001 0231
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
- COMMISSIONERS:
- Timothy J. Muris, Chairman
- Sheila F. Anthony
- Mozelle W. Thompson
- Orson Swindle
- Thomas B. Leary
In the Matter of
WARNER COMMUNICATIONS INC., a corporation. |
Docket No. C-4025 DECISION AND ORDER |
The Federal Trade Commission having initiated an
investigation of certain acts and practices of Respondent, Warner Communications Inc., and
Respondent having been furnished thereafter with a copy of the draft of Complaint that the
Bureau of Competition proposed to present to the Commission for its consideration and
which, if issued, would charge Respondent with violations of Section 5 of the Federal
Trade Commission Act, as amended, 15 U.S.C. § 45; and
Respondent, its attorneys, and counsel for the Commission
having thereafter executed an Agreement Containing Consent Order ("Consent
Agreement"), containing an admission by Respondent of all the jurisdictional facts
set forth in the aforesaid draft of Complaint, a statement that the signing of said
Consent Agreement is for settlement purposes only and does not constitute an admission by
Respondent that the law has been violated as alleged in such Complaint, or that the facts
as alleged in such Complaint, other than jurisdictional facts, are true, and waivers and
other provisions as required by the Commission's Rules; and
The Commission having thereafter considered the matter and
having determined that it had reason to believe that Respondent has violated the said Act,
and that a Complaint should issue stating its charges in that respect, and having accepted
the executed Consent Agreement and placed such Consent Agreement on the public record for
a period of thirty (30) days for the receipt and consideration of public comments, now in
further conformity with the procedure described in Commission Rule 2.34, 16 C.F.R.
§ 2.34, the Commission hereby issues its Complaint, makes the following
jurisdictional findings and issues the following Order:
- 1. Respondent Warner Communications Inc. 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 75 Rockefeller Plaza,
New York, New York 10019.
-
- 2. The Federal Trade Commission has jurisdiction of the
subject matter of this proceeding and of the Respondent, and the proceeding is in the
public interest.
ORDER
I.
IT IS ORDERED that, as used in this Decision
and Order, the following definitions shall apply:
- A. "WCI" or "Respondent" means Warner
Communications Inc., its directors, officers, employees, agents, representatives,
successors, and assigns; its subsidiaries, divisions, groups, and affiliates controlled by
Warner Communications Inc., except Time Warner Entertainment Company, L.P.; and the
respective directors, officers, employees, agents, representatives, successors, and
assigns of each.
-
- B. "Commission" means the Federal Trade Commission.
C. "Audio Product" means any prerecorded music in any physical, electronic, or
other predominantly audio form or format, now or hereafter known, including, but not
limited to, any compact disc, magnetic recording tape, audio DVD, audio cassette, album,
audiotape, digital audio tape, phonograph record, electronic recording, or digital audio
file (i.e., digital files delivered to the consumer electronically to be stored
on the consumer's hard drive or other storage device).
-
- D. "Video Product" means any prerecorded visual or
audiovisual product in any physical, electronic, or other form or format, now or hereafter
known, including, but not limited to, any videocassette, videotape, videogram, videodisc,
compact disc, electronic recording, or digital video file (i.e., digital files
delivered to the consumer electronically to be stored on the consumer's hard drive or
other storage device), that includes a performance by The Three Tenors.
-
- E. "Seller" means any Person other than Respondent
that produces or sells at wholesale any Audio Product or Video Product.
-
- F. "Joint Venture Agreement" means an agreement
between Respondent and a Seller that provides that the parties to the agreement shall
collaborate in the production or distribution (including, without limitation, through the
licensing of intellectual property) of Audio Products or Video Products.
-
- G. An Audio Product or Video Product is "Jointly
Produced" by Respondent and a Seller when, pursuant to an agreement between
Respondent and such Seller, each contributes significant assets to the production or
distribution of the Audio Product or Video Product (including, without limitation,
personal artistic services, intellectual property, technology, manufacturing facilities,
or distribution networks) to achieve procompetitive benefits. For example and without
limitation, an Audio Product or Video Product is "Jointly Produced" by
Respondent and a Seller when (1) such product is manufactured or packaged by such Seller
and sold at wholesale by Respondent, or (2) such product is manufactured or packaged by
Respondent and sold at wholesale by such Seller.
-
- H. "The Three Tenors" means Jose Carreras, Placido
Domingo and Luciano Pavarotti.
-
- I. "Person" means both natural persons and
artificial persons, including, but not limited to, corporations, partnerships, and
unincorporated entities.
J. "Officer, Director, or Employee" means any officer or director or management
employee of WCI with responsibility for the pricing, marketing, or sale in the United
States of Audio Products or Video Products.
-
- K. "United States" means the fifty states, the
District of Columbia, the Commonwealth of Puerto Rico, and all territories, dependencies,
and possessions of the United States of America.
II.
IT IS FURTHER ORDERED that Respondent shall
cease and desist from, directly, indirectly, or through any corporate or other device, in
or affecting commerce, as "commerce" is defined in the Federal Trade Commission
Act, soliciting, participating in, entering into, attempting to enter into, implementing,
attempting to implement, continuing, attempting to continue, or otherwise facilitating or
attempting to facilitate any combination, conspiracy, or agreement, either express or
implied, with any Seller:
- A. to fix, raise, or stabilize prices or price levels, in
connection with the sale in or into the United States of any Audio Product or any Video
Product; or
-
- B. that prohibits, restricts, regulates, or otherwise places
any limitation on any truthful, non-deceptive advertising or promotion in the United
States for any Audio Product or any Video Product.
III.
IT IS FURTHER ORDERED that:
- A. It shall not, of itself, constitute a violation of
Paragraph II.A. of this Decision and Order for Respondent to enter into, attempt to enter
into, or comply with an agreement to set the prices or price levels for any Audio Product
or Video Product when such agreement is reasonably related to a lawful Joint Venture
Agreement and reasonably necessary to achieve its procompetitive benefits.
-
- B. It shall not, of itself, constitute a violation of
Paragraph II.B. of this Decision and Order for Respondent to enter into, attempt to enter
into, or comply with an agreement that regulates or restricts the advertising or promotion
for any Audio Product or Video Product where such agreement is reasonably related to a
lawful Joint Venture Agreement and reasonably necessary to achieve its procompetitive
benefits.
-
- C. It shall not, of itself, constitute a violation of
Paragraph II.A. of this Decision and Order for Respondent and a Seller to enter into,
attempt to enter into, or comply with an agreement to set the prices or price levels for
any Audio Product or Video Product that is Jointly Produced by Respondent and such Seller.
-
- D. It shall not, of itself, constitute a violation of
Paragraph II.B. of this Decision and Order for Respondent and a Seller to enter into,
attempt to enter into, or comply with an agreement that regulates or restricts the
advertising or promotion for any Audio Product or Video Product that is Jointly Produced
by Respondent and such Seller.
E. It shall not, of itself, constitute a violation of Paragraph II.B. of this Decision and
Order for Respondent to enter into, attempt to enter into, or comply with a written
agreement, industry code, or industry ethical standard that is: (1) intended to prevent or
discourage the advertising, marketing, promotion, or sale to children of Audio Products or
Video Products labeled or rated with a parental advisory or cautionary statement as to
content, and (2) reasonably tailored to such objective.
IV.
IT IS FURTHER ORDERED that:
- A. Within sixty (60) days after the date this Decision and
Order becomes final, Respondent shall submit to the Commission a verified written report
setting forth in detail the manner and form in which that Respondent has complied and is
complying with this Order.
B. One (1) year after the date this Decision and Order becomes final, annually for the
next four (4) years on the anniversary of the date this Decision and Order becomes final,
and at other times as the Commission may require, Respondent 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 this Decision and Order.
V.
IT IS FURTHER ORDERED that Respondent shall
notify the Commission at least thirty (30) days prior to any proposed change in Respondent
such as dissolution, assignment, 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 the order.
VI.
IT IS FURTHER ORDERED that, for the purpose
of determining or securing compliance with this order, upon written request, Respondent
shall permit any duly authorized representative of the Commission:
- A. Access, during office hours and in the presence of counsel,
to all facilities and access 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 Decision and Order; and
-
- B. Upon five (5) days' notice to Respondent and without
restraint or interference from it, to interview officers, directors, or employees of
Respondent.
VII.
IT IS FURTHER ORDERED that Respondent shall:
- A. Within thirty (30) days after the date on which this
Decision and Order becomes final, send a copy of this Decision and Order by first class
mail to each Officer, Director, or Employee;
-
- B. Mail a copy of this Decision and Order by first class mail
to each person who becomes an Officer, Director, or Employee, no later than (30) days
after the commencement of such person's employment or affiliation with Respondent.
VIII.
IT IS FURTHER ORDERED that this Decision and
Order shall terminate on September 17, 2021.
By the Commission, Chairman Muris recused.
Donald S. Clark
Secretary
SEAL
ISSUED: September 17, 2001 |