[Federal Register Volume 60, Number 20 (Tuesday, January 31, 1995)]
[Notices]
[Pages 5927-5932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2307]
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FEDERAL TRADE COMMISSION
[File No. 941 0124]
Nestle Food Company; Proposed Consent Agreement With Analysis To
Aid Public 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, Nestle, a California-based manufacturer, to
complete its planned acquisition of Alpo PetFoods, but would require
that it divest the Fort Dodge, Iowa, manufacturing plant within twelve
months. The consent agreement also would require Nestle to obtain prior
Commission approval of the divestiture and if not completed on time,
would permit the Commission to appoint a trustee to complete the
transaction. In addition, the consent agreement would require Nestle,
for ten years, to obtain Commission approval before acquiring stock in
any entity engaged in, or assets used for, manufacturing canned cat
food in the United States.
DATES: Comments must be received on or before April 3, 1995.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th Street and Pennsylvania Avenue, NW., Washington, DC
20580.
FOR FURTHER INFORMATION CONTACT:
Ronald Rowe or Stephen Riddell, FTC/S-2105, Washington, DC 20580. (202)
326-2610 or 326-2721.
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 [[Page 5928]] 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 comment 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)).
In the matter of Nestle Food Company, a corporation, File No.
941-0124.
Agreement Containing Consent Order
The Federal Trade Commission (``Commission''), having initiated and
investigation of the proposed acquisition by Nestle Food Company
(``Nestle''), a direct wholly-owned subsidiary of Nestle Holdings,
Inc., a wholly-owned subsidiary of Nestle S.A., of certain assets of
Allen Products Company, Inc., d/b/a ALPO PetFoods, and its subsidiaries
(``Alpo''), a wholly-owned subsidiary of Grand Metropolitan
Incorporated (``Grand Metropolitan''), and it now appearing Nestle,
hereinafter referred to as proposed respondent, and Nestle S.A. are
willing to enter into an Agreement Containing Consent Order
(``Agreement'') to divest certain assets, to cease and desist from
making certain acquisitions, and providing for other relief:
It Is Hereby Agreed By And Between Nestle and Nestle S.A. by their
duly authorized officers and attorneys, and counsel for the Commission
that:
1. Proposed respondent is a corporation organized, existing and
doing business under and by virtue of the laws of the State of
Delaware, with its principal executive offices located at 800 North
Brand Boulevard, Glendale, California 91203.
2. Nestle S.A. is a corporation organized, existing and doing
business under and by virtue of the laws of Switzerland, with its
principal executive offices located at Avenue Nestle 55, Ch-1800 Vevey,
Switzerland.
3. Nestle and Nestle S.A. admit all the jurisdictional facts set
forth in the draft of Complaint.
4. Nestle and Nestle S.A. waive:
(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 claim under the Equal Access to Justice Act.
5. 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 with 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.
6. This Agreement is for settlement purposes only and does not
constitute an admission by Nestle or Nestle S.A. 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.
7. 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
Nestle S.A., (1) issue its Complaint corresponding in form and
substance to 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 United States Postal Service of the
Complaint and decision containing the agreed-to Order to Nestle's
address as stated in this Agreement shall constitute service. Nestle
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.
8. Nestle and Nestle S.A. have read the proposed Complaint and
Order contemplated hereby. Nestle understands that once the Order has
been issued, it will be required to file one or more compliance reports
showing that they have fully complied with the Order. Nestle and Nestle
S.A. further understand that they may be liable for civil penalties in
the amount provided by law for each violation of the Order after it
becomes final.
Order
I.
As used in this Order, the following definitions shall apply:
A. ``Respondent'' or ``Nestle'' means Nestle Food Company, its
parent Nestle S.A., predecessors, subsidiaries, divisions, and
affiliates and groups controlled by Nestle Food Company, their
directors, officers, employees, agents, and representatives, and their
successors and assigns.
B. ``Nestle S.A.'' means Nestle S.A., its predecessors,
subsidiaries, divisions, and affiliates and groups controlled by Nestle
S.A., their directors, officers, employees, agents, and
representatives, and their successors and assigns.
C. ``Alpo'' means Allen Products Company, Inc., its predecessors,
subsidiaries, divisions, and affiliates and groups controlled by Allen
Products Company, Inc., their directors, officers, employees, agents,
and representatives, and their successors and assigns.
D. ``Acquisition'' means the acquisition by Nestle from Alpo of
certain assets of Alpo, as described in an Asset Purchase Agreement
dated September 16, 1994.
E. ``Commission'' means the Federal Trade Commission.
F. The ``assets to be divested'' or ``Fort Dodge Plant'' means the
following assets used in the manufacture of canned pet food, which
assets are located at 2400 5th Avenue South, Fort Dodge, Iowa 50501:
a. All buildings, machinery, fixtures, equipment, vehicles, storage
facilities, furniture, tools, supplies, spare parts and other tangible
personal property;
b. All rights, title and interest in and to real property, together
with appurtenances, licenses, and permits;
c. All rights under warranties and guarantees for equipment,
express or implied;
d. All on site quality control equipment, including all supplies
and technical information and drawings concerning the equipment; and
e. At the option of the Acquirer, to the extent such can be
assigned to the Acquirer without third party consent, all rights,
title, and interests in and to the contracts entered into in the
ordinary course of business with suppliers, personal property lessors
and [[Page 5929]] licensors, pertaining solely to the operation of the
Fort Dodge Plant.
Provided, however, that excluded from the assets to be divested
are: (i) Meat chunk sizer equipment that is proprietary to Nestle and/
or Nestle S.A., and (ii) all inventory of finished goods, work in
progress, raw materials and supplies used only in the production of
finished goods.
G. ``Fort Dodge Plant Employees'' means all Nestle employees based
at the Fort Dodge Plant location as of the date of divestiture.
H. ``Optional Assets'' means any or all of Alpo's recipes for
private label canned pet food that may be licensed without the consent
of any third party and that were in existence as of September 16, 1994.
II
It Is Further Ordered that:
A. Nestle shall divest, absolutely and in good faith, within twelve
(12) months of the date this order becomes final, the Fort Dodge Plant.
B. Nestle shall divest the Fort Dodge Plant 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 Fort Dodge Plant is to ensure the continued use of
the Fort Dodge Plant in the manufacture and production of canned cat
food and to remedy the lessening of competition alleged in the
Commission's complaint.
C. Pending divestiture of the Fort Dodge Plant, Nestle shall take
such actions as are reasonably necessary to maintain the viability and
marketability of the assets to be divested and to prevent the
destruction, removal, wasting, deterioration, or impairment of any
assets that are subject to divestiture pursuant to this Order except
for ordinary wear and tear.
D. Nestle shall comply with all the terms of the Asset Maintenance
Agreement attached to this Order and made a part hereof as Appendix I.
The Asset Maintenance Agreement shall continue in effect until such
time as Nestle has divested all of the assets to be divested.
E. Nestle shall facilitate and not interfere with the Acquirer's
hiring of any Fort Dodge Plant Employees as may desire to undertake
such employment.
III
It Is Further Ordered that:
A. If Nestle has not divested, absolutely and in good faith and
with the Commission's prior approval, the Fort Dodge Plant within
twelve (12) months of the date this Order becomes final, the Commission
may appoint a trustee to divest the assets to be divested. The trustee
shall also have the authority, with the prior approval of the
Commission, to license the Optional Assets on a non-exclusive basis to
the Acquirer for a period not to exceed five (5) years from the date of
the divestiture of the Fort Dodge Plant. In the event the Commission or
the Attorney General brings an action pursuant to section 5(l) of the
Federal Trade Commission Act, 15 U.S.C. 45(l), or any other statute
enforced by the Commission, Nestle 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 available relief, 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 Nestle or
Nestle S.A. to comply with this Order.
B. If a trustee is appointed by the Commission or a court pursuant
to Paragraph III.A. of this Order, Nestle shall consent to the
following terms and conditions regarding the trustee's powers, duties,
authority, and responsibilities:
1. The Commission shall select the trustee, subject to the consent
of Nestle, which consent shall not be unreasonably withheld. The
trustee shall be a person with experience and expertise in acquisition
and divestitures of manufacturing facilities. If Nestle has not
opposed, in writing, the selection of any proposed trustee within ten
(10) days after its receipt of notice by the staff of the Commission to
Nestle of the identity of any proposed trustee, Nestle shall be deemed
to have consented to the selection of the proposed trustee.
2. Subject to the prior approval of the Commission, the trustee
shall have the exclusive power and authority to divest the Fort Dodge
Plant and have the authority to grant to the Acquirer a non-exclusive
license of Optional Assets, as described in Paragraph III.A.; for a
period not to exceed five (5) years from the date of the divestiture of
the Fort Dodge Plant, to facilitate the divestiture.
3. Within ten (10) days after appointment of the trustee, Nestle
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 reasonably
necessary to permit the trustee to effect the divestiture required by
this Order, and, if appropriate, the license of Optional Assets.
4. The trustee shall have twelve (12) months from the date the
Commission approves the trust agreement described in Paragraph
III.B.(3) to accomplish the divestiture, which shall be subject to the
prior approval of the Commission. If, however, at the end of the
twelve-month period, the trustee has submitted a plan of divestiture or
believes that the divestiture can be accomplished within a reasonable
time, the divestiture period may be extended by the Commission, or by
the court in the case of a court-appointed trustee; provided, however,
the Commission may only extend the divestiture period two (2) times.
5. The trustee shall have full and complete access to the
personnel, books, records (to the extent not prohibited by law) and
facilities related to the Fort Dodge Plant, the Optional Assets, or to
any other relevant information, as the trustee may request. Nestle
shall develop such financial or other information as such trustee may
request and shall cooperate with any request of the trustee. Nestle and
Nestle S.A. shall take no action to interfere with or impede the
trustee's accomplishment of the divestiture of the Fort Dodge Plant or
the license of the Optional Assets. Any delays in divestiture caused by
Nestle or Nestle S.A. shall extend the time for divestiture under this
Paragraph in an amount equal to the delay, as determined by the
Commission or by the court for a court-appointed trustee.
6. The trustee shall use his or her best efforts to negotiate the
most favorable price and terms available in each contract that is
submitted to the Commission, subject to respondent's absolute and
unconditional obligation to divest at no minimum price. The divestiture
shall be made in the manner and to the acquirer or acquirers as set out
in Paragraph II of this order; provided, however, if the trustee
receives bona fide offers from more than one acquiring entity, and if
the Commission determines to approve more than one such acquiring
entity, the trustee shall divest to the acquiring entity or entities
selected by respondent from among those approved by the Commission.
7. The trustee shall serve, without bond or other security, at the
cost and expense of Nestle, 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 Nestle, such
consultants, accountants, attorneys, investment bankers, business
brokers, appraisers, and other representatives and assistants as are
necessary, and at reasonable fees, to carry out the trustee's
[[Page 5930]] duties and responsibilities. The trustee shall account
for all monies derived from the divestiture 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 Nestle, 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 divesting the Fort
Dodge Plant.
8. Nestle shall indemnify the trustee and hold the trustee harmless
against any losses, claims, damages, liabilities, or expenses arising
out of, or in connection with, the performance of the trustee's duties,
including all reasonable fees of counsel and other expenses incurred in
connection with the preparation for, or defense of any claim, whether
or not resulting in any liability, except to the extent that such
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 III.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 the divestiture required by this Order.
11. The trustee shall have no obligation or authority to operate or
maintain the Fort Dodge Plant.
12. The trustee shall report in writing to Nestle and to the
Commission every sixty (60) days concerning the trustee's efforts to
accomplish the divestiture.
IV
It Is Further Ordered that, within sixty (60) days after the date
this order becomes final and every sixty (60) days thereafter until
Nestle has fully complied with the provisions of Paragraph II or III of
this order, Nestle 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, or has complied with those provisions. Nestle
shall include in its compliance reports, among other things that are
required from time to time, a full description of all efforts being
made to comply with Paragraphs II and III of the Order, including a
description of all substantive contacts or negotiations for the
divestiture and the identities of all parties contacted. Nestle also
shall include in its compliance reports copies of all written
communications to and from such parties, all internal memoranda, and
all reports and recommendations concerning the divestiture.
V
It Is Further Ordered that, for a period of ten (10) years from the
date this Order becomes final, Nestle and Nestle S.A. 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 manufacturing or
producing canned cat food in the United States; or
2. acquire any assets which are located in the United States and
which are used, or previously used (and still suitable for use) in the
manufacture or production of canned cat food from any other
manufacturer or producer of canned cat food in the United States.
Provided, however, that this Paragraph V. shall not apply to the
acquisition of products or services in the ordinary course of business.
It is Further Ordered that, one year from the date this Order
becomes final, annually for nine (9) years on the anniversary of the
date this Order becomes final, and at other times as the Commission may
require, Nestle shall file with the Commission a verified written
report setting forth in detail the manner and form in which it has
complied and is complying with Paragraph V. this Order.
VII
It Is Further Ordered that, for the purpose of determining or
securing compliance with this Order and subject to any legally
recognized privilege or restriction, Nestle and Nestle S.A. shall
permit any duly authorized representatives of the Commission:
A. Access, during office hours and in the presence of counsel, to
inspect and designate for copying all books, ledgers, accounts,
correspondence, memoranda and other records and documents in the
possession or under the control of Nestle relating to any matters
contained in this Order; and
B. Upon five (5) days' notice to Nestle or Nestle S.A., and without
restraint or interference from them, to interview their officers or
employees, who may have counsel present, regarding such matters.
VIII
It Is Further Ordered that, Nestle and Nestle S.A. shall notify the
Commission at least thirty (30) days prior to any proposed change in
Nestle or Nestle S.A. such as dissolution, assignment, sale resulting
in the emergence of a successor corporation, or the creation or
dissolution of domestic subsidiaries or any other change that may
affect compliance obligations arising out of this Order.
Appendix I--United States of America Before The Federal Trade
Commission
In the matter of Nestle Food Company, a corporation, File No.
941-0124.
Asset Maintenance Agreement
This Asset Maintenance Agreement (``Agreement'') is by and between
Nestle Food Company (``Nestle''), a corporation organized, existing and
doing business under and by virtue of the laws of the state of
Delaware, with its principal executive offices located at 800 North
Brand Boulevard, Glendale, California 91203, and the Federal Trade
Commission (``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 16, 1994, Nestle entered into an Agreement to
acquire certain assets (hereinafter ``Acquisition'') from Allen
Products Company, Inc., d/b/a ALPO PetFoods and its subsidiaries
(``Alpo''); and
Whereas, the Commission is now investigating the Acquisition to
determine whether it would violate any of the statutes enforced by the
Commission; and
Whereas, if the Commission accepts the Agreement Containing Consent
Order (``Consent Order''), 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 Fort Dodge Plant, as defined in Paragraph
I.F. of the Consent Order, and the Optional Assets, as defined in
Paragraph I.H. of the Consent Order, during the period prior to the
Commission's issuance of its Decision and Order (after the 60-day
comment period), divestiture resulting from any proceeding challenging
the legality of the Acquisition might not be [[Page 5931]] possible, or
might be a less than 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 Fort Dodge Plant and, if appropriate,
the license of the Optional Assets and to preserve the Commission's
right to seek to have the Fort Dodge Plant continue as a viable
concern; and
Whereas, the purpose of this Agreement is to:
A. Preserve the Fort Dodge Plant as a viable, ongoing concern
engaged in canned cat food manufacture in which it is presently engaged
until divestiture is achieved; and
B. Maintain and make certain improvements to the Fort Dodge Plant
to ensure it can be effectively divested as a viable independent
facility engaged in the manufacture and production of canned cat food;
and
C. Preserve the Optional Assets pending the divestiture of the Fort
Dodge Plant or, if required under the Consent Order, the license of the
Optional Assets; and
D. Preserve a remedy for any anticompetitive effects of the
Acquisition; and
Whereas, Nestle's entering into this Agreement shall in no way be
construed as an admission by Nestle that the Acquisition is illegal or
anticompetitive; and
Whereas, Nestle understands that no act or transaction contemplated
by this Agreement shall be deemed immune or exempt from the provisions
of the antitrust laws or the Federal Trade Commission Act by reason of
anything contained in this Agreement.
Now, Therefore, upon the understanding that the Commission has not
yet determined whether the Acquisition will be challenged, and in
consideration of the Commission's agreement that, at the time it
accepts the Consent Order for public comment it will grant early
termination of the Hart-Scott-Rodino waiting period, and unless the
Commission determines to reject the Consent Order, it will not seek
further relief from Nestle with respect to the Acquisition (except that
the Commission may exercise any and all rights to enforce this
Agreement and the Consent Order to which it is annexed and made a part
thereof, and in the event that the divestiture required in Paragraph II
of the Consent Order is not accomplished, to appoint a trustee to seek
divestiture of the Fort Dodge Plant and, if required, the license of
the Optional Assets), the Parties agree as follows:
1. Nestle agrees to execute and be bound by the Consent Order.
Nestle and the Commission further agree that each term defined in the
Consent Order shall have the same meaning in this Agreement.
2. Nestle agrees that from the date this Agreement is accepted
until the earlier of the dates listed in subparagraphs 2.a. and 2.b.,
it will comply with the provisions of Paragraph 3. of this Agreement:
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 time that the divestiture required by the Consent Order is
completed.
3. Nestle shall maintain and preserve the viability and
marketability of the Fort Dodge Plant and the Optional Assets on the
following terms and conditions:
a. Nestle shall continue to provide the Fort Dodge Plant with such
support services as provided by Nestle prior to the Acquisition.
b. Nestle shall take all necessary steps to ensure that the Fort
Dodge Plant is staffed with sufficient employees to maintain the
viability and marketability of the Fort Dodge Plant.
c. Nestle shall take all necessary steps to maintain the production
capability of the Fort Dodge Plant in a condition at least equal to
that existing as of the date of this Agreement (``Current Condition'').
Nestle shall continue to make all expenditures necessary to maintain
the Fort Dodge Plant in its Current Condition. Nestle shall maintain
the Fort Dodge Plant in accordance with Nestle usual standards of plant
maintenance.
d. Nestle shall complete all capital improvements in the Fort Dodge
Plant that were initiated prior to the date of this Agreement.
e. Nestle shall take all necessary steps to ensure that the Fort
Dodge Plant is furnished with all the equipment, machine parts and
other assets necessary to produce canned pet food in can sizes in the
range of: (1) Five (5) to six (6) ounces; and (ii) thirteen (13) to
fourteen (14) ounces; and that such equipment, machine parts and other
assets are in good working order.
f. Nestle shall refrain from, directly or indirectly, selling,
disposing of, or causing to be transferred any assets or property of
the Fort Dodge Plant, except that Nestle may sell or otherwise dispose
of manufactured products in the ordinary course of business, and may
replace and sell or dispose of assets or property in the course of
fulfilling its maintenance and capital improvements obligations set
forth above, and may sell the assets or property of the Fort Dodge
Plant pursuant to Paragraph II of the Consent Order.
g. Nestle shall refrain from mortgaging or pledging the assets of
the Fort Dodge Plant or the Optional Assets pursuant to any loan
transaction.
h. Nestle shall maintain hazard insurance on the Fort Dodge Plant
in the same manner as prior to this Agreement to provide for the
facility's replacement.
i. Nestle shall maintain separate cost books and records for the
Fort Dodge Plant, and, upon request, shall make some available to the
Commission. All such books, records and statements shall be kept in a
manner consistent with Nestle standard accounting practices. Nestle
shall provide the Commission with copies of all agreements entered into
by Nestle with third parties relating to any of the Optional Assets.
4. Should the Federal Trade Commission seek in any proceeding to
compel Nestle to divest itself of the Fort Dodge Plant or to license
any Optional Assets, or to seek any other injunctive or equitable
relief, Nestle shall not raise any objection based on the expiration of
the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 or the fact that the Commission has permitted
the Acquisition. Nestle also waives all rights to contest the validity
of this Agreement.
5. For the purpose of determining or securing compliance with this
Agreement, subject to any legally recognized privilege, and upon
written request with reasonable notice to Nestle made to its principal
office, Nestle shall permit any duly authorized representative or
representatives of the Commission:
a. Access during the office hours of Nestle 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 Nestle relating to compliance with
this Agreement;
b. Upon five (5) days' notice to Nestle and without restraint or
interference from it, to interview officers or employees of Nestle, who
may have counsel present, regarding any such matters.
6. In the event the Commission has not finally issued the Consent
Order within one hundred twenty (120) days of its publication in the
Federal Register, Nestle may, at its option, terminate this Agreement
by delivering written notice of termination to the
[[Page 5932]] Commission, which termination shall be effective ten (10)
days after the Commission's receipt of such notice, and this Agreement
shall thereafter be of no further force and effect. If this Agreement
is so terminated, the Commission may take such action as it deems
appropriate, including, but not limited to, an action pursuant to
Section 13(b) of the Federal Trade Commission Act, 15 U.S.C. 53(b).
Termination of this Agreement shall in no way operate to terminate the
Consent Order that Nestle has entered into in this matter.
7. This Agreement shall not be binding until approved by the
Commission.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission has accepted for public comment from
Nestle Food Company (``Nestle''), an agreement containing a consent
order to divest certain assets. The agreement is designed to remedy any
anticompetitive effect stemming from Nestle's acquisition of most of
the assets of Allen Products Company, Inc., d/b/a ALPO PetFoods, and
its subsidiaries (``Alpo''), a wholly-owned subsidiary of Grand
Metropolitan Incorporated (``Grand Metropolitan). Nestle is an indirect
subsidiary of and controlled by Nestle S.A.
The agreement has been placed on the public record for 60 days for
reception of comments from interested persons. Comments received during
this period will become part of the public record. After 60 days, the
Commission will again review the agreement and comments received, and
will decide whether it should withdraw from the agreement or make final
the order contained in the agreement.
The Commission's draft complaint charges that on or about September
16, 1994, Nestle and its parent Nestle S.A. agreed to acquire certain
assets of Alpo, a wholly-owned subsidiary of Grand Metropolitan, for
$510 million. The Commission has reason to believe that the
acquisition, as well as the agreement to enter into the acquisition,
may have anticompetitive effects and be in violation of Section 7 of
the Clayton Act and Section 5 of the Federal Trade Commission Act.
According to the draft complaint, Nestle and Alpo are direct
competitors in the United States market for the manufacture and
production of canned cat food. According to the draft complaint, the
market is highly concentrated and entry is difficult or unlikely.
Nestle acquisition of Alpo may reduce competition in the United States
canned cat food market by eliminating the direct competition between
Nestle and Alpo, by increasing the likelihood that Nestle will become a
dominant firm, and by increasing the likelihood of collusive behavior
among the few remaining significant competitors. Consequently, the
acquisition may lead to higher prices for purchasers of canned cat
food.
The agreement containing consent order attempts to remedy the
Commission's competitive concerns about the acquisition. Under the
terms of the proposed order, Nestle must divest its canned cat food
manufacturing facility located in Fort Dodge, Iowa, within twelve
months, to a purchaser approved by the Commission. The assets to be
divested included: (1) All rights to the real property, buildings,
machinery, fixtures, equipment, furniture, tools, supplies and spare
parts; (2) all warranties and technical information concerning the
equipment; and (3) at the option of the purchaser, all supply contracts
that Nestle has the absolute right to assign. A separate asset
maintenance agreement requires the respondent to maintain the assets
that are to be divested in a marketable and viable condition pending
divestiture.
If Nestle fails to complete the divestiture within the twelve
months, the Commission may appoint a trustee to divest the facility. In
addition, at the option of the purchaser, the trustee is empowered to
grant the purchaser a non-exclusive license to use any and all of
Alpo's wholly-owned private label formulations for the manufacture of
canned cat food. The license may extend up to five years.
For ten years, the agreement containing consent order also requires
Nestle to obtain Commission approval before acquiring either stock in
another company engaged in, or assets used in, the manufacture or
production of canned cat food in the United States.
By accepting the consent order subject to final approval, the
Commission anticipates that the competitive problems alleged in the
complaint will be resolved. The purpose of this analysis is to invite
and facilitate public comment concerning the consent order. It is not
intended to constitute an official interpretation of the agreement and
proposed order or in any way to modify their terms.
Donald S. Clark,
Secretary.
[FR Doc. 95-2307 Filed 1-30-95; 8:45 am]
BILLING CODE 6750-01-M
