[Federal Register Volume 80, Number 243 (Friday, December 18, 2015)]
[Notices]
[Pages 79041-79043]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31822]


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FEDERAL TRADE COMMISSION

[File No. 151-0048]


Drug Testing Compliance Group, LLC; 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 methods of competition. 
The attached Analysis to Aid Public Comment describes both the 
allegations in the draft complaint 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 13, 2016.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/dtcgroupconsent online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Drug Testing 
Compliance Group--Consent Agreement; File No. 151-0048'' on your 
comment and file your comment online at https://ftcpublic.commentworks.com/ftc/dtcgroupconsent by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, write ``Drug Testing Compliance Group--Consent Agreement; 
File No. 151-0048'' 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.

FOR FURTHER INFORMATION CONTACT: William Lanning (202-326-3361), Bureau 
of Competition, 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 agreement 
containing 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 14, 2015), 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 January 13, 
2016. Write ``Drug Testing Compliance Group--Consent Agreement; File 
No. 151-0048'' 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,

[[Page 79042]]

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/dtcgroupconsent by following the instructions on the web-based 
form. 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 ``Drug Testing Compliance 
Group--Consent Agreement; File No. 151-0048'' 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 January 13, 2016. 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 of Agreement Containing Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an agreement containing consent order (``Consent 
Agreement'') from Drug Testing Compliance Group, LLC (``DTC Group''). 
The Commission's Complaint alleges that DTC Group violated Section 5 of 
the Federal Trade Commission Act, as amended, 15 U.S.C. 45, by inviting 
a competitor to enter a customer allocation agreement.
    Under the terms of the proposed Consent Agreement, DTC Group is 
required to cease and desist from communicating with its competitors 
about customers and prices. The Consent Agreement also prohibits DTC 
Group from entering into, participating in, inviting, or soliciting an 
agreement with any competitor to allocate customers, to divide markets, 
or to fix prices.
    The Consent Agreement has 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 Agreement 
again and the comments received, and will decide whether it should 
withdraw from the Consent Agreement or make final the accompanying 
Decision and Order (``Proposed Order'').
    The purpose of this Analysis to Aid Public Comment is to invite and 
facilitate public comment. It is not intended to constitute an official 
interpretation of the proposed Consent Agreement and the accompanying 
Proposed Order or in any way to modify their terms.

I. The Complaint

    The allegations of the Complaint are summarized below:
    DTC Group markets and sells an array of services to commercial 
drivers, commercial trucking firms, and other persons that facilitate 
compliance with various regulations administered by the Department of 
Transportation and the Federal Motor Carrier Safety Administration, 
including regulations relating to drug and alcohol testing, safety 
audits, and driver qualifications.
    DTC Group primarily utilizes telemarketing and the internet to 
market and sell its services. DTC Group competes with several firms 
throughout the United States offering similar services.
    DTC Group and Competitor A market and sell similar services in 
direct competition. Beginning in 2013 and continuing to date, DTC Group 
and Competitor A have competed for one another's customers by offering 
lower prices for the services they sell. In some instances, one firm 
can induce a customer, whose contract is terminable at will, to switch 
service providers by offering lower prices.
    On or about June 27, 2014, the president of DTC Group, David 
Crossett, contacted Competitor A to complain that Competitor A's sales 
personnel had induced a DTC Group customer to switch service providers. 
Mr. Crossett requested a meeting with Competitor A to discuss the 
matter.
    Mr. Crossett met with the principals of Competitor A on July 10, 
2014. Mr. Crossett proposed that the firms agree not to solicit or 
compete for one another's customers. Specifically, Mr. Crossett 
proposed that DTC Group and Competitor A should reciprocally agree to 
refrain from selling or attempting to sell a service to a customer if 
the rival firm had previously arranged to sell the same service to the 
customer. Mr. Crossett referred to this arrangement as ``First Call 
Wins,'' and explained that such agreement would permit each company to 
sell its services to customers without fearing that its rival would 
later undercut it with a lower price offer.

II. Analysis

    Mr. Crossett's communication to Competitor A is an attempt to 
arrange a customer allocation agreement between the two companies. The 
invitation, if accepted, would be a per se violation of the Sherman 
Act.\2\ The Commission has long held that invitations to collude 
violate Section 5 of the FTC Act, and this is unaltered by the 
Commission's recent Statement on Section 5. In that Statement, the 
Commission explained that unfair methods of competition under Section 5 
``must cause, or be likely to cause, harm to competition or the 
competitive process, taking into account any associated cognizable 
efficiencies and business justifications.'' \3\ Potential violations 
are

[[Page 79043]]

evaluated under a ``framework similar to the rule of reason.'' \4\ 
Competitive effects analysis under the rule of reason depends upon the 
nature of the conduct that is under review.\5\
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    \2\ United States v. Coop. Theatres of Ohio, Inc., 845 F.2d 
1367, 1372 (6th Cir. 1988) (``[A] horizontal agreement between two 
competitors to refrain from seeking business from each other's 
existing accounts . . . is plainly a form of customer allocation 
and, hence, is the type of `naked restraint' which triggers 
application of the per se rule of illegality.''); United States v. 
Cadillac Overall Supply Co., 568 F.2d 1078 (10th Cir.), cert. 
denied, 437 U.S. 903 (1978).
    \3\ Fed. Trade Comm'n, Statement of Enforcement Principles 
Regarding ``Unfair Methods of Competition'' Under Section 5 of the 
FTC Act (Aug. 13, 2015) (Section 5 Unfair Methods of Competition 
Policy Statement), available at https://www.ftc.gov/system/files/documents/public_statements/735201/150813section5enforcement.pdf. 
Commissioner Ohlhausen dissented from the issuance of the Section 5 
Unfair Methods of Competition Policy Statement. See https://www.ftc.gov/public-statements/2015/08/dissenting-statement-commissioner-ohlhausen-ftc-act-section-5-policy.
    \4\ Section 5 Unfair Methods of Competition Policy Statement.
    \5\ See, e.g., California Dental Ass'n v. FTC, 526 U.S. 756, 781 
(1999) (``What is required . . . is an enquiry meet for the case, 
looking to the circumstances, details, and logic of a restraint.'').
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    An invitation to collude is ``potentially harmful and . . . serves 
no legitimate business purpose.'' \6\ For this reason, the Commission 
treats such conduct as ``inherently suspect'' (that is, presumptively 
anticompetitive).\7\ This means that an invitation to collude can be 
condemned under Section 5 without a showing that the respondent 
possesses market power.\8\
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    \6\ In re Valassis Commc'ns, Inc., 141 F.T.C. 247, 283 (2006) 
(Analysis of Agreement Containing Consent Order to Aid Public 
Comment); see also Address by FTC Chairwoman Edith Ramirez, Section 
5 Enforcement Principles, George Washington University Law School at 
5 (Aug. 13, 2015), available at https://www.ftc.gov/system/files/documents/public_statements/735411/150813section5speech.pdf.
    \7\ See, e.g., In re North Carolina Bd. of Dental Examiners, 152 
F.T.C. 640, 668 (2011) (noting that inherently suspect conduct is 
such that can be ``reasonably characterized as `giv[ing] rise to an 
intuitively obviously inference of anticompetitive effect.' '') 
(citation omitted).
    \8\ See, e.g., In re Realcomp II, Ltd., 148 F.T.C. __, Docket 
No. 9320, 2009 FTC LEXIS 250, at *51 (Oct. 30, 2009) (Comm'n Op.) 
(explaining that if conduct is ``inherently suspect'' in nature, and 
there are no cognizable procompetitive justifications, the 
Commission can condemn it ``without proof of market power or actual 
effects'').
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    The Commission has long held that an invitation to collude violates 
Section 5 of the FTC Act even where there is no proof that the 
competitor accepted the invitation.\9\ First, unaccepted solicitations 
may facilitate coordination between competitors because they reveal 
information about the solicitor's intentions or preferences. Second, it 
can be difficult to discern whether a competitor has accepted a 
solicitation. Third, finding a violation may deter similar conduct that 
has no legitimate business purpose.\10\
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    \9\ See, e.g., In re Valassis Commc'ns, Inc., 141 F.T.C. 247 
(2006); In re Stone Container, 125 F.T.C. 853 (1998); In re 
Precision Moulding, 122 F.T.C. 104 (1996). 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 endorsed 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. See 
Liu v. Amerco, 677 F.3d 489 (1st Cir. 2012).
    \10\ In re Valassis Commc'ns, Inc., 141 F.T.C. 247, 283 (2006) 
(Analysis of Agreement Containing Consent Order to Aid Public 
Comment).
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III. The Proposed Consent Order

    The Proposed Order has the following substantive provisions:
    Section II, Paragraph A of the Proposed Order enjoins DTC Group 
from communicating with its competitors about rates or prices, with a 
proviso permitting public posting of rates.
    Section II, Paragraph B prohibits DTC Group 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 DTC Group 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 Order impose reporting and 
compliance requirements on DTC Group.
    The Proposed Order will expire in 20 years.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2015-31822 Filed 12-17-15; 8:45 am]
BILLING CODE 6750-01-P