Agreements to ban price advertising for new farm equipment violated federal law, the Federal Trade Commission said today in announcing a settlement with Fastline Publications, Inc., a Kentucky publisher, and Mid-America Equipment Retailers Association, an Indiana trade association representing farm equipment dealers. According to the FTC, the agreements deprived consumers of the benefits of competition among farm equipment dealers and deprived consumers of truthful and nondeceptive price information. The agreement to settle the charges would prohibit Fastline and Mid-America from restricting the advertising of prices for farm equipment in the future.
"Price advertising communicates critical information to consumers. Competitors cannot agree among themselves to stop advertising prices, and they cannot pressure publications to achieve the same result," said William J. Baer, Director of the FTC's Bureau of Competition. "These actions not only deprive consumers of the information they need to purchase the products they want, but they can lead to higher prices."
According to the FTC, 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. In Kentucky, farm equipment dealers view the Fastline Kentucky Farm Edition as a key vehicle for advertising to farmers.
Mid-America is a trade association for farm equipment dealers, the agency said. About 90 percent of 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 FTC's complaint charges. The price advertisements, were among other things, pressuring dealers to cut prices for new farm equipment. In protest, the complaint says, several dealers withheld their advertisements in retaliation for Fastline publishing advertisements that included prices for new equipment. Advertising was withheld until Fastline agreed not to publish price advertisements for new farm equipment.
One year later, the retailers again threatened to withdraw advertising after price advertisements had reappeared in Fastline. Fastline, threatened with the loss of substantial advertising revenue, acquiesced and stopped accepting advertisements that included prices for new equipment, the FTC alleged. In June 1993, Mid-America sought and obtained Fastline's reaffirmation of the agreement not to publish prices for new equipment, the complaint charges.
The proposed consent order would enjoin Mid-America from impeding the advertising of prices for farm equipment. In addition, it would be enjoined from participating in any boycott regarding the advertising of prices for farm equipment. The proposed order also would prohibit Fastline from restricting the advertising of prices for farm equipment. The settlement would provide, however, that Fastline may disseminate to its advertisers reasonable guidelines to enforce restrictions against advertisements that Fastline believes would be false or deceptive.
The settlement also would require Fastline and Mid-America to distribute the proposed consent order and complaint to anyone who is affected by 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 that is attached to the order.
The Commission vote to accept the proposed settlement for public comment was 5-0.
An analysis of the proposed agreement will appear in the Federal Register shortly. The agreement will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.
NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.
Copies of the complaint, the proposed consent order and the analysis of the proposed consent order to aid public comment are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD 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 File No. 971 0039)
Office of Public Affairs
Bureau of Competition
Willard K. Tom
Bureau of Competition