Reuters America Inc.; Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 951-0015]

Reuters America Inc.; Consent Agreement With Analysis To Aid

Public Comment

AGENCY: Federal Trade Commission.

ACTION: 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, among other things, prohibit a New York-based distributor of

fast-turnaround verbatim news transcripts from agreeing to or

attempting to agree to allocate customers or divide markets with any

provider of 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., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:

Michael E. Antalics, Bureau of Competition, Federal Trade Commission,

S-2627, 6th Street & Pennsylvania Ave., N.W., 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 Sec. 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 Reuters America Inc., hereinafter

sometimes referred to as ``Proposed Respondent'', and it now appearing

that Proposed Respondent is 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 Respondent, their

attorney, and counsel for the Federal Trade Commission that:

1. Proposed Respondent Reuters America Inc. (``Reuters'') is a

corporation organized, existing and doing business under and by virtue

of the laws of the State of Delaware, with its offices and principal

place of business located at 1700 Broadway, New York, New York 10019.

2. Proposed Respondent admits all the jurisdictional facts set

forth in the draft of complaint.

3. Proposed Respondent waives:

(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.

4. 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

Respondent, 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.

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

constitute an admission by Proposed Respondent 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.

6. 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 Respondent, (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 the attention of the Office of the General Counsel

at the Proposed Respondent's addresses as stated in this agreement

shall constitute service. Proposed Respondent waives any right it 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.

7. Proposed Respondent has read the draft complaint and Order

contemplated hereby. It understands that once the Order has been

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

showing that it has fully complied with the Order. Proposed Respondent

further understands that it 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. Respondent means Reuters America Inc., its subsidiaries,

divisions, and groups and affiliates controlled by Reuters America

Inc., its successors and assigns, and its directors, officers,

employees, agents, and representatives.

B. FNS means Federal News Service Group, Inc/, its directors,

officers, representatives, delegates, agents, employees, successors,

assigns and its subsidiaries and their successors and assigns; and

Federal News Service, its directors, officers, representatives,

delegates, agents, employees, successors, assigns and its subsidiaries

and their successors and assigns.

C. News transcripts mean full-text fast turnaround verbatim

transcripts of government-related events that are usually but not

always produced within

[[Page 52195]]

three (3) hours of the event and transmitted in any manner to resellers

and customers in the United States. The definition of ``news

transcripts'' refers to the type of full-text verbatim news transcript

service formerly marketed by Respondent under the name ``the Federal

News Reuter Transcript Service.'' News transcripts do not include news,

information or data of the type generally included in Respondent's

other news services which may incorporate some quotations or partial

excerpts from government-related events.

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 service

on a subscription basis.

II

It Is Ordered that Respondent, directly, indirectly, or through any

corporate or other device, in or affecting commerce, as ``commerce'' is

defined in the Federal Trade Commission Act, does 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 to divide markets or customers with respect to news

transcripts.

III

It Is Further Ordered that Respondent, 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 Respondent and FNS that prevents Respondent from

in any way competing with FNS 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,

Respondent 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 FNS 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 Respondent from:

A. Purchasing a subscription for news transcripts from FNS for

Respondent's own use but not for resale; and

B. Contracting with FNS for supplying FNS with Respondent's

Daybook.

V

It Is Further Ordered that Respondent, 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 entering into, attempting to enter

into, maintaining, enforcing, or attempting to enforce, any agreements

or understandings (1) with any competitor in the production,

distribution, or sale of news transcripts, that fix, establish,

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

transcripts, or (2) with any purchaser or reseller of news transcripts

which is directly or indirectly supplied by Respondent, that fix,

establish, control, or maintain resale prices or resale price levels

that such purchaser or reseller charges for news transcripts.

VI

It Is Further Ordered that Respondent shall:

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

distribute a copy of this Order and complaint to each of its officers

and to each of its employees engaged in the production or sale of news

transcripts.

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 Respondent require, file a

verified written report with the Commission setting forth in detail the

manner and form in which the Respondent has complied and is 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 Respondent such as dissolution, assignment or

sale resulting in the emergence of a successor corporation, or the

creation or dissolution or subsidiaries or any other change in

Respondent which may affect compliance obligations arising out of the

Order.

VII

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 has accepted an agreement to a

proposed consent order from Reuters America Inc. (``Reuters''),

which is located in New York City.

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 Reuters 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.

The complaint alleges that from 1988 through May 1993, Reuters

and Federal News Service Group, Inc. (``FNS''), the dominant sellers

of news transcripts, directly competed with each other for

customers. The news transcripts sold by Reuters were produced by

News Transcripts Inc. (``NTI''), and Reuters had the exclusive right

to market these news transcripts.

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

that Reuters would not sell news transcripts to FNS's customers;

Reuters would sell FNS-produced news transcripts; Reuters would not

produce or sell any news transcripts that compete with FNS-produced

news transcripts for the term of their supply agreement plus five

years; and Reuters would sell news transcripts at or above the

minimum price of $500 per month.

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 effect of these agreements

was to unreasonably restrain 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 Reuters assisted FNS in

obtaining a database reseller's agreement to raise the price of the

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

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

Reuters has signed a proposed consent agreement that prohibits

it 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 Reuters

from entering into any agreements with FNS for the supply of news

transcripts or for the purchase or sale of news transcript customer

contracts or accounts. Additionally, the proposed consent agreement

prohibits

[[Page 52196]]

Reuters from entering into any agreement with FNS that prevents Reuters

from competing in the production, marketing, or sale of news

transcripts. Finally, the proposed consent order prohibits Reuters

from entering into any agreements with any news transcript

competitor or reseller that fix the resale prices for news

transcripts.

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. 95-24758 Filed 10-4-95; 8:45 am]

BILLING CODE 6750-01-M