Summit Communications Group, Inc.

Summit Communications Group, Inc. and seven Wometco Cable TV companies operating in Georgia (collectively referred to below as Wometco) have agreed to settle Federal Trade Commission charges that they illegally agreed to allocate between themselves the customers they would serve in the area of Cobb County, Georgia, where their local cable systems overlap. Allocation of customers deprives consumers of choices on quality and price made available through competition. The settlement would prohibit Summit and Wometco from engaging in similar illegal conduct to allocate or divide markets in the 14 counties where they offer cable service in Georgia.

Summit, based in Atlanta, Georgia, has been acquired by and is now a wholly-owned subsidiary of Time Warner Inc., which is based in New York City. Wometco was acquired by U S West, Inc. through its wholly-owned subsidiary, Multimedia Cable, Inc., in December 1994. The seven Wometco companies named as respondents in the case are Wometco Cable TV of Georgia, Inc., of Cobb County, Inc., of Clayton County, Inc., of Conyers-Rockdale, Inc., of Fayette County, Inc., of Fulton County, and of Henry County, Inc. U S West is based in Englewood, Colorado.

According to the FTC complaint detailing the allegations in this case, the illegal market-allocation began in March 1990, when Summit and Wometco both began prewiring units of the Asbury Village Apartments in Cobb County for cable television service. In April, the two companies allegedly began discussing who should provide service to the apartments, and ultimately agreed that Wometco would do so and that Summit would assign Wometco the contract rights it had with the apartment complex to provide the service.

The FTC further alleged that the companies reached addi- tional agreements during telephone conversations later that April regarding how they would handle future situations where both companies were attempting to serve the same apartment complexes or housing subdivisions in the dual franchise area. The agree- ment allegedly was in effect until at least March 1993, when Summit tried to convince Wometco to abandon plans to serve a housing subdivision called Manor Oaks. According to the complaint, Wometco did not abandon the subdivision, and Summit withdrew.

Then in August 1993, according to the complaint, Wometco sold Summit at cost its cable television facilities in two housing subdivisions called Grand Manor and Elan, acknowledging as to the Elan division that Summit "should have the right to be the provider" there.

The agreement between Summit and Wometco restrained compe- tition for cable television services in the dual franchise area, and deprived cable subscribers there of access to competitively determined prices and quality of cable television services, the FTC charged.

The proposed consent agreement to settle these charges, announced today for public comment, would prohibit Summit and Wometco from in any way agreeing, attempting to agree or carrying out an agreement with any cable television provider to allocate or divide markets, customers, contracts or territories for cable television service in any part of Georgia where they offer cable service. This area comprises Cobb, Bartow, Dekalb, Walton, Gwinnett, Fulton, Douglas, Fayette, Coweta, Clayton, Henry, Rockdale, Newton, and Cherokee counties. The settlement also would prohibit such agreements or combinations to refrain from overbuilding any portion of any cable television system in these counties.

The settlement also contains various reporting requirements that would assist the FTC in monitoring the respondents' compliance.

The Commission vote to accept the proposed consent agreement for public comment was 5-0, and two statements were issued. The Commission issued a statement in which it said that the unique circumstances of this case warrant limiting the proposed order to the 14 counties in Georgia where either of the two firms had operations. Wometco has been acquired by U S West, Inc. and Summit has been acquired by Time Warner Inc., so both are now under the control of major cable television firms not implicated in the FTC complaint, the Commission said. The proposed order prevents both of them from engaging in market allocation where either Summit or Wometco had operations, "a far broader area than the small area in one county where the parties had cable systems capable of competing for business," the Commission said. Noting that this is an extraordinary case, the Commission then reiterated its general policy to seek the broadest possible relief in instances where it alleges there was per se illegal conduct.

In her statement, Commissioner Mary L. Azcuenaga said she dissented from the decision to geographically limit the cease and desist order. Noting that Summit operates cable TV systems outside the 14 counties, Azcuenaga stated that, "[i]f, after the order is issued, Summit enters an identical market allocation agreement at a cable system outside these fourteen counties, the Commission's only recourse will be to initiate an administrative proceeding to obtain still another order." Azcuenaga also said that limiting the geographic scope of the order here "opens the door to unguided negotiations regarding the geographic scope of conduct orders."

The consent agreement will be published in the Federal Register shortly and will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $10,000.

Copies of the complaint, consent agreement, an analysis of the agreement to assist the public in commenting, and the statements referenced above are available from the FTC's Public Reference Branch, Room 130, same address as above; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To learn the latest FTC news as it is announced, call the FTC's NewsPhone at 202-326-2710. FTC news releases and other materials also can be found on the Internet at the FTC's World Wide Web site at http://www.ftc.gov

(FTC File No. 951 0024)