Alleghany Corporation, of New York City, has petitioned the Federal Trade Commission to reopen two FTC settlement orders and modify or end Alleghany's obligation under the orders to notify the FTC or obtain its approval before acquiring certain title-insurance related assets. In the interim, Alleghany has applied for FTC approval to acquire, through its indirect subsidiary Security Union Title Insurance Company, certain real estate information pertaining to Los Angeles, Orange, Riverside, San Bernardino and Ventura Counties from TRW REDI Property Data. The deal involves an exchange of electronic images of publicly-recorded real estate documents and other information between TRW REDI and Security Union. TRW REDI is based in Anaheim, California.
The FTC is seeking public comments on both the petition and the application for 30 days, until Jan. 2, 1996, before making a decision.
Alleghany signed both consent orders at issue in this matter to settle FTC charges that the company's acquisitions of title-insurance related assets from other entities would substantially lessen competition in the provision of title plant and back plant information. (Title plants and back plants are privately-owned sets of records depicting who owns and has interests in real property. A title plant's records are regularly updated, whereas the records of a back plant are historical.) The 1987 order resolved antitrust concerns over Alleghany's acquisition of its competitor, Safeco Title Insurance Co., and the 1991 consent order addressed Alleghany's acquisition of title- insurance related assets from Westwood Equities Corporation. The orders required Alleghany to make specific divestitures in various areas of the country in order to restore competition. In addition, for 10 years from the dates they were issued, they require Alleghany to obtain FTC approval before acquiring an interest in any of six major companies with title insurance operations, or in any entity with an ownership interest in title plants or back plants in the geographic areas where competition allegedly would have been harmed by the mergers. Further, the orders require Alleghany, for 10 years, to notify the FTC at least 30 days before acquiring an interest in any title plant or back plant in any locality where Alleghany already has such a plant.
Alleghany submitted the petition for relief from its prior-approval requirements under the orders pursuant to FTC's policy announcement that it will no longer routinely include prior-approval provisions in consent orders settling allegations that mergers are anticompetitive, and that it will presume the public interest requires reopening outstanding merger orders and making them consistent with the policy. This is the second petition Alleghany has submitted in this matter; it withdrew the first petition before the FTC announced it for public comment. The resubmitted petition announced today is identical to the one Alleghany filed in September, except that it includes two declarations in support of reopening and modifying the orders as requested.
Alleghany maintains in its petition that there is nothing to rebut the FTC presumption favoring removal of the prior-approval provisions in the orders, so the orders should be modified to set those provisions aside entirely. The prior-notice provisions are overly broad, the petition states, and if not completely set aside, should at least be modified to eliminate the requirement to provide notice of certain transactions which plainly present no anti-competitive risks. Specifically, the petition seeks modification to exempt the transfer of copies of title records to Alleghany, where the transferor retains the original records, because "such a transaction is inherently pro-competitive, broadening and diffusing rather than concentrating any economic power attendant to the records."
Similarly, in its acquisition application, Alleghany maintains that the principal effect of the data exchange will be to enhance competition. "By enlarging each party's collection of electronic images of title records, the proposed transaction enhances the ability of each of the parties to deliver title plant services and other services to customers by electronic means. ... This will improve the speed, flexibility and quality of title plant services and other services which TRW REDI and [Security Union] are each able to provide." In addition, Alleghany said the agreement does not limit the extent to which the two firms compete with each other on price, terms and other conditions.
Comments on the petition and the application should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.
Copies of the petition, the application, the two consent orders, and other documents associated with these cases, are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 202-326- 2502. 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