[Federal Register Volume 65, Number 49 (Monday, March 13, 2000)]
[Notices]
[Pages 13386-13387]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6044]


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FEDERAL TRADE COMMISSION

[Docket No. 981-0386]


Nine West Group Inc.; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint that accompanies the consent agreement and the terms of the 
consent order--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before April 5, 2000.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 600 Pennsylvania Ave., NW, Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT: Richard Parker, FTC/H-374, 600 
Pennsylvania Ave., NW, Washington, D.C. 20580. (202) 326-2574.

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 Practices (16 CFR 2.34), notice is hereby 
given that the above-captioned 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 thirty (30) days. The following Analysis to Aid 
Public Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for March 6, 2000), on the World Wide Web, at ``http://www.ftc.gov/
ftc/formal.htm.'' A paper copy can be obtained from the FTC Public 
Reference Room, Room H-130, 6000 Pennsylvania Avenue, NW, Washington, 
D.C. 20580, either in person or by calling (202) 326-3627.
    Public comment is invited. Comments should be directed to: FTC/
Office of the Secretary, Room 159, 600 Pennsylvania Ave., NW, 
Washington, D.C. 20580. Two paper copies of each comment should be 
filed, and should be accompanied, if possible, by a 3\1/2\ inch 
diskette containing an electronic copy of the comment. Such comments or 
views will be considered by the Commission and will be available for 
inspection and

[[Page 13387]]

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)).

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``the Commission'') has accepted, 
subject to final approval, an agreement from Nine West Group Inc. 
(``Nine West'') to a proposed consent order. The agreement settles 
charges by the Commission that Nine West violated Section 5 of the 
Federal Trade Commission Act by entering into vertical agreements that 
restricted retail price competition in the sale of women's shoes. Nine 
West is a major manufacturer and seller of women's shoes and sells 
shoes under the ``Easy Spirit,'' ``Enzo Angiolini,'' ``Bandolino,'' cK/
Calvin Klein,'' ``Pappagallo,'' ``Selby,'' ``Amalfi,'' ``Calico,'' 
``Evan-Picone,'' ``Westies,'' ``Capezio,'' ``Joyce,'' and ``9 & Co.'' 
labels. Jones Apparel Group, Inc., purchased Nine West in July of 1999, 
and is a signatory to the consent agreement, but none of the conduct 
alleged in the complaint occurred after the purchase.
    The proposed consent order has been placed on the public record for 
thirty days for receipt of comments by interested persons. Comments 
received during this period will become part of the public record. 
After thirty 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 purpose of this analysis is to invite public comment on the 
proposed 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. Further, the proposed consent order has been entered 
into for settlement purposes only and does not constitute an admission 
by Nine West that the law has been violated as alleged in the 
complaint.

The Complaint

    Nine West Group is a Delaware corporation with its principal place 
of business in White Plains, New York. Nine West sells women's footwear 
to retail outlets throughout the United States, including many of the 
nation's largest department stores.
    The complaint alleges that beginning in January 1988 and continuing 
until at least July 31, 1999, Nine West entered into agreements with 
certain retailers that fixed, raised, and stabilized retail prices to 
consumers. Nine West adopted pricing policies that determine which 
shoes the retailer could not discount or promote outside of specified 
times. Nine West did not merely announce these policies and terminate a 
retailer that did not adhere to them, which would have been lawful, but 
instead Nine West sought agreement from these dealers on future 
pricing. For example, Nine West suspended shipments and said it would 
resume them only if the dealer promised not to violate the policy 
again. Nine West also coerced compliance by threatening to withhold 
discounts or advertising funds if the dealer refused to comply with a 
pricing policy. Retailers communicated to Nine West that they would 
adhere to the pricing policies.

The Proposed Consent Order

    The proposed consent order is designed to prevent Nine West from 
agreeing with its dealers to set prices. Paragraph II of the order 
prohibits Nine West from fixing, controlling, or maintaining the retail 
price of women's footwear. It also prohibits Nine West from coercing or 
pressuring any dealer to maintain, adopt, or adhere to any resale 
price. Nine West also may not secure or attempt to secure commitments 
or assurances from any dealer concerning resale prices. Finally, 
Paragraph II prohibits Nine West, for a period of ten years, from 
notifying a dealer in advance that the dealer is subject to a temporary 
suspension of supply (e.g., no shoes shipped for six months) or a 
partial suspension (e.g., no orders of Easy Spirit loafers) if the 
dealer sells Nine West shoes below a designated price.
    Paragraph III of the order requires that for a period of five years 
from the date on which the order becomes final, Nine West shall clearly 
and conspicuously include a statement on any list, advertising, book, 
catalogue, or promotional material where it has suggested any resale 
price for any Nine West product to any dealer. The required statement 
explains that while Nine West may suggest resale prices for its 
products, dealers remain free to determine on their own the prices at 
which they will sell and advertise Nine West's products.
    Paragraph IV of the order requires Nine West to mail a letter (see 
attachment A) to its retailers with a copy of the Commission's order. 
The letter states that while Nine West may send materials to them with 
suggested retail prices, they are free to sell and advertise at a price 
they choose. Paragraph V requires that the same letter with a copy of 
the Commission's order be sent to new employees of Nine West.
    Paragraph VI of the order requires Nine West to notify the 
Commission at least thirty days prior to any proposed changes in the 
corporation, such as dissolution or sale. Paragraph VII consists of 
standard Commission reporting and compliance procedures. Finally, 
Paragraph VIII contains a standard ``sunset provision,'' under which 
the terms of the order terminate twenty years after the date of 
issuance.

    By direction of the Commission.
Donald S. Clark,
Secretary.

Statement of Commissioners Orson Swindle and Thomas B. Leary

    We have voted to accept the consent agreement for public comment 
because we have reason to believe that the conduct engaged in by Nine 
West falls outside the limited zone of protection afforded by the 
Colgate doctrine,\1\ and thus is per se illegal under current law. We 
do not mean to indicate agreement, however, with the artificial 
analysis mandated by the Colgate doctrine or with the overboard per se 
condemnation resale price maintenance (``RPM''), which the Colgate 
doctrine mitigates to some degree.
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    \1\ United States v. Colgate & Co., 250 U.S. 300 (1919).
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    We do not know what conclusion we might have reached had Nine 
West's behavior been analyzed under the rule of reason, because that 
question did not arise. Nevertheless, one can easily posit instances of 
minimum RPM that involve a mixture of procompetitive and 
anticompetitive effects, like any other vertical restraint, and 
undercut the continuing validity of the per se rule against the 
practice. Several years ago, the Supreme Court took the beneficial step 
of reexamining the overruling the doctrine that condemned maximum RPM 
as per se illegal.\2\ When an appropriate case arises, we believe that 
the Court should continue this healthy trend by reassessing the even 
hoarier per se treatment of minimum RPM.\3\
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    \2\ State Oil Co. v. Khan, 522 U.S. 3 (1997), overruling 
Albrecht v. Herald Co., 390 U.S. 145 (1968).
    \3\ Dr. Miles Medical Co. v. John D. Park & Sons Co. 220 U.S. 
373 (1911).

[FR Doc. 00-6044 Filed 3-10-00; 8:45 am]
BILLING CODE 6750-01-M