41238 Federal Register / Vol. 66, No. 152 / Tuesday, August 7, 2001 / Notices
evidence before they market a product Analysis to Aid Public Comment Warner Inc., and has its principal place for children using the name ‘‘A.D.D.’’ or describes both the allegations in the of business in New York, New York. any other name that represents that the complaint that accompanies the consent The proposed Consent Order has been product can treat or mitigate ADHD. agreement and the terms of the consent placed on the public record for thirty Finally, Part III of the proposed order order—embodied in the consent (30) days for reception of comments by prohibits Respondents from making any agreement—that would settle these interested persons. Comments received representation about the ability of any allegations. during this period will become part of food, drug or dietary supplement DATES: Comments must be received on the public record. After thirty (30) days, marketed for children to treat or cure or before August 30, 2001. the Commission will again review the agreement and the comments received, any disease or mental disorder, unless ADDRESSES: Comments should be and decide whether it should withdraw they possess competent and reliable directed to FTC/Office of the Secretary, from the agreement or make final the scientific evidence. Room 159, 600 Pennsylvania Ave., NW., agreement’s proposed Order. Part IV of the proposed order states Washington, DC 20580. that Respondents will be permitted to The Commission has not held an FOR FURTHER INFORMATION CONTACT: make claims that the FDA has approved evidentiary hearing concerning the Joseph Simons or Geoffrey Green, FTC/ pursuant to the Nutrition Labeling and complaint. By accepting this agreement, H–374, 600 Pennsylvania Ave., NW., Education Act of 1990, or pursuant to the Commission is affirming only that it Washington, DC 20580. (202) 326–3667 has reason to believe that the allegations sections 303–304 of the Food and Drug or 326–2641. Administration Modernization Act of in the complaint are well-founded. SUPPLEMENTARY INFORMATION: 1997. Pursuant The Commission’s complaint charges Part V of the proposed order states to section 6(f) of the Federal Trade that Warner has violated section 5 of the that nothing in the order constitutes a Commission Act, 38 Stat. 721, 15 U.S.C. Federal Trade Commission Act by waiver of Respondents’ First 46 and § 2.34 of the Commission’s rules agreeing with certain subsidiaries of of practice (16 CFR 2.34), notice is Amendment rights. Vivendi Universal S.A. (the ‘‘Universal hereby given that the above-captioned As set out in Part VI of the proposed Respondents’’) to fix prices and to forgo consent agreement containing a consent order, the proposed consent order will advertising. According to the order to cease and desist, having been not apply to any product sold or Commission’s complaint, the Universal filed with and accepted by the distributed to consumers by third Respondents are the successor firms to Commission, has been placed on the 1 parties under private labeling PolyGram Music Group. The Universal public record for a period of thirty (30) agreements with Respondents, provided Respondents have not signed an days. The following Analysis to Aid agreement containing a proposed Respondents do not participate in any Public Comment describes the terms of consent order, and hence the manner in the funding, preparation or the consent agreement, and the Commission’s antitrust claims against dissemination of the product’s allegations in the complaint. An the Universal Respondents will be advertising. electronic copy of the full text of the addressed in an administrative trial. The remainder of the proposed consent agreement package can be The alleged conspiracy involves audio consent order contains provisions obtained from the FTC Home Page (for and video products featuring the regarding distribution of the order, July 31, 2001), on the World Wide Web, renowned opera singers Luciano record-keeping, notification of changes at ‘‘http://www.ftc.gov/os/2001/07/ Pavarotti, Placido Domingo, and Jose in corporate status or employment, index.htm.’’ A paper copy can be Carreras—known collectively as The termination of the order, and the filing obtained from the FTC Public Reference Three Tenors. Beginning in 1990, The of a compliance report. Room, Room H–130, 600 Pennsylvania Three Tenors have come together every The purpose of this analysis is to four years at the site of the World Cup facilitate public comment on the Avenue, NW., Washington, DC 20580, either in person or by calling (202) 326– soccer finals for a combination live proposed order, and it is not intended concert and recording session. to constitute an official interpretation of 3627. Public comment is invited. Comments According to the complaint, prior to the agreement and proposed order or to should be directed to: FTC/Office of the each performance, the concert promoter modify in any way their terms. Secretary, Room 159, 600 Pennsylvania selects one (or more) of the major By direction of the Commission. Ave., NW., Washington, DC 20580. Two music/video distribution companies to Benjamin I. Berman, paper copies of each comment should distribute compact discs, cassettes, Acting Secretary. be filed, and should be accompanied, if videocassettes, and videodiscs derived 2 [FR Doc. 01–19724 Filed 8–6–01; 8:45 am] possible, by a 31⁄2 inch diskette from the master recordings. BILLING CODE 6750–01–M containing an electronic copy of the Distribution rights to the original 1990 comment. Such comments or views will Three Tenors performance, entitled The be considered by the Commission and Three Tenors, were acquired by FEDERAL TRADE COMMISSION will be available for inspection and PolyGram Music Group. Distribution copying at its principal office in rights to the follow-up performance, the [File No. 001 0231] accordance with § 4.9(b)(6)(ii) of the Three Tenors in Concert 1994, were Warner Communications Inc.; Analysis Commission’s rules of practice (16 CFR acquired by Warner Music Group. The complaint alleges that in 1997, To Aid Public Comment 4.9(b)(6)(ii)). Warner Music Group and PolyGram Analysis of Proposed Consent Order To AGENCY: Federal Trade Commission. Music Group agreed to collaborate in Aid Public Comment ACTION: Proposed consent agreement. the distribution of audio and video The Federal Trade Commission has SUMMARY: The consent agreement in this accepted, subject to final approval, an 1 PolyGram N.V. was acquired by The Seagram matter settles alleged violations of agreement containing a proposed Company Ltd. in 1998. Two years later, The Seagram Company Ltd. merged with Vivendi S.A. federal law prohibiting unfair or Consent Order from Warner and Canal Plus S.A. to form Vivendi Universal S.A. deceptive acts or practices or unfair Communications Inc. (‘‘Warner’’). 2 The concert promoter is responsible for methods of competition. The attached Warner is a subsidiary of AOL Time producing the master recordings.
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products derived from the next Three deceptive advertising and promotion for the pre-existing Three Tenors releases— Tenors World Cup concert, scheduled any audio product.3 products that were separately produced for Paris on July 10, 1998. The parties The Federal Trade Commission is and separately distributed. Restraints agreed that Warner Music Group would aware that there is a great deal of that operate on products outside of a distribute the 1998 releases in the collaborative activity among companies joint venture will be scrutinized by the United States; that PolyGram Music in the music industry (e.g., joint Commission with great care,5 Group would distribute the 1998 ventures, intellectual property licenses, particularly if the restraints are directed releases outside of the United States; sharing of artist rights and at price. Here the Commission has and that the firms would share all costs, compositions). The proposed Consent reason to believe that the alleged profits, and losses on a 50/50 basis. The Order re-affirms the Commission’s view agreement between Warner and complaint does not challenge the that participation in a joint venture is PolyGram is not reasonably related to formation or basic structure of the often pro-competitive, but that it is not the joint venture or reasonably Warner/PolyGram joint venture. a blanket excuse for price fixing or other necessary to achieve procompetitive serious restraints on competition. In this benefits of the joint venture and is According to the complaint, as the regard, The Antitrust Guidelines for therefore per se unlawful. concert approached, Warner Music Collaborations Among Competitors, One specific question involved in this Group and PolyGram Music Group issued by the Federal Trade proceeding is whether the moratorium became concerned that the audio and Commission and the U.S. Department of agreement was reasonably necessary in video products that would be derived Justice in April 2000, should not be read order to address a free-rider problem.6 from the Paris concert would not be as to suggest that all agreements ‘‘related Suppose, hypothetically, that Warner original or as commercially appealing as to’’ a joint venture will be analyzed Music Group’s investment in the earlier Three Tenors releases. In under the full rule of reason. advertising the 1998 Three Tenors order to reduce competition from these There are, however, situations in album in the United States brings earlier releases, Warner Music Group which horizontal restraints on price consumers into the record stores. and PolyGram Music Group adopted competition and advertising are Suppose further that many such what they called a ‘‘moratorium’’ permissible. Thus, the proposed consumers then opt to purchase, at a agreement. PolyGram Music Group Consent Order contains exceptions to lower price, the 1990 album distributed agreed not to discount and not to the above-described prohibitions that by PolyGram Music Group. The result advertise the 1990 Three Tenors album are intended to permit Warner to engage may be that Polygram Music Group and video during a designated time in certain lawful and procompetitive benefits from Warner Music Group’s period (from August 1, 1998 through conduct. First, when Warner and a investment, leaving Warner Music October 15, 1998). In return, Warner competing seller jointly produce a new Group (arguably) with less incentive to Music Group agreed not to discount and audio product, the Order does not bar invest resources in promoting the 1998 not to advertise the 1994 Three Tenors the firms from jointly setting the selling Three Tenors album.7 album and video during the same price and jointly directing the The Commission has reason to believe interval. advertising campaign for that product. that this hypothetical scenario does not See Broadcast Music, Inc. v. CBS, 441 justify the restraints on competition According to the complaint, the third U.S. 1 (1979).4 Second, when Warner Three Tenors album and video, both alleged in the complaint. According to and a competing seller enter into a the compliant, Warner Music Group and entitled The Three Tenors—Paris 1998, legitimate joint venture agreement, the were released on August 18, 1998, and PolyGram Music Group agreed to share order does not bar the firms from the cost of advertising the 1998 Three were distributed in the United States by entering into ancillary restraints both Warner Music Group. During the Tenors album. It follows that, with reasonably related to the venture and regard to such advertising, PolyGram moratorium period, PolyGram Music reasonably necessary to achieve the pro- Group refrained from discounting or Music Group need not be characterized competitive benefits of the venture. See as a free rider. In the words of Judge advertising the 1990 Three Tenors NCAA v. Board of Regents, 468 U.S. 85 album and video. During this period, Easterbrook: ‘‘Free-riding is the (1984); Massachusetts Board of diversion of value from a business Warner Music Group likewise refrained Registration in Optometry, 110 F.T.C. from discounting or advertising the 549 (1988). 5 See General Motors Corp., 103 F.T.C. 374 (1984) 1994 Three Tenors album and video. The Commission’s complaint alleges (consent order) (manufacturing joint venture Finally, the complaint alleges that the that the Warner/PolyGram moratorium between General Motors and Toyota approved by moratorium agreement was not agreement was not a lawful restraint on the Commission, subject to conditions aimed at competition. Of critical importance is reducing the likelihood of collusion between the reasonably necessary to the formation or competitors with regard to both joint venture to the efficient operation of the joint the allegation that the parties’ products and products outside the joint venture). venture between Warner Music Group restrictions on competitive activity were 6 See Chicago Pro. Sports Ltd. Partnership v. and PolyGram Music Group. Rather, the not limited to jointly produced NBA, 961 F.2d 667, 674 (7th Cir.), cert. denied, 506 U.S. 954 (1992): effect of the moratorium agreement was products. Instead, the complaint charges that Warner Music Group and PolyGram It costs money to make a product attractive to restrain competition unreasonably, to against other contenders for consumers’ favor. increase prices, and to injure Music Group agreed to fix the prices of Firms that take advantage of costly efforts without consumers. paying for them, that reap where they have not 3 These Order provisions would also apply to sown, reduce the payoff that the firms making the Warner has signed a consent video products that feature the Three Tenors. The investment receive. This makes investments in agreement containing the proposed proposed Order generally does not cover vertical design and distribution of products less attractive, Consent Order. The proposed Consent restraints. to the ultimate detriment of consumers. Control of 4 In order to fall within this proviso, the free-riding is accordingly an accepted justification Order would prohibit Warner from: (i) collaborating parties must each contribute for cooperation. Agreeing with a competitor to fix, raise, significant assets toward production of the audio 7 Note that this is a hypothetical example. It is not or stabilize prices for any audio product, product so as to achieve pro-competitive benefits. apparent, inter alia, that an advertising campaign or (ii) agreeing with a competitor to Sham collaborations will not shield an agreement promoting the 1998 Three Tenors album would on price. Cf. Palmer v. BRG of Georgia, Inc., 498 necessarily lead a significant number of consumers prohibit, restrict, or limit truthful, non- U.S. 46 (1990). to purchase the 1990 Three Tenors album.
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rival’s efforts without payment * * *. reasonably related to the venture and Times and Dates: 9:00 a.m. to 5:00 p.m., When payment is possible, free-riding is reasonably necessary to achieve the August 20, 2001; and 8:30 a.m. to 12:00 noon, not a problem because the ‘ride’ is not venture’s procompetitive objectives. The August 21, 2001. free.’’ Chicago Pro. Sports Ltd. Commission’s complaint against Warner Place: Hubert H. Humphrey Building, Room 705A, 200 Independence Avenue, SW., Partnership v. NBA, 961 F.2d 667, 675 Communications and the accompanying Washington, DC. (7th Cir.), cert. denied, 506 U.S. 954 consent order that we accepted for Status: Open. (1992).8 More generally, when faced public comment today underscore this Purpose: At this working session, the with a potential free-rider problem, important principle of joint venture law. Subcommittee on Standards and Security will obtain public input into the Committee firms should consider whether there are [FR Doc. 01–19723 Filed 8–6–01; 8:45 am] practical, less-restrictive alternatives process for uniform patient medical record BILLING CODE 6750–01–M than price-fixing. information from a panel of invited speakers. The proposed Consent Order includes Contact Person for More Information: a third proviso that is designed to Substantive program information as well as ensure that the Order does not impede summaries of meetings and a roster of DEPARTMENT OF HEALTH AND committee members may be obtained from J. Warner’s ability to participate in HUMAN SERVICES Michael Fitzmaurice, Ph.D., Senior Science industry efforts to discourage the Advisor for Information Technology, Agency promotion of violent or otherwise Office of the Secretary for Health Care Research and Quality, 2101 inappropriate audio and video products East Jefferson Street, #600, Rockville, MD to children. Although Warner is Notice of Interest Rate on Overdue 20852, phone: (301) 594–3938; or Marjorie S. generally prohibited from agreeing with Debts Greenberg, Executive Secretary, NCVHS, a competitor to restrict truthful and non- National Center for Health Statistics, Centers deceptive advertising, Warner is Section 30.13 of the Department of for Disease Control and Prevention, Room expressly permitted under the Order to Health and Human Services’ claims 1100, Presidential Building, 6525 Belcrest collection regulations (45 CFR part 30) Road, Hyattsville, Maryland 20782, join with other sellers to prevent the telephone (301) 458–4245. Information also advertising, marketing or sale to provides that the Secretary shall charge is available on the NCVHS home page of the children of audio products or video an annual rate of interest as fixed by the HHS website: http://www.ncvhs.hhs.gov/ products labeled or rated with a Secretary of the Treasury after taking where an agenda for the meeting will be parental advisory or cautionary into consideration private consumer posted when available. statement as to content. rates of interest prevailing on the date The purpose of this analysis is to that HHS becomes entitled to recovery. Dated: July 31, 2001. facilitate public comment on the The rate generally cannot be lower than James Scanlon, proposed Order, and it is not intended the Department of Treasury’s current Director, Division of Data Policy, Office of to constitute an official interpretation of value of funds rate or the applicable rate the Assistant Secretary for Planning and the agreement and proposed Order or to determined from the ‘‘Schedule of Evaluation. modify in any way its terms. Certified Interest Rates with Range of [FR Doc. 01–19649 Filed 8–6–01; 8:45 am] By direction of the Commission. Maturities.’’ This rate may be revised BILLING CODE 4151–05–M quarterly by the Secretary of the Benjamin I. Berman, Treasury and shall be published Acting Secretary. quarterly by the Department of Health DEPARTMENT OF HEALTH AND Statement of Commissioner Mozelle W. and Human Services in the Federal HUMAN SERVICES Thompson Register. National Committee on Vital and Health Warner Communications Inc. File No. The Secretary of the Treasury has 1 Statistics: Meeting 001–0231 certified a rate of 13 ⁄4 percent for the quarter ended June 30, 2001. This Pursuant to the Federal Advisory 1 As I said in my statement following interest rate will remain in effect until Committee Act, the Department of the issuance of the Antitrust Guidelines such time as the Secretary of the Health and Human Services announces 2 for Collaborations Among Competitors, Treasury notifies HHS of any change. the following advisory committee I believe that joint ventures can enable meeting. companies to expand into foreign Dated: July 26, 2001. markets, fund expensive innovation and George Strader, Name: National Committee on Vital and research efforts, and lower costs to the Deputy Assistant Secretary, Finance. Health Statistics (NCVHS) Executive Subcommittee, Workgroup on Health [FR Doc. 01–19651 Filed 8–6–01; 8:45 am] benefit of industry and consumers alike. Statistics for the 21st Century, Subcommittee But an otherwise legitimate joint BILLING CODE 4150–04–M on Populations. venture may not shield price fixing or Times and Dates: 8:30 a.m to 5:30 p.m., any other form of anticompetitive August 14, 2001; and 8:30 a.m. to 3:45 p.m., restraint if the restraint is not both DEPARTMENT OF HEALTH AND August 15, 2001. HUMAN SERVICES Place: The Westin O’Hare, 6100 River 8 Accord High Technology Careers v. San Jose Road, Rosemont, IL 60018, (847) 698–6000. Mercury News, 996 F.2d 987, 992 (9th Cir. 1993); National Committee on Vital and Health Status: Open. Toys R Us, Inc. _ F.T.C. _ (1998), 1998 FTC LEXIS Statistics: Meeting Purpose: The Executive Subcommittee will 119, 131–35 (1998), aff’d, 221 F.3d 928, 938 (7th use the first day as a retreat for Committee Cir. 2000); H. Hovenkamp, XIII Antitrust Law at 334 Pursuant to the Federal Advisory planning purposes. The Subcommittee will ¶ 2223b (1999) (‘‘[F]ree rider defenses should be Committee Act, the Department of plan future Committee meetings and review rejected when the firm that controls the input is work plans for 2001 and early 2002. Strategic able to sell, rather than give away, the good or Health and Human Services announces service that is subject to the free ride.’’). the following advisory committee planning will include organizing and integrating agenda issues across priorities, 1 http://www.ftc.gov/os/2000/04/ meeting. antitrustguidethompson.htm reviewing the efficiency and effectiveness of 2 The Federal Trade Commission and the U.S. Name: National Committee on Vital and the current Committee structure and meeting Department of Justice issued the Guidelines in Health Statistics (NCVHS), Subcommittee on schedule, and positioning the Committee to April 2000. http://www.ftc.gov/bc/guidelin.htm Standards and Security. address new and emerging topics.
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