of any credit insurance. But there is no way that there can be credit insurance without an extension of credit and no way to extend credit for an automobile purchase without the sale of an automobile. Wherefore, it would seem that the insurance depends on the financing transaction but the credit transaction is or may be independent of the insurance, which is, of course, what the investigation seeks to determine.
The Pireno criteria must be applied in terms of their genesis in determining exemption from antitrust laws; their application may be somewhat different in determining exemption from regulation of consumer credit transactions. The Pireno majority argued that Section 2(b) of the Act "was intended primarily to protect intra -industry cooperation in the underwriting of risks." Pireno, supra, 73 L. Ed. 2d at 658-59, citing, Royal Drug, supra, 440 U.S. at 221 (emphasis added by Pireno Court). Congress was concerned that if insurance companies were subject to federal antitrust law, it would be impossible to pool actuarial data and set rates for policies. See generally, Pireno. Allowing the FTC to investigate whether the purchase of credit insurance has been involuntary rather than voluntary in the credit transactions complained of here will not affect the ability of the industry to set rates for insurance offered or sold.
In addition, if the practice sought to be investigated is characterized as the business of insurance because insurance is somehow involved, the insurance industry would be able to expand its McCarran Act protection to new activities by combining diverse activities with the sale of insurance; e.g., mortgage insurance for commercial buildings, health insurance for corporate executives, etc. The courts should guard against this possibility. Hahn v. Oregon Physicians Service, 689 F.2d 840, 1982-2 CCH Trade Cases para. 64,970, n.2 (9th Cir. 1982).
Two of the Pireno criteria clearly suggest this investigation is not of the business of insurance and the third can perhaps be viewed either way. Our application of the Pireno criteria results in a determination that the activity to be investigated to determine the need for regulation is not the business of insurance but the terms and conditions of provision of credit. See, Nurse Midwifery Assoc. v. Hibbett, 549 F. Supp. 1185, 1982-83 CCH Trade Cases para. 65,040 (M.D. Tenn. 1982).
The court holds that the investigation is within the power of the FTC, that is, that the investigation has a legitimate purpose and the inquiry is relevant to that purpose. There remains the issue of whether the subpoena duces tecum is overbroad and burdensome which may not have been adequately addressed. The court will hear the parties on whether the subpoenas are overbroad or unnecessarily burdensome before enforcing them as issued.
AND NOW, this 30th day of June, 1983, upon consideration of the outstanding motions in this matter, and for the reasons set forth in the foregoing Memorandum, it is ORDERED that:
1. Defendant Credico Financial Inc.'s motion for declaratory judgment in its favor is DENIED; the Federal Trade Commission is not precluded by the McCarran-Ferguson Act, 15 U.S.C. § 1012(b), from investigating the activity in connection with which it issued the subject subpoena duces tecum.
2. A hearing will be held on August 5, 1983 at 2:00 p.m., in Courtroom 10-A, United States Courthouse, 601 Market Street, Philadelphia, Pennsylvania, at which time the parties will be heard on whether the Federal Trade Commission's subpoena duces tecum should be enforced as issued or modified.