Federal News Service Group, Inc., et al.; Proposed Consent Agreement With Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 941 0015]

Federal News Service 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, a District of Columbia corporation that

sells verbatim news transcripts, and its president, from agreeing, or

soliciting an agreement, to allocate customers or divide markets with

any provider of news transcripts; entering into, continuing, or

renewing any agreement that prevents Reuters America from competing

with the respondents in the production, marketing or sale of news

transcripts; renewing its news transcript supply agreement with Reuters

America for five years; agreeing, or soliciting agreements, with

competitors to fix or maintain resale prices for news transcripts; and

requiring or pressuring any competitor to maintain or adopt any resale

price for news transcripts.

DATES: Comments must be received on or before December 4, 1995.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

Michael Antalics, FTC/S-2627, Washington, DC 20580. (202) 326-2821.

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)).

The Federal Trade Commission having initiated an investigation of

certain acts and practices of Federal News Service Group Inc., and

Cortes W. Randell, hereinafter sometimes referred to as ``Proposed

Respondents'', and it now appearing that Proposed Respondents are

willing to enter into an Agreement containing an Order to Cease and

Desist from engaging in the acts and practices being investigated,

It Is Hereby Agreed by and between the Proposed Respondents, their

attorney, and counsel for the Federal Trade Commission that:

1. Proposed Respondents Federal News Service Group, Inc. (``FNS'')

is a corporation organized, existing and doing business under and by

virtue of the laws of the District of Columbia, with its offices and

principal place of business located at 620 National Press Building,

Washington, D.C. 20045. FNS operates under the business name Federal

News Service.

2. Proposed Respondents Cortes W. Randell is an individual who is

President of Proposed Respondents FNS. His principal office and place

of business is 620 National Press Building, Washington, D.C. 20045.

3. Proposed Respondents admit all the jurisdictional facts set

forth in the draft of complaint.

4. Proposed Respondents 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.

5. This agreement shall not become a 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 in respect

thereto publicly released. The Commission thereafter may either

withdraw its acceptance of this agreement and so notify the Proposed

Respondents, 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.

6. This agreement is for settlement purposes only and does not

constitute an admission by Proposed Respondents 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.

7. 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 Commission's

Rules of Practice, the Commission may, without further notice to the

Proposed Respondents, (1) issue its complaint corresponding in form and

substance with the draft of the complaint and its decision containing

the following Order to cease and desist in disposition of the

proceeding, and (2) make information public in respect thereto. When so

entered, the Order to cease and desist shall have the same force and

effect as other orders. The Order 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 complaint and decision containing the

agreed-to Order to Proposed Respondents' addresses as stated in this

agreement shall constitute service. Proposed Respondents waive any

right they 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 agreement may be used to vary or contradict the terms of the

Order.

8. Proposed Respondents have read the draft complaint and Order

contemplated hereby. They understand that once the Order has been

issued, they will be required to file one or more compliance reports

showing that they have fully complied with the Order. Proposed

Respondents further understand that they may be liable for civil

penalties in the amount provided by law for each violation of the Order

after it becomes final.

Order

I

For the purposes of this Order:

A. ``Respondents'' mean Federal News Service Group, Inc., its

subsidiaries, divisions, and groups and affiliates controlled by

Federal News Service Group, Inc., its successors and assigns, and its

directors, officers, employees, agents, and representatives; Federal

[[Page 52187]]

News Service, its subsidiaries, divisions, and groups and affiliates

controlled by Federal News Service, its successors and assigns, and its

directors, officers, employees, agents, and representatives; and Cortes

W. Randell, an individual, his employees, agents, and representatives,

and entities controlled by him.

B. ``Reuters'' means Reuters America Inc., its directors, officers,

representatives, delegates, agents, employees, successors, assigns and

its subsidiaries and their successors and assigns.

C. ``News transcripts'' mean fast turnaround verbatim transcripts

of statements made by governmental officials or others covering a

variety of news events or individual news events or parts thereof that

are usually but not always produced within three (3) hours of the event

and transmitted in any manner to resellers and customers in the United

States. The definition of ``news transcripts'' does not include the

``Daybook'', a daily calendar of news events not containing news

transcripts, which is sold by Reuters to FNS.

D. ``News Transcript Provider'' means any person or entity which

produces news transcripts, by itself or through an arrangement by which

a third party produces news transcripts exclusively for that person or

entity, and markets and sells such news transcripts as a daily news

service on a subscription basis.

II

It Is Ordered that Respondents, directly, indirectly, or through

any corporate or other device, in or affecting commerce, as

``commerce'' is defined in the Federal Trade Commission Act, do

forthwith cease and desist from entering into, attempting to enter

into, or continuing or attempting to continue, any combination,

agreement or understanding, either express or implied, with any News

Transcript Provider to allocate or divide markets or customers with

respect to news transcripts.

III

It Is Further Ordered that Respondents, directly, indirectly, or

through any corporate or other device, in or affecting commerce, as

``commerce'' is defined in the Federal Trade Commission Act, do

forthwith cease and desist from entering into, continuing, or renewing

any agreement between Respondents and Reuters that prevents Reuters

from in any way competing with Respondents for the production,

marketing or sale of news transcripts.

IV

It Is Further Ordered that for five (5) years from either the date

this Order becomes final or July 31, 1995, whichever is later,

Respondents directly or indirectly, or through any corporate or other

device, in or affecting commerce, as ``commerce'' is defined in the

Federal Trade Commission Act, do cease and desist from entering into,

continuing, or renewing any agreements with Reuters providing for the

supply of news transcripts or the purchase or sale of news transcript

customer contracts or accounts.

Provided that nothing in this Order shall prohibit Respondents

from:

A. Selling a subscription for news transcripts to Reuters for

Reuters internal use but not for resale; and

B. Contracting with Reuters for Reuters to supply Respondents with

Reuters' Daybook.

It Is Further Ordered that Respondents, directly or indirectly, or

through any corporate or other device, in or affecting commerce, as

``commerce'' is defined in the Federal Trade Commission Act, do

forthwith cease and desist from:

A. Entering into, attempting to enter into, maintaining, enforcing,

or attempting to enforce, any agreements or understandings with any

competitor in the production, distribution, or sale of news

transcripts, or any purchaser or reseller of news transcripts which is

directly or indirectly supplied by Respondents, that fix, establish,

control, or maintain resale prices or resale price levels for news

transcripts; or

B. Requiring, coercing, or otherwise pressuring any competitor in

the production, distribution or sale of news transcripts, or any

purchaser or reseller of news transcripts which is directly or

indirectly supplied by Respondents, to maintain, adopt, or adhere to

any resale price or resale price level for news transcripts.

VI

It Is Further Ordered that Respondents shall:

A. Within thirty (30) days after the date this Order becomes final,

distribute a copy of this Order and complaint to each of their

employees and news transcript resellers.

B. Within ninety (90) days after the date this Order becomes final,

and annually thereafter for five (5) years on the anniversary of the

date this Order becomes final, and at such other times as the

Commission may, by written notice to the Respondents require, file a

verified written report with the Commission setting forth in detail the

manner and form in which the Respondents have complied and are

complying with this Order.

C. Maintain and make available to Commission staff for inspection

and copying upon reasonable notice, records adequate to describe in

detail any action taken in connection with the activities covered by

this Order.

D. Notify the Commission at least thirty (30) days prior to any

proposed change in the corporate Respondent 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 in Respondents which may affect compliance obligations

arising out of this Order.

VII

It Is Further Ordered that this Order shall terminate as follows:

A. With respect to Federal News Service Group, Inc., this Order

shall terminate twenty (20) years from the date this Order becomes

final.

B. With respect to Cortes W. Randell, this Order shall terminate

twenty (20) years from the date this Order becomes final, unless Cortes

W. Randell totally ceases and does not resume his participation in the

news transcript business in any capacity, in which case this Order

shall terminate five (5) years from the date he ceased participating in

the business.

Analysis of Proposed Consent Order To Aid Public Comment

The Federal Trade Commission has accepted an agreement to a

proposed consent order from Federal News Service Group, Inc.

(``FNS''), which is located in Washington, DC, and its President,

Cortes W. Randell.

The proposed consent order has been placed on the public record

for sixty (60) days for reception of comments by 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 decide whether it should withdraw from the agreement

or make final the agreement's proposed order.

The complaint alleges that FNS and Cortes Randell engaged in

acts and practices that have unreasonably restrained competition in

the news transcript business in violation of Section 5 of the

Federal Trade Commission Act. News transcripts are fast turnaround

verbatim transcripts of a variety of news events primarily involving

the federal government. Cortes Randell is the President of FNS, and

the complaint alleges that he formulated, directed, and controlled

the alleged acts and practices of FNS.

The complaint alleges that before May 1993, FNS and Reuters

America Inc. (``Reuters'') directly competed with each other for

news transcript customers. The news transcripts sold by Reuters were

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produced by News Transcripts Inc. (``NTI''), and Reuters had the

exclusive right to market these news transcripts.

The complaint alleges that by May 1993, FNS, Reuters and Cortes

W. Randell agreed that Reuters would become a reseller of FNS-

produced news transcripts and not sell news transcripts to FNS's

customers; Reuters would not produce or sell any news transcripts

which compete with FNS-produced news transcripts; and Reuters would

not sell news transcripts below a minimum monthly price of $500.

The complaint further alleges that Reuters, in concert with FNS,

induced NTI to cease producing news transcripts and not to compete

with FNS. The complaint alleges that the purpose or effect of the

agreements was to eliminate competition in the production and sale

of news transcripts. The complaint alleges that after FNS became the

sole producer of news transcripts, many customers of FNS received

price increases.

The complaint also alleges that FNS and Cortes W. Randell, in

concert with Reuters, coerced a reseller to raise the price of the

reseller's news transcript database. The reseller raised its price

to assure its continued supply of FNS-produced news transcripts.

FNS and Cortes W. Randell have signed a proposed consent

agreement that prohibits them from agreeing to or attempting to

agree to allocate customers or divide markets with any provider of

news transcripts. For a five year period, the proposed consent

agreement also prohibits FNS from having a supply agreement with

Reuters or an agreement with Reuters to acquire or sell news

transcript customer accounts. Additionally, the proposed consent

agreement prohibits FNS or Cortes W. Randell from entering into

agreements with Reuters that prevent Reuters from competing in the

production, marketing, or sale of news transcripts. Finally, the

proposed consent order prohibits FNS or Cortes W. Randell from

fixing or attempting to fix resale prices for news transcriptions.

The purpose of this analysis is to facilitate public comment on

the proposed order, and it is not intended to constitute an official

interpretation of the terms of the agreement and proposed order or

to modify in any way their terms.

Donald S. Clark,

Secretary.

[FR Doc. 95-24757 Filed 10-4-95; 8:45 am]

BILLING CODE 6750-01-M