Alleghany Corporation

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IN THE MATTER OF ALLEGHANY CORPORATION CONSE;.T ORDER, ETC. , IN REGARD TO ALLEGED VIOLATION OF SEC. 7 OF THE CLAYTON ACT AND SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3335. Complaint, July 1991-Decision, July, 1991 This consent order requires, among other things, Alleghany Corporation to divest within twelve months of this order, all rights and interest in either its own title plants and back plants or those of Westwood Equities Corporation, to a Commission-approved acquireI'.

Appearances For the Commission: Ann B. Malester. For the respondent: John C. Christie, Jr. , Belt, Boyd Lloyd Washington, D.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal Trade Commission ("Commission ), having reason to believe that respondent Alleghany Corporation ("Alleghany ), a corporation subject to the jurisdiction of the Commission, through one of its subsidiaries, has entered into an agreement that constitutes a violation of Section 5 of the Federal Trade Commission Act, as amended, (15 L. C. 45); and that such acquisition, if consummated would constitute a violation of Section 7 of the Clayton Act, as amended, (15 U. C. 18); and it appearing to the Commission that a proceeding by it 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: I. DEFINITIONS 1. For the purposes of this complaint, the following definitions apply:

386 FEDERAL TRADE COMMISSION DECISIO Complaint 114 F.

a. Alleghany means Alleghany Corporation, its directors, officers, employees and representatives, its successors and assigns, and its subsidiaries, divisions, groups and affiliates controlled by Alleghany, their respective directors, officers, employees and representatives and their respective successors and assigns. b. Title plant" means a privately owned set of records regarding the ownership of and interests in real property that is maintained by obtaining information from the public records on a daily or regular basis, and is indexed, posted or otherwise organized to update data regarding specific land parcels.

c. Back plant" means a privately owned set of records regarding the ownership of and interests in real property that is no longer being updated on a daily or regular basis.

d. Title plant information means information contained in or obtained from a title plant.

e. Back plant information means information contained in or obtained from a back plant.

II. ALLIOGHANY CORPORATION 2. Alleghany is a corporation organized, existing and doing business under and by virtue of the laws of Delaware, with its principle office at Park Avenue Plaza, Xew York, New York.

3. Alleghany is the sole owner of Chicago Title & Trust Company, which is the sole owner of Chicago Title Insurance Company Chicago Title 4. Alleghany is, and at all times relevant herein has been, 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. C. 44).

III. THE ACQUISITION 5. On November 29 , 1990, Chicago Title & Trust Company and Westwood Equities Corporation ("WEC"), a wholly owned subsidiary of ew TC Holding Corporation, entered into an Acquisition Agreement by which Alleghany agreed to purchase most of the title insurance-related assets of WEC , including Ticor Title Insurance Company of California.

IV. TRADE AND COM IERCE 6. The relevant sections of the country are Imperial County, ALLEGHA Y CORPORATION 387 385 Complaint California; Orange County, California; Riverside County, California; San Bernardino County, California; San Luis Obispo County, California; Santa Barbara County, California; Tulare County, California; Cook County, Ilinois; Du Page County, Ilinois; Lake County, Ilinois; Wil County, Ilinois; Johnson County, Indiana; Lake County, Indiana; Marion County, Indiana; Porter County, Indiana; Davidson County, Tennessee; Benton County, Washington; and Franklin County, Washington.

7. The relevant lines of commerce are the production and/or sale of title plant information and the production and/or sale of back plant information.

8. There are no reasonable substitutes for access to title plant information in Imperial County, California; Du Page County, Ilinois; Lake County, Ilinois; Will County, Ilinois; Johnson County, Indiana; Lake County, Indiana; Porter County, Indiana; Benton County, Washington; and Franklin County, Washington. 9. There are no reasonable substitutes for access to back plant information in Orange County, California; Riverside County, California; San Bernardino County, California; San Luis Obispo County, California; Santa Barbara County, California; Tulare County, California; Cook County, Ilinois; ~arion County, Indiana; and Davidson County, Tennessee.

10. There are substantial barriers to entry into the creation of title plants in Imperial County, California; Du Page County, Ilinois; Lake County, Ilinois; Will County, Ilinois; Johnson County, Indiana; Lake County, Indiana; Porter County, Indiana; Benton County, Washington; and Franklin County, Washington.

I I. There are substantial barriers to entry into the creation of back plants in Orange County, California; Riverside County, California; San Bernardino County, California; San Luis Obispo County, California; Santa Barbara County, California; Tulare County, California; Cook County, Ilinois; Marion County, Indiana; and Davidson County, Tennessee.

12. Through their respective ownership interests, Chicago Title and WEC are significant competitors in the production and/or sale of title plant information in Imperial County, California; Du Page County, Illinois; Lake County, Ilinois; Will County, Ilinois; Johnson County, Indiana; Lake County, Indiana; Porter County, Indiana; Benton County, Washington; and Franklin County, Washington. The market for title plant information in each of these counties is highly concentrated.

Compaint 114 F.

13. Through their respective ownership interests, Chicago Title and WEC are significant competitors in the production and/or sale of back plant information in Orange County, California; Riverside County, California; San Bernardino County, California; San Luis Obispo County, California; Santa Barbara County, California; Tulare County, California; Cook County, Ilinois; Marion County, Indiana; and Davidson County, Tennessee. The market for back plant information in each of these counties is highly concentrated. v. EFFECTS 14. The effects of the acquisition may be substantially to lessen competition or tend to create a monopoly in the relevant lines of commerce in the following ways, among others: (a) It wil eliminate substantial actual competition between Chicago Title and WEC in the production and/or sale of title plant information in Imperial County, California; Du Page County, Ilinois; Lake County, Ilinois; Wil County, Ilinois; Johnson County, Indiana; Lake County, Indiana; Porter County, Indiana; Benton County, Washington; and Franklin County, Washington;

(b) It will eliminate substantial actual competition between Chicago Title and WEC in the production and/or sale of back plant information in Orange County, California; Riverside County, California; San Bernardino County, California; San Luis Obispo County, California; Santa Barbara County, California; Tulare County, California; Cook County, Ilinois; Marion County, Indiana; and Davidson County, Tennessee; and (c) It will deny customers of title plant information or back plant information the benefits of free and open competition in Imperial County, California; Orange County, California; Riverside County, California; San Bernardino County, California; San Luis Obispo County, California; Santa Barbara County, California; Tulare County, California; Cook County, Ilinois; Du Page County, Ilinois; Lake County, Ilinois; Will County, Ilinois; Johnson County, Indiana; Lake County, Indiana; Marion County, Indiana; Porter County, Indiana; Davidson County, Tennessee; Benton County, Washington; and Franklin County, Washington.

VI. VIOLATIONS CHARGED 15. The acquisition agreement described in paragraph 5 constitutes asa violation of Section 5 of the Federal Trade Commission Act, ALLEGHANY CORPORATION 389 385 Decision and Order amended, (15 U. C. 45), and the proposed acquisition, if consummat- , would constitute a 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 U. C. 45). DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondent named in the caption hereof relating to the acquisition of certain stock or voting securities of Westwood Equities Corporation, and 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 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 Commission having thereafter considered the matter and having determined that it had reason to believe that the respondent has violated the said Acts, and that a complaint should issue stating its charges in 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, and having duly considered the comment filed thereafter by an interested person pursuant to Section 34 of its Rules, 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. Alleghany Corporation is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its principal office at Park Avenue Plaza, Kew York New York.

2. Chicago Title and Trust Company, a wholly owned subsidiary of , ( 390 FEDERAL TRADE COMMISSION DECISIO Decision and Order 114 F. T. Alleghany, is a corporation organized, existing and doing business under and by virtue of the laws of the State of Ilinois, with its principal office at III West Washington Street, Chicago, Ilinois. 3. Westwood Equities Corporation Westwood"), a subsidiary of New TC Holding Corporation, is a corporation organized, existing and doing business under and by virtue of the laws of the State of California, with its principal office at 6300 Wilshire Boulevard, Los Angeles, California.

4. 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 hereby ordered That as used in this order the following definitions shall apply:

A. A lleghany means Alleghany Corporation, its directors, officers, employees and representatives, its successors and assigns, and its subsidiaries, divisions, groups and affiliates controlled by Alleghany, their respective directors, officers, employees and representatives and their respective successors and assigns. B. Chicago Title and Trust" means Chicago Title and Trust , itsCompany, its directors, officers, employees and representatives successors and assigns, and its subsidiaries, divisions, groups and affiliates controlled by Chicago Title and Trust, their respective directors, officers, employees and representatives, and their respective successors and assigns.

C. New TC" means New TC Holding Corporation, its directors officers, employees and representatives, its successors and assigns and its subsidiaries, divisions, groups and affiliates controlled by New , their respective directors, officers, employees and representatives and their respective successors and assigns. D. Title plant" means a privately owned set of records regarding the ownership of and interests in real property that is maintained by obtaining information from the public records on a daily or regular basis, and is indexed, posted or otherwise organized to update data regarding specific land parcels.

E. Back plant" means a privately owned set of records regarding ALLEGHANY CORPORATIO" 391 385 Decision and Order the ownership of and interests in real property that is no longer being updated on a daily or regular basis.

F. Remaining Properties means all of the rights, title and interest in the properties required to be divested in paragraphs IIA and lib that have not yet been divested by Alleghany. II.

It is further ordered That within twelve months from the date this order becomes final Alleghany shall divest or shall cause to divested, absolutely and in good faith, all of its rights, title and interest in the properties described in paragraphs IIA and lib. Divestiture shall be made only to a buyer or buyers that receive the prior approval of the Commission, and only in a manner that receives the prior approval of the Commission. The purpose of the divestiture is to ensure the continuation of the assets as ongoing, viable title plants and back plants engaged in the production and/or sale of title plant information, and to remedy the lessening of competition resulting from the acquisition as alleged in the Commission s complaint in this matter.

A. For each of the following counties, at the option of Alleghany, either New TC' s title plant or Alleghany s title plant serving such county: Imperial County, California; Du Page County, Ilinois; Lake County, Ilinois; Will County, Ilinois; Johnson County, Indiana; Lake County, Indiana; Porter County, Indiana; Benton County, Washington; and Franklin County, Washington. All user or access agreements pertaining to each divested title plant shall also be divested. At the buyer s option at the time of purchase, and at a commercially reasonable price, Alleghany shall continue to provide computer and other services provided for each divested plant by either New TC or Alleghany, for a period of up to three years from the date such title plant is divested and shall assist the buyer in transferring the computer and other services to any other provider of such services. B. For each of the following counties, at the option of Alleghany, either New TC' s back plant or Alleghany s back plant serving such county: Orange County, California; Riverside County, California; San Bernardino County, California; San Luis Obispo County, California; Santa Barbara County, California; Tulare County, California; Cook County, Ilinois; Marion County, Indiana; and Davidson County, Tennessee. All user or access agreements pertaining to each divested Decision and Order 114 F.

back plant shall also be divested. At the buyer s option at the time of purchase, and at a commercially reasonable price, Alleghany shall continue to provide services provided for each divested back plant by either New TC or Alleghany, for a period of up to three years from the date such back plant is divested and shall assist the buyer in transferring the services to any other provider of such services. It is further ordered That:

A. If Alleghany has not divested all of its rights, title and interest in the properties required to be divested in paragraphs IIA and lib within the twelve month period, Alleghany shall consent to the appointment by the Commission of a trustee to divest all of the Remaining Properties. In the event the Commission or the Attorney General brings an action pursuant to Section 5(1) of the Federal Trade Commission Act, 15 U. C. 45 (I), or any other statute enforced by the Commission, Alleghany shall consent to the appointment of a trustee in such action. ='either the appointment of a trustee nor a decision not to appoint a trustee under this paragraph shall preclude the Commission or the Attorney General from seeking civil penalties or any other relief available to it, including a court-appointed trustee pursuant to Section 5(1) of the Federal Trade Commission Act, or any other statute enforced by the Commission, for any failure by Alleghany to comply with this order.

B. If a trustee is appointed by the Commission or a court pursuant to paragraph Ila of the order, Alleghany shall consent to the following terms and conditions regarding the trustee s powers authorities, duties and responsibilities:

1. The Commission shall select the trustee, subject to Alleghany consent, which consent shall not be unreasonably withheld. The trustee shall be a person with experience and expertise in acquisitions and divestitures.

2. Subject to the prior approval of the Commission, the trustee shall have the exclusive power and authority to divest the Remaining Properties.

3. The trustee shall have twelve months from the date of appointment to accomplish the divestiture of the Remaining Properties.

ALLEGHANY CORPORA TIO;; 393 385 Decision and Order 4. If at the end of the trustee s twelve month period the trustee has submitted a plan of divestiture or believes that divestiture can be achieved within a reasonable time, the divestiture period may be extended by the Commission or by the court for a court-appointed trustee.

5. The trustee shall have full and complete access to the personnel books, records, and facilities relating to the Remaining Properties, or any other information, as the trustee may reasonably request. Alleghany shall develop such financial or other information relevant to the Remaining Properties as the trustee may reasonably request. Alleghany shall cooperate with the trustee and shall take no action to interfere with or impede the trustee s accomplishment of the divestitures. Any delays in divestiture caused by Alleghany shall extend the time for divestiture under this paragraph in an amount equal to the delay, as determined by the Commission or by the court for a court-appointed trustee.

6. Subject to Alleghany s absolute and unconditional obligation to divest at no minimum price and the purposes of the divestitures as stated in paragraph II of this order, the trustee shall use his or her best efforts to negotiate the most favorable price and terms available with each acquiring entity for the divestiture of the Remaining Properties. The divestitures shall be made in the manner set out in paragraph II; provided, however that if the trustee receives bona fide offers from more than one acquiring entity or entities, and if the Commission determines to approve more than one such acquiring entity, the trustee shall divest to the acquiring entity or entities selected by Alleghany from among those approved by the Commis- SIOn.

7. The trustee shall serve, without bond or other security, at the cost and expense of Alleghany on such reasonable and customary terms and conditions as the Commission or a court may set. The trustee shall have authority to employ, at the cost and expense of Alleghany, such consultants, accountants, attorneys, investment bankers, business brokers, appraisers, and other representatives and assistants as are reasonably necessary to carry out the trustee s duties and responsibilties. The trustee shall account for all monies derived from the divestitures and all expenses incurred. After approval by the Commission and, in the case of a court-appointed trustee, by the court, of the account of the trustee, including fees for his or her services, all remaining monies shall be paid at the direction of Alleghany and the Decision and Order 114 F.

trustee s power shall be terminated. The trustee s compensation shall be based at least in significant part on a commission arrangement (percentage of price) that is contingent on the trustee divesting the Remaining Properties.

8. Alleghany shall indemnify the trustee and hold the trustee harmless against any losses, claims, damages, or liabilities arising in any manner out of, or in connection with, the trustee s duties under this order, except for cases of misfeasance, wilful or wanton acts, or bad faith.

9. Within thirty days after appointment of the trustee, Alleghany shall, subject to the prior approval of the Commission and, in the case of a court-appointed trustee, of the court, and consistent with provisions of this order, execute a trust agreement that transfers to the trustee all rights and powers necessary to permit the trustee to effect the divestitures required by this order. 10. If the trustee ceases to act or fails to act diligently, the Commission may, on its own or by the request of Alleghany, appoint a substitute trustee in the same manner as provided in paragraph Ila of this order.

11. The Commission and, in the case of a court-appointed trustee the court may on its own initiative or at the request of the trustee issue such additional orders or directions as may be necessary or appropriate to accomplish the divestitures required by this order. 12. The trustee shall have no obligation or authority to operate or maintain the Remaining Properties.

13. The trustee shall report in writing to Alleghany and to the Commission every sixty days concerning the trustee s efforts to accomplish the divestitures.

IV.

It is JUTtheT ordered That Alleghany shall not cause or permit the wasting or deterioration of the assets and operations to be divested in accordance with paragraphs IIA and lib of this order in any manner that impairs the marketability of such assets and operations or impairs in any manner the viability of the assets and operations as going concerns engaged in the production and/or sale of title plant or back plant information. In this regard:

A. Alleghany shall maintain the title plants and back plants listed in paragraphs lia and lib to the extent and in the manner maintained ALLEGHANY CORPORATIO" 395 385 Decision and Order by New TC and Alleghany prior to this acquisition, including but not limited to updating the records contained in the title plants on a daily or regular basis such that the title plants are as current as possible at all times.

B. Alleghany shall maintain in good faith all contracts for access to Kew TC' s title plants and back plants and to Alleghany s title plants and back plants listed in paragraphs IIA and lib subject to the terms conditions and stipulations of those contracts, and will refrain from taking any action toward terminating those contracts other than that which would be commercially reasonable to New TC and Alleghany under the terms of those agreements.

C. For each county listed in paragraph IIA, Alleghany shall, at the option of the accessors, automatically continue to maintain in good faith on identical terms, conditions and stipulations all contracts for access to New TC's title plant and all contracts for access to Alleghany s title plant in such county that expire by their terms prior to divestiture of either New TC's or Alleghany s title plant for a period lasting until the closing date upon which such divestiture is completed at which time Alleghany s obligations under such contracts shall cease.

D. For each county listed in paragraph lib, Alleghany shall, at the option of the accessors, automatically continue to maintain in good faith on identical terms, conditions and stipulations all contracts for access to New TC's back plant and all contracts for access to Alleghany s back plant in such county that expire by their terms prior to divestiture of either Kew TC' s or Alleghany s back plant for a period lasting until the closing date upon which such divestiture is completed, at which time Alleghany s obligations under such contracts shall cease.

It is further ordered That for a period of ten years from the date this order becomes final, Alleghany shall not acquire, directly or indirectly, any stock, share capital, equity interest, or assets in First American Title Insurance Company, Lawyers Title Insurance Corporation, Stewart Title Guaranty Company, Commonwealth Land Title Insurance Company, Title Insurance Company of Minnesota, TRW Inc. or any of their successors or assigns, or in any concern, corporate or non-corporate, that has any direct or indirect ownership interest in 396 FEDERAL TRADE CO:lmission DECISIONS Decision and Order 114 F.

a title plant that services any county listed in paragraph IIA or in a back plant that services any county listed in paragraph lib, or acquire from any concern, corporate or non-corporate, any assets (other than in the ordinary course of business) of, or ownership interest in, an existing title plant that services any county listed in paragraph IIA or a back plant that services any county listed in paragraph lib, without the prior approval of the Federal Trade Commission. VI.

It is further ordered That for a period of ten years from the date this order becomes final, Alleghany shall not, directly or indirectly, acquire any stock, share capital, or equity interest in any concern corporate or non-corporate, that in turn has any direct or indirect ownership interest in a title plant or back plant servicing any geographic area for which Alleghany at that time has any direct or indirect ownership interest in a title plant or back plant servicing the same area, or acquire from any concern, corporate or non-corporate any assets (other than in the ordinary course of business) of, or ownership interest in, any existing title plant or back plant servicing any geographic area for which Alleghany at that time has any direct or indirect ownership interest in a title plant or back plant servicing the same area, without providing advance written notification to the Federal Trade Commission. Said notification shall be given on the Notification and Report Form set forth in the Appendix to Part 803 of Title 16 of the Code of Federal Regulations as amended (hereinafter referred to as "the Notification ), except that for purposes of the Notification, Chicago Title and Trust, with the addition of any other subsidiary, division, group and affiliate of Alleghany engaged in, or having an interest in any other entity engaged in, the production and sale of title plant information or back plant information, shall be considered the ultimate parent entity as that term is defined in 16 CFR 80I.(a)(3). Alleghany shall provide to the Federal Trade Commission, at least thirty days prior to acquiring any such interest (hereinafter referred to as the "first waiting period" ), both the Notification and supplemental information either in Alleghany possession or reasonably available to Alleghany. Such supplemental information shall include a copy of the proposed acquisition agreement; the names of the principal representatives of Alleghany and of the firm Alleghany desires to acquire who negotiated the acquisition ALLEGHANY CORPORATIO 397 385 Decision and Order agreement; any management or strategic plans discussing the proposed acquisition; and all documents relating to competition for the provision of title plant or back plant services in that particular county. , within the first waiting period, representatives of the Federal Trade Commission make a written request for additional information Alleghany shall not consummate the acquisition until twenty days after submittng such additional information. Early termination of the waiting periods in this paragraph may be requested and, where appropriate, granted in the same manner as is applicable under the requirements and provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15 U. C. I8A).

VII.

It is further ordered That acquisitions resulting in an interest of not more than 3% of the outstanding voting securities of publicly traded companies, solely for the purpose of investment, are not subject to paragraphs V and VI of this order; acquisitions of voting securities of a publicly traded company shall not be subject to paragraphs V and VI of this order solely by reason of the ownership, directly or indirectly, by such publicly traded company of less than 5% of the outstanding voting securities of one of the companies named in paragraph V.

VII It is further ordered That:

A. Within sixty days after the order becomes final, and every sixty days thereafter until Alleghany has fully complied with paragraphs II II and IV of this order, Alleghany shall file with the Commission a verified written report setting forth in detail the manner and form in which it intends to comply, is complying, or has complied with this order. Such compliance reports shall include, in addition to any other information that the staff of the Federal Trade Commission may reasonably request, a full description of all contacts and negotiations with potential acquirers of the title plants and back plants to be divested under this order, the identity and address of all such potential acquirers, copies of all written communications to and from such potential acquirers, and all internal memoranda, reports and recommendations concerning divestiture.

Decision and Order 114 F.

B. On or before September 21 , 1991 , and annually for the next ten years, Alleghany shall submit to the Commission a verified written report setting forth in detail the manner and form in which it intends to comply, is complying, or has complied with this order. IX.

It is further ordered That, for the purposes of determining or securing compliance with this order, and subject to any legally recognized privilege, upon written request and on reasonable notice to Alleghany made to its principal office, Alleghany shall permit any duly authorized representatives of the Federal Trade Commission: A. Access, during office hours and in the presence of counsel, to inspect and copy all books, ledgers, accounts, correspondence memoranda and other records and documents in the possession or under the control of Alleghany relating to any matters contained in this order; and B. Upon five days notice to Alleghany and without restraint or interference from Alleghany, to interview officers or employees of Alleghany, who may have counsel present, regarding such matters. It isf1,rther ordered That Alleghany shall notify the Commission at least thirty days prior to any proposed change in Alleghany such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation, dissolution or sale of subsidiaries or any other change in Alleghany that may affect compliance obligations arising out of this order.

TELELINE , INC. 399 399 Complaint