, et al.€¦ · amc") is a maryland corporation with its principal place of business at 27777...

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227 Modifying Order

IN THE MATTER OF

BAYER AG, ET AL.

MODIFYING ORDER

OF THE FEDERAL

IN REGARD TO ALLEGED VIOLATION OF SEC. 5TRADE COMMISSION ACT AND SEC. 7 OF THE

CLAYTON ACT

Docket C-3007. Final Order, Jan. 1980-Modifying Order, July , 1982

This order reopens the proceeding and modifies the Commission s order issued onJanuary 15 , 1980 , 95 F. C. 254 , by deleting Paragraphs I-IV from the orderso as to relieve respondent of the requirement of divesting asets used tomanufacture allergenic extracts. Accordingly, the portion of Paragraph VIIconcerning respondent's divestiture effort has also been deleted.

REOPENING AND MODIFICATION OF ORDER DOCKET NO. C-3007

By petition filed on February 26, 1982 , respondent Miles Laborato-ries, Inc. ("Miles ), requests on behalf of itself, Bayer AG, and

Rhinechem Corporation that the Commission s order in Docket No.C-3007 be modified so that Miles no longer would be required to

divest assets used to manufacture allergenic extracts. Pursuant toSection 2.51 of the Commission s Rules of Practice the petition wasplaced on the public record and Mr. Stanford Yates, representingKallestad Laboratories, Inc., and Dr. Raymond Rosedale filedcomments.

Miles previously had petitioned the Commission to modify theorder. However, the Commission by a letter dated May 22, 1981

denied the earlier petition but gTanted a year s extension of the timein which Miles was required to divest its allergenic extracts assets.

Upon consideration of Miles ' petition and supporting material andthe public comments, the Commission now finds that due to a Foodand Drug Administration proposal to eliminate Category III(A) as aclassification for biologics, Miles is unable to sell its allergenicextracts business as a complete, viable competitor. In denying Milesprevious petition , the Commission noted that the proposed elimina-tion of Category IIIA) might constitute a changed circumstancesuffcient to warrant modification of the order. Events since then

have established that modification is now warranted. For this reasonthe Commission has determined that the order should be modified.

Accordingly,It is ordered That the proceeding be , and it hereby is, reopened.It is furthered ordered That the order to cease and desist be , and it

hereby is, modified by deleting ParagTaphs I-IV of the order and so

228 FEDERAL TRADE COMMISSION DECISIONS

Modifying Order 100 F.

much of Paragraph VII as relates toefforts. ParagTaph VII wil now read:

reports of Miles ' divestiture

It is further ordered That respondents shall annually, on theanniversary date of this order, submit in writing to the FederalTrade Commission a verified report setting forth in detail themanner and form in which each or every respondent intends tocomply, is complying or has complied with the order.

- - -, - - -

229 Complaint

IN THE MATTER OF

AMERICAN MOTORS CORPORATION, ET AL.

CONSENT ORDER, ETC.. IN REGARD TO ALLEGED VIOLATION OFSEC. 5 OF THE FEDERAL TRADE COMMISSION ACT

Docket C-3093. Complaint, July 1982-Decision, July , 1982

This consent order requires a Southfield , Mich. motor vehicle manufacturer and itssubsidiary to cease , among other things, failing to disclose that the Jeep CJshandle and maneuver differently from ordinary passenger cars under certnreasonably expected driving conditions; and that sharp turns or abruptmaneuvers on pavement may result in loss of control or an accident. Theorder requires the company to place a prescribed sticker on the windshield ofall new Jeep CJs warning owners of the Jeep s handling and maneuveringlimitations; provide all existing Jeep CJ owner s manuals with an informa-tional supplement concerning on-pavement driving and update the ownermanual to include this supplemental information. The company is alsorequired to provide its dealers with a point-of-sale display designed to callattention to the Supplement, and with a suffcient quantity of the Supplementto enable dealers to make it available to each person who requests it. Theorder further requires the company to send to current registered owners ofJeep CJs since 1972, the sticker and the Supplement, together with a letteradvising the owner to affix the sticker to his/her Jeep.

Appearances

For the Commission: Barry E. Barnes, Rachel W Sesser and PaulaK. Stein.

For the respondents: John M Sheridan and Kenneth 1. Gluckmanin-house counsel, Southfield, Mich. Earl W Kintner, Robert H.Neuman and Christopher Smith, Arent, Fox, Kintner, Plotkin &Kahn Washington, D.C. and Robert N. Sayler and Robert M.Sussman, Covington Burling, Washington , D.

COMPLAINT

The Federal Trade Commission , having reason to believe thatAmerican Motors Corporation and Jeep Corporation , corporations(hereinafter "respondents ), have violated Section 5 of the FederalTrade Commission Act, and that a proceeding in respect thereofwould be in the public interest, hereby issues its complaint, statingits charges as follows:PARAGRAPH 1. Allegations in this complaint in the present tense

include the past tense. For purposes of this complaint the following

definitions shall apply:


Complaint 100 F.

(1) Jeep CJ(s) means CJ5, CJ6 or CJ7 model Jeep motor vehiclesmanufactured by Jeep Corporation.

(2) Ordinary passenger car means a vehicle designed primarily fornon-commercial on-pavement usage and excludes utility vehiclesvans, buses or trucks.

(3) Advertisement means any written, verbal or audiovisualstatement, ilustration, depiction or presentation, which is designedto effect the sale or lease of any Jeep CJ, or to create interest in thepurchasing or leasing of such vehicles whether such statementillustration, depiction or representation appears in a brochurenewspaper, magazine. leaflet, circular. mailer, hook insert, catalog.bilboard, public transit card, point-of-sale or lease materials, fimstrip, video presentation , or in a radio or television broadcast or inany other media, regardless of whether such statement, ilustrationdepiction or presentation is characterized as promotional , education-al or informative.

PAR. 2. Respondent American Motors Corporation (hereinafterAMC") is a Maryland corporation with its principal place of

business at 27777 Franklin Road , Southfield, Michigan.Respondent Jeep Corporation (hereinafter "Jeep ) is a Nevada

corporation with its principal place of business at 27777 FranklinRoad, Southfield, Michigan.

AMC dominates and controls the acts and practices of its whollyowned subsidiary Jeep.PAR. 3. AMC's net sales for the fiscal year ending September 30

1979 were in excess of $3.1 billon. Jeep CJ sales for the fiscal yearending September 30, 1979 were in excess of $485 millon withadvertising expenditures of approximately $5 millon.

PAR. 4. Respondents AMC and Jeep individually or collectivelyengage in the manufacture, advertising, sale , lease or distribution ofJeep CJs. AMC and Jeep cause Jeep CJs to be shipped interstatefrom various manufacturing locations.

Therefore, respondents maintain a substantial course of businessin or affecting commerce, as "commerce" is defined in the FederalTrade Commisson Act.

PAR. 5. The Jeep CJ handles and maneuvers differently from anordinary passenger car under certain reasonably expected driving

conditions; sharp turns or abrupt maneuvers on-pavement mayresult in loss of control or an accident.

PAR. 6. The facts alleged in Paragraph Five are material factswhich if known would be considered in a consumer s purchase anduse decision. Respondents ' have failed to disclose these facts. Such

229 Complaint

failure constitutes a material omission of fact and is therefore adeceptive act or practice.PAR. 7. By and through the use of advertisements such as

Legendary" and "Luxury" (copies of which are attached hereto andidentified as Exhibits 1 and 2 and incorporated by reference herein)and other advertisements not specifically set forth herein , respond-ents represent, directly of by implication, that the Jeep CJ may bedriven on-pavement like an ordinary passenger car.PAR. 8. In light of the advertising representations referred to in

ParagTaph Seven, respondents ' failure to disclose facts referred to inParagaph Five renders the advertisements misleading and istherefore a deceptive act or practice.PAR. 9. Respondents ' acts or practices as alleged above have the

capacity and tendency to mislead members of the public. Such actsand practices may prevent consumers from making informedpt;rchase and use decisions. Therefore , such acts or practices causesubstantial economic injury to members of the public and depriveconsumers of information necesary for proper use of the vehiclewhen driven on-pavement.

PAR. 10. The aforesaid acts or practices of respondents are all tothe prejudice and injury of the public and constitute deceptive acts

or practices in or affecting commerce in violation of Section 5 of theFederal Trade Commission Act. These acts and practices, as herein

alleged, are continuing and will continue in the absence of the reliefrequested.


100 F.

COPTON ADVERTISING. INC.IAS_I_A-.. ro-V"rk. 11X2

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Decision and Order 100 F.

DECISION AND ORDER

The Federal Trade Commission having initiated an investigationof certain acts and practices of the respondents named in the captionhereof, and the respondents having been furnished thereafter with acopy of a draft of complaint which the New York Regional Offceproposed to present to the Commission for its consideration andwhich, if issued by the Commission, would charge respondents withviolation of the Federal Trade Commission Act; and

The respondents, their attorneys, and counsel for the Commissionhaving thereafter executed an agreement containing a consentorder, an admission by the respondents of all the jurisdictional factsset forth in the aforesaid draft of complaint, a statement that thesigning of said agTeement is for settlement purposes only and doesnot constitute an admission by respondents that the law has beenviolated as alleged in such complaint, and waivers and other

provisions as required by the Commission s Rules; andThe Commission having thereafter considered the matter and

having determined that it had reason to believe that the respondentshave violated the said Act, and that complaint should issue statingits charges in that respect, and having thereupon accepted the

executed consent agreement and placed such agreement on thepublic record for a period of sixty (60) days, now in furtherconformity with the procedure prescribed in Section 2.34 of its Rulesthe Commission hereby issues its complaint, makes the followingjurisdictional findings and enters the following order:

1. Respondent American Motors Corporation is a corporation

organized, existing and doing business under and by virtue of thelaws of the State of Maryland, with its offce and principal place ofbusiness at 27777 Franklin Road, Southfield, Michigan.

Respondent Jeep Corporation is a corporation organized , existingand doing business under and by virtue of the laws of the State ofNevada with its offce and principal place of business at 27777Franklin Road, Southfield , Michigan.2. The Federal Trade Commission has jurisdiction of the subject

matter of this proceeding and of the respondents , and the proceedingis in the public interest.

ORDER

This Order applies to respondents American Motors Corporation(hereinafter "AMC") and Jeep Corporation (hereinafter "Jeeptheir successors , assigns, officers , agents , representatives, and em-

229 Decision and Order

ployees, directly or through any corporation , subsidiary, division orother device , in connection with the offering for sale, sale, lease ordistribution of Jeep CJ(s) in or affecting commerce as "commerce" is

defined in the Federal Trade Commission Act, within the UnitedStates, including the Commonwealth of Puerto Rico and anyterritory or possession of the United States.

Definitions: For purposes of this Order, the following definitionsshall apply:

1. Jeep CJ(s) shall mean CJ- , CJ-- , or CJ-7 model Jeep vehiclesbuilt since 1972, which are or were manufactured or distributed byAMC or Jeep, and vehicles of substantially equivalent design andperformance. Substantially equivalent performance means a vehiclewhich is substantially similar with respect to its abilty to makesudden sharp turns and abrupt maneuvers on-road. For purposes ofthis definition , other Jeep motor vehicles built from 1972 to 1982 arenot of substantially equivalent design to Jeep CJs.

2. Dealer(s) shall mean all independent person(s), partnership(s)or corporation(s) which, pursuant to a dealer s sales and service

agreement, receive on consignment or purchase new Jeep CJ(s) fromAMC or Jeep for resale or lease to the public. The term dealer(s) shallalso mean all person(s), partnership(s) or corporation(s) owned oroperated by respondents which sell or lease new Jeep CJ(s) to thepublic.

It is ordered That respondents shall, within 120 days from thedate of servce of this Order, affx a sticker to each new Jeep CJvehicle manufactured or distributed by AMC or Jeep. The stickershall read as follows:

This multipurpose vehicle handles and maneuvers .differently from an ordinarypassenger car. AF with other vehicles of this type, sudden sharp turns and abruptmaneuvers may result in loss of control. Read driving guidelines in Owner s Manualand Supplement.

WEAR SEATBELTS AT ALL TIMES

Respondents shall affx the sticker to the instrument panel orwindshield frame of each new Jeep CJ in a prominent location. Thesticker shall be printed in a typeface and color which are clear andconspicuous. Respondents shall advise their dealers in writing not toremove the sticker.



II.

It is further ordered That respondents shall , within 120 days fromthe date of service of this Order, distribute an informationalsupplement to the Owner s Manual for new Jeep CJ(s) (hereinafterSupplement") which is similar in scope and subject matter to the

current pamphlet "Driving Your 4-Wheel Drive Vehicle" a copy of

which is attached as Exhibit A. The supplement shall include thefollowing statement in an on-pavement driving section:

Utility vehicles have higher ground clearance and narrower track to make themcapable of performing in a wide variety of off-road applications. Specific design

characteristics give them a higher center of gravity than ordinary cars. An advantageof the higher ground clearance is a better view of the road allowing you to anticipateproblems. They are not designed for cornering at the same speeds as conventional

2WD vehicles any more than low-slung sports cars are designed to performsatisfactorily under off-road conditions. If at all possible, avoid sharp turningmaneuvers. As with other vehicles of this type , failure to operate this vehicle correctlymay result in loss of control or an accident.

The Supplement shall also include the following statement in theintroduction:

As with other vehicles of this type, failure to operate this vehicle correctly may resultin loss of control or an accident. Be sure to read on-pavement and off-road drivingguidelines which follow.

The above-required language shall be printed in a typeface at leastas large as that which is used in the main body of the Supplement.Nothing contrary, inconsistent or in mitigation of the above-requiredlanguage shall be used in the Supplement.

III.

It is further ordered That respondents shall, within 120 days fromthe date of service of this Order, revise the Owner s Manual for newJeep CJs to include the information that is required by Part II of thisOrder. Headings , typeface , and other devices consistent with thoseused for warnings in the Owner s Manual shall be used to ensureclarity and prominence of the information required. Nothing con-trary, inconsistent or in mitigation of the information required shallbe used in the Owner s Manual.

IV.

It is further ordered That any substantive modification of theinformation required by Part II or Part III of this Ord"r may be

AMERICAN MOTORS CORP. , ET AL. 237


made only upon prior written approval of the Commission. A requestfor approval shall be in writing and shall be deemed granted if notdisapproved within 60 days after receipt by the Commission.

It is further ordered That respondents shall, within 120 days afterservice of th;s Order, insert a copy of the Supplement and theOwner s Manual into the glove box of each new Jeep CJ prior to thedistribution of the vehicle.

VI.

It is further ordered That respondents shall provide to each dealera reasonable number of free copies of the Supplement to enabledealers to make the Supplement available to each prospective JeepCJ purchaser or lessee who requests it. Respondents shall alsoprovide to each dealer one free point-of-sale display designed to callattention to the Supplement. Respondents shall advise their dealersin writing to (1) maintain such point-of-sale display in a prominentlocation in the dealer s showroom and (2) provide a copy of theSupplement to each person who requests it. Respondents shallimplement the requirements of this Part within 120 days from dateof servce of this Order.

VII.

It is further ordered That respondents shall, within 150 days afterservice of this Order, send by first-class mail to each identifiablecurrent registered owner of Jeep CJ(s) from the 1972 model year tothe effective date of this Order the following materials: (1) the stickerrequired by Part I; (2) the Supplement required by Part II; and (3) aletter advising the owner to affx the sticker to the Jeep CJ. Currentregistered owners shall be deemed identifiable if they can be tracedusing the same sources used to develop lists for recall notificationspursuant to the National Traffc and Motor Vehicle Safety Act of

1966.

VIII.

It is further ordered That respondents distribute a copy of thisOrder to all present and future personnel who have supervisoryresponsibilty with respect to the subject matter of this Order.

Respondents shall secure from each such person a signed statement



acknowledging receipt of this Order. Respondents shall also distrib-ute a copy of this Order to each dealer.

IX.

It is further ordered That respondents shall maintain documentsdemonstrating compliance with this Order. Upon reasonable re-quest, respondents shall make available to the Commission or itsstaff for inspection and copying documents which shall include, butnot be limited to, the following:

A. The name and last known address of each owner who was sentthe materials required by Part VII of this Order.B. The name and last known address of each owner whose

materials were returned undelivered by the United States PostalService.C. Communications from dealers regarding the distribution of

the Supplement which are received by the department responsiblefor such distribution.

It is further ordered That in the event that respondent AMC

Jeep merges with another corporation or transfers all or a substan-tial part of its business or assets to any other corporation , respondentAMC or Jeep shall require said successor or transferee to filepromptly with the Commission a written agreement to be bound bythe terms of this Order; provided, that if respondent AMC or Jeepwishes to present to the Commission any reasons why said Ordershould not apply in its present form to said successor or transferee, itshall submit to the Commission a written statement setting forthsaid reasons prior to the consummation of said succession ortransfer.

XI.

It is further ordered That respondents shall, within one hundredand eighty (180) and three hundred and sixty-five (365) days after thedate of service of this Order, fie with the Commission reports settingforth in detail the manner and form in which they have compiledwith this Order.

AMERICAN MOTORS CORP. , ET AL. 239


And Gettig AlongWIth The Envionment

Jeep. Owner s ManU1l1 SupplementSmall SporU CJtllty Edition(CJ.5, CJ-7 and5cbler)


100 F.Decision and Order

Contents

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bow Your Vehcle_IO_""_",-,,SI..-prln...._----"'lIlhllun _.IcTh..-'-mu-_In_'''_I.._atr_'""....--. TIIa...OIdl"-_Io..o'I""'"'''I''_""""",....IuI_t...IO"'Clrltul..on1"" I.,,"""'f_rr""--_""-'-_'II_"" In...--tOOO""-'. I""---IN_""-.

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-,-'''lyca'odOotn:Driver ADd P.._ngen ShoudBe Secar At Al Tlmll ByThe R8Itrt Sy.te

Y.. _"'..wawi'''_-..-- U.'-"""'II..N&_5&I..yConc!l."'I.'lglndc-. ,n. ....- ""1- -"CO 'njuri TIl. ca 01-""""" '1UIn.... ""I",.

Drive Siowlyr Be CautlouslBe Alert!

W..'.."lomll,a'''''"'M'.''dl'.n....0,..ng, I,,,m01Y"".n. 10 01 0'.0&'80, Lum'Oan"Clpa,.",oo'.m..na,o

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O'..."',"C.'.'.,.acCO'Olngly. Gi..yo"...tltlm.'o'ue"o.m.'g.ncy"'U."OM, Oo.."'.tnogUlo."n.ot.''..'.c.r'.ng,not.oac.""'....nyo".no'n..on,ct..n.."Olyoulo,,,,,'Q""'.'D.'hpU'YDU...aming Wn.n",.'nO"'O"', OMotnlgn' I"o",...n"'or..oac.'ooyO,,OI"'.'O'II"""'OO'"'y,

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Avoid ShaqJ TurningManeuverssn "'W'y ""L I..

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n.... '''''''0 '0 mo.. In"" oaac'O 0' oonO,"nll ,n

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a! aU.", ooo"cot,ono, Sg"",!lo !1"' n awOCI...i!! o, ". In.. 0 "'II"" Cln'.. 01 'O"'Y Ilt oml.. ..Th....no, "-""lIn.. !",com..,nll ;n '"0"". r"'"'on """""0"1'2WC''''C,...",,..,nanl''"'""II'''Oca"""-Olf\"'" '0 pOrlo....".rocu.nIY "_an...uonalt,onL "'" ...an'..o 01 ",

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""'' 01.. '.0C8,.....o' '"0.. oll..nqyau '0 antJ,,I''O I!O'&!I_o. ._.n""'''' II-''

:-C-" Approach Curve. CautioualYISlowly

Thoa"'ool._o,..n,cn'O'akOoOU""'.""-."...naatOy,noc"",ntugarar,n....,JlDo....on,no''''010. 8ooUMO' you' J8O'WD,,,,.'. 1 nlgn. 0..,..01

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0""'''o'no''o1dn.,n I__ y"",",ldna,.nomat '0 go.. '''''"rcugn'um'''1'' mlgnrlno-lIunOIl.CO, ._".,tom'IyCO.

Slow Down In Cra...iD.St",nqgulun "'nQ."!!U"9'''_oI..-.O""

.o8CIlOd.'ify- Drm"9O_u"""_co'-,,,,,m'nlm...tn.oU..tlan '..yo..OOru.

Proceed WIU. Care On Road8With A Pronounced Slope ToThe Shoulder

"",,,"..d"'II""''''',,o o,,..n o''''lInCI"''''O"o,.,..'I!d"'nOtl'''o.url.u. Cc"",,,,,,", Ou,,ylinQlaurOr on 0'0... ,",un";l'_ n.."". ''''0''0 IOaQ w,l" 0n'g""- '''''''o''ooo'o..n, r""O'O''" .U''ono....Q,,"""""'m...o,"..nOUld..,nyoul....o,O. YOUCMcoun,ont'''O.IOQII..ot..'oonOydn.,nIlOJOlOlo'"OC""n.""lIuto",nll'"O"'lIn""'d";d"-

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,.,nQJnll",,'h "'0' at Olpi and rolll. yom....O'Pd..mo'"I""'Y""SI""y

Regularly Check And MaintainYour Vehicle Equipment

lIyou,v""""o'ntoo",nn"'lIor. _OI'8uotrout".. cM 1 01 tM ..IoJO 1 a,_ng ""'_, pa- ,rea_. l!nnll". """__"'. 11'''111'"

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..pour..

Road CondltloDa And SurfacesAffect The Way You DriveY",_'d_I'_L\'........pl-lurl-..-,oq..,nl'_OIdIU..t "ana1l"l ,..

po_t""IM Th"'"u_"'v""..""opun"y1OLC,tyst.-lon""'''lIn",no..I-IUrlKn"'''O. .o""",''OO,. I.V''Od. sm,"",on""....aI8CtOPf, WMI"",conlt",,,.OU"'OU'-.YrllC. COOllnQrorotUlma..I8"....IM,Uon,MII pI 'M d"-. On ,". I Ollaqpoq,,_w"1dl"".o""ortno'""n'au..rO'd nllon'""OUI-"""-""Y_dllt""'_""OfCanc:UUonl



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Off-RoadDriving Guidelines

ml.""_'on, ..n.'\'rJ_""rc,...CI'OCIO. una....""oj'con,U,",nl ""14WO- Su'a.,'_,no""-''''''CI YClU"'''''gU,,II,..lO""p,.\n""" gnY""4WD""Ic""n'''_'a;a"''''''rw''o 'n.'.''"P' Y'''-''' lvolI"""""---'""-nQaI'_IoI-COIl.,"'cII\lauOc.'You' 'nlf . lo

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Gea RecOlleDdaUOD8Par Off.R_d DrivlgWo__Iam.-DC---QotN__II..-O----tOlI.w-au...,81"-""'"oa-r... DI_I_oc.--'--OT_In,-Ol._-.,---=--V_IO_"'OSl"'''II----IM-"_""n__,_"oa.-.....--O&I ""I'W."(I;I-""-011"-II-"ID8

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IO"' g..,."'Sypno"nu..

Driving Off. RoadOn Steep InclinesAnd SldehlllsBeI...._ng_ta ""uc.t"cn'"I""O''-

nlnl. m."no,.o..n,moonlnt oo'nl. U yOu 00"' m_"10 tn. ,oo_ e'yOu""'lcl. I. aIt 10 ""01 e' ,Oll,_"ya.010c_,u,nO"'M

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cu'"ln,a'''''o..rCUlcn,""01"''"0 br... .nO 0.' oul an ..oi dow". An cunCO or pr....Hon""O"""CCunoclcuI'

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nlll ornion II nol "8 .'..11 .noul lIorlV' boO.. ..lIn II''""""ullan_ W_ao'olbll ,,ol" a'"U't!..I\'OO...Mn ,au '. Inln au' cl you' .""0110" "" I",' . be SU'"'o",,'on Inlupnlll """

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Decision and Order

Driving Off-Road OnRock And Sand

lafOdIOlu"'"Q d""" On'OC""O'o. O"'cal""'"-Ul, '''It Ou,.d''Y.n'"'aC.'''!a'''''''DlLyau,p,".,,.Muld Do,noo",,,", la'on '''Ldu.,n'nelln'"QHII..uwml,","nonC"".uqg..,lloa,n.hn'/I"--ouau'c"' ;lna'c'_ln...uc u...Rock

ThlboalC ",,,M'QUI Icrd"y;n9;n'cekcan""'''alfau'III,,,,.: S.L-oW- Lo.. '"n91. Cr_, up. er dO. An-.'" II"""",. 'OC 'oa"

If ou ",IOU'Oml"" ""nlm'II'on

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In un au' Dr'0l1 au'"'' dawn aU f 11 ,ceo ou IOdIH-"", CllmOlua, wltnlmlnul"ran'''"'',, I''''''''"do",n,ne,ocll

a,"st Ino,no comp'o..",n . You 'IcIJI,noongln"OC""""II, , bu, ,"",., ,no ""' '0 dO'!.O""""cnolo"M'''Cr'ir...-...'-.'OC."'I'!1lnQ,n.ro. au_'''Y''I'', ,,,,",ou',,,"""an" Squ....,on 't Thin I" know"",,, "" II"'d,n"',"n a'n ,on'Qn"".n,..,ouO'cl'rOU'-'C4U""","II"""

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ouoa'n..un!l. lnll1""!.'n...noa_pulllup '0 "'" oo,n' 'nl'YOU CI 0"'. off I"" oU.""lng oajOC.Tn." mQ ,no .."..leSLOWLY-I"",'""ng ' n'I""

Sand.h"OCM'Cu.IO'dri..n 'n"",'nYOI'"'",oor,n..

_"ncln'''. 'n,mOIl ,,,,,non' of..n'cn"," o" '0001 I!nu o.n 00 ,n,. p.o""n9 ",,,nl""uqn.a," 'Omllnll,n

mo",.",um. P nl""Q P,g ,,,.., a, Y _!UIIV '""uc'n Inlp,enu,e ,n normtJ. .,," "'.1. Romlm".. II ou ao ""'u,,"'e p,,,ou'.lna an," an dl"""" 11,.. o'.mIlU'.,".IIO",ne"",. "lIom"" """'I"''''''''''''',O"u''"".oP'o,,,,,,nl."'icl.,,..,,,..,u'"

'I.au n,,"..no"po,on oJ oon..o 10 "" om.... . rou coI'" 'uon" ..a moe it ICre..- S'ud. 'nl ."..';on , dIC1C1

n.,. yOU a'h '0 O, ,n." OIC. uo. I"". Iliml",n "' ilP mo..,nlOUlh .,. """,, piel. "a, ",oop,nq. na' ma,ng

00"'01 cn.. .. of ol..lon , on no, n""""n on ' I ...,." vau

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Driving Off. Road InMad And RaiDIIaoi _11_"__'"_01-"1"_111'1\1-'. ._""'-""11tt__"_'n_,ol_.."""ICrl1n pr II 111_"""'._""''--.._..."_t""'Ig Cita.-.IIQIlA.oI_,.8I..-

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II yo ,."" on un_a""..a. MO","O",.,..m8Y"'''rnloo',ngou'I""u..yau""....o..".moo.."'...orI"U,og.'Und..o,_n. tT...onnc,OIHOIO'Y""""on""I_ngt..b8n..g8tcag"'bY._. !co.n''''1IK.IM"""I' H...Of '"'"'gn.. grond.

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Driving Off. Road OnSnow_..II_,noll1_--_"'_..",oa_II"IIIC8II.IIc"Th'.'ra- "'I_tl.., I'!:IIIO_IIPI'"up.nl",'o't"'II__""I.I__Th...pr.."...tal"O_,_,....,.lIlconllllkaan"'_--H:-..T1I...llllntt""on'''''''II-.lnl""l8-"ng'o- Iraoornao..nln"-- Oo.II8.allO"".

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Wheel-Drive ClubsAnd ActivitiesWhat They Can Do For You

WII 'ho n; n in..,.., in 011.'0"""9 m."y 'K'.."....-"""'''''0l81 "0. Acro.. "__I"'"""'''''cluG'"8V_!c''... Th.''rc,":Ta...._lngmolnaniu"""".I'IU"",, '''''.,Ianltfo8lI, ue"'ng!."",y..,,..- Gluc.CADoCl"';''''''",yruns,a_alnay","U,ocom"""''''''O!!!I-.18,.-,... So Ii.. ,.. c""".ngl"'.OIp."""-,0. 01". 1I_ic18C '0 ,'' lP8oaly "'1B

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,","""",

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Complaint 100 FTC.

IN THE MATTER OF

THE TIMES MIRROR COMPANY, INC.

DISMISSAL ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OFSEC. 5 OF THE FEDERAL TRADE COMMISSION ACT

Docket 9103. Complaint, July 1977-Dismissal Order, July , 1982

This order returns the matter to adjudication and dismisses the complaint charginga Los Angeles , Calif. publisher with adversely affecting competition by the useof a discriminatory rate structure for run-of-the-paper and suburban displayadvertising, Having considered the views of the parties and the commentsreceived from the public , the Commission concluded that the public interestwould best be served by rejecting the consent agreement and dismissing thecomplaint.

Appearances

For the Commission: Carleton C. Eastlake, Jon R. Calhoun andCaprice L. Collins.

For the respondent: Julian O. von Kalinowski, John J. Hanson, J.Edd Stepp, Jr., Joseph A. Collns and C. Lobdell, Gibson, Dunn &Crutcher Los Angeles , Calif.

COMPLAINT

Pursuant to thE) provisions of the Federal Trade Commission Act(15 U. C. 41 et seq. and by virtue of the authority vested in it bysaid Act, the Federal Trade Commission , having reason to believethat the party listed in the caption hereof and more particularlydescribed and referred to hereinafter as respondent, has violated theprovisions of Section 5 of the Federal Trade Commission Act, asamended , (15 U. C. 45) and Section 2(a) of the Clayton Act, asamended , (15 U. C. 13) and it appearing to the Commission that aproceeding by it in respect thereof would be in the intE)rest of thepublic , hereby issues its complaint, stating its charges as follows:

PARAGRAPH 1. Respondent Times-Mirror Company, Inc. is acorporation organized on or about October 6, 1884, and is existingand doing business under and by virtue of the laws of the State ofCalifornia. Respondent maintains its home office and principal placeof business at Times-Mirror Square, Los Angeles, California.

PAR. 2. Respondent is the largest publicly-held publishing compa-ny in the United States. Its newspaper publishing revenues were

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252 Complaint

approximately 44% of its total revenue in 1976, or about $426milion.

PAR. 3. Publication of the Los Angeles Times newspaper is thelargest operation of respondent Times-Mirror Company. The Los

Angeles Times enjoys an average daily circulation in excess of onemilion copies, and has the largest weekday circulation among thenation s standard-size newspapers. The Los Angeles Times has formany years led all newspapers in the nation in advertising volume.Its total advertising revenues for 1976 were approximately $276

milion, with retail display advertising approximately one-half oftotal advertising revenues.

PAR. 4. In connection with its newspaper publishing operationsfrom its home and branch offces, respondent solicits, offers to selland sells advertising linage in the Los Angeles Times to purchaserslocated in the various States of the United States. In the course ofsuch operations it frequently sends and receives contracts, ratecards, advertising materials , bilings and payments across statelines.

The acts and practices herein described in connection with thepromoting, offering for sale and sale of newspaper advertising linageto retail merchandisers are (( in or affecting commerce" as the termcommerce" is defined by the Federal Trade Commission Act, as

amended, and Hin commerce " as defined in the amended ClaytonAct.

PAR. 5. The Los Angeles Times is distributed and sold primarilyin Los Angeles County, Orange County, Riverside County, SanBernardino County, San Diego County, San Luis Obispo County,

Santa Barbara County, Tulane County, and Ventura County inCalifornia; with some addtional distribution in numerous otherstates and the District of Columbia. For example , the Los Angeles

Times has a significant and substantial distribution in the State ofArizona and in Clark County, Nevada.

PAR. 6. In the course and conduct of its business , respondent hasbeen and is now offering to sell and sells advertising linage tovarious purchasers, including, among others, persons, firms andcorporations engaged in the manufacture , distribution, offering forsale or sale of merchandise at retail. A substantial number of theretailer purchasers of respondent's advertisers have retail outlets inother states as well as California. The advertising linage purchasedis used for the purpose of offering for sale or promotion of products,labels and materials.

PAR. 7. Retail merchandisers who purchase advertising linage inthe Los Angeles Times have also promoted merchandise to customers


Complaint 100 F.

in adjoining states, who travel into California to purchase productsor purchase them by mail order. Marketers of merchandise offered

for sale and sold at retail , who purchase advertising linage in the LosAngeles Times, also promote sales in some out-of-state locationsthereby.

PAR. 8. In the course and conduct of its business, respondent hasbeen and is now discriminating in price, directly or indirectly,

between different purchasers of its advertising linage of like gradeand quality, by sellng said commodities at higher prices to some

purchasers than it sells to other purchasers , many of whom havebeen and now are in competition with the purchasers paying thehigher prices. More specifically, respondent offers for sale and sellsadvertising linage to persons, firms or corporations engaged in theoffering for sale, sale and distribution of merchandise at retailincluding, but not limited to, apparel and accessories, appliancesand furniture. Such sales are made on the basis of a rate structurethat results in higher advertising rates to some competing purchas-ers than to others.

The aforesaid rate structure provides for a cumulative volumediscount on an annual basis according to the number of lines that anadvertiser or prospective advertiser may purchase or agree topurchase. Advertisers or prospective advertisers who agree topurchase a specific number of lines may take advantage of yearlybulk contract rates , whereas advertisers or prospective advertiserswho cannot and do not contract for a specified number of columnlines pay at the "open rate" price level. The price per line purchaseddecreases as the linage purchased increases. The differences in ratesper line are substantial.PAR. 9. Respondent's use of a cumulative volume discount

advertising rate structure results in a substantial and systematicdiscrimination in the price of advertising linage sold to various

customers , in that larger volume advertisers receive more favorablerates than smaller volume advertisers.

COUNT I

Alleging violation of Section 5 of the Federal Trade CommissionAct , as amended.

PAR. 10. The allegations of Paragraphs One through Nine areincorporated by reference herein as if fully set forth verbatim.PAR. 11. Respondent's advertising rate structure , and the dis-

crimination in the price of advertising between and among variouspurchasers of advertising linage, adversely affect competition be-

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252 Statement

tween those paying higher and those paying lower advertising ratesand constitute unreasonable restraints of trade and unfair methodsof competition in or affecting commerce within the intent andmeaning of Section 5 of the Federal Trade Commission Act, asamended.

COUNT II

Alleging violation of Section 2(a) of the Clayton Act, as amended.PAR. 12. The allegations of ParagTaphs One through Nine are

incorporated by reference herein as if fully set forth verbatim.PAR. 13. The effect of respondent's discrimination in prices may

be substantially to lessen competition or tend to create a monopolyin the lines of commerce in which its favored purchasers areengaged, or to injure , destroy or prevent competition between thefavored and non-favored purchasers, and constitute violations of theprovisions of subsection (a) of Section 2 of the Clayton Act, asamended.

STATEMENT OF THE COMMISSION

By BAILEY CommissionerThe Commission brought this case in 1977 out of a concern that

the Los Angeles Times discriminatory rate structure for run-of-the-paper and suburban display advertising adversely affected competi-tion by disadvantaging smaller advertisers. In November 1980 theLos Angeles Times entered into a negotiated agreement and jointlywith FTC staff proposed a consent order for the Commissionconsideration.

On September 25 , 1981 , the Commission , Commissioner Clantondissenting, provisionally accepted the consent order. At that timehowever, the Commission expressed concern about whether theorder would work as intended, and whether it was practical orfeasible to apply similar orders to newspapers in other markets. TheCommission believed it had insuffcient data against which to test itsconcerns and so sought public comment on the order for ninety days.

The comment period produced a broad sampling of opinion: 65newspapers and broadcasters, 13 media trade associations, 10retailers, 7 trade associations and four individuals responded. Of the99 comments received , 98 urged the Commission to reject the consentorder.

These comments caused reexamination of two important assump-tions which formed the basis of the Commission s original decision tobring the case and on which the proposed consent was based. The


Statement 100 F.

first assumption was that smaller advertisers were injured competi-tively by the Los Angeles Times cumulative volume discount ratestructure. However, all but one of the retailers and retail tradeassociations which responded opposed the consent agTeement andindicated no concern about competitive injury. Their position wasreinforced by academics knowledgeable in the field of mass mediaeconomics, who concluded that the benefits of the proposed orderwere fairly speculative, and that the order might well raise prices toall advertisers. Thus, the Commission has concluded that thebenefits to competition from accepting this order are much moreuncertain than was originally believed.

The comments also highlighted the issue of whether the principlesof this order could or should be extended beyond the Los AngelesTimes. It now appears that to do so within the newspaper industrywould be unwise, as the type of uniform pricing required by the ordercould impair the pricing flexibility of secondary size papers. Werethe principles of the order to be extended to other advertising mediathe uncertainties as to the trade-offs between vigorous pricingflexibilty and the benefits of eliminating price discriminationincrease. In particular, making cross-media comparisons for the

purpose of assessing a valid meeting competition defense is likely tobe impossible. Clearly, however, it was never the Commissionintention, and would be inappropriate now, to leave the Los AngelesTimes as the only seller of advertising space subject to Robinson-

Patman Act principles.In conclusion , the Commission notes that the process of decision-

making in this matter worked precisely as the Commission s Rulescontemplate. The scope and depth of public comment contributedgreatly to the Commission s ability to reach an informed decision.

SEPARATE STATEMENT OF CHAIRMAN MILLER

In concurring with the Commission s decision today, I am heart-ened to find that the extensive administrative exercise required to

analyze this consent proposal has reached the same conclusion thatmy analysis of the likely economic consequences, as well as myreading of the law, would have suggested in the first instance.

First, economic analysis and overwhelming public comment havedemonstrated persuasively that an order applying Robinson-Patmanrules to newspaper advertising could injure competition in thisindustry.

Second, and more importantly, it seems quite clear that the intent

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252 Statement

of CongTess was to leave advertising rates outside the reach of the

Robinson-Patman Act. ' While I do not dispute our role of fillnginadvertent gaps in antitrust law with enforcement of the FTC Actthat role should stop short of creating law in defiance of Congress.

SEPARATE STATEMENT OF COMMISSIONER CLANTON

I concur with the Commission s decision to dismiss the complaintin this matter not only for the reasons set out in the Commissionstatement but for an additional reason that I expressed earlier whenI voted not to accept provisionally the negotiated consent agTeement.My decision to dismiss this complaint stems from my concerns aboutextending the coverage of Section 5 of the FTC Act to encompasscommercial circumstances on which we reserved judgment inReuben H. Donnelley Corp., 95 F. C. 1 (1980), rev d sub nom. OfficialAirline Guides, Inc. v. FTC 630 F.2d 920 (2d Cir. 1980), cert. denied101 S.Ct. 1362 (1981).The Commission s opinion in Donnelley did not distinguish be-

tween an absolute refusal to deal and dealing on discriminatoryterms. While we did not foreclose the possibility of reaching pricediscrimination under Section 5, we emphasized the difficulties ofextending a duty to deal into the area of secondary-line discrimina-tion, which is at issue in Times-Mirror. In Dunnelley, we signaled acautionary note for any future applications of such a duty to dealwhere the inevitable result would be to involve the Commission inregulatory-style monitoring of the reasonableness of pricing or otheron-going activities. 95 F. C. at 81. Furthermore, in definingarbitrary " conduct in Dunnelley, we indicated that our concern

should be limited to "conduct which results in a substantial injury tocompetition and lacks substantial business justification. Id. at 82. I

was persuaded earlier and remain persuaded that this matter wouldnot be likely to meet the Donnelley standards for liability. At theleast, I am persuaded that this possibilty is insuffcient to justifyacceptance of the order, especially in light of the other significantuncertainties associated with the case.

SEPARATE STATEMENT OF COMMISSIONER PERTSCHUK

I have voted to reject the tentatively accepted order against Times-Mirror for two reasons.

First, the benefits to competition from accepting this order aremuch more uncertain than we had believed. The comments, by

, In Senate floor debates , Senator Logan flatly replied

, "

" wh.m asked if the Act. would require newspapersselling advertising to obsrve its price discrimination provisions. 80 Cong. Rec. 3115.


Dismisal Order 100 F.

newspapers, retailers and academics alike, overwhelmingly supportthe view that the competitive strength of newspapers themselvesrequire more pricing flexibilty than the order allows and thatsmaller retailers may not be significantly helped by it.

Second, it is clear that, if we were to prohibit newspapers fromgiving discounts to large advertisers which are not cost-justified, we

should apply the same principle to other advertising media whichcompete with newspapers, including network and cable television. Ido not see a realistic possibility that this Commission in theforeseeable future wil apply Robinson-Patman principles in thisway, and I do not believe it is appropriate to single out Times-Mirroras the only company to be subjected to such standards.

Consequently, I join the Commission in rejecting this particularorder. It is important to state , however, that this decision by theCommission does not represent any repudiation of Robinson-Patmanprinciples, only a decision that it would be inappropriate to applythem in this case. '

Finally, I note that Times-Mirror, to its credit, argued its positionthoroughly and carefully on the merits and through public comment.It did not, as has increasingly become the custom , solicit members ofCongTess to pressure the Commission, after having heard an

incomplete and biased presentation of the disputed issues.

FINAL ORDER RETURNING MATTER TO ADJUDICATION ANDDISMISSING COMPLAINT

On November 7 , 1980 , this matter was withdrawn from adjudica-tion for consideration by the Commission of a proposed consentageement. The Commission accepted the proposed consent and

placed it on the public record on September 25 , 1981 , for commentpursuant to Section 3.25(D of the Commission s Rules of Practice andProcedure.

Having considered the views of the parties to the consent and thecomments received from the public, the Commission has determinedthat the public interest would best be served by rejecting the consentagTeement and dismissing the complaint. Therefore

It is ordered That this matter be returned to adjudication andIt is furthered ordered That the complaint issued in the matter be

and it hereby is, dismissed.

I I ag with Charman MHler a point in his statement that the Commision should not defy the wil ofCongr. I therefore am hopeful that the CommiBion wil continue to enforce the RobinEln-Patman Act in other

inustries.

259 Modifying Order

IN THE MA'IER OF

LENOX, INCORPORATED

MODIFYING ORDER IN REGARD TO ALLEGED VIOLATION OF THEFEDERAL TRADE COMMISSION ACT

Docket 8718. Final Order, April 1968-Modifying Order, July , 1982

This order reopens the proceeding and modifies the Commission s modified orderissued on June 24 , 1970 , 77 F. C. 860, by deleting Paragraph 8 from theorder, so as to allow Lenox to prevent transshipping of its products by itsauthorized dealers. The Commission has also included a provision whichprevents Lenox from taking disciplinary action against any dealer fortransshipment which occurred before the effective date of the order.

DECISION AND ORDER

Whereas a "Request of Lenox , Incorporated for Modification ofFinal Order" was fied by Respondent on March 15 , 1982 pursuant toSection 5(b) of the Federal Trade Commission Act, 15 U. C. 45(b),

and Section 2.51 of the Commission s Rules of Practice, 16 C., wherein Lenox , Incorporated seeks a partial modification of the

order that issued on June 24 , 1970 by the deletion of Paragraph 8;and

Whereas the matter was thereafter placed on the public record forthirty (30) days pursuant to Section 2.51(c) of the Commission s Rulesof Practice , 16 C. R. 2.51(c), during which time comments from thepublic were received; and

Whereas the Commission thereafter considered the Petitionpresented by Lenox, Incorporated and all of the materials andinformation submitted as public comments on the petition and hasdetermined that the request makes a satisfactory showing thatchanged conditions of fact and law and the public interest ' requirethat the order be reopened for the purpose of modification.

Accordingly, it is ordered that the matter is reopened and that theorder is modified by deleting the language of paragraph 8 that reads:

Requiring or inducing, by any means, dealers or prospective dealers to refrain , or toagee to refrain , from resellng respondent' s products to any dealers or distributors;

It is further ordered, That paragraphs 9 and 10 be renumbered to 8and 9.

It is further ordered That nothing herein shall be construed topermit respondent to terminate or otherwise discipline any dealerfor (1) having resold respondent's products to any dealer or distribu-tor prior to the effective date of this order or (2) for any such resale


Modifying Order 100 F.

that occurs prior to the dealer s receipt of notice that it may bedisciplined for such resale.

Commissioner Bailey voted in the negative.

SEPARATE STATEMENT OF COMMISSIONER PERTSCHUK

1 wish to make clear why I voted for Lenox s petition to modify theCommission order prohibiting it from engaging in resale pricemaintenance. The petition persuaded me that the ban on transship-ping, which was included in the order originally only as an ancillarymeans of deterrence, was no longer a necessary safeguard againstvertical price fixing by Lenox and could safely be dropped from theorder. The petition argued that the requested relief was alsonecessary to maintain a strong Lenox presence and vigorousinterbrand competition in the houseware china business, and that itwould not cause a rollback of the gains in intrabrand competitionthat have occurred during the life of the order. In this regard , I foundthe petition to be much less persuasive. I do not believe it has beenestablished in this reopening proceeding that competition in thechina industry wil be improved as a result of allowing Lenox toprevent transshipping of its products by its authorized dealers.However, since Lenox has met the statutory standard for modifyingorders by showing that the ancilary transshipping provision is nolonger appropriate under the circumstances , it is entitled to therelief gTanted.

, et al.€¦ · amc") is a maryland corporation with its principal place of business at 27777...

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