[Federal Register Volume 61, Number 196 (Tuesday, October 8, 1996)]
[Notices]
[Pages 52796-52797]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25738]
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FEDERAL TRADE COMMISSION
[File No. 961-0067]
Castle Harlan Partners, II, L.P.; 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 or deceptive acts or practices and unfair methods of
competition, this consent agreement, accepted subject to final
Commission approval, would require, among other things, modification of
the planned combination of two of the four major competitors in the
class rings market. The settlement resolves allegations that the
proposed purchase of the class ring businesses of both Town & Country
Corporation and CJC Holdings, Inc. by Class Rings, Inc., which is owned
by Castle Harlan, could have raised prices to the more than 1.6 million
high school and college students who purchase commemorative class rings
in this country every year, by giving one firm nearly 45 percent of all
class rings sold and more than 90 percent of class rings sold in retail
stores. Under the settlement, the merger no longer includes Town &
Country's Gold Lance, Inc. class ring business, which will continue as
an independent competitor.
DATES: Comments must be received on or before December 9, 1996.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.
FOR FURTHER INFORMATION CONTACT:
William J. Baer, Federal Trade Commission, H-374, 6th and Pennsylvania
Ave, NW., Washington, DC 20580. (202) 326-2932.
George Cary, Federal Trade Commission, H-374, 6th and Pennsylvania
Ave, NW., Washington, DC 20580. (202) 326-3741.
Howard Morse, Federal Trade Commission, S-3627, 6th and
Pennsylvania Ave, NW., Washington, DC 20580. (202) 326-2949.
Joseph G. Krauss, Federal Trade Commission, S-3627, 6th and
Pennsylvania Ave, NW., Washington, DC 20580. (202) 326-2713.
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 above-captioned 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. The following Analysis to Aid
Public Comment describes the terms of the consent agreement, and the
allegations in the accompanying complaint. An electronic copy of the
full text of the consent agreement package can be obtained from the FTC
Home page, on the World Wide Web, at ``http://www.ftc.gov/os/actions/
htm.'' A paper copy can be obtained from the FTC Public Reference Room,
Room H-130, Sixth Street and Pennsylvania Avenue, N.W., Washington,
D.C. 20580. 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)).
Analysis To Aid Public Comment on the Provisionally Accepted Consent
Order
The Federal Trade Commission (``the Commission'') has accepted for
public comment an agreement containing a consent order with Class
Rings, Inc., Castle Harlan Partners II, L.P. (``Castle Harlan''), and
the Town & Country Corporation (``Town & Country''). This agreement has
been placed on the public record for sixty days for reception of
comments from 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
with draw from the agreement or make final the agreement's order.
The Commission's investigation of this matter concerns the proposed
acquisition by Class Rings, Inc., a wholly owned subsidiary of Castle
Harlan, of certain assets of Town & Country and CJC Holdings,
Incorporated (``CJC''). The Commission's proposed complaint alleges
that Town & Country and CJC are two of four major manufacturers of
class rings in the United States.
The agreement containing consent order would, if finally accepted
by the Commission, settle charges that the acquisitions may
substantially lessen competition in the manufacture and sale of class
rings in the United States. The Commission has reason to believe that
the acquisitions and agreements violate Section 5 of the Federal Trade
Commission Act and the acquisitions would have anticompetitive effects
and would violate Section 7 of the Clayton Act and Section 5 of the
Federal Trade Commission Act if consummated, unless an effective remedy
eliminates such anticompetitive effects.
The Commission's Complaint alleges that class rings are a uniquely
American phenomenon and that class ring purchasers would not switch to
other products even if prices for class rings increased significantly.
The top four manufacturers of class rings--Jostens, Inc., CJC, Town &
Country, and Herff Jones, Inc.--account for over 95% of all class rings
sold. Moreover, CJC and Town & Country combined account for over 90% of
class rings sold in retail jewelry stores and mass merchandisers. The
Complaint further alleges that new entry into class rings or expansion
by the fringe class ring manufacturers would not be timely or likely to
deter or offset reductions in competition resulting from the proposed
acquisitions. The Commission's Complaint alleges that the proposed
acquisitions would lessen competition by eliminating competition
between CJC and Town & Country, and would lead to higher prices.
The proposed order accepted for public comment contains provisions
that would prohibit Class Rings, Inc., and Castle Harlan from Acquiring
Gold Lance, Inc. (``Gold Lance''), a subsidiary of Town & Country. The
purpose of this provision is to ensure the continuation of Gold Lance
as an independent competitor in the manufacture and sale of class rings
and to remedy the lessening of competition as alleged in the
Commission's Complaint. In effect, this order is equivalent to an
injunction preventing the acquisition of Gold Lance by Class Rings,
Inc., and Castle Harlan, and keeps Gold Lance in the hands of Town &
Country, a company well positioned to compete in the marketplace.
Moreover, the proposed order prohibits Class Rings, Inc., and
Castle Harlan, for a period of ten years, from purchasing any interest
in Town & Country or any assets from Town &
[[Page 52797]]
Country used for the design, manufacture, or sale of class rings
without the prior approval of the Commission. The proposed order also
prohibits Town & Country, for a period of ten years, from purchasing
any interest in Castle Harlan or Class Rings, Inc., or any assets from
Castle Harlan or Class Rings, Inc., used for the design, manufacture,
or sale of class rings without the prior approval of the Commission.
Town & Country, however, may purchase assets from Class Rings, Inc., or
Castle Harlan totaling not more than $2 million in any twelve month
period. The purpose of these provisions is to ensure that Class Rings,
Inc. and Town & Country remain independent from each other, thereby
fostering a competitive environment for the sale of class rings.
The proposed order also prohibits Castle Harlan and Class Rings,
Inc., for a period of one year from the date this proposed order
becomes final, from employing or seeking to employ any person who is or
was employed at any time during calendar year 1996 by Gold Lance or
Town & Country in the design, manufacture or sale of class rings. The
purpose of this provision to ensure that Town & Country, through Gold
Lance, remains a viable competitor in the manufacture and sale of class
rings.
An interim agreement was also entered into by the parties and the
Commission that requires Class Rings, Inc., Castle Harlan, and Town &
Country to be bound by the terms of the proposed order, as if it were
final, from the date that Class Rings, Inc. and Castle Harlan signed
the proposed order.
The purpose of this analysis is to invite public comment concerning
the proposed order. This analysis is not intended to constitute an
official interpretation of the agreement and order or to modify their
terms in any way.
Donald S. Clark,
Secretary.
Statement of Commissioner Mary L. Azcuenaga Concurring in Part and
Dissenting in Part
In Class Rings, Inc., File No. 961-0067
Today the Commission accepts for public comments a consent
agreement resolving allegations that the proposed acquisitions by Class
Rings, Inc., a newly created subsidiary of Castle Harlan Partners II,
L.P., of certain assets of Town & Country Corp. (two subsidiaries, Gold
Lance, Inc., and L.G. Balfour, Inc.) and CJC Holdings, Inc., would be
unlawful. The proposed order prohibits the acquisition of Gold Lance.
I concur, except with respect to the prior approval provisions in
Paragraphs III and IV of the proposed order, which are inconsistent
with the ``Statement of Federal Trade Commission Policy Concerning
Prior Approval and Prior Notice Provisions'' (``Prior Approval Policy
Statement'' or ``Statement''). In its Statement, the Commission
announced that it would ``rely on'' the Hart-Scott-Rodino premerger
notification requirements in lieu of imposing prior approval or prior
notice provisions in its orders. Although the Commission reserved its
power to use prior approval or notice ``in certain limited
circumstances,'' it cited only a single situation in which a prior
approval clause might be appropriate, that is, ``where there is a
credible risk that a company'' might attempt the same merger.
The complaint does not allege any facts showing a ``credible risk''
that the parties might attempt to acquire Gold Lance a second time. Nor
am I aware of any reason to think that the parties have a concealed
plan or intention to circumvent the order by doing so. Of course, as
evidenced by their premerger notification report filed pursuant to the
requirements of the Hart-Scott-Rodino Act, the parties wanted to
acquire Gold Lance, but every merger case involves parties who want to
combine firms or assets.
As I understand it, the primary reason for assuming that the
parties will try again is that they seemed so much to want to
consummate this transaction. The intensity of the parties' interest in
a proposed transaction as perceived by the Commission (even assuming
that we can distinguish between the vigor of their legal representation
and the intensity of their own feelings) has no established predictive
value of the likelihood that parties will again attempt a transaction
now known to be viewed unfavorably by the FTC. In addition, the
intensity of their feelings as perceived by the Commission is unlikely
to result in an evenhanded selection of exceptions to our prior
approval policy.
It also has been suggested that one reason for imposing a prior
approval requirement is that the Commission is prohibiting the
acquisition of Gold Lance, rather than allowing it subject to a
divestiture requirement, under which the Commission supervises the
divestiture. In fact, however, the choice of remedy is not predictive
of the likelihood of recurrence. Once a divestiture has been
accomplished, the Commission has no greater ability to deter a
particular transaction than it will here.
I am most sympathetic to the concern that if the parties attempted
to repeat the transaction in the future, the Commission might be faced
with a significant duplicative expenditure of resources. That is one of
the reasons I dissented from the Commission's Prior Approval Policy
Statement. Dissenting Statement of Commissioner Mary L. Azcuyenaga on
Decision to Abandon Prior Approval Requirements in Merger Orders, 4 CCH
Trade Reg. Rep. para. 13,241 at 20,992 (1995). But given that we have
the policy, it seems to me incumbent on the Commission either to live
by it or to change it.\1\
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\1\ See Dissenting Statement of Commissioner Mary L. Azcuenaga
in The Vons Companies, Inc., Docket No. C-3391 (May 24, 1996).
[FR Doc. 96-25738 Filed 10-7-96; 8:45 am]
BILLING CODE 6750-01-M
