Sensormatic Electronics Corporation

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The Federal Trade Commission has given final approval to a consent agreement with Sensormatic Electronics Corporation, settling charges that its acquisition of Knogo Corporation assets would decrease competition in research and development for new systems to prevent retail shoplifting. The Commission's action makes the consent order provisions binding on Sensormatic.

Sensormatic is based in Deerfield Beach, Florida, and Knogo is based in Hauppauge, New York.

Under the final order, Sensormatic was permitted to proceed with the acquisition except that it is prohibited from acquiring patents and other exclusive rights for Knogo's "SuperStrip" manu- facturer-installed disposable antishoplifting labels, as they pertain to the United States and Canada.

The order does permit Sensormatic to acquire a non-exclusive license to manufacture and sell SuperStrip labels in the United States and Canada, and exclusive rights to manufacture and sell SuperStrip labels outside the United States and Canada. In addition, the order requires Sensormatic, for 10 years, to obtain FTC approval before acquiring rights other than those mentioned above in connection with the SuperStrip. The same prior approval requirement applies generally to any significant Sensormatic acquisitions of entities engaged in, or assets used for, the research, development or manufacture of disposable labels for source labelling, as well as for acquisitions of patents or other intellectual property for such purposes.

The consent agreement was announced for a public-comment period on Jan. 4. The Commission vote to issue it in final form occurred on April 18 and was 5-0. Commissioner Mary L. Azcuenaga issued a concurring and dissenting statement in which she said she would have defined the product market more broadly to include not just research and development for source labelling, but research and development in electronic article surveillance systems and components, including source labelling. She also

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Sensormatic--04/21/95)

stated that she would not have limited the geographic market to the United States and Canada, a market which excludes the poten- tially important research activity of at least one European firm.

Finally, Azcuenaga dissented from the settlement provision requiring that Sensormatic comply with its supply agreement with Knogo North America. "Absent a demonstrable link between the contract and competition, the contract provides no basis for liability and compliance with the contract does not appear necessary to effect relief," her statement says.

NOTE: A consent agreement is for settlement purposes only and does not constitute admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions by the respon- dents. Each violation of such an order may result in a civil penalty of up to $10,000.

A news release summarizing the complaint and consent agree- ment was issued at the time the Commission accepted the consent agreement for public comment. Copies of that release, the complaint and final order, and Commissioner Azcuenaga's statement are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

(FTC File No. 941 0126)

(Docket No. C-3572)

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