[Federal Register Volume 82, Number 163 (Thursday, August 24, 2017)]
[Notices]
[Pages 40155-40157]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-17880]


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FEDERAL TRADE COMMISSION

[File No. 151 0138]


National Association of Animal Breeders, Inc.; Analysis 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 methods of competition. 
The attached Analysis to Aid Public Comment describes both the 
allegations in the 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 September 19, 2017.

ADDRESSES: Interested parties may file a comment online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write: ``In the Matter of 
National Association of Animal Breeders, Inc. File No. 1510138'' on 
your comment, and file your comment online at https://ftcpublic.commentworks.com/ftc/cattleartificialinseminationconsent by 
following the instructions on the web-based form. If you prefer to file 
your comment on paper, write ``In the Matter of National Association of 
Animal Breeders, Inc. File No. 1510138'' on your comment and on the 
envelope, and mail your comment to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite 
CC-5610 (Annex D), Washington, DC 20580, or deliver your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex 
D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Armando Irizarry (202-326-2964), 
Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC 
20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing 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 August 18, 2017), on the World Wide Web, at 
https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before September 19, 
2017. Write ``In the Matter of National Association of Animal Breeders, 
Inc. File No. 1510138'' on your comment. Your comment--including your 
name and your state--will be placed on the public record of this 
proceeding, including, to the extent practicable, on the public 
Commission Web site, at https://www.ftc.gov/policy/public-comments.
    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/cattleartificialinseminationconsent by following the instructions 
on the web-based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that 
Web site.
    If you prefer to file your comment on paper, write ``In the Matter 
of National

[[Page 40156]]

Association of Animal Breeders, Inc. File No. 1510138'' on your comment 
and on the envelope, and mail your comment to the following address: 
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania 
Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, or deliver 
your comment to the following address: Federal Trade Commission, Office 
of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, 
Suite 5610 (Annex D), Washington, DC. 20024. If possible, submit your 
paper comment to the Commission by courier or overnight service.
    Because your comment will be placed on the publicly accessible FTC 
Web site at https://www.ftc.gov, you are solely responsible for making 
sure that your comment does not include any sensitive or confidential 
information. In particular, your comment should not include any 
sensitive personal information, such as your or anyone else's Social 
Security number; date of birth; driver's license number or other state 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. You are also 
solely responsible for making sure that your comment does not include 
any sensitive health information, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 
16 CFR 4.10(a)(2)--including in particular competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular, 
the written request for confidential treatment that accompanies the 
comment must include the factual and legal basis for the request, and 
must identify the specific portions of the comment to be withheld from 
the public record. See FTC Rule 4.9(c). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted on the public FTC Web site--as legally required by FTC Rule 
4.9(b)--we cannot redact or remove your comment from the FTC Web site, 
unless you submit a confidentiality request that meets the requirements 
for such treatment under FTC Rule 4.9(c), and the General Counsel 
grants that request.
    Visit the FTC Web site to read this Notice and the news release 
describing it. The FTC Act and other laws that the Commission 
administers permit the collection of public comments to consider and 
use in this proceeding, as appropriate. The Commission will consider 
all timely and responsive public comments that it receives on or before 
September 19, 2017. For information on the Commission's privacy policy, 
including routine uses permitted by the Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

Analysis of Agreement Containing Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Order (``Consent 
Agreement'') from the National Association of Animal Breeders, Inc. 
(``NAAB''). NAAB is a trade association of cattle artificial 
insemination firms.
    Dairy production in the United States is dependent on volume from 
more than 9.3 million cows, the market for which relies on services 
provided by NAAB member breeders. In 2008, the U.S. Department of 
Agriculture, with partial funding from the NAAB through a Cooperative 
Research and Development Agreement (``CRADA''), developed a new 
technology that is the best indicator of genetic merit of dairy bulls 
for use in artificial insemination in so far as yielding higher 
producing dairy cows. The Commission's complaint (``Complaint'') 
alleges that NAAB violated Section 5 of the Federal Trade Commission 
Act, as amended, 15 U.S.C. 45, by restraining competition among its 
regular members in the use of this new technology, which dampened 
competition in the market for dairy bulls used for semen production.
    This matter reaffirms the longstanding rule that trade associations 
composed of members that compete among themselves, while typically 
serving important and procompetitive functions, must not adopt rules or 
regulations that unreasonably limit competition among their members. It 
also illustrates that industry groups that obtain valuable and unique 
technology from the government may not establish rules or regulations 
regarding that technology that unreasonably restrain competition.
    The Consent Agreement has been placed on the public record for 30 
days for receipt of comments from interested members of the public. 
Comments received during this period will become part of the public 
record. After 30 days, the Commission will review the Consent Agreement 
and comments received, and decide whether it should withdraw, modify, 
or make the Consent Agreement final.
    The Consent Agreement is for settlement purposes only and does not 
constitute an admission by NAAB that it has violated the law as alleged 
in the Complaint or that the facts alleged in the Complaint, other than 
jurisdictional facts, are true.
    The purpose of this Analysis to Aid Public Comment is to invite and 
facilitate public comment. It is not intended to constitute an official 
interpretation of the proposed Consent Agreement and the accompanying 
Proposed Order, or in any way modify their terms.

I. The Complaint

    The Complaint makes the following allegations.
    NAAB is a non-profit corporation with about 24 regular members that 
compete among themselves and with others in the business of collecting, 
processing, freezing, marketing or selling dairy cattle semen for 
artificial insemination. NAAB's members buy dairy bulls from dairy 
farmers and breeders to produce semen for artificial insemination. NAAB 
members together account for more than 90 percent of dairy cattle semen 
sales in the United States.
    In September 2006, NAAB entered into a CRADA with the United States 
Department of Agriculture (``USDA'') to cooperate with a USDA 
laboratory in a project for developing the genomic testing technology 
described above. The CRADA granted NAAB exclusive access to the results 
of the CRADA project until February 2013. The CRADA did not restrain in 
any way the ability of NAAB or its members to use the new technology or 
to sell access to it, nor did it authorize NAAB or its members to adopt 
rules that restrain in any way the ability of its members to use the 
new technology or to sell access to it.
    By April 2008, the USDA laboratory had developed the new 
technology, known as the Genomic Predicted Transmitting Ability 
(``GPTA''), which analyzes the genetics of a dairy bull to predict the 
ability of the bull to transmit commercially important traits, such as 
milk yield, to its daughters. This new technology is superior to the 
traditional method of evaluating dairy bulls for semen production, and 
it became the best indicator of a dairy bull's

[[Page 40157]]

commercial value for transmitting genetic traits.
    In October 2008, more than two years after entering into the CRADA, 
NAAB approved a resolution that regulated its members' access to the 
new technology during the exclusivity period granted by the CRADA 
(through February 2013). NAAB acted as a combination of its members 
when it approved the resolution.
    The resolution required that for a NAAB member to obtain the GPTA 
of a dairy bull, the Member had to have one of the following interests 
in the bull: (a) Own the bull, (b) have an agreement to purchase at 
least a 30 percent interest in the bull, (c) have a lease on the bull, 
or (d) have an exclusive marketing agreement for the bull. The USDA 
laboratory was the only source of GPTAs during the exclusivity period.
    The Complaint alleges that NAAB's resolution harmed competition by 
diminishing competition for dairy bulls used for semen production. 
First, it impeded the development of a market in which dairy farmers 
and breeders could pay NAAB members to obtain GPTAs for their dairy 
bulls. Second, the resolution limited NAAB members from obtaining the 
GPTA of bulls in which they did not already have a financial interest. 
Access to a bull's GPTA prior to buying or selling it would tend to 
increase competition and drive the price of the bull toward a value 
that more accurately reflects its ability to yield higher producing 
dairy cows. After the exclusivity period expired in February 2013, 
GPTAs became available for a fee through an industry organization.
    The Complaint alleges that the purpose, effect, tendency or 
capacity of the resolution was to restrain competition unreasonably 
among NAAB's Members, and that this conduct injured dairy farmers and 
breeders by depriving them of the benefits of free and open 
competition. Therefore, the resolution constitutes an unfair method of 
competition that violates Section 5 of the Federal Trade Commission 
Act.

II. The Proposed Order

    The Proposed Order has the following substantive provisions. 
Paragraph II requires NAAB to cease and desist from restraining the 
ability of its members to obtain, disclose, provide, use or sell any 
technology or information resulting from research projects conducted 
by, or pursuant to, an agreement to which NAAB is a party. The Proposed 
Order also prohibits NAAB from restraining price-related competition 
among its members relating to the sale or acquisition of bulls or bull 
semen.
    A proviso to Paragraph II specifies that the Proposed Order does 
not prohibit NAAB from engaging in any conduct that is reasonably 
necessary to achieve procompetitive benefits or efficiencies relating 
to NAAB's operation or to the operation of its members, provided that 
such benefits or efficiencies likely would offset the anticompetitive 
harms.
    Paragraph III requires that, for five years, NAAB notify the 
Commission if it adopts or modifies any regulation that restrains the 
ability of its members to obtain disclose, provide, sell or use any 
technology or information resulting from any research project.
    Paragraph V of the Proposed Order requires that NAAB implement an 
antitrust compliance program to ensure compliance with the Proposed 
Order and the antitrust laws.
    Paragraphs IV and VI-VIII of the Proposed Order impose certain 
standard reporting and compliance requirements on NAAB.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2017-17880 Filed 8-23-17; 8:45 am]
 BILLING CODE 6750-01-P