[Federal Register Volume 61, Number 182 (Wednesday, September 18, 1996)]
[Notices]
[Pages 49143-49145]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23923]


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FEDERAL TRADE COMMISSION
[File No. D.9268]


New Balance Athletic Shoe, 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

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Boston-based athletic footwear manufacturer from misrepresenting, in 
any manner, that footwear made wholly abroad was made in the United 
States, and the quantity of footwear it exports. The agreement resolves 
charges that New Balance misrepresented that all of its athletic 
footwear sold in the United States is made in the United States when a 
substantial amount is made wholly abroad. The Commission also alleged 
that New Balance falsely represented that it annually exports to Japan 
hundreds of thousands of pairs of athletic shoes that are American 
made.

DATES: Comments must be received on or before November 18, 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: Elaine D. Kolish, Federal Trade 
Commission, S-4302, 6th & Pennsylvania Ave, NW, Washington, DC 20580. 
(202) 326-3042; C. Steven Baker, Chicago Regional Office, Federal Trade 
Commission, 55 East Monroe Street, Suite 1437, Chicago, Illinois 60603. 
(312) 353-8156.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 3.25 of 
the Commission's Rules of Practice (16 CFR 3.25), 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 agreement herein, by and between New Balance Athletic Shoe, 
Inc., hereinafter sometimes referred to as respondent, and its 
attorneys, and counsel for the Federal Trade Commission, is entered 
into in accordance with the Commission's Rules governing consent order 
procedures. In accordance herewith, the parties hereby agree that:
    1. Respondent New Balance Athletic Shoe, Inc., is a Massachusetts 
corporation with its principal office and place of business at 61 North 
Beacon Street, Boston, Massachusetts. Respondent is a U.S. 
manufacturer, importer, and seller of footwear, with manufacturing 
facilities in Lawrence and Boston, Massachusetts, and Norridgewock and 
Skowhegan, Maine.
    2. Respondent has been served with a copy of the complaint issued 
by the Federal Trade Commission charging respondent with violations of 
Section 5(a) of the Federal Trade Commission Act, and has filed an 
answer to said complaint denying said charges.
    3. Respondent admits all the jurisdictional facts set forth in the 
Commission's complaint in this proceeding.
    4. 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) All claims under the Equal Access to Justice Act.
    5. 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 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 its acceptance of this agreement and so notify the respondent, 
in which event it will take such action as it may consider appropriate, 
or issue and serve its decision in disposition of the proceeding.
    6. This agreement is for settlement purposes only and does not 
constitute an admission by respondent that the law has been violated as 
alleged in the complaint or that the facts as alleged in the complaint, 
other than the jurisdictional facts, are true.
    7. 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. 3.25(f) of the 
Commission's Rules, the Commission may without further notice to 
respondent, (1) issue 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 decision 
containing the agreed-to order to respondent's address as stated in 
this agreement shall constitute service. Respondent waives any right it 
might have to any other manner of service. The complaint and amended 
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 
contradict the terms of the order.
    8. Respondent has read the 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 it has fully 
complied with the order. 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, New Balance Athletic Shoe, Inc., a 
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 
manufacturing, labeling, advertising, promotion, offering for sale, 
sale, or distribution of any footwear in or affecting commerce, as 
``commerce'' is defined in the Federal Trade Commission Act, do 
forthwith cease and desist from misrepresenting, in any manner, 
directly or by implication:
    1. That footwear made wholly abroad is made in the United States.
    2. The quantity of footwear it exports.

II

    It is further ordered that for five (5) years after the last date 
of dissemination of any representation covered by this Order, 
respondent, or its successors and assigns, shall maintain and upon 
request make available to the Federal Trade Commission for inspection 
and copying:
    A. All materials that were relied upon in disseminating such 
representations; and
    B. All tests, reports, studies, surveys, demonstrations, or other 
evidence in its possession or control that contradict, qualify, or call 
into question such representation, or the basis relied upon for such 
representation, including complaints from consumers.

III

    It is further ordered that respondent shall distribute a copy of 
this Order to

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each of its operating divisions and to each of its officers, agents, 
representatives, or employees engaged in the preparation or placement 
of advertisements, promotional materials, product labels or other sales 
materials covered by this Order.

IV

    It is further ordered that respondent shall notify the Commission 
at least thirty (30) days prior to any proposed change in the 
corporation 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 which may affect 
compliance obligations under this Order.

V

    It is further ordered that respondent shall, within sixty (60) days 
after service of this Order upon it, and at such other times as the 
Commission may require, file with the Commission a report, in writing, 
setting forth in detail the manner and form in which it has complied 
with this Order.

VI

    It is further ordered that this Order will terminate twenty (20) 
years from the date it becomes final, or twenty (20) years from the 
most recent date that the United States or the Federal Trade Commission 
files a complaint (with or without an accompanying consent decree) in 
federal court alleging any violation of the Order, whichever comes 
later;
    Provided, However, that the filing of such a complaint will not 
affect the duration of:
    A. Any paragraph in this Order that terminates in less than twenty 
(20) years;
    B. This Order's application to any respondent that is not named as 
a defendant in such complaint; and
    C. This Order if such complaint is filed after the Order has 
terminated pursuant to this paragraph.
    Provided Further, that if such complaint is dismissed or a federal 
court rules that the respondent did not violate any provision of the 
Order, and the dismissal or ruling is either not appealed or upheld on 
appeal, then the Order will terminate according to this paragraph as 
though the complaint was never filed, except that the Order will not 
terminate between the date such complaint is filed and the later of the 
deadline for appealing such dismissal or ruling and the date such 
dismissal or ruling is upheld on appeal.

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 respondent New Balance 
Athletic Shoe, Inc.
    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 and take other appropriate action or make 
final the agreement's proposed order.
    This matter concerns advertising and promotional practices related 
to the sale of athletic shoes. The Commission's amended complaint, 
issued on December 18, 1995, charges that respondent falsely 
represented that all of its athletic shoes sold in the United States 
are made in the United States, and that it annually exports to Japan 
hundreds of thousands of pairs of athletic shoes that are made in the 
United States.
    The proposed consent order contains a provision which is designed 
to remedy the advertising violation charges and to prevent the 
respondent from engaging in similar acts and practices in the future. 
Part I of the proposed order prohibits the respondent from 
misrepresenting: (1) that footwear made wholly abroad is made in the 
United States; and (2) the quantity of footwear it exports. Part II 
requires the respondent to maintain materials relied upon in 
disseminating any representation covered by the order. Part III of the 
proposed order requires the respondent to distribute copies of the 
order to certain company officials and employees. Part IV of the 
proposed order requires the respondent to notify the Commission of any 
change in the corporation which may affect compliance obligations under 
the order. Part V of the proposed order requires the respondent to file 
one or more compliance reports. Part VI of the proposed order is a 
provision whereby the order, absent certain circumstances, terminates 
twenty years from the date of issuance.
    The purpose of this analysis is to facilitate public comment on the 
proposed consent order. 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.

Dissenting Statement of Commissioner Roscoe B. Starek, III in the 
Matter of New Balance Athletic Shoe, Inc.

    I continue to object to the approach that the majority of the 
Commission has elected in this litigation. The settlement is hardly 
surprising in light of the Commission's decision to drop the most 
important allegation in this matter--involving unqualified ``Made in 
USA'' claims for products assembled in the United States from foreign 
and domestic components--in favor of an eviscerated complaint and 
notice order addressing only narrow claims about exported footwear and 
footwear made wholly abroad. For the reasons stated in my dissent from 
the Commission's decision to narrow the complaint and notice order, I 
again dissent. See New Balance Athletic Shoe, Inc., Docket No. 9268 
(Dissenting Statement of Commissioner Roscoe B. Starek, III).

[FR Doc. 96-23923 Filed 9-17-96; 8:45 am]
BILLING CODE 6750-01-P