Arizona Automobile Dealers Association; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 931 0056]

Arizona Automobile Dealers Association; 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, an Arizona association consisting of

approximately 199 dealers from restricting, regulating, or interfering

with truthful, non-deceptive comparative or price advertising or

advertising concerning financing among members in the future.

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: Ralph Stone, 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 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 Arizona Automobile Dealers Association, a

corporation, File No. 931 0056.

The Federal Trade Commission, having initiated an investigation of

certain acts and practices of the Arizona Automobile Dealers

Association, a corporation, and it now appearing that the Arizona

Automobile Dealers Association, hereinafter sometimes referred to as

``AADA'' or ``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 AADA, by its duly authorized

officer, and its attorney, and counsel for the Federal Trade Commission

that:

1. AADA is a corporation organized, existing, and doing business

under and by virtue of the laws of the State of Arizona, with its

office and principal place of business at 4701 North 24th Street, suite

B-3, Phoenix, Arizona 85064-2717.

2. AADA admits all the jurisdictional facts set forth in the draft

of Complaint here attached.

3. AADA 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 U.S.C. 504.

4. 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 attached

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 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 of Complaint here attached, or that

the facts as alleged in the draft of Complaint, other than the

jurisdictional facts, are true.

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

Commission, and if such acceptance is not subsequently withdraw 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, (a) 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 (b) 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. Proposed respondent 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, for purposes of this Order, the terms

``respondent'' or ``AADA'' mean the Arizona Automobile Dealers

Association, its directors, committees, officers, delegates,

representatives, agents, employees, successors, and assigns.

II

It is further ordered that AADA, directly or indirectly, or through

any person or any corporate or other device, in or in connection with

its activities as a trade association, in or affecting commerce, as

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

forthwith cease and desist from:

A. Prohibiting, restricting, regulating, impeding, declaring

unethical, interfering with, advising against, or discouraging: (1)

Truthful, non-deceptive discount or price advertising or (2) any person

or organization from otherwise engaging in truthful, non-deceptive

discount or price advertising;

B. Prohibiting, restricting, regulating, impeding, declaring

unethical, interfering with, advising against, or discouraging

truthful, non-deceptive advertising concerning the terms or

availability of consumer credit;

C. Prohibiting, restricting, regulating, impeding, declaring

unethical, interfering with, advising against, or discouraging: (1)

Truthful, non-deceptive disparaging or comparative advertising or (2)

any person or organization from otherwise engaging in truthful, non-

deceptive disparaging or comparative advertising; and

D. Inducing, suggesting, urging, encouraging, or assisting any non-

governmental person or organization to take any action that if take by

respondent would violate this Order; Provided That nothing contained in

this Order shall prohibit AADA from formulating, adopting,

disseminating to its members, and enforcing reasonable ethical

guidelines governing the conduct of its members with respect to

advertising, including unsubstantiated representations, that AADA

reasonably believes would be false or deceptive within the meaning of

Section 5 of the Federal Trade Commission Act.

III

It is further ordered that AADA shall:

A. Within thirty (30) days after the date this order becomes final,

remove from its Standards for Advertising Motor Vehicles, and from any

other existing policy statement or guideline, any provision,

interpretation or policy statement that is inconsistent with the

provisions of part II of this Order including, but not limited to

sections 4, 5, 6, and 11;

B. Within thirty (30) days after the date this Order becomes final,

publish in Topics or in any successor publication, (a) this Order, (b)

the accompanying Complaint, (c) any revision of the Standards for

Advertising Motor Vehicles or any other existing policy statement or

guideline of AADA made pursuant to part III.A. of this Order, and (d) a

complete revised version of the Standards for Advertising Motor

Vehicles.

C. Within thirty (30) days after the date this Order becomes final,

distribute by first-class mail a copy of this Order and the Complaint

to each of its members;

D. For a period of five (5) years after the date this Order becomes

final, provide each new member who joins AADA with a copy of the Order

and Complaint within thirty (30) days of membership in AADA;

E. Within sixty (60) days after the date this Order becomes final,

and annually thereafter for a period of five (5) years on the

anniversary of the date this Order became final, file with the

Secretary of the Commission a verified written report setting forth in

detail the manner and form in which AADA has complied with and is

complying with this Order; and

F. For a period of five (5) years after this Order becomes final,

maintain and make available to Commission staff for inspection and

copying, upon reasonable notice, all documents that relate to the

manner and form is which AADA has complied, and is complying with this

Order.

IV

It is further ordered that AADA notify the Commission at least

thirty (3) days prior to any change in AADA, such as dissolution or

reorganization resulting in the emergence of a successor corporation or

association, or any other change in the corporation or association

which may affect compliance obligations arising out of this Order.

Analysis of Proposed Consent Order To Aid Public Comment

The Federal Trade Commission has accepted, subject to final

approval, an agreement to a proposed consent order from the Arizona

Automobile Dealers Association (``AADA'').

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.

Description of the Complaint

A complaint prepared for issuance by the Commission along with the

proposed order alleges that the members of AADA agreed to restrict

truthful, non-deceptive advertising. More specifically, the complaint

alleges that AADA adopted, published, and enforced its Standards for

Advertising Motor Vehicles that: (1) Prohibits discount advertising;

(2) restricts the advertising of consumer credit terms; and (3)

prohibits disparaging advertising.

The complaint alleges that AADA's agreement to restrict advertising

injured consumers by depriving them of truthful information pertinent

to the purchase of new automobiles and trucks.

Description of the Proposed Consent Order

The proposed order would prohibit AADA from restricting: Truthful,

non-deceptive discount or price advertising; truthful, non-deceptive

advertising concerning the terms or availability of consumer credit;

and truthful, non-deceptive disparaging or comparative advertising. It

would further prohibit AADA from inducing or encouraging any non-

government person or organization from taking an action that violates

the order.

The proposed order would permit AADA to adopt and enforce

reasonable ethical guidelines governing the conduct of its members with

respect to advertising, including unsubstantiated representations, that

AADA reasonably believes would be false or deceptive within the meaning

of Section 5 of the Federal Trade Commission Act.

The proposed order would require AADA to make its Standards for

Advertising Motor Vehicles consistent with the order and revoke any

interpretations that conflict with the order. It would also require

AADA to distribute the order to its members, publish the complaint and

order in its monthly newsletter, file compliance reports, retain

certain documents, and notify the Commission of certain changes in its

corporate structure.

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.

The proposed consent order has been entered into for settlement

purposes only and does not constitute an admission by AADA that the law

has been violated as alleged in the compliant.

Donald S. Clark,

Secretary.

[FR Doc. 94-6536 Filed 3-18-94; 8:45 am]

BILLING CODE 6750-01-M