Analysis of Proposed Consent Order
The Federal Trade Commission ("Commission") has accepted, subject to final approval, an Agreement Containing Consent Order ("Order") from South Lake Tahoe Lodging Association ("SLTLA" or "Proposed Respondent"). The proposed Order is designed to prevent the recurrence of anticompetitive practices engaged in by SLTLA and its members in connection with an effort by the Proposed Respondent and its members to eliminate or restrict the use of signs advertising the prices at which its members provided lodging services in the South Lake Tahoe, California, area.
The Agreement Containing Consent Order, if finally accepted by the Commission, would settle charges that Proposed Respondent's conduct violated Section 5 of the Federal Trade Commission Act by eliminating one form of competition between lodging establishments in the South Lake Tahoe area and by making it more difficult for consumers to get accurate information about the prices for lodging in that area. The proposed complaint, described below, relates the basis for this relief.
The proposed consent order has been placed on the public record for sixty (60) days for reception of comments by interested persons. Comments received during this period will become part of the public record. After sixty (60) days, the Commission will again review the agreement and the comments received and will decide whether it should withdraw from the agreement or make final the agreement's proposed order.
The Proposed Complaint
According to the Commission's proposed complaint, SLTLA is a nonprofit corporation whose members are operators of lodging establishments in the South Lake Tahoe, California, area. SLTLA's associate members include operators of lodging establishments and related businesses in the South Lake Tahoe, California, area and the adjacent areas of Nevada. According to the proposed complaint, SLTLA's members and associate members constitute approximately 70 percent of the available lodging in the South Lake Tahoe area. The Commission's complaint alleges that SLTLA and its members entered into an agreement to suspend the use of signs advertising prices for lodging. The evidence also shows that the primary purpose of the agreement was to increase the room rates charged for lodging in the South Lake Tahoe area of Northern California and Nevada and to end what members saw as a "destructive" price war on motel rooms in the South Lake Tahoe area by eliminating the posting of signs advertising the prices at which its individual members offer such lodging.
According to the proposed complaint, the effects of the agreement are that price competition among providers of lodging in the South Lake Tahoe area has been reduced, and consumers have been deprived of the benefits of readily available information about the price for lodging.
The Proposed Order
The proposed Order contains provisions designed to remedy the violations charged and to prevent the respondent from engaging in similar acts and practices in the future. Part II of the proposed order would prohibit SLTLA from carrying out, participating in, inducing, suggesting, urging, encouraging, or assisting any agreement, combination or conspiracy with its members, or agreement, combination or conspiracy with some of its members, to restrict the posting of signs advertising the prices at which its individual members offer lodging. Part II would not bar SLTLA from exercising rights protected under the First Amendment to the United States Constitution to petition any federal, state or local government executive agency or legislative body concerning legislation, rules, programs, or procedures, or to participate in any federal, state or local administrative or judicial proceeding.
The proposed order also requires the respondent to amend its corporate by-laws to incorporate by reference Paragraph II of this Order; to distribute a copy of the amended by-laws to each of its members; to provide a copy of the consent agreement and complaint to all of its current members and to any new members for a period of five (5) years; and to file one or more reports detailing compliance with the order.
The purpose of this analysis is to invite public comment on the proposed order. This analysis is not intended to constitute an official interpretation of the agreement and proposed order or to modify their terms in any way.