[Federal Register Volume 61, Number 123 (Tuesday, June 25, 1996)]
[Notices]
[Pages 32824-32826]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16114]



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FEDERAL TRADE COMMISSION
[File No. 951-0124]


Precision Moulding Company, Inc.; 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 or deceptive acts or practices and unfair methods of 
competition, this consent agreement, accepted subject to final 
Commission approval, would prohibit, among other things, the 
Cottonwood, California-based company from requesting, suggesting, 
urging, or advocating that any competitor raise, fix, or stabilize 
price levels. This consent agreement settles allegations that 
Precision, the leading supplier of wood products used to construct 
frames for artists' canvases, attempted to fix prices and restrain 
trade in the market for these products, known as stretcher bars.

DATES: Comments must be received on or before August 26, 1996.

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:
Michael Antalics, Federal Trade Commission, S-2627, 6th and 
Pennsylvania Ave, NW, Washington, DC 20580. (202) 326-2821.

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

Agreement Containing Consent Order To Cease and Desist

    The Federal Trade Commission (``Commission''), having initiated an 
investigation of certain acts and practices of Precision Moulding Co., 
Inc., a corporation, hereinafter sometimes referred to as ``proposed 
respondent,'' and it now appearing that Precision Moulding Co., Inc. 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 Precision Moulding Co. Inc., by 
its duly authorized officer, and its attorney, and counsel for the 
Commission that:
    1. Proposed respondent Precision Moulding Co., Inc., is a 
corporation organized, existing and doing business under and by virtue 
of the laws of the State of California with its principal place of 
business located at 3308 Cyclone Court, Cottonwood, California 96022, 
and its mailing address at P.O. Box 406, Cottonwood, California 96022.
    2. Proposed respondent admits all the jurisdictional facts set 
forth in the draft of complaint.
    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;
    (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) Any claim under the Equal Access to Justice Act.
    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

[[Page 32825]]

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 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 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 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. 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
    For purposes of this order, the following definitions shall apply:
    A. ``Respondent'' means Precision Moulding Co., Inc., its 
directors, officers, employees, agents and representatives, 
predecessors, successors and assigns; its subsidiaries, divisions, and 
groups, and affiliates controlled by Precision Moulding Co., Inc., and 
the respective directors, officers, employees, agents and 
representatives, successors, and assigns of each.
    B. ``Stretcher bar products'' means an art supply wood product 
which when assembled comprises a rectangular frame over which a canvas 
used for painting is stretched, and includes any size of stretcher bar.
II
    It is ordered that respondent, directly or indirectly, through any 
corporation, subsidiary, division or other device, in connection with 
the manufacture, advertising, offering for sale, sale or distribution 
of any stretcher bar products, in or affecting commerce, as 
``commerce'' is defined in the Federal Trade Commission Act, forthwith 
cease and desist from:
    A. Requesting, suggesting, urging, or advocating that any 
competitor raise, fix or stabilize prices or price levels, or engage in 
any other pricing action; and
    B. Entering into, attempting to enter into, adhering to, or 
maintaining any combination, conspiracy, agreement, understanding, plan 
or program with any competitor to fix, raise, establish, maintain or 
stabilize prices or price levels.
    Provided, that nothing in this order shall prohibit respondent 
from: (1) agreeing to sell or distribute its stretcher bar products to 
its competitors, and (2) negotiating or agreeing upon the price which 
any of its stretcher bar products will be sold to its competitors.
    It is further ordered That respondent shall:
    A. Within thirty (30) days of the date on which this order becomes 
final, provide a copy of this order to all of its directors, officers, 
and management employees;
    B. For a period of three (3) years after the date on which this 
order becomes final, and within ten (10) days after the date on which 
any person becomes a director, officer, or management employee of 
respondent, provide a copy of this order to such person; and
    C. Require each person to whom a copy of this order is furnished 
pursuant to subparagraphs III.A. and B. of this order to sign and 
submit to Precision Moulding Co., Inc. within thirty (30) days of the 
receipt thereof a statement that: (1) acknowledges receipt of the 
order; (2) represents that the undersigned has read and understands the 
order; and (3) acknowledges that the undersigned has been advised and 
understands that non-compliance with the order may subject Precision 
Moulding Co., Inc. to penalties for violation of the order.
IV
    It is further ordered That respondent shall:
    A. Within sixty (60) days from the date on which this order becomes 
final, and annually thereafter for three (3) years on the anniversary 
date of this order, and at such other times as the Commission may be 
written notice to the respondent require, file with the Commission a 
verified written report setting forth in detail the manner and form in 
which respondent has complied and is complying with this order;
    B. For a period of three (3) years after the order becomes final, 
maintain and make available to the staff of the Federal Trade 
Commission for inspection and copying, upon reasonable notice, all 
records of communications with competitors of respondent relating to 
any aspect of pricing for stretcher bar products, and records 
pertaining to any action taken in connection with any activity covered 
by parts II, III and IV, of this order; and
    C. Notify the Commission at least thirty (30) days prior to any 
change in respondent such as dissolution, assignment or sale resulting 
in the emergence of a successor corporation, the creation or 
dissolution of subsidiaries, or any other change in the corporation 
that may affect compliance obligations arising out of this order.
V
    It is further ordered That this order shall terminate on       , 
2016.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted an agreement to a 
proposed consent order from Precision Moulding Company, Inc., a 
manufacturer of stretcher bars \1\ with its principal place of business 
located at 3308 Cyclone Court, Cottonwood, California.
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    \1\ A stretcher bar is an art supply wood product which when 
assembled comprises a rectangular frame over which a canvas used for 
painting is stretched.
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    The proposed consent order has been placed on the public record for 
60 days for reception of comments by interested

[[Page 32826]]

persons. Comments received during this period will become part of the 
public record. After 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 alleges that two representatives of Precision 
Moulding Co., Inc. visited one of its competitors and invited the 
competitor to raise its prices for stretcher bars. The complaint 
alleges that the invitation to collude, if accepted, would constitute 
an agreement in restraint of trade.
    Solicitations to collude have been condemned as unlawful under 
Section 2 of the Sherman Act (attempted monopolization), under the wire 
and mail fraud statutes,\2\ and under Section 5 of the FTC Act. In this 
case, the structure of the stretcher market is not conducive to 
prosecution under Section 2 of the Sherman Act. Market structure does 
not affect whether an alleged solicitation to collude can be prosecuted 
under the wire fraud or mail fraud statutes. However, those statutes do 
not apply in this case, because there is no evidence that Precision 
Moulding Company, Inc. used either the telephone (or another form of 
wire communication) or the mail to invite its competitor to collude. 
Thus, if not prosecuted under Section 5 of the FTC Act, the conduct 
would go unpunished.
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    \2\ See 18 U.S.C.A. Secs. 1341, 1343 (mail and wire fraud).
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    Solicitations to collude have been alleged to be unfair methods of 
competition that violate Section 5 of the FTC Act, which reaches 
anticompetitive activities that may not violate the Sherman Act.\3\ 
During the past several years, the Commission has entered into several 
consent agreements involving invitations to collude that could not be 
reached under the wire and mail fraud statutes. See YKK, C-3345 (1993); 
Quality Trailer Products, C-3403 (1992) (``Quality''); A.E. Clevite, 
Inc., C-3429 (1993). The Commission has condemned invitations to 
collude where the evidence is unambiguous, regardless of market power. 
Section 5 provides an appropriate vehicle for relief where the conduct 
falls short of criminal liability.
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    \3\ See Fashion Originators' Guild v. FTC, 312 U.S. 457, 466 
(1941); FTC v. Brown Shoe Co., 384 U.S. 316, 321 (1966) (Commission 
could ``ban trade practices which conflict with the basic policies 
of the Sherman and Clayton Acts even though such practices may not 
actually violate those laws''); FTC v. Cement Institute, 333 U.S. 
683, 708 (1948) (Commission was intended to ``restrain practices as 
`unfair' which, although not yet having grown into Sherman Act 
dimensions would most likely do so if left unrestrained'').
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    The alleged conduct engaged in by Precision Moulding Co., Inc. and 
the terms of the proposed consent order are similar to the conduct 
alleged and the relief obtained in Quality Trailer Products, C-3403 
(1992). In Quality, according to the Commission complaint, two 
representatives of a firm visited the headquarters of a competitor and 
met with an officer of the firm. During the course of the meeting, they 
invited the competitor to fix prices. As in Quality, the visit here was 
uninvited, and the solicitor informed its competitor in a private 
conservation that its prices were too low. See Quality (Concurring 
Statement of Commissioner Azcuenaga) (Nov. 5, 1992).
    The proposed consent order prohibits Precision Moulding Co., Inc. 
from requesting, suggesting, urging, or advocating that any other 
producer or seller of stretcher bars raise, fix or stabilize prices or 
price levels, or engage in any other pricing action. The proposed 
consent order also prohibits Precision Moulding Co., Inc. from entering 
into, adhering to, maintaining, or carrying out any combination, 
conspiracy, agreement, understanding, plan or program with any other 
producer or seller of stretcher bars to fix, raise, establish, control, 
maintain or stabilize prices or price levels. The provisions of the 
order apply to stretcher bar products of any size.
    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.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 96-16114 Filed 6-24-96; 8:45 am]
BILLING CODE 6750-01-M