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The Federal Trade Commission has given final approval to a consent agreement with Del Monte Corporation and Pacific Coast Producers (PCP) settling charges that their supply and purchase option agreements -- under which Del Monte effectively took over PCP's canned fruit business -- violated federal antitrust laws by eliminating PCP as a substantial and direct competitor to Del Monte. The FTC alleged that under the terms of the supply agreement, PCP manufactures the canned fruit, and Del Monte markets it. The complaint charged that Del Monte makes all of the pricing decisions, arranges the orders with customers, and directs PCP as to what products Del Monte will need manufactured for the coming pack year. The Commission's action makes the consent order provisions binding on the respondents.

Del Monte and PCP are among the leading producers of canned peaches, pears, fruit cocktail and fruit mix in the United States. Del Monte Corporation, a wholly-owned subsidiary of Del Monte Foods Company, is based in San Francisco, California.

Pacific Coast Producers is based in Lodi, California.

The final order requires PCP and Del Monte to terminate the purchase option agreement and the provisions of the supply agreement that relate to planning for the 1995 canning season within three days after the order becomes final, and to terminate the remaining provisions of the supply agreement by June 30, 1995.

In addition, the order requires Del Monte to obtain FTC approval:

  • for 10 years, before purchasing the stock or assets of a U.S. canned-fruit manufacturer (with certain minimum- purchase exceptions, and to give the Commission 30 days' notice of certain asset acquisitions below the minimum);
  • for 10 years, before entering into any purchase or mar- keting agreement with a competitor (except for purchases in the on-the-spot market);
  • for 10 years, before having canned fruit packed on Del Monte's behalf by Tri Valley Growers or PCP, except under certain strictly-defined conditions (the FTC noted with regard to this provision that PCP packed canned fruit for Del Monte prior to entering into the challenged supply and purchase option agreements); and
  • for five years, before entering into co-pack agreements (arranging for others to pack canned fruit for Del Monte) with competitors, other than Tri Valley or PCP, and to give the Commission 30 days' notice before entering into co-pack agreements with competitors for five years thereafter.

The consent agreement was announced for public comment on Jan. 9, 1995. The Commission vote to issue it in final form occurred on April 11, and was 4-0. In a separate concurring statement, Commissioner Roscoe B. Starek, III, said: "As a general proposition, I prefer clear, simple, easily enforceable cease-and-desist language over orders that establish complex metes and bounds for permissible conduct." But despite the detailed nature of some provisions of the order, said Starek, "the order is unlikely to place undue constraints on the parties' operations."

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 up to $10,000.

A news release summarizing the complaint and consent agree- ment was issued at the time the Commission accepted the consent agreements for public comment. Copies of that release, the complaint and final order, and other documents and news releases 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.

(FTC File No. 921 0071)

(FTC Docket No. C-3569)

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