Smitty'S Super Markets, Inc

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IN THE MATTER OF SMITTY' S SUPER MARKETS, INC.

CONSENT ORDER, ETC. IN REGARD TO ALLEGED VIOLA'l'ON OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket 9172. Complaint, Dec. 198,'- Decision, Sept. 7, 1984 This consent order requires a Springfield, Missouri operator of retail grocery stores among other things, to cease engaging in any concerted action to impede the collection or dissemination of comparative price information. For a period of five years, the company is prohibited from requiring price checkers to purchase items to be priced as a condition of allowing them to price check; denying price checkers the same access to its stores as is provided to customers; or coercing any price checker, publisher or broadcaster to refrain from collecting or reporting comparative price information. The company is also required to offer to reimburse TeleCable up to $1 000 for the broadcast of a comparative grocery price information program. Should the station elect to broadcast such a program, respondent is further required to post signs and place newspaper ads notifying the public that such a program is being broadcast.

Appearances For the Commission: Patricia Bremer. For the respondent: Donald W Jones Springfeld, Mo. COMPLAINT Pursuan t to the provisions of the Federal Trade Commission Act as amended, 15 U. C. 41 et seg. and by virtue ofthe authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Smitty s Super Markets, Inc., Roswil, Inc., and David Porter (hereinafter sometimes referred to collectively as "respondents ) have violated Section 5 of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues this complaint charging as follows: 1. Smitty s Super Markets, Inc., is a Missouri corporation with its principal otTces at 218 South Glenstone, Springfield, Missouri. 2. Roswil, Inc., is a Missouri corporation trading and doing business as Ramey Super Markets. Its registered agent is Flavius Freeman 130 Corporate Square, Springfeld, Missouri. 3. David Porter is an individual trading and doing business as Porter s So-Lo Markets. Porter s business address is 1475 North National Springfield, Missouri.

SMITTY' S SUPER MARKETS, INC. 527 526 Complaint 4. At all times relevant to this complaint, respondents have been engaged in the operation of retail grocery stores in Greene or Christian counties, Missouri (hereafter "Springfield"), said activities being in or affecting commerce as commerce is defined in the Federal Trade Commission Act.

5. Except to the extent that competition has been restrained as herein alleged, in the course and conduct oftheir retail grocery businesses respondents have been and are now in competition in or affecting commerce among themselves and with other corporations; firms or individuals engaged in the operation of retail grocery stores in Springfeld.

6. Vector Enterprises, Inc., (hereafter "Vector ) has been and is engaged in the business of collecting and selling comparative retail grocery price information in various cities throughout the United States for publication or broadcast to consumers. This activity is sometimes referred to herein as "price checking. 7. On or about July 15, 1980, Vector began collecting comparative price information on a weekly basis at about five Springfeld retail grocery stores, including stores of some of the respondents. Vector then began selling this comparative retail grocery price information to TeleCable of Springfield C'TeleCable ), a cable television operator in Springfield. TeleCable broadcast this information to cable television subscribers in Springfeld. During the weeks immediately preceding October 14, 1981 , Vector s price checking included stores operated by respondents and two other operators of retail grocery stores in Springfield.

8. Prior to October 14, 1981 , each respondent agreed with one or more other respondents or other operators of retail grocery stores in Springfield to impede Vector s ability to price check. On or about that date, in furtherance oftheir agreements, each respondent and others took action that effectively prevented Vector from price checking in their stores.

9. As of October 14, 1981, as a direct result of the agreements alleged in Paragrapb 8, and the actions taken in furtherance thereof Vector was able to price check only one of the retail grocery chains that had been included in its survey. Thereafter, TeleCable broadcast the prices for just that one chain. On or about December 31 , 1981 TeleCable stopped broadcasting Vector s price reporting program because Vector was no longer able to provide comparative price information for the major retail grocery chains in Springfeld. 10. Through the acts and practices described above, each respondent has agreed, combined or conspired with one or more other respondents or other operators of retail grocery stores to prevent or obstruct the collection and dissemination of comparative grocery 528 FEDERAL TRADKCOMM!SSION DECISIONS Decision and Order 104 F. price information with the following actual or potential effects among others:

a. Price competition among Springfield grocery retailers has been hindered or restrained; and b. Consumers in Springfield have been deprived of comparative retail grocery price information that can be used in the selection of a grocery store.

11. The acts and practices described above constitute an unlawful restraint on price competition and constitute unfair methods of competition or unfair acts or practices. Respondents have violated Section 5(a)(I) of the Federal Trade Commission Act, as amended. 12. The acts and practices described above constitute an unlawful boycott and constitute unfair methods of competition or unfair acts or practices. Respondents have violated Section 5(a)(I) of the Federal Trade Commission Act, as amended.

13. The violations charged herein or the eflects thereof are continuing and will continue in the absence of appropriate relief. DECISION AND ORDER The Commission having heretofore issued its complaint charging the respondent named in the caption hereof with violation of Section 5 ofthe Federal Trade Commission Act, as amended, and the respondent having been served with a copy of that complaint, together with a notice of contemplated relief; and The respondent, its attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondent of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settement 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 Secretary ofthe Commission having thereafter withdrawn this matter from adjudication as to this respondent in accordance with Section 3.25(c) of its Rules; and The Commission having considered the matter and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, and having duly considered the comments fied thereafter by interested persons pursuant to Section 3.25 of its Rules, now in further conform ih, "rit"h tho nr",,.,,r1nrp ";:('r -ihprl in p("+;nn ')fi of -it," Rllh:,,;: t.np ::

ti1\1llly' ::Ut' lVAKKf;T::, INC. DL: 526 Decision and Order Commission hereby makes the following jurisdictional findings and enters the following order:

1. Smitty s Super Markets, Inc., is a Missouri corporation, with its principal offce at 218 South Glenstone, Springfeld, Missouri. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and ofthe respondent, and the proceeding is in the public interest.

ORDER For the purpose of this Order, the following definitions shall apply: A. Smitty means Smitty s Super Markets, Inc., its divisions and subsidiaries, officers, directors, representatives, agents, employees successors and assigns.

B. Price check or price checkingmeans the collecting, from information available to customers, of retail prices of items offered for sale by any retail grocery store (SIC 5411), which is done neither by nor on behalf of a person engaged in the sale of groceries, and which information is used in price reporting.

C. Price checker means any person engaged in price checking. D. Price reporting or price report means the dissemination to the public of price cbecking information through any medium by any person not engaged in tbe sale of groceries. E. Springfield means the counties of Christian and Greene, Missound.

F. Customer means any individual who enters a retail grocery store for the purpose of grocery sbopping, whether or not that individual actually makes a purchase.

G. Person means individuals, corporations, partnerships, unincorporated associations, and any other business entity. H. Geographic area means: (1) a Standard Metropolitan Statistical Area as defined by the Bureau of the Census, U.S. Department of Commerce, as of October 1 , 1982; or (2) a county. I. Supermarket means any retail grocery store (SIC 5411) with annual sales of more than one milion dollars ($1 000 000.00). II.

It is further ordered That:

A. Smitty s shall forthwitb cease and desist from taking any action 530 FEDERAL TRAD COMMISSIdN DECISIONS Decision and Order 104 F. in concert with any other person engaged in the sale of grocery products which has the purpose or effect of restricting, impeding, interfering with or preventing price checking or price reporting. B. Except as provided in paragraph II. , for five (5) years following the date on which this Order becomes final, Smitty s shall cease and desist from taking or threatening to take any unilateral action thatwould: 1. Require price checkers to purchase items to be price checked as a condition of allowing them to price check; or 2. Deny price checkers the same access to Smitty s supermarkets as is provided to customers; or 3. Coerce, or attempt to coerce, any price checker, publisher or broadcaster into refraining from or discontinuing price checking or price reporting.

C. 1. Nothing in paragraph II.B. shall prevent Smitty s from adopting reasonable, non-discriminatory rules governing the number of price checkers in its supermarkets at anyone time for the purpose of preventing disruption of Smitty s normal business operations. 2. Nothing in subparagraph II.B.3. shall prevent Smitty s from publicly commenting upon or objecting to any price report in which its prices are compared to those of any other grocery retailer. 3. Whenever Smitty s believes that conditions exist that justify the exclusion of a price checker, it may submit to the Federal Trade Commission a sworn statement setting forth with particularity the facts that Smitty s believes meet such conditions. For purposes of this Order, the only conditions justifying the exclusion of a price checker are that another supermarket operator with whose prices Smitty prices are compared in a price report has knowingly tampered with or manipulated the results of such price report for its own competitive gain either (a) by the use of information wrongfully obtained and not available to all supermarket operators whose prices are being compared, or (b) by inducing any price reporter or price checker to cause false information to be published or broadcast. Following the F deral Trade Commission s actual receipt of such statement, Smitty s may exclude the price checkers from its supermarkets in the geographic area(s) covered by the affected price report for so long as the conditions set forth in Smitty s statement shall exist. In any civil penalty action against Smitty s for a violation of subparagraph II.B. 2. occurring after notice to the Federal Trade Commission was given by Smits as provided in this subparagraph, Smitty s shall have the burden of proving, by a preponderance of the evidence, that the conditions justifying the exclusion ofa price checker as set forth in this subpara- 526 Decision and Order dence only for the purpose of proving the facts set forth in its state" ment to the Federal Trade Commission. Nothing in this subparagraph shall be construed to be an exception to the prohibitions of paragraph ILA. of this Order.

II.

It is further ordered That, upon the resumption of price reporting by TeleCable of Springfeld that is similar in quality and coverage to that broadcast by it prior to October 14, 1981, and that includes any Smitty s supermarket, and upon receipt by Smitty s of written request for payment from TeleCable, Smitty s shall reimburse TeleCable for its actual cost of obtaining a price reporting program up to the amount of two hundred fifty dollars ($250.00) per week. Smitty s obligation under this Part (III) shall terminate either when it has reimbursed TeleCable in the total amount of one thousand dollars ($1 000.00) or three (3) years following the date on which this Order becomes final, whichever occurs first. Smitty s shall not reimburse TeleCable for costs incurred by TeleCable during any week for which TeleCable s costs are reimbursed by any other person. IV.

It is further ordered That, within seven (7) days following the date on which this Order becomes final, Smitty s shall send a letter, a copy of which is attached here as Exbibit A, together with a copy of this Order, to TeleCable of Springfeld, informing TeleCable of Smitty obligations under Parts II and V of this Order, TeleCable s rights under Part III, and the notices that Smitty s must receive from Tele- Cable before certain Order provisions become binding upon Smitty It is further ordered That, if at any time during the two years following the date on which this Order becomes final, Smitty s is notified in writing by TeleCable of Springfeld that price reporting that includes any of Smitty s supermarkets has resumed in Springfield:

A. For a period of sixty (60) days following the receipt of such notice, Smitty s shall post signs no smaller than 30 inches by 40 incbes in a front window in each of Smitty s supermarkets in Springfield, stating: Decision and Order 104 F. GROCERY PRICE SURVEY A price survey comparing prices of selected grocery items at Smitty s and other Springfeld grocery supermarkets is being broadcast over cable television. This comparative price survey can be seen on channel and is broadcast from to B. For a period of sixty (60) days following the receipt of such notice, wbenever Smitty s places food advertisements of one-half page or larger in any printed advertising medium with circulation of 15 000 or more copies in Springfield, Smitty s shall publish an announcement as a part thereof in tbe same language provided in paragraph A. This announcement shall be no smaller than 3 inches high by 3 inches wide and shall be printed in conspicuous type. In each week in which Smitty s does not place a one-half page or larger food advertisement in such printed advertising medium, Smitty s shall place this announcement as a display advertisement in any printed advertising medium with circulation of 15 000 or more copies in Springfeld. VI.

It is further ordered That Smitty s shall, within seven (7) days after the date on which this Order becomes final, and once a year thereafter for three years, provide a copy of this Order to each of its offcers and supermarket managers, and secure from each such individual a signed statement acknowledging receipt of this Order. VII.

It is further ordered, That Smitty s shall, within sixty (60) days after the date on which this Order becomes final, fie with the Commission a verified written report, setting forth in detail the manner and form in which Smitty s has complied with this Order. Additional reports shall be fied at such other times as the Commission may by written notice require. Each compliance report shall include all information and documentation as may be required by the Commission to show compliance with this Order.

VIII.

It is further ordered That Smitty s shall notify the Federal Trade Commission at least thirty (30) days prior to any proposed change in it such as dissolution, assignment or sale resulting in the emergence of a successor corporation, or any other proposed change in the corpo- 526 Decision and Order ration or its retail grocery operations; which may affect eompliiulce obligations arising out of this Order.

EXHIBIT A TeleCable of Springfield 1533 South Enterprise Springfield, Missouri 65801 Dear Sir or Madam:

This is to notify you that Smitty s Super Markets, Inc. ("Smitty ), which operates Smitty s grocery stores in Springfield, Missouri, has entered into a consent order with the Federal Trade Commission in which it has agreed that it wil not interfere with efforts by independent parties such as TeleCable of Springfield to engage in price reporting or price checking in Smitty s grocery stores in Springfield. Smitty s has agreed that it wil not require price checkers to purchase the items being price checked wil not deny price checkers the same access to its supermarkets as is provided to customers, and will not attempt to coerce any price checker, publisher or broadcaster into refraining from or discontinuing price checking or price reporting. The terms of and limitations on Smitty s agreement are set forth in a consent order issued by the Federal Trade Commission, a copy of which is enclosed herewith. If TeleCable of Springfeld institutes a price reporting program similar or superior in quality and coverage to the one broadcast by TeleCable in 1981, and if the program includes any of Smitty s grocery stores in Springfield, Missouri, Smitty s will reimburse TeleCable for its actual costs of obtaining price reports, up to the amount of $250 per week, and up to $1 000 in total. Smitty s wil also place notices in its Springfeld grocery stores and in its weekly advertisements, informing consumers of TeleCable s price surveys. The precise terms of Smitty s obligations to place such notices, and to reimburse TeleCable for certain of its costs, are set forth in the enclosed consent order. In order to receive any funds to which you may be entitled and to em ct the placement of the notices described above, please notify Smitty s in writing, c/o President, Smitty Super Markets, Inc., 218 South Glenstone, Springfield, Missouri 65802, stating when the program began or is scheduled to begin, the time and channel on which the survey will be broadcast, and TcleCable s costs, if any, of obtaining the survey information. Very truly yours Presiden t Smitty s Super Markets, Inc.

Decision and Order 104 F.