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Chief Administrative Law Judge for the FTC to Retire

Federal Trade Commission Chairman William E. Kovacic today announced that Stephen J. McGuire, Chief Administrative Law Judge for the FTC, is retiring after 31 years of public service. Judge McGuire, who was appointed by former FTC Chairman Timothy J. Muris in 2003, will become Vice President for Compliance & Ethics at the University of Louisville Hospital in his hometown, Louisville, Ky.

“We thank Judge McGuire for his distinguished career of public service and for his many valuable contributions to the Federal Trade Commission. We will remember him for the thoughtful, conscientious approach he took in fulfilling his duties as a manager and a judge.” Chairman Kovacic said. “We wish him the best of success in this exciting new appointment.”

Among the FTC cases that Judge McGuire presided over are the Rambus, Inc. matter, which involved alleged monopolization and restraint of trade in the global DRAM computer memory industry and disclosure rules for international standard-setting organizations, and the Evanston Northwestern Healthcare Corporation matter, which was the first hospital post-merger antitrust proceeding in the era of managed care. He also adjudicated several consumer protection matters, including the Telebrands Corporation matter, involving deceptive business practices.

Judge McGuire previously served as an administrative law judge with the Environmental Protection Agency, the Patent & Trademark Office, and the Social Security Administration, and as senior attorney and hearings examiner with the Department of Interior Board of Contract Appeals. He also served as an alternative dispute resolution (ADR) mediator in hundreds of environmental cases. Judge McGuire received a certificate in Strategic Management in Regulatory and Enforcement Agencies from Harvard University, John F. Kennedy School of Government; he was president of the Exchange Club of Washington, D.C.; and he spoke at ADR conferences across the nation, including the Attorney General’s Inter-Agency ADR Task Force meetings and the New York Bar Association ADR conference. He is a graduate of the National Judicial College in Reno, Nevada.

Appointed under the authority of the Office of Personnel Management, Administrative Law Judges are independent decision makers who hold pre-hearing conferences; resolve discovery, evidentiary, and procedural disputes; decide motions to dismiss or for summary decision; and conduct adversarial evidentiary hearings on the record before issuing an initial decision.

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 1,500 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.

(McGuire)

Chief Administrative Law Judge for the FTC to Retire

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Commission Approves Final Consent Order in Matter of The TJX Companies, Inc.; FTC Approves Final Consent Order in the Matter of Reed Elsevier, Inc. and Seisint, Inc.

Commission approval of final consent orders – Following a public comment period, the Commission has approved the issuance of a final consent order and authorized the staff to respond to the commenters of record in the matter of The TJX Companies, Inc. The vote approving issuance of the final order was 4-0. (FTC File No. 072-3055; the staff contact is Molly K. Crawford, Bureau of Consumer Protection, 202-326-2252; see press release dated March 27, 2008.)

– Following a public comment period, the Commission has approved the issuance of a final consent order and authorized the staff to respond to the commenters of record in the matter of Reed Elsevier Inc. and Seisint, Inc. The vote approving issuance of the final order was 4-0. (FTC File No. 072-3055; the staff contact is Alain Sheer, Bureau of Consumer Protection, 202-326-2252; see press release dated March 27, 2008.)

Copies of the documents mentioned in this release are available from the FTC’s Web site 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 39.2008.wpd)

Federal Trade Commission Creates Information Line for Customers Serviced by Express Consolidation, Inc.

The Federal Trade Commission has created an information line for customers who purchased debt-consolidation services from Express Consolidation, Inc., Randall L. Leshin, and Debt Management Counseling Center (also known as Randall L. Leshin, P.A.). Express Consolidation, Inc. is based in Delray Beach, Florida and has serviced debt-management plans for customers nationwide.

The dedicated line – 866-706-7597 – will describe the notices that have been sent to customers regarding their options to transfer or cancel their debt management plans. The notices are the result of the settlement of an FTC lawsuit charging Express Consolidation, Inc. and affiliated individuals and companies with deception in the sale of debt-consolidation services under the name Express Consolidation (see press release dated May 8, 2008). As part of the settlement, a court-appointed monitor is sending notices to customers who have contracts with Randall L. Leshin and Randall L. Leshin, P.A. (also known as Debt Management Counseling Center and Express Consolidation).

The notices fall under three categories depending upon the customer’s state of residence:

In late May, customers in New York and Vermont received a notice in the mail asking if they want to cancel their agreement or transfer to another provider.
In July, customers in 18 states and the District of Columbia received a notice in the mail asking if they wish to cancel their contracts, agree to a contract with Express Consolidation, Inc., or transfer to another provider. The 18 states in which customers received this notice are: Alabama, Alaska, Arkansas, Hawaii, Idaho, Louisiana, Massachusetts, Michigan, Mississippi, Missouri, Nebraska, New Mexico, Pennsylvania, South Dakota, Washington, West Virginia, Wisconsin, and Wyoming.
In July, customers in the remaining states, where Express Consolidation, Inc. did not fulfill qualifications under state law for providing debt-management services, received a notice in the mail asking if they want to cancel or transfer to a different provider.

A court-appointed monitor will oversee the transfer of the customers’ debt-management plans to alternate providers that are not connected to Express Consolidation, Inc. or the other defendants. The monitor, attorney Gerald B. Wald, has established a Web site at www.expressconsolidationmonitor.com, and a toll-free number, 1-800-718-5071, for consumers seeking more information on the case.

Free publications about choosing, participating in, and stopping debt-payment plans are available as a link to this press release on the FTC’s Web site. The Commission 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, 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 1,500 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.

(Leshin Info Line.wpd)

FTC Challenges McCormick’s Acquisition of Unilever’s Lawry’s and Adolph’s Brands

The Federal Trade Commission today issued a complaint charging that McCormick & Company, Incorporated’s proposed $605 million acquisition of the Lawry’s and Adolph’s brands of seasoned salt products from Unilever N.V. would be anticompetitive and likely would result in higher prices for U.S. consumers. Under a Commission consent order designed to address the FTC’s competitive concerns associated with the acquisition, McCormick has agreed to sell its Season-All seasoned salt business to Morton International, Inc. within 10 days of the date the deal is completed.

“The U.S. market for seasoned salt products is highly concentrated and the proposed acquisition would significantly increase market concentration by eliminating the substantial competition between McCormick and Lawry’s,” said Jeffrey Schmidt, Director of the FTC’s Bureau of Competition. “With Morton taking ownership of the Season-All brand, the Commission is ensuring that vibrant competition in the seasoned salt market will continue.”

The Proposed Transaction

McCormick manufactures, markets, and sells spices, seasonings, and flavors to grocery retailers and the food industry. Headquartered in Maryland, it had sales in 2006 of approximately $2.7 billion. Under a purchase agreement dated November 13, 2007, McCormick would acquire the Lawry’s and Adolph’s brands of marinades, spice, and seasoning products from Unilever N.V., a corporation based in the Netherlands, for $605 million in cash. In 2006, the combined Lawry’s and Adolph’s brands had sales of approximately $153 million.

The Commission’s Complaint

According to the Commission’s complaint, the relevant product market in which to assess likely competitive effects is the manufacture and sale of branded seasoned salt products in the United States. Branded seasoned salt includes products that are composed of several different kinds of spices, including seasoned salt, garlic salt, and reduced-sodium varieties. According to the FTC, the U.S. market for branded seasoned salt is highly concentrated, with McCormick’s Season-All and Lawry’s products comprising most of the $100 million in annual sales. McCormick and Lawry’s have strong brand followings, and evidence indicates that if faced with a five to ten percent increase in the prices of branded seasoned salt, consumers would not switch to other spice blends or seasoned salt products.

The transaction as proposed would be anticompetitive and in violation of Section 5 of the FTC Act and Section 7 of the Clayton Act, as amended. The U.S. market for branded seasoned salt is highly concentrated and is dominated by two lines, Lawry’s Seasoned Salt products and McCormick’s Season-All products. The FTC contends that the proposed acquisition would significantly increase market concentration by eliminating the substantial competition that exists between Lawry’s and McCormick’s seasoned salt products. As a result of the acquisition as proposed, McCormick would control nearly 80 percent of the U.S. market for branded seasoned salts.

Consumers currently benefit from competition between the two firms through reduced prices, discounts, promotional trade spending, and product innovation. Absent the relief provided by the FTC’s consent order, McCormick could unilaterally raise prices on either Lawry’s seasoned salt or Season-All, to the detriment of consumers. McCormick also would have a reduced incentive to develop new products. Due to high sunk costs, entry into the seasoned salts market would be difficult and unlikely to remedy the Commission’s competitive concerns for at least two years.

Terms of the Consent Order

The Commission’s proposed consent order is designed to remedy the alleged anticompetitive effects of the proposed acquisition. It would preserve competition in the U.S. market for seasoned salt products by requiring McCormick to divest its Season-All business to Morton, an up-front buyer approved by the FTC. In total, the Season-All business consists of Season-All seasoned salt, Garlic Season-All seasoned salt, Pepper Season-All seasoned salt, Spicy Season-All seasoned salt, 25% Less Sodium Season-All seasoned salt, and Season-All coating mix. The proposed consent order contemplates divestiture to Morton, which already manufactures and sells a wide variety of salt products to the food service industry and is well positioned to acquire the Season-All assets and replace the competition lost through McCormick’s acquisition of Lawry’s.

The consent order would require McCormick to divest the Season-All assets within 10 days of completing its acquisition of Lawry’s, but would allow the Commission to approve another acquirer if it determines during the public comment period that Morton is not an acceptable buyer. In addition, the order would allow the FTC to appoint a trustee to divest any assets to be divested if necessary to satisfy its terms. The order also will ensure that McCormick maintains the viability of the Season-All assets pending their sale and transfer to Morton to ensure the newly divested business is able to effectively compete following the acquisition. Finally, the proposed Consent Agreement prohibits McCormick for 10 years from acquiring any other seasoned salt product, or any interest in any other spice blends business without providing the Commission with prior notice. It does not, however, restrict McCormick from otherwise expanding its line of spices.

The Commission vote to accept the complaint and consent order for public comment was 4-0. The FTC will publish an announcement regarding the agreement in the Federal Register shortly. The complaint, consent order, and an analysis to aid public comment can be found on the Commission’s Web site at http://www.ftc.gov/os/caselist/0810045/index.shtm.

The agreement will be subject to public comment for 30 days, beginning today and continuing through August 28, 2008, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, Room H-135, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

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 documents related to this matter are available from the FTC’s Web site at http://www.ftc.gov and the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 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 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 File No. 081-0045)
(McCormick.final)

FTC Challenges McCormick’s Acquisition of Unilever’s Lawry’s and Adolph’s Brands

The Proposed Transaction

The Commission’s Complaint

Terms of the Consent Order

(FTC File No. 081-0045)
(McCormick.final)

FTC Report Sheds New Light on Food Marketing to Children and Adolescents

The Federal Trade Commission today announced the results of a study on food marketing to children and adolescents. The report, Marketing Food to Children and Adolescents: A Review of Industry Expenditures, Activities, and Self-Regulation, finds that 44 major food and beverage marketers spent $1.6 billion to promote their products to children under 12 and adolescents ages 12 to 17 in the United States in 2006. The report finds that the landscape of food advertising to youth is dominated by integrated advertising campaigns that combine traditional media, such as television, with previously unmeasured forms of marketing, such as packaging, in-store advertising, sweepstakes, and Internet. These campaigns often involve cross-promotion with a new movie or popular television program. Analyzing this data, the report calls for all food companies “to adopt and adhere to meaningful, nutrition-based standards for marketing their products to children under 12.”

“Our study makes a path-breaking contribution to understanding how food and media industries are marketing food to youth,” said FTC Chairman William E. Kovacic. “We call on both industries to deploy their talents to promote healthier choices for children and adolescents.”

The Commission obtained the data for this report through compulsory process orders requiring financial and marketing information from beverage manufacturers and bottlers; producers of packaged snacks, baked goods, cereals, and prepared meals; makers of candy and chilled desserts; dairy marketers; fruit and vegetable growers; and quick-service restaurants.

The report finds that approximately $870 million was spent on child-directed marketing, and a little more than $1 billion on marketing to adolescents, with about $300 million overlapping between the two age groups in 2006. Marketers spent more money on television advertising than on any other technique ($745 million or 46 percent of the 2006 total.) But for most food products, they employed the full spectrum of promotional techniques and formats when advertising to a young audience: themes from television ads carried over to packaging, displays in stores or restaurants, and the Internet.

That same year, cross-promotions tied foods and beverages to about 80 movies, television shows, and animated characters that appeal primarily to children. In total, the companies spent more than $208 million, representing 13 percent of all youth-directed marketing, on cross-promotional campaigns. For some food categories, such as restaurant food and fruits and vegetables, cross-promotions accounted for nearly 50 percent of reported child-directed expenditures.

For example, characters from Superman Returns and Pirates of the Caribbean appeared in ads that were shown in movie theaters; and on television, product packaging, the Internet, and in-store displays. According to the report, food marketers created special limited-edition snacks, cereals, frozen waffles, and candies “in honor” of these movie characters. In cross-promotional campaigns, television ads and packaging often directed viewers to a Web site where they could enter a sweepstakes to win a related premium, such as movie posters, character action figures, and cash. Consumers might also be directed to “advergames” (video games advertising a product), free downloads such as screen savers and ring tones, podcasts, and online video episodes known as “Webisodes.”

The report finds that, although there is room for improvement, the food and beverage industries have made significant progress since the FTC and the Department of Health and Human Services co-sponsored the Workshop on Marketing, Self-Regulation & Childhood Obesity in 2005. The report cites the Children’s Food and Beverage Advertising Initiative, launched by the Council of Better Business Bureaus (CBBB) in 2006, for taking “important steps to encourage better nutrition and fitness among the nation’s children,” by changing the mix of food and beverage advertising messages directed to children under 12 and encouraging them toward healthier eating and better physical fitness. To date, 13 of the largest food and beverage companies – accounting for the majority of food and beverage expenditures directed toward children – have adopted the initiative, pledging either not to advertise to children under 12, or to limit their television, radio, print, and Internet advertising to foods that meet specified nutritional standards. In addition, several major food and beverage companies have adopted the Alliance for a Healthier Generation guidelines, which are designed to lower the caloric value and increase the nutritional value of foods and drinks sold in schools outside the school meal program.

The report recommends that all companies that market food or beverage products to children under 12 adopt meaningful, nutrition-based standards for marketing their products – standards that extend to all advertising and promotional techniques, including, for example, product packaging and in-store marketing. Companies also should improve the nutritional profiles of products marketed to children and adolescents, whether in or outside of schools; cease the in-school promotion of products that do not meet nutritional standards; and improve the quality and consistency of the nutritional criteria adopted for “better for you” products. The report also recommends steps to enhance the Council of Better Business Bureaus’ initiative.

Finally, the report recommends that more media and entertainment companies restrict the licensing of their characters to healthier foods and beverages that are marketed to children, so that cross-promotions with popular children’s movies and television characters will favor more nutritious foods and drinks. Media companies also should consider limiting ads on child-directed programs to those that promote healthier foods and beverages.

The Commission vote to approve the report was 4-0, with a separate concurring statement from Commissioner Jon Leibowitz.

“Most large food marketers are beginning to take their self-regulatory obligations seriously, and for that they deserve recognition,” Commissioner Leibowitz stated. “Yet some companies still need to step up to the plate and others need to strengthen their voluntary measures, not only because it is in the public interest, but also because it is in their self-interest.”

View the complete text of the statement.

Copies of the report are available at the FTC’s Web site, www.ftc.gov, and from the FTC’s Consumer response Center, Room 130, 600 Pennsylvania Avenue N.W., Washington, DC 20580.

Statement by Jeffrey Schmidt, Director of the FTCs Bureau of Competition

Statement by Jeffrey Schmidt, Director of the FTC’s Bureau of Competition, on the United States Court of Appeals for the District of Columbia Circuit ruling that reverses the District Court’s decision in the Whole Foods matter and remands the case to the District Court for further proceedings consistent with the appellate court opinion:

“We are pleased by today’s decision of the appeals court in the Whole Foods matter and are looking forward to future proceedings before the district court, leading to a full trial on the merits before the Commission.”

Statement by Jeffrey Schmidt, Director of the FTCs Bureau of Competition

FTC Press Briefing to Discuss Report on Food Marketing To Children

WHERE: Federal Trade Commission
600 Pennsylvania Ave., N.W., Room 432
Washington, D.C. 20580

Reporters unable to attend the event can either call in or view the Webcast.

Call-in Information: The toll-free phone number (in the U.S. and Canada) is 866-363-9013. The confirmation number is 58072292. (Please reference this number when joining the call). The chairperson is Gail Kingsland, and the lines, which are for media only, will open at 10:45 a.m. EST.

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