UNITED STATES OF AMERICA
In the Matter of
Docket No. 9244
ORDER REOPENING AND MODIFYING ORDER
On February 16, 2000, Meade Instruments Corporation ("Meade"), the successor to the respondent named in the consent order issued by the Commission on August 19, 1991, in Docket No. 9244 ("Order"), filed its Petition To Reopen and Modify Consent Order ("Petition") in this matter. Meade asks that the Commission reopen and modify the Order pursuant to Section 5(b) of the Federal Trade Commission Act, 15 U.S.C. § 45(b), and Section 2.51 of the Commission's Rules of Practice and Procedure, 16 C.F.R. § 2.51, and consistent with the Statement of Federal Trade Commission Policy Concerning Prior Approval And Prior Notice Provisions, 60 Fed. Reg. 39,745 (Aug. 3, 1995) ("Prior Approval Policy Statement"). Meade's Petition requests that the Commission reopen and modify the Order so as to remove the prior approval requirement contained in Paragraph II of the Order, which currently requires Meade to seek the prior approval of the Commission before directly or indirectly, through subsidiaries or otherwise, acquiring the whole or any part of the stock, share capital, equity interest, or assets, other than purchases of manufactured product in the ordinary course of business, of any company engaged in the United States in the manufacture or sale of mid-sized Schmidt-Cassegrain telescopes with apertures of eight (8) to eleven (11) inches used for astronomical viewing ("SCTs"). The thirty-day public comment period on Meade's Petition ended on March 24, 2000. No comments were received. For the reasons discussed below, the Commission has determined to reopen and modify the Order.
The Commission, in its Prior Approval Policy Statement, "concluded that a general policy of requiring prior approval is no longer needed," citing the availability of the premerger notification and waiting period requirements of Section 7A of the Clayton Act, commonly referred to as the Hart-Scott-Rodino ("HSR") Act, 15 U.S.C. § 18a, to protect the public interest in effective merger law enforcement. 60 Fed. Reg. at 39,746. The Commission announced that it will "henceforth rely on the HSR process as its principal means of learning about and reviewing mergers by companies as to which the Commission had previously found a reason to believe that the companies had engaged or attempted to engage in an illegal merger." Id. As a general matter, "Commission orders in such cases will not include prior approval or prior notification requirements." Id.
The Commission stated that it will continue to fashion remedies as needed in the public interest, including ordering narrow prior approval or prior notification requirements in certain limited circumstances. The Commission said in its Prior Approval Policy Statement that "a narrow prior approval provision may be used where there is a credible risk that a company that engaged or attempted to engage in an anticompetitive merger would, but for the provision, attempt the same or approximately the same merger." 60 Fed. Reg. at 39,746. The Commission also said that "a narrow prior notification provision may be used where there is a credible risk that a company that engaged or attempted to engage in an anticompetitive merger would, but for an order, engage in an otherwise unreportable anticompetitive merger." Id. As explained in the Prior Approval Policy Statement, the need for a prior notification requirement will depend on circumstances such as the structural characteristics of the relevant markets, the size and other characteristics of the market participants, and other relevant factors. Id.
The Commission also announced, in its Prior Approval Policy Statement, its intention "to initiate a process for reviewing the retention or modification of these existing requirements" and invited respondents subject to such requirements "to submit a request to reopen the order." 60 Fed. Reg. at 39,746. The Commission determined that, "when a petition is filed to reopen and modify an order pursuant to . . . [the Prior Approval Policy Statement], the Commission will apply a rebuttable presumption that the public interest requires reopening of the order and modification of the prior approval requirement consistent with the policy announced" in the Prior Approval Policy Statement. Id.
The complaint in this matter alleged that the entry of Harbour Group Investments, L.P. ("Harbour Group"), the predecessor to Meade, into a joint venture with Diethelm Holding (U.S.A.) Ltd ("Diethelm") would have violated Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, by lessening competition and tending to create a monopoly in the market for SCTs in the United States.
The presumption is that setting aside the general prior approval requirement in this Order is in the public interest. Prior notification is appropriate for acquisitions in the relevant markets because the record evidences a credible risk that Meade could engage in future anticompetitive acquisitions that would not be subject to the premerger notification and waiting period requirements of the HSR Act. The complaint in this matter alleged that, in 1990, Harbour Group and Diethelm collectively had sales of only $4.1 million in the relevant market, but had sufficient market share to create a "virtual monopoly" in that market if the transaction had been consummated. This is an indication that acquisitions in the relevant market could fall below the size-of-transaction threshold in the HSR Act. By letter dated March 22, 2000, Meade agreed to accept a prior notification requirement as a substitute for the prior approval requirement. Accordingly, the Commission has determined to reopen the proceedings and modify the Order to replace the original prior approval requirement with a prior notification requirement.
Accordingly, IT IS ORDERED that this matter be, and it hereby is, reopened; and
IT IS FURTHER ORDERED that Paragraph II of the Order be, and it hereby is, modified, as of the effective date of this order, to read as follows:
IT IS FURTHER ORDERED that, for a period commencing on the date this order becomes final and continuing for ten (10) years, Harbour Group shall not, without prior notification to the Commission, directly or indirectly, through subsidiaries or otherwise, acquire the whole or any part of the stock, share capital, equity interest, or assets, other than purchases of manufactured product in the ordinary course of business, of any company engaged in the manufacture or sale of SCTs in the United States. Provided, however, that these prohibitions shall not relate to the construction of new facilities.
The prior notification required by this Paragraph II 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 Respondent and not of any other party to the transaction. Respondent 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, Respondent shall not consummate the transaction until twenty (20) days after substantially complying with such request for additional information. Early termination of the waiting periods in this paragraph may be requested and, where appropriate, granted by letter from the Bureau of Competition. Notwithstanding, 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.
By the Commission.
Donald S. Clark
ISSUED: May 22, 2000