b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nDivision of Marketing Practices\nCraig Tregillus\nctregillus@ftc.gov\n\nDirect Dial: (202) 326-2970\nFacsimile: (202) 326-3395\n\nJanuary 3, 2013\nMr. Harvey I. Lapin, Esq.\nHarvey I. Lapin, PC\nP.O. Box 1327\nNorthbrook, IL 60065-1327\nMr. Justin E. Huie, Instructor\nFuneral Service Education\nNorthampton Community College\n3835 Green Pond Road\nBethlehem, PA 18020\nGentlemen:\nYou have inquired whether the Funeral Rule permits a funeral provider to charge clients\na mark-up above the price stated on its General Price List (\xe2\x80\x9cGPL\xe2\x80\x9d) where there are special\ncircumstances that impose additional costs on the provider. In particular, you ask whether\nfuneral homes and crematories may charge extra for handling obese bodies requiring additional\npersonnel or equipment, or for very large funeral services necessitating additional personnel.\nYou also request advice on how any such additional charges should appear on the Statement of\nFuneral Goods and Services Selected (\xe2\x80\x9cSFGSS\xe2\x80\x9d).\nIt is staff\xe2\x80\x99s view, for the reasons stated below, that the Rule allows a funeral provider to\ncharge only the prices that are listed on its GPL or other price lists required by the Rule, and\ndoes not permit additional charges that have not been disclosed on the price lists. Funeral\nproviders are free, however, to place reasonable limitations on the availability of any listed GPL\nitem at a particular price, provided they also disclose sufficient information for a consumer to\ndetermine the additional cost if the stated limitation is exceeded.\nIt is not uncommon, for example, for a GPL to include a mileage limitation within which\nthe provider will transfer remains to the funeral home for the flat fee stated, and to disclose an\nadditional cost per mile for removals from beyond the mileage limit. This is expressly permitted\nby Section 453.2(b)(4)(ii) of the Rule which states that a GPL may include \xe2\x80\x9cretail prices\n(expressed either as the flat fee, or as the price per hour, mile or other unit of computation). . . .\xe2\x80\x9d1\n\n1\n\n16 C.F.R. \xc2\xa7 453.2(b)(4)(ii).\n\n\x0cMr. Harvey I. Lapin and Mr. Justin E. Huie\nPage 2 of 3\nThus, nothing in the Rule prevents a funeral provider from including in its GPL an\nexpress weight limit for its flat fee for transferring remains to the funeral home, so long as the\nprovider also discloses the additional cost for removals that exceed the weight limitation.2\nSimilarly, a crematory covered by the Rule may include an express weight limit for the flat fee\nfor cremation in its GPL if it also discloses the additional cost for cremations that exceed that\nweight limit.\nBy the same token, a funeral provider may limit its stated GPL price for funeral\nceremonies or memorial services to a specified maximum number of people in attendance. In\nthat case, the GPL must also make clear the additional cost for services exceeding the specified\nmaximum.\nWhere any such limitations have been disclosed in the GPL, together with the additional\ncost if those limitations are exceeded, preparation of the SFGSS should present no difficulties for\nthe provider nor unwelcome surprises for the client. The basic fee for each service with an\nexpress limitation in the GPL should be listed, followed by a separate entry showing the number\nof units by which the limitation has been exceeded, the price of each unit as listed on the GPL,\nand the total cost for the number of units exceeding the basic fee.\nStaff\xe2\x80\x99s opinion that a funeral provider may charge its clients only the prices listed on its\nGPL follows from the Rule\xe2\x80\x99s fundamental stated goals of enhancing consumer choice and price\ncompetition by requiring itemized pre-sale price disclosure for funeral goods and services.3\nSection 453.2(a) of the Rule therefore expressly prohibits any failure to furnish \xe2\x80\x9caccurate price\ninformation disclosing the cost to the purchaser for each of the specific funeral goods and funeral\nservices used in connection with the disposition of deceased human bodies. . . .\xe2\x80\x9d4 Allowing\nadditional charges not disclosed on the price lists required by the Rule would jeopardize the\naccuracy of itemized price information and stymie pre-need and at need comparison shopping.\nStaff cannot condone undisclosed charges for those reasons.\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\n2\n\nSince Section 453.2(b)(4)(ii) permits any \xe2\x80\x9cother unit of computation,\xe2\x80\x9d the additional\ncost can be priced in various weight increments, such as, for example, \xe2\x80\x9c$ ___ for each additional\n100 lbs.\xe2\x80\x9d\n3\n\nSee, e.g., Statement of Basis and Purpose, 53 Fed. Reg.1592, 1594 (Jan. 11, 1994)\n(reviewing consumer choice benefits from price competition), available at\nhttp://www.ftc.gov/bcp/rulemaking/funeral/funrlprac2.pdf; Statement of Basis and Purpose,\n47 Fed. Reg.42260, 42270 (Sept. 24, 1982) (citing consumer injury from lack of itemized price\ndisclosures and forced purchases of unwanted items), available at\nhttp://www.ftc.gov/bcp/rulemaking/funeral/funrlprac.pdf.\n4\n\n16 C.F.R. \xc2\xa7 453.2(a).\n\n\x0cMr. Harvey I. Lapin and Mr. Justin E. Huie\nPage 3 of 3\nenforcement of the Funeral Rule. Staff Funeral Rule opinions are now routinely posted on the\nFTC website at http://business.ftc.gov/content/funeral-rule-opinions.\nSincerely,\n/s/\nCraig Tregillus\nFuneral Rule Coordinator\n\n\x0c\x0c'


b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nDivision of Marketing Practices\n~\nCraig Tregillus\nctregillus@ftc.gov\n\nDirect Dial: (202) 326-2970\nFacsimile: (202) 326-3395\n\nJanuary 3, 2013\nMs. Kathleen K. Ryan, General Counsel\nPennsylvania Funeral Directors Association\n7441 Allentown Blvd.\nHarrisburg, PA 17112-9982\nMr. O. C. Robbins, Executive Director\nTexas Funeral Service Commission\nP. O. Box 12217\nCapitol Station\nAustin, TX 78711\nDear Ms. Ryan and Mr. Robbins:\nThis staff opinion responds to your requests for guidance on whether the Funeral Rule\npermits funeral providers to charge consumers for the cost of collecting insurance or trust\nproceeds for the funeral goods and services a consumer purchases. You ask, in particular, about\nfees charged: (1) by providers for processing the paperwork needed to collect insurance\nassignments or pre-paid arrangements funded by insurance or trust vehicles; and (2) by thirdparty funding companies that advance payments from insurance policies or trusts to funeral\nproviders before the funding company collects the proceeds, deducts its fees, and remits any\nremaining balance to the consumer.\nAs you know, the Rule specifies that a funeral provider may charge only one nondeclinable fee, the basic services fee,1 unless another fee is necessitated by any legal, cemetery\nor crematory requirement that is disclosed in writing on the Statement of Funeral Goods and\nServices Selected (\xe2\x80\x9cSFGSS\xe2\x80\x9d).2 Accordingly, the Rule expressly prohibits funeral providers from\ncharging:\nany fee as a condition to furnishing any funeral goods or funeral services to a\nperson arranging a funeral, other than the fees for: (1) Services of funeral director\nand staff, permitted by \xc2\xa7 453.2(b)(4)(iii)(C) [basic services fee]; (2) other funeral\nservices and funeral goods selected by the purchaser; and (3) other funeral goods\nor services required to be purchased [i.e., by legal, cemetery or crematory\n1\n\n2\n\n16 C.F.R. \xc2\xa7 453.2(b)(4)(iv).\n\n16 C.F.R. \xc2\xa7 453.3(d)(2). Staff is not aware of any such external requirement mandating\nthat funeral providers charge consumers for collecting insurance or trust proceeds.\n\n\x0cMs. Kathleen K. Ryan and Mr. O. C. Robbins\nPage 2 of 2\nmandates], as explained on the itemized statement [SFGSS] in accordance with\n\xc2\xa7 453.3(d)(2).3\nWhile the Rule does not permit a second non-declinable fee, it expressly permits fees for\nfuneral goods and services voluntarily \xe2\x80\x9cselected by the purchaser.\xe2\x80\x9d It is therefore staff\xe2\x80\x99s opinion\nthat funeral providers may offer to collect insurance or trust proceeds for a fee that is optional.\nNo Rule violation occurs if a purchaser voluntarily chooses such a service and is free to avoid\nthe cost by declining it.4\nAs a corollary, a purchaser would not be able to make a voluntary choice, as a practical\nmatter, unless the service and fee are disclosed in advance on the funeral provider\xe2\x80\x99s GPL at the\ntime of a pre-need or at-need purchase. Toward this end, a funeral provider may list as an\noptional charge on its GPL its own collection fees, or the fees for a third party used by the\nprovider to collect trust or insurance proceeds. If a purchaser voluntarily selects the collection\nservice, its cost must appear on the SFGSS. This is required by the Rule, and in the case of a\npre-need purchase, assures that the purchaser\xe2\x80\x99s personal representative will know that collection\ncosts have been prepaid.\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are now routinely\nposted on the FTC website at http://business.ftc.gov/content/funeral-rule-opinions.\nSincerely,\n/s/\nCraig Tregillus\nFuneral Rule Coordinator\n\n3\n\n16 C.F.R. \xc2\xa7 453.4(b)(1)(ii). Although the Rule provides an additional exception to the\nprohibition \xe2\x80\x9cfor a combination of goods or services which would be impossible, impractical, or\nexcessively burdensome to provide,\xe2\x80\x9d 16 C.F.R. \xc2\xa7 453.4(b)(2)(ii), it can hardly be applicable to\nthe costs of collecting payment that many funeral providers have undertaken routinely for years\nwithout charge. Collection costs may be recovered in the basic services fee only if this service is\n\xe2\x80\x9ccommon to virtually all forms of dispositions.\xe2\x80\x9d FTC, Complying with the Funeral Rule (June\n2004), p. 10.\n4\n\nSome consumers may choose to avoid any such fee by paying the provider up-front and\nlater undertaking the work of collecting the insurance or trust proceeds themselves. Others may\ndecide that they need or prefer to have this service performed on their behalf and agree that the\ncost is worthwhile.\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nDivision of Marketing Practices\nCraig Tregillus\nctregillus@ftc.gov\n\nDirect Dial: (202) 326-2970\nFacsimile: (202) 326-3395\n\nDecember 13, 2012\nMr. Stephen Dirksen, General Counsel\nNorth Carolina Board of Funeral Service\n1033 Wade Ave. - Suite 108\nRaleigh, North Carolina, 27605-1158\nDear Mr. Dirksen:\nThis letter responds to your request for clarification of the circumstances under which a\ncasket offered by a funeral provider must be listed in the provider\xe2\x80\x99s Casket Price List (\xe2\x80\x9cCPL\xe2\x80\x9d).\nThe question comes from a provider in your state that wishes to test market a casket to select\nclients. The provider will store the casket on its premises, but not in public view in its selection\nroom, and will show the casket only to clients it believes might wish to purchase it.\nAs you know, the Funeral Rule compliance guide states that funeral providers \xe2\x80\x9cneed list\nonly those caskets that you usually offer for sale that do not require special ordering.\xe2\x80\x9d1 The\nquestion you raise relates to how best to read this phrase. In staff\xe2\x80\x99s view, the meaning is clear:\nany casket that does not require special ordering is \xe2\x80\x9cusually offered\xe2\x80\x9d for sale. Any contrary\ninterpretation would defeat the purposes of the CPL requirement; namely, ensuring that all\nconsumers receive information about every pricing alternative and casket choice a provider can\nreadily provide, and at the same time preventing a provider from concealing the availability of\nless expensive caskets and offering them only to clients unable to afford a more expensive\nalternative.\nAccordingly, because the provider that prompted your inquiry will store the caskets it\nwishes to test market, and will not need to special order them, they must be listed on its CPL for\nas long as the provider offers them to any of its clients. The fact that the provider may intend to\noffer the casket only to a select group of customers does not mean that it does not \xe2\x80\x9cusually offer\xe2\x80\x9d\nthe casket for sale.\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\n\n1\n\nFTC, Complying With the Funeral Rule (2004), p. 14 (emphasis in original).\n\n\x0cMr. Stephen Dirksen\nPage 2 of 2\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are now routinely\nposted on the FTC website at http://www.ftc.gov/bcp/edu/microsites/funerals/staffopinions.shtm.\nSincerely,\n/s/\nCraig Tregillus\nFuneral Rule Coordinator\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHTNGTON, D.C. 20580\n\nBureau of Competition\nHealth Care Division\n\nNovember 30, 2012\nDionne C. Lomax\nVinson & Elkins LLP\n2200 Pennsylvania Avenue NW\nSuite 500 West\nWashington, DC 20037\nRe:\n\nThe Methodist Hospital System Advisory Opinion\n\nDear Ms. Lomax:\nThis letter responds to your request on behalf of The Methodist Hospital System ("Methodist")\nfor an advisory opinion concerning Methodist\'s proposal to sell certain critical shortage drugs to\nBaytown EMS, a division of the Baytown, Texas, city government, during the pendency of the\nshortage. Baytown EMS serves as the exclusive 9-1-1 emergency transport service for Baytown\nresidents. You requested our view on the permissibility of these proposed sales under the\nRobinson-Patman Act.\' Specifically, you requested that we opine on the applicability of the\nNon-Profit Institutions Act ("NPIA") to the proposal. The NPIA provides an exemption from\nliability under the Robinson-Patman Act for purchases of supplies by certain non-profit\norganizations for their own use. 2\nWe need not reach the NPIA question, however, because Methodist\'s proposal, as presented,\nappears to be a pennissible emergency humanitarian gesture. As explained below, Methodist\nproposes to sell pharmaceuticals to Baytown EMS for the sole purpose of assisting Baytown\nEMS in the care of patients during a time of nationwide shortages of certain critical drugs. Given\nthese facts, it is our view that, pursuant to the Supreme Court\'s discussion ofa hospital\'s role in\nan emergency in Abbott Labs. v. Portland Retail Druggists Ass \'n, Inc., 425 U.S. I (1976) and the\nCommission\'s similar discussion in its St. Peter\'s Hospital of the City ofAlbani advisory\n\n, 15 U.S.C. \xe0\xb8\xa2\xe0\xb8\x87 13.\n2 15 U.S.C. \xe0\xb8\xa2\xe0\xb8\x87 13c (exempting from the Robinson-Patman Act "purchases of supplies for their own use by\nschools, colleges, universities) public libraries, churches, hospitals, and charitable institutions not operated for\nprofit").\n3\n\nSt. Peter\'s Hospital of the City ofAlbany, 92 F.T.C. 1037 (1978) (Commission advisory opinion).\n\n\x0cThe Methodist Hospital System Advisory Opinion\nNovember 30, 2012\nPage 2\nopinion, Methodist may resell the needed pharmaceuticals to Baytown EMS as a humanitarian\ngesture during the shortages. 4\nFactual Background\nAs we understand the facts based on information you provided, Methodist is a non-profit\nhospital system that provides comprehensive care to its patients. It is based in Houston, Texas,\nand purchases its pharmaceuticals through a group purchasing organization at an NPIAdiscounted price. 5 Methodist is comprised of inpatient facilities, outpatient surgery centers,\nimaging centers, and emergency care centers. CUlTently, its facilities include five hospitals. One\nof Methodist\'s hospitals is San Jacinto Methodist Hospital, which is a 392-bed general acute care\ninpatient facility located about 30 miles east of downtown Houston, in Baytown, Texas. 6 San\nJacinto Methodist is the only hospital within Baytown\'s city limits.\' Further, it is the only\nhospital in the Baytown area that provides the full range of acute care inpatient health services. s\nBaytown EMS is the exclusive transport provider for the City of Baytown\'s 9-1-1 service. It is a\ndivision of the city of Baytown and was created under the Emergency Healthcare Act for the sole\npurpose of providing critical medical care and emergency medical transportation services to the\ncitizens of Baytown. By city ordinance, Baytown EMS is the only emergency medical service\ntransport allowed to respond within the city limits. It employs 21 paramedics and has four frontline ambulances. 9 The vast majority of Baytown EMS\'s emergency transports go to San Jacinto\n\n4 This advisory opinion should not be construed as taking the position that the Robinson-Patman Act\nnecessarily applies to these facts, or that Methodist\'s proposed sale to Baytown EMS would violate the RobinsonPatman Act absent the shortage situation or other applicable exemption. We provide this opinion, under these unique\ncircumstances of critical drug shortages~ in an effort to provide reassurances that may be helpful to entities in their\nefforts to cope with the current drug shortages.\n\n5 Letter from Dionne C. Lomax, Vinson & Elkins LLP, to Markus H. Meier, FTC (July 25, 2012)\n[hereinafter "July Letter"]; Letter from Dionne C. Lomax, Vinson & Elkins LLP, to Robert S. Canterman, FTC\n(Sept. 6, 2012) [hereinafter "September Letter"]\'\n\n6\n\nSee http://www.methodisthealth.com (viewed September 17,2012); July Letter.\n\n, September Letter.\n8\n\nJuly Letter.\n\n9\n\nJuly Letter; September Letter.\n\n\x0cThe Methodist Hospital System Advisory Opinion\nNovember 30,2012\nPage 3\nMethodist. 10 Though it can collect fees for its services, Baytown EMS does not generate a\nprofit."\nAs you have explained, during transport of patients to hospitals for care, it may be necessary for\nBaytown EMS to administer certain phannaceuticals prior to arrival at the hospital. Indeed, the\nadministration of certain phannaceuticals at the first point of care can be critical to a patient\'s\nclinical outcome. Recently, however, owing to well-publicized nationwide shortages of certain\ncritical drugs, Baytown EMS has been unable to keep its ambulances stocked with safe inventory\nlevels of certain of these clitical pharmaceuticals. Efforts to secure supply from other vendors\nhave not succeeded, and the problem appears to be prevalent throughout the region.\'2\nTo assist Baytown EMS in dealing with the drug shortages and to ensure that its patients, which\ncomprise tlte vast majority of Baytown EMS\'s transports, receive the necessary clinical care en\nroute to the hospital, Methodist proposes to sell, at cost, critical shortage drugs to Baytown EMS.\nAs you explained to us, Methodist would continue this arrangement only for so long as the drugs\nare in shortage.\'3\nAnalysis\n\nThe Supreme Court\'s opinion in Abbott Labs. v. Portland Retail Druggists Ass \'n, Inc., 425 U.S.\n1 (1976) guides our analysis of permissible uses of NPIA-discounted phannaceuticals. There,\nin addition to clarifying the applicability of the NPIA exemption to the Robinson-Patman Act,\nthe Supreme Court addressed the appropriate role of a hospital in an emergency situation. It\nstated:\nWe recognize, however, that there may be an occasion when the hospital\npham1acy is the only one available in the community to meet a particular\nemergency situation.... So long as the hospital phannacy holds the emergency\nsituation within bounds, and entertains it only as a humanitarian gesture, we shall\nnot condemn the hospital and its suppliers to a Robinson-Patman violation\nbecause of the presence of the occasional walk-in dispensation of that type. \'4\n\n10\n\nSee id.\n\n" September Letter.\n\'2\n\nJuly Letter; September Letter.\n\n13\n\nSee id.\n\n\'4 See Abbott at 18. The Court further noted that the occasional emergency would likely be de minimis in\n\nany event.\n\n\x0cThe Methodist Hospital System Advisory Opinion\nNovember 30,2012\nPage 4\nApplying the Supreme Court\'s reasoning in Abbott, the Commission previously has determined\nthat a hospital could resell pharmaceutieals it purchased pursuant to the NPIA diseount to the\ngeneral public during an emergency caused by a Medicaid strike. In its St. Peter\'s opinion, the\nCommission concluded that "if needed pharmaceuticals are not available or difficult to obtain,\n[the hospital) may resell the needed pharmaceuticals to the general public as a humanitarian\ngesture during the emergency caused by the [Medicaid) strike.,,15\nMethodist\'s proposal appears consistent with both the Supreme Court\'s reasoning in Abbott and\nthe Commission\'s reasoning in St. Peter\'s. As we understand the facts you have presented,\nMethodist runs the only hospital within Baytown\'s city limits. To assist Baytown EMS during a\ntime of well-publicized nationwide shortages of clitical drugs, Methodist seeks to sell certain\nshortage drugs that it obtains at the NPIA-disconnted price to Baytown EMS. These shortage\ndrugs are necessary to the care of Baytown EMS\'s emergency transport patients, most of whom\nare transported to Methodist and ultimately become patients of Methodist. Despite its efforts to\ndo so, Baytown EMS has been nnable to secure adequate supply of these drugs from other\nsources. Methodist only proposes to assist Baytown EMS during the pendency of the shortages.\nThus, applying Abbott and St. Peter\'s, it is our opinion that Methodist may resell the needed\nshortage drugs to Baytown EMS to assist Baytown EMS in its efforts to maintain safe inventory\nlevels of those products for use in the treatment of its emergency transport patients.\nConclusion\n\nAs diseussed above, we conclude that Methodist\'s proposal to resell pharmaceuticals to Baytown\nEMS to assist Baytown EMS in its efforts to cope with shortages of certain critical drugs would\nbe a permissible humanitarian gesture and that Methodist may resell the needed pharmaceuticals\nto Baytown EMS during the shortages.\nThis letter sets out the views of the staff of the Bureau of Competition, as authorized by the\nCommission\'s Rules of Practice. Under Commission Rule \xe0\xb8\xa2\xe0\xb8\x87 1.3(c), 16 C.P.R. \xe0\xb8\xa2\xe0\xb8\x87 1.3(c), the\nCommission is not bound by this staff opinion and reserves the right to rescind it at a later time.\nIn addition, this office retains the right to reconsider the questions involved and, with notice to\nthe requesting party, to rescind or revoke the opinion if implementation of the proposed program\nresults in substantial anticompetitive effects, if the program is used for improper purposes, if\nfacts change significantly, or ifit otherwise would be in the public interest to do so.\nSincerely,\n\nMPI.L~\n\nMarkus H. Meier\nAssistant Director\n\nIS\n\nSt. Peter\'s H05pitai of the City of Albany, 92 F.T.C. 1037 (1978) (Commission advisory opinion).\n\n\x0c'


b'Vinson &Elkins\nDionne C. Lomax dlomax@velaw.com\nTel +1 .202.639.6610 Fax +1 .202 .879.8843\n\nJuly 25, 2012\nMarkus H. Meier\nAssistant Director\nFederal Trade Commission\nBureau of Competition\nHealth Care Services and Products\n601 New Jersey Avenue\nWashington, D.C. 20001\n\nRe:\n\nRequestfor Staff Advisory Opinion Relating to the Non-Profit Institutions Act\n\nDear Mr. Meier,\nOn behalf of The Methodist Hospital System ("Methodist"), I am submitting a request for a\nstaff advisory opinion pursuant to 16 C.F.R. \xc2\xa7l.l regarding the applicability of the NonProfit Institutions Act ("NPIA") to the sale of pharmaceuticals by Methodist to Baytown\nEMS.\nFactual Background\nMethodist is a non-profit hospital system based in Houston, Texas, that purchases its\npharmaceuticals through a distributor at a GPO discount. Methodist is comprised of five\ninpatient facilities as well as numerous outpatient surgery centers, imaging centers and\nemergency care centers. The discounted pharmaceuticals purchased by Methodist are used\nfor its hospitalized patients for inpatient needs, emergency room patients, in-clinic treatment,\nas well as periodic discharge prescriptions.\nBaytown EMS is a division of the City of Baytown, Texas. It employs 21 paramedics and\nprovides critical medical care and emergency medical transportation services to the citizens\nof Baytown. As the exclusive transport providers for 9-1 -1 service for the City of Baytown,\nBaytown EMS responds to approximately 8,200 calls for service each year, resulting in\napproximately 5,300 transports. l Baytown EMS patients are typically transported to\nMethodist\'s Baytown facility, San Jacinto Methodist Hospital, a 392-bed general acute care\ninpatient facility located approximately 30 miles from Houston. It is the only facility in the\nBaytown area that offers a full range of acute care inpatient health services.\n\n1\n\nhttp://www.baytown.orglsafetyhealthlems\n\nVinson & Elkins LLP Attorneys at Law\n\n2200 Pennsylvania Avenue NW. Suite 500 West\n\nAbu Dhabi A ustin Beijing Dallas Dubai Hong Kong Houston l ondon Moscow\n\nWashington, DC 20037-1701\n\nNew York Palo Alto Riyadh San Francisco Shang hai Tokyo Washi ngton\n\nTel +1 .202.639.6500 Fax +1 .202.639.6604 www.velaw.com\n\n\x0cV&E\n\nMarkus H. Meier\n\nJuly 25, 2012 Page 2\n\nAs you may know, drug shortages in the United States have been increasing in frequency and\nseverity in recent years and adversely affecting patient care. As a result of these shortages,\nBaytown EMS has experienced difficulties keeping its ambulances stocked with certain\nprescription drugs that are critical to ensure quality patient care. In an effort to resolve the\nproblem, Baytown EMS seeks to purchase certain drugs from Methodist that are in short\nsupply.\nMethodist\'s central institutional function is to deliver comprehensive acute health care\nservices, including pharmaceuticals, to all of its patients. Its patients include Baytown area\nresidents who rely on Baytown EMS \' s emergency transport services. Methodist is dedicated\nto quality patient care, and thus, would prefer that certain drugs be administered to patients\nwhile in transport to its Baytown facility rather than once the patient has arrived at the\nhospital. The administration of critical drugs at the first point of care rather than after\ntransport can be critical to a patient\'s clinical outcome. Methodist, therefore, seeks to sell\npharmaceuticals to Baytown EMS to ensure that the patients it serves receive critical care in\na timely manner. Methodist proposes to sell pharmaceuticals to Baytown EMS at a price that\ndoes not exceed its direct costs in purchasing and transporting the drugs. In most cases the\ndrugs are likely to be picked up by paramedics employed by Baytown EMS when making\nnormal transport runs to Methodist\'s Baytown facility.\nFor the reasons explained below, we believe that the NPIA should apply to pharmaceuticals\ntransferred by Methodist to Baytown EMS, but are writing to request an opinion from the\nFTC staff regarding the extension of the NPIA to this government agency.\nAnalysis\n\nThe Robinson-Patman Act ("the Act") prohibits price discrimination between different\npurchasers to whom contemporaneous sales of like goods are made, where the effect of such\ndiscrimination may be to adversely affect competition. The Non-Profit Institutions Act\n("NPIA") exempts from the Robinson-Patman Act "purchases of . .. supplies for their own\nuse by schools, colleges, universities, public libraries, churches, hospitals, and charitable\ninstitutions not operated for profit.,,2 To fall within the NPIA exemption to the RobinsonPatman Act, an organization must be an "eligible entity" and must use the exemption to\npurchase supplies for its "own use.,,3\n\n\' IS U. S.c. \xc2\xa7 13c(emphasis added).\n3 Abbott Laboratories v. Portland Retail Druggists Ass \'n" 425 U.S. 1 (1976).\n\n\x0cV&E\n\nMarkus H. Meie r\n\nJuly 25, 20 12 Page 3\n\nAccording to the Commission\'s holding in St. Peter\'s Hospital, the Act covers the transfer of\nsupplies, at cost, from a non-profit hospital to another charitable organization that is entitled\nto NPIA protection for its own purchases, so long as those supplies are for the receiving\ninstitution\'s "own use" within the meaning ofthe NPIA. 4\nI.\n\nEligibility of Baytown EMS for Exemption from the Robinson-Patman Act\nUnder the NPIA\n\nThe basic purpose of the Robinson-Patman Act is to eliminate unfair competition among\nthose engaged in private enterprise where such practices might result in restraint of trade or\ninjury to competition. The law seeks to cover within its scope every person engaged in\nbusiness whose activities might restrain or monopolize commerce. Courts have held the\nfederal government immune from liability under the Act, and in the NPIA, Congress\nspecifically excluded non-profit organizations and certain other entities that are not otherwise\nengaged in competition in the private market.\nAs a division of the City of Baytown, Baytown EMS is a government instrumentality entitled\nto coverage under the NPIA. The rationale underlying the exclusion of public libraries,\nhospitals, and other non-profit institutions from the proscriptions of the Robinson-Patman\nAct are easily extended to Baytown EMS. Baytown EMS is engaged in a traditional\ngovernment function of ensuring the health, safety and welfare of area residents. It does not\ncompete with private parties within the meaning of the Act (e.g., it is the exclusive EMS\nservice in Baytown), and its activities are not affected by a profit-making motivation. To the\ncontrary, the services provided by Baytown EMS are undertaken on behalf of the City of\nBaytown to ensure the health Of its citizens. In that sense the central institutional function of\nBaytown EMS is to provide a traditional government function, not to gain competitive\nadvantage in the pri vate market. Thus, Baytown EMS\'s eligibility under the NPIA appears\nentirely consistent with the intent of the NPIA to make the Act\'s exemption available to\nhospitals, public libraries and other charitable organizations.\n2.\n\nPharmaceuticals for Bavtown EMS \'s "Own Use"\n\nThe sole purpose of Baytown EMS is to transport patients in need of emergency medical\nservices to an area inpatient facility for acute care medical treatment. To alleviate the\ninstances in which Baytown EMS lacks the appropriate drugs (as a result ofthe national drug\nshortage) to treat patients at the point of care, it seeks to purchase drugs from Methodist. The\npharmaceuticals will be used by Baytown solely for the treatment of patients under its care\n\n4\n\nSt. Peter\xc2\xb7s Hospital of the City of Albany. 92 F.T.C. 1037 (1978).\n\n\x0cV&E\n\nMar1<.us H. Meier\n\nJuly 25, 2012 Page 4\n\nprior to or while en route to an acute care medical facility. The immediate administration of\nsuch drugs will enhance Baytown\'s ability to provide quality care to patients prior to their\narrival at an acute care medical facility and enhance its ability to have good patient outcomes.\nSince the sole purpose of Baytown\' s use of the pharmaceuticals will enable it to carry out its\nactivities as an emergency medical service provider to provide quality health care to area\nresidents, we believe that the provision of discounted pharmaceuticals to Baytown EMS as\npart of its provision of emergency medical services to patients would be for its "own use,"\nand thus would be covered by the NPIA exemption.\nConclusion\n\nAs discussed above, we believe that the sale of pharmaceuticals by Methodist to Baytown\nEMS should receive coverage under the NPIA. Given its institutional purpose and function,\nBaytown EMS should be characterized as an NPIA-eligible institution. The pharmaceuticals\nwill be sold to Baytown EMS at cost and will be used solely by Baytown EMS to care for\npatients prior to or while transporting patients to Methodist\'s Baytown facility or other acute\ncare facilities. In many ways, the services provided by Baytown EMS are essentially an\nextension of Methodist\'s basic services to area residents and contributes directly to\nMethodist\'s ability to fulfill its central institutional function to deliver high-quality\ncomprehensive acute health care services to its patients.\nShould you have any questions or comments, please do not hesitate to contact me at 202-6396610.\nSincerely,\n\n~ 4~\n\nDionne C. Lomax\n?"\nCounsel for The Methodist Hospital System\n\nUS 1498924v.1\n\n\x0c'


b'United States of America\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nDivision of Enforcement\nof Consumer Protection\n\nBur~au\n\nAugust 7, 2012\nVIA FEDERAL EXPRESS\nC.J. Erickson\nCowan, Liebowitz & Latman, P.C.\n1133 Avenue of the Americas\nNew York, NY 10036\nRe:\n\nAdvisory Opinion Request ofMJ] Brilliant Jewelers, Inc.\n\nDear Mr. Erickson:\nThis letter responds to MJJ Brilliant Jewelers, Inc. ("MIJ" or "Company")\' s request for a\nstaff opinion concerning MIJ\'s proposed marking and advertising ofjewelry constructed of an\nalloy comprising gold, silver, palladium, and non-precious metals.!\n.\nYou state that MIJ has developed a proprietary alloy fOmlulation composed of.\n%\ngold (periodic element Au), 21 % silvcr (periodic eloment Ag), .\' % palladium (periodic element\nPa), and. % base metals, which MJJ will use in jewelry merchandise ("Jewelry Alloy,,).2\nAcknowledging the provisions in the Jewelry Guides3 that address misrepresentations regarding\nthe content of gold or gold alloy in an industry prodUct, you ask whether your client\'s anticipated\nuse of the term "gold" in its advertising and marketing materials to identifY the specific\ncomposition of the Jewelry Alloy would be "propel\'\'\' under Section 5 of the Federal Trade\nConunissionAct ("FTC Act;\'), 15 U.S.C. \xc2\xa745(a). Specifically, you request guidance on the\nacceptability of each of the following: (1) using the phrase: "consisting of a proprietary alloy of\ngold, silver, and platinum;" (2) proViding a link to a third-party assay report that identifies the\nprecious metal content of the finished article; (3) identifying the specific percentage content of\n.all precious metals in the finished article; (4) stamping merchandise with the Company\'s\n",\n(" trademark. You did not provide any specific advertising or marketing materials for\n\nI\nYour letter requests "that the Commission of [sic] FTC Staff issue an advisory opinion,"\nwhich could be interpreted as a request for a Commission advisory opinion. You also indicate,\n.however, that yourrequest is jn accordance with Section 1.3 (c) of the Commission Rules of\nPractice, by which FTC staff may render an opinion without prejudice to\'the right of the\nCommission to rescind the advice at a later date and, as appropriate, to commence an\nenforcement action. 16 C.FR. \xc2\xa71.3(c).\n2\n\nYour letter also states that the MIJ alloy.is "identified as\n\n\xe2\x80\xa2\nThe Federal Trade Commission\'s Guides for the Jewelry, Precious Metals, and Pewter\nIndustries ("Jewelry Guides" or "Guides"), 16 C.F.R. Part 23.\n\n\x0cMr. C.J. Erickson\nAugust 7, 2012\nPage 2\nour consideration, nor did you make clear whether MJJ intends to use any of the proposed\nmarketing claims in combination.\nAs you are aware, the Jewelry Guides Ill\'e administrative interpretations of Section 5 of\nthe FTC Act, which prohibits unfair or deceptive acts or practices. The Guides state, in pertinent\npart, that "[iJt is unfair or deceptive to misrepresent the presence of gold or gold alloy in an\nindustry product, or the quantity or karat fineness of gold or gold alloy contained in the\nproduct. ..." 16C.F.R. \xc2\xa723.4(a). The Guides also provide that it may be misleading to use the\nword "gold" or any abbreviation, or a quality mark implying gold content (e.g., 9 karat), "to\ndescribe all or part of an industry product that is composed throughout of an alloy of gold of less\nthan 10 karat fineness." 16 C.F.R. \xc2\xa723.4(b)(9). In addition, the Jewelry Guides provide that "[i)t\nis unfair or deceptive to mark, describe, or otherwise represent all or part of an industry product\nas silver, ... un.less it is at least 925/1000ths pure silver." 16 C.F.R. \xc2\xa723.6(b). Additionally, the\nJewelry Guides provide that "[i)t is unfair or deceptive to use the words \'platinum, ...\n\'palladium,\' ... or any abbreviation to mark or describe all or part of an industry product if such\nmarking or description misrepresents the product\'s true composition," and further provide that it\nmay be misleading to use the word "platinum" or any abbreviation \'\'to mark or describe any\nproduct that is not composed throughout of at least 500 parts per thousand pure Platinum."\n16 C.F.R. \xc2\xa7\xc2\xa723.7(a), 23.7(b)(3).\nYou concede that MJJ "cannot stamp or market its gold alloy jewelry with the traditional\nkarat nmrking[, ...J as the alloy is admittedly less than 10 karat fineness." Indeed, given your\nrepresentation that the Jewelry Alloy is comprised of \'% gold by weight, the gold content of\nthe product more closely approximates 6 karats, which falls short of the 10 karat minimum\nfineness set forth in the Guides. Likewise, your description of the Jewelry Alloy indicates that it\ncontains, , % silver, which is below the 92.5% level stated in the Guides. The Jewelry Alloy\nalso includes % palladium, but does not contain any pure platinum.\nAs part of the 1996 review, the Commission considered whether to amend the Guides to\npermit gold alloys containing less than 10 karats of gold (i.e., less than 41.6% gold) to be\nmarketed as containing gold. 61 Fed. Register 27185-86 (May 30, 1996). In addressing this\nissue, the Commission noted that it had previously sought comments in 1977 regarding a\nproposal to lower the 10 karat minimum threshold to permit sellers to market gold of less than 10\nkarats If the quality was accurately disclosed. and also to lower the 92.5% level for silver. Based\non the record and comments it received in response to the 1977 proposal, the Commission\nretained the 10 karat minimum fineness which appears in Section 23.4 of the Jewelry Guides,\nand the Commission also retained the 92.5% level for silver which appears in Section 23.6. ld\nat 27185 0.99.\nThe Commission included the minimum of 500 parts per thousand pure platinum for\nplatinum markings pursuant to its 1997 revisions to the Guides. 62 Fed. Register 16673 (Apr. 8,\n1997). In developing the 1997 guidance, the Commission indicated that referring to an article\ncontaining less than 500 parts per thousand pure platinum as "platinum," without qualification,\nmay be deceptive. 61 Fed. Register 27225 (May 30, 1996). When revising the platinum section\nagaln in 2010, the Commission noted that it had previously found that deception would likely\n\n\x0cMr. C.J. Erickson\nAugust 7, 2012\nPage 3\nresult if marketers were to describe platinurnlbase metal alloys as "platinum" without disclosing\ninformation regarding their composition and attributes. 75 Fed. Register 8 I 449 (Dec. 28,2010).\nIn light of the foregoing, it is our opinion that MJJ\'s proposed use of the phrase\n"consisting of a proprietary alloy of gold, silver, and platinum" would contravene the plain\nlanguage of the current Jewelry Guides. As discussed above, the Guides advise against using the\nword "gold" or any quality mark implying gold content on any product oflesa thim 10 karat\nfineness. 16 C.P.R. \xc2\xa723.4(b)(9). The Guides also advise against using the word "silver" to\ndescribe all or part of an industry product unless it meets the 92.5% threshold, 16 C.P.R.\n\xc2\xa723.6(b), and advise against using the word "platinum" to describe all or part of any product that\nis not composed throughout of at least 500 parts per thousand pure platinum. 16 C.F.R.\n\xc2\xa723. 7(b)(3). Furthermore, using the phrase "consisting of a proprietary alloy of gold, silver, and\nplatinum" may misleadingly imply that the Jewelry Alloy is comprised solely of those three\nprecious metals (gold, silver, platinum). Therefore, this claim would likely run afoul of\nSection 5 of the FTC Act, which prohibits deceptive acts or practices.\nThe Jewelry Guides do not explicitly address the use of marketing claims that identify the\ntotal precious metal content of a jewelry product. Thus, in our opinion, the Guides would not\nprohibit MIJ from stamping the Jewelry Alloy merchandise with its .\'"\n" trademark.\nYouxletter does not indicate whether MJJ\'s proposed "identification of the specific\npercentage content of all precious metals" would specifically describe the Jewelry Alloy as\ncontaining gold, silver, or platinum, not did you attach a copy of the "representative" assay\nreport that MJJ anticipates using to market the product.4 On that basis, we cannot provide an\nopinion regarding those proposed practices.\nMarketing of the Jewelry Alloy would nevertheless be guided by the provisions cited\nabove that prohibit misrepresentations regarding gold, silver, and platinum content, as well as the\ngeneral prohibition against deception contained in Section 23.1 of the Jewelry Guides. MJJ\'s\nmarketing would also be SU"Qject to Section 5 of the FTC Act. Your letter does not make clear\nwhether the Company\'s marketing and advertising materials would adequately disclose the .\nJewelry Alloy\'s full composition and attributes, such as by giving consunters complete\ninformation regarding all components of the product (including disclosure of the fact that \'10 of\nthe alloy consists of non-precious base metals). Moreover, to the extent MJJ anticipates\nproviding qualifications or disclosures regarding the content of its Jewelry Alloy, any such\ndisclosures or qualifications must be sufficiently clear and prominent, and proximate to the\nclaim, to prevent deception. In evaluating whether a representation is misleading, the\nCommission examines not only the claim itself, but the net impression of the entire\nadvertisement. Finally, to the extent MJJ provides disclosures through a hyperlink reference to a\nthird-party assay report, the information in such report must be truthful and non-misleading.\n\n4\n\nWe understand that an assay usually reflects a test made to determine the quantity of\nprecious metal in a product compared to the weight of the whol" product.\n\n\x0cMr. C.J. Erickson\nAugust 7, 2012\nPage 4\nIn our opinion, a literal reading of the provisions in the Guides that discuss misuse of the\nwords "gold," "silver," and "platinum" does not address how to describe the content of an alloy\nthat contains those precious metals in amounts below the minimum thresholds. Pursuant to the\nCommission\'s systematic review process for all of its mles and industry guides, the Commission\nrecently published a Federal Register notice soliciting comment on all aspects of the Jewelry\nGuides, including disclosures that relate to the content of precious metal alloys. 77 Fed. Register\n39201 (July 2,2012). We encourage MJJ to submit comments and supporting consumer\nperception evidence on this and any other issue relating to the Guides before the deadline of\nAugust 27, 2012.\n\'\nThis letter sets out the views of the staff of the Bureau of Consumer Protection, as\nauthorized by the Commission\'S Rules of Practice. Those views are based on information you\nprovided to Commission staff. Staff has not engaged in independent factual investigation\nregarding the proposed marketing and product stamping. In accordance with Section 1.3(c) of\nthe Commission Rules of Practice, 16 C.F.R. \xc2\xa7 1.3(c), this is a staff opinion only and has not\nbeen reviewed or approved by the Commission or by any individual Commissioner, and is given\nwithout prejudice to the right of the Commission to rescind the advice at a later date and, as\nappropriate, to commence an enforcement action. In accordance with Section 1.4 of the\nCommission\'s Rules of Practice, 16 C.F.R. \xc2\xa7 1.4, your request for advice and this response will\nbe placed on the public record.\nThank you for contacting the Federal Trade Commission. If you have any questions,\nplease do not hesitate to contact me at 202\xc2\xb7326\xc2\xb72272.\n\nSincerely.\n\n,;. \':. f .\n.\n\n,\n\n,\n\n, .\n\n\x0c'


b'UN ITED STATES OF AM ERICA\n\nFEDERAL TRADE COMMISSION\nW ASH IN GTO N , D .C. 20580\n\nM ichael Bloom\nAssistant Director for Policy & Coordination\nD irect D ial\n(202) 326-2475\n\nJuly 2, 2012\n\nEugene A. Guilford, Jr.\nPresident\nIndependent Connecticut Petroleum Ass\xe2\x80\x99n\n10 Alcap Ridge\nCromwell, Connecticut 06416\nRe: FTC Staff Advisory Opinion\nDear Mr. Guilford:\nThis letter responds to your request, on behalf of the Independent Connecticut Petroleum\nAssociation (\xe2\x80\x9cICPA\xe2\x80\x9d), for an FTC staff advisory opinion. You seek the staff\xe2\x80\x99s assessment of the\nICPA\xe2\x80\x99s contemplated system for collecting a voluntary per-gallon assessment from heating oil\nretailers to fund a variety of educational and training programs.\nThree issues are of potential concern here. Do the structure and purposes of the program suggest\nthat it \xe2\x80\x9cwould always or almost always tend to restrict competition and decrease output,\xe2\x80\x9d1 such\nthat it might be deemed unlawful per se, that is, without further analysis?2 Might increased retail\ndealer costs result in anticompetitive price increases? And is it possible that firms may use the\nreporting features of this system to gain competitively sensitive information about the pricing\nand behavior of others?\nWe understand, however, that the ICPA\xe2\x80\x99s plan incorporates features intended to minimize these\nconcerns: (1) wholesaler and retailer participation in the program will be voluntary, with\nparticipants remaining free to withdraw from the program at any time; (2) given the noncoercive structure of the program, potential effects on retailer prices likely will be tempered by\ncompetition and offset by efficiencies; and (3) information about purchase volumes will be\naggregated into combined numbers at each step of the reporting process, with the ICPA reporting\nto its members only the total combined numbers for all participating wholesalers. This level of\naggregation likely will prevent firms from obtaining competitively useful information about\nindividual rivals. In view of these facts, the FTC staff has no present intention of recommending\nto the Commission that it challenge the implementation of this program.\n\n1\n\nBroadcast Music, Inc. v. CBS, 441 U.S. 1, 19-20 (1979).\n\n2\n\nSee id.\n\n\x0cIn forming this intention, we have relied entirely on a review of the written materials and other\nrepresentations that you have given to the FTC staff. Should there be information that we are\nunaware of that qualifies, modifies, or contradicts any of these materials or representations or\nthat calls in to question the conclusions we have drawn from them, or should the proposed\nactivities materially change in the future, then we may change our recommendation accordingly.\n\nThe background facts\nThe Independent Connecticut Petroleum Association is a voluntary association organized under\nSection 501(c)(3) of the Internal Revenue Code. It is made up primarily of retail heating oil\ndealers operating in the state of Connecticut, plus their associated businesses. There are\napproximately six hundred such heating oil retailers registered with the state\xe2\x80\x99s Department of\nConsumer Protection. They are supplied by thirteen wholesalers.\nSome consumer industries benefit from congressionally-sanctioned programs under which the\nindustry assesses a fee on each unit produced or sold, with the proceeds going to an industry\nassociation for use in improving, or increasing consumer familiarity with, its products. Well\nknown programs financed in this way include \xe2\x80\x9cCotton, the Fabric of Your Life,\xe2\x80\x9d and \xe2\x80\x9cPork, the\nOther White Meat.\xe2\x80\x9d At present there are about 24 such programs authorized by statute in the\nUnited States.\nFor several years the home heating oil industry operated such a congressionally-sanctioned\nprogram, which was implemented through the National Oilheat Research Alliance.3 The statute\nauthorized collection of a fee of one-fifth of a cent per gallon, assessed at the wholesale level.\nAfter the fee was collected by the wholesalers, the revenue was sent to the Alliance\xe2\x80\x99s national\noffice, and then 75 percent of the revenue collected from each state was sent back to the\nauthorized state association for consumer education, technology research, and training subsidies\nfor people working in the industry. In the case of Connecticut, that association was the ICPA.\nThe statutory authorization for collecting the mandatory fees has since lapsed. The original\nstatute was passed and signed by President Clinton in 2000, and was reauthorized in 2005. It\nwas then scheduled to terminate in 2010, unless further extended. Congress did not make such\nan extension. There are two bills presently pending in Congress to revive the program, which\nthe ICPA supports.\nIn the meantime, the ICPA is considering a voluntary program that will replicate many features\nof the lapsed statute. This will permit financing of some of the former program activities while\nCongress considers reauthorization. The planned activities will include consumer education and\ntechnical training for retailers. Presumably the ICPA program will provide some measure of\nbenefit to consumers and the industry even if Congress does not renew the statutory program.\n\nThe proposed ICPA program\nThe ICPA proposes to implement its program through a series of contracts. Willing retailers\nwould authorize participating wholesalers to add the fees to their bills, and the wholesalers\nwould commit to sending the collected sums to the ICPA. The amount of the fee would be\ntwelve points (twelve hundredths of a cent) per gallon, somewhat less than the fee had been\n\n3\n\nSee Public Law 106-469, sections 701 et seq.\n2\n\n\x0cunder the statutory program. The contractual program would automatically terminate when and\nif the original Oilheat Alliance legislation is renewed.\nIt is this program that has prompted your request for an advisory opinion.\n\nThe issues presented\nThe program presents three issues for consideration: (1) Do the structure and purposes of the\nprogram, which is the product of agreement among industry participants,4 suggest that it should\nbe judged on a per se basis or according to the rule of reason? (2) Does the program threaten to\ncause consumer prices to rise in a way attributable to a lessening of competition? (3) Will the\nprocesses for collecting, reporting, and conveying the fees result in some firms learning sensitive\ninformation about other market participants?\n\nStructure and purposes of the agreement\nThe threshold question involves the structure and purposes of the program. This is important\nbecause it will affect whether the competitive import of the plan here should be reviewed under a\nper se standard or according to the rule of reason.\nNaked agreements among competitors on price are condemned on a per se basis, without\nelaborate inquiry. Some agreements on association assessments have been characterized as per\nse violations in this way. For example, an agreement among competitors to coerce universal\nparticipation in an industrywide program that raised firms\xe2\x80\x99 costs was condemned as unlawful per\nse in Premier Electrical Construction Co. v. National Electrical Contractors Ass\xe2\x80\x99n.5 Such a\nconclusion might be reached if the coercion were applied directly to holdout rivals, or applied\nindirectly through the assistance of another entity that was in a position to influence the rivals.6\nHere, however, it appears that any agreement among industry participants7 is voluntary. Your\nletter explains that non-participating companies will not suffer adverse consequences as a result\nof any decisions to not participate or to withdraw from participation. Participation is to occur\n\xe2\x80\x9con an entirely voluntary basis without any coercion whatsoever . . . . Those who choose not to\n\n4\n\nSection 1 of the Sherman Act condemns only contracts, combinations, and\nconspiracies\xe2\x80\x93i.e., agreements\xe2\x80\x93that unreasonably restrain trade. See 15 U.S.C. 1. It does not\ncondemn independent single-firm conduct, irrespective of its purpose or effect. See Monsanto\nCo. v. Spray-Rite Serv. Corp., 465 U.S. 752, 761 (1984).\n5\n\n814 F.2d 358 (7th Cir. 1987).\n\n6\n\nSee id. at 368.\n\n7\n\nWithout first performing a formal market definition exercise it is not possible to know\nwhether or to what extent the ICPA members are actual competitors in one or more of the\nConnecticut markets. For purposes of this analysis we assume that the members are competitors,\nat least respecting some relevant markets for heating oil.\n3\n\n\x0cparticipate would face no significant economic consequences as a result of that decision.\xe2\x80\x9d8 An\nagreement to form a voluntary group for educational purposes, without coercing firms outside of\nthe agreement, will be judged under the rule of reason.9\n\nPrice effects under the rule of reason\nOnce it is determined that rule of reason analysis is applicable to an agreement, a variety of\neffects and benefits can be considered. Industry-wide trade associations are not intrinsically\nsuspect under the antitrust laws. To be sure, they involve agreements among firms that may be\ncompetitors in other respects, but the collaborative activities of an association do not necessarily\nreduce competition \xe2\x80\x93 they may instead increase output and enhance consumer welfare.\nAcceptable collaborative activities of this sort can include consumer awareness campaigns,10\ndevelopment of industry technical standards,11 and professional training programs.12 These are\nthe kinds of activities that the new ICPA program is reportedly intended to pursue.\nA rule of reason analysis need not always go so far as to require a full scale assessment of all\npotentially relevant considerations; rather, \xe2\x80\x9cwhat is required . . . is an enquiry meet for the case,\nlooking to the circumstances, details, and logic of a restraint.\xe2\x80\x9d13 As the Commission\xe2\x80\x99s Polygram\nopinion establishes, under some circumstances it is appropriate to perform a \xe2\x80\x9ctruncated rule of\nreason\xe2\x80\x9d or \xe2\x80\x9cquick look\xe2\x80\x9d in which the Commission considers the capacity of the conduct at issue\nto facilitate competitive harm against its tendency or ability to further plausible and cognizable\nprocompetitive ends.14\nOne element in a rule of reason assessment is an examination of likely price effects. As a\nthreshold matter, it appears that the assessments that are made will increase the expenses of\nparticipating retail dealers, however modestly. It is therefore possible that some of those\n\n8\n\nLetter from Eugene A. Guilford, Jr., President, ICPA to Donald Clark, Secretary of the\nFederal Trade Commission, at p.3 (Feb. 17, 2012).\n9\n\nSee nn.10-12, infra. See also Premier Electrical Construction, supra, at 371 n.3.\n\n10\n\nSee Johanns v. Livestock Marketing Ass\xe2\x80\x99n, 544 U.S. 550, 554 (2005); Michigan Pork\nProducers Ass\xe2\x80\x99n v. Veneman, 348 F.3d 157, 160 (6th Cir. 2003), vacated and remanded on other\ngrounds, 544 U.S. 1058 (2005). In these cases there were issues as to whether the fee\nassessment programs involved improperly compelled speech, but the collective conduct of the\nprograms was not challenged on antitrust grounds.\n11\n\nSee American Society of Mechanical Engineers v. Hydrolevel Corp., 456 U.S. 556,\n559, 576 (1982).\n12\n\nSee California Dental Ass\xe2\x80\x99n v. FTC, 526 U.S. 756, 765 (1999).\n\n13\n\nId. at 781.\n\n14\n\nSee Polygram Holdings, 136 F.T.C. 310 (2003) (applying principles from the Supreme\nCourt\xe2\x80\x99s decision in California Dental Ass\xe2\x80\x99n, supra). If a quick look indicates that there is a\nplausible and cognizable efficiency underlying a restraint, a more searching rule of reason\nanalysis may be warranted.\n4\n\n\x0cincreased costs would be passed on to consumers.15 For two reasons, however, it appears that\nany such possibility here would not call the ICPA proposal into question.\nFirst, it is not clear that prices will increase as a result of the proposed program. If retailers find\nthat the incremental expenses imposed by the fees are offset by the increased efficiency that\nparticipation in the program brings, then the retailers\xe2\x80\x99 true net costs will not have been increased,\nand we would not expect the program to have an adverse effect on consumer prices. Moreover,\neven if stated transaction prices do go up by as much as the entire fee assessment amount, twelve\nhundredths of one cent per gallon, it is possible that any such price increases will reflect\nincreased value to consumers, resulting directly or indirectly from the fee-funded programs of\ntraining and information.\nSecond, it does not appear that any price increase, in either of these respects, would have been\nthe product of a lessening of competition. The voluntary context of the program is central in\nreaching this conclusion. If any retailer believes that the assessed fees are causing a measurable\nand unwarranted rise in consumer prices \xe2\x80\x93 in either stated prices or quality-adjusted ones \xe2\x80\x93 it\ncan, and seemingly would have an incentive to, withdraw from the program, secure a modest\ncost advantage over its rivals who continue to participate, and reduce its prices to that extent so\nas to compete more effectively for consumers\xe2\x80\x99 business. The continuing possibility of such a\nshift by competitors will limit the price risks that the ICPA program poses to consumers, such\nthat any price effects likely would not be attributable to a reduction in competition.\n\nInformation exchanges\nA final question presented by the proposed program involves the possibility of anticompetitive\ninformation exchanges. The program might raise concerns if it were intended to facilitate\ncollusion, or if there were some feature in it that would give businesses competitively sensitive\ndata about the prices paid or charged by their rivals.\nUnder the antitrust laws, the legality of information exchanges among competitors is also\nanalyzed under the rule of reason. Here the rule of reason balances the potential for competitive\nharm against efficiencies or other procompetitive effects, if any, that the information exchange\ngenerates.16 Among other factors, a rule of reason analysis may inquire into market structure and\nthe nature of the exchanged information to assess whether the exchange is likely to reduce the\nvigor of competition.17\nApplying this methodology, it does not appear that the information sharing contemplated here is\nlikely to result in competitive harm.\n\n15\n\nThese costs would not exceed 85 cents per year for a household using the statewide\naverage of 708 gallons of heating oil.\n16\n\nSee United States v. United States Gypsum Co., 438 U.S. 422, 441 n.16 (1978)\n(information exchanges among competitors should be judged by the rule of reason, at least when\nno evidence of actual agreement to limit competition, because they do not always produce\nanticompetitive effects, but can also have procompetitive consequences by increasing\nefficiency).\n17\n\nId. See United States v. Container Corp., 393 U.S. 333 (1969) (condemning price\nexchange agreement, without detailed proof of market effects, largely because of the nature of\nthe information exchanged, structure of the market, and absence of a benign justification).\n5\n\n\x0cThe flow of data will largely follow the procedures that had been established under the nowexpired Research Alliance program. Wholesalers will collect the per-gallon contribution on an\nongoing basis as they bill their retail dealer customers. The wholesalers will then aggregate\nthese collections and send a single payment to the ICPA each quarter. Because the per-gallon\nrate is known, the ICPA could deduce from the size of the payment how many total gallons a\nwholesaler had sold to participating retailers in the previous quarter. But the actual transaction\nprices could not be deduced from the payments, nor could an observer identify the division of\nsales among particular retailer customers.\nData will be further aggregated at the association level. The ICPA has committed itself to a\npolicy of keeping the contributions from individual wholesalers confidential. It will\ncommunicate to its members only the total combined sum received from all wholesalers during\nthe previous quarter. From this it would not appear possible to deduce even overall retailer\nparticipation rates in any particular market. The ICPA reports will be issued in the ordinary\ncourse of business, as part of an accounting of the revenues received and the research and\npromotional activities that are financed.\nInformation aggregated in these ways is unlikely to lead to anticompetitive results. In reaching\nthis conclusion we have been guided by the Commission\xe2\x80\x99s statements on information exchanges\nin the context of the health care industry. One of these addresses \xe2\x80\x9cProvider Participation in\nExchanges of Price and Cost Information.\xe2\x80\x9d18 Those guidelines were originally drafted for a\ndifferent industry, but their analytical principles have wider relevance. Moreover, the guidelines\nwere drafted to assess a more sensitive kind of information exchange than is involved here,\nbecause they address exchanges of data on prices, wages, costs, and salaries, and not just\ninformation on quantities of product sold.19\nThe Price Exchange guidelines provide a safety zone for aggregated data that is: (1) managed by\na third party such as a trade association; (2) made up of information from at least five\nparticipants; (3) not reliant on any one firm for more than 25 percent of the weight of a particular\nstatistic; and (4) using data more than three months old.\nThe proposed ICPA program appears to be reasonable in light of these tests. The data here\nwould be collected by a trade association, and not circulated. Because there are about six\nhundred heating oil retailers in the state, and thirteen wholesalers, it is likely that there will be\ndata from at least five firms behind each statistic.20 For similar reasons, it is unlikely that any\none firm will account for more than 25 percent of the weight of any one statistic. On the fourth\npoint \xe2\x80\x93 the age of the data \xe2\x80\x93 the proposed plan does not meet the guidelines\xe2\x80\x99 safe-harbor test of\nusing information more than three months old. However, the guidelines recognize that conduct\n\n18\n\nSee \xe2\x80\x9cStatements of Health Care Antitrust Policy,\xe2\x80\x9d Statement 6, available at\nhttp://www.ftc.gov/bc/healthcare/industryguide/policy/statement6.htm .\n19\n\nWe note, however, that in other contexts the exchange of information as to quantities\nsold could be anticompetitive. For example, the exchange of such information among members\nof an oligopoly could enable the oligopolists to better observe changes in market share, which in\nturn could facilitate or be part of an agreement to avoid the type of aggressive pricing that can\nundermine a pricing consensus.\n20\n\nYou point out that the participation rate in the program cannot be known with certainty\nuntil the program is actually offered to the industry. You believe that a high participation rate is\nlikely. If the facts develop in ways that we have not anticipated, however, and if competitive\nproblems appear as a result, then the agency retains the right to withdraw this opinion, as\ndescribed in the concluding section of the letter.\n6\n\n\x0cfalling outside the safety zone nevertheless may be unlikely to harm competition, and should be\nassessed on a case by case basis. The quantity-sold data to be exchanged under the ICPA\nprogram is, in the context of this industry, unlikely to be competitively sensitive. Accordingly,\nits exchange among competitors is unlikely to facilitate anticompetitive outcomes.\n\nConclusion\nOn the basis of these features, FTC staff concludes that the proposed ICPA program would be\nunlikely to harm competition. Staff believes that the particular data being shared here is not\nespecially sensitive in light of the workings of this industry, and, in any event, that it will be\nsufficiently aggregated to substantially eliminate any risk that it will facilitate anticompetitive\neffects at either the wholesale or the retail level. The program appears, moreover, to be\nvoluntary rather than coercive, and to have the goal of financing potentially output-enhancing\nand safety-enhancing features.\nFor these reasons, the Bureau of Competition staff has no present intention to recommend that\nthe Commission undertake an enforcement action against the program upon its implementation.\nThis opinion of the FTC staff is predicated on the accuracy of the information you have provided\nto us. In accordance with normal practice, the Bureau of Competition reserves the right to\nreconsider the questions involved and, with notice to the requesting party, to rescind the opinion\nif actual conduct respecting the ICPA program proves to be anticompetitive in any purpose or\neffect, or if facts change significantly in the future such that it would be in the public interest to\nbring an enforcement action.\nThe views of FTC staff contained herein are provided as authorized by Rule 1.1(b) of the\nCommission\xe2\x80\x99s Rules of Practice, 16 C.F.R. 1.1(b). Under Commission Rule 1.3( c), 16 C.F.R.\n1.3( c), the Commission is not bound by this staff opinion.\nSincerely,\n\nMichael Bloom\nAssistant Director for Policy & Coordination\nBureau of Competition\nFederal Trade Commission\n600 Pennsylvania Avenue, N.W.\nWashington, D.C. 20580\n\n7\n\n\x0c'