[Federal Register Volume 67, Number 237 (Tuesday, December 10, 2002)]
[Notices]
[Pages 75855-75857]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-31143]


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FEDERAL TRADE COMMISSION

[File No. 011 0242]


National Academy of Arbitrators; Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint that accompanies the consent agreement and the terms of the 
consent order--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before January 2, 2003.

ADDRESSES: Comments filed in paper form should be directed to: FTC/
Office of the Secretary, Room 159-H, 600 Pennsylvania Avenue, NW., 
Washington, DC 20580. Comments filed in electronic form should be 
directed to: [email protected], as prescribed below.

FOR FURTHER INFORMATION CONTACT: L. Barry Costilo, FTC, Bureau of 
Competition, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 
326-2024.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade

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Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Section 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 thirty (30) days. The following Analysis to Aid Public 
Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for December 3, 2002), on the World Wide Web, at http://www.ftc.gov/os/2002/12/index.htm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington, 
DC 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. Comments filed in paper form should 
be directed to: FTC/Office of the Secretary, Room 159-H, 600 
Pennsylvania Avenue, NW., Washington, DC 20580. If a comment contains 
nonpublic information, it must be filed in paper form, and the first 
page of the documents must be clearly labeled ``confidential.'' 
Comments that do not contain any nonpublic information may instead be 
filed in electronic form (in ASCII format, WordPerfect, or Microsoft 
Word) as part of or as an attachment to email messages directed to the 
following email box: [email protected]. Such comments 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)).

Analysis of Proposed Consent Order to Aid Public Comment

    The Federal Trade Commission has accepted an agreement to a 
proposed consent order from the National Academy of Arbitrators 
(``NAA''). NAA has its principal place of business in Pittsburgh, 
Pennsylvania.
    The proposed consent order has been placed on the public record for 
thirty (30) days for reception of comments by interested persons. 
Comments received during this period will become part of the public 
record. After thirty (30) days, the Commission will again review the 
agreement and the comments received, and decide whether it should 
withdraw from the agreement or make final the agreement's proposed 
order.
    NAA is an honorary association for labor-management arbitrators. 
Labor-management arbitrators hear and decide disputes between labor 
unions and employers. The complaint alleges that NAA engages in 
substantial activities for the economic benefit of its members. The 
complaint further alleges that NAA has approximately 600 members, many 
of whom arbitrate labor-management disputes for a fee.
    The complaint charges that NAA has violated Section 5 of the 
Federal Trade Commission Act by acting as a combination of its members 
and in agreement with some of its members to retrain competition by 
restricting advertising and solicitation by its members. The complaint 
alleges that in furtherance of the combination and agreement NAA has 
adopted and maintained a Code of Professional Responsibility for 
Arbitrators of Labor-Management Disputes and Formal Advisory Opinions 
that restrain arbitrators from engaging in truthful, non-deceptive 
advertising and solicitation, regardless of whether such advertising or 
solicitation compromises or appears to compromise the impartiality of 
Arbitrators. The Code of Professional Responsibility states:

    An arbitrator must not solicit arbitration assignments. * * * 
Solicitation, as prohibited by this section, includes the making of 
requests for arbitration work through personal contacts with individual 
parties, orally or in writing.

In addition to prohibiting solicitation, the previous version of the 
Code prohibited virtually all advertising. The advertising restriction 
was recently amended to restrict only false and misleading advertising. 
However, NAA's Formal Advisory Opinions, which serve as official 
interpretations of the Code, often do not draw a distinction between 
advertising and solicitation and continue to restrict members from 
distributing truthful information. For example, Opinion 14 deems an 
arbitrator's unsolicited mailing to both labor and management 
representatives that contains truthful biographical information to be a 
violation of NAA's ethics provisions on advertising and solicitation. 
Opinion 16 concludes that it is unethical solicitation and advertising 
for an arbitrator to send out announcements of the change of address of 
his office, which include his resume (including the fact that he is a 
lawyer) and state his fee schedule. Opinion 18 declares it unethical 
for an arbitrator to ``distribute his business cards, except on 
request, to potential clients.'' And Opinion 19 holds that an 
arbitrator who gives potential clients ball point pens to inform them 
of his change of address runs afoul of the proscriptions on advertising 
and solicitation. Given these Formal Advisory Opinions, the narrowing 
of the advertising restrictions in the Code to false and misleading 
advertising does not eliminate competitive concerns.
    The complaint alleges that the above acts and practices constitute 
unfair methods of competition which have restrained competition 
unreasonably. It further alleges that the effects of the acts and 
practices are to injure consumers by depriving consumers of the 
services of labor-management arbitrators of the benefits of truthful, 
non-deceptive information and of free and open competition among 
arbitrators.
    NAA has signed a consent agreement containing the proposed consent 
order. The proposed consent order would prohibit NAA from maintaining 
or enforcing any policy, ethics rule, interpretation or guideline that 
impedes or restricts arbitrators from engaging in advertising truthful 
information about their services, including the prices, terms and 
conditions of sale of their services. The proposed consent order would 
also prohibit NAA from maintaining or enforcing any policy, ethics 
rule, interpretation or guideline against solicitation of arbitration 
work. The order permits NAA to adopt and promulgate reasonable ethics 
guidelines governing the conduct of its members with respect to 
representations that NAA reasonably believes would be false or 
deceptive or governing conduct that NAA reasonably believes would 
compromise or appear to compromise the impartiality of arbitrators.
    To ensure and monitor compliance, the consent order provides, among 
other things, that within certain time frames NAA shall remove the 
provisions that are inconsistent with the order from NAA's Code of 
Professional Responsibility for Arbitrators of Labor-Management 
Disputes, NAA's Advisory Opinions, any NAA policy statement or 
guideline and NAA's website. The order requires NAA to publish a copy 
of the order and complaint in its newsletter. It further provides that 
the order and complaint shall be published on the NAA web site, with a 
link placed in a prominent position on the web site's home page. The 
proposed consent order also contains other provisions to monitor 
compliance.
    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

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the agreement and proposed order or to modify in any way their terms.

    By director of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 02-31143 Filed 12-9-02; 8:45 am]
BILLING CODE 6750-01-M