Art Supplier Settles FTC Charges

The leading supplier of wood products used to construct frames for artists’ canvases has agreed to settle Federal Trade Commission charges that it attempted to fix prices and restrain trade in the market for these products, known as stretcher bars. Under the order, Precision Moulding, based in Cottonwood, California, will be barred from any acts to induce competitors to conspire with them to fix or raise prices.

This is the second FTC case involving alleged pricing practices announced this week. In the other case, the FTC announced that New Balance Athletic Shoe, Inc., agreed to settle charges that it fixed resale prices of its shoes in violation of antitrust laws, thereby raising prices for consumers.

“We intend to move swiftly and decisively against companies whether they are engaged in illegal price fixing or attempting to fix prices,” said William J. Baer, Director of the FTC’s Bureau of Competition. “Price fixing is a way to pick consumers’ pockets. It erodes competition and the cost savings that come with it,” he said.

According to the FTC complaint detailing the charges, Precision was planning to raise its prices when it learned that a new competitor in the field was offering stretcher bars to art supply stores at prices lower than Precision’s. The President and General Manager flew from California, where Precision is located, to the east coast to visit the headquarters of their competitor. The Precision representatives allegedly invited the competitor to fix prices. The Precision officials allegedly suggested that the company’s prices were “ridiculously low” and that the company did not “have to give the product away.” When the competitor refused to engage in a price-fixing discussion, the Precision officer threatened a price war saying that the competitor would not survive, the complaint alleges.

The invitation by Precision to its competitor to raise prices, if accepted, would constitute an agreement to restrain trade in violation of federal law, according to the FTC complaint. The invitation by Precision allegedly violates the FTC Act, which prohibits “unfair methods of competition.”

To settle the FTC charges, Precision will be barred from “requesting, suggesting, urging or advocating that any competitor raise, fix or stabilize prices or price levels,” and from entering into any agreement or conspiracy to fix, raise, or maintain prices.

The commission vote to accept the proposed consent agreement for public comment was 5-0.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $10,000.

Copies of the complaint and proposed consent are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov

(FTC File No. 951 0124)