Legal Library: Cases and Proceedings

The FTC charged that Stone Container Corporation, the world's leading manufacturer of linerboard, violated the antitrust laws by attempting to orchestrate an industry-wide price increase. According to the FTC, in both private conversations and public statements the executives of Stone Container signaled their intention to take mill downtime and reduce industry-wide inventories and their belief that doing so would build support for a price increase. According to the FTC complaint, the actions and statements constituted an invitation by Stone to its competitors to join a coordinated price increase. If accepted, the invitation would result in higher prices, reduced output and consumer injury, the complaint alleges.The FTC alleged that, following a failed attempt to increase the price it charged for linerboard in 1993, Stone Container temporarily shut down production at its own mills and bought up competitors' excess inventory as part of an intentional effort to build industry support for a price increase. The agreement to settle the FTC charges bars Stone Container from urging any competitor to raise or fix the price charged for linerboard.

CUC International settled allegations that its proposed acquisition of HFS, Inc. would create a virtual monopoly in the worldwide market for full-service timeshare exchange services. CUC operates more than 20 membership-based consumer services companies, while HFS subsidiary, Resort Conduminiums International, is the world's largest provider of timeshare vacation exchanges.  Timeshare owners rely on exchange services to process exchanges. The consent order requires divestiture of CUC's interval timeshare business to Interval Acquisition Corporation, a new entrant. Should this divestiture not take place, the consent order requires CUC to divest either Interval or HFS' Resort Condominiums International.

Consent order settles charges that Cablevision's acquisition of certain cable operations in northern New Jersey and in New York from Tele-Communications Inc. would result in higher prices and lower quality of cable television services for residents of Paramus and Hillsdale, New Jersey. The settlement requires divestiture of TCI's cable systems in the two cities.

The complaint accompanying the proposed consent order alleged that the merger between Guinness and Grand Metropolitan PLC would eliminate substantial competition between the two firms in the sale and distribution of premium Scotch and premium gin in the U.S. The order requires the divestiture of Dewar's Scotch, Bombay gin, and Bombay Sapphire gin brands worldwide to acquirers pre-approved by the Commission.

Checkpoint Systems, Inc. and Sensormatic Electronics Corporation, the two largest marketers of electronic article surveillance systems used in retail stores to prevent shoplifting, agreed to nullify and void the section of their June 1993 agreement that restricts negative advertising and promotional claims about each other's products or services. The consent order also prohibits each firm from entering into any agreement that restricts truthful, non-deceptive advertising, comparative advertising or promotional and sales activities.

CVS agreed to settle allegations that its acquisition of Revco would substantially reduce competition for the retail sale of pharmacy services to health insurance companies and other third-party payers in Virginia and in the Binghamton, New York metropolitan area. The consent order requires the divestiture of 114 Revco stores in Virginia and 6 pharmacy counters in Binghamton.

In March, 1998, CVS Corporation agreed to pay a $600,000 civil penalty to settle Federal Trade Commission charges that the company violated a 1997 consent order and asset maintenance agreement it signed with the agency to settle charges stemming from CVS's 1997 acquisition of Revco D.S., Inc.

Insilco agreed to divest two aluminum tube mills acquired in its acquisition of Helima-Helvetion International, Inc. to settle antitrust concerns that the acquisition would substantially reduce competition in the markets for welded-seam aluminum radiator and charged air cooler tubing in North America.

The Commission authorized staff to file a motion for a preliminary injunction to block the proposed merger of the two largest hospitals in Grand Rapids, Michigan, Blodgen and Butterworth Hospital, on grounds that the merger would substantially reduce competition for acute-care inpatient hospital services in the area The complaint was filed January 23,1996 in the U.S. District Court for the Western District of Michigan (Southern Division). On September 26,1996, the court denied the Commission's request for an injunction. The Commission dismissed its administrative complaint after the U.S. Court of Appeals for the Sixth Circuit upheld the district court's decision.