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Public Relations Firm to Settle FTC Charges that It Advertised Clients’ Gaming Apps Through Misleading Online Endorsements

A public relations agency hired by video game developers will settle Federal Trade Commission charges that it engaged in deceptive advertising by having employees pose as ordinary consumers posting game reviews at the online iTunes store, and not disclosing that the reviews came from paid employees working on behalf of the developers.

“Companies, including public relations firms involved in online marketing, need to abide by long-held principles of truth in advertising,” said Mary Engle, Director of the FTC’s Division of Advertising Practices. “Advertisers should not pass themselves off as ordinary consumers touting a product, and endorsers should make it clear when they have financial connections to sellers.”

Under the proposed settlement order, Reverb Communications, Inc. and its sole owner, Tracie Snitker, are required to remove any previously posted endorsements that misrepresent the authors as independent users or ordinary consumers, and that fail to disclose a connection between Reverb and Snitker and the seller of a product or service. The agreement also bars Reverb and Snitker from misrepresenting that the user or endorser is an independent, ordinary consumer, and from making endorsement or user claims about a product or service unless they disclose any relevant connections that they have with the seller of the product or service.

Reverb is a company that provides public relations, marketing, and sales services to developers of video game applications, including mobile gaming apps. Between November 2008 and May 2009, Reverb and Snitker posted reviews about their clients’ games at the iTunes store using account names that gave readers the impression the reviews were written by disinterested consumers, according to the FTC complaint. Reverb and Snitker did not disclose that they were hired to promote the games and that they often received a percentage of the sales. These facts would have been relevant to consumers who were evaluating the endorsement and deciding whether to buy the gaming applications, the FTC complaint alleged.

In its revised endorsements and testimonials guides issued last year, the FTC specified that while decisions will be reached on a case-by-case basis, the online post by a person connected to the seller, or someone who receives cash or in-kind payment to review a product or service, should disclose the material connection the reviewer shares with the seller of the product or service. This applies to employees of both the seller and the seller’s advertising agency.

The FTC vote to approve the administrative complaint and proposed consent agreement was 5-0. The FTC will publish an announcement regarding the agreement in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through September 27, 2010, after which the FTC will decide whether to make it final. To file a public comment, please click on the following hyperlink: https://ftcpublic.commentworks.com/ftc/reverb. Copies of the complaint, the proposed consent agreement, and an analysis of the agreement to aid in public comment are available from both the FTC’s website at http://www.ftc.gov and the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.

NOTE: The Commission issues an administrative complaint when it has reason to believe that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the respondents have actually violated the law. The consent agreement is for settlement purposes only and does not constitute admission by the respondents 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 up to $16,000.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.

(FTC File No. 0923199)
(Reverb)

Floods in Pakistan: FTC Warns Consumers to Give Wisely

For Your Information

August 24, 2010

In the wake of the devastation caused by flooding in Pakistan and along the border between China and North Korea, the Federal Trade Commission warns consumers to choose carefully when considering urgent appeals for aid in the news, online, and at social networking sites. The best way to provide immediate help is to donate money directly to established national relief organizations that have the experience and means to deliver aid.

The FTC, the nation’s consumer protection agency, has these tips to help consumers give wisely:

Donate to recognized charities that you have given to before. Watch out for those that have sprung up overnight. They may be well-meaning, but probably lack the infrastructure to provide effective assistance. And be wary of charities with names that sound like familiar or nationally known organizations. Some phony charities use names that sound or look like those of respected, legitimate organizations.
You don’t have to donate to someone who contacts you out of the blue with an unsolicited e-mail, phone call, or text message. It’s better to give through a Web site or phone number that you know is legitimate, such as the U.S. Department of State page titled Donate to the Pakistan Relief Fund, at http://www.state.gov/pakistanrelief/index.htm.
Check out any charities before you donate. Contact the Better Business Bureau’s Wise Giving Alliance at www.give.org.
Don’t give or send cash. For security and tax record purposes, contribute by check or credit card. Write the official name of the charity on your check. You can contribute safely online through national charities like www.redcross.org/donate.
Ask for identification if you’re approached in person. Many states require paid fund-raisers to identify themselves as such and to name the charity for which they are soliciting.
For more information, visit ftc.gov/charityfraud.

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a new video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad.

(FYI Pakistan Flood)

Contact Information

MEDIA CONTACT:

Office of Public Affairs
202-326-2180

Auto Warranty Robocaller To Pay $2.3 Million, Sell Mercedes For Consumer Redress

One of the telemarketers who blasted U.S. consumers with millions of illegal auto “warranty” robocalls last year will pay approximately $2.3 million, give up his Mercedes, and be barred from telemarketing, under a settlement with the Federal Trade Commission that wraps up the agency’s case against the deceptive operation. In sum, the FTC is collecting nearly $3 million to reimburse victims of the scam.

The settlements resolve FTC charges that Damian Kohlfeld and his two firms made millions of illegal prerecorded calls to consumers nationwide in an attempt to deceive them into buying extended auto warranties or service contracts (audio files of these calls can be found on the FTC’s website as a link to this press release). The robocalls misled consumers into thinking that the callers were affiliated with consumers’ car dealerships or manufacturers, and that their auto warranty was expiring or about to expire.

Earlier this year, the FTC announced a settlement with two other defendants who helped make the robocalls, under which they have paid more than $655,000. The FTC also announced a settlement in September 2009 with Transcontinental Warranty, Inc, the company that employed the defendants in this case to make the illegal prerecorded calls. (See press release at http://www.ftc.gov/opa/2009/09/twi.shtm.)

“Fortunately for American consumers, the telemarketers who were responsible for millions of unsolicited and annoying robocalls will never be able to telemarket again,” said FTC Chairman Jon Leibowitz. “We’ve also taken away all of their money to provide redress for consumers who were defrauded. This case serves as a clear message: telemarketers who violate the privacy of ordinary Americans will have to pay the price.”

According to the FTC’s complaint, Kohlfeld and the Chicago-based firms Voice Foundations, LLC, and Network Foundations, LLC, violated the FTC’s Do Not Call Registry and falsely represented that:

the telemarketers were calling from, or affiliated with, the manufacturer or dealer of the consumer’s automobile;
the consumer’s original automobile warranty was about to expire; and
the telemarketer had specific information about whether the consumer’s vehicle was the subject of a recall.

The settlement requires Kohlfeld to pay more than $2.2 million. In addition, he is required to liquidate two investment accounts totaling approximately $130,000 and to sell his 2006 Mercedes. All of the money collected will be used for consumer redress.

The settlement order also bans Kohlfeld from telemarketing or assisting others engaged in telemarketing, prevents him from making the misrepresentations alleged in the FTC’s complaint, and bars him from making any misrepresentations related to the sale of any goods or services. The order specifically prohibits him from misrepresenting the cost, use, or effectiveness of any product or service or any of the refund policies associated with any product or services.

In addition, Network Foundations will pay $50,000 to be used for consumer redress. Voice Foundations has no assets to pay toward a judgment. If either of the companies later is found to have misrepresented its financial condition, it will be subject to a larger monetary judgment.

The Commission vote authorizing the three stipulated final orders settling the court actions against Network Foundations, LLC, Voice Foundations, LLC, and Damian Kohlfeld was 5-0. They were filed in the U.S. District Court for the Northern District of Illinois, Eastern Division, on August 19, 2010, and signed by the judge the same day.

NOTE: These stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Stipulated final orders requires approval by the court and have the force of law when signed by the judge.

Copies of the stipulated final orders are available from the FTC’s website at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click: http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.

(Voice Touch.wpd)
(FTC File No. X090046; Civ. No. 09-cv-2929)

FTC Sends Second Round of Redress Checks to Stewart Finance Victims

Beginning today, a claims administrator working for the Federal Trade Commission will mail more than 16,000 checks to consumers who were victims of Stewart Finance Company.

In September 2003, the FTC charged Stewart, seven related companies, and their principals with deceiving consumers, many of them elderly, by packing optional products such as accidental death and dismemberment insurance and membership in roadside assistance clubs onto small personal loans. The agency also alleged that Stewart deceptively induced consumers to participate in a free “direct deposit” program that was not in fact free, and encouraged them to incur additional costs and fees by repeatedly refinancing their loans. In addition, the complaint charged that the company failed to provide consumers who were denied loans with federally required “adverse action” notices, and placed illegal liens on borrowers’ household goods. The company settled the FTC charges.

The settlement required the companies to shut down and to agree to the entry of a financial judgment. In addition, certain amounts were owed by individual defendants and directed to a consumer redress fund.

In September 2009 the FTC administrator issued a first round of checks to Stewart Finance victims in the average amount of $54.82. Residual funds are now being sent to 16,291 consumers. The average amount of the checks is $23.40. Consumers who have questions can call 1-800-925-2505.

These consumer redress checks can be cashed directly by the recipients of the checks. The FTC never requires the payment of money up-front, or the provision of additional information, before consumers cash redress checks issued to them.

(stewart)

Federal Trade Commission and U.S. Department of Justice Issue Revised Horizontal Merger Guidelines

The Federal Trade Commission and Department of Justice issued today revised Horizontal Merger Guidelines that outline how the federal antitrust agencies evaluate the likely competitive impact of mergers and whether those mergers comply with U.S. antitrust law. These changes mark the first major revision of the merger guidelines in 18 years, and will give businesses a better understanding of how the agencies evaluate proposed mergers.

A primary goal of the 2010 guidelines is to help the agencies identify and challenge competitively harmful mergers while avoiding unnecessary interference with mergers that either are competitively beneficial or likely will have no competitive impact on the marketplace. To accomplish this, the guidelines detail the techniques and main types of evidence the agencies typically use to predict whether horizontal mergers may substantially lessen competition.

The revised merger guidelines derive from the agencies’ collective experience in assessing thousands of transactions focusing on the types of evidence the department and the FTC use to decide whether a merger of competitors may harm competition. Many of the proposed refinements and changes reflect issues previously identified in the “Commentary on the Horizontal Merger Guidelines,” which the agencies jointly issued in 2006. In crafting the revisions, the agencies considered a wide range of opinions gathered through a series of joint public workshops, as well as hundreds of public comments submitted by attorneys, academics, economists, consumer groups and businesses.

“Because of the hard work of all involved at both agencies, private parties and judges will be better equipped to understand how the agencies evaluate deals. That improvement in clarity and predictability will benefit everyone,” said FTC Chairman Jon Leibowitz. “We thank Christine Varney and her team at DOJ for their terrific work on this initiative, demonstrating once again how effectively and collegially the two agencies work together.”

“The revised guidelines better reflect the agencies’ actual practices,” said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The guidelines provide more clarity and transparency, and will provide businesses with an even greater understanding of how we review transactions. This has been a successful process due to the commitment of the talented staff from both agencies and the excellent working relationship with the FTC led by Jon Leibowitz.”

The agencies jointly announced the project in September 2009, followed by a series of workshops over the course of the winter. The FTC issued proposed revisions for public comment on April 20, 2010. All of the written comments are posted on the FTC’s website at http://www.ftc.gov/os/comments/hmgrevisedguides/index.shtm.

The 2010 guidelines are different from the 1992 guidelines in several important ways. The guidelines:

Clarify that merger analysis does not use a single methodology, but is a fact-specific process through which the agencies use a variety of tools to analyze the evidence to determine whether a merger may substantially lessen competition.
Introduce a new section on “Evidence of Adverse Competitive Effects.” This section discusses several categories and sources of evidence that the agencies, in their experience, have found informative in predicting the likely competitive effects of mergers.
Explain that market definition is not an end itself or a necessary starting point of merger analysis, and market concentration is a tool that is useful to the extent it illuminates the merger’s likely competitive effects.
Provide an updated explanation of the hypothetical monopolist test used to define relevant antitrust markets and how the agencies implement that test in practice.
Update the concentration thresholds that determine whether a transaction warrants further scrutiny by the agencies.
Provide an expanded discussion of how the agencies evaluate unilateral competitive effects, including effects on innovation.
Provide an updated section on coordinated effects. The guidelines clarify that coordinated effects, like unilateral effects, include conduct not otherwise condemned by the antitrust laws.
Provide a simplified discussion of how the agencies evaluate whether entry into the relevant market is so easy that a merger is not likely to enhance market power.
Add new sections on powerful buyers, mergers between competing buyers, and partial acquisitions.

The 2010 guidelines are available on the FTC’s website at http://www.ftc.gov/os/2010/08/100819hmg.pdf and the Department of Justice’s website at http://www.justice.gov/atr/public/guidelines/hmg-2010.html.

The Horizontal Merger Guidelines, which were first adopted in 1968, and revised in 1992, serve as an outline of the main analytical techniques, practices and enforcement policies the FTC and the Department of Justice use to evaluate mergers and acquisitions involving actual or potential competitors under federal antitrust laws.

The guidelines issued today take into account the legal and economic developments since the 1992 guidelines were issued. They are not intended to represent a change in the direction of merger review policy, but to offer more clarity on the merger review process to better assist the business community and, in particular, parties to mergers and acquisitions.

The Bank Merger Competitive Review guidelines, which the federal banking agencies and the Department of Justice developed in 1995 to facilitate the competitive review of bank mergers, remain unchanged. The Bank Merger Competitive Review guidelines can be found at http://www.justice.gov/atr/public/premerger.htm.

The FTC vote approving the 2010 guidelines was 5-0. Chairman Leibowitz issued a separate written statement outlining some of the ways the guidelines have been improved. Commissioner J. Thomas Rosch issued a separate concurring statement praising the guidelines for considering “competitive effects first, and market definition second, thereby making clear that while . . . the market must be defined at some point in the process, ultimately merger analysis must rest on the competitive effects of a transaction.” Commissioner Rosch, nevertheless, noted concerns that the guidelines place too much emphasis on economic evidence including margins and prices, and insufficient attention to empirical evidence and non-price competitive effects.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to [email protected], or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

FTC Staff Opinion: Yakima Valley Memorial Hospital’s Proposed Rx Program Exempt From the Robinson-Patman Act

In a letter issued today, the staff of the Federal Trade Commission advised Yakima Valley Memorial Hospital that its proposal to provide pharmaceuticals purchased at a discount to employees of two affiliate entities is exempt from the Robinson-Patman Act, a U.S. antitrust law that prohibits anti-competitive price discrimination.

The Non-Profit Institutions Act, or NPIA, creates an exemption from the Robinson-Patman Act for purchases of supplies by certain eligible entities for their “own use.” According to the FTC staff opinion letter, the proposed program meets the requirements of the NPIA.

Yakima Valley Memorial Hospital asked the FTC whether a proposal through which it would sell discounted pharmaceuticals available to eligible nonprofits to employees of its two affiliates, Memorial Physicians, PLLC and Valley Imaging, would qualify for the exemption. First, Yakima Valley Memorial Hospital is an eligible institution under the NPIA. Second, consistent with existing case law and prior opinions, the provision of NPIA-discounted pharmaceuticals to employees of entities that are owned by the eligible institution, and intended to help further the mission of the eligible institution, falls within the “own use” requirement of the statute. Therefore, according to staff, the proposed program appears to fall within the NPIA.

NOTE: This letter sets out the views of the staff of the FTC’s Bureau of Competition, as authorized by the Commission’s Rules of Practice. It has not been reviewed or approved by the Commission. As the Commission’s Rules explain, the staff’s advice is rendered “without prejudice to the right of the Commission later to rescind the advice and, where appropriate, to commence an enforcement proceeding.”

Copies of the staff comment can be found on the FTC’s website. The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to [email protected], or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(Yakima Valley.final)

Court Orders Internet Marketers of Acai Berry Weight-Loss Pills and “Colon Cleansers” to Stop Deceptive Advertising and Unfair Billing Practices

At the request of the Federal Trade Commission, a U.S. district court has ordered the marketers of acai berry supplements, “colon cleansers,” and other products to temporarily halt an Internet sales scheme that allegedly scammed consumers out of $30 million or more in 2009 alone through deceptive advertising and unfair billing practices. The FTC will seek a permanent prohibition. Since 2007, victimized consumers have flooded law enforcement agencies and the Better Business Bureau with more than 2,800 complaints about the company.

Acai berry supplements, derived from acai palm trees that are native to Central and South America, have become popular in recent years. Last year, the Better Business Bureau named fake “free” trial offers – including those for acai supplements offered by the defendants in this case – as one of the “Top 10 Scams and Rip Offs of 2009.”

“Too many ‘free’ offers come with strings attached,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “In this case, the defendants promised buyers a ‘risk free’ trial and then illegally billed their credit cards again and again – and again. We estimate that about a million people have fallen victim to this scam. As if that weren’t enough, there were fake endorsements from celebrities like Oprah Winfrey and Rachael Ray for a product that didn’t work in the first place.”

The court order halts the allegedly illegal conduct of Central Coast Nutraceuticals, Inc., imposes an asset freeze, and appoints a temporary receiver over CCN and several related companies, while the FTC moves forward with its case to stop the company’s bogus health claims and other deceptive and unfair conduct.

The FTC charged CCN, two individuals, and four related companies with multiple violations, including deceptively advertising AcaiPure, an acai berry supplement, as a weight-loss product, and Colopure, a colon cleansing supplement, as an aid for preventing cancer.

The FTC complaint alleges that to sell AcaiPure, the marketers made dramatic claims on their website, including:

“WARNING! AcaiPure Is Fast Weight Loss That Works. It Was Not Created For Those People Who Only Want To Lose A Few Measly Pounds. AcaiPure was created to help you achieve the incredible body you have always wanted …USE WITH CAUTION! Major weight loss in short periods of time may occur.”

In pitching Colopure, the defendants cited frightening statistics about colon
cancer, while promising that their product would get rid of consumers’ “excess weight and toxic buildup.”

The marketers also deceived consumers about their purported “free” or “risk free” trial offers, and about the charges and refund terms consumers could expect, according to the FTC’s complaint. The FTC also alleges that the marketers made numerous additional unauthorized charges to consumers’ credit and debit card accounts.

The alleged deceptive practices include:

Falsely claiming that using AcaiPure could lead to rapid and substantial weight loss. Consumers were told that “[m]ost consumers taking AcaiPure report weight loss anywhere from 10-25 pounds in the first month.”
Making unproven claims that AcaiPure’s weight-loss claims are backed by “double-blind, placebo-controlled weight loss studies.”
Deceptively claiming that Colopure could help prevent colon cancer because it would “cleanse your entire system,” “detoxify your organs,” and break down and remove “toxic waste matter which may have been stuck in the folds and wrinkles of your digestive system for years and years.”
Falsely claiming that celebrities including Oprah Winfrey and Rachael Ray have endorsed products marketed by Central Coast Nutraceuticals, Inc. In marketing AcaiPure, the defendants declared on their homepage, “Acai Berry rated #1 SUPERFOOD by Rachael Ray.” A photo of Oprah appeared on the homepage, next to a quote that read in part, “Studies have shown that this little berry is one of the most nutritious and powerful foods in the world!” In fact, in declarations to the FTC, both celebrities denied endorsing AcaiPure.
Deceptively claiming that the marketers will provide full refunds to all consumers who request them, and that consumers who paid a nominal fee for a “free” trial supply of supplements would incur no risks or obligations. In fact, many consumers found it all but impossible to avoid paying full price for the products, typically $39.95 to $59.95.
Failing to adequately disclose that consumers would be automatically enrolled in a membership program and charged for additional monthly supplies of a product.
Failing to adequately disclose that consumers would be automatically charged for items other than the trial product unless they opted out.
Failing to adequately disclose the terms and conditions of trial programs, membership programs, and additional charges.
Making numerous unauthorized charges to consumers’ credit and debit card accounts.
Debiting consumers’ bank accounts on an automatic, recurring basis, without obtaining proper preauthorization. The unauthorized debits violated the FTC Act as well as the Electronic Fund Transfer Act and Regulation E, according to the complaint.

“Visa is committed to ensuring that consumers trust digital currency when they shop online by protecting them from deceptive merchant marketing practices,” said Martin Elliott, Senior Business Leader, Payment System Risk, Visa Inc. “Deceptive merchant practices hurt the economy by eroding trust in e-commerce and undermining the vast majority of ethical merchants who deal and compete fairly. We have tightened enforcement of our rules against banks whose merchants generate excessive levels of cardholder disputes because of deceptive marketing. We also make it a priority to partner with law enforcement and agencies like the Federal Trade Commission and support their investigations such as this case.”

The FTC would like to thank the Better Business Bureau of Central, Northern & Western Arizona and Visa, Inc. for their invaluable assistance in this investigation.

The Commission vote authorizing the staff to file the complaint and seek a temporary restraining order was 5-0. The FTC filed its complaint and requested a temporary restraining order against the defendants from the U.S. District Court for the Northern District of Illinois, Eastern Division. On August 6, 2010, the court granted the request for the temporary restraining order.

The complaint also names as defendants Graham D. Gibson and Michael A. McKenzy, and four companies affiliated with Central Coast Nutraceuticals, Inc. – iLife Health and Wellness LLC; Simply Naturals LLC; Health and Beauty Solutions LLC; and Fit for Life LLC.

NOTE: The Commission files a complaint when it has reason to believe that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law.

(FTC File No. 1023028)
(CC Nutraceuticals NR.wpd)

FTC Proposes Changes to Update and Improve Credit Reporting Notices

The Federal Trade Commission is proposing revisions to the notices that consumer reporting agencies provide to consumers, and to users and furnishers of credit report information under the Fair Credit Reporting Act (FCRA). The FCRA requires the FTC to publish model notices for several forms that must be provided by consumer reporting agencies. The proposed changes are designed to reflect new rules that the FTC and other financial regulators have enacted under the Fair and Accurate Credit Transactions Act of 2003, and to make the notices more useful and easier to understand.

In addition to revising the general Summary of Rights notice, which informs consumers about their FCRA rights, such as how to obtain a free credit report and dispute inaccurate information in credit reports, the FTC also is proposing improvements to the notices that credit reporting agencies provide to users and furnishers of credit report information. The User Notice and Furnisher Notice inform users and furnishers of their obligation to provide certain protections to consumers. The model notices were originally issued in 1997 and revised in 2004. The FTC is accepting public comments on the proposed changes until September 21, 2010. The Commission vote authorizing the Federal Register notice was 5-0. (The staff contact is Pavneet Singh, Bureau of Consumer Protection, 202-326-2252.)

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

FTC Order Protects Consumers in U.S. Market for Eye Care Drug Used in Cataract Surgery

Novartis AG will be required to sell an injectable eye care drug used in cataract surgery as part of a settlement which resolves Federal Trade Commission charges that Novartis’s proposed acquisition of Alcon, Inc., would be anticompetitive. Novartis and Alcon are the only two U.S. providers of the class of drugs known as injectable miotics, and the FTC alleges that the acquisition would have created a monopoly in injectable miotics. The settlement requires Novartis to sell its drug Miochol-E to Bausch & Lomb, Inc.

Injectable miotics are a class of prescription drugs used to induce miosis, or constriction of the pupil. Primarily surgeons use miotics during cataract surgery to shrink the pupil, which helps them determine whether a rupture has occurred in the eye. The only two miotics products in the market are Miochol-E, owned by Novartis, and Miostat, owned by Alcon. U.S. sales of injectable miotics totaled $12.4 million in 2009, and Novartis and Alcon have shares of 67 percent and 33 percent respectively.

According to the FTC’s complaint, Novartis’s acquisition of Alcon would harm consumers, who have in the past benefitted from the direct competition between Novartis and Alcon. If Novartis were allowed to purchase Miochol-E consumers of injectable miotics likely would face higher prices, according to the FTC.

To preserve competition, the settlement requires Novartis to sell the rights and assets related to Miochol-E to Bausch & Lomb (B&L) within 10 days of when the acquisition is consummated. The FTC believes B&L, which is a major international eye-health company, is well-positioned to manufacture and market Miochol-E and compete effectively against Novartis.

Also under the settlement order, Novartis must provide transitional services to ensure that the divestiture to B&L is successful and must transfer its third-party manufacturing arrangements for Miochol-E to B&L as part of the sale. Novartis also must provide technical assistance to help B&L implement procedures to other parts of the manufacturing process. The FTC has appointed Karl L. Hoffman of Rondaxe Pharma to oversee the transfer of the assets to B&L and ensure that Novartis complies with the terms of the order.

The FTC vote approving the complaint and proposed settlement order was 4-0-1, with Commissioner William E. Kovacic recused. The order will be subject to public comment for 30 days, until September 16, 2010, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. To submit a comment electronically, please click on: https://ftcpublic.commentworks.com/ftc/novartis.

International Cooperation

During the FTC’s investigation, staff communicated and cooperated with enforcement counterparts in Australia, Canada, Mexico, and the European Commission (EC) that also reviewed this proposed transaction. This cooperation was conducted pursuant to the respective bilateral cooperation agreements with these jurisdictions and, in the case of the EC, the 2002 Best Practices on Cooperation in Merger Investigations.

NOTE: The Commission issues a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of a complaint is not a finding or ruling that the respondent has violated the law. 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 up to $16,000.

Copies of the complaint, consent order, and an analysis to aid in public comment can be found on the FTC’s website at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to [email protected], or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File No. 101-0068)
(Novartis.final.wpd)

Commission Proposes Changes to Improve Premerger Notification Form; Commission Approves Carilion Clinics Application to Sell the Center for Advanced Imaging to InSight Health Corp.

Commission Proposes Changes to Improve Premerger Notification Form

The Federal Trade Commission is proposing to modify the form that companies must file when seeking FTC or Department of Justice review of a proposed transaction under the Hart-Scott-Rodino Act. Companies must notify the agencies when their transactions meet the HSR filing thresholds. The form, which both agencies use, provides basic background information on the premerger filing process.

The agency is seeking public comments on changes designed to streamline the form and focus on the information most needed by the agencies in their initial merger review. The proposal, to be published in the Federal Register, eliminates requests for unnecessary information. The new form, however, will require additional information that is needed to help the FTC and DOJ during their initial review of transactions. The FTC also believes the proposed changes will make the premerger notification process more efficient and will make the form easier to complete.

In addition to changes in the form, the proposal includes minor changes to the HSR Rules to address omissions from the Commission’s 2005 rulemaking involving unincorporated entities. Public comments on the proposed changes will be accepted until October 18, 2010.

The FTC vote approving the Federal Register notice was 5-0. It will be published shortly and is available now on the agency’s website as a link to this press release at www.ftc.gov/os/2010/08/100812hsrfrn.pdf. (FTC File No. P989316; the staff contact is Robert L. Jones, Bureau of Competition, 202-326-2740.)

Commission Approves Carilion Clinic’s Application to Sell the Center for Advanced Imaging to InSight Health Corp.

The Federal Trade Commission has approved Carilion Clinic’s divestiture of the Center for Advanced Imaging to InSight Health Corp. The divestiture restores competition for medical imaging in Roanoke, Virginia, that the FTC alleged was lost when Carilion acquired the Center for Advanced Imaging in 2008. Under a December 2009 settlement with the FTC, Carilion must divest a medical imaging center and an outpatient surgical center in Roanoke to FTC-approved buyers. The settlement resolves charges that Carilion’s acquisitions of the centers were illegal and anticompetitive. Carilion previously requested, and the FTC approved, the sale of one of the clinics – the Center for Surgical Excellence – to Fairlawn Surgery Center, LLC to satisfy, in part, its requirements under the Order.

The FTC vote approving Carilion’s application was 5-0. (FTC Docket No. C-9338; the staff contact is Roberta S. Baruch, Bureau of Competition, 202-326-2861; see press release dated October 7, 2009, at http://www.ftc.gov/opa/2009/10/carilion.shtm.)

Copies of the documents mentioned in this release are available from the FTC’s website at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(FYI 32.2010.wpd)

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