Salomon/North America, Inc.

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IN THE MATTER OF SALOMON/NORTH AMERICA, INC.

MODIFYING ORDER IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-2859. Consent Order, Jan. 1977-Modifying Order, July 30, 1985 This order modifies the 1977 consent order (89 F. C. 24) issued against respondent by deleting provisions in the original order that prohibited the company from barring transshipment (sales between retailers) or limiting the retail locations from which dealers may sell its products. The modifying order is the result of respondent's request to the Commission for modification of the terms of the original order. ORDER REOPENING AND MODIFYING ORDER ISSUED ON JANUARY 6 1977 On March 25, 1985, respondent Salomon/North America, Inc. Salomon ) fied its "Request of Salomon/North America, Inc. for Modification of Consent Order" ("Request"), pursuant to Section 5(b) of the Federal Trade Commission Act, 15 U. C. 45(b), and Section 51 of the Commission s Rules of Practice. The Request asked the Commission to reopen the proceeding in Docket No. C-2859 and to modify the order issued by the Commission in this case on January , 1977, by deleting the provisions that restrict Salomon s ability.to limit the transshipping of its products and that prohibit Salomon from limiting the retail locations from which dealers may sell its products. Salomon also requests deletion of Paragraph II of the order which creates a limited exception to the order s provision that restricts Salomon s ability to limit the transshipment of its products. Salomon s Request was on the public record for thirty days and no comments were received.

After reviewing Salomon s request and other available information, the Commission has concluded that the public interest warrants reopening and modification of the order in the manner requested by Salomon. The transshipment and location restriction provisions of the order (subparagraphs LB and LC) were adopted principally as fencing- " restraints ancillary to the order s ban on resale price maintenance ("RPM"). Salomon has shown that it does not fix the prices at which its authorized dealers resell Salomon ski products that Salomon ski product prices vary from dealer to dealer, and that the transshipment and location restriction provisions therefore have served their purpose to encourage the emergence of intra brand price competition in Salomon products. To the extent that subparagraphs Modifying Order 106 F. LB and LC were intended as a remedy for the alleged anticompetitive effects of transshipment and location restrictions independent of RPM , the Supreme Court's ruling in Continental T. V. Inc. v. GTE Sylvania, Inc. 433 U.S. 26 (1977), constitutes a change in law that justifies reexamination of the provisions. Such a reexamination based on the record presented by Salomon and other information demonstrates that transshipment and location restraints by Salomon would pose no threat to interbrand competition. Salomon s inability to ban transshipping and sales from unauthorized locations would likely cause Salomon significant competitive injury by, among other things, lessening the effciency of Salomon distribution system, discouraging dealers from remaining with Salomon, exposing Salomon s customers to increased risk of injury and consequently, exposing Salomon to personal injury claims. The transshipment and location restriction provisions in question appear to have served their remedial purpose. There is no indication that Salomon has engaged in RPM (or has breached the order s transshipping and location restriction provisions) from January 6 1977, to date, and nothing in the record suggests that there is a need to continue the order s transshipment and location restriction provisions to ensure that RPM is not reinstituted by Salomon. Accordingly, it is ordered that this matter be, and it hereby is, reopened and that subparagraphs LB, LC and Paragraph II of the order be, and they hereby are, deleted.

SOUTHWEST SUN SITES, INC., ET AL. ::\J Dccision and Order