Samick Music Corporation; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 922 3330]

Samick Music Corporation; Proposed Consent Agreement With

Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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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

prohibit, among other things, a California subsidiary of a Korean piano

manufacturer from misrepresenting the composition of any of its piano

soundboards or any other piano parts in the future, and would require

the respondent to pay, to the U.S. Treasury, $266,000 as a disgorgement

remedy.

DATES: Comments must be received on or before May 20, 1994.

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

room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

Bennett Rushkoff, FTC/H-200, Washington, DC 20580. (202) 326-3439.

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

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 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 record 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

In the Matter of: Samick Music Corporation, a corporation.

The Federal Trade Commission having initiated an investigation of

certain acts and practices of Samick Music Corporation, a corporation,

and it now appearing that Samick Music Corporation, hereinafter

sometimes referred to as proposed respondent, is willing to enter into

an agreement containing an order to cease and desist from the use of

the acts and practices being investigated,

It is hereby agreed by and between Samick Music Corporation, by its

duly authorized officer, and its attorney, and counsel for the Federal

Trade Commission that:

1. Proposed respondent Samick Music Corporation is a corporation

organized, existing and doing business under and by virtue of the laws

of the State of California, with its office and principal place of

business located at 18521 Railroad Street, City of Industry, California

91748.

2. Proposed respondent admits all the jurisdictional facts set

forth in the draft of complaint here attached.

3. 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; and

(c) All rights to seek judicial review or otherwise to challenge or

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

4. This agreement shall not become a 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, together with the draft

of complaint contemplated thereby, it 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 this 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 the

proceeding.

5. 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 complaint here attached, or that the

facts as alleged in the draft complaint, other than jurisdictional

facts, are true.

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 Section 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 in the

agreement may be used to vary or to contradict the terms of the order.

7. Proposed respondent has read the proposed complaint and the

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

I

It is ordered that respondent Samick Music Corporation, its

successors and assigns, and its officers, agents, representatives and

employees, directly or through any corporation, subsidiary, division or

other device, in connection with the advertising, offering for sale,

sale, or distribution of any piano in or affecting commerce, as

``commerce'' is defined in the Federal Trade Commission Act, forthwith

cease and desist from misrepresenting, directly or by implication, the

composition of piano soundboards or any other piano parts.

II

It is further ordered that, pursuant to 15 U.S.C. 57(b),

respondent, its successors and assigns, shall pay a refund of Two

Hundred Sixty-Six Thousand Dollars ($266,000), which, in view of the

impracticality of distributing the refund to consumers, shall be paid

to the United States Treasury. Such payment shall be by two cashier's

checks or certified checks made payable to the Treasurer of the United

States, the first such check, in the amount of One Hundred Thirty-Two

Thousand Dollars ($132,000), to be tendered to the Commission within

six months of the date of service of this Order, and the second such

check, in the amount of One Hundred Thirty-Four Thousand Dollars

($134,000), to be tendered to the Commission within twelve months of

the date of service of this Order.

III

It is further ordered that respondent shall maintain for a period

of three (3) years, and upon request make available to the Commission

for inspection and copying, all promotional, advertising or other

materials disseminated by respondent which make any representation

concerning the composition of soundboards in pianos advertised, sold,

distributed or offered for sale or distribution by respondent; all

consumer complaints concerning the composition of soundboards in pianos

advertised, sold, distributed or offered for sale or distribution by

respondent; and accurate records of all materials relied upon by

respondent to substantiate any representation concerning the

composition of soundboards in pianos advertised, sold, distributed or

offered for sale or distribution by respondent.

IV

It is further ordered that respondent shall notify the Commission

at least thirty (30) days period to any proposed change in respondent,

including but not limited to dissolution, assignment, sale resulting in

the emergence of a successor corporation, or the creation or

dissolution of subsidiaries, that may affect compliance obligations

arising out of the Order.

V

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

after service of this Order, distribute this Order to each of its

officers, directors, managers and all personnel responsible for the

preparation or review of promotional material.

VI

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

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

writing, setting forth in detail the manner 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 Samick Music Corporation, of City of

Industry, California.

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 or make final the agreement's proposed

order.

The complaint attached to the proposed consent order alleges that

Samick Music Corporation's representations, disseminated in promotional

materials, that the soundboards in its pianos were ``solid spruce'' or

``spruce'' were false and misleading, because many such soundboards

were actually composed of outer layers of spruce with inner layers made

of another type or types of wood. The complaint alleges that this

practice is a violation of Section 5 of the Federal Trade Commission

Act.

The proposed consent order prohibits Samick Music Corporation from

misrepresenting, directly or by implication, the composition of piano

soundboards or any other piano parts. The proposed consent order also

contains a disgorgement remedy in the form of a $266,000 refund, which,

in view of the impracticality of distributing the refund to consumers,

shall be payable to the U.S. Treasury.

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

proposed order, and 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. 94-6535 Filed 3-18-94; 8:45 am]

BILLING CODE 6750-01-M