Summit Communications Group, Inc., et al.; Proposed Consent Agreement With Analysis to Aid Public Comment

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