The Federal Trade Commission today accepted for public comment a proposed consent order with the Institute of Store Planners (ISP), which would require the group to remove restrictions on competition by and among its members. According to the FTC’s complaint, ISP, based in Tarrytown, New York, requires all of its members to comply with its Code of Ethics. The Code prohibits its members from providing their services for free and competing with other members for work on the basis of price. In implementing the terms of the proposed order, ISP must revise its Code of Ethics to eliminate the anticompetitive provisions and publish the new Code in its newsletter and on its Web site for one year.
"The ISP Code of Ethics is just one of several identified by the Commission as containing provisions that have the potential to harm consumers by decreasing price competition," said FTC Bureau of Competition Director Joe Simons. "Professional organizations should take this opportunity to revise their codes before we knock on their door."
ISP’s membership is composed of professional design practitioners who provide architectural, store design, store planning, merchandise planning, traffic flow planning fixture and lighting design, in-store graphics and visual presentation services to retail stores. Its membership is also comprised of trade members such as suppliers and fabricators of products and materials used in store design, as well as general contractors who provide labor and project management services and build the projects.
According to the FTC, ISP, which has approximately 800 members, many of whom provide services for a fee or are employed by store planning and design firms, engages in substantial activities for the economic benefit of its members.
According to the FTC’s complaint, ISP violated Section 5 of the FTC Act by acting on behalf of its members and in agreement with some members to restrain prices and restrict competition among its members and others. This was achieved, the FTC contends, through ISP’s Code of Ethics, which states, among other things, that "a member shall not render professional services without compensation" and that "a member shall not knowingly compete with other members on the basis of professional charges, or use donations as a device for obtaining a professional advantage." The Code also states that "a member shall not offer his services in competition except as provided by such competition codes as the Institute may establish."
All applicants seeking admission to membership in ISP must agree in writing to follow the Institute’s by-laws, which contain the Code of Ethics. The FTC contends that ISP is engaged in unfair methods of competition that have unreasonably restrained competition and injured consumers by discouraging price competition among store planners.
Under the terms of the proposed consent order with the Commission, ISP is prohibited from restricting, impeding, declaring unethical or unprofessional, or advising against price competition among its members. In addition, to ensure ISP’s compliance with the order, within 90 days after the Commission makes the order final, ISP is required to remove from its Code of Ethics any existing policy statement, commentary, or guideline – including those on its Web site – that is inconsistent with the terms of the order. Further, ISP is required to publish a copy of any relevant revised documents in its newsletter, ISP International News, and on its Web site, as well as publishing a copy of the complaint and order in the ISP International News. Finally, ISP must place the Commission’s complaint and order on its Web site for at least one year, with a link in a prominent position on the site’s home page. The order contains additional provisions to monitor compliance as well.
The Commission voted 5-0 to approve the consent agreement and place it on the public record. An announcement regarding the proposed consent agreement will be published in the Federal Register shortly. The proposed order will be subject to public comment for 30 days, until May 16, 2003, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.
(FTC File No. 021-0144)