The Federal Trade Commission has settled charges that the nation's largest sellers of fast-turnaround verbatim news transcripts entered into agreements that ended competition between them. The FTC charged that, as a result of the agreements, Federal News Service Group, Inc. (FNS) became the sole producer of verbatim news transcripts and thereafter raised prices.
According to the complaint against FNS and its president, Cortes W. Randell, of Washington, D.C., FNS and Reuters America were direct competitors in the news transcript business. FNS produced and marketed its own transcripts and Reuters America had the exclusive rights to sell news transcripts produced by News Transcripts Inc. In May 1993, FNS, Randell, and Reuters America allegedly entered into an agreement under which:
- FNS would supply Reuters America with FNS-produced transcripts for resale and Reuters America would not produce or sell any news transcripts which competed with FNS-produced news transcripts for the term of the agreement plus five years; and
- Reuters America was barred from selling news transcripts to FNS customers and from selling news transcripts below a minimum monthly price of $500.
The complaint against Reuters America, in addition to restating the facts outlined above, notes that Reuters America had previously rejected an anticompetitive proposal from FNS. After learning of and becoming concerned about a potential tax liability of its former transcript supplier, Reuters America entered the challenged agreements with FNS.
The result of these illegal agreements, the FTC charged, was to eliminate or restrain competition in the production and sale of verbatim new transcripts based on price and quality, and to raise the prices for verbatim news transcript services.
The order against FNS and Randell, announced today for public comment, prohibits FNS from:
- agreeing, or soliciting an agreement, to allocate customers or divide markets with any provider of news transcripts;
- entering into, continuing, or renewing any agreement that prevents Reuters America from competing with FNS and Randell in the production, marketing or sale of news transcripts;
- renewing its news transcript supply agreement with Reuters America for five years;
- agreeing, or soliciting agreements, with competitors to fix or maintain resale prices for news transcripts; and
- requiring or pressuring any competitor to maintain or adopt any resale price for news transcripts.
The proposed settlement with FNS and Randell also includes various reporting requirements that would assist the FTC in monitoring the respondents' compliance. The order against Reuters America contains provisions similar to those in the FNS order.
Since the conclusion of the Commission investigation, Reuters America has sold most of its customer contracts to Federal Document Clearing House, Inc., a new supplier of news transcripts.
The Commission vote to take these law-enforcement actions was 5-0. The proposed consent agreements will be published in the Federal Register soon and will be subject to public comment for 60 days, after which the Commission will decide whether to make them final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.
NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of the law with respect to future actions. Each violation of such an order may result in a civil penalty of $10,000.
Copies of the complaint, proposed notice order, proposed consent agreement, and an analysis of the consent agreement to assist the public in commenting are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov
(FTC File No. 941 0015)