UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
- Robert Pitofsky, Chairman
- Sheila F. Anthony
- Mozelle W. Thompson
- Orson Swindle
- Thomas B. Leary
In the Matter of
Manheim Auctions, Inc., Cox Enterprises, Inc., ADT Automotive
Holdings, Inc., and Tyco International, Ltd., corporations.
Docket No. C -
DECISION AND ORDER
The Federal Trade Commission ("Commission") having initiated an investigation
of the acquisition by Respondent Manheim Auctions, Inc. ("Manheim"), a wholly
owned subsidiary of Respondent Cox Enterprises, Inc. ("Cox"), of Respondent ADT
Automotive Holdings, Inc. ("ADT"), a wholly owned subsidiary of Respondent Tyco
International, Ltd. ("Tyco"), and Respondents having been furnished thereafter
with draft of Complaint that the Bureau of Competition presented to the Commission for its
consideration and which, if issued, would charge Respondents with violations of Section 5
of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, and Section 7 of the
Clayton Act, as amended 15 U.S.C. § 18; and
Respondents, their attorneys, and counsel for the Commission having thereafter executed
an Agreement Containing Consent Order ("Consent Agreement"), containing an
admission by Respondents of all the jurisdictional facts set forth in the aforesaid draft
of Complaint, a statement that the signing of said Consent Agreement is for settlement
purposes only and does not constitute an admission by Respondents that the law has been
violated as alleged in such Complaint, or that the facts as alleged in such Complaint,
other than jurisdictional facts, are true, 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 Respondents have violated said Acts, and that a Complaint
should issue stating its charges in that respect, and having accepted the executed Consent
Agreement and placed such Consent Agreement on the public record for a period of thirty
(30) days for the receipt and consideration of public comments, now in further conformity
with the procedure described in Commission Rule 2.34, 16 C.F.R. § 2.34, the Commission
issues its complaint, and hereby makes the following jurisdictional findings and issues
the following Order:
- 1. Respondent Manheim is a corporation organized, existing and doing business under and
by virtue of the laws of the State of Delaware, with its office and principal place of
business located at 1400 Lake Hearn Drive, N.E., Atlanta, Georgia 30319.
- 2. Respondent Manheim is a wholly owned subsidiary of Respondent Cox Enterprises Inc.
("Cox"), a corporation with its office and principal place of business located
at 1400 Lake Hearn Drive, N.E., Atlanta, Georgia 30319.
- 3. Respondent ADT is a corporation organized, existing and doing business under and by
virtue of the laws of the State of Delaware, with its office and principal place of
business located at 435 Metroplex Drive, Nashville, Tennessee 37211.
- 4. Respondent ADT is a wholly owned subsidiary of Respondent Tyco International Ltd.
("Tyco"), a corporation organized, existing and doing business under and by
virtue of the laws of Bermuda, with its office and principal place of business located at
The Zurich Center, Second Floor, 90 Pitts Bay Road, Pembroke HM08, Bermuda. Tyco's
principal operating subsidiary in the United States is located at One Tyco Park, Exeter,
New Hampshire 03833.
- 5. The Federal Trade Commission has jurisdiction of the subject matter of this
proceeding and of Respondents, and the proceeding is in the public interest.
IT IS ORDERED that, as used in this Order, the following definitions
- A. "Manheim" means Manheim Auctions, Inc., its directors, officers, employees,
agents and representatives, successors, and assigns; its joint ventures, subsidiaries,
divisions, groups and affiliates controlled by Manheim Auctions, Inc., and the respective
directors, officers, employees, agents, representatives, successors, and assigns of each.
- B. "Cox" means Cox Enterprises, Inc., its directors, officers, employees,
agents and representatives, succe by Cox Enterprises, Inc., and the respective directors,
officers, employees, agents, ressors, and assigns; its joint ventures, subsidiaries,
divisions, groups and affiliates controlledpresentatives, successors, and assigns of each.
- C. "ADT" means ADT Automotive Holdings, Inc., its directors, officers,
employees, agents and representatives, successors, and assigns; its joint ventures,
subsidiaries, divisions, groups and affiliates controlled by ADT Automotive Holdings,
Inc., and the respective directors, officers, employees, agents, representatives,
successors, and assigns of each.
- D. "Tyco" means Tyco International, Ltd., its directors, officers, employees,
agents and representatives, successors, and assigns; its joint ventures, subsidiaries,
divisions, groups and affiliates controlled by Tyco International, Ltd., and the
respective directors, officers, employees, agents, representatives, successors, and
assigns of each.
- E. "Respondents" means Manheim, Cox, ADT and Tyco, individually and
- F. "Commission" means Federal Trade Commission.
- G. "ADESA" means ADESA Corporation, a corporation with its principal place of
business at Two Parkwood Crossing, 310 East 96th Street, Suite 400,
Indianapolis, Indiana 46240.
- H. "Acquirer(s)" means the entity or entities approved by the Commission to
acquire the Assets To Be Divested pursuant to this Order, individually and collectively,
other than ADESA.
- I. "Assets To Be Divested" means the Auctions listed below:
- 1. "Metro Auto Auction," the ADT Auction located at 101 Southwest Oldham
Parkway, Lee's Summit, Missouri 64081.
- 2. "Colorado Springs Auto Auction," the ADT Auction located at 500 Willow
Springs Road, Fountain, Colorado 80817.
- 3. "Southern States Vehicle Auction," the ADT Auction located at 300 Raymond
Hill Road, Newman, Georgia 30265.
- 4. "Golden Gate Auto Auction," the ADT Auction located at 6700 Stevenson
Boulevard, Fremont, California 94538.
- 5. "Puget Sound Auto Auction," the ADT Auction located at 621 37th
Street, N.W. Auburn, Washington 98002.
- 6. "Bayside Auto Auction," the ADT Auction located 3225 North 50th
Street, Tampa, Florida 33619.
- 7. "Clearwater Auto Auction," the ADT Auction located at 5153 126th
Avenue, North, Clearwater, Florida 33760.
- 8. "Dealer's Auto Auction of Sanford," the ADT Auction located at 3895 State
Road 46 East, Sanford, Florida 32771.
- 9. "Southwest Auto Auction," the Manheim Auction located at 400 North Beck
Avenue, Chandler, Arizona 85526.
- J. "Auction" means a wholesale motor vehicle auction, including all tangible
and intangible assets used in the business and operations of auctioning used automobiles,
including related reconditioning, transportation and repair services, including, but not
- 1. All land and buildings and other improvements and fixtures thereon, leasehold
interests, easements, licenses, rights to access, rights-of-way, and other real property
- 2. All machinery, equipment, tools, computer hardware and software, vehicles, furniture,
leasehold improvements, office equipment, plant inventory, spare parts, supplies
(including office and reconditioning supplies) and other tangible personal property;
- 3. All contracts, agreements, options, leases, commitments, and undertakings, written
and oral, and other similar rights and interests;
- 4. All rights, titles and interest in and to all licenses and other governmental permits
- 5. All accounts receivable, pre-paid expenses, deposits (other than bank deposits),
machinery and equipment warranties, customer lists, files and records; and
- 6. Goodwill and going concern value.
- K. "Acquisition" means the proposed acquisition by Manheim of ADT as described
in the January 13, 2000, Stock Purchase Agreement between Manheim and ADT General
- L. "Key Employees" means those individuals employed by Respondents whose
principal work relates to any Asset To Be Divested and who hold one of the following
positions or perform the duties generally performed by persons with the following titles:
(a) General Manager, (b) Assistant General Manager, (c) Fleet/Lease Manager, (d) General
Sales Manager, (e) Operations Manager, (f) Controller, and (g) Factory
- M. "Divestiture Agreement" means the Asset Purchase Agreement dated July 28,
2000, by and between Manheim and ADESA.
- N. "Third Party Consents" means all consents, waivers and approvals from any
person, private or public, that are necessary to effect the complete transfer to ADESA or
to the Acquirer(s), as applicable, of the Assets To Be Divested pursuant to this Order.
IT IS FURTHER ORDERED that:
- A. Respondents shall divest the Assets To Be Divested to ADESA pursuant to and in
accordance with the Divestiture Agreement (which agreement shall not vary from or
contradict or be construed to vary from or contradict the terms of this Order). The
divestiture shall be made no later than three (3) months after Respondent Manheim
consummates the Acquisition. Failure to comply with the Divestiture Agreement shall
constitute a failure to comply with this Order. PROVIDED, HOWEVER, that if Respondents
have divested the Assets To Be Divested to ADESA prior to the date the Order becomes
final, and if, at the time the Commission determines to make the Order final, the
Commission notifies Respondents that ADESA is not an acceptable acquirer or that the
Divestiture Agreement is not an acceptable manner of divestiture, then Respondents shall
immediately rescind the transaction with ADESA and shall divest the Assets To Be Divested
within six (6) months of the date the Order becomes final. Respondents shall divest the
Assets To Be Divested only to an Acquirer(s) that receives the prior approval of the
Commission and only in a manner that receives the prior approval of the Commission.
- B. Respondents shall obtain all material Third Party Consents prior to the closing of
the divestitures required by Paragraph II.A.
- C. The purpose of the divestitures of the Assets To Be Divested is to ensure the
continued use of the assets in the same businesses in which they were engaged at the time
of the announcement of the proposed Acquisition and to remedy the lessening of competition
resulting from the Acquisition as alleged in the Commission's complaint.
IT IS FURTHER ORDERED that:
- A. From the date Respondents sign the Consent Agreement until the divestiture is
completed pursuant to the terms of this Order, Respondents shall take, or cause to be
taken, reasonable steps, including implementing appropriate incentive plans (such as
vesting or crediting of all current and accrued benefits and pensions to which Key
Employees are entitled) and paying bonuses, to cause Key Employees to accept offers of
employment from ADESA or the Acquirer(s), as applicable.
- B. For a period of one year following the divestiture of the Assets To Be Divested,
Manheim shall not, directly or indirectly, solicit or otherwise attempt to induce any Key
Employees of the ADT Auctions to terminate their employment relationship with ADESA or
other Acquirer(s); provided, however, it shall not be deemed to be a violation of this
provision if (i) Manheim advertises for employment opportunities in newspapers, trade
publications or other media not targeted specifically at the Key Employees, or (ii)
Manheim hires Key Employees who apply for employment with Manheim, as long as such Key
Employees were not solicited by Manheim in violation of this Paragraph III. B. During the
one-year period following the divestiture of the Assets To Be Divested pursuant to the
Divestiture Agreement, Manheim shall not, directly or indirectly, hire or enter into any
arrangement for the services of any Key Employees employed by Southwest Auto Auctions on
the date hereof; provided, however, that Manheim shall not be prohibited from hiring,
during that one-year period, any Key Employees of Southwest Auto Auctions who are
terminated by ADESA or other Acquirer or who move out of the state of Arizona for reasons
unrelated to their employment.
IT IS FURTHER ORDERED that Respondents shall maintain the viability,
marketability, and competitiveness of the Assets To Be Divested, and shall not cause the
wasting or deterioration of the Assets To Be Divested, nor shall they cause the Assets To
Be Divested to be operated in a manner inconsistent with applicable laws, nor shall they
sell, transfer, encumber or otherwise impair the viability, marketability or
competitiveness of the Assets To Be Divested. Respondents shall comply with the terms of
this Paragraph until such time as Respondents have divested the Assets To Be Divested
pursuant to the terms of this Order. Respondents shall conduct or cause to be conducted
the business of the Assets To Be Divested in the regular and ordinary course and in
accordance with past practice (including regular repair and maintenance efforts) and shall
preserve the existing relationships with suppliers, customers, employees, and others
having business relations with the Assets To Be Divested in the ordinary course of
business and in accordance with past practice. Respondents shall not terminate the
operation of any Asset To Be Divested. Respondents shall continue to maintain the
inventory of each Asset To Be Divested at levels and selections consistent with those
maintained by Manheim or ADT at such Auction in the ordinary course of business consistent
with past practice. Respondents shall keep the organization and properties of each Asset
To Be Divested intact, including current business operations, physical facilities, working
conditions, and a work force of equivalent size, training, and expertise associated with
the Auction. Included in the above obligations, Respondents shall, without limitation:
- A. Maintain operations and departments and neither reduce hours nor change the schedule
of auctions at each Asset To Be Divested;
- B. Not transfer inventory from any Asset To Be Divested other than in the ordinary
course of business consistent with past practice;
- C. Make any payment required to be paid under any contract or lease when due, and
otherwise pay all liabilities and satisfy all obligations associated with any Asset To Be
Divested, in each case in a manner consistent with past practice;
- D. Maintain the books and records of each Asset To Be Divested;
- E. Not display any signs or conduct any advertising that indicates that any Respondent
is moving its operations from an Asset To Be Divested to another location, or that
indicates an Asset To Be Divested will close or will be owned by another entity; and
- F. Not change or modify in any material respect the existing advertising practices,
programs and policies for any Asset To Be Divested, other than changes in the ordinary
course of business consistent with past practice for Auctions of Manheim and ADT not being
closed or relocated.
IT IS FURTHER ORDERED that:
- A. If Respondents have not divested, absolutely and in good faith and with the
Commission's prior approval, the Assets To Be Divested within the time required by
Paragraph II of this Order, the Commission may appoint a trustee to divest the Assets To
- B. In the event that the Commission brings an action pursuant to Section 5(l) of
the Federal Trade Commission Act, 15 U.S.C. § 45(l), or any other statute enforced
by the Commission, Respondents shall consent to the appointment of a trustee in such
action. Neither the appointment of a trustee nor a decision not to appoint a trustee under
this Paragraph shall preclude the Commission from seeking civil penalties or any other
relief available to it, including a court-appointed trustee, pursuant to Section 5(l)
of the Federal Trade Commission Act, or any other statute enforced by the Commission, for
any failure by the Respondents to comply with this Order.
- C. If a trustee is appointed by the Commission or a court pursuant to Paragraph V.A. of
this Order, Respondents shall consent to the following terms and conditions regarding the
trustee's powers, duties, authority, and responsibilities:
- 1. The Commission shall select the trustee, subject to the consent of Respondents, which
consent shall not be unreasonably withheld. The trustee shall be a person with experience
and expertise in acquisitions and divestitures. If Respondents have not opposed, in
writing, including the reasons for opposing, the selection of any proposed trustee within
ten (10) days after receipt of notice by the staff of the Commission to Respondents of the
identity of any proposed trustee, Respondents shall be deemed to have consented to the
selection of the proposed trustee.
- 2. Subject to the prior approval of the Commission, the trustee shall have the exclusive
power and authority to divest the Assets To Be Divested.
- 3. Within ten (10) days after appointment of the trustee, Respondents shall execute a
trust agreement that, subject to the prior approval of the Commission and, in the case of
a court-appointed trustee, of the court, transfers to the trustee all rights and powers
necessary to permit the trustee to effect each divestiture required by this Order.
- 4. The trustee shall have twelve (12) months from the date the Commission or court
approves the trust agreement described in Paragraph V.C.3. to accomplish the divestitures,
which shall be subject to the prior approval of the Commission. If, however, at the end of
the twelve-month period, the trustee has submitted a plan of divestiture or believes that
divestiture can be achieved within a reasonable time, the divestiture period may be
extended by the Commission, or, in the case of a court-appointed trustee, by the court;
provided, however, the Commission may extend the period for no more than two (2)
- 5. The trustee shall have full and complete access to the personnel, books, records, and
facilities related to the Assets To Be Divested or to any other relevant information, as
the trustee may request. Respondents shall develop such financial or other information as
such trustee may reasonably request and shall cooperate with the trustee. Respondents
shall take no action to interfere with or impede the trustee's accomplishment of the
divestitures. Any delays in divestiture caused by Respondents shall extend the time for
divestiture under this Paragraph in an amount equal to the delay, as determined by the
Commission or, for a court-appointed trustee, by the court.
- 6. The trustee shall use his or her best efforts to negotiate the most favorable price
and terms available in each contract that is submitted to the Commission, subject to
Respondents' absolute and unconditional obligation to divest expeditiously at no minimum
price. The divestitures shall be made in a manner that receives the prior approval of the
Commission and to Acquirer(s) that receive the prior approval of the Commission; provided,
however, if the trustee receives bona fide offers for an Asset To Be Divested from more
than one acquiring entity, and if the Commission determines to approve more than one such
acquiring entity, the trustee shall divest such asset to the acquiring entity or entities
selected by Respondents from among those approved by the Commission; provided further,
however, that Respondents shall select such entity within five (5) days of receiving
notification of the Commission's approval.
- 7. The trustee shall serve, without bond or other security, at the cost and expense of
Respondents, on such reasonable and customary terms and conditions as the Commission or a
court may set. The trustee shall have the authority to employ, at the cost and expense of
Respondents, such consultants, accountants, attorneys, investment bankers, business
brokers, appraisers, and other representatives and assistants as are necessary to carry
out the trustee's duties and responsibilities. The trustee shall account for all monies
derived from the divestitures and all expenses incurred. After approval by the Commission
and, in the case of a court-appointed trustee, by the court, of the account of the
trustee, including fees for his or her services, all remaining monies shall be paid at the
direction of Respondents, and the trustee's power shall be terminated. The trustee's
compensation shall be based at least in significant part on a commission arrangement
contingent on the trustee's divesting the Assets To Be Divested.
- 8. Respondents shall indemnify the trustee and hold the trustee harmless against any
losses, claims, damages, liabilities, or expenses arising out of, or in connection with,
the performance of the trustee's duties, including all reasonable fees of counsel and
other expenses incurred in connection with the preparation for or defense of any claim,
whether or not resulting in any liability, except to the extent that such losses, claims,
damages, liabilities, or expenses result from misfeasance, gross negligence, willful or
wanton acts, or bad faith by the trustee.
- 9. If the trustee ceases to act or fails to act diligently, a substitute trustee shall
be appointed in the same manner as provided in Paragraph V.A. of this Order.
- 10. The Commission or, in the case of a court-appointed trustee, the court, may on its
own initiative or at the request of the trustee issue such additional orders or directions
as may be necessary or appropriate to accomplish each divestiture required by this Order.
- 11. In the event that the trustee determines that he or she is unable to divest the
Assets To Be Divested in a manner consistent with the Commission's purpose as described in
Paragraph II, the trustee may divest assets similar and corresponding to the Assets To Be
Divested of Respondents as necessary to achieve the remedial purposes of this Order.
- 12. The trustee shall have no obligation or authority to operate or maintain the Assets
To Be Divested.
- 13. The trustee shall report in writing to Respondents and the Commission every sixty
(60) days concerning the trustee's efforts to accomplish each divestiture required by this
IT IS FURTHER ORDERED that, for a period commencing on the date this
Order becomes final and continuing for ten (10) years, Respondents shall not, without
providing advance written notification to the Commission, acquire, directly or indirectly,
through subsidiaries or otherwise, any ownership, leasehold, or other interest, in whole
or in part, in any facility that has operated as an Auction, within six (6) months of the
date of such proposed acquisition, in the relevant sections of the country stated in the
Said notification shall be given on the Notification and Report Form set forth in the
Appendix to Part 803 of Title 16 of the Code of Federal Regulations as amended
(hereinafter referred to as "the Notification"), and shall be prepared and
transmitted in accordance with the requirements of that part, except that no filing fee
will be required for any such notification, notification shall be filed with the Secretary
of the Commission, notification need not be made to the United States Department of
Justice, and notification is required only of Respondents and not of any other party to
the transaction. Respondents shall provide the Notification to the Commission at least
thirty (30) days prior to consummating any such transaction (hereinafter referred to as
the "first waiting period"). If, within the first waiting period,
representatives of the Commission make a written request for additional information or
documentary material (within the meaning of 16 C.F.R. § 803.20), Respondents shall not
consummate the transaction until twenty (20) days after submitting such additional
information or documentary material. Early termination of the waiting periods in this
Paragraph may be requested and, where appropriate, granted by letter from the Bureau of
Competition. Provided, however, that prior notification shall not be required by this
Paragraph for a transaction for which notification is required to be made, and has been
made, pursuant to Section 7A of the Clayton Act, 15 U.S.C. § 18a.
IT IS FURTHER ORDERED that:
- A. Within thirty (30) days after the date this Order becomes final and every thirty (30)
days thereafter until Respondents have fully complied with the provisions of Paragraphs II
through V of this Order, Respondents shall submit to the Commission a verified written
report setting forth in detail the manner and form in which they intend to comply, are
complying, and have complied with Paragraphs II through V of this Order. Respondents shall
include in their compliance reports, among other things that are required from time to
time, a full description of the efforts being made to comply with Paragraphs II through V
of the Order, including a description of all substantive contacts or negotiations relating
to the divestitures and the approvals. Respondents shall include in their compliance
reports copies, other than of privileged materials, of all written communications to and
from such parties, all internal memoranda, and all reports and recommendations concerning
the divestitures and approvals. The final compliance report required by this Paragraph
VII.A. shall include a statement that the divestitures have been accomplished in the
manner approved by the Commission and shall include the dates the divestitures were
- B. One (1) year from the date this Order becomes final, annually for the next nine (9)
years on the anniversary of the date this Order becomes final, and at other times as the
Commission may require, Respondents shall file a verified written report with the
Commission setting forth in detail the manner and form in which they have complied and are
complying with this Order.
IT IS FURTHER ORDERED that Respondents shall notify the Commission at
least thirty (30) days prior to any proposed change in the Respondents that may affect
compliance obligations arising out of this Order, such as dissolution, assignment, sale
resulting in the emergence of a successor corporation, or the creation or dissolution of
subsidiaries or any other change in the corporation.
IT IS FURTHER ORDERED that, for the purpose of determining or securing
compliance with this Order, and subject to any legally recognized privilege, and upon
written request with reasonable notice to Respondents, Respondents shall permit any duly
authorized representative of the Commission:
- A. Access, during office hours and in the presence of counsel, to all facilities and
access to inspect and copy all non-privileged books, ledgers, accounts, correspondence,
memoranda and other records and documents in the possession or under the control of
Respondents relating to any matter contained in this Order; and
- B. Upon five (5) days' notice to Respondents and without restraint or interference from
them, to interview officers, directors, or employees of Respondents, who may have counsel
present, regarding any such matters.
IT IS FURTHERED ORDERED that this Order shall terminate:
- A. With respect to Respondents Manheim and Cox, on ___________, _____, 20____.
- B. With respect to Respondents ADT and Tyco, when the transfer of the Assets To Be
Divested to Respondent Manheim has been completed pursuant to the Acquisition.
By the Commission.
Donald S. Clark