Manheim Auctions, Inc.

001-0098

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

COMMISSIONERS:: Robert Pitofsky, Chairman; Sheila F. Anthony; Mozelle W. Thompson; Orson Swindle; Thomas B. Leary

In the Matter of

Manheim Auctions, Inc., Cox Enterprises, Inc., ADT Automotive Holdings, Inc., and Tyco International, Ltd., corporations.

Docket No. C-3892

DECISION AND ORDER

The Federal Trade Commission ("Commission") having initiated an investigation of the acquisition by Respondent Manheim Auctions, Inc. ("Manheim"), a wholly owned subsidiary of Respondent Cox Enterprises, Inc. ("Cox"), of Respondent ADT Automotive Holdings, Inc. ("ADT"), a wholly owned subsidiary of Respondent Tyco International, Ltd. ("Tyco"), and Respondents having been furnished thereafter with draft of Complaint that the Bureau of Competition presented to the Commission for its consideration and which, if issued, would charge Respondents with violations of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, and Section 7 of the Clayton Act, as amended 15 U.S.C. § 18; and

Respondents, their attorneys, and counsel for the Commission having thereafter executed an Agreement Containing Consent Order ("Consent Agreement"), containing an admission by Respondents of all the jurisdictional facts set forth in the aforesaid draft of Complaint, a statement that the signing of said Consent 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, or that the facts as alleged in such Complaint, other than jurisdictional facts, are true, 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 Respondents have violated said Acts, and that a Complaint should issue stating its charges in that respect, and having accepted the executed Consent Agreement and placed such Consent Agreement on the public record for a period of thirty (30) days for the receipt and consideration of public comments, now in further conformity with the procedure described in Commission Rule 2.34, 16 C.F.R. § 2.34, the Commission issues its complaint, and hereby makes the following jurisdictional findings and issues the following Order:

1. Respondent Manheim is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located at 1400 Lake Hearn Drive, N.E., Atlanta, Georgia 30319.

2. Respondent Manheim is a wholly owned subsidiary of Respondent Cox Enterprises Inc. ("Cox"), a corporation with its office and principal place of business located at 1400 Lake Hearn Drive, N.E., Atlanta, Georgia 30319.

3. Respondent ADT is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located at 435 Metroplex Drive, Nashville, Tennessee 37211.

4. Respondent ADT is a wholly owned subsidiary of Respondent Tyco International Ltd. ("Tyco"), a corporation organized, existing and doing business under and by virtue of the laws of Bermuda, with its office and principal place of business located at The Zurich Center, Second Floor, 90 Pitts Bay Road, Pembroke HM08, Bermuda. Tyco's principal operating subsidiary in the United States is located at One Tyco Park, Exeter, New Hampshire 03833.

5. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of Respondents, and the proceeding is in the public interest.

ORDER

IT IS ORDERED that, as used in this Order, the following definitions shall apply:

A. "Manheim" means Manheim Auctions, Inc., its directors, officers, employees, agents and representatives, successors, and assigns; its joint ventures, subsidiaries, divisions, groups and affiliates controlled by Manheim Auctions, Inc., and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

B. "Cox" means Cox Enterprises, Inc., its directors, officers, employees, agents and representatives, successors, and assigns; its joint ventures, subsidiaries, divisions, groups and affiliates controlled by Cox Enterprises, Inc., and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

C. "ADT" means ADT Automotive Holdings, Inc., its directors, officers, employees, agents and representatives, successors, and assigns; its joint ventures, subsidiaries, divisions, groups and affiliates controlled by ADT Automotive Holdings, Inc., and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

D. "Tyco" means Tyco International, Ltd., its directors, officers, employees, agents and representatives, successors, and assigns; its joint ventures, subsidiaries, divisions, groups and affiliates controlled by Tyco International, Ltd., and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

E. "Respondents" means Manheim, Cox, ADT and Tyco, individually and collectively.

F. "Commission" means Federal Trade Commission.

G. "ADESA" means ADESA Corporation, a corporation with its principal place of business at Two Parkwood Crossing, 310 East 96^th Street, Suite 400, Indianapolis, Indiana 46240.

H. "Acquirer(s)" means the entity or entities approved by the Commission to acquire the Assets To Be Divested pursuant to this Order, individually and collectively, other than ADESA.

I. "Assets To Be Divested" means the Auctions listed below:

1. "Metro Auto Auction," the ADT Auction located at 101 Southwest Oldham Parkway, Lee's Summit, Missouri 64081.

2. "Colorado Springs Auto Auction," the ADT Auction located at 500 Willow Springs Road, Fountain, Colorado 80817.

3. "Southern States Vehicle Auction," the ADT Auction located at 300 Raymond Hill Road, Newman, Georgia 30265.

4. "Golden Gate Auto Auction," the ADT Auction located at 6700 Stevenson Boulevard, Fremont, California 94538.

5. "Puget Sound Auto Auction," the ADT Auction located at 621 37^th Street, N.W. Auburn, Washington 98002.

6. "Bayside Auto Auction," the ADT Auction located 3225 North 50^th Street, Tampa, Florida 33619.

7. "Clearwater Auto Auction," the ADT Auction located at 5153 126^th Avenue, North, Clearwater, Florida 33760.

8. "Dealer's Auto Auction of Sanford," the ADT Auction located at 3895 State Road 46 East, Sanford, Florida 32771.

9. "Southwest Auto Auction," the Manheim Auction located at 400 North Beck Avenue, Chandler, Arizona 85526.

J. "Auction" means a wholesale motor vehicle auction, including all tangible and intangible assets used in the business and operations of auctioning used automobiles, including related reconditioning, transportation and repair services, including, but not limited to:

1. All land and buildings and other improvements and fixtures thereon, leasehold interests, easements, licenses, rights to access, rights-of-way, and other real property interests;

2. All machinery, equipment, tools, computer hardware and software, vehicles, furniture, leasehold improvements, office equipment, plant inventory, spare parts, supplies (including office and reconditioning supplies) and other tangible personal property;

3. All contracts, agreements, options, leases, commitments, and undertakings, written and oral, and other similar rights and interests;

4. All rights, titles and interest in and to all licenses and other governmental permits and authorizations;

5. All accounts receivable, pre-paid expenses, deposits (other than bank deposits), machinery and equipment warranties, customer lists, files and records; and

6. Goodwill and going concern value.

K. "Acquisition" means the proposed acquisition by Manheim of ADT as described in the January 13, 2000, Stock Purchase Agreement between Manheim and ADT General Holdings, Inc.

L. "Key Employees" means those individuals employed by Respondents whose principal work relates to any Asset To Be Divested and who hold one of the following positions or perform the duties generally performed by persons with the following titles: (a) General Manager, (b) Assistant General Manager, (c) Fleet/Lease Manager, (d) General Sales Manager, (e) Operations Manager, (f) Controller, and (g) Factory Manager.

M. "Divestiture Agreement" means the Asset Purchase Agreement dated July 28, 2000, by and between Manheim and ADESA.

N. "Third Party Consents" means all consents, waivers and approvals from any person, private or public, that are necessary to effect the complete transfer to ADESA or to the Acquirer(s), as applicable, of the Assets To Be Divested pursuant to this Order.

II.

IT IS FURTHER ORDERED that:

A. Respondents shall divest the Assets To Be Divested to ADESA pursuant to and in accordance with the Divestiture Agreement (which agreement shall not vary from or contradict or be construed to vary from or contradict the terms of this Order). The divestiture shall be made no later than three (3) months after Respondent Manheim consummates the Acquisition. Failure to comply with the Divestiture Agreement shall constitute a failure to comply with this Order. PROVIDED, HOWEVER, that if Respondents have divested the Assets To Be Divested to ADESA prior to the date the Order becomes final, and if, at the time the Commission determines to make the Order final, the Commission notifies Respondents that ADESA is not an acceptable acquirer or that the Divestiture Agreement is not an acceptable manner of divestiture, then Respondents shall immediately rescind the transaction with ADESA and shall divest the Assets To Be Divested within six (6) months of the date the Order becomes final. Respondents shall divest the Assets To Be Divested only to an Acquirer(s) that receives the prior approval of the Commission and only in a manner that receives the prior approval of the Commission.

B. Respondents shall obtain all material Third Party Consents prior to the closing of the divestitures required by Paragraph II.A.

C. The purpose of the divestitures of the Assets To Be Divested is to ensure the continued use of the assets in the same businesses in which they were engaged at the time of the announcement of the proposed Acquisition and to remedy the lessening of competition resulting from the Acquisition as alleged in the Commission's complaint.

III.

IT IS FURTHER ORDERED that:

A. From the date Respondents sign the Consent Agreement until the divestiture is completed pursuant to the terms of this Order, Respondents shall take, or cause to be taken, reasonable steps, including implementing appropriate incentive plans (such as vesting or crediting of all current and accrued benefits and pensions to which Key Employees are entitled) and paying bonuses, to cause Key Employees to accept offers of employment from ADESA or the Acquirer(s), as applicable.

B. For a period of one year following the divestiture of the Assets To Be Divested, Manheim shall not, directly or indirectly, solicit or otherwise attempt to induce any Key Employees of the ADT Auctions to terminate their employment relationship with ADESA or other Acquirer(s); provided, however, it shall not be deemed to be a violation of this provision if (i) Manheim advertises for employment opportunities in newspapers, trade publications or other media not targeted specifically at the Key Employees, or (ii) Manheim hires Key Employees who apply for employment with Manheim, as long as such Key Employees were not solicited by Manheim in violation of this Paragraph III. B. During the one-year period following the divestiture of the Assets To Be Divested pursuant to the Divestiture Agreement, Manheim shall not, directly or indirectly, hire or enter into any arrangement for the services of any Key Employees employed by Southwest Auto Auctions on the date hereof; provided, however, that Manheim shall not be prohibited from hiring, during that one-year period, any Key Employees of Southwest Auto Auctions who are terminated by ADESA or other Acquirer or who move out of the state of Arizona for reasons unrelated to their employment.

IV.

IT IS FURTHER ORDERED that Respondents shall maintain the viability, marketability, and competitiveness of the Assets To Be Divested, and shall not cause the wasting or deterioration of the Assets To Be Divested, nor shall they cause the Assets To Be Divested to be operated in a manner inconsistent with applicable laws, nor shall they sell, transfer, encumber or otherwise impair the viability, marketability or competitiveness of the Assets To Be Divested. Respondents shall comply with the terms of this Paragraph until such time as Respondents have divested the Assets To Be Divested pursuant to the terms of this Order. Respondents shall conduct or cause to be conducted the business of the Assets To Be Divested in the regular and ordinary course and in accordance with past practice (including regular repair and maintenance efforts) and shall preserve the existing relationships with suppliers, customers, employees, and others having business relations with the Assets To Be Divested in the ordinary course of business and in accordance with past practice. Respondents shall not terminate the operation of any Asset To Be Divested. Respondents shall continue to maintain the inventory of each Asset To Be Divested at levels and selections consistent with those maintained by Manheim or ADT at such Auction in the ordinary course of business consistent with past practice. Respondents shall keep the organization and properties of each Asset To Be Divested intact, including current business operations, physical facilities, working conditions, and a work force of equivalent size, training, and expertise associated with the Auction. Included in the above obligations, Respondents shall, without limitation:

A. Maintain operations and departments and neither reduce hours nor change the schedule of auctions at each Asset To Be Divested;

B. Not transfer inventory from any Asset To Be Divested other than in the ordinary course of business consistent with past practice;

C. Make any payment required to be paid under any contract or lease when due, and otherwise pay all liabilities and satisfy all obligations associated with any Asset To Be Divested, in each case in a manner consistent with past practice;

D. Maintain the books and records of each Asset To Be Divested;

E. Not display any signs or conduct any advertising that indicates that any Respondent is moving its operations from an Asset To Be Divested to another location, or that indicates an Asset To Be Divested will close or will be owned by another entity; and

F. Not change or modify in any material respect the existing advertising practices, programs and policies for any Asset To Be Divested, other than changes in the ordinary course of business consistent with past practice for Auctions of Manheim and ADT not being closed or relocated.

IT IS FURTHER ORDERED that:

A. If Respondents have not divested, absolutely and in good faith and with the Commission's prior approval, the Assets To Be Divested within the time required by Paragraph II of this Order, the Commission may appoint a trustee to divest the Assets To Be Divested.

B. In the event that the Commission brings an action pursuant to Section 5(l) of the Federal Trade Commission Act, 15 U.S.C. § 45(l), or any other statute enforced by the Commission, Respondents shall consent to the appointment of a trustee in such action. Neither the appointment of a trustee nor a decision not to appoint a trustee under this Paragraph shall preclude the Commission from seeking civil penalties or any other relief available to it, including a court-appointed trustee, pursuant to Section 5(l) of the Federal Trade Commission Act, or any other statute enforced by the Commission, for any failure by the Respondents to comply with this Order.

C. If a trustee is appointed by the Commission or a court pursuant to Paragraph V.A. of this Order, Respondents shall consent to the following terms and conditions regarding the trustee's powers, duties, authority, and responsibilities:

1. The Commission shall select the trustee, subject to the consent of Respondents, which consent shall not be unreasonably withheld. The trustee shall be a person with experience and expertise in acquisitions and divestitures. If Respondents have not opposed, in writing, including the reasons for opposing, the selection of any proposed trustee within ten (10) days after receipt of notice by the staff of the Commission to Respondents of the identity of any proposed trustee, Respondents shall be deemed to have consented to the selection of the proposed trustee.

2. Subject to the prior approval of the Commission, the trustee shall have the exclusive power and authority to divest the Assets To Be Divested.

3. Within ten (10) days after appointment of the trustee, Respondents shall execute a trust agreement that, subject to the prior approval of the Commission and, in the case of a court-appointed trustee, of the court, transfers to the trustee all rights and powers necessary to permit the trustee to effect each divestiture required by this Order.

4. The trustee shall have twelve (12) months from the date the Commission or court approves the trust agreement described in Paragraph V.C.3. to accomplish the divestitures, which shall be subject to the prior approval of the Commission. If, however, at the end of the twelve-month period, the trustee has submitted a plan of divestiture or believes that divestiture can be achieved within a reasonable time, the divestiture period may be extended by the Commission, or, in the case of a court-appointed trustee, by the court; provided, however, the Commission may extend the period for no more than two (2) additional periods.

5. The trustee shall have full and complete access to the personnel, books, records, and facilities related to the Assets To Be Divested or to any other relevant information, as the trustee may request. Respondents shall develop such financial or other information as such trustee may reasonably request and shall cooperate with the trustee. Respondents shall take no action to interfere with or impede the trustee's accomplishment of the divestitures. Any delays in divestiture caused by Respondents shall extend the time for divestiture under this Paragraph in an amount equal to the delay, as determined by the Commission or, for a court-appointed trustee, by the court.

6. The trustee shall use his or her best efforts to negotiate the most favorable price and terms available in each contract that is submitted to the Commission, subject to Respondents' absolute and unconditional obligation to divest expeditiously at no minimum price. The divestitures shall be made in a manner that receives the prior approval of the Commission and to Acquirer(s) that receive the prior approval of the Commission; provided, however, if the trustee receives bona fide offers for an Asset To Be Divested from more than one acquiring entity, and if the Commission determines to approve more than one such acquiring entity, the trustee shall divest such asset to the acquiring entity or entities selected by Respondents from among those approved by the Commission; provided further, however, that Respondents shall select such entity within five (5) days of receiving notification of the Commission's approval.

7. The trustee shall serve, without bond or other security, at the cost and expense of Respondents, on such reasonable and customary terms and conditions as the Commission or a court may set. The trustee shall have the authority to employ, at the cost and expense of Respondents, such consultants, accountants, attorneys, investment bankers, business brokers, appraisers, and other representatives and assistants as are necessary to carry out the trustee's duties and responsibilities. The trustee shall account for all monies derived from the divestitures and all expenses incurred. After approval by the Commission and, in the case of a court-appointed trustee, by the court, of the account of the trustee, including fees for his or her services, all remaining monies shall be paid at the direction of Respondents, and the trustee's power shall be terminated. The trustee's compensation shall be based at least in significant part on a commission arrangement contingent on the trustee's divesting the Assets To Be Divested.

8. Respondents shall indemnify the trustee and hold the trustee harmless against any losses, claims, damages, liabilities, or expenses arising out of, or in connection with, the performance of the trustee's duties, including all reasonable fees of counsel and other expenses incurred in connection with the preparation for or defense of any claim, whether or not resulting in any liability, except to the extent that such losses, claims, damages, liabilities, or expenses result from misfeasance, gross negligence, willful or wanton acts, or bad faith by the trustee.

9. If the trustee ceases to act or fails to act diligently, a substitute trustee shall be appointed in the same manner as provided in Paragraph V.A. of this Order.

10. The Commission or, in the case of a court-appointed trustee, the court, may on its own initiative or at the request of the trustee issue such additional orders or directions as may be necessary or appropriate to accomplish each divestiture required by this Order.

11. In the event that the trustee determines that he or she is unable to divest the Assets To Be Divested in a manner consistent with the Commission's purpose as described in Paragraph II, the trustee may divest assets similar and corresponding to the Assets To Be Divested of Respondents as necessary to achieve the remedial purposes of this Order.

12. The trustee shall have no obligation or authority to operate or maintain the Assets To Be Divested.

13. The trustee shall report in writing to Respondents and the Commission every sixty (60) days concerning the trustee's efforts to accomplish each divestiture required by this Order.

VI.

IT IS FURTHER ORDERED that, for a period commencing on the date this Order becomes final and continuing for ten (10) years, Respondents shall not, without providing advance written notification to the Commission, acquire, directly or indirectly, through subsidiaries or otherwise, any ownership, leasehold, or other interest, in whole or in part, in any facility that has operated as an Auction, within six (6) months of the date of such proposed acquisition, in the relevant sections of the country stated in the Complaint.

Said notification shall be given on the Notification and Report Form set forth in the Appendix to Part 803 of Title 16 of the Code of Federal Regulations as amended (hereinafter referred to as "the Notification"), and shall be prepared and transmitted in accordance with the requirements of that part, except that no filing fee will be required for any such notification, notification shall be filed with the Secretary of the Commission, notification need not be made to the United States Department of Justice, and notification is required only of Respondents and not of any other party to the transaction. Respondents shall provide the Notification to the Commission at least thirty (30) days prior to consummating any such transaction (hereinafter referred to as the "first waiting period"). If, within the first waiting period, representatives of the Commission make a written request for additional information or documentary material (within the meaning of 16 C.F.R. § 803.20), Respondents shall not consummate the transaction until twenty (20) days after submitting such additional information or documentary material. Early termination of the waiting periods in this Paragraph may be requested and, where appropriate, granted by letter from the Bureau of Competition. Provided, however, that prior notification shall not be required by this Paragraph for a transaction for which notification is required to be made, and has been made, pursuant to Section 7A of the Clayton Act, 15 U.S.C. § 18a.

VII.

IT IS FURTHER ORDERED that:

A. Within thirty (30) days after the date this Order becomes final and every thirty (30) days thereafter until Respondents have fully complied with the provisions of Paragraphs II through V of this Order, Respondents shall submit to the Commission a verified written report setting forth in detail the manner and form in which they intend to comply, are complying, and have complied with Paragraphs II through V of this Order. Respondents shall include in their compliance reports, among other things that are required from time to time, a full description of the efforts being made to comply with Paragraphs II through V of the Order, including a description of all substantive contacts or negotiations relating to the divestitures and the approvals. Respondents shall include in their compliance reports copies, other than of privileged materials, of all written communications to and from such parties, all internal memoranda, and all reports and recommendations concerning the divestitures and approvals. The final compliance report required by this Paragraph VII.A. shall include a statement that the divestitures have been accomplished in the manner approved by the Commission and shall include the dates the divestitures were accomplished.

B. One (1) year from the date this Order becomes final, annually for the next nine (9) years on the anniversary of the date this Order becomes final, and at other times as the Commission may require, Respondents shall file a verified written report with the Commission setting forth in detail the manner and form in which they have complied and are complying with this Order.

VIII.

IT IS FURTHER ORDERED that Respondents shall notify the Commission at least thirty (30) days prior to any proposed change in the Respondents that may affect compliance obligations arising out of this Order, such as dissolution, assignment, sale resulting in the emergence of a successor corporation, or the creation or dissolution of subsidiaries or any other change in the corporation.

IX.

IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance with this Order, and subject to any legally recognized privilege, and upon written request with reasonable notice to Respondents, Respondents shall permit any duly authorized representative of the Commission:

A. Access, during office hours and in the presence of counsel, to all facilities and access to inspect and copy all non-privileged books, ledgers, accounts, correspondence, memoranda and other records and documents in the possession or under the control of Respondents relating to any matter contained in this Order; and

B. Upon five (5) days' notice to Respondents and without restraint or interference from them, to interview officers, directors, or employees of Respondents, who may have counsel present, regarding any such matters.

IT IS FURTHERED ORDERED that this Order shall terminate:

A. With respect to Respondents Manheim and Cox, on November 13, 2010.

B. With respect to Respondents ADT and Tyco, when the transfer of the Assets To Be Divested to Respondent Manheim has been completed pursuant to the Acquisition.

By the Commission.

Donald S. Clark
Secretary

SEAL

ISSUED: November 13, 2000