Batus Inc

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

IN THE MATTER OF BATUS INC.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT AND SEC. 7 OF THE CLAYTON ACT Doket C-3099. Complaint, Dec. 1982-Decision, Dec. , 1982 This consent order requires, among other things, that a Louisvile, Kentucky management and holding company timely divest 200 00 square feet of its retail floor space, and reduce the volume of its retail sales by $20 milion of 1981 sales. Further, the company is barred from making certain acquisitions in prescribed areas without prior Commission approval. Appearances For the Commission: Daniel P. Ducore. For the respondent: Ronald S, Rolfe, Cravath, Swaine Moore, New York City.

COMPLAINT The Federal Trade Commission, having reason to believe that respondent, subject to the jurisdiction of the Commission, has acquired the stock or assets of Marshall Field & Company, in violation of Section 7 of the Clayton Act, as amended (15 U, C. 18), and Section 5 of the Federal Trade Commission Act, as amended (15 C. 45), and that a proceeding in respect thereof would be in the public interest, hereby issues its complaint, pursuant to Section 11 of the Clayton Act (15 U. C. 21) and Section 5(b) of the Federal Trade Commission Act (15 U, C, 45(b)), stating its charges as follows: L Definitions 1. For purposes of this complaint, the following definitions shall apply:

a, Respondent means BATUS Inc., a corporation organized existing, and doing business under and by virtue of the laws of the State of Delaware, with headquarters address at 2000 Citizens Plaza Louisvile, Kentucky, as well as its officers, directors, employees agents, parents, divisions, subsidiaries, affiliates, successors, assigns, and the offcers, directors, employees or agents of BATUS' parents divisions, subsidiaries, affiliates, successors or assigns. b. Marshall Field means Marshall Field & Company, a corporag.

Complaint 100 F.

tion organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with principal offces at 25 East Washington St" Chicago, Ilinois, as well as its offcers, directors employees, agents, its parents. divisions, subsidiaries, affiliates successors and assigns, and the officers, directors, employees or agents of its parents, divisions, subsidiaries, affilates, successors or assigns.

c. SMSA means a Standard Metropolitan Statistical Area as defined by the Offce of Management and Budget, Statistical Policy Division, 1975 Edition, as amended, d. Department stores, as used herein, corresponds with Bureau of Census Standard Industrial Classification No, 531, 1977 Census of Retail Trade, It refers to retail stores normally employing 25 or more people and engaged in sellng some items of each of the following groups of merchandise:

(i) Furniture, home furnishings, appliances, and radio and TV sets; and (ii) A general line of apparel for the family; and (iii) Household linens and dry goods.

8. Discount department store means a department store distinguished from other types of department stores by certain characteristics of location, physical structure, services provided, products offered for sale, general pricing and merchandise strategies, or other factors.

f. Traditional department store means a department store of any type other than a discount department store, GMAF stores as used herein, refers to all retail establishments included in the following Bureau of Census Major Industry Groups and Standard Industrial Classifications as used in the 1977 Census of Retail Trade:

Census Number Descriptions Classification No. 531 Department stores Major Industry Group No. 56 Other stores primarily engaged in the sale of apparel Classification No. 533 limited price variety stores Classification No. 539 Miscellaneous general merchandise stores , p.

553 Complaint Census Number Descriptions Major Industry Group No. 57 Furniture, home furnishings and equipment stores.

II. Respondent 2, BA TUS is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with headquarters address at 2000 Citizens Plaza, Louisvile, Kentucky. 3, Respondent was formed in January 1980 as both the holding and management company for the United States major business interests of its parent, RA.T, Industries Lc., of London, England, 4. Respondent is responsible for a substantial group of companies in the tobacco, retail and paper industries, including: Brown & Wiliamson Tobacco Corporation, Saks & Company, Gimbel Brothers, Inc" The Kohl Corporation, Thimbles Specialty Stores, Inc., and Appleton Papers, Inc, 5, In fiscal year 1980, respondent had sales of $4 161 milion and operating income of $432 millon.

6. In fiscal year 1981, respondent received retail revenues in the Milwaukee, Wisconsin SMSA in excess of $217 500 000 including approximately $130 400 000 from its eight Gimbels traditional department stores and $87 100 000 from its 14 Kohl's Department Stores.

7, In 1981 respondent was the largest department store retailer in the Milwaukee, Wisconsin SMSA, 8, In 1981 respondent, through its Gimbels stores, was the largest traditional department store retailer in the Milwaukee, Wisconsin SMSA, 9, In 1981 respondent was the largest retailer of certain merchandise categories in the Milwaukee, Wisconsin SMSA, 10, At all times relevant herein, respondent has been and is now engaged in commerce as ucommerce" is defined in Section 1 of the Clayton Act, as amended, 15 U. C, 12, and is a corporation whose business is in or affecting commerce as Hcommerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 44.

III. Marshall Field 11, Marshall Field is a corporation organized, existing, and doing business under and by virture of the laws of the State of Delaware with principal offices at 25 East Washington Street, Chicago, Ilinois. 12, Through various retail divisions, Marshall Field operates Complaint 100 F.

department stores and GMAF stores in various sections of the United States, including: the Chicago division (Marshall Field stores), Breuners, Frederick & Nelson, The Crescent, and J.B. Ivey & Company.

13. In fiscal year 1980, Marshall Field had net sales of approximately $1 013 million and net income of approximately $21 milion, 14. In fiscal year 1981, Marshall Field received retail revenues in excess of $27 milion from its one traditional department store in the Milwaukee, Wisconsin SMSA.

15. In 1981 Marshall Field was the eighth largest department store retailer in the Milwaukee, Wisconsin SMSA. 16, In 1981 Marshall Field was the fifth largest traditional department store retailer in the Milwaukee, Wisconsin SMSA. 17. In 1981 Marshall Field ranked among the top ten retailers of certain merchandise categories in the Milwaukee, Wisconsin SMSA. 18. At all times relevant herein, Marshall Field has been and is now engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U . C. 12, and is a corporation whose business is in or affecting commerce as " commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.8. C. 44.

IV. The Acquisition 19, Respondent, a wholly owned subsidiary of respondent and Marshall Field entered into a Stock Purchase Agreement dated as of March 15, 1982, providing for the issuance and sale by Marshall Field to BA TUS' subsidiary of 2 000 000 shares of Marshall Field common stock, at $25.50 per share (the "Stock Purchase Agreement"

20. On or about March 17, 1982, a direct wholly owned subsidiary of respondent commenced a tender offer for a majority of the shares of Marshall Field, with the intention of acquiring the balance of the Marshall Field stock pursuant to a merger between Marshall Field and an indirect wholly-owned subsidiary of respondent (the acquisition of Marshall Field shares pursuant to such tender offer and merger or any other business combination with Marshall Field together with the purchase of Marshall Field shares pursuant to the Stock Purchase Agreement, is hereinafter called the "Acquisition Under the terms of the acquisition as amended, the offering price was $30 per Common share. The acquisition was substantially completed on or about April 20, 1982. The total acquisition price 553 Complaint including the shares to be acquired by merger, was approximately $365 milion.

V. Trade and Commerce 21. One relevant line of commerce in which to evaluate the effects of respondent' s acquisition of Marshall Field is retail sales by department stores.

22. Within the department store line of commerce, a relevant line of commerce in which to evaluate the effects of respondent' acquisition of Marshall Field is retail sales by traditional departmen t stores.

23, Other relevant lines of commerce in which to evaluate the effects of respondent' s acquisition of Marshall Field are retail sales of certain merchandise, including, but not limited to: a. men s apparel;

b. women s apparel;

c. children s apparel.

24. The relevant section of the country is the Milwaukee Wisconsin SMSA, 25. The department store market in the Milwaukee, Wisconsin SMSA is concentrated.

26. The traditional department store and certain apparel markets in the Milwaukee, Wisconsin SMSA are highly concentrated. Since 1977 only six firms have maintained a traditional department store presence in Milwaukee, with the top four firms accounting for over 75 percent of sales, In those years as well, four firms have controlled in excess of 65 percent of retail sales in certain apparel markets, 27. Barriers to entry into department store retailing in the Milwaukee, Wisconsin SMSA are substantial. 28. Prior to the acquisition here in question, respondent and Marshall Field were and had been actual competitors of each other in department store and traditional department store retailng and in the retail sale of other merchandise, and had been actual competitors of others engaged in similar retail activities in the Milwaukee, Wisconsin SMSA.

VI. Effects 29, The effect of respondent' s acquisition of Marshall Field may be substantially to lessen competition or tend to create a monopoly in the relevant markets in violation of Section 7 of the Clayton Act Decision and Order 100 F. as amended, 15 U. C, 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U. C. 45, in the following ways among others:

a. actual competition between Marshall Field and respondent in department store and traditional department store retailng and the retail sale of other merchandise in the Milwaukee, Wisconsin SMSA has been eliminated;

b. actual competition between competitors generally in department store and traditional department store retailng and in the retail sale of other mechandise in the Milwaukee, Wisconsin SMSA may be lessened;

c. concentration in department store and traditional department store retailing and in the retail sale of other merchndise in the Milwaukee, Wisconsin SMSA has been increased; and d, the likelihood of eventual deconcentration may be lessened. VII. Violation Charged 30, The acquisition by respondent of the stock and assets of Marshall Field constitutes a violation of Section 7 of the Clayton Act as amended, 15 U.s,C, 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U. C, 45, DECISION AND ORDER The Federal Trade Commission having initiated and investigation of certain acts and practices of the respondent named in the caption hereof, and the respondent having been furnished thereafter with a copy of a draft of complaint which the Bureau of Competition proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondent with violation of the Federal Trade Commission Act and the Clayton Act; and The respondent, its attorneys, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondent of all signing of said agreement is for settlement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission s Rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondent has violated the said Act, and that complaint should issue stating its .. , 553 Decision and Order charges iri that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in Section 2.34 of its rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1. Respondent BA TUS, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its offce and principal place of business located at 2000 Citizens Plaza, in the City of Louisvile, State of Kentucky. 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 It is ordered That for purposes of this order the following definitions shall apply:

1. BATUS means BATUS Inc., a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with headquarters address at 2000 Citizens Plaza, Louisville, Kentucky, as well as its officers, directors, employees, agents parents, divisions, subsidiaries, affiliates, successors, assigns, and the officers, directors, employees or agents of BATUS' parents, divisions subsidiaries, affiliates, successors or assigns. 2. Marshall Field means Marshall Field & Company, a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with principle offces at 25 East Washington St., Chicago, Ilinois, as well as its offcers, directors employees, agents, its parents, divisions, subsidiaries, affiliates successors and assigns, and the officers, directors, employees or agents of its parents, divisions, subsidiaries, affiliates, successors or assigns.

3. SMSA means a Standard Metropolitan Statistical Area as defined by the Offce of Management and Budget, Statistical Policy Division, 1975 Edition, as amended, 4. Department stores, as used herein, corresponds with Bureau of the Census Standard Industrial Classification No, 531, 1977 Census of Retail Trade. It refers to retail stores normally employing 25 or Decision and Order 100 F. more people and engaged in sellng some items of each of the following groups of merchandise:

(a) Furniture, home furnishings, appliances, and radio and TV sets; and (b) A general line of apparel for the family; and (c) Household linens and dry goods.

5, GMAF stores, as used herein, refers to all retail establishments included in the following Bureau of Census Major Industry Group and Standard Industrial Classifications as used in the 1977 Census of Retail Trade:

Census Number Descriptions Classification No. 531 Department stores Major Industry Group No. 56 Other stores primarily engaged in the sale of apparel Classification No. 533 Limited price variety stores Classification No. 539 Miscellaneous general merchandise stores Major Industry Group No. 57 Furniture, home furnishings and equipment stores.

II.

It is further ordered That BATUS shall, within two (2) years from the date upon which this order becomes final, divest absolutely and in good faith such of its department stores in the Milwaukee Wisconsin SMSA as wil reduce the floor space of its department stores in that SMSA by an amount not less than 200 000 square feet and reduce its annual sales volume in that SMSA in an amount not less than $20 milion as measured by fiscal 1981 sales. A. Divestiture of any store under the terms of this order shall be made only to an acquiror approved in advance by the Federal Trade Commission.

B. Such divestiture shall include all leases, stock space and inventories but not the trade name or other proprietary names associated with the store.

C, Should BATUS divest the Marshall Field department store in Mayfair Mall it shall within two (2) years from the date of such divestiture open or begin construction of another Marshall Field retail establishment consisting of not less than 120 000 square feet of floor space in the Milwaukee SMSA. BATUS shall complete construction within three years from the time construction is begun. BA TUS shall ensure that the store is a viable competitive retail 553 Decision and Order establishment for not less than five (5) years from the date of its opening, III.

It iB further ordered That:

A. For a period of ten (10) years from the date upon which this order becomes final, BATUS shall not, directly or indirectly, through acquisition of stock, share capital, equity or any other interest in any equity, corporate or noncorporate, acquire any department store or GMAF store located within the Milwaukee, Wisconsin SMSA without the prior approval of the Federal Trade Commission; nor shall BA TUS acquire any assets of any entity, corporate or noncorporate, operating any department store or GMAF store located within the Milwaukee, Wisconsin SMSA without the prior approval of the Federal Trade Commission.

B. For a period of two (2) years from the date upon which this order becomes final, BATUS shall not, directly or indirectly, through acquisition of stock, share capital, equity or any other interest in any equity, corporate or noncorporate, acquire any department store or GMAF store located in any SMSA in which BATUS then operates a department store or GMAF store without the prior approval of the Federal Trade Commission; nor shall BATUS acquire any assets of any entity, corporate or noncorporate, operating any department store or GMAF store located in any SMSA in which BATUS then operates a department store or GMAF store without the prior approval of the Federal Trade Commission, C. For a period of three (3) years, beginning two (2) years from the date upon which this order becomes final, BATUS shall not directly or indirectly, through acquisition of stock, share capital equity or any other interest in any equity, corporate or noncorporate, acquire any department store or GMAF store located in any SMSA in which BATUS then operates a department store or GMAF store without the prior approval of the Federal Trade Commission; nor shall BATUS acquire any assets of any entity, corporate or noncorporate, operating any department store or GMAF store located in any SMSA in which BATUS then operates a department store or GMAF store without the prior approval of the Federal Trade Commission, Provided that this provision (II. C.) shall not be deemed to require prior approval of the Federal Trade Commission of acquisitions (1) of store sites, leases or inventories if the store property has not been operated as a department store or GMAF store for a period of ninety (90) consecutive days immediately prior to its Decision and Order 100 F. acquisition, or (2) of stock, share capital, equity or any other interest in any equity, corporate or noncorporate, or assets for a purchase price or other consideration less than $15 milion. IV.

It is further ordered That BA TUS shall submit within sixty (60) days after the date upon which this order becomes final, and every ninety (90) days thereafter, until such time that divestiture as required by paragraph II of this order has been accomplished, a report setting forth in detail the manner and form in which BATUS intends to comply, is complying, and has complied with the terms of this order and such additional information relating thereto as may from time to time be required. All such reports shall include a summary of contacts or negotiations with anyone for the specified assets, the identity of all such persons, and copies of all written communications to and from such persons.

It is furthered ordered That for a period of ten (10) years from the date upon which this order becomes final, BA TUS shall notify the Federal Trade Commission at least thirty (30) days prior to any change in BA TUS which may affect compliance with the obligations arising out of this consent order, such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries or any other change in the corporation.

VI.

It is further ordered That each year, for a period of ten (10) years from the date upon which divestiture as required by paragraph II of this order is accomplished, BATUS shall submit a report setting forth in detail the manner and form in which BATUS intends to comply, is complying or has complied with paragraph III of this order.

563 Complaint