B.A.T Industries P.L.C

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

IN THE MA TTER OF BAT. INDUSTRIES P.L.C., ET AL.

SET ASIDE ORDER IN REGARD TO ALLEGED VIOLATION OF SEe. 7 OF THE CLA YTON ACT AND SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket 9271. Consent Order April 1995-Set Aside Order, Aug. , 1999 This order reopens a 1995 consent order -. which required the respondents to divest certain cigarette brands and a cigarette manufacturing facility - and sets aside the prior approval provision pursuant to the Commission s Prior Approval Policy Statement. Thus the consent order is set aside in its entirety because no further obligation remains under the order, besides an annual reporting requirement. ORDER SETTING ASIDE ORDER l.c. ("BAT"), the On April 29, 1999, British American Tobacco p. successor to B.AT Industries p.l.c. and Brown & Williamson Tobacco Corporation, the respondents in the above-referenced order ("Order ), fied its Petition to Reopen and Modify Order ("Petition in this matter. BAT asks that the Commission reopen and modify the Order pursuant to Section 5(b) ofthe Federal Trade Commission Act ("FTC Act ), 15 U. c. 45(b), and Section 2. 51 ofthe Commission Rules of Practice and Procedure, 16 CFR 2. , and consistent with the Statement of Federal Trade Commission Concerning Prior , 1995Approval and Prior Notice Provisions, issued on June 21 ("Policy Statement ' The Petition requests that the Commission reopen and modify the Order to eliminate the prior approval provision in paragraph IV of the Order. The thirt-day comment period on the Petition ended June 29, I 999. No comments were received. for the reasons discussed below, the Commission has determined to grant BA T's Petition. Because there would remain no further affirmative obligations under the Order, besides an annual reporting requirement the Commission has determined to set aside the Order in its entirety. The complaint in this matter alleges that BAT's acquisition of the American Tobacco Company ("A TC") violated Section 5 ofthe FTC Act, as amended, 15 U. c. 45, and Section 7 of the Clayton Act, as amended, 15 U. C. 18 , by lessening competition in the United States 60 Fed, Reg, 39,745-47 (August 3. 1995); 4 Trade Reg, Rep, (CCH) 13,241. , Set Aside Order 128 FT.C. cigarette market. The Order required BAT to divest certain assets of A TC, as defined in the Order. The Commission approved BAT's application for approval to divest the assets to Commonwealth Brands, Inc., and BAT did so. Paragraph IV of the Order prohibits BA T for a ten-year period from acquiring, without the prior approval of the Commission, any stock, share capital, or other interest in any concern engaged in the manufacture in the United States of cigarettes for consumption in the United States; or from acquiring any assets used for the manufacture, distribution, or sale in the United States of cigarettes.

The Commission, in its Policy Statement concluded that a general policy of requiring prior approval is no longer needed " citing the availability of the premerger notification and waiting period requiremcnts of Section 7 A of the Clayton Act, commonly referred to as the Hart-Scott-Rodino ("HSR") Act, 15 U. c. 18a, to protect the public interest in effective merger law enforcement.' The Commission announced that it wil "henceforth rely on the HSR process as its principal means of learning about and reviewing mergers by companies as to which the Commission had previously found a reason to believe that the companies had engaged or attempted to engage in an illegal merger. " As a general matter Commission orders in such cases wil not include prior approval or prior notification requirements. ,,) The Commission stated that it will continue to fashion remedies as needed in the public interest, including ordering narrow prior approval or prior notification requirements in certain limited circumstances. The Commission said in its Policy Statement that " narrow prior approval provision may be used where there is a credible risk that a company that engaged or attempted to engage in an anti competitive merger would, but for the provision, attempt the same or approximately the same merger. " The Commission also said that a narrow prior notification provision may be used where there is a credible risk that a company that engaged or attempted to engage in an anticompctitive merger would, but for an order, engage in an otherwise unreportablc anticompetitivc merger. '" As explained in the Policy Statemcnt, the need for a prior notification requirement will 2 Policy Statement at 2.

1d.

Id. at 3.

, BAT INDUSTRlES P.L.e. , ET AL. 261 259 Set Aside Order depend on circumstances such as the structural characteristics of the relevant markets, the size and other characteristics of the market participants and other relevant factors.

, its The Commission also announced, in its Policy Statement intention "to initiate a process for reviewing the retention or modification of these existing requirements" and invited respondents subject to such requirements "to submit a request to reopen the order. '" The Commission determined that when a petition is filed to reopen and modify an order pursuant to ... (the Policy Statement), the Commission will apply a rebuttable presumption that the public interest requires reopening of the order and modification of the prior approval requirement consistent with the policy announced" in the Policy Statement The presumption is that setting aside the general prior approval requirement of paragraph IV of the Order is in the public interest. There is no evidence in the record that suggests that this matter presents any of the circumstances identified by the Policy Statement as appropriate for retaining a narrow prior approval provision, nor is there any indication of the circumstances that would warrant the substitution of a prior notice provision for the prior approval provision. There is nothing to suggest that the respondent would attempt the same or essentially the same merger that gave rise to the original complaint. In addition, it appears likely that future mergers within the relevant market would be HSR reportable. BA T completed the divestiture required by the Order. Nothing to overcome the presumption having been presented, and because the only remaining obligation under the Order is the prior approval requirement in paragraph IV and the attendant reporting requirements, the Commission has determined to reopen the proceeding in Docket No. 9271 and set aside the Order.

Accordingly, It is hereby ordered That this matter be, and it hereby is, reopened, and that the Commission s order issued on April , 1995 , be, and it hereby is, set aside as of the effective date of this order.

5 Id. at 4 6 Jd Complaint 128 FTC.