[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]
-----------------------------------------------------------------------
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