The Crittenden Automotive Library

Announced Actions for November 26, 1996

Agency: Federal Trade Commission
Date: 26 November 1996
[Non-automotive content removed.]

Consent orders given final approval: Following a public comment period, the Commission has determined to issue consent orders with the following entities as final, thus making the consent order provisions binding on the respondents:

with Hale Products, Inc., of Conshohocken, Pennsylvania, and Waterous Company, Inc., of South Saint Paul, Minnesota, settling charges that these two leading manufac turers of fire truck-mounted fire pumps each imposed restraints requiring their customers to deal exclusively in that manufacturer’s pumps. This reduced competition between the two firms and made it more difficult for other firms to enter the market for truck-mounted fire pumps, the FTC alleged. The consent orders prohibit the respondents from entering into, continuing, or enforcing any requirement that fire truck manufacturers refrain from purchasing mid-ship mounted fire pumps from any company, or that any purchaser sell only the relevant respondent’s pumps. In addition, each of the two companies is required to send a specifically-worded notice to fire truck manufacturers stating that it has entered into an agreement with the FTC under which the respondent will not refuse to sell mid- ship mounted fire pumps because a manufacturer refuses to sell the respondent’s pumps exclusively, and also that manufacturers are free to offer and install competing pumps. (See July 24, 1996 news release for more details regarding this case; Docket Nos. C-3693 [Waterous], and C-3694 [Hale]; Commission votes on Nov. 25 to finalize the orders were 3-2, with Commissioners Mary L. Azcuenaga and Roscoe B. Starek, III, dissenting and issuing statements, and the majority also issuing a statement.

"I cannot endorse an ineffective remedy for a nonexistent harm," Starek said in his dissenting statement, which also outlines his reasons for concluding that (1) the distribution policies of Hale and Waterous cannot be characterized as "exclusive," because several large fire truck manufacturers said they would be willing to install (and in fact have installed) another pump manufacturer’s pumps at their customer’s request; (2) the policies in any case did not harm competition (in part because they did not entail the allocation of final customers, that is, the fire departments, and in part because the evidence does not show that they deterred entry); and (3) the prohibitions on requiring exclusivity as a condition of sale do not remedy the alleged anticompetitive effects because the respondents could pursue a variety of alternative strategies to achieve the same end.

Azcuenaga commented that she generally endorsed Starek’s views, adding: "The evidence does not in my view suggest a market in which competition has been unlawfully restrained . . .."

Chairman Robert Pitofsky and Commissioners Janet D. Steiger and Christine A. Varney disagreed with Starek’s suggestion that the allocation of customers for a component would be undermined by, among other things, competition for customers of the final product. That would be true, the majority said, in situations where the component is a significant part of the cost of the final good or where the final customers have a stronger preference for the component than the ultimate good, but neither was the case here. The majority added: "The fact that the exclusive policy was not perfect . . . did not have a significant effect on competition at the pump level." The plan worked for several decades to diminish competition, keep prices higher and make new entry more difficult, they said, concluding that "those are the anticompetitive effects that the Commission’s orders are intended to address.") FTC staff contact is William J. Baer, 202-326-2932, or Mark Whitener, 202-326-2845.

Copies of the documents referenced above are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov (no period). FTC news Releases and other documents also are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

Media Contact:

Office of Public Affairs
202-326-2180