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[Federal Register Volume 72, Number 67 (Monday, April 9, 2007)]
[Notices]
[Pages 17552-17553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-6610]

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FEDERAL TRADE COMMISSION

[File No. 062 3112]

Darden Restaurants, Inc., GMRI, Inc., and Darden GC Corp.; 
Analysis of Proposed Consent Order To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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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 May 2, 2007.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Darden, Inc., File No. 062 3112,'' to 
facilitate the organization of comments. A comment filed in paper form 
should include this 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 159-H, 600 Pennsylvania 
Avenue, NW., Washington, DC 20580. Comments containing confidential 
material must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with Commission Rule 4.9(c). 16 CFR 
4.9(c) (2005).\1\ 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. Comments that do not 
contain any nonpublic information may instead be filed in electronic 
form as part of or as an attachment to email messages directed to the 
following e-mail box: [email protected].
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    \1\ The 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 Commission Rule 4.9(c), 
16 CFR 4.9(c).
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    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments, whether filed 
in paper or electronic form, will be considered by the Commission, and 
will be available to the public on the FTC Web site, to the extent 
practicable, at http://www.ftc.gov. As a matter of discretion, the FTC 
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.htm.

FOR FURTHER INFORMATION CONTACT: Lucy Morris or Jonathan Kraden, Bureau 
of Consumer Protection, 600 Pennsylvania Avenue, NW., Washington, DC 
20580, (202) 326-3224.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 of 
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 April 3, 2007), on the World Wide Web, at http://www.ftc.gov/os/2007/04/index.htm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington, 
DC 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, subject to final 
approval, an agreement containing a consent order from Darden 
Restaurants, Inc., GMRI, Inc., and Darden GC Corp. (collectively, 
``respondents'' or ``Darden'').
    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 will again review the

[[Page 17553]]

agreement and the comments received, and will decide whether it should 
withdraw from the agreement or make final the agreement's proposed 
order.
    Respondents, through subsidiaries, own and operate several 
restaurant chains, including Olive Garden Restaurant, Red Lobster 
Restaurant, Smokey Bones Restaurant, and Bahama Breeze Restaurant. 
Respondents advertise, sell, and distribute Darden Gift Cards through 
their restaurants and Web sites, and third parties. Darden Gift Cards 
are plastic, stored-value cards, similar in size and shape to credit or 
debit cards, often branded with one or more of Darden's restaurant 
logos. Darden Gift Cards typically can be used to purchase goods or 
services at any of Darden's restaurant locations. This matter concerns 
the respondents' alleged failure to disclose, or failure to disclose 
adequately, material terms and conditions of Darden Gift Cards.
    The Commission's complaint alleges that, in the advertising and 
sale of Darden Gift Cards, respondents have represented, expressly or 
by implication, that a consumer can redeem a Darden Gift Card for goods 
or services of an equal value to the monetary amount placed on the 
card. Respondents have failed to disclose, or failed to disclose 
adequately, that, after a specified number of consecutive months of 
non-use (i.e., 15 or 24 months), respondents deduct a $1.50 fee per 
month from the value of the Darden Gift Card until it is used again. 
The proposed complaint alleges that the failure to disclose adequately 
this material fact is a deceptive practice.
    The proposed consent order contains provisions designed to prevent 
respondents from engaging in similar acts and practices in the future.
    Part I.A. of the proposed order prohibits respondents from 
advertising or selling Darden Gift Cards without disclosing, clearly 
and prominently: (a) The existence of any expiration date or automatic 
fees, in all advertising, and (b) all material terms and conditions of 
any expiration date or automatic fee, at the point of sale and prior to 
purchase. The effect of this provision is to require respondents to 
alert consumers to potential fees and expiration dates during 
advertising, and to fully disclose all relevant details at the point of 
sale, before consumers purchase the gift cards.
    Part I.B. of the proposed order prohibits respondents from 
advertising or selling Darden Gift Cards without disclosing, clearly 
and prominently the existence of any automatic fee or expiration date 
on the front of the gift card.
    Part II of the proposed order prohibits respondents from making any 
misrepresentation about any material term or condition associated with 
the Darden Gift Card.
    Part III.A. of the proposed order prohibits respondents from 
collecting or attempting to collect any dormancy fee on any Darden Gift 
Card activated prior to the date of issuance of the proposed order.
    Part III.B. of the proposed order requires respondents, upon 
issuance of the order, to cause the amount of any fees assessed on a 
Darden Gift Card prior to the date of issuance of the order to be 
restored to the card.
    Part III.C. of the proposed order requires respondents to provide 
notice to consumers of the automatic restoration of fees required by 
Section III.B. This notice must be clearly and prominently disclosed on 
respondents' websites, including http://www.darden.com, http://www.dardenrestaurants.com, http://www.redlobster.com, http://www.olivegarden.com, http://www.smokeybones.com, and http://www.bahamabreeze.com.
    Part IV of the proposed order contains a document retention 
requirement, the purpose of which is to ensure compliance with the 
proposed order. It requires that respondents maintain accounting and 
sales records for Darden Gift Cards, copies of ads and promotional 
material that contain representations covered by the proposed order, 
complaints and refund requests relating to the Darden Gift Cards, and 
other materials that were relied upon by respondents in complying with 
the proposed order.
    Part V of the proposed order requires respondents to distribute 
copies of the order to various principals, officers, directors, and 
managers of respondents as well as to the officers, directors, and 
managers of any third-party vendor who engages in conduct related to 
the proposed order.
    Part VI of the proposed order requires respondents to notify the 
Commission of any changes in corporate structure that might affect 
compliance with the order.
    Part VII of the proposed order requires respondents to file with 
the Commission one or more reports detailing compliance with the order.
    Part VIII of the proposed order is a ``sunset'' provision, 
dictating the conditions under which the order will terminate twenty 
years from the date it is issued or twenty years after a complaint is 
filed in Federal court, by either the United States or the FTC, 
alleging any violation of the order.
    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 proposed order or to modify in any way its terms.

    By direction of the Commission.
Donald S. Clark,
Secretary.
 [FR Doc. E7-6610 Filed 4-6-07; 8:45 am]
BILLING CODE 6750-01-P
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