001-0098 UNITED STATES OF AMERICA In the Matter of Manheim Auctions, Inc., Cox Enterprises, Inc., ADT Automotive Holdings, Inc., and Tyco International, Ltd., corporations. Docket No. C-3982 COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and the Clayton Act, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission ("Commission"), having reason to believe that Respondents Manheim Auctions, Inc. ("Manheim"), Cox Enterprises, Inc. ("Cox"), ADT Automotive Holdings, Inc. ("ADT") and Tyco International, Ltd. ("Tyco"), have entered into an agreement whereby Manheim would acquire all of the voting securities of ADT in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act ("FTC Act"), as amended, 15 U.S.C. § 45, and it appearing to the Commission that a proceeding in respect thereof would be in the public interest, hereby issues its Complaint pursuant to Section 11 of the Clayton Act, as amended, 15 U.S.C. § 21, and Section 5(b) of the FTC Act, as amended, 15 U.S.C. § 45(b), stating its charges as follows: Manheim and Cox 1. 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. Manheim is a wholly owned subsidiary of Cox, a corporation with its office and principal place of business located at 1400 Lake Hearn Drive, N.E., Atlanta, Georgia 30319. 3. Manheim is the largest wholesale motor vehicle auction company in the United States. It operates 65 auctions in the United States and auctioned more than 6.5 million motor vehicles in 1998. 4. At all times relevant herein, Respondents Manheim and Cox have been and are now engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. § 12, and are corporations whose businesses are in or affecting commerce as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 44. ADT and Tyco 5. 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. 6. ADT is a wholly owned subsidiary of 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. 7. ADT is the third largest wholesale motor vehicle auction company in the United States with 28 auctions across the country. In 1998, it auctioned 2.1 million vehicles. 8. At all times relevant herein, Respondents ADT and Tyco have been and are now engaged in commerce as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. § 12, and are corporations whose businesses are in or affecting commerce as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 44. The Proposed Acquisition 9. Pursuant to an agreement among Manheim and ADT, dated January 13, 2000, Manheim agreed to purchase all voting securities of ADT for a purchase price of approximately $1 billion (the "ADT Acquisition"). Count One - Kansas City 10. One relevant line of commerce is the provision of wholesale motor vehicle auction services by major motor vehicle auctioneers ("WMVA services"). These services include marshaling motor vehicles before auctions (picking up vehicles and transporting them to the auction), preparing condition reports, reconditioning the motor vehicles, promoting and marketing auctions to potential buyers, auctioning motor vehicles, and reporting the results of those auctions. Major motor vehicle auctions use sophisticated technology to serve large institutional sellers that have thousands of vehicles to sell. 11. One relevant section of the country is the greater metropolitan area of Kansas City, Missouri. This section consists of the following Missouri counties: Cass, Clay, Clinton, Jackson, Lafayette, Platte, and Ray. This section consists of the following Kansas counties: Johnson, Leavenworth, Miami, and Wyandotte. 12. Respondent Manheim owns and operates the Kansas City Auto Auction in Kansas City, Missouri. 13. Respondent ADT owns and operates the Metro Auto Auction of Kansas City Inc. in Lee's Summit, Missouri. 14. Respondents Manheim and ADT are direct and substantial competitors in the business of providing WMVA services in the relevant section of the country set out in Complaint Paragraph 11. 15. The business of providing WMVA services in the relevant section of the country set out in Complaint Paragraph 11 is highly concentrated. The ADT Acquisition would significantly increase concentration in this relevant section of the country, resulting in a Herfindahl-Hirschman Index (commonly referred to as "HHI") of 10,000. That is, the ADT Acquisition would result in a monopoly in the relevant product market and section of the country set out in Complaint Paragraphs 10 and 11. 16. The effect of the proposed ADT Acquisition, if consummated, may be substantially to lessen competition or to tend to create a monopoly in the provision of WMVA services in the relevant section of the country set out in Complaint Paragraph 11, in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, in the following ways, among others:
17. Entry would not be timely, likely, or sufficient to prevent anticompetitive effects in the relevant section of the country set out in Complaint Paragraph 11. Count Two - Colorado Front Range 18. One relevant line of commerce is the provision of WMVA services. 19. One relevant section of the country includes the Colorado Front Range, which includes the greater metropolitan areas of Denver, Colorado and Colorado Springs, Colorado. This section consists of the following counties: Adams, Arapahoe, Boulder, Denver, Douglas, El Paso, Jefferson, and Weld. 20. Respondent Manheim owns and operates the Denver Auto Auction in Denver, Colorado and the Colorado Auto Auction in Commerce City, Colorado. 21. Respondent ADT owns and operates the Colorado Springs Auto Auction Inc., in Fountain, Colorado. 22. Respondents Manheim and ADT are direct and substantial competitors in the provision of WMVA services in the relevant section of the country set out in Complaint Paragraph 19. 23. The business of providing WMVA services in the relevant section of the country set out in Complaint Paragraph 19 is highly concentrated. The ADT Acquisition would significantly increase concentration in this relevant section of the country, resulting in an HHI of 10,000. That is, the ADT Acquisition would result in a monopoly in the relevant product market and section of the country set out in Complaint Paragraphs 18 and 19. 24. The effect of the proposed ADT Acquisition, if consummated, may be substantially to lessen competition or to tend to create a monopoly in the provision of WMVA services in the relevant section of the country set out in Complaint Paragraph 19, in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, in the following ways, among others:
25. Entry would not be timely, likely, or sufficient to prevent anticompetitive effects in the relevant section of the country set out in Complaint Paragraph 19. Count Three - Atlanta, Georgia 26. One relevant line of commerce is the provision of WMVA services. 27. One relevant section of the country is the greater metropolitan area of Atlanta, Georgia. This section consists of the following counties: Barrow, Bartow, Carroll, Cherokee, Clayton, Cobb, Coweta, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Spalding, and Walton. 28. Respondent Manheim owns and operates the Atlanta Auto Auction in Atlanta, Georgia, the Bishop Brothers' Auto Auction in Atlanta, Georgia and the Georgia Dealers' Auto Auction in Atlanta, Georgia. 29. Respondent ADT owns and operates the Southern States Vehicle Auction in Newnan, Georgia. 30. Respondents Manheim and ADT are direct and substantial competitors in the provision of WMVA services in the relevant section of the country set out in Complaint Paragraph 27. 31. The business of providing WMVA services in the relevant section of the country set out in Complaint Paragraph 27 is highly concentrated. The ADT Acquisition would significantly increase concentration in this relevant section of the country, resulting in an HHI of 10,000. That is, the ADT Acquisition would result in a monopoly in the relevant product market and section of the country set out in Complaint Paragraphs 26 and 27. 32. The effect of the proposed ADT Acquisition, if consummated, may be substantially to lessen competition or to tend to create a monopoly in the provision of WMVA services in the relevant section of the country set out in Complaint Paragraph 27, in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, in the following ways, among others:
33. Entry would not be timely, likely, or sufficient to prevent anticompetitive effects in the relevant section of the country set out in Complaint Paragraph 27. Count Four - San Francisco, California 34. One relevant line of commerce is the provision of WMVA services. 35. One relevant section of the country is the greater metropolitan area of San Francisco, California. This section consists of the following counties: Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano and Sonoma. 36. Respondent Manheim owns and operates the Bay Cities Auto Auction in Hayward, California. 37. Respondent ADT owns and operates the Golden Gate Auto Auction in Fremont, California. 38. Respondents Manheim and ADT are direct and substantial competitors in the provision of WMVA services in the relevant section of the country set out in Complaint Paragraph 35. 39. The business of providing WMVA services in the relevant section of the country set out in Complaint Paragraph 35 is highly concentrated. The ADT Acquisition would significantly increase concentration in this relevant section of the country, resulting in an HHI of 10,000. That is, the ADT Acquisition would result in a monopoly in the relevant product market and section of the country set out in Complaint Paragraphs 34 and 35. 40. The effect of the proposed ADT Acquisition, if consummated, may be substantially to lessen competition or to tend to create a monopoly in the provision of WMVA services in the relevant section of the country set out in Complaint Paragraph 35, in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, in the following ways, among others:
41. Entry would not be timely, likely, or sufficient to prevent anticompetitive effects in the relevant section of the country set out in Complaint Paragraph 35. Count Five - Seattle, Washington 42. One relevant line of commerce is the provision of WMVA services. 43. One relevant section of the country is the greater metropolitan area of Seattle, Washington. This section consists of the following counties: Island, King, Kitsap, Pierce, and Snohomish. 44. Respondent Manheim owns and operates the South Seattle Auto Auction in Seattle, Washington. 45. Respondent ADT owns and operates the Puget Sound Auto Auction Inc., in Auburn, Washington. 46. Respondents Manheim and ADT are direct and substantial competitors in the provision of WMVA services in the relevant section of the country set out in Complaint Paragraph 43. 47. The business of providing WMVA services in the relevant section of the country set out in Complaint Paragraph 43 is highly concentrated. The ADT Acquisition would significantly increase concentration in this relevant section of the country, resulting in an HHI of 10,000. That is, the ADT Acquisition would result in a monopoly in the relevant product market and section of the country set out in Complaint Paragraphs 42 and 43. 48. The effect of the proposed ADT Acquisition, if consummated, may be substantially to lessen competition or to tend to create a monopoly in the provision of WMVA services in the relevant section of the country set out in Complaint Paragraph 43, in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, in the following ways, among others:
49. Entry would not be timely, likely, or sufficient to prevent anticompetitive effects in the relevant section of the country set out in Complaint Paragraph 43. Count Six - I-4 Corridor of Florida 50. One relevant line of commerce is the provision of WMVA services. 51. One relevant section of the country is the I-4 corridor of Florida, which is approximated by the route of the Interstate highway between Daytona and Tampa, and includes the greater metropolitan areas of Tampa, Orlando, and Daytona Beach. This section consists of the following counties: Flagler, Hernando, Hillsborough, Lake, Orange, Osceola, Pasco, Pinellas, Seminole, and Volusia. 52. Respondent Manheim owns and operates the Daytona Auto Dealers' Exchange in Daytona Beach, Florida, the Florida Auto Auction of Orlando in Ocoee, Florida, the Greater Tampa Bay Auto Auction in Tampa, Florida, the Imperial Auto Auction in Lakeland, Florida, the Lakeland Auto Auction in Lakeland, Florida, Manheim's Central Florida Auto Auction in Orlando, Florida, Manheim's Orlando Orange County Auto Auction in Orlando, Florida and the St. Pete Auto Auction in Clearwater, Florida. 53. Respondent ADT owns and operates the Bayside Auto Auction of Tampa in Tampa, Florida, the Clearwater Auto Auction in Clearwater, Florida, and the Dealers' Auto Auction of Sanford Inc., in Sanford, Florida. 54. Respondents Manheim and ADT are direct and substantial competitors in the provision of WMVA services in the relevant section of the country set out in Complaint Paragraph 51. 55. The business of providing WMVA services in the relevant section of the country set out in Complaint Paragraph 51 is highly concentrated. The ADT Acquisition would significantly increase concentration in this relevant section of the country, resulting in an HHI of 10,000. That is, the ADT Acquisition would result in a monopoly in the relevant product market and section of the country set out in Complaint Paragraphs 50 and 51. 56. The effect of the proposed ADT Acquisition, if consummated, may be substantially to lessen competition or to tend to create a monopoly in the provision of WMVA services in the relevant section of the country set out in Complaint Paragraph 51, in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, in the following ways, among others:
57. Entry would not be timely, likely, or sufficient to prevent anticompetitive effects in the relevant section of the country set out in Complaint Paragraph 51. Count Seven - Phoenix, Arizona 58. One relevant line of commerce is the provision of WMVA services. 59. One relevant section of the country is the greater metropolitan area of Phoenix, Arizona. This section consists of the following counties: Maricopa and Pinal. 60. JM Family Enterprises, Inc. ("JMF"), is a Delaware corporation with its office and principal place of business located at 100 NW 12th Avenue, Deerfield Beach, Florida. 61. As a result of a 1996 agreement between Manheim and JMF, Manheim acquired a controlling interest in two major wholesale motor vehicle auctions - Manheim's Greater Auto Auction and Southwest Auto Auction (the "Phoenix Acquisition"). Manheim had previously owned the Southwest Auto Auction. 62. The business of providing WMVA services in the relevant section of the country set out in Complaint Paragraph 59 is highly concentrated. The Phoenix Acquisition has significantly increased concentration in this relevant section of the country, resulting in an HHI of 10,000. That is, a monopoly presently exists in the relevant product market and section of the country set out in Complaint Paragraphs 58 and 59. 63. The effect of the Phoenix Acquisition may have substantially lessened competition in the relevant market in the following ways, among others:
64. Entry has not been timely or sufficient to prevent anticompetitive effects in the relevant section of the country set out in Complaint Paragraph 59. Violations Charged 65. The acquisition described in Complaint Paragraph 9, if consummated, would violate Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45. 66. The acquisition described in Complaint Paragraph 61 constitutes a violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45. WHEREFORE THE PREMISES CONSIDERED, the Federal Trade Commission, on this thirteenth day of November, 2000, issues its Complaint against said Respondents. By the Commission. Donald S. Clark SEAL: |