Federal Register / Vol. 75, No. 45 / Tuesday, March 9, 2010 / Notices 10799 

Consumer Protection, 600 Pennsylvania 

Avenue, NW, Washington, D.C. 20580. 

SUPPLEMENTARY INFORMATION: Pursuant 

to section 6(f) of the Federal Trade 

Commission Act, 38 Stat. 721, 15 U.S.C. 

46(f), and § 2.34 the Commission Rules 

of Practice, 16 CFR 2.34, notice is 

hereby given that the above-captioned 

consent agreement containing a 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 February 25, 2010), on 

the World Wide Web, at (http:// 

www.ftc.gov/os/actions.shtm). A paper 

copy can be obtained from the FTC 

Public Reference Room, Room 130-H, 

600 Pennsylvania Avenue, NW, 

Washington, D.C. 20580, either in 

person or by calling (202) 326-2222. 

Public comments are invited, and may 

be filed with the Commission in either 

paper or electronic form. All comments 

should be filed as prescribed in the 

ADDRESSES section above, and must be 

received on or before the date specified 

in the DATES section. 

Analysis of Agreement Containing 

Consent Order to Aid Public Comment 

The Federal Trade Commission 

(‘‘FTC’’ or ‘‘Commission’’) has accepted, 

subject to final approval, an agreement 

containing a consent order from Richard 

J. Stanton (‘‘respondent’’), the founder 

and former Chief Executive Officer of 

ControlScan, Inc. (‘‘ControlScan’’). The 

Commission has entered into a separate 

settlement with ControlScan to be filed 

in federal district court in the Northern 

District of Georgia. 

The proposed consent order has been 

placed on the public record for thirty 

(30) days for receipt of comments by 

interested persons. Comments received 

during this period will become part of 

the public record. After thirty (30) days, 

the Commission again will review the 

agreement and the comments received 

and will decide whether it should 

withdraw from the agreement or make 

final the agreement’s proposed order. 

This matter involves respondent’s 

marketing and distribution of a variety 

of online seal certification marks 

(‘‘website seals’’ or ‘‘seals’’) for 

companies to display on their websites. 

The FTC complaint alleges that 

respondent violated Section 5(a) of the 

FTC Act by falsely representing to 

consumers that ControlScan had 

verified the privacy and data security 

practices of companies displaying its 

website seals, when in fact it had not. 

Specifically, the complaint alleges that 

respondent falsely represented to 

consumers that ControlScan had 

verified the privacy and security 

protections offered by a company 

displaying ControlScan’s Business 

Background Reviewed, Registered 

Member, Privacy Protected, and Privacy 

Reviewed seals, and falsely represented 

how frequently ControlScan reviewed 

such companies’ fitness to display each 

of these seals. In addition, the complaint 

alleges that respondent falsely 

represented to consumers how 

frequently ControlScan reviewed 

companies’ fitness to display the 

Verified Secure seal. The FTC complaint 

describes, with specificity, the claims 

respondent made regarding 

ControlScan’s verification of a company 

displaying each of the challenged seals, 

as well as the verification that 

ControlScan in fact conducted in 

connection with each seal. 

The proposed consent order contains 

provisions designed to prevent 

respondent from engaging in similar 

acts and practices in the future. Part I of 

the proposed order prohibits respondent 

from misrepresenting: 1) the verification 

that is conducted concerning the 

protection that a company provides for 

the privacy and/or security of consumer 

information or the steps a company has 

taken to provide such protection; or 2) 

the frequency of such verification. Part 

II requires respondent to pay to the 

Commission $102,000 in equitable 

monetary relief. Parts III through VI of 

the proposed order are reporting and 

compliance provisions. Part III requires 

respondent to keep copies of documents 

relevant to compliance with the order 

for a five-year period. Part IV requires 

respondent to provide copies of the 

order to certain personnel of companies 

he controls, and Part V requires him to 

notify the Commission of changes in his 

employment or affiliation with any 

business that involves offering or 

providing seals or related products or 

services. Part VI mandates that 

respondent file an initial compliance 

report with the Commission and 

respond to other requests from FTC 

staff. Part VII is a provision ‘‘sunsetting’’ 

the order after twenty (20) years, with 

certain exceptions. 

The purpose of this analysis is to 

facilitate public comment on the 

proposed order. It is not intended to 

constitute an official interpretation of 

the agreement and proposed order or to 

modify in any way its terms. 

By direction of the Commission. 

Donald S. Clark, 

Secretary. 

[FR Doc. 2010–4897 Filed 3–8–10; 11:16 am] 

BILLING CODE 6750–01–S 

FEDERAL TRADE COMMISSION 

[File No. 091 0062] 

Transitions Optical, 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 or 

deceptive acts or practices or 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 April 5, 2010. 

ADDRESSES: Interested parties are 

invited to submit written comments 

electronically or in paper form. 

Comments should refer to ‘‘Transitions 

Optical, File No. 091 0062’’ to facilitate 

the organization of comments. Please 

note that your comment—including 

your name and your state—will be 

placed on the public record of this 

proceeding, including on the publicly 

accessible FTC website, at (http:// 

www.ftc.gov/os/publiccomments.shtm). 

Because comments will be made 

public, they should not include any 

sensitive personal information, such as 

an individual’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. Comments 

also should not include any sensitive 

health information, such as medical 

records or other individually 

identifiable health information. In 

addition, comments should not include 

any ‘‘[t]rade secret or any commercial or 

financial information which is obtained 

from any person and which is privileged 

or confidential. . . .,’’ as provided in 

Section 6(f) of the FTC Act, 15 U.S.C. 

46(f), and Commission Rule 4.10(a)(2), 

16 CFR 4.10(a)(2). Comments containing 

material for which confidential 

treatment is requested must be filed in 

paper form, must be clearly labeled 


sroberts on DSKD5P82C1PROD with NOTICES
10800 Federal Register / Vol. 75, No. 45 / Tuesday, March 9, 2010 / Notices 

1The comment must be accompanied by an 

explicit request for confidential treatment, 

including the factual and legal basis for the request, 

and must identify the specific portions of the 

comment to be withheld from the public record. 

The request will be granted or denied by the 

Commission’s General Counsel, consistent with 

applicable law and the public interest. See FTC 

Rule 4.9(c), 16 CFR 4.9(c). 

‘‘Confidential,’’ and must comply with 

FTC Rule 4.9(c), 16 CFR 4.9(c).1

Because paper mail addressed to the 

FTC is subject to delay due to 

heightened security screening, please 

consider submitting your comments in 

electronic form. Comments filed in 

electronic form should be submitted by 

using the following weblink: (https:// 

public.commentworks.com/ftc/ 

transitionsoptical) and following the 

instructions on the web-based form. To 

ensure that the Commission considers 

an electronic comment, you must file it 

on the web-based form at the weblink: 

(https://public.commentworks.com/ftc/ 

transitionsoptical). If this Notice 

appears at (http://www.regulations.gov/ 

search/index.jsp), you may also file an 

electronic comment through that 

website. The Commission will consider 

all comments that regulations.gov 

forwards to it. You may also visit the 

FTC website at (http://www.ftc.gov/) to 

read the Notice and the news release 

describing it. 

A comment filed in paper form 

should include the ‘‘Transitions Optical, 

File No. 091 0062’’ reference both in the 

text and on the envelope, and should be 

mailed or delivered to the following 

address: Federal Trade Commission, 

Office of the Secretary, Room H-135 

(Annex D), 600 Pennsylvania Avenue, 

NW, Washington, DC 20580. The FTC is 

requesting that any comment filed in 

paper form 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. 

The Federal Trade Commission Act 

(‘‘FTC Act’’) and other laws 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, 

whether filed in paper or electronic 

form. Comments received will be 

available to the public on the FTC 

website, to the extent practicable, at 

(http://www.ftc.gov/os/ 

publiccomments.shtm). As a matter of 

discretion, the Commission makes every 

effort to remove home contact 

information for individuals from the 

public comments it receives before 

placing those comments on the FTC 

website. More information, including 

routine uses permitted by the Privacy 

Act, may be found in the FTC’s privacy 

policy, at (http://www.ftc.gov/ftc/ 

privacy.shtm). 

FOR FURTHER INFORMATION CONTACT: 

Linda M. Holleran (202-326-2267), 

Bureau of Competition, 600 

Pennsylvania Avenue, NW, Washington, 

D.C. 20580. 

SUPPLEMENTARY INFORMATION: Pursuant 

to section 6(f) of the Federal Trade 

Commission Act, 38 Stat. 721, 15 U.S.C. 

46(f), and § 2.34 the Commission Rules 

of Practice, 16 CFR 2.34, notice is 

hereby given that the above-captioned 

consent agreement containing a 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 March 3, 2010), on the 

World Wide Web, at (http:// 

www.ftc.gov/os/actions.shtm). A paper 

copy can be obtained from the FTC 

Public Reference Room, Room 130-H, 

600 Pennsylvania Avenue, NW, 

Washington, D.C. 20580, either in 

person or by calling (202) 326-2222. 

Public comments are invited, and may 

be filed with the Commission in either 

paper or electronic form. All comments 

should be filed as prescribed in the 

ADDRESSES section above, and must be 

received on or before the date specified 

in the DATES section. 

Analysis of Agreement Containing 

Consent Order to Aid Public Comment 

The Federal Trade Commission has 

accepted for public comment an 

Agreement Containing Consent Order to 

Cease and Desist (‘‘Agreement’’) with 

Transitions Optical, Inc. (‘‘Transitions’’). 

The Agreement seeks to resolve charges 

that Transitions used exclusionary acts 

and practices to maintain its monopoly 

power in the photochromic lens 

industry in violation of Section 5 of the 

Federal Trade Commission Act, 15 

U.S.C. § 45. Photochromic lenses are 

corrective ophthalmic lenses that 

darken when exposed to the ultraviolet 

light present in sunlight, and fade back 

to clear when removed from the 

ultraviolet light. 

The proposed Complaint that 

accompanies the Agreement 

(‘‘Complaint’’) alleges that Transitions 

has used its monopoly power to impose 

an exclusive-dealing policy on its 

customers since 1999. As a result, 

Transitions has foreclosed rivals from 

key distribution channels and limited 

competition in the relevant market, 

leading to higher prices, lower output, 

reduced innovation and diminished 

consumer choice. 

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 Agreement. 

The 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 again review the 

Agreement and comments received, and 

will decide whether it should withdraw 

from the Agreement or make final the 

Order contained in the Agreement. 

The purpose of this Analysis to Aid 

Public Comment is to invite and 

facilitate public comment concerning 

the proposed Order. It is not intended 

to constitute an official interpretation of 

the Agreement and proposed Order or in 

any way to modify their terms. The 

Agreement is for settlement purposes 

only and does not constitute an 

admission by Transitions 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. Industry Background 

This case involves the photochromic 

lens industry. Consumers of corrective 

ophthalmic lenses (lenses used for 

vision correction and worn in 

eyeglasses) have the option to purchase 

those lenses with a photochromic 

treatment, which protects eyes from 

harmful ultraviolet (‘‘UV’’) light. A 

‘‘photochromic lens,’’ which is a 

corrective ophthalmic lens with a 

photochromic treatment, will darken 

when it is exposed to the UV light 

present in sunlight, and fade back to 

clear when it is removed from the UV 

light. 

In 2008, approximately 18 to 20 

percent of all corrective ophthalmic 

lenses purchased in the United States 

were photochromic, and photochromic 

lenses totaled approximately $630 

million in sales at the wholesale level. 

Photochromic lenses have 

characteristics and uses distinct from 

polarized lenses (which are designed to 


sroberts on DSKD5P82C1PROD with NOTICES
Federal Register / Vol. 75, No. 45 / Tuesday, March 9, 2010 / Notices 10801 

remove glare) and fixed-tint lenses (e.g., 

prescription sunglasses). 

Transitions produces its 

photochromic lenses in partnership 

with lens manufacturers known as ‘‘lens 

casters.’’ Lens casters supply the 

corrective ophthalmic lenses to 

Transitions, and Transitions uses 

proprietary methods to apply patented 

photochromic dyes or other 

photochromic materials to the lenses. 

Transitions then sells the lenses, now 

photochromic, back to the lens casters. 

These lens casters are Transitions’ only 

direct customers. 

Lens casters, in turn, resell the 

photochromic lenses to wholesale 

optical laboratories (‘‘wholesale labs’’) 

and optical retailers (‘‘retailers’’). 

Wholesale labs generally sell corrective 

ophthalmic lenses, including 

photochromic lenses, to 

ophthalmologists, optometrists, and 

opticians (collectively known as ‘‘eye 

care practitioners’’) who are not 

affiliated with retailers. Wholesale labs 

grind the lens according to the lens 

prescription, fit the lens into an eyeglass 

frame, and deliver the frame with the 

finished lens back to the eye care 

practitioner. In addition to these 

laboratory functions, a wholesale lab 

will often employ a sales force to 

promote specific lenses to eye care 

practitioners. Photochromic lens 

suppliers, such as Transitions, use 

wholesale labs and their sales forces to 

market their lenses because wholesale 

labs are the most efficient means for a 

photochromic lens supplier to promote 

and sell its products to the tens of 

thousands of independent eye care 

practitioners prescribing photochromic 

lenses to consumers. 

Retailers, on the other hand, combine 

both eye care practitioner and laboratory 

services. They employ their own eye 

care practitioners who deal directly 

with consumers. In addition, retailers 

grind and fit lenses into eyeglass frames 

and deliver the frame with the finished 

lens to the consumer. The retail channel 

is generally a more efficient means for 

promoting and selling photochromic 

lenses to consumers than comparable 

efforts through the wholesale lab 

channel because a single sales effort to 

a large retailer can influence the 

prescribing behavior of hundreds of eye 

care practitioners. Retailers range from 

large national retail chains to smaller, 

regional ones. 

This industry structure is reflected in 

the diagram below. 

B. Transitions’ Monopoly Power 

Transitions has monopoly power in 

the relevant market for the 

development, manufacture and sale of 

photochromic treatments for corrective 

ophthalmic lenses in the United States. 

Transitions has garnered a persistently 

high share of at least 80 percent of this 

market over the past five years, and over 

85 percent in 2008. The photochromic 

lens industry has high barriers to entry, 

which include significant product 

development costs and capital 

requirements, substantial intellectual 

property rights, regulatory requirements, 

and Transitions’ anticompetitive and 

exclusionary conduct. Direct evidence 

of Transitions’ ability to exclude 

competitors and to control prices 

confirms Transitions’ monopoly power. 

C. Transitions’ Conduct 

Transitions has maintained its 

dominance, in significant part, by 

implementing exclusive agreements and 

other exclusionary policies at nearly 

every level of the photochromic lens 

distribution chain. 

1. Exclusionary Practices with Direct 

Customers (Lens Casters) 

In 1999, Corning Inc. introduced a 

new plastic photochromic lens, 

Sunsensors®, which was a direct 

challenge to Transitions. Transitions 

responded to this competitive threat by 

terminating the first lens caster that 

began selling the new SunSensors® 

lens, Signet Armorlite, Inc. (‘‘Signet’’), 

and by adopting a general policy not to 

deal with lens casters that sold or 

promoted a competing photochromic 

lens. Transitions furthered its 

anticompetitive and exclusionary efforts 

by, among other things: (i) entering into 

exclusive agreements with certain lens 

casters; (ii) announcing to the industry 

its policy of dealing only with lens 

casters that sold its lenses on an 

exclusive basis; (iii) threatening to 

terminate lens casters that did not want 

to sell its lenses on an exclusive basis; 

and (iv) terminating a second lens 

caster, Vision-Ease Lens (‘‘Vision-Ease’’), 

that developed a photochromic 

treatment, LifeRx®, to apply to its own 

ophthalmic lenses. Because of 

Transitions’ course of conduct, even 

lens casters that have not signed 

exclusive agreements have a clear 

understanding that they cannot sell or 

promote a competing photochromic lens 

without being terminated by 

Transitions. 

Transitions’ exclusive policy is 

coercive to lens casters and acts as a 

powerful deterrent against selling a 

competing photochromic treatment 

because Transitions is such a large part 

of the photochromic lens market. Losing 

the sales generated by Transitions’ 

photochromic lenses can jeopardize up 

to 40 percent of a lens caster’s overall 

profit. Additionally, losing the ability to 

sell Transitions’ photochromic lenses 

can endanger a lens caster’s sales of 

clear lenses because many retailers and 

wholesale labs (and their eye care 

practitioner customers) prefer to buy 

both clear and photochromic versions of 

the same lens. 


sroberts on DSKD5P82C1PROD with NOTICESEN09MR10.015</GPH>
10802 Federal Register / Vol. 75, No. 45 / Tuesday, March 9, 2010 / Notices 

2See, e.g., Aspen Skiing Co. v. Aspen Highlands 

Skiing Corp., 472 U.S. 585, 605 & n.32 (1985) 

(exclusionary conduct ‘‘tends to impair the 

opportunities of rivals’’ but ‘‘either does not further 

competition on the merits or does so in an 

unnecessarily restrictive way’’) (citations omitted); 

Lorain Journal Co. v. United States, 342 U.S. 143, 

151-54 (1951) (condemning newspaper’s refusal to 

deal with customers that also advertised on rival 

radio station because it harmed the radio station’s 

ability to compete);United States v. Microsoft Corp., 

253 F.3d 34, 68-71 (D.C. Cir. 2001) (condemning 

exclusive agreements because they prevented rivals 

from ‘‘pos[ing] a real threat to Microsoft’s 

monopoly’’); United States v. Dentsply Int’l, Inc., 

399 F.3d 181, 191 (3d Cir. 2005) (‘‘test is not total 

foreclosure but whether the challenged practices 

bar a substantial number of rivals or severely 

restrict the market’s ambit’’); LePage’s, Inc. v. 3M, 

324 F.3d 141, 159-60 (3d Cir. 2003) (same). 

3See, e.g., Microsoft, 253 F.3d at 64 (condemning 

exclusive agreements that foreclosed rivals from 

‘‘cost-efficient’’ distribution channels); LePage’s, 324 

F.3d at 159-60 (finding ‘‘exclusionary conduct cut 

LePage’s off from key retail pipelines’’). See also 

Richard A. Posner, ANTITRUST LAW 229 (2d ed. 

2002) (noting that exclusive dealing may ‘‘increase 

the scale necessary for new entry, and . . . increase 

the time required for entry and hence the 

opportunity for monopoly pricing’’). 

For all these reasons, Transitions has 

succeeded in foreclosing competitors 

from dealing with lens casters 

collectively accounting for over 85 

percent of photochromic lens sales in 

the United States. These lens casters 

deal with Transitions on an exclusive 

basis and will not do business with any 

other suppliers of photochromic 

treatments. 

2. Exclusionary Practices with Indirect 

Customers (Retailers and Wholesale 

Labs) 

In an effort to shut out its rivals, 

Transitions also directed its 

exclusionary practices at its indirect 

customers: wholesale labs and retailers. 

In 2005, in order to mitigate the new 

competitive threat posed by VisionEase’s introduction of LifeRx®, 

Transitions began an exclusionary 

agreement campaign with major 

retailers. Transitions induced over 50 

retailers, including many of the largest 

chains, with up-front payments and/or 

rebates to enter into long term exclusive 

agreements that were difficult to 

terminate. 

Transitions also has entered into over 

100 agreements with wholesale labs that 

require the wholesale labs to promote 

Transitions’ lenses as their ‘‘preferred’’ 

photochromic lens and to withhold 

normal sales efforts for competing 

photochromic lenses in exchange for 

rebates or other items of pecuniary 

value. Further, at least 50 percent of all 

wholesale labs are owned by lens 

casters that sell only Transitions’ lenses. 

Because these lens casters generally use 

their wholesale labs to promote and sell 

primarily their own brand of lenses, this 

further impairs competitors’ access to 

wholesale labs. 

Additionally, Transitions’ agreements 

with retailers and wholesale labs 

generally provide a discount only if the 

customer purchases all or almost all of 

its photochromic lens needs from 

Transitions. Because no other supplier 

has a photochromic treatment that 

applies to a full line of ophthalmic 

lenses, Transitions’ discount structure 

impairs the ability of rivals to compete 

for sales to these customers. It also 

erects a significant entry barrier by 

limiting the ability of a rival to enter the 

market with a new photochromic 

treatment that applies to less than a full 

line of ophthalmic lenses. 

Transitions’ exclusionary practices 

with retailers and wholesale labs 

foreclose rivals, in whole or in part, 

from a substantial share – as much as 40 

percent or more – of the retailer and 

wholesale lab distribution channels. 

D. Competitive Impact of Transitions’ 

Conduct 

Transitions’ course of conduct harms 

competition by marginalizing existing 

competitors and by deterring new entry. 

Faced with the threat of termination by 

Transitions, no major lens caster 

operating in the United States has been 

willing to carry the plastic SunSensors® 

lens since Transitions terminated 

Signet. Without access to effective 

distribution, Corning has been unable to 

pose a competitive threat to Transitions’ 

monopoly, and has had little incentive 

to invest in research and development 

to improve its product. Further, some 

lens casters would likely develop and/ 

or sell competing photochromic lenses, 

but Transitions’ exclusive dealing – 

particularly its ‘‘all or nothing’’ 

ultimatum to lens casters – effectively 

deters new entrants. 

Transitions’ conduct at the wholesale 

lab and retailer levels also has harmed 

competition. For example, Transitions 

deprived Vision-Ease of access to many 

large retailers (one of the most efficient 

channels for distributing photochromic 

lenses to consumers), which blunted the 

force of its entry into the market and 

diminished its ability to constrain 

Transitions’ exercise of monopoly 

power. Potential entrants observed 

Transitions’ exclusionary campaign 

against Vision-Ease and have been 

deterred from entering the market. 

Further, Transitions’ exclusionary 

policies at all levels of the distribution 

chain deter potential competitors from 

entering the market on an incremental 

basis. Transitions’ ‘‘all or nothing’’ 

policy with lens casters deters them 

from purchasing or developing a 

competing photochromic treatment that 

can be applied to less than a full line of 

ophthalmic lenses because the lens 

caster is unlikely to be able to recoup 

the substantial profits it would have 

made from the sale of the full line of 

Transitions’ products. Similarly, the 

structure of Transitions’ discounts to 

retailers and wholesale labs – which are 

generally conditioned on the customer’s 

purchase of all or almost all of 

Transitions’ products – places 

competitors with less than a full line of 

photochromic lenses at a disadvantage 

when competing for this business. 

Transitions’ exclusionary practices 

have likely increased prices and 

reduced output. For example, because it 

does not face effective competition, 

Transitions has been able to ignore 

consumer demand and refuse to supply 

its low-priced, private label 

photochromic lens in the U.S. market, 

even though Transitions offers this 

product in other markets. 

Transitions’ conduct has also harmed 

consumers by depriving rivals of the 

incentive to innovate and to develop 

competing photochromic lenses. If faced 

with more competition, Transitions 

would also likely have a greater 

incentive to invest additional resources 

in research and development. 

There are no procompetitive 

efficiencies that justify Transitions’ 

conduct or outweigh its substantial 

anticompetitive effects. 

II. Legal Analysis 

Exclusive dealing by a monopolist is 

condemned under Section 2 of the 

Sherman Act, 15 U.S.C. § 2, when the 

challenged conduct significantly 

impairs the ability of rivals to compete 

with the monopolist and thus to 

constrain its exercise of monopoly 

power.2 Agreements that foreclose key 

distribution channels are often found to 

have this proscribed effect and are 

deemed illegal.3

The factual allegations in the 

Complaint are consistent with a finding 

of monopoly power and competitive 

harm. Transitions’ policy of requiring 

exclusivity from its lens caster 

customers has foreclosed its rivals from 

over 85 percent of available sales 

opportunities at this level of the 

distribution chain. This foreclosure is 

particularly significant because nearly 

all photochromic lenses are first sold by 

lens casters – attempts to fabricate 

photochromic lenses at the wholesale 

lab or retailer level have largely been 

abandoned as uneconomical. The 

competitive impact of this exclusive 

dealing with lens casters is amplified by 

Transitions’ exclusionary practices with 

retailers and wholesale labs, which 


sroberts on DSKD5P82C1PROD with NOTICES
Federal Register / Vol. 75, No. 45 / Tuesday, March 9, 2010 / Notices 10803 

4E.g., Microsoft, 253 F.3d at 59. 

5 Id. 

6 ‘‘Interbrand free-riding’’ occurs when a 

manufacturer provides services, training, or other 

incentives in the promotion of its products for 

which it cannot easily charge its dealer, and that 

dealer ‘‘free-rides’’ on these demand-generating 

services by substituting a cheaper, more profitable 

product made by another manufacturer that does 

not invest in comparable services. See generally 

Howard P. Marvel, Exclusive Dealing, 25 J.L. & 

Econ. 1, 8 (1982). 

7See United States v. Dentsply Int’l, Inc., 277 F. 

Supp. 2d 387, 445 (D. Del. 2003), aff’d in rel. part, 

399 F.3d at 196-97; Marvel, Exclusive Dealing, 25 

J.L. & Econ. at 8 (explaining that an interbrand freeriding justification ‘‘does not apply if the 

promotional investment is purely brand specific. In 

such cases, the dealer will not be in a position to 

switch customers from brand to brand.’’). 

8See In re Polygram, 136 F.T.C. 310, 361-62 

(2003), aff’d, 416 F.3d 29, 37-38 (D.C. Cir. 2005). 

9We use the term ‘‘de facto exclusive dealing’’ to 

refer to practices that significantly deter a customer 

from purchasing or selling a competing 

photochromic lens. 

further foreclose rivals, in whole or in 

part, from as much as 40 percent or 

more of these downstream distribution 

channels. Transitions’ exclusionary 

conduct has thus likely caused higher 

prices, lower output, and reduced 

innovation and consumer choice. 

A monopolist may rebut a such a 

showing of competitive harm by 

demonstrating that the challenged 

conduct is reasonably necessary to 

achieve a procompetitive benefit.4 Any 

proffered justification, if proven, must 

be balanced against the harm caused by 

the challenged conduct.5

No procompetitive efficiencies justify 

Transitions’ exclusionary and 

anticompetitive conduct. Transitions 

cannot show that the exclusive 

arrangements were reasonably necessary 

to achieve a procompetitive benefit, 

such as protecting Transitions’ 

intellectual property or technical knowhow, or preventing interbrand freeriding.6 Transitions does not transfer 

substantial intellectual property or 

technical know-how to its customers, 

and even if it did, any such transfer 

would likely be protected by existing 

confidentiality agreements. 

A concern about interbrand freeriding also does not justify the 

substantial anticompetitive effects 

found here. The vast majority of 

Transitions’ promotional efforts are 

brand specific, reducing the significance 

of any free-riding concern.7 While 

Transitions’ marketing efforts may 

generate some consumer interest in the 

product category as a whole – and not 

just in Transitions’ own products – this 

is a part of the natural competitive 

process. This type of consumer response 

does not raise a free-riding concern 

sufficient to justify the substantial 

anticompetitive effects found here.8

III. The Order 

The proposed Order remedies 

Transitions’ anticompetitive and 

exclusionary conduct and imposes 

certain fencing-in requirements that are 

designed to prevent de facto exclusive 

dealing.9 Paragraph II of the Order 

addresses the core of Transitions’ 

exclusionary conduct and seeks to lower 

entry barriers and to restore 

competition. Paragraph III requires 

Transitions to implement an antitrust 

compliance program, which includes 

providing notice of this Order to 

Transitions’ customers. Paragraphs IVVI impose reporting and other 

compliance requirements. The Order 

expires in 20 years unless otherwise 

indicated. 

Paragraph II.A prohibits Transitions 

from adopting or implementing any 

agreement or policy that results in 

‘‘exclusivity’’ with lens casters, or its 

‘‘Direct Customers.’’ ‘‘Exclusivity’’ is 

defined in the Order to include any 

requirement that a customer limit or 

refrain from dealing with a competing 

photochromic lens, as well as any 

requirement that a customer give 

Transitions’ products more favorable 

treatment as compared to a competitor’s 

products. 

Paragraph II.B allows Transitions to 

enter into exclusive agreements with 

retailers and wholesale labs (‘‘Indirect 

Customers’’), provided certain 

safeguards are met. Specifically, any 

exclusive agreements with Indirect 

Customers must: i) be terminable 

without cause, and without penalty, on 

30 days written notice; ii) be available 

on a partially exclusive basis, if 

requested by the customer; and iii) not 

offer flat payments of monies in 

exchange for exclusivity. These 

provisions, along with Paragraph II.E, 

which prohibits Transitions from 

bundling discounts, are designed to 

enable a competitor or entrant to 

compete for a customer’s business, even 

if it does not offer a photochromic 

treatment that applies to a full line of 

ophthalmic lenses. Creating conditions 

conducive to effective entry on an 

incremental basis is likely to hasten new 

entry and to restore competition. 

Under Paragraph II.C, Transitions may 

not limit its customers from 

communicating or discussing a 

competing photochromic lens with 

consumers and others. This Paragraph 

also requires Transitions to allow a lens 

caster or another customer that sells 

Transitions’ photochromic treatment on 

a particular brand of lens to sell a 

competitors’ photochromic treatment on 

the same brand. 

Paragraph II.D has two provisions 

designed to prevent de facto exclusive 

dealing through pricing policies. First, 

Transitions cannot offer market share 

discounts, i.e., discounts based on the 

percentage of a customer’s sales of 

Transitions’ lenses as a percentage of all 

photochromic lens sales. Second, 

Transitions cannot offer discounts that 

are applied retroactively once a 

customer reaches a specified threshold. 

For example, Transitions may provide a 

discount on sales beyond 1000 units but 

it may not lower the price of the first 

999 units if and when the customer 

buys the 1000th unit. The provisions in 

Paragraph II.D, along with Paragraph 

II.E, will be in effect for 10 years. 

Notwithstanding any provision of the 

Order, Paragraph II.G explicitly allows 

Transitions to provide volume discounts 

that reflect certain cost differences, and 

to offer discounts to meet competition. 

It also allows Transitions to require that 

any monies it provides to customers be 

used solely for the manufacture, 

promotion or sale of Transitions lenses. 

Finally, Paragraph II.F prohibits 

Transitions from retaliating against a 

customer that purchases or sells 

Transitions lenses on a non-exclusive 

basis. 

By direction of the Commission. 

Donald S. Clark, 

Secretary. 

[FR Doc. 2010–4979 Filed 3–8–10; 7:23 am] 

BILLING CODE 6750–01–S 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Disease Control and 

Prevention 

[30Day–10–09AM] 

Agency Forms Undergoing Paperwork 

Reduction Act Review 

The Centers for Disease Control and 

Prevention (CDC) publishes a list of 

information collection requests under 

review by the Office of Management and 

Budget (OMB) in compliance with the 

Paperwork Reduction Act (44 U.S.C. 

Chapter 35). To request a copy of these 

requests, call the CDC Reports Clearance 

Officer at (404) 639–5960 or send an email to omb@cdc.gov. Send written 

comments to CDC Desk Officer, Office of 

Management and Budget, Washington, 

DC or by fax to (202) 395–5806. Written 

comments should be received within 30 

days of this notice. 

Proposed Project 

Prevalence Survey of Healthcare 

Associated Infections (HAIs) and 


sroberts on DSKD5P82C1PROD with NOTICES