[Federal Register Volume 60, Number 35 (Wednesday, February 22, 1995)]
[Notices]
[Pages 9860-9866]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4283]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States of America v. Playmobil USA, Inc.; Proposed Final
Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b) through (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 of America versus Playmobil USA, Inc., Civil Action No.
95-0214. The Complaint alleged that Playmobil engaged in a combination
and conspiracy with dealers to fix the price of children's toys in
violation of section 1 of the Sherman Act, 15 U.S.C. 1. The proposed
Final Judgment that Playmobil has agreed to prohibits it for a period
of ten years from (A) agreeing with any dealer to fix or maintain the
resale prices at which Playmobil`s products may be sold; (B) discussing
or encouraging adherence to Playmobil's suggested resale prices; (C)
threatening to terminate or retaliate against a dealer for discounting;
and (D) communicating information to any dealer relating to the
termination of any other dealer due to discounting. Additionally, for
five years Playmobil is barred from (E) terminating any dealer or
taking any other action for reasons relating to that dealer's
discounting of Playmobil products; (f) announcing that it will adopt
any resale pricing policy under which a dealer may be terminated
because of discounting; (G) acting, or representing that it will act,
upon a dealer's complaint of another dealer's discounting; and (H)
establishing any cooperative advertising policy that denies or reduces
advertising allowances for any reason related to a dealer's advertised
discount prices. These prohibitions are discussed more fully in the
Competitive Impact Statement.
Playmobil is also required to appoint an antitrust compliance
officer and establish an antitrust compliance program. This program is
designed to inform Playmobil employees and agents about the consent
decree and the antitrust laws, thereby helping to prevent future
violations.
Public comment is invited within the statutory 60-day comment
period. Such comments and responses to them will be published in the
Federal Register and filed with the Court. Comments should be directed
to Rebecca P. Dick, Chief, Civil Task Force I, U.S. Department of
Justice, Antitrust Division, 1401 H Street, NW., Room 3700, Washington,
DC 20530 (telephone: 202/514-8368).
Constance K. Robinson,
Director of Operations, Antitrust Division.
In the United States District Court for the District of Columbia
United States of America, Plaintiff, v. Playmobil USA, Inc., 11
E. Nicholas Court, Dayton, NY 08810. Defendant.
Case Number 1:95CV00214
Judge: James Robertson
Deck Type: Antitrust
Date Stamp: 01/31/95
Complaint
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 against the above-named
[[Page 9861]] defendant and complains and alleges as follows:
I.
Jurisdiction and Venue
1. This complaint is filed under section 4 of the Sherman Act, as
amended (15 U.S.C. 4), in order to prevent and restrain violations, as
hereinafter alleged, by the defendant of section 1 of the Sherman Act
(15 U.S.C. 1). This court has jurisdiction over this matter pursuant to
28 U.S.C. 1331 and 1337.
2. Defendant transacts business and is found in the District of
Columbia.
II.
Definitions
3. ``Person'' means any individual, corporation, partnership,
company, sole proprietorship, firm or other legal entity.
4. ``Dealer'' means any person not wholly owned by defendant who
has at any time purchased or acquired Playmobil products for resale,
excluding any person who did not purchase or acquire Playmobil products
directly from Playmobil or its agents.
5. ``Playmobil product'' means any product sold or distributed by
defendant for resale in the United States.
III.
Defendant and Co-Conspirators
6. Playmobil USA, Inc. (``Playmobil'') is made a defendant herein.
Playmobil is a corporation headquartered in the District of New Jersey,
organized and existing under the laws of the State of New Jersey.
7. Various companies and individuals who are dealers, not made
defendants in this complaint, have been induced to participate by and
have participated with the defendant in the offense charged herein and
performed acts and made statements in furtherance of it.
IV.
Trade and Commerce
8. Playmobil is a prominent seller of specialty toys for children
in the United States. Playmobil products are manufactured by
Playmobil's parent company, Geobra Brandstatter GmbH & Co., KG., in
Germany and sold and distributed in the United States by Playmobil.
9. Playmobil sells substantial quantities of Playmobil products to
dealers throughout the United States, which in turn resell Playmobil
products to consumers.
10. During the period covered by this complaint, there has been a
continuous and uninterrupted flow in interstate commerce of Playmobil
products from Playmobil's facilities in New Jersey to dealers
throughout the United States. The activities of the defendant and its
co-conspirators, as hereinafter described, have been within the flow
of, and have substantially affected, interstate commerce.
V.
Violation Alleged
11. Beginning at least as early as February, 1990, and continuing
at least through August, 1994, the exact dates being unknown to the
United States, the defendant and its co-conspirators engaged in a
combination and conspiracy in unreasonable restraint of interstate
trade and commerce in violation of section 1 of the Sherman Act, as
amended (15 U.S.C. 1). This unlawful combination and conspiracy will
continue or may be renewed unless the relief prayed for herein is
granted.
12. The combination and conspiracy consisted of a continuing
agreement, understanding, and concert of action among the defendant and
its co-conspirators to fix and maintain the resale price of Playmobil
products at the amount set by the defendant, Playmobil.
13. In furtherance of this combination and conspiracy, the
defendant did the following things, among others:
(a) Established and communicated to dealers minimum resale prices
for Playmobil products;
(b) Threatened to terminate dealers for selling or advertising
Playmobil products at prices below defendant's minimum resale prices;
(c) Used threats of termination to secure dealers' adherence to
defendants' minimum resale prices and to limit the duration of
promotional sales by dealers;
(d) Enforced adherence to minimum resale prices at the behest of
dealers in order to stop ``price wars'' among them; and
(e) Agreed with dealers on the retail prices for Playmobil products
to be charged by the dealers.
VI.
Effects
14. The aforesaid combination and conspiracy has had the following
effects, among others:
(a) Resale prices of children's toys have been fixed and
maintained; and
(b) Competition in the sale of children's toys by dealers has been
restrained, suppressed, and eliminated.
VII.
Prayer for Relief
Wherefore, plaintiff prays:
1. That the Court adjudge and decree that the defendant has
combined and conspired to restrain interstate trade and commerce of
Playmobil products in violation of section 1 of the Sherman Act.
2. That the defendant, its officers, directors, agents, employees
and successors and all other persons acting or claiming to act on their
behalf be enjoined and restrained from, in any manner, directly or
indirectly, continuing, maintaining, or renewing the combination and
conspiracy herein before alleged, or from engaging in any other
combination, conspiracy, contract, agreement, understanding or concern
of action having a similar purpose or effect, and from adopting or
following any practice, plan, program, or device having a similar
purpose or effect.
3. That plaintiff have such other relief as the Court may deem just
and proper.
4. That plaintiff recover the costs of this action.
Anne K. Bingaman,
Assistant Attorney General
Robert E. Litan,
Mark C. Schechter,
Rebecca P. Dick,
Bruce K. Yamanaga,
Andrew S. Cowan,
Steven Semeraro, ]
D.C. Bar No. 419612, Attorneys, Department of Justice Antitrust
Division, Civil Task Force, 1401 H Street, NW., Room 3700, Washington,
DC. 20530, (202) 514-8368.
In the United States District Court for the District of Columbia
United States of America, Plaintiff, v. Playmobil USA, Inc.,
Defendant.
Civil Action No. 95-0214
Stipulation
It is stipulated by and between the undersigned parties, by their
respective attorneys, that:
1. The parties to this Stipulation consent that a Final Judgment in
the form attached may be filed and entered by the Court, upon any
party's or the Court's own motion, at any time after compliance with
the requirements of the Antitrust Procedures and Penalties Act (15
U.S.C. 16), without further notice to any party or other proceedings,
provided that plaintiff has not withdrawn its consent, which it may do
at any time before entry of the proposed Final Judgment by serving
notice on the defendant and by filing that notice with the Court.
2. If plaintiff withdraws its consent or the proposed Final
Judgment is not [[Page 9862]] entered pursuant to this Stipulation,
this Stipulation shall be of no effect whatever and its making shall be
without prejudice to any party in this or any other proceedings.
For the plaintiff:
Anne K. Bingaman
Assistant Attorney General
Robert E. Litan,
Mark Schechter,
Rebecca P. Dick,
Bruce K. Yamanaga,
Andrew S. Cowan,
Attorneys, U.S. Department of Justice, Antitrust Division, Civil Task
Force, 1401 H Street, NW., Room 3700, Washington, DC. 20530, (202) 514-
8368.
For the defendant:
Eugene J. Meigher,
Counsel for Playmobil, USA, Inc.
Certificate of Service
I certify that, on this day January 31, 1995, I have caused to be
served, by messenger, a copy of the foregoing Stipulation, Final
Judgment and Competitive Impact Statement on counsel of record for
Playmobil USA, Inc. at the address below:
Eugene Meigher, Arent, Fox 1050 Connecticut Ave NW., 5th Floor,
Washington, DC 20036
Andrew S. Cowan
In the United States District Court for the District of Columbia
United States of America, Plaintiff, v. Playmobil USA, Inc.,
Defendant.
Civil Action No. 95-0214
Final Judgment
Plaintiff, United States of America, having filed its complaint
herein on __________, and plaintiff and defendant, Playmobil, USA,
Inc., having consented to the entry of this Final Judgment without
trial or adjudication of any issue of fact or law herein and without
the Final Judgment constituting any evidence against or an admission by
any party with respect to any such issue;
And whereas defendant has agreed to be bound by the provisions of
this Final Judgment pending its approval by the Court;
Now, 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 hereto, it is hereby ORDERED, adjudged and
decreed as follows:
I.
Jurisdiction
This Court has jurisdiction of the subject matter of this action
and of the party consenting hereto. The complaint states a claim upon
which relief may be granted against defendant under Section 1 of the
Sherman Act (15 U.S.C. 1).
II.
Definitions
As used in this Final Judgment:
A. ``Cooperative advertising policy'' means any policy or program
under which defendant provides a dealer with any rebate, allowance, or
reimbursement that relates to that dealer's advertising of Playmobil
products.
B. ``Dealer'' means any person not wholly owned by defendant who
has at any time purchased or acquired Playmobil products for resale,
excluding any person who did not purchase or acquire Playmobil products
directly from Playmobil or its agents.
C. ``Discount'' means to offer, sell or advertise any Playmobil
product for resale at a price below defendant's suggested resale price.
D. ``Person'' means any individual, corporation, partnership,
company, sole proprietorship, firm or other legal entity.
E. ``Playmobil product'' means any product sold or distributed by
defendant for resale in the United States.
F. ``Promotional event'' means a sale of offering of limited
duration during which a dealer discounts a Playmobil product.
G. ``Resale price'' means any price, price floor, price ceiling,
price range, or any mark-up, formula or margin of profit relating to
Playmobil products sold by dealers.
H. ``Suggested resale price'' means any resale price level,
including those related to everyday pricing or promotional pricing,
that is suggested, endorsed, communicated, distributed or determined by
defendant.
I. ``Terminate'' means to refuse to continue selling, either
permanently or temporarily, any or all Playmobil products to a dealer.
III.
Applicability
A. This Final Judgment applies to defendant and to each of its
officers, directors, agents, employees, subsidiaries, successors, and
assigns, and to all other persons in active concert or participation
with any of them who shall have received actual notice of this Final
Judgment by personal service or otherwise.
B. Defendant shall require, as a condition of the sale of all or
substantially all of its assets or stock, that the acquiring party
agree to be bound by the provisions of this Final Judgment.
IV.
Prohibited Conduct
A. Defendant is hereby enjoined and restrained from directly or
indirectly entering into, adhering to, maintaining, furthering,
enforcing or claiming any right under any contract, agreement,
understanding, plan or program with any dealer to fix, stabilize, or
maintain the resale prices at which defendant's products may be sold or
offered for sale in the United States by any dealer.
B. Defendant is further enjoined and restrained from (1)
discussing, explaining, or encouraging adherence to defendant's
suggested resale prices with any dealer, (2) threatening or warning any
dealer that it may be terminated or otherwise subjected to any action
by the defendant for discounting, and (3) communicating to any dealer
information relating to any actual or contemplated termination of any
other dealer for any reason related to discounting.
C. Defendant is further enjoined and restrained for a period of
five (5) years from the date of entry of the final judgment from
directly or indirectly announcing to the public or to any present or
potential dealer of its products that defendant has or is adopting,
promulgating, suggesting, announcing or establishing any resale pricing
policy for Playmobil products that: (1) Provides that defendant will
sell only to a dealer that prices at or above suggested resale prices;
(2) provides that defendant may or will terminate, or take any other
action related to, a dealer for discounting; or (3) relates to the
duration or frequency of any dealer's promotional events.
D. Defendant is further enjoined and restrained for a period of
five (5) years from the date of entry of the final judgment from (1)
representing that it will act on any complaint or communication from a
dealer that relates to any other dealer's discounting, (2) discussing
any such complaint or communication with the complaining dealer, except
that defendant may state that it does not accept dealer complaints or
communications that relate to the pricing practices of other dealers,
and (3) terminating any dealer or taking any other action for reasons
relating to that dealer's discounting.
E. Defendant is further enjoined and restrained for a period of
five (5) years from the date of entry of the final judgment from
adopting, promulgating, suggesting, announcing or establishing any
cooperative advertising policy that denies or reduces advertising
rebates, allowances or reimbursements to a [[Page 9863]] dealer for any
reason related to that dealer's advertised prices.
F. Nothing in this Section IV shall prohibit defendant from (1)
establishing suggested resale prices and communicating these prices to
dealers, provided that such communications also state that these prices
are only suggested prices and that dealers are free to adopt any resale
price that they choose, or (2) terminating any dealer for reasons
unrelated to that dealer's discountings.
V.
Notification Provisions
Defendant is ordered and directed:
A. To send a written notice, in the form attached as Appendix A to
this Final Judgment, and a copy of this Final Judgment, within sixty
(60) days of the entry of this Final Judgment, to each dealer who
purchased Playmobil products in 1993 or 1994.
B. To send a written notice, in the form attached as Appendix A to
this Final Judgment, and a copy of this Final Judgment, to each dealer
who purchases products from defendant within ten (10) years of entry of
this Final Judgment and who was not previously given such notice. Such
notice shall be sent within thirty (30) days after the first shipment
of Playmobil products to such dealer.
VI.
Compliance Program
Defendant is ordered to establish and maintain an antitrust
compliance program which shall include designating, within 30 days of
entry of this Final Judgment, an Antitrust Compliance Officer with
responsibility for implementing the antitrust compliance program and
achieving full compliance with this Final Judgment. The Antitrust
Compliance Officer shall, on a continuing basis, be responsible for the
following:
A. Furnishing a copy of this Final Judgment within thirty (30) days
of entry of the Final Judgment to each of defendant's officers and
directors and each of its employees, salespersons, sales
representatives, or agents whose duties include supervisory or direct
responsibility for the sale or advertising of Playmobil products in the
United States, except for employees whose functions are purely clerical
or manual;
B. Distributing in a timely manner a copy of this Final Judgment to
any owner, officer, employee or agent who succeeds to a position
described in Section VI (A);
C. Providing each person designated in Sections VI (A) or (B) with
a written explanation in plain language of this Final Judgment, with
examples of conduct prohibited by the Final Judgment and with
instructions that each person designated in Section VI (A) and (B)
shall report any known violations of the Final Judgment to the
Antitrust Compliance Officer;
D. Arranging for an annual oral briefing to each person designated
in Sections VI (A) or (B) on the meaning and requirements of this Final
Judgment and the antitrust laws, accompanied by a written explanation
of the type described in Section VI. (C);
E. Obtaining (1) from each person designated in Sections VI (A) or
(B) certification that he or she has read, understands and agrees to
abide by the terms of this Final Judgment and is not aware of any
violation of the Final Judgment that has not been reported to the
Antitrust Compliance Officer; and (2) from each officer, director and
employee certification that he or she understands that failure to
comply with this Final Judgment may result in conviction for criminal
contempt of court.
F. Maintaining (1) a record of all certifications received pursuant
to Section VI (E); (2) a file of all documents related to any alleged
violation of this Final Judgment; (3) a record of all communications
related to any such violation, which shall identify the date and place
of the communication, the persons involved, the subject matter of the
communication, and the results of any related investigation; and (4) a
list of all persons terminated as dealers, or threatened with
termination, after the effective date of this Final Judgment and all
documents related to any such termination or threatened termination.
VII.
Certification
A. Within 75 days of the entry of this Final Judgment, defendant
shall certify to plaintiff whether the defendant has designated an
Antitrust Compliance Officer and has distributed the Final Judgment in
accordance with Section VI (A) above.
B. For ten years after the entry of this Final Judgment, on or
before its anniversary date, the defendant shall file with the
plaintiff an annual statement as to the fact and manner of its
compliance with the provisions of Sections V and VI.
C. If defendant's Antitrust Compliance Officer learns of any
violations of any of the terms and conditions contained in this Final
Judgment, defendant shall immediately notify the plaintiff and
forthwith take appropriate action to terminate or modify the activity
so as to comply with this Final Judgment.
VIII.
Plaintiff Access
A. For the purpose of determining or securing compliance with this
Final Judgment, and for no other purpose, duly authorized
representatives of plaintiff shall, upon written request of the
Attorney General or the Assistant Attorney General in charge of the
Antitrust Division, and on reasonable notice to the defendant, be
permitted, subject to any legally recognized privilege:
1. Access during the defendant's office hours to inspect and copy
all records and documents in the possession or under the control of
defendant, which may have counsel present, relating to any matters
contained in this Final Judgment; and
2. To interview the defendant's officers, employees and agents, who
may have counsel present, regarding any such matters. The interviews
shall be subject to the defendant's reasonable convenience.
B. Upon the written request of the Attorney General or the
Assistant Attorney General in charge of the Antitrust Division made to
defendant at its principal office, defendant shall submit such written
reports, under oath if requested, with respect to any of the matters
contained in this Final Judgment as may be requested, subject to any
legally recognized privilege.
C. No information or documents obtained by the means provided in
this Section VIII shall be divulged by any representative of the
Department of Justice 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 ten (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), so that
defendant shall have an [[Page 9864]] opportunity to apply to this
Court for protection pursuant to Rule 26(c)(7) of the Federal Rules of
Civil Procedure.
IX.
Duration of Final Judgment
Except as otherwise provided hereinabove, this Final Judgment shall
remain in effect until ten (10) years from the date of entry.
X.
Construction, Enforcement, Modification and Compliance
Jurisdiction is retained by the Court for the purpose of enabling
any of the parties to this Final Judgment to apply to this Court at any
time for such further orders or directions as may be necessary or
appropriate for the construction or carrying out of this Final
Judgment, for the modification of any of its provisions, for its
enforcement or compliance, and for the punishment of any violation of
its provisions.
XI.
Public Interest
Entry of this Final Judgment is in the public interest.
Dated: ________
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United States District Judge
Appendix A
Dear Playmobil Dealer:
Since 1991, Playmobil USA has maintained a Retailer Discount
Policy that provided for the termination of any Playmobil dealer
that failed to adhere to certain Playmobil suggested price ranges.
In January 1995, the Antitrust Division of the United States
Department of Justice filed a civil suit that alleged that Playmobil
enforced this policy in a manner that violated the antitrust laws by
reaching agreements with some of its retailers about what their
retail prices would be. Playmobil has agreed, without admitting any
violation of the law and without being subject to any monetary
penalties, to the entry of a civil Consent Order prohibiting certain
pricing practices in the United States.
I have enclosed a copy of the Order for your information. Under
its terms, you as a Playmobil dealer are absolutely free to sell
Playmobil products at whatever resale price you choose. Furthermore,
Playmobil may not attempt to influence your discounting of Playmobil
products, influence the duration or frequency of your promotional
events, or condition advertising allowances on your adhering to
Playmobil's suggested resale prices.
If you learn that Playmobil or its agents have violated the
terms of the Order at any time after the effective date of the
Order, you should provide this information to Playmobil in writing.
Should you have any questions concerning this letter, please
feel free to contact me.
Sincerely,______________
John Thorpe,
President Playmobil USA, Inc. 11 E. Nicholas Court Dayton, NJ 08810
In the United States District Court for the District of Columbia
United States of America, Plaintiff v. Playmobil USA, Inc.,
Defendant.
Case Number 1:95CV00214
Judge: James Robertson
Deck Type: Antitrust
Date Stamp: 01/31/95
Competitive Impact Statement
The United States of America, pursuant to section 2 of the
Antitrust Procedures and Penalties Act (``APPA''), 15 U.S.C. 16(b),
submits this Competitive Impact Statement in connection with the
proposed Final Judgment submitted for entry in this civil antitrust
proceeding.
I
Nature and Purpose of the Proceeding
On January 30, 1995, the United States filed a civil antitrust
complaint under section 4 of the Sherman Act, as amended, 15 U.S.C. 4,
alleging that the defendant Playmobil USA, Inc. (``Playmobil'') engaged
in a combination and conspiracy, in violation of section 1 of the
Sherman Act, 15 U.S.C. 1, to fix the retail prices of Playmobil
children's toys throughout the United States. The complaint alleges
that, in furtherance of this conspiracy, Playmobil from February 1990
through August of 1994:
(a) Established and communicated to dealers minimum resale prices
for Playmobil toys;
(b) Threatened to terminate dealers for selling or advertising
Playmobil toys at prices below those minimum resale prices;
(c) Through the threats of termination, secured dealers' adherence
to those minimum resale prices and limited the duration of promotional
sales by dealers;
(d) Enforced adherence to minimum resale prices at the behest of
dealers in order to stop price wars among them; and
(e) Agreed with dealers on the retail prices the dealers would
charge for Playmobil toys.
The complaint also alleges that as a result of the combination and
conspiracy, prices of children's toys have been fixed and maintained,
and competition in the sales of children's toys has been restrained.
The complaint alleges that the combination and conspiracy is
illegal, and accordingly requests that this Court prohibit Playmobil
from continuing or renewing such activity or similar activities.
The United States and Playmobil have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA, unless
the United States withdraws its consent.
The Court's entry of the proposed Final Judgment will terminate the
action, except that the Court will retain jurisdiction over the matter
for possible further proceedings to construe, modify or enforce the
Judgment, or to punish violations of any of its provisions.
II
Description of Practices Giving Rise to the Alleged Violation of the
Antitrust Laws
Playmobil, a New Jersey corporation, is a prominent seller of
specialty toys for children in the United States, with annual sales at
wholesale in excess of $18 million. Playmobil imports its toys from
Germany, where its parent company makes them. From New Jersey it
distributes to retail toy stores in every state, and these stores in
turn sell Playmobil toys to consumers.
Over the past several years, Playmobil regularly published what it
termed ``Suggested Retail Price Ranges'' for all of its products. It
also annually issued letters to all of its dealers setting forth a
``Retailer Discount Policy.'' The Playmobil letters facially expressed
a well-defined, unilateral, dealer-termination policy under United
States versus Colgate & Co., 250 U.S. 300 (1919) that even included
some safeguards to ensure that Playmobil and its dealers would not
enter into resale price agreements. The stated policy said, in effect,
that Playmobil would, entirely on its own, monitor its retailers and
automatically, without discussion, refuse to sell to any dealer it
determined was discounting beyond the prescribed limits (emphasis
supplied). In the letters, Playmobil also committed not to further
discuss the policy or anything related to it.
In practice, however, Playmobil ignored these restrictions:
Playmobil personnel repeatedly contacted and pressured dealers in over
a dozen states who reportedly were discounting below the policy's
``suggested'' minimum levels. Playmobil secured from a number of its
dealers express agreements to follow Playmobil's published retail
prices. Playmobil often expressly threatened a dealer with termination
in order to obtain its agreement.
Frequently the impetus for Playmobil's actions was pressure from
other dealers that did not want to face [[Page 9865]] price competition
in the retail sales of Playmobil toys. Playmobil determined whether an
accused dealer was in fact discounting beyond the ``suggested'' limits,
and if it was, Playmobil forcefully ``discussed'' its resale pricing
policy with the offending dealer.
If, after such discussions, the dealer did not agree to raise its
prices, Playmobil responded with various threats--additional stores in
the immediate area might begin carrying Playmobil toys, Playmobil might
improperly process orders, a variety of shipping problems could occur.
In some instances, Playmobil refused to sell additional toys to a
dealer until after that dealer agreed to adhere to Playmobil's price
ranges.
The volume of commerce affected by Playmobil's illegal conduct is
difficult to estimate. Playmobil's illegal conduct was concentrated in
the more than one dozen states where, at the urging of retail dealers
that wanted to prevent price competition, it obtained illegal resale
pricing agreements with potential discounters. Thus while it is
difficult to estimate the total volume of commerce affected by
Playmobil's violations, it clearly was substantial although
significantly less than the entire $35 million in annual, nationwide,
retail sales of Playmobil toys.
Playmobil, by using the devices described, was usually successful
in inducing dealers to raise their prices. Indeed, the power of these
actions was such that Playmobil never had to permanently sever its
relationship with a dealer because of that dealer's continued
discounting. Thus, the result of Playmobil's activities was to fix,
raise and stabilize the prices at which toy retailers sold Playmobil
products. The courts have routinely found conduct such as Playmobil's
here to be a per se violation of the prohibition on agreements in
restraint of trade under section 1 of the Sherman Act.
III
Explanation of the Proposed Final Judgment
The parties have stipulated that the Court may enter the proposed
Final Judgment at any time after compliance with the APPA. The proposed
Final Judgment states that it shall not constitute an admission by
either party with respect to any issue of fact or law.
The proposed Final Judgment enjoins any continuation or renewal,
directly or indirectly, of the type of combination or conspiracy
alleged in the Complaint. Specifically, Section IV A prohibits
Playmobil from entering into any agreement or understanding with any
dealer to fix, stabilize or maintain any dealer's prices for Playmobil
products in the United States.
The law permits a manufacturer unilaterally to announce and
unilaterally to implement a policy of terminating discounters. Colgate,
supra. The manufacturer may not, however, secure a dealer's agreement
on retail price levels. United States v. Parke, Davis & Co., 362 U.S.
29 (1960). If a dealer discounts, the manufacturer must choose either
to continue to supply that dealer, knowing of its discounting
practices, or to forego that retail outlet for its products in the
future.
In this case, the Complaint alleges that Playmobil reached illegal
agreements with its dealers in the course of discussions about discount
pricing. Although discussions between a manufacturer and a dealer about
resale pricing do not always result in an agreement about those prices,
see Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752 (1984), the
evidence in this case showed, and the Complaint alleges, that
Playmobil's discussions clearly led to, and in fact included, illegal
agreements. Isaksen v. Vermont Castings, 825 F.2d 1158, 1164 (7th Cir.
1987), cert. denied, 486 U.S. 1005 (1988). To avoid a repetition of
such episodes, Section IV B bars Playmobil from discussing, explaining,
or encouraging dealers to adhere to suggested prices, threatening to
terminate a dealer for discounting, or discussing a dealer's
termination with another dealer. This prohibition addresses the central
offense in this case and extends for the entire ten-year life of the
decree.
The proposed Final Judgment not only bars Playmobil's unlawful
practices, but also contains additional provisions that are remedial in
nature, intended to restore competitive conditions in retail toy
markets and in dealer relationships, both of which have been distorted
by Playmobil's conduct from 1990 through August of 1994, as set forth
in the Complaint. These provisions bar some activities that are not, in
and of themselves, illegal, but which could nevertheless serve the same
purpose as Playmobil's outright agreements to fix resale prices--
preventing Playmobil dealers from selling or advertising at discount
prices.
To establish a new pricing regime to replace the former illegally
enforced regime, and to encourage retailers of Playmobil toys that
previously could not offer Playmobil products at discount prices,
because of Playmobil's illegal conduct, to exercise their ability to
discount if they so wish, Sections IV C and D of the Final Judgment
prohibit Playmobil for the first five years of the decree from
reestablishing its resale price policy in any form, even forms that
would be legal if Playmobil had never engaged in the illegal conduct
alleged in the Complaint. Thus, Section IV C bars Playmobil from
announcing policies to (1) sell only to non-discounting dealers, (2)
terminate or hinder dealers for discounting, or (3) control the
duration or frequency of a dealer's discounting. Section IV D 3 further
ensures that regardless of its stated policies, Playmobil will not
terminate or otherwise take actions against any dealer because of
discounting. Under the decree, the only thing Playmobil may continue to
do is to publish truly suggested retail prices, together with the clear
statement that dealers are free to ignore the suggestions.
When it is clear that a manufacturer's suggested retail prices are
informational only and strictly optional, they can serve useful market
functions without adversely affecting competition. In such an
environment, dealers become fully aware of and accustomed to exercising
their pricing rights.
Since the problem with Playmobil's policy lay in the implementation
of the policy rather than in the policy itself, the prohibition on
adopting such a policy extends only for five years. Similarly, since
Playmobil never improperly terminated any dealers, the prohibition on
terminations also extends only for five years. Playmobil will
thereafter regain its Colgate right unilaterally to announce a resale
pricing policy and unilaterally to terminate non-complying dealers.
Throughout the period, Playmobil will be able to disseminate its
suggested retail prices, but it must make clear that actual retail
sales prices will be set entirely at its dealers' discretion.
Subsections 1 and 2 of Section IV D of the Final Judgment also
prohibit Playmobil from accepting dealer complaints about other
dealers' pricing. In some cases, Playmobil was acting in response to
dealers' complaints when it pressured other dealers to agree to charge
higher retail prices. The complaints about discounting were the
proximate cause of much of the illegal conduct alleged in the
Complaint. Although a manufacturer's merely listening to a dealer's
complaint about another's pricing does not necessarily violate the law,
Business Electronics Corp. v. Sharp Electronics Corp., 485 U.S. 717
(1988), the evidence here showed that the dealer complaints led
directly to Playmobil's violations. Accordingly, in order to establish
a period of time during which Playmobil's [[Page 9866]] and its
dealers' conduct can become clearly legal, Playmobil has agreed not
even to accept such communications from its dealers for five years.
Section IV E of the Final Judgment prohibits Playmobil from
establishing a cooperative advertising program that conditions rebates
in any way upon a dealer's adherence to certain advertising price
levels. Playmobil did not have a cooperative advertising program, but
its illegal price agreements with dealers were often triggered by
advertising. In order to avoid any discussions at all with dealers on
the sensitive issue of retail pricing, Playmobil has also agreed not to
undertake a cooperative advertising program during the first five years
of the decree. This will provide a period of time during which market
conditions can become more competitive, and Playmobil and its dealers
can become more accustomed to remaining within legal parameters.
Section V of the proposed Final Judgment is designed to ensure that
Playmobil's dealers are aware of the limitations the Final Judgment
imposes on Playmobil. Section V requires Playmobil to send notices and
copies of the Judgment to each dealer who purchased Playmobil products
from the defendant in 1993 or 1994. In addition, Playmobil must send
notices and copies of the Judgment to every other dealer to which it
sells Playmobil products within ten years of the date of the Judgment's
entry.
Sections VI and VII require Playmobil to set up an antitrust
compliance program and designate an antitrust compliance officer. Under
the program, Playmobil is required to furnish a copy of the Judgment
and a less formal written explanation of it to each of its officers and
directors and each of its non-clerical employees, representatives, or
agents responsible for the sale or advertising of Playmobil products in
the United States.
In addition, the proposed Final Judgment provides methods for
determining and securing Playmobil's compliance with its terms. Section
VIII provides that, upon request of the Department of Justice,
Playmobil shall submit written reports, under oath, with respect to any
of the matters contained in the Judgment. Additionally, the Department
of Justice is permitted to inspect and copy all books and records, and
to interview officers, directors, employees and agents, of Playmobil.
Section IX makes the Judgment effective for ten years from the date
of its entry.
Section XI of the proposed Final Judgment states that entry of the
Judgment is in the public interest. The APPA conditions entry of the
proposed Final Judment upon a determination by the Court that the
proposed Final Judgment is in the public interest.
The Government believes that the proposed Final Judgment is fully
adequate to prevent the continuation or recurrence of the violation of
section 1 of the Sherman Act alleged in the Complaint, and that
disposition of this proceeding without further litigation is
appropriate and in the public interest.
IV
Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorney 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. 16(a), the
proposed Final Judgment has no prima facie effect in any subsequent
private lawsuit that may be brought against the defendant.
V
Procedures Available for Modification of the Proposed Final Judgment
The United States and the 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 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 wants 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 the
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: Rebecca P. Dick, Chief,
Civil Task Force I, U.S. Department of Justice, Antitrust Division,
1401 H Street NW., Room 3700, Washington, DC 20530.
Under Section X of the proposed Judgment, the Court will retain
jurisdiction over this matter for the purpose of enabling either of the
parties to apply to the Court for such further orders or directions as
may be necessary or appropriate for the construction, implementation,
modification, or enforcement of the Judgment, or for the punishment of
any violations of the Judgment.
VI
Alternatives to the Proposed Final Judgment
The only alternative to the proposed Final Judgment considered by
the Government was a full trial on the merits and on relief. Such
litigation would involve substantial cost to the United States and is
not warranted, because the proposed Final Judgment provides appropriate
relief against the violations alleged in the Complaint.
VII
Determinative Materials and Documents
No particular materials or documents were determinative in
formulating the proposed Final Judgment. Consequently, the Government
has not attached any such materials or documents to the proposed Final
Judgment.
Dated:
Respectfully submitted,
Bruce K. Yamanaga,
Andrew S. Cowan,
Attorneys, U.S. Department of Justice, Antitrust Division, 1401 H
Street NW., Room 3700, Washington, DC 20530, (202) 514-8368.
[FR Doc. 95-4283 Filed 2-21-95; 8:45 am]
BILLING CODE 4410-01-M