Warner Communications, Inc

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF WARNER COMMUNICATIONS, INC., ET AL.

Docket 9174. Interlocutory Order, May 1985. ORDER Respondents have fied several motions requesting that this matter , terminated, either by dismissal of the complaint or by consideraon and eventual acceptance of a proposed consent agreement. In disposition of these and related motions it is hereby ordered ollows:

1. Respondents' application pursuant to Section 3. 23(b) of the Commission s Rules for review of the administrative law judge s order of March 27, 1985, is granted.

2. Respondents' motion to dismiss the complaint is denied. Section 7 of the Clayton Act, 15 U.S.C. 18, prohibits acquisitions having certain anticompetitive effects. The Commission is empowered by Section 11 of the Clayton Act, 15 U. C. 21, to enforce compliance with Section 7. The Commission is similarly empowered by 15 U. C. 45(a) to enforce compliance with the FTC Act. The complaint in this case alleges that the acquisition proposed by the respondents would violate these statutes. The fact that the respondents have not consummated their proposed transaction, and claim to have abandoned it, does not oust this statutory grant of jurisdiction. The Commission s subjectmatter jurisdiction depends on the nature of the alleged ilegal conduct, and not on whether it is ongoing at any particular point during the trial. To hold otherwise would mean that a Commission law enforcement action could be brought to a halt at any time, even after a complaint and injunction have issued, by an abandonment, even a temporary one, of the challenged conduct. The cases indicate that voluntary cessation of unlawful activity is not a basis for halting a law enforcement action. See United States v. Concentrated Phosphate Export Ass ' 393 U. S. 199 (1968); United States v. Trans-Missouri Freight Ass 166 U.s. 290, 309 (1897) (Sherman Act cases). Indeed Section 13(b) of the Clayton Act, 15 U.s.C. 53(b), expressly contemplates adjudication of the merits of the legality of unconsummated mergers when it provides for enjoining a proposed merger pending administrative hearings. And, in fact, the consummation ofthis transaction has been preliminarily enjoined pursuant to Section 13(b) pending Commission adjudication of the matter. FTC u. Warner Communications, Inc. 742 F.2d 1156 (9th Cir. 1984). 342 Interlocutory Order The nonconsummation of the proposed transaction does not affect the Commission s subject-matter jurisdiction, but it may on an appropriate showing justify a conclusion that the matter is moot. Here however, the claim that the allegedly unlawful transaction has been abandoned does not make the matter moot. At a minimum, questions offact remain which prevent us from concluding that "it (is) absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur " in either identical or functionally-equivalent form. United States u. Phosphate Export Ass, supra 393 U.S. at 203; see United States u. W T Grant Co. 345 U.S. 629 (1953). Respondents' additional arguments for dismissal are not persuasive. First, we believe that complaint counsel's demand for a priorapproval term in any final order is not made inappropriate by the Hart-Scott-Rodino Act, since that statute was intended only to ensure that the enforcement agencies receive prior notice of mergers, and nothing in its legislative history suggests that it was intended to supersede the use of fencing-in provisions imposed after a merger has actually been found improper. Second, while we express no view as to the appropriate remedy in this case, we see nothing requiring dismissal in the fact that complaint counsel have offered to settle on terms that were more or less favorable to respondents at different stages of the litigation, since any settlement offer wil refleet the party s assessment ofthe strength of his case as ofthat particular point in the trial. Finally, we find that continuation of the administrative hearings would be in the public interest, because, as we have said, there exist substantial questions of fact as to the risk that a violation may recur. Nothing in this order, however, precludes the administrative law judge from subsequently concluding on an appropriate showing that mootness has been demonstrated or that relief is unnecessary. See United States u. Phosphate Export Ass, supra 393 U.S. at 203-04. 3. Respondents' motion to withdraw this matter from adjudication for consideration of a proposed consent agreement pursuant to Section 3.25(d) ofthe Commission s Rules is denied. Because the proposed settlement is on terms significantly difierent from the terms of Commission orders in similar cases, and because questions offact concerning appropriate remedy remain, we are not satisfied that there is a likelihood of settlement on the terms proposed. 4. Respondents' motion lor leave to reply to complaint counsel's answer to respondents' motion for dismissal ufthe complaint is granted.

5. Complaint counsel' s motion for leave to reply to the motion of respondents to withdraw this matter from adjudication was fied with the Commission on March 25, 1985. A motion for leave to fie a statement of Bureau of Competition Director Timothy J. Muris was fied Interlocutory Order 105 F. with the Commission on April 18, 1985, with the statement attached. The second motion sought leave to address the same questions as the first. Because the Bureau Director is the chief counsel supporting the complaint, we have treated the second motion as a duplicate of the first, which we have granted, and we have treated the statement attached to the second motion as complaint counsel's reply. 6. Respondents' request that their opposition to the motion for leave to fie statement of Bureau Director Timothy Muris be considered as a response to that statement is granted.

7. The administrative law judge is directed to terminate the stay of the adjudicative hearing without unnecessary delay. It is so ordered.

_. , . , n.L - , L... ./U. ,)'w 345 Modifying Order