[Federal Register Volume 59, Number 221 (Thursday, November 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-28440]


[[Page Unknown]]

[Federal Register: November 17, 1994]


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DEPARTMENT OF JUSTICE
Antitrust Division

 

Proposed Final Judgment and Competitive Impact Statement; United 
States v. Association of Retail Travel Agents

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec. 16(b)-(h), that a proposed Final 
Judgment, Stipulation, and Competitive Impact Statement have been filed 
with the United States District Court for the District of Columbia in 
United States v. Association of Retail Travel Agents, Civil No. 94-2305 
as to the association of Retail Travel Agents.
    The Complaint alleges that the defendant and its members agreed on 
commission levels and other terms of trade on which to transact 
business with providers of travel services, and encouraged and 
participated in a group boycott with the intent to induce certain 
providers of travel services to agree to certain commission levels and 
practices.
    The proposed Final Judgment enjoins the defendant from inviting or 
encouraging travel agents to engage in concerted refusals to deal with 
travel services providers, and also requires defendant to establish an 
antitrust compliance program.
    Public comment on the proposed Final Judgment is invited within the 
statutory 60-day comment period. Such comments and responses thereto 
will be published in the Federal Register and filed with the Court. 
Comments should be directed to Roger Fones, Chief, Transportation, 
Energy and Agriculture Section, Room 9104, U.S. Department of Justice, 
Antitrust Division, 555 4th Street, N.W., Washington, D.C. 20001 
(telephone: 202-307-6351).
Mark C. Schechter,
Deputy Director of Operations, Antitrust Division.

In the United States District Court for the District of Columbia

    Case Number 1:94CV02305.
    Judge: Paul L. Friedman.
    Deck Type: Antitrust.
    Date Stamp: 10/25/94.

    The United States of America, plaintiff, by its attorneys, acting 
under the direction of the Attorney General of the United States, 
brings this civil action to obtain equitable relief against the above-
named defendant, and complains and alleges as follows:

I

Jurisdiction and Venue
    1. This complaint is filed under Section 4 of the Sherman Act, 15 
U.S.C. Sec. 4, in order to prevent and restrain violations by defendant 
of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1, and this Court has 
jurisdiction over this matter pursuant to 28 U.S.C. Secs. 1331 and 
1337.
    2. Defendant transacts business and is found in the District of 
Columbia, within the meaning of 15 U.S.C. Sec. 22 and 28 U.S.C. 
Sec. 1391(c).

II

Defendant
    3. Association of Retail Travel Agents, Ltd. (``ARTA''), is a 
District of Columbia nonprofit corporation with its principal place of 
business in Arlington, Virginia. ARTA is a trade association with over 
two thousand members who act as retail travel agents selling 
transportation and accommodations (``travel services'') to the public 
as agents for airlines, hotels, cruise lines, rental car companies and 
other providers of travel services (``travel providers''). ARTA's 
members compete with one another both to sell travel services to the 
public and to act as selling agents for travel providers.

III

Trade and Commerce
    4. Airlines, hotels, rental car companies, cruise lines, and other 
travel providers sell a significant portion of their travel services to 
the public through travel agents, including the members of defendant. 
Travel agents inform consumers about the price, availability and other 
details of various travel options and make reservations and sell 
tickets to the travellers for the travel services they choose. Roughly 
80% of airline sales, 30% of hotel sales, 50% of rental car sales and 
95% of cruise line sales in the United States are made through travel 
agents. In 1993, the amount of such sales by travel agents was in 
excess of $90 billion.
    5. Travel agents sells travel services to the public as agents of 
the travel providers. Travel agents normally do not charge travellers 
directly for their services; instead, travel providers pay commissions 
to the travel agents for the sales the agents make on behalf of the 
travel providers. These commissions vary and are established between 
individual travel agents and travel providers. These commissions 
generally are included in the price the consumer pays for airline 
tickets, hotel accommodations, rental cars, cruises and other travel 
services. The lower the sales commissions established between 
individual travel agents and travel providers, the lower the total cost 
of travel services to the consumer.
    6. A substantial proportion of the commissions earned by travel 
agents, including members of defendant, are derived from the sale of 
travel services that are within the flow of and substantially affect 
interstate and foreign trade and commerce.
    7. The sale of travel services by travel agents constitutes a line 
of commerce and a relevant product market within the meaning of Section 
1 of the Sherman Act.
    8. The United States constitutes a relevant geographic market 
within the meaning of Section 1 of the Sherman Act.

IV

Alleged Violation
    9. On or about October 16, 1993, the members of defendant, through 
its Board of Directors, adopted a statement of objectives for defendant 
and its members. That statement, entitled ``ARTA Objectives for the 
Travel Agency Community,'' constitutes an agreement among the members 
of defendant's Board of Directors and among defendant's members as to 
the matters contained therein.
    10. Included among the ARTA Objectives described in Paragraph 9 are 
agreements concerning the amount of commissions that certain travel 
providers should pay to travel agents, including members of defendant, 
and agreements as to the terms under which travel providers should 
transact business with travel agents, including members of defendant.
    11. On or about October 19, 1993, defendant held a press 
conference, attended by defendant's president and two members of its 
Board of Directors, where it announced and disseminated the contents of 
the ARTA Objectives. The contents of the ARTA Objectives were 
subsequently disseminated to travel providers, its own members and 
other travel agents through publications that are widely circulated 
among travel agents and travel providers.
    12. Shortly after defendant's public announcement of the ARTA 
Objectives, a member of defendant's Board of Directors made a public 
statement, through a press release, that he and his travel agency would 
refuse to deal with certain travel providers who did not comply with 
the ARTA Objectives. In making that announcement, the defendant's 
director stated that he ``encourage[d] owners and managers [of travel 
agencies] nationwide to join this effort.''
    13. Thereafter, at least one other member of defendant's Board of 
Directors made a public announcement that she and her travel agency 
would also refuse to deal with the travel providers who did not comply 
with the ARTA Objectives.
    14. As a result of the actions of its president and directors 
described above, defendant and its members agreed on commission levels 
and other terms of trade on which ARTA members and other travel agents 
should transact business with travel providers, and invited, encouraged 
and participated in a group boycott of certain travel providers to 
induce them to agree to those commission levels and other terms of 
trade.
    15. The group boycott and agreement on commissions and other terms 
of trade described above had the effect of unreasonably restraining 
trade in the sale of travel services by travel agents.
    16. The group boycott and agreement on commissions and other terms 
of trade described above constitutes a contract, combination or 
conspiracy in unreasonable restraint of trade and commerce in violation 
of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1. There is a 
significant likelihood that the offense will recur unless the relief 
hereinafter prayed for is granted.

Prayer

    Wherefore, plaintiff prays:
    1. That defendant be enjoined from inviting or encouraging 
concerted action by travel agents that has the purpose or effect of 
specifying the commission levels paid by travel providers to travel 
agents, or of specifying the terms of trade between travel agents and 
travel providers;
    2. That plaintiff have such other or further relief as the Court 
may deem just and proper; and
    3. That plaintiff recover the costs of this action.

    Dated: October 25, 1994.
Anne K. Bingaman,
Assistant Attorney General.
Robert E. Litan,
Deputy Asst. Atty. General.
Mark C. Schechter,
Roger W. Fones,
Mary Jean Moltenbrey,
Robert D. Young,
D.C. Bar #.
Nina B. Hale,
Transportation, Energy, and Agriculture Section, Antitrust Division, 
Attorneys, U.S. Department of Justice.

    Civil Action No.: 94 2305.

Stipulation

    It is stipulated by and between the undersigned parties, by their 
respective attorneys, that:
    1. The Court has jurisdiction over the subject matter of this 
action and over each of the parties thereto, and venue of this action 
is proper in the District of Columbia;
    2. The parties consent that a Final Judgment in the form hereto 
attached may be filed and entered by the Court, upon the motion of any 
party or upon the Court's own motion, at any time after compliance with 
the requirements of the Antitrust Procedures and Penalties Act (15 
U.S.C. Sec. 16), and without further notice to any party or other 
proceedings, provided that plaintiff has not withdrawn consent, which 
it may do at any time before the entry of the proposed Final Judgment 
by serving notice thereof on defendant and by filing that notice with 
the Court;
    3. Defendant shall abide by and comply with the provisions of the 
Final Judgment pending entry of the Final Judgment;
    4. This Stipulation and the Final Judgment to which it relates are 
for settlement purposes only and do not constitute an admission by 
defendant in this or any other proceeding that Section 1 of the Sherman 
Act, 15 U.S.C. Sec. 1, or any other provision of law has been violated;
    5. In the event plaintiff withdraws its consent or if the proposed 
Final Judgment is not entered pursuant to this Stipulation; this 
Stipulation shall be of no effect whatever, and the making of this 
Stipulation shall be without prejudice to any party in this or any 
other proceeding.

    Dated: October 25, 1994.

For Plaintiff United States of America:
Anne K. Bingaman,
Assistant Attorney General.
Robert E. Litan,
Deputy Asst. Attorney General.
Mark C. Schechter,
Deputy Director of Operations.
Roger W. Fones,
Mary Jean Moltenbrey,
Robert D. Young,
DC Bar #248260,
Nina B. Hale,
Attorneys, Transportation, Energy, and Agriculture Section, Antitrust 
Division, U.S. Department of Justice.

For Defendant Association of Retail Travel Agents:
Alexander Anolik,
A Professional Law Corporation,
By: Mitchell Blumenthal.
    Civil Action No.: 94 2305

Final Judgment

    Plaintiff, United States of America, filed its complaint on October 
25, 1994. Plaintiff and defendant, by their respective attorneys, have 
consented to the entry of the Final Judgment without trial or 
adjudication of any issue of fact or law. This Final Judgment shall not 
be evidence against or an admission by any party with respect to any 
issue of fact or law. Therefore, before the taking of any testimony and 
without trial or adjudication of any issue of fact or law herein, and 
upon consent of the parties, it is hereby ordered, adjudged, and 
decreed, as follows:

I

    This Court has jurisdiction over the subject matter of and parties 
to this action. The complaint states a claim upon which relief may be 
granted against defendant under Section 1 of the Sherman Act, 15 U.S.C. 
Sec. 1.

II

    The provisions of this Final Judgment shall apply to defendant, to 
the officers, directors, agents, employees, successors, and assigns of 
defendant, and to all other persons in active concert or participation 
with any of them who receive actual notice of this Final Judgment by 
personal service or otherwise.

III

    Defendant is enjoined from:
    (A) Inviting or encouraging concerted action by travel agents or 
travel agencies to refuse to do business with specified suppliers of 
travel services or to do business with specified suppliers only on 
specified terms; and
    (B) Directly or indirectly adopting, disseminating, publishing, or 
seeking adherence to any rule, bylaw, resolution, policy, guideline, 
standard, objective, or statement made or ratified by an officer, 
director or other official of defendant that has the purpose or effect 
of advocating or encouraging any of the practices identified in Section 
III(A) above.

IV

    (A) Nothing in this Final Judgment shall prohibit any individual 
travel agent or travel agency, acting alone and not on behalf of 
defendant, from negotiating commission rates and policies with 
suppliers of travel services, or from choosing the suppliers whose 
services they wish to sell.
    (B) Nothing in this Final Judgment shall prohibit defendant from 
advocating or discussing, in accordance with the doctrine established 
in Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 
365 U.S. 127 (1961), and its progeny, legislative, judicial or 
regulatory actions, or governmental policies or actions.

V

    Defendant is ordered:
    (A) To cause the annual publication of a summary of this Final 
Judgment, in a form acceptable to the Assistant Attorney General in 
charge of the Antitrust Division, in ARTAFacts or any equivalent 
newsletter provided to its members;
    (B) To provide a copy of this Final Judgment to each director, 
officer, and chapter president at the time they take office and 
annually, and to obtain a written certification from those persons that 
they received, read, understand to the best of their ability, and agree 
to abide by this Final Judgment and that they have been advised and 
understand that noncompliance with the Final Judgment may result in 
conviction of the person for criminal contempt of court.

VI

    Defendant is ordered to maintain an antitrust compliance program 
which shall include an annual briefing of the defendant's Board of 
Directors, officers, chapter presidents, and non-clerical employees on 
this Final Judgment and the antitrust laws.

VII

    (A) To determine or secure compliance with this Final Judgment and 
for no other purpose, duly authorized representatives of the plaintiff 
shall, upon written request of the Assistant Attorney General in charge 
of the Antitrust Division, and on reasonable notice to defendant made 
to its principal office, be permitted, subject to any legally 
recognized privilege:
    (1) Access during defendant's office hours to inspect and copy all 
documents in the possession or under the control of defendant, who may 
have counsel present, relating to any matters contained in this Final 
Judgment; and
    (2) Subject to the reasonable convenience of defendant and without 
restraint or interference from it, to interview officers, employees, or 
agents of defendant, who may have counsel present, regarding such 
matters.
    (B) Upon the written request of the Assistant Attorney General in 
charge of the Antitrust Division made to defendant's principal office, 
defendant shall submit such written reports, under oath if requested, 
relating to any matters contained in this Final Judgment as may be 
reasonably requested, subject to any legally recognized privilege.
    (C) No information or documents obtained by the means provided in 
Section VII shall be divulged by the plaintiff to any person other than 
a duly authorized representative of the Executive Branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party, or for the purpose of securing compliance with this 
Final Judgment, or as otherwise required by law.
    (D) If at the time information or documents are furnished by 
defendant to plaintiff, defendant represents and identifies in writing 
the material in any such information or documents to which a claim of 
protection may be asserted under Rule 26(c)(7) of the Federal Rules of 
Civil Procedure, and defendant marks each pertinent page of such 
material, ``Subject to claim of protection under Rule 26(c)(7) of the 
Federal Rules of Civil Procedure,'' then 10 days notice shall be given 
by plaintiff to defendant prior to divulging such material in any legal 
proceeding (other than a grand jury proceeding) to which defendant is 
not a party.

VIII

    This Final Judgment shall expire ten (10) years from the date of 
entry.

IX

    Jurisdiction is retained by this Court for the purpose of enabling 
any of the parties to this Final Judgment to apply to this Court at any 
time for further orders and directions as may be necessary or 
appropriate to carry out or construe this Final Judgment, to modify or 
terminate any of its provisions, to enforce compliance, and to punish 
violations of its provisions.

X

    Entry of this Final Judgment is in the public interest.

Competitive Impact Statement

    Pursuant to Section 2(b) of the Antitrust Procedures and Penalties 
Act (``APPA''), 15 U.S.C. Sec. 16(b)-(h), the United States files this 
Competitive Impact Statement relating to the proposed Final Judgment 
submitted for entry with the consent of the Association of Retail 
Travel Agents in this antitrust proceeding.

I

Nature and Purpose of the Proceeding
    On October 25, 1994, the United States filed a Complaint alleging 
that the Association of Retail Travel Agents (hereinafter ``ARTA'') had 
entered into a contract, combination or conspiracy in restraint of 
trade in violation of Section 1 of the Sherman Act (15 U.S.C. Sec. 1). 
The Complaint alleges that ARTA, a trade association all of whose 
members are travel agents, and its members agreed on commission levels 
and other terms of trade on which to transact business with providers 
of travel services, and encouraged and participated in a group boycott 
with the intent to induce certain providers of travel services to agree 
to certain commission levels and practices.
    On October 25, 1994, the United States and ARTA filed a Stipulation 
by which they consented to the entry of a proposed Final Judgment 
designed to prevent any recurrence of such activity in the future. 
Under the proposed Final Judgment, ARTA will be enjoined from inviting 
or encouraging travel agents to deal with travel providers only on 
agreed terms. This prohibition includes any agreements on specified 
commission levels. The proposed Final Judgment also prohibits ARTA from 
adopting or disseminating any rules, policies, or statements that have 
the purpose or effect of advocating or encouraging such a concerted 
refusal to deal.
    The United States and ARTA have agreed that the proposed Final 
Judgment may be entered after compliance with the APPA. Entry of the 
proposed Final Judgment will terminate the action, except that the 
Court will retain jurisdiction to construe, modify, and enforce the 
Final Judgment, and to punish violations of the Final Judgment.

II

Events Giving Rise to the Alleged Violation
    Airlines, hotels, rental car companies, cruise lines and other 
providers of transportation and accommodations (hereinafter ``travel 
providers'') sell a significant proportion of their services to the 
public through travel agents. Travel agents inform travellers about the 
price, availability and other details of various travel options and 
make reservations and sell tickets to the travellers for the travel 
services they choose. Travel agents are agents of the travel providers, 
receiving commissions from the travel providers for sales they make. 
These commissions vary and are established between individual travel 
agents and travel providers. These commissions generally are included 
in the price the consumer pays for airline tickets, hotel 
accommodations, rental cars, cruises and other travel services. The 
lower the sales commissions established between individual travel 
agents and travel providers, the lower the total cost of travel 
services to the consumer.
    ARTA is an association of travel agents. Among its goals are 
achieving improved commission levels for travel agents and persuading 
travel services providers to adopt commission policies and practices 
that are beneficial to travel agents. ARTA members compete with each 
other and with other travel agents both to sell travel services to the 
public and to act as selling agents for travel services providers.
    On October 16, 1993, ARTA's Board of Directors adopted a document 
entitled ``ARTA Objectives for the Travel Agency Community.'' Among its 
Objectives, ARTA stated that it sought a ``minimum'' ten percent 
commission on all hotel and car rental sales by travel agents, the 
elimination of all distribution outlets for airline tickets other than 
travel agents, and the payment of commissions based on full fares 
rather than the discounted prices actually paid by travellers.
    A few days after adopting the ARTA Objectives, ARTA hosted a press 
conference attended by its president and two members of its Board of 
Directors, in addition to members of the press. Several days after the 
press conference, one of ARTA's board members announced that his travel 
agency would cease doing business with certain travel providers whose 
commission and sales practices did not comport with the ARTA 
Objectives, and invited other travel agents to join his boycott in 
support of the ARTA Objectives. Shortly thereafter, at least one other 
ARTA board member made a similar public announcement.
    The Complaint alleges that through those activities, defendant and 
its members agreed on commission levels and other terms of trade on 
which ARTA members and other travel agents should transact business 
with travel providers, and invited, encouraged and participated in a 
group boycott designed to induce travel providers to agree to those 
commission levels and terms of trade. The Complaint further alleges 
that those activities constitute a contract, combination or conspiracy 
in unreasonable restraint of trade in violation of Section 1 of the 
Sherman Act (15 U.S.C. Sec. 1).

III

Explanation of the Proposed Final Judgment
    The proposed Final Judgment is designed to prevent defendant and 
its officers, directors and agents from inviting, encouraging or 
advocating concerted refusals to deal. In addition to enjoining 
defendant and its officers, directors and agents from engaging in such 
activities (Section III), it requires defendant to provide an annual 
summary of the Final Judgment to its members (Section IV), and requires 
that its officials provide an annual certification that they have read 
and understand the Final Judgment (Section IV). The proposed Final 
Judgment also requires that defendant provide an annual briefing on the 
requirements of the Final Judgment and on the antitrust laws to its 
officials (Section V).
    The United States is satisfied that the proposed Final Judgment 
sufficiently resolves the antitrust violations alleged in the 
Complaint. Compliance with the proposed Final Judgment would prevent 
any recurrence of the violations alleged in the Complaint, and thus 
provides complete relief.

IV

Remedies Available to Potential Private Litigations
    Section 4 of the Clayton Act (15 U.S.C. Sec. 15) provides that any 
person who has been injured in his business or property as a result of 
conduct forbidden by the antitrust laws may bring suit in federal court 
to recover three times the damages suffered, as well as costs and 
reasonable attorneys fees. Entry of the proposed Final Judgment will 
neither impair nor assist the bringing of any private antitrust damage 
action. Under the provisions of Section 5(a) of the Clayton Act (15 
U.S.C. Sec. 16(a)), the proposed Final Judgment has no prima facie 
effect in any subsequent private lawsuit that may be brought.

V

Procedure Available for Modification of the Proposed Final Judgment
    The United States and defendant have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least 60 days preceding the 
effective date of the proposed Final Judgment within which any person 
may submit to the United States written comments regarding the proposed 
Final Judgment. Any person who wishes to comment should do so within 60 
days of the date of publication of this Competitive Impact Statement in 
the Federal Register. The United States will evaluate the comments, 
determine whether it should withdraw its consent, and respond to 
comments. The comments and the response of the United States will be 
filed with the Court and published in the Federal Register.
    Written comments should be submitted to: Roger W. Fones, Chief, 
Transportation, Energy, and Agriculture Section, Antitrust Division, 
Judiciary Center Building, 555 4th Street, N.W., Rm 9104, Washington, 
D.C. 20001.

VI

Alternative to the Proposed Final Judgment
    The alternative to the proposed Final Judgment would be a full 
trial of the case against ARTA. In the view of the Department of 
Justice, such a trial would involve substantial cost to the United 
States and is not warranted because the Proposed Final Judgment 
provides relief that will remedy the violations of the Sherman Act 
alleged in the United States' Complaint.

VII

Determination Materials and Documents
    There are no materials or documents that the United States 
considered to be determinative in formulating this proposed Final 
Judgment. Accordingly, none are being filed with this Competitive 
Impact Statement.

    Dated: October 25, 1994.
        Respectfully submitted,
Robert D. Young,
Attorney, Antitrust Division, U.S. Department of Justice.
[FR Doc. 94-28440 Filed 11-16-94; 8:45 am]
BILLING CODE 4410-01-M