ANALYSIS OF PROPOSED CONSENT ORDER TO AID PUBLIC COMMENT
The Federal Trade Commission has accepted, subject to final approval, an agreement to a proposed consent order from Fastline Publications, Inc. ("Fastline") and Mid-America Equipment Retailers Association ("Mid-America"). The agreement would settle allegations that Fastline and Mid-America violated Section 5 of the Federal Trade Commission Act by agreeing not to advertise or publish prices for new farm equipment in the Fastline Kentucky Farm Edition.
The proposed consent order has been placed on the public record for sixty (60) days for receipt of comments by interested persons. Comments received during this period will become part of the public record. After sixty (60) days, the Commission will review the agreement and the comments received, and will decide whether it should withdraw from the agreement and take other appropriate action or make final the agreement's proposed order.
The purpose of this analysis is to facilitate public comment on the proposed consent order. The analysis is not intended to constitute an official interpretation of the agreement and proposed order, or to modify in any way their terms. Further, the proposed consent order has been entered into for settlement purposes only, and does not constitute an admission by Fastline or Mid-America that the law has been violated as alleged in the complaint.
Fastline publishes, among other things, picture buying guides for new and used farm equipment, which are mailed free to farmers and ranchers in over 40 states. Farm equipment advertised in Fastline's buying guides ranges from relatively inexpensive lawn mowers to heavy duty farm equipment such as tractors, plows, planters, cotton pickers, and combines costing tens of thousands of dollars. Fastline's principal source of revenue is the farm equipment dealers who advertise in its buying guides. Fastline currently publishes 20 monthly editions of its farm equipment buying guides, serving 41 states. Farm equipment dealers view the Fastline Kentucky Farm Edition as a key vehicle for advertising to farmers located in Kentucky.
Mid-America is a trade association for farm equipment dealers. It was formed in 1992 through the merger of the Indiana Implement Dealers Association, Inc., and the Kentucky Farm and Power Equipment Retailers Association (the "Kentucky Retailers Association"). About 90 percent of the farm equipment dealers in Kentucky and Indiana are members of Mid-America.
In early 1991, several Kentucky farm equipment dealers complained to Fastline about dealers advertising prices, including discount prices, for new farm equipment in the Fastline Kentucky Farm Edition. The price advertisements were, among other things, facilitating downward pressure on prices for new farm equipment. In protest, several dealers withheld their advertising from the Fastline Kentucky Farm Edition until Fastline agreed not to publish advertisements that included prices for new farm equipment.
Price advertisements for new farm equipment began to reappear in the Fastline Kentucky Farm Edition by the end of 1991. In early 1992, Fastline was invited to the annual meeting of the Kentucky Retailers Association, during which several of its members expressed their dislike for price advertising and threatened to withdraw or otherwise cancel their advertisements in the Fastline Kentucky Farm Edition if Fastline continued to publish advertisements that included prices for new equipment. Fastline, threatened with the loss of substantial advertising revenue, acquiesced and stopped accepting advertisements that included prices for new equipment. Following the merger of the Kentucky and Indiana trade associations, Mid-America sought and obtained Fastline's reaffirmation of the agreement not to publish prices for new equipment in the Fastline Kentucky Farm Edition.
These agreements have injured consumers by: (1) reducing price competition among farm equipment dealers for new farm equipment; (2) depriving consumers of truthful and nondeceptive price information; and (3) depriving consumers of the benefits of competition.
The Proposed Consent Order
Fastline and Mid-America have signed a consent agreement containing a proposed order. Part II of the proposed order would enjoin Mid-America from impeding the advertising of prices or other terms of sale for farm equipment or parts. Additionally, Mid-America would be enjoined from participating in or assisting in any boycott regarding the advertising of prices or other terms of sale for farm equipment or parts.
Part III of the proposed order would enjoin Fastline from agreeing to prohibit or restrict the advertising of prices or other terms of sale for farm equipment or parts. Notwithstanding this provision, however, the proposed order would not prevent Fastline from adopting and enforcing reasonable guidelines with respect to advertisements that Fastline reasonably believes would be false or deceptive within the meaning of Section 5 of the Federal Trade Commission Act.
Part IV of the proposed order would require Mid-America to amend its by-laws to incorporate by reference Paragraph II of the order, and distribute a copy of the amended by-laws to each of its members. In addition, the proposed order would require Mid-America to distribute copies of the proposed order and accompanying complaint to: (a) persons whose activities are affected by the order, or who have responsibilities with respect to the subject matter of the order; and (b) each of its members.
Part V of the proposed order would require Fastline to distribute copies of the order and accompanying complaint to persons whose activities are affected by the order, or who have responsibilities with respect to the subject matter of the order. In addition, the proposed order would require Fastline to publish annually for each of the next five years in each edition of its farm equipment buying guides a copy of the NOTICE attached to the order.
Parts VI, VII, and VIII of the proposed order impose certain reporting requirements in order to assist the Commission in monitoring compliance with the order.
The proposed consent order would terminate twenty (20) years after the date it is issued.