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1
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DECISION & ORDER
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EXTRACTED KEY WORDS
RESPONDENTS GRAND AGREEMENT GUINNESS FEDERAL TRADE COMMISSION GRAND METROPOLITAN PLC CONSENT ORDER MERGER DIAGEO TRADE COMMISSION ACT COUNSEL TRUSTEE PROPOSED MERGER ASSETS SUCCESSOR COMPLAINT DIVESTITURE ATTORNEYS THEREAFTER UNITED STATES REPRESENTATIVES PARAGRAPH GREENALLS MATERIALS AMERICA DRAFT COMPLAINT CLAYTON ACT REGULATORY AUTHORITY RELATING COURT-APPOINTED TRUSTEE |
9710081
B236768
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
COMMISSIONERS:
Robert Pitofsky, Chairman
Mary L. Azcuenaga
Sheila F. Anthony
Mozelle W. Thompson
Orson Swindle
In the Matter of
GUINNESS PLC, a corporation, GRAND METROPOLITAN PLC, a corporation,
and DIAGEO PLC, a corporation.
Docket No. C-3801
DECISION AND ORDER
The Federal Trade Commission ("Commission") having initiated an
investigation of the proposed merger between Guinness plc ("Guinness")
and Grand Metropolitan plc ("Grand Met"), and Guinness and Grand Met,
having merged into a successor corporation known as Diageo plc
("Diageo"), all sometimes referred to herein as "respondents", and
respondents having been furnished with a copy of a draft complaint
that the Bureau of Competition proposed to present to the Commission
for its consideration, and which, if issued by the Commission, would
charge respondents with violations of the Clayton Act and Federal
Trade Commission Act;
Respondents, their attorneys, and counsel for the Commission having
thereafter executed an agreement containing a consent order, an
admission by respondents, for purposes of this proceeding, of all the
jurisdictional facts set forth in the aforesaid draft of complaint, a
statement that the signing of said agreement is for settlement
purposes only and does not constitute an admission by respondents that
the law has been violated as alleged in such complaint, 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 the respondents have
violated the said Acts, and that the complaint should issue stating
its charges in that respect, and having thereupon accepted the
executed consent agreement and placed such agreement on the public
record for a period of sixty (60) days, and having duly considered the
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2
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AGREEMENT CONTAINING CONSENT
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EXTRACTED KEY WORDS
FEDERAL TRADE COMMISSION GRAND GUINNESS AGREEMENT PROPOSED RESPONDENTS ASSETS UNITED STATES PROPOSED MERGER CONSENT ORDER GRAND METROPOLITAN PLC BUSINESS COUNSEL DIVEST BOMBAY TRUSTEE PREMIUM GIN TRADE COMMISSION ACT PREMIUM SCOTCH DIVESTITURE UNITED KINGDOM COMPLAINT PUBLIC RECORD REPRESENTATIVES COMPETITION AMERICA PORTMAN SQUARE PARAGRAPH BOMBAY SAPPHIRE GREENALLS |
UNITED STATES OF AMERICA
BEFORE
FEDERAL TRADE COMMISSION
In the matter of
GUINNESS PLC a corporation, and GRAND METROPOLITAN PLC, a corporation.
File No. 971 0081
AGREEMENT CONTAINING CONSENT ORDER
The Federal Trade Commission ("Commission"), having initiated an
investigation of the proposed merger between Guinness plc ("Guinness")
and Grand Metropolitan plc ("Grand Met"), and it now appearing that
Guinness and Grand Met, hereinafter sometimes referred to as "proposed
respondents," are willing to enter into an agreement containing an
order to divest certain assets and providing for other relief:
IT IS HEREBY AGREED by and between proposed respondents, by their duly
authorized officers and attorneys, and counsel for the Commission
that:
1. Proposed respondent Guinness is a corporation organized,
existing and doing business under and by virtue of the laws of the
United Kingdom with its office and principal place of business
located at 39 Portman Square, London, England W1H 0EE.
2. Proposed respondent Grand Met is a corporation organized,
existing and doing business under and by virtue of the laws of the
United Kingdom with its office and principal place of business
located at 8 Henrietta Place, London, England W1M 9AG.
3. Proposed respondents admit all the jurisdictional facts set
forth in the draft of complaint here attached for the purposes only
of this agreement and any proceeding arising out of, or to enforce,
this agreement (including the order herein and the Asset
Maintenance Agreement, attached as Appendix I).
4. Proposed respondents waive:
a. any further procedural steps;
b. the requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
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3
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AZCUENAGA STATEMENT
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EXTRACTED KEY WORDS
MARKET COMMISSION BRANDS GUINNESS PLC COMPLAINT GIN BOMBAY REASON COMPETITION PREMIUM GIN SCOTCH UNITED STATES SOLD WINE ALLEGATIONS MERGER GRAND METROPOLITAN PLC VIOLATE ANTITRUST RETAIL TANQUERAY EXCLUDE HEAD HEUBLEIN DESPITE DISAGREEMENT BASIS REMEDY LESSENING |
Separate Statement of Commissioner Mary L. Azcuenaga
Concurring in Part and Dissenting in Part
in Guinness PLC, Docket No. C-3801
___________________________________
Today, the Commission accepts a consent order settling allegations
that the merger of Guinness PLC and Grand Metropolitan PLC would
violate Section 7 of the Clayton Act and Section 5 of the Federal
Trade Commission Act. The complaint alleges as antitrust product
markets: (1) "premium Scotch," which is defined as "blended Scotch
whisky that is made and bottled in Scotland, generally advertised,
promoted, and available throughout the United States, and sold at
retail at prices comparable to the prices of the Johnnie Walker Red,
Dewar's White Label, and J&B Rare brands," and (2) "premium gin,"
which is defined as "gin that is made and bottled in England,
generally advertised, promoted, and available throughout the United
States, and sold at retail at prices comparable to the prices of
Tanqueray, Bombay Original, and Bombay Sapphire brands." I cannot
support the complaint as written.
Although at first glance the markets may seem overly creative, if not
gerrymandered, the complaint merits our careful attention. For reasons
that are not apparent, the proposed product markets exclude brands not
marketed throughout the United States, if there are any, that compete
head to head with the national brands. By definition, the "premium
gin" product market also excludes domestically bottled gin brands, if
any, that are sold at prices comparable to Tanqueray and Bombay. I see
no reason for these seemingly arbitrary exclusions.
More importantly, the price limitations in the product markets do not
seem justifiable. As recognized in Commission precedent, competition
occurs along a continuum of prices. In Heublein, Inc., 96 F.T.C. 385
(1980), for example, the Commission dismissed the complaint based on
findings in an "all wine" market and the table, dessert and sparkling
wine submarkets. As then Commissioner Pitofsky stated in the Heublein
opinion, although the competitive offerings of the wine industry were
not altogether homogeneous, "those diverse products nevertheless may
'appropriately be designated as a market' for antitrust analysis." 96
F.T.C. at 576 quoting Coca Cola Bottling Co. of New York, Inc., 93
F.T.C. 110 (1979).
Despite my disagreement with the allegations in the complaint, I find
reason to believe that the merger of Guinness PLC and Grand
Metropolitan PLC would violate the law on the basis of a broader
market and that an order to remedy the lessening of competition in the
broader market would be appropriate. The divestiture of the Dewar's
Scotch and Bombay gin brands will have some remedial effect in the
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4
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COMPLAINT
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EXTRACTED KEY WORDS
UNITED STATES GRAND PREMIUM RESPONDENT GUINNESS PREMIUM GIN ACT FEDERAL TRADE COMMISSION PREMIUM SCOTCH SALES MERGER DIAGEO DISTILLERIES PLC COMMERCE CLAYTON ACT BUSINESS ENGLAND BRANDS VIOLATION TIMES RELEVANT MARKET VIRTUE AGREEMENT SOLD PROPOSED MERGER PRICES BOMBAY RETAIL COMPETITOR |
9710081
B236768
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
COMMISSIONERS:
Robert Pitofsky, Chairman
Mary L. Azcuenaga
Sheila F. Anthony
Mozelle W. Thompson
Orson Swindle
In the Matter of
GUINNESS PLC, a corporation, GRAND METROPOLITAN PLC, a corporation,
and DIAGEO PLC, a corporation.
Docket No. C-3801
COMPLAINT
Pursuant to the provisions of the Federal Trade Commission Act and the
Clayton Act, and by virtue of the authority vested in it by said Acts,
the Federal Trade Commission, having reason to believe that Guinness
plc ("Guinness") and Grand Metropolitan plc ("Grand Met") have entered
into an agreement in violation of Section 5 of the Federal Trade
Commission Act, as amended, 15 U.S.C. § 45, and that the terms of such
agreement, were they to be satisfied, would result in a violation of
Section 5 of the Federal Trade Commission Act and Section 7 of the
Clayton Act, 15 U.S.C. § 18, and Guinness and Grand Met, having also
merged into a successor corporation known as Diageo plc ("Diageo"),
and it appearing to the Commission that a proceeding in respect
thereof would be in the public interest, hereby issues its complaint,
stating its charges as follows:
I. RESPONDENT GUINNESS PLC
1. Respondent Guinness was, until on or about December 17, 1997, a
corporation organized, existing and doing business under and by virtue
of the laws of the United Kingdom with its office and principal place
of business located at 39 Portman Square, London, England W1H 0EE.
2. Among other things, Respondent Guinness, through United Distillers,
a wholly-owned subsidiary corporation, produced and sold Scotch from
distilleries located in Scotland and gin from distilleries located in
England.
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