Automatic Retailers of America, Inc.

Text (OCR of the scan at left; may contain errors)

In the MATTER oF AUTOMATIC RETAILERS OF AMERICA, INC.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FED- ERAL TRADE COMMISSION ACT AND SEC. 7 OF THE CLAYTON ACT Docket C-809. Complaint, Aug. 14, 1964—Decision, Aug. 14, 1964 Consent order requiring a large Philadelphia operator of automatic vending machine enterprises to divest two of its acquired vending businesses and refrain from acquiring such businesses in certain areas for the next 3 years without the prior approval of the Federal Trade Commission. Complaint The Federal Trade Commission, having reason to believe that the above-named respondent has violated and is violating the provisions of Section 7 of the Clayton Act, as amended (U.S.C., Title 15, Section 18), through the acquisition of the stock and assets of approximately forty (40) corporations, hereinafter more particularly designated and described, and that respondent has engaged in unfair methods of competition, acts and practices through these and numerous other acquisitions in violation of Section 5 of the Federal Trade Commission Act (U.S.C., Title 15, Section 45), and believing that a proceeding in this regard will be in the public interest, hereby issues its complaint pursuant to Section 11 of the Clayton Act and Section 5 of the Federal Trade Commission Act, charging as follows: I.

Definitions 1. For the purposes of this complaint, the following definition shall apply:

. “Vendi hine” y col rated electronic or mea, “Vending machine” means any coin operated electronic or me chanical device which dispenses vendible products. or © or AUTOMATIC RETAILERS OF AMERICA, INC.

50+ Complaint b. “Vendible products” means one, or any combination, of the following:

(1) Cigarettes. (7) Cold cup beverages.

(2) Packaged candy. (8) Milk and ice cream. (3) Packaged gum. (9) Pastries.

(4) Packaged nuts. (10) Sandwiches and salads. (5) Cookies and crackers. (11) Hot canned foods. (6) Hot cup beverages. (12) Food platters. c. “Location” means the establishment or site at which the vending machine is placed. .

d. “Industrial locations” means vending machine sites such as factories, plants, schools, hospitals office buildings and military installations.

e. “Commercial locations” means all public or off-street vending machine sites not included in the definition for industrial locations. f. “Vending business” means the business of soliciting and obtaining locations, installing, operating and servicing vending machines therein, and selling vendible products through said vending machines. o. “Vendor” means a person, partnership, or corporation, engaged = in the vending business in the United States. , h. “Single-line vendor” means a vendor engaged in vending only one type of vendible products.

i. “Multiple-line vendor” means a vendor engaged in vending two or more vendible products, but who does not vend any sandwiches, salads, hot canned foods or food platters. j. “Full-line vendor” means a multiple-line vendor who is also engaged in vending sandwiches, salads, hot canned foods, or food platters. nal Respondent 2, Automatic Retailers of America, Inc. (ARA), respondent herein, is a corporation organized in February, 1959 sub nomine Davidson Automatic Merchandising Co., Inc., and existing under the laws of the State of Delaware, with its principal office located at 10889 Wilshire Boulevard, Los Angeles, California. The present corporate name was adopted on December 30, 1959. As used herein, respondent ARA includes Automatic Retailers of America, Inc., its wholly owned subsidiaries, and its predecessor.

3. ARA is engaged in the vending business in more than twenty-five States of the United States, the District of Columbia and the Commonwealth of Puerto Rico.

Complaint 66 E.T.C.

4. For its fiscal years 1960 through 1962, the total sales, net income and assets of ARA stated in millions of dollars were approximately as follows:

Year Total sales Net income Assets $37.4 $1.1 $19.2 110, 9 2.3 59.0 180.8 4.0 79.0 5. At all times relevant herein, ARA purchased, shipped and sold its products, including vendible products, in interstate commerce, and conducted its business in interstate commerce and at federal military installations and other places subject to the jurisdiction of the United States, through its many offices, warehouses and distribution points located throughout the United States.

III The Nature of Trade and Commerce 6. The “line of commerce” for the purpose of this case is the vending business, as defined in paragraph 1(f) above. 7. The vending business in the United States is substantial. In 1962, _ vending sales of vendible products amounted to about $2,178,700,000. 8, ARA is the second largest full-line vendor in the vending business in the United States, serving approximately 21,000 industrial and commercial locations through approximately 70,000 vending machines placed at said locations in more than 25 states. 9. Asa result of technological and economic changes in the vending business since 1945, the vending business is no longer a smail business industry. Between 1960 and 1961 alone, over 500 independent vendors were acquired. Large regional and national companies have emerged as a result of this trend. Substantially contributing to this trend, ARA, from the date of its incorporation in 1959 through April 1963, acquired numerous firms engaged in the vending business throughout the United States, as particularly designated and described in Appendix A [p. 510 herein] hereto, incorporated herein by reference, 10. in a series of transactions beginning in 1959, ARA has acquired the stock or assets of corporations, partnerships and proprietorships, set forth in Appendix A [p. 510 herein], engaged in the rending business in many geographic markets throughout the United States, at a cost of approximately $66,000,000. As of April 1962, the cumulative sales of these acquired companies for the year prior to their acquisition AUTOMATIC RETAILERS OF AMERICA, INC. 507 504 Complaint totaled approximately $144,000,000. Each of the acquired companies was engaged in the vending business in acutal or potential competition with ARA.

11. The sections of the country which constitute the geographic markets relevant herein, include among others, the following: a. The United States as a whole, b. Marion County, Indiana, ce. Monroe County, New York, d. Cook County, Mlinois, Clark County, Nevada, Honolulu County, Hawaii, . Jefferson County, Alabama, h. Montgomery County, Ohio, i. Wayne County, Michigan, j. San Diego County, California, k. Baltimore City and Baltimore County, Maryland. 12, ARA’s acquisitions include, among others, the following, identified by date of acquisition, name, geographic market and main office: a. In 1960 ARA acquired the stock of Automatic Coffee Service Company, Inc., a corporation, Marion County, Indiana; Indianapolis, Indiana.

b. In 1960 ARA acquired the assets of two corporations, K.O.R., Inc. and Quick Cafeterias, Inc., both doing business as Quick Cafeteria Service, Monroe County, New York; Rochester, New York. c. In 1960 ARA acquired the stock of Vernon Fox Co., a corporation, Cook County, Illinois; Chicago, Illinois. d. In 1961 ARA acquired the assets of Sutton Vending Service, Inc., a corporation, Clark County, Nevada; Las Vegas, Nevada. e. In 1961 ARA acquired the stock of Southern Cigarette Service, Ine., @ corporation, and its wholly owned subsidiary, Jefferson County, Alabama; Birmingham, Alabama.

f. In 1961 ARA acquired the stock of Automatic Food Services, a corporation, Jefferson County, Alabama; Birmingham, Alabama. g. In 1961 ARA acquired the stock of Pacific Tobacco, Inc., a corporation, Honolulu County, Hawaii; Honolulu, Hawaii. h. In 1961 ARA acquired the stock of Sonnie-Gay, Ltd., a corporation Honolulu County, Hawaii; Honolulu, Hawaii. i. In 1961 ARA acquired the stock of Automatic Vending Enterprises Inc., a corporation, and its wholly owned subsidiaries, Montgomery County, Ohio; Middletown, Ohio.

j. In 1961 ARA acquired the assets of Vendo Cigarette Company, a corporation, Wayne County, Michigan; Detroit, Michigan. GQ bh @ Complaint 66 F.T.C.

k. In 1961 ARA acquired the stock of Honolulu Tobacco Company, Ltd., a corporation, Honolulu County, Hawaii; Honolulu, Hawaii. I, In 1961 ARA acquired the stock of Michigan Cigarette Vending Co., Inc., a corporation, Wayne County, Michigan; Detroit, Michigan. m. In 1961 ARA acquired the stock of Vend-O-Matic Co., Inc. a corporation, Cook County, Illinois; Chicago, Illinois. n. In 1961 ARA acquired the stock of Catermat Corporation of America, a corporation, San Diego County, California; Los Angeles, California.

o. In 1962 ARA acquired the stock of Automatic Food Systems, Inc., a corporation, and its wholly owned subsidiaries, Baltimore County, Maryland; Baltimore, Maryland.

p. In 1962 ARA acquired Central Vending Company, a partnership, Wayne County, Michigan; Detroit, Michigan. 13. Prior to and at the time of their acquisition by ARA, each of the acquired companies designated in paragraph 12 above regularly: a. Purchased vendible products and other products in interstate commerce, and b. Shipped or caused such products to be shipped in interstate commerce, and ce. Sold such products in interstate commerce, and d. Sold such products at federal military installations, or other places subject to the jurisdiction of the United States. IV Violation of Section 7 of the Clayton Act 14. The effect of the corporate acquisitions by ARA described and set forth in paragraph 12 above, individually and collectively, may be substantially to lessen competition or to tend to create a monopoly, in the vending business in each relevant geographic market in violation of Section 7 of the Clayton Act, as amended, in the following ways, among others:

a. Actual and potential competition between respondent and each of the acquired corporations has been eliminated ; b. Actual and potential competition between respondent and other vendors may be substantially lessened ;

c. Respondent has achieved a dominant position in terms of financial resources, marketing power, and managerial and engineering resources ;

AUTOMATIC RETAILERS OF AMERICA, INC. 509 504 Complaint d. Respondent’s power to purchase vendible products, vending machines, and other vending fixtures, accessories and supplies has been increased to such a substantial extent that it may obtain discounts, rebates, and allowances substantially larger than other vendors receive;

e. Respondent has decisively enhanced its power to compete for all locations, particularly the large and lucrative locations, by offering higher bids and commissions, new vending machines, advance commissions, loans, and other inducements to existing or prospective location owners;

f, Entry into the vending business may be discouraged or inhibited; g. Concentration in the vending business has been substantially increased, and a substantial number of small, independent vendors have been eliminated from the vending business. y- Violation of Section 5 of the Federal Trade Commission Act 15. ARA’s acquisitions, individually and collectively, specifically designated and described in Appendix A hereto, are methods of competition and acts and practices in commerce within the meaning of the Federal Trade Commission Act.

16. These acquisitions, individually and collectively, constitute unfair methods of competition and unfair acts and practices in commerce in violation of Section 5 of the Federal Trade Commission Act, in the following ways, among others:

a. Actual and potential competition in the vending business between ARA and the acquired corporations, partnerships and proprietorships has been eliminated;

b. Respondent has monopolized or attempted to monopolize the vending business in all relevant geographic markets; c. The acquisition of these corporations, partnerships, and proprietorships constitute an unreasonable restraint of trade and commerce, as described in paragraph 14 above.

Now therefore, the corporate acquisitions by ARA, set forth in paragraph 12 above constitute violations of Section 7 of the Clayton Act. (U.S.C. Title 15, Section 18), as amended, and the acquisitions by ARA set forth in Appendix A constitute a violation of Section 5 of the Federal Trade Commission Act (U.S.C. Title 15, Section 45). In run Marrmer or AUTOMATIC RETAILERS OF AMERICA, INC Apprnpix A Acquired Corporations, Partnerships and Propriclorships Approximate State of incorpora- Approximate sales for year Primary—Sales area Acquired company name Type of tion or typo of purchase prior to acquisition business price acquisition Stato Counties 1. Mar. 26—Allied Vending Products, Inc...-.-.---- Stock California Q 2. Mar. 26—General Vendors, Inc__.-.--.--- . Stock California S 3. Mar. 26—Davidson Bros. of Los Angeles. _. . Stock California $4, 250,000 $9,800,000 Cualifornia..._.---- Los Angeles and San Diego. E 4, Mar. 26—Spacard of Southern Calif., Inc__. . Stock California | Ls} 5. Mar. 26—Wavidson Equipment Co., Inc. -- . Stock Catiforn Db 6. Mar. 26—Davidson Bros. of San Diego, Inc . Stock California, _...-.------------.--- 2,303,240 California....---.- San Diego. iy 7. May 20—Automatic Merchants Service Co- . Asset * Partnership 65, 800 300, 000 California . Los Angeles. o 8. Sept. 17—Automatic Merchandising Co- --------- Stock Nevada___-------- 1, 200, 000 6,400,000 Tilinois.__ . Cook, Dupage. Indiana . Lake.

Michigan. . Oakland, Wayne.

. . Wisconsin _- . Racine, Kenosha.

9. Sept. 23—Leming Cigarette Service. -.....------- Asset... .-...--. Proprietorship- --- 8, 000 (NA*) — California_.....--- Los Angeles, Orange. 10. Sept. 23—Vending Machine Corporation of Asset. .-.----- Delaware. .-.----- 500, 000 2,271,000 Oklahoma, Tulsa. America, . . Arkansas.

11. Dec. 3—ILoward Vending Service, Inc. -...-.--- Stock ___..---- Indiana_.--------- 367, 000 1,465,000 Indiana Marion, Monroe, Toward. 12. Dec. 10—San Diego Music Company Incorporated. Asset. ~~. ----- California. _._._.-- 37, 700 (NA) California San Diego. 13. Feb. 18—Yood-O-Matic Sales Company-.-.------- Partnership... ---- 80, 000 (NA) California. ___ _ Los Angeles.

14. Mar. 1—Ilow-Dee Company, Inc-...-- Massachusetts... - 588, 000 1,300,000 Massachuset Tampden. 15. Mar. 1—Automatic Food Services, Inc-- wee Massachusetts_._ 32, 000 128,000 Massachusetts... Suffolk. 16. Mar. 22—TTarbor Cigarette Company - - Proprictorship . -__ 3, 500 (NA) California. . Orange. 17, Apr. 1—The Keilson Company - Ohio.__---.-- 1, 425, 000 3,300,000 Ohio_.._--- ¥Lamilton, Montgomery. 18. Apr. 1—The Keilson Vendomatic Compiny - --- Ohio. 50, 000 80,000 Ohio._ Iamilton. > 19. Apr. 1—Keilson Cup Drinks, Inc Ohio. 100, 000 210,000 Ohio Montgomery. o 20. Apr. 25—Tracy Automatic Sales Co. .- Proprietorship... 81, 000 200,000 California. Los Angeles. | 21. May 6—Automatic Coffce Service Company, Inc. .- Indiana_....-.-.-- 140, 000 1608,484 Indiana...__----.- Marion. = Q org SNOISIOGd NOISSININOD AACVYL TVUEdds 22.

23.

24, 25.

26.

27.

28.

29.

30.

31.

32.

33.

34.

35.

36.

37.

38, 39.

40.

41.

42.

43.

44, 45.

46.

47.

48.

49.

50.

51.

52.

53.

54.

55.

56.

57.

58.

June 2—Signal Vending Service_.

July July July Aug.

Aug.

Sept.

Sept.

Sept.

Oct.

Oct.

Oct.

Oct.

Oct.

Oct.

Oct.

Oct.

Oct.

Dee.

Dee.

Dee.

Dee.

Dee.

Dee. § Jan.

Jan.

Jan.

Jan.

Jan.

Jan.

Jan, Feb.

Feb.

Feb.

Fel.

Feb.

Mar.

6—K.O.R., Ince____._------- 6—Quick Cafelerias, Inc...

25— Rowe Service Co., Inc 15—Edward L. Nelson, Co_...-....--.----- Asset_ 2.222. Proprietorship... ..- 31—Industrial Vendors, Ine. and LV.L. Indiana. Coffee Service, Inc. Stock_...-2-.. Tilinois_. 19—Meiers Vending Co__._...222-- 22-2. Asset. . Proprictorship__._- 26—County Beverage Company, Inc_ .. Asset. . California. - 30—Midwest Food Service, Ine__.....------ Stock _-.._.-.- Hlinois__ --- 3—Serv-U Vending Company, Inc___.-._.- Asset_---.-.--- 3 Allied Vending Engineers, ine - —'Fennessee Service Company - Smokey Service Company-...- _ Stock.

3—Southern Industrial Service, Inc. .. Stock . ‘Tennes 3—Industrial Service, Inc___.._.. .- Stock . Tennes: 5—Beacon Beverage Co___ -- Asseot_ ] i 18—Beall Vending Corp. _.__ .. Asset. . Towa____ 23—Oxnard Automatic Sales... -- Asset. -- Proprietorship .._. 12—Harmony Cigarette Service, Inc. Asset. - California_ 16—Walter C. Knack Company. -- Asset. - Iinois_. 20—Control-Vend, Ine.._..___- -- Asset. - Winois 20-—Sales & Service Vending Co_ 20—Vernon Por Co...

- Illinois.

- Illinois_.

1—Frost Tee Vend 3—Sutton Vending Service, Ine... -- 6—Frenken Cigarette Machine Co_ 6—Oakland Vending Co__ 9—Cigarette Service Co. of Fresno, Ir 20—American Coin & Vending Co____ 30—Colemat Co., Inc_....--2.--2.

2—Clusker Vending Company.

6—Superior Vend_...__.__.- 13—Cornell Vending Service- 13—Peoples Bakery Service...

16—Suges Vending Service_ 1—Oakland Coin Co..-.___.

Pa rtnership -- Galiornia.”

Proprietorship .._.

Proprietorship - . _.

.. Partnership....._- See footnotes at end of table.

1, 600, 000 2433; 000 41,000 G00; 000 91, 360 154, 570 600, 000 185, 000 189, 000 1, 154, 000 132, 400 142; 000 321, 009 280, 000 77, 000 24) 000 155, 500 60, 000 275, 000 43, 000 541, 800 730, 000 470, 000 433, 200 82, 000 275, 000 625, 000 24, 000 450, 000 5, 000) 108, 000 20, 000 4; 000 25, 000 50, 500 1, 858, 000 (NA) 117, 000 1, 500, 000 215, 709 412, 000 3, 129, 000 309, 000 624; 000 1, 411; 000 2654, 000 177, 000 470, 090 352, 000 51, 000 (NA) 517, 000 (NA) 1, 290, 000 205, 000 2, 350, 000 "2327 000 609, 000 1, 765, 000 (NA) 345, 000 1, 639, 000 (NA) 965, 000 (NA) (NA) (NA) (NA) (NA) (NA) Fog California. .....2_. Orange.

New York_ --- Monroe.

New York - Monvoc.

California. ....... Los Angeles, Riverside, San Bernardino.

California. ......_- Los Angeles.

Indiana. . Lake.

Minois__ - Cook.

Llinois . Sangamon.

California:

- - San Diego.

Indiana, Lili Towa, Michigan, Missouri and Ohio.

Tiinois_....222- 22. Kane.

Massachusetts Seo.

Middlesex.

‘Pennesseo and Georgia South Carolina and Georgia.

South Carolina and Georgia.

Indiana. _. -.. St. Joseph, Elkart.

Towa___. . Polk, California. . Los Angeles.

California_ . Los Angele Q Illinois... - Tri City area. fo} Illinois ~ Cook. B Illinois - Cook, 3, Tlinois - Cook, Lake. FS) TMinois._...-22 222. Cook. gy ct New York . Monroe.

Nevada_ - Clark.

California - San Diego.

Michigan_- . Oakland.

California. . Fresno.

Nevada... - Clark.

New York_ - New York City.

Alabama. - Jefferson.

California_ . Los Angeles.

California. . Los Angeles.

Alabama._ . Madison.

Alabama. - Calhoun.

i Oakland.

‘ONI ‘VOINRINY JO SUHATIVLIGY OILLYNWOLAV ITg Avvenpix A—Continued Approximate State of incorpora- Approximate sales for year Primary—Sales area Acquired company name Type of tion or type of purchase prior to acquisition business prico acquisition State Counties 59. Mar. 22—Roo Cigarette Service, Inc. Alabama._.__.__ 2 $216,000 Alabama._.__..__. Madison. 60. Mar. 22—Roe Vending Co., Inc. __... Alabama. $435, 000 2 299,000 Alabama.__ -- Madison. 61. Mar. 22—Super Vending Company, Inc. Alabama. , 3 811,000 Alabama__.__ - Mobile. 62. Mar. 22—Vending Engineers, Ine. Alabama_.-..__. 3 215,000 Alabama, Florida, Georgia, Louisiana, Missis- : sippi, Missouri, North Carolina, South Carolina, ; ‘Tennessee.

63. Mar. 22—Coflee Vending Co Partnership. -___- - 243, 000 3 221,000 Alabama...._..___ Jefferson. 64. Mar. 22—Southern Cigarette Service, Inc. & Bama Alabama....-... 3912,000 Alabama__._..___- Calhoun, Jefferson, Talla- Distributors, Inc. 2, 500, 000 dega, and Etowah. 65. Mar. 22—Automatic Food Services of Mobile... .. Alabama. .-.. 4 1, 700, 000 3 152,000 Alabama_________. Mobile. 66. Mar. 22—Mobile Vending Company, Ine. - Alabama. | 364,000 Alabaina. - Mobile. 67, Mar. 22—Automatic Food Services... ._.._- - Alabama. 3311,000 Alabama_ - Jefferson. 68. Mar. 24—Pacifte Tobacco, Inc... - Hawai -- 1, 000, 000 1,621,691 Hawai - Honolulu. 69. Mar. 24—Sonnie- Gay, Lid. wee JLawaii- -- 535, 000 677,000 Iawaii - Honolulu. 70. Mar. 28—Automatic Vending Iénter prises, Inc. und Ohio__._. 2.22.2. Ohio... 2-2. Montgomery, Marion, Miami, subsidiaries: Franklin, Butler, Fairfield, ; 2, 400, 000 1, 600, 000 Green.

Winchester Vending, Inc__..-.-......---- Indiana_._...-.. |fraiana ween nee eee Randolph. Salem Vending, Inc... - New Jersey New Jersey Salem. 71. May = 1—Vendo Cigarelle Company. Michigan___ 355, 000 (NA) Michigan._._..___. Wuynie. 72, May 5—Automatic Coffee Service of Southern Deleware.___...-. 60, 000 (NA) Calif., Inc. ;

73. May 5—Coffee Automatic Partnership_.....- 90, 000 251,000 California Los Angeles. 74. May 16—Pico Vending Co., Ine ane California -- 41, 000 (NA) Californ Los Angeles, 75. May 16—Gates Automatic Merchanc ising. Proprictorship_ 25, 000 73,000 Indiana_ Warren, Vermillion. 76. May 26—Merchants Candy & Notions Company Proprietorship. __- 25, 000 190,000 Alabama. Colbert. 77. May 26—Estate of Horace K. Ward. - Proprictorship__-_ 5,975 (NA) California Los Angeles. 78. June 2—Automatic Games Co__. - Proprictor, 3%, 300, (NA) California Orange. 79, June 2—Acme Vending Machine Corp_._.- New York week 453, 000 416,000 New Yo Onondaga. 80. June 2—Kwik Kafe Coffeo Services of Central | New York._..-.-- 255, 000 376,000 New York... Onondaga. New York, Inc. .

81. June 2—Piedmont Vendors, Ine._-_.- 2-2-2. e- South Carolina_-__ 402, 700 670, 000 South Carolina and Georgia.

82. June 14—Candy Distributors, Ltd___....-...2-.- Stock__-. Tawaii_..-.-....-- 300, 000 518,000 Tawaii. Fonolulu. 83. June 16—Springfield Spacarh, Inc. - Asset. Massachusetts... 60, 000 129,060 Massachuset TTanipden. 84. June 19—Cigareite Service a ‘ Partnership. - - 150, 306 665,000 Georgia. - Chatham. 85. June 30—Moore Cigar & Candy Company- Proprietorship. ___ 25, 000 (NA) Alabai --. Lauderdale. 86. June 30—Bryant Vending Co - Proprietorship_--. 90, 000 (NA) Indiana__.. 22... St. Joseph, Elkart. quretdmog ‘ODA 99 oI SNOISIOd NOISSIMMOD AGVUL Weaags7

AUTOMATIC RETAILERS OF AMERICA, INC. 515 504 : Decision and Order DeEcIsIoN AND ORDER The Commission having heretofore determined to issue its complaint charging the respondent named in the caption hereof with violation of Section 7 of the Clayton Act, as amended, and with violation of the Federal Trade Commission Act, and the respondent having been served with notice of said determination and with a copy of the complaint the Commission intended to issue, together with a proposed form of order; and The respondent and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by respondent of all the jurisdictional facts set forth in the complaint to issue herein, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondent that the law has been violated as set forth in such complaint, and waivers and provisions as required by the Commission’s rules; and The Commission, having considered the agreement, hereby accepts same, issues its complaint in the form contemplated by said agreement, makes the following jurisdictional findings, and enters the following order:

1. Respondent Automatic Retailers of America, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its corporate office located at Lombard at 25th Street, in the city of Philadelphia, State of Pennsylvania.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDER I It is ordered, That respondent, Automatic Retailers of America, Inc., a corporation, through its officers, directors, agents, representatives and employees, within twelve (12) months from the date of service of this Order, shall divest itself absolutely, in good faith and to a purchaser or purchasers approved by the Federal Trade Commission, of all stock or assets, properties, rights and privileges, tangible or intangible, including, but not limited to, all contract and location rights, vending machines, vending routes, inventories, trade names and trade-marks of respondent’s Spencer Vending Division d/b/a Spencer Vending Co., Inc., Rochester, New York, and Fox Cigarette Service Company, Chicago, Illinois, including all their Decision and Order 66 F.T.C, location rights as of the date of service of this order: Provided, however, That if said location rights to be divested shall have been responsible for less than $400,000 in vended sales with respect to Spencer Vending Co., Inc., and less than $1,750,000 in vended sales with respect to Fox Cigarette Service Company, in the twelve (12) calendar months next preceding divestiture, additional location rights in Rochester, New York Standard Metropolitan Statistical Area (SMSA) and Chicago, Illinois SMSA respectively, shall be divested with volume sufficient to make the total divested volume equal to the figures specified in this paragraph, a It is further ordered, That respondent, through its officers, directors, agents, representatives and employees, within twelve (12) months from the date of service of this Order, shall divest itself absolutely, in good faith, to a purchaser or purchasers approved by the Federal Trade Commission of (a) two or more vending routes in the State of Hawaii, having aggregate sales of vendible products in the twelve (12) calendar months next preceding divestiture of not less than $1,000,000, and (b) one or more vending routes in each of the following Standard Metropolitan Statistical Areas (SMSA), as defined by the Bureau of the Budget, Executive Office of the President, having aggregate sales of vendible products in such area in the twelve (12) calendar months next preceding divestiture in an amount not less than that specified opposite the name of such area:

Area: Aggregate amount (1) Rochester, New York SMSA---_------------------------ $ 300, 000 (2) Chicago, Illinois SMSA ____.--_-_-----_-- ee 1, 750, 000 (8) Dayton, Ohio SMSA ~__--~--------------_--_--_-------- 500, 000 (4) Detroit, Michigan SMSA ----_--------------_-_2--_ 1, 500, 000 (5) San Diego, California SMSA ~-_------_----_--_- le 450, 000 A vending route shall include the assets, properties, rights and privilegles, tangible or intangible, and location rights required by the purchaser to operate said route.

pani li ts further ordered, That by such divestiture none of the stocks, assets, vending routes, location rights or other privileges, tangible or intangible, shall be sold or transferred, directly or indirectly, to any person who is at the time of the divestiture an officer, director, employee, or agent of, or under the control or direction of, respondent or any of respondent’s subsidiaries or affiliated corporations, or owns or controls more than one (1) percent of the outstanding shares of stock AUTOMATIC RETAILERS OF AMERICA, INC. 517 504, Decision and Order of respondent, nor to anyone who is not approved as a purchaser in advance by the Federal Trade Commission.

Iv It is further ordered, That if respondent divests itself of the stock, assets, properties, vending routes, location rights and privileges, described in Paragraphs I and II of this Order, by transferring them to a new corporation or corporations, the stocks of which are wholly owned by Automatic Retailers of America, Inc., and if respondent then distributes all of the stocks in said wholly-owned corporations to the stockholders of Automatic Retailers of America, Inc., in proportion to their holding of Automatic Retailers of America, Inc. stock, then Paragraph IIT of this Order shall be inapplicable, and the following Paragraphs V and VI shall take force and effect in its stead. Vv No person who is an officer, director, or executive employee of Automatic Retailers of America, Inc., or who owns or controls, directly or indirectly, more than one (1) percent of the stock of Automatic Retailers of America, Inc., shall be an officer, director or executive employee of any of the new. corporations described in Paragraph IV, or shall own or control, directly or indirectly, any of the stocks of said new corporations.

VI Any person who must sell or dispose of a stock interest in Automatic Retailers of America, Inc., or in the new corporations referred to in Paragraph V of this order in order to comply with said Paragraph V may do so within six (6) months and twelve (12) months, respectively, after the date on which the divestiture provided in Paragraph IV of this Order becomes effective.

vir As used in this Order, the word “persons” shall include all members of the immediate family of the individual specified and shall include corporations, partnerships and associations and other legal entities as well as natural persons.

vin Lt ts further ordered, That as long as a divested location is served by the purchaser which was approved by the Commission and which purchased from respondent pursuant to said approval, but in no event Decision and Order 66 F.T.C.

longer than a period of three (8) years from the date of divestiture, respondent shall cease and desist from soliciting and acquiring, directly or indirectly, any of the location rights divested to such purchaser pursuant to this Order.

HAS It is further ordered, That, for a period of three (3) years from the date of service of this Order, respondent shall cease and desist from acquiring, directly or indirectly, through subsidiaries, or in any other manner, the assets, stocks, share capital, or any other interest, in any organization, corporate or otherwise, which operates a vending business (as defined in the complaint) in the following Standard Metropolitan Statistical Areas (SMISA), except with the approval of the Federal Trade Commission, upon written application and proper showing in support thereof by respondent: Baltimore, Md. SMSA; Birmingham, Ala. SMSA; Chicago, Ill. SMSA; Dayton, Ohio SMSA; Detroit, Mich. SMSA; Fresno, Cal. SMSA; Honoiulu, Hawaii SMSA; Huntsville, Ala. SMSA; Indianapolis, Ind. SMSA; Las Vegas, Nev. SMSA; Rochester, N.Y. SMSA; San Diego, Cal. SMSA; and Tulsa, Okla. SMSA. x It is further ordered, That, for a period of three (8) years from the date of service of this Order, respondent shall cease and desist from acquiring, directly or indirectly, through subsidiaries, or in any other manner, the assets, stocks, share capital, or any other interest, in any organization, corporate or otherwise, which operates a vending business (as defined in the complaint) in any Standard Metropolitan Statistical Area (SMSA) or county not included in any SMSA, other than the areas designated in Paragraph TX hereof, in which respondent had $300,000 or more in sales of vendible products by machines during respondent's fiscal year next preceding the first acquisition in each area after the date of service of this Order, except with the approval of the Federal Trade Commission upon written application and proper showing by respondent: provided, however, that nothing contained in this paragraph shall be construed to prohibit respondent from acquiring the assets, stocks, share capital, or other interest in any organization, corporate or otherwise, which operates a vending business (as defined in the complaint) in any said area where the agetregate sales of vendible products by machines (based on volume AUTOMATIC RETAILERS OF AMERICA, INC. 519 504 Decision and Order in the twelve (12) calendar months next preceding acquisition) obtained by it by acquisition in any said area after the date of service of this Order does not exceed the maximum provided in the following schedule:

Population (000) 3-year ceiling (Annual volume) (000) Exceeding Not exceeding 0 250 $165 250 875 245 375 500 325 500 750 350 750 1, 0C0 875 1, 000 1, 250 400 1, 250 1, 500 . 500 1, 560 1, 750 875 1, 750 2, 000 650 2,000 eee eee ee ee eee eee eee eee 750 Respondent shall report each such acquisition to the Federal Trade Commission within thirty (80) days of its consummation with a satisfactory showing that the reported acquisition complies with the requirements of this paragraph.

XI lt is further ordered, That, for a period of three (8) years from the date of service of this order, respondent shall forthwith cease and desist from acquiring, directly or indirectly, through subsidiaries, or in any other manner, the assets, stocks, share capital, or any other interest, in any organization, corporate or otherwise, which operates a vending business (as defined in the complaint) in any Standard Metropolitan Statistical Area (SMSA) or county not included in any SMSA where respondent had sales of vendible products by machines of less than $300,000 during respondent’s fiscal year next preceding the first acquisition in each area after the date of service of this Order except with the approval of the Federal Trade Commission upon written application and proper showing by respondent: provided, however, that nothing contained in this paragraph shall be construed to prohibit respondent from acquiring the assets, stocks, share capital, or any other interest, in any other organization, corporate or otherwise, which operates a vending business (as defined in the complaint) in any said area where the aggregate sales of vendible products by machines (based on volume in the twelve (12) calendar months next preceding acquisition) obtained by it by acquisition in any said area after the date of service of this Order does not exceed the maximum provided in the following schedule: 856-438 —70 34 Decision and Order 66 F.T.C.

Population (000) 3-year ceiling (Annual volume) (000) Exceeding Not exceeding 0 200 $200 200 300 825 300 400 455 400 500 585 500 600 715 600 700 845 700 800 975 800 900 1,105 900 1,000 1, 235 1, 000 1,100 1,365 1, 100 1, 200 1,495 1, 200 1, 300 1, 625 1,300 1, 400 1, 755 1, 400 1, 500 1, 885 1, 500 2,000 Respondent shall report each such acquisition to the Federal Trade Commission within thirty (80) days of its consummation with a satisfactory showing that the reported acquisition complies with the requirements of this paragraph.

xr Nothing contained in this Order shall be construed to prohibit respondent: (1) From the purchase of new or used vending equipment; (2) From purchasing vending routes in any Standard Metropolitan Statistical Area (SMSA) or county not included in any SMSA where the aggregate sales of vendible products by machines of all such routes purchased pursuant to this paragraph (based on volume in the twelve (12) calendar months next preceding acquisition) does not exceed $75,000 in any such area in the first year after the date of service of this Order, a cumulative total of $150,000 in any such area by the end of the second year, or a cumulative total of $225,000 in any such area by the end of the third year, provided, however, that no single route purchase shall involve more than $75,000 in annual sales of vendible products by machines; (These shall not be considered purchases of vending businesses under the terms of paragraphs CX, X and XI hereof and shall not be included in the three-year ceilings specified in Paragraphs X and XI). (3) From purchasing vending machines, fixtures, equipment and other accessories used and useful in the vending business from any vending business in any area, which, as a result of bona fide competitive bids or proposals, has been replaced as a vendor by respondent: Provided, however, That such purchase by the successful bidder or proposer is made a condition of acceptance of the bids or proposals by the location owner, and such purchase by respondent is limited to the vending machines, fixtures, equipment and other accessories at the said location at the date of take-over by respondent. AUTOMATIC RETAILERS OF AMERICA, INC. 521 50+ Decision and Order Respondent shall report each purchase under (2) and (8) of this paragraph to the Federal Trade Commission within thirty (380) days of its consummation with a satisfactory showing that the reported purchase complies with the requirements of this paragraph. XTIT It is further ordered, That within sixty (60) days from the date of service of this Order respondent shall submit to the Commission a description of stock, vending routes or other assets including the composition of each vending route it proposes to divest in accordance with Paragraphs I and II of this Order, with the reasons for grouping or organizing the locations involved into each vending route, Said lists shall be accompanied by a statement by the corporate officer signing such submission that at the time of such submission neither he nor any other officer or executive employee of respondent whose duties include responsibility for service or maintainance of said locations has any knowledge or information that loss through renegotiation or otherwise of any location or location rights proposed to be divested is imminent or probable in the near future, that respondent is serving the listed locations subject to customary arrangements and that in good faith respondent will exert its best efforts to pursuade the location owners to accept the approved purchaser(s) of the divested locations as successor(s) at said locations. “Executive employees” shall consist of group vice presidents, area vice presidents, regional vice presidents, regional sales managers and divisional managers. Upon the approval by the Commission of the composition of such vending routes, the loss of any location included therein shall be considered as pro tanto divestiture by respondent required by this Order, provided, however, that respondent shall report such loss to the Commission within twenty (20) days of such occurrence with a statement that respondent has exercised customary due care in serving such locations and has refrained from doing any act which caused such loss. Respondent shall periodically, every sixty (60) days thereafter until divestiture is fully effected, submit to the Commission a written and detailed report of the progress in carrying out the provisions of this Order.

Complaint o rong ky Ll Q