[Federal Register Volume 60, Number 9 (Friday, January 13, 1995)]
[Notices]
[Pages 3236-3246]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-759]
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FEDERAL TRADE COMMISSION
[File No. 951-0013]
Reckitt & Colman plc; Proposed Consent Agreement With Analysis To
Aid Pubic Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair acts and practices and unfair methods of competition, this
consent agreement, accepted subject to final Commission approval, would
allow, among other things, Reckitt & Colman to acquire L&F Products
Inc. with the required prior approval on the condition that it sells
its own rug cleaning assets, within six months, to a Commission
approved acquirer. If the divestiture is not completed on time, the
consent agreement would permit the Commission to appoint a trustee to
complete the transaction. In addition, the consent agreement would
require the respondent to obtain Commission approval, for ten years,
before acquiring any interest in the carpet-deodorizer business in the
United States.
DATES: Comments must be received on or before March 14, 1995.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th Street and Pennsylvania Avenue NW., Washington, D.C.
20580.
FOR FURTHER INFORMATION CONTACT: Ann Malester, FTC/S-2224, Washington,
D.C. 20580. (202) 326-2682.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby
given that the following consent agreement containing a consent order
to cease and desist, having been filed with and accepted, subject to
final approval, by the Commission, has been placed on the public record
for a period of sixty (60) days. Public comments is invited. Such
comments or views will be considered by the Commission and will be
available for inspection and copying at its principal office in
accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of
Practice (16 CFR 4.9(b)(6)(ii)).
Agreement Containing Consent Order
Commissioners: Janet D. Steiger, Chairman, Mary L. Azcuenaga,
Roscoe B. Starek, III, Christine A. Varney.
The Federal Trade Commission (``Commission''), having initiated an
investigation of the proposed acquisition by Reckitt & Colman plc
(``Reckitt & Colman''), a United Kingdom corporation, of substantially
all of the assets and liabilities of L&F Products Inc., a Delaware
corporation, from Eastman Kodak Company, and it now appearing that
Reckitt & Colman, hereinafter sometimes referred to as ``proposed
respondent,'' is wiling to enter into an agreement containing an order
to divest certain assets and cease and desist from making certain
acquisitions, and providing for certain other relief:
It is hereby agreed by and between proposed respondent, by its duly
authorized officers and attorneys, and counsel for the Commission that:
1. Proposed respondent Reckitt & Colman is a corporation organized,
existing, and doing business under and by virtue of the laws of England
and Wales with its principal executive offices located at One
Burlington Lane, London, England W4 2RW. Reckitt & Colman does business
in the United States through its wholly-owned subsidiary Reckitt &
Colman Inc., with its offices and principal place of
[[Page 3237]] business at 1655 Valley Road, Wayne, New Jersey 07474-
0943.
2. Proposed respondent admits all the jurisdictional facts set
forth in the draft of complaint.
3. Proposed respondent waives:
(a) any further procedural steps;
(b) the requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
(c) all rights to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this agreement;
and
(d) any claims under the Equal Access to Justice Act.
4. This agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
agreement is accepted by the Commission it, together with the draft of
complaint contemplated thereby, will be placed on the public record for
a period of sixty (60) days and information in respect thereto publicly
released. The Commission thereafter may either withdraw its acceptance
of this agreement and so notify the proposed respondent, in which event
it will take such action as it may consider appropriate, or issue and
serve its complaint (in such form as the circumstances may require) and
decision, in disposition of the proceeding.
5. This agreement is for settlement purposes only and does not
constitute an admission by proposed respondent that the law has been
violated as alleged in the draft of complaint, or that the facts as
alleged in the draft complaint, other than jurisdictional facts, are
true.
6. This agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Section 2.34 of the
Commission's Rules, the Commission may, without further notice to
proposed respondent, (1) issue its complaint corresponding in form and
substance with the draft of complaint and its decision containing the
following order to divest and to cease and desist, in disposition of
the proceeding, and (2) make information public with respect thereto.
When so entered, the order shall have the same force and effect and may
be altered, modified, or set aside in the same manner and within the
same time provided by statute for other orders. The order shall become
final upon service. Delivery by the U.S. Postal Service of the
complaint and decision containing the agreed-to order to 1655 Valley
Road, Wayne, New Jersey 07474-0943 shall constitute service. Proposed
respondent waives any right it may have to any other manner of service.
The complaint may be used in construing the terms of the order, and no
agreement, understanding, representation, or interpretation not
contained in the order or the agreement may be used to vary or
contradict the terms of the order.
7. Proposed respondent has read the proposed complaint and order
contemplated hereby. Proposed respondent understands that once the
order has been issued, it will be required to file one or more
compliance reports showing that it has fully complied with the order.
Proposed Respondent further understands that the Commission's approval,
pursuant to the Commission's Order in Docket No. C-3306, of the
Acquisition, as defined in the following order, is conditioned upon the
proposed respondent's compliance with the terms of the following order.
Proposed respondent further understands that it may be liable for civil
penalties in the amount provided by law for each violation of this
order after it becomes final, or of the Commission's Order in Docket
No. C-3306.
Order
I.
Definitions
It is ordered that, as used in this order, the following
definitions shall apply:
A. ``Reckitt & Colman'' means Reckitt & Colman plc, its
predecessors, successors and assigns, the divisions, subsidiaries,
affiliates, companies, groups, partnerships and joint ventures that
Reckitt & Colman controls, directly or indirectly, and their directors,
officers, employees, agents and representatives, and their respective
successors and assigns.
B. ``Kodak'' means Eastman Kodak Company, its predecessors,
successors and assigns, the divisions, subsidiaries, affiliates,
companies, groups, partnerships and joint ventures that Kodak controls,
directly or indirectly, and their directors, officers, employees,
agents and representatives and their respective successors and assigns.
C. ``L&F''means the United States Assets and Businesses acquired by
Reckitt & Colman in the Acquisition.
D. ``Respondent'' means Reckitt & Colman.
E. ``Commission'' means the Federal Trade Commission.
F. ``Acquisition'' means Reckitt & Colman's acquisition of
substantially all of the assets and liabilities of the household
products, professional products and personal products businesses of L&F
Products Inc. pursuant to an asset purchase agreement dated September
26, 1994, with Eastman Kodak Company, L&F Products Inc., a wholly-owned
subsidiary of Kodak, and Sterling Winthrop Inc., a wholly-owned
subsidiary of L&F Products Inc.
G. ``Carpet Deodorizer Products'' means powder products designed to
combat and eliminate offensive odors in rugs and carpets that are
distributed to consumers primarily through grocery, drug, and mass
merchandise stores. Carpet Deodorizer Products does not include Rug
Cleaning Products.
H. ``Carpet Deodorizer Assets'' means all of Reckitt & Colman's
United States rights, title and interest in and to:
(1) Carpet Deodorizer Products, including, but not limited to, the
brands, trademarks and tradedress ``Carpet Fresh'', ``Rug Fresh''; and
(2) All of Reckitt & Colman's Carpet Deodorizer Products assets and
businesses delineated in Schedule A, attached hereto and made a part
hereof.
Carpet Deodorizer Assets excludes any assets or businesses acquired
in the Acquisition.
I. ``Rug Cleaning Products'' means products designed to clean rugs
and carpets that are applied by aerosol spray, or in liquid, foam or
other forms and that are distributed to consumers primarily through
grocery, drug, and mass merchandise stores. Rug Cleaning Products does
not include Carpet Deodorizer Products.
J. ``Rug Cleaning Assets'' means all of Reckitt & Colman's United
States rights, title and interest in and to:
(1) Rug Cleaning Products, including, but not limited to, the right
to use the brands, trademarks and tradedress ``Woolite Heavy Traffic
Carpet Cleaner'', ``Woolite One Step Carpet Cleaner'', ``Woolite Spot &
Stain Carpet Cleaner'', ``Woolite Fabric and Upholstery Cleaner'', and
``Woolite Pet Stain Carpet Cleaner'' in connection with the production,
marketing and sale of Rug Cleaning Products; and
(2) all of Reckitt & Colman's Rug Cleaning Products assets and
businesses delineated in schedule B, attached hereto and made a part
hereof.
Rug Cleaning Assets excludes any assets or businesses acquired in
the Acquisition.
K. ``Woolite Fabric Care Products'' means products designed to
clean fabric and clothing that are applied by aerosol spray, or in
liquid, foam or other forms and that are distributed to consumers
primarily through grocery, drug, and mass merchandise stores. Woolite
[[Page 3238]] Fabric Care Products excludes Rug Cleaning Products.
L. ``Woolite Assets'' means all of Reckitt & Colman's United States
rights, title and interest in and to:
(1) Woolite Fabric Care Products, including, but not limited to,
the brand and trademark ``Woolite''; and
(2) all of Reckitt & Colman's Woolite Fabric Care Products assets
and businesses delineated in Schedule C, attached hereto and made a
part hereof.
Woolite Assets excludes any assets or businesses acquired in the
Acquisition.
M. ``Air Freshener Products'' means products that are specifically
designed to scent the air in the home that are applied by aerosol
spray, or in liquid, solid, wick or other forms and that are
distributed to consumers primarily through grocery, drug, and mass
merchandise stores.
N. ``Air Freshener Assets'' means all of Reckitt & Colman's United
States rights, title and interest in and to:
(1) Air Freshener Products, including, but not limited to, the
brands and trademarks ``Airwick'', ``Stick Ups'', ``Air Waves'',
``Wizard'', ``Botanicals'', and ``Airwick Neutra Air''; and
(2) all of Reckitt & Colman's Air Freshener Products assets and
businesses delineated in Schedule D, attached hereto and made a part
hereof.
Air Freshener Assets excludes any assets or businesses acquired in
the Acquisition.
II
Divestiture of Carpet Deodorizer Assets
It is ordered that:
A. Reckitt & Colman shall divest the Carpet Deodorizer Assets,
absolutely and in good faith, within six (6) months of the date this
order becomes final, and shall also divest such additional ancillary
assets and effect such arrangements as are necessary to assure the
marketability, viability, and competitiveness of the Carpet Deodorizer
Assets; provided, however, that Reckitt & Colman is not required to
divest nay of the Carpet Deodorizer Assets identified in Schedule A,
Part 2, if such assets are not required by the acquirer.
B. Reckitt & Colman shall divest the Carpet Deodorizer Assets only
to an acquirer that receives the prior approval of the Commission, and
only in a manner that receives the prior approval of the Commission.
The purpose of the divestiture of the Carpet Deodorizer Assets is to
ensure the continuation of the assets as an ongoing, viable enterprise
engaged in the same businesses in which the Carpet Deodorizer Assets
presently are employed, and to remedy the lessening of competition
resulting from the Acquisition as alleged in the Commission's
complaint.
C. Upon reasonable notice from the acquirer of the Carpet
Deodorizer Assets to Reckitt & Colman, for a period of six (6) months
following the date of the divestiture, Reckitt & Colman shall provide
such personnel, information, assistance, advice and training to the
acquirer as is necessary to transfer the Carpet Deodorizer Assets
pursuant to Paragraph II.A. of this order and establish such business
as a viable, ongoing concern. Such assistance shall include reasonable
consultation with knowledgeable employees of Reckitt & Colman as
necessary to satisfy the acquirer's management that its personnel are
appropriately trained in the manufacture, distribution and marketing of
Carpet Deodorizer Products. Reckitt & Colman shall not charge the
acquirer a rate more than its own direct costs for providing such
assistance.
D. Reckitt & Colman shall cooperate and assist the acquirer in
obtaining approvals for the transfer of all registrations, leases,
licenses, certifications, permits, or similar documents relating to the
Carpet Deodorizer Assets.
E. Reckitt & Colman shall take such actions as are necessary to
maintain the viability and marketability of the Carpet Deodorizer
Assets and to prevent the destruction, removal, wasting, deterioration
or impairment of any of the Carpet Deodorizer Assets except in the
ordinary course of business and except for ordinary wear and tear.
III
Rug Cleaning Divestiture
It is further ordered that:
A. Reckitt & Colman shall divest, absolutely and in good faith,
within six (6) months of the date the Commission approves the
Acquisition pursuant to Paragraph V of the order in Docket No. C-3306,
the Rug Cleaning Assets, and shall also divest such additional
ancillary assets and effect such arrangements as are necessary to
assure the marketability, viability, and competitiveness of the Rug
Cleaning Assets; provided, however, that Reckitt & Colman is not
required to divest any of the Rug Cleaning Assets identified in
Schedule B, Part 2, if such assets are not required by the acquirer.
B. Reckitt & Colman shall divest the Rug Cleaning Assets only to an
acquirer that receives the prior approval of the Commission, and only
in a manner that receives the prior approval of the Commission. The
purpose of the divestiture of the Rug Cleaning Assets is to ensure the
continuation of the assets as an ongoing, viable enterprise engaged in
the same businesses in which the Rug Cleaning Assets presently are
employed, and to remedy the lessening of competition resulting from the
Acquisition as described in the Commission's letter approving the
Acquisition.
C. Upon reasonable notice from the acquirer of the Rug Cleaning
Assets to Reckitt & Colman, for a period of six months following the
date of the divestiture, Reckitt & Colman shall provide such personnel,
information, assistance, advice and training to the acquirer as is
necessary to transfer the Rug Cleaning Assets pursuant to Paragraph
III.A. of this order and establish such business as a viable, ongoing
concern. Such assistance shall include reasonable consultation with
knowledgeable employees of Reckitt & Colman to satisfy the acquirer's
management that its personnel are appropriately trained in the
manufacture, distribution and marketing of Rug Cleaning Products.
Reckitt & Colman shall not charge the acquirer a rate more than its own
direct costs for providing such assistance.
D. Reckitt & Colman shall cooperate and assist the acquirer in
obtaining approvals for the transfer of all registrations, leases,
licenses, certifications, permits, or similar documents relating to the
Rug Cleaning Assets.
E. Reckitt & Colman shall take such actions as are necessary to
maintain the viability and marketability of the Rug Cleaning Assets to
prevent the destruction, removal, wasting, deterioration or impairment
of any of the Rug Cleaning Assets except in the ordinary course of
business and except for ordinary wear and tear.
IV
Trustee provisions
It is further ordered that:
A. (1) If Reckitt & Colman has not divested, absolutely and in good
faith and with the Commission's prior approval the Carpet Deodorizer
Assets within six (6) months of the date this order becomes final, the
Commission may appoint a trustee to divest the Carpet Deodorizer Assets
and the Air Freshener Assets; provided, however, that the trustee is
not required to divest any of the Carpet Deodorizer Assets identified
in Schedule A, Part 2, or any of the Air Freshener Assets identified in
Schedule D, Part 2, if such assets are not required by the
acquirer. [[Page 3239]]
(2) If Reckitt & Colman has not divested, absolutely and in good
faith and with the Commission's prior approval the Rug Cleaning Assets
within six (6) months of the date the Commission approves the
Acquisition pursuant to the order in Docket No. C-3306, the Commission
may appoint a trustee to divest the Rug Cleaning Assets and the Woolite
Assets; provided, however, that the trustee is not required to divest
any of the Rug Cleaning Assets identified in Schedule B, Part 2, or any
of the Woolite Assets identified in Schedule C, Part 2, if such assets
are not required by the acquirer.
B. In the event the Commission or the Attorney General brings an
action pursuant to Sec. 5(1) of the Federal Trade Commission Act, 15
U.S.C. Sec. 45(1), or any other statute enforced by the Commission,
Reckitt & Colman 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 or
the Attorney General from seeking civil penalties or any other relief
available to it, including a court-appointed trustee, pursuant to
Section 5(1) of the Federal Trade Commission Act, or any other statute
enforced by the Commission, for any failure by Reckitt & Colman to
comply with this order, or the order in Docket No. C-3306.
C. If a trustee is appointed by the Commission or a court pursuant
to Paragraph IV.A.(1) or Paragraph IV.A.(2) of this order, Reckitt &
Colman shall consent to the following terms and conditions regarding
the trustee's powers, duties, authorities, and responsibilities.
1. The Commission shall select the trustee, subject to the consent
of Reckitt & Colman, which consent shall not be unreasonably withheld.
The trustee shall be a person with experience and expertise in
acquisitions and divestitures. If Reckitt & Colman has not opposed, in
writing, including the reasons for opposing, the selection of any
proposed trustee within ten (10) days after notice by the staff of the
Commission to Reckitt & Colman of the identity of any proposed trustee,
Reckitt & Colman shall be deemed to have consented to the selection of
the proposed trustee.
2. Subject to the prior approval of the Commission and under the
terms and conditions described in Paragraph IV.A. of this order, the
trustee shall have the exclusive power and authority to divest the
Carpet Deodorizer Assets and the Air Freshener Assets, and/or the Rug
Cleaning Assets and the Woolite Assets, together with any additional,
incidental assets of Reckitt & Colman that may be reasonably necessary
to assure the viability and competitiveness of the Carpet Deodorizer
Assets and the Air Freshener Assets, and/or the Rug Cleaning Assets and
the Woolite Assets.
3. Within ten (10) days after the appointment of the trustee,
Reckitt & Colman 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 effect the divestiture(s) require by this order.
4. The trustee shall have twelve (12) months from the date the
Commission approves the trust agreement described in Paragraph IV.C.3.
of this order to accomplish the divestiture(s). If, however, at the end
of the twelve-month period, the trustee has submitted a plan of
divestiture or believes that divestiture(s) can be accomplished 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 only extend the divestiture
period two (2) times.
5. The trustee shall have full and complete access (subject to the
terms and conditions described in Paragraph IV.A. of this order) to the
personnel, books, records, and facilities related to the Carpet
Deodorizer Assets, Air Freshener Assets, Rug Cleaning Assets and
Woolite Assets and to any other relevant information, as the trustee
may reasonably request. Reckitt & Colman shall develop such financial
or other information as such trustee may request and shall cooperate
with the trustee. Reckitt & Colman shall take no action to interfere
with or impede the trustee's accomplishment of the divestiture(s). Any
delays in the divestiture(s) caused by Reckitt & Colman 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. Subject to Reckitt & Colman's absolute and unconditional
obligation to divest at no minimum price the assets described in
Paragraph IV.A. of this order (and subject to the terms and conditions
described in Paragraph IV.A. of this order), and to remedy the
lessening of competition resulting from the Acquisition as alleged in
the Commission's complaint and as described in the Commission's letter
approving the Acquisition, the trustee shall use his or her best
efforts to negotiate the most favorable price and terms available with
each acquirer for each divestiture described in Paragraph IV.A of this
order. If the trustee receives bona fide offers from more than one
acquirer for each divestiture, and if the Commission determines to
approve more than one such acquirer, the trustee shall divest the
assets described in Paragraph IV.A. of this order to each acquirer
selected by Reckitt & Colman from among those approved by the
Commission for each divestiture.
7. The trustee shall serve, without bond or other security, at the
cost and expense of Reckitt & Colman, on such reasonable and customary
terms and conditions as the Commission or a court may set. The trustee
shall have authority to employ, at the cost and expense of Reckitt &
Colman, such consultants, accountants, attorneys, investment bankers,
business brokers, appraisers, and other representatives and assistants
as are reasonably necessary to carry out the trustee's duties and
responsibilities. The trustee shall account for all monies derived from
the sale 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 Reckitt & Colman 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 described in Paragraph
IV.A. of this order.
8. Reckitt & Colman 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
trusteeship, 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 liabilities, claims, or expenses result from
misfeasance, 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 IV.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. The trustee shall have no obligation or authority to operate or
[[Page 3240]] maintain the assets described in Paragraph IV.A. of this
order.
12. The trustee shall report in writing to Reckitt & Colman and to
the Commission every thirty (30) days concerning the trustee's efforts
to accomplish the divestitures.
V
Hold Separate
It is further ordered that Reckitt & Colman shall comply with all
terms of the Agreement to Hold Separate, attached to this order and
made a part hereof as Appendix I. The Agreement to Hold Separate shall
continue in effect according to its terms until Reckitt & Colman has
divested all of the Rug Cleaning Assets and all of the Carpet
Deodorizer Assets as required by this order.
VI
Prior approval
It is further ordered that, for a ten (10) year period commencing
on the date this order becomes final, Reckitt & Colman shall not,
without the prior approval of the Commission, directly or indirectly,
through subsidiaries, partnerships or otherwise:
(1) acquire any stock, share capital, equity or other interest in
any concern, corporate or non-corporate, engaged in at the time of such
acquisition, or within the two years preceding such acquisition engaged
in the development, production, distribution, or sale for resale of
Carpet Deodorizer Products in the United States; or
(2) acquire any assets used or previously used (and still suitable
for use) in the manufacture, distribution, or sale for resale of Carpet
Deodorizer Products in the United States.
Provided, however, that this Paragraph VI shall not apply to the
acquisition of products or services acquired in the ordinary course of
business.
VII
Compliance Reports
It is further ordered that:
A. Within sixty (60) days after the date this order becomes final
and every sixty (60) days thereafter until Reckitt & Colman has fully
complied with the provisions of Paragraphs II, III, IV and V of this
order, Reckitt & Colman shall submit to the Commission a verified
written report setting forth in detail the manner and form in which it
intends to comply, is complying, and has complied with those
provisions. Reckitt & Colman shall include in its compliance reports,
among other things that are required from time to time, a full
description of all substantive contacts or negotiations for each
divestiture, including the identity of all parties contacted. Reckitt &
Colman also shall include in its compliance reports, subject to any
legally recognized privilege, copies of all written communications to
and from such parties, all internal memoranda, and all reports and
recommendations concerning each divestiture.
B. One (1) year from the date this order becomes final and annually
thereafter for nine (9) years on the anniversary date of this order,
Reckitt & Colman shall submit to the Commission a verified written
report setting forth in detail the manner and form in which it has
complied and is complying with this order.
VIII
Access
It is further ordered that, for the purposes of determining or
securing compliance with this order, and subject to any legally
recognized privilege, upon written request and on reasonable notice to
Reckitt & Colman, Reckitt & Colman shall permit any duly authorized
representatives of the Commission:
A. Access, during office hours and in the presence of counsel, to
inspect and copy all books, ledgers, accounts, correspondence,
memoranda and other records and documents in the possession or under
the control of Reckitt & Colman or L&F relating to any matters
contained in this consent order; and
B. Upon five (5) days' notice to Reckitt & Colman, and without
restraint or interference from Reckitt & Colman, to interview officers
or employees of Reckitt & Colman or L&F, who may have counsel present,
regarding such matters.
IX
Corporate Change
It is further ordered that Reckitt & Colman shall notify the
Commission at least thirty (30) days prior to any proposed change in
the corporate respondent 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
that may affect compliance obligations arising out of the order.
Schedule A
Reckitt & Colman shall divest all of the Carpet Deodorizer Products
assets and businesses pursuant to the terms of this order. The assets
and businesses identified in Paragraph I.H.(2) of this order shall
include all assets, properties, business and goodwill, tangible and
intangible, utilized by Reckitt & Colman in the development,
production, distribution and sale of Carpet Deodorizer Products in the
United States, including, but not limited to, the following:
Part 1
(1) all customer lists, vendor lists, catalogs, sales promotion
literature, existing advertising materials, marketing information,
product development information, research materials, technical
information, management information systems, software, inventions,
trade secrets, technology, know-how, specifications, designs, drawings,
processes and quality control data;
(2) intellectual property rights, patents and patent applications
and the formulas, copyrights, trademarks, trade names, tradedress,
service marks, and UPC codes;
(3) all rights, title and interest in and to the contracts entered
in the ordinary course of business with customers (together with
associated bid and performance bonds), suppliers, sales
representatives, brokers and distributors, agents, inventors, product
testing and laboratory research institutions, providers of electronic
data exchange services, personal property lessors, personal property
lessees, licensers, licensees, consignors and consignees;
(4) all rights under warranties and guarantees, express or implied;
(5) all Environmental Protection Agency and all other federal and
state regulatory agency registrations and applications, and all
documents related thereto;
(6) all books, records, files, financial statements, business plans
and supporting documents;
(7) all items of prepaid expense; and
(8) a perpetual license at no royalty to use the brands, trademarks
and tradedress ``Airwick Neutra Air'' and ``Botanicals'' in connection
with the production, marketing and sale of Carpet Deodorizer Products
in the United States.
Part 2
(1) a perpetual license at no royalty to use the brand, trademark
and tradedress ``Airwick'' in connection with the production, marketing
and sale of Carpet Deodorizer Products in the United States;
(2) all machinery, fixtures, equipment, molds, vehicles, furniture,
tools and all other tangible personal property;
(3) inventory; [[Page 3241]]
(4) accounts and notes receivable; and
(5) all rights, title and interest in and to owned or leased real
property, together with appurtenances, licenses and permits.
Schedule B
Reckitt & Colman shall divest all of the Rug Cleaning Products
assets and businesses pursuant to the terms of this order. The assets
and business identified in Paragraph I.J. (2) of this order shall
include all assets, properties, business and goodwill, tangible and
intangible, utilized by Reckitt & Colman in the development,
production, distribution and sale of Rug Cleaning Products in the
United States, including, but not limited to, the following:
Part 1
(1) a perpetual license at no royalty to use the brand, trademark,
and tradedress ``Woolite'' in connection with the production, marketing
and sale of Rug Cleaning Products in or into the United States;
(2) all customer lists, vendor lists, catalogs, sales promotion
literature, existing advertising materials, marketing information,
product development information, research materials, technical
information, management information systems, software, inventions,
trade secrets, technology, know-how, specifications, designs, drawings,
processes and quality control data;
(3) intellectual property rights, patents and patent applications
and the formulas, copyrights, trademarks, trade names, service marks,
and UPC codes;
(4) all rights, title and interest in and to the contracts entered
in the ordinary course of business with customers (together with
associated bid and performance bonds), suppliers, sales
representatives, brokers and distributors, agents, inventors, product
testing and laboratory research institutions, providers of electronic
data exchange services, personal property lessors, personal property
lessees, licensors, licensees, consignors and consignees;
(5) all rights under warranties and guarantees, express or implied;
(6) all Environmental Protection Agency and all other federal and
state regulatory agency registrations and applications, and all
documents related thereto;
(7) all books, records, files, financial statements, business plans
and supporting documents; and
(8) all items of prepaid expense.
Part 2
(1) all machinery, fixtures, equipment, molds, vehicles, furniture,
tools and all other tangible personal property;
(2) inventory;
(3) accounts and notes receivable; and
(4) all rights, title and interest in and to owned or leased real
property, together with appurtenances, licenses and permits.
Schedule C
The trustee shall divest all of the Woolite Fabric Care Products
assets and businesses pursuant to the terms of this order. The assets
and businesses identified in Paragraph I.L.(2) of this order shall
include all assets, properties, business and goodwill, tangible and
intangible, utilized by Reckitt & Colman in the development,
production, distribution and sale of Woolite Fabric Care Products in
the United States, including, but not limited to, the following:
Part 1
(1) all customer lists, vendor lists, catalogs, sales promotion
literature, existing advertising materials, marketing information,
product development information, research materials, technical
information, management information systems, software, inventions,
trade secrets, technology, know-how, specifications, designs, drawings,
processes and quality control data;
(2) intellectual property rights, patents and patent applications
and the formulas, copyrights, trademarks, trade names, tradedress,
service marks, and UPC codes;
(3) all rights, title and interest in and to the contracts entered
in the ordinary course of business with customers (together with
associated bid and performance bonds), suppliers, sales
representatives, brokers and distributors, agents, inventors, product
testing and laboratory research institutions, providers of electronic
data exchange services, personal property lessors, personal property
lessees, licensors, licensees, consignors and consignees;
(4) all rights under warranties and guarantees, express or implied;
(5) all Environmental Protection Agency and all other federal and
state regulatory agency registrations and applications, and all
documents related thereto;
(6) all books, records, files, financial statements, business plans
and supporting documents; and
(7) all items of prepaid expense.
Part 2
(1) all machinery, fixtures, equipment, molds, vehicles, furniture,
tools and all other tangible personal property;
(2) inventory;
(3) accounts and notes receivable, and
(4) all rights, title and interest in and to owned or leased real
property, together with appurtenances, licenses and permits.
Schedule D
The trustee shall divest all of the Air Freshener Products assets
and businesses pursuant to the terms of this order. The assets and
businesses identified in Paragraph I.N.(2) of this order shall include
all assets, properties, business and goodwill, tangible and intangible,
utilized by Reckitt & Colman in the development, production,
distribution and sale of Air Freshener Products in the United States,
including, but not limited to the following:
Part 1
(1) all customer lists, vendor lists, catalogs, sales promotion
literature, existing advertising materials, marketing information,
product development information, research materials, technical
information, management information systems, software, inventions,
trade secrets, technology, know-how, specifications, designs, drawings,
processes and quality control data;
(2) intellectual property rights, patents and patent applications
and the formulas, copyrights, trademarks, trade names, tradedress,
service marks, and UPC codes;
(3) all rights, title and interest in and to the contracts entered
in the ordinary course of business with customers (together with
associated bid and performance bonds), suppliers, sales
representatives, brokers and distributors, agents, inventors, product
testing and laboratory research institutions, providers of electronic
data exchange services, personal property lessors, personal property
lessees, licensors, licensees, consignors and consignees;
(4) all rights under warranties and guarantees, express or implied;
(5) all Environmental Protection Agency and all other federal and
state regulatory agency registrations and applications, and all
documents related thereto;
(6) all books, records, files, financial statements, business plans
and supporting documents; and
(7) all items of prepaid expense. [[Page 3242]]
Part 2
(1) all machinery, fixtures, equipment, molds, vehicles, furniture,
tools and all other tangible personal property;
(2) inventory;
(3) accounts and notes receivable, and
(4) all rights, title and interest in and to owned or leased real
property, together with appurtenances, licenses and permits.
Appendix I--Agreement to Hold Separate
This Agreement to Hold Separate (``Hold Separate'') is by and
between Reckitt & Colman plc (``Reckitt & Colman''), a corporation
organized, existing, and doing business under and by virtue of the laws
of England and Wales, with its office and principal place of business
at One Burlington Lane, London 4W 2RW, England, which does business in
the United States through its wholly-owned subsidiary Reckitt & Colman
Inc., with its offices and principal place of business at 1655 Valley
Road, Wayne, New Jersey 07474-0943; and the Federal Trade Commission
(``the Commission''), an independent agency of the United States
Government, established under the Federal Trade Commission Act of 1914,
15 U.S.C. Sec. 41, et seq. (collectively the ``Parties'').
Premises
Whereas, on September 26, 1994 Reckitt & Colman entered into an
agreement with Eastman Kodak Company (``Kodak'') to acquire
substantially all of the United States assets and liabilities of the
household products, professional products and personal products
businesses of L&F Products Inc. (such assets and businesses hereinafter
referred to as ``L&F''), as well as the voting securities of certain
wholly-owned subsidiaries of L&F or Kodak that sell products outside
the United States (hereinafter ``Acquisition''); and
Whereas, on October 22, 1990, the Commission, with the consent of
Reckitt & Colman, issued its complaint and made final its Order to
settle charges that the acquisition by Reckitt & Colman of the Boyle-
Midway Division of American Home Products Corporation violated Section
7 of the Clayton Act, as amended, 15 U.S.C. Sec. 18, and Section 5 of
the Federal Trade Commission Act (``FTC Act''), as amended, 15 U.S.C.
Sec. 45 (In the Matter of Reckett & Colman plc, FTC Docket No. C-3306);
and
Whereas, the Order in Docket No. C-3306 provides that for a period
of ten (10) years Reckitt & Colman shall not acquire, without the prior
approval of the Commission, directly or indirectly through
subsidiaries, partnerships, or otherwie, any interest in, or the whole
or any part of the stock or share capital of any person or business
that is engaged in the rug cleaning products business in the United
States, or, except in the ordinary course of business, any assets used
or previously used in (and still suitable for use in) the rug cleaning
products business; and
Whereas, Reckitt & Colman products and markets, among other things,
Carpet Deodorizer Products and Rug Cleaning Products, as defined in
Paragraph I of the Agreement Containing Consent Order (``Consent
Agreement'' or ``Consent Order'') to which this Hold Separate is
attached and made a part thereof as Appendix I; and
Whereas, L&F, with its principal office and place of business
located at 225 Summit Avenue, Montvale, New Jersey 07645-1575, produces
and markets, among other things, Carpet Deodorizer Products and Rug
Cleaning Products, as defined in Paragraph I of the Consent Order; and
Whereas, the Commission is now investigating the Acquisition to
determine whether it would violate any of the statutes enforced by the
Commission and whether the Commission should approve the Acquisition
pursuant to the Order in In the Matter of Reckitt & Colman plc, FTC
Docket No. C-3306; and
Whereas, the Commission has determined to grant Reckitt & Colman
the prior approval required for its acquisition of L&F conditioned,
however, upon Reckitt & Colman divesting, as required under the Consent
Agreement, the Carpet Deodorizer Assets and the Rug Cleaning Assets, as
defined in Paragraph I of the Consent Agreement; and
Whereas, if the Commission accepts the Consent Agreement, the
Commission must place it on the public record for a period of at least
sixty (60) days and may subsequently withdraw such acceptance pursuant
to the provisions of Section 2.34 of the Commission's Rules; and
Whereas, the Commission is concerned that if an understanding is
not reached, preserving the status quo ante of the Carpet Deodorizer
Assets and the Rug Cleaning Assets, as defined in Paragraph I of the
Consent Agreement, during the perioid prior to the final acceptance and
issuance of the order by the Commission (after the 60-day public
comment period), divestiture resulting from any proceeding challenging
the legality of the Acquisition might not be possible, or might be less
than an effective remedy; and
Whereas, the Commission is concerned that if the Acquisition is
consummated, it will be necessary to preserve the Commission's ability
to require the divestiture of the Carpet Deodorizer Assets and the Rug
Cleaning Assets, as defined in Paragraph I of the Consent Agreement,
and the Commission's right to have the Carpet Deodorizer Assets and the
Rug Cleaning Assets continue as viable competitors; and
Whereas, the purpose of the Hold Separate and the Consent Agreement
is:
1. to preserve the Carpet Deodorizer Assets, the Air Freshener
Assets, and the Rug Cleaning Assets as viable, independent, ongoing
enterprises, pending the divestiture of the Carpet Deodorizer Assets,
the Air Freshener Assets, and Rug Cleaning Assets required under the
terms of the Consent Agreement;
2. to remedy any anticompetitive effects of the Acquisition; and
3. to preserve the Carpet Deodorizer Assets, the Air Freshener
Assets, and the Rug Cleaning Assets as ongoing and competitive entities
engaged in the same businesses in which they are presently employed
until each of the respective divestitures required under the terms of
the Consent Agreement is achieved; and
Whereas, Reckitt & Colman's entering into this Hold Separate shall
in no way be construed as an admission by Reckitt & Colman that the
Acquisition is illegal; and
Whereas, Reckitt & Colman understands that no act or transaction
contemplated by this Hold Separate shall be deemed immune or exempt
from the provisions of the antitrust laws of the FTC Act by reason of
anything contained in this Consent Agreement.
Now, Therefore, the Parties agree, upon the understanding that the
Commission has not yet determined whether the Acquisition will be
challenged, and in consideration of the Commission's conditional
approval of the Acquisition and its agreement that, at the time it
accepts the Consent Agreement for public comment it will grant early
termination of the Hart-Scott-Rodino waiting period, and unless the
Commission determines to reject the Consent Agreement, it will not seek
further relief from Reckitt & Colman with respect to the Acquisition,
except that the Commission may exercise any and all rights to enforce
this Hold Separate and the Consent Agreement to which it is annexed and
made a part thereof, and the Order in Docket No. C-3306, and in the
event the required divestiture of the Carpet Deodorizer
[[Page 3243]] Assets is not accomplished, to appoint a trustee to seek
divestiture of the Air Freshener Assets as well as the Carpet
Deodorizer Assets, and in the event the required divestiture of the Rug
Cleaning Assets is not accomplished, to appoint a trustee to seek
divestiture of the Woolite Assets as well as the Rug Cleaning Assets,
or to seek civil penalties or a court appointed trust or other
equitable relief, as follows:
1. Reckitt & Colman agrees to execute and be bound by the Consent
Agreement.
2. Reckitt & Colman agrees that from the date this Hold Separate is
accepted until the earlier of the dates listed below in subparagraphs
2.a and 2.b, it will comply with the provisions of paragraph 4 of this
Hold Separate:
a. three (3) business days after the Commission withdraws its
acceptance of the Consent Order pursuant to the provisions of Section
2.34 of the Commission's rules; or
b. the day after the divestiture of the Carpet Deodorizer Assets
required by the Consent Order has been completed.
3. Reckitt & Colman agrees that from the date this Hold Separate is
accepted until the day after the divestiture of the Rug Cleaning Assets
required by the Consent Order has been completed, it will comply with
the provisions of Paragraph 5 of this Hold Separate.
4. Reckitt & Colman agrees to manage and maintain the Carpet
Deodorizer Assets and the Air Freshener Assets, as they are presently
constituted, on the following terms and conditions:
a. Reckitt & Colman shall appoint four individuals, one each from
among Reckitt & Colman's current employees working in Reckitt &
Colman's marketing, sales, materials management, and finance
operations, to manage and maintain the Carpet Deodorizer Assets and the
Air Freshener Assets. These individuals (``the management team'') shall
manage the Carpet Deodorizer Assets and the Air Freshener Assets
independently of the management of Reckitt & Colman's other businesses,
except that these individuals will arrange for the Reckitt & Colman
Carpet Deodorizer Products and the Reckitt & Colman Air Freshener
Products to be marketed and sold by Reckitt & Colman's marketing and
sales forces. The management team shall not thereafter, until the
Carpet Deodorizer Assets are divested pursuant to the Consent Order, be
in any way involved in the marketing, selling or materials management
of any other Reckitt & Colman product.
b. The management team, in its capacity as such, shall report
directly and exclusively to an independent auditor/manager, to be
appointed by Reckitt & Colman. The independent auditor/manager shall
have exclusive control over the operations of the Carpet Deodorizer
Assets and the Air Freshener Assets, with responsibility for the
management of the Carpet Deodorizer Assets and the Air Freshener Assets
and for maintaining the independence of those businesses.
c. Reckitt & Colman shall not exercise direction or control over,
or influence directly or indirectly, the independent auditor/manager or
the management team or any of its operations relating to the operations
of the Carpet Deodorizer Assets and the Air Freshener Assets; provided
however, that Reckitt & Colman may exercise only such direction and
control over the management team and the Carpet Deodorizer Assets and
the Air Freshener Assets as is necessary to assure compliance with this
Hold Separate or the Consent Order.
d. Reckitt & Colman shall maintain the viability and marketability
of the Carpet Deodorizer Assets and the Air Freshener Assets and shall
not cause or permit the destruction, removal, wasting, deterioration,
or impairment of any assets or businesses it may have to divest except
in the ordinary course of business and except for ordinary wear and
tear. Reckitt & Colman shall not sell, transfer, or encumber the Carpet
Deodorizer Assets or the Air Freshener Assets except in the ordinary
course of business, or to effect the divestitures contemplated by the
Consent Order pursuant to the terms of the Consent Order.
e. Except for the management team, Reckitt & Colman shall not
permit any other Reckitt & Colman employee, officer, or director to be
involved in the management of the Carpet Deodorizer Assets or the Air
Freshener Assets except to the extent the services of Reckitt &
Colman's sales, marketing, and materials management personnel are
necessary as set forth in subparagraph 4.a.
f. Except as required by law, and except to the extent that
necessary information is exchanged in the course of evaluating the
Acquisition, defending investigations or defending or prosecuting
litigation, or negotiating agreements to divest assets, Reckitt &
Colman shall not receive or have access to, or the use of, any material
confidential information not in the public domain about the Carpet
Deodorizer Assets or the Air Freshener Assets or the activities of the
management team in managing those businesses, nor shall the management
team receive or have access to, or use of, any material confidential
information not in the public domain about Reckitt & Colman's competing
Carpet Deodorizer Products or Air Freshener Products businesses, or the
activities of Reckitt & Colman in managing its Carpet Deodorizer
Products or Air Freshener Products businesses. Reckitt & Colman may
receive on a regular basis from the management team aggregate financial
information necessary and essential to allow Reckitt & Colman to
prepare United States consolidated financial reports, tax returns, and
personnel reports. Any such information that is obtained pursuant to
this subparagraph shall be used only for the purposes set forth in the
subparagraph. (``Material confidential information'' as used herein,
means competitively sensitive or proprietary information not
independently known to Reckitt & Colman from sources other than the
management team, including, but not limited to, customer lists, price
lists, marketing methods (except to the extent marketing and sales
plans need to be divulged to the Reckitt & Colman marketing and sales
force in the ordinary course of business), patents, technologies,
processes, or other trade secrets).
g. Nothing in this Hold Separate shall prohibit Reckitt & Colman
from providing cash management, tax preparation and/or insurance
functions for the Carpet Deodorizer Assets and the Air Freshener Assets
heretofore provided by Reckitt & Colman. Reckitt & Colman personnel
providing such support services must retain and maintain all material
confidential information relating to the Carpet Deodorizer Assets and
the Air Freshener Assets on a confidential basis and, except as
permitted by this Hold Separate, such persons shall be prohibited from
providing, discussing, exchanging, circulating, or otherwise furnishing
such information to or with any person whose employment involves any
other Reckitt & Colman Carpet Deodorizer Product business or Rug
Cleaning Products business. Reckitt & Colman personnel providing these
support services to the Carpet Deodorizer Assets and the Air Freshener
Assets shall execute a confidentiality agreement prohibiting the
disclosure of any Carpet Deodorizer Assets or Air Freshener Assets
confidential information.
h. Reckitt & Colman shall not change the composition of the
management team, and the independent auditor/manager shall have the
power to remove employees only for cause.
i. All material transactions, out of the ordinary course of
business and not [[Page 3244]] precluded by Paragraph 4 hereof, shall
be subject to a majority vote of the management team. In the case of a
tie, the independent auditor/manager shall cast the deciding vote.
j. Reckitt & Colman shall establish written procedures to be
approved by the independent auditor/manager, covering the management,
maintenance, and independence of the Carpet Deodorizer Assets and the
Air Freshener Assets and the conduct of the management team in
accordance with this Consent Agreement. Reckitt & Colman shall also
circulate to its employees and appropriately display a notice of this
Hold Separate Agreement and Consent Order in the form attached hereto
as Appendix A.
k. All earnings and profits from the Carpet Deodorizer Assets and
the Air Freshener Assets shall be available for use in those businesses
until divestiture. In computing earnings and profits for the Carpet
Deodorizer Assets and the Air Freshener Assets, Reckitt & Colman may
deduct from the revenues generated by the Carpet Deodorizer Assets and
the Air Freshener Assets only direct product costs and indirect
overheads allocated to those businesses.
l. Reckitt & Colman shall make available for use in the Carpet
Deodorizer Assets and the Air Freshener Assets businesses until
divestiture an amount not lower than those budgeted for 1995 and 1996
for advertising, trade promotion, and product development of the
Reckitt & Colman Carpet Deodorizer Products and Air Freshener Products,
and shall increase such spending as deemed reasonably necessary by the
management team in light of competitive conditions. If necessary,
Reckitt & Colman shall provide the management team with any funds to
accomplish the foregoing.
m. Reckitt & Colman shall pay all direct product costs and indirect
overheads for the Carpet Deodorizer Assets and the Air Freshener Assets
businesses. The management team and the independent auditor/manager
shall serve at the cost and expense of Reckitt & Colman, and the Carpet
Deodorizer Assets and the Air Freshener Assets businesses shall not be
charged with the compensation and expenses of the independent auditor/
manager.
n. If the independent auditor/manager ceases to act or fails to act
diligently, a substitute independent auditor/manager shall be appointed
in the same manner as provided in subparagraph 4.b. of this Hold
Separate. Any replacement for independent auditor/manager shall be
appointed with the consent of the Commission.
o. Reckitt & Colman shall indemnify the management team and the
independent auditor/manager against any losses or claims of any kind
that might arise out of involvement under this Hold Separate, except to
the extent that such losses or claims result from misfeasance, gross
negligence, willful or wanton acts, or bad faith by the management team
or the independent auditor/manager.
p. The independent auditor/manager shall report in writing to the
Commission every thirty (30) days concerning the efforts to accomplish
the purposes of this Hold Separate.
5. To ensure the complete independence and viability of L&F and to
assure that no competitive information is exchanged between L&F and
Reckitt & Colman, Reckitt & Colman shall hold L&F as it is presently
constituted separate and apart on the following terms and conditions:
a. L&F, as defined in paragraph I of the Consent Agreement, shall
be held separate and apart and shall be operated independently of
Reckitt & Colman, except to the extent that Reckitt & Colman must
exercise direction and control over L&F to assure compliance with this
Hold Separate Agreement, the Consent Order, or the Order in Docket No.
C-3306.
b. Reckitt & Colman shall assign to L&F its rights under the
transition services agreements and all supply agreements contemplated,
respectively, by Secs. 5.12 and 5.13 of the September 26, 1994, Asset
Purchase Agreement among Eastman Kodak Company, L&F Products Inc.,
Sterling Winthrop Inc., and Reckitt & Colman plc; and, as contemplated
by Secs. 5.12 and 5.13 of the September 26, 1994 Asset Purchase
Agreement, Sterling Winthrop Inc. (``Sterling'') personnel will
continue the support and administrative services being provided by such
Sterling personnel to L&F as of the date this Hold Separate was signed,
and all arrangements, existing on the date this Hold Separate was
signed, that provide for the supply by Sterling of materials to L&F
will remain in place. Reckitt & Colman shall enforce all its rights to
cause such Sterling personnel providing support and administrative
services and maintaining existing supply arrangements to retain and
maintain all material confidential information relating to L&F on a
confidential basis and, except as is permitted by this Hold Separate,
such persons shall be prohibited from providing, discussing,
exchanging, circulating, or otherwise furnishing any such information
to or with any other person whose employment involves any other Reckitt
& Colman business, including the Reckitt & Colman Rug Cleaning Products
business.
c. Reckitt & Colman shall appoint four individuals, one each from
among L&F's current employees working in L&F's marketing, sales,
materials management, and finance operations to manage and maintain
L&F. These individuals, (``the management team'') shall manage L&F
independently of the management of Reckitt & Colman's other businesses.
The management team shall not thereafter, until the Rug Cleaning Assets
are divested pursuant to the Consent Order, be in any way involved in
the marketing, selling or materials management of any competing Reckitt
& Colman products.
d. The management team, in its capacity as such, shall report
directly and exclusively to an independent auditor/manager, to be
appointed by Reckitt & Colman. The independent auditor/manager shall
have exclusive control over the operations of L&F with responsibility
for the management of L&F and for maintaining the independence of those
businesses. Provided, however, that the auditor/manager appointed
pursuant to this Paragraph 5 shall not be the same auditor/manager
appointed pursuant to Paragraph 4.
e. Reckitt & Colman shall not exercise direction or control over,
or influence directly or indirectly, L&F, the independent auditor/
manager or the management team or any of their operations relating to
the operations of L&F; provided however, that Reckitt & Coleman may
exercise only such direction and control over the Management team of
L&F as is necessary to assure compliance with this Hold Separate, the
Consent Order, and the Order in Docket No. C-3306.
f. Except as required by law, and except to the extent that
necessary information is exchanged in the course of evaluating the
Acquisition, defending investigations or defending or prosecuting
litigation, or negotiating agreements to divest assets, Reckitt &
Colman shall not receive or have access to, or the use of, any material
confidential information not in the public domain about L&F or the
activities of the management team in managing L&F; nor shall L&F or the
management team receive or have access to, or use of, any material
confidential information not in the public domain about Reckitt &
Colman's businesses, of the activities of Reckitt & Colman in managing
its businesses. Reckitt & Colman may receive on a regular basis from
L&F aggregate financial information necessary and essential to allow
Reckitt & Colman to [[Page 3245]] prepare United States consolidated
financial reports, tax returns, and personnel reports. Any such
information that is obtained pursuant to this subparagraph shall be
used only for the purposes set forth in this subparagraph. (``Material
confidential information'' as used herein, means competitively
sensitive or proprietary information not independently known to Reckitt
& Colman from sources other than L&F or the management team including,
but not limited to, customer lists, price lists, marketing methods,
patents, technologies, processes, or other trade secrets).
g. Nothing in this Hold Separate shall prohibit Reckitt & Colman
from providing cash management, tax preparation and/or insurance
functions for L&F heretofore provided by Sterling or Kodak. Reckitt &
Colman personnel providing such support services must retain and
maintain all material confidential information relating to L&F on a
confidential basis and, except as permitted by this Hold Separate, such
persons shall be prohibited from providing, discussing, exchanging,
circulating, or otherwise furnishing such information to or with any
person whose employment involves any other Reckitt & Colman Carpet
Deodorizer Product business or Rug Cleaning Products business. Reckitt
& Colman personnel providing these support services to L&F shall not be
involved in any other Reckitt & Colman Carpet Deodorizer Products
business or Rug Cleaning products business, and shall execute a
confidentiality agreement prohibiting the disclosure of any L&F
confidential information.
h. L&F shall be staffed with sufficient employees to maintain the
viability and competitiveness of L&F, which employees shall be selected
from L&F's existing employee base and may also be hired from sources
other than L&F. Each director, officer and management employee of L&F
shall execute a confidentiality agreement prohibiting the disclosure of
any L&F confidential information.
i. Reckitt & Colman shall not change the composition of the
management team and the independent auditor/manager shall have the
power to remove employees only for cause.
j. All material transactions, out of the ordinary course of
business and not precluded by Paragraph 5 hereof, shall be subject to a
majority vote of the management team. In case of a tie, the independent
auditor/manager shall cast the deciding vote.
k. Reckitt & Colman shall establish written procedures to be
approved by the independent auditor/manager, covering the management,
maintenance, and independence of L&F and the conduct of the management
team in accordance with this Consent Agreement.
l. All earnings and profits of L&F shall be retained separately by
L&F. If necessary, Reckitt & Colman shall provided L&F with sufficient
working capital to operate at the rate of operation in effect during
the twelve (12) months preceding the date of this Hold Separate.
m. Reckitt & Colman shall cause L&F to continue to expend funds for
the advertising, trade promotion, and product development of L&F
products at levels not lower than those budgeted for 1995 and 1996, and
shall increase such spending as deemed reasonably necessary by the
management team in light of competitive conditions. If necessary,
Reckitt & Colman shall provide L&F with any funds to accomplish the
foregoing.
n. If the independent auditor/manager ceases to act or fails to act
diligently, a substitute independent auditor/manager shall be appointed
in the same manner as provided in subparagraph 5.d of this Hold
Separate. Any replacement for independent auditor/manager shall be
appointed with the consent of the Commission.
o. The management team and the independent auditor/manager shall
serve at the cost and expense of Reckitt & Colman. Reckitt & Colman
shall indemnify the management team and the independent auditor/manager
against any losses or claims of any kind that might arise out of
involvement under this Hold Separate, except to the extent that such
losses or claims result from misfeasance, gross negligence, willful or
wanton acts, or bad faith by the management team or the independent
auditor/manager.
p. The independent auditor/manager shall report in writing to the
Commission every thirty (30) days concerning the efforts to accomplish
the purposes of this Hold Separate.
6. Should the Commission seek in any proceeding to compel Reckitt &
Colman to divest itself of the Carpet Deodorizer Assets or the Rug
Cleaning Assets or any additional assets, as provided in the Consent
Agreement, or to seek any other equitable relief, Reckitt & Colman
shall not raise any objection based on the expiration of the applicable
Hart-Scott-Rodino Antitrust Improvements Act waiting period or the fact
that the Commission has permitted the Acquisition. Reckitt & Colman
also waives all rights to contest the validity of this Hold Separate.
7. For the purpose of determining or securing compliance with this
Hold Separate, subject to any legally recognized privilege, and upon
written request with reasonable notice to Reckitt & Colman made to its
principal office in the United States, Reckitt & Colman shall permit
any duly authorized representative or representatives of the
Commission:
a. Access, during office hours and in the presence of counsel, to
inspect and copy all books, ledgers, accounts, correspondence,
memoranda, and other records and documents in the possession or under
the control of Reckitt & Colman or L&F relating to compliance with this
Hold Separate; and
b. Upon five (5) days' notice to Reckitt & Colman, and without
restraint or interference from it, to interview officers or employees
of Reckitt & Colman or L&F, who may have counsel present, regarding any
such matters.
8. This Hold Separate shall not be binding until approved by the
Commission.
Appendix A--Divestiture and Requirement for Confidentiality
Reckitt & Colman has entered into a Consent Order and Hold Separate
Agreement with the Federal Trade Commission relating to the divestiture
of certain Reckitt & Colman carpet deodorizer assets and products,
including Carpet Fresh, Rug Fresh, Botanicals, and Airwick Neutra Air;
or alternatively, if that divestiture is not accomplished within six
months, the additional divestiture of certain Reckitt & Colman air
freshener assets and products, including Airwick, Stick Ups, Air Waves,
Wizard, Botanicals, and Airwick Neutra Air. Until such divestitures as
are required by the Consent Order are accomplished, the Reckitt &
Colman carpet deodorizer assets and products, including Carpet Fresh,
Rug Fresh, Botanicals, and Airwick Neutra Air, and the Reckitt & Colman
air freshener assets and products, including Airwick, Stick Ups, Air
Waves, Wizard, Botanicals, and Airwick Neutra Air must be managed and
maintained as a separate, ongoing business, independent of all other
competing lines of Reckitt & Colman as provided by the Agreement to
Hold Separate. All competitive information relating to these product
lines must be retained and maintained by the persons responsible for
the management of these products on a confidential basis and such
persons shall be prohibited from providing, discussing, exchanging,
circulating or otherwise furnishing any such information to or with any
other [[Page 3246]] person whose employment involves any competing
Reckitt & Colman carpet deodorizer or air freshener product. Similarly,
all persons responsible for the management of any competing Reckitt &
Colman carpet deodorizer product or air freshener product shall be
prohibited from providing, discussing, exchanging, circulating or
otherwise furnishing any such information to or with any other person
responsible for the Carpet Fresh, Rug Fresh, Botanicals, or Airwick
Neutra Air carpet deodorizer products, or Airwick, Stick Ups, Air
Waves, Wizard, Botanicals, and Airwick Neutra Air air freshener
products.
Any violation of the Consent Order or the Hold Separate Agreement,
incorporated by reference as part of the Consent Order, subjects the
violator to civil penalties and other relief as provided by law.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted subject
to final approval an agreement containing a proposed consent order from
Reckitt & Colman plc (``Reckitt & Colman'') to resolve competitive
concerns with the proposed acquisition of certain assets and
liabilities of the household products, professional products and
personal products businesses of L&F Products Inc. Under the proposed
order, Reckitt & Colman would divest assets relating to its carpet
deodorizer products business and its rug cleaning products business
(respectively, the ``Carpet Deodorizer Assets'' and the ``Rug Cleaning
Assets'').
The proposed consent order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will review the agreement
and the comments received and will decide whether to withdraw from the
agreement or make final the agreement's proposed order.
The draft complaint alleges that the proposed acquisition, if
consummated, would violate Section 7 of the Clayton Act, 15 U.S.C.
Sec. 18, as amended, and Section 56 of the FTC Act, 15 U.S.C. Sec. 45,
as amended, in the market for carpet deodorizers. Additionally, Reckitt
& Colman is already subject to a Commission order issued to settle
charges that its previous acquisition of the Boyle-Midway Division of
American Home Products Corporation violated Section 7 of the Clayton
Act, 15 U.S.C. Sec. 18, as amended, and Section 5 of the FTC Act, 15
U.S.C. Sec. 45, as amended (In the Matter of Reckitt & Colman plc, FTC
Docket No. C-3306). The Order in Docket No. C-3306 provides that for a
period of ten (10) years Reckitt & Colman shall not acquire, without
the prior approval of the Commission, any interest in, stock of, or any
assets used in the rug cleaning products business. The proposed consent
order would remedy the violation alleged in the draft complaint by
requiring the divestiture of the Carpet Deodorizer Assets.
Additionally, the proposed order would allow Reckitt & Colman to
acquire L&F with the required prior approval of the Commission on the
condition that Reckitt & Colman divest the Rug Cleaning Assets.
The proposed order would require Reckitt & Colman to divest the
Carpet Deodorizer Assets within six (6) months after the proposed order
becomes final. The proposed order also would require Reckitt & Colman
to divest the Rug Cleaning Assets within six (6) months after the
Commission approves Reckitt & Colman's acquisition of L&F pursuant to
the Order in Docket No. C-3306.
Reckitt & Colman would also be required to divest, at the option of
the acquirer of the Carpet Deodorizer Assets, the rights to use the
Airwick brand name in connection with the manufacture and sale of
carpet deodorizer products. In addition, Reckitt & Colman would be
required to divest manufacturing equipment and facilities associated
with the Carpet Deodorizer Assets and Rug Cleaning Assets at the
acquirer(s)' option.
To help ensure the viability of the Carpet Deodorizer Assets and
the Rug Cleaning Assets, Reckitt & Colman would be required to provide
such personnel, information, assistance, advice, and training as are
necessary to transfer these assets pursuant to the order and establish
these businesses as viable, ongoing concerns. In addition, Reckitt &
Colman would be required to assist the acquirer(s) in obtaining
approvals for the transfer of all registrations, leases, licenses,
certifications, permits, or other similar documents relating to the
Carpet deodorizer Assets and the Rug Cleaning Assets.
If Reckitt & Colman fails to divest the Carpet Deodorizer Assets
during the allotted time, a trustee could be appointed to divest,
within twelve (12) months, the Carpet Deodorizer Assets and, in
addition, assets relating to Reckitt & Colman's air freshener products
business (``Air Freshener Assets''). If Reckitt & Colman does not
divest the Rug Cleaning Assets within the allotted time, a trustee
could be appointed to divest, within twelve (12) months, the Rug
Cleaning Assets and, in addition, assets relating to Reckitt & Colman's
Woolite fabric care products business (``Woolite Assets''). If, at the
end of twelve months, the trustee submitted a plan of divestiture or
believed that divestiture could be achieved within a reasonable time,
the time period for divestiture could be extended by the Commission,
or, in the case of a court-appointed trustee, by the court. The
Commission, however, may extend this period only two (2) times.
A Hold Separate Agreement signed by a Reckitt & Colman provides
that until divestiture of the Carpet Deodorizer Assets is completed,
the Reckitt & Colman Carpet Deodorizer Assets and Air Freshener Assets
businesses shall be held separate from and operated independently of
Reckitt & Colman. The Hold Separate Agreement also provides that until
the divestiture of the Rug Cleaning Assets required by the proposed
order is completed, the L&F businesses being acquired by Reckitt &
Colman shall be held separate from and operated independently of
Reckitt & Colman.
The proposed order would require Reckitt & Colman, for a period of
ten (10) years, to obtain the prior approval of the Commission before
acquiring any interest in any other company engaged in the development,
production, distribution, or sale for resale of carpet deodorizer
products in the United States.
Under the proposed order, Reckitt & Colman would be required to
provide to the Commission reports of its compliance with the
divestiture provisions of the order sixty (60) days after the order
becomes final and every sixty (60) days thereafter, until the
divestitures have been completed.
Additionally, one year from the date the order becomes final and
annually thereafter for nine (9) years, Reckitt & Colman would be
required to provide to the Commission a report of its compliance with
the order.
The purpose of this analysis is to facilitate public comment on the
proposed order, and it is not intended to constitute an official
interpretation of the agreement and proposed order or to modify in any
way their terms.
Donald S. Clark,
Secretary.
[FR Doc. 95-759 Filed 1-12-95; 8:45 am]
BILLING CODE 6750-01-M
