[Federal Register Volume 59, Number 173 (Thursday, September 8, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-22118]


[[Page Unknown]]

[Federal Register: September 8, 1994]


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FEDERAL TRADE COMMISSION

[File No. 931 0090]

 

First Data Corporation; Proposed Consent Agreement With Analysis 
To Aid Public Comment

agency: Federal Trade Commission.

action: Proposed consent agreement.

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summary: In settlement of alleged violations of federal law prohibiting 
unfair acts and practices and unfair methods of competition, this 
consent agreement, accepted subject to final Commission approval, would 
permit, among other things, First Data Corporation to acquire Western 
Union Financial Services, Inc. as long as it divests either its own 
consumer money wire transfer business or that of Western Union. The 
divestiture would require Commission approval, would have to be 
completed in a specified time period, and would require the respondent 
to provide personnel, assistance and training to the new acquirer. In 
addition, the consent agreement would require the respondent, for ten 
years, to obtain Commission approval before acquiring any interest in 
any entity engaged in the consumer money wire transfer business.

dates: Comments must be received on or before November 7, 1994.

addresses: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

for further information contact: Casey Triggs or James Egan, Jr., FTC/
S-2224, Washington, DC 20580. (202) 326-2682 or 326-2886.

supplementary information: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the 
Commission's rules of practice (16 CFR 2.34), notice is hereby given 
that the following consent agreement containing a consent order to 
cease and desist, having been filed with and accepted, subject to final 
approval, by the Commission, has been placed on the public record for a 
period of sixty (60) days. Public comment is invited. Such comments or 
views will be considered by the Commission and will be available for 
inspection and copying at its principal office in accordance with 
Sec. 4.9(b)(6)(ii) of the Commission's rules of practice (16 CFR 
4.9(b)(6)(ii)).

Agreement Containing Consent Order

    The Federal Trade Commission (``Commission''), having initiated an 
investigation of the proposed acquisition of all of the voting stock of 
Western Union Financial Services, Inc. (``Western Union''), by First 
Data Corporation (``First Data''), and it now appearing that First 
Data, hereinafter sometimes referred to as ``proposed respondent,'' is 
willing to enter into an agreement containing an Order to divest 
certain assets, and to cease and desist from making certain 
acquisitions, and providing for other relief:
    It is hereby agreed by and between proposed respondent, by its duly 
authorized officers and attorney, and counsel for the Commission that:
    1. Proposed respondent First Data Corporation is a corporation 
organized, existing and doing business under and by virtue of the laws 
of the State of Delaware with its office and principal place of 
business located at 401 Hackensack Avenue, Hackensack, New Jersey 
07601.
    2. Proposed respondent admits all the jurisdictional facts set 
forth in the draft of complaint here attached.
    3. Proposed respondent waives:
    a. Any further procedural steps;
    b. The requirement that the Commission's decision contain a 
statement of findings of fact and conclusions of law;
    c. All rights to seek judicial review or otherwise to challenge or 
contest the validity of the Order entered pursuant to this agreement; 
and
    d. Any claim under the Equal Access to Justice Act.
    4. This agreement shall not become part of the public record of the 
proceeding unless and until it is accepted by the Commission. If this 
agreement is accepted by the Commission it, together with the draft of 
complaint contemplated thereby, will be placed on the public record for 
a period of sixty (60) days and information in respect thereto publicly 
released. The Commission thereafter may either withdraw its acceptance 
of this agreement and so notify the proposed respondent, in which event 
it will take such action as it may consider appropriate, or issue and 
serve its complaint (in such form as the circumstances may require) and 
decision, in disposition of the proceeding.
    5. This agreement is for settlement purposes only and does not 
constitute an admission by proposed respondent that the law has been 
violated as alleged in the draft of complaint here attached, or that 
the facts as alleged in the draft complaint, other than jurisdictional 
facts, are true.
    6. This agreement contemplates that, if it is accepted by the 
Commission, and if such acceptance is not subsequently withdrawn by the 
Commission pursuant to the provisions of Sec. 2.34 of the Commission's 
rules, the Commission may, without further notice to the proposed 
respondent, (1) issue its complaint corresponding in form and substance 
with the draft of complaint here attached and its decision containing 
the following Order to divest and to cease and desist in disposition of 
the proceeding, and (2) make information public with respect thereto. 
When so entered, the Order shall have the same force and effect and may 
be altered, modified or set aside in the same manner and within the 
same time provided by statute for other orders. The Order shall become 
final upon service. Delivery by the U.S. Postal Service of the 
complaint and decision containing the agreed-to Order to proposed 
respondent's address as stated in this agreement shall constitute 
service. Proposed respondent waives any right it may have to any other 
manner of service. The complaint may be used in construing the terms of 
the Order, and no agreement, understanding, representation or 
interpretation not contained in the Order or the agreement may be used 
to vary or contradict the terms of the Order.
    7. Proposed respondent has read the proposed complaint and Order 
contemplated hereby. Proposed respondent understands that once the 
Order has been issued, it will be required to file one or more 
compliance reports showing that it has fully complied with the Order. 
Proposed respondent further understands that it may be liable for civil 
penalties in the amount provided by law for each violation of the Order 
after it becomes final.

Order

I.
    It is ordered that, as used in this Order (including Appendix I), 
the following definitions shall apply:
    A. ``Respondent'' Or ``First Data'' means First Data Corporation, 
its subsidiaries, divisions, groups and affiliates controlled by First 
Data Corporation, and their respective directors, officers, employees, 
agents, and representatives, and their respective successors and 
assigns.
    B. ``Western Union'' means Western Union Financial Services, Inc., 
a wholly-owned subsidiary of New Valley Corporation, with its principal 
office and place of business located at One Mack Center Drive, Paramus, 
New Jersey 07652. Western Union provides and markets, among other 
things, consumer money wire transfer services.
    C. ``Commission'' means the Federal Trade Commission.
    D. ``Acquisition'' means the direct or indirect acquisition of all 
of the voting stock or substantially all of the assets of Western Union 
Financial Services, Inc., a wholly-owned subsidiary of New Valley 
Corporation, by Respondent First Data.
    E. ``Consumer Money Wire Transfer Service'' means the business of 
transferring the right to money using computer or telephone lines from 
one person through the location of a Selling Agent to a different 
person physically present at the location of a Selling Agent available 
to the general public through Selling Agents at retail outlets as 
currently offered by First Data and Western Union. ``Consumer Money 
Wire Transfer Service'' does not include transactions involving 
automatic teller machines and other point of sale devices, debit cards, 
cash advances utilizing credit cards, home banking, prepaid telephone 
and cash cards, money orders, and utility bill payment services and 
further does not include the provision of data processing services to a 
Consumer Money Wire Transfer Service business.
    F. ``Selling Agent'' means a person or business, such as a check 
cashing store, a drug store, a supermarket, a postal service, a bus 
station, or a travel agency, that contracts with Consumer Money Wire 
Transfer Service providers to provide the Consumer Money Wire Transfer 
Service to customers.
    G. ``MoneyGram Service'' means First Data's Consumer Money Wire 
Transfer Service marketed under the name ``MoneyGram.''
    H. ``MoneyGram Assets'' or ``MoneyGram Business'' include all 
assets, properties, business and goodwill, tangible and intangible, 
related to the sale and marketing of the MoneyGram Service, including, 
but not limited to:
    1. The MoneyGram trade name, trade dress, trade marks, and service 
marks; and,
    2. A group of contracts with Selling Agents to provide the 
MoneyGram Service that provides a network of Selling Agents at least 
comparable to the group of Selling Agents under contract to provide the 
MoneyGram Service on January 1, 1994 other than the American Express 
Travel Related Services Company Travel Service Offices, based on 
characteristics of the Selling Agents such as the countries and cities 
served, number of Selling Agents, and type of outlet.
    I. ``Western Union Service'' means Western Union's Consumer Money 
Wire Transfer Service.
    J. ``Western Union Assets'' or ``Western Union Business'' include 
all assets, properties, business and goodwill, tangible and intangible, 
related to the sale and marketing of the Western Union Service, 
including, but not limited to:
    1. The Western Union trade name, trade dress, trade marks, and 
service marks; and,
    2. All contracts with selling agents to provide the Western Union 
Service.
    K. ``Assets To Be Divested'' means either the MoneyGram Assets or 
the Western Union Assets. The definition of ``Assets To Be Divested'' 
as well as any other provision in this order, however, shall not be 
construed to prohibit First Data from divesting both the MoneyGram 
Assets and the Western Union Assets to different acquirers.
    L. ``Marketability, Viability, and Competitiveness'' of the Assets 
To Be Divested means that such assets when used in conjunction with the 
assets of the acquirer or acquirers are capable of providing a Consumer 
Money Wire Transfer Service substantially similar to the Consumer Money 
Wire Transfer Service that the Assets To Be Divested are capable of 
providing at the time of the Acquisition.
    M. ``Non-public information'' means any information not in the 
public domain furnished to First Data in its capacity as a provider of 
data processing services by a Consumer Money Wire Transfer Service 
provider.
II.
    It is further ordered that:
    A. Respondent shall divest, absolutely and in good faith, within 
the later of (i) fifteen (15) months after the date this Order becomes 
final or (ii) three (3) months after the date the Acquisition takes 
place pursuant to an order of the United States Bankruptcy Court for 
the District of New Jersey in ``In re New Valley Corporation, Debtor,'' 
Case No. 91-27704 NW, the Assets To Be Divested and shall also divest 
such additional ancillary assets and businesses other than money order 
or utility bill payments businesses and effect such arrangements as are 
necessary to assure the Marketability, Viability, and Competitiveness 
of the Assets To Be Divested.
    B. Respondent shall divest the Assets To Be Divested only to an 
acquirer or acquirers that receive the prior approval of the Commission 
and only in a manner that receives the prior approval of the 
Commission. The purpose of the divestiture of the Assets To Be Divested 
is to ensure the continued use of the Assets To Be Divested in the same 
businesses in which the Assets To Be Divested are presently engaged, 
and to remedy the lessening of competition resulting from the 
Acquisition as alleged in the Commission's complaint.
    C. Respondent shall make available to the acquirer or acquirers 
such First Data personnel, assistance and training as the acquirer or 
acquirers reasonably need to transfer technology and know-how, and 
First Data shall continue providing such personnel, assistance and 
training at no additional cost for a period of time sufficient to 
satisfy the acquirer's or acquirers' management that its personnel are 
appropriately trained in the business. However, Respondent shall not be 
required to continue providing such personnel, assistance and training 
for more than six (6) months after the Assets To Be Divested are 
divested pursuant to this Order.
    D. Pending divestiture of the Assets To Be Divested, Respondent 
shall take such actions as are necessary to maintain the Marketability, 
Viability, and Competitiveness of the Assets To Be Divested, and to 
prevent the destruction, removal, wasting, deterioration or impairment 
of any of the Assets To Be Divested except for ordinary wear and tear. 
Provided, however, that nothing in this Paragraph shall be construed to 
prohibit First Data from competing in the ordinary course of business.
    E. Respondent shall comply with all terms of the Agreement to Hold 
Separate, attached to this Order and made a part hereof as Appendix I. 
The Agreement to Hold Separate shall continue in effect until such time 
as Respondent has divested all Assets To Be Divested as required by 
this Order.
III.
    It is further ordered that:
    A. If First Data has not divested, absolutely and in good faith, 
and with the Commission's prior approval, the Assets To Be Divested 
within the time period specified in Paragraph II.A. of this Order, the 
Commission may appoint a trustee to divest the Western Union Assets. In 
the event that the Commission or the Attorney General brings an action 
pursuant to section 5(l) of the Federal Trade Commission Act, 15 U.S.C. 
45(l), or any other statute enforced by the Commission, First Data 
shall consent to the appointment of a trustee in such action. Neither 
the appointment of a trustee nor a decision not to appoint a trustee 
under this Paragraph shall preclude the Commission or the Attorney 
General from seeking civil penalties or any other relief available to 
it, including a court-appointed trustee, pursuant to section 5(l) of 
the Federal Trade Commission Act, or any other statute enforced by the 
Commission, for any failure by the Respondent to comply with this 
Order.
    B. If a trustee is appointed by the Commission or a court pursuant 
to Paragraph III. A. of this Order, Respondent shall consent to the 
following terms and conditions regarding the trustee's powers, duties, 
authority, and responsibilities:
    1. The Commission shall select the trustee, subject to the consent 
of Respondent, which consent shall not be unreasonably withheld. The 
trustee shall be a person with experience and expertise in acquisitions 
and divestitures. If Respondent has not opposed, in writing, including 
the reasons for opposing, the selection of any proposed trustee within 
ten (10) days after notice by the staff of the Commission to Respondent 
of the identity of any proposed trustee, Respondent shall be deemed to 
have consented to the selection of the proposed trustee.
    2. Subject to the prior approval of the Commission, the trustee 
shall have the exclusive power and authority to divest the Western 
Union Assets.
    3. Within ten (10) days after appointment of the trustee, 
Respondent shall execute a trust agreement that, subject to the prior 
approval of the Commission and, in the case of a court-appointed 
trustee, of the court, transfers to the trustee all rights and powers 
necessary to permit the trustee to effect the divestiture required by 
this Order.
    4. The trustee shall have twelve (12) months from the date the 
Commission approves the trust agreement described in Paragraph III. B. 
3. to accomplish the divestiture of the Western Union Assets, which 
shall be subject to the prior approval of the Commission. If, however, 
at the end of the twelve (12) month period, the trustee has submitted a 
plan of divestiture or believes that divestiture can be achieved within 
a reasonable time, the divestiture period may be extended by the 
Commission, or, in the case of a court-appointed trustee, by the court; 
provided, however, the Commission may extend this period only two (2) 
times.
    5. The trustee shall have full and complete access to the 
personnel, books, records and facilities related to the Western Union 
Assets or to any other relevant information, as the trustee may 
request. Respondent shall develop such financial or other information 
as such trustee may request and shall cooperate with the trustee. 
Respondent shall take no action to interfere with or impede the 
trustee's accomplishment of the divestitures. Any delays in divestiture 
caused by Respondent shall extend the time for divestiture under this 
Paragraph in an amount equal to the delay, as determined by the 
Commission or, for a court-appointed trustee, by the court.
    6. The trustee shall use his or her best efforts to negotiate the 
most favorable price and terms available in each contract that is 
submitted to the Commission, subject to Respondent's absolute and 
unconditional obligation to divest at no minimum price. The divestiture 
shall be made in the manner and to the acquirer or acquirers as set out 
in Paragraph II. of this Order; provided, however, if the trustee 
receives bona fide offers from more than one acquiring entity, and if 
the Commission determines to approve more than one such acquiring 
entity, the trustee shall divest to the acquiring entity or entities 
selected by Respondent from among those approved by the Commission.
    7. The trustee shall serve, without bond or other security, at the 
cost and expense of Respondent, on such reasonable and customary terms 
and conditions as the Commission or a court may set. The trustee shall 
have the authority to employ at the cost and expense of Respondent, 
such consultants, accountants, attorneys, investment bankers, business 
brokers, appraisers, and other representatives and assistants as are 
necessary to carry out the trustee's duties and responsibilities. The 
trustee shall account for all monies derived from the sale and all 
expenses incurred. After approval by the Commission and, in the case of 
a court-appointed trustee, by the court, of the account of the trustee, 
including fees for his or her services, all remaining monies shall be 
paid at the direction of the Respondent, and the trustee's power shall 
be terminated. The trustee's compensation shall be based at least in 
significant part on a commission arrangement contingent on the 
trustee's divesting the Western Union Assets.
    8. Respondent shall indemnify the trustee and hold the trustee 
harmless against any losses, claims, damages, liabilities, or expenses 
arising out of, or in connection with, the performance of the trustee's 
duties, including all reasonable fees of counsel and other expenses 
incurred in connection with the preparation for, or defense of any 
claim, whether or not resulting in any liability, except to the extent 
that such liabilities, losses, damages, claims, or expenses result from 
misfeasance, gross negligence, willful or wanton acts, or bad faith by 
the trustee.
    9. If the trustee ceases to act or fails to act diligently, a 
substitute trustee shall be appointed in the same manner as provided in 
this Paragraph of this Order.
    10. The Commission or, in the case of a court-appointed trustee, 
the court, may on its own initiative or at the request of the trustee 
issue such additional orders or directions as may be necessary or 
appropriate to accomplish the divestiture required by this Order.
    11. The trustee shall have no obligation or authority to operate or 
maintain the Western Union Assets.
    12. The trustee shall report in writing to Respondent and the 
Commission every thirty (30) days concerning the trustee's efforts to 
accomplish divestiture.
IV.
    It is further ordered that if First Data divests the MoneyGram 
Assets pursuant to Paragraphs II. or III. of this Order, First Data 
shall not enter into any Consumer Money Wire Transfer Service contract 
with any Selling Agent who is under contract to provide the MoneyGram 
Service at the time of the divestiture; provided, however, that First 
Data may enter into such a Consumer Money Wire Transfer Service 
contract (i) after the time the Selling Agent's contract with First 
Data would have expired had the divestiture not occurred determined 
without regard to any contract extension or renewal that could occur 
after the date of the divestiture or (ii) if the contract is terminated 
in accordance with its terms other than as may be permitted as a result 
of the divestiture of the MoneyGram Assets.
V.
    It is further ordered that nothing in this Order shall be construed 
as prohibiting First Data from entering into agreements with any 
Consumer Money Wire Transfer Service provider, including the acquirer 
or acquirers of the MoneyGram Business and the Western Union Business, 
for the provision of data processing services provided that:
    A. No First Data officer, employee or agent who is involved in 
providing First Data's Consumer Money Wire Transfer Service receives 
non-public information of any other Consumer Money Wire Transfer 
Service provider;
    B. First Data uses any non-public information obtained by First 
Data only in First Data's capacity as a provider of data processing 
services; and
    C. First Data delivers a copy of this Order to each officer, 
employee or agent involved in marketing First Data's Consumer Money 
Wire Transfer Service or in providing data processing to any other 
Consumer Money Wire Transfer Service provider prior to First Data's 
obtaining any non-public information relating to the provider's 
business.
VI.
    It is further ordered that, for a period of ten (10) years from the 
date this Order becomes final, Respondent shall not, without the prior 
approval of the Commission, directly or indirectly, through 
subsidiaries, partnerships, or otherwise:
    A. Acquire any stock, share capital, equity, or other interest in 
any concern, corporate or non-corporate, presently engaged in, or 
within six months preceding such acquisition engaged in, providing a 
Consumer Money Wire Transfer Service in the United States; provided, 
however, that no agreement with a Selling Agent, or actions connected 
with such an agreement, relating to the Selling Agent's providing a 
First Data Consumer Money Wire Transfer Service shall be construed as 
such an acquisition; or
    B. Acquire any assets used at the time of such acquisition for or 
previously used for (and still suitable for use for) providing a 
Consumer Money Wire Transfer Service in the United States other than 
the acquisition of assets in connection with the provision of services 
described in Paragraph V. of this Order.
VII.
    It is further ordered that: A. Within sixty (60) days after the 
date this Order becomes final and every sixty (60) days thereafter 
until Respondent has fully complied with the provisions of Paragraphs 
II. and III. of this Order, Respondent shall submit to the Commission a 
verified written report setting forth in detail the manner and form in 
which it intends to comply, is complying, and has complied with 
Paragraphs II. and III. of this Order. Respondent shall include in its 
compliance reports, among other things that are required from time to 
time, a full description of the efforts being made to comply with 
Paragraphs II. and III. of the Order, including a description of all 
substantive contacts or negotiations for the divestiture and the 
identity of all parties contacted. Respondent shall include in its 
compliance reports copies of all written communications to and from 
such parties, all internal memoranda, and all reports and 
recommendations concerning divestiture.
    B. One (1) year from the date this Order becomes final, annually 
for the next nine (9) years on the anniversary of the date this Order 
becomes final, and at such other times as the Commission may require, 
Respondent shall file a verified written report with the Commission 
setting forth in detail the manner and form in which it has complied 
and is complying with Paragraphs IV., V. and VI. of this Order.
VIII.
    It is further ordered that Respondent shall notify the Commission 
at least thirty (30) days prior to any proposed change in the corporate 
Respondent such as dissolution, assignment, or sale resulting in the 
emergence of a successor corporation, or the creation or dissolution of 
subsidiaries or any other change in the corporation that may affect 
compliance obligations arising out of this Order.
IX.
    It is further ordered that, for the purpose of determining or 
securing compliance with this Order, subject to any legally recognized 
privilege, and upon written request with reasonable notice to First 
Data made to its General Counsel, Respondent shall permit any duly 
authorized representative of the Commission:
    A. Access during office hours of First Data and in the presence of 
counsel, to inspect and copy all books, ledgers, accounts, 
correspondence, memoranda and other records and documents in the 
possession or under the control of Respondent relating to any matters 
contained in this Order; and
    B. Upon five days' notice to Respondent and without restraint or 
interference from it, to interview officers, directors, or employees of 
Respondent, who may have counsel present regarding such matters.
X.
    It is further ordered that Respondent shall not be obligated to 
comply with this Order if First Data abandons the proposed acquisition 
of Western Union after submitting a bona fide bid to the United States 
Bankruptcy Court for the District of New Jersey in connection with ``In 
re New Valley Corporation, Debtor,'' Case No. 91-27704 NW and losing 
that bid. For purposes of this Order, First Data will be deemed to have 
abandoned the proposed acquisition of Western Union after it provides 
written notice to the Commission that it has abandoned its proposed 
acquisition and has withdrawn any related notifications filed pursuant 
to Section 7A of the Clayton Act, as amended, 15 U.S.C. 18a.

Appendix I

Agreement to Hold Separate

    This Agreement to Hold Separate (the ``Agreement'') is by and 
between First Data Corporation (``First Data''), a corporation 
organized, existing, and doing business under and by virtue of the laws 
of the State of Delaware, with its office and principal place of 
business at 401 Hackensack Avenue, Hackensack New Jersey 07601; and the 
Federal Trade Commission (``the Commission''), an independent agency of 
the United States Government, established under the Federal Trade 
Commission Act of 1914, 15 U.S.C. 41, et seq. (collectively, the 
``Parties'').

Premises

    Whereas, First Data has proposed to acquire, directly or 
indirectly, all of the voting stock or substantially all of the assets 
of Western Union Financial Services, Inc. (``Western Union''), a 
wholly-owned subsidiary of New Valley Corporation, (hereinafter 
``Acquisition''); and
    Whereas, First Data, with its principal office and place of 
business located at 401 Hackensack Avenue, Hackensack, New Jersey 
07601, provides and markets, among other things, Consumer Money Wire 
Transfer Services; and
    Whereas, Western Union, a wholly-owned subsidiary of New Valley, 
with its principal office and place of business located at One Mack 
Center, Paramus, New Jersey 07652, provides and markets, among other 
things, Consumer Money Wire Transfer Services; and
    Whereas, the Commission is now investigating the Acquisition to 
determine whether it would violate any of the statutes enforced by the 
Commission; and
    Whereas, if the Commission accepts the attached Agreement 
Containing Consent Order (``Consent Order''), the Commission must place 
it on the public record for a period of at least sixty (60) days and 
may subsequently withdraw such acceptance pursuant to the provisions of 
Sec. 2.34 of the Commission's rules; and
    Whereas, the Commission is concerned that if an understanding is 
not reached, preserving the status quo ante of the MoneyGram Business 
during the period prior to the final acceptance of the Consent Order by 
the Commission (after the 60-day public notice period), divestiture 
resulting from any proceeding challenging the legality of the 
Acquisition might not be possible, or might be less than an effective 
remedy; and
    Whereas, the Commission is concerned that if the Acquisition is 
consummated, it will be necessary to preserve the Commission's ability 
to require the divestiture of the Assets To Be Divested as described in 
Paragraph I. of the Consent Order and the Commission's right to have 
the MoneyGram Business continued as a viable competitor; and
    Whereas, the purpose of the Agreement and the Consent Order is:
    1. To preserve the viability of the MoneyGram business pending the 
divestiture of the Assets To Be Divested as a viable and ongoing 
enterprise,
    2. To remedy any anticompetitive effects of the Acquisition, and
    3. To preserve the MoneyGram Business as an ongoing and competitive 
Consumer Money Wire Transfer Service until divestiture is achieved; and
    Whereas, First Data's entering into this Agreement shall in no way 
be construed as an admission by First Data that the Acquisition is 
illegal; and
    Whereas, First Data understands that no act or transaction 
contemplated by this Agreement shall be deemed immune or exempt from 
the provisions of the antitrust laws or the Federal Trade Commission 
Act by reason of anything contained in this Agreement.
    Now, therefore, the parties agree, upon the understanding that the 
Commission has not yet determined whether the acquisition will be 
challenged, and in consideration of the Commission's agreement that, at 
the time it accepts the Consent Order for public comment it will grant 
early termination of the Hart-Scott-Rodino waiting period, and unless 
the Commission determines to reject the Consent Order, it will not seek 
further relief from First Data with respect to the Acquisition, except 
that the Commission may exercise any and all rights to enforce this 
Agreement to Hold Separate and the Consent Order to which it is annexed 
and made a part thereof, and in the event the required divestiture is 
not accomplished, to appoint a trustee to seek divestiture of the 
Western Union Assets pursuant to the Consent Order, as follows:
    1. First Data agrees to execute and be bound by the attached 
Consent Order.
    2. First Data agrees that from October 3, 1994 until the earliest 
of the dates listed in subparagraphs 2.a-2.b., it will comply with the 
provisions of Paragraph 3. of this Agreement:
    a. Three business days after the Commission withdraws its 
acceptance of the Consent Order pursuant to the provisions of Section 
2.34 of the Commission's rules;
    b. The day after the divestiture required by the Consent Order has 
been completed.
    3. To ensure the complete independence and viability of the 
MoneyGram Business and to assure that no competitive information is 
exchanged between the MoneyGram Business and First Data, First Data 
shall hold the MoneyGram Business separate and apart on the following 
terms and conditions:
    a. First Data will appoint three individuals to manage and maintain 
the MoneyGram Business. These individuals (``the management team'') 
shall manage the MoneyGram Business independently of the management of 
First Data's other businesses. The individuals on the management team 
shall not be involved in any way in the marketing, selling or 
management of any other First Data business, including the Western 
Union Business.
    b. The management team, in its capacity as such, shall report 
directly and exclusively to an independent auditor/manager, to be 
appointed by First Data. The independent auditor/manager shall have 
expertise in management and marketing. The independent auditor/manager 
shall have exclusive control over the operations of the MoneyGram 
Business, with responsibility for the management of the MoneyGram 
Business and for maintaining the independence of that business.
    c. First Data shall not exercise direction or control over, or 
influence directly or indirectly the independent auditor/manager or the 
management team or any of its operations relating to the operations of 
the MoneyGram Business; provided, however, that First Data may exercise 
only such direction and control over the independent auditor/manager, 
management team and MoneyGram Business as is necessary to assure 
compliance with this Agreement and with all applicable laws.
    d. First Data shall maintain the Marketability, Viability, and 
Competitiveness of the MoneyGram Assets and shall not sell, transfer, 
encumber (other than in the normal course of business), or otherwise 
impair their Marketability, Viability or Competitiveness.
    e. Except for the management team, sales and marketing employees 
involved in the Moneygram Business, and support service employees 
involved in the MoneyGram Business, such as Human Resource, Legal, Tax, 
Accounting, Insurance, and Internal Audit employees, First Data shall 
not permit any other First Data employee, officer, or director to be 
involved in the management of the MoneyGram Business. Sales and 
marketing employees involved in the MoneyGram Business, shall not be 
involved in any other First Data business, including the Western Union 
Business. Support service employees involved in the MoneyGram Business 
shall not be involved in the Western Union Business.
    f. Except as required by law, and except to the extent that 
necessary information is exchanged in the course of evaluating the 
Acquisition, defending investigations or litigation, or negotiating 
agreements to divest assets, First Data, other than sales and marketing 
employees involved in the MoneyGram Business, or support service 
employees involved in the MoneyGram Business, shall not receive or have 
access to, or the use of, any material confidential information about 
the MoneyGram Business, the activities of the management team, sales 
and marketing employees involved in the MoneyGram Business, or support 
service employees involved in the MoneyGram Business in managing that 
business not in the public domain, nor shall the management team, sales 
and marketing employees involved in the MoneyGram Business, or support 
service employees involved in the MoneyGram Business receive or have 
access to, or the use of, any material confidential information about 
the Western Union Business or the activities of First Data in managing 
the Western Union Business not in the public domain. Any such 
information that is obtained pursuant to this subparagraph shall be 
used only for the purpose set forth in this subparagraph. (``Material 
confidential information,'' as used herein, means competitively 
sensitive or proprietary information not independently known to First 
Data from sources other than the management team, sales and marketing 
employees involved in the MoneyGram business, or support service 
employees involved in the MoneyGram Business and includes but is not 
limited to customer lists, price lists, marketing methods, patents, 
technologies, processes, or other trade secrets.)
    g. First Data shall not change the composition of the management 
team unless the independent auditor/manager consents. The independent 
auditor/manager shall have the power to remove members of the 
management team and to require First Data to appoint replacement 
members to the management team in the same manner as provided in 
Paragraph 3.a. of this Agreement to Hold Separate.
    h. First Data shall circulate to all its employees and 
appropriately display a notice of this Hold Separate Agreement and 
Consent Order in the form attached hereto as Attachment A.
    i. First Data shall make available for use in the MoneyGram 
Business each quarter until divestiture an amount of money for 
advertising and trade promotion of the MoneyGram Service not lower than 
$5 million per quarter. First Data shall pay all direct costs and 
indirect overheads for the MoneyGram Business. The MoneyGram Business 
shall not be charged with the compensation and expenses of the 
independent auditor/manager.
    j. The independent auditor/manager shall serve at the cost and 
expense of First Data. First Data shall indemnify the independent 
auditor/manager against any losses or claims of any kind that might 
arise out of his or her involvement under this Agreement to Hold 
Separate, except to the extent that such losses or claims result from 
misfeasance, gross negligence, willful or wanton acts, or bad faith by 
the independent auditor/manager.
    k. If the independent auditor/manager ceases to act or fails to act 
diligently, a substitute auditor/manager shall be appointed in the same 
manner as provided in Paragraph 3.b. of this Agreement to Hold 
Separate.
    l. The independent auditor/manager shall have access to and be 
informed about all companies who inquire about, seek or propose to buy 
the MoneyGram Assets. First Data may require the independent auditor/
manager to sign a confidentiality agreement prohibiting the disclosure 
of any material confidential information gained as a result of his or 
her role as independent auditor/manager to anyone other than the 
Commission.
    m. All material transactions, out of the ordinary course of 
business and not precluded by subparagraphs 3.a.-3.n. hereof, shall be 
subject to a majority vote of the management team. In case of a tie, 
the independent auditor/manager shall cast the deciding vote.
    n. The independent auditor/manager shall report in writing to the 
Commission every thirty (30) days concerning the independent auditor/
manager's efforts to accomplish the purposes of this Agreement to Hold 
Separate.
    4. Should the Federal Trade Commission seek in any proceeding to 
compel First Data to divert itself of the MoneyGram Assets or the 
Western Union Assets, or to seek any other equitable relief, First Data 
shall not raise any objection based on the expiration of the applicable 
Hart-Scott-Rodino Antitrust Improvements Act waiting period or the fact 
that the Commission has permitted the Acquisition. First Data also 
waives all rights to contest the validity of this Agreement.
    5. For the purpose of determining or securing compliance with this 
Agreement, subject to any legally recognized privilege, and upon 
written request with reasonable notice to First Data made to its 
General Counsel, First Data shall permit any duly authorized 
representative or representatives of the Commission:
    a. Access during the office hours of First Data and in the presence 
of counsel to inspect and copy all books, ledgers, accounts, 
correspondence, memoranda, and other records and documents in the 
possession or under the control of First Data relating to compliance 
with this Agreement;
    b. Upon five (5) days notice to First Data, and without restraint 
or interference from it, to interview officers or employees of First 
Data, who may have counsel present, regarding any such matters.
    6. This Agreement shall not be binding until approved by the 
Commission.

Attachment A--Divestiture and Requirement for Confidentiality

    First Data Corporation (``First Data'') has entered into a Consent 
Agreement and Agreement to Hold Separate with the Federal Trade 
Commission relating to the diverstiture of the MoneyGram Business or 
the Western Union Business. Until after the Commission's Order becomes 
final and First Data's interest in either the MoneyGram Business or the 
Western Union Business is divested, the MoneyGram Business must be 
managed and maintained as a separate, ongoing business, independent of 
all other First Data businesses and independent of the Western Union 
Business. All competitive information relating to the MoneyGram 
Business, except information received by First Data in connection with 
the provision of data processing services to the MoneyGram Business as 
described in and protected by the confidentiality provision of 
Paragraph IV. of the Consent Order, must be retained and maintained by 
the persons involved in the MoneyGram Business on a confidential basis 
and such persons shall be prohibited from providing, discussing, 
exchanging, circulating, or otherwise furnishing any such information 
to or with any other person whose employment involves any other First 
Data business, including the Western Union Business. Similarly, all 
such persons involved in the Western Union Business shall be prohibited 
from providing, discussing, exchanging, circulating or otherwise 
furnishing competitive information about such business to or with any 
person whose employment involves the MoneyGram business.
    Any violation of the Consent Agreement or the Agreement to Hold 
Separate, incorporated by reference as part of the Consent Order, may 
subject First Data to civil penalties and other relief as provided by 
law.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted 
provisionally an agreement containing a proposed consent order from 
First Data Corporation (``First Data''), under which First Data would 
divest either the MoneyGram or Western Union consumer money transfer 
business.
    The proposed Consent Order has been placed on the public record for 
sixty (60) days for reception of comments by interested persons. 
Comments received during this period will become part of the public 
record. After sixty (60) days, the Commission will again review the 
agreement and the comments received, and will decide whether it should 
withdraw from the agreement or make final the agreement's proposed 
Order.
    First Data has proposed to acquire the stock or assets associated 
with Western Union's consumer money transfer business by submitting a 
bid with the New Jersey bankruptcy court, which is auctioning the 
company in September of 1994.
    The proposed complaint alleges that the proposed acquisition, if 
consummated, would constitute a violation of Section 7 of the Clayton 
Act, as amended, 15 U.S.C. 18, and Section 5 of the FTC Act, as 
amended, 15 U.S.C. 45, in the market for consumer money transfer 
services. The proposed Consent Order would remedy the alleged violation 
by replacing the lost competition that would result from the 
acquisition.
    The proposed Consent Order provides that, within the later of 
fifteen (15) months after the date the Order becomes final or three (3) 
months after the date the acquisition takes place pursuant to an order 
of the bankruptcy court, First Data shall divest either the consumer 
money transfer assets of MoneyGram or those of Western Union. If First 
Data is unable to divest these assets during the allotted time period, 
then a trustee may be appointed to divest the Western Union assets 
within a twelve (12) month period. If, at the end of the twelve month 
period, the trustee has submitted a plan of divestiture or believes 
that divestiture can be achieved within a reasonable time, the time 
period for divestiture can be extended by the Commission, or, in the 
case of a court-appointed trustee, by the court. The Commission, 
however, may extend this period only two (2) times.
    A Hold Separate Agreement signed by First Data provides that during 
any period in which First Data possesses an ownership interest in the 
Western Union assets, these assets will be operated independently of 
the MoneyGram assets. Under the provisions of the Order, First Data is 
also required to provide to the Commission a report of compliance with 
the divestiture provisions of the Order within sixty (60) days 
following the date this Order becomes final, and every sixty (60) days 
thereafter until First Data has completely divested its interest in 
either the MoneyGram or Western Union assets.
    The Order also provides that, if First Data divests the MoneyGram 
assets, First Data is prohibited from entering into a contract with any 
selling agent who is under contract to provide the MoneyGram service at 
the time of the divestiture. However, the Order does permit First Data 
to enter into a contract with such an agent after the agent's contract 
with First Data would have expired absent the divestiture.
    The Order also prohibits First Data from acquiring any interest in 
any other company providing a consumer money transfer service without 
prior approval from the Commission for a ten-year period.
    The Order expressly allows First Data to supply data processing 
services to other consumer money transfer suppliers, provided that it 
shield any First Data employee who is involved in providing First 
Data's consumer money transfer service from non-public information of 
any other consumer money transfer provider. This provision will allow 
competing consumer money transfer companies to use First Data's data 
processing service while preventing the facilitation of collusion that 
could occur as a result of the transfer of proprietary information from 
other consumer money transfer providers to First Data, through its role 
as a data processor.
    The Order removes First Data's obligation to comply with the Order 
if the bankruptcy court fails to award the Western Union assets to 
First Data.
    The purpose of this analysis is to facilitate public comment on the 
proposed Order, and it is not intended to constitute an official 
interpretation of the agreement and proposed Order or to modify in any 
way their terms.
Donald S. Clark,
Secretary.
Separate Statement of Commissioner Mary L. Azcuenaga in First Data 
Corporation, File 931-0090
    Although I have voted to publish the proposed consent agreement for 
comment, I see no reason to allow this respondent fifteen months as 
opposed to the usual year in which to accomplish divestiture. Fifteen 
months is too long to permit the alleged competitive overlap to 
persist. Pending divestiture, even in the presence of a hold-separate 
agreement, the competitive viability of the assets to be divested is 
threatened and the restoration of competition is delayed. The danger to 
the business to be divested may be particularly acute in this case, 
where a large part of the assets consists of short-term contracts with 
the independent agents that deliver wire transfer services to 
consumers. No justification for the extended divestiture period has 
been offered, and none is apparent.

[FR Doc. 94-22118 Filed 9-7-94; 8:45 am]
BILLING CODE 6750-01-M