FTC Settles Allegations of Illegal Anticompetitive Conduct by Associations in Minnesota And Iowa

For Release

The Federal Trade Commission today announced it has settled separate allegations of illegal anticompetitive conduct by associations in Minnesota and Iowa. The proposed consent orders settle charges that the Minnesota Transport Services Association and the Iowa Movers and Warehousemen's Association (the MTSA and IMWA, respectively) harmed competition by filing collectively established rate tariffs in those states under circumstances where the state action doctrine does not apply. Through the orders, both household goods movers associations have agreed to cease and desist from filing collective rates and to rescind existing tariffs based on jointly established rates filed with Minnesota and Iowa.

"The settlements announced today continue the Commission's commitment to challenge anticompetitive conduct that does not meet the strict requirements of the state action doctrine," said Joe Simons, Director of the FTC's Bureau of Competition. "The settlements also ensure that consumers in both Minnesota and Iowa receive the benefits of competitive pricing when using intrastate moving services."

Simons noted that as a result of the Commission's discussions with state officials, the State of Minnesota repealed the state statute requiring the use of collective rates unless the state granted a mover's petition to file independent rates. The legislation was passed this spring and signed into law on June 8, 2003.

The State Action Doctrine

Under the state action doctrine, the actions of some private firms may be shielded from antitrust scrutiny - if they are conducted pursuant to state authority. States may not, however, simply authorize private parties to violate the antitrust laws. That is, to utilize the state action doctrine as a defense for allegedly anticompetitive conduct, the private party must show that its conduct meets a strict two-pronged standard established by the U.S. Supreme Court. First, "the challenged restraint must be 'one' clearly articulated and affirmatively expressed as state policy'" and second, "the policy must be 'actively supervised' by the state itself."

A more detailed discussion of the state action doctrine - and specifically the Supreme Court's standard of active supervision - as well as a description of the doctrine's impact on these cases is provided in the two analyses to aid public comment issued today and reiterates the points made in the Commission's analysis to aid public comment in Indiana Household Movers and Warehousemen, Inc. (FTC File No. 021-0115). This analysis is available on the FTC's Web site at the address provided below.

The Movers Associations

The MTSA is comprised of approximately 89 household goods movers conducting business in Minnesota. One of its primary functions is preparing and filing tariffs and supplements on behalf of its members with the Minnesota Department of Transportation.

The IMWA is comprised of approximately 70 household goods movers that conduct business in Iowa. One of the IMWA's primary functions is to file tariffs and supplements on behalf of its members with the Iowa Department of Transportation's Office of Motor Carrier Services. In both Minnesota and Iowa, these tariffs and supplements contain rates and charges for the intrastate and local transportation of household goods and related services.

The Commission's Complaints

The charges alleged in both the Commission's complaint against the MTSA and the IMWA are similar. In both cases, the FTC contends the association is engaged in initiating, preparing, developing, disseminating, and taking other actions to establish and maintain collective rates, in violation of the FTC Act. The result of these activities, according to the Commission, has been to fix, establish, or stabilize rates for the transportation of household goods in Minnesota and Iowa, respectively. In Iowa, the tariff permitted discounts off rates but movers had agreed to limit the extent to which they could discount their rates when charging consumers for moving services.

In addition, according to the FTC, the associations organize and conduct meetings that provide a forum for discussion or agreement between competing carriers regarding rates and the prices they will charge for the intrastate transportation of household goods. The complaints also state that the associations' conduct has had the effect of raising, fixing, and stabilizing the prices consumers pay for household goods moves and that it has deprived consumers in Minnesota and Iowa of the benefits of competition in this industry.

The Proposed Consent Orders

The terms of the Commission's proposed consent orders with each association are similar, in that they will provide relief for the alleged illegal anticompetitive effects of the associations' conduct through a cease-and-desist order barring them from continuing their practice of filing tariffs containing collective intrastate rates.

Specifically, the proposed orders would prohibit the MTSA and the IMWA from engaging in activities such as exchanges of information that would facilitate member movers in agreeing on the rates contained in the tariffs. They also bar the associations from maintaining a tariff committee or agreeing with movers to institute any automatic intrastate rate increases. Next, the proposed orders require the MTSA and IMWA to cancel all tariffs they have filed that contain intrastate collective rates. The associations also are required to cancel any provisions in their governing documents that permit them to engage in activities barred by the proposed orders.

Finally, the proposed orders require that the associations send their members a letter explaining the terms of their respective order to ensure they understand they can no longer engage in collective rate-making. The associations also must inform the FTC of any changes in their structures that could affect compliance with the terms of the order. The proposed orders will terminate in 20 years. Until then, the associations can seek to modify the order to permit them to engage in collective rate-making if they can demonstrate that the state action doctrine would shield their conduct from antitrust enforcement. A detailed discussion of how they could do so is provided in both orders' analyses to aid public comment.

The Commission vote to approve the proposed consent orders and place a copy on the public record was 5-0 in each matter. The proposed orders will be subject to public comment until September 1, 2003, after which the Commission will determine whether to make them final. Comments should be sent to: FTC Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 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 law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the Commission's complaints, proposed consent orders, and analyses to aid public comment are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC's Bureau of Competition seeks to prevent business practices that restrain competition. The Bureau carries out its mission by investigating alleged law violations and, when appropriate, recommending that the Commission take formal enforcement action. To notify the Bureau concerning particular business practices, call or write the Office of Policy and Evaluation, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580, Electronic Mail: antitrust@ftc.gov; Telephone (202) 326-3300. For more information on the laws that the FTC enforces, the Commission has published "Promoting Competition, Protecting Consumers: A Plain English Guide to Antitrust Laws," which can be accessed at http://www.ftc.gov/bc/compguide/index.htm.

 

(FTC File No. 021-0115)

Contact Information

Media Contact:
Mitchell J. Katz,
Office of Public Affairs
202-326-2161
Staff Contact:
Dana Abrahamsen,
Bureau of Competition
202-326-2906