[Federal Register Volume 79, Number 145 (Tuesday, July 29, 2014)]
[Notices]
[Pages 44030-44033]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-17785]


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FEDERAL TRADE COMMISSION

[File No. 141 0036]


Mr. Jacob J. Alifraghis, Also Doing Business As 
InstantUPCCodes.com, and 680 Digital, Inc., Also Doing Business As 
Nationwide Barcode, and Philip B. Peretz; Analysis to Aid Public 
Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreements.

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SUMMARY: The consent agreements in this matter settle alleged 
violations of federal law prohibiting unfair methods of competition. 
The attached Analysis to Aid Public Comment describes both the 
allegations in the draft complaints and the terms of the consent 
orders--embodied in the consent agreements--that would settle these 
allegations.

DATES: Comments must be received on or before August 18, 2014.

ADDRESSES: For InstantUPCCodes.com, interested parties may file a 
comment at https://ftcpublic.commentworks.com/ftc/instantupccodesconsent online or on paper, by following the 
instructions in the Request for Comment part of the SUPPLEMENTARY 
INFORMATION section below. Write ``InstantUPCCodes.com--Consent 
Agreement; File No. 141 0036'' on your comment and file your comment 
online at https://ftcpublic.commentworks.com/ftc/instantupccodesconsent 
by following the instructions on the web-based form. For Nationwide 
Barcode, interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/barcodeconsent online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Barcode Resellers 
Release--Consent Agreement; File No. 141 0036'' on your comment and 
file your comment online at https://ftcpublic.commentworks.com/ftc/

[[Page 44031]]

barcodeconsent by following the instructions on the web-based form. If 
you prefer to file your comment on paper, mail your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
600 Pennsylvania Avenue NW., Suite CC-5610 (Annex D), Washington, DC 
20580, or deliver your comment to the following address: Federal Trade 
Commission, Office of the Secretary, Constitution Center, 400 7th 
Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Matthew Accornero, Bureau of 
Competition, (202-326-3102), 600 Pennsylvania Avenue NW., Washington, 
DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreements 
containing consent orders to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, have 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 agreements, and the allegations in the complaints. An 
electronic copy of the full text of the consent agreement packages can 
be obtained from the FTC Home Page (for July 21, 2014), on the World 
Wide Web, at http://www.ftc.gov/os/actions.shtm.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before August 18, 2014. 
Write ``InstantUPCCodes.com--Consent Agreement; File No. 141 0036'' or 
``Barcode Resellers Release--Consent Agreement; File No. 141 0036'' on 
your comment. Your comment--including your name and your state--will be 
placed on the public record of this proceeding, including, to the 
extent practicable, on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the 
Commission tries to remove individuals' home contact information from 
comments before placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which . . . is privileged or confidential,'' as discussed in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/instantupccodesconsent or https://ftcpublic.commentworks.com/ftc/barcodeconsent by following the instructions on the web-based forms. If 
this Notice appears at http://www.regulations.gov/#!home, you also may 
file a comment through that Web site.
    If you file your comment on paper, write ``InstantUPCCodes.com--
Consent Agreement; File No. 141 0036'' or ``Barcode Resellers Release--
Consent Agreement; File No. 141 0036'' on your comment and on the 
envelope, and mail your comment to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite 
CC-5610 (Annex D), Washington, DC 20580, or deliver your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex 
D), Washington, DC 20024. If possible, submit your paper comment to the 
Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before August 18, 2014. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an agreement containing consent order (``Consent 
Agreement'') from Mr. Jacob J. Alifraghis, who operates 
InstantUPCCodes.com (``Instant''), and a separate Agreement from Philip 
B. Peretz and 680 Digital, Inc., also d/b/a Nationwide Barcode 
(``Nationwide''). These individuals and entities are collectively 
referred to as ``Respondents.'' The Commission's complaints 
(``Complaints'') allege that each Respondent violated Section 5 of the 
Federal Trade Commission Act, as amended, 15 U.S.C. 45, by inviting 
certain competitors in the sale of barcodes to join together in a 
collusive scheme to raise prices.
    Under the terms of the proposed Consent Agreements, Respondents are 
required to cease and desist from communicating with their competitors 
about rates or prices. They are also barred from entering into, 
participating in, inviting, or soliciting an agreement with any 
competitor to divide markets, to allocate customers, or to fix prices.
    The Commission anticipates that the competitive issues described in 
the Complaints will be resolved by accepting the Proposed Orders, 
subject to final approval, contained in the Consent Agreements. The 
Consent Agreements have been placed on the public record for 30 days 
for receipt of comments from interested members of the public. Comments 
received during this period will become part of the public record. 
After 30 days, the Commission will review the Consent Agreements again 
and the comments received, and will decide whether it should withdraw 
from the Consent Agreements or make final the accompanying Decisions 
and Orders (``Proposed Orders'').
    The purpose of this Analysis to Aid Public Comment is to invite and 
facilitate public comment. It is not

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intended to constitute an official interpretation of the proposed 
Consent Agreements and the accompanying Proposed Orders or in any way 
to modify their terms.
    The Consent Agreements are for settlement purposes only and do not 
constitute an admission by Respondents that the law has been violated 
as alleged in the Complaints or that the facts alleged in the 
Complaints, other than jurisdictional facts, are true.

I. The Complaints

    The allegations of the Complaints are summarized below:
    Instant, Nationwide, and a firm we refer to as Competitor A sell 
barcodes over the Internet. A firm we refer to as Competitor B also 
sells barcodes over the Internet, but at higher prices than Instant, 
Nationwide, and Competitor A. Price competition among these firms 
caused the price of barcodes to decrease over time.
    Prior to August 2013, Instant had never communicated with 
Nationwide or Competitor A. On the evening of August 4, 2013, Mr. 
Alifraghis of Instant sent a message to Mr. Peretz of Nationwide 
proposing that all three competitors raise their prices to meet the 
higher prices charged by Competitor B:

    Hello Phil, Our company name is InstantUPCCodes.com, as you may 
be aware, we are one of your competitors within the same direct 
industry that you are in. . . . Here's the deal Phil, I'm your 
friend, not your enemy. . . .
    Here's what I'd like to do: All 3 of us--US, YOU and [Competitor 
A] need to match the price that [Competitor B] has. . . . I'd say 
that 48 hours would be an acceptable amount of time to get these 
price changes completed for all 3 of us. The thing is though, we all 
need to agree to do this or it won't work. . . . Reply and let me 
know if you are willing to do this or not.

    Mr. Alifraghis then sent a similar email message to Competitor A. 
The next day, on August 5, Mr. Peretz forwarded Mr. Alifraghis' message 
to Competitor A, asking for Competitor A's thoughts on the proposal to 
raise and fix prices.
    On August 6, Mr. Peretz emailed Mr. Alifraghis and Competitor A. He 
stated that, rather than raise price within the next 48 hours as 
proposed by Mr. Alifraghis, he would prefer to wait until Sunday, 
August 11, to raise his prices. Mr. Peretz added a second condition: he 
wanted Instant to raise its prices first:

    We are open to what you suggest . . . and are willing to pull 
the trigger on this at midnight Sunday, August 11th.

    Competitor A did not respond to this email or to any emails in the 
series. Not having heard from Competitor A, Mr. Alifraghis emailed Mr. 
Peretz stating that he would have to hear from Competitor A directly 
before any price increase could take place.
    On August 7, Mr. Peretz sent an email to Mr. Alifraghis and 
Competitor A, trying to overcome the lack of lack of trust that he 
perceived as impeding efforts to coordinate a price increase.
    On August 11, the price increase discussed by the barcode 
competitors in multiple email messages failed to materialize. Two days 
later, on August 13, Mr. Peretz wrote again to Mr. Alifraghis and 
Competitor A. Mr. Peretz urged his competitors to continue their 
dialogue and to take the opportunity presented to raise prices:

    This is a dialog [. . .] a dialog is a very good thing and it 
seems, regardless of how I feel about each of you and how you feel 
about each other or me, this is an opportunity to increase 
profitability. All it takes is conversation and a leap of faith.
    This is the opportunity that we have all wanted [. . .] to be 
able to increase our prices and to make some money.

    In their correspondence, Mr. Alifraghis and Mr. Peretz also 
threatened to lower their own prices if the other parties did not cede 
to their demands to collectively increase pricing. For example, on 
August 19, Mr. Peretz stated in an email to Instant and Competitor A:

    Gentlemen,
    Have we given up on this conversation?
    This is the busiest time of year . . . and I am considering 
meeting and/or beating your prices. Would like to see what your 
thoughts are before I screw up our industry even more.

    Mr. Peretz and Mr. Alifraghis continued to exchange communications 
about price levels into January 2014, until they learned of the FTC's 
investigation.

II. Analysis

    The term ``invitation to collude'' describes an improper 
communication from a firm to an actual or potential competitor that the 
firm is ready and willing to coordinate on price or output or other 
important terms of competition. Mr. Alifraghis' August 4 email to his 
competitors outlining a mechanism by which the three companies can and 
should fix the price of barcodes is a clear example of an invitation to 
collude. The ensuing private communications among barcode sellers 
outlined in the Complaints establish a series of subsequent 
invitations, with each Respondent repeatedly communicating its 
willingness to raise and fix prices for barcodes, contingent on other 
competitors doing so, and soliciting rivals to participate in a common 
scheme.
    For 20 years, the Commission has held that an invitation to collude 
may violate Section 5 of the FTC Act.\2\ Several legal and economic 
justifications support the imposition of liability upon a firm that 
communicates an invitation to collude, even where there is no proof of 
acceptance. First, difficulties exist in determining whether a 
competitor has or has not accepted a particular solicitation. Second, 
even an unaccepted solicitation may facilitate coordinated interaction 
by disclosing the solicitor's intentions or preferences. Third, the 
anti-solicitation doctrine serves as a useful deterrent against 
potentially harmful conduct that serves no legitimate business 
purpose.\3\
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    \2\ See, e.g., In re Quality Trailer Prods., 115 F.T.C. 944 
(1992); In re AE Clevite, 116 F.T.C. 389 (1993); In re Precision 
Moulding, 122 F.T.C. 104 (1996); In re Stone Container, 125 F.T.C. 
853 (1998); In re MacDermid, 129 F.T.C (C-3911) (2000); see also In 
re McWane, Inc., Docket No. 9351, Opinion of the Commission on 
Motions for Summary Decision at 20-21 (F.T.C. Aug. 9, 2012) (``an 
invitation to collude is `the quintessential example of the kind of 
conduct that should be . . . challenged as a violation of Section 
5''') (citing the Statement of Chairman Leibowitz and Commissioners 
Kovacic and Rosch, In re U-Haul Int'l, Inc., 150 F.T.C. 1, 53 
(2010). This conclusion has been affirmed by leading antitrust 
scholars. See, P. Areeda & H. Hovenkamp, VI ANTITRUST LAW ] 1419 
(2003); Stephen Calkins, Counterpoint: The Legal Foundation of the 
Commission's Use of Section 5 to Challenge Invitations to Collude is 
Secure, ANTITRUST Spring 2000, at 69. In a case brought under a 
state's version of Section 5, the First Circuit expressed support 
for the Commission's application of Section 5 to invitations to 
collude. Liu v. Amerco, 677 F.3d 489 (1st Cir. 2012).
    \3\ Valassis Communications, Inc., Analysis of Agreement 
Containing Consent Order to Aid Public Comment, 71 FR 13976, 13978-
79 (Mar. 20, 2006).
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    If the invitation is accepted and the competitors reach an 
agreement, the Commission will refer the matter to the Department of 
Justice for a criminal investigation. In this case, the complaint does 
not allege that Nationwide, Instant, and Competitor A reached an 
agreement.
    An invitation to collude, which, if accepted, would constitute a 
per se violation of the Sherman Act, is a violation of Section 5. 
Although this case involves particularly egregious conduct, less 
egregious conduct may also result in Section 5 liability. It is not 
essential that the Commission find such explicit invitations to 
increase prices. Nor must the Commission find repeated misconduct 
attributable to the principals of firms.

III. The Proposed Consent Orders

    The Proposed Orders have the following substantive provisions:
    Section II, Paragraph A of the Proposed Orders enjoin Respondents

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from communicating with their competitors about rates or prices, with a 
proviso permitting public posting of rates and a second proviso that 
permits Respondents to buy or sell barcodes.
    Section II, Paragraph B prohibits Respondents from entering into, 
participating in, maintaining, organizing, implementing, enforcing, 
inviting, offering, or soliciting an agreement with any competitor to 
divide markets, to allocate customers, or to fix prices.
    Section II, Paragraph C bars Respondents from urging any competitor 
to raise, fix or maintain its price or rate levels or to limit or 
reduce service terms or levels.
    Sections III-VI of the Proposed Orders impose certain standard 
reporting and compliance requirements on Respondents.
    The Proposed Orders will expire in 20 years.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2014-17785 Filed 7-28-14; 8:45 am]
BILLING CODE 6750-01-P