[Federal Register Volume 60, Number 148 (Wednesday, August 2, 1995)]
[Notices]
[Pages 39399-39403]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-18956]
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FEDERAL TRADE COMMISSION
[File No. 951-0024]
Summit Communications Group, Inc., et al.; Proposed Consent
Agreement With Analysis to Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair acts and practices and unfair methods of competition, this
consent agreement, accepted subject to final Commission approval, would
prohibit, among other things, Summit and seven Wometco Cable TV
companies from agreeing, attempting to agree or carrying out an
agreement with any cable television provider to allocate or divide
markets, customers, contracts or territories for cable television
service in the incorporated and unincorporated areas of the Georgia
counties of Cobb, Bartow, Dekalb, Walton, Gwinnett, Fulton, Douglas,
Fayette, Coweta, Clayton, Henry, Rockdale, Newton and Cherokee.
[[Page 39400]]
DATES: Comments must be received on or before October 2, 1995.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., N.W., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Ronald Rowe or Robert Doyle, Jr., FTC/
S-2105, Washington, DC 20580. (202) 326-2610 or 326-2819.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby
given that the following consent agreement containing a consent order
to cease and desist, having been filed with and accepted, subject to
final approval, by the Commission, has been placed on the public record
for a period of sixty (60) days. Public comment is invited. Such
comments or views will be considered by the Commission and will be
available for inspection and copying at its principal office in
accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of
Practice (16 CFR 4.9(b)(6)(ii)).
Agreement Containing Consent Order To Cease and Desist
In the Matter of Summit Communications Group, Inc., a
corporation, and Wometco Cable TV of Georgia, Inc., a corporation;
Wometco Cable TV of Cobb County, Inc., a corporation; Wometco Cable
TV of Clayton County, Inc., a corporation; Wometco Cable TV of
Conyers-Rockdale, Inc., a corporation; Wometco Cable TV of Fayette
County, Inc., a corporation; Wometco Cable TV of Fulton County, a
corporation; and Wometco Cable TV of Henry County, Inc., a
corporation.
The Federal Trade Commission having initiated an investigation of
certain acts and practices of Summit Communications Group, Inc.
(``Summit''), a Delaware corporation, and Wometco Cable TV of Georgia,
Inc., a Georgia corporation, Wometco Cable TV of Cobb County, Inc., a
Georgia corporation, Wometco Cable TV of Clayton County, Inc., a
Georgia corporation, Wometco Cable TV of Conyers-Rockdale, Inc., a
Georgia corporation, Wometco Cable TV of Fayette County, Inc., a
Georgia corporation, Wometco Cable TV of Fulton County, a Georgia
corporation, and Wometco Cable TV of Henry County Inc., a Georgia
corporation (hereinafter collectively referred to as ``Wometco''), and
it now appearing that Summit and Wometco are willing to enter into an
agreement containing an order to cease and desist from the acts and the
practices being investigated and providing for other relief:
It is hereby agreed by and between Summit and Wometco, by their
duly authorized officers and attorneys, and counsel for the Federal
Trade Commission that:
1. Proposed respondent Summit is a corporation organized, existing,
and doing business under and by virtue of the laws of the State of
Delaware, with its office and principal place of business at 115
Perimeter Center Place, Suite 1150, Atlanta, Georgia 30346.
2. Proposed respondent Wometco Cable TV of Georgia, Inc., is a
corporation organized, existing, and doing business under and by virtue
of the laws of the State of Georgia, with its office and principal
place of business at 5979 Fairburn Road, Douglasville, Georgia 30134.
3. Proposed respondent Wometco Cable TV of Cobb County, Inc., is a
corporation organized, existing, and doing business under and by virtue
of the laws of the State of Georgia, with its office and principal
place of business at 1145 Powder Springs Road, Marietta, Georgia 30064.
4. Proposed respondent Wometco Cable TV of Clayton County, Inc., is
a corporation organized, existing, and doing business under and by
virtue of the laws of the State of Georgia, with its office and
principal place of business at 6435 Tara Boulevard, Suite 22,
Jonesboro, Georgia 30236.
5. Proposed respondent Wometco Cable TV of Conyers-Rockdale, Inc.,
is a corporation organized, existing, and doing business under and by
virtue of the laws of the State of Georgia, with its office and
principal place of business at 1361 Iris Drive, Conyers, Georgia 30209.
6. Proposed respondent Wometco Cable TV of Fayette County, Inc., is
a corporation organized, existing, and doing business under and by
virtue of the laws of the State of Georgia, with its office and
principal place of business at 107 South Glynn Street, Fayetteville,
Georgia 30214.
7. Proposed respondent Wometco Cable TV of Fulton County is a
corporation organized, existing, and doing business under and by virtue
of the laws of the State of Georgia, with its office and principal
place of business at 6435 Tara Boulevard, Suite 22, Jonesboro, Georgia
30236.
8. Proposed respondent Wometco Cable TV of Henry County, Inc., is a
corporation organized, existing, and doing business under and by virtue
of the laws of the State of Georgia, with its office and principal
place of business at 6435 Tara Boulevard, Suite 22, Jonesboro, Georgia
30236.
9. Time Warner Inc. (``TWI'') is a corporation organized, existing,
and doing business under and by virtue of the laws of the State of
Delaware, with its office and principal place of business at 75
Rockefeller Plaza, New York, New York 10019. After consummation of a
proposed acquisition of Summit by TWI, Summit will become a wholly-
owned subsidiary of TWI.
10. U S WEST, Inc. (``USW'') is a corporation organized, existing,
and doing business under and by virtue of the laws of the State of
Colorado, with its office and principal place of business at 7800 East
Orchard Road, Englewood, Colorado 80111. USW is an owner of
approximately 25% of Time Warner Entertainment Company, L.P., an
affiliate of TWI. On December 6, 1994, USW, through its wholly-owned
subsidiary Multimedia Cable, Inc., a Delaware corporation, acquired
Wometco.
11. Summit and Wometco admit all the jurisdictional facts set forth
in the draft of complaint.
12. Summit and Wometco waive:
a. Any further procedural steps;
b. The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
c. All rights to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this agreement;
and
d. Any claim under the Equal Access to Justice Act.
13. This agreement shall not become part of the public record of
the proceeding unless and until it is accepted by the Commission. If
this agreement is accepted by the Commission it, together with the
draft of complaint contemplated thereby, will be placed on the public
record for a period of sixty (60) days and information with respect
thereto publicly released. The Commission thereafter may either
withdraw its acceptance of this agreement and so notify Summit and
Wometco, in which event it will take such action as it may consider
appropriate, or issue and serve its complaint (in such form as the
circumstances may require) and decision, in disposition of the
proceeding.
14. This agreement is for settlement purposes only and does not
constitute an admission by Summit or Wometco that the law has been
violated as alleged in the draft of complaint or that the facts as
alleged in the draft complaint, other than jurisdictional facts, are
true.
15. This agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Sec. 2.34 of the
[[Page 39401]]
Commission's Rules, the Commission may, without further notice to
Summit or Wometco, (1) issue its complaint corresponding in form and
substance with the draft complaint and its decision containing the
following order to cease and desist in disposition of the proceeding,
and (2) make information public with respect thereto. When so entered,
the order to cease and desist shall have the same force and effect and
may be altered, modified, or set aside in the same manner and within
the same time provided by statute for other orders. The order shall
become final upon service. Delivery by the U.S. Postal Service of the
compliant and decision containing the agreed-to order to the addresses
of Summit and Wometco, as stated in this agreement, shall constitute
service. Summit and Wometco waive any right each may have to any other
manner of service. The complaint may be used in construing the terms of
the order, and no agreement, understanding, representation, or
interpretation not contained in the order or the agreement may be used
to vary or contradict the terms of the order.
16. Summit and Wometco have read the proposed compliant and order
contemplated hereby. They understand that once the order has been
issued, each will be required to file one or more compliance reports
showing that each has fully complied with the order. Summit and Wometco
further understand that they may be liable for civil penalties in the
amount provided by law for each violation of the order after the order
becomes final.
Order
I
It is Ordered that, as used in this order, the following
definitions shall apply:
A. ``Summit'' means Summit Communications Group, Inc., its
directors, officers, employees, agents and representatives,
predecessors, successors and assigns, its subsidiaries, divisions,
groups and affiliates controlled by Summit, and the respective
directors, officers, employees, agents, representatives, successors and
assigns of each:
B. ``Wometco'' means Wometco Cable TV of Georgia, Inc., Wometco
Cable TV of Cobb County, Inc., Wometco Cable TV of Clayton County,
Inc., Wometco Cable TV of Conyers-Rockdale, Inc., Wometco Cable TV of
Fayeete County, Inc., Wometco Table TV of Fulton County, Wometco Cable
TV of Henry County, Inc., their directors, officers, employees, agents
and representatives, predecessors, successors and assigns, their
subsidiaries, divisions, groups and affiliates controlled by Wometco,
and the respective directors, officers, employees, agents,
representatives, successors and assigns of each;
C. ``TWI'' means Time Warner Inc., its directors, officers,
employees agents and representatives, predecessors, successors and
assigns, it subsidiaries, divisions, group and affiliates controlled by
TWI, and the respective directors, officers, employees, agents,
representatives, successors and assigns of each;
D. ``USW'' means US West, Inc., its directors, officers, employees,
agents and representatives, predecessors, successors and assigns, its
subsidiaries, divisions, groups and affiliates controlled by USW, and
the respective directors, officers, employees, agents, representatives,
successors and assigns of each;
E. ``Commission'' means the Federal Trade Commission;
F. ``Cable Operator'' means any partnership, sole proprietorship or
corporation, including all of its subsidiaries, affiliates, divisions
and joint ventures, that owns, controls or operates one or more Cable
Television Systems; ``Cable Operator'' includes the partners, directors
officers, employees, and agents of such partnership, sole
proprietorship or corporation as well as the directors, officers,
employees, and agents of such partnership's sole proprietorship's or
corporation's subsidiaries, affiliates, divisions and joint ventures.
The words ``subsidiary,'' ``affiliate,'' and ``joint venture'' refer to
any firm in which there is partial (10% or more) or total ownership or
control between corporations.
G. ``Cable Television Service'' means the delivery to the home of
various entertainment and informational programming via a Cable
Television System.
H. ``Cable Television System'' means a facility, consisting of a
set of closed transmission paths and associated signal generation,
reception, and control equipment that is designed to provide Cable
Television Service, which includes video programming and which is
provided to multiple subscribers within a community. The term does not
include: (a) a facility that serves only to retransmit the television
signals of one or more television broadcast stations; or (b) a facility
that serves only subscribers in one or more multiple dwelling units
under common ownership, control, or management, unless such facility or
facilities uses a public right-of way.
I. ``Relevant Geographic Area'' means the incorporated and
unincorporated areas of the counties of Cobb, Bartow, Dekalb, Walton,
Gwinnett, Fulton, Douglas, Fayette, Coweta, Clayton, Henry, Rockdale,
Newton, and Cherokee, in the State of Georgia.
J. ``Overbuilding'' means instances in which two or more Cable
Operators have the facilities to provide and are capable of providing
Cable Television Service to the same subscribers.
II
It is further ordered that Summit and Wometco each cease and desist
from, directly, indirectly, or through any corporate or other device,
in or affecting commerce, as ``commerce'' is defined in the Federal
Trade Commission Act, combining or attempting to combine, entering into
or attempting to enter into, organizing or attempting to organize,
implementing or attempting to implement, carrying out or attempting to
carry out, or soliciting or attempting to solicit, any combination,
agreement, or understanding, either express or implied, with any Cable
Operator or other provider or potential provider of Cable Television
Service in any part of the Relevant Geographic Area:
A. To allocate or divide markets, customers, contracts, or
territories for Cable Television Service in any part of the Relevant
Geographic Area. ``Customers'' includes, but is not limited to,
residents of existing, newly-constructed, or future housing
developments, subdivisions, apartment complexes, or hotels; and
B. To refrain from Overbuilding any portion of any Cable Television
System in any part of the Relevant Geographic Area.
Provided that nothing contained in the foregoing paragraphs of this
order shall be construed to prohibit TWI or USW from engaging in any
lawful conduct or entering into any lawful agreement.
III
It is further ordered that Summit and Wometco shall:
A. Within thirty (30) days after the date this order becomes final,
distribute a copy of the complaint and order to each of their
directors, officers, and supervisory employees who are in any way
involved in Cable Television Service in the Relevant Geographic Area;
B. For a period of three (3) years after the date this order
becomes final, furnish a copy of the complaint and order to each of
their new directors, officers, and to each of their supervisory
employees in any way involved in Cable Television Service in the
Relevant Geographic Area, at the time they
[[Page 39402]]
become a director, officer, or supervisory employee;
C. For a period of three (3) years from the date this order becomes
final, and within thirty (30) days after the date any entity becomes a
majority-owned subsidiary of Summit or Wometco, provide a copy of the
complaint and order to all directors, officers, and supervisory
employees of such entity who are in any way involved in Cable
Television Service in the Relevant Geographic Area.
IV
It is ordered that Summit and Wometco:
A. Within sixty (60) days after the date this order becomes final,
and annually for the next five (5) years on the anniversary of the date
this order becomes final, and at other times as the Commission may
require, shall each file a verified written report with the Commission
setting forth in detail the manner and form in which each has complied
and is complying with this order;
B. For the purpose of determining or securing compliance with this
order, shall permit any duly authorized representative of the
Commission:
1. Access, during office hours and in the presence of counsel, to
inspect and copy all books, ledgers, accounts, correspondence,
memoranda and other records and documents in the possession or under
the control of Summit or Wometco, relating to any matters contained in
this order; and
2. Upon five days' notice to Summit and Wometco, and without
restraint or interference from them, to interview officers, directors,
or employees of Summit and Wometco, relating to any matters contained
in this order. Summit and Wometco, and the officers, directors, and
employees, may have counsel present.
C. Shall notify the Commission at least thirty (30) days prior to
any proposed change in Summit or Wometco affecting the provision of
Cable Television Service in the Relevant Geographic Area, such as
dissolution, assignment, or sale resulting in the emergence of a
successor corporation, or the creation or dissolution of subsidiaries
or any other change that may affect their compliance obligations
arising out of this order.
V
It is further ordered that this order shall terminate twenty (20)
years from the date this order becomes final.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted for
public comment from Summit Communications Group, Inc. (``Summit''),
and Wometco Cable TV of Georgia, Inc., Wometco Cable TV of Cobb
County, Inc., Wometco Cable TV of Clayton County, Inc., Wometco
Cable TV of Conyers-Rockdale, Inc., Wometco Cable TV of Fayette
County, Inc., Wometco Cable TV of Fulton County, and Wometco Cable
TV of Henry County, Inc. (hereinafter collectively referred to as
``Wometco''), an agreement containing a proposed consent order to
cease and desist.
The agreement has been placed on the public record for sixty
(60) days for receipt of comments from interested persons. Comments
received during this period will become part of the public record.
After sixty (60) days, the Commission will again review the
agreement and the comments received and will decide whether it
should withdraw from the agreement or make final the agreement's
proposed order.
The Complaint prepared for issuance by the Commission along with
the proposed order alleges that on or about April 26, 1990,
officials of Summit and Wometco reached an understanding concerning
which of the two companies would serve apartment complexes and/or
housing complexes in an area of unincorporated Cob County, Georgia,
where both companies have franchise authority to provide cable
television service. The Complaint alleges that this understanding
between Summit and Wometco was in operation from late April 1990
until at least March 24, 1993. The Complaint alleges that this
understanding reached by Summit and Wometco was an agreement not to
compete and has had the purpose or effect, or the tendency and
capacity, to restrain competition unreasonably and to injure
consumers by restraining competition between providers of cable
television services in parts of unincorporated Cobb County, and
depriving cable television subscribers in parts of unincorporated
Cobb County of access to a competitively determined price and
quality of cable television services.
Summit and Wometco have signed a consent agreement containing
the proposed order. The proposed order prohibits Summit and Wometco
from directly or indirectly combining or attempting to combine,
entering into or attempting to enter into, organizing or attempting
to organize, implementing or attempting to implement, carrying out
or attempting to carry out, or soliciting or attempting to solicit
any combination, agreement, or understanding, either express or
implied, with any cable operator or other provider or potential
provider of cable television services to (a) allocate or divide
markets, customers, contracts, or territories for cable television
service, and (b) refrain from overbuilding any portion of any cable
television system, in any part of the incorporated and
unincorporated areas of the counties of Cobb, Bartow, Dekalb,
Walton, Gwinnett, Fulton, Douglas, Fayette, Cowetta, Clayton, Henry,
Rockdale, Newton, and Cherokee, in the State of Georgia.
The purpose of this analysis is to invite public comment
concerning the proposed consent order. This analysis is not intended
to consent order. This analysis is not intended to constitute an
official interpretation of the agreement and proposed order or to
modify their terms in any way. The agreement would settle charges by
the Commission that the proposed respondents violated Section 5 of
the Federal Trade Commission Act by engaging in practices that
restricted competition between providers of cable television
services in parts of unincorporated Cobb County, Georgia.
Statement of the Commission; Summit Communications Group, Inc.
[File No. 951-0024]
In this matter, the Commission has alleged that the respondents,
Summit and Wometco, which were competing providers of cable
television service, entered into a market allocation agreement. Such
an agreement is per se illegal and, in this case, deprived cable
television subscribers of a competitive marketplace.
The two respondents were Georgia-based firms, each of which
offered cable television services in some or all of fourteen Georgia
counties. Subsequent to the alleged illegal conduct, Wometco was
acquired by U.S. West, and after commencement of the Commission's
investigation, Summit was acquired by Time-Warner. Thus, both Summit
and Wometco are under the active control of major cable television
firms whose managements were not implicated by the allegations of
the Commission's complaint.
The proposed order prevents these respondents from engaging in
similar conduct in the fourteen counties in Georgia where either of
the two firms had operations, a far broader area than the small area
in one county where the parties had cable systems capable of
competing for business. Under the unique circumstances of this
proceeding, the Commission has concluded that relief may be limited
in this fashion.
The Commission's policy is that where per se illegal conduct is
found, it will seek the broadest possible relief, without geographic
limitation. Boulder Ridge Cable TV, Docket No. C-3537 (Oct. 19,
1994). Only in extraordinary cases, such as this one, will it be
appropriate to limit the scope of relief.
Statement of Commissioner Mary L. Azcuenaga Concurring in Part and
Dissenting in Part; Summit Communications Group, Inc.
[File No. 951-0024]
I concur in the Commission decision to issue a complaint
alleging that the respondents conspired to allocate the market for
cable television services. Market allocation agreements, including
this one, are per se unlawful. Addyston Pipe and Steel Co. v. United
States, 175 U.S. 211 (1899).
I dissent from the decision to limit the cease and desist order
against Summit Communications Group, Inc. (Summit) and the seven
named Wometco cable systems to a small geographic area surrounding
Atlanta, Georgia. Summit operates cable television systems outside
the fourteen Georgia counties that are included in the geographic
[[Page 39403]]
coverage of the order, and the order does nothing to prevent future
violations at those systems. If, after the order is issued, Summit
enters an identical market allocation agreement at a cable system
outside these fourteen counties, the Commission's only recourse will
be to initiate an administrative proceeding to obtain still another
order.
Market allocation, like price fixing, has long been deemed per
se unlawful, and no proof of market power is necessary to condemn
the conduct. Nothing about the fourteen Georgia counties renders
them uniquely susceptible to market allocation schemes. Since market
allocation is unlawful whenever and wherever it occurs, I see no
reason to limit the prohibition in the order to a tiny geographic
region.
The complaint and order set forth no rationale for drawing a
line around these fourteen counties as the geographic metes and
bounds of the order's coverage. The actual agreements alleged in
paragraphs six through eleven of the complaint relate to the
provision of cable television service to the Asbury Village
apartment complex and specific housing subdivisions. As alleged in
paragraph thirteen of the complaint, the restraint of trade had its
anticompetitive effect only in these unincorporated areas of Cobb
County, Georgia. The absence of any apparent rationale is troubling.
In future cases, it opens the door to unguided negotiations
regarding the geographic scope of conduct orders.
This is the second consent agreement involving allegations of
market allocation in which the Commission has limited the coverage
of the order to a narrow geographic area In B & J School Bus
Service, Inc., Docket No. C-3425 (April 22, 1993), I dissented from
the limitation on the geographic coverage of the order on the ground
that in the rare case in which the Commission uncovers a flagrant
per se violation such as bid rigging, price fixing or market
allocation, it should take strong action to prohibit the
participants in conspiracy from repeating the violation. I expressed
concern that the Commission was signalling a new leniency toward per
se antitrust violations. In accepting this second order with such a
weak and limited remedy, the Commission appears to eliminate the
possibility that the school bus order can be disregarded as an
aberration.
Benjamin I. Berman,
Acting Secretary.
[FR Doc. 95-18956 Filed 8-1-95; 8:45 am]
BILLING CODE 6750-01-M