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It is further ordered, That respondent shall, within sixty (60) days from the date of service of this order, and every sixty (60) days thereafter until the divestitures are fully effected, and every one hundred eighty (180) days thereafter until it has fully complied with the provisions of this order, submit to the Commission a detailed written report of its actions, plans, and progress in complying with the divestiture provisions of this order, and fulfilling its objectives. All reports shall include, among other things that will be from time to time required, a summary of all contacts and negotiations with any person or persons interested in acquiring the stock, assets, properties, rights or privileges to be divested under this order, the identity of each such person or persons, and copies of all written communications to and from each such person or persons.

VII

It is further ordered, That respondent provide a copy of this order to each purchaser of plants and assets divested pursuant to this order at or before the time of purchase.

Commissioner Thompson dissenting.

IN THE MATTER OF

GIFFORD-HILL & COMPANY, INC.*

Docket 8989. Order, June 25, 1975

Complaint counsel's second request that Commission seek an all writs injunction

denied.

ORDER DENYING SECOND REQUEST TO SEEK INJUNCTION

This matter is before the Commission on the certification by the administrative law judge of complaint counsel's motion entitled “Second Request for Action Pursuant to the All Writs Act.” In a prior “Request,” counsel supporting the complaint asked the Commission to seek an injunction to prevent the sale of one of the three ready-mixed firms, the acquisition of which is challenged in the complaint in the above-captioned matter. Since the sale had been consummated by the time the matter came before us, we considered the request for an injunction moot, and denied the motion. By this "Second Request,” complaint counsel again asks the Commission to seek an injunction

* For appearances, see p.948, herein.

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pursuant to the All Writs Act, but, in this instance, as to the possible divestiture of all properties subject to the complaint except the readymix property which has been divested.

In support of his motion, complaint counsel has filed an in camera affidavit affirming that two persons with affiliations in the cement and concrete business have volunteered information which has led complaint counsel to believe that respondent is undertaking a program to divest all or a portion of the assets which are the subject of the complaint. If the program is carried out, complaint counsel contends the Commission will be denied an opportunity to "approve such contemplated" divestitures, and “an opportunity to order a particular divestiture plan which may identify a preferable purchaser" so as to restore competition in the relevant markets.

By an answer filed June 20, 1975, Gifford-Hill has opposed the “Second Request,” arguing that complaint counsel has failed to make a showing that there is “a reasonable probability of an antitrust violation *** with respect to the acquisition of the companies to be subject to the requested injunction," and, more specifically, has failed to show "that Gifford-Hill has any intention of irretrievably breaking up a formerly viable' company.” Gifford-Hill does not deny that it is presently engaged in negotiating the sale of the acquired companies.

Even if we assume the truth of what the persons reported to complaint counsel concerning the sale of the properties challenged in the complaint, we are without sufficient facts upon which to base a decision as to whether an All Writs injunction, as requested by complaint counsel, is warranted and should be sought. In the present posture of this matter, the administrative law judge is in a better position to ascertain these facts. If he determines that a program such as is alleged by complaint counsel would make an “effective remedial order * * * virtually impossible, "* it is within the law judge's authority to grant a request for compulsory process if necessary to obtain information that would support a motion for an injunction pursuant to the All Writs statute before the Circuit Court. Accordingly,

It is ordered, That counsel supporting the complaint's Second Request that the Commission seek as All Writs injunction be, and it hereby is, denied.

Commissioner Thompson not participating.

* FTC v. Dean Foods Company. 384 U.S. 597, 605 (1966).

1173

ADVISORY OPINIONS WITH REQUESTS THEREFOR Advertising and selling as “new” test automobiles used for

emission control tests. (File 753 7005)

Opinion Letter

Mar. 7, 1975

a

Dear Mr. Kirk:

This is in response to your letter of Sept. 16, 1974 requesting the Commission's opinion on the right of automobile manufacturers to advertise and sell as "new" those test automobiles used to demonstrate compliance with air pollution control standards.

Your letter indicates that the Environmental Protection Agency is developing a regulatory program under the Clean Air Act that would require both domestic and foreign manufacturers to select and test annually a statistical sample of production vehicles. The sample would consist of a “few hundred” vehicles per model year per manufacturer.

” The proposed test itself requires that each selected vehicle be operated for the equivalent of about fifty miles. Manufacturers would be permitted to accumulate as much as 4,000 miles on each selected vehicle prior to testing if they thought such accumulation necessary to overcome the erratic emission performance that is typical of new engines. The issue is whether manufacturers would have the right to advertise and sell any of these test vehicles as “new.”

After careful deliberation, the Commission has determined that it cannot conclude, as a matter of law, that automobile manufacturers have the right to sell such test vehicles as “new." Each manufacturer's testing may raise unique questions. Therefore, the Commission would prefer to defer a more definitive opinion until it receives a request from an auto manufacturer.

By direction of the Commission.

Letter of Request

Sept. 16, 1974

Dear Mr. Tobin:

EPA is developing a regulatory program under the Clean Air Act, as amended, which will require both domestic and foreign automobile manufacturers to demonstrate that production vehicles comply with applicable air pollution emission standards. Because these regulations allow a manufacturer to accumulate up to 4,000 miles on production

85 F.T.C.

vehicles selected for testing, we are requesting an advisory opinion based on current FTC rules or decisions as to whether such mileage accumulated in accordance with the proposed program, as outlined below, will affect the right of the manufacturer to advertise and sell such tested vehicles as new automobiles.

The regulations will require a manufacturer to select and test upon request by EPA a statistical sample of production vehicles. Because the EPA testing requirement is imposed on a statistical sample of selected models only, it is anticipated that no more than a few hundred vehicles per model year per manufacturer will require testing based on EPA regulations. Prior to the testing of such vehicles, the manufacturer may, if he so desires, accumulate mileage on the vehicles in order to stabilize exhaust emissions. This provision is intended as an accommodation to the manufacturers who claim that a new vehicle exhibits erratic emission performance during the first few miles of use until the engine and emission control system settle into more predictable operating modes. This phenomenon is sometimes referred to as the "green engine” effect. Such mileage accumulation prior to testing is solely at the option of the manufacturer. We anticipate that, in most instances, manufacturers will elect to accumulate the minimum mileage necessary to perform the emission test which is about 50 miles.

In summary, the EPA regulations will result in new vehicles being required to accumulate mileage prior to being delivered by manufacturers to their dealers. The accumulated mileage may range from a minimum of about 50 to a maximum of 4,000 miles.

Your advice as to the status of such test vehicles as "new automobiles" and the manufacturers' right to sell them as such would be appreciated prior to the scheduled proposal of these regulations within the next thirty days.

Thank you for your cooperation in this matter.
Very truly yours,
/s/ Alan G. Kirk II
Assistant Administrator for
Enforcement and General Counsel (eg-329)

No. 147. Granting of "back-haul" allowances to customers

picking up their own orders. (72 F.T.C. 1050, 16 C.F.R.

$15.147) No. 483. “Backhaul" Allowances advisory opinion affirmed.

(File No. 683 7026, released Dec. 26, 1973, 83 F.T.C. 1843, 16 C.F.R. $15.483) Clarification of Ruling (File No. 683 7026).

1173

Clarifying Opinion Letter

Mar. 19, 1975.
Dear Mr. Silbergeld:

Your letters of Nov. 8, and Dec. 12, 1974, have been considered by the Commission. The Commission is of the view that a useful purpose would be served by providing brief review and comment relative to the various points that you have raised.

Principally referenced in your initial letter was Commission Advisory Opinion No. 147, issued Oct. 24, 1967, relating to "backhaul” allowances. You characterize that opinion as constituting a form of government “regulation” and suggested, inter alia, that the opinion mandates waste and inefficiency in transportation.

Advisory Opinion No. 147 was directed to a rather narrow issue, i.e., whether General Foods Corporation, the company that requested the Commission's opinion, might violate Section 2(a) of the Clayton Act as amended, if it required its rank and file customers to continue to purchase from it pursuant to a uniform zone delivered price system while, at the same time, it offered varying freight-related allowances to “private-carrier" customers positioned to take "dock” delivery. The allowances would vary according to whatever common carrier charge would apply if, in fact, delivery were made to those customers' home locations.

That such deviations in customer pricing could result in illegal price discrimination would seem fairly apparent once the situation is examined. For example, different “private-carrier" purchasers, even though purchasing the same goods, in the same quantities, by precisely the same method - i.e. by pick-up in their own trucks at General Food's dock or warehouse, would buy those goods at substantially different net prices under General Foods' proposal. Substantial net price differentials would not only obtain among and between individual "private-carrier" purchasers taking “dock” delivery, but those purchasers would be provided, in turn, varying net purchase price advantages over "delivered-price" customers of General Foods supplied from that same shipping point.

The Commission in connection with its responsibility to enforce the requirements of Section 2 of the Clayton Act, as amended, advised General Foods that, assuming the presence of other elements necessary to a determination of violation of the statute, implementation of its proposal would probably result in a violation of law.

The choice of the basic underlying pricing system, addressed in the opinion, was General Foods'. The issue raised by General Foods was not with respect to the merits of its delivered price system but, rather, the

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