# Apple Computer, Inc.; Analysis To Aid Public Comment > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A97-6056 ## Record - **Collection:** Federal Register - **Document type:** Notice - **Published:** March 11, 1997 - **Citation:** 62 FR 11199 ## Text FEDERAL TRADE COMMISSION [File No. 952-3275] Apple Computer, Inc.; Analysis To Aid Public Comment AGENCY: Federal Trade Commission. ACTION: Proposed consent agreement. ----------------------------------------------------------------------- SUMMARY: In settlement of alleged violations of federal law prohibiting unfair or deceptive acts or practices and unfair methods of competition, this consent agreement, accepted subject to [[Page 11200]] final Commission approval, would require, among other things, the Cupertino, California-based computer hardware and software manufacturer to offer Power PC Upgrade Kits, at less than half the original price, to each consumer who purchased one of three of the company's entry- level ``Performa'' model personal computers. Apple has already agreed to rebate $776 of the original price to consumers who have already purchased the upgrade. The complaint accompanying the consent agreement alleges that Apple misrepresented that the upgrade was available to consumers at the time that they purchased a Performa or within a reasonable period of time thereafter. DATES: Comments must be received on or before May 12, 1997. 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: Matthew Gold, San Francisco Regional Office, Federal Trade Commission, 901 Market Street, Suite 570, San Francisco, CA 94103. (415) 356-5276. Linda Badger, San Francisco Regional Office, Federal Trade Commission, 901 Market Street, Suite 570, San Francisco, CA 94103. (415) 356-5275. 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 above-captioned 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. The following Analysis to Aid Public Comment describes the terms of the consent agreement, and the allegations in the accompanying complaint. An electronic copy of the full text of the consent agreement package can be obtained from the Commission Actions section of the FTC Home Page (for March 3, 1997), on the World Wide Web, at ``http://www.ftc.gov/os/actions/htm.'' A paper copy can be obtained from the FTC Public Reference Room, Room H-130, Sixth Street and Pennsylvania Avenue, NW., Washington, DC 20580, either in person or by calling (202) 326-3627. 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)). Analysis of Proposed Consent Order to Aid Public Comment The Federal Trade Commission has accepted an agreement, subject to final approval, to a proposed consent order from Apple Computer, Inc. (hereinafter ``Apple'' or ``respondent''). Apple is a major manufacture and marketer of personal computer hardware and software products. The proposed consent order has been placed on the public record for sixty (60) days for the 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 any comments received and will decide whether it should withdraw from the agreement and take other appropriate action or make final the agreement's proposed order. This matter has focused on Apple's advertisements for the ``Performa 550,'' ``Macintosh LC 550,'' and ``Performa 560'' personal computers. The Performa 550, Macintosh LC 550, and Performa 560 models are based on the Motorola 680030 microprocessor. While continuing to promote the sale of these computers, respondent introduced a new series of computers based on the faster, more powerful ``PowerPC'' microprocessor. Beginning on or about April 1, 1994, subsequent to the introduction of the PowerPC microprocessor, respondent advertised Performa 550, Macintosh LC 550, and Performa 560 computers as upgradeable to PowerPC performance. A PowerPC upgrade, however, was not offered for at least one year after Apple began representing that these computers were upgradeable. Further, by the time Apple made the upgrade available, its price approached the cost of an entirely new computer with a PowerPC microprocessor. The proposed complaint alleges that Apple made false claims that: (1) A PowerPC upgrade was available to consumers at the time that they purchased a Performa 550 or Performa 560 computer; and (2) a PowerPC upgrade would be available within a reasonable period of time after the purchase of a Performa 550, Macintosh LC 550, or Performa 560 computer. The proposed complaint further alleges that Apple deceptively failed to disclose that the PowerPC upgrade package for the Performa 550, Macintosh LC 550, or Performa 560 computers would include not only a PowerPC upgrade card, but also a new logic board. As a result, the complaint alleges, consumers were not aware that they would have to incur the cost and inconvenience associated with the replacement of the logic board. Part I of the proposed order prohibits Apple from misrepresenting the availability of any microprocessor upgrade product. Part II of the proposed order prohibits Apple from representing that any computer hardware product is currently upgradeable, unless at the time such representation is made, the upgrade is then available, in reasonable quantities to the public, given good-faith projections of anticipated demand. Parts III and IV of the proposed order address Apple's failure to disclose that the upgrade product for the Performa 550, Macintosh LC 550, or Performa 560 computers would include a new logic board in addition to an upgrade card. Part III provides that Apple, when marketing any microprocessor upgrade product that incorporates a new logic board, may not represent that such product is an ``upgrade'' unless it clearly and prominently discloses that a new logic board is a component of the upgrade product. Part IV of the proposed order prescribes a redress program under which Apple is required to offer a PowerPC Upgrade Kit for the reduced price of $599 to consumers who purchased a Performa 550, or Macintosh LC 550 computer after Apple began advertising them as upgradeable. Under Part IV, the kit will include all of the hardware necessary for the upgrade, as well as four megabytes of RAM, two essential pieces of PowerPC software, and a coupon for free installation of the upgrade redeemable at any authorized Apple service location. Under Part IV, Apple has the option of providing eligible consumers with a new PowerPC system in lieu of the upgrade kit. This provision is designed to protect consumers if Apple runs out of the hardware necessary to build the upgrade kits. Any consumer who receives a new system will have to return the old computer to an authorized Apple dealer. Apple will then be responsible for arranging for the dealer to transfer all the consumer's data and peripherals to the new PowerPC, and for testing the new system to make certain that it is functional. To compensate the consumers who have already purchased an upgrade for one of the relevant computers, Part IV of the proposed order requires Apple to rebate $776.00 of the original purchase price of $1,375.00. The proposed order also requires the respondent to maintain materials relied upon to substantiate claims covered by the order; to provide a copy of the consent agreement to all employees or [[Page 11201]] representatives with duties affecting compliance with the terms of the order; to notify the Commission of any changes in corporate structure that might affect compliance with the order; and to file one or more reports detailing compliance with the order. 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. 97-6056 Filed 3-10-97; 8:45 am] BILLING CODE 6750-01-M --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A97-6056. Public record. Not legal advice.