Hunton Retail Law Resource

This past week, several consumer actions made headlines that affect the retail industry.

Private Litigation

Antitrust Claims Against Comcast for Spot Ad Sales Survive Motion to Dismiss

A U.S. District Court judge has found that antitrust claims against Comcast, alleging that the company impaired ad agency Viamedia’s ability to compete in the spot cable ad market, may proceed. When cable providers contract with cable networks (e.g., ESPN and CNN), the cable providers agree to pay the networks to carry their programs and the providers gain rights to sell a certain amount of spot advertising on the network. In this case, Viamedia claims that Comcast abused its monopoly power through tying and exclusive dealing agreements to harm competition in the cable spot advertising market and to favor its own spot advertising company. Comcast responded by arguing, among other things, that Viamedia only alleged that Comcast’s practices harmed the plaintiff as a competitor and not competition in the market – the hallmark of antitrust injury. The Court found that Viamedia alleged not only harm to competitors, but to competition as a whole, and has permitted the advertisers antitrust claims to proceed in the litigation.

Agency Enforcement

FTC Requires Valeant to Divest Recently Acquired Paragon

Valeant Pharmaceuticals International, Inc., parent company of Bausch+Lomb, has agreed to divest Paragon Holdings, which it acquired in May 2015, to settle charges that the acquisition violated the Clayton Act and the FTC Act. The FTC claimed that the acquisition eliminated competition between Valeant and Paragon in the market for FDA-approved buttons used to make certain gas permeable contact lenses. The combined entity controlled more than 70 percent of the relevant market, which, according to the FTC, resulted in the exercise of market power to increase price, reduce output and decrease innovation.

FTC Charges Housing Insulation Manufacturer with Making False Claims

The FTC has filed suit in the U.S. District Court for the Western District of Pennsylvania against Innovative Designs, Inc., for allegedly making false and unsubstantiated claims in its advertising about its insulating housing wrap product. The company claimed that its wrap, Insultex House Wrap, would save consumers money based on the company’s claims that its products meet certain criteria for resisting the flow of heat. The FTC alleges that the housing wrap products do not meet or exceed this criteria and that the company misleads consumers by claiming so.

FTC Charges Prepaid Card Company for Deceptively Marketing Reloadable Debit Card

The FTC has filed a complaint in the U.S. District Court for the Northern District of Georgia against NetSpend, a reloadable prepaid debit card provider, based on three counts: (1) allegedly making deceptive representations about the its cards being “immediately” ready for consumers to use and allowing consumers “immediate” access to their funds; (2) making deceptive representations about “guaranteed approval”; and (3) deceptively representing that NetSpend would provide provisional account credit to cover account errors claimed by consumers until the disputes are resolved.

Agency Rulemaking

FTC Approves Final Changes for Used Car Rule

The FTC has approved final changes to the Used Car Rule which requires car dealers to use window stickers, or “Buyer Guides,” for used cars sales. The sticker is required to disclose whether the dealer is selling the car “as is” or with a warranty. If the sale is with a warranty, the sticker must disclose the terms and conditions of the warranty including coverage duration, costs covered by dealer and vehicle systems covered by the warranty. If a state does not allow used cars to be sold “as is,” then the dealer must use an alternative guide to disclose whether the car comes with a warranty or with implied warranties only.

Industry Self-Regulation

CARU Recommends Toy Companies Add Disclosures

The Children’s Advertising Unit (“CARU”) has recommended that Moose Toys add an audio disclosure to its broadcast advertising indicating that figures made using the “Qixels 3D Maker” require up to 60 minutes to set up before being handled. CARU has also recommended that PlayMonster, LLC, add an audio disclosure to its broadcast advertising that assures viewers that its “Chrono Bomb” game uses colored string to simulate a laser field instead of laser-type lights or glowing material. The toy manufacturers have accepted CARU’s recommendations.

Infomerical Group Refers Solar Matter to the FTC

The Electronic Retailing Self-Regulation Program (“ERSP”) has referred two solar power marketers, SolarExpertsUSA.com and BestSolarExperts.com, to the FTC after failing to provide substantive responses to ERSP inquiries. Under ERSP policy, if a marketer does not provide substantive responses to ERSP’s inquiry within a certain time period, the matter is referred to the FTC.

NAD Recommends YouTube Videos Be Discontinued

The National Advertising Division (“NAD”) has recommended that Spectrum Brands, which markets Rayovac FUSION AA Batteries, discontinue two YouTube commercials that show products, which are depicted as using Energizer MAX batteries, failing at critical times. According to the NAD, the commercials convey the unsupported claim that all Rayovac batteries last longer than Energizer batteries. Spectrum has accepted the NAD recommendation.

NAD Recommends Company Cease Comparative Flea and Tick Claims

The NAD has recommended that Zoetis, Inc., discontinue advertising that compares the efficacy of its Simparica dog collars to competitor products, and makes the claim that its products are more effective at protecting dogs from fleas, ticks and other parasites. The NAD found that Zoetis based its comparison claims on flawed product testing that did not use the competitor’s product as directed in the product’s instructions. Zoetis has accepted the NAD recommendation.