48650 Federal Register / Vol. 48, No. 204 / Thursday, October 20, 1985 / Rules and Regulations

FEDERAL ELECTION COMMISSION

[Notice 1983-26]

11 CFR Part 114

Trade Association Solicitation

Authorization

a g e n c y : Federal Election Commission. 

ACTION: Transmittal of regulations to 

Congress.

s u m m a r y : The Commission’s 

regulations at 11 CFR 114.8(c)(2), (d)(2) 

and (d)(4) have been revised and 

transmitted to Congress pursuant to 2 

U.S.C. 438(d). These regulations govern 

the request and receipt of solicitation 

authorizations that a trade association 

must obtain prior to soliciting its 

corporate members’ stockholders and 

executive or administrative personnel. 

The revisions would permit trade 

associations to request and receive the 

authorizations prior to the calendar year 

in which the solicitation is to occur. 

Further information on the revised 

regulations is provided in the 

supplementary information which 

follows.

EFFECTIVE DATE: Further action, 

including the announcement of an 

effective date, will be taken by the 

Commission after these regulations have 

been before the Congress 30 legislative 

days in accordance with 2 U.S.C. 438(d). 

FOR FURTHER INFORMATION CONTACT:

Ms. Susan E. Propper, Assistant General 

Counsel, 1325 K Street, NW„ 

Washington, D.C. 20463, (202) 523-4143 

or (800) 424-9530.

SUPPLEMENTARY INFORMATION: The 

Commission published a Notice of 

Proposed Rulemaking on these 

regulations on November 26,1982. (47 

FR 53396) The revised regulations are 

based in part upon the comments 

received in response to that Notice.

2 U.S C.S. 438(d) requires that any rule 

or regulation prescribed by the 

Commission to implement Title 2, United 

States Code, be transmitted to the 

Speaker of the House of Representatives 

and the President of the Senate. The 

Commission may prescribe the 

regulations in question after they have 

been before both Houses of Congress for 

30 legislative days. The following 

regulations were transmitted to 

Congress on October 17,1983.

Explanation and Justification

The Commission’s Notice of Proposed 

Rulemaking on these regulations posed 

the following question: does 2 U.S.C 

441b(b)(4)(D) require trade associations 

to obtain the requisite solicitation 

authorization from their corporate

members in the same year for which it is 

to be applicable, or may it be obtained 

prior to that calendar year?

Of the 80 comments received, ali but 

one favore^ the Commission’s proposal 

to permit trade associations to request 

and receive authorizations prior to the 

year for which they are designated.

Many of these favorable comments 

spoke of the difficulties trade 

associations encountered when trying to 

comply with the requirements of the 

current regulations. They complained of 

the months lost each year trying to get 

corporate members to return the 

solicitation approval before solicitation 

could begin. Since it is most economic 

for a trade association to solicit its 

members’ employees at one time, some 

associations cited a loss of up to four 

months a year waiting for the approvals 

to come in. They also stated that 

corporate members were annoyed by 

the repeated requests for approvals and 

that these members would have 

preferred to submit more than one year’s 

approval at a time.

The revisions to 11 CFR 114.8(c)(2) 

and (d)(4) should resolve many of the 

problems raised by the comments. The 

revised regulations permit trade 

associations to obtain solicitation 

approval from their members for several 

years at a time if they so choose. The 

approvals must still be obtained in 

accordance with 2 U.S.C. 441b(b)(4)(D), 

which requires that the solicitation be 

“separately and specifically approved" 

by the member corporation and that the 

member approve solicitations by no 

more than one trade association in any 

calendar year. This means that, for each 

year that a member corporation gives its 

approval to solicit, a separate 

authorization must be prepared even if 

several authorizations are prepared and 

transmitted to the trade association at 

one time. It should also be noted that the 

member corporation continues to have 

the right to withdraw its authorization at 

any time. If, however, any solicitation 

has been made for the trade 

association’s separate segregated fund 

during that calendar year, the 

corporation may not approve 

solicitation by another trade association 

for that calendar year but it may give 

approval for future years.

Since these regulations allow 

corporate members to approve 

solicitation for several years at a time, 

the retention requirements of 11 CFR 

114.8(d)(2) needed to be altered 

accordingly. Therefore, the Commission 

has also revised that section to require 

that each authorization be kept for three 

years from the year to which it applies 

rather than three years from the time it 

was approved. Otherwise,

authorizations might be discarded 

before they even went into effect.

The negative comment was submitted 

by the National Association of Casualty 

and Surety Agents, which was 

concerned that the proposed changes 

would result fin increased competition 

among, trade associations in the same 

industry to obtain corporate approval , 

earlier. While this may be an 

unfortunate result in some cases, the 

benefits to be gained by relaxing the 

requirement to obtain approval in the 

same year that the solicitation occurs, 

as noted by the majority of the 

comments, would seem to outweigh any 

such adverse effects.

List of Subjects in 11 CFR Part 114

Business and industry, Elections.

PART 114— [AMENDED]

11 CFR 114.8 is amended by revising 

paragraphs (c)(2), (d)(2) and (d)(4) as 

follows:

§ 114.8 Trade Associations

*****

(c) * * *

(2) The member corporation has not 

approved a solicitation by any other 

trade association for the same calendar 

year.

(d) * * *

(2) A copy of each approved request 

received by a trade association or its 

separate segregated fund shall be 

maintained by the trade association or 

its fund for three years from the year for 

which the approval is given.

* * * * *

(4) A separate authorization 

specifically allowing a trade association 

to solicit its corporate member’s 

stockholders, and executive or 

administrative personnel applies 

through the calendar year for which it is 

designated. A separate authorization by 

the corporate member must be 

designated for each year during which 

the solicitation is to occur. This 

authorization may be requested and 

may also be received prior to the 

calendar year in which the solicitation is 

to occur.

(2 U.S.C. 441b, 437d(a)(8))

Dated: October 17,1983.

Danny L. McDonald,

Chairman, Federal Election Commission.

[FR Doc. 83-28551 Filed 10-19-83: 8:45 am)

BILLING CODE 6715-01-M
Federal Register / Vol. 48, No. 204 / Thursday, O ctober 20, 1983 / Rules and Regulations 48651

FEDERAL TRADE COMMISSION

16 CFR Part 13

[Docket 9143]

Dairymen, Inc.; Prohibited Trade

Practices, and Affirmative Corrective

Actions

agency: Federal Trade Commission. 

action: Dismissal order.

SUMMARY: The Commission has issued a

Final Order returning this matter to 

adjudication and dismissing the 

complaint issued against one of the 

nation’s largest raw milk processors, 

holding that the record did not support a

finding that Dairymen’s 1978 acquisition 

of Farmbest Foods, Inc., violated Section 

7 of the Clayton Act and Section 5 of the 

Federal Trade Commission Act. 

dates: Complaint issued July 31,1980.*

Final Order issued Sept. 20,1983.

FOR FURTHER INFORMATION CONTACT:

FTC/CS-6, Steven A. Rothman, 

Washington, D.C. 20580. (202) 724-1239.

SUPPLEMENTARY INFORMATION: In the 

Matter of Dairymen, Inc., a corporation.

List of Subjects in 16 CFR Part 13

Milk processors, Trade practices.

(Sec. 6, 38 Stat. 721; 15 U.S.C. 46. Interpret or

apply sec. 5, 38 Stat. 719, as amended; sec. 7,

38 Stat. 731, as amended; 15 U.S.C. 45,18)

[Docket No. 9143]

Final Order Returning Matter to 

Adjudication and Dismissing Complaint

In the Matter of Dairymen, Inc., a 

corporation.

On July 31,1980, the Commission 

issued an administrative complaint 

alleging that Dairymen, Inc.

(“Dairymen”) and Munford, Inc. 

(“Munford”) violated Section 7 of the 

Clayton Act and Section 5 of the Federal 

Trade Commission when Dairymen 

acquired Farmbest Foods, Inc. 

(“Farmbest”) from Munford in 1978. On 

November 4,1982, this matter was 

withdrawn from adjudication so that the 

Commission could consider a proposed 

consent. On March 25,1983, the staff of 

the Bureau of Competition and the 

Bureau of Economics forwarded their 

analyses and recommendations to the 

Commission regarding the proposed 

consent.

At the time this action was filed, the 

Commission had been monitoring the 

Class I milk processing industry for 

m°re than twenty-five years. In the first 

ten years of its corporate existence,

Copies of the Complaint filed with the original 

document.

Dairymen acquired over thirty-one Class 

I milk processing plants in the southern 

United States. None of these individual 

acquisitions were challenged either by 

the Commission or by the Department of 

Justice (“Department”) under Section 7 

of the Clayton Act; however, in 1973, the 

Department brought a civil action 

against Dairymen alleging that it 

violated Section 2 of the Sherman Act 

and Section 3 of the Clayton Act by 

various acts affecting the upstream raw 

milk industry.1 This matter was in 

litigation throughout the development of 

the Commission’s case concerning the 

Farmbest acquisition.

The Commission’s complaint alleged 

that the Farmbest acquisition 

substantially lessened competition in 

the sale of Class I milk products in five 

standard metropolitan statistical areas 

(“SMSAs”): Johnson City-KinsportBristol, Tennessee-Virginia; Knoxville, 

Tennessee; Birmingham, Alabam a;, 

Montgomery, Alabama; and Columbus, 

Georgia-Alabama. The evidence 

adduced in discovery to date, however, 

tends to support geographic markets of 

broader scope. For example, products 

were shipped 135 miles from the Bristol 

plant, 200 miles from the Montgomery 

plant, 140 miles from the Columbus, 

Georgia, plant and 195 miles from the 

Knoxville plant. The recent findings by 

the District Court on remand in U.S. v. 

Dairymen, supra, also suggest broader

1 As part of the complaint, the Government 

alleged that eighteen of these acquisitions 

evidenced Dairymen’s intent to monopolize the 

market in Grade A milk in the southeastern United 

States by foreclosing raw milk competitors from 

access to processing facilities and thereby forcing 

non-member producers either to join Dairymen's 

cooperative or to exit the raw milk market. The 

Government, however, did not seek to ban 

Dairymen from making future acquisitions in the 

relevant market. The District Court entered a 

supplemental judgment dismissing the attempted 

monopolization portion of the Government's 

complaint. The Sixth Circuit Court of Appeals in a 

p er puriam opinion reversed the District Court’s 

attempted monopolization holding, instructing the 

District Court in the correct legal standard and 

directing it to determine relevant geographic 

submarkets for evaluating the attempted 

monopolization allegation on the basis of 

“commercially significant areas in which 

[Dairymen’s] customers could turn to other 

suppliers.” United States v. Dairymen, Inc., 860 F.2d 

92 (6th Cir. 1981).

On remand, the District Court found that the 

Government h'ad met its burden of showing that 

Dairymen had the requisite specific intent to 

monopolize a relevant submarket of five 

southeastern states (Kentucky, Tennessee, Georgia, 

Louisiana and Mississippi), but that the Government 

had failed to show a dangerous probability of 

success. The District Court held the evidence was 

insufficient to show that Dairymen had the power to 

control prices or exclude competitors in the relevant 

five-state market. United States v. Dairymen, Inc.,

Civil Action No. C 7634A (W.D. Ky. June 9,1983, slip 

op. at 14-15).

geographic markets at the processing 

level. In that case the evidence showed 

that raw milk handlers in the five 

southeastern states market have 

purchased milk outside of that 

territory—sometimes from as far away 

as Wisconsin and Minnesota.2 On the 

other hand, our record does not 

conclusively rebut the plausibility of 

more confined markets. Shipments data 

are incomplete; thus, we are unsure of 

the frequency of or reason for the longer 

shipments. The proposed testimony of 

trial witnesses uniformly perceives the 

relevant geographic markets to be 

“local”, although the scope of that 

definition is unclear.

The fact that the contours of the 

relevent geographic markets in milk 

processing are unclear raises the 

concern that the Farmbest acquisition 

has not had anticompetitive effects. 

Other factors strengthen that concern. 

The record indicates that entry barriers 

into milk processing are not high. A 

steady and substantial decline in the 

number of dairy processors for well over 

a decade has made numerous physical 

facilities available. Brand loyalty 

appears to be an insignificant 

competitive factor: Witnesses do not 

emphasize it and Flav-O-Rich has not 

used the Farmbest name since the 

acquisition. Thus, the apparent lack of 

entry into the market appears to be due 

to increasing scale economies, rather 

than to any market power exercised by 

Dairymen Inc.3 These factors, coupled 

with the lack of other evidence of 

anticompetitive effects, have dissipated 

our initial concern about this 

acquisition. Therefore, because the 

record does not support a finding that 

the acquisition is likely to injure 

competition, the Commission no longer 

has reason to believe that respondent 

violated Section 7 of the Clayton Act or 

Section 5 of the Federal Trade 

Commission Act. Therefore,

It is ordered that this matter be 

returned to adjudication and

It is further ordered that the complaint 

issued in the matter be, and it hereby is, 

dismissed.

By the Commission. Chairman Miller did

not participate in the decision of the

* United States v. Dairymen, Inc., supra, slip op. 

at 5.

3 The District Court decision on remand in 

Dairymen also supports this view. The Court there 

held that Dairymen did not have the power to raise 

or fix prices or exclude competitors in the five 

Southeastern states market. Dairymen, supra, slip 

op. at 14-15.