Fruehauf Corporation

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IN THE MATTER OF FRUEHAUF CORPORATION Doket 8972. Interlocutory Ordr. Dec. 21, 1977 Order requiring fiing of memoranda pertaining to the issue of appropriate relief. ORDER REQUIRING MEMORANDA ON ISSUE OF RELIEF The Commission has taken this matter under advisement upon the appeal of respondent's counsel from the initial decision of the administrative law judge. The Commission has as yet made no determination as to liabilty. The Commission notes, however, that respondent has suggested in its brief that assuming arguendo that a violation of law is found, the Commission should consider requiring less than total divestiture of the acquired company, Kelsey-Hayes. The question of appropriate relief in a matter is one which should ordinarily be addressed as part of the trial on the merits, so as to minimize the delay in obtaining such relief if a violation should be found. This is especially so where the extent of any violation which may ultimately be found is clear in advance of a finding of such violation. In this matter, for example, any violation found must be predicated upon Fruehaufs acquisition of Kelsey-Hayes' manufacturing capacity in one or two markets, heavy-duty wheels and/or antiskid braking devices. Accordingly the parties should be able to specify in advance of any ultimate finding of liabilty the contours of a remedy involving partial divestiture. (Compare Warner-Lambert Co., 88 F. C. 503 (1976) wherein the ultimate finding of violation was predicated upon only a small fraction of the submarkets in which violations were initially alleged.

In order to consider respondent's contention that partial divestiture would be appropriate assuming a violation is found, without however, prolonging the time necessary for resolution of this matter, the Commission wil order the parties to fie supplemental memoranda on the question of an appropriate partial divestiture. The memoranda should not introduce new evidence but should cite relevant evidence already of record. They should discuss, inter alia, (1) the percentage of Kelsey-Hayes' assets and sales accounted for by its manufacturing capacity in the relevant markets and (2) the divisibility and independent viabilty of the assets which would be subject to any order of partial divestiture. Both parties shall also submit a proposed form of order which they believe suitable to effect a partial divestiture if such should be ordered. Submission of such an order, is, of course, without prejudice to the contention of respondent Interlocutory Order 90 F. that no violation has occurred and of complaint counsel that full divestiture is the appropriate remedy.

Each side shall have 30 days from the date of receipt of service to submit its initial memorandum, and thereafter shall have 15 days from the date of receipt of the other side s memorandum within which to submit a reply.

Therefore, it is ordered, That within 30 days from the date of servce of this order, each party shall fie with the Commission memorandum pertaining to the issue of appropriate relief in this matter, as described hereinabove. Thereafter, each party, within fifteen days after receipt of the memorandum of the other may fie with the Commission a reply thereto.

, In isuin thi order we have taken into account the contention of complaint courul that a presumption should favor total divestiture in merger cas, beus the acquired entity is more likely to prove viable upon divestiture (havin proven viable before it: acquisition) than some arbitrary create sub-entity with no prior mliket hiltory. We believe this argument is corret, and that the burden reats with respondent to demonstrate that a r€medy other than full divestiture would adequately redreM any violation which iB found. However complaint Could8el when preparg their memorandum should llume arguni, that Borne partial divestiture may be deemed appropriate, and dius what form it should tae BLOCK DRUG CO" INC., ET AL. 893 893 Complaint