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71566
Federal Register
/Vol. 67, No. 231/Monday, December 2, 2002/Notices
1
Section 3 of the Textile Act, 15 U.S.C. 70a;Section 3 of the Wool Act, 15 U.S.C. 68a.
Dated: November 27, 2002.
Robert deV. Frierson,
Deputy Secretary of the Board.
[FR Doc. 02
–
30620 Filed 11
–
27
–
02; 2:06 pm]
BILLING CODE 6210
–
01
–
P
FEDERAL TRADE COMMISSIONSunshine Act Meeting
AGENCY
:
Federal Trade Commission.
TIME AND DATE
:
10 a.m., Tuesday, January 7, 2003.
PLACE
:
Federal Trade CommissionBuilding, Room 532, 600 PennsylvaniaAvenue, NW., Washington, DC 20580.
STATUS
:
Part of the meeting will be opento the public. The rest of the meetingwill be closed to the public.
MATTERS TO BE CONSIDERED
:
PortionOpen to the Public:
(1) Oral Argumentin Schering-Plough Corporation
et al.,
Docket 9297.
Portion Closed to Public:
(2) ExecutiveSession to follow Oral Argument inSchering-Plough Corporation,
et al.,
Docket 9297.
FOR FURTHER INFORMATION CONTACT
:
Mitch Katz, Office of Public Affairs:(202) 326
–
2180. Recorded Message:(202) 326
–
2711.
Donald S. Clark,
Secretary.
[FR Doc. 02
–
30651 Filed 11
–
27
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02; 8:45 am]
BILLING CODE 6750
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01
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M
FEDERAL TRADE COMMISSIONNotice and Request for CommentRegarding Textile Corporate LeniencyPolicy
AGENCY
:
Federal Trade Commission.
ACTION
:
Notice of Textile CorporateLeniency Policy Statement and requestfor comment.
SUMMARY
:
The Federal TradeCommission (the
‘‘
Commission
’’
) isannouncing a policy statementdescribing the Commission
’
s approachto self-reported minor and inadvertentviolations of certain provisions of therules and regulations implementing theTextile Fiber Products Identification Act(
‘‘
Textile Act
’’
), 15 U.S.C. section 70,
et seq.
, and the Wool Products LabelingAct (
‘‘
Wool Act
’’
), 15 U.S.C. section 68,
et seq.
Although this policy is alreadyin effect, the Commission is solicitingcomments about this policy frominterested persons. If, after consideringany comments, the Commissiondetermines to revise the policy, it willpublish a revised policy statement.
DATES
:
The policy statement is effectiveon December 2, 2002. Comments must be received by December 31, 2002.
ADDRESSES
:
Send written comments toSecretary, Federal Trade Commission,Room H
–
159, 600 Pennsylvania Ave.NW., Washington, DC 20580. Allcomments should be captioned
‘‘
TextileCorporate Leniency Comments.
’’
Comments in electronic form should besent to:
textilecorporateleniency@ftc.gov
as prescribed below.
FOR FURTHER INFORMATION CONTACT
:
Constance M. Vecellio, Attorney,Federal Trade Commission, 600Pennsylvania Ave., NW., Washington,DC 20580, (202) 326
–
2966, or
cvecellio@ftc.gov.
SUPPLEMENTARY INFORMATION
:
Thispolicy statement discusses how theCommission expects to considermitigating factors in matters whereminor and inadvertent violations of theTextile or Wool Rules are self-reported by a company. This policy statementprovides guidance and informationonly, and does not create any rights,duties, obligations, or defenses, impliedor otherwise. The Commissionspecifically retains its discretion fordetermining how to proceed inparticular cases.As noted above, the Commission issoliciting comments about this policyfrom interested persons. If a commentcontains nonpublic information, it must be filed in paper form, and the first pageof the document must be clearly labeled
‘‘
confidential.
’’
Comments that do notcontain any nonpublic information mayinstead be filed in electronic form (inASCII format, WordPerfect, or MicrosoftWord) as part of or as an attachment toemail messages directed to the followinge-mail box:
textilecorporateleniency@ftc.gov.
Suchcomments will be considered by theCommission and will be available forinspection and copying in accordancewith Section 4.9(b)(6)(ii) of theCommission
’
s Rules of Practice, 16 CFRsection 4.9(b)(6)(ii), on normal businessdays between the hours of 8:30 a.m. and5 p.m. at Room 130, Federal TradeCommission, 600 Pennsylvania Avenue,NW., Washington, DC 20580.
I. Introduction
The Commission is announcing apolicy statement that describesgenerally how the Commission willexercise its discretion in matters whereminor and inadvertent violations of theTextile or Wool Rules are self-reported by a company. The purpose of thepolicy is to help increase overallcompliance with these rules while alsominimizing the burden on business of inadvertent labeling errors that are notlikely to cause injury to consumers. Indeveloping this policy, the Commissionlooked for guidance to its existing CivilPenalty Leniency Program, 62 FR 16809(April 8, 1997). That program wasadopted under Section 223 of the SmallBusiness Regulatory EnforcementFairness Act of 1996, (Pub. L. No. 104
–
21) (
‘‘
SBREFA
’’
), and affects only small businesses. This Textile CorporateLeniency Policy is not limited to small businesses, and it differs from the CivilPenalty Leniency Program in that it isnot limited to situations involving theassessment of civil penalties.
II. Background
A. Statutory Disclosure/Labeling Requirements
The Textile and Wool Acts cover mosttextile products, including apparel andhome furnishings such as sheets andtowels. They require that labeling of wool and other textile products conveythree basic pieces of information toconsumers: the fiber content, thecountry of origin, and the name (orregistered identification number) of themanufacturer, importer, or some otherdealer responsible for the item. TheTextile and Wool Rules promulgated bythe Commission explain in detail howthis information should be conveyed,and these requirements have been wellpublicized through
‘‘
how to comply
’’
guides and industry seminars. Theindustry, however, is very large, andmany of its members are small businesses. About 17.7 billion textileswere sold in the United States in 2001,and about 34,000 companiesparticipated in the manufacture,importation, and sale of these items.Accordingly, it is not surprising thatminor violations regularly occur.
B. Enforcement Authority and History
The Textile and Wool Acts providethat violations of those acts, or of theimplementing Textile or Wool Rules, areviolations of the Federal TradeCommission Act.
1
Violations of theTextile or Wool Rules can be prosecutedadministratively or in district court. Inaddition, pursuant to section 5(l) of theFederal Trade Commission Act (
‘‘
FTCAct
’’
), 15 U.S.C. 45(l), violation of aCommission administrative order canresult in a federal court action, withcivil penalties of up to $11,000 perviolation. The Commission also canseek penalties in appropriate situationsunder section 5(m)(1)(B) of the FTC Act,15 U.S.C. 45(m)(1)(B). Under thissection, a company that engages in a
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71567
Federal Register
/Vol. 67, No. 231/Monday, December 2, 2002/Notices
2
The Textile Act itself provides a 3% tolerance,so variations of less than 3% do not violate the Act.
3
In particular, violations of labeling rulesdiscovered by U.S. Customs are not eligible forconsideration under this policy. The Commissionstaff currently cooperates informally with U.S.Customs in assessing the seriousness of labelingviolations, and will continue to do so.
practice that the Commission has foundto be unfair or deceptive in a priordecision also can be subject to civilpenalties of up to $11,000 per violation.Thus, in appropriate instances, theCommission can seek civil penalties infederal court, even when the party is notsubject to a prior order.There have been 31 Textile or WoolAct cases since 1990
—
nine of themfederal court actions with civil penaltiesranging from $10,000 to $360,000. Oneof these cases was a criminal action.(Under both the Textile and Wool Acts,willful acts of mislabeling can becharged as a misdemeanor.)
C. Current Informal Policy for Self-Reported Violations
For many years, the staff of theCommission has been receiving reportsfrom businesses about minormislabeling problems and requests foradvice on how to handle them. The staff has advised that it would notrecommend enforcement action if themislabeled goods are sold withoutrelabeling under the followingconditions:
‘‘
first offense
’’
of this typefor the company; the mislabeling wasinadvertent; the mislabeling is not likelyto lead to consumer injury; and thecompany has undertaken to institutenew procedures to ensure themislabeling will not occur again. TheCommission staff tells the company thatits decision does not bind theCommission, and asks the company toaffirm that it understands that theCommission remains free to takewhatever action it deems appropriateand that the staff is making its decisionnot to recommend action on a one-time basis only. In many of these cases, thecost of relabeling is prohibitive, and thegoods would be destroyed if they couldnot enter commerce without beingrelabeled.The following is a list of the types of mislabeling that have been reported tothe Commission staff and have resultedin advice from the Commission staff thatit would not recommend enforcementaction if the goods were sold withoutrelabeling:
•
Label with required information isaccessible but not immediately obvious(
e.g.
, covered by another label that may be lifted up).
•
Fiber content is correct butconstituent fibers are not listed in orderof prominence (
e.g.
, 20% polyester, 80%cotton instead of 80% cotton, 20%polyester).
•
A trade name is used to identify thefiber rather than the generic name (
e.g.
,lycra rather than spandex).
•
A shortened form of the genericname is used (
e.g.
,
‘‘
poly
’’
is listedrather than polyester).
•
Label contains country of origin butis not in the neck of the garment.
•
The fiber content is slightlyincorrect (
e.g.
, 90% nylon, 10% spandexrather than 85% nylon, 15% spandex).
2
In instances such as these, theCommission staff has advisedcompanies that it would not recommendenforcement action. The Commission believes it will be useful to publiclyannounce this policy, for the benefit of those companies that are not aware thatthey have the option of self-reportingand seeking a one-time reprieve fromthe expense of relabeling mislabeledgoods.
III. Textile Corporate Leniency Policy
The Commission announces thatconsideration of the following factorswill lead the staff to allow mislabeledtextiles to be sold without relabeling:1. The entity reported the violation tothe Commission promptly afterdiscovering it and the violation has not been discovered by the Commission orany other government agency.2. The entity undertakes, in writing,to adopt procedures that will helpensure that the violation does not occurin the future.3. The entity has a low degree of culpability. The degree of culpabilityreflects the efforts taken by the entity todetermine and meet its legal obligations.4. The entity has not been grantedleniency under this program in the lastthree years. In addition, it has not beensubject to any previous enforcementaction by the Commission or otherfederal, state, or local law enforcementjurisdiction for the same or similarconduct. Where there have been priorenforcement actions, however, theCommission staff may take intoconsideration, as possible mitigatingfactors, when the previous enforcementaction occurred, and whether theentity
’
s management has changed sincethe previous enforcement action, andother appropriate factors (for example,the use of a new sub-contractor).5. The entity
’
s violations did notinvolve willful or criminal conduct.6. The violations do not causesignificant injury to consumers.As noted, the Commission looked toits Civil Penalty Leniency Programunder SBREFA for guidance. The factorslisted above are in most cases identicalto, or similar to the factors listed in theSBREFA program. Factor 1 is similar toSBREFA factor 1 except that the TextileCorporate Leniency Program includesthe additional requirement that no othergovernment agency has discovered theviolation.
3
Factor 2 differs from thesecond SBREFA factor, which states thatthe entity
‘‘
corrected the violationwithin a reasonable time, if feasible.
’’
Under the Textile Corporate LeniencyPolicy, however, the entity is allowed tosell the mislabeled goods withoutcorrecting the mislabeling, for thereasons stated above, but it mustundertake to adopt procedures that willhelp ensure that the mislabeling doesnot occur in the future. Factor 3 isidentical to factor 3 in the SBREFAprogram in that the efforts taken by theentity to determine and meet its legalobligations are important in determiningculpability. In the SBREFA program,however, efforts to comply with the law
‘‘
are judged in light of such factors asthe size of the business; thesophistication and experience of itsowners, officers, and managers; thelength of time it has been in operation;the availability of relevant complianceinformation; the clarity of its legalobligations; and any active attempts toclarify any uncertainties regarding itsobligations.
’’
Because a company canhave minor and inadvertent violationsof the Textile and Wool Rules in spiteof its size or sophistication or the otherfactors listed in the SBREFA statement,the relevant criteria for culpability, orlack thereof, in this program is based onthe efforts taken by the entity todetermine and meet its legal obligations.Factor 4 in the SBREFA program
—
ability to pay the usual civil penalty
—
is not relevant to this program. Factor 4in this program is identical to factor 5in the SBREFA program, except thatthere is an additional requirement thatthe entity has not been granted leniencyunder this program in the last threeyears. Factor 5 in this program isidentical to factor 6 in the SBREFAprogram, requiring that the conduct not be willful or criminal. Factor 6 in thisprogram is similar to the last factor inthe SBREFA program, except thatreference to health, safety, andenvironmental threats has been omitted because the Textile and Wool Rules donot address health, safety, orenvironmental issues.The policy announced today is notlimited to small businesses because theCommission believes it is a desirablepolicy for any business, large or small,that meets the criteria described above.
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