[Federal Register Volume 60, Number 193 (Thursday, October 5, 1995)]
[Notices]
[Pages 52188-52194]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-24759]
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FEDERAL TRADE COMMISSION
[File No. 951-0107]
First Data Corporation; Consent Agreement With Analysis to Aid
Public Comment
AGENCY: Federal Trade Commission.
ACTION: 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
require First Data, a Hackensack, New Jersey corporation to divest
either the Western Union business acquired through its merger with
First Financial Management Corporation or its own MoneyGram business to
an entity that will operate it in competition with the merged company.
DATES: Comments must be received on or before December 4, 1995.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: William J. Baer, Bureau of
Competition, Federal Trade Commission, H-374, 6th Street & Pennsylvania
Ave., NW., Washington, DC 20580. (202) 326-2932, or Ann Malester,
Bureau of Competition, Federal Trade Commission, S-2307, 6th Street &
Pennsylvania Ave., NW., Washington, DC 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 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)).
Agreement Containing Consent Order
The Federal Trade Commission (``Commission'') having initiated an
investigation of the proposed acquisition of all of the stock of First
Financial Management Corporation (``First Financial'') by First Data
Corporation (``First Data''), and it now appearing that First Data,
hereinafter sometimes referred to as ``proposed respondent,'' is
willing to enter into an agreement containing an Order to divest
certain assets and providing for other relief:
It is hereby agreed by and between proposed respondent, by its duly
authorized officers and attorney, and counsel for the Commission that:
1. Proposed respondent First Data Corporation is a corporation
organized, existing and doing business under and by virtue of the laws
of the State of Delaware with its office and principal place of
business located at 401 Hackensack Avenue, Hackensack, New Jersey
07601.
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 claim 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
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 the
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 proposed
[[Page 52189]]
respondent's address as stated in this agreement 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 it may be liable for civil
penalties in the amount provided by law for each violation of the Order
after it becomes final.
Order
I
It is ordered that, as used in this Order (including Appendix I),
the following definitions shall apply:
A. ``Respondent'' or ``First Data'' means First Data Corporation,
its subsidiaries, divisions, groups and affiliates controlled by First
Data Corporation, and their respective directors, officers, employees,
agents, and representatives, and their respective successors and
assigns.
B. ``First Financial'' means First Financial Management
Corporation, a corporation providing certain services including
consumer money wire transfers through Western Union Financial Services,
Inc.
C. ``Western Union'' means Western Union Financial Services, Inc.,
a wholly-owned subsidiary of First Financial Management Corporation,
with its principal office and place of business located at One Mack
Center Drive, Paramus, New Jersey 07652. Western Union provides and
markets, among other things, consumer money wire transfer services.
D. ``Commission'' means the Federal Trade Commission.
E. ``Acquisition'' means the direct or indirect acquisition of
control of First Financial by Respondent First Data.
F. ``Consumer Money Wire Transfer Service'' means the business of
transferring the right to money using computer or telephone lines from
one person through the location of a Selling Agent to a different
person physically present at the location of a Selling Agent available
to the general public through Selling Agents at retail outlets as
currently offered by First Data and Western Union. ``Consumer Money
Wire Transfer Service'' does not include transactions involving only
one customer utilizing automatic teller machines and other point of
sale devices, transactions involving debit cards, cash advances
utilizing credit cards, home banking, prepaid telephone and cash cards,
money orders, and utility bill payment services and further does not
include the provision of data processing services to a Consumer Money
Transfer Service business.
G. ``Selling Agent'' means a person or business, such as a check
cashing store, a drug store, a supermarket, a postal service, a bus
station, or a travel agency, that contracts with Consumer Money Wire
Transfer Service to provide the Consumer Money Wire Transfer Service to
customers.
H. ``MoneyGram Service'' means First Data's Consumer Money Wire
Transfer Service marketed under the name ``MoneyGram.''
I. ``MoneyGram Assets'' or ``MoneyGram Business'' include all
assets, properties, business and goodwill, tangible and intangible,
related to the sale and marketing of the MoneyGram Service, including,
but not limited to:
1. the MoneyGram trade name, trade dress, trade marks, and service
marks; and,
2. a group of contracts with Selling Agents to provide the
MoneyGram Service that provides a network of Selling Agents at least
comparable to the group of Selling Agents under contract to provide the
MoneyGram Service on May 1, 1995 other than the American Express Travel
Related Services Company Travel Services Offices, based on
characteristics of the Selling Agents such as the countries and cities
served, number of Selling Agents, and type of outlet; provided,
however, that the condition regarding the ``number of Selling Agents''
is satisfied if the number of Selling Agents is 10,000 or greater.
J. ``Western Union Service'' means Western Union's Consumer Money
Wire Transfer Service.
K. ``Western Union Assets'' or ``Western Union Business'' include
all assets, properties, business and goodwill, tangible and intangible,
related to the sale and marketing of the Western Union Service,
including, but not limited to:
1. the Western Union trade name, trade dress, trade marks, and
service marks; and,
2. all contracts with selling agents to provide the Western Union
Service.
L. ``Assets To Be Divested'' means the MoneyGram Assets or the
Western Union Assets. The definition of ``Assets To Be Divested'' as
well as any other provision in this order, however, shall not be
construed to prohibit First Data from divesting both the MoneyGram
Assets and the Western Union Assets to different acquirers.
M. ``Marketability, Viability, and Competitiveness'' of the Assets
To Be Divested means that such assets when used in conjunction with the
assets of the acquirer or acquirers are capable of providing a Consumer
Money Wire Transfer Service substantially similar to the Consumer Money
Wire Transfer Service that the Assets To Be Divested are capable of
providing at the time of the Acquisition.
N. ``Non-public information'' means any information not in the
public domain furnished to First Data in its capacity as a provider of
data processing services by a Consumer Money Wire Transfer Service
provider.
II
It is further ordered that:
A. Respondent shall divest, absolutely and in good faith, within
twelve (12) months after the date this Order becomes final, the Assets
To Be Divested and shall also divest such additional ancillary assets
and businesses other than money order or utility bill payments
businesses and effect such arrangements as are necessary to assure the
Marketability, Viability, and Competitiveness of the Assets To Be
Divested.
B. Respondent shall divest the Assets To Be Divested only to an
acquirer or acquirers that receive 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 Assets To Be Divested
is to ensure the continued use of the Assets To Be Divested in the same
businesses in which the Assets To Be Divested are presently engaged,
and to remedy the lessening of competition resulting from the
Acquisition as alleged in the Commission's complaint.
C. Respondent shall make available to the acquirer or acquirers
such First Data personnel, assistance and training as the acquirer or
acquirers reasonably need to transfer technology and know-how, and
First Data shall continue providing such personnel, assistance and
training at no additional cost for a period of time sufficient to
satisfy the acquirer's or acquirers' management that its personnel are
appropriately trained in the business. However, Respondent shall not be
required to continue providing such personnel, assistance
[[Page 52190]]
and training for more than six (6) months after the Assets To Be
Divested are divested pursuant to this Order.
D. Pending divestiture of the Assets To Be Divested, Respondent
shall take such actions as are necessary to maintain the marketability,
Viability, and Competitiveness of the Assets To Be Divested, and to
prevent the destruction, removal, wasting, deterioration or impairment
of any of the Assets To Be Divested except for ordinary wear and tear.
Provided, however, that nothing in this Paragraph shall be construed to
prohibit First Data from competing in the ordinary course of business.
E. Respondent 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 until such time
as Respondent has divested all Assets To Be Divested as required by
this Order.
III
It is further ordered that:
A. If First Data has not divested, absolutely and in good faith,
and with the Commission's prior approval, the Assets To Be Divested
within the time period specified in Paragraph II.A. of this Order, the
Commission may appoint a trustee to divest the Western Union Assets. In
the event that the Commission or the Attorney General brings an action
pursuant to Sec. 5(l) of the Federal Trade Commission Act, 15 U.S.C.
Sec. 45(l), or any other statute enforced by the Commission, First Data
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 Sec. 5(l) of the
Federal Trade Commission Act, or any other statute enforced by the
Commission, for any failure by the Respondent 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, Respondent 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 Respondent, which consent shall not be unreasonably withheld. The
trustee shall be a person with experience and expertise in acquisitions
and divestitures. If Respondent 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 Respondent
of the identity of any proposed trustee, Respondent 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 Western
Union Assets.
3. Within ten (10) days after appointment of the trustee,
Respondent 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 permit the trustee to effect the divestiture required by
this Order.
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 of the Western Union Assets, which
shall be subject to the prior approval of the Commission. If, however,
at the end of the twelve (12) month period, the trustee has submitted a
plan of divestiture or believes that divestiture can be achieved 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 extend this period only two (2)
times.
5. The trustee shall have full and complete access to the
personnel, books, records and facilities related to the Western Union
Assets or to any other relevant information, as the trustee may
request. Respondent shall develop such financial or other information
as such trustee may request and shall cooperate with the trustee.
Respondent shall take no action to interfere with or impede the
trustee's accomplishment of the divestitures. Any delays in divestiture
caused by Respondent 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. 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 Respondent, on such reasonable and customary terms
and conditions as the Commission or a court may set. The trustee shall
have the authority to employ at the cost and expense of Respondent,
such consultants, accountants, attorneys, investment bankers, business
brokers, appraisers, and other representatives and assistants as are
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 the Respondent, 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 Western Union Assets.
8. Respondent 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, losses, damages, claims, or expenses result from
misfeasance, gross 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
this Paragraph 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 Western Union Assets.
12. The trustee shall report in writing to Respondent and the
Commission every thirty (30) days concerning the trustee's efforts to
accomplish divestiture.
[[Page 52191]]
IV
It is further ordered that if First Data divests the MoneyGram
Assets pursuant to Paragraph II. of this Order, First Data shall not
enter into any Consumer Money Wire Transfer Service contract with any
Selling Agent who is under contract to provide the MoneyGram Service at
the time of the divestiture; provided, however, that First Data may
enter into such a Consumer Money Wire Transfer Service contract (i)
after the time the Selling Agent's contract with First Data would have
expired had the divestiture not occurred, determined without regard to
any contract extension or renewal that could occur after the date of
the divestiture, (ii) if the contract is terminated in accordance with
its terms other than as may be permitted as a result of the divestiture
of the MoneyGram Assets or (iii) if the First Data Consumer Money Wire
Transfer Service being provided is a transfer service utilizing
automatic teller machines or any other point of sale device, and the
MoneyGram Service contract upon its terms would not have barred the
Selling Agent from entering into such a contract.
V
It is further ordered that nothing in this Order shall be construed
as prohibiting First Data from entering into agreements with any
Consumer Money Wire Transfer Service provider, including the acquirer
or acquirers of the MoneyGram Business and the Western Union Business,
for the provision of data processing services provided that:
A. Any such agreement entered into within eighteen (18) months of
the date of the divestiture does not run for a period of more than two
years;
B. No First Data officer, employee or agent who is involved in
providing First Data's Consumer Money Wire Transfer Service receives
non-public information of any other Consumer Money Wire Transfer
Service provider;
C. First Data uses any non-public information obtained by First
Data only in First Data's capacity as a provider of data processing
services; and
D. First Data delivers a copy of this Order to each officer,
employee or agent involved in marketing First Data's Consumer Money
Wire Transfer Service or in providing data processing to any other
Consumer Money Wire Transfer Service provider prior to First Data's
obtaining any non-public information relating to the provider's
business.
VI
It is further ordered that:
A. Within sixty (60) days after the date this Order becomes final
and every sixty (60) days thereafter until Respondent has fully
complied with the provision of Paragraphs II. and III. of this Order,
Respondent 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 Paragraphs II. and III. of
this Order. Respondent shall include in its compliance reports, among
other things that are required from time to time, a full description of
the 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 identity of all parties
contacted. Respondent 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 divestiture.
B. One (1) year from the date this Order becomes final, annually
for the next nine (9) years on the anniversary of the date this Order
becomes final, and at such other times as the Commission may require,
Respondent shall file a verified written report with the Commission
setting forth in detail the manner and form in which it has complied
and is complying with Paragraphs IV. and V. of this Order.
VII
It is further ordered that Respondent shall notify the Commission
at least thirty (30) days prior to any proposed change in the corporate
Respondent such as dissolution, assignment, or 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 this Order.
VIII
It is further ordered that, for the purpose of determining or
securing compliance with this Order, subject to any legally recognized
privilege, and upon written request with reasonable notice to First
Data made to its General Counsel, Respondent shall permit any duly
authorized representative of the Commission.
A. Access during office hours of First Data 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 Respondent relating to any matters
contained in this Order; and
B. Upon five days' notice to Respondent and without restraint or
interference from it, to interview officers, director, or employees of
Respondent, who may have counsel present regarding such matters.
Appendix I
Agreement to Hold Separate
This Agreement to Hold Separate (the ``Agreement'') is by and
between First Data Corporation (``First Data''), a corporation
organized, existing, and doing business under and by virtue of the
laws of the State of Delaware, with its office and principal place
of business at 401 Hackensack Avenue, Hackensack, New Jersey 07601;
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. 41, et
seq. (collectively, the ``Parties'').
Premises
Whereas, First Data has proposed to acquire, directly or
indirectly, all of the voting stock or substantially all of the
assets of First Financial Management Corporation (``First
Financial''), (hereinafter ``Acquisition''); and
Whereas, First Data, with its principal office and place of
business located at 401 Hackensack Avenue, Hackensack, New Jersey
07601, provides and markets, among other things, Consumer Money Wire
Transfer Services; and
Whereas, First Financial, with its principal office and place of
business located at 3 Corporate Square, Suite 700, Atlanta, Georgia,
30329, provides and markets, among other things, Consumer Money Wire
Transfer Services; 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 attached 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 status quo ante of the MoneyGram
Business during the period prior to the final acceptance of the
Consent Order by the Commission (after the 60-day public notice
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 Assets To Be Divested as
described in Paragraph I. of the Consent Order and the Commission's
right to have the MoneyGram Business continued as a viable
competitor; and
Whereas, the purpose of the Agreement and the Consent Order is:
[[Page 52192]]
1. To preserve the viability of the MoneyGram Business pending
the divestiture of the Assets To Be Divested as a viable and ongoing
enterprise,
2. To remedy any anticompetitive effects of the Acquisition, and
3. To preserve the MoneyGram Business as an ongoing and
competitive Consumer Money Wire Transfer Service until divestiture
is achieved; and
Whereas, First Data's entering into this Agreement shall in no
way be construed as an admission by First Data that the Acquisition
is illegal; and
Whereas, First Data 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, 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 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 First Data with respect
to the Acquisition, except that the Commission may exercise any and
all rights to enforce this Agreement to Hold Separate and the
Consent Order to which it is annexed and made a part thereof, and in
the event the required divestiture is not accomplished, to appoint a
trustee to seek divestiture of the Western Union Assets pursuant to
the Consent Order, as follows:
1. First Data agrees to execute and be bound by the attached
Consent Order.
2. First Data agrees that from the date this Agreement is
accepted until the earliest of the dates listed in subparagraphs
2.a. - 2.b., it will comply with the provisions of Paragraph 3. of
this Agreement:
a. three 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;
b. the day after the divestiture required by the Consent Order
has been completed.
3. To ensure the complete independence and viability of the
MoneyGram Business and to assure that no competitive information is
exchanged between the MoneyGram Business and First Data, First Data
shall hold the MoneyGram Business separate and apart on the
following terms and conditions:
a. First Data will appoint three individuals to manage and
maintain the MoneyGram Business. These individuals (``the management
team'') shall manage the MoneyGram Business independently of the
management of First Data's other businesses. The individuals on the
management team shall not be involved in any way in the marketing,
selling or management of any other First Data business, including
the Western Union Business.
b. The management team, in its capacity as such, shall report
directly and exclusively to an independent auditor/manager, to be
appointed by First Data. The independent auditor/manager shall have
expertise in management and marketing. The independent auditor/
manager shall have exclusive control over the operations of the
MoneyGram Business, with responsibility for the management of the
MoneyGram Business and for maintaining the independence of that
business.
c. First Data 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 MoneyGram Business; provided, however, that First
Data may exercise only such direction and control over the
independent auditor/manager, management team and MoneyGram Business
is necessary to assure compliance with this Agreement and with all
applicable laws.
d. First Data shall maintain the Marketability, Viability, and
Competitiveness of the MoneyGram Assets and shall not sell,
transfer, encumber (other than in the normal course of business), or
otherwise impair their Marketability, Viability or Competitiveness.
e. Except for the management team, sales and marketing employees
involved in the MoneyGram Business, and support service employees
involved in the MoneyGram Business, such as Human Resource, Legal,
Tax, Accounting, Insurance, and Internal Audit employees, First Data
shall not permit any other First Data employee, officer, or director
to be involved in the management of the MoneyGram Business. Sales
and marketing employees involved in the MoneyGram Business, shall
not be involved in any other First Data business, including the
Western Union Business. Support service employees involved in the
MoneyGram Business shall not be involved in the Western Union
Business.
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 litigation, or negotiating
agreements to divest assets, First Data, other than sales and
marketing employees involved in the MoneyGram Business, or support
service employees involved in the MoneyGram Business, shall not
receive or have access to, or the use of, any material confidential
information about the MoneyGram Business, the activities of the
management team, sales and marketing employees involved in the
MoneyGram Business, or support service employees involved in the
MoneyGram Business in managing that business not in the public
domain, nor shall the management team, sales and marketing employees
involved in the MoneyGram Business, or support service employees
involved in the MoneyGram Business receive or have access to, or the
use, any material confidential information about the Western Union
Business or the activities of First Data in managing the Western
Union Business not in the public domain. Any such information that
is obtained pursuant to this subparagraph shall be used only for the
purpose set forth in this subparagraph. (``Material confidential
information,'' as used herein, means competitively sensitive or
proprietary information not independently known to:
(a) First Data, with regard to the MoneyGram Business, from
sources other than the management ream, sales and marketing
employees involved in the MoneyGram Business, or support service
employees involved in the MoneyGram Business; or
(b) the management team, sales and marketing employees involved
in the MoneyGram Business, or support service employees involved in
the MoneyGram Business with regard to the Western Union Business and
includes but is not limited to customer lists, price lists,
marketing methods, patents, technologies, processes, or other trade
secrets.)
g. First Data shall not change the composition of the management
team unless the independent auditor/manager consents. The
independent auditor/manager shall have the power to remove members
of the management team and to require First Data to appoint
replacement members to the management team in the same manner as
provided in Paragraph 3.a. of this Agreement to Hold Separate.
h. First Data shall circulate to all its employees involved with
the MoneyGram Business, Western Union Business, or the data
processing services provided to either the MoneyGram or Western
Union Businesses, and appropriately display, a notice of this Hold
Separate Agreement and Consent Order in the form attached hereto as
Attachment A.
i. First Data shall make available for use in the MoneyGram
Business until divestiture of the Assets To Be Divested is
accomplished an amount of money for advertising and trade promotion
of the MoneyGram Service not lower than $24 million annually, with
no less than $10 million for any two consecutive quarters. First
Data shall pay all direct costs and indirect overheads for the
MoneyGram Business. The MoneyGram Business shall not be charged with
the compensation and expenses of the independent auditor/manager.
j. First Data shall make available for use in the MoneyGram
Business until divestiture of the Assets To Be Divested an amount of
money needed to provide an additional 20 percent sales commission to
the MoneyGram Business sales force on all MoneyGram agent renewals
and MoneyGram agent recruitments above and beyond the 1995 sales
commission rate for MoneyGram agent renewals and MoneyGram agent
recruitments.
k. The independent auditor/manager shall serve at the cost and
expense of First Data. First Data shall indemnify the independent
auditor/manager against any losses or claims of any kind that might
arise out of his or her involvement under this Agreement to 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 independent auditor/manager.
l. If the independent auditor/manager ceases to act or fails to
act diligently, a substitute auditor/manager shall be appointed in
the same manner as provided in Paragraph 3.b. of this Agreement to
Hold Separate.
m. The independent auditor/manager shall have access to and be
informed about all
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companies who inquire about, seek or propose to buy the MoneyGram
Assets. First Data may require the independent auditor/manager to
sign a confidentiality agreement prohibiting the disclosure of any
material confidential information gained as a result of his or her
role as independent auditor/manager to anyone other than the
Commission.
n. All material transactions, out of the ordinary course of
business and not precluded by subparagraphs 3.a.-3.n. 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.
o. The independent auditor/manager shall report in writing to
the Commission every thirty (30) days concerning the independent
auditor/manager's efforts to accomplish the purposes of this
Agreement to Hold Separate.
4. Should the Federal Trade Commission seek in any proceeding to
compel First Data to divest itself of the MoneyGram Assets or the
Western Union Assets, or to seek any other equitable relief, First
Data 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. First Data 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 First Data made to
its General Counsel, First Data shall permit any duly authorized
representative or representatives of the Commission:
a. Access during the office hours of First Data 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 First Data relating to
compliance with this Agreement; and
b. Upon five days' notice to First Data, and without restraint
or interference from it, to interview officers or employees of First
Data, who may have counsel present, regarding any such matters.
6. This Agreement shall not be binding until approved by the
Commission.
Attachment A
Notice of Divestiture and Requirement for Confidentiality
First Data Corporation (``First Data'') has entered into Consent
Agreement and Agreement To Hold Separate with the Federal Trade
Commission relating to the divestiture of the MoneyGram Business or
the Western Union Business. Until after the Commission's Order
becomes final and First Data's interest in either the MoneyGram
Business or the Western Union Business is divested, the MoneyGram
Business must be managed and maintained as a separate, ongoing
business, independent of all other First Data businesses and
independent of Western Union Business. All competitive information
relating to the MoneyGram Business, except information received by
First Data in connection with the provision of data processing
services to the MoneyGram Business as described in and protected by
the confidentiality provision of Paragraph V. of the Consent Order,
must be retained and maintained by the persons involved in the
MoneyGram Business 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
person whose employment involves any other First Data business,
including the Western Union Business. Similarly, all such persons
involved in the Western Union Business shall be prohibited from
providing, discussing, exchanging, circulating or otherwise
furnishing competitive information about such business to or with
any person whose employment involves the MoneyGram business.
Any violation of the Consent Agreement or the Agreement to Hold
Separate, incorporated by reference as part of the Consent Order,
may subject First Data 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 First Data Corporation (``First Data''), under
which First Data would divest either the MoneyGram or Western Union
consumer money wire transfer business.
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 days, the Commission will again review the
agreement and the comments received, and will decide whether it
should withdraw from the agreement or make final the agreement's
proposed Order.
On June 13, 1995, First Data and First Financial Management
Corporation (``First Financial'') agreed to merge in a stock swap
valued at $6.7 billion. Under the proposed agreement, First
Financial shareholders would receive 1.5859 shares of First Data
stock for each share of First Financial.
The proposed complaint alleges that the proposed merger, if
consummated, would constitute a violation of Section 7 of the
Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the FTC Act,
as amended, 15 U.S.C. 45, in the market for consumer money wire
transfer services. A consumer money wire transfer is a unique method
of transferring cash between two people in different geographic
locations that is quick, secure and convenient to use. First Data
currently provides consumer money wire transfers through its
MoneyGram business. First Financial currently provides consumer
money wire transfers through its subsidiary, Western Union Financial
Services, Inc. These two companies are currently the only two
domestic consumer money wire transfer services. No potential entrant
is well-situated to overcome the high barriers to entry and deter or
counteract the anticompetitive effects of the proposed merger. As a
consequence, the combination of these two companies is likely to
result in a monopoly and lead to anticompetitive effects such as
higher prices and reduced services in the United States consumer
money transfer market.
The proposed Consent Order would remedy the alleged violation by
replacing the lost competition that would result from the merger of
First Data and First Financial. The proposed Consent Order provides
that, within twelve (12) months after the date the Order becomes
final, First Data shall divest either the consumer money wire
transfer assets of MoneyGram or those of Western Union. If First
Data is unable to divest these assets during the allotted time
period, then a trustee may be appointed to divest the Western Union
assets within a (12) month period. If, at the end of the twelve
month period, the trustee has submitted a plan of divestiture or
believes that divestiture can be achieved within a reasonable time,
the time period for divestiture can 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 First Data provides that
until the MoneyGram or Western Union consumer money wire transfer
assets are divested, the MoneyGram assets will be operated
independently of the Western Union assets. Under the provisions of
the Order within sixty (60) days following the date this Order
becomes final, and every sixty (60) days thereafter until First Data
has completely divested its interest in either the MoneyGram or
Western Union assets.
The Order also provides that, if First Data divests the
MoneyGram assets, First Data would then be prohibited from entering
into a contract with any selling agent who is under contract to
provide the MoneyGram service at the time of the divestiture.
However, the Order does permit First Data to enter into a contract
with such an agent after the agent's contract with First Data would
have expired absent the divestiture.
The Order expressly allows First Data to supply data processing
services to other consumer money wire transfer suppliers, provided
that it shield any First Data employee who is involved in providing
First Data's consumer money wire transfer provider. This provision
will allow competing consumer money wire transfer companies to use
First Data's data processing service while preventing the
facilitation of collusion that could occur as a result of the
transfer of proprietary information from other consumer money wire
transfer providers to First Data, through its role as a data
processor.
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.
Statement of Commissioner Christine A. Varney, Merger of First
Financial Management Corp. and First Data Corp. [File No. 951-0107]
The First Financial/First Data merger represents another
milestone in the fast-
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paced development of electronic payment systems. While combinations
such as this may have efficiency driven, pro-competitive effects, I
remain concerned about increased concentration in the merchant
acquirer services industry. This market is growing dramatically, and
is increasingly central to back-end processing of credit card
purchases. I expect that we will soon see additional acquisitions in
the merchant acquirer services industry and, in that light, I have
asked the Staff of the Commission to continue to monitor the
competitive situation in this evolving market.
[FR Doc. 95-24759 Filed 10-4-95; 8:45 am]
BILLING CODE 6750-01-M
