Baby Furniture Plus Association, Inc

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

IN THE MA TTER OF BABY FURNITURE PLUS ASSOCIATION, INC.

CONSENT ORDER, ETe., IN REGARD TO ALLEGED VIOLATION OF SEe. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3553. Complaint, Jan. 18, 1995--Decision, Jan, , 1995 This consent order prohibits, among other things, an Alabama-based buying cooperative and trade association from taking any action on behalf of its members, or encouraging them to take any action, that interferes with a juvenile product manufacturer s decision as to how or to whom to distribute its products. The consent order also prohibits the respondent from coercing means of actual or threatened refusals to deal -- any juvenile products manufacturer to abandon or adopt -- or to refrain from abandoning or adopting -- any marketing method for its products. Appearances For the Commission: Phoebe D. Morse and Gary S. Cooper. For the respondent: Jack Sanders, Sanders McDermott Hampton, N.

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 Commssion, having reason to believe that the Baby Furniture Plus Association, Inc., hereinafter sometimes referred to as respondent, has violated the provisions of Section 5 of the Federal Trade Commission 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, stating its charges in that respect as follows:

PARAGRAPH 1. Respondent Baby Furniture Plus Association Inc. (" BFPAI") is a corporation organized, existing and doing business under and by virtue of the laws of the Commonwealth of Virginia, with its principal office and place of business located at Suite I , 1020 Montgomery Highway, Binningham, Alabama. BABY FURNITURE PLUS ASSOCIATION, INC.

Complain! Respondent is a voluntary association of retailers of juvenile products doing business in approximately twenty- five States. PAR. 2. Respondent is a corporation organized for the purpose among others, of serving the interests of its members by associating them into a practical business organization and is engaged in substantial activities that further its members' pecuniary interests. By virtue of its purposes and activities, respondent is a corporation within the meaning of Section 4 of the Federal Trade Commission Act, as amended, 15 U. c. 44.

PAR. 3. Respondent s members are engaged in the business of the retail sale of juvenile products. Except to the extent that competition has been restrained herein, respondent s members have been and are now in competition with other retailers of juvenile products in various States of the United States. PAR. 4. The acts and practices of the BFP AI, including those alleged herein, are in commerce or affect commerce, as "commerce is defined in the Federal Trade Commission Act, as amended, 15 c. 45.

PAR. 5. New Hampshire Buyer s Service, Inc. ("NHBS" operates a mail order catalog through which it sells juvenile products at discount prices up to 20-40 % below juvenile specialty store prices. PAR. 6. In June J990, NHBS began distributing its mail order catalog to consumers located in the trade areas of some of respondent s members. At a general meeting of the membership on April 9, 1991 , respondent s administrator circulated a copy of the NHBS catalog to respondent s members. Following a discussion of the NHBS catalog and the economic impact it was having on some of the members' individual businesses, the BFPAI's members agreed to act in concert to restrict the competition that some of the members faced from the NHBS catalog. In furtherance of this plan, the members agreed to send letters to certain manufacturers whose products were in the NHBS catalog to complain about NHBS's price discounting.

PAR. 7. Pursuant to the agreements arived at during the abovereferenced meeting, on April 22, 1991 , respondent sent letters to thirty-seven manufacturers of juvenile products. All but two of these manufacturers distributed their products through the NHBS catalog. The letters directly or impliedly threatened that respondent BFP AI and its individual members would refuse to deal with these manufacturers if they continued to do business with NHBS. Decision and Order J!9FTC. PAR. 8. By engaging in the acts and practices described in paragraphs six and seven, respondent has combined or conspired with at least some of its members to threaten to boycott juvenile product manufacturers that do business with the NHBS mail order catalog, and otherwise to restrain competition among retailers of juvenile products in various States of the United States. PAR. 9. The actions of respondent described in paragraphs six through eight have had the purpose or effect, or the tendency and capacity, to restrain competition unreasonably and to injure consumers in the following ways, among others: A. By restraining competition between respondent BFPAI's members and other retailers of juvenile products, including the NHBS mail order catalog;

B. By restraining the ability of manufacturers of juvenile products to distribute their products through mail order catalogs; and C. By depriving consumers of the benefits of additional price, quality and service competition in connection with the purchase and sale of juvenile products.

PAR. 10. The combination or conspiracy and the acts and practices described above constitute unfair methods of competition and unfair acts and practices in violation of Section 5 of the Federal Trade Commission Act, as amended . IS U. c. 45. Such combination or conspiracy, or the effects thereof, is continuing and will continue or recur absent the entry against respondent of appropriate relief.

Commissioner Azcuenaga dissenting.

DECISION AND ORDER The Federal Trade Commission having initiated an 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 complaint which the Boston Regional Offce 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 BABY FURNITURE PLUS ASSOCIATION, INC.

Decision and Order The respondent, by its duly authorized officer, 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 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 charges in that respect, and having thereupon accepted the executed consent agreement and placed such agrcement 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 Baby Furniture Plus Association, Inc. is a voluntary association of retailers of juvenile products, and is a corporation organized, existing and doing business under and by virtue of the laws of the Commonwealth of Virginia, with its principal office and place of business located at Suite 1 , 1020 Montgomery Highway, Birmingham, Alabama. 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 For purposes of this order, the following definitions shall apply: A. Baby Furniture Plus Association, Inc. means Baby Furniture Plus Association, Inc. , and its directors, committees officers, representatives, agents, employees, successors and assigns. B. Juvenile products means products or accessories to products that are used by or are intended for use by babies, children or juveniles.

Decision and Order 119 F.T. It is ordered That BFPAI, directly, indirectly, or through any corporate or other device, in or in connection with its activities in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, forthwith cease and desist from:

A. Taking any action, directly or indirectly, on behalf of its members, including but not limited to any actual or threatened boycott or refusal to deal, that has the purpose or effect of interfering with any juvenile product manufacturer s decision as to how or to whom it distributes its product(s);

B. Coercing, compelling, inducing, or intimidating by means of actual or threatened refusals to deal, or attempting to coerce, compel induce, or intimidate by means of actual or threatened refusals to deal, any manufacturer of juvenile products into abandoning, adopting or refraining from abandoning or adopting any marketing method, practice or policy with regard to the distribution of its product(s); and C. Requesting, urging, recommending or suggesting that BFP Al members take any action, directly or indirectly, including but not limited to any actual or threatened boycott or refusal to deal, which has the purpose or effect of interfering with any juvenile product manufacturer s decision as to how or to whom it distributes its product(s).

Provided that this order shall not be construed to prevent BFP AI from engaging in trade association or buying cooperative activities that are lawful under the antitrust laws. II.

It is further ordered, That BFPAI shall: A. Distribute by first-class mail a copy of this order and the accompanying complaint to each of BFPAI's members within thirty (30) days after the date on which this order becomes final; B. For a period of five (5) years after the date on which this order becomes final, provide each new BFP AI member with a copy of this BABY FURNITURE PLUS ASSOCIATION, INC. 101 Decision and Order order and the accompanying complaint at the time the member is accepted for membership; and C. Within thirty (30) days after the date on which this order becomes final, distribute by first-class mail to each manufacturer enumerated in "Appendix A" to this order a copy of the Commission s complaint and order in this matter and a letter, on BFP AI letterhead and signed by BFP AI's president, in the form shown as "Appendix B" to this order.

It is further ordered That, for a period of five (5) years after this order becomes final, BFPAI shall maintain in its files a copy of the minutes of each meeting of its membership and of each meeting of its board of directors and a copy of all correspondence received from, or sent to, any mail order dealer of juvenile products, any manufacturer of juvenile products, or any association representing manufacturers of juvenile products and that such copies of minutes and correspondence be made available to Commssion staff for inspection and copying upon reasonable notice.

IV.

It is further ordered, That, within sixty (60) days after the date on which this order becomes final, BFP A1 shah file with the Commission a verified written report setting forth in detail the manner and form in which it has complied with this order. Thereafter, additional reports shall be filed at such other times as the Commission or its staff may, by written notice to BFPAI, require. It is further ordered That BFPAI shall notify the Commission at least thirty (30) days prior to any proposed change in the corporation such as a dissolution, assignment, or sale resulting in the emergence of a successor corporation or association, or any other change in the corporation or association which may affect compliance obligations arising out of this order.

Commissioner Azcuenaga dissenting.

Decision and Order 119 FTC. APPENDIX A !. Lamps Children on the Go O. Box 6357 1670 S. Wolf Road Phoenix, AZ 85005 Wheeling, IL 60090 Altn: National Sales Manager Atto: National Sales Manager Aprica U. , Inc. Cased, Inc. O. Box 25408 - Zip 92825-5408 2525 State St. 1200 Howe\! A venue Columbus, tN 47201 Anaheim, CA 92805 Attn: National Sales Manager Ann: National Sales Manager Dutalier, Inc.

Baby Trend, Inc. 298 Chaput St. Pic 1928 W. Holt Avenue Quebec, Canada JOH I WO Pnmona, CA 91768 Attn: National Sales Manager Ann: Nationa! Sales Manager Evcnflo Juvenile Furniture Co.

Bandaks Emmaljunga Incorporated 1801 Commerce Drive 737 South Vinewood Street Piqua OH 45356 Escondida, CA 92029 Attn: National Sales Manager Ann: National Sales Manager FBS , Ine.

Bassett Furniture Industries, Inc. 107! Baresville Rd. O. Box 626 Greer, SC 29650 Bassett, V A 24055 Attn: National Sales Manager Attn: National Sales Manager Fisher-Price, Inc.

Carlson Children s Products, Inc. 636 Girard Ave. 122 Kirkland Circle East Aurora, NY 14052 Oswego, IL 60543 Altn: National Sales Manager Ann: National Sales Manager Gerr Baby Products Century Products Company t2520 Grant Drive 9600 Valley View Road Denver, CO 80233 Macedonia, OH 44056-9989 Ann: National Sales Manager Ann: National Sales Manager Glenna Jean Mfg.

Chicco Artsana of America O. Box 2187 200 Fifth Ave., Rm 910 Petersburg, VA 23804 New York, NY 10010 Ann: National Sales Manager Ann: National Sales Manager Graco Children s Products, Inc.

Child Craft Industries, lnc. Rt 23, Main SL p.o. Box 444 E!version, PA 19520 Salem, IN 47167-0444 Ann: National Sales Manager Ann: National Sales Manager BABY FURNITURE PLUS ASSOCIATION, INe. 103 Decision and Order Jolly Jumper The Red CalJiope & Associates, Inc. O. Box M 13003 S. Figueroa St. Woonsocket, RI 22895 Los Angeles, CA 90061 Atto: National Sales Manager Attn: National Sales Manager Lambs & Ivy Rochelle Furniture 5978 Bowcroft St. 722 North Market St. Los Angeles, CA 90016 Duncannon P A j 7020 Ann: National Sales Manager Attn: National Sales Manager The Little Tikes Co. Safety I st, Inc. 2180 Barlow Rd. 210 Boylston St. Hudson OH 44236 Chestnut Hill, MA 02167 AUn: National Sales Manager Artn: National Sales Manager Newbome Company Sandbox Industries River Rd. O. Box 477 Worthington, MA 01098 Tenafly, NJ 07670 Attn: National Sales Manager Ann: National Sales Manager Noel Joanna Inc. Sassy, Inc.22942 Arroyo Vista 1534 College SERancho Santa Margarita, CA 92688 Grand Rapids, Ml 49507Attn: National Sales Manager Attn: National Sales Manager Line Simmons Juvenile Products Co.214 Line St. Suring, WI 54174 613 E. Beacon A venue Ann: National Sales Manager New London, WI 54961 Ann: National Sales Manager Ommo Marsha!! Products Snugl! , Inc. 600 Barclay Blvd. 12520 Grant Drive LincoJnshire IL 60069 Denver, CO 80233 Attn: National Sales Manager Attn: National Sales Manager Pansy Ellen Products Summer Infant Products 1245 Old Alpharetta Rd. 33 Meeting Street Alpharcua, GA 30202 Cumberland, RI 02864 Attn: National Sales Manager Ann: National Sales Manager Perego. USA Welsh Company 3625 Independence Drive 1535 S. Eighth St. Fort Wayne, IN 46808 St. Louis, MO 63104 Ann: NalionaJ Sales Manager Attn: National Sales Manager Prince Lionhcart 3070 Skyway Dr. , Bldg. 502 Santa Maria, CA 93455 Attn: National Sales Manager Decision and Order 119 FTC. APPENDIX B Dear As you may be aware, the Federal Trade Commission ("FTC" has been investigating certain activities of the Baby Furniture Plus Association, Inc. ("BFP AI"). The BFP AI has voluntarily entered into an agreement with the FTC which resulted in the issuance by the FTC on (date) of a complaint and the entry of a consent order. The order requires that you be sent a copy of the complaint, the order and this letter.

In accordance with the tei1S of the FTC's order, you are hereby notified that, among other things, the BFP AI will cease and desist from:

A, Taking any action, directly or indirectly, on behalf of its members, including but not limited to any actual or threatened boycott or refusal to deal, that has the purpose or effect of interfering with any juvenile product manufacturer s decision as to how or to whom it distributes its product(s);

B. Coercing, compelling, inducing, or intimidating by means of actual or threatened refusals to deal, or attempting to coerce, compel induce, or intimidate by means of actual or threatened refusals to deal, any manufacturer of juvenile products into abandoning, adopting or refraining from abandoning or adopting any marketing method, practice or policy with regard to the distribution of its product(s); and C. Requesting, urging, recommending or suggesting that BFP AI members take any action, directly or indirectly, including but not limited to any actual or threatened boycott or refusal to deal, which has Ihe purpose or effect of interfering with any juvenile product manufacturer s decision as to how or to whom it distributes its product(s).

A copy of the complaint and the order are enclosed. Sincerely, President Enclosures BABY FURNITURE PLUS ASSOCIATION, INC. 105 Dissenting Statement DISSENTING STATEMENT OF COMMISSIONER MAR Y L. AZCUENAGA In these cases, two trade associations complained to manufacturers about free riding by a catalogue seller, and the Commission charges them and the retailer members of one association with directly or impliedly threatening a concerted refusal to deal with the manufacturers. Although the letters of complaint were ill-advised, evidence that the retailers (many of whom were not represented by counsel during our investigation) were committed " a common scheme designed to achieve an unlawful objective (i. a coercive, concerted refusal to deal) is thin at best. Given the dearth of evidence of unlawful agreement, the arguably procompetitive purpose, and the absence both of market power and of anticompetitive effects, I do not find reason to believe that the challenged conduct unreasonably restrained trade or that the imposition of an order is in the interest of the public. I dissent. Monsanto Co. v Spray- Rite Service Corp. 465 C. S. 752, 768 (1984), Complaint 119 FTC.