INTERNATIONAL SHOE COMPANY - Federal Trade … Set Aside Order IN THE MATTER m' INTERNATIONAL SHOE...

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191 Set Aside Order

IN THE MATTER m'

INTERNATIONAL SHOE COMPANY, ET AL.

SET ASIDE ORDER IN REGARD TO ALLEGED VIOLATION OF THEFEDRRAL TRADE COMMISSION ACT

Docket 6835. Consent Order, March 6, 1958-Set Aside Order, Jan. 30

, ),

985

1n its Order Reopening and Settinl- Aside Order Issued March

, ),

958, the Commissionnotes that the public interest warrants granting the request fied by lnterco Incor-porated (formerly International Shoe Company) to set aside the 1958 consent orderwhich barred the company from engaging in exclusive-dealing arrangements withshoe dealers, and providing loans and special services to those dealers who agreedto handle the firm s products exclusively. The Commission found that the sameconsiderations that prompt.ed it.s July 16 , 19H4 determination to set aside the 1966Order issued against the Brown Shoe Company, Inc. , 104 F. C. 266 , which alsoinvolved a perpetual exclusive dealing order, are applicable in present action.

Accordingly, this Order reopens the matter and sets aside the consent order issuedagainst International Shoe Company on March 6, 1958 (54 F.T.C. 1120).

ORDER REOPENING AND SETTING ASIDE ORDER ISSUED MARCH 6 , 1958

On October 9 , 1984 , respondent Interco Incorporated (formerly In-ternational Shoe Company and hereafter "Interco ) filed a RequestTo Reopen And Set Aside Order" ("Request" ), pursuant to Section 5(b)ofthe Federal Trade Commission Act , 15 D. C. 45(b) and Section 2.ofthe Commission s Rules of Practice. The Request asked the Com-mission to reopen the consent order issued on March 6, 1958 ("theorder ) and set it aside. Interco s request was on the public record forthirty days and no comments were received.

After reviewing respondent's Request , the Commission has conclud-ed that the public interest warrants reopening and setting aside theorder as requested by respondent. The action we take today is consist-ent with our recent determination in Brown Shoe Company, Inc.Docket No. 7606, July 16 , 1984 (104 F. C. 266J, which also involvesa perpetual exclusive dealing order in the shoe industry. The sameconsiderations which prompted our action in Brown Shoe are applica-ble to the present request.

Accordingly, it is ordered that this matter be , and it hereby is,reopened, and that the Commission s order issued on March 6, 1958shall be of no further force and effect as of the effective date ofthisorder.

192 FEDERAL TRADE COMMISSION' DECISIONS

Set Aside Order 105 F.

IN THE MATTER OF

LURIA BROTHERS AND COMPANY , INC. , ET AL

SET ASIDE ORDER IN REGARD TO ALLEGgn VIOLATION OF THE FEDERALTRADE COMMISSION ACT AND SEC. 7 OF THE CLAYTON ACT

Docket 6156. Order, Feb. 1963-Set Aside Order, Peb. , 1985

After considering respondent' s petition to reopen the matter and set aside the Commis-sion s order of February 13 , 1963 (62 F. C. 243), together with public commentsand other relevant information , the Commission found that the order , whichamong" other things , barred the firm from entering into exclusive supplier arrange-ments with steel mills and receiving preferential treatment as a scrap metalsupplier, no longer serves the public interest. The Commission held that in viewof the present characteristics of the ferrous scrap industry, and respondent'

present inability to exclude competitors through the exercise of market power , theorder no longer serves any procompetitive purpose and may impede Luria s abilityto compete et1ectively for the business of scrap consumers that desire exclusivesupply arrangements. Accordingly, the Order reopens the matter and sets asidethe Commission s order of February 1 , 1963 as it applies to respondent Luria.

ORDER REOPENING AND SETTING ASIDE THE ORDERISSUED FEBRUARY 13 , 1963

By petition fied on September 19 , 1984 , Luria Brothers & Compa-ny, Inc. (hereafter "Luria ) requests that the Commission reopen theproceeding in Docket No. 6156 and set aside the order therein. Uponconsideration of Luria s petition , the public comments , and otherrelevant information , the Commission now finds that the public inter-est warrants reopening the proceeding and setting aside the order asto Luria.

The record describes an industry in which Luria s use of exclusivearrangements to supply purchased iron and steel scrap to any foreignor domestic scrap consumer , including respondent mills, would haveno significant anticompetitive effects. Luria s shares in the nationaland regional ferrous scrap markets have declined steadily since theCommission issued its complaint in. this matter. In contrast to itsprevious dominance in the export of iron and steel scrap, Luria is nowonly minimally involved in that aspect of the scrap business. More-over , concentration in the industry has decreased significantly as newfirms have entered the market , thus demonstrating the absence ofnatural or artificial barriers to entry.

In view of the present characteristics of the ferrous scrap industry,and Luria s inability to exclude competitors through the exercise of

rkpt, nowpr thp ornpr now c;prvpc; no nrOf"nmnptitivp nnrnoc;p !'n

LURIA BROTHERS AND CO. , INC. , ET AL. 193

192 Set Aside Order

may impede Luria s ability to compete efIectively for the business ofscrap consumers that desire exclusive supply arrangements. As aresult, we conc1ude that the order no longer is in the public interest.However , the Commission will not be precluded from taking enforce-ment action concerning the practices that are the subject ofthis orderwhen the Commission has reason to believe they violate the law.

Accordingly,It is ordered That this matter be and it hereby is reopened, and that

the Commission s February 13 , 1963 order be and it hereby is set asideas it applies to respondent Luria.

Commissioner Bailey concurred in the result.

194 FEDERAL TRADE COMMISSION DECISIONS


IN THE MATTER OF

AMERICAN MOTORS CORPORATION , ET AL.

SET ASIDE ORDER IN REGARD TO ALLEGED VIOLATION OF THEFEDERAL TRADE COMMISSION ACT

Dockel C-3093. Consent Order

, ,

luly 1982-Set Aside Order, Feb. , 1985

This Order reopens the proceeding and grants the petitions ofa utility vehicle manufac-turer and its subsidiary to set aside the FTC Consent Order issued on July 6 1982(100 F. C. 229 (1982)), which requires them to attach to each new Jeep CJ a stickerwarning that multipurpose vehicles handle differently from ordinary passengercars and sudden sharp turns or abrupt maneuvers may result in loss of control; andto include additional safety disclosures in Owner s Manuals and Supplements.

Petitioners ' request that the Order be set aside was based on changes in law andfact and on public interest considerations. The manufacturers asserted that a newregulation promulgated by the National Highway Trame Safety Administration

NHTSA" ), which became efiective on September 1, 1984 , covers the same subjectmatter as :FTC's Order and makes the Order unnecessary. Further , while theregulation requires all manufacturers of utility vehicles to place a sticker on suchvehicles and to disclose in their operating manuals information "to alert driversthat the particular handling and maneuvering characteristics of utility vehiclesrequire special driving practices when those vehicles are operated on paved roadsrespondent is the only manufacturer of such vehicJes subject to dual liability. Afterconsidering all arguments presented by petitioners , and noting that NHTSA , thefederal agency with the specific st.atutory responsibility to regulate automobiletraffc , has in effect a regulation , enforceable by the assessment of penalties, thatadequately addresses the problem that led to issuance of the FTC Order , theCommission concluded that petitioners had adequately shown that changed condi-tions of law and fact and public interest considerations require that the Order beset aside. Accordingly, the Commission ordered the matter reopened and the con-sent order set aside.

ORDER REOPENING THE PROCEEDING AND SETTING ASIDECEASE AND DgSIST ORDER

On September 13 , 1984 , American Motors Corporation and its whol-ly'owned subsidiary, Jeep Corporation , respondents in the captionedmatter, fied a petition pursuant to Rule 2.51 of the CommissionRule of Practice to reopen the proceeding and set aside the ConsentOrder entered therein.

The Order, which was issued on July 6 , 1982 , requires inter alia,that respondents affx a sticker to the instrument panel or windshieldframe of each new Jeep CJ reading as follows:

This multiouroose vehicle handles and maneuvers difIerently from an ordinary passen-

lJ:'J\lv'"1' Ul'-.L'_

_.. ., -- -

194 Set Aside Order

may result in loss of control. Read driving guidelines in Owner s Manual and Supple"ment.

WEAR SEATBELTS AT ALL TIMES

The Order also requires respondents to disclose in the OwnerManual for new Jeep CJ' s and in an informational Supplement to theOwner s Manual the following:

Utility vehicles have higher grol.nd clearance and narrower track to make them capa-ble of performing in a wide variety of off road applications. Specific design characteris-tics give them a higher center of gravity than ordinary cars. An advantage of the higherground clearance is a better view of the road allowing you to anticipate problems. Theyare not designed for cornering at the same speeds as conventional 2WD vehicles anymore than low-slung sports cars are designed to perform satisfactorily under ofi:roadconditions. Ifat all possible, avoid sharp turning maneuvers. As with other vehicles ofthis type , failure to operate this vehicle correctly may result in loss of control or anaccident.

The Order further mandates that respondents include the folJowingstatement in the introduction to the Supplement:

As with other vehicles ofthis type , failure to operate this vehicle correctly may resultin loss of control or an accident. Be sure to read on-pavement and off-road drivingguideJines which follow.

Petitioners ' requests that the Order be set aside is based on changesin law and fact and on public interest considerations. The petitionasserts that a new regulation ofthe National Highway Traffc SafetyAdministration ("NHTSA") became effective on September 1 , 1984which covers the same subject matter as the Commission s Order. 49

R. 575.105 reprinted in 49 FR 20016 (1984). NHTSA' s regulationrequires all manufacturers of utility vehicles to plaee a sticker onsuch vehicles and to disclose in their Operating Manuals informationto alert drivers that the particular handling and maneuvering char-

acteristics of utility vehicles require special driving practices whenthose vehicles are operated on paved roads. " While the sticker and thedisclosures required by the NHTSA regulation were patterned afterthose in the Commission s Order against petitioners , the languagetherein differs substantively from the exact language required by theCommission s Order. Violations of both the NHTSA regulation andthe Commission s Order may subject petitioners to civil penalties.

Petitioners argue that the new regulation promulgated and imple-mented by NHTSA constitutes a change oflaw. The regulation coversthe same subject matter as the Commission s Order , and NHTSA isthe federal agency with specific statutory authority to regulate traffc



safety. See 15 U. C. 1381 (1982). "In short " petitioners ' assert

, "

theNHTSA regulation has made the Order unnecessary.

As a changed condition of fact , petitioners argue that the newNHTSA regulation ensures that they will continue to make disclo-sures concerning the handling of utility vehicles. The regulation ap-plies to all utility vehicles , and AMC is the only manufacturer of suchvehicles subject to dual liability. Petitioners are , therefore, injuredcompetitively. Furthermore , they contend that they have been placedin an untenable regulatory dilemma. Ifthey comply with the NHTSAregulation , they are in violation of the Commission s Order , and com-pliance with the Order constitutes non-compliance with the NHTSAregulation. Penalties are assessable for violations of both the regula-tion and the Order.

FinaJly, petitioners contend that the public interest requires that

the Order be set aside because inconsistent and overlapping regulato-ry schemes do not serve the goal of effcient government administra-tion.

Under Section 5(b) of the Federal Trade Commission Act and Rule51 of t.he Commission s Rules , the Commission must reopen the

proceeding and consider altering, modifying or setting aside an Orderif a respondent files a request showing that changed conditions oflawor fact. require the Order to be altered , modified or set aside , in wholeor in part., or that the public interest so requires.

The National Highway TrafIc Safety Admninistration, the federalagency with the specific statutory responsibility to regulate automo-bile trafic safety, has in'effect a regulation , enforceable by the assess-ment of penalties, that adequately addresses the problem that led tothe issuance of the Commission s Order. Therefore , the Commissionhas conc1uded that petitioners have adequately shown that changedconditions of law and fact and public interest considerations requirethat the Order be set aside.

Accordingly, it is ordered that the proceeding in this matter be

reopened and the Order set aside.

SENTRONIC CONTROLS CORP. , ET AL. 197

197 Complaint

IN THE MATTER OF

SENTRONIC CONTROLS CORPORATION, ET AL.

CONSENT ORDER , ETC. , IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OFTHE FEDERAL TRADE COMMISSION ACT

Docket C-3150. Complaint, Feb. 1985-Decision, Feb. , 1985

This Consent Order , among other things, requires three Chicago , IlL corporations andthree individuals engaged in the advertising, sale and distribution of an ultrasonicpest control product called the "Pest Sentry," to cease representing that the PestSentry or' any other ultrasonic pest control device wil eliminate cockroaches , ratsmice, and other such pests from a home or place of business; eliminate them withina specified period of time; prevent them from entering or remaining in an areawhere the product is being used; and serve as an effective alternative to the useof conventional pest control products. The Order further bars respondents frommaking any performance or effectiveness claims for ultrasonic pest control devicesunless they possess and rely on competent and reliable substantiating evidencewhen making those claims.

Appearances

For the Commission: Edwin Dosek.

For the respondents: Alvin Becker, Beerman, SwerdloveBerezky Berkson Chicago , Il.

Woloshin

COMPLAINT

Pursuant to the provisions of the Federal Trade Commission Actand by virtue of the authority vested in it by said Act, the FederalTrade Commission, having reason to believe that Sentronic ControlsCorporation , a corporation , International Marketing & Manufactur-ing, Inc. , a corporation , Unigraf, Inc. a corporation , Stanley Stewartand Anne K. Stewart, individually and as offcers of said SentronicControls Corporation and ofInternational Marketing & Manufactur-ing, Inc. , and Richard Muller, individually and as an offcer of saidSentronic Controls Corporation and of Unigraf, Inc. , hereinaftersometimes referred to as respondents , have violated the provisions ofsaid Act, and it appearing to the Commission that a proceeding by itin respect thereof would be in the public interest, hereby issues it,complaint stating its charges in that respect as follows:

PARAGRAPH 1. Respondents Sentronic Controls Corporation (SCeand International Marketing & Manufacturing, Inc. (IMM) are r


plaint 105 F.

linois corporations with their offces and principal places of businesslocated at 730 North LaSalle Street, Chicago, Ilinois.

Respondent Unigraf, Inc. (UnigraD is an Ilinois corporation withits offces and principal place of business located at 60 West ErieStreet, Chicago, Ilinois.

Respondent Stanley Stewart is an offcer of SCC and an offcer ofIMM. Respondent Anne K. Stewart is an offcer ofIMM. RespondentRichard Muller is an offcer of SCC, and an offcer and director ofUnigraf, As such , they formulate, direct and control the policies, actsand practices of said corporations, including the acts and practiceshereinafter set forth. Their addresses are the same as those of saidcorporations.

The aforesaid respondents cooperate and act together in carryingout the acts and practices hereinafter set forth.

PAR. 2. Respondents manufacture, advertise and offer for sale, selland distribute ultrasonic pest control products under the brand nameof Pest Sentry.

PAR. 3. Respondents, at all times mentioned herein , have main-tained a substantial course of business, including the acts and prac-tices as hereinafter set forth , which are in or affecting commerce , ascommerce" is defined in the Federal Trade Commission Act.PAR. 4. In the course and conduct of their business, and for the

purpose of inducing the purchase of the Pest Sentry ultrasonic pestcontrol product, respondents have disseminated, directly and throughtheir marketers and distributors, various promotional materials , in-cluding "suggested advertisements , sales brochures and promotionalpamphlets, which contain statements respecting the performance ofthe Pest Sentry ultrasonic pest control product. Examples of suchpromotional materials are attached hereto as Exhibits A through C.

PAR. 5. Typical statements in said promotional materials, but notnecessarily inclusive thereof, are

A. NOW ELIMINATE-FLYING and CRAWLING PESTS - RATS - MICE - RO-ACHES - MOSQUITOES - FLIES - WATERBUGS ULTRASONICALLY.

B. PEST SENTRY eliminates f1ying and crawling pests.

. .

safely, economically

. . .

in 2-6 weeks. WITHOUT.

. .

calling in expensive pest control services or spendingyour valuable time using poisonous powders , messy sprays , dangerous chemicals orunsightly traps.

C. You will notice results in a few days and within 4 to 6 weeks you wil be free ofhe entire list. of crawling and flying, pests as long as PEST SENTRY "stands guard"D. THE PEST SENTRY protects indoor faciJities from:

. Rats

. Mice

. Flies

. Roaches

. Mosquitoes

. Waterbugs

. Chipmunks

. Squirrels


197 Complaint.

and other kinds of crawling and flying pests. Research data available upon request frommanufacturer.

E. SAY GOOD-BYE TO ANNOYING PESTS! Let Pest Sentry eJiminate roaches, rats

mice, mosquitoes, flies, water bugs, and other crawling and flying pests from yourhome.

. NOW.. . YOU CAN PROTECT YOUR HOME AND FAMILY FROM FLYINGAND CRAWLING PESTS with an all.new Sound Solution to Pest Control!

G. One Pest Sentry covers a very large area , 1500 - 2000 sq. ft. (16 000 cubic ft. for

8 ft. ceilings). The Pest Sentry sound wil penetrate doors , dryvaU and plastered rooms.

H. PEST SENTRY eliminates setting unreliable traps , using messy and often danger-

ous chemicals and hard-to-control poisonous sprays.1. (Tlhe PEST SENTRY is a professional answer for homes , restaurants, warehouses

schools, farm buildings.

. .

garages , retail stores, hospitals , nursing homes-any indoor

location where flying and crawling pests are a problem.J. Ultra - Effective Pest Eliminator.

COUN1' I

Pest Elimination Claims

Alleging violations of Section 5 of the Federal Trade CommissionAct, the allegations of Paragraphs One, Two, Three, Four and Five areincorporated by reference herein.

PAR. 6. Through the use ofthe statements referred to in ParagraphFive and others not specifically set forth therein , respondents haverepresented , and are now representing, directly or by implicationthat use of the Pest Sentry:

1. Eliminates rats , mice , cockroaches, and other pests from a pur-chaser s home or place of business.

2. Eliminates rodent and insect problems from a purchaser s homeor place of business within two to six weeks.

3. Prevents rodents and insects from entering or remaining in anarea in a purchaser s home or place of business where the Pest Sentrydevice is in use.

PAR. 7. The representations set forth in Paragraph Six are falsebecause use of the Pest Sentry does not:

1. Eliminate unwanted rats, mice , cockroaches, or other pests froma purchaser s home or place of business.

2. Eliminate rodent and insect problems from a purchaser s home

or place of business within two to six weeks.3. Prevent rodents and insects from entering or remaining in an

area in a purchaser s home or place of business in which such produc1is in use.

Therefore , the representations set forth above constitute deceptivand unfair acts or practices.


Complaint 105 F.

COUNT II

Ability To Control Pest Claims

Alleging further violation of Section 5 of the Federal Trade Com-mission Act , the allegations of Paragraphs One, Two, Three, Four andFive are incorporated by reference herein.

PAR. 8. Through the use ofthe statements referred to in Par graphFive, and others not expressly set out therein, respondents haverepresented , and are now representing, directly or by implicationthat the Pest Sentry:

1. Controls effectively rats and mice in the home or place of busi-ness.

2. Controls effectively insects, such as cockroaches, in the home orplace of business.

3. Eliminates the need to use, in the home or place of businessalternative rodent or insect control products such as traps , powderssprays or other chemicals.

PAR. 9. In truth and in fact, contrary to the representations madeby respondents set forth in Paragraph Eight, the Pest Sentry:

1. Is ineffective for controlling rodents in the home or place ofbusiness. Any reaction by rodents to the Pest Sentry would, at bestonly be of short duration. Rodents habituate to ultrasound and wilreturn to their chosen nesting or feeding habitats even in the presenceof such ultrasonic products.

2. Is ineffective for controlling insects in the home or place of bus ness.

3. Does not eliminate the need to use alternative pest controlproducts such as chemicals, sprays, powders, or traps in the home orplace of business.

Therefore, the representations set forth herein constitute deceptiveand unfair acts or practices.

COUNT III

Area Coverage Claims

Alleging further violation of Section 5 of the Federal Trade Com-nission Act, the allegations of Paragraphs One , Two , Three , Four and

ive are incorporated by reference herein.PAR. 10. Through the use ofthe statements referred to in Paragraph

ive , and others not expressly set out therein , respondents haveepresented, and are now representing, directly or by implication1at the Pest Sentry wil effectively cover an area of 1500 to 2000luare feet in the home or place of business.

SENTRONIC CONTROLS CORP. , ET AI,. 201

197 Complaint

PAR. 11. In truth and in fact, contrary to the representations madeby respondents alleged in Paragraph Ten , the Pest Sentry will noteffectively cover areas of1500 to 2000 square feet in the home or placeof business because among other reasons , ultrasound:

1. Loses intensity as it travels;2. Is absorbed by soft objects such as carpeting, curtains and drapes;3. Is reflected by hard surfaces such as partitions , appliances , furni-

ture, cabinets and shelving creating sound "shadows ; or4. Is unable to penetrate to places of nesting and feeding that are

behind and within recesses of walls , under floors or within cracks orcrevices.

Therefore , the representations set forth herein constitute deceptiveand unfair acts or practices.

COUNT IV

Reasonable Basis Substantiation

Alleging further violation of Section 5 ofthe Federal Trae Commis-sion Act, the allegations of Paragraphs One , Two, Three, Four andFive are incorporated by reference herein.

PAR. 12. Through the use ofthe statements referred to in ParagraphFive , and others not expressly set out therein , respondents haverepresented and are now representing, directly or by implication, that

at the time of making the representations respondents possessed andrelied upon a reasonable basis for those representations. In truth and

in fact, at such times, respondents did not possess and rely upon areasonable basis for making such representations because , amongother reasons , respondents had not conducted appropriate tests orhad improperly applied results oftests done by others. Therefore , said

representations constituted and now constitute deceptive and unfairacts or practices.

PAR. 13. The use by respondents of the aforesaid representations

as set forth in Count I-IV, and the placement in the hands ofdistribu-tors and retailers of promotional materials through which others mayhave conveyed those representations, have had the capacity and tend-

ency to mislead consumers and to induce the purchase of respondentsultrasonic pest control products.

PAR. 14. The acts and practices of respondents , as herein allegedconstituted , and now constitute unfair and deceptive acts or practicesin or aflecting commerce in violation of Section 5 ofthe Federal TradeCommission Act. The acts and practices of respondents, as hereinalleged , are continuing and will continue in the absence of the reliefherein requested.

Chairman Miler dissented.

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197 Complaint

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Complaint 105 F.

EXHIBIT A-

peST SenTrypeST SenTry

peST SenTry

::%:

ultrasonic sound

t'eST SenTry

wave system

The professional

peST SenTry

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ultrasonic soundwave system

ELIMINATES FLYING AND CRAWLING PESTS... SAFELY, ECONOMICALLY

EUMINATES FLYING AND CRAWUNG PESTS... SAFELY, ECONOMICAlY

I:LlMINATES FLYING AND CRAWLING

t'ESTS... SAFELY, ECONOMICALLYELIMINATES FLYING AND CRAWLING ELIMINATES flYING AND CRAWUG

PESTS... SAFELY, ECONOMICALLY PESIS.. SAFELY. ECONDMICAlY

ELIMINATES FLYING AND CRAWUNG

~~~~

M1VfPESTS... SAFELY, ECONOMICAllY

peST senTry peST senTry peST senTry

will 1'0\ h fm people,

"'C"""p""i.ffMrn :imals

Y""d"Plant5 Ilowers

will notln\"rfe'e with electronic

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Complaint 105 F.

EXHIBIT B-

' semronlc comrOLS corpSurle 200 730 North LaSalle StreetCf,caQC!, 11I,,,all 6010 IeI"P""!3t21781-

NEI ULTRSONIC SOU D \lIIVE SYSn:M nll-nNAn:s

liTS , MIC , Ro,ClIES, FLIES, KJSQUIWES AND onlEll /'YING 6. CRI/LIlG YlSTS

Th.. n ..ly .LD.r"duc d PEST SE "lY (PS- 1500) broadc..to htgh In' notry ul'"ooDlc..a..eoon 0 "",ninuolly changing frequent)'. Thlo .erloualy afh.u th" .udltoryand " rvoua oyote",. of rau , "'Ice, reaeheo, !lIe. , "".qultoe. .nd ot""t flylo. andcra..lin p..IU.

While " lld"nt " peHI .. """'pl tely 11t1,,8ted In 2-6 ..eeka, PEST SENTI ..Ul noth.r.. p,wpl , hou.ehold pe'a, blrdo, folI a"I",.l., phnt. or llo..," , "Ieetrool..h".. , TV r"c lver. or rehted technlc.1 e'lulp,"en.. And...!' cr...I1o. Drflyin peH& ..Ill en. r . PEST SENTRY-pro.ec.ed .re. (I, oo to 2 000 .q. feet).

l1alns ooly ..att. of po..r , the PEST SENTRY 10 .0 .co""",ical .nd profe..1noal ..ayto ,,11JlnH cr...l1ng .Dd flying peH. ..I,hou. re.orting to b.ttln and lettiD&unrelbble trap' or .pre.dlng and opray1ng hord- to-conCTol pol.on..1I ch.udcah.

In .ddltlo"... PEST SENTRY h

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lnoUll and uoe. Juot plug It into any 110volt AC outlet , "-In on the 0..1tch, .nd l t PEST SENTRY InCToduce you to the

fH. nf u'llhlng .nto fully ..orun.ed , roln.e"an..- free device that protoct.you fro", c....!.ng ond flyl1' p HI 24 houra a day. PEST SENTNY h.. a red !nlc.torliRht and a 10.. bunlng oound fro", the elect",nlc compono'" (nut tn ult....ound)to .how that the unit 10 perfOI"'tn contlnuouoly. It 10 UL lht d (8SG4).

nu I'&ST SEN11Y an be odlpt d to DC opOtat1on and 10 .vall.bl In ".t.LU. PO"""aupplhl to pce' "port requtreo..nu. SURge. tOl ..oUII prl.e II 99.

I)"elop"d tor 1.-oor US", the P!'T SUrI'RY I. . prof"..loo.l an...r for ""_"..e.tau...nu , ...rehou.... I hoolo , fora building. ( hl.k " 'OOpl , ba",o, DUt-

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1l/6ed fll-c..W A. - MIll SUPLIPAl. HA

WJJO/ l.J. 6- hI YORK 11710. BElOR. NE . SUnsS-2262

rlthro..",t..

..,

. ".-rt, "" . ..rl

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;;.

:"d _.."h""".. , tb"1&1 1" ""......1n.t d t"rtU1z"...

1...y Ult.-o",1;:

W. bad "'. ot ..... .."do ""

lied tll. "!'.t Soo .-th..y rod_t"tb" p&ek.n

Sh, " OlIO 1".1" the.. prob.L..

ot 1.._t.."..""..dno111" ...aut....

for..ySO""(!""v" Ul\t.

, "

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b." "

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. - "'.. "..

,,00',o 0St..".'-'" ",a ."1' t.1.\1"1"" t"" "",,t

"'.' "".

_0. ,0' '0' 0 O"C... ."fau "c." Sy.t.'"

.,,"1 "

Jo' ode"ta. un"- '0."'"

no" .eennd" 1" So

",a"e..ac.

"''''

..\l1u..on w..t."et. S.."

)'

to atat." 1.".

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208DF1RIIL TR

IIDE COMMISSION DECISIONS

COlD plaint

EXHIBIT B-

qj\

Senrr;gUile 56ryc conrrOLS'''CODO llh''I ''0rth loSa! COrp

Q ""C'Dho le5tf€'el"" /J')I

WDOROAP co....rTON . WISCONSIN :m1' THf""ON( ( '4)377..

~~~

arch 3. 1982

Gentlemen.

I would like to express our delight with the perfect resultllof OUT pest sentry. For over twelve years W have had field",ice in our basement "nd each year hired a peEt control Hervice.Af"er three months use of our pest sentry we have had nofield mice , Bpid rs or bugs in our basement area.

The r sults are pnenomlnal. 1 can only applaud the fantaatlcresults we have had with this new innovation in pes control.It is simple to use, neat and clean and most important r1dathe property of th nt5 in a most efficient manner:

May we add our complim nts and applause to this sensationaldevice. It really works and solves the pest control proble

--'

d"'YCsZ;;/ti'1' c!-;

Rdk "Y

7/Y f(. "r FebStewart. 5th, 1902

.t f' :.'e h.)v a . bel) i ./ 'I1'''rtm horribl

. "'

''/'!'iJ nt i.lf'IIE'.I in lJd :Btlt io.l

Po", .ttf'r. n", "-:)::1' lie to Of" -1oa'"-'L :.o , I!O erJj

:: :;

tllel' . th,...c Ci e$ il'

Pa" 0 1'''3 , ba 5 1/J y, laz 1' "!:-'de ;;:t9, B': le'-veOl E..';'orted Y lJlt

1,, : (' rUn YOwr ,boilb sPr..i!d

to the J./J a s alJrj o lj'lWjd'"QrJ.,, ntQ StOl'l. j lJeL'eJ:b .:e O!'a. "a.I1.'J.n2

' o :dji.t"l ; SUnd4i;ff!

, .

1 porch"..ed youx- Pe..t Senrry in New York au!, ;rour - i il' eedl:s9In Nove",b"r of thi" y".r; lInd brought it

d lIO""tIm "'.Jthout . e-"cell

my ho"" 1n Mlx-1nfque. A",ozJngly I f d to SJnc Stop -

~~~

"bl"; fox- thex-e 10 . d"c1ded ;el1e:Dd t "ery

erely, X-cnte betw""n thh .nd the p.st

r.,, y lit".u. E".('i tAA .x-ytruIYyour.

(.

. JOh

, .

P:1C)

ry, Df."'.ntrtln!que9721J"neh West lodl".

"e""""r28 1981

;"ntle""n:

2J-J/JCi

(lsC liO':dY, 1/ Y ,

- . 11106

!O5 P.

197

complaint

EXHIBIT B-1-4

February 12 1982

1\ BeemB to b

,,"'-

Dm Mo. S,"woo', mo"oo '0' h

=;,

, '0' ", o:h'

l!wUched l1nil8;!hi!e w

:nd begi;J..

ts 8WII e (:o..

d 1 t en 'p'o,,,, :":"ld hm 'n

. ""oP:; '0' ," h.. ::"

men! units h lugged my

d of the ho ..nHur.. etc

w8!1B

to the eem that the u

;eplo',o'''m "0"

, ,

' or ", '0"0"S'o,mly yo "

--

'"""'0"'"'

/C arles V. Feel y Jrbuy anolnt'r unit too II

O.

~~~

illinOiS 60513

SI would like tworker

Brook 1.. .WQuid a cpO"''''Y

fLeCe

"," ' "

't J..4. " J,

"' ,,' "'

tZ

"-

"-4-, 4 f,, P'"'

I" -(0-

f)7:""- ;j'l"'

!r

'-,-

A ,

u.k. f4. -0''"

-- "- .!

f' "0 ,J .s --",';7

'"

V, 00.

"'-f,,j'u

1u

"- :!

'7.. f..:- .J"J

..7 'TI""'i'

I'I"S-

My?/? M.v.rHh'w'

1330,

9",1'

1\2

/'Q.(ot/Qd.2Y


Complaint 105 F.

EXHIBIT B-

- --.c -Qb .;.obB"'1Do 4'..- I'.L

1?:?" =c-'to J?/f 0-0 ;n"j "t ..

='

fnf;?"j",o 8 gLgu u 1?rs iP 0 0 a. 6.u. f?" gl2'D

1"2:9 t"LJ"'O.c ,=of

..,

d?' -t); O1- j 5.nu

, "

QZ f?z

~~~

IL:2QE'2j

8""

,,-).",

oJ

. \.

"".LV

..\

).D

,,,

0 CO-p,'

,,).

\91

,,-,,\,,\''

1''/"

C\SDr:S\01'

Co,"'Dr; . t'1\\1" ;\3.\"1.

tl

coU'F"11'.l'r;v

'\C..1'. .\0"

'1).'111-

\I\II\''i.

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~~~

SEN'I'RONIC CONTROLS CORP

, ET AL

197

COJrJPla.int

EXHIBIT B-3-2

, f .cJrt

l t! if!

213

214FEDERAL

TRADE CO""'MISSI

Dj" CISIONSCOO1 alnt

EXHIBIT B-4-105 F

WITHOUT...

callng In expensive pest control services or spending your valuable time usingpoisonous powder. messy sprays, dangeros chemicals or unsightly trps.PEST SENT 15 0 ccmpa (7\ ' W . D. x:W- H. ec moln 1m PEST SENT Wtrsolc 5o 'N!rlc, soid-ste $'em that brcosts hlOh 1f1 1t Sysam P!ec fr t52C lee! In tTy ultlc

-:

01 a collr"olly chCJing fr. loot!onThePESTSfNTINCJesooooty4 delThe ..s s.CU/y allee the CPdltor CT n8f sy c:l po. 1I"s a Pfde lonl an 10 1h t:o/ pI

..

tO. mice. roches. ties, ffC1QUllom (I ct lem pe colfoj, The PEST ,SENl hi peec !o ha.,.ing ax flyir. pests. -Residant" pam co be tallly bo5f,rnanb . gmoges . worehoos8s . foctor&1, scoos...,\mlnoI'1n2Io6~s, 'fwilb6frdthec relail slores. enclosed form bulldlt's. 1o servicetire Ust l.sJrables lor as loo as conTinu 10 US foI1li6!. hols c: nuiro hO - my 1rx k;th PEST SENT Plug1no Into my tK Id AC ouet. th tion wh crlng or flyi"O pe a6 0 prem

197 Complaint

EXHIBIT B-

peST senTry ,'mply p'o,' ,,,, "y lID "It ACoutlet. It uses only 4 walts of power--aking it an economical aswell as professional way to eliminate crawling and flying pests

Pes semrvThe Prfss.lonlUltrasonic Sound Wave Syslem

semronlc comrOLS corp SUI!e 200.730 N. LaSalle 51 . Chicag. IL (io:. (312) 787-1511

peST semrywillnOlh.rmpeoPI.

hDU"hOldpel"

Pf

'''m m.''

planu. 110"""

PeST semrvwillnalinlerl.rewith.leclron,c

b"r l.r .ndl"."l.fm'TV..(ePIIOn

Or other 'oph;,!,(.t.

electronic .viLe;

peST semrv.Iimin.le,..ttingun,,'i.ble

I"P5, usmg m."

and aHe.. d'''gNDU$

chenllul..ndh.r"

IQ.Mtml

po"onau, '0"'%

c,,T";. Product I. LI.t.d byUNDERWRITERS LABORATORIES INC.

and B..,.",. M..1o, 85Gb

THEPEST$ENTIlPrJIOCI''''l'',l:cillhe,1r01115 -Mo';ulloMice .Walerbl;l'Fllel .Chlpmunkl

.ioachel . SqullTl.mdDlheki o!c\Q'llntmdflV1ntP"'' Re"'chdoloa""iloblecpn1O",

SPECIfiCATIONS:

-c.lTrn-\:1'

7",w.A\. D.J\'nsUC\kN,WCVd

,"-

OI""""r1.,'Iy

--"""

:J.OO- WIOJKI

INSIAllAON:s,rr Y''''IIQntPES1SCNTmd plv, " in!D any )"( "" At Dlel1",n"\e,wilch'O and""e.uIhPledir;lcoIorl'Qh'IJ'''. \bwollhco_ylowbwlC:DmI""trtholec cn'ccrr. ..nl'wIICh"nolIheulto""omolel "fi '1es=wlintonolly''"pe

A WORD Of CAUTION:Mlok"'2\(J6"",,,,k"OlOlelelyeliMinae\.:fuwlinoandllV1ntpe

"'\""lIl!a;nl..nesT, h'd'ntpl'"cr lee,no sTC"'''''' will er" a

h'Qhd"OA€o(poinbo",1h0''' up lhell ")" . wa6' cn SO", \blJ""illnolir:er", inarewOOY' ond wilhin 10 6 -, yo willb.. ""o!lhPenl"eli"oI=wli'"cnnyi YJpmrnlo"C PfS1SCNiIN"orx:

216

wU)

o (!

U) oe

FIWERAL TRADE COMMISSION DECISIONS

Complaint 105 F.

EXHIBIT C-

::

-e

G) ::- 0

G) 0

0";G)

--J!en en

G) s: C1 c

'EE:tCD - ct7 G) 0 .- 0en- 0CD E 0. -o.:"i-00G) .. .,0

G) s:

o :E

- c: .


197 Complaint

EXRIBIT C-1 (CONT

1W-''', -II,..J! i I i !;f!i

. !

It!!

JIHH

:'

!il. I!.

II!

f liJ!J ilf JI fiu

Ii ! I d u h

II!!111

H Iii 1!lf

Lt Hi. I HI Pi!

Iii!.! l!jlll

0. Iii ili hi HI c. ill

. '

I" a!

t t !hh ' !hJ IIiH'S I g jftf

I i

)!!

t 1!Jj Hi! r

Ililli Jlltll ! lr!1

218EDERAL TRADE COMMlSSIONDECrSIONS

'lfT.ODUCTO.y OFF..OlfL Y

PEST SENTRY simply plugs into Ony 110 vallA( Outlet

It 1.$&$ only 4 WOI'$

of POWf!r -making it on economicol 0$ well (:1 profes-lional way 10 eliminate Crawljng ond flying

;nSllfl

THPfSTSENIJ"""",r..-

.. ...-"". .

""tw

.. "

a.-

.... ."""''''''' "",,.."'""' """". ..,"

INS

-""'

''-''S' ''''rI'""P'""""" ,;c""..:"",,,,"""''''w.'"oc On cn""

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""On """"Q-,.."""c""""

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OICA

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lo"'"""'""""

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NEUKAM

ROTHERT 5&TPhone5J6,J913-HoIJnnd. '''dian"

So M,,

..

Mo_. 7h"n A. Hord"". Sfar.

Complaint

105 P

EXIiBIT C-

SAY GOOD-YETo ANNOYING PESTS!

L.f'iSlr.tOt .t."Iltr)'ll

:::"_.. ,...,-" . , '.. ' . ---. -...,. " ...." -... .. - -'.,. .::::_ '., :':. ;"'-

'9.IrO.f

~~~

H.A.'?:Y

':?'::" ---

197

----. -----.--

_--_.__n

'--"- . --

Complaint

EXHIBIT C-

,/ ,'"

c,"

"' "" .. ~~~~~

c;\r\y. ; J

~~~"\'; \\.

t"'-\.\.

..,\\.;.,.

ot"

(',,

Th. Pf r S!NTln". t"Mp." . '0 .1 "'"9"-\

'-\ \)\' . .....'"

.h., b.o.d..,.. h.gh ,n.on..'. u lh....".e

......., ...,'"' ,.."..".. ,.........,\\.' - --

' ""0",".

...."...,

0'''''''.''0"'

\)

- ...'.m"!"' ''ng

p.,,,

, PfSTSENTRVw..."donTp..",n2CbW""&P''''.'''. SOO'C

/" ,q

h..u h"m fu,'h"'p,,'.nv...om

----

PESTSfNT t"...d""u..Idull". , onv..h,'."u"....",,,br...;;u

'- --

Reg 599.

...,'""." ......",. ..,

$79ondh..",., U..,ool,

".."

,o.-., SALE.WITHOUT...

";;:,

::l;

~~~~ :::; ::p :;: ~~~ ::!:.:::

&."..I.,,,,TII..,.o',ooo,o Ph."OO".,,,,,'.d.I.,,.on.,d...,..HOURS M- I 8 JO-6 JO SAT 8 JO.6 SUN 10-

7532 N. ARMENIA 933. 1500IB.",nn SI'9 dW.'.'"

'-/

NEW!Pest Sentr".",o,," , "'0.'".'" ,

."" ". '"' ..." .,...."

",..,JrJo..F,u-.h'''- WW""'",.M""""',,,,,,,,,,

."'","" "" p""'" .",

"'\IIIO b

ULnA.EfFECTIVE Pest EJimR1lor.

.., ...,. '-'''''''''''.

' ".'''I."d .,.

-... ,.. " ..."."", ,.. .,.." ."-",,,

'"'''9''''' "",n o' '.

.~, ."""-

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h,,',.

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h''''''

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h'.

,'''' ,,,,,,,_'..:::::::, :::::. ::::. ::;:, :::.. :.... '" ""' " " '''' '- ,.. ""..- , ""."",.

.",,,,,,,''',d.

,.,,'

Ju.

',,'''.",,,,,. .,,. ' ,...

, "1I,'

,,,,,,. \\(\;': ' . \. :::

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P$1 OOO "II.

Shop

Hes

ss For Y

our

Nee

ds.

(lJ\

\?\

9'Y

'\!

G

. .

. Will no!

'-iharm people.

pets, Of plants. . . "

. Will not interfere with elec-

tron

ic a

larm

s O

f TV

rec

eptio

n. .

. Eliminates un

reli

trap

, mes

sych

emic

als.

SAV

E

$19!

Pest Sentry Eliminates

Fly

ing

and

Cra

wlin

g P

ests

Eliminate resident pests in 2-6

wee

ks. H

igh

inte

nsity

ultr

ason

icw

aves

ser

ious

ly a

ffec

t the

aud

.itor system of rats. mice

roac

hes,

flie

s. m

osqu

itoes

and

othr !tying and crawling pests.

HA

WA

R

$80

reg. 99.

'0

197 Complaint

EXHIBIT C-

Pe sery Pe semry Pe wlllnO!ln'e .""mlll(Du",..r anflce

"".

TV_

8HmII\M.."lU'-

""""'

PtPI..

'$::

only tn. wn..- QI-

~~~

1Y!

"" -

.1(olUD8--JOC8-.-"':z.ue

...

.7U_-.1'-lkClaVI

OCTOBOOII

'.'

""--...."'wu.

222 FEDERAL TRADE CDMMISS)ONDECISIONS

Complaint

EXHIBIT C-

SAY GOOD-BYETO ANNOYING PESTS!

Let PEST SENTRY eliminaeroches, ra, mice, mosuitoe, nles,

waterbugs and oter crwling and IIng

pe fr your hoe.

""'Son..I0.-.""""..-r;' i'..

~~~ ""."

...,. un" ",,, b",,," "'

!""

.ncl """'0010 w..., !"""'".,.....,I"""....UI"".onlc......c.u""""dL.-,1..T""",,,..oo,c.....,.IIK':;h

~~~ ;;. ~~~

. 0'

""u"og'''md"",,lo''. R.''','',,".""u.. ,""

. ,..,.... ='="-

''In_ ,,,,...,r.. V-,,s,M,,""'""""PO""'''''do ''_al'""olu"_""Y""wtll_-uttI.2-t_.,nw

:: . ; .: .

"'boor.n""JogPH"

"""""N' ,,,,u,"n,,.,,.,.,W..iI.oo""'gh',,oootol

'::'

;f,.

'", ':, "

"' :;n,

~~~~

r.n\ P1f"l.....'nl"K"""""'"'pro''','''''.I''.'''

Ir...mpl.oo ocon,"., 10_.....p'ug, In'o.n, 1W'o"AC "'"., YOU""",,,,,,,,p.,,s.n'''''''y.ndnlgnt beu.." ,..., 001,

' ...."

01_.,cS"C8'. bI"'"P"""-""",",'.1100'''. ,"0'.''.''',,,",,.,,,.,,.,,..,O",rv ,,lc,o.....

..."aM bo'gl.,.I.rm O"','"HO,"

""."\. ",",'', ,.. """". .."

",of""".

AtlANmln-ddl."Viliog.

"'ooa,quon

Di,lriodb,(J""D!I1"""". P",.;ppqny.

105 F.

l.t V"l'- '-'-.11 -'1 '-.1'''' '-VIH. , '''1 r:U..I.

197 Complaint

EXHIBIT C-

to\

\\"

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..'" .,."' ... "", ... ..:" '\\." "-,,,. "'

\c:.

..\

f; ,,

~~~

"- ..t"

... -'- "--'""

..,... C

.. ""'" -'" ..\\\.' ~~~~~~

Pe serv

-----_

---t;pr"-

...

A"a,lable now at rhesepartie,pating Dealers'

Pe

-'..--'- --..::::-=".' ...

CAROL STREAM OOWNERSOROVE laORANOEE"'--c..., ("""Con'" ...wE '* -.. "'100

-'" , -..."'

DARIEN HINSDAlE lEMONT-..-_c..... '-1_".""r..-. 3!S""- 'OI. 'OOs.S...,

PLAINfiElD

_SIVllU.'ARk

'D'''SI


Decision and Order

DECISION AND ORDER

105 F.T.

The Federal Trade Commission, having initiated an investigationof certain acts and practices ofthe respondents named in the captionhereof, and the respondents having been furnished thereafter with acopy ofa draft of complaint which the Bureau of Consumer Protectionproposed to present to the Commission for its consideration andwhich , if issued by the Commission , would charge respondents withviolation of the Federal Trade Commission Act; and

The respodnents , their attorneys, and counsel for the Commissionhaving thereafter executed an agreement containing a consent orderan admission by the respondents of all the jurisdictional facts set forthin the aforesaid draft of complaint , a statement that the signing ofsaid agreement is for settlement purposes only and does not constitutean admission by respondents that the law has been violated as allegedin such complaint , and waivers and other provisions as required bythe Commission s Rules; and

The Commission having thereafter considered the matter and hav-ing determined that it had reason to believe that the respondentshave violated the said Act, and that complaint should issue stating itscharges in that respect , and having thereupon accepted the executedconsent agreement and placed such agreement on the public recordfor a period of sixty (60) days , now in further conformity with theprocedure prescribed in Section 2.34 of its Rules, the Commissionhereby issues its complaint, makes the following jurisdictional find-ings and enters the following order:

1. Respondents Sentronic Controls Corporation and InternationalMarketing and Manufacturing, Inc. are Ilinois corporations withtheir offces and principal places of business located at 730 NorthLaSalle Street , Chicago, Ilinois.Respondent Unigraf, Inc. is an Ilinois corporation with its princi-

pal place of business located at 60 West Erie Street , Chicago, Ilinois.Respondent Stanley Stewart is an offcer of SCC and an offcer of

IMM. Respondent Anne K. Stewart is an offcer ofIMM. RespondentRichard Muller is a director of SCC and an offcer and director ofU nigraf.

As such , the individual respondents formulate , direct and controlthe policies, acts and practices of said corporations , and their businessaddresses are the same as those for said corporations.

2. The Federal Trade Commission has jurisdiction of the subjectmatter ofthis proceeding and ofthe respondents , and the proceedingis in tnp. D11hlir. int.p.rp.

SENTRON1C CONTROLS CORP. , ET AL.

197 Decision and Order

ORDER

PART I

It is ordered That respondents Sentronic Controls Corporation , acorporation , its successors and assigns , and its offcers, InternationalMarketing & Manufacturing, Inc. , a corporation , its successors andassigns, and its offcers Unigraf Inc. , a corporation. its successors andassigns, and its offcers , and Stanley Stewart, Anne K. Stewart andRichard Muller , individually and as offcers of said corporations, andrespondents ' agents , representatives , distributors , and employees, di-rectly or through any corporation, subsidiary, division of other devicein connection with the advertising, offering for sale, sale or distribu-tion of the Pest Sentry (PS-1500) or any other pest control product inor affecting commerce , as "commerce" is defined in the Federal TradeCommission act , do forthwith cease and desist from:

A. Representing, directly or by implication , that respondents ' PestSentry (PS-1500) or any such ultrasonic product will:

(1) eliminate cockroaches, rats , mice and other pests from a homeor place of business;

(2) eliminate rodent and insect problems from a home or place ofbusiness within two to six weeks , or within any other specified periodof time;

(3) prevent rodents and insects from entering or remaining in ararea where the ultrasonic product is in use in a home or place cbusiness;

(4) protect, from rodent and insect infestations , areas up to 15(square feet in a home or place of business , or within any other spe'fied square footage area;

(5) serve as an effective alternative to the use of conventiOJ

products such as sprays, powders , traps or other chemicals in pro'ing protection from insect and rodent infestation.

B. Representing, directly or by implication, any performance cacteristic of any pest control product unless at the time of masuch representation respondents possess and rely upon camp'and reliable evidence which substantiates the representation.dence shall be competent and reliable only if tests , experimentslyses, research studies, or other evaluations are conductedobjective manner by persons qualified to do so , using procedurferally accepted in the relevant professions or sciences to yielrrate, reliable , and reproducible results.

C. Representing, directly or by implication , that any pest

, -

" '0 pffective in providing protection from insect and

FEDERAL TRADE COMMISSION DECISioNS

Decision and Order 105 F.

infestation in a home or place of business unless at the time of makingsuch representation respondents possess and rely upon competentand reliable evidence which either directly relates to such home orplace of business use conditions or which can properly be applied tosuch conditions.

PART II

It is further ordered That for three years after the last date ofdissemination of the relevant representation respondents shall main-tain and upon request make available to the Federal Trade Commis-sion for inspection and copying copies of all materials relied upon to

support any representation covered by Part I ofthis Order, and copiesof all documents in respondents' possession that contradict, qualify,or otherwise call into question any such representations, includingcomplaints from consumers.

PART III

It is further ordered, That respondents shall for a period of threeyears:

A. Distribute a copy of this Order to all managerial employeesistributors , independent sales agents and retailers present and fu-ire.E. Notify each present and future distributor or sales representa-'e that the failure to comply with the Order may result in cancella-n of the distributorship or other sellng agreement withpondents.. Require all distributors , independent sales agents and retailerseport to respondents semi-annually all consumer requests to re-i and their action taken in response to such requests.

PART IV

is further ordered, That for a period of ten years:

espondents shall notify the Commission at least thirty (30) daysto any proposed change in the corporate respondents , such asItion, assignment, or sale resulting in the emergence of a30r corporation , the creation or dissol utian of subsidiaries , or1er change in the corporation that may afIect compliance obli-arising out of this Order.e individual respondents named herein shall promptly notify,mission of the discontinuance of their present pest controlbusiness or employment and oftheir affliation with any newcrol product business or employment, stating the nature ofess or employment in which the individual is newlv p

--

SENTRONIC CONTROLS CORP. , ET AI"

197 Decision- and.Order

as well as a description of duties and responsibilities in connectionwith such new business or employment and the address of such newbusiness and employment.

PART V

It is further ordered, That respondents shall , within sixty (60) daysafter service upon it ofthis Order, fie with the Commission a reportin writing, setting forth in detail the manner and form in which it hascomplied with this Order.

Chairman Miler dissented.

FEDERAL TRADE COMMISSION DECISIONS

Modifying Order 105 F.

IN THE MATTER OF

CHEVRON CORPORATION , ET AL.

MODIFYING ORDER IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THEFEDERAL TRADE COMMISSION ACT AND SEC. 7 OF THE CLAYTON ACT

Docket

(.'

3147. Cunsent Order, Oct. 1984-Modi(ying Order, March , 1985

After a "Request For Termination of Hold Separate Agreement" (Request) filed by arespondent in a divestiture order isued on October 24, 1984 , had been placed onthe public record for ten days and no comments had been received , the Commissionreviewed the Request and concluded that the public interest warranted modifyingParagraph II(c) of the Order , so that the Agreement To Hold Separate, attachedto the Order as Appendix 1, "shall continue in effect until such time as Gulfs stockinterest in Colonial Pipeline Company has been divested. " The Commission heldthat the Hold Separate Agreement had accomplished its primary objectives withthe divestitures of Gulfs refining and marketing assets in the Southeast and of itsinterest in ColoniaJ Pipeline Company, and the potentia! harm resulting from thecosL" of continuing the Agreement outweighed any further need to maintain it ineHect.

ORDER MODIFYING DECISION AND ORDER ISSUED OCTOBER 24 , 1984

On February 21 , 1985, respondent Chevron Corporation ("Chev-) filed a "Request For Termination Of Hold Separate Agreement"

'Request" ). Since Paragraph II(c) ofthe decision and order issued onctober 24 , 1984 ("the order ) incorporates the Agreement To Hold,parate , which is attached to the order as Appendix I , the Requesteffect, seeks modification of the order to terminate the Hold Sepa-;e Agreement. The Request was on the public record for ten daysi no comments were received.aragraph II(e) of the order provides that the Agreement to Holdarate "shall continue in effect until such time as the Schedule Aperties have been divested. . . ." As the Request notes , the Hold,rate Agreement is not limited to the assets that Chevron is re-ed to divest pursuant to the order but is applicable to all of Gulf's,stic oil and gas assets and operations. Chevron has now submit-ivestiture applications covering all of the assets it is required tot and the Commission has approved the divestitures with thetion of the divestiture of 51 percent of Gulfs interest in the WestPipeline Company. The latter divestiture proposal is awaiting\ission action.r reviewing respondent' s Request, the Commission has conclud-; the public interest warrants reopening the order and modify-ragraph II(c) so that the Hold Separate Agreement will

CHEVRON CORP. , ET AL. 44::

228 Modifying Ordey

terminate on the consummation of the divestiture of Gulfs interestin Colonial Pipeline Company. The Commission has concluded thatthe potential harm resulting from the costs of continuing the HoldSeparate Agreement outweighs any further need to maintain it ineffect. The Commission is of the opinion that, with the divestitures ofGulfs refining and marketing assets in the Southeast and of its inter-est in Colonial Pipeline Company, the Hold Separate Agreement hasaccomplished its primary objectives. On the other hand , Chevron hasdemonstrated that the continuation of the Hold Separate Agreementwhich is applicable to all of Gulfs domestic oil and gas assets andoperations , is imposing considerable costs on Chevron and Gulf. Thesecosts have been estimated to exceed $1 milion a day and are beingincurred because the Hold Separate Agreement prevents the realiza-tion of effciencies that are expected to flow from integrating theoperations of the two companies. Such effciencies include those thatcan be achieved in combining the Chevron and Gulf work forces;increasing operating effciencies and eliminating the duplication offunctions resulting from overlapping operations in various areas; andcombining desirable aspects of the technologies ofthe two companies.Chevron has also demonstrated that the Hold Separate Agreement iscontributing to the loss of a considerable number of skilled employeeswho are diffcult to replace and is adversely affecting the morale andproductivity of Gulf employees.

Accordingly, it is ordered that this matter be, and it hereby is

reopened , and that Paragraph lI(c) of the Commission s order issued

on October 24, 1984 , be, and it hereby is, modified to read as follows:

(c) The Agreement to Hold Separate, attached hereto and made apart hereof as Appendix shall continue in effect until such time asGulfs stock interest in Colonial Pipeline Company has been divested,and Chevron and Gulfshall comply with all terms of said Agreement.

Commissioner Calvani voted in the negative.

"'"u FEDERAL TRADE COMMISSION DECISIONS

Co-fuplaiht 105 F.

IN THE MATTER OF

COMMODORE BUSINESS MACHINES, INC.

CONSENT ORDER , ETC. , IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OFTHE FEDERAL TRADE COMMISSION ACT

Ducket C-3151. Complaint, March 1985-Decision, March , 1985

This Consent Order requires a West Chester, Pa. marketer of computer products

among other things, to cease, in connection with the advertising, sale or distribu-tion of the Commodore 64 or any other hardware or software computer productrepresenting the availability or capability of a product, unless at the time of theclaim the product is available for public sale in reasonable quantities, or has theclaimed capability. The Order further bars the company from making any repre-sentations concerning the future availability or capability of a computer productunless the firm has a reasonable basis for the claim at the time the representationis made. Respondent is additionally required to maintain specified records for aperiod of three years.

Appearances

For the Commission: Reid B. Horwitz and Joel Winston.

For the respondent:

Chester, Pa.James R. Wendelgass in-house counsel , West

COMPLAINT

Pursuant to the provisions of the Federal Trade Commission Actand by virtue of the authority vested in it by said Act, the FederalTrade Commission, having reason to believe that Commodore Busi-ness Machines, Inc. ("Commodore ), hereinafter at times referred toIS respondent, has violated the provisions of the said Act, and it'ppearing to the Commission that a proceeding by it in respect there-fwould be in the public interest, hereby issues its complaint stating:s charges in that respect as follows:

PARAGRAPH 1. Commodore is a corporation organized, existing andling business under and by virtue of the laws of the State of Dela-

, with its offce and principal place of business located at 1200ilson Drive, West Chester, Pennsylvania.PAR. 2. Commodore has been and now is engaged in the business mufacturing, advertising, offering for sale , sale and distribution of, Commodore 64 computer and other computer hardware and soft-re products to the public.AR. 3. Among the products available as accessories for computers

COMMODORE BUSINESS MACHINES, INC. 231

230 Complaint

are microprocessors , which enable the computer to utilize differentsoftware operating systems. These operating systems allow the use ofvarious software programs. One such operating system is CPIMwhich enables the computer to process hundreds of software pro-grams.

PAR. 4. The respondent, in connection with the marketing of com-puter products, has disseminated , and now disseminates, advertise-ments and promotional material for the purpose of promoting the saleof Commodore products.

PAR. 5. Respondent mai tains , and has maintained , a substantialcourse of business, including the acts and practices set forth herein

in or affecting commerce , as commerce is defined in the Federal TradeCommission Act.

PAR. 6. Typical statements and representations in said advertise-ments and promotional materials , but not necessarily all-inclusivethereof, are found in advertisements attached hereto as Exhibits A -

PAR. 7. Through the use of the statements and representationsreferred to in Paragraph Six and others, respondent has representeddirectly or by implication , that:

(a) The Z80 microprocessor, for use with the Commodore 64 comput-, was generally available for sale to the public.(b) The Commodore 64 computer could be equipped to use the CPIM

operating system , and thereby process CP 1M software, through pur-chase of the Z80 microprocessor.

PAR. 8. In truth and in fact:

(a) At the time of the dissemination of said statements and repre-sentations , the Z80 microprocessor for use with the Commodore 64computer was not generally available for sale to the public.

(b) At the time of the dissemination of said statements and repre-sentations, the Commodore 64 computer could not be equipped to usethe CP 1M operating system , and was therefore incapable of process-ing CP 1M software , because the Z80 microprocessor was not general1yavailable for sale to the public.

Therefore , the statements and representations referred to in Para-graphs Six and Seven were false , misleading and deceptive.

PAR. 9. The use by respondent ofthe aforesaid false, misleading ancdeceptive statements, representations, acts and practices , has had th,capacity and tendency to mislead members of the public into th.erroneous and mistaken belief that said statements and representations were true and complete , and into the purchase of substanti2quantities of respondent' s products by reason of said erroneous anmistaken belief.


Complaint 105 F.

PAR. 10. The acts and practices of respondent, as herein allegedwere and are all to the prejudice and injury of the public and ofrespondent' s competitors and constituted , and now constitute , unfairand deceptive acts or practices in or affecting commerce in violationof Section 5 of the Federal Trade Commission Act.

230 Complaint

ATTACHMENT A


105 F.

COMMODORE-:TU

- - - - -

Base Pr""-= - 5595Ad"a""oo 1 Compu'

.!~!

BUIII.onU..rMemDr"ProgrammableR"al Typnler KeOOrdGraphICChar.cte"promK9rd)Uppr.;,LawrC.",L"lters

."mum

' _

12'" P"'("tv PIr On""oQFotu

Sond GaneralOr

YES (B6 ""l

17OK/100

Complaint

APPLEII!

18M

5 ,!X

TANDYTR5.00. 111

AlAHIem'

"'"

YESf52'''1

Uppr Only14JK

16KYES YES YlSYESIB3.""1 nSI6s.ey1 Yl5rbl'''1NO NO Yl5YES YES YES

--fJ_

M'IS'oSvntl',,er- H,-FIOutpulVid,..!u""

NOuTu.._Inp.I!OulpuIFtlu""

Smar! Pflph",t,Solt.",fetu""~M' ()tIOICNr, (XPoIuI

- _

YES Y S -

- "!

YESR_!"".J' I9B_ Df_- ""fUnc"'f7 ih64'sprmBol wr';

Multiply what the Commodore 64. giveau (and sa youl by the number of com-

puters you re planning to buy for your schoolsystem. The numbers you wind up with will beImpreive, to sa the least

Beuse with 64K of memory and a sug.gested retail price oj $595, th Commooore64IS les than half the price of competitive unitsthat can t measure up to its por.

Which , of cours. means you can gettwice as many students behind Commodore64s for the same amount of money.

A tact that should pklsestudents, facul.ties. school OOrds and, espeially, taxprs.

TAP IT INTO YOUR PRESENT SYSEMRJr yers, Commodore has bon a major

force in educational computing.To take advantage of thiS dominance,

the Commooore 64 is PET'" compatible. Whichmeans that with the optional PET Emulatoryou can use most of the PET prorams youmay alrey hav.

So you not only sa money on softre,you sa the time it take to build it up.

Naturally, beuse the basic price of theCommodre64 isso la, yo can ad periphralsnd still relize COsiderable ecnomies com.

pared with other syems.If your nees include proramming in

PilOT, lOGO, BASIC or USCD Pascl. the 64can run them all. Plus hundres of prorams inCP/M' with the optional Z80+ microproesr-

What all this amounts to is that the soH.ware avilable for the 64 is virtually limitles.VIDEO QUALITY THAT COMMANDS ATTENTION--e has eXcePtlOnally highvideoresolution. including 16 available colors. 3D Sprite

~~~

ge 01 charts and graphs

,co YES

YES

EXTHA NQ_

All of which combine to make the 64as visually exciting a computer as you ll findanywhere

And. while you might discourage it dur-ing school hours, the Commodore 64 will playan extensive assortment of game cartridges,besides running games which students can in-vent themselve.

SOUND TO TEACH OR ENTERTAINThe Commodore 64 has excellent sound

effects in its game mode. As a music synthe-Sizer, ItS sound is Increfble

It feature a built- in ADSR (attack. decy,sustain. release I envelope, 3 voices (each witha 9-tave range) and 4 waveforms

And it shows you your music note by noteas you compose or play back . as well as beingadaptable to playback through an audio system.so the whole class can hear what's going on

SAVE NOW FOR A BETTER EDUCAT11 you re looking to upgrade your prent

computers or buy computers tor the first time,look long and hard at the CommDdore 64.

Its combination of por. graphics. musicand softre make It perfect for evry applica-tion from Junior highs to grad schools.

And ItS price make It perft. period

;,0'

~~~~~ ~~~~ ~~~~ - -

"... ..00"""'0'"'"'0"""'0""" '''Comm'''' 11 IN,m. 1""0""'- Ie", - s",,-z,o-IP'on, I: commodore ICOvPUTER :

- - - - ------- --

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~~~~~

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Complaint230

ATTACHMENT B

THE COMMODORE 64 COULD THE MICROCOMPUTER INDUSTRY'

OUTSTANDING NEW PRODUCTINTRODUCTION SINCE

THE BIRTH OF THIS INDUSTRSHEARSCN/.AVlERICAN EXPRf

The Commodore 64 to ludge trom the abov

ie '

~~~~~~~

9n a

~~~~ ~~~~ ~~~~~

1hepp.plewhotu them

The mas.n tor thlS IS that , for thelirsttlme , high''icomputer power IS Ilmltoo only by the Inclination

hav I!. rather than the meanst:UJJ:i.E_ COST_ TWIC E THE PRODlJCT1YDY

This Slmpl€ equation mflecfi the Commo:orr 64'most baSic- and Qutstafldlng- llfiQtlofls.

Its standaro memory IS 64K, WhLCh 's unuSLJalf'noughlnamlccoatanYPrice

AtS595, lt,sastonlshlng

the Co

~~~ ~~~

SldRrably les than 50"101 thepnceComparcd With anythong Rise. ,!'sevn more

Impresll/eAnd 11 yVure a businessman , It can eHectlveiy

doubleyQur computer-equlppewor jorceLE O THE PERIPH ERAL_

Bewuse the basic cosiOfhe Commodore 6415 so low. you Ciln a11ord:r.ore peripherals fDr It Likedlskdnve , prlntersanda telephone modem

f'Jrabout the price 01 an Appie 11+ computeralort, you could equip your company With a Commodore64. disk drive , p"nteranu modem

HARQ FPCTSA QUTSOFT\ABFThe Commodore 64 will be able to run w1ually

anypmgram Important to business and IndustryCommodore soltware wFlI Include an electroniC

sp' eadshecl.bUSlnessgraphlcsllncludingpnntouti:aJSer- dellnabledlary/calendar:wordoroceslng, mailing"sts: an elC(tror"c mall program , and much more

Even programs tl'at can tf'ach operators oow10 pro

rograrT1naDle In BASICW,ththeaddedCP/M' optlon youcanhav

accesst edsolexlstmgsoftarepackigeInshort.ltsapf)llc tlonsareVlrtuallyllmltiess

THE FUN SIDE OF POWERThe Cocnmodore 64 can becom very playful at

a mument'snot,ceYou can use It with Commudorf"S game Cdrtrld1Jes

0' Invent yOur own ulverslons, All will be enhancedby bnlilant vlueoqt.all;Y and high 'csorutlon graph,csr320x 2(XJplxels lOavallablecrJlors , 3D Spritegraphics I, piUS ,ts (Jwn unique mLJSIC synthes,ze'

11111111/111

COMMODORE 6l.0NLYSS9NOW"S YOlJR CHANCl

If Wu ve ben wa iting for the "compu!er revlulion:' r:onSlder It as hav"'g amve

Through 11s 25 years of eXistence , Commodorehas ben committed todelivenng better pruductSiitIO'Mr

~~~

!heCOmpany svert.cal ntegratlonhasrEsulted In the Commodore 64.s price performancebrek1hmugh her.lded by Shears/American bpre

So 11 yVU runa company. yVU cou,dnt milkeamorecost-€Hlc""ntcapitaiIJlIlSlmeflt

For more Iflformatlon , contact your loclCommodore dealer, or send In this coupon

Co'.""ooo..Bo,"e"Mac",o."I"'''O"' alS,.",",O,o''''o Bo, "CO CO""'"o,,,,,.., P"""""o.o,. '

"I..,P "00 m.-nc" , 010'''0''0'' on ,hO (ccomouo,e 00

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Complaint

AITACHMENT C

105 F.

WHEN WE ANNOUNCEDTHE COMMODORE 64 FOR $595, OUR COMPETITORS

SAID WE COULDN' T DO IT.

THAT' S BECAUSE THEY COULDN' T DO IT.

T"e reaSOn IS l"at. unl'ke our competitorswe make our own IC chips. Pluoall the parts of thecomputer they go Irto

So Commouore r.an get more advancedcomputers to marKet sooner than anybody elseAnd wecan get them therefor a lot lessrr. ::C1ey

WHAT PRIC EJ'OWERiFor your $595 . the CommOdore 64TM gives

voua built-In user memory of 64K ThlSlshundreds01 doHars less tnan computer, of comparable power

Leslyou think Ihat!he Commodore 64 is50me stropped-down lOSS leader, a look al 115avcilable peripherals and "'terfa esw,11 qU1cklyconvince vou o!herwise

SOETWARE THAT WORKS HARDThe suppiV ot software for the Commodore

64 will be e lenSlve, And WJlh the optional plug-Z80 roprocessar, the Commodore 54 canaccommodate the enormous amount ot sof1wareava,lablelnCP/M'

Ado In the number of programsava,lable InBAS,C and YQu li find tha11here are v"tually '10appllca!lons . from word processmg to spreadsheets tha1 the CommOdore 54 can t handle wl1hthe greatest of ease wish It has sound qual,tyyou ll hnd only on

PERIPHERAlS WITH V1SIO separate- mus,c-only synt 1esllers. Ar,d graphicsThe Commodore 54 Inte rfa w'th all the and storageabiltty YOU won t find 011 any seoarate

perrpheralsyoucouldwan1fortolaloersonal Sy'llheSllercomoutlng: disk dnves. prmters and a telephone 'fT Wmodemlhats about S100, Including a free hours The pr"dlctabl"efiector advanced leC' ''l()1aCC:Bssto somB of the more popular computer ogy IS that It prOduc:es less expenSive. "'orecapablinformatIon services, Including CommOdore s own products the longer you wa,tInlormatlon Network tor users If you ve been waiting for this fo happe,

RUN YOUR B USINESS BY DAY personal computers . your walt IS overEARTH BY NIGHT See the Commodore fi4 soor at your local

At the end of a business day. the Commooore Compu1er dealer and compare ,: wllhCommooore64 can go into your brrefLaseand ride the best thecompetotion r,as:o Dfferhome wllh you tor an even,ng s fun and games You CM1 bet that's what the cOmpl'tlllon wl

Because of , tssupenorvldeoquallty(320 200 be OOlng

~~~~~ ~~~ ~~~ ~~~~

tf; Df i Co ;"e Bus,n." - - 1

~~~ ~~~

:i ; ws you I 'io;

~~~

2'o'n ;k." , P"on"w" 1CJ428 ito Invent game programs that a game machine w,1I I PI.a,e ,end Ol' ma.e ,nlorOl",'O" on 1he COmmOdo'e 64

~~~ ~~~

:;ir11 as enJOY Commodore s I Nam._

_--

T,tle

ATTACK nECAY USTAIN , RELEASEIt you md musicologist, y u alceady kn

whilt anADSR lattdck , decay, sustain . release Ienvelope IS If yOl!" re not. you ca n lea rn h 15 iln d'1uch more about muSIC with :he Commodore 64'mu"c syntheSlllng teatures

Irs a ull-scale compositional tool. Besides iIprogrammabie AOSR erwe!ope yenerator , II has 3vOIces I ac" WI!r a 9-octaverangel and -1 waveforms for trulysOphlst'cated comPOSition "nd plavback- througi'Vour home aUClosyste' , II you

ComDenv-Add'.,,_

, C"v

I Z,p

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(= commodoreCOIPUTER

Phoo"

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230 Complaint

ATTACHMENT D

. . I

~~~ ~~~~~~ . ,_,,__... - ~~~ ..",;" ,.. ,

:t,- ;:J'

:,.

i. :.

FOR YOUGETWHATOBODY ELSE CAN GIVEYOU

FOR TWICE THE PRICE.al ' W'CP. I le price .lOu wor" h1cJ Ire:) fi'j- anypelsonalum. ;JUie'

,cnm()(i()re 11,)S" u,,1I1 I' meMory 01 fillKTh.1T !;u;T a' e WCLJIU h ve sent co""', PLJ' ' cr, ,c:;

""dd" ilj'IS:,rt1e t'ilk"Iv'heCD"".

l3uT :I" ,,n-

j,;

)",rr.1 )'J

'A, . ;kl.

6'.


Complaint 105 YT.

TI 64 OUIT SIMPY, HAS NO COMPETITIO.ASAOUKK LO ATOUR COMPETI WLlTELLYO.

? -

. I

COMMODOR, APPLE IBM' TANDY 1

- -

- ATARIa!ure5 11+

j--

51:;:JOB,," Price 5595 51565 : S J I S899

C:9-'laLCQ",R o\!J''5BUIII.rn User Memory eo, OS, 16' 16' OS,

~~~

n=r :r Keyboard'0' '0'

,,, ,,,

Yes 166 keys! Y"5 (52 keY5) Yes 183 kevs) Ves 165 keysi Yes 161 k yslGraph,csCharaclers Ilrom Keyboard) '0'Upper and Lower Case Lette"

y",

Upper Only" D,skCapacllyF\, DrI"" 170K 143K 17BK 9bK

Avolo FeatureSound Generator '0' '0' Ves

'"'

MuSIc Svnthl!'lZ

,,,

H,-F,Output '0' Yes

ldeo o!!!-'

':!

Ves b1ra Extr"

- -

putIOutf1 l Featufesrlph Yes Ve,

oftw re Features!"/M' Optlof\IOver 00 Packages) '0'

,,,

'e;Game i!hJ!! I'Qtyr1.

;lot '0' Yes Yes

=:C;:OO""

;;,, ;;.

;".;o.C;,

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,,'"''' '.'"'"00 '-, ""M

WIT A COPU THAn LIGYEAI AI OF m COMWI TH IT APIATE

THT ITS SOARE 5H BlAT LE A FE YEA AI.Heres how we did I( the world' s most popular programs 10 the 6,;PART I THE FIRST ORDERLY APPROACH Fur1her, the 6"'!s compar,b:e wH CP , . Wh,c:1

SOFTWARC means a SlmrJl€ orJtllH'al adrJ-or' UlJlofls. m owr "2 GOe'Commodore s p,ngrammers exam,neo the whole andltlOr"al ' JS,.tul prowams

')lcotsot1warp', waIIJble1OdJy Iiteradyhlmdredsot Plus- and a big pluS this IS tor NJucalorS- IOU

,grams- a'1d IsolJted the most popular and CJn also have a(;cess to proqrams develope(j lor :he'lost 'setul Commodore Pt I." as : uses the sarr,e dAS.C la" Ji"Jr

Hw'1 they made tllen1 better The r "lJI1 a va" ty of as the Cummodore 6'ghlyrrlrnpd. rcrtf'CfpdrrogrMTlS -

" ,

orhome busrrwssandeducatlon

:""

ART II AN AI \I05T INFINITFARRAY OF SOFTWARf:

IndePe oe;;:a ke'-s oTsotlware

:i;O

~~~ ~~~ ''' ...- ",,, - '

III \

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WH DI TI 64 COME FR COME AND MO IOIIEUIBlCAU WI MAKE OU OW CHI.

Commoaole IS oneal the tew cornp"",PS thIgr, and manulaCiure 1111'' own cnlps

So, nl-'ke 8ther comp' Jter (omp 'es Ihat have1 buY therr chips, w'lpn C8'nmodorewa":5 tualter

a dpSI'jr 0' crrate,1r' "wolleenglneerswor" h d In hand

e result a IC! morerr.puter fur d lot Ie,s 'noney

f'le' rdpSlqrwrsand

~~~~~ . ..

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..

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230 Complaint

OH, BY TH WAY, TH 64 AI 50 HAPPTO BE TH MO BALUNTCAME MA- YO CA BUY.

With- the 64 . not only will yO have an amazingarrayofterrlhcgamesljLJstafewareplcturedhcrel, bulwhars really amallrg IS hOw you ll Sf'C them

W,lh avarlcty of colors that"s never beencffered

before. wdhatullraClgeo!sound. andwdhacesoILJtlonIhat Iruly rivals arcades

Slr1Cethe64 Isa Iruecomputer, you canactuallv'rtvem your OWrl soplllstlCa!edlor unsoph,stlcatcdlgames

WHT DO TH COME 64 DOl WHTDOYO WA IT TO DOlWhether you re Ln bUSLfcSS ar1dwart a personal

computer for spreadsheel calcl1latlon Of word and tcxtp,ocessm90r mailmg lists or da1a storage andretrieval

Or whether you re a mUSICian lookmg tor a mUSIc

syntr'e ller ior a beg,nn", whow nt$ to l(:iJ.plavonel

The64 - qu,tes,mply. C,lndoaimostan thing youwant.tto. Andallwlthgraphlcsthalhaveanlncredloleresoluhon

FO AB '1 EXTRA, TH COME 64 CA GEINATI AI PR FR MlML DOR COMR5.A modem 's a dr-vice thaI connects our comoutpr

to our phonelelecompUhng, the callll. Theyused to also call It

" "

lJ'

: j 1

~~~"'

rxpensJVe A personal computer and modem wOuldgclorat least 5\ 500and be:udged" 'easonable

Whafhapp('nSWr1ef" lorlrsslr\art,al!thatl,gur(', theCommodore64

hoOkS up with your telephoneJU5t about anything

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230 Complaint

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MICROCOMPUR LINE

Complaint

FEDERAL TRADE C;OMMISSION- DECISIONS

105 F.

242

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230 Decision and Orer

DECISION AND ORDER

The Federal Trade Commission having initiated an investigation ofcertain acts and practices of the respondent named in the captionhereof, and the respondent having been furnished thereafter with acopy ofa draft of complaint which the Bureau of Consumer Protectionproposed to present to the Commission for its consideration andwhich, if issued by the Commission , would charge respondents withviolation of the Federal Trade Commission Act; and

The respondent, its attorney, and counsel for the Commission hav-ing thereafter executed n agreement containing a consent order, anadmission by the respondent of all the jurisdictional facts set forth inthe aforesaid draft of complaint, a statement that the signing of saidagreement is for settlement purposes only and does not constitute anadmission by respondent that the law has been violated as alleged insuch complaint, and waivers and other provisions as required by theCommission s Rules; and

The Commission having thereafter considered the matter and hav-ing determined that it had reason to believe that the respondent hasviolated the said Act, and that complaint should issue stating itscharges in that respect , and having thereupon accepted the executedconsent agreement and placed such agreement on the public recordfor a period of sixty (60) days , and having duly considered the com-ments fied thereafter by interested persons pursuant to Section 2.of its Rules , now in further conformity with the procedure prescribedin Section 2.34 of its Rules , the Commission hereby issues its com-plaint , makes the following jurisdictional findings and enters thefollowing order:

1. Respondent Commodore Business Machines , Inc. is a corporationorganized, existing and doing business under and by virtue ofthe lawsofthe State of Delaware , with its offce and principal place of businesslocated at 1200 Wilson Drive, in the City of West Chester, State ofPennsylvania.

2. The Federal Trade Commission has jurisdiction of the subjectmatter of this proceeding and of the respondent, and the proceedingis in the public interest.

ORDER

This order shall not apply to representations made by respondentexclusively outside the United States and its possessions and territo-nes.



It is ordered That respondent Commodore Business Machines, Inc.a corporation , its successors and assigns, and its offcers , agents, rep-resentatives, and employees , directly or through any corporation , sub-

sidiary, division or other device , in connection with the manufactureadvertising, offering for sale , sale , or distribution of the Commodore64 computer , or any other computer hardware or software product, inor affecting commerce , as "commerce" is defined in the Federal TradeCommission Act , do forthwith cease and desist from representing,directly or by implication:

a. That any such product is available for sale to the public or hasany capability, unless at the time such representation is made suchproduct is then available for sale in reasonable quantities to thepublic or has said capability.

b. That any such product will be available for sale to the public orwill have any capability, unless at the time of such representationrespondent possesses and relies upon a reasonable basis for said repre-sentation.

It is further ordered That rcspondent or its successors or assignsmaintain accurate records of all materials that were relied upon byrespondent in disseminating any representation covered by this or-der.

Such record shall be retained by respondent or its successors orassigns for three (3) years from the date that the representations towhich they pertain are last disseminated. It is further ordered thatany such records shall be retained by respondent or its successors orassigns and that respondent or its successors or assigns shall makesuch documents available to the Commission for inspection and copy-ing upon request.

It is further ordered That respondent notify the Commission atleast thirty (30) days prior to any proposed change in respondent suchas dissolution , assignment , or sale resulting in the emergence of asuccessor corporation, the creation or dissolution of subsidiaries or

any other change in the corporation which may affect compliance

LAJmmUL/uttl'-, .uU l'; ti 1VACHl.N INC.


It is further ordered That respondent shall forthwith distribute acopy of this order to each of its operating divisions.

It is further ordered That respondent shall , within sixty (60) daysafter service ofthis order, fie with the Commission a report, in writ-ing, setting forth in detail the manner and form in which it hascomplied with this order.

246 FEDERAL TRADE COMMISSION Dr;Cl JUNb


IN THE MATTER OF

LURIA BROTHERS AND COMPANY , INC. , ET AL.

SET ASIDE ORDER IN REGARD TO ALLEGED VIOLATION OF THE FEDERALTRADE COMMISSION ACT AND SEC. 7 OF THE CLAYTON ACT

Docket 6156. Order, Feb. 13, 1963-Set Aside Order, March , 1985

In response to a petition filed by Luria Brothers and Company, Inc. ("Luria ), theCommission, on February 1, 1985, reopened the proceedings in Docket No. 6156and set aside the order issued on February 13 , 1963 , 65 F. C. 243 , as it applied toLuria , on ground that it no longer served any procompetitive purpose and mayimpede the company s ability to compete effectively for the business of scrap

consumers that desire exclusive supply arrangements. l105 F. C. 192) Howeverthe commission determined that this action would only provide partial relief aslong as the corresponding prohibitions against the purchasers of iron and stcelscrap remained in effect. It therefore issued to respondent mills stil in operationorders to show cause why the proceedings in Docket 6156 should not be reopenedto set aside Paragraph 2(a), which prohibited the mills from purchasing scrapexclusively from Luria , and giving the firm preferential treatment as a broker orsupplier of scrap. Having received no objections to the proposed action , the Com-mission has reopcned the proceeding and set aside Paragraph 2(a) holding that inview of its set aside order as it applied to Luria , setting aside Paragraph 2(a) of the1963 order is in the public interest.

ORDER SETTING ASIDE PARAGRAPH 2(a) OF THE ORDER ISSUEDFEBRUARY 13, 196:-

In response to a petition fied by Luria Brothers and Company, Inc.Luria ), the Federal Trade Commission on February 1 , 1985 , re-

opened the proceedings in Docket No. 6) 56 and set aside the order asit applied to respondent Luria. (105 F. C. 192) In doing so , the com-mission concluded that the order no longer serves any procompetitivepurpose and that it may impede unnecessarily Luria s ability to com-pete effectively for the business of scrap consumers that desire exclu-sive supply arrangements. However, the Commission believes thatsetting aside the order as to Luria alone would provide only partialrelief as long as order Paragraph 2(a)'s corresponding prohibitionsagainst scrap purchasers remain in effect. Paragraph 2(a) prohibitsthe respondent mills from purchasing all or almost all of any plant'requirement of scrap iron and steel from Luria, and from giving Luriapreferential status or favored treatment as a broker or supplier ofiron and steel scrap.On February 1 , 1985 , the Commission , pursuant to Section 3.72 of

its Rules of Practice and Procedure, 16 C. R. 3. 72, issued to the

,,VHlft nnVUtEl\:: AND CO. , INC. , ET AI.. 247

246 Set Aside Order

spondent mills stil in operation I orders to show cause why the pro-ceedings in Docket No. 6156 should not be reopened to set aside Para-graph 2(a) of the order. Respondent mils were provided anopportunity to object to the proposed action , and having failed to do

, are now deemed to have consented to such action. In view of theCommission s set aside ofthe order as it applied to Luria , the Commis-sion believes that the set aside of Paragraph 2(a) ofthe order, barringthe respondent mills from using Luria as their exclusive scrap brokeror supplier, is in the public interest.

Accordingly,It is hereby ordered That this matter be , and it hereby is, reopened

and that Paragraph 2(a) of the order shall be set aside as of theeffective date of this order.

Commissioner Bailey concurs in result.

I The Commission issued show ca\1se orders to the following respondent mills: Bethlehom Steel Corporation;United States St.eeJ Corporation; Phoenix Steel Corporation; Empire-Det.roit Steel Division , Cyclops Corporation;111' GrinneJJ Corporat.ion; Standard SteeJ Division , Titanium Metals Corporation; McLouth Steel Corporation;Edgewater Corporat.ion; Ruryrus-Erie Company; Weirton Steel Corporation; CF & I Steel Corporation and Nation-al Steel Corporation. Respondent mil formorly known as the Granite City Steel Company is now a division of theNational Steej Corporation

248 FEDERAL TRADE COMMISS10N DECISlpNS


IN THE MATTER OF

THE AMERICAN ACADEMY OF ORTHOPAEDIC SURGEONS

MODIFYING ORDER IN REGARD TO ALLEGED VIOLATION OF THEFEDERAL TRADE COMMISSION ACT

Docket C-2856. Consent Order, Dec. 1976-Modifying Order, March , 1985

In response to a petition filed by the American Academy of Orthopaedic Surgeons("AAOS" ), this Order reopens the matter of Docket C-2856, and modifies theconsent order entered against AAOS , 88 F. C. 968 , by deleting Paragraph IJ(ll ofthe Order which bars the organization from advising in favor of or against anyrelative value scale developed by third parties , and inserting a provision identicalto one contained in the FTC' s order in Michigan State Medical Society (MichiganStaie), Docket No. 9129, 101 F. C. 191. that permits AAOS more freedom todiscuss reimbursement issues with third-party payers and governmental entities.The Commission noted that it had recently modified a similar order enteredagainst the American College of Obstetricians and Gynecologists (" ACOG" ), Dock-

et No. C-2855 , l104 C. 524 (1984)J after finding that the benefits derived from

its restriction on ACOG's ability to discuss relative value scales with third-partypayers and governmental entities were outweighed by the resulting injury toACOG and the public, and that finding was applicable to AAOS. Accordingly, theCommission has modified the AAOS ordcr in the same manner as it modified theACOG order , and that modification is also consistent with the Commission s deci-

sion in Michigan State.

ORDER REOPENING AND MODIFYING FINAL ORDER

By petition fied November 19, 1984 , the American Academy ofOrthopaedic Surgeons ("AAOS") asked the Commission to reopen andmodify the Commission order in Docket No. C-2856 entered by con-sent against AAOS on December 14 , 1976 ("Order ) (88 F. C. 968).

AAOS requested that the Commission modify the Order by a) deletingParagraph lI(B) of the Order, which prohibits AAOS from advising infavor of or against any relative value scale developed by third parties(except that AAOS is permitted to provide historical data), and b)inserting a provision identical to a provision contained in the Commis-sion s Order in Michigan State Medical Society, Docket No. 9129, 101

C. 191 (1983) Michigan State that would allow AAOS morefreedom to discuss issues relating to reimbursement with third-partypayers and governmental entities. AAOS's petition was placed on thepublic record and no comments were received.

Upon consideration ofAAOS's petition and other relevant informa-tion, the Commission finds that the public interest would be servedby deleting Paragraph lIB) ofthe Order and by inserting the relevantT",","U C1(m r.ontained in the order in Michigan State. The Commission

AMERICAN ACADEMY OF ORTHOPAEDIC SURGEONS 249

248 Modifying Order

order against the American College of Obstetricians and Gynecolo-

gists ("ACOG" ) in Docket No. C-2855 is similar to the AAOS orderand the Commission recently reopened and modified the ACOGorderfinding that its restriction on ACOG's ability to discuss relative valuescales with third-party payers and governmental entities had causedinjury to ACOG and the public that outweighed any .benefit thatmight be derived from the restriction. (104 F. C. 524 (1984)) AAOS'petition is based on ACOG's petition and the Commission has deter-mined that its finding in ACOG is applicable to AAOS. Accordingly,the Commission has modified the AA OS order in the same manner asit modified the A COG order. The modification is also consistent withthe Commission s decision in Michigan State.

The Order continues to prohibit AAOS from developing and cir-culating its own relative value guide for use by its members. In addi-tion , although the Order no longer will prohibit AAOS fromdiscussing relative value scales with governmental entities and third-party payers , serious antitrust concerns would arise were AAOS tonegotiate or attempt to negotiate an agreement with any such partyor engage in any type of coercive activity to efIect such an agreement.

Accordingly,It is ordered That this matter be , and it hereby is, reopened and

that the Order in Docket No. C-2856 be modified 1) to delete Para-graph IIE) and to redesignate Paragraphs IIC) and IID) ofthe OrderParagraphs IIE) and IIC) respectively; 2) to renumber Paragraphs

, IV and V of the Order Paragraphs IV, V and VI respectively; and3) to insert the following:

III.

It is further ordered That this order shall not be construed to

prevent AAOS from:

A. Exercising rights permitted under the First Amendment to theUnited States Constitution to petition any federal or state govern-

ment , executive agency, or legislative body concerning legislationrules or procedures, or to participate in any federal or state adminis-trative or judicial proceeding.

B. Providing information or views , on its own behalf or on behalfof its members , to third-party payers concerning any issue , includingreimbursement.

250 FEDERAL TRADE C()MMISSION DECISIONS

CompJaint 105 F.

IN THE MATTER OF

WARD CORPORATION , ET AL.

CONSENT ORDER, ETC. , IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OFTHE FEDERAL TRADE COMMISSION ACT

Docket .9160. Complaint, March 1982-Decision, April 5, 1985

This Consent Order , among other things , requires five Rockville , Maryland buildersand sellers of residential housing, together with a corporation offcer, to ceasefailing to fully honor valid warranty claims within a reasonable period of time;representing that materials are defect-free , unless defects due to faulty materialworkmanship or design are corrected or remedied within a reasonable period oftime; failing to provide purchasers with buiJding lots substantially conforming tothe physical characteristics represented by the seDers; and failing to disclose , priorto the signing ofa sales contract, all disclaimers or limitations of the firms ' respon-sibilities with regard to the physical condition of the lot. The text of all writtenwarranties must be clearly and conspicuously displayed in sales offces and modelhomes, and a copy of such warranties must be pnJvided to prospective buyers ifrequested. In addition , the firm.!? are required to provide future purchasers with anopportunity to arbitrate warranty disputes; provide arbitration to homeownerswho had purchased their homes in the year preceding the effective date of theorder; and, subject to conditions set forth in the order , provide repairs and/orpayments to qualified homeowners who had purchased their homes betweenMarch 10 , 1978 and a date one year prior to the effective date of the order, andwho stil own these homes.

Appearances

For the Commission: Miriam Daniels, Louise R.bert, Anne Maher and Richard C. Donahue.

For the respondents: Mitchell S. Cutlerand Michael E. Kris, Finley,Kumble, Wagner, Heine, Undedberg Casey, Washington , D.C. andRobert A. Skitol, Steven K. Yablonski and Jane Seigler, Wald, Hark-rader Ross Washington , D.

Jung, Karen Eg-

COMPLAINT

Pursuant to the provisions of the Federal Trade Commission Actas amended , and by virtue of the authority vested in it by said Actthe Federal Trade Commission , having reason to believe that respond-ents Ward Corporation , R.E. Ward, Inc. , Ward Development Compa-ny, Inc. , Ward Component Systems , Inc. , Richlynn Development , Inc.Richlynn Land Developers , Inc. , corporations , and Richard E. Ward,individually and as an offcer of said corporations, hereinafter some-

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250 Complaint

Act, and it appearing to the Commission that a proceeding by it inrespect thereof would be in the public interest, hereby issues its com-plaint, stating its charges in that respect as follows:

I. RESPONDENTS

PARAGRAPH 1. Respondent Ward Corporation is a corporation orga-nized , existing and doing business under and by virtue of the laws ofthe State of Maryland, with its offce and principal place of businesslocated at 1300 Piccard Drive , Rockville, Maryland.

Respondents R.E. Ward Inc. , Ward Development Company, Inc.and Ward Component Systems , Inc. , are wholly-owned subsidiaries ofrespondent Ward Corporation , and are corporations organized, exist-ing and doing business under and by virtue of the laws of the Stateof Maryland , with their offce and principal place of business locatedat 1300 Piccard Drive, Rockville, Maryland.

Respondents Richlynn Development , Inc. and Richlynn Land De-velopers, Inc. , are wholly-owned subsidiaries of respondent Ward Cor-poration , and are corporations organized , existing and doing businessunder and by virtue of the laws of the State of Virginia, with theiroffce and principal place of business located at 1300 Piccard DriveRockvile , Maryland.

Respondent Richard E. Ward is an individual and is the principaloffcer and director of the corporate respondents. He formulates , di-rects and controls the acts and practices of the corporate respondentsincluding the acts and practices hereinafter set forth. His business

address is the same as that of the corporate respondents.

II. NATURE OF TRADE AND BUSINESS

PAR. 2. Respondents are now , and for some time past have beenengaged in: the construction of housing; the manufacture of pre- fab-ricated components and component systems , lumber products andother building materials for use in housing; the development oflandon a finished lot basis; the improvement, repair or modification ofhousing; the advertising, offering for sale and/or sale of the above-mentioned property, goods or services to the public; and other like orsimilar activities.

III. JURISDICTION

PAR. 3. In the course and conduct of their business , respondentscause, and for some time past have caused , their property, goods andservices to be offered for sale and sold in Maryland, Virginia andother States to purchasers and prospective purchasers located inMaryland , Virginia and various other States ofthe United States and

252 FEDERAL TRADE COMM1SSION- DECISIONS

Complaint 105 F.

the District of Columbia by means of advertisements placed in news-papers of interstate circulation.

Respondent Ward Corporation provides , and for some time past hasprovided, its subsidiary companies incorporated and doing business inMaryland and Virginia with administrative , financial and accountingservices , and in-house data processing facilities.

Respondent R.E. Ward , Inc. , subcontracts , and for some time pasthas subcontracted , its housing construction services to its affliates inMaryland and Virginia.

Respondents Ward Development Company, Inc. , and Richlynn De-velopment, Inc. , are now , and for some time past have been , engagedin the offering for sale and sale of housing to purchasers and prospec-tive purchasers residing in various States ofthe United States and theDistrict of Columbia.

Respondent Ward Component Systems , Inc. , is now, and for sometime past has been , engaged in the manufacture , sale , and distribu-tion of building components and materials from its plants in Mary-land, Virginia and Delaware to customers located in various States ofthe United States and the District of Columbia.

Respondent Richlynn Land Developers, Inc. , is now , and for sometime past has been , engaged in the development of land in variousStates in the United States.

In addition , respondents cause, and for some time past have causedtheir advertising material , contracts , and various business papers tobe transmitted by means ofthe United States mail from their placesof business in Maryland and Virginia to purchasers and potentialpurchascrs in various other States ofthe United States and the Dis-

trict of Columbia. Respondents maintain , and at all times mentionedherein have maintained , a substantial course of trade in said proper-ty, goods and services in or affecting commerce , as "commerce" is

defined in the Federal Trade Commission Act, as amended.

IV. ACTS AND PRACTICES: WARRANTIES

PAR. 4. In the further course and conduct of their aforesaid busi-ness, respondents are now and have been , directly or implicitly, grant-ing or disseminating certain warranties to purchasers of theiraforesaid homes.

1. Respondents are now and have been disseminating a writtenwarranty to purchasers of their aforesaid homes , under which war-ranty respondents warrant that they will correct (a) any defects dueto faulty construction and/or defective materials , (b) specific defectsincluding roofleaks , basement leaks , ir:adequate heating or air condi-tioning systems, excess settlement of finish grade , and (c) any patent

WARD CORP. , ET AL. ;:tj;j

250 mplaint

defects noted at the time of final inspection , where such defects arereported to respondents before the end of one year from the date ofpossession or settlement, whichever occurs first.

2. Respondents are now and have been since approximately July

1976 , by force of Maryland State law, warranting for a period of oneyear to purchasers oftheir aforesaid homes located in Maryland thatat the time the home is completed it is (a) free from faulty materials(b) constructed according to sound engineering standards and in aworkmanlike manner , and (c) fit for habitation , except that thesewarranties do not apply to any condition that an inspection of thepremises would reveal to a reasonably diligent purchaser at the timethe contract is signed.

3. Respondents are now and have been since approximately July

1979 , by force of Virginia State law, warranting for a period of oneyear to purchasers of their aforesaid homes located in Virginia thatthe home, at the time of transfer of record title or the purchasertaking possession , whichever occurs first, is (a) suffciently free fromstructural defects , so as to pass without objection in the trade , (b)

constructed in a workmanlike manner, so as to pass without objectionin the trade, and (c) fit for habitation.PAR. 5. By and through the granting and dissemination of such

warranties , respondents have represented, directly or implicitly, that:

1. Respondents will correct, in a workmanlike manner , all defectswithin the scope of the written warranty disseminated to purchasersand wil complete these tasks within a reasonable time after theyreceive notice of the defects.

2. Respondents wil correct , in a workmanlike manner, all defectswithin the scope ofthe warranties implied under Maryland State lawand will complete these tasks within a reasonable time alter they

receive notice of the defects.

3. Respondents will correct, in a workmanlike manner, all defectswithin the scope ofthe warranties implied under Virginia State lawand wil complete these tasks within a reasonable time after theyreceive notice of the defects.

PAR. 6. In truth and in fact, respondents have not fully performedtheir obligations under their written warranty and warranties im-plied under Maryland and Virginia State law.

1. In numerous instances, respondents have failed to correct, in aworkmanlike manner, defects within the scope of their written war-ranty and/or warranties implied under Maryland or Virginia Statelaw. Typical and illustrative of the uncorrected defects , but not allinclusive thereof, are:

254

- -

FEDERAL TRADE COMMISSION DECISIONS

Complaint 105 F.TC.

a. Excessive vibration , sloping and/or sagging of floors , caused inpart by the faulty construction of floor support systems;

b. Uneven and inadequate heating of rooms, caused in part by theuse of undersized heat pumps, faulty installation of heating ducts andomission of insulation;

c. Basement water leakage through walls , window wells and doorscaused in part by the faulty installation of components, poor sitegrading and inadequate waterproofing;

d. Roof leaks , caused in part by the lack of building paper under-neath the roofing shingles;

e. Excessive air and water infiltration in window areas , caused inpart by the faulty installation , poor fit and/or poor design of windowsand window frames;

f. Excessive cracking and settling of stoops , caused in part by thelack of a proper base under the stoops;

g. Excessive cracking and settling of driveways , caused in part bythe improper application ofthe asphalt material and/or inadequate

preparation of the underlying surface;2. In numerous instances, where respondents , in a workmanlike

manner, have corrected defects within the scope of the written war-ranty and/or warranties implied under State law , purchasers haveencountered delays frequently exceeding six months from the timerespondents received notice of the defect to the time respondentscorrected the defect.Therefore, the statements, representations, acts and practices

relating to respondents ' written warranty, as alleged in ParagraphsFour (1.) and Five (1. were and are deceptive.

PAR. 7. Furthermore, respondents ' failure to perform their obliga-tions fully pursuant to their written warranty and warranties impliedunder State law has resulted in substantial injury to consumers.Therefore , the acts and practices as alleged in Paragraphs Four , Fiveand Six were and are unfai

PAR. 8. Furthermore , respondents continued to grant or dissemi-nate said warranties to purchasers of their aforesaid homes eventhough respondents knew or should have known of their failure toperform warranty obligations fully with respect to past purchasershomes. Under these circumstances, reasonably prudent businessper-sons would have known that the acts and practices as alleged inParagraphs Four , Five and Six were dishonest or fraudulent. Further-more , such acts and practices have resulted in substantial injury torespondents ' purchasers for which a court may grant relief pursuantto Section 19(b) of the Federal Trade Commission Act , as amended.

PAR. 9. In the further course oftheir business , respondents are now.. l. - 1 10'70

_..

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H "u .L v~lU , J.l L".

250 Complaint

Agreement of Sale" whereby purchasers agree to accept respond-ents ' written warranty " in lieu of all other warranties whatsoeverwhether express or implied.

PAR. 10. By and through the inclusion ofthe aforesaid clause in the

Agreement of Sale, " respondents have represented, directly or im-plicitly, that purchasers have only those warranty rights provided byrespondents and no other warranty rights , whether express or im-plied under State law.

PAR. 11. In truth and in fact , the aforesaid clause is clearly inappli-cable , ineffective , invalid and/or unenforceable under Maryland andVirginia State law. Thetefore , the inclusion of this clause has thetendency or capacity to deceive or mislead purchasers as to theirwarranty rights and was and is unfair or deceptive.

V. OTHER ACTS AND PRACTICES

PAR. 12. In the further course and conduct of their aforesaid busi-ness , respondents are now and have been providing purchasers withan opportunity to inspect their homes prior to settlement while ac-

companied by respondents ' representative and to . have all readilyapparent defects or incomplete items listed on an "Orientation In-speetion" sheet provided by respondents. In the further course andconduct of their business , respondents have represented , directly orimplicitly, orally or in writing, that they wil correct or complete , ina workmanlike manner , as many items listed as possible prior tosettlement , and/or will correct or complete, in a workmanlike man-ner , all items listed within a reasonable time after the pre-settlementinspection.

PAR. 13. In truth and in fact, respondents have not fully performedtheir obligations with respect to items listed by purchasers during thepre-settlement inspection.

1. In numerous instances , respondents have failed to correct, in aworkmanlike manner , defects listed. Typical and ilustrative of theuncorrected defects , but not al1 inclusive thereof are the following:floor vibration; basement leaks; erosion of dirt under stoops; deterio-ration of driveways; damaged siding; poorly fitting storm windows;missing or loose roof shingles.

2. In numerous instances , respondents have failed to complete, ina workmanlike manner , al1 incomplete items listed. Typical and ilus-trative of the incomplete items, but not all inclusive thereof, are thefollowing: missing insulation; lack of grass coverage of the lot; pres-ence of rocks and construction debris in the soil; unfinished and inade-quate lot grading.

3. In numerous instances , where respondents , in a workmanlike


Complaint 105 F.

manner, have corrected or completed items listed , purchasers haveencountered long delays frequently exceeding six months from thetime of the pre-settlement inspection to the time respondents correct-ed or completed the item.

Therefore , the statements, representations , acts and practices asalleged in Paragraph Twelve were and are deceptive.

PAR. 14. Furthermore , respondents ' failure to perform their obliga-tions fully with respect to items listed by purchasers during the pre-settlement inspection has resulted in substantial injury to consumers.Therefore , the acts and practices as alleged in Paragraphs Twelve andThirteen were and are unfair.

PAR. 15. Furthermore, respondents continued to engage in the actsand practices alleged in Paragraph Twelve even though respondentsknew or should have known of their failure to perform obligationsfully with respect to items listed during the pre-settlement inspectionby past purchasers of their aforesaid homes. Under these circum-stances , reasonably prudent businesspersons would have known thatthe acts and practices as alleged in Paragraphs Twelve and Thirteenwere dishonest or fraudulent. Furthermore, such acts and practiceshave resulted in substantial injury to respondents ' purchasers forwhich a court may grant relief pursuant to Section 19fb) of the Feder-al Trade Commission Act, as amended.

PAR. 16. In the further course and conduct of their aforesaid busi-ness , and for the purpose of inducing the public to purchase respond-ents ' homes , respondents are now and have been including pictorialrepresentations and written statements in their advertising bro-chures, sales documents and advertising inserted in newspapers ofinterstate circulation.

Typical and illustrative of said pictorial representations are Exhib-its A , and attached hereto.

Typical and ilustrative of said written statements are the follow-

Ing:

STANDARD FEATURES: Attractive Landscaping

STANDARD FEATURES: Landscaping includes seeding and shrubs.

You ll find split level and 2 story homes on beautiful lots all over a full acre.

An inviting community of'traditional homes on beautiful \1 acre lots.

The homes are surrounded by beautifully landscaped shade trees.

Furthermore, respondents have built model homes which are opento the public. These homes are located on level lots which are fullygrass-covered and landscaped.

PA u 17 Po" .:n .1 thrl"11tTh t'ha

p,

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WARD CORP. . E'f AL.

250 plaint

tions and statements described in Paragraph Sixteen , and others ofsimilar import and meaning not expressly set out therein , respond-ents have represented , directly or implicitly, that:

1. Respondents wil grade, in a workmanlike manner , the lots soldto purchasers of their homes.

2. Respondents wil remove rocks and construction debris from thelots.

3. Respondents wil provide suffcient topsoil so that purchasers canreasonably maintain landscaping on the lots.

4. Respondents will adequately protect trees on the lots during theconstruction process.

PAR. 18. In truth and in fact, respondents have not finished lots asrepresented.

1. In numerous instances , respondents have failed to grade lots ina workmanlike manner.

a. In numerous instances, respondents have failed to fill in ruts,depressions and holes created on the lots during the construction

process.b. In numerous instances , respondents have failed to provide ade-

quate drainage on the lot, resulting in the presence of standing waterover long periods of time and large muddy areas on the lots.

c. In numerous instances , respondents have left steep inclines onthe lots.

2. In numerous instances, respondents have failed to remove sub-stantial amounts of rocks and construction debris from the lots.

3. In numerous instances, respondents have failed to provide suff-cient topsoil, resulting in the purchasers' inability to reasonably

maintain the landscaping on the lots.4. In numerous instances , respondents have failed to protect ade-

quately trees on the lots during the construction process , resulting inthe destruction of the trees.Therefore, the representations, statements, acts and practices as

alleged in Paragraphs Sixteen and Seventeen were and are deceptive.PAR. 19. Furthermore , respondents ' failure to finish Jots as repre-

sented to purchasers has resulted in substantial injury to consumers.Therefore, the acts and practices as alleged in Paragraphs SixteenSeventeen and Eighteen were and are unfair.

PAR. 20. Furthermore, respondents continued to engage in the actsand practices alleged in Paragraphs Sixteen and Seventeen eventhough respondents knew or should have known of their failure tofinish lots as represented to past purchasers oftheir aforesaid homes.Under these circumstances, reasonably prudent businesspersons


Complaint 105 F.

would have known that the acts and practices as alleged in Para-graphs Sixteen , Seventeen and Eighteen were dishonest or fraudu-lent. Furthermore, such acts and practices have resulted insubstantial injury to respondents ' purchasers for which a court maygrant relief pursuant to Section 19(b) of the Federal Trade Commis-sion Act , as amended.

PAR. 21. In the course and conduct of their aforesaid business, andat all times mentioned herein , respondents have been, and now arein substantial competition in or affecting commerce with corpora-tions , firms, and individuals engaged in the sale and construction ofresidential housing.

PAR. 22. The use by respondents of the aforesaid unfair , false , mis-leading, or deceptive statements , representations, acts , and practiceshas had , and now has, the capacity and tendency to mislead membersof the public into the erroneous and mistaken belief that said state-ments and representations were , and are, true and complete , or intothe purchase of substantial numbers of respondents ' houses by reasonof said erroneous and mistaken belief

PAR. 23. The aforesaid acts and practices of respondents, as herein

alleged, were , and , are , all to the prejudice and injury of the publicand of respondents ' competitors , and constituted , and now constituteunfair or deceptive acts or practices in or affecting commerce in viola-tion of Section 5 of the Federal Trade Commission Act, as amended.Although respondents , in some of their sales contracts , provide forbinding arbitration of disputes "arising under and pursuant to thisContract, or in any way related to the house and lot to be conveyedpurchasers could not have reasonably avoided injury resulting fromrespondents ' alleged unfair acts or practices. The availability of arbi-tration was not referred to in conjunction with respondents ' pre-settlement or warranty procedures and was not raised by respondentsat the time any dispute arose between respondents and purchasers orat the time any lawsuit was fied by a purchaser against respondents.Furthermore , many other sales contracts used by respondents did notprovide for arbitration of disputes. For these and other reasons , thepresence of the arbitration provision in some of respondents ' salescontracts does not excuse respondents from liability for the unfairacts or practices alleged herein. The acts and practices of respondentsas herein alleged , are continuing, and will continue , in the absence ofthe relief herein requested.

~~~ ~~~~ , .... .

.L.

250 Complaint

EXHIBIT A

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EXHIBIT C

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with ils "Wn 1,,,11, "ddi/;o",1 bedroom."nd it mmp/ele 1,,,/1 bath. 0.. the Inwer

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262 FEDERAL TRADE COMMISSION DECISIONS105 F.

Complaint

EXHIBIT D

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DECISION" AND ORDER

The Commission having theretofore issued its complaint chargingthe respondents named in the caption hereof with violation of Section5 ofthe Federal Trade Commission Act , as amended , and the respond-ents having been served with a copy ofthat complaint , together witha notice of contemplated relief; and

The respondents, their attorney, and counsel for the Commissionhaving thereafter executed an agreement containing a consent orderan admission by the respondents of all the jurisdictional facts set forthin the complaint, a statemcnt that the signing of said agreement is forsettlement purposes only and does not constitute an admission byrespondents that the law has been violated as alleged in such com-plaint, and waivers and other provisions as required by the Commis-sion s Rules; and

The Secretary of the Commission having thereafter withdrawn thismatter from adjudication in accordance with section 3.25(c) of itsRules; and

The Commission having considered the matter and having there-upon accepted the executed consent agreement and placed such

agreement on the public record for a period of sixty (60) days , andhaving duly considered the comments fied thereafter by interestedpersons pursuant to section 3. 25 of its Rules , now in conformance withthe procedure prescribed in section 3.25(1) of its Rules , the Commis-sion hcreby makes the following jurisdictional findings and enters thefollowing order:

1. Respondents Ward Corporation , Ward Development Company,Inc. , and Ward Component Systems, Inc. , are corporations organizedexisting and doing business under and by virtue of the laws of theState of Maryland , with their principal place of business located at1300 Piccard Drive, in the City of Rockvile , State of Maryland.

2. Respondents Richlynn Development, Inc. , and Richlynn LandDevelopers , Inc. , are corporations organized, existing and doing busi-ness under and by virtue ofthe State of Virginia , with their principalplace of business located at 1300 Piccard Drive , in the City of Rock-ville , State of Maryland.

3. Respondent Richard E. Ward is an oflcer of each said corporaterespondent, and his principal placc of business is located at 1300Piccard Drive , in the City of Rockville , State of Maryland.

4. The Federal Trade Commission has jurisdiction of the subjectmatter of this proceeding and ofthe respondents , and the proceedingis in the public interest.


DecisiDn and Order 105 F.

ORDER

It is ordered That respondents Ward Corporation , Ward Develop-ment Company, Inc. , Ward Component Systems , Inc. , Richlynn Devel-opment , Inc. , and Richlynn Land Developers , Inc. , corporations, andrespondent Richard E. Ward, individually and as an offcer of thecorporations , their successors and assigns, and respondents ' offcersagents , representatives and employees , directly or through any corpo-ration, subsidiary, division or other device , in connection with theconstruction , advertising, ofIering for sale , or sale of any new single-family unit which is a detached structure, an attached or semi-at-tached townhouse unit or a twin unit (hereinafter referred to as resi-dential home ) in or affecting commerce, as "commerce" is defined inthe Federal Trade Commission Act , as amended, do forthwith ceaseand desist from:

1. Representing, directly or by implication, that respondents wilcorrect, repair or otherwise remedy any defect due to faulty materi-als , workmanship or design unless respondents do, in fact, correctrepair or otherwise remedy such defect within a reasonable period oftime after receipt of a homeowner s valid request to do so.

2. Representing, directly or by implication, that the materials

workmanship or design is defect-free or meets or will meet a specifiedlevel of performance , unless the representation is , in fact, true or, inthe event of any defect or a failure to meet the specified level ofperformance , respondents do, in fact, correct, repair or otherwise

remedy such defect within a reasonable period of time after receiptof a homeowner s valid request to do so.

3. Failing to honor fully every valid warranty claim within a rea-sonable period oftime after receipt ofa homeowner s request therefor;provided, however that nothing herein shall be construed as preclud-

ing respondents from denying or contesting a warranty claim believedin reasonable good faith to be without merit or , in such cases, frominvoking any other rights provided by law.

4. Failing, whenever respondents represent , directly or by implica-tion , that the lot offered to a purchaser wil have certain physicalcharacteristics including, but not limited to , size , contours , drainagesoil preparation , and seeding, to provide the purchaser with a lotconforming substantially to such representation.

5. Failing, prior to the time a sales contract for a new residentialhome is signed , to disclose clearly and conspicuously in writing to the


prospective purchaser all disclaimers or limitations of respondentsresponsibilities with regard to the physical condition of the lot.

II.

It is further ordered, That respondents , in connection with the saleof any new residential home settled after the home is completed , doforthwith cease and desist from representing, directly or by implica-tion, that respondents will correct or complete items listed on anOrientation Inspection Sheet" or any similar document" reflecting

the results of the purchaser s pre-settlement inspection of the homeunless respondents:

(a) prior to settlement , inspect the home with the purchaser andany accompanying person(s), including (if desired) an inspector chos-en by the purchaser, and list every readily apparent problem or in-complete item on an Orientation Inspection Sheet or similarlydesignated document;

(b) correct or complete all such listed problems or items within onehundred and twenty (120) days of the inspection , subject to forcemajeure labor disruptions , or any other events reasonably beyondrespondents ' control , in which case respondents shall correct or com-plete such problems or items within a reasonable period of time; and

(c) disclose to the purchaser clearly and conspicuously on a copy ofthe Orientation Inspection Sheet or similarly designated documentprovided to the purchaser that, subject to events reasonably beyondrespondents ' control , all listed problems or items wil be corrected orcompleted within one hundred and twenty (120) days.

III.

It is further ordered That , in connection with any offering for saleof any new residential home for which a written warranty is offeredrespondents shall:

1. Clearly and conspicuously display in each sales offce and in eachmodel home:

(a) The text of the warranty.(b) A notice, in plain and readily understood language , that copies

of the warranty may be obtained free of charge upon request.2. Provide a copy ofthe warranty to each prospective purchaser who

requests one.

3. Furnish to each purchaser a copy of the warranty prior to or atthe time of execution of the sales contract for a new home.

266 FEDERAL TRADE COMMISmONDEC1S10NS

Decision and Order 105 r'

4. Disclose clearly and conspicuously within the warranty any lim-itations on , disclaimers of, or exclusions from coverage under thewritten warranty or any implied warranty arising under state law;provided, however that respondents shall not make any representa-tion , written or oral , concerning any such limitation , disclaimer orexclusion where such limitation , disclaimer or exclusion is prohibitedby state or federal law.

IV.

It is further ordered That, in connection with each sale of a newresidential home for which a written warranty is offered , respondents

shall establish and abide by an informal dispute resolution procedureas described in Appendix A. Respondents shall furnish to each pur-chaser of such a home a copy of Appendix A or a comparable writtenexplanation of said informal dispute resolution procedure prior to, orat the time of, execution of the sales contract for the new home;

provided, however, that nothing herein shall prohibit respondents

from utilizing a form of sales contract which clearly and conspicuous-ly discloses that the homeowner agrees to invoke the aforementioneddispute resolution procedure prior to invoking any other remedy pro-vided by law.

It is further ordered That, if respondents deny any written requestfor warranty work under respondents ' written warranty, respondentsshall, within thirty (30) days after receipt of the request, provide the

homeowner with a written statement of reasons for the denial , to-gether with notice ofthe homeowner s right to submit any such war-ranty dispute to the informal dispute resolution procedure providedfor in Paragraph IV of this Order.

VI.

It is further ordered, That, in connection with any offering for saleof a new residential home for which no written warranty is offered,respondents shall , prior to the time of execution of the sales contractdisclose clearly and conspicuously in writing to the prospective pur-chaser the fact that no written warranty is offered and any limita-tions on , disclaimers of, and exclusions from any implied warrantyarising under state law; provided, however that respondents shall notmake any represe tation written or oral , concerning any such limita-


tion , disclaimer or exclusion where such limitationexclusion is prohibited by state or federal law.

disclaimer or

VII.

It is further ordered That , for each homeowner who took title to ahome from respondents from March 10 , 1978, to one year prior to thedate of service of this Order and who as of the date of service of thisOrder is stil the owner ofthat home, respondents shall establish andabide by the redress procedure and dispute resolution mechanismdescribed in Appendix B for any claim made by the homeowner underany written warranty or under any express or implied warranty aris-ing from state law and for any claim made by the homeowner relatingto the pre-settlement inspection of the home, provided that:

1. In the case of a warranty claim , the homeowner made a claim torespondents during the first year after settlement , and there is credi-ble written evidence in respondents ' or the homeowner s possessionto establish that such a claim was then made;

2. In the case of a claim relating to the pre-settlement inspectionthe homeowner or respondents had at the time listed the problem oritem on the Orientation Inspection Sheet;

3. The claim relating to a specific problem or item has a value of$500 or more, measured by the greater of the homeowner s actualout-of-pocket expenses reasonably incurred or the reasonable estimat-ed cost of repair by a contractor. (All problems or items resulting fromthe same cause and involving the same component(s) or defect(s) shallbe deemed to be a single problem or item for purposes of determiningvalue. For example , a number of leaking windows in a home causedby improper installation ofthe windows shall be deemed to be a singleproblem or item.

4. Respondents refused or otherwise failed adequately to satisfy thehomeowner s claim; and

5. In the case of a home in which the homeowner has modified theaffected part in a manner that substantially increases the cost ofrepairing or correcting the alleged problem or item but the homeown-er nonetheless establishes that the alleged problem or item existedprior to the modification , respondents shall not be required to bearthe increase in cost of repair or correction resulting from the modifi-cation.

268 FEDERAL TRAm; COMMISSION DECISIONS

Decision and Order 105 F.T.C.

VIII.

It is further ordered That , for each homeowner who took title to ahome from respondents within one year prior to the date of serviceof this Order and who as of the date of service ofthis Order is stil theowner ofthe home, respondents shall establish and abide by an infor-mal dispute resolution procedure substantially similar to that de-scribed in Appendix A for any claim made by the homeowner underany written warranty or under any express or implied warranty aris-ing from state law and for any claim made by the homeowner relatingto the presettlement inspection ofthe home and that within sixty (60)days after this Order becomes final , respondents shall provide eachsuch homeowner with the notice letter attached hereto as Appendix

, along with a copy of Appendix A, or a comparable written explana-tion of said informal dispute resolution procedure.

IX.

It is further ordered That in connection with any sale of a newresidential home respondents shall maintain for three years after thedate oftransfer of title or of delivery of the home to the purchaserwhichever is earlier , and upon reasonable notice make available tothe Commission for inspection and copying all non-privileged corre-spondence , memoranda and other documents regarding complaints orrequests for repairs made to respondents by the purchasers , includingall documents relating to repairs made by respondents to the homeand all documents relating to disputes handled under the informaldispute resolution procedures required by this Order.

It is further ordered That respondents shall notify the Commissionat least thirty (30) days prior to any proposed change in the corporaterespondents, such as dissolution , assignment or sale resulting in theemergence of a successor corporation , the creation or dissolution ofsubsidiaries , or any other change in the corporations which may af-fect compliance obligations arising out of this Order.

XI.

It is further ordered That respondents shall , within thirty (30) daysof the date of service of this Order , distribute a copy of this Order to(a) each of respondents ' operating subsidiaries and divisions , and (b)each offcer and salaried employee of respondents and of said subsidi-

YY1-.IUJvU.r.r;;.rI1-I,. L,V


aries and divisions engaged in the construction , advertising, offeringfor sale , or sale of any new residential homers).

XII.

It is further ordered That within six (6) months after the date ofservice of this Order and within six (6) months after the completionof all of respondents ' obligations pursuant to paragraph VII of thisOrder, respondents shall fie with the Commission a report , in writ-ing, setting forth in detail the manner in which they have compliedwith this Order.

XII

It is further ordered That all provisions of this Order except Sub-paragraphs 1 , 2 , 3 and 4 of Paragraph I shall be vacated ten (10) yearsafter the date of service of this Order.

XIV.

It is further ordered That no provision of this Order shall apply toany person , partnership, corporation or other entity not named here-in unless respondents, individually or collectively, either have (a) amajority equity position in , (b) actual working control over, or (c)management responsibility for such person , partnership, corporationor other entity.

APPENDIX A

The informal dispute resolution procedure required by Paragraph TV of this Ordershall be available to homeowners for an initiation fee of no more than $75.00 duringthe first three years after the efIoctive date of this Order provision , no morc than$100.00 during the fourth through sixth years after the efIective date of this Orderprovision, and no more than $125.00 during the remaining years that this Orderprovision remains in effect. Provided, howevel That in no event shall the initiation feeconstitute more than half of the total cost of the procedure. Respondents shall beordered to return or reimburse any such fee as part of the decision at the end of theprocedure if the homeowner s claim is determined to be meritorious.

Upon invocation of this procedure by a homeowner, respondents shall appoint anarbitrator who is independent and knowledgeable in home construction and who hasbeen either selected by an independent third-party organization experienced in disputeresolution or approved , in writing, by the homeowner. In ruling on claims submittedto him/her f(Jr resolution , the arbitrator shall (a) be bound by the provisions of respond-ents ' written warranty and any express or implied warrant.ies arising from state lawand (b) use the Home Owners Warranty Program Quality Standards which are applica-ble to the first year of ownership of the home and any applicable provisions of thebuilding code in the jurisdiction in which the home is located to interpret all applicable



warranty provisions. lIe/she may also consider any applicable Orientation InspectionSheet or similar document relating to an applicable pre-settlement inspection.

The arbitrator shall render a written decision on all claims submitted for resolutionwithin sixty (60) days of respondents ' receipt of the initiation fee, and shall promptlyprovide Ii copy of his/her decision t.o the homeowner and respondents. (Ifthe homeown-er is required under the sales contract to pursue this procedure prior to invoking anyother legal remedy, he/she wiJl be deemed to have fulfilled that requirement if Iidecision is not. rendered within the required sixty-day period. ) Such decisions shall belimited to determinations of the existence of defects or other problems within the scopeof respondents ' obligations , the nature of and time within which respondents shouldmake required repairs or corrections , and , if the submitted claim is determined to bemeritorious, return or reimbursement of the homeowner s initiation fee. The arbitra-tor s decision on each submitted claim shall be binding on respondents but not on thehomeowner.

APPENDIX B

The procedure for redress under Paragraph VII ofthe Order shall includc the follow-ing:

A. Within sixty (60) days after the Order becomes final , respondent.s shall provideeach homeowner covered by paragraph VII with the attached documents and a detaileddescription of the disput.e resolution mechanism and its possible uses.

B. Within sixty (60) days after the mailing date of respondents ' notice to the home-owner of his/her right to file claims for redress, the homeowner shall mail his/herclaim to respondcnts or forfeit any right to repairs or reimbursement under this Order.

C. Within sixty (6OJ days after receipt of any claim for redress , respondents sha1lrespond in writing to the homeowner by eit.her:

1) Offering, within a stated time , to correct or repair the problem or item or to paythe homeowner an amount of money in settlement of the claim , and at. the same timeinforming the homeowner ufhis/her right to accept or reject the otter , along with noticethat:

a) Ifa homeowncr accepts the offer , he/she has the right to submit any dispute overrespondents ' performance under thc oiler to the dispute resolution mechanism; and

b) Ifa homeowner rejects the ofJer , he/she has the right to submit the disputed claimto thc dispute resolution mechanism.

2) Denying the claim and at the same time giving the homeowner a detailed explana-tion of the reasons fur the denial , along with notice that the homcowner has the rightto submit the denied claim to the dispute resolution mechanism.

D. Ifa homeowner accepts the offered remedy, respondents shall perform the remedywithin the time promised.

E. The dispute resolution mechanism shall:

1) Be available to homeowners for an initiation fee of no more than $75. 00. Providedhowever That in no event shall the initiation fee constitute more than half of the totalcost of the procedure.

2) Use an arbitrator who is independent and knowledgeable in home constructionand who has been either selected by an independent third-party organization ex-perienced in disput.e rcsolution or approved, in writing, by the homeowner. In decisionsrelating to warranty claims , he/she shall be bound by the provisions of the writtenwarranty and warranties implied under state law. The arbitrator shall use the HomeOwners Warranty Program Quality Standards which are applicable to the first year

WARD CORP. , ET AL. 271

250 Deci!Jion and prdex

of ownership of the home and any applicable provisions of the building code in thejurisdiction in which the home is located to interpret the warranty provisions.

3) Render a decision in writing within sixty (60) days of respondents' receipt of theinitiation fee. The arbitrator shaH provide a copy of that decision to the homeownerand respondents within one week of Tendering it. The arbitrator s decision shall be

binding on respondents but not on the homeowner , who , at the time he/she receivesa copy of the arbitrator s decision , shall be provided by the arbitrator or respondentswith notice of his/her right to accept or reject the offer, along with notice that:

a) If the homeowner accepts the decision, he/she has the right to submit any disputeover compliance with the decision to the dispute resolution mechanism; and

b) Ifthe homeowner rejects the decision , he/she ha." the right to pursue any otherlegal remedies available to him/her.

F. The arbitrator shall include in his/her decision an award ofreimburseilent of theinitiation fee unless the arbitrator determines that the homeowner s claim was notsubstantially justified.

ATTACHMENT 1 TO APPENDIX B

Dear Ward/Richlynll Homeowner:

This letter is to notify you that you may be entitled to certain repairs made to yourhome free of charge. You may also be entitled to be reimbursed for money you alreadyspent repairing your home.

Ward Development Company, Inc. ("Ward") and Richlynn Development, Inc.

Richlynn ) recently agreed with the Federal Trade Commission to make certainhome repairs without charge or to reimburse homeowners for repairs previously paidf()r by homeowners. If you purchased (that is, took title to) a home from Ward orRichlynn from March 10 , 1978, to lone year prior to date o(service o(the Orde and stillown that home today, you may be entitled to havc no-cost repairs madc under thewritten warranty we gave you. A copy of this warranty is attached to this letter asAppendix A. You may also be entitled to have no-cost repairs made to items that wereJisted during the pre-settlement inspection you made around the time you took title toyour home. In addition , you may be entitled to reimbursement for money you spentrepairing your home due to Ward or Richlynn s failure to do the repairs covered by thewarranty or the pre-settlement inspection list.

You are eligibJefolJowing are true:

Warranty Problems

for a repair or reimbursement under the warranty if all of the

1. During your first year of ownership, you experienced a problem that was coveredby the warranty;

2. You , Ward or Richlyno have some credible written evidence that you notifiedWard or Richlyno of the problem during your first year of ownership. (If you do nothave a letter or any other written record that you made a complaint to Ward orRichlynn , we will check our customer fies to see if we have any record of your com-plaint. Our files may contain a work order , for example. We wil considcr your claimfor a warranty problem only ifthere is some credible written evidence that you notifiedus of the problem during your first year of ownership.

3. Ward or Richlynn refused to repair the problem or inadequately repaired theproblem; and 4. The claim has a value of $500 or more , measured by the highest of the following:


Decision and Order 105 F.TC.

. The reasonable estimated cost of repair by a contractor; or

. The homeowner s actual out- pocket expenses reasonably spent to repair theproblem.

Pre-Settlement Inspection Items

You are eligible for a repair or reimbursement pursuant to the pre-settlement inspec-tion list if all of the following are true:

1. The item was listed on the Orientation Inspection Sheet;2. Ward or RichlYlln refused to repair the item or inadequately repaired the item;

and3. The claim has a value of 8500 or more , measured by the highest of the following:

. The reasonable estimated cost of repair by a contractor; or

. The homeowner s actual out.of-pocket expenses reasonably spent to repair theproblem.

Limitation on Repair or Reimbursement Under theor Prh.')ettlement Inspection List

Please note, however , that if you have modified the part of your home affected by theclaimed problem or item in a manner that substantially increases the cost of repair orcorrection, you must establish that the problem or item existed prior to the modifica-tion. And , even then , we will not bear the increase in cost of repair or correction

resulting from the modification. For example , if you finished your basement and thuscovered up the problem , we cannot he responsible fur the cost of refinishing yourbasement alter our repair work.

Warranty

What You Must Do

If you think you are eligible for repairs or reimbursement under the warranty or thepre-settlement inspection or both , please fil out the enclosed "Claim Form " and mailit to:

Att: ( name of Ward/Richlynn representative)Ward/Richlynn1300 Piccard Drive

Rockvillc , Maryland 20850

You rnustmail this claim form by 60 days from the mailing date of this letter. If youmiss the deadline , you will Jose your right to repairs or reimbursement under the termsof our agreement with the Federal Trade Commission. Remember to keep a copy of yourclaim f()rm and a record ofthe date you mail it , just in case your claim gets lost in themail.

Ward/ Richlynn will notify you within sixty (60) days of receipt of your claim formabout whether we will honor your claim. If you are not satisfied with what we offer youas a repair or reimbursement , you will have t.he right to take the dispute to an impartialarbitrator. IfWard/Richlynn disputes any part of your claim , we will tell you why weare disputing the claim. You will also have the right to take this dispute to an impartialarbitrator. A description of the arbitration procedures is attached to this letter asAppendix B.

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ofWard/Richlynn representative) at (phone number) between the hours of 8:30 a.and 5:00 p. , Monday through Friday.

If you have any comments or concerns about how well Ward/Richlynn is respondingto your claim , you might wish to send t.hem to the Federal Trade Commission , Divisionof Enforcement, Bureau of Consumer Protection , Washington, D.C. 20580. Do notsend your claim form t.o that address; if you do so you might lose your right to repairsor reimbursement due to delays in Ward/Richlynn s receipt of the claim form.

Very truly yours

Ward Development Company, Inc.Richlynll Development, Inc.

Enclosures

ATTACHMENT 2 TO APPENDIX B

CLAIM FORM

This claim fbrm must be mailed by 60 days from the mailing date of the letter ofnotification. If you miss this deadline, you will lose your right to repairs or reimburse-ment under the terms of the agreement between Ward/Richlynn and the FederaJ

Trade Commission.

Namc(s) of Homeowner(s)

Telephone (Home)

(Work)

Mailing Address(Street)

(City) (State) (Zip Code)

Today s date

- - - -

11.

Hwe) purchased a home from:( ) Ward Development Company, Inc.( ) Richlynn Development , Inc.( ) An afiliate of Ward Development or Richlynn Development

(Enter name of company)

111.

The date ofsettcmentlclosing on my(our) Ward/Richlynn home was (Enter date youtook title).



IV.

MARK ONE

) Yes , Hwe) am(are) the current owner of this Ward/Richlynn home.) No , J(we) do not currently own this Ward/Richlynn home.

NOTETo be eligible for repairs or reimbursement by Ward/Richlynn , you must be both

the purchaser of a new home from Ward/Richlynn from March 10 , 1978. to fone yearprior to date of service of the OrderJ and the current owner of this Ward/Richlynnhome.

The address of my(our) Ward/Richlynn home is

(Street)

(City) (State) (Zip Code)

(Kame of' Subdivision)

VI.

INSTRUCTIONS FOR WARRANTY CLAIMS

. Use additional sheets of paper if necessary.

. List each problem separately.

. Describe in detail the nature of the problem.

. Attach a copy (not originals) of any written evidence you have that you notifiedWard or Richlynn of the problem during your first year of ownership.

. If you are requesting reimbursement for money you spent for repairs, attachthe following: a description ofthe repairs which were made, a copy (not origi-nals) of the cancelled check or receipt showing that you paid for repairs , anda copy (not originals) of any other document(s) you have that shows whatrepairs were made and what you paid for them.

NOTE

If you do not have any written record that you made a complaint to us about a warrantyproblem , we wil1 check our customer files to see if we have any written records (suchas work orders) that you made a complaint to us. We will consider your claim for repairor reimbursement ftJr a warranty problem only if there is some credible written evi-dence that you notified us about the problem in your first year of ownership. Ifno onehas any written evidence that you made a complaint about the warranty problem , we

can deny your claim for that problem

WARD CORP. , ET AL. 275

250 Decision and Orde!

Warranty Claims

I(we) request Ward/Richlynn to make the f()Jlowing repair(s) or reimburse me(us)under the warranty:

VII.

INSTRUCTIONS FOR PRE-SETTLEMENT CLAIMS

. Use additional sheets of paper if necessary.List each problem separately.

. Describe in detail the nature of the problem.

. Attach a copy ( not originals) of the pre-settlement inspection list , if you haveit.

. If you are requesting reimbursement for money you spent for repairs , attachthe following: a description ofthe repairs that were made , a copy ( not originals)of the cancelled check or receipt showing that you paid for repairs, and a copy(not originals) of any other rlocument(s) you have that shows what repairs weremade and what you paid for them.

Pre.SettlemenlInspection Claims

I(we) request Ward/Richlynn to make the following repair(s) or reimburse me(us)pursuant to the pre-settlement inspection list:

APPENDIX C

Dear Ward/Richlynn Homeowner:

This letter is t.o notify you that you may have the right to use arbitration to settledisputes with Ward/Richlynn.

Ward Development Company, Inc. ("Ward") and Richlynll Development, Inc.Richlynn ) reccntJy agreed with the Federal Trade Commission to set up all arbitra-

tion procedure which would be available at a reasonable cost to homeowners. If youpurchased (that is, took title to) a new home from Ward or Richlynn from r 364 daysprior to date o(service of Order to one day prior to date afservice ofOrderJ and still ownthat home today, you have the right to submit certain disputes to arbitration. Disputesthat can go to arbitration include:

Any disagreements you have with Ward/Richlynn about its performance underthe one year written warranty given to you when you purchased the home. (Forexample , you may disagree with Ward/Richlynn s refusal to repair a probJcm

that you believe is covered by the warranty. Or you may believe that WardlRichlynn s attempts to repair a problem were inadequate. You can take thesekinds of disputes t.o arbitration.Any disagreements you have with Ward/Richlynn about its handling of problemsand items Jisted during your pre-settlement inspection. (For example , you maybelieve that Ward/Richlynn has not corrected all of the items listed on the Orien-tation Inspection Sheet. Or you may dispute the adequacy of Ward/Richlynnrepairs. You can submit these disagreements to arbitration.



You may use this arbitration procedure at any time , even after the one year warrantyperiod is over. The expiration ofthe one year warranty period does not affect your rightto arbitrate disputes that arise during the warranty period. A copy of the arbitrationprocedures is attached to this letter. Please read these procedures carefully.

If you have any questions about this arbitration procedure, call (name of Ward!Richlynn representative) at (phone number) between the hours of 8:30 a.m. and 5:00

, Monday through Friday.

Very truly yours

Ward Development Company, Inc.Richlynn Development, Inc.

Enclosure

Li\Ll1'LJrtl'lli\ lVl.rUlLi\L AbbUC. ',FI

277 Modifying Order

IN THE MATTER OF

CALIFORNIA MEDICAL ASSOCIATION

MODIFYING ORDER IN REGARD TO ALLEGED VIOLATIONS OF SEC. 5 OF

THE FEDERAL TRADE COMMISSION ACT

Docket C-2967. Consent Order, April 17, 1979-Modifying Order, April , 198.5

In response to a petition fied by the California Medical Association ("CMA"), thisOrder reopens the proceeding and modifies the consent order entered in DocketG-2967 , 93 F. G 519 , by deleting Paragraph mC), which prohibits the associationfrom advising in favor of or against any relative value scale developed by third

parties , and inserting a provision that permits CMA more freedom to discuss issuesrelating to reimbursement with governmental entities and third-party payers.Such modification is consistent with the Commission s decision in Docket 9219Michigan State Medical Society, 101 F. 'l. C. 191 , and its modified order in DocketC-2855 American College of Obstetricians and Gynecologists 104 F. C. 524 (1985).The Commission , however , denied the other modifications requested by CMAholding that CMA had failed to show that changed circumstances or the publicinterest warranted further modification of the order.

ORDER REOPENING AND MODIFYING FINAL ORDER

By petition fied October 1 , 1984 , the California Medical AssociationCMA") asked the Commission to reopen and modify the Commission

order in Docket No. G-2967 ("Order ) entered with CMA's consent onApril 17 , 1979 (93 F. C. 519). CMA requested that the Commissionmodify the Order by a) deleting Paragraph n(C) of the Order, whichprohibits CMA from advising in favor of or against any relative valuescale developed by third parties (except that CMA is permitted provide historical data), and b) inserting a provision identical to aprovision contained in the Commission s Order in Michigan StateMedical Society, Docket No. 9129, 101 F. C. 191 (1983) ( MichiganState that would allow CMA more freedom to discuss issues relatingto reimbursement with third-party payers and governmental entities.CMA also requested that the Commission modify the order so that itwould no longer prohibit CMA from developing and disseminating arelative value scale. CMA's petition was placed on the public recordfor comment, and none of the comments received specifically relatedto the modification of Paragraph mC).

Upon consideration ofCMA' s petition and other relevant informa-tion , the Commission finds that the public interest would be servedby deleting Paragraph mC) ofthe Order and by inserting the relevantprovision contained in the order in Michigan State. Modification isconsistent with both the Commission s decision in Michigan State



and its modification ofthe Order in American College of Obstetriciansand Gynecologists, Docket No. G-2855 , August 28, 1984 (104 F.5241-

The Commission has denied the other modifications requested byCMA because CMA failed to show that changed circumstances or thepublic interest requires such modifications of the order. Th reforethe Order continues to prohibit CMA from developing or circulatingits own relative value guide for use by its members.

Relative value studies may have anticompetitive consequences inseveral ways. First , they establish price relationships that maybecome stable without regard to quality or eficiency differences. Sec-ond, they may result in new and separate billing categories that arefragmented from others, thereby resulting in higher prices simplybecause charges are made for more numerous services. Third , ifmedi-cal associations were permitted to publish RVS's it could lead toconcerted or interdependent adherence to an RVS by physicians.Fourth , RVS' s may facilitate an actual agreement by physicians to fixprices by providing a "starting point" from which collusion may oc-cur. Given these possibilities of competitive harm and the absence ofa convincing showing of the need for CMA to develop an RVS, webelieve the public interest lies in the continuation of the prohibitionagainst CMA.

In addition , although the Order no longer wil prohibit CMA fromdiscussing relative value scales with governmental entities and third-party payers , serious antitrust concerns would arise were CMA tonegotiate or attempt to negotiate an agreement with any such partyor engage in any type of coercive activity to effect such an agreement.

Accordingly,It is ordered That this matter be, and it hereby is , reopened and

that the Order in Docket No. G-2967 be modified 1) to delete Para-graph IIC) and to redesignate Paragraphs II(D) and II(E) ofthe Orderas Paragraphs II(C) and IID) respectively; 2) to renumber Paragraphs

, IV and V of the Order as Paragraphs IV , V and VI respectively;and 3) to insert the following:

II.

It is further ordered That this orderprevent CMA from:

A. Exercising rights permitted under the First Amendment to theUnited States Constitution to petition any federal or state govern-

ment , executive agency, or legislative body concerning legislation

shall not be construed to

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277 Modifying Order

B. Providing information or views, on its own behalf or on behalfof its members , to third-party payers concerning any issue, includingreimbursement.


Complaint 105 F.

IN THE MATTER OF

DESCENT CONTROL, INC.

CONSEN' r ORDER , ETC. IN REGARD TO ALLEGED VIOLATION OF SECTION 5OF THE FEDERAL TRADE COMMISSION ACT

Docket C-3152. Complaint, April 1985-Decision, April , 1985

This consent order requires a Fort Smith, Ark. marketer and distributor of the "SkyGenie" and other descent systems that arc used for descent , rescue , or escape fromhigh places , among other things , to cease misrepresenting that any descent systemprovides an aut.omatically-controlled descent or contains long-lasting line. Theorder requires the company to have a reasonable basis consisting of specified databefore making claims concerning the safety and performance characteristics ofdescent systems; or representations that the products meet or exceed any standardor are used as sold by any government agency or non-government organization.The firm is also required to disclose in catalogs , technical bulletins and operatinginstructions that the line should be replaced after two uses for rapid descent atspeeds exceeding 15 feet per second; and that the line must be replaced immediate-ly if exposed to certain chemicals or used to arrest a free fall of two feet or more.Technical bulletins and operating instructions must warn users that a line that hasbeen used as a utility line should not be used as a safi ty line; that the safety andspeed of desccnt is dependent upon manual control by the user; and that descentsystems should not be used by individuals who arc unfamiliar with their use.Additionally, the firm is required to aflx a warning label to all descent systems;mail specified safety information to past purchasers; and place advertisementscontaining the safety information in specified trade publications.

Appearances

For the Commission: Jeffrey M. Karp.

For the respondent:Pa.

Joseph Weiss, Weiss and Golden Philadelphia,

COMPLAINT

Pursuant to the provisions of the Federal Trade Commission Actas amended, 15 U. C. 45 et seq. and by virtue of the authority vestedin it by said Act , the Federal Trade Commission , having reason tobelieve that respondent Descent Control , Inc. , hereinafter referred toas respondent , has violated the provisions of said Act, and it appear-ing to the Commission that a proceeding by it in respect thereof wouldbe in the public interest , hereby issues its complaint , stating itscharges as follows:

P"PAf'UAPH 1 Hp"nnnnpnt. T)pf4('pnt. (;ont.rol. Inc.. is a corooration

DESCENT CONTROL , INC. 281

280 Complaint

organized, existing, and doing business under and by virtue of thelaws of the State of California, with its offce and principal place ofbusiness located at 3920 Ayers Road, P.O. Box 6405 , Fort SmithArkansas.

PAR. 2. Respondent is now and for sometime in the past has been

engaged in the manufacturing, advertising, marketing, distributing,and selling to the public of "Sky Genie Descent Systems , which aredevices for work in , and descent, escape and rescue from , high places.Such devices consist of a nylon line , aluminum shaft, cylindrical shaftcover, and a variety of harnesses, belts , seats and scaffolds.

PAR. 3. In the course and conduct of its business, respondent causes,and in the past has caused , Sky Genie Descent Systems to be offeredand sold from its place of business to purchasers located in variousStates ofthe United States and the District of Columbia. Respondentmaintains and , at all times mentioned herein , has maintained a sub-stantial course of trade in said products in or affecting commerce, ascommerce" is defined by the Federal Trade Commission Act, as

amended.PAR. 4. In the further course and conduct of its aforesaid business

respondent has at all times mentioned herein made numerous state-ments, orally and in writing, in various advertisements, promotionaland packaging materials prepared and/or disseminated by respond-

ent for use in selling respondent' s products. Ilustrative and typicalbut not inclusive of the statements employed as aforesaid , are thefollowing:

1. Descent control device for perfectly controlled descent from high places.

. .

2. EASY TO USE systems are preset for the desired rate of descent by the numberof line turns made around the shaft. Pre-adjustable to a wide range of weight loadsand desired speed of descent.

. .

3. SKY GENIE LINE.

. .

special woven , rot and mildew resistant nylon , stronger-many years longer lasting with shock absorbing elasticity built-in.

. .

4. All SKY GENIE equipment meets or exceeds O. A. standards for lifelinesboatswain chairs , escape and rescue use.

5. O. II.A. standards met or exceeded where applicable.6. SKY GENIE DESCENT SYSTEMS ARE IN USE BY. . A,my .

PAR. 5. Through the use ofthe aforesaid statements , respondent hasrepresented and continues to represent, directly or by implicationthat:

1. presetting the device by the number ofturns of the rope aroundthe shaft provides an automatically controlled descent which does notdepend on user control;

2. the nylon line of the Sky Genie descent systems is safe and

282 FEDF;RAL TRADE COMMISSION DECISIONS

Complaint 105 F.

durable for long periods oftime under repeated use for work, descentrescue or escape;

3. all Sky Genie descent systems equipment meet or exceed allapplicable OSHA standards , and , in particular , OSHA standards forlifelines , boatswain chairs , and escape and rescue; and

4. Sky Genie descent systems are used, in the form such systems areoffered for sale, by the U.S. Army.

PAR. 6. In truth and in fact:

1. presetting the device by the number of turns around the shaftdoes not provide an automatically controlled descent; rather, speed ofdescent is dependent upon user control;

2. the nylon line of the Sky Genie descent systems is not safe ordurable for long periods of time when used for rapid descents or toarrest a free fall. The nylon line of the Sky Genie descent systems issubject to failure or breakage after two uses for descents at speeds inexcess of 15 feet per second , or after one use to arrest a free fall of 2feet or more;

3. Sky Genie descent systems do not meet or exceed all applicableOSHA standards;

4. all lines distributed and sold by respondent do not meet or exceedOSHA standards for lifelines; only the 1/2" line meets OSHA stan-dards for lifelines;

5. the Sky Genie boatswain chair descent system does not meetOSHA standards;

6. no OSHA standards exist for lines used in escape and rescue;7. The U.S. Army does not use the Sky Genie descent systems in the

form such systems are offered for sale by respondent. The U.S. Armyuses the Sky Genie descent systems only after modifying them be-

cause the Sky Genie descent systems , in the form such systems areoffered for sale, do not meet Army standards for escape and rescuedevices.

Therefore, the representations set forth in Paragraph Five wereand are, false and misleading.

PAR. 7. Paragraphs Four , Five and Six are hereby incorporated byreference. In the course and conduct of its business , respondent hasrepresented and continues to represent that the Sky Genie descentsystems, when used according to instructions, are safe and effectivefor work in , and descent, rescue and escape from , high places.

PAR. 8. In truth and in fact , the Sky Genie descent systems , whenused according to instructions, are not safe and effective for work inand descent, rescue and escape from , high places because the instruc-


cerning the safe use and proper maintenance ofthe Sky Genie descentsystems:

1. user control , and not any presetting of the device , determines thespeed of descent;

2. the nylon line should be replaced after two uses for rapid descentat speeds in excess of 15 feet per second;

3. the nylon line must be replaced immediately ifused once to arresta free fall of 2 feet or more; and

4. the nylon line must be replaced immediately if exposed to certainchemicals commonly found in and around construction and mainte-nance sites.

PAR. 9. Respondent's representation, set forth in Paragraph Sevenby reason of its failure to disclose the facts described in ParagraphEight, is misleading in a material respect in that the disclosure ofthese facts to purchasers would be likely to affect their purchasingand/or product use decisions. Therefore, the failure to disclose thesematerial facts renders the representation referred to in ParagraphSeven false and misleading.

PAR. 10. The acts and practices of respondent, herein alleged , wereand are all to the prejudice and injury ofthe public and constitutedand now constitute unfair and deceptive acts or practices in or affect-ing commerce in violation of Section 5 of the Federal Trade Commis-sion Act. The acts and practices of respondent, as herein alleged, arecontinuing.

DECISION AND ORDER

The Federal Trade Commission having initiated an investigation ofcertain acts and practices of the respondent named in the captionhereof; and the respondent having been furnished thereafter with acopy ofa draft of complaint which the Bureau of Consumer Protectionproposed to present to the Commission for its consideration andwhich, if issued by the Commission , would charge respondents withviolation of the Federal Trade Commission Act; andThe respondent, its attorney, and counsel for the Commission hav-

ing thereafter executed an agreement containing a consent order, an

admission by the respondent of all the jurisdictional facts set forth inthe aforesaid draft of complaint , a statement that the signing of saidagreement is for settlement purposes only and does not constitute anadmission by respondent that the law has been violated as alleged insuch complaint , and waivers and other provisions as required by theCommission s Rules; and

The Commission having thereafter considered the matter and hav-



ing determined that it had reason to believe that the respondent hasviolated the said Act, and that complaint should issue stating itscharges in that respect, and having thereupon accepted the executedconsent agreement and placed such agreement on the public recordfor a period of sixty (60) days , now in further conformity with theprocedure prescribed in Section 2.34 of its Rules , the Commissionhereby issues its complaint , makes the following jurisdictional find-ings and enters the following order:

1. Respondent Descent Control, is a corporation organized, existingand doing business under and by virtue of the laws of the State ofCalifornia with its offce and principal place of business located at3920 Ayers Road , P.O. Box 6405 , Fort Smith , Arkansas.

2. The Federal Trade Commission has jurisdiction of the subjectmatter of this proceeding and of the respondent, and the proceedingis in the public interest.

ORDER

For the purpose of this Order, the following definitions shall apply:

1. Descent Control means Descent Control , Inc. , its subsidiariessuccessors and assigns, and any other entity continuing the businessof Descent Control , Inc. , that has actual knowledge of this Order.

2. descent systems means all hardware , rope and other componentswhich are marketed and sold for the purpose of work in, or descentrescue or escape from , high places.

3. person means any individual, partnership, corporation, firmtrust, estate , cooperative , association , or other entity.

4. distributormeans any person who , pursuant to a sales agreementwith Descent Control, purchases or receives on consignment descentsystems for resale to the public.

5. owner means any person who purchased a Sky Genie descentsystem directly from Descent Control or from a distributor.

It is ordered That respondent Descent Control , Inc. , a corporationits successors and assigns, and its offcers, agents , representativesand employees , directly or through any corporation , subsidiary, divi-sion or other device , in connection with the advertising, offering forsale, sale or distribution of Sky Genie descent systems, or any otherdescent systems , in or affecting commerce , as "commerce" is definedin the Federal Trade Commission Act, do forthwith cease and desistfrom disseminatine-. or causing- the dissemination of: any advertise-

l)JCuvC.i'11 "-Vi" .L!\Vl. u~"-.

280 Dccision and Order

ment, promotional material , operating instruction , technical manuallabel , packaging, or catalog, which represents directly or by implica-tion:

a. that any such descent systems provide an automatically con-

trolled descent, unless such is the case;b. that any nylon line within any such descent systems is long-

lasting, unless such is the case;

c. that any such descent systems meet or exceed a standard of anygovernment agency or non-government organization unless:

(i) there is disclosed clearly and prominently, in close conjunctiontherewith, a description of which standard is met or exceeded andwhether all or only part of the descent systems meet or exceed suchstandard; and

(ii) at the time the representation is made Descent Control possessesand relies upon a reasonable basis for the representation.

d. that any such descent systems are used , in the form such systemsare offered for sale, by any government agency or non-governmentorganization , unless , at the time the representation is made, DescentControl possesses and relies upon a reasonable basis for the represen-tation consisting of a verified written statement from the agency ororganization which is claimed to use the descent systems attesting tosuch use; and

e. any safety or other performance characteristic of any such de-scent systems , unless , at the time the representation is made , DescentControl possesses and relies upon a reasonable basis for the represen-

tation consisting of competent and reliable objective evidence sub-stantiating the representation.

II.

It is further ordered That respondent Descent Control , Inc. , a corpo-ration , its successors and assigns , and its offcers , agents , representa-tives and employees, directly or through any corporation , subsidiary,division or other device , in connection with the advertising, offeringfor sale , sale or distribution of the Sky Genie descent systems , or anyother descent systems, in or afIecting commerce , as "commerce" is

defined in the Federal Trade Commission Aet, do forthwith cease anddesist from failing to disclose clearly and prominently in each catalogfor such systems the following:

1. that the line should be replaced after two uses for rapid descentat speeds in excess of 15 feet per second;



2. that the line must be replaced immediately if once used to arresta free fall of 2 feet or more; and

3. that the line must be replaced immediately if exposed to anychemicals listed in the operating instructions.

III.

It is further ordered That respondent Descent Control , Inc. , a corpo-ration , its successors and assigns, and its ofIicers , agents , representa-tives and employees , directly or through any corporation , subsidiary,division or other device, in connection with the advertising, offeringfor sale , sale or distribution of the Sky Genie descent systems , or anyother descent systems , in or affecting commerce, as "commerce" is

defined in the Federal Trade Commission Act , do forthwith cease anddesist from failing to disclose clearly and prominently in each techni-cal bulletin and operating instruction for such descent systems ade-quate instructions for safe and proper use , including, but not limited

, the following:

1. that the line which is a component ofthe descent systems shouldbe replaced after two uses for rapid descent at speeds in excess of 15

feet per second;2. that the line must be immediately replaced if once used to arrest

a free fall of 2 feet or more;3. that the line must be replaced immediately if exposed to any of

the following chemicals (herein Descent Control should identify allchemicals which it knows or has reason to know would adversely

affect the line in its descent systemsJ;4. that the line should not be used as a safety line if it has ever been

used as a utility line;5. that the descent systems are not appropriate or safe for use as

personal emergency or self-rescue devices by individuals who are notfamiliar with the proper use and application of the devices; and

6. that the safety and speed of descent of users of the descent sys-

tems is dependent upon manual control by the user.

IV.

It is further ordered That respondent Descent Control , Inc. , a corpo-ration , its successors and assigns , and its offcers, agents, representa-tives , and employees , directly or through any corporation , subsidiary,division or other device , in connection with the advertising, offeringfor sale, sale or distribution ofthe Sky Genie descent systems , or anynthpr rlpl;f'pnt ,""..tCllT''':. -in r.... J'fnr.tinrr r',YYY"'YYH..,,,,"""a ""CO " "'''"Y''O''''''

'' ;,.

DESCENT UJ1 lnv"-, .L..


defined in the Federal Trade Commission Act, do forthwith cease anddesist from failng to affx to each such descent system and to thepackaging thereof a permanent white-adhesive label disclosing clear-ly and prominently in red letters:

WARNING: This line is subject to breakage under certain conditions. See operat-ing manual for details.

It is further ordered That Descent Control shall within thirty (30)days after the date of service of this order:

1. provide each of its distributors with the labels described in PartIV and with technical bulletins and operating instructions whichcontain the disclosures required by Part III in suffcient number tocover each distributor s existing inventory of descent systems; and

2. instruct and use its best efIorts to ensure that each distributoraffxes such labels to each descent system and its packaging andincludes such technical bulletins and operating instructions witheach descent system in the distributor s inventory.

VI.

It is further ordered That Descent Control shall send to each owneridentified by its records and to each owner identified by its distribu-tors ' records, by first class mail , within sixty (60) days after the serviceof this order, a copy of the letter attached hereto as Appendix A inan envelope clearly stamped on the front with the words "ContainsImportant Product Safety Information.

VII.

It is further ordered That Descent Control shall , within thirty daysafter the date of service ofthis Order , place or cause to be placed , inthe manner described below, the announcement attached hereto asAppendix B, beginning as soon as space is available , in three consecu-tive issues of Occupational Hazards and Industrial Safety and Hy-

giene News, and National Safety News.

The printed announcement shall be no smaller than one quarterpage in size , and shall not include any additional text or graphics.

288 FEDERAL TRADE CQMMISSlON DECISIONS

Deci::ion and Order 105 F.

VIII.

It is further ordered That Descent Control shall distribute a copyofthis Order to each present and future offcer, employee, agent andrepresentative having sales, advertising, or policy making respon-sibilities for any descent systems and secure from each such persona signed statement acknowledging receipt of said Order.

IX.

It is further ordered That Descent Control shall maintain for atleast three years and upon request make available to the FederalTrade Commission for inspection and copying the originals of signedstatements required by Part VIII of this Order and all test resultsdata, and other documents or information relied upon for any repre-sentation for any descent systems and any information in the posses-sion of Descent Control which contradicts, qualifies or calls intoserious question that representation.

It is further ordered That respondent notify the Commission atleast thirty (30) days prior to any proposed change in the corporaterespondent such as dissolution , assignment or sale resulting in theemergence of a successor corporation , the creation or dissolution ofsubsidiaries or any other change in the corporation which may affectcompliance obligations arising out of the Order.

XI.

It is further ordered That respondent shall , within ninety (90) daysafter service upon it ofthis Order, fie with the Commission a reportin writing, setting forth in detail , the manner and form in which ithas complied with this Order.

APPENDIX A

Dear Customer:

Our records show that you have purchased a Sky Genic descent system. Recently, ithas come to our attention that users of this product may not be aware of necessaryprecautions to ensure safe use. Therefore , as a result of an agreement w.ith the Federalrrade Commission , we are contacting all of our Sky Gcnie customers to alert them\bout the foJlowing precautions.

1. THE LINE MAY BREAK if used more than 2 times for rapid descPflh: "I ",....

..-

DESCENT CONTROL , INC.


in excess of 15 feet per second (for example , rappelling or using it as a climbing rope).Replace the line after 2 rapid descents.

2. DO NOT use the rope as a safety line if it has ever been used as a utility line.3. Replace the line IMMEDIATELY after it has been used to arrest a free fall of 2

feet or more.4. Replace the line IMMEDIATELY if it has been exposed to any of the following

chemicals:

Hydrochloric acidNitric acid

Muriatic acid

Sulfuric acid

Acetic acid

Oxalic acidPhenolNitrobenzene

5. The number of turns of t.he line around the shaft of the Sky Genie will NOTautomatically ensure a controlled rate of descent. The user must be prepared to manu-ally control the descent in order to prevent an uncontrolJed fall.

6. The durability and lie of the line will vary significantly depending on how andwhere it is used. In order to ensure safe use in an emergency, inspect the line carefullybefore each use. Look for broken , cut or pulled strands, worn fibers, or any hardeningor discoloring of portions of the line. Ifany of these warning signs are present , the linemay break.

If you have any questions on the use and care of the Sky Genie descent system , pleasewrite Desccnt Control , P. O. Box 6405 , Fort Smith , Arkansas 72906 , or call (800) 643-2539.

Sincerely yours

President

290 FEDERAL TRADE COMMISSIONDECISIONS


APPi' NDIX B

(insertcompany10goJ

For owners of

SKY GENIEDESCENT SYSTEMS

Your SKY GENIE line may break or you may suffer an un-controlled fall if you don t use it properly-follow these im-portant steps for safe use:

1. REPLACE THE LINE when it s been used to arrest a freefall of 2 feet or more.

2. REPLACE THE LINE when it's been exposed to any ofthe following chemicals: Hydrochloric , Nitric , MuriaticSulfuric , Acetic or Oxalic acids, Phenol or Nitrobenzene.

3. REPLACE THE LINE after two rapid descents at speedsin excess of 15 feet per second.

4. BE PREPARED to manually control the speed of descent.The number of turns of the line around the shaft will notautomatically ensure a controlled descent.

* For further information , write: Descent Control , P.Box 6405. Fort Smith , Arkansas 72906, or call (800)643-2539.

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