International Monthly: May 2017

 
 U.S. Competition, Consumer Protection and Privacy News
 

MAY 2017

Highlights

FTC Participates in Meetings of International Competition Network and International Consumer Protection and Enforcement Network

ICN logo

The FTC participated in meetings of both the International Competition Network and the International Consumer Protection and Enforcement Network during the past month. At the ICN’s 16th annual conference in Portugal in May, the network adopted recommended practices on merger process, analysis, and remedies developed by the Merger Working Group, of which the FTC is a co-chair. Acting FTC Chairman Ohlhausen helped lead the conference’s discussion of the analysis of non-price effects in merger analysis.

ICPEN logo

At the April ICPEN conference in Germany, the network adopted a new strategy plan for 2017-2020. The FTC moderated a panel on online lead generation and presented a draft toolkit developed by the Online Lead Generation Working Group to educate the Network about the consumer protection issues.

Competition

Divestiture Will Preserve Competition in U.S. Market for Industrial Switchboxes

Industrial valve manufacturer Emerson Electric Co. agreed to sell the switchbox business of Pentair plc to Crane Co. to settle FTC charges that Emerson’s proposed $3.15 billion acquisition of Pentair would violate federal antitrust law. According to the complaint, switchboxes perform a critical safety function, so brand reputation and product reliability are very important to customers. Because of the time and investment required to develop switchboxes and to build a sufficient reputation with customers for quality and reliability, current and future competitors in the switchbox market are unlikely to restore the loss of competition caused by the acquisition, the complaint alleges. Further details about the consent agreement are set forth in the analysis to aid public comment.

FTC Staff Submits Comment to FERC on Helping New Electricity Generators Connect to the Power Grid

FTC staff submitted a comment to the U.S. Federal Energy Regulatory Commission (FERC) on a proposal to improve the rules governing how electricity generation facilities connect to the transmission grid. These reforms are designed to allow wholesale power producers to connect to the transmission grid more quickly and cost-effectively. The FTC staff comment supports FERC’s reform proposals. The comment notes that FERC's proposals may give power generation entrants more opportunities to innovate and decrease interconnection costs. FTC staff believes that these proposed reforms will increase competition and benefit electricity customers.

Consumer Protection and Privacy

FTC Obtains Court Order Halting Peruvian Telemarketing Scheme that Preyed on Spanish Speaking Consumers

At the FTC’s request, a federal court has halted an operation whose telemarketers in Peru allegedly used deceptive and abusive tactics to sell products for learning English to Spanish speaking consumers throughout the United States. The court froze the defendants’ assets pending resolution of the case. According to the FTC complaint, when consumers declined a sales pitch or canceled delivery, the telemarketers allegedly said they were lawyers or government officials and threatened to sue, arrest, or jail consumers, or seize their homes, if they didn’t pay. For consumer information about dealing with phone fraud, see the FTC blog Phone Scams. To stay informed about fraud, sign up to receive FTC scam alerts. All of the FTC’s consumer education information is available in Spanish.

Marketers of ‘NutriMost Ultimate Fat Loss System’ Settle FTC Charges

The marketers of the “NutriMost Ultimate Fat Loss System” have agreed to settle an FTC complaint that their marketing claims were deceptive and not supported by scientific evidence. The complaint also charges the defendants with using endorsements and testimonials without disclosing that the endorsers had material connections to the defendants or their franchisees. The FTC also alleged that the defendants required buyers to sign a contract agreeing not to make any negative statements or comments about the NutriMost System, and that if they did, they would have to pay $35,999. The court order settling the FTC’s charges bars the defendants from making the deceptive claims, as well as providing others, including franchisees, with the means to deceive consumers. The defendants also will pay $2 million to provide refunds to consumers. The order prohibits the defendants from using deceptive endorsements and from including non-disparagement clauses in their contracts.

FTC Staff Reminds Influencers and Brands to Clearly Disclose Relationship

After reviewing numerous Instagram posts by celebrities, athletes, and other influencers, FTC staff recently sent more than 90 letters reminding influencers and marketers that influencers should clearly and conspicuously disclose their relationships to brands when they promote or endorse products through social media. The letters are the first time that FTC staff has reached out directly to educate social media influencers themselves. The FTC’s Endorsement Guides provide that if there is a “material connection” between an endorser and an advertiser, i.e. a connection that might affect the weight or credibility that consumers give the endorsement, that connection should be clearly and conspicuously disclosed, unless it is already clear from the context of the communication. A material connection could be a business or family relationship, monetary payment, or the gift of a free product. Importantly, the Endorsement Guides apply to both marketers and endorsers.

The letters also addressed disclosure placement concerns specific to Instagram and to posts containing multiple tags, hashtags, or links. In addition to issuing the Endorsement Guides, the FTC has addressed the need for endorsers to adequately disclose connections to brands through law enforcement actions and the staff’s business education efforts. These include FTC’s Endorsement Guides: What People are Asking, an informal business guidance document.

In Other News

FTC Announces Final Agenda for Identity Theft Conference

ID Theft conference

The FTC has announced the final agenda for a May 24 conference on identity theft. FTC Acting Chairman Maureen K. Ohlhausen will deliver keynote remarks. The conference will include panel discussions on how identity thieves acquire and use consumer information, how websites trade in stolen consumer information, the impact of identity theft on financial services, health care, and other sectors, the challenges that identity theft victims face, and resources available to identity theft victims. In addition, FTC technical experts will give a presentation describing how malicious actors use consumer data available online. The conference, which is free and open to the public, will be held at the FTC’s Constitution Center, 400 7th St., SW, Washington, DC and will be webcast live. Additional information can be found on the event page.