UNITED STATES DISTRICT COURT
FEDERAL TRADE COMMISSION, Plaintiff
Civil Action No.
COMPLAINT FOR PRELIMINARY INJUNCTION PURSUANT TO SECTION 13(b) OF THE FEDERAL TRADE COMMISSION ACT
Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), by its designated attorneys, petitions the Court, pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), for a preliminary injunction enjoining defendant Conso International Corporation ("Conso"), including its domestic and foreign agents, divisions, subsidiaries, affiliates, partnerships, or joint ventures, from acquiring through a merger or otherwise any stock, assets, or other interest, either directly or indirectly, from MP Holdings, Inc., ("MP") or The McCall Pattern Company ("McCall"); thereby maintaining the status quo during the pendency of an administrative proceeding, challenging defendant's proposed combination, that will be commenced by the Commission pursuant to Section 5 of the FTC Act, 15 U.S.C. § 45, and Sections 7 and 11 of the Clayton Act, 15 U.S.C. §§ 18 and 21.
JURISDICTION AND VENUE
1. Jurisdiction is based on Section 13(b) of the FTC Act, 15 U.S.C. § 53(b) and 28 U.S.C. §§ 1337 and 1345. Venue is proper under Section 13(b) of the FTC Act; 28 U.S.C. § 1391(b) and (c); and Section 12 of the Clayton Act, 15 U.S.C. § 22.
2. The Commission is an administrative agency of the United States Government established, organized, and existing pursuant to the FTC Act, 15 U.S.C. § 41 et seq., with its principal offices at Sixth Street and Pennsylvania Avenue, NW, Washington, DC 20580. The Commission is vested with authority and responsibility for enforcing, inter alia, Section 7 of the Clayton Act and Section 5 of the FTC Act.
3. Defendant Conso is a for-profit corporation organized and existing under the laws of the state of South Carolina, with its principal place of business at 513 North Duncan Bypass, Union, SC 29379. Conso also does business as Conso Products Company. In June 1998, Conso acquired all the outstanding common stock of Simplicity Capital Corporation, the parent company of Simplicity Pattern Company, Inc. ("Simplicity"). Simplicity is the largest manufacturer of sewing patterns in the United States with a market share of about 45%.
4. Defendant MP is a for-profit corporation organized and existing under the laws of the state of Delaware, with its principal place of business at 11 Penn Plaza, New York, NY 10001. MP owns defendant McCall.
5. Defendant McCall is a for-profit corporation organized and existing under the laws of the state of Delaware, with its principal place of business at 11 Penn Plaza, New York, NY 10001. McCall is owned by defendant MP. McCall is the second-largest manufacturer of sewing patterns in the United States with a market share of about 31.5%.
6. Conso, MP, and McCall are engaged in commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44, and Section 1 of the Clayton Act, 15 U.S.C. § 12.
7. Conso, MP, and McCall agree that they are subject to the personal jurisdiction of this Court for the purposes of this litigation.
SECTION 13(b) OF THE FTC ACT
8. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), provides in pertinent part:
THE PROPOSED MERGER AND THE COMMISSION'S RESPONSE
9. Pursuant to a Letter of Intent dated February 25, 2000, Conso through Citicorp Venture Capital Ltd. proposes to acquire all of the stock of McCall for approximately $22 million (plus assumption of up to $7.5 million in debt), and to merge with McCall.
10. On August 2, 2000, the Commission authorized the commencement of an action under Section 13(b) of the FTC Act to seek injunctive relief barring the proposed merger during the pendency of administrative proceedings.
11. The defendants have informed the Commission that they will delay consummation of the proposed acquisition until after this Court rules on the Commission's request for a preliminary injunction.
12. In authorizing the commencement of this action, the Commission determined that such an injunction is in the public interest and that it has reason to believe that the aforesaid proposed merger would violate Section 7 of the Clayton Act because the acquisition may substantially lessen competition and/or tend to create a monopoly in the manufacture and sale of sewing patterns.
LIKELIHOOD OF SUCCESS ON THE MERITS AND NEED FOR RELIEF
13. The Commission is likely ultimately to succeed in demonstrating, in administrative proceedings to adjudicate the legality of the proposed merger, that the proposed merger would violate Section 7 of the Clayton Act. In particular, the Commission is likely ultimately to succeed in demonstrating, inter alia, that:
14. The reestablishment of Conso and McCall as independent viable competitive entities if they were to merge would be difficult, and there is a substantial likelihood that it would be difficult or impossible to restore the businesses as they originally existed. Furthermore, it is likely that substantial interim harm to competition would occur even if suitable divestiture remedies could be devised.
15. For the reasons stated above, the granting of the injunctive relief sought is in the public interest. WHEREFORE, the Commission requests that the Court:
Dated: August 4, 2000