Montgomery Ward & Co., Incorporated; Proposed Consent Agreement With Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 932 3116]

Montgomery Ward & Co., Incorporated; Proposed Consent Agreement

With Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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

SUMMARY: In settlement of alleged violations of federal law prohibiting

unfair acts and practices and unfair methods of competition, this

consent agreement, accepted subject to final Commission approval, would

require, among other things, the Illinois-based retail department store

to comply with the Pre-Sale Availability Rule under the Magnuson-Moss

Warranty Act, to inform its retail store managers of their compliance

responsibilities, and to develop and implement a program for

instructing its sales personnel about the availability and location of

manufacturers' warranty information.

DATES: Comments must be received on or before September 6, 1994.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:

Jeffrey Klurfeld or Gerald Wright, FTC/San Francisco Regional Office,

901 Market St., Suite 570, San Francisco, CA. 94103. (415) 744-7920.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of

the Commission's Rules of Practice (16 CFR 2.34), notice is hereby

given that the following consent agreement containing a consent order

to cease and desist, having been filed with and accepted, subject to

final approval, by the Commission, has been placed on the public accord

for a period of sixty (60) days. Public comment is invited. Such

comments or views will be considered by the Commission and will be

available for inspection and copying at its principal office in

accordance with Sec. 4.9(b)(6)(ii) of the Commission's Rules of

Practice (16 CFR 4.9(b)(6)(ii)).

Agreement Containing Consent Order to Cease and Desist

The Federal Trade Commission having initiated an investigation of

Montgomery Ward & Co., Incorporated, a corporation (``proposed

respondent'' or ``respondent''), and it now appearing that proposed

respondent is willing to enter into an agreement containing an order to

cease and desist from the acts and practices being investigated.

It is hereby agreed by and between Montgomery Ward & Co.,

Incorporated, by its duly authorized officer, and counsel for the

Federal Trade Commission that:

1. Proposed respondent Montgomery Ward & Co., Incorporated is a

corporation organized, existing, and doing business under and by virtue

of the laws of the State of Illinois, with its principal office and

place of business located at One Montgomery Ward Plaza, Chicago,

Illinois 60671.

2. This agreement is for settlement purposes only and does not

constitute an admission by proposed respondent that the law has been

violated as alleged in the draft of complaint here attached.

3. Proposed respondent admits all the jurisdictional facts set

forth in the draft complaint here attached.

4. Proposed respondent waives:

a. Any further procedural steps;

b. The requirement that the Commission's decision contain a

statement of findings of fact and conclusions of law;

c. All rights to seek judicial review or otherwise to challenge or

contest the validity of the order entered pursuant to this agreement;

and

d. All claims under the Equal Access to Justice Act.

5. This agreement shall not become part of the public record of the

proceeding unless and until it is accepted by the Commission. If this

agreement is accepted by the Commission, it, together with the draft of

complaint contemplated thereby, will be placed on the public record for

a period of sixty (60) days and information in respect thereto publicly

released. The Commission thereafter may either withdraw its acceptance

of this agreement and so notify the proposed respondent, in which event

it will take such action as it may consider appropriate, or issue and

serve its complaint (in such form as the circumstances may require) and

decision, in disposition of this proceeding.

6. This agreement contemplates that, if it is accepted by the

Commission,and if such acceptance is not subsequently withdrawn by the

Commission pursuant to the provisions of Sec. 2.34 of the Commission's

Rules, the Commission may, without further notice to proposed

respondent, (1) issue its complaint corresponding in form and substance

with the draft of complaint here attached and its decision containing

the following order to cease and desist in disposition of the

proceeding, and (2) make information public in respect thereto. When so

entered, the order to cease and desist shall have the same force and

effect and may be altered, modified or set aside in the same manner and

within the same time provided by statute for other orders. The order

shall become final upon service. Delivery by the U.S. Postal Service of

the complaint and decision containing the agreed-to order to proposed

respondent's address as stated in this agreement shall constitute

service. Proposed respondent waives any right it may have to any other

manner of service. The complaint may be used in construing the terms of

the order, and no agreement, understanding, representation, or

interpretation not contained in the order or the agreement may be used

to vary or contradict the terms of the order.

7. Proposed respondent has read the proposed complaint and order

contemplated hereby. It understands that once the order has been

issued, it will be required to file one or more compliance reports

showing that it has fully complied with the order. Proposed respondent

further understands that it may be liable for civil penalties in the

amount provided by law for each violation of the order after it becomes

final.

Order

The definitions of terms contained in Sec. 101 of the Magnuson-Moss

Warranty Act, 15 U.S.C. 2301, and in Rule 702, 16 CFR 702.1,

promulgated thereunder, shall apply to the terms of this Order.

I

It is ordered that respondent Montgomery Ward & Co., Incorporated,

a corporation, its successors and assigns, and its officers,

representatives, agents and employees, directly or through any

corporation, subsidiary, division or other device in connection with

the sale or offering for sale of any consumer product in or affecting

commerce, do forthwith cease and desist from failing to make a text of

any written warranty on a consumer product actually costing more than

$15 readily available for examination by prospective buyers prior to

sale through utilization of one or more means specified in 16 CFR

702.3(a), as amended.

II

It is further ordered that respondent shall, within thirty (30)

days of the date of service of this Order, deliver to each current

retail store manager engaged in the sale of consumer products on behalf

of respondent, a copy of this Order to cease and desist.

III

It is further ordered that respondent shall, within thirty (30)

days of the date of service of this Order, instruct all current retail

store managers engaged in the sale of consumer products on behalf of

respondent as to their specific obligations and duties under the

Magnuson-Moss Warranty Act (15 U.S.C. 2301) and this Order.

IV

It is further ordered that respondent shall, for a period of not

less than four (4) years from the date of service of this order,

instruct all future retail store managers who will be engaged in the

sale of consumer products on behalf of respondent, before they assume

said responsibilities for respondent, as to their specific obligations

and duties under the Magnuson-Moss Warranty Act (15 U.S.C. 2301) and

this Order.

V

It is further ordered that respondent shall, within thirty (30)

days of the date of service of this Order, develop and implement a

program to instruct its sales personnel about the availability and

location of warranty information.

VI

It is further ordered that respondent shall, for a period of not

less than five (5) years from the date of service of the Order,

maintain and upon request make available to the Federal Trade

Commission for inspection and copying (i) copies of all written

instructions provided by respondent to its retail store managers and

sales personnel regarding their obligations and duties under the

Magnuson-Moss Warranty Act (15 U.S.C. 2301) and this Order; (ii) copies

of signs posted by respondent in its retail store outlets designed to

elicit prospective buyers' attention to the availability of the text of

written warranties for review upon request; and (iii) copies of the

text of written warranties made readily available by respondent's

retail store outlets for examination by prospective buyers on request.

VII

It is further ordered that respondent, for a period of six (6)

years from the date of service of this Order, shall notify the

Commission at least thirty (30) days prior to any dissolution,

assignment, or sale resulting in the emergence of a successor

corporation, the creation of dissolution of subsidiaries, or any other

change in the corporation that may affect compliance obligations

arising out of the Order.

VIII

It is further ordered that respondent shall, within sixty (60) days

after service of this Order on it, file with the Commission a report in

writing, setting forth in detail the manner and form in which it has

complied with this Order.

Analysis of Proposed Consent Order to Aid Public Comment

The Federal Trade Commission has accepted an agreement to a

proposed consent order from Montgomery Ward & Co., Incorporated,

Chicago, Illinois (``Wards''). Wards is a national chain of retail

department stores, and of specialty stores selling appliances and

consumer electronics.

The proposed consent order has been placed on the public record for

sixty (60) days for reception of comments by interested persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

agreement and the comments received and will decide whether it should

withdraw from the agreement and take other appropriate action, or make

final the proposed order contained in the agreement.

The complaint alleges that Wards has violated a Rule promulgated by

the Federal Trade Commission (16 CFR 702.3(a)) pursuant to the

Magnuson-Moss Consumer Warranty Act (15 U.S.C. Sec. 2301). This Rule

requires Wards to maker manufacturers' warranty information available

to consumers. The purposes of this Act, and the Rule, are to improve

the information available to consumers, to prevent deception, and to

promote competition, in the marketing of consumer product warranties

offered by manufacturers.

The Rule, called the ``Pre-Sale Availability Rule,'' gives

retailers the option of either 1) displaying the text of manufacturers'

warranties in close proximity to the product display; or 2) furnishing

the text of manufacturers' warranties to customers upon request, and

prominently displaying signs advising of the availability of such

warranties. The complaint alleges that Wards has not complied with

either of these options.

The proposed order requires Wards to comply with this Rule, to

inform its retail store executives of their compliance

responsibilities, and to develop a program for instructing its sales

personnel about the availability and location of manufacturers'

warranty information. Wards will be subject to civil penalties if it

does not comply with the order.

The purpose of this analysis is to facilitate public comment on the

proposed order. It is not intended to constitute an official

interpretation of the agreement and proposed order or to modify in any

way their terms.

Donald S. Clark,

Secretary.

[FR Doc. 94-16276 Filed 7-5-94; 8:45 am]

BILLING CODE 6750-01-M