2015-24874. National Association of Animal Breeders, Inc.; Analysis To Aid Public Comment

AGENCY:

Federal Trade Commission.

ACTION:

Proposed consent agreement.

SUMMARY:

The consent agreement in this matter settles alleged violations of federal law prohibiting unfair methods of competition. The attached Analysis to Aid Public Comment describes both the allegations in the draft complaint and the terms of the consent order—embodied in the consent agreement—that would settle these allegations.

DATES:

Comments must be received on or before October 26, 2015.

ADDRESSES:

Interested parties may file a comment at http://ftcpublic.commentworks.com/​ftc/​NAABconsent online or on paper, by following the instructions in the Request for Comment part of the SUPPLEMENTARY INFORMATION section below. Write “National Association of Animal Breeders, Inc.—Consent Agreement; File No. 141 0125” on your comment and file your comment online at http://ftcpublic.commentworks.com/​ftc/​NAABconsent by following the instructions on the web-based form. If you prefer to file your comment on paper, write “National Association of Animal Breeders, Inc.—Consent Agreement; File No. 141 0125” on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT:

Armando Irizarry (202-326-2964) or Karen A. Mills (202-326-2052), Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

Pursuant to Section 6(f) of the Federal Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, notice is hereby given that the above-captioned consent agreement containing consent order to cease and desist, having been filed with and accepted, subject to final approval, by the Commission, has been placed on the public record for a period of thirty (30) days. The following Analysis to Aid Public Comment describes the terms of the consent agreement, and the allegations in the complaint. An electronic copy of the full text of the consent agreement package can be obtained from the FTC Home Page (for September 24, 2015), on the World Wide Web, at http://www.ftc.gov/​os/​actions.shtm.

You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before October 26, 2015. Write “National Association of Animal Breeders, Inc.—Consent Agreement; File No. 141 0125” on your comment. Your comment—including your name and your state—will be placed on the public record of this proceeding, including, to the extent practicable, on the public Commission Web site, at http://www.ftc.gov/​os/​publiccomments.shtm. As a matter of discretion, the Commission tries to remove individuals' home contact information from comments before placing them on the Commission Web site.

Because your comment will be made public, you are solely responsible for making sure that your comment does not include any sensitive personal information, like anyone's Social Security number, date of birth, driver's license number or other state identification number or foreign country equivalent, passport number, financial account number, or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, like medical records or other individually identifiable health information. In addition, do not include any “[t]rade secret or any commercial or financial information which . . . is privileged or confidential,” as discussed in Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do not include competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names.

If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you have to follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).^[1] Your comment will be kept confidential only if the FTC General Counsel, in his or her sole discretion, grants your request in accordance with the law and the public interest.

Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online. To make sure that the Commission considers your online comment, you must file it at http://ftcpublic.commentworks.com/​ftc/​NAABconsent by following the instructions on the web-based form. If this Notice appears at http://www.regulations.gov/​#!home,, you also may file a comment through that Web site.

If you file your comment on paper, write “National Association of Animal Breeders, Inc.—Consent Agreement; File No. 141 0125” on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. If possible, submit your paper comment to the Commission by courier or overnight service.

Visit the Commission Web site at http://www.ftc.gov to read this Notice and the news release describing it. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before October 26, 2015. You can find more information, including routine uses permitted by the Privacy Act, in the Commission's privacy policy, at http://www.ftc.gov/​ftc/​privacy.htm.

Analysis of Agreement Containing Consent Order To Aid Public Comment

The Federal Trade Commission (“Commission”) has accepted, subject to final approval, an Agreement Containing Consent Order (“Consent Agreement”) from the National Association of Animal Breeders, Inc. (hereinafter “NAAB”). The Commission's complaint (“Complaint”) alleges that NAAB, acting as a combination of its members and in agreement with at least some of its members, restrained competition among its members and others in violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 45. NAAB restrained competition by adopting and maintaining provisions in its Code of Ethics that restrain its members from (1) naming competitors in printed materials that contain certain information about the competitors, and (2) disclosing or publicizing prices of bulls purchased or sold.

Under the terms of the proposed Consent Agreement, NAAB is required to cease and desist from restraining its members from (1) naming members or other competitors when making statements comparing the products and services of a member with the products and services of any other member or competitor, and (2) publicizing or disclosing price information relating to the purchase or sale of animals.

The Commission anticipates that the competitive issues described in the Complaint will be resolved by accepting the proposed order, subject to final approval, contained in the Consent Agreement. The proposed Consent Agreement has been placed on the public record for 30 days for receipt of comments from interested members of the public. Comments received during this period will become part of the public record. After 30 days, the Commission will review the Consent Agreement again and the comments received, and will decide whether it should withdraw from the Consent Agreement or make final the accompanying Decision and Order (“the Proposed Order”).

The purpose of this Analysis to Aid Public Comment is to invite and facilitate public comment. It is not intended to constitute an official interpretation of the proposed Consent Agreement and the accompanying Proposed Order or in any way to modify their terms.

The Consent Agreement is for settlement purposes only and does not constitute an admission by NAAB that the law has been violated as alleged in the Complaint or that the facts alleged in the Complaint, other than jurisdictional facts, are true.

I. The Complaint

The Complaint makes the following allegations.

A. The Respondent

NAAB is a non-profit corporation of animal breeders, with about twenty-four regular members, and about twenty-seven non-voting associate members. Many of NAAB's members are organizations in the business of collecting, processing, marketing and selling dairy and beef cattle semen for artificial insemination (“AI”). Members include small, family-owned breeding operations, cooperatives, and multinational corporations.

B. The Anticompetitive Conduct

NAAB maintains a Code of Ethics applicable to the commercial activities of its members. NAAB's bylaws require that members comply with the Code of Ethics. NAAB maintains the following provisions in its Code of Ethics:

• “Member competitors will not be named in printed material comparing averages between members.”
• “The purchase price of sires, purchased at private treaty, by NAAB members shall not be disclosed by the Buyer, and the Seller shall be requested not to quote the selling price. Also, prices of bulls purchased at public auction by AI organizations shall not be quoted in their printed statements, advertising, and/or publicity material.”

NAAB also established a process for receiving complaints about and resolving alleged violations of the Code of Ethics, including by allowing its members to resolve privately disputes arising out of the Code of Ethics, and also by establishing a mechanism by which NAAB may sanction violations of the Code of Ethics.

The Complaint alleges that NAAB has violated Section 5 of the Federal Trade Commission Act by adopting and maintaining provisions in its Code of Ethics that restrain its members from (1) making advertisements comparing AI organizations, and (2) disclosing truthful and non-deceptive information. The Complaint alleges that the purpose, effects, tendency, or capacity of the combination, agreement, acts and practices of NAAB has been and is to restrain competition unreasonably and to injure consumers by discouraging and restricting competition among AI organizations, and by depriving consumers and others of the benefits of free and open competition among AI organizations.

II. The Proposed Order

The Proposed Order has the following substantive provisions. Paragraph II requires NAAB to cease and desist from restraining its members from (1) naming members or other competitors when making statements comparing the products and services of a member with the products and services of any other member or competitor, and (2) publicizing or disclosing price information relating to the purchase or sale of animals. The Proposed Order does not prohibit NAAB from adopting and enforcing reasonable restraints with respect to representations that NAAB reasonably believes would be false or deceptive within the meaning of Section 5 of the Federal Trade Commission Act.

Paragraph III of the Proposed Order requires NAAB to remove from its Web site and organization documents any statement that does not comply with the Proposed Order, and to publish on the Web site any revision to the organization documents. NAAB must publish an announcement that it has changed its Code of Ethics, and a statement describing the Consent Agreement (“the Settlement Statement”). NAAB must distribute the Settlement Statement to NAAB's board of directors, officers, employees, and members. Paragraph III also requires NAAB to provide all new members and all members who receive a membership renewal notice with a copy of the Settlement Statement.

Paragraph IV of the Proposed Order requires NAAB to design, maintain, and operate an antitrust compliance program. NAAB will have to appoint Antitrust Counsel for the duration of the Proposed Order. For a period of five years, NAAB will have to provide in-person annual training to its board of directors, officers, and employees, and conduct a presentation at its annual convention that summarizes NAAB's obligations under the Proposed Order and provides context-appropriate guidance on compliance with the antitrust laws. NAAB must also implement policies and procedures to enable persons to ask questions about, and report violations of, the Proposed Order and the antitrust laws confidentially and without fear of retaliation, and to discipline its board of directors, officers, employees, members, and agents for failure to comply with the Proposed Order.

Paragraphs V-VII of the Proposed Order impose certain standard reporting and compliance requirements on NAAB.

The Proposed Order will expire in 20 years.

By direction of the Commission.

Donald S. Clark,

Secretary.

Footnotes

1.  In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record. See FTC Rule 4.9(c), 16 CFR 4.9(c).