Announced Action(s) for May 2, 1997

For Your Information

Applications for approval of transactions: The FTC has received applications for approval for transactions from the following entities. The FTC is seeking public comments on the applications for 30 days, until June 2.

  • Baxter International, Inc., of Deerfield, Illinois, has applied for FTC approval to divest by license the Immuno Fibrin Sealant assets, a product in development that will be used to control bleeding in surgical procedures, to Haemacure Corporation, a Canadian firm. Divestiture of these assets is required under a February 1996 consent order designed to restore competition, allegedly injured as a result of Baxter’s acquisition of Immuno International, for the development for fibrin sealant. (The FTC case also challenged the acquisition as to a plasma product used for the treatment of Factor VIII inhibitors in hemophiliacs. A divestiture application regarding a required divestiture in that market is pending at the FTC.) The divestiture requirements in the consent order are designed to restore competition. (See Dec. 19, 1996 news release for more details regarding the consent order; Docket No. C-3726.) Staff contact is Elizabeth A. Piotrowski, 202-326-2623.
  • Phillips Petroleum Company, of Bartlesville, Oklahoma, has applied for FTC approval to divest approximately 160 miles of its natural gas pipeline system in Oklahoma to KN Gas Gathering, Inc., of Douglas, Wyoming. The divestiture of this pipeline is required under a March 1997 consent order settling charges that Phillips’ acquisition of gas gathering assets from ANR Pipeline Company violated antitrust laws in that it would substantially reduce competition for natural gas gathering services in areas of five Oklahoma counties. The divestiture is designed to restore competition. (See Dec. 30, 1996 news release for more details about this case; Docket C-3728.) Staff contact is Daniel Ducore, 202-326-2526.

Consent agreements given final approval: Following a public comment period on each, the Commission has made final consent agreements with the following entities. The Commission action makes the consent orders binding on the respondents.

  • The consent order with The Money Tree, Inc., of Bainbridge, Georgia, and company officer Vance R. Martin, settles charges that they required consumers applying for loans to purchase some combination of credit-life insurance, credit-disability insurance, accidental death and dismemberment insurance, and/or an auto club membership, but did not include the cost of these mandatory "extras" in the finance charge and the annual percentage rate disclosed to consumers, as required by the Truth in Lending Act and Regulation Z. Instead, the FTC alleged, Money Tree included the cost of the extras in the amount financed, causing consumers to pay interest on the premiums and fees for these extras. In addition, the FTC alleged that the respondents violated the Fair Credit Reporting Act by failing to disclose to consumers, when their credit applicatons were denied because of information ocntained in a credit report, the name and address of the credit bureau that supplied the credit report. This disclosure triggers a consumer’s right to get a free copy of his or her credit report to check for errors. The order requires Money Tree to offer customers the chance to cancel the credit-life, credit-disability, or accidental death and dismemberment insurance they purchased, and to obtain cash refunds or credits which could amount to as much as $1.2 million. The order also bars Money Tree and Martin from requiring consumers to sign statements that such purchases are voluntary if, in fact, they are required to obtain the loan; from referring to credit-related insurance or auto club memberships without, at the same time, telling consumers their loan applica tions have been approved and the amount of the approved loans; and requires the respondents to disclose to consumers that such coverage is optional and to have those consumers sign a form acknowledging that fact and stating that the consumers’ loans already have been approved and the amount the extras will cost if they choose to purchase them. The order also bars violations of the FCRA provisions regarding disclosures to consumers when their credit reports played a role in the denial of credit. (See. Feb. 4, 1996 news release for more details regarding this case; Docket No. C-3735; Commission vote on April 28 to issue this order as final was 5-0.) Staff contacts are Thomas Kane and Rolando Berrelez, 202-326-3224.
  • The consent order with Nationwide Syndications, Inc., of Barrington, Illinois, and company president Thomas W. Karon, settles charges that they made false and unsubstantiated claims regarding the benefits of their NightSafe Glasses, which purpor tedly make night driving safer by improving night vision. The order prohibits the respondents from representing that NightSafe Glasses or any substantially similar product makes driving safer or improves night vision, and requires them to have competent and reliable scientific evidence to substantiate claims about the efficacy, performance, bene fits or safety of such products. The order also bars use of the trade name "NightSafe," or any other trade name that implies the use of such a product makes night driving safer. In addition, the respondents will pay $125,000 in consumer redress, and will provide the FTC with the names and addresses of purchasers so that the FTC can send them a safety notice about using NightSafe Glasses while driving at night. (See Jan. 24, 1997 news release for more details regarding this case; Docket No. C-3736; Commission vote on April 28 to issue the order as final was 5-0.) Staff contact is Steven Baker, Chicago Regional Office, 312-353-8156.
  • The consent order with SplitFire, Inc., of Northbrook, Illinois, settles charges that the fuel economy, efficiency and improved performance claims it made in ads for its spark plugs were false or unsubstantiated. The consent order prohibits SplitFire from making fuel economy, emissions, horsepower, or cost savings claims without competent and reliable scientific evidence to support them. It also bars misrepresentations about the existence, contents, validity, results, conclusions or interpretations of any test or study. In connection with testimonials, the order requires SplitFire to have competent and reliable scientific evidence to substantiate claims in endorsements or testimonials; to disclose either what the typical or ordinary consumers experience would be or the limited applicability of the endorser’s experience to other consumers. (See Feb. 11, 1997 news release for details regarding this case; Docket No. C-3737; Commission vote on April 28 to issue this order as final was 5-0.) Staff contact is Laura Fremont, San Francisco Regional Office, 415-356-5270.
  • The consent order with Zale Corporation, of Irving, Texas, settles charges that Zale deceptively advertised its "Ocean Treasures" line of imitation pearl jewelry as composed of cultured pearls. The consent order prohibits Zale from misrepresenting the composi tion or origin of any imitation, cultured or natural pearl product. It also requires Zale to include a word such as "artificial," "imitation," or "simulated" in close proximity to any representation that an imitation pearl product contains pearls; and to include a word such as "cultured" or "cultivated" in close proximity to any representation that a cultured pearl product contains pearls. In addition, the order requires Zale, for three years, to make available to consumers in Zale’s stores an information sheet that describes the origin of imitation, cultured and natural pearls. (See Feb. 10, 1997 news release for more details regarding this case; Docket No. C-3738; Commission vote on April 28 to issue this order as final was 5-0.) Staff contact is Matthew Gold, San Francisco Regional Office, 415- 356-5276.

Comments on the Baxter and Phillips’ applications should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580. Copies of the documents referenced above are available from the FTC’s Public Reference Branch, Room 130, at the same address; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov

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