Dear Mr. Berman:

            Thank you for your letter of May 30 (postmarked June 28), replying to CAC’s comments in the Napa Valley case. We have given serious consideration to the FTC’s reply to our concerns, and after reviewing the Commission’s position and other relevant materials, we have determined that our original position on this matter is correct, and that the consent order adopted by the FTC is not consistent with the public interest.

            Since your reply letter failed to address most of the arguments raised in our initial comment letter, we can only assume that the Commission has chosen to evade our concerns. Given the substantial and credible objections raised by CAC, we are gravely troubled by the FTC’s failure to articulate any rationale for its position in this case.

            While we acknowledge the FTC’s position on the constitutionality of the Federal Trade Commission Act, CAC maintains its application in this case is unwarranted and harmful to the rights of both the respondents and the public itself. In your letter, you indicate you understand our position that there was no legal injury caused by the respondents, yet you do not make any effort to refute or otherwise disprove our claim. Therefore, CAC is left to conclude that the Commission accepts our argument, but has nevertheless chosen to disregard it.

            Second, your letter states the Commission’s belief that “the consent order is the product of a negotiated settlement between the Commission and the respondents.” Once again, CAC finds the FTC’s grasp of basic capitalist principles to be somewhat underwhelming. In contract law, it is well established that a voluntary agreement is reached by a “meeting of the minds” which is free of coercion among the parties. Here, the respondents essentially signed a settlement agreement at the barrel of a proverbial gun held by the FTC. The consent order gives the FTC all substantial relief sought in its initial complaint, while giving the respondents absolutely nothing. The settlement proceeding was hardly a meeting of equals. This action is as much a “negotiated settlement” as the recent actions by the government of Cuba to ratify 40 years of failed socialism was a “referendum.” 

            Accordingly, CAC does not believe your claim that our initial comment letter was given “serious consideration,” as required by law. There is no evidence contained in your letter which supports your assertion. You claim that the Commission “determined the public interest would be served” by adopting the consent order “[a]fter” reviewing our letter. Clearly, this is false. Based on the Commission’s inability to articulate any rationale in rebuttal to the arguments raised in our comments, we believe that the FTC had already made up its mind as to whether this agreement was in the “public interest” well before it had read or considered our comments.

            Additionally, we are mindful of the fact that in the public announcement of the adoption of the consent order here, the FTC claimed that it had received no public comments whatsoever, and had ratified the final consent order on that understanding. Only after CAC officials contacted the FTC regarding the status of our comment letter were our objections placed upon the public record, something which you were legally required to do before proceeding to final adoption of the settlement. This fact alone makes us seriously doubt your claim that our comments were given “serious consideration” prior to the Commission’s determination that the public interest was being served.

            It is regrettable that the Federal Trade Commission treats its responsibility to the American public so carelessly that it not only ignores its own procedures and legal mandates, but it cannot even offer a simple defense of actions which they purport to take on the public’s behalf. When we submitted our comments to the FTC, we expected that our substantive arguments would have been addressed by the Commission. This did not occur.

In the future, we hope CAC’s efforts to serious address the Commission’s activities are met with a greater degree of courtesy, competence and professionalism.

            Thank you again for your reply.

            Sincerely,

            S.M. Oliva
            Director of Federal Affairs