Policy Statements for Assisting Small Businesses and Other Small Entities

16809	Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Notices
FEDERAL RESERVE SYSTEM
Change in Bank Control Notices;
Acquisitions of Shares of Banks or
Bank Holding Companies
The notificants listed below have
applied under the Change in Bank
Control Act (12 U.S.C. 1817(j)) and §
225.41 of the Board’s Regulation Y (12
CFR 225.41) to acquire a bank or bank
holding company. The factors that are
considered in acting on the notices are
set forth in paragraph 7 of the Act (12
U.S.C. 1817(j)(7)).
The notices are available for
immediate inspection at the Federal
Reserve Bank indicated. Once the
notices have been accepted for
processing, they will also be available
for inspection at the offices of the Board
of Governors. Interested persons may
express their views in writing to the
Reserve Bank indicated for that notice
or to the offices of the Board of
Governors. Comments must be received
not later than April 22, 1997.
A. Federal Reserve Bank of
Minneapolis (Karen L. Grandstrand,
Vice President) 250 Marquette Avenue,
Minneapolis, Minnesota 55480-2171:
1. First Security Bank of Havre Profit
Sharing Plan and Trust, Havre,
Montanna; to acquire an additional 2.1
percent, for a total of 11.6 percent, of the
voting shares of Montana Security, Inc.,
Havre, Montana, and thereby indirectly
acquire First Security Bank of Havre,
Havre, Montana.
Board of Governors of the Federal Reserve
System, April 2, 1997.
Jennifer J. Johnson,
Deputy Secretary of the Board.
[FR Doc. 97–8902 Filed 4–7–97; 8:45 am]
BILLING CODE 6210–01–F
FEDERAL RESERVE SYSTEM
Change in Bank Control Notices;
Formations of, Acquisitions by, and
Mergers of Bank Holding Companies;
Correction
This notice corrects a notice (FR Doc.
97-8135) published on page 15518 of the
issue for Tuesday, April 1, 1997.
On page 15519, under the Federal
Reserve Bank of Dallas heading, the
entry for BonState Bancshares, Inc.,
Bonham, Texas, is revised to read as
follows:
A. Federal Reserve Bank of Dallas
(Genie D. Short, Vice President) 2200
North Pearl Street, Dallas, Texas 75201-
2272:
1. BonState Bancshares, Inc.,
Bonham, Texas, and Bonham Financial
Services, Inc., Dover, Delaware; to
become bank holding companies by
acquiring 100 percent of the voting
shares of Bonham State Bank, Bonham,
Texas.
Comments on this application must
be received by April 25, 1997.
Board of Governors of the Federal Reserve
System, April 2, 1997.
Jennifer J. Johnson,
Deputy Secretary of the Board.
[FR Doc. 97–8901 Filed 4–7–97; 8:45 am]
BILLING CODE 6210–01–F
FEDERAL RESERVE SYSTEM
Sunshine Act Meeting
AGENCY HOLDING THE MEETING: Board of
Governors of the Federal Reserve
System.
TIME AND DATE: 11:00 a.m., Monday,
April 14, 1997.
PLACE: Marriner S. Eccles Federal
Reserve Board Building, C Street
entrance between 20th and 21st Streets,
N.W., Washington, D.C. 20551.
STATUS: Closed.
MATTERS TO BE CONSIDERED:
1. Personnel actions (appointments,
promotions, assignments,
reassignments, and salary actions)
involving individual Federal Reserve
System employees.
2. Any items carried forward from a
previously announced meeting.
CONTACT PERSON FOR MORE INFORMATION:
Mr. Joseph R. Coyne, Assistant to the
Board; (202) 452–3204. You may call
(202) 452–3207, beginning at
approximately 5 p.m. two business days
before this meeting, for a recorded
announcement of bank and bank
holding company applications
scheduled for the meeting.
Dated: April 4, 1997.
Jennifer J. Johnson,
Deputy Secretary of the Board.
[FR Doc. 97–9157 Filed 4–4–97; 2:47 pm]
BILLING CODE 6210–01–P
FEDERAL TRADE COMMISSION
Notice and Request for Comment
Regarding Compliance Assistance and
Civil Penalty Leniency Policies for
Small Entities
AGENCY : Federal Trade Commission.
ACTION : Notice of policies and request
for comment.
SUMMARY: The Federal Trade
Commission is issuing two statements
describing its policies for assisting small
businesses and other small entities.
These policy statements implement
requirements of the Small Business
Regulatory Enforcement Fairness Act of
1996. The first policy statement
discusses the variety of mechanisms
available for small entities to obtain
advice about their obligations under
statutes and rules enforced by the
Commission. The second policy
statement describes the Commission’s
approach to reduction or waiver of civil
penalties for small entities in various
mitigating circumstances.
Although these statements reflect
policies that are already in effect, the
Commission is soliciting comments
about them from interested persons. If,
after considering any comments, the
Commission determines to revise either
policy, it will publish a revised policy
statement.
DATES : The policy statements were
effective on March 28, 1997. Comments
will be received until May 12, 1997.
ADDRESSES : Comments should be
identified as Small Business Policy
Comments, and sent to: Secretary, FTC,
Room H–159, Sixth and Pennsylvania
Ave., N.W., Washington, D.C. 20580.
Comments will be entered on the public
record of the Commission and will be
available for public inspection in Room
130 during the hours of 9 a.m. to 5 p.m.
FOR FURTHER INFORMATION CONTACT:
Mary K. Engle, 202–326–3161,
Enforcement Division, Bureau of
Consumer Protection; or Neil W.
Averitt, 202–326–2885, Office of Policy
and Evaluation, Bureau of Competition.
SUPPLEMENTARY INFORMATION: Part A, the
statement of the Small Entity
Compliance Assistance Policy, is
intended to explain to small businesses
and other small entities what assistance
is available to them from the
Commission and its staff to help them
understand and comply with obligations
imposed by the statutes and rules
enforced by the Commission. Part B, the
statement of the Civil Penalty Leniency
Policy, discusses how the Commission
expects to consider mitigating factors in
matters where small entities are subject
to civil penalties. These statements are
issued in implementation of sections
213 and 223 of the Small Business
Regulatory Enforcement Fairness Act
(‘‘SBREFA’’), Pub. L. No. 104–121,
enacted March 29, 1996.
These policy statements provide
guidance and information only, and do
not create any rights, duties, obligations,
or defenses, implied or otherwise. The
Commission specifically retains its
discretion for determining how to
proceed in particular cases. Also, while
the statements are drafted specifically
with respect to small entities in order to

16810 	Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Notices
1 Currently, more than 50 such publications are
available.
2 The Commission has published compliance
guides for many of its Rules affecting small
businesses, including the Franchise Rule, Funeral
Rule, Telemarketing Sales Rule, Telephone
Disclosure and Dispute Resolution (‘‘900’’ Number)
Rule, and Used Car Rule.
3 Over 20 such guides are available, including
guides for the use of environmental marketing
claims, the feather and down products industry, the
household furniture industry, and the jewelry
industry.
4 The Commission, jointly with the Department of
Justice (‘‘DOJ’’), has issued guidance on such issues
as health care, international operations, licensing of
intellectual property, and horizontal mergers. The
Commission has separately issued guidelines on
promotional allowances and services.
5 For example, in the area of medicine and health
care, the FTC and DOJ have jointly issued
guidelines discussing nine frequently encountered
subjects, such as physician network joint ventures,
and hospital joint ventures involving specialized
clinical or other expensive health care services.
6 For example, in fiscal year 1996 the Commission
distributed 3,970,828 copies of its print materials.
Also, small businesses are frequently consumers
themselves; in particular, materials on such topics
as disclosures to prospective franchisees and office
supply scams that ship and bill for unordered
merchandise can help small businesses avoid
problems.
provide clear information to those
entities about the applicable policies,
comparable methods of providing
compliance assistance, and comparable
factors for selecting civil penalty
amounts (as applied to the individual
facts), may be used for larger entities as
appropriate.
Part A—Small Business Compliance
Assistance Policy
Under Section 213 of SBREFA,
agencies regulating the activities of
small entities must establish a program
to answer small entities’ inquiries and
provide information and advice on
compliance in particular circumstances,
when appropriate. Section 213 provides
as follows: Whenever appropriate in the
interest of administering statutes and
regulations within the jurisdiction of an
agency which regulates small entities, it
shall be the practice of the agency to
answer inquiries by small entities
concerning information on, and advice
about, compliance with such statutes
and regulations, interpreting and
applying the law to specific sets of facts
supplied by the small entity. In any civil
or administrative action against a small
entity, guidance given by an agency
applying the law to facts provided by
the small entity may be considered as
evidence of the reasonableness or
appropriateness of any proposed fines,
penalties or damages sought against
such small entity.
As discussed below, the Commission
offers a comprehensive array of services,
involving both general guidance and
individualized advice, to help small
entities understand their obligations
under the laws and regulations
administered by the Commission.
(1) General Guidance
The Commission offers general
information in a variety of forms to
address issues and questions that small
entities frequently encounter. Such
guidance frequently will satisfy the
needs of small entities for guidance as
to their own obligations. For example:
(i) The Commission has issued a
brochure, entitled ‘‘A Guide to the
Federal Trade Commission,’’ that
includes brief descriptions of the
principal antitrust statutes and
consumer protection laws enforced by
the agency.
(ii) The Commission also issues many
types of publications designed to
explain how small entities and others
can conduct their affairs in compliance
with the laws and regulations
administered by the FTC.1 These
include materials specifically directed
to businesses, such as:
(a) Business compliance guides
explaining the requirements of specific
Commission rules in a non-technical
manner;2
(b) Industry guides addressing
common compliance issues under the
Federal Trade Commission Act, as
applied to particular industries or
particular practices;3 and
(c) Guidelines and policy statements
explaining the application of antitrust
laws to particular practices or
industries. 4
The Commission’s industry guides
and other guidelines frequently contain
specific examples and illustrative fact
patterns that show how the agency
would apply the law to a particular set
of facts.5
(iii) The Commission also produces
and disseminates over 175 print and
broadcast materials that, while directed
to consumers, can benefit small
businesses by identifying the practices
that generate consumer protection
issues between businesses and their
customers.6
(iv) All these materials are readily
available to small businesses and other
small entities through a variety of
sources, including:
(a) Directly from the Commission.
Materials on both competition and
consumer protection issues can be
obtained by writing Public Reference,
Room 130, Federal Trade Commission,
Washington, DC 20580, or by
telephoning the Public Reference Room
at (202) 326–2222.
(b) Most Commission items are
available through the Internet, at the
Commission’s website at http://
www.ftc.gov. The Commission is in the
process of making all of its business
compliance guides and its antitrust
guidelines and policy statements, as
well as its consumer materials, available
on the Internet. Industry guides, as well
as Commission Rules, published in the
Code of Federal Regulations are
available at the U.S. House of
Representatives Internet Law Library’s
website at http://law.house.gov/cfr.htm.
(c) Materials also are available for
distribution from the Small Business
Administration regional centers, and the
Consumer Information Center in Pueblo,
Colorado.
(d) The BusinessLine section of the
Commission’s website provides online
access to all of the Commission’s
business education publications.
Similarly, the Commission’s
ConsumerLine provides online access to
all of the Commission’s consumer
education publications, as well as the
business education publications. In
addition to being accessible through
personal computers, the ConsumerLine
may be reached from online services
provided to the public at the offices of
the Small Business Administration and
the U.S. Department of Commerce.
(e) Materials are made available to
state agencies, the military, schools and
libraries, financial institutions, the
media, and consumer and non-profit
organizations.
(f) Materials are made available to
industry trade associations and other
business organizations. Frequently,
business publications obtain and
publish Commission guidance, such as
advisory opinion letters (discussed
below), in order to make the compliance
information readily available to industry
members.
(g) Commission guidance can often be
found in commercial publications
describing the Commission and its
enforcement activities. For example, the
Statements of Antitrust Enforcement
Policy in Health Care are published at
4 CCH Trade Regulation Reporter
¶ 13,153.
(v) Other sources of information about
the Commission and its policies include
staff and Commission advisory
opinions, proposed Commission
consent agreements, final orders, and
other formal documents. These are
available in the Commission’s Public
Reference Room or by mail from Public
Reference. Many are available from the
Commission’s Internet website as well.
(vi) Commissioners and Commission
staff members frequently give speeches
to business groups, and conduct
programs geared to explaining statutory
and regulatory requirements and to

16811	Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Notices
7 16 CFR 1.1–1.4.
answering attendees’ questions. Where
the topics are of particular interest to
small business, these speeches may
involve appearances before groups
representing small-business interests.
Small business groups may request
speakers by contacting directly the
office at the Commission that
specializes in the subject matter of
interest. Business groups may also
request speakers by contacting the
Commission’s Bureau of Competition,
(202) 326–3300, or Bureau of Consumer
Protection, (202) 326–3238. Copies of
major speeches are available from the
Office of Public Affairs, (202) 326–2180,
and also on the Internet at the
Commission’s website.
(2) Individual Advice
(i) Small entities may also ask specific
questions of the Commission or its staff.
Each substantive area under the
Commission’s laws and regulations has
one or more staff members who are
responsible for responding to
compliance inquiries. A staff member
may determine that the agency’s
published material provides the
assistance sought and send that material
to the inquirer. Where the sources of
general information are insufficient to
provide the needed guidance or
assistance, the staff member may
provide specific, informal advice or
arrange for a more formal response.
(ii) Small entities may make inquiries
of the Commission by telephone, letter,
fax, or e-mail. Inquiry by telephone
rather than in writing is encouraged,
since it is the agency’s experience that
the give-and-take of a conversation
facilitates understanding an issue. If it
appears that more detailed or complex
information is needed to address an
issue, the FTC staff may then ask the
caller to provide a supplementary letter.
(a) Telephone inquiries regarding
competition issues may be made to the
general inquiries number of the Bureau
of Competition, at (202) 326–3300; and
calls regarding consumer protection
issues may be made to the Bureau of
Consumer Protection, at (202) 326–3238.
From these contact points, calls will be
forwarded to the staff member best able
to address the particular issues
presented.
(b) Written questions or comments
regarding competition matters may be
mailed to the Office of Policy and
Evaluation, Bureau of Competition,
Federal Trade Commission,
Washington, DC 20580. Inquiries may
be sent by fax to (202) 326–2884.
(c) Written questions or comments
regarding consumer protection matters
may be mailed to the Bureau of
Consumer Protection, Federal Trade
Commission, Washington, D.C. 20580.
Inquiries may be sent by fax to (202)
326–3799.
(d) Persons who are uncertain which
of these offices to contact may write or
call the Office of the Secretary, Federal
Trade Commission, Washington, D.C.
20580, (202) 326–2515. Inquiries may be
sent by fax to (202) 326–2496.
(e) Inquiries can also be sent by e-mail
to the address of ‘‘webmaster@ftc.gov,’’
where they will be reviewed and
forwarded to the appropriate staff
person. E-mail requests for advice
should include the inquiring party’s
telephone number, again because it is
the agency’s experience that a telephone
conversation is often needed to resolve
an issue.
(f) In addition to the above sources of
information, the Commission’s ten
regional offices, which are listed below,
also may be contacted for information
and materials regarding consumer
protection or competition issues:
Atlanta Regional Office, Suite 5M35,
Midrise Building, 60 Forsyth St.,
S.W., Atlanta, GA 30303, (404) 656–
1390 FAX: (404) 656–1379
Boston Regional Office, 101 Merrimac
St., Suite 810, Boston, MA 02114–
4719, (617) 424–5960 FAX: (617) 424–
5998
Chicago Regional Office, 55 E. Monroe
St., Suite 1860, Chicago, IL 60603,
(312) 353–8156 FAX: (312) 353–4438
Cleveland Regional Office, 668 Euclid
Ave., Suite 520–A, Cleveland, OH
44114, (216) 522–4210 FAX: (216)
522–7239
Dallas Regional Office, 1999 Bryan St.,
Suite 2150, Dallas, TX 75201, (214)
979–9350 FAX: (214) 953–3079
Denver Regional Office, 1961 Stout St.,
Suite 1523, Denver, CO 80294–0101,
(303) 844–2272 FAX: (303) 844–3599
Los Angeles Regional Office, 11000
Wilshire Blvd., Suite 13209, Los
Angeles, CA 90024, (310) 235–4040
FAX: (310) 235–7976
New York Regional Office, 150 William
St., 13th Floor, New York, NY 10038,
(212) 264–8290 FAX: (212) 264–0459
San Francisco Regional Office, 901
Market St., Suite 570, San Francisco,
CA 94103, (415) 356–5284 FAX: (415)
356–5284
Seattle Regional Office, 915 Second
Ave., Suite 2896, Seattle, WA 98174,
(206) 220–6366 FAX: (206) 220–6366
(iii) The FTC’s Bureau of Competition
has a special program to provide advice
to firms that must give premerger
notification pursuant to the terms of the
Hart-Scott-Rodino Act. While premerger
notification is generally required only
for larger transactions valued at more
than $15 million, some parties to such
transactions may still come within the
definition of ‘‘small businesses.’’ Any
firm required to give notification (or that
thinks it might be required to give
notification) may receive guidance on
the proper procedures from the
Premerger Notification Office, in writing
or by telephone, at (202) 326–3100.
Interested firms may also obtain from
the Premerger Notification Office a set
of written guides describing the program
and explaining how to determine
whether a particular firm must file.
(iv) The Commission also has a
special procedure to provide advice to
small entities and other persons who are
subject to an order of the Commission.
The Compliance Division of the Bureau
of Competition and the Enforcement
Division of the Bureau of Consumer
Protection are responsible for overseeing
enforcement of and compliance with the
competition and consumer protection
administrative orders of the
Commission. The Commission’s general
practice is to send a letter to each
person subject to an order shortly after
the order becomes effective. In addition
to describing the requirements of the
order in general terms, the letter also
identifies and provides the telephone
number for a specific staff person who
has responsibilities for the matter. Staff
of the Compliance and Enforcement
Divisions are available to handle
telephone and written inquiries
concerning outstanding orders. For any
small entity uncertain of which staff
person is responsible for its order,
questions concerning the requirements
or scope of a competition order may be
sent to: Compliance Division, Bureau of
Competition, Federal Trade
Commission, Washington, D.C. 20580,
and questions regarding a consumer
protection order to: Enforcement
Division, Bureau of Consumer
Protection, Washington, D.C. 20580.
Telephone inquiries may be made to the
Bureau of Competition Compliance
Division at (202) 326–2687, and to the
Bureau of Consumer Protection
Enforcement Division at (202) 326–
2996.
(v) If the above sources of advice are
insufficient for the inquirer’s purpose,
the Commission has procedures for
providing, where appropriate, either a
Commission advisory opinion or, more
commonly, a staff advisory opinion.7
(a) Advisory opinions are intended to
clarify the law applicable to a course of
action that the inquiring firm proposes
to undertake, and ordinarily are not
appropriate where the requester is
already engaged in that course of action.

16812 	Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Notices
8 As previously noted, Commission staff on an
informal basis provide advice or guidance in
response to inquiries.
9 See Introduction, Statements of Antitrust
Enforcement Policy in Health Care, 4 CCH Trade
Reg. Rep. ¶ 13,153 at p. 20,800.
10 The Commission recently issued a rule
implementing the Debt Collection Improvement Act
of 1996 (Pub. L. 104–134) by making inflation
adjustments in the dollar amounts prescribed for
each type of violation established by the statutory
civil penalty provisions within the FTC’s
jurisdiction. See 61 FR 54548 (Oct. 21, 1996).
(b) An advisory opinion from the
Commission may be appropriate where
the matter involves a substantial or
novel question of fact or law and there
is no clear Commission or court
precedent; or the subject matter of the
request and consequent publication of
Commission advice is of significant
public interest. Otherwise, the staff will
provide a staff advisory opinion where
practicable and appropriate.
(c) An advisory opinion, whether
from staff or the Commission, will
ordinarily be considered inappropriate
if the same or substantially the same
course of action is already under
investigation or is or has been the
subject of current governmental
proceedings; or an informed opinion
cannot be made, or could be made only
after extensive investigation, clinical
study, testing, or collateral inquiry.
Advisory opinions do not answer
hypothetical questions.8
(d) The Commission may at any time
reconsider the questions involved and
rescind any advice it gives in a
Commission advisory opinion.
Nevertheless, the Commission will not
proceed against the requester of the
advice respecting an action taken in
good faith reliance on the advice, so
long as the requester presented all
relevant facts fully and accurately and
discontinues the action promptly upon
notification that the advice has been
rescinded. Advice rendered in a staff
advisory opinion does not bar the
Commission from rescinding it and,
where appropriate, initiating an
enforcement action.
(e) The advice given to a small entity
may be considered in an enforcement
action as evidence of the reasonableness
or appropriateness of any proposed fine,
penalty, or damages sought against that
small entity.
(f) It is often most efficient to make a
telephone inquiry to the staff person
responsible for the relevant area, as
described above, before deciding
whether to seek a formal advisory
opinion. Persons wishing to request an
advisory opinion should submit a
statement identifying the requester and
stating the question, the relevant
provision of law, and all material facts.
The request and two copies should be
submitted to the Office of the Secretary,
Federal Trade Commission, Washington
D.C. 20580. For further information, that
office may be reached by telephone at
(202) 326–2515.
(g) For inquiries involving most types
of issues under the Health Care
Guidelines, the agency has committed
itself to preparing advisory opinions
within 90 days of the time that all
necessary information has been
submitted.9 For matters on other topics,
the time for reply will depend on the
complexity and novelty of the issues
raised.
These wide-ranging programs are
provided by the Commission to assist
small entities in understanding their
obligations under the laws and
regulations administered by the
Commission.
Part B—Civil Penalty Leniency Program
Under Section 223 of SBREFA,
agencies regulating the activities of
small entities must establish, by March
29, 1997, a policy or program for ‘‘the
reduction, and under appropriate
circumstances for the waiver, of civil
penalties for violations of a statutory or
regulatory requirement by a small
entity.’’ The statute suggests that
‘‘[u]nder appropriate circumstances, an
agency may consider ability to pay in
determining penalty assessments.’’ The
statute further provides that the policy
or program shall contain conditions or
exclusions, which may include, but
shall not be limited to:
(1) Requiring the small entity to
correct the violation within a reasonable
correction period;
(2) Limiting the applicability to
violations discovered through
participation by the small entity in a
compliance assistance or audit program
operated or supported by the agency or
a State;
(3) Excluding from the program small
entities that have been subject to
multiple enforcement actions by the
agency;
(4) Excluding violations involving
willful or criminal conduct;
(5) Excluding violations that pose
serious health, safety, or environmental
threats; and
(6) Requiring a good-faith effort to
comply with the law.
Section 223 provides that the policy
or program is ‘‘[s]ubject to the
requirements of other statutes,’’ and
thus does not supersede existing law on
penalties. Also, because the leniency
policy is prescribed only for civil
penalties for violations of a statutory or
regulatory requirement, it does not
apply to Commission cease and desist
orders, federal court injunctions,
affirmative requirements for fencing-in
or redress contained in Commission
orders, or civil penalty actions under
Section 5(l), 15 U.S.C. 45(l), for
violations of Commission orders.
None of the statutes or rules enforced
by the Commission provide for the
mandatory imposition of non-
discretionary penalties. In most
instances, as discussed below, the
Commission is not authorized to assess
civil penalties itself, but rather selects a
civil penalty amount to be sought in a
federal court action brought by the
Department of Justice. In developing a
policy statement that describes
generally how the Commission will
exercise its discretion in selecting
penalty amounts for small entities, the
Commission considered that it already
exercises its discretion in a wide variety
of contexts to consider mitigating factors
when selecting penalty amounts. The
Commission believes that this
experience suggests a list of factors
suitable for selecting the penalties
appropriate to small entities.
First, Section 5(m)(1)(A) of the FTC
Act, 15 U.S.C. 45(m)(1)(A), authorizes
the Commission to seek, in federal
district courts, up to $11,000 per
violation of certain Commission rules.10
Such a civil penalty is assessable only
if the defendant knew or should have
known that its acts violated the rule. In
determining the appropriate amount of
a penalty, the courts are directed by
Section 5(m)(1)(C), 15 U.S.C.
45(m)(1)(C), to take into account the
degree of culpability; any history of
prior such conduct; ability to pay; effect
on ability to continue to do business;
and such other matters as justice may
require. The Commission also evaluates
these factors to determine appropriate
penalties in cases that are not litigated.
Second, one Commission rule has a
separate enforcement mechanism.
Under the Energy Policy and
Conservation Act, 42 U.S.C. 6303(a), the
Commission has authority to assess
administrative civil penalties, up to
$110 per violation, for violations of its
Appliance Labeling Rule, 16 CFR Part
305. The Commission’s Rules of Practice
provide that factors to be considered in
determining the amount of penalty
include the respondent’s size and ability
to pay; the respondent’s good faith; any
history of previous violations; the
deterrent effect of the penalty action; the
length of time involved before the
Commission was made aware of the
violation; the gravity of the violation,
including the amount of harm to

16813	Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Notices
10 The criteria for assessing penalties for
violations of the Appliance Labeling Rule are set
forth in Subpart K of Part 1 of the Commission’s
Rules of Practice, 16 CFR 1.92–1.97.
12 Generally, at least $15 million.
13 Generally, one of the entities must have sales
or assets above $100 million and the other must
have sales or assets above $10 million. Because of
the ‘‘size of person’’ and ‘‘size of transaction’’
thresholds, many small businesses are not subject
to the premerger notification reporting requirements
of the HSR Act.
14 The Commission’s order enforcement cases are
not included in the SBREFA civil penalty leniency
program because, as noted above, SBREFA only
refers to entities accused of violating statutes and
rules, not orders. Moreover, Section 5(l) defendants
are, by definition, allegedly repeat offenders, and
therefore are unlikely to be good candidates for
leniency. (As in all cases, however, the agency
would consider individual facts that may affect the
penalty to be sought in each particular case.)
consumers and the public caused by the
violation; and such other matters as
justice may require.11
Third, civil penalties may also be
imposed for violations of the Hart-Scott-
Rodino Antitrust Improvements Act of
1976, 15 U.S.C. 18a (‘‘HSR Act’’). Under
the HSR Act, acquisitions above a
certain size,12 involving entities above
certain sizes,13 cannot be consummated
unless certain information is filed with
the Commission and with the
Department of Justice and certain
waiting periods are observed. By statute,
civil penalties of up to $11,000 for each
day a person is in violation of the HSR
Act may be imposed in a federal court
action brought by DOJ. The Commission
is charged with administering the
premerger notification program
established by the HSR Act, and
recommends actions and penalty
amounts to DOJ. The Commission
generally will consider the firm’s ability
to pay when recommending appropriate
penalties. The Commission generally
will not seek an enforcement action for
a violation of the HSR Act that appears
to be truly inadvertent and where the
filing is made promptly after discovery
of the oversight. If the violation is the
firm’s first, and is not the result of gross
negligence or a reckless disregard for the
filing obligation, the Commission staff
generally sends a letter calling attention
to the filing obligation but indicating
that no further action will be taken if the
filing requirement is promptly met.
Fourth, judicial opinions interpreting
Section 5(l) of the FTC Act, which
provides for civil penalties of up to
$11,000 per violation of FTC
administrative orders, are instructive.14
The statute does not set forth criteria for
assessing specific penalties for Section
5(l) violations, but the Third Circuit
Court of Appeals in United States v.
Reader’s Digest Ass’n, 662 F.2d 955, 967
(3d Cir. 1981), cert. denied, 455 U.S. 908
(1982), set out five factors bearing on the
selection of an appropriate civil penalty
or remedy: the good or bad faith of the
respondent; the injury to the public; the
respondent’s ability to pay; the desire to
eliminate the benefits derived from the
violations; and the necessity of
vindicating the Commission’s authority.
In each penalty case, the Commission
selects an appropriate penalty amount
after weighing the above factors, along
with the litigation risks and penalties
imposed in similar cases.
Finally, the Commission has
undertaken an innovative approach to
achieve compliance with one of its
rules. In early 1996, the Commission
approved a new program to increase
compliance with its Funeral Industry
Practices Rule, 16 CFR Part 453, which,
among other things, requires funeral
homes to give consumers a list of prices
for various goods and services offered.
The Funeral Rule Offenders Program,
implemented jointly by the Commission
and the National Funeral Directors
Association (‘‘NFDA’’), offers to certain
businesses that appear to have violated
the Rule an alternative to a federal court
enforcement action. Funeral firms
entering the alternative program make a
voluntary payment to the U.S. Treasury
in an amount lower than would be
sought in a civil penalty action. The
NFDA then will review the firm’s
practices, revise those practices to
comply with the Rule, and conduct on-
site training and testing for all licensed
employees. The NFDA also will provide
follow-up training, and conduct testing
each year for five years.
In light of the Commission’s
experience exercising its discretion to
consider mitigating factors when
selecting appropriate penalty amounts,
the innovative approach taken to
achieve compliance with one rule, and
the factors suggested in SBREFA itself,
the Commission adopts the following
policy for reducing, or in appropriate
circumstances waiving, civil penalties
for violations of a statutory or regulatory
requirement by a small entity.
When the Commission identifies a
small entity as not being in compliance
with a statutory or regulatory
requirement within the Commission’s
jurisdiction, the Commission will
consider the propriety of penalty waiver
or reduction. The following factors will
weigh in favor of leniency:
1. The small entity reported the
violation to the Commission promptly
after discovering it.
2. The small entity corrected the
violation within a reasonable time, if
feasible.
3. The small entity had a low degree
of culpability. The degree of culpability
reflects the efforts taken by the entity to
determine and meet its legal obligations.
These efforts are judged in light of such
factors as the size of the business; the
sophistication and experience of its
owners, officers, and managers; the
length of time it has been in operation;
the availability of relevant compliance
information; the clarity of its legal
obligations; and any active attempts to
clarify any uncertainties regarding its
obligations.
4. The small entity is financially
unable to pay the usual penalty, or the
usual penalty would impair the small
entity’s ability to do business or to
compete effectively.
5. The small entity has not been
subject to any previous enforcement
action by the Commission or other
federal, state, or local law enforcement
jurisdiction for the same or similar
conduct for which the small entity is
being considered for leniency. Where
there have been prior enforcement
actions, however, the Commission may
take into consideration, as possible
mitigating factors, when the previous
enforcement action occurred, and
whether the small entity’s management
has changed since the previous
enforcement action.
6. The small entity’s violations did
not involve willful or criminal conduct.
7. The violations did not pose a
serious health, safety, environmental, or
economic threat to consumers or the
public.
Each factor need not necessarily be
present for a small entity to qualify for
leniency, and, depending upon the
particular circumstances, some factors
may be weighed more heavily than
others. Also, any other factors relevant
in particular circumstances will be
considered, as appropriate.
The above criteria include most of the
factors suggested in SBREFA. The one
suggested factor that the Commission is
not including is one that would limit
the penalty reduction policy or program
to violations discovered by the small
entity through participation in an
agency-run or state-run compliance
assistance or audit program. The
Commission does not have formal
compliance assistance or audit
programs. Given the variety and scope
of the rules and statutes that the
Commission enforces, imposing some
parallel requirement, such as a self-
auditing program, would unnecessarily
restrict the availability of penalty waiver
or reduction.
In addition, the Commission has
expanded somewhat the scope of two of
the factors suggested in SBREFA. First,
SBREFA suggests excluding entities that
have been subject to multiple
enforcement actions by the agency. The

16814 	Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Notices
15 In addition, the Commission often works with
the State Attorneys General and other federal
agencies, such as the United States Post Office, to
investigate conduct that may violate laws enforced
by the Commission. In cases where we work with
certain agencies, the Commission must often enter
conduct Orders to ensure that the violative behavior
is prohibited nationwide.
Commission has broadened this
category to include entities that have
been subject to actions for the same or
similar conduct by other federal
agencies or state or local agencies. The
law violations prosecuted by the
Commission are frequently very similar
to violations prosecuted by other
federal, state, and local law enforcement
agencies.15 It is therefore appropriate, in
considering whether to exclude entities
from lenient treatment, to consider
whether similar conduct has been
subject to enforcement efforts by such
agencies.
Second, SBREFA also suggests
excluding violations that pose serious
health, safety, or environmental threats.
The Commission will, in addition to
such risks, also consider serious
economic injury, as that form of injury
is the type most often encountered in
Commission cases, and in many
instances may cause as much serious
injury as that arising from health, safety,
or environmental threats.
Part C—Request for Comments
Members of the public are invited to
comment on any issues or concerns that
they believe are relevant or appropriate
to the policies described above. The
Commission requests that factual data
upon which the comments are based be
submitted with the comments. In this
section, the Commission identifies
specific issues on which it solicits
public comments. The identification of
issues is designed to assist the public
and should not be construed as a
limitation on the issues on which public
comment may be submitted.
Questions
(1) Should the Commission revise in
any way the policies that it has adopted
to assist small businesses and other
small entities? If so, please provide
specific suggestions.
(2) How would the revisions affect the
benefits provided by the current
policies?
(3) Are any of the criteria or means of
guidance that the Commission has used
in establishing small business
compliance assistance and civil penalty
leniency policies for small businesses
and other small entities inappropriate?
If so, please explain.
(4) Are there any other criteria or
economical means of guidance that the
Commission should use? If so, please
elaborate.
Authority: Secs. 213 and 223, Pub. L. 104–
121, 110 Stat. 847.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 97–8941 Filed 4–7–97; 8:45 am]
BILLING CODE 6750–01–P
FEDERAL TRADE COMMISSION
[File No. 971–0049]
Autodesk, Inc.; Softdesk, Inc.; Analysis
to Aid Public Comment
AGENCY : Federal Trade Commission.
ACTION : Proposed consent agreement.
SUMMARY: In settlement of alleged
violations of federal law prohibiting
unfair or deceptive acts or practices and
unfair methods of competition, this
consent agreement, accepted subject to
final Commission approval, would
prohibit, among other things,
Autodesk—a San Rafael, California-
based developer and marketer of
computer-aided design (CAD) software
which intends to acquire Softdesk,
Inc.—from reacquiring the
‘‘IntelliCADD’’ CAD engine that
Softdesk recently sold to Boomerang
Technology, Inc. The complaint
accompanying the consent agreement
alleged that Autodesk’s $90 million
acquisition of Softdesk, as originally
proposed, would have substantially
lessened competition in the
development and sale of CAD software
engines.
DATES: Comments must be received on
or before June 9, 1997.
ADDRESSES : Comments should be
directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pennsylvania
Ave., NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
Howard Morse, Federal Trade
Commission, S–3627, 6th St. and
Pennsylvania Ave., NW., Washington,
DC 20580. (202) 326–2949.
SUPPLEMENTARY INFORMATION: Pursuant
to section 6(f) of the Federal Trade
Commission Act, 38 Stat. 721, 15 U.S.C.
46, and § 2.34 of the Commission’s rules
of practice (16 CFR 2.34), notice is
hereby given that the above-captioned
consent agreement containing a consent
order to cease and desist, having been
filed with and accepted, subject to final
approval, by the Commission, has been
placed on the public record for a period
of sixty (60) days. The following
Analysis to Aid Public Comment
describes the terms of the consent
agreement, and the allegations in the
accompanying complaint. An electronic
copy of the full text of the consent
agreement package can be obtained from
the Commission Actions section of the
FTC Home Page (for March 31, 1997), on
the World Wide Web, at ‘‘http://
www.ftc.gov/os/actions/htm.’’ A paper
copy can be obtained from the FTC
Public Reference Room, Room H–130,
6th Street and Pennsylvania Avenue,
NW., Washington, DC 20580, either in
person or by calling (202) 326–3627.
Public comment is invited. Such
comments or views will be considered
by the Commission and will be available
for inspection and copying at its
principal office in accordance with
§ 4.9(b)(6)(ii) of the Commission’s rules
of practice (16 CFR 4.9(b)(6)(ii)).
Analysis to Aid Public Comment on the
Provisionally Accepted Consent Order
The Federal Trade Commission (‘‘the
Commission’’) has accepted, subject to
final approval, an Agreement
Containing Consent Order
(‘‘Agreement’’) from Autodesk, Inc.
(‘‘Autodesk’’) and Softdesk, Inc.
(‘‘Softdesk’’).
The proposed Order has been placed
on the public record for sixty (60) days
for reception of comments from
interested persons. Comments received
during this period will become part of
the public record. After sixty (60) days,
the Commission will again review the
Agreement and the comments received
and will decide whether it should
withdraw from the Agreement or make
final the Agreement’s proposed Order.
The Commission’s investigation of
this matter concerns a proposed
acquisition by Autodesk of Softdesk. In
December 1996, Autodesk and Softdesk
entered into an Agreement and Plan of
Reorganization whereby Autodesk will
acquire 100% of the voting securities of
Softdesk in exchange for share of
Autodesk common stock with a value of
$90 million (the ‘‘Acquisition’’).
The Agreement Containing Consent
Order would, if finally accepted by the
Commission, settle charges that the
Autodesk acquisition of Softdesk as
originally proposed may have
substantially lessened competition in
the development and sale of computer
aided design (‘‘CAD’’) engines for
Windows-based personal computers in
the United States or in North America.
The Commission has reason to believe
that Autodesk’s original proposal to
acquire Softdesk violates Section 5 of
the Federal Trade Commission Act and
that the acquisition, if consummated,
would have violated Section 7 of the
Clayton Act and Section 5 of the Federal
Trade Commission Act, unless an