[Federal Register Volume 63, Number 16 (Monday, January 26, 1998)]
[Notices]
[Pages 3747-3748]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1802]
[[Page 3747]]
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FEDERAL TRADE COMMISSION
[File No. 951-0083]
Sensormatic Electronics Corporation; and Checkpoint Systems,
Inc.--Analysis to Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreements.
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SUMMARY: The consent agreements in these matters settle alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaints that accompany the consent agreements and the terms of the
consent orders--embodied in the consent agreements--that would settle
these allegations.
DATES: Comments must be received on or before March 27, 1998.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
William Baer or Michael Antalics, FTC/H-374, Washington, D.C. 20580.
(202) 326-2932 or 326-2821.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the
Commission's rules of practice (16 CFR 2.34), notice is hereby given
that the above-captioned consent agreements containing consent orders
to cease and desist, having been filed with and accepted, subject to
final approval, by the Commission, have been placed on the public
record for a period of sixty (60) days. The following Analysis to Aid
Public Comment describes the terms of the consent agreements, and the
allegations in the complaints. An electronic copy of the full text of
the consent agreement packages can be obtained from the FTC Home Page
(for January 21, 1998), on the World Wide Web, at ``http://www.ftc.gov/
os/actions/htm.'' A paper copy can be obtained from the FTC Public
Reference Room, Room H-130, Sixth Street and Pennsylvania Avenue, NW.,
Washington, DC 20580, either in person or by calling (202) 326-3627.
Public comment is invited. Such comments or views will be considered by
the Commission and will be available for inspection and copying at its
principal office in accordance with Sec. 4.9(b)(6)(ii) of the
Commission's rules of practice (16 CFR 4.9(b)(6)(ii)).
Analysis of Proposed Consent Orders To Aid Public Comment
The Federal Trade Commission has accepted agreements to proposed
consent orders from Sensormatic Electronics Corporation
(``Sensormatic'') and Checkpoint Systems, Inc. (``Checkpoint'').
Sensormatic's principal place of business is located at 951 Yamato
Road, Boca Raton, Florida. Checkpoint's principal place of business is
located at 101 Wolf Drive, Thorofare, New Jersey.
The proposed consent orders have been placed on the public record
for 60 days for reception of comments by interested persons. Comments
received during this period will become part of the public record.
After 60 days, the Commission will again review the agreements and the
comments received, and will decide whether it should withdraw from the
agreements or make final the agreements' proposed orders.
Sensormatic and Checkpoint are the two largest manufacturers and
sellers of electronic article surveillance (``EAS'') systems in the
United States and the world. Their combined worldwide sales exceed 70
percent of total EAS industry sales.
EAS systems are used primarily by retailers to deter and detect
shoplifting and employee theft. Bits of reactive metal or electronic
transmitters called ``tags'' are attached to products sold in retail
stores. When a product is purchased, the tag is removed or deactivated
by the cashier. If a tag passes through an EAS system's sensors at a
store exit without being deactivated, it sets off an alarm. EAS systems
are also commonly found in libraries and video stores.
The complaint alleges that Sensormatic and Checkpoint entered a
written agreement on June 27, 1993 to refrain from ``negative
advertising or other negative selling, promotional activities or other
communications with respect to the other party or the other party's
products and services,'' including ``statements that the other party's
products or services cause or may cause harm to customers, consumers or
merchandise.'' The complaint further alleges that the respondents have
construed the June 27, 1993 agreement to restrict comparative
advertising relating to the performance and effectiveness of the
proposed respondents' EAS systems.
The complaint alleges that the June 27, 1993 agreement deprives
retailers, other customers who purchase EAS systems, and consumers of
comparative information about the characteristics of EAS systems that
they would find helpful. In particular, the complaint alleges that
retailers and other EAS customers have an interest in obtaining
comparative information relevant to their purchasing decisions. The
complaint further alleges that certain information about EAS systems,
such as the potential harm to retail products and information about
possible interactions between certain medical devices and EAS
equipment, is relevant to consumers. Finally, the complaint alleges
that the June 27, 1993 agreement is an agreement among competitors to
refrain from making truthful, non-deceptive claims, including
comparisons, criticisms, or disparaging statements in advertising, and
that this agreement constitutes an unfair method of competition in
violation of Section 5 of the Federal Trade Commission Act.
On many occasions, the Commission has prohibited groups of
horizontal competitors from agreeing to refrain from making truthful,
non-deceptive claims, including comparisons, criticisms, or disparaging
statements in advertising. The Commission has recognized that one of
the benefits of competition is that competitors may be driven to
provide consumers with information that makes for better educated,
effective consumers.\1\ The alleged conduct engaged in by Sensormatic
and Checkpoint and the terms of the proposed orders are similar to the
conduct alleged and the relief obtained in Personal Protective Armor
Association, Inc., 117 F.T.C. 104 (1994).
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\1\ See generally Commission Policy Statement in Regard to
Comparative Advertising, 16 CFR 14.15 (1997) (comparative
advertising assists consumers in making rational purchase decisions,
encourages product improvement or innovation, and can lead to lower
market prices).
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Sensormatic and Checkpoint have signed consent agreements
containing the proposed consent orders. The proposed consent orders
require Sensormatic and Checkpoint to declare null and void the
negative advertising provision of the June 27, 1993 agreement. The
proposed consent orders also prohibit Sensormatic and Checkpoint from
entering into any agreement that prohibits, restricts, impedes,
interferes with, restrains, places limitations on, or advises against
engaging in truthful, non-deceptive advertising, comparative
advertising, promotional and sales activities for twenty years after
the date the order becomes final. In addition, the proposed consent
orders require that Sensormatic and Checkpoint provide copies of the
orders to their respective executives, and that Sensormatic and
Checkpoint file annual compliance reports with the Federal Trade
Commission.
[[Page 3748]]
The purpose of this analysis is to facilitate public comment on the
proposed orders, and it is not intended to constitute an official
interpretation of the agreement and proposed orders or to modify in any
way their terms.
Donald S. Clark,
Secretary.
[FR Doc. 98-1802 Filed 1-23-98; 8:45 am]
BILLING CODE 6750-01-M
