Federated Department Stores To Pay $250,000 Penalty To Settle FTC Order Violation Charges

Federated Department Stores, Inc., one of the country's largest operators of department stores, has agreed to settle Federal Trade Commission charges that it violated a 1979 FTC order prohibiting it from interfering with the entry of another tenant in any shopping mall in which it operates a store. The FTC charged that Federated, the parent company of Lazarus department stores, threatened to block a competitor from buying a Hess's department store in a Florence, Kentucky mall where Federated operates a Lazarus store. Federated acquired the Hess's store later that year. Under the proposed settlement, Federated would pay a $250,000 civil penalty for the order violation.

Federated, based in Cincinnati, Ohio, operates retail department stores throughout the country. In addition to Lazarus, Federated divisions include Abraham & Straus, Bloomingdale's, The Bon Marche, Burdines, Goldsmith's, Jordan Marsh, Macy's, Rich's and Stern's.

According to the FTC complaint detailing the charges, the 1979 FTC order prohibits Federated, as a tenant in any shopping mall, from "obtaining, making, carrying out, or enforcing, directly or indirectly, any agreement" which grants it the "right to approve or disapprove the entry into (the) shopping center of any other tenant." The 1979 order resulted from charges that a predecessor of Federated had agreements with developers and other major tenants at various shopping centers throughout the country that allowed it to exclude competitors as tenants, or to otherwise unfairly restrict competition.

The FTC now has charged that, in 1993, during negotiations between Federated and Hess's Department store over retail space Hess's was attempting to resell in the Florence mall, Federated threatened to enforce an agreement granting it the right to disapprove the entry into the mall of another tenant. In addition to Federated, Hess's was negotiating with at least one other company for the sale of the retail space at the time. After Federated threatened to block any other tenant for the mall, Federated acquired the store in the Florence Mall from Hess's.

The proposed consent judgment to settle the charges that Federated violated the order would require that Federated pay a $250,000 civil penalty within 30 days of the date the court approves the settlement.

"The action in this case makes it clear that the Commission is committed to the protection of competition in the retail marketplace," William J. Baer, Director of the Bureau of Competition said.

"The Bureau will vigorously enforce Commission orders in this area and will pursue significant civil penalties where violations occur."

The FTC vote to authorize filing the complaint and proposed consent judgment in court was 5-0. They were filed on October 18 in the U.S. District Court for the District of Columbia. It is subject to court approval.

NOTE: This consent judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the complaint and consent judgment, as well as prior documents associated with this case, 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 at 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's NewsPhone at 202-326-2710. FTC news releases and other materials are also available on the Internet at the FTC's World Wide Web site at: http: // www.ftc.gov

(FTC Matter No. C2958)
(Civil Action No. 951965)