial interest in a client (e.g., where the prospective\\nauditor is an investor in or creditor of the client), the independence rule would be\\nsatisfied if the prospective auditor severed all financial interests in the client prior to\\ncommencement of the audit. 30\\n\\n23.\\n\\nId. at 3.\\n\\n24.\\n\\nId.\\n\\n25.\\n\\nId. at 4.\\n\\n26.\\n\\nId.\\n\\n27.\\n\\nId. at 6.\\n\\n28.\\n\\nId. at 6-7.\\n\\n29.\\n\\nId. at 8.\\n\\n30.\\n\\nId.\\n\\n4\\n\\n\\x0c\\xe2\\x80\\xa2\\n\\nProvided that the auditor complies with certain general requirements, the auditor may,\\nunder AICPA\\'s independence rule, provide other non-audit services such as performing\\ntax, bookkeeping, payroll, or consulting?!\\n\\n\\xe2\\x80\\xa2\\n\\nAICP A intends to amend its Code so as to apply the independence rule to member\\nnetworks. 32 As amended, the Code would require that each member firm of an\\naccounting network be independent of financial statement audit and review clients of the\\nother firms in the network. 33 Thus, a network member may provide audit or review\\nservices for a client only insofar as other network members are not providing, and did not\\nprovide, during the period covering the financial statements, related, prohibited non-audit\\nservices for that client; and may provide prohibited non-audit services for a client only\\ninsofar as no other network member is then providing audit or review services. 34 As\\namended, the independence rule is intended to address an ethical issue arising from the\\nincreasing prevalence of accounting networks, ensuring the public that a firm providing\\nan audit or review of a client\\'s financial statements will make required judgments in an\\nobjective manner without regard to how its judgments will affect the other network\\nmembers. 35\\n\\n\\xe2\\x80\\xa2\\n\\nThe proposed amended AICPA independence rule does not restrict any network member\\nfrom competing with any other network member in the offering of audit or review\\nservices where no network member is providing, or recently has provided related,\\nprohibited non-audit services to the same client; nor does it restrict any network member\\nfrom competing with any other member in the offering of non-audit services where no\\nnetwork member is then providing audit or review services. 36\\n\\n\\xe2\\x80\\xa2\\n\\nBefore taking on an audit or review engagement, a network member would have to learn\\nfrom other network members or the prospective client whether any other network\\nmember has a prohibited relationship with the prospective client. 37 Thus, prior to\\nproviding audit or review services to a new client, a network member would have to\\n\\n31.\\n\\nId. at 7-8.\\n\\n32.\\n\\nId. at 5.\\n\\n33.\\n\\nId.\\n\\n34.\\nId. \"Related prohibited non-audit services\" refers to prohibited non-audit services upon\\nwhich a provider of audit services would or might have to rely in the provision of audit services\\nin accordance with GAAS.\\n35.\\n\\nId.\\n\\n36.\\n\\nId. at 6-8.\\n\\n37.\\n\\n!d. at 8.\\n\\n5\\n\\n\\x0cdetennine that no other network member was providing, or had recently provided related,\\nprohibited non-audit services to that client; and prior to providing non-audit services to a\\nnew client, a network member would have to detennine whether any other member was\\nthen providing audit or review services to that client. 38\\n\\xe2\\x80\\xa2\\n\\nAICPA intends to issue guidance to its members urging them, in evaluating\\nindependence, to seek needed infonnation from prospective clients to the greatest extent\\nreasonably possible, and, where needed infonnation can be obtained only from other\\nnetwork finns, to ask only whether the other network finns had potentially prohibited\\nrelationships with, or provided potentially prohibited non-audit services to, the\\nprospective client. 39 The rule would not require the exchange among potentially\\ncompeting finns of any infonnation regarding a network member\\'s bids, bidding\\nstrategy, capacity to bid, pricing or pricing plans, or other competitively sensitive\\ninfonnation. 40\\n\\n\\xe2\\x80\\xa2\\n\\nThe SEC requires that publicly-traded companies file audited financial statements with\\nthe agency that have been prepared by an accounting finn that adheres to SEC\\nindependence rules. 41 The SEC also requires that broker\/dealers submit audited\\nstatements prepared by accounting finns that adhere to the SEC independence rules,\\nregardless of whether the broker\/dealer is publicly traded. 42\\n\\n\\xe2\\x80\\xa2\\n\\nThe SEC has detennined that, to be effective, the audits filed with it must be independent\\nboth in fact and in appearance. 43 The SEC independence rule thus extends to all offices\\nof an individual accounting finn, any subordinate units, and any affiliated entities,\\nincluding any joint ventures or networks, including networks as defined by PEEC, to\\nwhich the accounting finn may belong. 44\\n\\n\\xe2\\x80\\xa2\\n\\nAICP A seeks an opinion from FTC staff as to whether the application of the\\nindependence rule to networks raises significant antitrust concerns or would result in a\\n\\n38.\\n\\nId.\\n\\n39.\\n\\nId. See also Exhibit F to Hnatt Letter.\\n\\n40.\\n\\nId. See also Exhibit F to Hnatt Letter.\\n\\n41.\\n\\nInterview with SEC officials, January 20,2010.\\n\\n42.\\n\\nId.\\n\\n43.\\n\\nId.\\n\\n44.\\n\\nId.\\n6\\n\\n\\x0cstaff recommendation to the Commission that the application of the rule in such a manner\\nbe challenged. 45\\n\\nBureau of Competition Analysis\\nThe amended Code is aimed at the preservation of independence in the performance of\\naudit services by a network member. The antitrust risks, if any, that may arise from blanket\\nimplementation of the amended Code across all AICP A member networks, regardless of the\\ndegree of integration or limits on competition that may be inherent in any given individual\\nnetwork, concern the degree to which the rule potentially further limits competition at the\\nmargm.\\nAICPA members are already subject to AICPA\\'s independence rule on an individual\\nbasis. They are also subject to compliance with the SEC\\'s independence rule, both individually\\nand as part of any networks, to the extent they perform audits for publically-traded companies\\nand for broker\/dealers that will be filed with the SEC. Thus, were AICPA to amend its\\nindependence rule as proposed, the impact would be felt on accounting services for nonpublicly-traded businesses and other entities that are not required to file audited financial\\nstatements with the SEC.\\nFor these firms, application of the rule may reduce the number of AICPA members that\\nwould be able to bid for contemporaneous audit and prohibited non-audit work. Specifically,\\nonce the AICPA independence rule is expanded to cover networks, the individual members of\\nthat network may not compete for the audit work of a business during the time surrounding the\\nprovision of prohibited non-audit services to that same business by any single member of the\\nnetwork; nor may the individual members compete for the prohibited non-audit work of a\\nbusiness while any single member of the network is engaged to perform audit work for that same\\nbusiness. Such a situation could potentially significantly reduce competition in localized\\ngeographic markets in which there are few, if any, accounting competitors outside of the AICPA\\nnetwork. As a result, some local privately-held businesses seeking both audit and prohibited\\nnon-audit services could face higher bids because of the expanded independence rule.\\nAs a general matter, the FTC recognizes that collaboration among competitors can be\\npro competitive when it results in cost-saving efficiencies or creates a new competitor.\\nCollaboration, however, also may be anticompetitive if it eliminates one or more competitors or\\nreduces incentives to compete. The joint FTCIDOJ Antitrust Guidelines for Collaborations\\nAmong Competitors provide the analytical framework for determining the net competitive\\neffects of any given joint venture. 46\\n\\n45.\\n\\nHnatt Letter at 1.\\n\\n46.\\nSee FTCIDOJ, Antitrust Guidelines for Collaboration Among Competitors (April 2000).\\nSpecifically, except where an agreement among competitors is per se unlawful, the agencies\\napply the \"rule of reason\" to assess competitor collaborations. In so doing, the agencies weigh\\nany procompetitive effects of the collaboration against the potential for competitive harm. The\\nagencies generally will not challenge collaborations where the net effect is competitively benign\\nor procompetitive. Significantly, the Guidelines do not attempt to divide all collaborations into\\n7\\n\\n\\x0cEven assuming that existing AICPA member networks satisfy the \"rule of reason\" test,\\nimplementation of the expanded independence rule may, at the margin, tip the balance in the\\nother direction. On the facts provided, however, it is not possible to make that determination for\\nall potentially affected geographic markets. The analysis would depend on the number and size\\ndistribution of market participants, as well as on some measure of any integrative efficiencies\\nappertaining to any given network of AICPA members.\\nNonetheless, the potential for net competitive harm arising from expanding the AICPA\\nindependence rule to AICPA networks appears, based on the information presently available, to\\nbe small. 47 Audits of publically-traded companies are already covered by the stricter SEC\\nindependence rule. In addition, significant benefits to the capital markets, even respecting\\ninvestors in non-publicly-traded businesses, can be expected to arise from AICPA\\'s adoption of\\nan expanded independence rule to cover networks. Moreover, additional procompetitive benefits\\ncan be expected to the extent that AICP A networks are better able to compete against larger\\naccounting firms for the business of larger privately-held clients. By contrast, potential\\nanticompetitive consequences are speculative, occurring, if at all, most likely in localized\\ngeographic markets where there may be only a limited number of accounting firms available to\\ncompete for the accounting work of local businesses.\\nNetwork members seeking to comply with the expanded independence rule will need to\\nobtain select information about recent and current engagements and activities of other network\\n\\nprocompetitive or anticompetitive lists. Rather,\\nthe Agencies hope to assist businesses in assessing whether the Agencies will challenge a\\ncompetitor collaboration or any of the agreements of which it is comprised. However,\\nthese Guidelines cannot remove judgment and discretion in antitrust law enforcement.\\nThe Agencies evaluate each case in light of its own facts and apply the analytical\\nframework set forth in these Guidelines reasonable and flexibly.\\nId. at 2 (citations omitted).\\nIn California Dental Ass\\'n v. F.T.C, 526 u.S. 756 (1999), the Court observed that, in the\\n47.\\ncontext of professional services where members of the public may not possess the specialized\\nknowledge to evaluate the quality of provided services, the likelihood of net anti competitive\\neffects arising from ethical codes that otherwise restrict competition is not \"comparably\\nobvious\" relative to restrictions in non-professional services situations. Id. at 771-772. For this\\nreason, the Court held that a \"quick look\" rule-of-reason analysis is inappropriate in these\\ninstances. Id. at 780-781. On the one hand, the Court\\'s opinion suggests that AICPA\\'s\\nexpansion of its independence rule to cover networks may be a proper stand-in for lenders\\'\\n(assumed) inability to evaluate the quality of an audit of a non-publicly-traded business, thus\\nenhancing economic value. On the other hand, the Court\\'s precise holding highlights the\\ndifficulty presented here, namely our inability to do more than render a \"quick look\" judgment\\nabout the likely competitive effects of the expansion of the independence rule, given the\\nunavailability of facts required to assess the likely impact of the expanded independence rule on\\nthe lawfulness of particular networks in specific localized geographic markets.\\n\\n8\\n\\n\\x0cmembers, and they might seek this information from other network members that are their\\npotential competitors. The exchange among competitors of some kinds of information could\\nitself result in anti competitive outcomes in some markets, for example by reducing accounting\\nfirms\\' uncertainty as to the capacity or interest of other network members in competing for new\\nclients. The reduction of uncertainty as to potential rivals\\' bidding intentions may, where only\\none or a few likely viable competitors remain, permit firms to increase bid prices for affected\\naccounting services. The exchange of certain kinds of information among competitors may\\ncause anti competitive outcomes through other mechanisms as well.\\nCompliance with the expanded independence rule, however, will not require network\\nmembers to seek from other network members any information about current or future capacity\\nor bidding intentions. Moreover, in most instances a network member will be able to obtain the\\nlimited information needed to determine whether it may provide audit or prohibited non-audit\\nservices to a prospective client from the prospective client, with little or no risk to competition.\\nAICP A intends to encourage the networks to do so, further reducing any risk of information\\nsharing among network members that harms competition.\\nOn balance, FTC staff has concluded that, although, in principle, there may be instances\\nin which the expansion of the AICPA independence rule to networks reduces competition, the\\nlikelihood that the expanded rule would significantly reduce competition does not appear to be\\nhigh. By contrast, the countervailing benefits of that expansion-in enabling small- and mediumsized accounting firms to increase their effective size and scope to compete for additional\\naccounting work while ensuring the public that their audit work is untainted by auditor selfinterest-appear substantial. On that basis, Commission staff has no present intention to\\nrecommend an enforcement action were AICPA to adopt the expanded rule. Having reached this\\nconclusion, however, we note that its basis rests on incomplete facts respecting the specific\\ngeographic markets in which AICPA member networks do business. Therefore, although we do\\nnot at present intend to pursue further investigation, we also do not intend this Advisory Opinion\\nto be construed as a blanket assessment that the expansion of the rule to networks could not raise\\ncompetition concerns sufficiently great to induce future agency action. If more complete facts\\nabout individual networks come to light, or if the FTC receives specific complaints about higher\\nbidding respecting individual AICPA networks because of the implementation of the expanded\\nindependence rule, our conclusion may change. 48\\n\\nConclusion\\nBased on the above, the Bureau does not intend to recommend a law enforcement action\\nto the FTC at this time.\\nThis letter expresses the current opinion of FTC staff, and is predicated on the accuracy\\nof the information that you have provided to us. In accordance with normal practice, BC\\nreserves the right to reconsider the questions involved and, with notice to the requesting party, to\\nrescind the opinion if actual conduct in compliance with the Code proves to be anticompetitive\\n\\n48.\\nAdditional facts, in this case, does not mean \"changed\" facts. It should also be\\nunderstood that if known facts change, our conclusion could similarly be revised.\\n9\\n\\n\\x0cin any purpose or effect or if facts change significantly in the future such that it would be in the\\npublic interest to bring an enforcement action.\\nThe views of FTC staff contained herein are provided as authorized by Rule 1.1 (b) of the\\nCommission\\'s Rules of Practice, 16 C.F.R. \\xc2\\xa7 1.1 (b). Under Commission Rule 1.3(c), 16 c.F.R. \\xc2\\xa7\\n1.3(c), the FTC is not bound by this staff opinion.\\n\\nAssistant Director for Policy & Coordination\\nBureau of Competition\\nFederal Trade Commission\\n600 Pennsylvania Ave. N.W.\\nWashington, D.C. 20580\\n\\n10\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/proposed-expansion-american-institute-certified-public-accounts-independence-rule\/100409aicpastaffadvisoryopinion.pdf"}
+{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nBureau of Competition\\n\\nAPR - 9 2010\\n\\nMichael Bloom\\nAssistant Director for Policy & Coordination\\nDirect Dial\\n(202) 326-2475\\n\\nKelly Hnatt\\nWillkie Farr & Gallagher LLP\\n787 Seventh Ave.\\nNew York, NY 10019-6069\\nDear Ms. Hnatt:\\nThis letter responds to your request for a staff Advisory Opinion concerning the law\\nenforcement intentions of the Federal Trade Commission\\'s (\"FTC\" or the \"Commission\")\\nBureau of Competition (\"BC\") with respect to the American Institute of Certified Public\\nAccountants\\' (\"AICPA\") proposed expansion of its \"independence rule.\"t For the reasons\\ndiscussed below, FTC staffhas no present intention to recommend to the FTC that it challenge\\nadoption of the expanded independence rule as it has been described to staff. This present\\nintention relies entirely on a review of the written materials you have provided to FTC staff,\\nother representations you have made, and an interview with Securities and Exchange\\nCommission (\"SEC\") officials to whom you directed FTC staff. Should there be information\\nthat we are unaware of that qualifies, modifies, or contradicts any of this information or calls in\\nto question the conclusions we have drawn from it, or should the independence rule or its\\nimplementation change in the future, we may change our law enforcement recommendation\\naccordingly.\\nSignificantly, we cannot conclude, on the facts before us, that competitive concerns with\\nrespect to AICP A\\'s expansion of its independence rule can be wholly ruled out. Application of\\nthe expanded independence rule could, at least in principle, produce anticompetitive effects in\\nsome geographic markets, and facts necessary to evaluate that possibility are lacking.\\nNonetheless, we find that the aggregate benefits of the independence rule expansion are likely to\\nbe substantial, while the anticompetitive consequences, if any, are speculative and likely to be\\nlocalized. Thus, our present intention is not to recommend a challenge to the expansion of the\\nindependence rule; however, we will be attentive to any customer complaints to the effect that\\nimplementation of the expanded rule by a specific AICP A-member network has\\nanticompetitively limited available supply of accounting services or otherwise caused\\nanti competitive outcomes. Ifwe receive well-founded complaints of that kind, they could result\\nin our recommendation to the Commission to challenge the lawfulness of specific AICP Amember networks or our reconsideration of our decision not to recommend that the Commission\\nchallenge the expanded AICP A independence rule.\\n\\n1.\\n\\nLetter from Kelly M. Hnatt to Donald S. Clark requesting an FTC staff Advisory Opinion\\n(April 2, 2010). (\"Hnatt Letter\")\\n\\n\\x0cSummary of Representations and Written Materials\\nBased on the representations you have made and the written materials you have provided,\\nwe understand the following to be accurate:\\n\\xe2\\x80\\xa2\\n\\nAICPA is a national, professional organization of certified public accountants, with\\napproximately 350,000 members.2 Nearly forty percent of AICPA\\'s members perform\\naudit services for clients. 3 Membership in AICPA is voluntary.4\\n\\n\\xe2\\x80\\xa2\\n\\nAICP A has developed a Code of Professional Conduct (\"Code\") that governs all AICP A\\nmembers. 5 The Code is interpreted and enforced by AICPA\\'s Professional Ethics\\nExecutive Committee (\"PEEC\"t A member\\'s violation of the Code may result in\\nexpulsion from the organization.?\\n\\n\\xe2\\x80\\xa2\\n\\nThe Code addresses various ethics principles relevant to the accounting profession,\\nincluding: independence, integrity, and objectivity; compliance with applicable\\nstandards; responsibilities to clients; and other matters affecting the reputation of the\\nprofession. 8\\n\\n\\xe2\\x80\\xa2\\n\\nSome of AICPA\\'s members have formed \"networks.,,9 A network is a collaborative\\nenterprise that, among other things, can assist small network member-firms to achieve\\nsome efficiencies of size and scope. 10\\n\\n\\xe2\\x80\\xa2\\n\\nAccounting networks exist in a variety of forms. 11 PEEC defines a network as an\\nassociation of entities that includes one or more firms that cooperate for the purpose of\\nenhancing the firms\\' capabilities to provide professional services and whose members\\npossess one or more of the following characteristics: common brand name; common\\n\\n2.\\n\\nHnatt Letter at 2.\\n\\n3.\\n\\nId.\\n\\n4.\\n\\nId.\\n\\n5.\\n\\nId.\\n\\n6.\\n\\nId.\\n\\n7.\\n\\nId.\\n\\n8.\\n\\nId.\\n\\n9.\\n\\nId. at 4.\\n\\n10.\\n\\nId.\\n\\nII.\\n\\nId.\\n2\\n\\n\\x0ccontrol; sharing of profits or costs; common business strategy; the sharing of significant\\nprofessional resources; and common quality control policies and procedures. 12 The\\nextent of economic integration across accounting networks can vary significantly. 13\\n\\xe2\\x80\\xa2\\n\\nThe business basis for the formation of networks is to enable AICPA members to\\ncompete more effectively by enhancing their marketing efforts and allowing them to gain\\naccess to new markets; improving the quality and efficiency of services by leveraging the\\nprofessional skills of other firms; and providing a referral network for clients that need\\nnon-attest services that their auditors cannot provide. 14 The formation of networks\\npermits smaller and medium-sized firms to compete for the business of larger\\ncompanies. 15 This business is currently dominated by the \"Big Four\" accounting firms. 16\\n\\n\\xe2\\x80\\xa2\\n\\nUnder AICPA\\'s Code, members are obligated to adhere to \"independence\" standards. 1?\\nIndependence has two components: independence of mind (also referred to as\\nindependence in fact), and independence in appearance. 18 The purpose of the\\nindependence standard is to assure that a CPA performing an audit or other attest service\\nacts with objectivity and professional skepticism when performing that service.\\nIndependence is therefore fundamental to the reliability of auditors\\' reports and to\\ninvestors\\' confidence in financial statements. 19 Reliable financial statements reduce\\ninvestor, prospective creditor, and others\\' risk with respect to evaluating the financial\\nhealth of business entities. 20\\n\\n\\xe2\\x80\\xa2\\n\\nAICPA members perform many professional services, including audit services. 21 An\\naudit of a client\\'s financial statements concludes with an opinion by the auditor on the\\nfairness of the client\\'s financial statements, in all material respects, with regard to the\\nclient\\'s financial position, results of operations, and cash flows. 22 The auditor opines\\n\\n12.\\n\\nPEEC Interpretation No. 101-17, \"Networks and Network Firms.\" See Exhibit D.\\n\\n13.\\n\\nHnatt Letter at 4.\\n\\n14.\\n\\nId. at 4.\\n\\n15.\\n\\nId.\\n\\n16.\\n\\nId.\\n\\n17.\\n\\nId. at 2.\\n\\n18.\\n\\nId. at 3.\\n\\n19.\\n\\nId.\\n\\n20.\\n\\nId. at 9.\\n\\n21.\\n\\nId. at 4.\\n\\n22.\\n\\nId. at 3.\\n\\n3\\n\\n\\x0cwhether the client\\'s financial statements are presented in conformity with generally\\naccepted accounting principles (\"GAAP,,).23 Audits are conducted in accordance with\\ngenerally accepted auditing standards (\"GAAS,,).24\\n\\xe2\\x80\\xa2\\n\\nAICPA members also perform non-audit services. 25 Non-audit services may include,\\namong other things, performing management functions; making management decisions;\\npreparing source documents used to generate the client\\'s financial statements;\\nauthorizing, executing, or consummating transactions; exercising authority on behalf of\\nthe client; having custody of client assets; serving as a director or officer of the client;\\nbeing a lender to the client; supervising client employees; and performing tax,\\nbookkeeping, payroll, or consulting services. 26\\n\\n\\xe2\\x80\\xa2\\n\\nAdherence to AICPA\\'s current independence rules generally requires that.a member\\nperforming audit services for a given client not have performed certain non-audit services\\nfor that client during the period covered by the financial statements and during the period\\nof the professional engagement (e.g., when performing the audit).27 Prohibited non-audit\\nservices include performing management functions or making management decisions for\\nthe client; preparation or review of client financial statements or other documents that\\nwould be inputs to a subsequent audit; authorizing, executing, or consummating\\ntransactions on behalf of the client; exercising authority on behalf of the client; having\\ncustody of client assets; serving as a director or officer of the client; being a non-financial\\ninstitution lender to the client; and supervising client employees. 28\\n\\n\\xe2\\x80\\xa2\\n\\nIn general, a failure of independence due to an auditor\\'s furnishing prohibited non-audit\\nservices to a client during the period covered by the financial statement or during the\\naudit cannot be purged. 29 If, however, a failure of independence would result solely from\\na prospective auditor having a financial interest in a client (e.g., where the prospective\\nauditor is an investor in or creditor of the client), the independence rule would be\\nsatisfied if the prospective auditor severed all financial interests in the client prior to\\ncommencement of the audit. 30\\n\\n23.\\n\\nId. at 3.\\n\\n24.\\n\\nId.\\n\\n25.\\n\\nId. at 4.\\n\\n26.\\n\\nId.\\n\\n27.\\n\\nId. at 6.\\n\\n28.\\n\\nId. at 6-7.\\n\\n29.\\n\\nId. at 8.\\n\\n30.\\n\\nId.\\n\\n4\\n\\n\\x0c\\xe2\\x80\\xa2\\n\\nProvided that the auditor complies with certain general requirements, the auditor may,\\nunder AICPA\\'s independence rule, provide other non-audit services such as performing\\ntax, bookkeeping, payroll, or consulting?!\\n\\n\\xe2\\x80\\xa2\\n\\nAICP A intends to amend its Code so as to apply the independence rule to member\\nnetworks. 32 As amended, the Code would require that each member firm of an\\naccounting network be independent of financial statement audit and review clients of the\\nother firms in the network. 33 Thus, a network member may provide audit or review\\nservices for a client only insofar as other network members are not providing, and did not\\nprovide, during the period covering the financial statements, related, prohibited non-audit\\nservices for that client; and may provide prohibited non-audit services for a client only\\ninsofar as no other network member is then providing audit or review services. 34 As\\namended, the independence rule is intended to address an ethical issue arising from the\\nincreasing prevalence of accounting networks, ensuring the public that a firm providing\\nan audit or review of a client\\'s financial statements will make required judgments in an\\nobjective manner without regard to how its judgments will affect the other network\\nmembers. 35\\n\\n\\xe2\\x80\\xa2\\n\\nThe proposed amended AICPA independence rule does not restrict any network member\\nfrom competing with any other network member in the offering of audit or review\\nservices where no network member is providing, or recently has provided related,\\nprohibited non-audit services to the same client; nor does it restrict any network member\\nfrom competing with any other member in the offering of non-audit services where no\\nnetwork member is then providing audit or review services. 36\\n\\n\\xe2\\x80\\xa2\\n\\nBefore taking on an audit or review engagement, a network member would have to learn\\nfrom other network members or the prospective client whether any other network\\nmember has a prohibited relationship with the prospective client. 37 Thus, prior to\\nproviding audit or review services to a new client, a network member would have to\\n\\n31.\\n\\nId. at 7-8.\\n\\n32.\\n\\nId. at 5.\\n\\n33.\\n\\nId.\\n\\n34.\\nId. \"Related prohibited non-audit services\" refers to prohibited non-audit services upon\\nwhich a provider of audit services would or might have to rely in the provision of audit services\\nin accordance with GAAS.\\n35.\\n\\nId.\\n\\n36.\\n\\nId. at 6-8.\\n\\n37.\\n\\n!d. at 8.\\n\\n5\\n\\n\\x0cdetennine that no other network member was providing, or had recently provided related,\\nprohibited non-audit services to that client; and prior to providing non-audit services to a\\nnew client, a network member would have to detennine whether any other member was\\nthen providing audit or review services to that client. 38\\n\\xe2\\x80\\xa2\\n\\nAICPA intends to issue guidance to its members urging them, in evaluating\\nindependence, to seek needed infonnation from prospective clients to the greatest extent\\nreasonably possible, and, where needed infonnation can be obtained only from other\\nnetwork finns, to ask only whether the other network finns had potentially prohibited\\nrelationships with, or provided potentially prohibited non-audit services to, the\\nprospective client. 39 The rule would not require the exchange among potentially\\ncompeting finns of any infonnation regarding a network member\\'s bids, bidding\\nstrategy, capacity to bid, pricing or pricing plans, or other competitively sensitive\\ninfonnation. 40\\n\\n\\xe2\\x80\\xa2\\n\\nThe SEC requires that publicly-traded companies file audited financial statements with\\nthe agency that have been prepared by an accounting finn that adheres to SEC\\nindependence rules. 41 The SEC also requires that broker\/dealers submit audited\\nstatements prepared by accounting finns that adhere to the SEC independence rules,\\nregardless of whether the broker\/dealer is publicly traded. 42\\n\\n\\xe2\\x80\\xa2\\n\\nThe SEC has detennined that, to be effective, the audits filed with it must be independent\\nboth in fact and in appearance. 43 The SEC independence rule thus extends to all offices\\nof an individual accounting finn, any subordinate units, and any affiliated entities,\\nincluding any joint ventures or networks, including networks as defined by PEEC, to\\nwhich the accounting finn may belong. 44\\n\\n\\xe2\\x80\\xa2\\n\\nAICP A seeks an opinion from FTC staff as to whether the application of the\\nindependence rule to networks raises significant antitrust concerns or would result in a\\n\\n38.\\n\\nId.\\n\\n39.\\n\\nId. See also Exhibit F to Hnatt Letter.\\n\\n40.\\n\\nId. See also Exhibit F to Hnatt Letter.\\n\\n41.\\n\\nInterview with SEC officials, January 20,2010.\\n\\n42.\\n\\nId.\\n\\n43.\\n\\nId.\\n\\n44.\\n\\nId.\\n6\\n\\n\\x0cstaff recommendation to the Commission that the application of the rule in such a manner\\nbe challenged. 45\\n\\nBureau of Competition Analysis\\nThe amended Code is aimed at the preservation of independence in the performance of\\naudit services by a network member. The antitrust risks, if any, that may arise from blanket\\nimplementation of the amended Code across all AICP A member networks, regardless of the\\ndegree of integration or limits on competition that may be inherent in any given individual\\nnetwork, concern the degree to which the rule potentially further limits competition at the\\nmargm.\\nAICPA members are already subject to AICPA\\'s independence rule on an individual\\nbasis. They are also subject to compliance with the SEC\\'s independence rule, both individually\\nand as part of any networks, to the extent they perform audits for publically-traded companies\\nand for broker\/dealers that will be filed with the SEC. Thus, were AICPA to amend its\\nindependence rule as proposed, the impact would be felt on accounting services for nonpublicly-traded businesses and other entities that are not required to file audited financial\\nstatements with the SEC.\\nFor these firms, application of the rule may reduce the number of AICPA members that\\nwould be able to bid for contemporaneous audit and prohibited non-audit work. Specifically,\\nonce the AICPA independence rule is expanded to cover networks, the individual members of\\nthat network may not compete for the audit work of a business during the time surrounding the\\nprovision of prohibited non-audit services to that same business by any single member of the\\nnetwork; nor may the individual members compete for the prohibited non-audit work of a\\nbusiness while any single member of the network is engaged to perform audit work for that same\\nbusiness. Such a situation could potentially significantly reduce competition in localized\\ngeographic markets in which there are few, if any, accounting competitors outside of the AICPA\\nnetwork. As a result, some local privately-held businesses seeking both audit and prohibited\\nnon-audit services could face higher bids because of the expanded independence rule.\\nAs a general matter, the FTC recognizes that collaboration among competitors can be\\npro competitive when it results in cost-saving efficiencies or creates a new competitor.\\nCollaboration, however, also may be anticompetitive if it eliminates one or more competitors or\\nreduces incentives to compete. The joint FTCIDOJ Antitrust Guidelines for Collaborations\\nAmong Competitors provide the analytical framework for determining the net competitive\\neffects of any given joint venture. 46\\n\\n45.\\n\\nHnatt Letter at 1.\\n\\n46.\\nSee FTCIDOJ, Antitrust Guidelines for Collaboration Among Competitors (April 2000).\\nSpecifically, except where an agreement among competitors is per se unlawful, the agencies\\napply the \"rule of reason\" to assess competitor collaborations. In so doing, the agencies weigh\\nany procompetitive effects of the collaboration against the potential for competitive harm. The\\nagencies generally will not challenge collaborations where the net effect is competitively benign\\nor procompetitive. Significantly, the Guidelines do not attempt to divide all collaborations into\\n7\\n\\n\\x0cEven assuming that existing AICPA member networks satisfy the \"rule of reason\" test,\\nimplementation of the expanded independence rule may, at the margin, tip the balance in the\\nother direction. On the facts provided, however, it is not possible to make that determination for\\nall potentially affected geographic markets. The analysis would depend on the number and size\\ndistribution of market participants, as well as on some measure of any integrative efficiencies\\nappertaining to any given network of AICPA members.\\nNonetheless, the potential for net competitive harm arising from expanding the AICPA\\nindependence rule to AICPA networks appears, based on the information presently available, to\\nbe small. 47 Audits of publically-traded companies are already covered by the stricter SEC\\nindependence rule. In addition, significant benefits to the capital markets, even respecting\\ninvestors in non-publicly-traded businesses, can be expected to arise from AICPA\\'s adoption of\\nan expanded independence rule to cover networks. Moreover, additional procompetitive benefits\\ncan be expected to the extent that AICP A networks are better able to compete against larger\\naccounting firms for the business of larger privately-held clients. By contrast, potential\\nanticompetitive consequences are speculative, occurring, if at all, most likely in localized\\ngeographic markets where there may be only a limited number of accounting firms available to\\ncompete for the accounting work of local businesses.\\nNetwork members seeking to comply with the expanded independence rule will need to\\nobtain select information about recent and current engagements and activities of other network\\n\\nprocompetitive or anticompetitive lists. Rather,\\nthe Agencies hope to assist businesses in assessing whether the Agencies will challenge a\\ncompetitor collaboration or any of the agreements of which it is comprised. However,\\nthese Guidelines cannot remove judgment and discretion in antitrust law enforcement.\\nThe Agencies evaluate each case in light of its own facts and apply the analytical\\nframework set forth in these Guidelines reasonable and flexibly.\\nId. at 2 (citations omitted).\\nIn California Dental Ass\\'n v. F.T.C, 526 u.S. 756 (1999), the Court observed that, in the\\n47.\\ncontext of professional services where members of the public may not possess the specialized\\nknowledge to evaluate the quality of provided services, the likelihood of net anti competitive\\neffects arising from ethical codes that otherwise restrict competition is not \"comparably\\nobvious\" relative to restrictions in non-professional services situations. Id. at 771-772. For this\\nreason, the Court held that a \"quick look\" rule-of-reason analysis is inappropriate in these\\ninstances. Id. at 780-781. On the one hand, the Court\\'s opinion suggests that AICPA\\'s\\nexpansion of its independence rule to cover networks may be a proper stand-in for lenders\\'\\n(assumed) inability to evaluate the quality of an audit of a non-publicly-traded business, thus\\nenhancing economic value. On the other hand, the Court\\'s precise holding highlights the\\ndifficulty presented here, namely our inability to do more than render a \"quick look\" judgment\\nabout the likely competitive effects of the expansion of the independence rule, given the\\nunavailability of facts required to assess the likely impact of the expanded independence rule on\\nthe lawfulness of particular networks in specific localized geographic markets.\\n\\n8\\n\\n\\x0cmembers, and they might seek this information from other network members that are their\\npotential competitors. The exchange among competitors of some kinds of information could\\nitself result in anti competitive outcomes in some markets, for example by reducing accounting\\nfirms\\' uncertainty as to the capacity or interest of other network members in competing for new\\nclients. The reduction of uncertainty as to potential rivals\\' bidding intentions may, where only\\none or a few likely viable competitors remain, permit firms to increase bid prices for affected\\naccounting services. The exchange of certain kinds of information among competitors may\\ncause anti competitive outcomes through other mechanisms as well.\\nCompliance with the expanded independence rule, however, will not require network\\nmembers to seek from other network members any information about current or future capacity\\nor bidding intentions. Moreover, in most instances a network member will be able to obtain the\\nlimited information needed to determine whether it may provide audit or prohibited non-audit\\nservices to a prospective client from the prospective client, with little or no risk to competition.\\nAICP A intends to encourage the networks to do so, further reducing any risk of information\\nsharing among network members that harms competition.\\nOn balance, FTC staff has concluded that, although, in principle, there may be instances\\nin which the expansion of the AICPA independence rule to networks reduces competition, the\\nlikelihood that the expanded rule would significantly reduce competition does not appear to be\\nhigh. By contrast, the countervailing benefits of that expansion-in enabling small- and mediumsized accounting firms to increase their effective size and scope to compete for additional\\naccounting work while ensuring the public that their audit work is untainted by auditor selfinterest-appear substantial. On that basis, Commission staff has no present intention to\\nrecommend an enforcement action were AICPA to adopt the expanded rule. Having reached this\\nconclusion, however, we note that its basis rests on incomplete facts respecting the specific\\ngeographic markets in which AICPA member networks do business. Therefore, although we do\\nnot at present intend to pursue further investigation, we also do not intend this Advisory Opinion\\nto be construed as a blanket assessment that the expansion of the rule to networks could not raise\\ncompetition concerns sufficiently great to induce future agency action. If more complete facts\\nabout individual networks come to light, or if the FTC receives specific complaints about higher\\nbidding respecting individual AICPA networks because of the implementation of the expanded\\nindependence rule, our conclusion may change. 48\\n\\nConclusion\\nBased on the above, the Bureau does not intend to recommend a law enforcement action\\nto the FTC at this time.\\nThis letter expresses the current opinion of FTC staff, and is predicated on the accuracy\\nof the information that you have provided to us. In accordance with normal practice, BC\\nreserves the right to reconsider the questions involved and, with notice to the requesting party, to\\nrescind the opinion if actual conduct in compliance with the Code proves to be anticompetitive\\n\\n48.\\nAdditional facts, in this case, does not mean \"changed\" facts. It should also be\\nunderstood that if known facts change, our conclusion could similarly be revised.\\n9\\n\\n\\x0cin any purpose or effect or if facts change significantly in the future such that it would be in the\\npublic interest to bring an enforcement action.\\nThe views of FTC staff contained herein are provided as authorized by Rule 1.1 (b) of the\\nCommission\\'s Rules of Practice, 16 C.F.R. \\xc2\\xa7 1.1 (b). Under Commission Rule 1.3(c), 16 c.F.R. \\xc2\\xa7\\n1.3(c), the FTC is not bound by this staff opinion.\\n\\nAssistant Director for Policy & Coordination\\nBureau of Competition\\nFederal Trade Commission\\n600 Pennsylvania Ave. N.W.\\nWashington, D.C. 20580\\n\\n10\\n\\n\\x0c'","created_timestamp":"April 2, 2010","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/proposed-expansion-american-institute-certified-public-accounts-independence-rule\/100409aicpastaffadvisoryopinion.pdf"}
 {"text":"b'\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/proposed-expansion-american-institute-certified-public-accounts-independence-rule\/100409aicpexhibits.pdf"}
-{"text":"b'UN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nD ivision of M arketing Practices\\n\\nFebruary 4, 2010\\nJoan Mullen\\nCreative Compliance Consulting\\n9505 Golf Course Lane\\nElk Grove, CA 95758\\nRequest for Advisory Opinion:\\nTransfer of Consumer-Initiated Call to Prerecorded Message\\nDear Ms. Mullen:\\nYou have requested an informal staff opinion on the applicability of the recent\\namendments to the Telemarketing Sales Rule (\\xe2\\x80\\x9cTSR\\xe2\\x80\\x9d) to calls that are transferred to a\\nprerecorded solicitation. The amendments at issue impose new restrictions on the use of\\nprerecorded messages in telemarketing. Specifically, these amendments, as of September 1,\\n2009, generally prohibit initiating an outbound telephone call that delivers a prerecorded\\nmessage to induce the purchase of any good or service unless the seller has obtained from the\\nrecipient of the call an express agreement, in writing, that evidences the willingness of the\\nrecipient of the call to receive calls that deliver prerecorded messages by or on behalf of that\\nseller and includes such person\\xe2\\x80\\x99s telephone number and signature. 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(v)\\n(2009); 73 Fed. Reg. 15204 (Aug. 29, 2008). Your letter asks whether this amendment prohibits\\nuse of a prerecorded message in the follow scenario:\\nA consumer calls in to [sic] a call center with a customer service need or to\\npurchase something. At the conclusion of the primary purpose of the call the\\nconsumer is advised by a live agent to \\xe2\\x80\\x9chold the line[\\xe2\\x80\\x9d] while the call is\\ntransferred to a rewards center. The call is then transferred to an automated sales\\nline and one or more [prerecorded] \\xe2\\x80\\x9cpitches\\xe2\\x80\\x9d are made. The consumer has no\\nopportunity to give permission for the prerecorded pitches.\\nThe staff of the Federal Trade Commission has concluded that 16 C.F.R.\\n\\xc2\\xa7 310.4(b)(1)(v)(A) does not apply to the delivery of prerecorded messages in the manner\\ndescribed in your letter. The provisions on prerecorded messages in 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(v)\\nrestrict initiating an \\xe2\\x80\\x9coutbound telephone call\\xe2\\x80\\x9d and such a call is defined as \\xe2\\x80\\x9ca telephone call\\ninitiated by a telemarketer to induce the purchase of goods or services or to solicit a charitable\\ncontribution.\\xe2\\x80\\x9d Id. \\xc2\\xa7 310.2(u) (italics added). In the circumstances described in your letter, the\\ncustomer initiates the telephone call and the transfer of the call that is initiated by the call center\\nis a continuation of the same telephone call. Because call was initiated by the consumer, and not\\nby a seller or telemarketer, 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(v)(A) does not apply to the call.\\n\\n\\x0cJoan Mullen\\nCreative Compliance Consulting\\nRequest for Advisory Opinion\\n\\nJanuary 29,2010\\nPage 2\\n\\nWe note that in 2002, the Commission proposed modifying the definition of \"outbound\\ntelephone call\" in the Telemarketing Sales Rule so that the definition would include situations in\\nwhich a telephone call is \"transferred to a telemarketer other than the original telemarketer.\" 67\\nFed. Reg. 4491, 4500, 4541 (2002). The Commission decided not to expand the Rule\\'s\\ndefinition of \"outbound telephone call\" by adding this language. 68 Fed. Reg. 4579, 4594-95\\n(2003). After considering public comments on the proposal, the Commission observed that\\nexpanding the definition in this manner would have unintended and undesirable consequences\\nbecause it would make upselling transactions subject to all the provisions of the Telemarketing\\nSales Rule relating to outbound calls, including the calling time restrictions and national \"donot-call\" provisions. Id. In the same document, the Commission explained that the definition of\\n\"outbound telephone call\" includes situations in which the telemarketer disconnects or\\n\"abandons\" a call answered by a person without delivering a sales pitch. \"A telemarketer\\ninitiates a telephone call,\" the Commission observed, \"by causing the called consumer\\'s\\ntelephone to ring.\" 68 Fed. Reg. at 4643. These statements in the Statement of Basis and\\nPurpose accompanying the Commission\\'s adoption of the current definition of \"outbound\\ntelephone call\" reinforce our conclusion that the situation described in your letter - in which the\\ntelemarketer does not cause the consumer\\'s telephone to ring but transfers a call initiated by the\\nconsumer after the primary purpose of the call has been completed - is not an \"outbound\\ntelephone call\" and, therefore, is not subject to 16 C.F.R. \\xc2\\xa7 31 O.4(b)(1 )(v).\\nPlease be advised that this opinion is based exclusively on the information furnished in\\nyour letter and applies only to the practice described in your letter. Moreover, this opinion only\\naddresses the issue that you presented, namely the applicability of 16 C.F.R. \\xc2\\xa7 31O.4(b)(1 )(v).\\nOther provisions ofthe Telemarketing Sales Rule that are not limited to outbound telephone\\ncalls may apply to the situation that you describe. In particular, provisions of the TSR\\nconcerning \"upselling\" would apply to the telephone call that you describe, even though the call\\nis not an outbound telephone call. 16 C.F .R. \\xc2\\xa7 31 0.3(d).\\nIn addition, please be advised that the views expressed in this letter are those of the FTC\\nstaff. They have not been reviewed, approved, or adopted by the Commission, and they are not\\nbinding upon the Commission. However, they do reflect the opinions of the staff members\\ncharged with enforcement of the TSR. Staff opinions concerning the TSR are routinely posted\\non the FTC website at http:\/\/www.ftc.gov\/bcp\/telemarketing\/staffopinions.shtm.\\n\\n~~lY~\\nLois Greisman\\nAssociate Director\\nDivision of Marketing Practices\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-10-2\/opinion1002_0.pdf"}
+{"text":"b'UN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nD ivision of M arketing Practices\\n\\nFebruary 4, 2010\\nJoan Mullen\\nCreative Compliance Consulting\\n9505 Golf Course Lane\\nElk Grove, CA 95758\\nRequest for Advisory Opinion:\\nTransfer of Consumer-Initiated Call to Prerecorded Message\\nDear Ms. Mullen:\\nYou have requested an informal staff opinion on the applicability of the recent\\namendments to the Telemarketing Sales Rule (\\xe2\\x80\\x9cTSR\\xe2\\x80\\x9d) to calls that are transferred to a\\nprerecorded solicitation. The amendments at issue impose new restrictions on the use of\\nprerecorded messages in telemarketing. Specifically, these amendments, as of September 1,\\n2009, generally prohibit initiating an outbound telephone call that delivers a prerecorded\\nmessage to induce the purchase of any good or service unless the seller has obtained from the\\nrecipient of the call an express agreement, in writing, that evidences the willingness of the\\nrecipient of the call to receive calls that deliver prerecorded messages by or on behalf of that\\nseller and includes such person\\xe2\\x80\\x99s telephone number and signature. 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(v)\\n(2009); 73 Fed. Reg. 15204 (Aug. 29, 2008). Your letter asks whether this amendment prohibits\\nuse of a prerecorded message in the follow scenario:\\nA consumer calls in to [sic] a call center with a customer service need or to\\npurchase something. At the conclusion of the primary purpose of the call the\\nconsumer is advised by a live agent to \\xe2\\x80\\x9chold the line[\\xe2\\x80\\x9d] while the call is\\ntransferred to a rewards center. The call is then transferred to an automated sales\\nline and one or more [prerecorded] \\xe2\\x80\\x9cpitches\\xe2\\x80\\x9d are made. The consumer has no\\nopportunity to give permission for the prerecorded pitches.\\nThe staff of the Federal Trade Commission has concluded that 16 C.F.R.\\n\\xc2\\xa7 310.4(b)(1)(v)(A) does not apply to the delivery of prerecorded messages in the manner\\ndescribed in your letter. The provisions on prerecorded messages in 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(v)\\nrestrict initiating an \\xe2\\x80\\x9coutbound telephone call\\xe2\\x80\\x9d and such a call is defined as \\xe2\\x80\\x9ca telephone call\\ninitiated by a telemarketer to induce the purchase of goods or services or to solicit a charitable\\ncontribution.\\xe2\\x80\\x9d Id. \\xc2\\xa7 310.2(u) (italics added). In the circumstances described in your letter, the\\ncustomer initiates the telephone call and the transfer of the call that is initiated by the call center\\nis a continuation of the same telephone call. Because call was initiated by the consumer, and not\\nby a seller or telemarketer, 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(v)(A) does not apply to the call.\\n\\n\\x0cJoan Mullen\\nCreative Compliance Consulting\\nRequest for Advisory Opinion\\n\\nJanuary 29,2010\\nPage 2\\n\\nWe note that in 2002, the Commission proposed modifying the definition of \"outbound\\ntelephone call\" in the Telemarketing Sales Rule so that the definition would include situations in\\nwhich a telephone call is \"transferred to a telemarketer other than the original telemarketer.\" 67\\nFed. Reg. 4491, 4500, 4541 (2002). The Commission decided not to expand the Rule\\'s\\ndefinition of \"outbound telephone call\" by adding this language. 68 Fed. Reg. 4579, 4594-95\\n(2003). After considering public comments on the proposal, the Commission observed that\\nexpanding the definition in this manner would have unintended and undesirable consequences\\nbecause it would make upselling transactions subject to all the provisions of the Telemarketing\\nSales Rule relating to outbound calls, including the calling time restrictions and national \"donot-call\" provisions. Id. In the same document, the Commission explained that the definition of\\n\"outbound telephone call\" includes situations in which the telemarketer disconnects or\\n\"abandons\" a call answered by a person without delivering a sales pitch. \"A telemarketer\\ninitiates a telephone call,\" the Commission observed, \"by causing the called consumer\\'s\\ntelephone to ring.\" 68 Fed. Reg. at 4643. These statements in the Statement of Basis and\\nPurpose accompanying the Commission\\'s adoption of the current definition of \"outbound\\ntelephone call\" reinforce our conclusion that the situation described in your letter - in which the\\ntelemarketer does not cause the consumer\\'s telephone to ring but transfers a call initiated by the\\nconsumer after the primary purpose of the call has been completed - is not an \"outbound\\ntelephone call\" and, therefore, is not subject to 16 C.F.R. \\xc2\\xa7 31 O.4(b)(1 )(v).\\nPlease be advised that this opinion is based exclusively on the information furnished in\\nyour letter and applies only to the practice described in your letter. Moreover, this opinion only\\naddresses the issue that you presented, namely the applicability of 16 C.F.R. \\xc2\\xa7 31O.4(b)(1 )(v).\\nOther provisions ofthe Telemarketing Sales Rule that are not limited to outbound telephone\\ncalls may apply to the situation that you describe. In particular, provisions of the TSR\\nconcerning \"upselling\" would apply to the telephone call that you describe, even though the call\\nis not an outbound telephone call. 16 C.F .R. \\xc2\\xa7 31 0.3(d).\\nIn addition, please be advised that the views expressed in this letter are those of the FTC\\nstaff. They have not been reviewed, approved, or adopted by the Commission, and they are not\\nbinding upon the Commission. However, they do reflect the opinions of the staff members\\ncharged with enforcement of the TSR. Staff opinions concerning the TSR are routinely posted\\non the FTC website at http:\/\/www.ftc.gov\/bcp\/telemarketing\/staffopinions.shtm.\\n\\n~~lY~\\nLois Greisman\\nAssociate Director\\nDivision of Marketing Practices\\n\\n\\x0c'","created_timestamp":"February 4, 2010","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-10-2\/opinion1002_0.pdf"}
 {"text":"b'UN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nD ivision of M arketing Practices\\nCraig Tregillus\\nctregillus@ ftc.gov\\n\\nD irect D ial: (202) 326-2970\\nFacsim ile: (202) 326-3395\\n\\nNovember 24, 2009\\nHarvey I. Lapin, Esq.\\nHarvey I. Lapin, PC\\nP.O. Box 1327\\nNorthbrook, IL 60065-1327\\nDear Mr. Lapin:\\nThis letter responds to your request for a staff opinion interpreting Section 453.4(e)(2) of\\nthe Funeral Rule, which prohibits claims representing \\xe2\\x80\\x9cthat funeral goods have protective\\nfeatures or will protect the body from gravesite substances, when such is not the case.\\xe2\\x80\\x9d1 You\\nask, in particular, whether this provision bars an advertisement by a funeral provider that\\nexpressly claims a burial vault is \\xe2\\x80\\x9cwaterproof.\\xe2\\x80\\x9d\\nThe Commission\\xe2\\x80\\x99s discussion of this provision in the Statement of Basis and Purpose\\n(\\xe2\\x80\\x9cSBP\\xe2\\x80\\x9d) for the Rule specifically cites claims that caskets and burial vaults are \\xe2\\x80\\x9cairtight,\\nwatertight, or offer special protection against the elements\\xe2\\x80\\x9d or are \\xe2\\x80\\x9cwaterproof.\\xe2\\x80\\x9d2 Although the\\nSBP thus makes it clear that Section 453.4(e)(2) applies to a claim that a casket or vault is\\n\\xe2\\x80\\x9cwaterproof,\\xe2\\x80\\x9d the prohibition only applies to such claims by funeral providers if they are untrue;\\ni.e., \\xe2\\x80\\x9cwhen such is not the case.\\xe2\\x80\\x9d The SBP points out that it is typically \\xe2\\x80\\x9cimpossible to estimate\\nhow often such claims are false, because consumers are unable to discover whether protective\\nclaims are inflated without exhuming the body.\\xe2\\x80\\x9d\\nYour request was prompted by an advertisement in which a funeral provider expressly\\nrepresents that it sells \\xe2\\x80\\x9ca quality VAULT that is water proof and has a warranty in writing\\xe2\\x80\\x9d and\\ncosts \\xe2\\x80\\x9cless than you paid for a plastic or concrete box.\\xe2\\x80\\x9d The funeral provider that placed this ad\\nmay be held liable for violating Section 453.4(e)(2) of the Rule if the claim is untrue \\xe2\\x80\\x93 even if\\nthe provider is simply repeating a representation made by the manufacturer. Any funeral\\nprovider that repeats a claim that funeral goods have protective features adopts that claim as its\\nown and can be held liable for making false or unsubstantiated claims.\\n\\n1\\n\\n2\\n\\n16 C.F.R. \\xc2\\xa7 453.3(e)(2).\\n\\n47 Fed. Reg. 42280, 42278 & n.186 (Sept. 24, 1982), available at\\nhttp:\/\/www.ftc.gov\/bcp\/rulemaking\/funeral\/funrlprac.pdf.\\n\\n\\x0cHarvey I. Lapin, Esq.\\nPage 2 of 2\\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted\\non the FTC website at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/staffopinions.shtm.\\nSincerely,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\n\\x0c'","created_timestamp":"November 24, 2009","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-09-7\/opinion09-7.pdf"}
-{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Marketing Practices\\n\\nNovember 6, 2009\\nStephen F. Ruffino\\nGibney Anthony & Flaherty LLP\\n665 Fifth Avenue\\nNew York, NY 10022\\nDear Mr. Ruffino:\\nThis letter responds to your request for a staff advisory opinion regarding compliance\\nwith the Magnuson-Moss Warranty Act (\\xe2\\x80\\x9cAct\\xe2\\x80\\x9d), 15 U.S.C. \\xc2\\xa7\\xc2\\xa7 2301-2312, and the Commission\\xe2\\x80\\x99s\\nrules promulgated under that Act. You seek guidance on the Act\\xe2\\x80\\x99s application to your client\\xe2\\x80\\x99s\\none-year \\xe2\\x80\\x9cService Warranty.\\xe2\\x80\\x9d According to your letter, your client provides this service\\nwarranty after a consumer has purchased one of your client\\xe2\\x80\\x99s consumer products and\\nsubsequently has had that product serviced through one of your client\\xe2\\x80\\x99s dealers or service\\ncenters. Specifically, you ask whether this service warranty is a \\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d as that term\\nis defined in the Act. Based on the information you provide in your letter, and after considering\\nthe purposes of the Act, it is the staff\\xe2\\x80\\x99s opinion that the service warranty you describe is not a\\n\\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d under the Act or the Commission\\xe2\\x80\\x99s rules.\\nYour Client\\xe2\\x80\\x99s Course of Conduct and Proposal\\nIn your letter you indicate that your client imports and distributes a line of high-end\\nconsumer products. In connection with the sale of these products, your client offers from the\\ndate of sale a Full Two-Year Warranty. This Full Two-Year Warranty provides that in the event\\nof a malfunction arising within the warranty period, your client will remedy any defects at no\\ncost to the consumer.\\nAfter the expiration of the Full Two-Year Warranty period, consumers may choose to\\npurchase additional maintenance and service for the product in what you refer to as \\xe2\\x80\\x9cFactory\\nService.\\xe2\\x80\\x9d This Factory Service requires that the consumer take the product to an authorized\\ndealer or service center for service. You indicate that this service can often entail a full overhaul\\nof the product.\\nAfter the completion of this service, your client issues a one-year \\xe2\\x80\\x9cService Warranty\\xe2\\x80\\x9d on\\nthe serviced product, pursuant to which your client promises to remedy any defects at no cost to\\nthe consumer for one year from the date of service. You indicate that there is no additional cost\\nfor this Service Warranty.\\n\\n\\x0cMr. Stephen F. Ruffino\\nNovember 6, 2009\\nPage 2\\nYour client intends to revise its Service Warranty, but would like more flexibility in\\ndrafting the text of the document. Therefore, you seek guidance on whether this Service\\nWarranty, which accompanies the serviced consumer product, is a \\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d as defined\\nin the Act.\\nThe Warranty Act and Rules\\nThe Act and Commission rules impose duties on warrantors that make written warranties\\non consumer products.1 Under the Act, a \\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d is defined as either:\\n(A) any written affirmation of fact or written promise made in connection with the\\nsale of a consumer product by a supplier to a buyer which relates to the nature of the\\nmaterial or workmanship and affirms or promises that such material or workmanship\\nis defect free or will meet a specified level of performance over a specified period\\nof time, or\\n(B) any undertaking in writing in connection with the sale by a supplier of a\\nconsumer product to refund, repair, replace, or take other remedial action with\\nrespect to such product in the event that such product fails to meet the specifications\\nset forth in the undertaking,\\nwhich written affirmation, promise, or undertaking becomes part of the basis of the\\nbargain between a supplier and a buyer for purposes other than resale of such\\nproduct.\\n15 U.S.C. \\xc2\\xa7 2301(6) (emphasis added). The Commission rules incorporate this definition of a\\nwritten warranty.2\\nThe Act and rules specifically distinguish between a written warranty and a \\xe2\\x80\\x9cservice\\ncontract.\\xe2\\x80\\x9d A service contract is defined as a \\xe2\\x80\\x9ccontract in writing to perform, over a fixed period\\nof time or for a specified duration, services relating to the maintenance or repair (or both) of a\\nconsumer product.\\xe2\\x80\\x9d 15 U.S.C. \\xc2\\xa7 2301(8). The Commission rules expand on the distinction\\nbetween a service contract and a written warranty, providing that a written warranty \\xe2\\x80\\x9cmust be\\n\\xe2\\x80\\x98part of the basis of the bargain,\\xe2\\x80\\x99 \\xe2\\x80\\x9d meaning that it \\xe2\\x80\\x9cmust be conveyed at the time of sale of the\\nconsumer product and the consumer must not give any consideration beyond the purchase of the\\nconsumer product in order to benefit from the agreement.\\xe2\\x80\\x9d 16 C.F.R. \\xc2\\xa7 700.11(b).\\n1\\n\\nThe term \\xe2\\x80\\x9cconsumer product\\xe2\\x80\\x9d means \\xe2\\x80\\x9cany tangible personal property which is\\ndistributed in commerce and which is normally used for personal, family, or household purposes\\n(including any such property intended to be attached to or installed in any real property without\\nregard to whether it is so attached or installed).\\xe2\\x80\\x9d 15 U.S.C. \\xc2\\xa7 2301(1).\\n2\\n\\nSee 16 C.F.R. \\xc2\\xa7\\xc2\\xa7 701.1(c); 702.1(c); 703.1(c). As acknowledged in your letter, your\\nclient\\xe2\\x80\\x99s Full Two-Year Warranty is a \\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d under the Act and Commission rules.\\n\\n\\x0cMr. Stephen F. Ruffino\\nNovember 6, 2009\\nPage 3\\nDiscussion\\nAfter considering the plain language of the Act and the purposes of the statute, it is the\\nstaff\\xe2\\x80\\x99s opinion that the service warranty you describe would not be a \\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d under\\nthe Act.\\nFirst, the plain language of the Act provides that a \\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d must be part of the\\nbasis of the bargain and must be made \\xe2\\x80\\x9cin connection with the sale\\xe2\\x80\\x9d of a consumer product. 15\\nU.S.C. \\xc2\\xa7 2301(6). Your client\\xe2\\x80\\x99s \\xe2\\x80\\x9cservice warranty,\\xe2\\x80\\x9d however, is provided to consumers after\\nthey have purchased the consumer product and therefore forms no part of the basis of the\\nbargain.\\nSecond, the purposes of the Act would not be furthered by a determination that your\\nclient\\xe2\\x80\\x99s service warranty is a written warranty under the Act. In passing the Act, it was\\nCongress\\xe2\\x80\\x99s intent that consumers receive clear and complete information about warranty\\ncoverage prior to sale; that consumers understand fully what to expect in the event of a consumer\\nproduct failure or malfunction; and that manufacturers compete on the basis of warranty\\ncoverage. 15 U.S.C. \\xc2\\xa7 2302(a). It is the staff\\xe2\\x80\\x99s opinion that these purposes have little\\napplication in the context of your client\\xe2\\x80\\x99s service warranty.\\nYou indicate in your letter that your client\\xe2\\x80\\x99s Full Two-Year Warranty fully complies with\\nthe Act. Accordingly, consumers have presumably received complete information about\\nwarranty coverage prior to sale and understand what to expect in the event of product failure or\\nmalfunction. Therefore, the first two purposes of the Act are served by the provision of the Full\\nTwo-Year Warranty. A determination that your client\\xe2\\x80\\x99s service warranty is a written warranty\\nwould do little to further these purposes because the consumer has already received information\\nregarding warranty coverage and would have been able to use that information in making a\\npurchasing decision. Similarly, a determination that the service warranty is not a written\\nwarranty would not impact competition on the basis of warranty coverage because the consumer\\nhas already purchased the consumer product.3\\n\\n3\\n\\nMoreover, the staff\\xe2\\x80\\x99s conclusion that your client\\xe2\\x80\\x99s service warranty is not a written\\nwarranty is not altered by 16 C.F.R. \\xc2\\xa7 700.1(h), which addresses warranties on replacement\\nparts. Specifically, Rule 700.1(h) provides that \\xe2\\x80\\x9cwarranties on replacement parts and\\ncomponents used to repair consumer products are covered; warranties on services are not.\\xe2\\x80\\x9d Rule\\n700.1(h) is intended to address \\xe2\\x80\\x9caftermarket\\xe2\\x80\\x9d replacement products that are purchased by\\nconsumers, and merely indicates that where a written warranty covers both parts and services, it\\nis covered by the Act. See Curtis R. Reitz, Consumer Product Warranties Under Federal and\\nState Laws \\xc2\\xa7 13.06 (2d ed. 1987). This provision, however, does not impact the meaning of a\\n\\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d under the Act, nor does it alter the \\xe2\\x80\\x9cbasis of the bargain\\xe2\\x80\\x9d test.\\n\\n\\x0cMr. Stephen F. Ruffino\\nNovember 6, 2009\\nPage 4\\nConclusion\\nBased on the plain text of the Act, which requires that a \\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d form part of\\nthe basis of the bargain of the original sale, and because designating your client\\xe2\\x80\\x99s service\\nwarranty a \\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d would do little to advance the purposes of the Act, it is the staff\\xe2\\x80\\x99s\\nopinion that the service warranty you describe would not be a written warranty under the Act.\\nThe opinions and conclusions expressed in the foregoing discussion are those of\\nCommission staff only and are not attributable to, nor binding on, the Commission itself\\nor any individual Commissioner. I hope this discussion is helpful to you. If you have any further\\nquestions, please do not hesitate to contact me at (202) 326-2505.\\n\\nSincerely,\\n\\nAllyson Himelfarb\\nInvestigator\/Magnuson-Moss\\nProgram Coordinator\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-09-2\/opinion0902_0.pdf"}
+{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Marketing Practices\\n\\nNovember 6, 2009\\nStephen F. Ruffino\\nGibney Anthony & Flaherty LLP\\n665 Fifth Avenue\\nNew York, NY 10022\\nDear Mr. Ruffino:\\nThis letter responds to your request for a staff advisory opinion regarding compliance\\nwith the Magnuson-Moss Warranty Act (\\xe2\\x80\\x9cAct\\xe2\\x80\\x9d), 15 U.S.C. \\xc2\\xa7\\xc2\\xa7 2301-2312, and the Commission\\xe2\\x80\\x99s\\nrules promulgated under that Act. You seek guidance on the Act\\xe2\\x80\\x99s application to your client\\xe2\\x80\\x99s\\none-year \\xe2\\x80\\x9cService Warranty.\\xe2\\x80\\x9d According to your letter, your client provides this service\\nwarranty after a consumer has purchased one of your client\\xe2\\x80\\x99s consumer products and\\nsubsequently has had that product serviced through one of your client\\xe2\\x80\\x99s dealers or service\\ncenters. Specifically, you ask whether this service warranty is a \\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d as that term\\nis defined in the Act. Based on the information you provide in your letter, and after considering\\nthe purposes of the Act, it is the staff\\xe2\\x80\\x99s opinion that the service warranty you describe is not a\\n\\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d under the Act or the Commission\\xe2\\x80\\x99s rules.\\nYour Client\\xe2\\x80\\x99s Course of Conduct and Proposal\\nIn your letter you indicate that your client imports and distributes a line of high-end\\nconsumer products. In connection with the sale of these products, your client offers from the\\ndate of sale a Full Two-Year Warranty. This Full Two-Year Warranty provides that in the event\\nof a malfunction arising within the warranty period, your client will remedy any defects at no\\ncost to the consumer.\\nAfter the expiration of the Full Two-Year Warranty period, consumers may choose to\\npurchase additional maintenance and service for the product in what you refer to as \\xe2\\x80\\x9cFactory\\nService.\\xe2\\x80\\x9d This Factory Service requires that the consumer take the product to an authorized\\ndealer or service center for service. You indicate that this service can often entail a full overhaul\\nof the product.\\nAfter the completion of this service, your client issues a one-year \\xe2\\x80\\x9cService Warranty\\xe2\\x80\\x9d on\\nthe serviced product, pursuant to which your client promises to remedy any defects at no cost to\\nthe consumer for one year from the date of service. You indicate that there is no additional cost\\nfor this Service Warranty.\\n\\n\\x0cMr. Stephen F. Ruffino\\nNovember 6, 2009\\nPage 2\\nYour client intends to revise its Service Warranty, but would like more flexibility in\\ndrafting the text of the document. Therefore, you seek guidance on whether this Service\\nWarranty, which accompanies the serviced consumer product, is a \\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d as defined\\nin the Act.\\nThe Warranty Act and Rules\\nThe Act and Commission rules impose duties on warrantors that make written warranties\\non consumer products.1 Under the Act, a \\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d is defined as either:\\n(A) any written affirmation of fact or written promise made in connection with the\\nsale of a consumer product by a supplier to a buyer which relates to the nature of the\\nmaterial or workmanship and affirms or promises that such material or workmanship\\nis defect free or will meet a specified level of performance over a specified period\\nof time, or\\n(B) any undertaking in writing in connection with the sale by a supplier of a\\nconsumer product to refund, repair, replace, or take other remedial action with\\nrespect to such product in the event that such product fails to meet the specifications\\nset forth in the undertaking,\\nwhich written affirmation, promise, or undertaking becomes part of the basis of the\\nbargain between a supplier and a buyer for purposes other than resale of such\\nproduct.\\n15 U.S.C. \\xc2\\xa7 2301(6) (emphasis added). The Commission rules incorporate this definition of a\\nwritten warranty.2\\nThe Act and rules specifically distinguish between a written warranty and a \\xe2\\x80\\x9cservice\\ncontract.\\xe2\\x80\\x9d A service contract is defined as a \\xe2\\x80\\x9ccontract in writing to perform, over a fixed period\\nof time or for a specified duration, services relating to the maintenance or repair (or both) of a\\nconsumer product.\\xe2\\x80\\x9d 15 U.S.C. \\xc2\\xa7 2301(8). The Commission rules expand on the distinction\\nbetween a service contract and a written warranty, providing that a written warranty \\xe2\\x80\\x9cmust be\\n\\xe2\\x80\\x98part of the basis of the bargain,\\xe2\\x80\\x99 \\xe2\\x80\\x9d meaning that it \\xe2\\x80\\x9cmust be conveyed at the time of sale of the\\nconsumer product and the consumer must not give any consideration beyond the purchase of the\\nconsumer product in order to benefit from the agreement.\\xe2\\x80\\x9d 16 C.F.R. \\xc2\\xa7 700.11(b).\\n1\\n\\nThe term \\xe2\\x80\\x9cconsumer product\\xe2\\x80\\x9d means \\xe2\\x80\\x9cany tangible personal property which is\\ndistributed in commerce and which is normally used for personal, family, or household purposes\\n(including any such property intended to be attached to or installed in any real property without\\nregard to whether it is so attached or installed).\\xe2\\x80\\x9d 15 U.S.C. \\xc2\\xa7 2301(1).\\n2\\n\\nSee 16 C.F.R. \\xc2\\xa7\\xc2\\xa7 701.1(c); 702.1(c); 703.1(c). As acknowledged in your letter, your\\nclient\\xe2\\x80\\x99s Full Two-Year Warranty is a \\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d under the Act and Commission rules.\\n\\n\\x0cMr. Stephen F. Ruffino\\nNovember 6, 2009\\nPage 3\\nDiscussion\\nAfter considering the plain language of the Act and the purposes of the statute, it is the\\nstaff\\xe2\\x80\\x99s opinion that the service warranty you describe would not be a \\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d under\\nthe Act.\\nFirst, the plain language of the Act provides that a \\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d must be part of the\\nbasis of the bargain and must be made \\xe2\\x80\\x9cin connection with the sale\\xe2\\x80\\x9d of a consumer product. 15\\nU.S.C. \\xc2\\xa7 2301(6). Your client\\xe2\\x80\\x99s \\xe2\\x80\\x9cservice warranty,\\xe2\\x80\\x9d however, is provided to consumers after\\nthey have purchased the consumer product and therefore forms no part of the basis of the\\nbargain.\\nSecond, the purposes of the Act would not be furthered by a determination that your\\nclient\\xe2\\x80\\x99s service warranty is a written warranty under the Act. In passing the Act, it was\\nCongress\\xe2\\x80\\x99s intent that consumers receive clear and complete information about warranty\\ncoverage prior to sale; that consumers understand fully what to expect in the event of a consumer\\nproduct failure or malfunction; and that manufacturers compete on the basis of warranty\\ncoverage. 15 U.S.C. \\xc2\\xa7 2302(a). It is the staff\\xe2\\x80\\x99s opinion that these purposes have little\\napplication in the context of your client\\xe2\\x80\\x99s service warranty.\\nYou indicate in your letter that your client\\xe2\\x80\\x99s Full Two-Year Warranty fully complies with\\nthe Act. Accordingly, consumers have presumably received complete information about\\nwarranty coverage prior to sale and understand what to expect in the event of product failure or\\nmalfunction. Therefore, the first two purposes of the Act are served by the provision of the Full\\nTwo-Year Warranty. A determination that your client\\xe2\\x80\\x99s service warranty is a written warranty\\nwould do little to further these purposes because the consumer has already received information\\nregarding warranty coverage and would have been able to use that information in making a\\npurchasing decision. Similarly, a determination that the service warranty is not a written\\nwarranty would not impact competition on the basis of warranty coverage because the consumer\\nhas already purchased the consumer product.3\\n\\n3\\n\\nMoreover, the staff\\xe2\\x80\\x99s conclusion that your client\\xe2\\x80\\x99s service warranty is not a written\\nwarranty is not altered by 16 C.F.R. \\xc2\\xa7 700.1(h), which addresses warranties on replacement\\nparts. Specifically, Rule 700.1(h) provides that \\xe2\\x80\\x9cwarranties on replacement parts and\\ncomponents used to repair consumer products are covered; warranties on services are not.\\xe2\\x80\\x9d Rule\\n700.1(h) is intended to address \\xe2\\x80\\x9caftermarket\\xe2\\x80\\x9d replacement products that are purchased by\\nconsumers, and merely indicates that where a written warranty covers both parts and services, it\\nis covered by the Act. See Curtis R. Reitz, Consumer Product Warranties Under Federal and\\nState Laws \\xc2\\xa7 13.06 (2d ed. 1987). This provision, however, does not impact the meaning of a\\n\\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d under the Act, nor does it alter the \\xe2\\x80\\x9cbasis of the bargain\\xe2\\x80\\x9d test.\\n\\n\\x0cMr. Stephen F. Ruffino\\nNovember 6, 2009\\nPage 4\\nConclusion\\nBased on the plain text of the Act, which requires that a \\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d form part of\\nthe basis of the bargain of the original sale, and because designating your client\\xe2\\x80\\x99s service\\nwarranty a \\xe2\\x80\\x9cwritten warranty\\xe2\\x80\\x9d would do little to advance the purposes of the Act, it is the staff\\xe2\\x80\\x99s\\nopinion that the service warranty you describe would not be a written warranty under the Act.\\nThe opinions and conclusions expressed in the foregoing discussion are those of\\nCommission staff only and are not attributable to, nor binding on, the Commission itself\\nor any individual Commissioner. I hope this discussion is helpful to you. If you have any further\\nquestions, please do not hesitate to contact me at (202) 326-2505.\\n\\nSincerely,\\n\\nAllyson Himelfarb\\nInvestigator\/Magnuson-Moss\\nProgram Coordinator\\n\\n\\x0c'","created_timestamp":"November 6, 2009","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-09-2\/opinion0902_0.pdf"}
 {"text":"b'UN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nD ivision of M arketing Practices\\nCraig Tregillus\\nctregillus@ ftc.gov\\n\\nD irect D ial: (202) 326-2970\\nFacsim ile: (202) 326-3395\\n\\nApril 16, 2009\\nT. Scott Gilligan, Esq.\\nGilligan Law Offices\\n3734 Eastern Avenue\\nCincinnati, OH 45226\\nDear Mr. Gilligan:\\nYou have asked for a clarification of Staff Opinion 09-1,1 because you are concerned that\\nportions of that opinion might be taken out of context and misinterpreted. You express\\nparticular misgivings about statements you believe could be read to imply that \\xe2\\x80\\x9cthe basic\\nservices fee must be the same for each of the clients of a funeral provider,\\xe2\\x80\\x9d and thus might\\nsuggest that the Funeral Rule prohibits funeral providers from providing free or nominal cost\\nfunerals for indigents and in other special cases.\\nThe point we made in Opinion 09-1 was that funeral providers must charge the same\\nbasic service fee listed on their General Price List (\\xe2\\x80\\x9cGPL\\xe2\\x80\\x9d) to clients who buy a discount\\npackage of funeral goods and services and those who do not. Only the goods and services\\nprovided in a discount package may be discounted, not the basic services fee, for the reasons\\nexplained in the Opinion.\\nIn fact, the statement from the Opinion that you cite as causing the greatest concern was\\ncarefully footnoted with an acknowledgment that funeral providers may charge lower prices for\\nspecial groups, such as indigents, infants, and memorial society members.2 The one prerequisite\\nfor charging lower prices for such special groups, as the Opinion noted, is the requirement that a\\nfuneral provider provide qualifying clients with an alternative price list. As the Compliance\\nGuide emphasizes:\\nRemember: Even if you use alternative price lists, you still must comply with all\\nRule provisions, including mandatory disclosures and itemized prices.3\\n1\\n\\nStaff Opinion 09-1 (Feb. 17, 2009).\\n\\n2\\n\\nId. at p.3, n.10, and accompanying text.\\n\\n3\\n\\nComplying with the Funeral Rule (June 2004), p. 13. See 47 Fed. Reg. 42260,\\n42299 (Sept. 24, 1982) (\\xe2\\x80\\x9cFinally, nothing in the rule will prevent funeral directors from meeting\\nany perceived social responsibility to make services available at nominal charges for welfare\\ncases or from charging special lower prices for infant deaths or other special cases.\\xe2\\x80\\x9d)\\n\\n\\x0cT. Scott Gilligan, Esq.\\nPage 2 of 2\\nYou also seek clarification that Opinion 09-1 is not meant to imply that a funeral\\nprovider is required to include the full basic services fee listed in its GPL in its fees for\\nforwarding and receipt of remains, direct cremation, and immediate burial. You are correct that\\nbecause the Opinion does not address that question, no such inference can be drawn from it.\\nThat issue has been raised in a separate request, and will be addressed in a forthcoming staff\\nopinion.\\nThe views expressed in this letter are those of the FTC staff. They have not been\\nreviewed, approved, or adopted by the Commission, and they are not binding on the Commission\\nor any individual Commissioner. However, they do reflect the views of FTC staff charged with\\nenforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted on the FTC\\nwebsite at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/staffopinions.shtm.\\nSincerely,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\n\\x0c'","created_timestamp":"April 16, 2009","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-09-3\/opinion09-3.pdf"}
 {"text":"b'UN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nD ivision of M arketing Practices\\nCraig Tregillus\\nctregillus@ ftc.gov\\n\\nD irect D ial: (202) 326-2970\\nFacsim ile: (202) 326-3395\\n\\nApril 16, 2009\\nMichael P. A. Cohen, Esq.\\nPaul, Hastings, Janofsky and Walker, LLP\\n875 15 th Street, N.W.\\nWashington, DC 20005\\nDear Mr. Cohen:\\nOn behalf of Selected Independent Funeral Homes (\\xe2\\x80\\x9cSIFH\\xe2\\x80\\x9d), a professional association of\\nindependent, locally owned funeral homes, you have requested a staff opinion on the application\\nof the Funeral Rule to cemeteries. You state that many SIFH members also own cemeteries, and\\nargue that staff\\xe2\\x80\\x99s analysis in Opinion 08-1 1 of the Rule\\xe2\\x80\\x99s application to crematories \\xe2\\x80\\x9capplies with\\nequal force to cemeteries,\\xe2\\x80\\x9d and compels a conclusion that the Rule likewise applies to cemeteries.\\nAs you may know, the Commission noted when it promulgated the Rule that a cemetery\\n\\xe2\\x80\\x9cwould generally not be considered a \\xe2\\x80\\x98funeral provider\\xe2\\x80\\x99\\xe2\\x80\\x9d because it \\xe2\\x80\\x9conly arranges or conducts\\nfinal dispositions\\xe2\\x80\\x9d and \\xe2\\x80\\x9cdoes not prepare human remains for burial or other dispositions.\\xe2\\x80\\x9d 2 In\\n2008, the Commission decided not to commence a rulemaking proceeding to amend the Rule to\\ncover all cemeteries operated for profit.3 Nothing in Opinion 08-1 is inconsistent with these\\ndeterminations.\\nIn Opinion 08-1, staff noted that the Rule applies only to \\xe2\\x80\\x9cfuneral providers\\xe2\\x80\\x9d that sell or\\noffer to sell both \\xe2\\x80\\x9cfuneral goods,\\xe2\\x80\\x9d as defined by \\xc2\\xa7 453.1(h) of the Rule,4 and \\xe2\\x80\\x9cfuneral services,\\xe2\\x80\\x9d as\\ndefined by \\xc2\\xa7 453.1(j).5 We stated that if a crematory sells or offers to sell \\xe2\\x80\\x9cfuneral goods,\\xe2\\x80\\x9d such\\n\\n1\\n\\nStaff Opinion 08-1, available at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\\n\/opinions\/opinion08-1.pdf.\\n2\\n\\n47 Fed. Reg. 42260, 42285 (Sept. 24, 1982).\\n\\n3\\n\\n73 Fed. Reg. 13740, 13742 (Mar. 13, 2008). The Commission observed that under\\nthe FTC Act, 15 U.S. C. \\xc2\\xa7 45, it would have jurisdiction over for-profit cemeteries, but not over\\nnon-profit cemeteries, and that the \\xe2\\x80\\x9clopsided application of the Rule to some, but not all, cemeteries\\nwould likely prove unduly costly.\\xe2\\x80\\x9d 73 Fed. Reg. at 13744-45.\\n4\\n\\n5\\n\\n16 CFR \\xc2\\xa7 453.1(h).\\n\\n16 CFR \\xc2\\xa7 453.1(j). The definition of \\xe2\\x80\\x9cfuneral provider\\xe2\\x80\\x9d in \\xc2\\xa7 453.1(i) of the Rule\\nrequires the offer or sale of both \\xe2\\x80\\x9cfuneral goods\\xe2\\x80\\x9d and \\xe2\\x80\\x9cfuneral services.\\xe2\\x80\\x9d 16 CFR \\xc2\\xa7 453.1(i).\\n\\n\\x0cMichael P. A. Cohen, Esq.\\nPage 2 of 2\\nas urns, it would be covered by the Rule because crematories also perform \\xe2\\x80\\x9cfuneral services.\\xe2\\x80\\x9d\\nStaff\\xe2\\x80\\x99s view that crematories perform \\xe2\\x80\\x9cfuneral services\\xe2\\x80\\x9d was based, in turn, on our analysis of the\\ntwo tests prescribed by the definition of that term:\\n\\xe2\\x80\\x98Funeral services\\xe2\\x80\\x99 are any services which may be used to:\\n(1)\\n\\nCare for and prepare deceased human bodies for burial, cremation\\nor other final disposition; and\\n\\n(2)\\n\\narrange, supervise or conduct the funeral ceremony or the final\\ndisposition of deceased human remains. 6\\n\\nWhile we agree that the second element in the definition applies equally to cemeteries and\\ncrematories, because both \\xe2\\x80\\x9carrange, supervise or conduct . . . the final disposition,\\xe2\\x80\\x9d staff is not\\npersuaded that most cemeteries \\xe2\\x80\\x9ccare for and prepare deceased human bodies for burial, \\xe2\\x80\\x9das\\nrequired by the first element. Unlike cemeteries, crematories typically must refrigerate and store\\nremains for waiting periods prescribed by state law, and physically handle remains to transfer\\nthem from regular or rental caskets to flammable containers, check for and remove prosthetics,\\npacemakers, and jewelry prior to cremation, and collect the ashes when the process is completed.\\nIt cannot be said that cemeteries likewise \\xe2\\x80\\x9ccare for an prepare deceased human bodies for burial\\xe2\\x80\\x9d\\nsince they generally deal only with casketed remains.\\nWhile the Funeral Rule generally does not apply to cemeteries, there may be some\\ncircumstances in which commercial cemeteries are \\xe2\\x80\\x9cfuneral providers\\xe2\\x80\\x9d and are obliged to comply\\nwith the Rule. For example, if a commercial cemetery provides \\xe2\\x80\\x9cfuneral services\\xe2\\x80\\x9d and offers or\\nsells \\xe2\\x80\\x9cfuneral goods,\\xe2\\x80\\x9d it would be obligated to comply with the Rule.\\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted\\non the FTC website at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/staffopinions.shtm.\\nSincerely,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\n6\\n\\n16 CFR \\xc2\\xa7 453.1(j)(1)-(2).\\n\\n\\x0c'","created_timestamp":"April 16, 2009","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-09-5\/opinion09-5.pdf"}
 {"text":"b'UN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nD ivision of M arketing Practices\\nCraig Tregillus\\nctregillus@ ftc.gov\\n\\nD irect D ial: (202) 326-2970\\nFacsim ile: (202) 326-3395\\n\\nMarch 18, 2009\\nMr. Mark W. Duffey, President\\nEverest Funeral Package, LLC\\n1300 Post Oak Blvd. - Suite 1210\\nHouston, TX 77056\\nDear Mr. Duffey:\\nYou have requested a staff opinion on whether the Commission\\xe2\\x80\\x99s Funeral Rule permits a\\nfuneral provider to decline to provide detailed price information in response to a telephone\\nrequest made by or on behalf of your company. The Funeral Rule is clear: funeral providers\\nmust provide price information by telephone to anyone who calls seeking such information.\\nEverest is a nationwide funeral planning and concierge service that provides its\\ncustomers with pre-need and at-need funeral planning assistance. A key feature of Everest\\xe2\\x80\\x99s\\nservices is its \\xe2\\x80\\x9cPriceFinder Report, an online tool that allows consumers to obtain comparative\\nprice information for funeral homes in their area. In order to obtain this information from the\\nmore than 20,000 funeral providers in the United States, Everest contracts with a telephone call\\ncenter that telephones each provider annually to ask for the information on its General Price List\\n(\\xe2\\x80\\x9cGPL\\xe2\\x80\\x9d).\\nSection 453.2(b)(1) of the Funeral Rule requires funeral providers to \\xe2\\x80\\x9c[t]ell persons who\\nask by telephone about the funeral provider\\xe2\\x80\\x99s offerings or prices any accurate information from\\nthe prices lists described in paragraphs (b)(2) through (4) of this section [the Casket Price List,\\nthe Outer Burial Container Price List, and the GPL] and any other readily available information\\nthat reasonably answers the question.\\xe2\\x80\\x9d1 Section 453.1(o) of the Rule defines a \\xe2\\x80\\x9cperson\\xe2\\x80\\x9d as \\xe2\\x80\\x9cany\\nindividual, partnership, corporation, association, government or governmental subdivision or\\nagency, or other entity.\\xe2\\x80\\x9d2 Thus, Everest and its call center agents are \\xe2\\x80\\x9cpersons\\xe2\\x80\\x9d entitled by the\\nRule to obtain price information by telephone from all \\xe2\\x80\\x9cfuneral providers.\\xe2\\x80\\x9d\\nIn the original Statement of Basis and Purpose for the Rule (\\xe2\\x80\\x9cSBP\\xe2\\x80\\x9d), the Commission\\nemphasized that the requirement that funeral providers give price information by telephone upon\\nrequest advances one of the Rule\\xe2\\x80\\x99s primary goals; namely, to allow for comparison shopping:\\n\\n1\\n\\n16 C.F.R. \\xc2\\xa7 453.2(b)(1) (emphasis added).\\n\\n2\\n\\n16 C.F.R. \\xc2\\xa7 453.1(o).\\n\\n\\x0cMr. Mark W. Duffey\\nPage 2 of 3\\nThe second disclosure requirement, the telephone price disclosure requirement,\\naddresses directly the record evidence that funeral directors have failed to respond\\nto telephone inquiries about prices. Consumers will thus have the ability to call\\nseveral funeral homes and compare their offerings before deciding where to\\npurchase. . . . In many instances, obtaining price information by telephone\\nrepresents the only practical opportunity for comparison shopping, since many\\noptions are foreclosed once the funeral home is [chosen].\\xe2\\x80\\x9d3\\nThe FTC\\xe2\\x80\\x99s Compliance Guide for funeral providers, Complying with the Funeral Rule\\n(\\xe2\\x80\\x9cCompliance Guide\\xe2\\x80\\x9d or \\xe2\\x80\\x9cGuide\\xe2\\x80\\x9d), emphasizes that if a call requesting price information is\\nreceived by a funeral provider, the call must be returned and the price information requested\\nmust be provided.4 The Guide also makes it clear that funeral providers \\xe2\\x80\\x9ccannot require callers\\nto give their names, addresses, or phone numbers before [giving] them the requested\\ninformation,\\xe2\\x80\\x9d and cannot refuse to provide price information to callers who refuse to identify\\nthemselves.5 The Guide also indicates, as the Rule provides, that the telephone price disclosure\\nmust be made by a \\xe2\\x80\\x9cfuneral provider\\xe2\\x80\\x9d that receives a telephone inquiry about prices.6 Nothing in\\nthe Rule authorizes a funeral provider to require a caller to place a second telephone call to a\\nthird party (e.g., an attorney) to obtain price information by telephone.\\nThe Funeral Rule is a trade regulation rule duly issued by the Commission that has the\\nfull force and effect of federal law. As the Commission noted in the SBP, unless a state has\\nobtained an exemption pursuant to \\xc2\\xa7 453.9 of the Rule, \\xe2\\x80\\x9cany state laws which conflict with this\\nrule after its effective date are preempted to the minimum extent necessary to resolve that\\nconflict.7 The same would be true for any state law enacted since that time.\\n\\n3\\n\\n47 Fed. Reg. 42260, 42272 (1982). The Commission also noted that \\xe2\\x80\\x9c[c]onsumer\\ngroups and state officials in numerous states reported substantial resistance or flat refusals when\\nthey attempted to gather price data by telephone for survey purposes.\\xe2\\x80\\x9d 47 Fed. Reg. at 42268.\\nWhen it amended the Rule in 1994, the Commission cited evidence that \\xe2\\x80\\x9cthe Rule overall is\\ncontributing to increased consumer \\xe2\\x80\\x98price sensitivity\\xe2\\x80\\x99 that leads some additional consumers to\\n. . . seek comparative price information from non-industry sources . . . such as calling memorial\\nsocieties, media price \\xe2\\x80\\x98hotlines,\\xe2\\x80\\x99 or state agencies that make comparative price information\\navai1able.\\xe2\\x80\\x9d 59 Fed. Reg. 1592, 1602 (1994).\\n4\\n\\nCompliance Guide (2004), p. 20.\\n\\n5\\n\\nId.\\n\\n6\\n\\nId. (\\xe2\\x80\\x9cYou must give consumers who telephone your place of business and ask\\nabout your prices or offerings accurate information from your General Price List, Casket Price\\nList, and Outer Burial Container Price List\\xe2\\x80\\x9d) (emphasis added). See also 16 C.F.R.\\n\\xc2\\xa7 453.2(b)(1).\\n7\\n\\n47 Fed. Reg. at 42287 (footnote omitted).\\n\\n\\x0cMr. Mark W. Duffey\\nPage 3 of 3\\nFor these reasons, it is a violation of the Funeral Rule for a funeral provider to refuse to\\nprovide price information by telephone upon request to any person for any reason, such as:\\n!\\n\\nState law does not require a funeral provider to disclose price information by telephone,\\nor permits a funeral provider to refuse to provide price information by telephone;\\n\\n!\\n\\nPrice information can be provided only by a third-party other than the funeral provider\\n(e.g., the funeral provider\\xe2\\x80\\x99s attorney);\\n\\n!\\n\\nThe caller will not disclose information about their organization, or what it intends to do\\nwith the information;\\n\\n!\\n\\nThe caller is not a consumer seeking to make funeral arrangements with the provider;\\n\\n!\\n\\nThe caller will or may profit from receipt of the pricing information requested;\\n\\n!\\n\\nThe caller has not requested price information in person at the funeral home;\\n\\n!\\n\\nThe caller has not requested price information in writing; or\\n\\n!\\n\\nThe caller has not paid a fee, or agreed to pay a fee, for the price information.\\n\\nAt the same time, as the Guide recognizes, funeral providers may: (1) use answering\\nmachines to record incoming calls or to advise callers to call a specified number during business\\nhours to get price information; (2) decline to provide price information outside of regular\\nbusiness hours if that is the provider\\xe2\\x80\\x99s normal practice; and (3) take a message if in the middle of\\nan arrangements conference, and call back to provide price information at a later time.8 In each\\nof these cases, the Rule requires that the funeral provider furnish price information promptly by\\nreturning the telephone call.\\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted\\non the FTC website at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/staffopinions.shtm.\\nSincerely,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\n8\\n\\nId.\\n\\n\\x0c'","created_timestamp":"March 18, 2009","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-09-2\/opinion09-2.pdf"}
 {"text":"b'\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-responding-complaint-computer-communications-industry-association-regarding-alleged\/071206ccia.pdf"}
 {"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Marketing Practices\\nCraig Tregillus\\nctregillus@ftc.gov\\n\\nDirect Dial: (202) 326-2970\\nFacsimile: (202) 326-3395\\n\\nJuly 12, 2007\\nMr. Joseph J. DellaVecchia, Jr.\\nDellaVecchia, Reilly, Smith & Boyd Funeral Home, Inc.\\n410 North Church St,\\nWest Chester, PA 19380\\nDear Mr. DellaVechhia:\\nThis letter responds to your request for a staff opinion on whether the FTC Funeral Rule\\npermits funeral homes to: (1) Charge a fee for disposal of the container in which a third-party\\ncasket is shipped; (2) Charge a fee for storage of a third-party casket that is delivered in advance\\nof the time it is needed; and (3) Furnish consumers with two separate contracts: one covering\\ngoods and services provided by the funeral home, and one covering cash advance items secured\\nfrom third parties by the funeral home on behalf of the consumer.\\nWith respect to the first two questions, your letter acknowledges that the Funeral Rule\\ndoes not permit funeral providers to charge a casket handling fee, but argues that providers\\nshould be allowed to charge separate fees for disposing of the large containers in which thirdparty caskets are shipped, and for storing third-party caskets when they arrive several days before\\nthey are needed for a visitation or service.\\nThe requirement that funeral providers allow customers to use caskets purchased from\\nthird parties comes from section 453.4(b) of the Rule. Section 453.4(b)(i) makes it an unfair or\\ndeceptive act or practice for a funeral provider to \\xe2\\x80\\x9c[c]ondition the furnishing of any funeral good\\nor funeral service to a person arranging a funeral upon the purchase of any other funeral good or\\nfuneral service, except as required by law or as otherwise permitted by this part.\\xe2\\x80\\x9d1\\nThe prohibition on casket handling fees, arises from section 453.4(b)(ii) of the Rule\\nwhich prohibits funeral providers from charging \\xe2\\x80\\x9cany fee as a condition to furnishing any funeral\\ngoods or funeral services to a person arranging a funeral\\xe2\\x80\\x9d other than the basic services fee,\\npayments for the funeral goods and services selected, and payments for items required to meet\\n\\n1\\n\\n16 C.F.R. \\xc2\\xa7 453.4(b)(i).\\n\\n\\x0clegal, cemetery or crematory requirements.2 Thus, when a customer purchases a casket from a\\nthird party, a funeral provider is prohibited from requiring that the customer purchase any other\\ngood or service, or pay \\xe2\\x80\\x9cany fee\\xe2\\x80\\x9d other than those permitted by the Funeral Rule. Requiring\\ncustomers who use third party caskets to pay a casket handling fee would violate that section of\\nthe Rule. Likewise, it is staff\\xe2\\x80\\x99s opinion that requiring customers who use third party caskets to\\npay a shipping container disposal fee or a casket storage fee would violate the same provision of\\nthe Rule.\\nYou also asked whether the Funeral Rule permits the use of two separate contracts so that\\na funeral provider can distinguish its own charges from \\xe2\\x80\\x9ccash advance\\xe2\\x80\\x9d charges for payments to\\nthird-party suppliers. It is staff\\xe2\\x80\\x99s opinion that providing two separate contracts would conflict\\nwith section 453.2(b)(5)(i) of the Rule. That section requires that at the conclusion of the\\ndiscussion of arrangements, the funeral provider give the customer a written statement that lists\\nthe \\xe2\\x80\\x9cfuneral goods and services selected\\xe2\\x80\\x9d; \\xe2\\x80\\x9cspecifically itemized cash advance items\\xe2\\x80\\x9d; and \\xe2\\x80\\x9cthe\\ntotal cost of the goods and services selected.\\xe2\\x80\\x9d3 Thus, providing information about cash advance\\nitems in a separate document and not in the Statement would violate the Rule. However, section\\n453.2(b)(5)(ii) of the Rule provides that the information required by section 453.2(b)(5)(i) \\xe2\\x80\\x9cmay\\nbe included on any contract, statement or other document.\\xe2\\x80\\x9d You are free, therefore, to format the\\nStatement in a way that clearly distinguishes the charges for cash advance items to be paid to\\nthird parties from the charges for the goods and services you provide.\\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\\ncharged with enforcement of the Funeral Rule.\\nSincerely,\\n\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\n2\\n\\n16 C.F.R. \\xc2\\xa7 453.4(b)(ii) (emphasis added).\\n\\n3\\n\\nSee 16 C.F.R. \\xc2\\xa7 453.2(b)(5).\\n\\n\\x0c'","created_timestamp":"July 12, 2007","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-07-4\/opinion07-4.pdf"}
-{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWA SHING TO N, D.C. 20580\\n\\nDivision of Marketing Practices\\n\\nApril 5, 2007\\nMitchell N. Roth, Esq.\\nWilliams Mullen\\n8270 Geensboro Drive, Suite 700\\nMcLean, Virginia 22102\\nDear Mr. Roth:\\nThis letter responds to your request of June 28, 2006, seeking an informal advisory\\nopinion from staff of the Federal Trade Commission (the \\xe2\\x80\\x9cCommission\\xe2\\x80\\x9d or the \\xe2\\x80\\x9cFTC\\xe2\\x80\\x9d) regarding\\nthe application of the Telemarketing Sales Rule (\\xe2\\x80\\x9cTSR\\xe2\\x80\\x9d or \\xe2\\x80\\x9cthe Rule\\xe2\\x80\\x9d), 16 C.F.R. Part 310, to a\\nbusiness plan involving the telemarketing of automobile service contracts.1 In the proposed plan,\\nyour client would supply auto service contracts under a sales program developed and maintained\\nby a third party. You request guidance on whether the third party in this plan would be both a\\n\\xe2\\x80\\x9ctelemarketer\\xe2\\x80\\x9d and a \\xe2\\x80\\x9cseller\\xe2\\x80\\x9d under the TSR, and whether your client would be neither. Based on\\nyour letter\\xe2\\x80\\x99s description of the proposed plan, we agree with your letter\\xe2\\x80\\x99s determination that the\\nthird party would meet the Rule\\xe2\\x80\\x99s definition of a \\xe2\\x80\\x9ctelemarketer,\\xe2\\x80\\x9d and its definition of a \\xe2\\x80\\x9cseller.\\xe2\\x80\\x9d\\nHowever, we also believe that your client would meet the definition of a \\xe2\\x80\\x9cseller.\\xe2\\x80\\x9d\\nRelevant Rule Provisions\\nThe TSR defines the terms \\xe2\\x80\\x9cseller,\\xe2\\x80\\x9d \\xe2\\x80\\x9ctelemarketer,\\xe2\\x80\\x9d and \\xe2\\x80\\x9ctelemarketing\\xe2\\x80\\x9d as follows:\\nSeller means any person who, in connection with a telemarketing transaction, provides,\\noffers to provide, or arranges for others to provide goods or services to the customer in\\nexchange for consideration;\\nTelemarketer means any person who, in connection with telemarketing, initiates or\\nreceives telephone calls to or from a customer or donor;\\nTelemarketing means a plan, program, or campaign which is conducted to induce the\\npurchase of goods or services or a charitable contribution, by use of one or more\\n\\n1\\n\\nFTC staff generally understands such a contract to be a promise to perform or pay\\nfor automobile repairs or services. See \\xe2\\x80\\x9cAuto Service Contracts,\\xe2\\x80\\x9d May 1997 (FTC consumer\\neducation pamphlet available at http:\/\/www.ftc.gov\/bcp\/conline\/pubs\/autos\/autoserv.pdf). We\\nfurther understand that automobile service contracts sold by automobile dealers are frequently\\nhandled by independent companies called administrators, and that such administrators may act as\\nclaims adjusters, authorizing payment of claims to any dealers under the contract. Id.\\n\\n\\x0cMr. Mitchell N. Roth\\nApril 5, 2007\\nPage 2\\ntelephones and which involves more than one interstate telephone call \\xe2\\x80\\xa6 .\\n16 C.F.R. \\xc2\\xa7\\xc2\\xa7 310.2(z), (bb), and (cc).2\\nDiscussion\\nIn your letter\\xe2\\x80\\x99s description of your client\\xe2\\x80\\x99s proposed business plan, you state that your\\nclient will, among other things: sell and administer automobile mechanical breakdown contracts;\\nsupply the service contract for sale under a program developed and maintained by a third party;\\nserve as the administrator of the service contract and take responsibility for claims payments and\\nadministering contractual obligations; and receive a predetermined wholesale cost per service\\ncontract sold.\\nYou state that the third party will, among other things: develop its own sales strategy;\\ndevelop its own marketing strategy and materials; develop scripts relevant to the sale of service\\ncontracts; manage its own sales persons and sales methods\/programs; maintain all licenses and\\nbonds required of a telemarketing seller; dictate retail product pricing; take responsibility for\\ncollecting payment; conduct all fulfillment services; and inform customers that it is selling the\\nservice contracts on its own behalf.\\nThe staff agrees with your letter\\xe2\\x80\\x99s assertion that the third party in the proposed plan\\nwould meet the Rule\\xe2\\x80\\x99s definitions of both \\xe2\\x80\\x9ctelemarketer\\xe2\\x80\\x9d and \\xe2\\x80\\x9cseller.\\xe2\\x80\\x9d The third party would\\napparently initiate or receive telephone calls to or from a customer. It appears that, by\\n\\xe2\\x80\\x9cconduct[ing] all fulfillment services\\xe2\\x80\\x9d and \\xe2\\x80\\x9cinform[ing] consumers that it is selling the Service\\nContracts on its own behalf,\\xe2\\x80\\x9d the third party would also provide or offer to provide services to\\nthe customer. Because the third party is responsible for \\xe2\\x80\\x9ccollection of payment,\\xe2\\x80\\x9d it would\\nprovide or offer to provide these services in exchange for consideration. Finally, the third party\\nwould initiate or receive these calls, and provide or offer to provide these services, in connection\\nwith telemarketing. Therefore, the third party would likely meet the Rule\\xe2\\x80\\x99s definitions of both a\\n\\xe2\\x80\\x9ctelemarketer\\xe2\\x80\\x9d and a \\xe2\\x80\\x9cseller.\\xe2\\x80\\x9d\\nHowever, the staff disagrees with your letter\\xe2\\x80\\x99s assertion that your client would meet\\nneither of these definitions. Our view, based on your letter\\xe2\\x80\\x99s discussion of the proposed business\\nplan, is that your client would meet the Rule\\xe2\\x80\\x99s definition of a \\xe2\\x80\\x9cseller.\\xe2\\x80\\x9d According to your letter,\\nyour client would be \\xe2\\x80\\x9cresponsible for claims payment and administration of contractual\\nobligations under the Service Contract,\\xe2\\x80\\x9d and would thus provide services to the customer. In\\nother words, your client would remain responsible to provide the consumer with the services that\\n\\n2\\n\\nWhen the Commission amended the TSR in 2003, 68 Fed. Reg. 4580 (Jan. 29,\\n2003), these definitions were modified pursuant to the USA PATRIOT Act, Pub. L. 107-56\\n(Oct. 26, 2001), to reach not only calls made to induce purchases, but also those made to induce\\ncharitable contributions. Otherwise, the definitions are substantively the same as in the original\\nrule, although they were renumbered. 60 Fed. Reg. 43843 (Aug. 23, 1995).\\n\\n\\x0cMr. Mitchell N. Roth\\nApril 5, 2007\\nPage 3\\ncomprise, in large measure, what the consumer is purchasing. In return, your client would\\n\\xe2\\x80\\x9creceive a predetermined wholesale cost per service contract sold.\\xe2\\x80\\x9d Finally, your Client would\\nperform these services in connection with telemarketing. We believe that this activity is\\nsufficient to bring your client\\xe2\\x80\\x99s role in the proposed business plan within the Rule\\xe2\\x80\\x99s definition of\\na \\xe2\\x80\\x9cseller.\\xe2\\x80\\x9d We note that neither the text of the Rule itself nor the Statement of Basis and Purpose\\nthat accompanied it when issued suggest that in a given transaction one and only one party can be\\na \\xe2\\x80\\x9cseller\\xe2\\x80\\x9d for purposes of Rule coverage. Arrangements such as described in your letter may\\nresult in more than one \\xe2\\x80\\x9cseller\\xe2\\x80\\x9d in a particular transaction.\\nThe fact that the marketing campaign for the sales contract would be developed and\\nexecuted by a third party is not determinative as to the question of who meets the definition of\\n\\xe2\\x80\\x9cseller\\xe2\\x80\\x9d under the Rule. As the Commission noted in the Statement of Basis and Purpose for the\\noriginal TSR:\\nthe term [\\xe2\\x80\\x98seller\\xe2\\x80\\x99] includes not only persons who, in connection with a\\ntelemarketing transaction, provide or offer to provide goods and services to the\\ncustomer in exchange for consideration, but also persons who, in connection with\\na telemarketing transaction, arrange for others to provide goods or services to the\\ncustomer \\xe2\\x80\\xa6 . [T]he Rule\\xe2\\x80\\x99s coverage cannot be avoided by structuring a sale so\\nthat someone other than the seller actually provides the goods or services directly\\nto the customer.\\n60 Fed. Reg. 43844, Aug. 23, 1995. In light of our conclusion that your client would meet the\\nRule\\xe2\\x80\\x99s definition of a \\xe2\\x80\\x9cseller\\xe2\\x80\\x9d under the described business plan, we advise that your client would\\nremain within the scope of the Rule\\xe2\\x80\\x99s coverage.\\nThe opinions expressed in the foregoing discussion and the basis for this conclusion are\\nthose of Commission staff only and are not attributable to, nor binding on, the Commission itself\\nor any individual Commissioner. I hope this discussion is helpful to you. If you have any further\\nquestions, please do not hesitate to contact me at 202-326-2330.\\nSincerely,\\n\\nGary Ivens\\n\\n\\x0c'","created_timestamp":"June 28, 2006","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-07-1\/opinion0701_0.pdf"}
+{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWA SHING TO N, D.C. 20580\\n\\nDivision of Marketing Practices\\n\\nApril 5, 2007\\nMitchell N. Roth, Esq.\\nWilliams Mullen\\n8270 Geensboro Drive, Suite 700\\nMcLean, Virginia 22102\\nDear Mr. Roth:\\nThis letter responds to your request of June 28, 2006, seeking an informal advisory\\nopinion from staff of the Federal Trade Commission (the \\xe2\\x80\\x9cCommission\\xe2\\x80\\x9d or the \\xe2\\x80\\x9cFTC\\xe2\\x80\\x9d) regarding\\nthe application of the Telemarketing Sales Rule (\\xe2\\x80\\x9cTSR\\xe2\\x80\\x9d or \\xe2\\x80\\x9cthe Rule\\xe2\\x80\\x9d), 16 C.F.R. Part 310, to a\\nbusiness plan involving the telemarketing of automobile service contracts.1 In the proposed plan,\\nyour client would supply auto service contracts under a sales program developed and maintained\\nby a third party. You request guidance on whether the third party in this plan would be both a\\n\\xe2\\x80\\x9ctelemarketer\\xe2\\x80\\x9d and a \\xe2\\x80\\x9cseller\\xe2\\x80\\x9d under the TSR, and whether your client would be neither. Based on\\nyour letter\\xe2\\x80\\x99s description of the proposed plan, we agree with your letter\\xe2\\x80\\x99s determination that the\\nthird party would meet the Rule\\xe2\\x80\\x99s definition of a \\xe2\\x80\\x9ctelemarketer,\\xe2\\x80\\x9d and its definition of a \\xe2\\x80\\x9cseller.\\xe2\\x80\\x9d\\nHowever, we also believe that your client would meet the definition of a \\xe2\\x80\\x9cseller.\\xe2\\x80\\x9d\\nRelevant Rule Provisions\\nThe TSR defines the terms \\xe2\\x80\\x9cseller,\\xe2\\x80\\x9d \\xe2\\x80\\x9ctelemarketer,\\xe2\\x80\\x9d and \\xe2\\x80\\x9ctelemarketing\\xe2\\x80\\x9d as follows:\\nSeller means any person who, in connection with a telemarketing transaction, provides,\\noffers to provide, or arranges for others to provide goods or services to the customer in\\nexchange for consideration;\\nTelemarketer means any person who, in connection with telemarketing, initiates or\\nreceives telephone calls to or from a customer or donor;\\nTelemarketing means a plan, program, or campaign which is conducted to induce the\\npurchase of goods or services or a charitable contribution, by use of one or more\\n\\n1\\n\\nFTC staff generally understands such a contract to be a promise to perform or pay\\nfor automobile repairs or services. See \\xe2\\x80\\x9cAuto Service Contracts,\\xe2\\x80\\x9d May 1997 (FTC consumer\\neducation pamphlet available at http:\/\/www.ftc.gov\/bcp\/conline\/pubs\/autos\/autoserv.pdf). We\\nfurther understand that automobile service contracts sold by automobile dealers are frequently\\nhandled by independent companies called administrators, and that such administrators may act as\\nclaims adjusters, authorizing payment of claims to any dealers under the contract. Id.\\n\\n\\x0cMr. Mitchell N. Roth\\nApril 5, 2007\\nPage 2\\ntelephones and which involves more than one interstate telephone call \\xe2\\x80\\xa6 .\\n16 C.F.R. \\xc2\\xa7\\xc2\\xa7 310.2(z), (bb), and (cc).2\\nDiscussion\\nIn your letter\\xe2\\x80\\x99s description of your client\\xe2\\x80\\x99s proposed business plan, you state that your\\nclient will, among other things: sell and administer automobile mechanical breakdown contracts;\\nsupply the service contract for sale under a program developed and maintained by a third party;\\nserve as the administrator of the service contract and take responsibility for claims payments and\\nadministering contractual obligations; and receive a predetermined wholesale cost per service\\ncontract sold.\\nYou state that the third party will, among other things: develop its own sales strategy;\\ndevelop its own marketing strategy and materials; develop scripts relevant to the sale of service\\ncontracts; manage its own sales persons and sales methods\/programs; maintain all licenses and\\nbonds required of a telemarketing seller; dictate retail product pricing; take responsibility for\\ncollecting payment; conduct all fulfillment services; and inform customers that it is selling the\\nservice contracts on its own behalf.\\nThe staff agrees with your letter\\xe2\\x80\\x99s assertion that the third party in the proposed plan\\nwould meet the Rule\\xe2\\x80\\x99s definitions of both \\xe2\\x80\\x9ctelemarketer\\xe2\\x80\\x9d and \\xe2\\x80\\x9cseller.\\xe2\\x80\\x9d The third party would\\napparently initiate or receive telephone calls to or from a customer. It appears that, by\\n\\xe2\\x80\\x9cconduct[ing] all fulfillment services\\xe2\\x80\\x9d and \\xe2\\x80\\x9cinform[ing] consumers that it is selling the Service\\nContracts on its own behalf,\\xe2\\x80\\x9d the third party would also provide or offer to provide services to\\nthe customer. Because the third party is responsible for \\xe2\\x80\\x9ccollection of payment,\\xe2\\x80\\x9d it would\\nprovide or offer to provide these services in exchange for consideration. Finally, the third party\\nwould initiate or receive these calls, and provide or offer to provide these services, in connection\\nwith telemarketing. Therefore, the third party would likely meet the Rule\\xe2\\x80\\x99s definitions of both a\\n\\xe2\\x80\\x9ctelemarketer\\xe2\\x80\\x9d and a \\xe2\\x80\\x9cseller.\\xe2\\x80\\x9d\\nHowever, the staff disagrees with your letter\\xe2\\x80\\x99s assertion that your client would meet\\nneither of these definitions. Our view, based on your letter\\xe2\\x80\\x99s discussion of the proposed business\\nplan, is that your client would meet the Rule\\xe2\\x80\\x99s definition of a \\xe2\\x80\\x9cseller.\\xe2\\x80\\x9d According to your letter,\\nyour client would be \\xe2\\x80\\x9cresponsible for claims payment and administration of contractual\\nobligations under the Service Contract,\\xe2\\x80\\x9d and would thus provide services to the customer. In\\nother words, your client would remain responsible to provide the consumer with the services that\\n\\n2\\n\\nWhen the Commission amended the TSR in 2003, 68 Fed. Reg. 4580 (Jan. 29,\\n2003), these definitions were modified pursuant to the USA PATRIOT Act, Pub. L. 107-56\\n(Oct. 26, 2001), to reach not only calls made to induce purchases, but also those made to induce\\ncharitable contributions. Otherwise, the definitions are substantively the same as in the original\\nrule, although they were renumbered. 60 Fed. Reg. 43843 (Aug. 23, 1995).\\n\\n\\x0cMr. Mitchell N. Roth\\nApril 5, 2007\\nPage 3\\ncomprise, in large measure, what the consumer is purchasing. In return, your client would\\n\\xe2\\x80\\x9creceive a predetermined wholesale cost per service contract sold.\\xe2\\x80\\x9d Finally, your Client would\\nperform these services in connection with telemarketing. We believe that this activity is\\nsufficient to bring your client\\xe2\\x80\\x99s role in the proposed business plan within the Rule\\xe2\\x80\\x99s definition of\\na \\xe2\\x80\\x9cseller.\\xe2\\x80\\x9d We note that neither the text of the Rule itself nor the Statement of Basis and Purpose\\nthat accompanied it when issued suggest that in a given transaction one and only one party can be\\na \\xe2\\x80\\x9cseller\\xe2\\x80\\x9d for purposes of Rule coverage. Arrangements such as described in your letter may\\nresult in more than one \\xe2\\x80\\x9cseller\\xe2\\x80\\x9d in a particular transaction.\\nThe fact that the marketing campaign for the sales contract would be developed and\\nexecuted by a third party is not determinative as to the question of who meets the definition of\\n\\xe2\\x80\\x9cseller\\xe2\\x80\\x9d under the Rule. As the Commission noted in the Statement of Basis and Purpose for the\\noriginal TSR:\\nthe term [\\xe2\\x80\\x98seller\\xe2\\x80\\x99] includes not only persons who, in connection with a\\ntelemarketing transaction, provide or offer to provide goods and services to the\\ncustomer in exchange for consideration, but also persons who, in connection with\\na telemarketing transaction, arrange for others to provide goods or services to the\\ncustomer \\xe2\\x80\\xa6 . [T]he Rule\\xe2\\x80\\x99s coverage cannot be avoided by structuring a sale so\\nthat someone other than the seller actually provides the goods or services directly\\nto the customer.\\n60 Fed. Reg. 43844, Aug. 23, 1995. In light of our conclusion that your client would meet the\\nRule\\xe2\\x80\\x99s definition of a \\xe2\\x80\\x9cseller\\xe2\\x80\\x9d under the described business plan, we advise that your client would\\nremain within the scope of the Rule\\xe2\\x80\\x99s coverage.\\nThe opinions expressed in the foregoing discussion and the basis for this conclusion are\\nthose of Commission staff only and are not attributable to, nor binding on, the Commission itself\\nor any individual Commissioner. I hope this discussion is helpful to you. If you have any further\\nquestions, please do not hesitate to contact me at 202-326-2330.\\nSincerely,\\n\\nGary Ivens\\n\\n\\x0c'","created_timestamp":"April 5, 2007","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-07-1\/opinion0701_0.pdf"}
 {"text":"b'\\x0c\\x0c\\x0c\\x0c\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-07-2\/opinion07-2.pdf"}
 {"text":"b'S~nnenschein\\n\\n1301 K Street N.W.\\nSuite 600, East Tower Chicago\\nWashington, D.C. 20005-3364 Kansas\\n202.408.6400 Los Angeles\\n202.408.6399 fax New Vork\\nwww,sonnenscheln.com Phoenix\\n\\nS O N N E N S C H E I N N A T H & R O S E N T H A L LLP\\n\\nChristopher Smith\\n202.408.923 1\\n\\nkitsmith@sonnenschein.com\\n\\nSan Francisco\\nShort Hills, N.J.\\nSt. Louis\\nWashington, D.C.\\nWesf Palm Beach\\n\\nElaine D. Kolish\\n202.408.3243\\n\\neltolish@sonnenschein.com\\n\\nNovember 15,2006\\n\\nThe Honorable Donald S. Clark\\nSecretary\\nFederal Trade Commission\\n600 Pennsylvania Ave., N.W.\\nWashington, DC 20580\\nRe:\\n\\nRequest For a Staff Advisory Opinion\\n\\nDear Mr. Clark:\\nOn behalf of Sony Electronics Inc. (Sony) we are requesting a staff advisory opinion,\\npursuant to 16 C.F.R. fj 1.1, on the question of whether Sony may lawfully market and sell as\\nnew certain returned consumer electronics products that have never been used and that are\\nindistinguishable from products straight fiom the factory. Specifically, Sony seeks guidance on\\nthe acceptability of selling consumer electronics products as new products under a narrowly\\ndefined program in which Sony or its authorized vendor would:\\n(i)\\n\\nidentify, fi-om among the products returned by retailers to Sony or its authorized\\nvendor, those that have never been turned on;\\n\\n(ii) visually inspect those products that have not been turned on and reject any damaged\\nproducts;\\n(iii) ensure that returned products that satisfy the first two conditions have all of their\\nrequisite parts, components, and manuals;\\n(iv) repackage the returned products that meet the above conditions;\\n(v)\\n\\nprovide the same warranty for these returned products as for new products that have\\nnever been sold; and\\n\\nY\\n\\nE\\n\\n2\\n\\nA\\n\\n0\\n\\nR\\n\\n0\\n\\nS\\n\\n6\\n\\n\\x0cS~nnenschein\\n\\nSONNENSCHEIN NATH & ROSENTHAL LLP\\n\\nFederal Trade Commission\\nNovember 15,2006\\nPage 2\\n\\n(vi) return them to a retailer for sale as new products.\\'\\nThis request is based on our understanding of prior Commission policy and precedent\\nthat require a seller to disclose when it is selling goods that have been previously used, but do\\nnot require returned goods that have merely been \"inspected\" by consumers to be described as\\nused when resold. Sony3srequest does not require the FTC staff to define the entire scope of\\nactions that can reasonably constitute inspection. Instead, we only ask the staff to conclude (a)\\nthat a product that has never been turned on will not be considered used, and (b) that the other\\nelements of Sony\\'s proposed program will assure that a consumer buying such a product will\\nencounter the same product purchase and usage experience as if he or she had bought a new\\nconsumer electronics product that had not been purchased previously.\\nWe explain below the reasons for Sony\\'s proposed course of action and provide\\nadditional details about how the program would be implemented. Additionally, we set forth an\\nanalysis of why we believe Sony\\'s proposed conduct is legally permissible and why it is\\nappropriate for the FTC staff to provide the requested guidance.\\n\\nSony\\'s Proposal to Sell Certain Unused Returned Consumer Electronics as New\\nLike many other consumer electronics companies, Sony experiences a high volume of\\nproduct returns from consumers, the wholesale value of which has grown dramatically in recent\\nyears. As a matter of policy, Sony generally treats all opened returned products as if they have\\nbeen used by consumers. These returned products, which are often inspected and serviced, are\\ndesignated by Sony as \"Class B\" products. These products are sold as refurbished products at a\\nsignificantly discounted price, and they typically include a 90-day limited warranty rather than a\\nlonger new product warranty.\\nBecause of the undifferentiating nature of its resale policy, many products designated as\\nClass B by Sony have never even been turned on - having merely been inspected by purchasers\\nbefore being returned to Sony. Such products have nothing wrong with them when returned by\\nconsumers and require no servicing before they are sold at a Class B discount.\\n\\n\\'\\n\\nThe consumer electronics products potentially covered by Sony\\'s program include but are not limited to the\\nfollowing products: video products (e.g.,DVD playerslrecorders, digital cameras, camcorders, televisions, and\\ncombination TVIVCR or TVDVD players); computers (desktop and notebook PCs and related equipment); video\\ngame systems; audio products (desktop, component and portable devices); cell phones; portable digital assistants;\\nand vehicle electronics.\\n\\nEGRITY\\nY\\n\\nE\\n2\\n\\nA\\n0\\n\\nR\\n0\\n\\nS\\n6\\n\\n\\x0cS~nnenschein\\n\\nSONNENSCHEIN NATH & ROSENTHAL LLP\\n\\nFederal Trade Commission\\nNovember 15,2006\\nPage 3\\n\\nThe financial cost to Sony of its Class B resale policy is substantial. Consequently, Sony\\nwould like to modify its policy to distinguish between returned products that have not been\\nturned on and those that have been operated. Such a modification would provide Sony with\\ngreater flexibility in both inventory control and supply chain management while ensuring\\ncompliance with the Commission\\'s policies.\\nAlthough even some use of a product reasonably could be considered mere \"inspection,\"\\nSony proposes to take an extremely conservative approach to the question of whether a returned\\nSony product has been used by a consumer. Sony\\'s proposed program is based on the simple,\\nbright line standard of whether a product has been turned on - i.e., if it has not been turned on, it\\nhas not been used. This approach avoids a potential slippery slope, because it does not require\\nthe FTC to evaluate or determine how much use is acceptable.\\nTo implement this policy change in a consistent, verifiable manner, Sony would use\\nexisting, reliable product and packaging technologies to determine if a purchaser has turned on a\\nreturned product. For example, some of Sony\\'s electronic products contain an internal chip or\\nclock that allows Sony to determine if a product has been turned on and for how long. Sony also\\nmay use tamper-evident tape, seals or labels, which can be affixed to AC plugs, connectors or\\nbattery compartments, to provide a clear indicator of consumer use of a product. Sony would\\ndetermine on a product-by-product basis which technology it would use to determine if a\\nconsumer has turned on a product. If the consumer has turned on the product at all - even if only\\nto conduct a cursory inspection of the product\\'s operation - Sony would disqualify the product\\nfi-om future sale as a new product. Sony\\'s plan thus avoids subjective evaluations about whether\\nor to what extent a returned product has been used by a consumer. Stated in its simplest terms, if\\nelectrical power has been applied to any of the product\\'s circuitry, then it cannot be sold as\\nnew.\"\\nLC\\n\\nThe other elements of Sony\\'s program ensure that the consumer purchasing experience\\nwould be the same as it would be with other new products. Sony would visually examine unused\\nproducts to ensure that they are complete and undamaged, and if so, place them in new\\npackaging.2 sony also would provide the same wmanty for these repackaged products as for\\nThis program will not involve refurbishment of products to a \"good as new\" condition. If there is visible damage,\\nsuch as scratches, dents or cracks, the product would not be eligible for the program. Of course, minor cosmetic\\nblemishes, such as fingerprints that a consumer might leave on a product when handling it, would be removed and\\nwould not render the product ineligible for the program. Otherwise damaged products would be designated for\\nSony\\'s refurbished sales program. Moreover, if the product is otherwise acceptable but a minor part or piece of\\nproduct dormation (e.g.,a headphone, manual, or warranty card) is missing because the consumer omitted the item\\nfrom the package when returning the product, then the missing item would be replaced.\\n\\n\\x0cS~nnenschein\\n\\nSONNENSCHEIN NATH & ROSENTHALLLP\\n\\nFederal Trade Commission\\nNovember 15,2006\\nPage 4\\n\\nother new similar products. Because Sony (or its authorized agent), and not retailers, would run\\nthe program, Sony can ensure that the policy is properly and uniformly applied across all returns.\\n\\nSony and Industry Experience With Returns Show the Significance of Sony\\'s Request\\nCurrently, as would be the case under the new program, retailers send all returned\\nproducts to return centers operated by Sony or its authorized agent. These return centers perfom\\nthe necessary inspections and refurbishment to prepare a returned item for resale as Class B\\nproducts. Sony\\'s experience through these return centers indicates that only a very small\\npercentage of returns are actually defective products and that a very significant percentage fall\\ninto the \"no problems found\" (NPF) category. Because many of the NPF products are items that\\nhave never been turned on, Sony incurs significant losses from their sale as Class B products.\\nSimilar industry-wide patterns of returns also have been reported. For example, a\\nconsumer survey conducted by the Consumer Electronics Association (CEA) in 2005 indicated\\nthat many consumers return products for reasons other than a defect, including (a) to obtain a\\ndifferent brand or model, (b) because they no longer wanted it, (c) because they already owned\\nit, or (d) because they spent too much money on i t 3 The CEA survey also indicated that nearly\\n50 percent of all returns occur within a week after purchase. Overall, these statistics suggest that\\nmany purchasers of consumer electronics products may merely open the box and inspect the\\nproduct without using it before returning it to the retailer or to the manufacturer.\\n\\nSony\\'s Proposed Course of Action Is Lawful\\nSony believes that its proposed course of action, as described in this letter, is lawful and\\nwould not be deceptive under the FTC Act or under the standards the Commission has expressed\\nin its 1984 Policy Statement on Deception and in its 1969 Enforcement Policy on \"Merchandise\\nWhich Has Been Subjected To Previous Use On Trial Basis and Subsequently Resold as New.\"\\nThe 1969 policy statement is particularly relevant. Although the 1969 Enforcement Policy\\npredates the Commission\\'s Policy Statement on Deception, it has not been repudiated by the\\nCommission. Moreover, we believe that application of the Deception Statement\\'s analytical\\ntools leads to the same conclusion the Commission reached in its 1969 Enforcement Policy.\\nThe 1969 statement, whle reaffirming the Commission\\'s long-held view that consumers\\nhave a preference for new or unused goods, also draws an important distinction between\\n3\\n\\n\"Return Rates and Issues for CE Products Update,\" Consumer Electronics Association (CEA) Market Research\\nReport (Nov. 2005).\\n\\nEGRITY\\nY\\n\\nE\\n\\nA\\n\\nR\\n\\nS\\n\\n\\x0cS~nnenschein\\nSONNENSCHEIN NATH & ROSENTHALLLP\\n\\nFederal Trade Commission\\nNovember 15,2006\\nPage 5\\n\\n\"inspectionyyand\\nSpecifically, the Commission concluded that trial use by a consumer\\nand subsequent refix-bishment of returned products to a good-as-new conhtion requires\\ndisclosure, but that its \"policy applies only to merchandise that has been used, and not to\\nmerchandise that has merely been inspected but not used.\"\\'\\nUnder the Deception Policy Statement there must be a representation, omission or\\npractice that is likely to mislead a consumer, acting reasonably under the circumstances, to his or\\nher detriment.6 In other words, the representation, omission or practice must be a material one.\\nUnder its proposed program, Sony would treat the products as new, in terms of their pricing,\\npackaging and warranty. The resulting implied representation that the repackaged products are\\nnew would not be misleading to consumers because the products would in fact be new, having\\nnever been used by their previous purchasers.7\\nAlthough Sony recognizes that the FTC appreciates empirical data on consumer\\nexpectations when it is available, we are unaware of any such empirical data in this case.\\nNevertheless, the absence of such data is not a bar to an advisory opinion. It is well established\\nin Cornmission case law that the Commission may use its accumulated expertise to determine\\nwhat facts are material to consumers and when it is deceptive to omit those facts from marketing\\nmaterials.\\' In the past, the Commission has generally alleged a deceptive failure to disclose\\ninformation only when the omitted information involved health or safety or the key financial\\nterms and conditions of a transaction.\\nWe also suggest that the FTC can find additional support for Sony\\'s proposed course of\\naction in various state laws that expressly or impliedly permit \"unused\" goods to be sold as new.\\nMany of these states have based their laws on the Uniform Deceptive Trade Practices Act and\\nthe Uniform Consumer Sales Act, which prohbit the resale, as new, of returned products only if\\nthe products have been used, altered, reconditioned or reclaimed. Under those statutes, mere\\n34. Fed. Reg. 176, 177.\\n\\nId. at 177.\\nAppended to ClzffdaleAssociates, Inc., 103 F.T.C. 110, 174 (1984).\\nJust as we believe that Sony has no legal obligation to disclose that goods are \"used\" because they have never been\\nturned on and thus fall squarely into the \"inspected\" category, we also believe that disclosure of the mere fact of\\nprior purchase is not a material omission that might trigger a disclosure requirement. The Commission\\'s Policy\\nStatement expressly recognizes that \"not all omissions are deceptive, even if providing the information would\\nbenefit consumers.. ..\" Id. at 183, n.4. Such a disclosure requirement also would be inconsistent with state laws, as\\ndiscussed below.\\n\\nSee, e.g., PJzer, 81 F.T.C. 23, 58 (1972).\\n\\n\\x0cS~nnenschein\\n\\nSONNENSCHEIN NATH & ROSENTHAL LLP\\n\\nFederal Trade Commission\\nNovember 15,2006\\nPage 6\\n\\ninspection that does not entail use or alteration of the product would not change the status of the\\nNotably, the Ohio Administrative Code states affirmatively that\\nproduct fiom \"new\" to\\n\"returned goods, which have not been used by a previous purchaser, shall be considered new or\\nunused.\"I0\\nFurthermore, in 1998 the Office of the Attorney General of the State of California came\\nto the same conclusion reached by the FTC in 1969 when it analyzed the question: \"must\\nmerchandise be advertised as \\'secondhand or usedyif it is used, worn, or sampled for a short\\ntime by a consumer and then returned in like-new condition pursuant to the retailer\\'s policy\\nallowing returns of merchandise at the customer\\'s discretion.\" Attorney General Daniel E.\\nLungren concluded that it must be so advertised,\" unless such use is for inspection purposes\\nonlY.\\'~\"\\n\\nIn analyzing the question, Attorney General Lungren was guided in part by the Oregon\\nSupreme Court\\'s decision in Weigel v. Ron Tonkin Chevrolet co.12 In that case the court held\\nthat because there was a transfer of legal possession of the auto and the purchaser had\\ndiscretionary use of the vehicle for his or her own purposes for five days, the auto must be\\nrepresented as used or secondhand. The court\\'s decision was based not on the fact of the sale,\\nbut on the purchaser\\'s use of the product. In that case, the court also commented on the common\\npractice of using goods for inspection purposes only, stating that \"merchandise other than\\nautomobiles sometimes is sold, examined, or tried out at home, and returned to the seller.\\nWhether such merchandise is \\'new\\' or \\'usedy does not depend on the fact of an earlier sale; it\\ndepends on whether the article was used.\"I3 The Attorney General believed that Weigel correctly\\ninterpreted the terms \"secondhand or used\" for its purposes. Thus, under the Attorney General\\'s\\nopinion, disclosure of the prior purchase of a product depends upon whether the product has been\\nused, unless such use is for inspection purposes only.\\n\\nSee Michael P. Sullivan, \\'What Goods or Property are \\'Used,\\' \\'Secondhand,\\' or the Like, for Purposes of State\\nConsumer Laws Prohibiting Claims that Such Items are New,\" 59 A.L.R. 4\\' 1192,s 2.\\n10\\n\\nSection 109:4-3-08. Other states such as Mississippi and Idaho have taken similar positions (\"goods are not\\nconsidered used if a prior consumer was given a full refund or exchange for the goods, in the normal course of\\nbusiness, and if the goods are not known to presently or formerly have defects\"). See, e.g., Mississippi, 24 000 002\\nR.5 1 (2006), and Idaho, IDAPA 04.02.02.113 (Returned Goods) (2005). See also Louisiana, LAC 16:III.S11(2003).\\nI \\' Opinion of Daniel E. Lungren, Attorney General, Clayton P. Roche, Deputy Attorney General, No. 97-1009\\n(May 22, 1998) (emphasis added).\\n\\nl3\\n\\nId. at 490, n.2.\\n\\nY\\n\\nE\\n2\\n\\nA\\n0\\n\\nR\\n0\\n\\nS\\n6\\n\\n\\x0cS~nnenschein\\n\\nSONNENSCHEIN NATH & ROSENTHAL LLP\\n\\nFederal Trade Commission\\nNovember 15,2006\\nPage 7\\n\\nSony believes that, under its proposed program, consumer electronics products that have\\nnot been turned on will not have been subjected to any use. The act of merely opening the\\npackaging and examining a product without turning it on should be considered \"inspection\" and\\nshould not trigger any affirmative disclosure duties nor any prohibition on representing the goods\\nas new.\\nAt its most basic level, Sony\\'s proposed program embodies the principles contained in\\nthe Commission\\'s 1969 policy statement and in the principles expressed in state laws and in the\\nCalifornia Attorney General\\'s opinion regarding a company\\'s disclosure duty. We believe that\\nthe principles of the 1969 policy statement remain valid and are consistent with those in the more\\nrecent Deception Policy Statement. Accordingly, Sony submits that it would be appropriate for\\nthe FTC to conclude that Sony consumer electronics products returned by consumers without\\never being turned on can be considered \"merely inspected\" and not \"used\" and thus be eligible\\nfor sale as new products.\\n\\nSony\\'s Request Satisfies the Commission\\'s Criteria for a Staff Advisory Opinion\\nSony believes that the issues raised by this request satisfy the criteria in the Commission\\'s\\nRules of Practice for issuance of a staff advisory opinion. The question posed by Sony is not a\\npurely hypothetical or theoretical one, because Sony is prepared to act upon a favorable opinion\\nissued by the staff. Sony is seeking this advisory opinion because, as noted above, the FTC has\\nnot issued guidance in this area in nearly 40 years, and there is no clear FTC or other guidance\\non the particular question posed by Sony. Furthermore, because of uncertainty about this issue,\\nSony and possibly other manufacturers are unnecessarily designating unused, \"merely inspected\"\\nproducts as Class B products. This situation creates substantial economic injury to\\nmanufacturers such as Sony, as well as to consumers, who may pay higher overall retail prices or\\nmay experience the effects of reduced marketplace competition resulting from lower\\nmanufacturer profitability. Thus, resolution of Sony\\'s question is likely to be of significant\\npublic interest.\\n\\nConclusion\\nThe conservative approach Sony is proposing will assure that returned products that\\nqualify under this program will be indistinguishable from new products delivered &om the\\nfactory. The fact that a qualifylng product was previously purchased will not affect its\\nperformance because the product will never have been turned on and thus never have been used.\\nMoreover, Sony\\'s plan to examine qualifylng returned products visually for damage and\\ncompleteness prior to repackaging and to provide a new product warranty will ensure that the\\nreturned products are indistinguishable from products that have never been sold. This\\n\\nEGRlN\\nY\\n\\nE\\n\\nA\\n\\nR\\n\\nS\\n\\n\\x0cS~nnenschein\\nSONNENSCHEIN NATH & ROSENTHAL LLP\\n\\nFederal Trade Commission\\nNovember 15,2006\\nPage 8\\n\\ncomprehensive plan will eliminate any potential harm to subsequent purchasers resulting from\\nthe qualifying products\\' previous purchase. Accordingly, Sony believes that its proposed\\nprogram to sell, as new, returned products that have not been turned on and that meet the\\nprogram\\'s other criteria will satisfy the Commission\\'s consmer protection objectives and\\nrequirements.\\nWe appreciate your consideration of this request. Please let us know if you would like us\\nto provide additional information to assist the staffs review. We would also be pleased to meet\\nwith the staff to discuss any questions they might have.\\n.\\n\\n..\\n\\nYours very truly,\\n\\nChristopher Smith\\nElaine D. Kolish\\ncc:\\n\\nLydia B. Parnes, Director, Bureau of Consumer Protection\\nJames A. Kohm, Associate Director, Division of Enforcement\\nSandy Prabhu, Esq., Division of Enforcement\\n\\nY\\n\\nE\\n\\n2\\n\\nA\\n\\n0\\n\\nR\\n\\n0\\n\\nS\\n\\n6\\n\\n\\x0c'","created_timestamp":"May 22, 1998","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/sony-electronics-proposal-resell-new-returned-consumer-electronics-products\/sony_request_for_staff_opinion_11-15-06.pdf"}
 {"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Enforcement\\nBureau of Consumer Protection\\n\\nDecember 20,2006\\n\\nChristopher Smith, Esq. and Elaine Kolish, Esq.\\nSonnenschein, Nath & Rosenthal LLP\\n1301 K Street, NW\\nSuite 600, East Tower\\nWashington, DC 20005-3364\\nDear Mr. Smith and Ms. Kolish:\\nThis letter responds to your request on behalf of your client, Sony Electronics Inc.\\n(\"Sony\"), for a staff advisory opinion regarding Sony\\'s proposal to resell, as \"new,\" returned\\nconsumer electronics products when the company or its authorized vendor can reliably determine\\nthat the products have never been turned on and other particular conditions are met. This\\nadvisory opinion is based on the information that you have provided to us in your letter of\\nNovember 15,2006. All references to facts regarding your proposal are based on your\\nrepresentations; we have not conducted an independent investigation, or otherwise verified the\\ninformation that you provided.\\nYou note that Sony, as well as other companies in the consumer electronics industry,\\nexperience high return volumes.\\' Sony\\'s uniform practice has been to treat all opened and\\nreturned products as used. As a result, following inspection and servicing, these products are\\nsold as \"refurbished\" at significantly discounted prices and include a 90-day limited warranty.\\nYou state that, because many of the returned products in fact have never been used, the current\\nresale policy comes at a substantial financial cost to the company. Sony proposes modifying its\\npractices by distinguishing between returned products that previously have been turned on and\\nwith the latter category of products being eligible for resale as new, if\\nthose that have notY2\\nspecific criteria are met.\\n\\n1\\n\\nConsumer electronics products sold by Sony include video products (DVD\\nplayers\/recorders, digital cameras, camcorders, televisions, and combination TVNCR or\\nTV\/DVD players), computers (desktop and notebook PCs and related equipment), video game\\nsystems, audio products (desktop, component and portable devices), cell phones, portable digital\\nassistants, and vehicle electronics.\\n2\\n\\nSony would regard a product has having been \"turned on\" if electrical power had\\nbeen applied to any of the product\\'s circuitry.\\n\\n\\x0cChristopher Smith and Elaine Kolish\\nDecember 12,2006\\nPage 2\\nYou state that Sony would implement the policy modification by having it or one of its\\nauthorized vendors:\\ni.\\n\\n..\\n\\nintroduce reliable product packaging technologies that ensure an objective\\nand verifiable process for identifying returned products that have never\\nbeen turned on.3\\n\\n11.\\n\\nidentify, fiom among the products returned by retailers to Sony or its\\nauthorized vendor, those that have never been turned on;\\n\\niii.\\n\\nvisually inspect those products that have not been turned on and reject any\\ndamaged products;\\n\\niv.\\n\\nensure that returned products that satisfy the first two conditions have all\\nof their requisite parts, components, and manuals;\\n\\nv.\\n\\nrepackage the returned products that meet the above conditions;\\n\\nvi.\\n\\nprovide the same warranty for these returned products as for new products\\nthat have never been sold; and\\n\\nvii.\\n\\nreturn them to a retailer for sale as new products.\\n\\nYou then ask for the staffs opinion as to whether Sony\\'s proposed course of conduct complies\\nwith the FTC Act and other Commission policy statements.\\nSection 5 of the FTC Act, which prohibits deceptive acts or practices, governs the issue.\\n15 U.S.C. tj 45. The Commission has explored the concept of deception under Section 5 in two\\nrelevant policy statements.\\nOur analysis begins with the Commission\\'s 1969 Enforcement Policy on Merchandise\\nWhich Has Been Subjected to Previous Use on Trial Basis and Subsequently Resold as New. 34\\nFed. Reg. 176-77. The 1969 Enforcement Policy concerned the then-prevalent business practice\\nof selling, as new, products that previously had been used on a trial basis by prospective\\npurchasers. Id. at 176. In that policy statement, the Commission set out the broad principle that\\ndeception lies where a marketer \"[fails] to disclose material facts relevant to a purchaser\\'s\\ndecision to buy or not to buy.\" Id. Because consumers have a preference for new or unused\\nproducts, the Commission found that prior use was material to the purchase decision. Id. The\\nCommission, therefore, concluded that the failure to disclose prior use was unlawfbl even where\\n3\\n\\nSome of these technologies include internal chips or clocks with the ability to\\nindicate whether a product has been turned on; and tamper-evident tape, seals, or labels affixed to\\nAC plugs, connectors, or battery compartments.\\n\\n\\x0cChristopher Smith and Elaine Kolish\\nDecember 12,2006\\nPage 3\\nreturned merchandise had been refurbished to \"good as new\" condition. Id. at 177. The\\nCommission noted, however, that this policy applied only to products that in fact had been\\n\"used,\" as distinguished from products that had \"merely been inspected but not used.\" Id.\\nThe Commission provided more specific guidance in its Policy Statement on Deception,\\nappended to Clifldale Assocs., Inc., 103 F.T.C. 110, 174 (1984). The Commission stated that it\\nwill find deception where a representation, omission or practice is likely to materially mislead a\\nconsumer acting reasonably under the circumstances. Id. at 176. Materiality is a core element of\\ndeception. A misrepresentation or omission is material if it is \"likely to affect a consumer\\'s\\nchoice of or conduct regarding the product,\" and therefore, injures the consumer who may have\\notherwise made a different choice. Id. at 182-83.\\nPursuant to the guidance provided by these policy statements, we do not believe that\\nconsumers would be deceived by Sony\\'s resale of returned consumer electronics within the\\nguidelines described above. As an initial matter, by limiting its program to products that have\\nnever been turned on, it appears that Sony would be reselling products that fall within the\\n\"inspected but not used\" category referenced in the 1969 Enforcement Policy. However, the\\nanalysis does not end there. The products, as a result of prior purchase, may carry defects upon\\nreturn. For example, a returned product may never have been turned on, but nonetheless may be\\ndamaged or missing requisite parts and inserts. Sony\\'s program appears comprehensive enough\\nto avoid such defects and protect consumers from injury, thereby likely rendering the fact of prior\\npurchase immaterial. Therefore, we believe Sony would be acting lawfblly under Section 5 of\\nthe FTC Act in implementing its proposed program, as represented to Commission staff.\\nThis letter sets out the views of the staff of the Bureau of Consumer Protection, as\\nauthorized by the Commission\\'s Rules of Practice. Those views are based on information\\nprovided to Commission staff by you. Staff have not engaged in independent factual\\ninvestigation regarding the proposal. In accordance with Section 1.3(c) of the Commission\\'s\\nRules of Practice and Procedure, 16 C.F.R. 5 1.3(c), this is a staff opinion only and has not been\\nreviewed or approved by the Commission or by any individual Commissioner, and is given\\nwithout prejudice to the right of the Commission later to rescind the advice and, where\\nappropriate, to commence an enforcement action. In accordance with Section 1.4 of the\\nCommission\\'s Rules of Practice and Procedure, 16 C.F.R. 5 1.4, your request for advice, along\\nwith this response, will be placed on the public record.\\nWe appreciate your taking the time to\\n\\n~ssdciateDirector for Enforcement\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/resale-consumer-electronics\/061220staffopintosonyelect.pdf"}
@@ -27,7 +27,7 @@
 {"text":"b'431UNITD STATES OF AMER\\n\\nFEDERA TRADE COMMSSION\\nWASHIGTON, D. C- 20580\\n\\nMay 12 , 2004\\n\\nT. Scott Giligan , Esqq.\\nStatman Rars Siegel & Eyrch , LLC\\n2900 Chemed Center\\n\\n255 East Fifth Street\\nCincinnati , OR 45202\\n\\nRe: Third Par Merchandise Issue\\nDear Scott:\\n\\nThan you for your letter of March 25 , 2004. I also was pleased with the meetings I had\\nwith NFA and the state associations in March , and hope that we wil continue to keep good\\nlines of communication open.\\n\\nYour letter requests an informal staff opinion on an issue related to delivery of caskets\\nthat consumers have purchased from third- pary sellers. You note that you have consistently\\nadvised funeral homes that they are not required. to sign receipt forms because the homes are not\\npar of the casket purchase contract. In addition , you note that the receipt forms frequently\\ncontain written representations that the delivered casket is the merchandise that was originally\\npurchased , is acceptable , and\/or was delivered without damage. You have advised funeral homes\\nthat they cannot attest to those conditions or representations because they are not a pary to the\\ncontract. You request an informal FTC staff opinion on whether the FTC\\' s Funeral Rule (\" Rule\\nwould prohibit a funeral home from refusing to sign a receipt acknowledging delivery of a casket\\na from a third-par casket seller.\\n\\nThe FTC staf has addressed this issue in the past , in opinions relating to practices that\\nmay violate the Rule s prohibition in Section 453. 4(b)(1) against conditioning the furnishing of\\nany funeral goods or services to a person aranging a funeral upon the purchase of any other\\n\\nfuneral good or service. Staff opinions in 1988 and again in 1997 make clear that this prohibition\\nincludes situations in which the funeral provider unreasonably burdens the consumer s choice to\\npurchase the casket elsewhere. Moreover , a staff opinion , dated March 10 , 1988 , is directly on\\npoint. In that opinion , Commission staff stated:\\nIn my view , a funeral provider may not unreasonably burden a\\nconsumer s choice to purchase an item such as a casket from a\\n\\nthird par\\n\\n.\\n\\n. , I believe that\\n\\nrefusal of the funeral I1rovider to sirm\\n\\nfor the merchandise. or acknowled!!e deliverv. al1l1ears\\n\\n\\x0ctantamount to refusal to accel1t deliverv and therefore may be in\\nviolaon of the Rule. (emphasis added) (A copy of the opinion is\\nenclosed..\\n\\nThose words reflect the FTC staff\\'s opinion in 1988 and they continue to reflect the current\\nthinking of the FTC staf charged with enforcing the Funeral Rule. Accordingly, I reaffirm the\\nstaf opinion that refusal to sign for merchandise or acknowledge delivery is tantamount to\\nrefusing to accept delivery and thus may violate the Funeral Rule s prohibition against tying, in\\nSection 453. 4(b)(l).\\n\\nI hope ths information is helpful to you. Please note that the views expressed in this\\nletter ar those of the FTC staff. They have not been reviewed, approved or adopted by the\\nCommssion, and they ar not binding on the Commssion or any individual Commssioner.\\nHowever, they reflect the opinions of the staff members who are charged with enforcement of the\\nFuneral Rule. If you have any questions , please feel free to contact me at (202) 326- 3115 (email\\ncdanielson (gftc. gov)\\n\\nSincerely,\\n\\nCarole 1. Danelson\\n\\nSenior Investigator and\\nFuneral Rule Coordinator\\nDivision of Marketing Practices\\n\\n\\x0cxx\\n\\nU \/I \/\\n\\n- \/1\\n\\n, 3\/9\\n\\nUNITED STATES OF AMERICA\\n\\nFEDERAL TRAE COMMISSION\\nWASHINGTON, D. C. 20580\\nBUREAU OF\\n\\nCONUMER PRTECT\\n\\nMarch 10, 1988\\n\\nPittsburgh, Pennsylvania 15236\\nDear Mr.\\n\\nI am writing in response to your request for a staff opinion\\nof December 1, 1987, and your follow-up letter of January 22,\\nsituation where a person\\n1988. Your question is twoarranging a funeral has elected to purchase a casket from a third\\nparty casket seller rather than from the funeral director who is\\narranging the funeral, (1) can the funeral director require that\\nperson or family to be present when the casket is delivered to\\nthe funeral home, even if they do not wish to be present: and (2)\\ncan the funeral director refuse to sign for the casket when it is\\ndelivered to the funeral home.\\n\\nfold: In a\\n\\nPlease be advised that the views expressed in this letter\\nare those of the FTC staff. They have not been reviewed,\\napproved or adopted by the Comm 5sion, and they are not binding\\nupon the Commission. However, they reflect the opinions of the\\nstaff members charged with enforcement of the Funeral Rule.\\nAs you know, under Section 453. 4(b)(1) of the Rule,\\nfuneral provider cannot condition the furnishing of any funeral\\ngoods or services to a person arranging a funeral upon the\\npurchase of any other funeral good or service (except as required\\nby law or otherwise permitted by the Rule). Under this section,\\nthe funeral provider cannot require the purchase of a casket from\\nthe funeral home as a condition of arranging a funeral for the\\nindividual or family. The FTC staff has taken the position that\\nfuneral providers can assess a casket handling fee to cover any\\nadded labor or liability costs incurred because a family chooses\\nto provide a casket purchased elsewhere.\\n\\nIn my view, a funeral provider may not unreasonably burden a\\n\\nconsumer s choice to purchase an item such as a casket from a\\nthird party. I believe that requiring a family to be present for\\ndelivery, when that family has expressly asserted they do not\\nwish to be present for delivery, is placing an unreasonable\\nburden upon the consumer \" s choice to purchase the casket\\nMoreover, I believe that refusal of the funeral\\nprovider to sign for the merchandise, or acknowledge delivery,\\n\\nelsewhere.\\n\\nBicentenn of the United States Constitution\\n11787- 1987)\\n\\n\\x0cPage 2\\n\\nappears tantamount to refusal to accept delivery and therefore\\nhe Rule.\\n\\nmay be in violation of\\n\\nIf, as you allege, there is concerted action among funeral\\nproviders in your area to engage in certain practices designed to\\ndiscourage or halt third party sales of caskets, such concerted\\naction might also constitute a violation of Section 5 of the FTC\\nAct, which. prohibi ts\" unfair methods of competition in or\\n15 U.\\nC. Section 45(a) (1).\\na1fecting commerce.\\nThank\\n\\nqu for writing to the Commission.\\n\\nWe appreciate your\\n\\nbringing these matters to our attention.\\n\\nSincerely yours,\\n\\nFuneral Rule Coordinator\\n\\n\\x0c'","created_timestamp":"March 10, 1988","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-04-1\/opinion04-1.pdf"}
 {"text":"b'\\x0c\\x0c\\x0c\\x0cCustoms Rulings Online Search System (CROSS) Document Preview\\n\\nPage 1 of 5\\n\\nHQ 966062\\nMarch 11, 2003\\nCLA-2 RR:CR:TE 966062 jsj\\nCATEGORY: Classification\\nTARIFF NO.: 6001.22.0000\\nMr. Herbert J. Lynch Sullivan & Lynch, P.C.\\n156 State Street Boston, Massachusetts 02109-2508\\nRe: Classification; Laminated Warp Knit Pile Fabric; Subheading 6001.22.0000, HTSUSA; Chapter\\n60, Note 1(c); Chapter 59, Note 1; Country of Origin; 19 C.F.R. 102.21 (c)(2).\\nDear Mr. Lynch:\\nThe purpose of this correspondence is to respond to your request dated March 6, 2002, directed to\\nthe National Commodity Specialist Division. The correspondence in issue requested, on the behalf of\\nyour client, Velcro USA, Inc., a binding classification and country of origin ruling of the\\nmerchandise described as laminated warp knit fabric.\\nThis ruling is being issued subsequent to the following: (1) A review of your submission dated\\nMarch 6, 2002; (2) A review of the Customs Service laboratory report number: NY 20020351, dated\\nMay 28, 2002; and (3) An examination of the base fabric sample and the laminated fabric sample.\\nFACTS\\nThe article in issue, identified as laminated warp knit fabric, is formed by laminating a sheet of\\nplastic to a two bar warp knit fabric. The Customs Service Office of Laboratory and Scientific\\nServices, subsequent to examining samples, reported that the lapping movement of the two guide\\nbars moving in unison in the same direction produced an unstable construction with inclined loops.\\nThe lapping movements of the front bar is expressed as 1\/0, 1\/2, with the lapping movements of the\\nback bar expressed as 1\/0, 3\/4. The back bar, which pulls the yarn over two rows of stitches before\\nforming a knit stitch, is adjusted in the formation of this fabric to provide less tension. The result is\\nthe production of a float that projects upward from the surface of the fabric. The projection of the\\nlooped float created by the back guide bar is entirely a function of its relative tension and not any\\nprocess subsequent to knitting. The fabric has not been brushed.\\nThe yarn used in the formation of the Velcro\\xc2\\xae fabric is 100 % nylon. It weighs approximately 72.2\\ngrams per square meters. It will be imported in 101.6 centimeter widths. The fabric, subsequent to\\nformation, is laminated with a sheet of polypropylene plastic that is visible to the naked eye. The\\nplastic sheeting is imprinted with differing designs, including those of animals, in different colors.\\nThe production of the finished Velcro\\xc2\\xae product, the laminated warp knit fabric, is undertaken in the\\nfollowing countries:\\nSpain: The nylon warp knit fabric is formed on warp knitting machines in rolls that are sixty inches\\nwide.\\nGermany: The warp knit fabric, subsequent to export from Spain to Germany, is laminated with\\npolypropylene film that had previously been decorated with water-based acrylic motifs appealing to\\nchildren.\\n\\nhttp:\/\/rulings.customs.gov\/detail.asp?ru=966062&ac=pr\\n\\n2\/25\/2004\\n\\n\\x0cCustoms Rulings Online Search System (CROSS) Document Preview\\n\\nPage 2 of 5\\n\\nThe Customs Service has not been advised whether the nylon yarn is extruded in Spain or whether\\nthe polypropylene film is produced in Germany.\\nISSUE\\nWhat is the classification, pursuant to the Harmonized Tariff Schedule of the United States\\nAnnotated, of the above-described laminated warp knit fabric?\\nWhat is the country of origin of the laminated warp knit fabric that is knitted in Spain and laminated\\nin Germany ?\\nLAW AND ANALYSIS\\nClassification\\nThe federal agency responsible for initially interpreting and applying the Harmonized Tariff\\nSchedule of the United States Annotated (HTSUSA) is the U.S. Customs Service. The Customs\\nService, in accordance with its legislative mandate, classifies imported merchandise pursuant to the\\nGeneral Rules of Interpretation (GRI) and the Additional U.S. Rules of Interpretation.\\nGeneral Rule of Interpretation 1 provides, in part, that classification decisions are to be \"determined\\naccording to the terms of the headings and any relative section or chapter notes.\" General Rule of\\nInterpretation 1. General Rule of Interpretation 1 further states that merchandise which cannot be\\nclassified in accordance with the dictates of GRI 1 should be classified pursuant to the other General\\nRules of Interpretation, provided the HTSUSA chapter headings or notes do not require otherwise.\\nAccording to the Explanatory Notes (EN), the phrase in GRI 1, \"provided such headings or notes do\\nnot otherwise require,\" is intended to \"make it quite clear that the terms of the headings and any\\nrelative Section or Chapter Notes are paramount.\" General Rules for the Interpretation of the\\nHarmonized System, Rule 1, Explanatory Note (V).\\nThe Explanatory Notes constitute the official interpretation of the Harmonized System at the\\ninternational level. See Joint Explanatory Statement supra note 1, at 549. The Explanatory Notes,\\nalthough neither legally binding nor dispositive of classification issues, do provide commentary on\\nthe scope of each heading of the HTSUS. The EN\\xe2\\x80\\x99s are generally indicative of the proper\\ninterpretation of the headings. See T.D. 89-80, 54 Fed. Reg. 35127-28 (Aug. 23, 1989); Lonza, Inc.\\nv. United States, 46 F. 3d 1098, 1109 (Fed. Cir. 1995).\\nCommencing classification of the laminated warp knit fabric, in accordance with the dictates of GRI\\n1, the Customs Service examined the headings of the HTSUSA. Heading 6001, HTSUSA, provides\\nfor the classification of \"[p]ile fabrics, including \\xe2\\x80\\x98long pile\\xe2\\x80\\x99 fabrics and terry fabrics, knitted or\\ncrocheted.\" The principle issue to be addressed by Customs in the classification of this fabric is\\nwhether the fabric is \"pile.\" The Explanatory Notes and prior Customs Service ruling letters assist in\\nresolving this question. Explanatory Note 60.01 provides, in part:\\nUnlike the woven fabrics of heading 58.01, the products of this heading are obtained by knitting.\\nThe following methods of production are those mainly used:\\na circular knitting machine produces a knitted fabric in which, by means of an additional yarn,\\nprotruding loops are formed; afterwards the loops are cut to form pile and thus give a velvet-like\\nsurface; a special warp knitting machine knits two fabrics face to face with a common pile yarn; the\\ntwo fabrics are then separated by cutting to produce two knitted fabrics with a cut pile; textile fibres\\nfrom a carded sliver are inserted into the loops of a knitted ground fabric as it is formed (\"long pile\"\\nfabrics); textile yarn to form loops (\"imitation terry fabrics\") (see General Explanatory Note). Such\\nfabrics have rows of chain stitches on the back of the fabric and they differ from the pile facrics of\\nheading 58.02, which are characterised by rows of stitches having the appearance of running stitches\\nalong the length of the back of the fabric. (Emphasis added).\\n\\nhttp:\/\/rulings.customs.gov\/detail.asp?ru=966062&ac=pr\\n\\n2\/25\/2004\\n\\n\\x0cCustoms Rulings Online Search System (CROSS) Document Preview\\n\\nPage 3 of 5\\n\\nCustoms, relying on EN 60.01, has previously concluded that the processes enumerated in the EN are\\nillustrative, rather than exclusive. The EN specifically states that the methods of production listed are\\nthose \"mainly used\" in the formation of \"pile\" fabric.\\nThe determinative factor with regards to whether fabric is considered to be \"pile\" fabric is whether\\nthe process utilized results in the production of a fabric with raised loops, not whether the fabricmaking process is listed in the Explanatory Note. As stated in HQ 951374 (Oct. 30, 1992), \"if during\\nthe weaving or knitting of a fabric, yarns are caused to project from the surface(s) (i.e., the base\\nmaterial) of that fabric creating a \\xe2\\x80\\x98pile\\xe2\\x80\\x99 appearance, that fabric will be considered a pile fabric for the\\npurposes of the HTSUSA\\xe2\\x80\\xa6.\" The Velcro\\xc2\\xae fabric subject to this classification ruling comports with\\nthe requirement that yarns project from the surface of the fabric as the result of the fabric-making\\nprocess resulting in the production of a \"pile\" fabric. See generally HQ 953303 (April 9, 1993); HQ\\n953942 (May 7, 1993).\\nChapter 60, Note 1(c) provides, with a single exception, that knitted or crocheted fabrics that are\\nimpregnated, coated, covered or laminated are classified in Chapter 59, HTSUSA,. The exception set\\nforth in Chapter 60, Note 1(c) states that knitted or crocheted pile fabrics that are impregnated,\\ncoated, covered or laminated remain classified in heading 6001, HTSUSA. The Velcro\\xc2\\xae fabric falls\\nwithin the exception to Chapter 60, Note 1(c), as it is both a knit pile fabric and laminated. It is,\\ntherefore, classified in heading 6001, HTSUSA.\\nContinuing the classification of the Velcro\\xc2\\xae laminated warp knit pile fabric, the fabric is classified in\\nsubheading 6001.22.0000, HTSUSA. Subheading 6001.22.0000, HTSUSA, provides for the\\nclassification of:\\nPile fabrics, including \"long pile\" fabrics and terry fabrics, knitted or crocheted:\\nLooped pile fabrics:\\n6001.22.0000 Of man-made fibers.\\nCounsel for the importer suggests that the fabric is properly classified in heading 5903, HTSUSA.\\nHeading 5903, HTSUSA, provides for the classification of \"[t]extile fabrics impregnated, coated,\\ncovered or laminated with plastics, other than those of heading 5902.\" The phrase \"textile fabrics\" in\\nheading 5903, HTSUSA, is defined in Chapter 59, Note 1. Chapter 59, Note 1 states that \"[e]xcept\\nwhere the context otherwise requires, for the purposes of this chapter the expression \"textile fabrics\"\\napplies only to the woven fabrics of chapters 50 to 55 and headings 5803 and 5806, the braids and\\nornamental trimmings in the piece of heading 5808 and the knitted or crocheted fabrics of headings\\n6002 to 6006.\" Since the Velcro\\xc2\\xae fabric is classified in heading 6001, HTSUSA, it is not a \"textile\\nfabric\" for the purposes of Chapter 59 or heading 5903, HTSUSA.\\nCountry of Origin\\nThe Uruguay Round Agreements Act, particularly section 334, codified at 19 U.S.C. 3592, as\\namended by section 405 of Title IV of the Trade and Development Act of 2000, sets forth rules of\\norigin for textile and apparel products. Customs, pursuant to legislative authority, published\\nregulations implementing the principles set forth by Congress.\\nSection 102.21 of Customs regulations establishes, with specifically delineated exceptions, that\\n\"the provisions of this section shall control the determination of the country of origin of imported\\ntextile and apparel products for purposes of the Customs laws\\xe2\\x80\\xa6.\" 19 C.F.R. 102.21. Textile and\\n\\nhttp:\/\/rulings.customs.gov\/detail.asp?ru=966062&ac=pr\\n\\n2\/25\/2004\\n\\n\\x0cCustoms Rulings Online Search System (CROSS) Document Preview\\n\\nPage 4 of 5\\n\\napparel products that are encompassed within the scope of section 102.21 are any goods classifiable\\nin Chapters 50 through 63 of the HTSUSA, as well as goods classifiable under other specifically\\nenunciated subheadings. See 19 C.F.R. 102.21 (b)(5).\\nThe Velcro\\xc2\\xae laminated warp knit pile fabric, as previously determined, is classified in Chapter\\n60, HTSUSA. It is, therefore, a textile product subject to the rules of origin in 19 C.F.R. 102.21. See\\n19 C.F.R. 102.21 (b)(5).\\nThe country of origin of textile and apparel products is determined by the sequential application of\\nparagraphs (c)(1) through (c)(5) of section 102.21. Paragraph (c)(1) provides that \"[t]he country of\\norigin of a textile or apparel product is the single country, territory or insular possession in which the\\ngood was wholly obtained or produced.\" Since the knit fabric was formed in Spain and the\\npolypropylene film was laminated to the fabric in Germany, the origin of the finished laminated warp\\nknit pile fabric cannot be determined by reference to paragraph (c)(1).\\nParagraph (c)(2) of section 102.21 provides that where the country of origin cannot be determined\\naccording to paragraph (c)(1), resort should next be to paragraph (c)(2). The country of origin,\\naccording to paragraph (c)(2), is \"the single country, territory or insular possession in which each\\nforeign material incorporated in that good underwent an applicable change in tariff classification,\\nand\/or met any other requirement, specified for the good in paragraph (e)\" of section 102.21.\\nParagraph (e)(1), as applicable to the instant determination, establishes a tariff shift rule that\\nprovides:\\nHTSUS Tariff Shift and\/or Other Requirement\\n6001-6006 (1) Except for fabric of wool or of fine animal hair, a change from greige fabric of\\nheading 6001 through 6006 to finished fabric of heading 6001 through 6006 by both dyeing and\\nprinting when accompanied by two or more of the following finishing operations: bleaching,\\nshrinking, fulling, napping, decating, permanent stiffening, weighting, permanent embossing, or\\nmoireing; or, (2) If the country of origin cannot be determined under (1) above, a change to heading\\n6001 through 6006 from any heading outside that group, provided that the change is the result of a\\nfabric-making process.\\nSince paragraph (1) of the tariff shift requirement for heading 6001, HTSUSA, does not establish the\\ncountry of origin of the laminated warp knit pile fabric Customs must examine paragraph (2).\\nParagraph (2) of the tariff shift requirement necessitates inquiry into whether the nylon yarn used in\\nthe formation of the fabric is classified in a heading other than headings 6001 through 6006,\\nHTSUSA, and whether the tariff shift to heading 6001, HTSUSA, resulted from a \"fabric-making\\nprocess.\" Although Customs was not advised of the country where the yarn was extruded, since the\\nfabric was formed in Spain and subsequently laminated in Germany, it is not necessary to know the\\ncountry of extrusion of the yarn.\\nThe yarn of which the Velcro\\xc2\\xae fabric is knitted is entirely nylon. Nylon yarn is classified in Chapter\\n54, HTSUSA. Customs Regulations define \"fabric-making process\" to mean \"any manufacturing\\noperation that begins with polymers, fibers, filaments (including strips), yarns, twine, cordage, rope\\nor fabric strips and results in a textile fabric.\" 19 C.F.R. 102.21 (b)(2). Customs is cognizant that the\\nknit pile fabric in issue is laminated. Subsequent to a thorough examination of 19 C.F.R. 102.21 and\\nprior Customs Service ruling letters, it is the decision of this office that the lamination process, with\\nregards to fabric classified in heading 6001, HTSUSA, does not impact the origin determination.\\nIt is Customs decision that the process of knitting nylon yarn classified in Chapter 54, HTSUSA, into\\n\\nhttp:\/\/rulings.customs.gov\/detail.asp?ru=966062&ac=pr\\n\\n2\/25\/2004\\n\\n\\x0cCustoms Rulings Online Search System (CROSS) Document Preview\\n\\nPage 5 of 5\\n\\na textile fabric of heading 6001, HTSUSA, constitutes a manufacturing operation that results in the\\nproduction of a textile fabric. The country of origin of the Velcro\\xc2\\xae laminated warp knit pile fabric,\\nknitted in Spain and laminated in Germany is Spain.\\nHOLDING\\nThe Velcro\\xc2\\xae laminated warp knit pile fabric is classified in subheading 6001.22.0000,\\nHarmonized Tariff Schedule of the United States Annotated.\\nThe General Column 1 Rate of Duty is seventeen and four-tenths (17.4) percent ad valorem.\\nThe textile quota category is 224.\\nThe country of origin of the laminated warp knit pile fabric, knitted in Spain and laminated in\\nGermany is Spain.\\nThe designated textile and apparel category may be subdivided into parts. If subdivided, any quota\\nand visa requirements applicable to the subject merchandise may be affected. Since part categories\\nare the result of international bilateral agreements which are subject to frequent negotiations and\\nchanges, to obtain the most current information available, we suggest your client check, close to the\\ntime of shipment, the Status Report On Current Import Quotas (Restraint Levels) an internal issuance\\nof the U.S. Customs Service which is updated weekly and is available for inspection at the local\\nCustoms Service office. The Status Report On Current Import Quotas (Restraint Levels) is also\\navailable on the Customs Electronic Bulletin Board (CEBB) which can be found on the U.S.\\nCustoms Web site at www.customs.gov.\\nDue to the changeable nature of the statistical annotation (the ninth and tenth digits of the\\nclassification) and the restraint (quota\/visa) categories, your client\\nshould contact its local Customs office prior to importation of this merchandise to determine the\\ncurrent status of any import restraints or requirements.\\nSincerely,\\nMyles B. Harmon, Director\\n\\nCommercial Rulings Division\\n\\nhttp:\/\/rulings.customs.gov\/detail.asp?ru=966062&ac=pr\\n\\n2\/25\/2004\\n\\n\\x0c\\x0c\\x0c\\x0c'","created_timestamp":"March 11, 2003","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/columbia-sportswear\/columbiasports.pdf"}
 {"text":"b\"UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nBureau of Competition\\nAlden F. Abbott\\nAssistant Director for Policy and Evaluation\\nDirect Dial\\n(202) 326-2881\\n\\nJanuary 29, 2004\\n\\nMr. Jerald A. Jacobs\\nShaw Pittman LLP\\n2300 N. Street, NW\\nWashington, DC 20037-1128\\nDear Mr. Jacobs:\\nThis letter responds to your request on behalf of the Electronic Retailing Association\\n(\\xe2\\x80\\x9cERA\\xe2\\x80\\x9d) for a Bureau of Competition staff (\\xe2\\x80\\x9cBC staff\\xe2\\x80\\x9d) opinion letter regarding a proposed\\nprogram to review and, if appropriate, recommend discontinuation of DRTV (\\xe2\\x80\\x9cdirect response\\ntelevision\\xe2\\x80\\x9d) shows (e.g., infomercials) and advertising in other media that contain claims that\\nappear on their face to be unreasonable or incapable of substantiation.1 You have asked whether,\\nbased on the facts submitted, BC staff would recommend that the Commission bring an\\nenforcement action challenging implementation of the program. On the basis of information that\\nyou provided in your letter of December 23, 2003, BC staff have no present intention to\\nrecommend a challenge to ERA\\xe2\\x80\\x99s implementation of the DRTV review program as proposed.\\nThis conclusion is entirely dependent on the accuracy of our understanding of pertinent facts\\nconcerning the review program. Our understanding of those facts, in turn, is entirely dependent\\non the information that you provided. Our present enforcement intentions might be different\\nshould the DRTV review program not be as described in your letter and other materials.\\nERA\\xe2\\x80\\x99s Proposed Program\\nWe understand that ERA is the nation\\xe2\\x80\\x99s principal trade association representing the\\nelectronic retailing\/DRTV industry. ERA\\xe2\\x80\\x99s membership includes DRTV producers, media\\nbuyers, product owners, consultants, and other industry firms.\\n\\n1\\n\\nLetter of December 23, 2003 from Jerald A. Jacobs to Alden Francis Abbott, Assistant\\nDirector for Policy and Evaluation, Bureau of Competition.\\n\\n\\x0cMr. Jerald A. Jacobs \\xe2\\x80\\x93 Page 2\\nWe further understand that ERA proposes to establish a separate unit under the umbrella\\nof the National Advertising Review Council (\\xe2\\x80\\x9cNARC\\xe2\\x80\\x9d) to perform the review function.2 We\\nalso understand that the new unit will be funded by ERA, and operate under the rules and\\nprocedures set forth in ERA\\xe2\\x80\\x99s proposal, but would otherwise be under NARC supervision and\\nindependent of ERA. The new unit will initially be staffed by one attorney, experienced in\\nadvertising law and ad substantiation, who will be selected by and work under the supervision of\\nNARC, although ERA may participate in the interviewing process and provide guidance on\\nselection standards and process.\\nWe understand that the review program is intended to identify and effectuate\\ndiscontinuance of advertising that contains claims that appear to be untrue and lack any form of\\ncredible substantiation. The single mission of the review program is to curtail false or deceptive\\nDRTV advertising for the benefit of consumers.\\nWe further understand that reviews may be initiated by the new unit on its own initiative\\nor in response to referrals by any ERA member, consumer, or consumer advocacy group.\\nDecisions on whether to review a referral will be based on the number of consumers affected, the\\ntype of advertising claims involved \\xe2\\x80\\x93 ERA proposes that the reviewing unit focus on advertising\\ncampaigns that involve \\xe2\\x80\\x9chigh impact\\xe2\\x80\\x9d on consumers, such as when health or safety issues are\\ninvolved \\xe2\\x80\\x93 and how egregious the advertising claims appear to be.\\nWe understand that the reviewing unit will notify the marketer whose advertising\\ncampaign is under review, and may request product samples and additional information and\/or\\ndocumentation from the marketer as needed. The review will be limited to the primary or core\\nefficacy or performance claims. The marketer will be required to provide the requested materials\\nwithin 15 calendar days, and, within those 15 days, may request a meeting with the reviewer,\\nwhich meeting shall be held within 15 calendar days of the request. The reviewing unit will\\nmake a decision and notify the marketer within 15 calendar days after receipt of the final\\nsubmission from the marketer or within 15 calendar days of the meeting.\\nReview Standards\\nWe understand that the review will consist of:\\n\\xe2\\x80\\xa2\\n\\n2\\n\\nDetermination\/identification of claims;\\n\\nWe understand that NARC is a strategic alliance of the advertising industry and the\\nCouncil of Better Business Bureaus (\\xe2\\x80\\x9cCBBB\\xe2\\x80\\x9d), formed in 1971 by the Association of National\\nAdvertisers, Inc., the American Association of Advertising Agencies, Inc., the American\\nAdvertising Federation, Inc., and the CBBB to foster truth and accuracy in national advertising\\nthrough voluntary self-regulation.\\n\\n\\x0cMr. Jerald A. Jacobs \\xe2\\x80\\x93 Page 3\\n\\xe2\\x80\\xa2\\n\\nDetermination whether substantiation for claims appears reasonable on its face,\\ne.g.,\\ni)\\n\\nDoes the substantiation address the claims being made?\\n\\nii)\\n\\nIf applicable, does the substantiation meet general standards of competent\\nand reliable scientific evidence?\\n\\nWe understand that the review is intended to be limited, with the goal of identifying\\n\\xe2\\x80\\x9coutliers\\xe2\\x80\\x9d \\xe2\\x80\\x93 egregious primary or core advertising claims that on their face appear unreasonable\\nor incapable of substantiation. The reviewing unit will recommend whether the primary or core\\nclaims that were reviewed should be continued. The reviewing unit is not expected to (but may)\\nmake recommendations regarding how claims should be modified or qualified. The proposed\\nprogram does not include provisions for appeal of the reviewing unit\\xe2\\x80\\x99s decisions.\\nEnforcement\\nWe understand that failure to comply with the reviewing unit\\xe2\\x80\\x99s recommendation to\\ndiscontinue a claim will result in a referral to the FTC or other appropriate agency and expulsion\\nfrom membership in ERA. Failure to comply with a request for information or other materials\\nalso may result in referral to the FTC or other agency. Decisions of the reviewing unit will be\\nmade public through publication in NARC reports. Review decisions and referrals to the FTC or\\nanother agency will also be announced in NARC press releases. Conclusions of the reviewing\\nunit will be qualified \\xe2\\x80\\x93 e.g., \\xe2\\x80\\x9cbased on preliminary evaluation, it appears that certain advertising\\nclaims may not be adequately substantiated.\\xe2\\x80\\x9d\\nFinally, we understand that ERA contemplates that publication of the reviewing unit\\xe2\\x80\\x99s\\ndecisions and actions will benefit ERA members and suppliers such as fulfillment companies,\\ntelemarketing companies, and media services by providing information that will assist them in\\nmaking independent decisions regarding whether to provide goods or services to a noncompliant company.\\nAnalysis of the ERA Proposed DRTV Review Program\\nWe begin with the observation that the antitrust laws do not forbid legitimate selfregulation that benefits consumers. As the Commission has stated, \\xe2\\x80\\x9c[s]uch self-regulatory\\nactivity serves legitimate purposes, and in most cases can be expected to benefit, rather than to\\ninjure, competition and consumer welfare.\\xe2\\x80\\x9d American Academy of Ophthalmology, 101 F.T.C\\n1018 (1983) (advisory opinion); see also American Medical Association, 117 F.T.C. 1091 (1994)\\n(advisory opinion); American Medical Association, 94 F.T.C. 701, 1029 (1979), aff'd as\\nmodified, 638 F.2d 443 (2d Cir. 1980), aff'd by an equally divided Court, 455 U.S. 676 (1982)\\n(\\xe2\\x80\\x9cAMA\\xe2\\x80\\x9d). On the other hand, conduct that unreasonably restricts competition is inconsistent\\nwith the antitrust laws.\\n\\n\\x0cMr. Jerald A. Jacobs \\xe2\\x80\\x93 Page 4\\nWe also note at the outset that ERA\\xe2\\x80\\x99s DRTV review program is in many respects similar\\nto a standard-setting and standard-compliance program, and that precedents dealing with these\\nkinds of programs are therefore helpful in the analysis of the ERA\\xe2\\x80\\x99s proposed program.3\\nSpecifically, under the review process, recommendations regarding whether ERA members\\nshould continue or discontinue an advertiser\\xe2\\x80\\x99s commercial will depend on whether the\\ncommercial satisfies a standard of reasonableness (capacity to be substantiated) with respect to\\nthe claims made in the commercial. The reasonableness standard, in turn, is solely determined\\nby ERA through NARC. ERA, through NARC, is thus, in this respect, both a standard-setting\\nbody and an evaluator of compliance with the adopted standard.\\nAs a general principle, industry adoption of private standards and voluntary compliance\\nwith those standards often, if not typically, promote competition by enhancing price and quality\\nrivalry and by increasing consumer confidence in product quality and thereby increase demand,\\nand facilitate entry of new sellers. It is inherent in a standards system, however, that some\\nproducts may fail to satisfy the standards, and therefore may tend to be excluded from the\\nmarketplace. This effect is not inherently anticompetitive, but an unreasonable restraint on\\ncompetition may arise under some circumstances. For this reason, the actions of standard-setting\\nbodies are subject to scrutiny under the antitrust laws.4 See, e.g., Allied Tube & Conduit Corp. v.\\nIndian Head, Inc., 486 U.S. 492, 500 (1988); American Soc\\xe2\\x80\\x99y of Mechanical Eng\\xe2\\x80\\x99rs, Inc. v.\\nHydrolevel Corp., 456 U.S. 556, 572-73 (1982).\\nCompetitive concerns can arise, for example, when competitors abuse or distort the use\\nof standards for the purpose of restricting competition, thus imposing harm on the market and\\nconsumers while not providing the procompetitive benefits that can flow from compliance with\\nindustry standards.5 In addition, the adoption of an industry standard may, in effect, be an\\n3\\n\\nThere is one significant difference between the ERA\\xe2\\x80\\x99s proposed program and\\nstandardization programs. An industry group might voluntarily adopt standard specifications to\\nensure that its members offer particularly high quality products or products that appeal to\\nspecific consumer preferences (like a preference for \\xe2\\x80\\x9corganic\\xe2\\x80\\x9d food). Many consumers may\\nprefer non-standard offerings (perhaps at lower prices), however, and it is therefore necessary to\\nconsider whether the standardization program will foreclose competition from non-compliant\\nsellers and thus reduce output and consumer welfare. Because the ERA\\xe2\\x80\\x99s program does not\\nestablish product standards but seeks only to exclude egregiously false claims, it is not necessary\\nto be concerned about an adverse effect on competitive opportunities for products that are\\ndeceptively promoted.\\n4\\n\\nThe actions of groups or associations such as ERA comprised of entities with horizontal\\nbusiness relationships (i.e., competitors) are deemed, under the antitrust laws, to be concerted\\naction.\\n5\\n\\nE.g., Allied Tube, 486 U.S. at 501; Accrediting Commission on Career Schools\\nand Colleges of Technology, 119 F.T.C. 977 (1995) (advisory opinion; Commission declined to\\napprove a proposed accreditation standard that would define acceptable tuition levels, reasoning\\n\\n\\x0cMr. Jerald A. Jacobs \\xe2\\x80\\x93 Page 5\\nagreement not to sell non-compliant products.6 Competitive concerns may arise when the\\nstandard is not reasonably necessary to attain procompetitive objectives.7\\nERA\\xe2\\x80\\x99s adoption of the proposed review program would be an agreement among\\ncompetitors to restrict a certain kind of DRTV advertising, i.e., advertising that does not meet\\nERA\/NARC substantiation standards. As such, it raises two potential antitrust concerns. First,\\nthe program could be characterized simply as a non-competition agreement, i.e., an agreement\\namong ERA members, by means of enforcement of a standard, not to compete for the business of\\nparticular advertisers. Second, the expulsion from ERA of a member that refuses to comply with\\nthe review program requirements could be characterized as a group boycott.\\nBC staff would analyze both of these issues under the \\xe2\\x80\\x9crule of reason\\xe2\\x80\\x9d test rather than the\\nper se test.8 Under a rule of reason test, BC staff weighs the potential for competitive harm\\narising from an agreement among competitors against any procompetitive or efficiency benefits\\nproduced by the agreement. If BC staff concludes that the procompetive benefits more than\\noffset the likely competitive harm, BC staff will not pursue an enforcement action. Given the\\nfacts as we understand them in this instance, it is unlikely that BC staff would conclude that\\npotential anticompetitive effects arising from the implementation of ERA\\xe2\\x80\\x99s DRTV review\\nprogram would outweigh procompetitive benefits. We find therefore that ERA\\xe2\\x80\\x99s DRTV review\\nprogram does not merit a staff recommendation to the Commission for enforcement action at this\\ntime. We reach this conclusion for a number of reasons.\\nFirst, truthful, non-deceptive advertising promotes competition by providing consumers\\nwith important information about product prices, quality, and availability, among other factors\\nthat consumers consider in their purchasing decisions. See, e.g., Virginia State Board of\\nPharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 765 (1976). Agreements\\non standards among competitors that restrict truthful, nondeceptive advertising, therefore, have\\nthe potential to restrict competition and harm consumers. See, e.g., American Medical\\nAssociation, 94 F.T.C. at 1005. Such agreements harm consumers by raising the cost of finding\\nthe combination of price, service, and quality that best fits their needs and by reducing the\\nincentive for firms to compete (by preventing them from informing consumers of their prices,\\nservices, or quality). Id. By contrast, false or deceptive advertising does not produce the same\\nbenefits for consumers as truthful advertising, and, therefore, agreements among competitors on\\n\\nthat this would in effect be an agreement among members of the accrediting body to charge no\\nmore than the standard would permit).\\n6\\n\\nId.\\n\\n7\\n\\nE.g., American Soc\\xe2\\x80\\x99y of Sanitary Eng\\xe2\\x80\\x99rs, 106 F.T.C. 324 (1985) (consent order).\\n\\n8\\n\\nSpecifically, BC staff\\xe2\\x80\\x99s analysis would follow the framework set out in the Federal\\nTrade Commission\/Department of Justice Guidelines for Collaborations Among Competitors,\\navailable at http:\/\/www.ftc.gov\/os\/2000\/04\/ftcdojguidelines.pdf.\\n\\n\\x0cMr. Jerald A. Jacobs \\xe2\\x80\\x93 Page 6\\nstandards that are aimed at restricting deceptive advertising present less antitrust concern;\\nindeed, restricting deceptive advertising may help avoid anticompetitive effects. Calif. Dental\\nAssn. v. FTC, 526 U.S. 756, 773 n.9 (1999) (\\xe2\\x80\\x9cThat false or misleading advertising has an\\nanticompetitive effect, as that term is customarily used, has been long established.\\xe2\\x80\\x9d) ERA\\xe2\\x80\\x99s\\nreview program appears to fall into this second class of restrictions.\\nSecond, both the agreement to adopt a standard and the standard itself are not product or\\nadvertiser-specific. Because ERA represents a wide spectrum of marketers that use DRTV\\nadvertising, the agreement would relate to a class of advertising rather than specific products.\\nThat fact would attenuate any adverse consumer impact.\\nThird, ERA\\xe2\\x80\\x99s proposed program appears to have a significant pro-consumer rationale by\\nrestricting advertising that is deemed to be facially unreasonable or incapable of substantiation.\\nAccording to ERA, the overriding purpose of the proposed program is to curtail false or\\ndeceptive DRTV advertising, rather than to restrict competition. The restriction of such\\nadvertising likely would increase consumer confidence in DRTV and make the overall market\\nmore efficient. See Calif. Dental Assn. v. FTC, 526 U.S. at 771-772 (restrictions designed for the\\npurpose of avoiding false or deceptive advertising might plausibly have a net procompetitive\\neffect).\\nFourth, the review program will be administered under the umbrella of NARC and not\\ndirectly by ERA. Although, because of ERA funding and participation in staff interviewing, the\\nreviewing unit cannot be characterized as fully independent of ERA, there is nonetheless some\\ndegree of separation between the reviewing unit and ERA respecting the actual screening and\\ndecision-making process. This separation tends to lessen the possibility that the program could\\nbe manipulated by horizontal competitors for the purpose of restraining competition for their\\nproducts.9 Furthermore, NARC will control the rules and procedures used by the reviewing unit\\nafter formation.\\nFifth, while the expulsion of a member for non-compliance with program requirements\\ncould be characterized as a horizontal boycott, there will not be an effect on competition in the\\nmarketing of the expelled member\\xe2\\x80\\x99s product unless two or more members actually compete in\\nthe marketing of that product or reasonable substitutes. Further, even if there is extant\\ncompetition with respect to the marketing of that particular product, expulsion of a noncompliant member may not be unreasonably exclusionary. In general, expulsion from a trade\\ngroup characteristically is not likely to result in predominantly anticompetitive effects. See\\nNorthwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 286\\n(1985). According to ERA, membership does not have significant competitive ramifications.\\nAlthough loss of membership results in the loss of ERA\\xe2\\x80\\x99s trade association services, those\\nservices are not essential to competition or competitors.\\n\\n9\\n\\nEvidence to the contrary would cause serious antitrust concerns.\\n\\n\\x0cMr. Jerald A. Jacobs \\xe2\\x80\\x93 Page 7\\nFinally, we understand that ERA plans to encourage members not to deal with marketers\\nthat refuse to comply with the reviewing unit\\xe2\\x80\\x99s procedures and decisions. BC staff would not\\nrecommend enforcement action by virtue of ERA simply encouraging members not to deal with\\nnon-compliant marketers, so long as the actions of the members remain voluntary. By contrast, a\\nrequirement that members refrain from dealing with such marketers could be viewed as a boycott\\nor an agreement not to compete for that marketer\\xe2\\x80\\x99s business, and therefore may be subjected to\\nheightened BC staff scrutiny.\\n\\nConclusion\\nFor all the reasons stated above, we believe that, on balance, the likely benefits of ERA\\xe2\\x80\\x99s\\nproposed review program more than offset the potential for competitive harm. On this basis, BC\\nstaff have no present intention to recommend a challenge to ERA\\xe2\\x80\\x99s proposed DRTV review\\nprogram.\\nThis letter sets out the views of the staff of the Bureau of Competition, as authorized by\\nRule 1.1(b) of the Commission's Rules of Practice, 16 C.F.R. \\xc2\\xa7 1.1(b). Under Commission Rule\\n1.3(c), 16 C.F.R. \\xc2\\xa7 1.3(c), the Commission is not bound by this staff opinion and reserves the\\nright to rescind it at a later time. In addition, this Office retains the right to reconsider the\\nquestions involved and, with notice to the requesting party, to rescind or revoke the opinion if\\nimplementation of the proposed program results in substantial anticompetiutive effects, if the\\nprogram is used for improper purposes, if facts change significantly, or if it would be in the\\npublic interest to do so.\\nSincerely yours,\\n\\nAlden F. Abbott\\nAssistant Director\\nfor Policy & Evaluation\\n\\n\\x0c\"","created_timestamp":"January 29, 2004","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/electronic-retailing-association\/040129eraopinion.pdf"}
-{"text":"b\"UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nBureau of Competition\\nAlden F. Abbott\\nAssistant Director\\nDirect Dial\\n(202) 326 2881\\n\\nDiane L. Weinberg, Esquire\\nMeeks & Sheppard\\n330 Madison Avenue, 39th Floor\\nNew York, NY 10017\\nRe:\\n\\nAmerican Down & Feather Section\\nHome Fashion Products Association\\nRequest for Staff Opinion Letter\\nFTC File No. P002501\\n\\nDear Ms. Weinberg:\\nThis letter responds to your request on behalf of the American Down & Feather Section\\nof the Home Fashion Products Association (AD&FS) for a staff opinion letter regarding a\\nproposed Labeling Compliance Program. You have asked whether, based on the facts submitted,\\nthe Commission Staff would recommend that the Commission bring an enforcement action\\nchallenging implementation of the AD&FS proposal. On the basis of information you provided\\nin your letters of May 1, 2003, June 9, 2003, and June 24, 2003, Commission staff have no\\npresent intention to recommend a challenge to AD&FS\\xe2\\x80\\x99s implementation of the Compliance\\nProgram as proposed.\\nAD&FS and the Proposed Labeling Compliance Program\\nWe understand that AD&FS is a voluntary association of dealers, buyers, sellers and\\nprocessors of raw feathers and down in home fashion products. As of June 9, 2003, AD&FS had\\n21 members, of which 18 were manufacturers of finished products containing down and feather,\\ntwo were importers of finished products, and one was a supplier of processed down and\\nfeathers.1\\n\\n1\\n\\nCommission.\\n\\nLetter of June 9, 2003, to the Office of Policy and Evaluation, Federal Trade\\n\\n\\x0cAD&FS proposes to implement a Labeling Compliance Program with two stated\\nobjectives: (1) \\xe2\\x80\\x9cto assure that all members [of AD&FS] and non-members are in compliance\\nwith Industry Standards adopted by the ADA . . . and reaffirmed by a majority vote of the\\nAD&FS,\\xe2\\x80\\x9d and (2) \\xe2\\x80\\x9cto further assure that all representations and claims made on the product, on\\nthe packing, and in advertising are truthful and in accordance with Industry Standards and the\\nLaw.\\xe2\\x80\\x9d2 To that end, AD&FS proposes to implement a Labeling Compliance Program, which\\ninvolves the physical testing of products, upon receipt of a complaint from a member, to ensure\\nthat those products meet Industry Standards. AD&FS proposes to impose various sanctions for\\nnon-compliance with Industry Standards. You have explained that the process for considering\\ncomplaints regarding representations, claims, and advertising, to ensure compliance with\\nIndustry Standards and State and Federal law, also will involve physical testing of the product as\\nset forth in the Labeling Compliance Program.3\\nAny member of AD&FS may bring a complaint to the AD&FS Standards and Testing\\nCommittee, asserting that another company\\xe2\\x80\\x99s product does not comply with Industry Standards,\\nor that another company\\xe2\\x80\\x99s representations, claims, and advertising do not comply with Industry\\nStandards or with state law or federal law. The Program will apply only to various home\\nfurnishing products in their finished state; it will not apply to intermediate products or inputs into\\nfinished goods.4 Complaints may be brought against non-members as well as members of\\nAD&FS. AD&FS estimates that no more than six non-member entities, primarily importers,\\nwould be subject to the AD&FS complaint process.5 Upon receipt of a complaint, the\\nCommittee will initiate a process of testing or evaluation, and, if the accused company is found\\nnot in compliance, the AD&FS may undertake sanctions against the company. Our\\nunderstanding of the details of the proposed Compliance Program is set forth below.\\nComplaints Regarding Non-Compliance with Industry Standards\\nThe Industry Standards specify the requirements for product attributes in seven\\ncategories: (A) Down Cluster content (with different standards depending on whether the\\nproduct bears a \\xe2\\x80\\x9cDown\\xe2\\x80\\x9d label, a \\xe2\\x80\\x9cDown & Feather\\xe2\\x80\\x9d label, or a \\xe2\\x80\\x9cFeather & Down\\xe2\\x80\\x9d label); (B)\\nGoose Specie content; (C) Filling Power; (D) Oxygen #; (E) Turbidity; (F) Thread Count; and\\n(G) Filling Weight.\\nCompliance with the Industry Standard is evaluated under a \\xe2\\x80\\x9cWeighted Point System\\xe2\\x80\\x9d\\n\\n2\\n\\nProposed Labeling Compliance Program, Home Fashion Products Association,\\nAmerican Down & Feather Section, dated April 30, 2003, at \\xc2\\xb6 1. We understand the ADA to be\\nthe American Down Association, the predecessor to AD&FS.\\n3\\n\\nLetter of June 24, 2003, to the Office of Policy and Evaluation, Federal Trade\\n\\nCommission.\\n4\\n\\nLetter of June 24, 2003, to the Office of Policy and Evaluation, Federal Trade\\n\\nCommission.\\n5\\n\\nCommission.\\n\\nLetter of June 9, 2003, to the Office of Policy and Evaluation, Federal Trade\\n\\n\\x0cthat rates a product in each category of performance covered by the standard. A product that\\nmeets the standard for a given category is deemed to \\xe2\\x80\\x9cpass\\xe2\\x80\\x9d that standard. A non-complying\\nproduct is assigned a specified number of \\xe2\\x80\\x9cpoints\\xe2\\x80\\x9d depending on the degree of failure. Four\\nsamples of the product are tested in each category, and the final score for each category is\\ncalculated by averaging the four tests. A product that receives 1-7 total points is deemed to pass;\\n8 or more total points, or 5 or more points in any one category, results in a failure. The\\ntolerances applied in this system are said to be consistent with Industry Standards. All sampling,\\nclassification, and testing of the filling material is required to satisfy the International Down and\\nFeather Bureau (\\xe2\\x80\\x9cIDFB\\xe2\\x80\\x9d) Standards and be performed by one of three certified IDFB testing\\nlabs.\\nIf the initial round of testing of four samples results in a failure, the Program Manager\\nwill purchase a second round of four samples of the same or similar product and repeat the\\ntesting.6 If the second round of testing results in a failure, the company that failed the testing\\nwill have an opportunity to appeal the findings and request additional testing at its expense.7\\nUnder the appeal process, the Program Manager will purchase four more samples of the\\nsame or similar product for a third round of testing. Third round samples will be tested in all\\nthree certified labs. The results of the second and third round of testing will be averaged\\ntogether to determine pass or fail. The same procedures for sampling and testing, and the same\\nappeal rights, apply to members and non-members.\\nAn AD&FS member found not in compliance with Industry Standards is subject to one\\nyear of probation, whereby the company is de-listed from the membership roster and is required\\nto pay for additional rounds of sampling and testing. If the company passes the additional\\nrounds of testing, it is taken off probation and all membership rights are reinstated. If the\\ncompany fails the additional rounds of testing, refuses to participate and fund the additional\\nrounds of testing, or does not pay its dues and its share of AD&FS expenses during the probation\\nperiod, it will be expelled from membership. Ongoing violations may be reported to appropriate\\ngovernmental agencies.\\nA non-member that is found not in compliance with Industry Standards will be notified in\\nwriting that failure to comply will result in notification to the appropriate governmental\\nauthorities.\\nComplaints Regarding Representations, Claims, or Advertising\\nThe proposed Labeling Compliance Program states that \\xe2\\x80\\x9c[i]f the complaint being\\n\\n6\\n\\nThe Program Manager is a third party retained by AD&FS to administer the\\n\\nProgram.\\n7\\n\\nThe cost of the first round of samples and testing is the responsibility of the\\nparty bringing the complaint. The AD&FS will initially pay for the second round of samples and\\ntesting; in the event of a pass the complaining company will be billed for the samples and\\ntesting, and in the event of a failure the accused company will be billed for the samples and\\ntesting.\\n\\n\\x0csubmitted is regarding representations, claims, or advertising, the AD&FS will consider each on\\na case by case basis and determine the appropriate action;\\xe2\\x80\\x9d the proposal does not describe the\\nprocess for evaluating such complaints, the standards to be applied, or the actions that may be\\ntaken if claims are determined not to be correct. Based on your letter of June 24, 2003, it now\\nappears, and we will assume for purposes of the analysis set forth in this letter, that the\\nevaluation of complaints regarding representations, claims, and advertising will involve no more\\nthan a testing of products to determine whether the representations, claims, or advertising at\\nissue are consistent with actual product attributes. We will also assume that the actions that may\\nbe taken by AD&FS, in the event claims are not substantiated, will be limited to the sanctions\\nthat may be imposed in the event a product is found not to comply with Industry Standards.8\\nAnalysis of the Proposed Compliance Program\\nWe begin with the observation that the antitrust laws do not forbid legitimate selfregulation that benefits consumers. As the Commission has stated, \\xe2\\x80\\x9c[s]uch self-regulatory\\nactivity serves legitimate purposes, and in most cases can be expected to benefit, rather than to\\ninjure, competition and consumer welfare.\\xe2\\x80\\x9d American Academy of Ophthalmology, 101 F.T.C.\\n1018 (1983) (advisory opinion); see also American Medical Association, 117 F.T.C. 1091 (1994)\\n(advisory opinion); American Medical Association, 94 F.T.C. 701, 1029 (1979), aff'd as\\nmodified, 638 F.2d 443 (2d Cir. 1980), aff'd by an equally divided Court, 455 U.S. 676 (1982)\\n(\\xe2\\x80\\x9cAMA\\xe2\\x80\\x9d). On the other hand, conduct that unreasonably restricts competition is inconsistent\\nwith the antitrust laws.\\nWe also note that voluntary private standards generally have the potential to promote\\ncompetition by providing useful information to consumers and making it easier for them to\\nselect among providers of a product or service. By providing information about quality and\\nperformance of products or services, voluntary private standards may facilitate quality\\ncompetition and price\/quality comparisons, increase consumer confidence in product quality and\\nthereby increase demand, and facilitate entry of new sellers.\\nIt is inherent in a standards system, however, that some products may fail to satisfy the\\nstandards, and therefore may tend to be excluded from the marketplace.9 The effect is not\\ninherently anticompetitive, but an unreasonable restraint on competition may arise under some\\ncircumstances. The actions of standard-setting bodies, therefore, are subject to scrutiny under\\nthe antitrust laws.10 See, e.g., Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492,\\n500 (1988); American Soc\\xe2\\x80\\x99y of Mechanical Eng\\xe2\\x80\\x99rs, Inc. v. Hydrolevel Corp., 456 U.S. 556, 57273 (1982).\\n\\n8\\n\\nShould either of these assumptions be incorrect, our analysis of the proposed\\nprogram may require modification insofar as it relates to the program for handling complaints\\nregarding representations, claims, and advertising.\\n9\\n\\nProducts that do not meet the standard may be disfavored, and, even under a\\nvoluntary standards program, non-compliant products may be disadvantaged in the market.\\n10\\n\\nThe actions of standards groups controlled by entities with horizontal business\\nrelationships (i.e., competitors) are deemed concerted action.\\n\\n\\x0cCompetitive concerns can arise, for example, when competitors abuse or distort the\\nstandard-setting process for the purpose of restricting competition, thus imposing harm on the\\nmarket and consumers while not providing the procompetitive benefits that can flow from\\nstandard-setting programs.11 In addition, the adoption of a standard may, in effect, be an\\nagreement not to sell non-compliant products.12 Competitive concerns may arise when the\\nstandard is not reasonably necessary to attain procompetitive objectives.13\\nAlthough the actions of the AD&FS in adopting the Industry Standards are not the focus\\nof this letter, efforts to enforce standards also can raise antitrust concerns.14 The proposal to test\\nproducts for compliance with Industry Standards, and to impose sanctions for non-compliance,\\nwill be evaluated from two perspectives. First, do the procedures themselves present any risk of\\nunreasonably restraining competition? For example, procedures that can be applied arbitrarily or\\nin a discriminatory manner may, in some circumstances, be used to unreasonably raise rivals\\xe2\\x80\\x99\\ncosts to such an extent as to substantially lessen competition. Second, are the proposed sanctions\\nlikely to result in a substantial lessening of competition?\\nProduct Testing\\nBased on the information provided, the procedures for testing products for compliance\\nwith Industry Standards do not appear likely to present a risk to competition. The procedures\\nappear to be reasonably formulated to achieve the stated objective. The Industry Standards\\nthemselves appear to be clearly defined, and the procedures for testing products for compliance\\nwith the standards appear reasonably likely to ensure objectivity in their application. The\\ncompliance program requires that sampling and testing satisfy independent third-party standards,\\nand be performed by an independent third party lab. Further, the fact that a complaining party\\nmust bear the costs for the first round of samples and testing, and also for the second round if the\\n\\n11\\n\\nE.g., Allied Tube, 486 U.S. at 496 (manufacturers \\xe2\\x80\\x9cpacked\\xe2\\x80\\x9d meeting at which\\nstandard was to be voted upon, in order to prevent approval of a competing product); Hydrolevel,\\n456 U.S. at 560-64 (manufacturer manipulated the process to obtain an unjustified interpretation\\nof a safety code, declaring a competitor\\xe2\\x80\\x99s product unsafe); Dell Computer Corp., 121 F.T.C. 616\\n(1996) (consent order) (failure of a participant in a standard setting process to disclose its patent\\nposition, contrary to the rules of the organization; after its technology was adopted in the\\nstandard, the company sought to enforce the patent).\\n12\\n\\nE.g., Allied Tube, 486 U.S. at 501; Accrediting Commission on Career Schools\\nand Colleges of Technology, 119 F.T.C. 977 (1995) (advisory opinion; Commission declined to\\napprove a proposed accreditation standard that would define acceptable tuition levels, reasoning\\nthat this would in effect be an agreement among members of the accrediting body to charge no\\nmore than the standard would permit).\\n13\\n\\n14\\n\\nE.g., American Soc\\xe2\\x80\\x99y of Sanitary Eng\\xe2\\x80\\x99rs, 106 F.T.C. 324 (1985) (consent order).\\n\\nWe express no opinion on the substantive reasonableness of the standards. Based\\non the information presently before us, however, we have no reason to believe that the standards\\nthemselves are unreasonably restrictive. This informs our analysis of the proposed Labeling\\nCompliance Program.\\n\\n\\x0ctesting results in a pass, may lessen the likelihood that complaints will be brought without\\nreasonable cause.15 In addition, the same procedures are applicable to the products of both\\nmembers and non-members. These factors tend to ensure impartiality in the application of the\\ncompliance program.\\nThe proposed program also incorporates an appeals process that provides for objective\\nretesting of products found not to be in compliance, using additional samples and additional\\ntesting labs. Although the antitrust laws do not require standards groups to apply any particular\\ndue process procedures, and the presence of such mechanisms is not determinative of the\\nantitrust analysis, adequate procedural safeguards lessen the possibility of exclusionary conduct\\nin the guise of self regulation. See Allied Tube & Conduit Corp. v. Indian Head Inc., 486\\nU.S.492 (1988); Silver v. New York Stock Exchange, 373 U.S. 341, 36-67 (1963).\\nFinally, given the number of firms that manufacture or import down and feathercontaining products, it does not appear likely that a competitive disadvantage visited upon any\\nsingle firm would adversely affect competition in the industry as a whole.16\\nFor the forgoing reasons, the procedures themselves do not appear likely to present a risk\\nto competition.\\nEvaluation of Complaints Regarding Representations, Claims, or Advertising\\nTo the extent that the evaluation of complaints regarding representations, claims, or\\nadvertising is limited to the testing of products to determine whether they are in compliance with\\nIndustry Standards, as stated in your letter of June 24, 2003, this aspect of the proposed Labeling\\nCompliance Program does not require separate analysis \\xe2\\x80\\x93 our observations regarding testing\\nprocedures (above) and sanctions (see below) are applicable in this context. We will note,\\nhowever, that agreements among competitors to restrict truthful, nondeceptive advertising have\\nthe potential to restrict competition and harm consumers. See, e.g., American Medical\\nAssociation, 94 F.T.C. at 1005. Such agreements may harm consumers by raising the cost of\\nfinding the combination of price, service, and quality that best fits their needs and by reducing\\nthe incentive for firms to compete (by preventing them from informing consumers of their prices,\\n\\n15\\n\\nHowever, the fact that a complainant may be required to bear some costs is not a\\nguarantee that the complaint will not be motivated by anticompetitive objectives. Under some\\ncircumstances, a complainant may be willing to incur those costs if it can reduce the level of\\ncompetition in the market by disadvantaging competitors, as by raising their costs\\ndisproportionately. In the present instance, however, although we lack specific information on\\nthe costs that may be imposed upon the complainant and the accused company, it does not\\nappear likely that testing costs would be of such magnitude as to affect the competitive balance.\\n16\\n\\nAlthough we lack sufficient information to determine the relevant antitrust\\nmarket, we note that the group of firms that manufactures or imports down and feathercontaining products is relatively unconcentrated. AD&FS members constitute a sizeable\\npercentage of that group, but the effects of the testing process on any given firm, standing alone,\\ndo not appear likely to affect competition adversely, so long as competition among other firms is\\nnot constrained.\\n\\n\\x0cservices, or quality). Id.\\nSeveral factors suggest that AD&FS\\xe2\\x80\\x99s proposed compliance program regarding\\nrepresentations, claims, and advertising is unlikely to harm competition. First, this aspect of the\\nprogram is limited to the physical testing of products against Industry Standards. Second, the\\ntesting procedures appear to be objective and narrowly tailored to achieve the stated purposes.\\nThird, the proposed program may make consumers more likely to purchase from AD&FS\\nmembers without concern that they are purchasing substandard merchandise. For these reasons,\\nthe restrictions, far from harming competition, may well promote it.\\nSanctions for Non-Compliance with Industry Standards\\nYou have asked that this staff opinion letter specifically address three questions:\\n\\xe2\\x80\\xa2\\n\\nWhether AD&FS may report a non-compliant party to state and federal\\nauthorities;\\n\\n\\xe2\\x80\\xa2\\n\\nWhether AD&FS may list a non-compliant company on a website or in another\\npublic forum; and\\n\\n\\xe2\\x80\\xa2\\n\\nWhether AD&FS may place members that are non-compliant on probation or\\nexpel them.\\n\\nThe proposed sanctions do not appear, on their face, to be unreasonably exclusionary.\\nFirst, the reporting of a non-compliant company to state and federal authorities appears unlikely,\\nin itself, to result in a substantial lessening of competition. Although such action may cause the\\nallegedly non-compliant company to incur some costs, such as legal fees, we have no reason to\\nbelieve, based on current information, that the rival\\xe2\\x80\\x99s costs would increase by such an amount as\\nto substantially impair its ability to compete and adversely affect competition in the market.\\nFurther, the reporting of a company that is reasonably believed to be non-compliant may\\nultimately have a salutary effect on the market by increasing consumer confidence in products\\nfound in the market.\\nSecond, the listing of a non-compliant company on a website or in another public forum\\nappears unlikely, in itself, to result in a substantial lessening of competition. The public\\nidentification of a company that is reasonably believed to be non-compliant may ultimately have\\na salutary effect on the market by increasing consumer confidence in products found in the\\nmarket. Thus, unless the underlying disciplinary action itself violates the antitrust laws,\\npublication of a disciplinary action or the fact of non-compliance is not likely to violate the\\nantitrust laws.17\\nThird, expulsion from AD&FS of a member found to be non-compliant, or placing such a\\nmember on probation, does not appear, on the basis of the information provided, to be\\nunreasonably exclusionary. In general, expulsion from a trade group characteristically is not\\n\\n17\\n\\nSee American Medical Association, 117 F.T.C. at 1105.\\n\\n\\x0clikely to result in predominantly anticompetitive effects.18 As stated by the Supreme Court,\\n\\xe2\\x80\\x9c[u]nless the organization has market power or exclusive access to an element essential to\\neffective competition, the conclusion that expulsion is virtually always likely to have an\\nanticompetitive effect is not warranted.\\xe2\\x80\\x9d19\\nBased on the information before us, probation or expulsion of a member from AD&FS\\nlikely would not result in denial of \\xe2\\x80\\x9caccess to an element essential to effective competition.\\xe2\\x80\\x9d\\nYou have stated that the primary benefit of AD&FS that would be lost if a member is placed on\\nprobation or expelled because of violating Industry Standards would be the inability to\\nparticipate in the association\\xe2\\x80\\x99s decision-making.20 Such participation does not appear to rise to\\nthe level of an \\xe2\\x80\\x9celement essential to effective competition.\\xe2\\x80\\x9d In addition, although the members\\nof AD&FS represent a sizeable percentage of the manufacturers and importers of products\\ncontaining down and feathers, the information presently before us does not suggest that\\ncompetition in the industry would be significantly affected by the expulsion of one member.21\\nConclusion\\nFor the reasons discussed above, Commission staff have no present intention to\\nrecommend a challenge to AD&FS\\xe2\\x80\\x99s proposed conduct. This letter sets out the views of the staff\\nof the Bureau of Competition, as authorized by Rule 1.1(b) of the Commission's Rules of\\nPractice, 16 C.F.R. \\xc2\\xa7 1.1(b). Under Commission Rule 1.3(c), 16 C.F.R. \\xc2\\xa7 1.3(c), the\\nCommission is not bound by this staff opinion and reserves the right to rescind it at a later time.\\nIn addition, this office retains the right to reconsider the questions involved and, with notice to\\nthe requesting party, to rescind or revoke the opinion if implementation of the proposed program\\nresults in substantial anticompetitive effects, if the program is used for improper purposes, if\\nfacts change significantly, or if it would be in the public interest to do so.\\n\\nSincerely yours,\\n\\nAlden F. Abbott\\nAssistant Director\\nfor Policy & Evaluation\\n\\n18\\n\\nSee Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co.,\\n472 U.S. 284, 286 (1985).\\n19\\n\\nId.\\n\\n20\\n\\nLetter of June 9, 2003, to the Office of Policy and Evaluation, Federal Trade\\n\\nCommission.\\n21\\n\\nIn contrast, for example, expulsion could raise serious questions if it were\\nintended to reinforce a price or output restraint.\\n\\n\\x0c\"","created_timestamp":"June 24, 2003","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/american-down-feather-section-home-fashion-products-association\/americandownletter031114.pdf"}
+{"text":"b\"UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nBureau of Competition\\nAlden F. Abbott\\nAssistant Director\\nDirect Dial\\n(202) 326 2881\\n\\nDiane L. Weinberg, Esquire\\nMeeks & Sheppard\\n330 Madison Avenue, 39th Floor\\nNew York, NY 10017\\nRe:\\n\\nAmerican Down & Feather Section\\nHome Fashion Products Association\\nRequest for Staff Opinion Letter\\nFTC File No. P002501\\n\\nDear Ms. Weinberg:\\nThis letter responds to your request on behalf of the American Down & Feather Section\\nof the Home Fashion Products Association (AD&FS) for a staff opinion letter regarding a\\nproposed Labeling Compliance Program. You have asked whether, based on the facts submitted,\\nthe Commission Staff would recommend that the Commission bring an enforcement action\\nchallenging implementation of the AD&FS proposal. On the basis of information you provided\\nin your letters of May 1, 2003, June 9, 2003, and June 24, 2003, Commission staff have no\\npresent intention to recommend a challenge to AD&FS\\xe2\\x80\\x99s implementation of the Compliance\\nProgram as proposed.\\nAD&FS and the Proposed Labeling Compliance Program\\nWe understand that AD&FS is a voluntary association of dealers, buyers, sellers and\\nprocessors of raw feathers and down in home fashion products. As of June 9, 2003, AD&FS had\\n21 members, of which 18 were manufacturers of finished products containing down and feather,\\ntwo were importers of finished products, and one was a supplier of processed down and\\nfeathers.1\\n\\n1\\n\\nCommission.\\n\\nLetter of June 9, 2003, to the Office of Policy and Evaluation, Federal Trade\\n\\n\\x0cAD&FS proposes to implement a Labeling Compliance Program with two stated\\nobjectives: (1) \\xe2\\x80\\x9cto assure that all members [of AD&FS] and non-members are in compliance\\nwith Industry Standards adopted by the ADA . . . and reaffirmed by a majority vote of the\\nAD&FS,\\xe2\\x80\\x9d and (2) \\xe2\\x80\\x9cto further assure that all representations and claims made on the product, on\\nthe packing, and in advertising are truthful and in accordance with Industry Standards and the\\nLaw.\\xe2\\x80\\x9d2 To that end, AD&FS proposes to implement a Labeling Compliance Program, which\\ninvolves the physical testing of products, upon receipt of a complaint from a member, to ensure\\nthat those products meet Industry Standards. AD&FS proposes to impose various sanctions for\\nnon-compliance with Industry Standards. You have explained that the process for considering\\ncomplaints regarding representations, claims, and advertising, to ensure compliance with\\nIndustry Standards and State and Federal law, also will involve physical testing of the product as\\nset forth in the Labeling Compliance Program.3\\nAny member of AD&FS may bring a complaint to the AD&FS Standards and Testing\\nCommittee, asserting that another company\\xe2\\x80\\x99s product does not comply with Industry Standards,\\nor that another company\\xe2\\x80\\x99s representations, claims, and advertising do not comply with Industry\\nStandards or with state law or federal law. The Program will apply only to various home\\nfurnishing products in their finished state; it will not apply to intermediate products or inputs into\\nfinished goods.4 Complaints may be brought against non-members as well as members of\\nAD&FS. AD&FS estimates that no more than six non-member entities, primarily importers,\\nwould be subject to the AD&FS complaint process.5 Upon receipt of a complaint, the\\nCommittee will initiate a process of testing or evaluation, and, if the accused company is found\\nnot in compliance, the AD&FS may undertake sanctions against the company. Our\\nunderstanding of the details of the proposed Compliance Program is set forth below.\\nComplaints Regarding Non-Compliance with Industry Standards\\nThe Industry Standards specify the requirements for product attributes in seven\\ncategories: (A) Down Cluster content (with different standards depending on whether the\\nproduct bears a \\xe2\\x80\\x9cDown\\xe2\\x80\\x9d label, a \\xe2\\x80\\x9cDown & Feather\\xe2\\x80\\x9d label, or a \\xe2\\x80\\x9cFeather & Down\\xe2\\x80\\x9d label); (B)\\nGoose Specie content; (C) Filling Power; (D) Oxygen #; (E) Turbidity; (F) Thread Count; and\\n(G) Filling Weight.\\nCompliance with the Industry Standard is evaluated under a \\xe2\\x80\\x9cWeighted Point System\\xe2\\x80\\x9d\\n\\n2\\n\\nProposed Labeling Compliance Program, Home Fashion Products Association,\\nAmerican Down & Feather Section, dated April 30, 2003, at \\xc2\\xb6 1. We understand the ADA to be\\nthe American Down Association, the predecessor to AD&FS.\\n3\\n\\nLetter of June 24, 2003, to the Office of Policy and Evaluation, Federal Trade\\n\\nCommission.\\n4\\n\\nLetter of June 24, 2003, to the Office of Policy and Evaluation, Federal Trade\\n\\nCommission.\\n5\\n\\nCommission.\\n\\nLetter of June 9, 2003, to the Office of Policy and Evaluation, Federal Trade\\n\\n\\x0cthat rates a product in each category of performance covered by the standard. A product that\\nmeets the standard for a given category is deemed to \\xe2\\x80\\x9cpass\\xe2\\x80\\x9d that standard. A non-complying\\nproduct is assigned a specified number of \\xe2\\x80\\x9cpoints\\xe2\\x80\\x9d depending on the degree of failure. Four\\nsamples of the product are tested in each category, and the final score for each category is\\ncalculated by averaging the four tests. A product that receives 1-7 total points is deemed to pass;\\n8 or more total points, or 5 or more points in any one category, results in a failure. The\\ntolerances applied in this system are said to be consistent with Industry Standards. All sampling,\\nclassification, and testing of the filling material is required to satisfy the International Down and\\nFeather Bureau (\\xe2\\x80\\x9cIDFB\\xe2\\x80\\x9d) Standards and be performed by one of three certified IDFB testing\\nlabs.\\nIf the initial round of testing of four samples results in a failure, the Program Manager\\nwill purchase a second round of four samples of the same or similar product and repeat the\\ntesting.6 If the second round of testing results in a failure, the company that failed the testing\\nwill have an opportunity to appeal the findings and request additional testing at its expense.7\\nUnder the appeal process, the Program Manager will purchase four more samples of the\\nsame or similar product for a third round of testing. Third round samples will be tested in all\\nthree certified labs. The results of the second and third round of testing will be averaged\\ntogether to determine pass or fail. The same procedures for sampling and testing, and the same\\nappeal rights, apply to members and non-members.\\nAn AD&FS member found not in compliance with Industry Standards is subject to one\\nyear of probation, whereby the company is de-listed from the membership roster and is required\\nto pay for additional rounds of sampling and testing. If the company passes the additional\\nrounds of testing, it is taken off probation and all membership rights are reinstated. If the\\ncompany fails the additional rounds of testing, refuses to participate and fund the additional\\nrounds of testing, or does not pay its dues and its share of AD&FS expenses during the probation\\nperiod, it will be expelled from membership. Ongoing violations may be reported to appropriate\\ngovernmental agencies.\\nA non-member that is found not in compliance with Industry Standards will be notified in\\nwriting that failure to comply will result in notification to the appropriate governmental\\nauthorities.\\nComplaints Regarding Representations, Claims, or Advertising\\nThe proposed Labeling Compliance Program states that \\xe2\\x80\\x9c[i]f the complaint being\\n\\n6\\n\\nThe Program Manager is a third party retained by AD&FS to administer the\\n\\nProgram.\\n7\\n\\nThe cost of the first round of samples and testing is the responsibility of the\\nparty bringing the complaint. The AD&FS will initially pay for the second round of samples and\\ntesting; in the event of a pass the complaining company will be billed for the samples and\\ntesting, and in the event of a failure the accused company will be billed for the samples and\\ntesting.\\n\\n\\x0csubmitted is regarding representations, claims, or advertising, the AD&FS will consider each on\\na case by case basis and determine the appropriate action;\\xe2\\x80\\x9d the proposal does not describe the\\nprocess for evaluating such complaints, the standards to be applied, or the actions that may be\\ntaken if claims are determined not to be correct. Based on your letter of June 24, 2003, it now\\nappears, and we will assume for purposes of the analysis set forth in this letter, that the\\nevaluation of complaints regarding representations, claims, and advertising will involve no more\\nthan a testing of products to determine whether the representations, claims, or advertising at\\nissue are consistent with actual product attributes. We will also assume that the actions that may\\nbe taken by AD&FS, in the event claims are not substantiated, will be limited to the sanctions\\nthat may be imposed in the event a product is found not to comply with Industry Standards.8\\nAnalysis of the Proposed Compliance Program\\nWe begin with the observation that the antitrust laws do not forbid legitimate selfregulation that benefits consumers. As the Commission has stated, \\xe2\\x80\\x9c[s]uch self-regulatory\\nactivity serves legitimate purposes, and in most cases can be expected to benefit, rather than to\\ninjure, competition and consumer welfare.\\xe2\\x80\\x9d American Academy of Ophthalmology, 101 F.T.C.\\n1018 (1983) (advisory opinion); see also American Medical Association, 117 F.T.C. 1091 (1994)\\n(advisory opinion); American Medical Association, 94 F.T.C. 701, 1029 (1979), aff'd as\\nmodified, 638 F.2d 443 (2d Cir. 1980), aff'd by an equally divided Court, 455 U.S. 676 (1982)\\n(\\xe2\\x80\\x9cAMA\\xe2\\x80\\x9d). On the other hand, conduct that unreasonably restricts competition is inconsistent\\nwith the antitrust laws.\\nWe also note that voluntary private standards generally have the potential to promote\\ncompetition by providing useful information to consumers and making it easier for them to\\nselect among providers of a product or service. By providing information about quality and\\nperformance of products or services, voluntary private standards may facilitate quality\\ncompetition and price\/quality comparisons, increase consumer confidence in product quality and\\nthereby increase demand, and facilitate entry of new sellers.\\nIt is inherent in a standards system, however, that some products may fail to satisfy the\\nstandards, and therefore may tend to be excluded from the marketplace.9 The effect is not\\ninherently anticompetitive, but an unreasonable restraint on competition may arise under some\\ncircumstances. The actions of standard-setting bodies, therefore, are subject to scrutiny under\\nthe antitrust laws.10 See, e.g., Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492,\\n500 (1988); American Soc\\xe2\\x80\\x99y of Mechanical Eng\\xe2\\x80\\x99rs, Inc. v. Hydrolevel Corp., 456 U.S. 556, 57273 (1982).\\n\\n8\\n\\nShould either of these assumptions be incorrect, our analysis of the proposed\\nprogram may require modification insofar as it relates to the program for handling complaints\\nregarding representations, claims, and advertising.\\n9\\n\\nProducts that do not meet the standard may be disfavored, and, even under a\\nvoluntary standards program, non-compliant products may be disadvantaged in the market.\\n10\\n\\nThe actions of standards groups controlled by entities with horizontal business\\nrelationships (i.e., competitors) are deemed concerted action.\\n\\n\\x0cCompetitive concerns can arise, for example, when competitors abuse or distort the\\nstandard-setting process for the purpose of restricting competition, thus imposing harm on the\\nmarket and consumers while not providing the procompetitive benefits that can flow from\\nstandard-setting programs.11 In addition, the adoption of a standard may, in effect, be an\\nagreement not to sell non-compliant products.12 Competitive concerns may arise when the\\nstandard is not reasonably necessary to attain procompetitive objectives.13\\nAlthough the actions of the AD&FS in adopting the Industry Standards are not the focus\\nof this letter, efforts to enforce standards also can raise antitrust concerns.14 The proposal to test\\nproducts for compliance with Industry Standards, and to impose sanctions for non-compliance,\\nwill be evaluated from two perspectives. First, do the procedures themselves present any risk of\\nunreasonably restraining competition? For example, procedures that can be applied arbitrarily or\\nin a discriminatory manner may, in some circumstances, be used to unreasonably raise rivals\\xe2\\x80\\x99\\ncosts to such an extent as to substantially lessen competition. Second, are the proposed sanctions\\nlikely to result in a substantial lessening of competition?\\nProduct Testing\\nBased on the information provided, the procedures for testing products for compliance\\nwith Industry Standards do not appear likely to present a risk to competition. The procedures\\nappear to be reasonably formulated to achieve the stated objective. The Industry Standards\\nthemselves appear to be clearly defined, and the procedures for testing products for compliance\\nwith the standards appear reasonably likely to ensure objectivity in their application. The\\ncompliance program requires that sampling and testing satisfy independent third-party standards,\\nand be performed by an independent third party lab. Further, the fact that a complaining party\\nmust bear the costs for the first round of samples and testing, and also for the second round if the\\n\\n11\\n\\nE.g., Allied Tube, 486 U.S. at 496 (manufacturers \\xe2\\x80\\x9cpacked\\xe2\\x80\\x9d meeting at which\\nstandard was to be voted upon, in order to prevent approval of a competing product); Hydrolevel,\\n456 U.S. at 560-64 (manufacturer manipulated the process to obtain an unjustified interpretation\\nof a safety code, declaring a competitor\\xe2\\x80\\x99s product unsafe); Dell Computer Corp., 121 F.T.C. 616\\n(1996) (consent order) (failure of a participant in a standard setting process to disclose its patent\\nposition, contrary to the rules of the organization; after its technology was adopted in the\\nstandard, the company sought to enforce the patent).\\n12\\n\\nE.g., Allied Tube, 486 U.S. at 501; Accrediting Commission on Career Schools\\nand Colleges of Technology, 119 F.T.C. 977 (1995) (advisory opinion; Commission declined to\\napprove a proposed accreditation standard that would define acceptable tuition levels, reasoning\\nthat this would in effect be an agreement among members of the accrediting body to charge no\\nmore than the standard would permit).\\n13\\n\\n14\\n\\nE.g., American Soc\\xe2\\x80\\x99y of Sanitary Eng\\xe2\\x80\\x99rs, 106 F.T.C. 324 (1985) (consent order).\\n\\nWe express no opinion on the substantive reasonableness of the standards. Based\\non the information presently before us, however, we have no reason to believe that the standards\\nthemselves are unreasonably restrictive. This informs our analysis of the proposed Labeling\\nCompliance Program.\\n\\n\\x0ctesting results in a pass, may lessen the likelihood that complaints will be brought without\\nreasonable cause.15 In addition, the same procedures are applicable to the products of both\\nmembers and non-members. These factors tend to ensure impartiality in the application of the\\ncompliance program.\\nThe proposed program also incorporates an appeals process that provides for objective\\nretesting of products found not to be in compliance, using additional samples and additional\\ntesting labs. Although the antitrust laws do not require standards groups to apply any particular\\ndue process procedures, and the presence of such mechanisms is not determinative of the\\nantitrust analysis, adequate procedural safeguards lessen the possibility of exclusionary conduct\\nin the guise of self regulation. See Allied Tube & Conduit Corp. v. Indian Head Inc., 486\\nU.S.492 (1988); Silver v. New York Stock Exchange, 373 U.S. 341, 36-67 (1963).\\nFinally, given the number of firms that manufacture or import down and feathercontaining products, it does not appear likely that a competitive disadvantage visited upon any\\nsingle firm would adversely affect competition in the industry as a whole.16\\nFor the forgoing reasons, the procedures themselves do not appear likely to present a risk\\nto competition.\\nEvaluation of Complaints Regarding Representations, Claims, or Advertising\\nTo the extent that the evaluation of complaints regarding representations, claims, or\\nadvertising is limited to the testing of products to determine whether they are in compliance with\\nIndustry Standards, as stated in your letter of June 24, 2003, this aspect of the proposed Labeling\\nCompliance Program does not require separate analysis \\xe2\\x80\\x93 our observations regarding testing\\nprocedures (above) and sanctions (see below) are applicable in this context. We will note,\\nhowever, that agreements among competitors to restrict truthful, nondeceptive advertising have\\nthe potential to restrict competition and harm consumers. See, e.g., American Medical\\nAssociation, 94 F.T.C. at 1005. Such agreements may harm consumers by raising the cost of\\nfinding the combination of price, service, and quality that best fits their needs and by reducing\\nthe incentive for firms to compete (by preventing them from informing consumers of their prices,\\n\\n15\\n\\nHowever, the fact that a complainant may be required to bear some costs is not a\\nguarantee that the complaint will not be motivated by anticompetitive objectives. Under some\\ncircumstances, a complainant may be willing to incur those costs if it can reduce the level of\\ncompetition in the market by disadvantaging competitors, as by raising their costs\\ndisproportionately. In the present instance, however, although we lack specific information on\\nthe costs that may be imposed upon the complainant and the accused company, it does not\\nappear likely that testing costs would be of such magnitude as to affect the competitive balance.\\n16\\n\\nAlthough we lack sufficient information to determine the relevant antitrust\\nmarket, we note that the group of firms that manufactures or imports down and feathercontaining products is relatively unconcentrated. AD&FS members constitute a sizeable\\npercentage of that group, but the effects of the testing process on any given firm, standing alone,\\ndo not appear likely to affect competition adversely, so long as competition among other firms is\\nnot constrained.\\n\\n\\x0cservices, or quality). Id.\\nSeveral factors suggest that AD&FS\\xe2\\x80\\x99s proposed compliance program regarding\\nrepresentations, claims, and advertising is unlikely to harm competition. First, this aspect of the\\nprogram is limited to the physical testing of products against Industry Standards. Second, the\\ntesting procedures appear to be objective and narrowly tailored to achieve the stated purposes.\\nThird, the proposed program may make consumers more likely to purchase from AD&FS\\nmembers without concern that they are purchasing substandard merchandise. For these reasons,\\nthe restrictions, far from harming competition, may well promote it.\\nSanctions for Non-Compliance with Industry Standards\\nYou have asked that this staff opinion letter specifically address three questions:\\n\\xe2\\x80\\xa2\\n\\nWhether AD&FS may report a non-compliant party to state and federal\\nauthorities;\\n\\n\\xe2\\x80\\xa2\\n\\nWhether AD&FS may list a non-compliant company on a website or in another\\npublic forum; and\\n\\n\\xe2\\x80\\xa2\\n\\nWhether AD&FS may place members that are non-compliant on probation or\\nexpel them.\\n\\nThe proposed sanctions do not appear, on their face, to be unreasonably exclusionary.\\nFirst, the reporting of a non-compliant company to state and federal authorities appears unlikely,\\nin itself, to result in a substantial lessening of competition. Although such action may cause the\\nallegedly non-compliant company to incur some costs, such as legal fees, we have no reason to\\nbelieve, based on current information, that the rival\\xe2\\x80\\x99s costs would increase by such an amount as\\nto substantially impair its ability to compete and adversely affect competition in the market.\\nFurther, the reporting of a company that is reasonably believed to be non-compliant may\\nultimately have a salutary effect on the market by increasing consumer confidence in products\\nfound in the market.\\nSecond, the listing of a non-compliant company on a website or in another public forum\\nappears unlikely, in itself, to result in a substantial lessening of competition. The public\\nidentification of a company that is reasonably believed to be non-compliant may ultimately have\\na salutary effect on the market by increasing consumer confidence in products found in the\\nmarket. Thus, unless the underlying disciplinary action itself violates the antitrust laws,\\npublication of a disciplinary action or the fact of non-compliance is not likely to violate the\\nantitrust laws.17\\nThird, expulsion from AD&FS of a member found to be non-compliant, or placing such a\\nmember on probation, does not appear, on the basis of the information provided, to be\\nunreasonably exclusionary. In general, expulsion from a trade group characteristically is not\\n\\n17\\n\\nSee American Medical Association, 117 F.T.C. at 1105.\\n\\n\\x0clikely to result in predominantly anticompetitive effects.18 As stated by the Supreme Court,\\n\\xe2\\x80\\x9c[u]nless the organization has market power or exclusive access to an element essential to\\neffective competition, the conclusion that expulsion is virtually always likely to have an\\nanticompetitive effect is not warranted.\\xe2\\x80\\x9d19\\nBased on the information before us, probation or expulsion of a member from AD&FS\\nlikely would not result in denial of \\xe2\\x80\\x9caccess to an element essential to effective competition.\\xe2\\x80\\x9d\\nYou have stated that the primary benefit of AD&FS that would be lost if a member is placed on\\nprobation or expelled because of violating Industry Standards would be the inability to\\nparticipate in the association\\xe2\\x80\\x99s decision-making.20 Such participation does not appear to rise to\\nthe level of an \\xe2\\x80\\x9celement essential to effective competition.\\xe2\\x80\\x9d In addition, although the members\\nof AD&FS represent a sizeable percentage of the manufacturers and importers of products\\ncontaining down and feathers, the information presently before us does not suggest that\\ncompetition in the industry would be significantly affected by the expulsion of one member.21\\nConclusion\\nFor the reasons discussed above, Commission staff have no present intention to\\nrecommend a challenge to AD&FS\\xe2\\x80\\x99s proposed conduct. This letter sets out the views of the staff\\nof the Bureau of Competition, as authorized by Rule 1.1(b) of the Commission's Rules of\\nPractice, 16 C.F.R. \\xc2\\xa7 1.1(b). Under Commission Rule 1.3(c), 16 C.F.R. \\xc2\\xa7 1.3(c), the\\nCommission is not bound by this staff opinion and reserves the right to rescind it at a later time.\\nIn addition, this office retains the right to reconsider the questions involved and, with notice to\\nthe requesting party, to rescind or revoke the opinion if implementation of the proposed program\\nresults in substantial anticompetitive effects, if the program is used for improper purposes, if\\nfacts change significantly, or if it would be in the public interest to do so.\\n\\nSincerely yours,\\n\\nAlden F. Abbott\\nAssistant Director\\nfor Policy & Evaluation\\n\\n18\\n\\nSee Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co.,\\n472 U.S. 284, 286 (1985).\\n19\\n\\nId.\\n\\n20\\n\\nLetter of June 9, 2003, to the Office of Policy and Evaluation, Federal Trade\\n\\nCommission.\\n21\\n\\nIn contrast, for example, expulsion could raise serious questions if it were\\nintended to reinforce a price or output restraint.\\n\\n\\x0c\"","created_timestamp":"May 1, 2003","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/american-down-feather-section-home-fashion-products-association\/americandownletter031114.pdf"}
 {"text":"b'EAGLE RIDGE 1\\nMarch 19, 2002\\n\\nMr. Neil Blickman\\nFederal Trade Commission\\n600 W. Pennsylvania Ave., N.W.\\nWashington, D.C. 20580\\n\\nPetition to Establish a New Generic Subclass\\nThe Dow Chemical Company (Dow), world headquartered in Midland, Michigan, hereby\\nsubmits this Petition to the Federal Trade Commission (FTC) for the establishment of a new\\ngeneric subclass (lastol) within the existing olefin category.\\nDow seeks to establish a generic subclass for its new crosslinked elastic fiber (CEF) for three\\nreasons:\\n1. Dow CEF fiber has the same general chemical composition as the FTC\\xe2\\x80\\x99s established olefin\\ngeneric fiber category:\\n- the fiber-forming substance in CEF is composed of at least 85 percent by weight of\\nethylene, propylene, or other olefin units.\\n- specifically, greater than 98 percent by weight of the fiber-forming substance in CEF\\nis composed of ethylene and other olefin units (e.g., 1-octene).\\n2. Dow CEF, while having the general chemical composition of olefin, has a unique chemistry,\\nmolecular design, and fiber structure which enables distinct, important properties to the\\nconsumer:\\n- the fiber is elastic with a wide temperature tolerance, enabling comfort stretch\\ngarments that can be repeatedly washed, dried, and ironed without loss of stretch and\\nelasticity\\n3. Dow CEF fiber\\xe2\\x80\\x99s distinctive elasticity and temperature tolerance features enable olefin to be\\nconsidered for new apparel applications beyond the conventional socks and thermal underwear:\\n- stretch cotton separates like dresses, shirts, and slacks, are now possible and desirable\\nfor their comfort stretch and easy-care properties\\n\\n1\\n\\n\\x0cIn short, Dow CEF is an atypical olefin fiber differing significantly \\xe2\\x80\\x93 in chemistry, process, and\\nproperties \\xe2\\x80\\x93 from conventional olefin fiber manufactured for apparel uses today per the FTC\\xe2\\x80\\x99s\\ndefinition. Dow CEF is not a rubber, per the FTC\\xe2\\x80\\x99s definition, because the fiber-forming\\nsubstance in Dow CEF is a polyolefin with low but significant crystallinity versus an amorphous\\n(non-crystalline) polyolefin. And last, Dow CEF is not a spandex, per the FTC\\xe2\\x80\\x99s definition,\\nbecause CEF is not made of polyurethane.\\nThe FTC definitions for olefin fiber1, rubber fiber2, and spandex fiber3 are listed below for\\nreference.\\n\\nOlefin. A manufactured fiber in which the fiber-forming substance is any long chain synthetic polymer composed\\nof at least 85 percent by weight of ethylene, propylene, or other olefin units, except amorphous (noncrystalline)\\npolyolefins qualifying under paragraph (j)(1) of this section.\\n1\\n\\nRubber. A manufactured fiber in which the fiber-forming substance is comprised of natural or synthetic rubber,\\nincluding the following categories:\\n\\n2\\n\\n(1) A manufactured fiber in which the fiber-forming substance is a hydrocarbon such as natural rubber,\\npolyisoprene, polybutadiene, copolymers of dienes and hydrocarbons, or amorphous (noncrystalline)\\npolyolefins.\\n(2) A manufactured fiber in which the fiber-forming substance is a copolymer of acrylonitrile and a diene\\n(such as butadiene) composed of not more than 50 percent but at least 10 percent by weight of acrylonitrile\\nunits.\\nThe term lastrile may be used as a generic description for fibers falling within this category.\\n(3) A manufactured fiber in which the fiber-forming substance is a polychloroprene or a copolymer of\\nchloroprene in which at least 35 percent by weight of the fiber-forming substance is composed of\\nchloroprene units.\\n(emphasis added)\\n3Spandex. A manufactured fiber in which the fiber-forming substance is a long chain synthetic polymer\\ncomprised of at least 85 percent of a segmented polyurethane.\\n\\n2\\n\\n\\x0cI\\n\\nDow Crosslinked Elastic Fiber (CEF): The Atypical Olefin Fiber\\nA. Properties of Dow CEF Versus Conventional Olefin\\n1.\\n\\nUnique Chemistry of Dow CEF\\n\\nDow CEF is the first manufactured olefin fiber founded on metallocene-based\\npolyolefin elastomer chemistry. Although the fiber-forming substance in Dow CEF\\nis made from olefin monomers, Dow CEF fiber has a unique molecular structure, a\\nunique morphology and unique properties when compared with any olefin fiber\\npreviously seen on the market. This unique combination of properties is a direct\\nresult of the polymerization chemistry, which includes the use of a constrained\\ngeometry catalyst, which is a member of the metallocene family.\\nThis catalyst has a single type of active site allowing precise control of molecular\\narchitecture of the polymer. Specifically, greater than 98 percent of the fiber forming\\nsubstance in Dow CEF is a homogeneously branched ethylene4 interpolymer5\\ncomposed of ethylene and other olefin comonomer units (typically octene).\\nVery technically, the polymer in Dow CEF contains short chain branching; has no\\nmeasurable high-density polymer fraction; has a narrow, essentially single peak in\\nTREF (temperature rising elution fractionation) and differential scanning calorimetry\\n(DSC) profile curve; and has a narrow molecular weight distribution prior to\\ncrosslinking. In simple terms, the molecules in Dow CEF are all very similar in size\\nand composition to each other. These molecular characteristics lead to important and\\ndistinct fiber properties.\\nThe alpha-olefin comonomer in Dow CEF is typically octene, and is present at a high\\nlevel (typically in excess of 30 weight percent). This high comonomer content leads to\\nDow CEF fiber\\xe2\\x80\\x99s low but significant level of crystallinity and low density.\\nIn contrast, olefin fiber manufactured today is based on conventional multi-site\\ncatalyst technology (such as Ziegler\/Natta catalysts). Consequently, it has a broad\\ncompositional molecular weight distribution and low or no comonomer content.\\n\\n4Homogeneously branched ethylene polymer. Refers to an ethylene interpolymer in which the comonomer is\\nrandomly distributed within a given polymer molecule and where substantially all of the polymer molecules have\\nthe same ethylene to comonomer molar ratios (WO 99\/60060) and are manufactured using so called\\nhomogeneous or single site catalyst systems known in the art as metallocene catalyst or constrained geometry\\ncatalysts system. (See also US 6,140,442, \\xe2\\x80\\x9cElastic Fibers, Fabrics and Articles Fabricated therefrom\\xe2\\x80\\x9d and US\\n6,194,532, \\xe2\\x80\\x9cElastic Fibers\\xe2\\x80\\x9d)\\n\\n5Interpolymer. Refers to polymers prepared by the polymerization of at least two different types of monomers,\\ntypically ethylene and octene.\\n\\n3\\n\\n\\x0c2.\\n\\nUnique Morphology of Dow CEF\\n\\nAs a result of its unique chemical structure, Dow CEF has lower crystallinity\\nthan conventional olefin fibers. (See Summary Table 1, page 15.) Specifically, the\\nhigh comonomer content leads to Dow CEF fiber\\xe2\\x80\\x99s low but significant level of\\ncrystallinity (12 \\xe2\\x80\\x93 16 weight percent) (Figure 1a, page 5) and low density (from 0.87\\nto 0.875 g\/cc). Unlike conventional olefin fiber where the polymer crystals are in\\nlamellae form, the crystals in the Dow CEF fiber-forming substance are in fringe\\nmicelle form. The fringed micellar crystalline morphology6 and the low but significant\\nlevel of crystallinity in Dow CEF imparts elastic properties not seen in other olefin\\nfiber manufactured today. This unique morphology of the Dow CEF polymer results\\nin high stretch (such that the fiber can be stretched to at least five times its original\\nlength before breaking) and high elasticity or snap back (such that when a fiber is\\nstretched to twice its length and then released, the fiber recovers to within 25% of its\\noriginal length).\\nIn contrast, conventional olefin fiber, such as drawn polypropylene fiber (Figure 1b,\\npage 5), is highly crystalline with degree of crystallinity greater than 50 percent and\\ndensity greater than 0.90 g\/cc. Additionally, conventional olefin has very low stretch\\n(for example, 33 percent elongation to break) and no significant elasticity at high\\nstretch.\\nThis combination of elasticity, elongation, and mechanical strength found in Dow\\nCEF fiber are not found in conventional olefin fiber manufactured today. (WO\\n99\/60060, US Patent allowed, but not yet issued.)\\n\\n6\\n\\nBenedikt, George M., Brian L. Good all (1998). Metallocene-C atalyzed P olymers: Ma terials,\\nPro perties, Processing & M arkets. Norwich, New York: Plastics Design Library, pp. 127-133.\\n\\n4\\n\\n\\x0cFigure 1: Differential scanning calorimetry (DSC) showing crystallinity and melting\\npeak temperature of Dow CEF fiber (a) versus conventional drawn polypropylene\\nfiber (b). Degree of crystallinity is determined from heat of fusion in the melting\\nendotherm.\\n\\nDow CEF (a)\\n\\nDrawn Polypropylene Fiber (b)\\n\\n\\x0c3. Unique Manufacturing Process of Dow CEF\\nDow CEF fibers are manufactured by melt spinning followed by crosslinking.\\nMelt spinning\\nThe Dow CEF fiber is fabricated using a melt spinning process. For instance, the\\npolymer may be melt spun into mono-filament or multi-filament fibers with a broad\\nrange of deniers (ranging from less than 20 to over 140 denier) on conventional\\nelastic melt spinning equipment, such as that used for thermoplastic urethane fibers.\\nIn one specific example, the fibers were separately melt spun on fiber extrusion\\nequipment consisting of an extruder, gear pump and spinneret. The extruder provided\\na melt temperature of 236\\xc2\\xb0C and each polymer melt stream was fed to the gear pump\\nwhich pressurized the melt and passed it through a 200 mesh pack followed by a 34\\nhole spinneret die. The spinneret had a 4:1 L\/D and the holes had a diameter of 800\\nmicrons. The resin output from the spinneret was controlled at 0.78 gram\/hole\/\\nminute. The fibers were quenched with a room temperature air high velocity blower.\\nCrosslinking\\nAfter spinning, the polymer chains in CEF fiber are not connected to one another\\nthrough covalent bonds. As a result, in an appropriate solvent, such as boiling xylene\\nor tri-chloro benzene, the polymer will dissolve. The fiber will also begin to flow and\\ndeform if heated above the crystalline melting point (about 68\\xc2\\xb0C). In order to prevent\\ndissolution and impart high-temperature dimensional stability, the fiber is crosslinked.\\nAfter the crosslinking process, the polymer chains in the fiber are linked to one\\nanother via covalent bonds (Figure 2, below). The crosslinked fiber is characterized as\\nhaving xylene extractables of less than about 70 weight percent as defined in\\naccordance with ASTM D-2765.\\nFigure 2: Schematic of morphology of crosslinked Dow CEF fiber (a) versus\\nuncrosslinked polymer (b).\\nDow CEF Fiber (a)\\n\\nUncrosslinked Fiber (b)\\n\\nCro sslinks and Crystals\\n\\nFringe-Miceller C rystals\\n\\n56\\n\\n\\x0cThe crosslinking process is conducted by any means capable of economically forming\\ncovalent links between the polymer chains including electron beam, beta irradiation,\\ngamma irradiation, corona radiation, peroxides, allyl compounds, silane compounds\\nand UV radiation with or without crosslinking catalysts. For example, crosslinking\\ncan be accomplished via high energy electron beam irradiation of the fiber spools.\\nThe irradiation source can be any electron beam generator operating in a range of 150\\nkilovolts to 12 megavolts with a power output capable of supplying the desired\\ndosage in megarads. The voltage can be adjusted to appropriate levels. The\\nirradiation is usually carried out at a dosage between 3 to 35 megarads. Irradiation\\nmay be carried out at room temperature or at a lower temperature, and is typically\\nconducted on the fiber spools after fiber spinning.\\n4.\\n\\nUnique Properties of Dow CEF\\n\\nDow CEF fibers have elasticity, high temperature stability, and chemical\\nresistance\\nElasticity\\nThe low but significant level of crystallinity imparts elasticity to the Dow CEF fiber\\nwhereas no olefin fiber manufactured today is elastic. Elasticity is defined as the\\nability of a strained material to recover its original size and shape, immediately after\\nremoval of the stress that causes deformation7. DOW CEF fiber\\xe2\\x80\\x99s favorable stretch\\n(at least five times its original length before breaking) and elasticity or snap back\\n(stretching to twice its length then, when released, recovering to within 25 percent of\\nits original length) are a consequence of its low but significant level of crystallinity\\n(Figure 3, page 8). Because of this, CEF can be successfully used in clothing\\napplications where stretch is desired.\\nIn contrast, conventional olefin fiber is highly crystalline, with degrees of crystallinity\\nof greater than 50 percent. The crystals of conventional olefin fiber are also in\\nlamellae form, unlike crystals in the Dow CEF fiber-forming substance which are in a\\nfringe micelle form. As a result, conventional olefin fiber is stiff, and essentially,\\nnon-elastic. Typical olefin fibers (in their manufactured, \\xe2\\x80\\x9cdrawn,\\xe2\\x80\\x9d form) exhibit very\\nlow elongation before breaking (typically less than 50%) and therefore cannot be\\nsuccessfully used in today\\xe2\\x80\\x99s apparel markets for stretch clothing.\\n\\n7 Ko Sa C omm unicatio ns and Pub lic Affairs (1 999 ). Dictionary of Fiber & Textile Technology.\\nCharlotte, N.C.: KoSa, p. 69.\\n\\n7\\n\\n\\x0cFigure 3: Tensile data of Dow CEF fiber (a) versus drawn polypropylene fiber (b).\\n\\nFigure 4: Dynamic mechanical thermal analysis (DMTA) of Dow CEF (a) versus\\ndrawn polypropylene fiber (b). Note: Dow CEF maintains its mechanical integrity\\nwell above its crystalline melting point (ca. > 68\\xc2\\xb0C), whereas drawn polypropylene\\ndoes not.\\n\\n8\\n\\n\\x0cHigh temperature stability, chemical resistance\\nDow CEF is substantially crosslinked with covalent crosslinks that connect adjacent\\npolymer chains into a contiguous 3-dimensional polymer network (Figure 2a, page 6).\\nThis crosslinked polymer network structure allows Dow CEF to maintain its shape\\nand mechanical integrity above its crystalline melting temperature. Above its melting\\ntemperature, the mechanical integrity of Dow CEF is provided by covalent crosslinks.\\nIn fact, Dow CEF retains its shape at temperatures up to 220\\xc2\\xb0C \\xe2\\x80\\x93 well in excess of\\nconventional olefin\\xe2\\x80\\x99s melting point which occurs at or below 170\\xc2\\xb0C (Figure 4, page 8; Figure 7, page\\n10). Furthermore, Figure 5, below, shows the heat stability of Dow CEF in nitrogen up to about 350\\xc2\\xb0C\\n(> 220\\xc2\\xb0C).\\nThis crosslinked polymer network structure also allows Dow CEF to maintain its integrity in solvents\\nwhich typically dissolve the starting polymer (Figure 7, page10). In contrast, conventional olefin fiber is\\nnot crosslinked and therefore loses shape and mechanical integrity and\/or dissolves above its crystalline\\nmelting temperatures which range up to about 170\\xc2\\xb0C.\\nFigure 5: DSC melting curve in nitrogen of Dow CEF from room temperature\\nto 500\\xc2\\xb0C.\\n\\nFurthermore, Figure 5, above, shows the heat stability of Dow CEF in nitrogen up to about 350\\xc2\\xb0C.\\n\\n9\\n\\n\\x0cFigure 6: Photographs showing mechanical integrity of Dow CEF (a)\\nversus conventional olefin fiber (b) which loses shape and integrity at 170\\xc2\\xb0C.\\nDow CEF\\n\\nConventional Olefin Fiber\\n\\na1\\n\\nb1\\n\\n25\\xc2\\xbaC, CEF\\n\\n25\\xc2\\xbaC, Drawn PP\\n\\na2\\n\\nb2\\n\\n170\\xc2\\xbaC, Drawn PP\\n\\n220\\xc2\\xbaC, CEF\\n\\nFigure 7: Photographs showing uncrosslinked fiber (a) which has dissolved in TCB after heating to\\n150\\xc2\\xb0C and crosslinked Dow CEF fiber (b) which continues to maintain its shape and structural\\nintegrity under same conditions. Note: you can see the Dow CEF fiber still present in the TCB\\nsolvent.\\n\\nCrosslinked fiber\\nafter heating in\\nTCB 150\\xc2\\xb0C\/2 hours\\n\\nUncrosslinked fiber\\n\\nafter heating in TCB\\n150\\xc2\\xb0C\/2 hours\\n(7a)\\n\\n(7b)\\n10\\n\\n\\x0cDow CEF fiber\\xe2\\x80\\x99s ability to withstand high temperatures has compelling advantages for the textile\\nmanufacturer: they can use more efficient dye and process methods requiring temperatures in excess of\\n170\\xc2\\xb0C. There are also advantages for consumers: they can repeatedly wash, dry; and iron fabrics\\ncontaining CEF at typical temperatures (up to 210\\xc2\\xb0C) without destroying the stretch properties of CEF\\nfiber. In contrast, since conventional olefin fiber manufactured today loses its shape and mechanical\\nintegrity in temperatures ranging from 105 \\xe2\\x80\\x93 170\\xc2\\xb0C, it cannot withstand the rigors of high heat and\\nrepeated launderings. Consequently, conventional olefin fiber is not widely used in apparel applications\\ntoday where the consumer seeks easy wash \\xe2\\x80\\x98n\\xe2\\x80\\x99 wear care.\\nTherefore, Dow CEF fiber is a uniquely differentiated olefin fiber and exhibits significant property\\nimprovements including shape retention and stability at very high temperatures plus improved fabric\\nprocessing and consumer care characteristics not found in conventional olefin fiber manufactured\\ntoday.\\n\\nB. Properties of Dow CEF Versus Rubber Fibers\\n1.\\n\\nDifferences in Chemistry and Morphology\\n\\nDow CEF fiber differs significantly from rubber fibers. The fiber-forming substance in Dow CEF\\nis a polyolefin having a low but significant level of crystallinity. Therefore, Dow CEF does not fall\\nwithin the FTC definition of a rubber (FTC definition of rubber, page 2).\\nEvidence of low but significant crystallinity in Dow CEF fiber is provided by a standard differential\\nscanning calorimetry (DSC) technique (Figure 8, page 12).\\nCEF fiber exhibits approximately 16% crystallinity and a melting point of approximately 68\\xc2\\xb0C. In\\nmarked contrast, the rubber fiber exhibits no crystallinity as indicated by lack of a discernible DSC\\nendotherm.\\n\\n11\\n\\n\\x0cFigure 8: Differential scanning calorimetry of Dow CEF (a) versus rubber (b). Degree of\\ncrystallinity is determined from heat of fusion in melting endotherm.\\nDow CEF (a)\\n\\nRubber Fiber (b)\\n\\n12\\n\\n\\x0c2. Process Distinctions\\nDow CEF fiber is produced by a melt spinning \/ crosslinking process. In contrast, rubber fibers are\\ncommonly made by extruding a pre-cured aqueous latex dispersion into an acid bath. This extrudate is\\ncoagulated to solidify the rubber. The resulting thread then proceeds into a drying and a curing oven.\\nAlternatively, rubber fibers can be made by slitting prevulcanized sheets (cut rubber).\\nTherefore, CEF and rubber fibers are manufactured from radically different materials via different\\nprocesses.\\n3.\\n\\nProperty Differentiation\\n\\nRubber fibers are not crystalline, whereas CEF fibers have a low but significant level of\\ncrystallinity. As a result, CEF fibers have unique differentiating properties.\\nRubber fibers are amorphous (non-crystalline) polymers, and are vulcanized typically using sulfur and\\nheat. As a result of this chemical structure, rubber fibers have uniform tensile properties across a broad\\ntemperature range. In contrast, CEF fibers have mechanical properties which derive from both the\\ncrystallinity and covalent crosslinks between carbon atoms \\xe2\\x80\\x93 without using sulfur. At low\\ntemperature, the presence of crystallites dominates the mechanical properties of CEF. As the\\ntemperature is raised above the crystalline melting point (ca. > 68\\xc2\\xb0C), the modulus of CEF fibers drops\\nby an order of magnitude; the modulus above melting point is determined solely by the degree of\\ncovalent crosslinks. Therefore, CEF has unique temperature-dependent mechanical properties which\\nare radically different from those of rubber fibers. Since rubber has absolutely no crystallinity, the\\nmodulus is\\nessentially flat with respect to temperature increases. The figure shown below (Figure 9) dramatically\\ndemonstrates this feature.\\nFigure 9: Dynamic mechanical thermal analysis (DMTA) of Dow CEF (a) versus rubber fiber (b).\\n\\n13\\n\\n\\x0cSecondly, since CEF has a low but significant level of crystallinity at room temperature, the fiber\\nexhibits higher tenacity (strength) at break compared to rubber fiber which is amorphous (Figure 10,\\nbelow). The improved mechanical strength and toughness of Dow CEF is important to survive\\nrigorous textile fabrication processes.\\n\\nFigure 10: Tensile data of Dow CEF fiber (a) versus rubber fiber (b) showing lower tenacity at break\\nof rubber fiber due to rubber\\xe2\\x80\\x99s amorphous character.\\n\\nAnd last, since Dow CEF has a low but significant level of crystallinity at room temperature, CEF\\nexhibits higher tensile set (lower elastic recovery) than rubber when extended to greater than 100%\\nelongation. The 5-cycle tensile set measurement (Figure 11, page 15) shows this contrasting behavior\\nbetween CEF and rubber fiber. The permanent set of CEF is a direct manifestation of its crystallinity\\nand stands in marked contrast to the low tensile set of rubber fibers.\\n\\n14\\n\\n\\x0cFigure 11: Tensile set data of Dow CEF (a) versus rubber (b) showing permanent set of Dow CEF\\nversus negligible set of rubber fiber (5 cycle elongation).\\n\\nSummary Table #1\\nProperty\\n\\nCEF\\n\\nConventional\\nOlefin 8\\n\\nRubber\\n\\nCrystallinity, wt%\\n\\n12 to 16\\n\\n> 50\\n\\n0\\n\\nElongation, %\\n\\n> 400\\n\\n< 15-200\\n\\n600 \\xe2\\x80\\x93 800\\n\\nBreaking Strength\\n(gm\/den)\\n\\n> 0.9\\n\\n1.7 \\xe2\\x80\\x93 6.8\\n\\n0.45\\n\\nInitial Modulus\\n\\n0.3\\n\\n34 \\xe2\\x80\\x93 56\\n\\n0.02\\n\\nDensity (gm\/cc)\\n\\n0.87 \\xe2\\x80\\x93 0.875\\n\\n0.90 \\xe2\\x80\\x93 0.91\\n\\n~ 1.0\\n\\nDissolution\\nCharacteristics\\nTemperature\\nStability\\n\\nDoes not dissolve\\n\\nDissolve\\n\\nDoes not dissolve\\n\\nUp to > 220\\xc2\\xb0C\\n\\nUp to 170\\xc2\\xb0C\\n\\nUp to 350\\xc2\\xb0C\\n\\nManufacturing\\nMethod\\n\\nMelt spinning\\nfollowed by\\ncrosslinking\\n\\nMelt spinning\\n\\nExtrusion\/vulcanization or\\nsplitting prevulcanized\\nsheets\\n\\n8\\n\\nPolypropylene drawn fiber data (elongation, breaking strength, initial modulus) from Fourne, Franz (1998). Synthetic Fibers:\\nMachines and Equipment, Manufacture, Properties. Cincinnati, Ohio: Hanser\/Gardner Publications, Inc. pp. 840 & 850.\\n\\n15\\n\\n\\x0cII\\n\\nDow CEF: A New Generic Subclass \\xe2\\x80\\x94 Lastol\\nA. Why Dow Seeks a New Generic Subclass\\nDow CEF meets the broad definition of olefin fiber. However, CEF has unique elastic properties,\\nthermal resistance, molecular structure, morphology, and property improvements which differentiate it\\nfrom conventional olefin fiber manufactured today. Today\\xe2\\x80\\x99s olefin \\xe2\\x80\\x93 largely seen in carpet, thermal\\nunderwear, and socks \\xe2\\x80\\x93 does not offer the consumer stretch or the easy-care characteristics gained\\nthrough high temperature tolerance. To textile mill producers, CEF enables process economies and the\\nproduction of new products with atypical stretch and performance properties. To the consumer, CEF\\noffers a wider choice in garments containing stretch fabric plus the benefit of easy-care laundering at\\nhigher temperatures without degradation of the stretch fiber.\\nB. Proposed New Generic Subclass Name \\xe2\\x80\\x93 Lastol\\nDow recognizes that a new subclass name should capture the chemical structure while also\\nreferencing the radical distinction. Dow has determined Lastol to be the descriptive new subclass\\nbecause it connotes an elasticized olefin. Dow proposed the following definition for Lastol:\\nA manufactured crosslinked elastic fiber in which a) the fiber-forming substance is a synthetic\\npolymer, with low but significant crystallinity, composed of at least 99 percent by weight of ethylene\\nand at least one other olefin unit, and b) wherein the fiber exhibits substantial elasticity and heat\\nresistance properties not present in traditional olefin fibers.\\n\\nIII\\n\\nCommercialization Plan and Time Table\\nCommercialization of Dow CEF is imminent \\xe2\\x80\\x93 occurring early in the second quarter of 2002.\\nBeginning in 1999, Dow identified and began working with developmental partners who are leaders in\\nthe fiber manufacturing and apparel industry around the world. Since the second quarter of 2001, CEF\\nhas been successfully made on commercial-scale spinning equipment, with resulting quantities\\nsubsequently produced and used in a wide range of fabrics including both knits and wovens. These\\nfabrics have been used to make a variety of goods, but most notably for those in the apparel market and\\nits various end-use segments.\\nGarments made with CEF have been tested and found to meet or exceed all standard industry\\nspecifications. The market testing process of garments with leading retailers is presently underway,\\nwith completion expected within the coming weeks.\\n\\n16\\n\\n\\x0cIf you have questions regarding this Petition, please contact Margaret Rogers in Dow\\xe2\\x80\\x99s Washington\\nD.C. office (202 429-3403) Stephen Krupp, our business attorney (979 238-2889). Steve is located in\\nFreeport, Texas.\\nThank you for your time and consideration.\\nSincerely,\\n\\nAntonio Torres\\nGlobal Business Director\\nDow Fiber Solutions\\nCc: Stephen Krupp\\nMargaret Rogers\\n\\n17\\n\\n\\x0c'","created_timestamp":"March 19, 2002","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/new-generic-fiber-petition-dow-chemical-company\/petition_dowsubclass.pdf"}
-{"text":"b'UNITED STATES OF AMERICA\\n\\n.\\n\\n.~.~\\n\\nFEDERAL TRADE COMMISSION\\n~\\n\\n~\".\\n\\n600 PENNSYLVANIA\\n\\n.\"\\n\\nA VENUE, NW\\n\\nWASHINGTON,DC 20580\\n\\nDivision of Enforcement\\nBureau of Consumer Protection\\n\\nMarch\\n\\n18,\\n\\n2002\\n\\nMr. Carlos Moore\\nExecutive Vice President\\nAmerican Textile Manufacturers Institute\\n1130 Connecticut Ave., NW, Suite 1200\\nWashington, DC 20036-3954\\nRe: ReQuestfor FTC Staff QRinion concerning Thread Count\\nDear Mr. Moore:\\nThis is in reply to your letter requesting a Commission staff opinion regarding the\\nappropriate method for determining fabric \"thread count,\" or yams per square inch, in textile\\nproducts such as bed sheetsand pillow cases. You state that some companies are marketing\\nbedding products with extremely high yam or thread counts, achieved by counting yams within a\\nply as individual yams, thus dramatically and deceptively increasing the number of yams in a\\nsquare inch of fabric. You make specific reference to the American Society for Testing and\\nMaterials (ASTM) test method D 3775, titled \"Standard Test Method for Fabric Count of Woven\\nFabric,\" and you express the view that this method is the long-accepted industry standard for\\ndetermining thread count.\\nUnder the Commission\\'s Rules of Practice, 16 C.F.R. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 1.I(a), the Commission (and,\\nunder delegated authority, its staff) may render an advisory opinion with respectto a prospective\\ncburse of conduct proposed by the requesting party:\\n\\xe0\\xb8\\xa2\\xe0\\xb8\\x87 1.1 Policy.\\n(a) Any person, partnership, or corporation may requestadvice\\nfrom the Commission with respectto a course of action which the\\nrequesting party proposes to pursue.\\nIn this instance, A TMI is not seeking advice with respectto a course of conduct it proposes to\\npursue. Rather, A TMI is seeking an opinion as to whether certain representationsmade by some\\nindustry members with regard to thread count might be considered deceptive under the FTC Act.\\nAs such, the question is not appropriate for issuanceof a staff advisory opinion.\\n\\n\\x0cMr. Carlos Moore\\npage 2\\n\\n,\\nAlthough we are unable to provide you with a staff advisory opinion about whether\\ncounting yarns within a ply as individual yarns would be deceptive, we can advise you as to how\\nthe Commission staff generally would analyze such claims. A thread count claim, like other\\nobjective, material claims about a product, must be supported by a \"reasonablebasis.\" In\\ndetermining what constitutes a reasonablebasis for claims, we would consider what experts in\\nthe field believe is appropriate, including whether there are relevant consensusbased test\\nprocedures, such as an ASTM test procedure, or other widely acceptedindustry practices that\\napply to the matter. If so, we would give suchprocedures or practices great weight in\\ndetermining whether:the advertiserhas met its substantiationburden. In other related contexts,\\nthe Commission has encouragedthe use of ASTM tests. SeePressRelease,FTC Announces\\nActions on Wool Labeling Rules, dated March 8, 1994 (copy attached)(\"In its clarification of the\\nprocedure used for testing the fiber content of wool products, the FTC said the industry members\\nshould, where possible, use procedures established by the American Society for Testing and\\nMaterials (ASTM).\")\\nI also wish to bring to your attention a closing letter that is on the public record\\n.concerning\\nan investigation of possibly deceptive practices in connection with the packaging of\\ndown comforters. In that instance, the staff determined that no further Commission action was\\nwarranted when the company notified the staff that it was changing its package product\\ndescription from \"760 White Goose Down\" to \"finely woven 380 2-ply fabric.\" (copy attached).\\nPursuant to Section 1.4 of the Commission\\'s Rules of Practice and Procedure, 16 C.F.R.\\n\\xe0\\xb8\\xa2\\xe0\\xb8\\x87 1.4, your letter, together with this response,will be placed on the public record.\\nI hope you will find the above information helpful.\\nSincerely yours,\\n\\n~U.L~\\n\\nl> .Ntl<:.-<..4;\\n\\nElaine D. Kolish\\nAssociate Director for Enforcement\\n\\nEnclosures\\n\\n\\x0c-\\n\\nFederalTrade Commission Washington, D.C. 20580\\n~\\nIMMEDIATERRT.RASE:March 8. 1984\\nFIt= A~ES\\n(If\\n\\nM)()L\\n\\nACr I (2fS\\n\\nt-A\"RI~ 1M; BOLES\\n\\nThe Federal\\nTrade Commission has decided,\\nafter\\nreviewing\\npublic\\ncomments,\\nnot to change its rule requiring\\na label\\nstating\\nthe minimum wool content\\non wool products.\\nThe Commission also\\nissued a clarification\\nof the procedures\\nit uses for testing\\nwool\\nproducts\\nto determine\\ntheir\\nfiber\\ncontent.\\nThe FTC enforces\\nwool-labeling\\nrules\\nunder the Wool Products\\nLabeling\\nAct.\\nIn April\\n1983, the FTC sought comments on whether\\nit should\\namend its\\nrules\\nto allow labels\\nto disclose\\nthe average amount,\\nrather\\nthan the minimum amount, of wool in fabrics\\nthat contain\\nrecycled\\nwool or wool blend products.\\nUsing the average amount\\nmight provide\\nconsumers more accurate\\ninformation,\\nthe FTC said,\\nbut using the minimum assures\\nthat conswners will\\nreceive\\nat\\nleast\\nthe amount of wool on the label.\\nHowever,\\nafter\\nreviewing\\nthe comments, the Commission\\ndecided\\nnot to amend the rule,\\nbecause there was no evidence\\nthe record\\nto support\\nthe change.\\n\\non\\n\\nIn its clarification\\nof the procedure\\nused for testing\\nthe\\nfiber\\ncontent\\nof wool products,\\nthe FTC said the industry\\nmembers\\nshould,\\nwhere possible,\\nuse procedures\\nestablished\\nby the\\nAmerican\\nSociety\\nfor Testing\\nand Materials\\n(ASTM).\\nThe test should be made on an \"oven-dry\\nbasis,\"\\n\"commercial\\nmoisture\\nregain\"\\nadded to determine\\nthe\\nfiber\\ncontent\\nof a wool product.\\n\\nwith\\nquantitive\\n\\nThe ASTM defines\\noven-dry\\nbasis as \"the condition\\nof a\\nmaterial\\nthat has been heated under prescribed\\nconditions\\nof\\ntemperature\\nand humidity\\nuntil\\nthere\\nis no further\\nsignificant\\nchange in its mass.\"\\nCommercial\\nmoisture\\nregain is \"an arbitrary\\nvalue\\nto be used with the oven-dry\\nweight\"\\nwhen calculating\\n\"the\\nweight\\n\\n\".of a specific\\n\\ncomponent\\n\\nin\\n\\nthe\\n\\nanalysis\\n\\nof\\n\\nfiber\\n\\nblends.\"\\n\\nCopies of the Federal\\nRegister\\nnotice\\non the minimum wool\\ncontent\\nrulemaking\\ndecision\\nare available\\nfrom the FTC\\'s Public\\nReference\\nBranch,\\nRoam 130, 6th st. and Pennsylvania\\nAve. N.W.,\\nWashington,\\nD.C. 20580; 202-523-3598;\\nTTY 202-523-3638.\\nNews\\nmedia copies\\nare available\\nfrom the Office\\nof Public\\nAffairs,\\nRoom 496, same address;\\n202-523-1892.\\n# # #\\n\\nMEDIA CONTACT:\\n\\nSusan Ticknor,\\n\\nOffice\\n\\nof Public\\n\\nAffairs,\\n\\n202-523-1892\\n\\nSTAFF-CONTACT:\\n\\nJerry\\n\\nMcDonald,\\n\\nBureau\\n\\nof Conswner\\n\\n202-376-2800\\n\\n(labels)\\n\\nEarl Johnson,\\n202-376-2891\\n\\nBureau of Conswner\\n(test\\nmethods)\\n\\nProtection,\\n\\nProtection,\\n\\n\\x0c.\" \\'IC\\n\\n.\\n\\n.~\\n\"\".\\nDivision\\n\\nUNITED STATESOF AMERICA\\n\\nj\\'~~\\n\\nFEDERAL TRADE COMMISSION\\n\\n~\\n.\\'1:-\\n\\nWASHINGTON, D.C. 20580\\n\\nof Enforcement\\n\\nBureau of Consumer Protection\\n\\nApril\\n\\n8, 1996\\n\\nJeffrey\\nGoldman, President\\nCalifornia\\nFeather & Down Corporation\\n11842 S. Alameda St.\\nLynwood, CA 90262\\nRe:\\n\\nCalifornia\\n\\nFeather\\n\\n& Down Corporation,\\n\\n9523373\\n\\nDear Mr. Goldman:\\nThe Commission has conducted an investigation\\ninvolving\\nyour\\ncompany\\'s possible\\nviolation\\nof the Federal Trade Commission Act\\nthrough the use of unfair\\nacts or deceptive\\nacts or practices\\nin\\nconnection\\nwith the packaging of down comforters.\\nBy letter\\ndated March 12, 1996, Mr. N. Frank Wiggins stated\\nthat your company is removing the reference\\nto \"760\" from the\\npackaging and labeling\\nof your \"White Knights\\n760 White Goose\\nDown Comforter.\"\\nFurther,\\nMr. Wiggins\\'\\nAugust 12, 1995, letter\\nstated that the company had revised\\nthe text of the packaging for\\nthis product\\nto say that the White Knights 760 White Goose Down\\nComforter\\ncontains\\n\"finely\\nwoven 380 2-ply fabric.\\n...\"\\nThe\\nformer packaging had stated\\n\"finely\\nwoven 760 threads per sq.\\n.\\n\"\\nlnc h Upon further\\nreview of this matter,\\nit now appears that no\\nfurther\\naction\\nis warranted\\nby the Commission at this time.\\nAccordingly,\\nthe investigation\\nhas been closed.\\nThis action is\\nnot to be construed\\nas a determination\\nthat a violation\\nhas not\\noccurred,\\njust as the pendency of an investigation\\nshould not be\\nconstrued\\nas a determination\\nthat a violation\\nhas occurred.\\nThe\\nCommission reserves\\nthe right\\nto take such further\\naction as the\\npublic\\ninterest\\nmay require.\\nSincerely,\\nC---l.La..l-l\\'&... ~ ~~1C_{-<...a-\\\\\"\\nElaine D. Kolish\\nAssociate\\nDirector\\ncc:\\n\\nN. Frank Wiggins,\\nEsq.\\nVenable, Baetjer,\\nHoward & Civiletti,\\n1201 New York Avenue, NW, Suite 1000\\nWashington,\\nDC 20005-3917\\n\\nLLP\\n\\n\\x0cFEDERAL\\nTRA.DE\\nCOMMISSION\\n\\n~\\n\\nA\\nAMERICAN\\nMANUFACTURERS\\n\\n_t)IVISION ENFORCEMENT\\nTEXTILE\\nINSTITUTE\\n\\nJanuary 31, 2002\\n\\nMr. Steve Ecklund\\nFederal Trade Commission\\nDivision of Enforcement\\nWashington, DC 20580\\n\\nRe:\\n\\nRequest for FTC Staff\\nOpinion on Yarn Count\\n\\nDear Mr. Ecklund:\\nIt has come to our attention again that. some companies are marketing bed\\nsheets and pillowcases to U.S. consumers where extremely high yarn or thread\\ncounts are claimed -some as high as 1000 count. We believe these products\\nare mislabeled, creating deceptive information for the consumer.\\nLabeling these products based on a count that includes each ply in plied yarns\\ndeceives the customer into believing that bedding products with higher counts\\nare better when, in fact, they might be inferior because of the method used to\\ndetermine the count. We wrote to the Commission regarding this same issue on\\nFebruary 24, 1997 (copy enclosed) and provided a fabric sample and\\nindependent lab report verifying our position.\\nIn many cases, these extremely high counts are achieved by counting yams\\nwithin a ply as individual yams, thus dramatically increasing the number of yarns\\nin a square inch of fabric. A plied yarn is one in which two or more yarns are\\ntwisted together to form a single strand.\\nATMI believes this method of labeling products based on counting each\\nindividual yarn in plies to be a deceptive practice, which misleads the American\\n\\n.\\n\\n1130 Connecticut Ave., NW. Suite 1200. Washington, DC 20036-3954\\n202-862-0500 .fax: 202-862-0570. http:\/\/www.atmi.org\\nfax on demand: 202-862-0572\\n\\n\\x0c-\\n\\n,\\n\\npublic into making decisions to purchase items, based on false and misleading\\ninformation.\\nASTM method D 3775-96 (Standard Test Method for Fabric Count of Woven\\nFabric) is the long-accepted industry standard for determining count. This\\nmethod has been in use in this country for many years and serves as the\\nindustry\\'s standard way to report the count of many woven textile fabrics,\\nincluding sheeting. It is based on the number of yarns in the warp direction and\\nfilling direction, regardless of ply, and has become an important parameter used\\nby consumers to judge the quality of sheeting products, since the higher the\\ncount, the more luxurious the product.\\nATMI believes that any information provided to the consumer should be true and\\ncorrect so as not to be deceptive or mis-leading. We believe that plied yarns are\\nproperly counted as only one yarn. For example, a fabric containing 250\\nindividual four ply yarns in a square inch would be described as a \"250 thread\\ncount fabric, even though each thread or yarn contained four plies twisted\\ntogether.\" It would be false and mis-leading to describe this as a 1000 thread\\ncount product.\\nATMI requests a staff opinion from the Federal Trade Commission on this issue.\\nWe believe that manufacturers, importers and retailers of bed sheets should rely\\non the ASTM D3775-96 standard test method to determine count.\\n\\na:;;el#\\n\\n~\\n\\nCarlos Moore\\nExecutive Vice President\\n\\nEnclosure\\n\\n\\x0c'","created_timestamp":"March 12, 1996","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/american-textile-manufacturers-institute\/americantextilemanuinstitute.pdf"}
-{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nDivision of Enforcement\\nBureau of Consumer Protection\\n\\n\\xe2\\x80\\x98August 6, 1999\\n\\nSteven S. Weiser\\n\\nAri L. Kaplan\\n\\nGraham & James, LLP\\n\\n885 Third Avenue\\n\\n21\" Floor\\n\\nNew York, NY 10022-4834\\n\\nDear Mr. Weiser and Mr. Kaplan:\\n\\nThis is in reply to your letter requesting a written advisory opinion regarding fiber content\\nlabeling of certain T-shirts, sweatshirts, sweatpants, and sweatshorts imported from Mexico. You\\n_ also request a second opinion on the exclusion from labeling of certain disposable knit wipe cloths\\nalso imported from Mexico.\\n\\n_ Based on your letter, and information that you provided over the telephone, it is my\\nunderstanding that your client plans to import from Mexico into the United States various odd\\nlots of textile fabrics composed of unknown percentages of cotton and polyester. Your client will\\nalso acquire various discarded textile panels of U.S. origin fabric, composed of unknown\\npercentages of cotton and polyester fibers. These imported odd lots.and domestic panels will then\\nbe shipped into Mexico where they will be cut and sewn to make T-shirts, sweatshirts,\\nsweatpants, and sweatshorts. Each such garment would be completely unique in terms of its fiber\\ncontent. The finished garments will then be shipped into the United States for retail distribution\\nand sale.\\n\\n\\xe2\\x80\\x98\\n\\nB d 01 licable and tion:\\n\\nBefore addressing your specific concern, let me provide some background information.\\nAs you note in your letter, according to Textile Rule 14(a) and (b) (16 C.F.R. \\xc2\\xa7 303.14(a) and\\n(b)), textile fiber products made in whole or in part from miscellaneous scraps, Tags, odd lots, or\\ntextile waste materials of undeterminable fiber content, may be labeled in various ways. Textile\\nRule 14(a) sets forth the following examples for labeling:\\n\\x0c_ Made of miscellaneous scraps of undetermined fiber content.\\n100% unknown fibers \\xe2\\x80\\x94 rags.\\nAll undetermined fibers \\xe2\\x80\\x94 textile by-products.\\n100% miscellaneous odd lots of undetermined fiber content.\\nSecondhand materials \\xe2\\x80\\x94 fiber content unknown.\\n\\nMade of unknown fibers \\xe2\\x80\\x94 waste materials.\\n\\nIt is staff\\'s opinion that the above examples are intended to apply to situations where the types of\\nfibers, such as cotton or polyester, are unknown, and where the percentages are likewise, of\\ncourse, unknown. Textile Rule 14(b) addresses situations in which some of the fibers are of\\nknown type and percentage, and other fibers in the same product are of unknown type and\\npercentage. The situation that you describe involves known fibers, but of unknown percentages.\\nIt appears that neither Textile Rule 14(a) nor 14(b) precisely fit the circumstances posed in your\\nletter. Although the Textile Rules do not exactly correspond to your situation, we find Wool Rule\\n\\n_ 29, under the Wool Products Labeling Act, may by analogy be used as guidance. Wool Rule 29\\n(16 C.F.R. \\xc2\\xa7 300.29) sets forth several examples that are helpful. Because the Rule is rather\\nlengthy, I will point out only the sample disclosures contained in the Rule:\\n\\nMade of Miscellaneous Cloth Scraps\\nComposed Chiefly of Cotton With Minimum of - -- % Recycled Wool.\\n\\nMade of Miscellaneous Cloth Scraps\\nComposed Chiefly of Rayon With Minimum of - \\xe2\\x80\\x94 % Recycled Wool.\\n\\nMade of Miscellaneous Cloth Scraps\\nComposed Chiefly of Cotton and Rayon With Minimum of - \\xe2\\x80\\x94 % Recycled Wool. .\\n\\nMade of Miscellaneous Cloth Scraps\\nContaining Cotton, Rayon and Other Non-Woolen Fibers,\\nWith Minimum of \\xe2\\x80\\x94 \\xe2\\x80\\x94 % Recycled Wool.\\n\\nAnalysis\\n\\nBased on the information you have provided, it is our understanding that the garments in\\nquestion are made from odd lots and discarded panels, some composed only of cotton, and others\\nof cotton and polyester, and that the percentages of cotton and polyester are unknown and, for\\npractical purposes, undeterminable. It is also our understanding that the odd lots and discarded\\npanels are not from used or secondhand textile products. Staff notes that the above examples use\\ndescriptive terms such as \\xe2\\x80\\x9cMiscellaneous Cloth Scraps,\\xe2\\x80\\x9d and \\xe2\\x80\\x9cwaste materials,\\xe2\\x80\\x9d and \\xe2\\x80\\x9c textile\\n\\nproducts\\xe2\\x80\\x9d and \\xe2\\x80\\x9cmiscellaneous odd lots.\\xe2\\x80\\x9d To remain consistent with Textile Rule 303.14 and\\nWool Rule 300.29, staff feels that it is appropriate that some such equivalent descriptive term(s)\\n\\x0cbe used on the labels of the garments at issue. Staff suggests the following fiber content\\ndisclosures: \\xe2\\x80\\x9cMade of scraps and odd lots of unknown percentages of cotton and polyester\\nfibers,\\xe2\\x80\\x9d or \\xe2\\x80\\x9cComposed of cotton and polyester scraps of unknown percentages.\\xe2\\x80\\x9d\\n\\nYou also requested an opinion on the fiber content labeling of certain disposable knit wipe\\ncloths (i.e., rags) which your client proposes to import from Mexico in either one thousand\\n(1,000) pound bundles or in cardboard boxes containing cloths weighing from 10 to 100 pounds.\\nThese items are made of knitted fabric (not woven fabric) and are of a disposable nature intended\\nfor one-time use only. You state that it is your position that this merchandise is excluded from\\nlabeling under 16 C.F.R. \\xc2\\xa7 303.45(a)(6), which provides for the exclusion of \\xe2\\x80\\x9cnon-woven\\nproducts of a disposable nature intended for one-time use only\\xe2\\x80\\x9d from the labeling requirements\\nunder the Textile Fiber Products Identification Act. Because the rags are made of knitted fabric\\nand, hence, \\xe2\\x80\\x9cnon-woven,\\xe2\\x80\\x9d and they are \\xe2\\x80\\x9cof a disposable nature intended for one-time use only,\\xe2\\x80\\x9d\\nstaff concurs that such rags are exempt from the labeling requirements of the Textile Act. I would\\nalso point out that on page 7 of our business guide book, Threading Your Way Through the\\nLabeling Requirements Under the Textile and Wool Acts (copy enclosed), \\xe2\\x80\\x9cindustrial wiping\\ncloths\\xe2\\x80\\x9d are listed as exempt from the Textile Act.\\n\\nIn accordance with Section 1.3(c) of the Commission\\'s Rules of Practice and Procedure\\n(16 C.F.R. \\xc2\\xa7 1.3(c)), this is a staff opinion only and has not been reviewed or approved by the\\nCommission or by any individual Commissioner, and is given without prejudice to the right of the\\nCommission later to rescind the advice and, where appropriate, to commence an enforcement\\naction.\\n\\nIn accordance with Section 1.4 of the Commission\\'s Rules of Practice and Procedure (16\\nCFR. \\xc2\\xa7 1.4), your request for advice, along with this response, will be placed on the public\\nrecord.\\n\\nT hope this has been helpful. If you have any questions do not hesitate to write to me or\\n\\ncall me at 202-326-2841.\\nSi ,\\nSea. Htc\\n\\nSteve Ecklund\\nFederal Trade Investigator\\n\\nEnclosure\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/graham-james-llp\/grahamandjames.pdf"}
+{"text":"b'UNITED STATES OF AMERICA\\n\\n.\\n\\n.~.~\\n\\nFEDERAL TRADE COMMISSION\\n~\\n\\n~\".\\n\\n600 PENNSYLVANIA\\n\\n.\"\\n\\nA VENUE, NW\\n\\nWASHINGTON,DC 20580\\n\\nDivision of Enforcement\\nBureau of Consumer Protection\\n\\nMarch\\n\\n18,\\n\\n2002\\n\\nMr. Carlos Moore\\nExecutive Vice President\\nAmerican Textile Manufacturers Institute\\n1130 Connecticut Ave., NW, Suite 1200\\nWashington, DC 20036-3954\\nRe: ReQuestfor FTC Staff QRinion concerning Thread Count\\nDear Mr. Moore:\\nThis is in reply to your letter requesting a Commission staff opinion regarding the\\nappropriate method for determining fabric \"thread count,\" or yams per square inch, in textile\\nproducts such as bed sheetsand pillow cases. You state that some companies are marketing\\nbedding products with extremely high yam or thread counts, achieved by counting yams within a\\nply as individual yams, thus dramatically and deceptively increasing the number of yams in a\\nsquare inch of fabric. You make specific reference to the American Society for Testing and\\nMaterials (ASTM) test method D 3775, titled \"Standard Test Method for Fabric Count of Woven\\nFabric,\" and you express the view that this method is the long-accepted industry standard for\\ndetermining thread count.\\nUnder the Commission\\'s Rules of Practice, 16 C.F.R. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 1.I(a), the Commission (and,\\nunder delegated authority, its staff) may render an advisory opinion with respectto a prospective\\ncburse of conduct proposed by the requesting party:\\n\\xe0\\xb8\\xa2\\xe0\\xb8\\x87 1.1 Policy.\\n(a) Any person, partnership, or corporation may requestadvice\\nfrom the Commission with respectto a course of action which the\\nrequesting party proposes to pursue.\\nIn this instance, A TMI is not seeking advice with respectto a course of conduct it proposes to\\npursue. Rather, A TMI is seeking an opinion as to whether certain representationsmade by some\\nindustry members with regard to thread count might be considered deceptive under the FTC Act.\\nAs such, the question is not appropriate for issuanceof a staff advisory opinion.\\n\\n\\x0cMr. Carlos Moore\\npage 2\\n\\n,\\nAlthough we are unable to provide you with a staff advisory opinion about whether\\ncounting yarns within a ply as individual yarns would be deceptive, we can advise you as to how\\nthe Commission staff generally would analyze such claims. A thread count claim, like other\\nobjective, material claims about a product, must be supported by a \"reasonablebasis.\" In\\ndetermining what constitutes a reasonablebasis for claims, we would consider what experts in\\nthe field believe is appropriate, including whether there are relevant consensusbased test\\nprocedures, such as an ASTM test procedure, or other widely acceptedindustry practices that\\napply to the matter. If so, we would give suchprocedures or practices great weight in\\ndetermining whether:the advertiserhas met its substantiationburden. In other related contexts,\\nthe Commission has encouragedthe use of ASTM tests. SeePressRelease,FTC Announces\\nActions on Wool Labeling Rules, dated March 8, 1994 (copy attached)(\"In its clarification of the\\nprocedure used for testing the fiber content of wool products, the FTC said the industry members\\nshould, where possible, use procedures established by the American Society for Testing and\\nMaterials (ASTM).\")\\nI also wish to bring to your attention a closing letter that is on the public record\\n.concerning\\nan investigation of possibly deceptive practices in connection with the packaging of\\ndown comforters. In that instance, the staff determined that no further Commission action was\\nwarranted when the company notified the staff that it was changing its package product\\ndescription from \"760 White Goose Down\" to \"finely woven 380 2-ply fabric.\" (copy attached).\\nPursuant to Section 1.4 of the Commission\\'s Rules of Practice and Procedure, 16 C.F.R.\\n\\xe0\\xb8\\xa2\\xe0\\xb8\\x87 1.4, your letter, together with this response,will be placed on the public record.\\nI hope you will find the above information helpful.\\nSincerely yours,\\n\\n~U.L~\\n\\nl> .Ntl<:.-<..4;\\n\\nElaine D. Kolish\\nAssociate Director for Enforcement\\n\\nEnclosures\\n\\n\\x0c-\\n\\nFederalTrade Commission Washington, D.C. 20580\\n~\\nIMMEDIATERRT.RASE:March 8. 1984\\nFIt= A~ES\\n(If\\n\\nM)()L\\n\\nACr I (2fS\\n\\nt-A\"RI~ 1M; BOLES\\n\\nThe Federal\\nTrade Commission has decided,\\nafter\\nreviewing\\npublic\\ncomments,\\nnot to change its rule requiring\\na label\\nstating\\nthe minimum wool content\\non wool products.\\nThe Commission also\\nissued a clarification\\nof the procedures\\nit uses for testing\\nwool\\nproducts\\nto determine\\ntheir\\nfiber\\ncontent.\\nThe FTC enforces\\nwool-labeling\\nrules\\nunder the Wool Products\\nLabeling\\nAct.\\nIn April\\n1983, the FTC sought comments on whether\\nit should\\namend its\\nrules\\nto allow labels\\nto disclose\\nthe average amount,\\nrather\\nthan the minimum amount, of wool in fabrics\\nthat contain\\nrecycled\\nwool or wool blend products.\\nUsing the average amount\\nmight provide\\nconsumers more accurate\\ninformation,\\nthe FTC said,\\nbut using the minimum assures\\nthat conswners will\\nreceive\\nat\\nleast\\nthe amount of wool on the label.\\nHowever,\\nafter\\nreviewing\\nthe comments, the Commission\\ndecided\\nnot to amend the rule,\\nbecause there was no evidence\\nthe record\\nto support\\nthe change.\\n\\non\\n\\nIn its clarification\\nof the procedure\\nused for testing\\nthe\\nfiber\\ncontent\\nof wool products,\\nthe FTC said the industry\\nmembers\\nshould,\\nwhere possible,\\nuse procedures\\nestablished\\nby the\\nAmerican\\nSociety\\nfor Testing\\nand Materials\\n(ASTM).\\nThe test should be made on an \"oven-dry\\nbasis,\"\\n\"commercial\\nmoisture\\nregain\"\\nadded to determine\\nthe\\nfiber\\ncontent\\nof a wool product.\\n\\nwith\\nquantitive\\n\\nThe ASTM defines\\noven-dry\\nbasis as \"the condition\\nof a\\nmaterial\\nthat has been heated under prescribed\\nconditions\\nof\\ntemperature\\nand humidity\\nuntil\\nthere\\nis no further\\nsignificant\\nchange in its mass.\"\\nCommercial\\nmoisture\\nregain is \"an arbitrary\\nvalue\\nto be used with the oven-dry\\nweight\"\\nwhen calculating\\n\"the\\nweight\\n\\n\".of a specific\\n\\ncomponent\\n\\nin\\n\\nthe\\n\\nanalysis\\n\\nof\\n\\nfiber\\n\\nblends.\"\\n\\nCopies of the Federal\\nRegister\\nnotice\\non the minimum wool\\ncontent\\nrulemaking\\ndecision\\nare available\\nfrom the FTC\\'s Public\\nReference\\nBranch,\\nRoam 130, 6th st. and Pennsylvania\\nAve. N.W.,\\nWashington,\\nD.C. 20580; 202-523-3598;\\nTTY 202-523-3638.\\nNews\\nmedia copies\\nare available\\nfrom the Office\\nof Public\\nAffairs,\\nRoom 496, same address;\\n202-523-1892.\\n# # #\\n\\nMEDIA CONTACT:\\n\\nSusan Ticknor,\\n\\nOffice\\n\\nof Public\\n\\nAffairs,\\n\\n202-523-1892\\n\\nSTAFF-CONTACT:\\n\\nJerry\\n\\nMcDonald,\\n\\nBureau\\n\\nof Conswner\\n\\n202-376-2800\\n\\n(labels)\\n\\nEarl Johnson,\\n202-376-2891\\n\\nBureau of Conswner\\n(test\\nmethods)\\n\\nProtection,\\n\\nProtection,\\n\\n\\x0c.\" \\'IC\\n\\n.\\n\\n.~\\n\"\".\\nDivision\\n\\nUNITED STATESOF AMERICA\\n\\nj\\'~~\\n\\nFEDERAL TRADE COMMISSION\\n\\n~\\n.\\'1:-\\n\\nWASHINGTON, D.C. 20580\\n\\nof Enforcement\\n\\nBureau of Consumer Protection\\n\\nApril\\n\\n8, 1996\\n\\nJeffrey\\nGoldman, President\\nCalifornia\\nFeather & Down Corporation\\n11842 S. Alameda St.\\nLynwood, CA 90262\\nRe:\\n\\nCalifornia\\n\\nFeather\\n\\n& Down Corporation,\\n\\n9523373\\n\\nDear Mr. Goldman:\\nThe Commission has conducted an investigation\\ninvolving\\nyour\\ncompany\\'s possible\\nviolation\\nof the Federal Trade Commission Act\\nthrough the use of unfair\\nacts or deceptive\\nacts or practices\\nin\\nconnection\\nwith the packaging of down comforters.\\nBy letter\\ndated March 12, 1996, Mr. N. Frank Wiggins stated\\nthat your company is removing the reference\\nto \"760\" from the\\npackaging and labeling\\nof your \"White Knights\\n760 White Goose\\nDown Comforter.\"\\nFurther,\\nMr. Wiggins\\'\\nAugust 12, 1995, letter\\nstated that the company had revised\\nthe text of the packaging for\\nthis product\\nto say that the White Knights 760 White Goose Down\\nComforter\\ncontains\\n\"finely\\nwoven 380 2-ply fabric.\\n...\"\\nThe\\nformer packaging had stated\\n\"finely\\nwoven 760 threads per sq.\\n.\\n\"\\nlnc h Upon further\\nreview of this matter,\\nit now appears that no\\nfurther\\naction\\nis warranted\\nby the Commission at this time.\\nAccordingly,\\nthe investigation\\nhas been closed.\\nThis action is\\nnot to be construed\\nas a determination\\nthat a violation\\nhas not\\noccurred,\\njust as the pendency of an investigation\\nshould not be\\nconstrued\\nas a determination\\nthat a violation\\nhas occurred.\\nThe\\nCommission reserves\\nthe right\\nto take such further\\naction as the\\npublic\\ninterest\\nmay require.\\nSincerely,\\nC---l.La..l-l\\'&... ~ ~~1C_{-<...a-\\\\\"\\nElaine D. Kolish\\nAssociate\\nDirector\\ncc:\\n\\nN. Frank Wiggins,\\nEsq.\\nVenable, Baetjer,\\nHoward & Civiletti,\\n1201 New York Avenue, NW, Suite 1000\\nWashington,\\nDC 20005-3917\\n\\nLLP\\n\\n\\x0cFEDERAL\\nTRA.DE\\nCOMMISSION\\n\\n~\\n\\nA\\nAMERICAN\\nMANUFACTURERS\\n\\n_t)IVISION ENFORCEMENT\\nTEXTILE\\nINSTITUTE\\n\\nJanuary 31, 2002\\n\\nMr. Steve Ecklund\\nFederal Trade Commission\\nDivision of Enforcement\\nWashington, DC 20580\\n\\nRe:\\n\\nRequest for FTC Staff\\nOpinion on Yarn Count\\n\\nDear Mr. Ecklund:\\nIt has come to our attention again that. some companies are marketing bed\\nsheets and pillowcases to U.S. consumers where extremely high yarn or thread\\ncounts are claimed -some as high as 1000 count. We believe these products\\nare mislabeled, creating deceptive information for the consumer.\\nLabeling these products based on a count that includes each ply in plied yarns\\ndeceives the customer into believing that bedding products with higher counts\\nare better when, in fact, they might be inferior because of the method used to\\ndetermine the count. We wrote to the Commission regarding this same issue on\\nFebruary 24, 1997 (copy enclosed) and provided a fabric sample and\\nindependent lab report verifying our position.\\nIn many cases, these extremely high counts are achieved by counting yams\\nwithin a ply as individual yams, thus dramatically increasing the number of yarns\\nin a square inch of fabric. A plied yarn is one in which two or more yarns are\\ntwisted together to form a single strand.\\nATMI believes this method of labeling products based on counting each\\nindividual yarn in plies to be a deceptive practice, which misleads the American\\n\\n.\\n\\n1130 Connecticut Ave., NW. Suite 1200. Washington, DC 20036-3954\\n202-862-0500 .fax: 202-862-0570. http:\/\/www.atmi.org\\nfax on demand: 202-862-0572\\n\\n\\x0c-\\n\\n,\\n\\npublic into making decisions to purchase items, based on false and misleading\\ninformation.\\nASTM method D 3775-96 (Standard Test Method for Fabric Count of Woven\\nFabric) is the long-accepted industry standard for determining count. This\\nmethod has been in use in this country for many years and serves as the\\nindustry\\'s standard way to report the count of many woven textile fabrics,\\nincluding sheeting. It is based on the number of yarns in the warp direction and\\nfilling direction, regardless of ply, and has become an important parameter used\\nby consumers to judge the quality of sheeting products, since the higher the\\ncount, the more luxurious the product.\\nATMI believes that any information provided to the consumer should be true and\\ncorrect so as not to be deceptive or mis-leading. We believe that plied yarns are\\nproperly counted as only one yarn. For example, a fabric containing 250\\nindividual four ply yarns in a square inch would be described as a \"250 thread\\ncount fabric, even though each thread or yarn contained four plies twisted\\ntogether.\" It would be false and mis-leading to describe this as a 1000 thread\\ncount product.\\nATMI requests a staff opinion from the Federal Trade Commission on this issue.\\nWe believe that manufacturers, importers and retailers of bed sheets should rely\\non the ASTM D3775-96 standard test method to determine count.\\n\\na:;;el#\\n\\n~\\n\\nCarlos Moore\\nExecutive Vice President\\n\\nEnclosure\\n\\n\\x0c'","created_timestamp":"March 8, 1994","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/american-textile-manufacturers-institute\/americantextilemanuinstitute.pdf"}
+{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nDivision of Enforcement\\nBureau of Consumer Protection\\n\\n\\xe2\\x80\\x98August 6, 1999\\n\\nSteven S. Weiser\\n\\nAri L. Kaplan\\n\\nGraham & James, LLP\\n\\n885 Third Avenue\\n\\n21\" Floor\\n\\nNew York, NY 10022-4834\\n\\nDear Mr. Weiser and Mr. Kaplan:\\n\\nThis is in reply to your letter requesting a written advisory opinion regarding fiber content\\nlabeling of certain T-shirts, sweatshirts, sweatpants, and sweatshorts imported from Mexico. You\\n_ also request a second opinion on the exclusion from labeling of certain disposable knit wipe cloths\\nalso imported from Mexico.\\n\\n_ Based on your letter, and information that you provided over the telephone, it is my\\nunderstanding that your client plans to import from Mexico into the United States various odd\\nlots of textile fabrics composed of unknown percentages of cotton and polyester. Your client will\\nalso acquire various discarded textile panels of U.S. origin fabric, composed of unknown\\npercentages of cotton and polyester fibers. These imported odd lots.and domestic panels will then\\nbe shipped into Mexico where they will be cut and sewn to make T-shirts, sweatshirts,\\nsweatpants, and sweatshorts. Each such garment would be completely unique in terms of its fiber\\ncontent. The finished garments will then be shipped into the United States for retail distribution\\nand sale.\\n\\n\\xe2\\x80\\x98\\n\\nB d 01 licable and tion:\\n\\nBefore addressing your specific concern, let me provide some background information.\\nAs you note in your letter, according to Textile Rule 14(a) and (b) (16 C.F.R. \\xc2\\xa7 303.14(a) and\\n(b)), textile fiber products made in whole or in part from miscellaneous scraps, Tags, odd lots, or\\ntextile waste materials of undeterminable fiber content, may be labeled in various ways. Textile\\nRule 14(a) sets forth the following examples for labeling:\\n\\x0c_ Made of miscellaneous scraps of undetermined fiber content.\\n100% unknown fibers \\xe2\\x80\\x94 rags.\\nAll undetermined fibers \\xe2\\x80\\x94 textile by-products.\\n100% miscellaneous odd lots of undetermined fiber content.\\nSecondhand materials \\xe2\\x80\\x94 fiber content unknown.\\n\\nMade of unknown fibers \\xe2\\x80\\x94 waste materials.\\n\\nIt is staff\\'s opinion that the above examples are intended to apply to situations where the types of\\nfibers, such as cotton or polyester, are unknown, and where the percentages are likewise, of\\ncourse, unknown. Textile Rule 14(b) addresses situations in which some of the fibers are of\\nknown type and percentage, and other fibers in the same product are of unknown type and\\npercentage. The situation that you describe involves known fibers, but of unknown percentages.\\nIt appears that neither Textile Rule 14(a) nor 14(b) precisely fit the circumstances posed in your\\nletter. Although the Textile Rules do not exactly correspond to your situation, we find Wool Rule\\n\\n_ 29, under the Wool Products Labeling Act, may by analogy be used as guidance. Wool Rule 29\\n(16 C.F.R. \\xc2\\xa7 300.29) sets forth several examples that are helpful. Because the Rule is rather\\nlengthy, I will point out only the sample disclosures contained in the Rule:\\n\\nMade of Miscellaneous Cloth Scraps\\nComposed Chiefly of Cotton With Minimum of - -- % Recycled Wool.\\n\\nMade of Miscellaneous Cloth Scraps\\nComposed Chiefly of Rayon With Minimum of - \\xe2\\x80\\x94 % Recycled Wool.\\n\\nMade of Miscellaneous Cloth Scraps\\nComposed Chiefly of Cotton and Rayon With Minimum of - \\xe2\\x80\\x94 % Recycled Wool. .\\n\\nMade of Miscellaneous Cloth Scraps\\nContaining Cotton, Rayon and Other Non-Woolen Fibers,\\nWith Minimum of \\xe2\\x80\\x94 \\xe2\\x80\\x94 % Recycled Wool.\\n\\nAnalysis\\n\\nBased on the information you have provided, it is our understanding that the garments in\\nquestion are made from odd lots and discarded panels, some composed only of cotton, and others\\nof cotton and polyester, and that the percentages of cotton and polyester are unknown and, for\\npractical purposes, undeterminable. It is also our understanding that the odd lots and discarded\\npanels are not from used or secondhand textile products. Staff notes that the above examples use\\ndescriptive terms such as \\xe2\\x80\\x9cMiscellaneous Cloth Scraps,\\xe2\\x80\\x9d and \\xe2\\x80\\x9cwaste materials,\\xe2\\x80\\x9d and \\xe2\\x80\\x9c textile\\n\\nproducts\\xe2\\x80\\x9d and \\xe2\\x80\\x9cmiscellaneous odd lots.\\xe2\\x80\\x9d To remain consistent with Textile Rule 303.14 and\\nWool Rule 300.29, staff feels that it is appropriate that some such equivalent descriptive term(s)\\n\\x0cbe used on the labels of the garments at issue. Staff suggests the following fiber content\\ndisclosures: \\xe2\\x80\\x9cMade of scraps and odd lots of unknown percentages of cotton and polyester\\nfibers,\\xe2\\x80\\x9d or \\xe2\\x80\\x9cComposed of cotton and polyester scraps of unknown percentages.\\xe2\\x80\\x9d\\n\\nYou also requested an opinion on the fiber content labeling of certain disposable knit wipe\\ncloths (i.e., rags) which your client proposes to import from Mexico in either one thousand\\n(1,000) pound bundles or in cardboard boxes containing cloths weighing from 10 to 100 pounds.\\nThese items are made of knitted fabric (not woven fabric) and are of a disposable nature intended\\nfor one-time use only. You state that it is your position that this merchandise is excluded from\\nlabeling under 16 C.F.R. \\xc2\\xa7 303.45(a)(6), which provides for the exclusion of \\xe2\\x80\\x9cnon-woven\\nproducts of a disposable nature intended for one-time use only\\xe2\\x80\\x9d from the labeling requirements\\nunder the Textile Fiber Products Identification Act. Because the rags are made of knitted fabric\\nand, hence, \\xe2\\x80\\x9cnon-woven,\\xe2\\x80\\x9d and they are \\xe2\\x80\\x9cof a disposable nature intended for one-time use only,\\xe2\\x80\\x9d\\nstaff concurs that such rags are exempt from the labeling requirements of the Textile Act. I would\\nalso point out that on page 7 of our business guide book, Threading Your Way Through the\\nLabeling Requirements Under the Textile and Wool Acts (copy enclosed), \\xe2\\x80\\x9cindustrial wiping\\ncloths\\xe2\\x80\\x9d are listed as exempt from the Textile Act.\\n\\nIn accordance with Section 1.3(c) of the Commission\\'s Rules of Practice and Procedure\\n(16 C.F.R. \\xc2\\xa7 1.3(c)), this is a staff opinion only and has not been reviewed or approved by the\\nCommission or by any individual Commissioner, and is given without prejudice to the right of the\\nCommission later to rescind the advice and, where appropriate, to commence an enforcement\\naction.\\n\\nIn accordance with Section 1.4 of the Commission\\'s Rules of Practice and Procedure (16\\nCFR. \\xc2\\xa7 1.4), your request for advice, along with this response, will be placed on the public\\nrecord.\\n\\nT hope this has been helpful. If you have any questions do not hesitate to write to me or\\n\\ncall me at 202-326-2841.\\nSi ,\\nSea. Htc\\n\\nSteve Ecklund\\nFederal Trade Investigator\\n\\nEnclosure\\n\\x0c'","created_timestamp":"August 6, 1999","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/graham-james-llp\/grahamandjames.pdf"}