b'L.121\nUNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON , D. C.\n\n20580\n\nDivision of Marketing Practices\nLaurie Meehan\nAttorney\nDirect Dial\n\n202- 326- 3755\n\nVIA FACSIMLE AN U. S. MAL\nMarch 20 ,\n\n1997\n\nDavid Parridge\nMeredyth P. Parridge\nRegulatory Support Servces , Inc.\n2608 Duffy Cour\nRichmond , VA 23233\nDear Mr. Parridge:\n\nI apologize for the delay in responding to your inquiries. You have requested staff\nopinions or clarifications on the following matters: 1) whether a statement regarding exposure\nincidents complies with the Funeral Rule; 2) whether prices on separate price lists may differ\nonly with respect to " unique " items offered on a paricular list; 3) whether package prices based\non items unique to a paricular nationality may be offered only to those persons of that\nnationality; 4) confirmation that funeral homes may charge a fee for a translator; and 5)\nconfirmation that the General Price List and Statement of Goods and Service , with their specific\ndisclosures , should be supplied to the customer in English.\nFirst , you have inquired as to whether the inclusion of the following statement on a\nStatement of Goods and Services complies with the Funeral Rule:\nIn the event of an exposure incident , as defined under applicable OSHA\nregulations , involving blood or other potentially infectious materials !Tom the\ndecedent and a member of the funeral home staff, the funeral home is hereby\ngranted permission to test appropriate samples !Tom the decedent for evidence of\ninfection with Human Immunodeficiency Virus (HI), hepatitis B virus (HBV),\nand hepatitis C virus (HCV) and to use the results of such testing for furter\n\n\x0cevaluation and management of the exposure incident , including disclosure of the\ntest results to the exposed staff member.\n\nThe Funeral Rule requires that funeral providers give consumers accurate , itemized price lists\nmake disclosures regarding certain funeral goods and service and prohibits funeral providers\nfrom making certain misrepresentations regarding fueral goods and services. The Funeral Rule\ndoes not address exposure incidents or the permissible methods for dealing with such incidents.\nThus , we can neither express approval nor disapproval of the proposed exposure incident\nstatement.\nSecond , you raised several issues in your letter regarding different General Price Lists.\nThe Funeral Rule requires that funeral providers produce a General Price List to consumers that\ncontains an itemized price list and certain disclosures at the beginning of any discussion\nregarding funeral arrangements. 16 C.F. R. 9453. 2(4). Under certain circumstances , funeral\nproviders may offer alternative price lists for special groups. Specifically, funeral providers may\n\noffer a different General Price List for funeral goods and services for an infant. Furter , a funeral\nprovider may enter agreements with religious groups or bural societies to provide funerals at a\ndiscounted price. However , even these alternative price lists must provide all items and\ndisclosures as required on the General Price List. I have enclosed a copy of the FTC publication\nComplving with the Funeral Rule , which discusses the issue of alternative price lists on page 18.\nYour letter questions whether prices must be identical on a General Price List given to al1\ncustomers versus a General Price List given to customers who are members of a specific group.\nIf you propose offering different General Price Lists for different ethnic groups , based on the\ninclusion of services which are appropriate for different groups , the prices for " like " items would\nneed to be consistent. Therefore , items that are " unique " to particular services may be included\n\non a paricular price list , but the prices for the required itemized goods and services must remain\nthe same. If you are offering discounted prices to a particular group, the prices need not be\nidentical Further , the discounts that you offer to members of groups may include items unique\nto that group or items common to al1 funeral services that you offer.\n\nThird , you requested clarfication with respect to offering discounted packages to Asian\ncustomers. Under the Funeral Rule , you may offer certain discounted packages to members of\n\ngroups that you have entered into arangements with. Note: if these discount prices are provided\nto the large m ority of your customers , the discount prices would be the actual prices and , thus\nthe General Price List provided to al1 customers should reflect that. As I mentioned above , I\nhave enclosed the FTC publication\nComplving with the Funeral Rule which addresses the issue\nof discounted prices on page 13. If the package or discount is par of a special arangement with\nan Asian group, you may provide discounted services , but the price list for those services must\nstil1 comport with the requirements of the General Price List. Furher , the FTC expresses no\nopinion regarding the legality or propriety of offering separate prices for different ethnic groups\nunder state or federal laws that address discrimination based upon race or national origin , but that\nare not enforced by the FTC. The opinions expressed in this letter are confined solely to the\napplication of the Funeral Rule to the issues raised.\n\n\x0cFourth , you requested that staff confirm the statement that a fee for a translator is allowed\nunder the Funeral Rule. The FTC does not regulate the prices charged by funeral providers. The\npurpose of the Funeral Rule is to make price information readily available to consumers and to\nenable them to do comparative shopping for funeral goods and services. Thus , the services of a\ntranslator , if so required , may be subject to a fee or charge by the funeral home under the Funeral\nRule. An itemized disclosure on the GPL regarding the fees or charges for translators , however\nwould be appropriate.\n\nFinally, you requested written confirmation that the required disclosures on the General\nPrice List should be provided in English due to the Rule requirement of specific wording of the\ndisclosures. The Funeral Rule provides for several specifically worded disclosures. Given the\n\ndifficulty that you raise of translating these terms verbatim into a different language , staff\nrecommends providing the General Price List and Itemized Statement of Funeral Goods and\nServices in English to comport with the specific disclosures of the Funeral Rule. If you wish\nyou may also disclose them in other languages , as long as the English disclosures are provided as\nwell.\nFTC staff are pleased to hear of the high compliance rate you observed in Virginia.\n\nPlease be advised that the views expressed in this letter are those of the FTC staff. They\nhave not been reviewed, approved or adopted by the Commission , and they are not binding upon\nthe Commission. However , they do reflect the opinions of those staff members charged with\nenforcement of the Funeral Rule.\n\nI apologize again for the delay in responding to your inquiry.\n\nSincerely,\n\nLaurie Meehan\nFuneral Rule Enforcement Staff\n\nEnclosure\n\n\x0cUNITED STATE OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON , D. C. 20580\n\nDivision of Marketing Practices\n\nLaurie Meehan\nAttorney\nDirect Dial\n\n202-326- 3755\n\nDecember 5 1996\n\nH. Stephen Hars , Jr,\nAlston & Bird\nOne Atlantic Center\n1201 Peachtree Street\nAtlanta, Georgia 30309- 3424\nDear Mr. Haris:\n\nI am wrting in response to your request that Federal Trade Commission ("FTC" or\nCommission ) staff review your client\' s proposed business plan as it relates to the FTC\'\nFuneral Rule, 16 C, F.R Par 453, Specifically, you asked for a staff opinion addressing the\nfollowing issues: 1\n\nwhether, by virtue of its provision of services , your\nclient would be considered a " fueral provider " as\nthat term is defined in 16 C. F.R 9 453. 1(i);\nwhether, and the extent , if any, to which the Funeral\nRule , 16 C. R. Par 453 is applicable to the\nproposed services to be offered by your client; and\n\nwhether, and the extent , if any, to which the\nCommission would regard any aspect of your\nclient\'s services to violate the Funeral Rule.\nAt the outset , it is useful to note that an essential purose of the Funeral Rule is to\nensure that consumers have access to sufficient information to permit informed purchase\ndecisions , that consumers are not required to purchase items they do not want and are not\n\nInitially you requested a Commission opinion, but later, by letter dated October 3\n1996 you amended your request and now seek a staff opinion.\n\n\x0crequired by law to purchase and that misrepresentations are not used to infuence consumer\npurchase decisions, " Statement of Basis and Purose , Funeral Industry Practices Trade\nRegulation Rule , 59 Fed. Reg. at 1593 (Januar 11 , 1994) (reprinted from the 1982 Statement of\nBasis and Purose), To a large extent, our conclusion must be driven by this essential purose of\nthe Rule.\nIn\nimplementing your client\'s plan , we would urge that the client also keep this\nuppermost in his or her mind.\n\nIs your client a " fueral\n\nprovider "\n\nwithn the term as defined by the Funeral Rule?\n\nFirst , the Funeral Rule defines a " funeral provider" as " any person , parnership or\ncorporation that sells or offers to sell fueral goods and fueral services to the public. " 16 C. F .\n9 453.l(i). The Rule fuher states that \'\'\' fueral goods \' are the goods which are sold or offered\nfor sale directly to the public in for use in connection with fueral services. " 16 C.\n9453.l(h). " Funeral services " are defined as " any services which may be used to: (1) care for\nand prepare the deceased human bodies for bural , cremation or other final disposition; and (2)\narange , supervise or conduct the fueral ceremony or the final disposition of deceased human\nbodies, " 16 C, F.R 9 453.10).\nAs set forth in your letter dated July 31 , 1996 , your client intends to offer , in par\n(e)\n\nto enter into agreements with fueral providers\n(which , by entering into such agreements will\nbecotne members of the Company s " network"\nobligating those fueral providers to provide the\nfollowing information and packages to the\nCompany and/or the Company s customers , where\nrequested by any such customer:\n(I)\n\ninformation specifically requested by any customer\nincluding: (A) the general price list of any network\nmembers \' fueral goods and services; and (B) the complete\nprice lists of an caskets and vaults offered by any network\nmember; and\n\n(ii)\n\n(f)\n\nfueral packages (at discounted prices where discounts can\nbe negotiated) and/or discounts on some or all ofthe goods\nand services on the providers \' general price lists; and\n\nto obtain on behalf of the consumer, at the time of death , from\nreputable fueral providers, at a discounted price where such can\nbe obtained , the specific fueral-related goods and services\nselected by the consumer (including any discount applicable to any\npackage selected), or the alternatives chosen by the consumer\nfamily at the time of death , in lieu of those selected by the\nconsumer;\n\n\x0c(g)\n\nwhere requested by the consumer, to provide varous services at\nthe time of death , including contacting the selected fueral\ndirector, informing the fueral director of the selections made by\nthe decedent , making other arangements such as travel\narangements , flower delivery, lunches and lodging;\n\nAlthough several ofthe proposed offerings of your client may be within the definition of " fueral\nservices " under the Funeral Rule , nothing in your cOITespondence indicates that your client win\nsell or offer to sell " fueral goods. " Thus , because the Funeral Rule defines a fueral provider as\nand fueral services , your client , operating as\nan entity sellng or offering to sell " fueral goods\ndescribed in your letter, would not be considered a " fueral provider " as that teIT is defined in\n16 C,\n\nR. 9 453.1 (i) (emphasis added),\n\nII.\n\nIs the Funeral Rule applicable to your client\'s proposed service?\n\nTo address your second question , we begin by noting that the Funeral Rule requires\nmake certain required disclosures , avoid\nmisrepresentations , and/or comply with preventive requirements. 16 C, R. 9 453. et seq\nfueral providers to provide accurate price infoITation ,\n\nEven though your client, under the facts described in your letter, is not technically\ncovered by the Funeral Rule, some of the proposed services raise issues with respect to the\ndisclosures required under the Funeral Rule. For example , your client proposes to infoIT " the\nconsumer of his or her rights under the Funeral Rule, including the right for the consumer at any\ntime (and the right of the consumer s family) to obtain wrtten general price lists of all goods and\nservices of any fueral home , including, but not limited to , the individual prices on such general\nprice list of all component goods and services of any package which the consumer may have\nselected. " The Compliance Guide states , however , that " (fueral providers) must offer any\nin addition to and not in place of the required itemized prices. See 16 C.\npackage fuerals\n2(b)(6).\nYour\nclient\'s proposed service implies that consumers may select packages and\n9 453.\nthen , upon request, receive itemized pricing. Even though your client intends to negotiate on\nbehalf of consumers with fueral providers for discounted packages, it is importt that\nconsumers receive the itemized price list along with any package price list for the services and\ngoods, Furher, in the context of your client\'s role as an agent for a consumer , your client must\nrelay all Funeral Rule disclosures, approvals and/or preventive requirements to the consumer.\n, and to the extent to which, your client serves as an agent for any fueral provider in\nthe network of providers , your client would be directly responsible for providing consumers the\nnecessar disclosures and price lists for that fueral provider and complying with all other\nrequirements under the Funeral Rule.\n\nThis does not mean that your client would not be within the general jursdiction of\nthe FTC under Section 5(a) of the FTC Act, 15 U, C, 9 45 (a), to tae\n\naction against persons\n\nengaging in unfair or deceptive acts or practices in or affecting commerce.\n\n\x0cII.\n\nDo any of your client\'s proposed services violate the Funeral Rule?\n\nA general review of the services that your client proposes to offer , as described in your\nletter, does not reveal any practice that would clearly violate the Rule. However , your client.\nproposes to provide consumers with a wide range of information and services regarding fueral\n\ngoods and services , and because the proposal is broad and generally states that it will comply\n\nwith the Funeral Rule , we are unable to deteITine at this time whether any of your client\'s\nactivities will , in practice , violate the disclosure requirements of the Funeral Rule, Once your\nclient actually offers these services and provides infoITation to consumers , the Commission\nwould be better able to deteITine whether your client\'s proposed plan , as implemented , violates\nthe Funeral Rule in any respect.\n\nPlease be advised that the views expressed in this letter are those ofthe FTC staff, They\nhave not been reviewed , approved or adopted by the Commission, and they are not binding upon\nthe Commission, However , they do reflect the opinions of those staff members charged with\nenforcement of the Funeral Rule.\n\nSincerely yours\n\nLaure Meehan\nFuneral Rule Enforcement Staff\n\n\x0c'


b'UNITED STATES OF AMERICA\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\n \n\nDivision of Marketing Practices\n\nLaurie Meehan\nAttorney\n\nDirect Dial\n202-326-3755\n\nVIA FACSIMILE A J.S. MAIL\n\nJanuary 14, 1997\n\nWilliam T. Steele, Jr.\nFamily Funeral Services and\nCasket Gallery\n\n207 Burns Lane, S.E.\nWinter Haven, FL 33884\n\nDear Mr. Steele:\n\nThank you for your letter of December 4, 1996. I apologize for any delay in responding.\nIn your letter, you request a staff opinion on whether it is a violation of the Funeral Rule for a\nfuneral director, in circumstances where a person or family purchases a casket from a third party\ncasket seller, to refuse to accept delivery of a casket sent directly from a casket manufacturer.\n\nUnder Section 453.4(b)(1) of the Funeral Rule, a funeral provider cannot condition the\nfurnishing of any funeral goods or services upon the purchase of any other funeral good or\nservice (except as required by law or otherwise permitted by the Rule). Ifa funeral home refuses\ndelivery of a casket in order to condition the furnishing of funeral arrangements upon the\npurchase of a casket, it is in violation of Section 453.4 (b)(1). However, your letter fails to state\nthe alleged basis for the funeral home\xe2\x80\x99s refusal to accept delivery of the casket. Note, though,\nprevious staff opinions state that unreasonable burdens placed on a consumer\xe2\x80\x99s choice of casket\nmay be tantamount to a violation of Section 453.4(b)(1).\n\nI hope that this information is helpful towards resolving your problem. In addition, I\n\nhave enclosed a. copy of the FTC publication Complying with the Funeral Rule to provide you\nwith assistance.\n\x0cPlease be advised that the views expressed in this letter are those of the FTC staff. They\nhave not been reviewed, approved or adopted by the Commission, and they are not binding upon\nthe Commission. However, they do reflect the opinions of those staff members charged with\n\nenforcement of the Funeral Rule.\n\n  \n\nFuneral Rule Enforcement Staff\n\nEnclosure\n\x0c'


b'UNITED STATES OF AMERICA\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\n \n\nDivision of Marketing Practices\n\nLaurie Meehan\nAttorney\n\nDirect Dial\n202-326-3755\n\nVIA FACSIMILE AND U.S. MAIL\n\nJanuary 14, 1997\n\nRonald A. Hast\n\nAbbott & Hast Publications\n4 Saint Lucia Place\nTiburon, CA 94920-1028\n\nDear Mr. Hast:\n\nThank you for your letter of December 20, 1996. I apologize for any delay in responding.\nIn your letter, you request a staff opinion on whether it is a violation of the Funeral Rule for a\nfuneral director, in circumstances where a person or family purchases a casket from a third party\ncasket seller, to require that the person or family be present upon casket delivery. Your letter\nindicates that the purpose of the presence of the family would be "to confirm appropriate model,\ncolor and condition." During our conversation on December 19, 1996, you referenced the\nCalifornia law which prohibits use of a casket that has previously been a receptacle for a dead\nhuman body as relevant to a staff opinion on this matter.\n\nThe issue of whether, in circumstances involving the purchase of a casket from a third\nparty seller, a funeral director may require a family or person\xe2\x80\x99s presence upon delivery of the\ncasket was addressed by FTC staff in 1988. FTC staff opined that the because the Funeral Rule\nprohibited conditioning funeral goods or services upon the purchase or any other funeral good or\nservice, a funeral provider could not place unreasonable burdens on consumers that were\ntantamount to conditioning funeral arrangements upon the purchase of other funeral goods. 16\nC.F.R. 453.4(b6)(1) Accordingly, FTC staff determined that requiring a family\xe2\x80\x99s presence for a\ndelivery of a third party casket, when a family has expressed a desire not to be present at\ndelivery, was an unreasonable burden on a consumer\xe2\x80\x99s choice to purchase a casket from a third\nparty seller.\n\x0cCalifornia state law prohibits the use of a casket that has previously been used as a\nreceptacle for a human body. Cal. Bus. & Prof. Code \xc2\xa7 7702 (Deering 1984). Nothing in\nSection 7702 prevents a funeral home or director from requiring a family to inspect the casket\nprior to placing human remains in the casket. The timing of the inspection, however, need not be\nat delivery. It is staff\'s opinion that the concerns with respect to the Funeral Rule, California law\nand the delivery of caskets from third party sellers may easily be met through inspection at a\nmutually convenient time for the funeral home and the family. Further, such an inspection would\nnot be an unreasonable burden on the consumer\xe2\x80\x99s choice of casket and services. Accordingly,\nthe staff opinion remains that requiring the presence of a person or family at delivery of a third\nparty casket is an unreasonable burden on a consumer\xe2\x80\x99s choice of funeral goods and services.\n\nPlease be advised that the views expressed in this letter are those of the FTC staff. They\nhave not been reviewed, approved or adopted by the Commission, and they are not binding upon\nthe Commission. However, they do reflect the opinions of those staff members charged with\nenforcement of the Funeral Rule.\n\n  \n\nurie Meehan\nuneral Rule Enforcement Staff\n\x0c'


b',"\n\n"l23\nUKITED STATES or AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON , D. C. 20580\n\nJanuary 19 ,\n\n1996\n\nRepresentative Lucien A. DiMeo\nOne Hundred and Third District\n531 Wintergreen Avenue\n\nHarnden , CT 06514\nDear Representative DiMeo:\n\nThank you for your lettcr dated January 5 , 1996 , concerning your proposed legislation on\npre-nced insurance in the upcoming session of the Connecticut General Assembly, to bettcr\nprotect thc consumcr. In your letter , you proposed an escrow agreement made betwccn thc\nfuncral home and the escrow agent; expanding the languagc in the statement of funeral goods and\nservices seleetcd , required by the Commission s Funeral Rule , 16 e.F. R. Part 453; and a trust\ndocument between the funeral home and the consumer. You requested my opinion as to the two\nproposed doeumcnts , which you enclosed. You also requested my opinion as to whether there\nean be changes made to the statement of goods and services , and if I fecl this is the best way to\nprotect the consumer.\n\nThe Commission is charged with enforcement of the Federal Trade Commission Act , 15\n41\n("FTC Act ), which prohibits unfair and deceptive acts and practices , as well\ne.\nas with enforcement of trade regulation rules enacted pursuant thereto , such as the Funcral Rule.\nAs to the two documents you enclosed , I can express no opinion on thcm , since they concern the\nbusiness of insurance , and the Funeral Rule expressly states that " this Rule shall not apply to the\nbusiness of insurance or to acts in the conduct thereof." 16 e.F. R.\n453. 8 (c). Furthermore\nunder the McCarran- Ferguson Act , 15 U. C.\nlOll , the FTC Act does not apply to the business\nof insurance or to acts in the conduct thereof. 15 u.se.\n1013(3)(a).\nAs to your suggestion about expanding the language or making other changes in the\nstatement offuneral goods and services selected , it is unlikely that the Commission would make\nany such changes soon. The Funeral Rule underwent a comprehensive review beginning in\n\n1988 , and culminating in a revised version of the Rule which became effective July 19 , 1994.\nThis time frame suggests the cumbersome nature of rulemaking and rule review proccdures\n\nwhich we must follow.\n\nHowever , additions to the statement of funeral goods and services selected could be made\nvoluntarily by funeral providers, or by state requirement , without violating the Funeral Rule.\nThe Rule allows funeral providers to give persons any other price information , in any format , in\naddition to that required by the casket , outer burial container , and general price lists so long as\nthe statement required (of funeral goods and services selected) . .. is given when required by the\nrule." 16 e.F. R.\n453. 2(b)(6). In addition , the procedure for state exemptions from the Funeral\n\n\x0cRule implies that a state could enact any requirement which applies to any transaction to which\nthe Funeral Rule applies , that " affords an overall level of protection to consumers which is as\nR. ~ 453. 9(b). I have\ngreat as , or greatcr than , the protection atIorded by this rule." 16 C,\nenclosed a copy of our compliance guidelines , including the Rule and sample forms , for your\nreVIew,\n\nPlease be advised that the views expressed in this letter are those of the FTC staff. They\nhave not been reviewed , approved or adopted by the Commission , and they are not binding upon\nthe Commission. However , they do reilect the opinions of those staff members charged witb\nenforcement of the Funeral Rule. I hope that this information is helpfil1 to you.\n\ntl flw\nThomas A. Cohn\nFuneral Rule Enforcement StatI\nEnclosure: 8/95 Funeral Rule Guide\n\n\x0c'


b'\'\'22UNITED STATE OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON . D. C. 20580\n\nDivision of\n\nMarketing Practices\nMary S. Feinstein\nAttorney\nDirect Dial:\n12021 326- 3064\n\nDecember 14, 1995\nK. Wayne Bishop\n\nPresident\n\nChapel Hill Funeral Home\n542 West 52nd Street\n\nAnniston, AL 36206\nRe:\n\nCharges for the Basic Services of Funeral Director and Staff\n\nDear Mr. Bishop:\n\nThis letter is in response to your letter of December 13,\nyou seek staff\' s opinion regarding whether\nthe fee for the basic services of the funeral director and staff\nmay be charged to every person who arranges a funeral at your\nfuneral home. The answer to this question depends upon whether\nyour general price list (" GPL") delineates a fee for the basic\n\n1995. In that letter ,\n\nservices of the funeral director and staff.\n\nThe Funeral Rule requires that a funeral provider itemize\nprices for 16 funeral goods and services, if a funeral provider\noffers those goods and services to customers.\nSee Complying with\nthe Funeral Rule, June 1994 , at 13. The prices on the GPL must\nbe accurate and up- to- date, and they should reflect the prices\nthat you actually charge customers.\nId.\nAmong those 16 items\nis the fee for the basic services of the funeral director and\nstaff. 16 C. R. !i 453. 2(b) (4) (iii) (C). If your funeral home\nGPL has a fee for the basic services of funeral director and\nstaff , then you may charge such a fee to all customers. The only\nexception to this Rule provision is when a customer selects any\nof four " minimal services, i. e. , forwarding of remains,\nreceiving remains , direct cremation , or an immediate burial. The\nprices for these four minimal services must include any fee for\nthe basic services of funeral director and staff.\n\nId.\n\nat 14.\n\nThe fee for basic services of funeral director and staff is the\nonly nondeclinable fee allowed under the Funeral Rule.\n\nOf course , you may offer discounts under special\ncircumstances, such as arrangements for friends, relatives, or to\nfamilies who cannot otherwise afford your services. However , you\nshould not inflate the prices on your price lists in order to\n\n\x0coffer all or most of your customers a discount. In that case,\nthe discounted price would be the accurate price and should be\nreflected on the GPL. To reiterate, absent special circumstances\nwarranting a discount, you should charge the same nondeclinable\nbasic services fee to all customers, unless they choose a\nminimal service " for which the basic service fee is already\n\nincluded.\n\nI hope that this information is helpful to you. Please be\nadvised that the views expressed here are those of FTC staff.\nThey have not been reviewed, approved or adopted by the\nCommission, and they are not binding upon the Commission.\nHowever , they do reflect the opinion of those staff charged with\nenforcement of the Funeral Rule.\n\nere1\n\nFeinstein ,\n\nEsq.\n\n1 Rule Enforcement Staff\n\n\x0c'


b'Re:\nin\n\n8\n\nUNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\n..\n\nDivision of\nMarketing Practices\nMary S. Feinstein\nAttorney\nDirect Dial:\n(202) 326-3064\n\nAugust\n\n15,\n\n1995\n\nScott R. McCray\nGeneral Counsel\nVanguard America Co\nP.O. Box 10223\nRaleigh,\nNC\n27605-0223\nVanguard\'s\n\nTrust\n\n100 Marketing\n\nProgram\n\nD~ar Mr. McCray:\nabout\nletter\n\nThis letter\nVanguard\'s\nprovides\n\nis in response to your letter\nof July 24,\nTrust 100 Marketing Program.\nI hope that\nan answer to the question\nyou posed.\n\n1995\nthis\n\n1.\nMay your company, acting as a sales agent for several\nfuneral\nproviders,\nuse one generic\ngeneral\nprice\nlist\n("GPL")\nthe sale of funeral\ngoods and services?\nIf your company is acting as an agent for funeral\nproviders,\nand is offering\nfor sale funeral\ngoods and services,\nit must\nprovide\na GPL (and other price lists\nto the extent\nthat they are\nrequired)\nthat meets the Funeral Rule\'s requirements.\nEach\nfuneral\nprovider\nwho agrees to be bound by the prices\non such GPL\nshould list\nits name, address and telephone\nnumber on the GPL\neven if one GPL is used.\n.Q.\xe0\xb8\xa2\xe0\xb8\x87.\xe0\xb8\xa2\xe0\xb8\x87.16 C.F.R.\n\xe0\xb8\xa2\xe0\xb8\x87 453.2(b)\n(4) (i) (C).\nAs\nnoted\nin your letter,\nconsumers\nmust be allowed\nto itemize\nthe\nfuneral\ngoods and services\nselected.\n\nI hope that this resolves\nthis question.\nPlease be advised\ntnat the views expressed here are those of FTC staff.\nThey have\nnot been reviewed,\napproved or adopted by the Commission,\nand\nthey are not binding\nupon the Commission.\nHowever, they do\nreflect\nthe opinion of those staff\ncharged with enforcement\nof\nthe Funeral Rule.\n\n\x0c'


b'.,\nLtZO\nUNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON , D, C, 20580\n\nDivision of\n\nMarketing Practices\nThomas A. Cohn\n\nAttorney\n\nJuly 18,\n\n1995\n\nGeorge W. Lemke\n\nExecuti ve Director\nCasket & Funeral Supply Association of America\n708 Church Street\nEvanston, IL 60201\n\nRe:\n\nStaff Opinion Regarding Refusal to Sell Caskets Only\n\nDear Mr, Lemke:\n\nThis office has received your recent request for an advisory\nletter , you ask whether a funeral director must\nsell a casket to a consumer al though he or she has no intent to\nhave services conducted by the funeral home and it is not the\npractice of the funeral home to sell caskets only or advertise\ncaskets for sale independent of funeral services. Let me begin\nby setting forth the Rule provisions relevant to your inquiry.\n\nopinion, In your\n\nSection 453. 4 (b) (2) (ii) of the Funeral Rule states:\n\nA funeral provider shall not violate this section by\nfailing to comply with a request for a combination of\ngoods or services which would be impossible\nimpractical , or excessively burdensome to provide.\nSection 453. 4(b) (1) (i) of\n\nthe Funeral Rule states:\n\nIn selling or offering to sell funeral goods or funeral\nit is an unfair or deceptive act or practice\nfor a funeral provider to condition the furnishing of\nany funeral good or funeral service to a person\narranging a funeral upon the purchase of any other\nfuneral good or funeral service, except as required by\nlaw or as otherwise permitted by this part\n\nservices ,\n\nFinally, Rule Section 453, 1 (i) defines a "funeral provider"\nperson, partnership or corporation that sells or offers\nto sell funeral goods and funeral services to the public " and\nRule Section 453. 1 (p) defines the" services of funeral director\nand staff" as " the basic services\nthat are furnished by a\nfuneral provider in arranging any funeral\n\nas " any\n\nStaff interprets these definitions to mean that the Rule is\nbased upon an understanding that funeral providers are persons\n\n\x0cGeorge W, Lemke\nPage 2\n\nJuly 18,\n\n1995\n\nwho furnish funeral arrangements, and not persons who simply sell\na particular good or service as a separate sales transaction,\nTherefore , it is impractical , in our opinion , for a business\noperation thus defined to be required to function as something\nelse , such as a casket seller,\nWe do not believe it to be the Commission s intention to\nrequire a funeral provider to sell an isolated good or service\nthat is not to be used in conjunction with a funeral arranged by\nthat funeral provider, The Statement of Basis and Purpose for\nthe original Funeral Rule supports this view. There the\nCommission stated that it:\nwould not consider it a violation of section\n\n453. (b)\n\nfor a funeral provider to refuse doing business with a\nconsumer who said\' we have our own casket\ntransportation , flowers, etc., but wish to use your\nviewing facilities for two hours next Monday.\nThe\nCommission wishes to stress, however , that this\nprovision does not give funeral providers the option to\nreject arrangements which are practical to provide but\nwhich do not comport with the provider s judgment of\nwhat is appropriate under the circumstances.\n47 FR 42260 , 42282 (Sept 24, 1982), fn. 230. Thus , in adopting\nthe Rule , the Commission merely sought to ensure that package\npricing was not the only option for consumers making funeral\narrangements, and that such consumers could choose and purchase\nonly what they desired for such arrangements.\n\nHowever, if a consumer asked the funeral home to make\nfuneral arrangements , and the funeral home stated that a casket\ncould only be furnished if the requestor purchased other funeral\ngoods or services, such a response would violate the Rule \' s anti\ntying provision , Section 453. 4 (b) (1) (i). For those consumers\nmaking funeral arrangements, the Rule \' s anti tying provision\nprotects them from having to purchase unwanted goods or services,\nas a condition for receiving the items they do want.\n\nTherefore, the Rule does not require funeral providers to\nsell a casket or any other item separately to anyone upon demand.\nThe Rule does require funeral providers to allow persons\narranging a funeral the freedom to choose and pay for only the\ngoods and services they desire for the funeral.\nAs you know , the Federal Trade Commission has amended the\nFuneral Rule , and the changes became effective on July 19, 1994.\nThe enclosed Guidelines explain the Rule s requirements and\nanswer many basic questions about how to comply with the revised\nRule. The Guidelines also offer sample price lists and a sample\n\n\x0c--/\n\nW.\n\nGeorge\n\nLemke~~ July 18 , 1995\n\nPage 3\n\nstatement of goods and services selected to assist you in\nbringing your forms into compliance with the revised Rule.\nFinally, please be advised that the views expressed in this\nletter are those of the FTC staff. They have not been reviewed,\napproved or adopted by the Commission , and they are not binding\nupon the Commission. However, they do reflect the opinions of\nthose staff members charged with enforcement of the Funeral Rule.\nI hope that this information is helpful to you.\nSincerely,\n\n(t;;1/f1/v\n\nThomas A. Cohn\nFuneral Rule Enforcement Staff\n\nEnclosure:\n\n6/94 Funeral Rule Guide\n\n\x0c'


b'L. I 8\'\nUNITED STATES OF AMERCA\n\nFEER TRE COMMSSION\nWASHINGTON , D. C. 20580\n\nDivision of\n\nMarketing Practices\nMary\n\nS.\n\nFei nstei n\n\nAttorney\nDirect Dial:\n12021 326- 3064\n\nMarch 6, 1995\n\nLavelle S. Jesse\nAssistant Vice President\n\nFederated Funeral Directors\n\nO. Box 19244\nSpringfield, IL\n\nRe:\n\nof America\n\n62794 - 9244\n\nOpinion Letter\n\nDear Mr. Jesse:\nThis letter is in response to your inquiry dated\nFebruary 24, 1995 about pre-need funeral pricing. For the sake\nof clarity, I will address your questions in the order in which\nthey were posed.\n\nIn the factual scenarios you described, three funeral homes\nagree to have one general price list (hereafter described as\nconsolidated GPL" ). Under Scenario 1, these homes would offer\nto consumers funeral goods and services on a pre-need basis where\nthe prices for those goods and services would not be fixed at the\ntime of the execution of the pre-need contract. Under scenario\n2, the same three funeral homes would offer consumers funeral\ngoods and services on a pre-need basis, but the prices for these\nitems would be fixed at the time of execution of the pre-need\n\ncontract.\n\nQuestion 1 - - Would this agreement between these homes\nviolate any antitrust laws?\nAs I mentioned to you in our previous telephone conversation\non this topic, you should direct this question to the FTC\'\nBureau of Competition staff.\n\nQuestion 2 - - Would the consolidated GPL used by the three\nfuneral homes violate the Funeral Rule?\n\nNo.\n\nThe Funeral Rule requires that a funeral provider give\nto inquiring persons, for retention , a GPL describing the funeral\ngoods and services offered by the funeral provider. The Rule\n\n\x0cMr. Lavelle S. Jesse - -\n\nPage 2\n\nMarch 6, 1995\n\nit.\n\n16 C.\nrequires that the GPL have an effective date on\n453. 2(b) (4). I would only caution that if this GPL\' s prices\nare not "fixed" on the pre- need contract, the pre-need contract\nmust be explicitly clear on this point. The consumer should be\non notice if the pre-need contract\' s prices are not fixed at the\ntime of execution of the pre-need contract. Any deception\nconcerning whether or not the prices on the pre-need contract are\nfixed may be a violation of Section 5 of the FTC Act, even though\nit may not be a violation of the Funeral Rule, per se.\n\nQuestion 3 - - May there be a variance between the prices\ndelineated on each individual funeral home s GPL and the\nconsolidated GPL?\nYes. The Funeral Rule only requires that a funeral provider\ngives a GPL with price information on it for certain items, if\noffered for sale. The Rule does not address what price can be\nAgain, this issue should also be addressed by our\nCompetition Bureau staff.\n\ncharged.\n\nI hope that this information is helpful to you. Please be\nadvised that the views expressed here are those of FTC staff.\nThey have not been reviewed, approved or adopted by the\nCommission, and they are not binding upon the Commission.\nHowever, they do reflect the opinion of those staff charged with\nenforcement of the Funeral Rule.\n\nSinCerel\n\n\x0c'


b'ACCREDITING COMMISSION ON CAREER SCHOOLS\n977\n\nRe:\n\n977\n\nAdvisory Opinion\n\nThe proposal to adopt and enforce certain accrediting\nstandards on tuition and fees would not violate antitrust\nlaws. [Accrediting Commission on Career Schools and\nColleges of Technology, P944015]\nJanuary 19, 1995\n\nDear Mr. Pelesh:\nThis letter responds to your request on behalf of the Accrediting\nCommission on Career Schools and Colleges of Technology for an\nadvisory opinion on the permissible means, under the antitrust laws,\nof adopting and enforcing an accrediting standard on tuition and fees,\nas the Higher Education Amendments of 1992 require. You have\nproposed three possible standards by which your organization might\nassess tuition and fees, and asked us to provide guidance on the\npermissibility of each.\nOn the basis of information you provided, the Commission has no\npresent objection to an accreditation program along the lines of your\nthird proposal, but believes your first and second proposals raise\nsubstantial antitrust concerns.\nI. BACKGROUND OF THE REQUEST\n\nAccording to the request for advisory opinion, the Accrediting\nCommission on Career Schools and Colleges of Technology\n("ACCSCT") is a private, nonprofit organization that adopts and\nenforces standards for accrediting and evaluating educational\ninstitutions with trade and technical objectives. The United States\nDepartment of Education ("DOE" or "Department") recognizes\nACCSCT under the Higher Education Act of 1965 as a reliable\nauthority on the quality of its accredited institutions, education and\ntrammg. To participate in federal student financial assistance\nprograms, a post-secondary institution of higher education must\nmaintain accreditation from a recognized organization such as\nACCSCT. ACCSCT is a membership organization, composed of the\naccredited schools. Five of its eleven Commissioners have no\naffiliation with any of the schools accredited by ACCSCT, while six\nare owners or executives of accredited schools.\n\n\x0c978\n\nFEDERAL TRADE COMMISSION DECISIONS\nAdvisory Opinion\n\n119 F.T.C.\n\nIn 1992, Congress re-authorized the student financial assistance\nprograms of the Higher Education Act with the Higher Education\nAmendments of 1992. Through this re-authorization, Congress\nspecified in great detail the requirements that accrediting agencies\nlike ACCSCT must meet in order to receive DOE recognition. One\nrequirement is that their accrediting standards assess the institutional\n"program length and tuition and fees in relation to the subject matters\ntaught and the objectives of the degrees or credentials offered." 20\nU.S.C. 1099b(a)(5). ACCSCT will be eligible for re-recognition in\nFall of 1995, at which time DOE expects it to have adopted new\naccreditation standards on tuition and fees.\nThe Department of Education\'s Notice of Proposed Rulemaking\n("NPRM") included a commentary in which the Department proposed\nthat accrediting organizations use one of three ratios comparing\ntuition to expected earnings to determine whether tuition and fees are\nexcessive. DOE stated that it could recognize an accrediting agency\neven if its standards departed from these proposals, but that the\nagency would bear the burden of justifying different standards. 59\nFed. Reg. at 22,273. The DOE rules implementing the statutory\nrequirements for accrediting standards repeat the statutory provisions,\nwithout including the ratios in the NPRM commentary. 34 CFR\n602.26(b)(7); 59 Fed. Reg. 22,250, 22,260 (April 29, 1994).\nII. EFFECT OF THE 1992 HIGHER EDUCATION AMENDMENTS\n\nACCSCT has raised the possibility that Congress impliedly\nexempted educational accrediting bodies from the antitrust laws when\nit required them to adopt a standard assessing tuition and fees in order\nto be recognized by DOE. It is well-established, however, that,\nwhere antitrust immunity is not express, it is disfavored and to be\nimplied only where "necessary to make the ... [a]ct work, and even\nthen only to the minimum extent necessary." Silver v. New York\nStock Exchange, 373 U.S. 341,357 (1963); see also United States v.\nPhiladelphia National Bank, 374 U.S. 321, 348 (1963); Georgia v.\nPennsylvania Railroad Co., 324 U.S. 439, 456-57 (1945). Indeed,\nexcept for industries in which Congress has committed pricing to\nagency regulation rather than to normal market forces, see e.g.,\nKeogh v. Chicago & Northwestern Railroad, 260 U.S. 156 (1922)\n(Interstate Commerce Commission rates), the courts have found\n\n\x0cACCREDITING COMMISSION ON CAREER SCHOOLS\n977\n\n979\n\nAdvisory Opinion\n\nimplied repeal very rarely and then only under extremely limited\ncircumstances.\nThe courts have found an implied repeal where Congress has\nestablished a substantial regulatory scheme and there is a clear\nrepugnancy between that scheme and the application of the antitrust\nlaws to the conduct in question. Gordon v. New York Stock\nExchange, 422 U.S. 659 (1975) (statute provided for Securities and\nExchange Commission review of exchange\'s self-regulation of\ncommission rates so that application of antitrust laws conflicted with\nSEC\'s vigorous supervision of such rates); United States v. National\nAssociation of Security Dealers, 422 U.S. 694 (1975) (finding price\xc2\xad\nfixing on inter-dealer sales of mutual fund shares immune because of\nconflict between antitrust laws and regulatory scheme:, Congress had\ngiven agency power over such sales and agency had accepted practice\nover long period); Rehagen v. Amateur Basketball Association of the\nU.S., 884 F.2d 524, 529 (10th Cir. 1989) (court found an implied\nrepeal in rejecting the claim that the antitrust laws prohibited an\namateur athlete\'s exclusion from defendant Association; Amateur\nSports Act required the establishment of gatekeeping, governance\norganizations to determine amateur eligibility); see also Thill v. New\nYork Stock Exchange, 433 F.2d 264 (7th Cir. 1970) (remanding for\ndetermination whether restriction on sharing commissions was\nnecessary to meet the goals of the Securities Exchange Act).\nAbsent a clear repugnancy between the antitrust: laws and the\nregulatory scheme, however, the courts have rejected the implied\nrepeal claim. Strobl v. New York Mercantile Exchange, 768 F.2d 22\n(2d Cir. 1985), cert. denied sub nom. Simplot v. Strobl, 474 U.S.\n1006 (1985) (no implied repeal because no conflict between antitrust\nlaws and Commodities Futures Trading Commission\'s oversight);\nTyphoon Car Wash, Inc. v. Mobil Oil Corp., 770 F.2d 1085 (Temp.\nErner. Ct. App. 1985), cert. denied, 474 U.S. 981 (1985) (Robinson\xc2\xad\nPatman Act not preempted by regulations promulgated under the\nEmergency Petroleum Allocation Act because no conflict between\nstatutes); Huron Valley Hospital v. City of Pontiac, 666 F.2d 1029\n(6th Cir. 1981) (no implied repeal where no direct conflict between\nantitrust laws and National Health Planning Act); Essential\nCommunications Systems v. AT&T, 610 F.2d 1114 (3d Cir. 1979) (no\nimplied repeal because no conflict between antitrust laws and Federal\nCommunication Commission\'s regulatory activities).\n\n\x0c980\n\nFEDERAL TRADE COMMISSION DECISIONS\nAdvisory Opinion\n\n119 F.T.C.\n\nThe courts have refused to imply a repeal when the regulatory\nscheme did not protect consumer interests by supervising the\nchallenged conduct. In rejecting a claim that the securities regulatory\nscheme conflicted with the antitrust laws and thus implied antitrust\nimmunity, the Supreme Court noted that:\nBy providing no agency check on exchange behavior in particular cases,\nCongress left the regulatory scheme subject to "the influences of* * * [improper\ncollective action] over which the Commission has no authority .... " .... Since\nthe antitrust laws serve, among other things, to protect competitive freedom ... it\nfollows that the antitrust laws are peculiarly appropriate as a check on the\nanticompetitive acts of exchanges .... Should review of exchange self-regulation\nbe provided through a vehicle other than the antitrust laws, a different case as to\nantitrust exemption would be presented.\n\nSilver, 373 U.S. at 357 (no implied exemption because exchange\'s\nrule that excluded non-members from access to exchange without a\nhearing not necessary to make securities act work), quoting Georgia\nv. Pennsylvania Railroad Co., 324 U.S. at 460.\nThe Commission believes the 1992 Higher Education Act\namendments do not impliedly repeal the antitrust laws as they apply\nto the technical school industry. Congress has not authorized the\nDepartment of Education to supervise or review accrediting agency\nself-policing of tuition and fees. The most persuasive argument for\nan implied repeal is that Congress, in requiring that accrediting\nagencies have a standard for assessing tuition, intended for them to\nexclude any school with a tuition that is unreasonable in light of\nexpected earnings. Indeed, the tuition assessment standard seems\nsuperficially similar to the eligibility standard at issue in the Behagen\ncase. There, the Amateur Sports Act authorized the U.S. Olympic\nCommittee to recognize and monitor a governance organization in\neach sport to determine amateur eligibility and provide a mechanism\nto assure compliance with the Act. 884 F.2d at 528. In dismissing a\ngroup boycott claim against a governance organization for its refusal\nto reinstate an athlete\'s amateur status, the Tenth Circuit held that the\ndefendant Association\'s "actions iq this case were clearly within the\nscope of activity directed by Congress, and were necessary to\nimplement Congress\' intent with regard to the governance of amateur\nathletics." Id. at 527. The court noted that the Association\'s\n"monolithic control exerted ... over its amateur sport is a direct\nresult of the congressional intent expressed in the Amateur Sports\n\n\x0cACCREDITING COMMISSION ON CAREER SCHOOLS\n977\n\n981\n\nAdvisory Opinion\n\nAct." Id. at 528. The court added that the Association "could not be\nauthorized under the Act unless it maintained exactly that degree of\ncontrol over its sport that Behagen here alleges as an antitrust\nviolation." Id. at 529.\nUnlike Behagen, the 1992 Higher Education Act Amendments do\nnot require accrediting agencies to fix tuition levels; they merely\nrequire that accrediting agencies have a standard for assessing tuition\nas one of many standards for determining accreditation. (ACCSCT\'s\nsubmission of a less restrictive accreditation standard, requiring only\ndisclosure, indicates that setting tuition levels is not necessary to\nachieve the statute\'s mandate to curb school loan abuse. Indeed, as\nnoted above, the Department stated that it would recognize an\naccrediting agency even if its standards departed from DOE\'s\nsuggested tuition-to-expected-earnings ratios.) Thus, there is no\nbroad or inherent conflict between the antitrust laws and the\nregulatory regime. Cf Rehagen, 884 F.2d at 529 ("Behagen\ncomplains of exactly that action which the Act directs"); see also\nGordon, 422 U.S. at 692 (Stewart, J., concurring) ("The Court has\nnever held, and does not hold today, that the antitrust laws are\ninapplicable to anticompetitive conduct simply because a federal\nagency has jurisdiction over the activities of one or more of the\ndefendants").\nIII. ANALYSIS OF ACCSCT\'S PROPOSED STANDARDS\n\nA. First Proposed Standard\n\nUnder ACCSCT\'s first proposed standard, ACCSCT would\ndetermine whether the tuition and fees charged by its accredited\nschools are too high and enforce this standard by withdrawing\naccreditation. The standard might use one of the following three\nmeasures to cap tuition at a certain level: (1) a percentage of\nannualized minimum wage, (2) a percentage of graduates\' earnings\nfor their first year of employment, or (3) a percentage of average\nannualized wages. ACCSCT believes that adopting this standard\nwould require it to collect tuition data from its members, define\nacceptable tuition limits, and enforce its standard by potentially\nwithdrawing accreditation. Thus, ACCSCT members would in effect\nbe agreeing to charge no more than the ACCSCT standard would\nallow.\n\n\x0c982\n\nFEDERAL TRADE COMMISSION DECISIONS\nAdvisory Opinion\n\n119 F.T.C.\n\nAs ACCSCT recognizes, such a standard, like any system for\ncollective competitor regulation of prices, raises grave antitrust\nconcerns. Arizona v. Maricopa County Medical Society, 457 U.S.\n332 ( 1982) (maximum price fixing is per se illegal); Kiefer-Stewart\nCo. v. Joseph E. Seagram & Sons, 340 U.S. 211 (1951) (maximum\nprice fixing is per se illegal); McLean County Chiropractic\nAssociation, 59 Fed. Reg. 22163 (April 29, 1994) (consent order\nsettling FTC charges that chiropractor association members fixed\nmaximum prices); see also American Medical Association (FTC\nAdvisory Opinion, February 14, 1994) (adopting fee peer review\nprogram with disciplinary sanctions would present serious antitrust\nconcerns, because it would allow competitors to set the maximum\nfees of their rivals) ("AMA Opinion").\nEven under a rule of reason approach similar to the Third\nCircuit\'s approach in United States v. Brown University, 5 F.3d 658\n(3d Cir. 1993), ACCSCT\'s first proposal would pose significant\nantitrust risks. An accrediting criterion based an tuition and fee level\nwould be inherently suspect because it sets prices and impedes the\nordinary functioning of the free market. Brown University, 5 F.3d at\n674; see generally Massachusetts Board of Registration in\nOptometry, 110 FTC 549 (1988).\nFurther, the only efficiency justification that ACCSCT could\ncoffer would be that the standard "protects" consumers, because\nunfettered competition over tuition levels is unwise or dangerous.\nThe Courts have consistently rejected this argument as "nothing less\nthan a frontal assault on the basic policy of the Sherman Act."\nNational Society of Professional Engineers v. United States, 435 U.S.\n679,695 (1978); see also FTC v. Indiana Federation of Dentists, 476\nU.S. 447, 463 (1986); Brown University, 5 F.3d at 676-77.\nMoreover, even if consumer protection justified regulation of tuition\nlevels, the first proposed standard is not reasonably necessary to\nachieve this objective. Courts often rule that such overbroad\nrestraints are unreasonable and in violation of the antitrust laws. See\nBrown University, 5 F.3d at 678-79; Bhan v. NME Hospitals, 929\nF.2d 1404,.1413 (9th Cir. 1991); Fleer Corp. v. Topps Chewing Gum,\n658 F.2d 139, 151-52 n.18 (3d Cir. 1981). The fact that ACCSCT\nhas proffered less restrictive alternatives that it believes can achieve\nthe statutory goal of assessing tuition and fees for trade school\nconsumers indicates that the proposed standard is not reasonably\nnecessary.\n\n\x0cACCREDITING COMMISSION ON CAREER SCHOOLS\n977\n\n983\n\nAdvisory Opinion\n\nB. Second Proposed Standard\nUnder the second proposed standard, ACCSCT would collect and\nanalyze tuition information from accredited schools to compare the\ntuition charged for a given program at a particular school with that\ncharged for similar programs and schools. Any tuition in the\nninetieth percentile or above of similar programs would trigger\nrequirements that the school explain why its tuition was so high and\nprovide this information to students and prospective students.\nThis approach appears to be less restrictive than the first,\nprimarily because, rather than denying accreditation, it would require\nthat a school disclose and justify its relative tuition. Nonetheless,\nbecause it targets for attention institutions charging prices of a certain\ntop percentage or level, the standard may have the same effect as the\nfirst proposed standard. Hence there is a substantial danger that\nimplementation of this standard may violate the antitrust laws. See\nMaricopa, 457 U.S. at 332.\nIn evaluating the reasonableness of the standard, the Commission\nwould find the following factors particularly relevant. First, targeting\nwould identify high tuition schools, opening them up to pressure to\nconform. Indeed, that appears to be the very purpose of the standard.\nSecond, the Commission in reviewing association fee peer review\nprograms has emphasized the increased potential for antitrust\nproblems where participation is mandatory. See AMA Opinion, at 6;\nIowa Dental Association, 99 FTC 648 (1982) (advising association\nnot to discipline members who refuse to use peer review process or\naccept its guidance). Here, the mandatory nature of ACCSCT\'s\nproposed standard compounds the antitrust concerns.\nThird, the potential for antitrust concern is reduced when peer\nreview programs involve mediation of specific fee disputes. A peer\nreview program based on tuition or fees runs a more serious antitrust\nrisk when it involves review of all schools\' tuition levels, particularly\nin the form of a systematic exchange of data and identification of\nschools with high tuition. See Iowa Dental Association, 99 FTC at\n649 ("Competition will be best protected if all concerned parties view\nfee peer review as a means of mediating specific fee disputes, rather\nthan a process for the collective sanctioning of fee levels or particular\npractices").\nFinally, as discussed above, the antitrust laws do not condone a\nrestraint that is not reasonably necessary to achieve its stated\n\n\x0c984\n\nFEDERAL TRADE COMMISSION DECISIONS\nAdvisory Opinion\n\n119F.T.C.\n\nprocompetitive objective. See Brown University, 5 F.3d at 678-79;\nFleer Corp., 658 F.2d at 151-52 n.18. Thus, the availability of a less\nrestrictive plan (ACCSCT\'s third proposed standard) suggests that its\nsecond proposed standard would fail to meet this test.\nC. Third Proposed Standard\n\nAs a third alternative for assessing tuition and fees, ACCSCT\nproposes a standard requiring schools to inform students in the\ncatalog, enrollment agreement, and other publications that they may\nobtain information about tuition charges for comparable programs\nfrom ACCSCT. ACCSCT would collect tuition information from\naccredited schools and make it available to students who could use\nthe information to compare the cost of similar programs at other\ninstitutions.\nBased upon the information ACCSCT has provided, there appears\nto be little cause for concern that the information exchange\ncontemplated by ACCSCT will have any anticompetitive effects.\nThe school tuition information ACCSCT proposes to collect already\nis widely available and easily accessible to the industry, alleviating\nthe concern that members would use the exchange to set prices. Cf\nUnited States v. Container Corp of America, 393 U.S. 333, 335\n( 1969) (striking down exchange among competitors of information\nthat "was not available from another source"); Cement Manufacturers\nProtective Association v. United States, 268 U.S. 588, 605 (1925)\n(when information is publicly available, court will not infer purpose\nto fix prices).\nThe procompetitive effects of increasing consumers\' access to\ninformation about relative trade school tuition levels could outweigh\nany potential anticompetitive concerns raised by the collection of\ntuition data. See Maple Flooring Manufacturers Association v.\nUnited States, 268 U.S. 563 (1925) (association survey of members\'\nprices held not unlawful under rule of reason). To the extent\nACCSCT\'s proposal wi\\l provide information useful to trade school\nconsumers, it is likely to promote competition. See AMA Opinion, at\n3. Indeed, ACCSCT could require other disclosures, e.g., how the\ntuition level compares to graduates\' earnings for their first year of\nemployment, as a condition of accreditation without injuring\nconsumers or violating the antitrust laws.\n\n\x0cACCREDITING COMMISSION ON CAREER SCHOOLS\n977\n\n985\n\nAdvisory Opinion\n\nThus, insofar as ACCSCT merely collects tuition information and\ndisseminates that information to students, it would not be likely to\nrun into any antitrust risks. ACCSCT, however, could violate the\nantitrust laws if it combined its data collection activities with any sort\nof coercion or admonishment of its members to adhere to certain\ntuition levels. See Maple Flooring Manufacturers Association, 268\nU.S. at 563; cf. American Column & Lumber Co. v. United States,\n257 U.S. 377 (1921).\nIV. CONCLUSION\n\nAccordingly, the Commission does not presently object to\nACCSCT\'s third proposed standard to assess tuition, insofar as it calls\nfor ACCSCT merely to collect and disseminate tuition information.\nThe Commission believes that the first and second proposals, because\nthey involve ACCSCT acting against members due to their tuition\nlevels, may involve a significant risk of violating the antitrust laws.\nThis advisory opinion, like all those that the Commission issues,\nis limited to the proposed conduct that your request describes. It does\nnot constitute approval for specific aspects of the proposal that may\nbecome the subject of litigation before the Commission or any court,\nsince application of the proposal in particular situations may injure\ncompetition and consumers and violate the Federal Trade\nCommission Act. The Commission reserves the right to reconsider\nthe questions involved, and with notice to the requesting parties in\naccordance with Section l.3(b) of the Commission\'s Rules of\nPractice, to rescind or revoke its opinion in the event that\nimplementation of the third proposal results in significant\nanticompetitive effects, should the purposes of the proposal be found\nnot to be legitimate, or should the public interest so require.\n\n\x0c986\n\nFEDERAL TRADE COMMISSION DECISIONS\nAdvisory Opinion\n\n119F.T.C.\n\nLetter of Request\nAugust 4, 1994\nDear Mr. Clark:\nOn behalf of the Accrediting Commission of Career Schools and\nColleges of Technology ("ACCSCT" or the "Commission"), I hereby\nrequest an advisory opinion on the permissibility under the antitrust\nlaws of ACCSCT\'s adoption and enforcement of an accrediting\nstandard on tuition and fees. In order to ensure that this request is\nconsidered by the Department or agency with appropriate\njurisdiction, we nave also filed a request for a business review letter\non the same subject with the Antitrust Division of the Department of\nJustice. We respectfully ask that the FTC and Antitrust Division\ncoordinate a response to these requests.\nDescription of ACCSCT. The Commission is a private nonprofit\norganization with exclusively educational purposes. It adopts and\napplies standards for the accreditation and evaluation of educational\ninstitutions with trade and technical objectives. The Commission is\nrecognized by the U.S. Department of Education under the Higher\nEducation Act of 1965 an a reliable authority as to the quality of\neducation and training offered by its accredited institutions. (Pub. L.\nNo. 89-329, 79 Stat. 1219, codified as amended in scatterecfsections\nof 20 U.S.C.). As a result of this recognition, accreditation by the\nCommission, together with licensure by a state and certification by\nthe Department, make a post-secondary institution of higher\neducation eligible to participate in the student financial assistance\nprograms authorized by the Act. (20 U.S.C. 1088). The Commission\ncurrently accredits approximately 950 schools located in all 50 states,\nthe District of Columbia and Puerto Rico. These schools educate and\ntrain 450,000 students and employ 16,000 instructors.\nThe Commission is a membership corporation. The\nCommissioners serve as the board of directors; five of the\nCommissioners are public members (i.e., they have no affiliation with\nany of the schools accredited by the Commission), and six of the\nCommissioners are school members (i.e., they are owners or\nexecutives of accredited schools). The members of the corporation\nare the accredited schools; membership status is coterminous with\naccreditation. Further, the rights of the members are restricted: They\n\n\x0cACCREDITING COMMISSION ON CAREER SCHOOLS\n977\n\n987\n\nAdvisory Opinion\n\nelect the school-affiliated Commissioners and two of five members\nof a nominating committee, receive various informational reports,\nand approve (but may not initiate) amendments to the articles of\nincorporation and bylaws, mergers and other fundamental\ntransactions, and dues and assessments. The Commission is\nunaffiliated with any trade association. It has applied for tax-exempt\nstatus under Section 501(c) (3) of the Internal Revenue Code.\nHigher Education Amendments of 1992. In 1992, Congress\nreauthorized the student financial assistance programs of the Higher\nEducation Act by enacting the Higher Education Amendments of\n1992. (Pub. L. No. 102-325, 106 Stat. 448, codified in scattered\nSections of 20 U.S.C.). This reauthorization formally provided for\na "Program Integrity Triad" of accrediting agencies, the states and the\nDepartment of Education to control access to the student financial\nassistance programs. Although such a Triad effectively had existed\nprior to the 1992 reauthorization, abusive practices of some\ninstitutions of higher education impelled Congress to specify in\ngreater detail the gatekeeping responsibilities of each leg of this\nTriad.\nThus, the statute specifies numerous requirements that accrediting\nagencies like the Commission must meet in order to be recognized by\nthe Department of Education. One of these requirements is that an\nagency\'s accrediting standards must assess 12 areas, including\n"program length and tuition and fees in relation to the subject matters\ntaught and the objectives of the degrees or credentials offered." (20\nU.S.C. 1099b(a)(5)).\nThe Department of Education has now completed the rulemaking\nto implement the statutory requirements for the recognition of\naccrediting agencies. In regard to accrediting standards, the\nregulations simply repeat the statutory provisions. (34 CFR\n602.26(b)(7); 59 Fed. Reg. 22,250, 22,260 (April 29, 1994)). In the\ncommentary accompanying the regulations, the Department noted\nthat its original proposals, which elaborated on the statute, had\nprompted substantial adverse comment.\nNonetheless, the\nDepartment\'s commentary stated that those proposals provided a\n"sound framework" for an assessment of the 12 areas, and\nsummarized them. The summary for program length and tuition and\nfees was as follows:\n\n\x0c988\n\nFEDERAL TRADE COMMISSION DECISIONS\nAdvisory Opinion\n\n119F.T.C.\n\nAn accrediting agency\'s standard for assessing this area should generally\naddress the appropriateness of an institution\'s program length and tuition and fees,\ntaking into account such factors as program objectives and content, the types and\nlocations of instructional delivery, the knowledge and skills necessary for students\nto reach competence in the field being taught, and generally accepted practices in\nhigher education.\n\n(Id. at 22,273).\nThe Notice of Proposed Rulemaking ("NPRM") more extensively\naddressed how to judge the "appropriateness" of tuition and fees. It\nspecified that, in developing a standard for tuition and fees, an\naccrediting agency should take into account the factors quoted above\nand "[f]or any pre-baccalaureate vocational education program,\nconsideration of the remuneration that can reasonably be expected by\nstudents who complete the program." (59 Fed. Reg. 3,578, 3,597\n(January 24, 1994)). In the commentary accompanying the proposed\nregulations, the Department explained that the basis for this proposal\nwas its concern that tuition and fees for pre-baccalaureate vocational\neducation programs may be "excessive." (Id. at 3,586). The\ncommentary also suggested three possible approaches under which\nannualized tuition and fees for a program could not exceed: ( 1) a\npercentage of the annualized minimum wage; (2) a percentage of\ngraduates\' earnings for their first year of employment; and (3) a\npercentage of average annualized wages. (Id. at 3,587). The NPRM\nprovided no specifics on these various maximum percentage levels.\nAlthough the Department stated that an agency could still be\nrecognized even if its standards departed from the original proposals,\nit also stated that the agency would bear a burden of justifying the\nappropriateness of different standards. (59 Fed. Reg. at 22,273).\nDevelopment of ACCSCT Standard. In order to comply with the\nstatutory and regulatory requirements described above, ACCSCT will\nhave to adopt and apply an accrediting standard that assesses tuition\nand fees. It has created a committee of Commissioners to study the\nissue and develop a proposal. In addition to the inherent difficulty of\nthe task, the Commission is concerned that any standard it adopts not\nbe violative of the antitrust laws.\nAs explained above, the Commission is a private body consisting\nin substantial part of school-affiliated Commissioners who could be\nviewed as competitors.\nFurther, the Commission is legally\nclassifiable as a form of association, although it is not a trade\nassociation in the conventional sense that seeks to advocate and\n\n\x0cACCREDITING COMMISSION ON CAREER SCHOOLS\n977\n\n989\n\nAdvisory Opinion\n\nadvance the interests of its members. (See Parsons College v. North\nCentral Ass\'n. of Colleges and Sch., 271 F. Supp. 65, 70 (N.D. Ill.\n1967); Transport Careers v. National Home Study Council, 646 F.\nSupp. 1474 (N.D. Ind. 1986)). Thus, the Commission would appear\nto be a combination subject to Section 1 of the Sherman Act. ( 15\nU.S.C. 1).\nAssociation activities which limit or set maximum prices are\nvulnerable to attack as price-fixing. (Arizona v. Maricopa County\nMedical Soc., 457 U.S. 332 (1982); McLean County Chiropractic\nAss \'n., 5 Trade Reg. Rep. (CCH) <][23, 524 (FfC Consent Order to\nCease and Desist Complaint, Dkt-3491, April 7, 1994)). The\nnonprofit and educational nature of the Commission does not\nnecessarily exempt it from such antitrust liability. (See United States\nv. Brown University, 5 F.3d 658 (3d Cir. 1993) (colleges and\nuniversities not immune from antitrust laws for price-fixing);\nGoldfarb v. Virginia State Bar, 421 U.S. 773 (1975) (no "learned\nprofessions" exemption); American Soc. of Mechanical Engineers,\nInc. v. Hydro/eve! Corp., 456 U.S. 556 (1982) (nonprofit nature of\norganization does not shield it from antitrust liability)). Moreover,\npaternalistic aims, such as protection of students, which unduly\nrestrict competition are not a defense to such liability. (See National\nSoc. of Professional Engineers v. United States, 435 U.S. 679 (1978);\nFederal Trade Commission v. Indiana Federation of Dentists, 476\nU.S. 447 (1986)).\nOf particular importance to this request, the FTC recently issued\nan advisory opinion which found violative of the antitrust laws a\nphysician fee review program proposed by the American Medical\nAssociation and state and local medical societies which provided for\nthe imposition of disciplinary sanctions for "fee gouging" or fees that\nwere deemed by peer review panels to be "excessive." (American\nMedical Ass\'n., 5 Trade Reg. Rep. (CCH) <][ 23,602 at 23,284-87,\n(FfC Advisory Opinion, Feb. 14, 1994 ). In contrast, the FfC found\npermissible sanctions for abusive conduct in connection with fees,\nsuch as misrepresentation, deception, or the exertion of undue\ninfluence. (Id. at 23,284). Private, non-binding advice on fee levels,\nnot based upon benchmarking of fees, and requirements, for\ndisclosure of fee-related information were also found to be\npermissible. (Id. at 23,283; accord, Iowa Dental Ass \'n., 99 FfC 648\n(FfC Advisory Opinion, April 3, 1982)).\n\n\x0c990\n\nFEDERAL TRADE COMMISSION DECISIONS\nAdvisory Opinion\n\n119 F.T.C.\n\nIn view of the regulations promulgated by the Department of\nEducation, the Commission appears to be obliged to consider\nadoption of an accrediting standard under which it would determine\nwhether the tuition and fees charged by its accredited schools are too\nhigh and enforce this standard potentially by withdrawing\naccreditation. Such a standard might use one or more of the three\napproaches suggested in the NPRM with tuition capped at a\nYet, such action by the\npercentage of expected earnings.\nCommission could be viewed as price fixing under the antitrust laws\nsince the Commission is arguably a combination which would be\nlimiting the pricing discretion of competitors.\nIt might be argued that Congress impliedly exempted accrediting\nbodies like the Commission from the antitrust laws when it\nconditioned recognition of accrediting agencies upon the adoption of\na standard for the assessment of tuition and fees. (See Behagen v.\nAmateur Basketball Ass\'n of the United States, 884 F.2d 524 (10th\nCir. 1989) (private governing board for amateur basketball exempt\nwhen it set and enforced player qualifications pursuant to Amateur\nSports Act)). However, this is an uncertain basis for actions which\ncould have extremely severe consequences. Congress did not speak\ndirectly to the issue, and such exemptions are disfavored. (Silver v.\nNew York Stock Exchange, 373 U.S. 341,357 (1963)).\nThe Third Circuit\'s holding in Brown University indicates that\nthe rule of reason would be applied to evaluate a tuition and fees\nstandard. Under the rule of reason, it might be argued that the\nstandard is designed not to inhibit competition but to protect students\nwho lack the knowledge and sophistication to make informed\nchoices. However, such a paternalistic justification was rejected by\nthe Supreme Court in National Society of Professional Engineers and\nIndiana Federation of Dentists. Further, less restrictive means may\nbe available to achieve the pro-competitive aims of correcting\ninformation deficiencies in the market. (See Brown University,\nsupra).\nAlternatively, the Commission might collect tuition information\nfrom its accredited schools and analyze this information to determine\nhow the tuition charged for a given program at a particular school\ncompares to similar programs and schools. If the tuition were in the\ntop tenth percentile of all similar programs, for example, the\nCommission might then require the school to explain why its tuition\nwas so high and to provide this information to students and\n\n\x0cACCREDITING COMMISSION ON CAREER SCHOOLS\n977\n\n991\n\nAdvisory Opinion\n\nprospective students. Under this approach, the school would retain\nits pricing discretion and remain free to charge the tuition that it\nwished. A standard establishing this procedure would provide\nstudents with useful information on which to base a decision to attend\nan institution and improve the functioning of the market.\nEven this approach may present difficulties under the antitrust\nlaws. In its advisory opinions on the fee review proposals in\nAmerican Medical Ass\'n. and Iowa Dental Ass\'n., the FTC cautioned\nthat the associations should not systematically collect fee data,\ndevelop any explicit or implicit "benchmarking" scheme, or publicly\ndisclose their review of particular fees. The alternative approach\ndescribed above could be viewed as inconsistent with these\nconditions. The heart of the accrediting standard would be the\nsystematic collection of tuition data and the disclosure to students of\ninformation comparing and explaining the school\'s tuition in relation\nto other schools. Since schools may wish to avoid this disclosure\nbecause it could inhibit students\' decisions to attend, the standard\ncould be regarded as an implicit form of benchmarking, with the\nbenchmark as the range of tuition levels where disclosure would not\nbe mandated by the Commission.\nA final possibility would be an accrediting standard which\nrequired schools to inform students in the catalog, enrollment\nagreement and other publications that they may obtain information\nabout tuition charges for comparable programs from the Commission.\nThe Commission would again collect tuition information from\naccredited schools about their programs, and assemble this\ninformation in a data base. Students could access this information to\ndetermine the cost of similar programs at other institutions. The data\nbase might also contain other information useful to consumer choice,\nsuch as geographic location, size of the institution, and other\nprograms and services offered at the school.\nThis approach would avoid any benchmarking of acceptable\ntuition levels. Schools would retain full discretion to price their\nservices. The accrediting standard would be formulated to address\ndirectly the underlying problem of lack of consumer information by\nproviding students with the data necessary to make informed choices.\nBy assembling, categorizing and providing context to the data, the\ncommission would still meet the requirements of the Higher\nEducation Amendments of 1992. since it would be "assessing" the\ntuition and fees of schools. The Antitrust Division recently released\n\n\x0c992\n\nFEDERAL TRADE COMMISSION DECISIONS\n119F.T.C.\n\nAdvisory Opinion\n\na business review letter stating that a similar type of fee survey\nshould not be subject to challenge under the antitrust laws. (Trade\nRegulation Reports (CCH), No. 322 at 3 (July 6, 1994)).\nRequest for Guidance. The Commission respectfully requests\nguidance on the permissibility under the antitrust laws of the\napproaches to an accrediting standard on tuition and fees outlined\nabove. The Commission will in the near future begin the process to\nrenew its recognition by the Department of Education. As part of that\nprocess, the Commission will have to demonstrate its compliance\nwith the statutory and regulatory recognition criteria, including the\nrequirement for a standard to assess tuition and fees. Your review of\nthe approaches under consideration by the Commission will be of\nsubstantial assistance as it seeks to continue to demonstrate that it is\na reliable authority as to the quality of the education and training\noffered by its accredited institutions. Accordingly, we respectfully\nurge expedited consideration of this request.\nSincerely,\nMark L. Pelesh\nCounsel to ACCSCT\n\n\x0c'


b'/)/\'\nJf) 1-\n\nUNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON , D, C, 20580\n\nDivision of\n\nMarketing Practices\n\nOctober 3, 1994\n\nChan Tysor ,\n\nPresident\n\nCelestis, Inc,\n3731 Purdue\n\nHouston ,\n\nTX 77005\n\nDear Mr. Tysor:\nYour letter to attorney Mary Feinstein of September 19, 1994\nrequests an opinion as to whether or not the Funeral Rule, 16\nR. Part 453 , would be applicable to the business activities\nof Celestis , Inc. Ms. Feinstein and I are staff attorneys\nassigned to Funeral Rule enforcement. In your letter , you state\nthat Celestis will offer the service of launching human cremains\nCelestis will have no contact with deceased human\nbodies and will not offer cremation services. A person s local\nfuneral service provider would cremate the body and send the\ncremains to Celestis, which would reduce all or a portion of the\ncremains through its reduction process and then encapsulate the\ncremains in an individual capsule and launch them into space.\n\ninto space.\n\nThe Funeral Rule only applies to "funeral providers, " which\nthe Rule defines as those who sell or offer to sell both funeral\ngoods and funeral services to the public. "Funeral goods " are\nthose sold or offered directly to the public for use in\nconnection with funeral services. and "funeral services" are any\nservices which may be used to: (1) care for and prepare deceased\nhuman bodies for burial, cremation or other final disposition;\nand (2) arrange , supervise or conduct the funeral ceremony or the\nfinal disposition of deceased human bodies. 16 C. R. S 453.\nA copy of the Funeral Rule is enclosed for your future reference.\n\nBased on the information provided in your letter and the\ndefinitions cited above, the Funeral Rule does not apply to the\nservices to be offered by Celestis, Inc. Please be advised that\nthe views expressed in this letter are those of the FTC staff.\nThey have not been reviewed, approved, or adopted by the\nCommission, and they are not binding upon the Commission.\nHowever , they do reflect the opinions of those staff members\ncharged with enforcement of the Funeral Rule.\n\nVery; truly youq:: ,.\n\ng;l/r14( U /?! 11/r/\nTomas A. Cohn\n\nAttorney\nEnclosure\n\n\x0c'


b'{\nI\n\nDue to insufficient information supplied by respondent SCM\nCorporation, Commission was unable to determine whether proposed interlocking directorate would violate provisions of Final Order entered against SCM. (92 F.T.C. 416\n(1978)) [Kraftco Corporation, et al., Dkt. 9035]\nJune 18, 1984\nDear Mr. Willis:\nThis is in response to your request for advice as to whether Dr.\nRichard R. West may serve simultaneously on the boards of directors\nof SCM Corporation ("SCM") and Bohemia, Inc. ("Bohemia") without\nviolating the prohibition against interlocking directorates contained\nin the Commission\'s order in Docket No. 9035 ("the order") [92 F.T.C.\n416 (1978)]. This request was made on behalf of SCM, which became\nsubject to the Commission\'s order on October 6, 1980 [14 C.D. 23 (612\nF.2d 707 (1980), cert. denied, 449 U.S. 821 (1980)].\nAccording to your request, Dr. West is presently a member of the\nSCM board and would like to rejoin the Bohemia board, provided that\nhis simultaneous service on the two boards would not violate the\norder. Your request involves a product overlap that occurs between\nSCM\'s subsidiary, Allied Paper, Incorporated ("Allied") and Bohemia;\nhowever, there is no direct product overlap between the two parent\ncompanies, SCM and Bohemia. You advise that Dr. West is not a\ndirector of Allied and that he is not involved with Allied\'s operating\npolicies.\nYour request states that Allied owns and operates a lumber mill in\nJackson, Alabama which sells lumber products, primarily to customers in the Southeast, under the "M.W. Smith Lumber Company"\n("M.W. Smith") trade name. For the fiscal year ended June 30, 1982,\nthe total sales of Allied and its subsidiaries were $288 million including $6.9 million total sales of all forms of lumber. You state that\nBohemia and M.W. Smith both sell lumber products in 18 states. The\ntotal annual sales of lumber products in the 18 states is $5.2 million\nfor Bohemia and $4.1 million for M.W. Smith. Bohemia and M.W.\nSmith each have sales of $100,000 or more of lumber products only\nin two states, Louisiana and Oregon and neither company is aware of\nany instance in which they have sold products to the same customers.\nThe total sales of Bohemia and M.W. Smith combined account for less\nthan 1 % of all sales included under SIC Code No. 2421 - Sawmills &\nPlaning Mills, General. You state that the only information which the\nSCM board sees with respect to M.W. Smith "would be a sales and a\nprofit line in the annual budget and in long range plans."\nWe believe that the order in Docket No. 9035 would be applicable\nby its terms to this interlock. Paragraph I of the order prohibits SCM\n\n,,,\xc2\xb7\n\n\xe2\x80\xa2ii-\xc2\xb7\n\n\x0c718\n\nFEDERAL TRADE COMMISSION DECISIONS\n\nfrom having a common director with any corporation which competes\nwith SCM in the production or sale of any product or service. The\norder does not contain any de minimis exception.\nNor can we say that any of the other possible grounds for exception\nare applicable here. The Commission has considered whether the\nDocket No. 9035 order is applicable to situations where the prospective interlock is between parent companies but the competition occurs\nbetween one parent and the subsidiary of the other parent. As stated\nabove, the order prohibits SCM from having a director interlock with\nKraft or with any other corporation (other than a subsidiary, parent,\nor sister ofSCM) which competes with SCM in the production or sale\nof any product or service. The order thus contains a specific exemption for interlocks arising solely between SCM and its subsidiaries,\nand it does not provide any exemption for the activities of subsidiaries\nin other contexts. The Commission concludes that no such exemption\nwas intended and that the language of the order is broad enough to\nencompass the prospective interlock described in your request.\nThe Commission has likewise considered whether it is appropriate\nto impute Allied\'s activities to SCM for the purpose of determining\norder coverage. In this connection, the Commission\'s opinion in BorgWarner Corporation, Docket No. 9120 (Slip Opinion, June 3, 1983) [101\nF.T.C. 863 at 919], discussed the question of when it was appropriate\nto impute a subsidiary\'s activities to a parent corporation for Section\n8 purposes. The Commission stated that the relevant inquiry under\nSection 8\nis whether the parent company should be regarded as a "competitor" of the subsidiary\'s\ncompetitors, and whether an\xc2\xb7 interlocked director is so placed as to be able to exercise\ncontrol or even to substantially influence decisionmaking at the director level so as to\ndampen competitive relationships between divided corporate interests. The common\nlaw "control" inquiry is relevant insofar as it is an indication of the likelihood of\ncollusion and anticompetitive transfer of information among competitors.\n\nThe staff invited you to supply detailed information on the control\nand other factors deemed relevant by the Commission in Borg- Warner\nas they relate to the relationship between SCM and M.W. Smith, but\nyou did not do so, with the exception of stating that SCM knows "of\nno communication whatsoever between M.W. Smith (or Allied) and\nBohemia." Accordingly, based on the limited information that you\nhave supplied, the Commission is unable to determine that it would\nbe inappropriate in this instance to impute Allied\'s activities to SCM\nfor the purpose of determining order coverage.\nIn the light of the fact that the information supplied in your request\nis insufficient to resolve the question of whether Allied\'s activities\nshould be imputed to SCM, the Commission is unable to determine\n\n\x0cwhether the simultaneous service of Dr. West on the boards of SCM\nand Bohemia would violate Paragraph I of the order.\nBy direction of the Commission.\n\nLetter of Request\nFebruary 15, 1983\nDear Mr. Feinberg:\nThis is a request made on behalf of respondent, SCM Corporation\n("SCM"), for your determination that the simultaneous service of Dr.\nRichard R. West on the boards of directors of SCM and Bohemia, Inc.\n("Bohemia") would not violate the Order in the above matter.\nDr. West became a member of the Board of Directors of SCM in\nDece~ber, 1982. He had previously been a member of the Board of\nDirectors of Bohemia, but he resigned from that position pending\nresolution of the question which we are raising in this letter. If you\ndetermine that Dr. West\'s simultaneous service on the boards ofSCM\nand Bohemia would not violate the Order, Dr. West intends to rejoin\nthe Bohemia board.\nDr. West is the Dean of the Amos Tuck School of Business Administration, Dartmouth College. He is a director of The Dorsey Corporation (a manufacturer of cargo trailers and plastic containers), Liberty\nCommunications Inc. (a cable TV and TV broadcasting company),\nVornado, Inc. (a real estate holding company), and several investment\ncompanies.\nBohemia has its principal office in Eugene, Oregon and is engaged\nin the manufacture and sale of a variety of forest products, including\nlumber, plywood, veneer, particleboard and laminated beams, in marine construction and in the production of rock, gravel and aggregates. For the fiscal year ended April 30, 1982, Bohemia had total\nsales of $155 million; of those sales $65 million were sales of lumber.\nSCM has its principal office in New York, New York and had total\nsales for the fiscal year ended June 30, 1982 of $1.9 billion. As you\nknow, the company\'s major businesses are chemicals, coatings and\nresins, paper products, foods, and typewriters and appliances.\nSCM owns Allied Paper, Incorporated, a Delaware corporation ("Allied"), with its principal office in Kalamazoo, Michigan. Allied\'s operations include a paper mill located in Jackson, Alabama. In\nconjunction with its paper mill, Allied owns and operates a lumber\nmill, also located in Jackson, Alabama; the lumber mill sells lumber\nproducts, mainly to customers in the Southeast, under the "M.W.\nSmith Lumber Company" trade name ("M.W. Smith"). For the fiscal\nyear ended June 30, 1982, the total sales of Allied and its subsidiaries\nwere $288 million, including $6.9 million total sales of all forms of\nlumber.\n\n\x0c720\n\nFEDERAL TRADE COMMISSION DECISIONS\n\nThe lumber products of Bohemia and M.W~ Smith are all included\nunder SIC Code No. 2421 - Sawmills & Planing Mills, General. This\nproduct line is dominated by such industry giants as Weyerhaeuser\nCo. Inc., Louisiana-Pacific Corp., Georgia-Pacific Corp., St. Regis\nPaper Co. Inc., Boise Cascade Corp. and many others. Bohemia\'s market share of this category is approximately one-half of 1% and M.W.\nSmith\'s share is infinitesimal.\nThere are 18 states in which Bohemia and M.W. Smith both sell at\nleast some quantity of lumber products. (See attached list.) The total\nannual sales oflumber products sold in those 18 states is $4.1 million\nfor M.W. Smith and approximately $5.2 million for Bohemia (annualizing the six-months sales of the California mills-see footnote to\nattached list). You will note that the list shows only two states (Louisiana and Oregon) in which Bohemia and M.W. Smith each have sales\nof $100,000 or more of lumber products.\nOf M.W. Smith\'s lumber sales, approximately 46% are to "office\nwholesalers" (non-stocking); 25% are to "yard wholesalers" (stocking); and the balance are direct sales to retailers or manufacturers.\nOf Bohemia\'s lumber sales, less than 15% are to office wholesalers;\nand most of Bohemia\'s sales are to yard wholesalers, contractors and\nretailers.\nM.W. Smith and Bohemia have each checked with their sales personnel, and none knew of any direct competition between the two\ncompanies, that is, instances in which both companies were competing for the business of the same customer. It is, of course, possible that,\nunknown to the present sales personnel of the two companies, they\nhave sold some product or products to the same customers. Even here\nthere is not likely to be any substantial competition in view of the fact\nthat the sales were quite small in each state and the principal channels of distribution employed by the two companies differ.\nDr. West does not serve on the board of the SCM subsidiary, Allied.\nNor in his capacity as a director of SCM would he be involved with\nthe operating policies of Allied or M.W. Smith.\nAlthough both Bohemia and M. W. Smith market some of the same\nproducts, they market in only 18 states in common, the sales volume\nis minimal in each state and one markets principally to office wholesalers while only 15% of the other\'s sales are to such customers.\nFurther, the sawmills and planing mills category is so large that even\nthe combined share of Bohemia and M.W. Smith is miniscule.\nIn these circumstances, we do not believe that either the Act or the\nOrder were intended to bar Dr. West\'s service on the boards of SCM\nand Bohemia.\nWe respectfully request that you indicate that you have no objection to service by Dr. West on the board of directors of Bohemia.\n\n\x0cThank you for your early consideration of this request.\nSincerely,\nIsl William E. Willis\nSales of Board (\'\'B"), Standard\nDimension ("D"), Industrial ("I"), Saps (\'\'S"),\nFlooring ("F"), Sidings ("Si"), Prime ("P"),\nWolmanized Lumber ("W") Products by\nBohemia, Inc., (FY ended 4/30/82)*\nand M.W. Smith Lumber Co. (FY ended 6/30/82)\nM.W. Smith\n\nBohemia\nState\n\n$000\'s\n\nProd.\n\n$000\'s\n\nProd.\n\n2,340\n\n8,0,1,\nS,F,Si,\nP,W\n\nAL\n\n70\n\n8,0\n\nFL\n\n100\n\nD\n\n90\n\n8,0,1,\nF,Si\n\nD\n\nGA\n\n30\n\n8,0\n\n170\n\nIL\n\n50\n\n8,F\n\n30\n\n8,F,W\n\nKY\n\n10\n\nB\n\n290\n\n8,0,1,\nF,Si,W\n\nLA\n\n470\n\n8,0\n\n100\n\n8,0,1,\nSi,W\n\nMD\n\n20\n\n8\n\n10\n\n8,Si\n\nMl\n\n110\n\nD\n\n10\n\n0,1\n\nMN\n\n190\n\n8\n\n10\n\n8\n\nMO\n\n160\n\n8,0\n\n70\n\n8,0,1\n8,0,1\n\nNC\nNY\n\n70\n\n8\n\n100\n\n30\n\nD\n\n20\n\n8,0,1\n\nOH\n\n20\n\nD\n\n140\n\nB,O,I,\nF,W\n\nOR\n\n2,120\n\n8,0\n\n180\n\nB,D,F\n\nPA\n\n20\n\nD\n\nTN\n\n30\n\n8,0\n\n430\n\nTX\n\n950\n\n8,0,1\n\n50\n\n8,0,1\n\nVA\n\n30\n\nD\n\n40\n\nO,I,S\n\n5\n\nD\n8,O,F,\nSi\n\n\xe2\x80\xa2 Sales for Bohemia in these states are based on annual sales for Oregon mills (representing 80% of all sales)\nand six-months sales for California mills.\n\n\x0c722\n\nFEDERAL TRADE COMMISSION DECISIONS\n\nSecond Letter of Request\nAugust 26, 1983\nDear Mr. Feinberg:\nIn connection with our pending request on behalf of SCM Corporation ("SCM") for your determination that the service of Dr. Richard\nR. West on the Boards of Directors of SCM and Bohemia, Inc. is not\nin violation of the Order entered in the above Docket, I would like to\ncall your particular attention to the recent decision of the Commission In the Matter ofBorg- Warner Corporation, et al., Docket No. 9120.\n[101 F.T.C. 863 (1983)]\nThe Borg-Warnerdecision confirms, I believe, that in view of all of\nthe circumstances the service of Dr. West on the Boards of the two\ncompanies would neither violate the law nor the outstanding Order.\nThe Commission clearly articulated in Borg-Warner:"A parent corporation is not a competitor of another corporation merely because its\nsubsidiary is. (citing cases)" (at p. 16), and further declared: "The\nrelevant inquiry under Section 8 is ... whether an interlocked director is so placed as to be able to exercise control or even to substantially\ninfluence decision making at the director level so as to dampen competitive relationships between divided corporate interests" (at p. 18).\nThe Board of Directors of SCM is not involved in and does not\nparticipate in the operation and policies of the M.W. Smith Lumber\nCompany, an operating group which is a part of SCM\'s subsidiary,\nAllied Paper, Incorporated. As we have previously disclosed to you,\nM.W. Smith\'s sales are a small fraction of 1 % of SCM\'s total sales.\nM.W. Smith\'s sales are in a sense generated as a by-product of Allied\'s\nprincipal business, the manufacture of pulp and paper products; thus,\nthe M.W. Smith Lumber Company is located near Allied\'s Jackson,\nAlabama pulp and paper mill and was acquired by SCM, in 1981,\nmainly as an adjunct to the pulp mill because it provided a local\nsource of wood chips, timber and timber cutting rights.\nThe monthly and annual financial operating reports which are\npresented to the SCM Board of Directors include data as to each of\nSCM\'s divisions with some breakouts for operating groups; but there\nare no such breakouts for the small M.W. Smith operations. The only\nsuch information which the Board sees with respect to M.W. Smith\nwould be a sales and a profits line in the annual budget and in long\nrange plans.\nIn the case ofSCM and M.W. Smith we have a relationship which\nis even more remote than the Commission faced in Borg- Warnerinasmuch as the SCM subsidiary, Allied, is essentially a pulp and paper\nproducer and only this small group in Jackson, Alabama, representing about 2% of Allied\'s sales, is engaged in activities which could be\ncompetitive with Portland, Oregon-based Bohemia, Inc ..\n\n\x0cIn fact, of course, as indicated\xc2\xb7 in our prior submission, neither the\nBohemia management nor the M.W. Smith management consider the\nother company to be a competitor, and neither management knew of\nany specific instances in which any of their products were sold in\ncompetition with the products of the other company.\nUnlike the situation in Borg-Warner, we know of no communications whatsoever between M.W. Smith (or Allied) and Bohemia.\nThe Commission in Borg-Warner placed great emphasis upon the\npurposes of Section 8, noting that interlocking directorates were seen\nby Congress as "likely to facilitate collusion" (p. 25) "and anti-competitive transfer ofinformation among competitors" (at p. 18). It is the\npossibility of such "collusion", the Commission declared, that renders\nthe "control" inquiry relevant.\nThe absence ofSCM Board involvement in the M.W. Smith activities, the fact that M.W. Smith itself is merely part of a larger subsidiary of SCM and the fact that M.W. Smith\'s sales are tiny in\ncomparison both to the total sales ofSCM and of its subsidiary Allied,\nrender non-existent the risk of collusion which underlies the purpose\nof Section 8 of the Clayton Act and the Order which has been rendered\nin this proceeding. Furthermore, when one realizes that the total\nshare of the lumber market enjoyed by Bohemia and M.W. Smith\ntogether does not reach 1 %, and that in fact the companies are not\neven aware of any competition between them, any fear of collusion is\nbeyond belief.\nWe renew our pending request that you indicate no objection to the\nservice of Dr. West on the Board of Directors of Bohemia, Inc.\nSincerely,\n\nIs/ William E. Willis\n\n\x0c'