Santa Clara County Motor Car Dealers Association; Proposed Consent Agreement With Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 941-0107]

Santa Clara County Motor Car 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, a California association from carrying

out, participating in, inducing or assisting any boycott or concerted

refusal to deal with any newspaper, periodical, television or radio

station, and would require the association to amend its by-laws to

incorporate the stipulated prohibition, and to distribute the amended

by-laws and the final Commission order to each of its members.

DATES: Comments must be received on or before October 3, 1995.

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

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

FOR FURTHER INFORMATION CONTACT:

Ralph Stone, San Francisco Regional Office, Federal Trade Commission,

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 and 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 Section 4.9(b)(6)(ii) of the Commission's Rule of

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

In the Matter of: Santa Clara County Motor Car Dealers

Association, an unincorporated association; File No. 941-0107.

Agreement Containing Consent Order to Cease and Desist

The Federal Trade Commission, having initiated an investigation of

certain acts and practices of the Santa Clara County Motor Car Dealers

Association, an unincorporated association, and it now appearing that

the Santa Clara County Motor Car Dealers Association, hereinafter

sometimes referred to as the ``Association'' 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 the Association, by its duly

authorized

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officers, and its attorney, and counsel for the Federal Trade

Commission that:

1. The Association is an unincorporated association 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 at

336 East Hamilton Avenue, Campbell, California 95008.

2. The Association admits all the jurisdictional facts set forth in

the draft of Complaint.

3. The Association 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.

Sec. 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 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, 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 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, (a) issue its Complaint corresponding in form and

substance with the draft of Complaint 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 the purposes of this Order, ``respondent''

or ``Association'' shall mean the Santa Clara County Motor Car Dealers

Association, its predecessors, successors and assigns, and its

directors, committees, officers, delegates, representatives, agents,

and employees.

II

It Is Further Ordered that the Association, 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 carrying out, participating

in, inducing, suggesting, urging, encouraging, or assisting any boycott

of, or concerted refusal to deal with, any newspaper, periodical,

television station, or radio station; provided, however, that nothing

in this Order shall prohibit the Association or any of its members from

establishing, participating in, or maintaining joint advertising

programs, so long as such joint advertising programs are not a part of

any boycott or concerted refusal to deal and do not otherwise violate

this Order.

III

It Is Further Ordered that the Association shall:

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

amend its by-laws to incorporate by reference Paragraph II of this

Order, and distribute by first-class mail a copy of the amended by-laws

to each of its members;

B. 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;

C. For a period of five (5) years after the date this Order become

final, provide each new member with a copy of this Order, the

complaint, and the amended by-laws within thirty (30) days of the new

member's admission to the Association; and

D. Within seventy-five (75) 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 the Association has complied with

and is complying with this Order.

IV

It Is Further Ordered that the Association shall notify the

Commission at least thirty (30) days prior to any change in the

Association, 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.

V

It Is Further Ordered that, for the purpose of determining or

securing compliance with this Order, respondent shall permit any duly

authorized representative of the Commission:

A. Upon seven (7) days' notice to respondent, to have access,

during office hours and in the presence of counsel, to inspect and copy

all books, ledgers, accounts, correspondence, memoranda and other

records and documents in the possession or under the control of

respondent relating to any matters contained in this Order; and

B. Upon seven (7) days' notice to respondent and without restraint

or interference from it, to interview officers, directors, or employees

of respondent.

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VI

It Is Further Ordered that this Order shall terminate twenty (20)

years from the date this Order becomes final.

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 Santa Clara

County Motor Car Dealers Association (``Association'').

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 Association and at least some of its

members agreed that members would cancel advertising in, and thereafter

collectively withhold advertising from, the San Jose Mercury News

newspaper in retaliation for a Mercury News article that was intended

to educate consumers on how to analyze the manufacturer's factory

invoice as part of the automobile-buying process. Armed with this

information, the consumer may be better equipped to negotiate a lower

price.

The complaint alleges that the purposes or effects of the agreement

were to restrain competition among new automobile and truck dealers in

Santa Clara County, California, and to deprive consumers of truthful

information pertinent to the purchase of new automobiles and trucks.

Agreements not to disemminate information through advertising can make

it more difficult for consumers to choose among automobile dealers by

preventing direct interbrand and intrabrand comparisons of dealers'

automobiles and their prices and services, and thus may increase

consumer search costs. Moreover, the use of the combined economic power

of the automobile dealers to affect a newspaper's editorial content may

chill the publication of information that would lower search costs and

make readers more effective consumers.

Description of the Proposed Consent Order

The proposed order would prohibit the Association from carrying

out, participating in, inducing, suggesting, urging, encouraging, or

assisting any boycott of, or concerted refusal to deal with, any

newspaper, periodical, television station, or radio station.

The proposed order would permit the Association to establish,

participate in, and maintain joint advertising programs, so long as

such joint advertising programs are not part of any boycott or

concerted refusal to deal.

The proposed order would require the Association to amend its by-

laws to incorporate by reference the order. It would also require the

Association to distribute a copy of the amended by-laws, the order, and

the complaint to each of its members, file compliance reports, and

notify the Commission of certain changes in its structure.

Finally, the proposed order contains a twenty year ``sunset''

provision. Under this provision, the terms of the order shall terminate

twenty years after the date the order becomes final.

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 the Association

that the law has been violated as alleged in the complaint.

Benjamin I. Berman,

Acting Secretary.

[FR Doc. 95-19240 Filed 8-3-95; 8:45 am]

BILLING CODE 6750-01-M