UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION

__________________________________________ 

)

In the Matter of )

)

CLASS RINGS, INC., )

)

 a corporation; )

 )

CASTLE HARLAN PARTNERS II, L.P., ) File No. 961-0067

)

 a limited partnership; )

)

 and )

)

TOWN & COUNTRY CORPORATION, )

)

 a corporation. )

__________________________________________) 

AGREEMENT CONTAINING CONSENT ORDER

The Federal Trade Commission (“Commission”) having initiated an investigation of the

proposed acquisition by Class Rings, Inc., a corporation controlled by Castle Harlan Partners II,

L.P. (“Castle Harlan”), of the class ring assets of CJC Holdings, Inc. and CJC North America,

Inc. (collectively “CJC”) and the class ring assets of Town & Country Corporation (“Town &

Country”), and the proposed acquisition by Town & Country of voting securities of Class Rings,

Inc. (Class Rings, Inc., Castle Harlan and Town & Country hereinafter sometimes referred to as

“Proposed Respondents”), and it now appearing that Proposed Respondents are willing to enter
2

into an Agreement Containing Consent Order (“Agreement”) to provide for certain relief.

IT IS HEREBY AGREED by and among Proposed Respondents, by their duly authorized

officers and their attorneys, and counsel for the Commission that:

1. Proposed Respondent Class Rings, Inc., a corporation controlled by Castle Harlan

Partners II, L.P., 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 150

East 58th Street, New York, New York 10155.

2. Proposed Respondent Castle Harlan Partners II, L.P., is a limited partnership

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 150 East 58th Street, New York, New

York 10155.

3. Proposed Respondent Town & Country Corporation is a corporation organized,

existing, and doing business under and by virtue of the laws of the Commonwealth of

Massachusetts with its office and principal place of business located at 25 Union Street, Chelsea,

Massachusetts 02150.

4. Proposed Respondents admit all the jurisdictional facts set forth in the draft of

Complaint here attached.

5. Proposed Respondents waive:

a. Any further procedural steps; 

b. The requirement that the Commission's decision contain a statement of 

findings of fact and conclusions of law;
3

c. All rights to seek judicial review or otherwise to challenge or contest the 

validity of the Order entered pursuant to this Agreement; and 

d. Any claim under the Equal Access to Justice Act.

6. This Agreement shall not become part of the public record of the proceeding

unless and until it is accepted by the Commission. If this Agreement is accepted by the

Commission, it, together with the draft of Complaint contemplated thereby, will be placed on the

public record for a period of sixty (60) days and information in respect thereto publicly released. 

The Commission thereafter may either withdraw its acceptance of this Agreement and so notify

Proposed Respondents, in which event it will take such action as it may consider appropriate, or

issue and serve its Complaint (in such form as the circumstances may require) and decision in

disposition of the proceeding.

7. This Agreement is for settlement purposes only and does not constitute an

admission by Proposed Respondents that the law has been violated as alleged in the draft of

Complaint here attached, or that the facts as alleged in the draft of Complaint, other than

jurisdictional facts, are true.

8. This Agreement contemplates that, if it is accepted by the Commission, and if

such acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of

§ 2.34 of the Commission's Rules, the Commission may, without further notice to Proposed

Respondents, (1) issue its Complaint corresponding in form and substance with the draft of

Complaint here attached and its decision containing the following Order in disposition of the

proceeding, and (2) make information public with respect thereto. When so entered, the Order
4

shall have the same force and effect and may be altered, modified, or set aside in the same

manner and within the same time provided by statute for other orders. The Order shall become

final upon service. Delivery by the United States Postal Service of the Complaint and decision

containing the agreed-to Order to Proposed Respondents’ addresses as stated in this Agreement

shall constitute service. Proposed Respondents waive any right they may have to any other

manner of service. The Complaint may be used in construing the terms of the Order, and no

agreement, understanding, representation, or interpretation not contained in the Order or the

Agreement may be used to vary or contradict the terms of the Order.

9. Proposed Respondents have read the proposed Complaint and Order contemplated

hereby. They understand that once the Order has been issued, they will be required to file one or

more compliance reports showing they have fully complied with the Order. Proposed

Respondents further understand that they may be liable for civil penalties in the amount provided

by law for each violation of the Order after it becomes final.

ORDER

I.

For purposes of this Order, the following definitions shall apply:

A. “Respondent Class Rings, Inc.” or “Class Rings, Inc.” means Class Rings, Inc., its

predecessors, subsidiaries, divisions, groups and affiliates controlled by Class Rings, Inc.; and

their respective directors, officers, employees, agents and representatives and the respective

successors and assigns of each.

B. “Respondent Castle Harlan” or “Castle Harlan” means Castle Harlan Partners II,
5

L.P., its predecessors, subsidiaries (including, but not limited to, Class Rings, Inc. and Keepsake

Jewelry, Inc.), divisions, groups and affiliates controlled by Castle Harlan; and their respective

general partners, officers, employees, agents and representatives and the respective successors

and assigns of each.

C. “Respondent Town & Country” or “Town & Country” means Town & Country

Corporation, its predecessors, subsidiaries (including but not limited to, Gold Lance, Inc.),

divisions, groups and affiliates controlled by Town & Country; and their respective directors,

officers, employees, agents and representatives, and the respective successors and assigns of

each. For purposes of this order, Town & Country shall not include L. G. Balfour Company,

Inc., the assets of L.G. Balfour Company, Inc., and any assets related to the business of L.G.

Balfour Company, Inc., to be purchased by Class Rings, Inc., referred to in the Asset Purchase

Agreement dated May 20, 1996.

D. “Gold Lance” means Gold Lance, Inc., its predecessors, subsidiaries, divisions,

groups and affiliates controlled by Gold Lance, Inc.; and their respective directors, officers,

employees, agents and representatives and the respective successors and assigns of each.

E. “Respondents” means Class Rings, Inc., Castle Harlan and Town & Country.

F. “Commission” means the Federal Trade Commission.

G. “Class Rings” means rings manufactured and sold to high school, junior high

school, college, undergraduate, graduate, trade school, and community college students, and

students of any other post-high school institutions to commemorate their graduation. Class Rings

are generally made of gold, silver or steel alloy metals and often include a precious or synthetic

stone, the school name, student’s interests or activities, date of graduation, and various
6

 other inscriptions. 

II.

IT IS ORDERED that, at or before the time Respondent Class Rings, Inc., acquires L.G.

Balfour Company, Inc., its assets and any other assets related to the business of L.G. Balfour

Company, Inc., to be purchased by Class Rings, Inc., referred to in the Asset Purchase Agreement

dated May 20, 1996, Castle Harlan and Class Rings, Inc., shall not acquire from or agree to

acquire from Town & Country, and Town & Country shall not sell to or agree to sell to Castle

Harlan or Class Rings, Inc., any stock, share capital, equity, debt, or other interest in or assets of

Gold Lance or any stock, share capital, equity, debt, or other interest in or assets of Town &

Country; and Respondent Town & Country shall not acquire or agree to acquire from Castle

Harlan or Class Rings, Inc., and Castle Harlan and Class Rings, Inc., shall not sell or agree to sell

to Respondent Town & Country any stock, share capital, equity, debt, or other interest in or

assets of Respondents Castle Harlan or Class Rings, Inc. 

The purpose of this provision is to ensure the continuation of Gold Lance as an

independent competitor in the design, manufacture and sale of Class Rings and to remedy the

lessening of competition as alleged in the Commission’s complaint. 

III.

IT IS FURTHER ORDERED that, for a period of ten (10) years from the date this Order

becomes final, Respondent Class Rings, Inc., and Respondent Castle Harlan shall not, without

the prior approval of the Commission, directly or indirectly, through subsidiaries, partnerships,
7

 or otherwise:

A, acquire any stock, share capital, equity, debt, or other interest in Gold Lance or

Town & Country, or;

B. acquire any assets used in the design, manufacture, or sale of Class Rings from

Gold Lance or Town & Country. 

IV.

IT IS FURTHER ORDERED that, for a period of ten (10) years from the date this Order

becomes final Respondent Town & Country shall not, without the prior approval of the

Commission, directly or indirectly, through subsidiaries, partnerships, or otherwise:

A. acquire any stock, share capital, equity, debt, or other interest in Class Rings, Inc.,

or Castle Harlan, or;

B. acquire any assets used in the design, manufacture, or sale of Class Rings from

Castle Harlan or Class Rings, Inc.;

PROVIDED, HOWEVER, Town & Country may purchase assets from Castle Harlan or

Class Rings, Inc., totaling not more than $2 million in any twelve (12) month period, without

prior approval of the Commission.

V.

IT IS FURTHERED ORDERED that:

Respondent Castle Harlan and Respondent Class Rings, Inc., shall not, for a period of one

(1) year from the date this Order becomes final, employ or seek to employ any person who is or
8

 was employed at any time during calendar year 1996 by Gold Lance or by Town & Country in

any position relating to the design, manufacture, or sale of Class Rings.

VI.

IT IS FURTHER ORDERED that:

A. Within sixty (60) days after this Order becomes final and every sixty (60) days

thereafter until Respondents have fully complied with the provisions of Paragraph II of this

Order, each of the Respondents shall submit to the Commission a verified written report setting

forth in detail the manner and form in which it intends to comply, is complying, and has

complied with Paragraph II of this Order.

B. One year (1) 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, each of the Respondents shall file a verified written report with the

Commission setting forth in detail the manner and form in which it has complied and is

complying with Paragraphs III, IV, and V of this Order.

VII.

IT IS FURTHER ORDERED that Respondents Castle Harlan, Class Rings, Inc., and

Town & Country, shall notify the Commission at least thirty (30) days prior to any proposed

change in the Respondents such as dissolution, assignment, or sale resulting in the emergence of

a successor corporation or partnership, the creation or dissolution of subsidiaries or any other

change in the Respondents that may affect compliance obligations arising out of the order.
9

VIII.

IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance

with this order, each of the Respondents shall permit any duly authorized representative of the

Commission:

A. Access, during office hours of Respondents and in the presence of counsel, to

inspect and copy all books, ledgers, accounts, correspondence, memoranda and other records and

documents in the possession or under the control of Respondents relating to any matters

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.

IX.

IT IS FURTHER ORDERED that this Order shall expire ten (10) years from the date this

Order becomes final.

Dated: _________________________

FEDERAL TRADE COMMISSION CLASS RINGS, INC.

By: _________________________ By: _________________________

Joseph G. Krauss David B. Pittaway

Deputy Assistant Director President

Bureau of Competition

Counsel for the 

Federal Trade Commission
10

APPROVED: CASTLE HARLAN PARTNERS, II, 

L.P.

By: CASTLE HARLAN, INC.,

 as Investment Manager

___________________

M. Howard Morse By: _______________________

Assistant Director David B. Pittaway

 Vice President

___________________

George S. Cary By: _________________________

Deputy Director Joseph Kattan

Morgan, Lewis & Bockius LLP

Counsel for Class Rings, Inc., 

___________________ Castle Harlan Partners II, L.P., 

William J. Baer and Town & Country

Corporation

Director

Bureau of Competition

TOWN & COUNTRY 

CORPORATION

By: _________________________

Francis X. Correra

Senior Vice President and Chief 

Financial Officer

By: _________________________

Keith Shugarman

Goodwin, Procter & Hoar LLP

Counsel for Town & Country 

Corporation 
UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION

_____________________________________________ 

)

In the Matter of )

)

CLASS RINGS, INC., )

)

 a corporation; )

)

CASTLE HARLAN PARTNERS II, L.P., ) File No. 961-0067

)

 a limited partnership; )

)

 and )

)

TOWN & COUNTRY CORPORATION, )

)

 a corporation. )

_____________________________________________ ) 

INTERIM AGREEMENT

This Interim Agreement is by and between Class Rings, Inc., a corporation organized and

existing under the laws of the State of Delaware (“Class Rings, Inc.”), Castle Harlan Partners II,

L.P., a limited partnership organized and existing under the laws of the State of Delaware

(“Castle Harlan”), Town & Country Corporation, a corporation organized and existing under the

laws of the State of Massachusetts (“Town & Country”), and the Federal Trade Commission, an

independent agency of the United States Government, established under the Federal Trade

Commission Act of 1914, 15 U.S.C. § 41, et seq. (the “Commission”).

PREMISES

WHEREAS, Class Rings, Inc. has proposed to acquire all of the class ring assets of

Town & Country pursuant to the Asset Purchase Agreement dated May 20, 1996 (“the proposed
2

Acquisition”); 

WHEREAS, the Commission is now investigating the proposed Acquisition to

determine if it would violate any of the statutes the Commission enforces; and

WHEREAS, if the Commission accepts the Agreement Containing Consent Order

(“Consent Agreement”), the Commission will place it on the public record for a period of at least

sixty (60) days and subsequently may either withdraw such acceptance or issue and serve its

Complaint and decision in disposition of the proceeding pursuant to the provisions of Section

2.34 of the Commission’s Rules; and

WHEREAS, the Commission is concerned that if an understanding is not reached during

the period prior to the final issuance of the Consent Agreement by the Commission (after the 60-

day public notice period), there may be interim competitive harm, and divestiture or other relief

resulting from a proceeding challenging the legality of the proposed Acquisition might not be

possible, or might be less than an effective remedy; and

WHEREAS, the entering into this Interim Agreement by Class Rings, Inc., Castle Harlan

and Town & Country shall in no way be construed as an admission by Class Rings, Inc., Castle

Harlan and Town & Country that the proposed Acquisition constitutes a violation of any statute;

and

WHEREAS, Class Rings, Inc., Castle Harlan and Town & Country understand that no

act or transaction contemplated by this Interim Agreement shall be deemed immune or exempt

from the provisions of the antitrust laws or the Federal Trade Commission Act by reason of

anything contained in this Interim Agreement.

NOW, THEREFORE, Class Rings, Inc., Castle Harlan and Town & Country agree,

upon the understanding that the Commission has not yet determined whether the proposed

Acquisition will be challenged, and in consideration of the Commission’s agreement that, at the
3

 time it accepts the Consent Agreement for public comment, it will grant early termination of the

Hart-Scott-Rodino waiting period, as follows:

1. Class Rings, Inc., Castle Harlan and Town & Country agree to execute the Consent

Agreement and be bound by the terms of the Order contained in the Consent Agreement, as if it

were final, from the date Class Rings, Inc., Castle Harlan and Town & Country sign the Consent

Agreement.

2. Class Rings, Inc., Castle Harlan and Town & Country agree to submit, within twenty

(20) days of the date the Consent Agreement is signed by Class Rings, Inc., Castle Harlan and

Town & Country, and every thirty (30) days thereafter until respondents have fully complied with

the provisions of Paragraph II of the Consent Agreement, written reports, pursuant to Section

2.33 of the Commission’s Rules, signed by Class Rings, Inc., Castle Harlan and Town & Country

setting forth in detail the manner in which Class Rings, Inc., Castle Harlan and Town & Country

will comply or have complied with Paragraph II of the Consent Agreement.

3. Class Rings, Inc., Castle Harlan and Town & Country agree that, from the date Class

Rings, Inc, Castle Harlan and Town & Country sign the Consent Agreement until the first of the

dates listed in subparagraphs 3.a. and 3.b., they will comply with the provisions of this Interim

Agreement:

 a. ten (10) business days after the Commission withdraws its acceptance of the

Consent Agreement pursuant to the provisions of Section 2.34 of the Commission’s

Rules; or

 b. the date the Order is final.

4. Class Rings, Inc., Castle Harlan and Town & Country waive all rights to contest the

validity of this Interim Agreement.

5. For the purpose of determining or securing compliance with this Interim
4

Agreement, subject to any legally recognized privilege, and upon written request, and on

reasonable notice, Class Rings, Inc., Castle Harlan and Town & Country shall permit any duly

authorized representative or representatives of the Commission:

 a. access, during the office hours of Class Rings, Inc., Castle Harlan and Town &

Country and in the presence of counsel, to inspect and copy all books, ledgers, accounts,

correspondence, memoranda, and other records and documents in the possession or under

the control of Class Rings, Inc., Castle Harlan and Town & Country relating to

compliance with this Interim Agreement; and

 b. upon five (5) days’ notice to Class Rings, Inc., Castle Harlan and Town &

Country and without restraint or interference from them, to interview officers, directors,

or employees of Class Rings, Inc., Castle Harlan and Town & Country, who may have

counsel present, regarding any such matters.

7. This Interim Agreement shall not be binding until accepted by the Commission.

Dated:

FEDERAL TRADE COMMISSION CLASS RINGS, INC.

By: __________________ By: ______________________

Stephen Calkins David B. Pittaway

General Counsel President

CASTLE HARLAN PARTNERS, II, 

L.P.

By: CASTLE HARLAN, INC.,

 as Investment Manager

By: _______________________

 David B. Pittaway

 Vice President

TOWN & COUNTRY 
5

CORPORATION

By:_____________________________

 Francis X. Correra

 Senior Vice President and Chief 

Financial Officer
UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION

_____________________________________________

)

In the Matter of )

)

CLASS RINGS, INC. )

a corporation; )

 )

CASTLE HARLAN PARTNERS II, L.P., ) Docket No.

a limited partnership; )

)

and )

)

TOWN & COUNTRY CORPORATION )

a corporation. )

_____________________________________________ ) 

COMPLAINT

Pursuant to the provisions of the Federal Trade Commission Act and of the Clayton Act,

and by virtue of the authority vested in it by said Acts, the Federal Trade Commission, having

reason to believe that Class Rings, Inc., a corporation controlled by Castle Harlan Partners II

L. P. (“Castle Harlan”), has entered into an Asset Purchase Agreement with Town & Country

Corporation (“Town & Country”) and CJC Holdings, Inc. (“CJC”), whereby Class Rings, Inc.

has agreed to acquire the class ring assets of Town & Country and has agreed to acquire the class

ring assets of CJC, and Town & Country has agreed to acquire stock of Class Rings, Inc., in

violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, and

that such acquisitions, 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, and it appearing to the

Commission that a proceeding in respect thereof would be in the public interest, hereby issues its

complaint stating its charges as follows:

A. THE RESPONDENTS

1. Respondent Class Rings, Inc., a corporation formed and controlled by Castle Harlan

Partners II, L.P., 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 150

East 58th Street, New York, New York 10155.

2. Respondent Castle Harlan Partners II, L.P. (“Castle Harlan”) is a limited partnership

organized, existing, and doing business under and by virtue of the laws of the State of
2

Delaware with its office and principal place of business located at 150 East 58th Street, New

York, New York 10155. Castle Harlan is a venture capital partnership organized by Castle

Harlan, Inc., a New York-based investment firm.

3. Respondent Town & Country Corporation is a corporation organized, existing, and

doing business under and by virtue of the laws of the Commonwealth of Massachusetts with its

office and principal place of business located at 25 Union Street, Chelsea, Massachusetts 02150.

4. At all times relevant herein, all respondents have been and are now engaged in

commerce as “commerce” is defined in Section 1 of the Clayton Act, 15 U.S.C. § 12, and are

partnerships or corporations whose business or practices 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.

B. THE PROPOSED ACQUISITIONS

5. On May 20, 1996, Class Rings, Inc., agreed to purchase all of the class ring assets of

Town & Country and CJC, pursuant to an Asset Purchase Agreement by and between Class

Rings, Inc. as buyer and CJC Holdings, Inc. and CJC North America, Inc. as seller, and an Asset

Purchase Agreement by and between Class Rings, Inc. as buyer and Town & Country

Corporation, Gold Lance, Inc. (“Gold Lance”), and L.G. Balfour Company, Inc. (“Balfour”) as

sellers. As consideration for the sale of the assets, Town & Country is to receive cash of

approximately $55 million and approximately 8% of the voting securities of Class Rings, Inc.

with rights to receive an additional 10% of the voting securities of Class Rings, Inc.

6. CJC, based in Austin, Texas, is one of the leading manufacturers of commemorative

jewelry in the United States. Its class ring division manufactures and markets class rings

primarily under the ArtCarved and R. Johns brand names, and also under the Class Rings, Ltd.,

Keystone, and Master Class Rings brand names. CJC distributes its class rings primarily through

retail jewelry stores, college bookstores, and certain mass merchandisers.

7. Town & Country, through its class ring divisions, Gold Lance and Balfour, is a

leading producer of high school and college class rings. Town & Country’s class rings are

available through retail jewelry stores and mass merchandisers under the Gold Lance brand

name, and through both independent sales representatives and direct sales in schools under the

Balfour brand name. Gold Lance and Balfour rings are manufactured in separate plants (Gold

Lance in Houston, Texas and Balfour in North Attleboro, Massachusetts), and the two divisions

are operated independently. Balfour also produces a variety of other products, including

graduation announcements, personalized jewelry, and sports and recognition products.

8. Town & Country and CJC are substantial, direct competitors in the United States

market for the manufacture and sale of high school and college class rings.
3

C. RELEVANT LINE OF COMMERCE

9. One relevant line of commerce within which to analyze the effects of the proposed

acquisitions is the United States market for class rings. Class rings are rings manufactured and

sold to high school, junior high school, undergraduate, graduate, trade school, and community

college students, and students of any other post-high school institutions to commemorate their

graduation. Class rings are generally made of gold, silver or of steel alloy metals and often

include a precious or synthetic stone, the school name, student’s interests or activities, date of

graduation, and various other inscriptions. 

10. Class rings are purchased by students to commemorate their graduation from high

school or college. There are no substitutes for class rings and students would not switch to other

types of commemorative jewelry, such as pins and medallions, even in response to a significant

price increase in class rings. Students generally buy or receive as gifts other commemorative

products in addition to, not instead of, class rings. Students do not view other products or

graduation gifts as substitutes for a class ring. Commemorative products are usually purchased

close to the time of graduation, whereas class rings are typically ordered well before graduation,

often one or two years in advance. 

11. Students often have the option of purchasing a class ring at their schools or at a

retail jewelry store. CJC distributes virtually all of its high school class rings through retail

jewelry stores and accounts for a dominant share of the high school rings sold in retail stores.

Town & Country’s Gold Lance subsidiary is CJC’s principal competitor; it sells only through

retail jewelry stores, and the vast majority of its business is in high school rings. Jostens, Inc.

has the leading share of in-school sales of high school class rings, and sells only small volumes

of class rings in retail jewelry stores. Balfour sells only in schools or in college bookstores and

has no sales through retail jewelry stores.

12. The relevant geographic market within which to analyze the effects of the proposed

transactions is the United States. The sale of class rings is a uniquely American phenomenon.

13. Total sales of class rings in the United States are approximately $330 million. 

Approximately 40% of all class rings are sold through retail distribution in retail jewelry stores. 

D. CONCENTRATION

14. The United States class ring market is highly concentrated. CJC and Town &

Country are two of only four major manufacturers of class rings in the United States and have a

combined market share of over 40% of all class rings sold in the United States. Jostens, Inc.

(currently the largest manufacturer of class rings in the United States), CJC, Town & Country,

and Herff Jones, Inc., together account for over 95% of all class ring sales. The proposed merger
4

of CJC and Town & Country assets would increase the Herfindahl-Hirschman Index (HHI) over

900 points to approximately 3760. 

15. The remaining 5% of the class ring market is composed of several smaller class ring

manufacturers whose combined share historically has not exceeded 5%. These firms are limited

in their ability to expand by their limited inventory of molds and limited distribution.

16. The combination of the CJC and Town & Country class ring assets would give the

merged entity a combined market share of over 90% of class rings sold through the retail

distribution channel.

E. CONDITIONS OF ENTRY

17. De novo entry or fringe expansion into the class rings market which would be

sufficient to deter or offset reductions in competition resulting from the proposed acquisitions

would not be timely or likely.

18. The four major class ring manufacturers each have hundreds of thousands of molds

and produce a variety of styles, sizes, options and features for class rings sold across the United

States. The small fringe producers each have inventories of only several thousand molds. The

costs and time necessary to create a large inventory of molds are significant and the costs to build

a mold inventory are sunk costs. 

19. Distribution barriers are also substantial. Schools and jewelry store operators are

reluctant to replace their existing class ring suppliers. Marketing impediments include the need

to build a reputation and a specialized sales force. Class ring manufacturers must deliver highly

customized products in a timely manner.

20. Manufacturers of recognition jewelry use the same manufacturing process as that

used by manufacturers of class rings. However, recognition jewelry manufacturers do not have

the necessary molds to produce class rings and are not organized to deliver customized products

to customers in a timely manner.

F. FACTORS THAT INCREASE LIKELIHOOD OF COORDINATED 

INTERACTION

21. The class ring market already has several indicia of a market susceptible to

coordinated interaction and the proposed acquisitions would increase competitors’ ability to

coordinate. Product lines, while diverse, are comparable across firms. Pricing and unit sales

information is widely available among firms, and the major firms are moving toward more

simple pricing structures which will make that information even more easily available. 

Transactions are numerous and small. Market shares have been relatively stable, with little or no
5

shifting of share among the leading firms.

22. There already is substantial communication and interaction between the leading

firms in the class ring market. Company documents reveal contacts between firms in the market

and the exchange of pricing and promotional information.

G. EFFECTS OF THE PROPOSED ACQUISITIONS

23. The proposed acquisition of the class ring assets of CJC and T&C by Class Rings,

Inc., may substantially lessen competition in the United States market for class rings by, among

other things:

 a. increasing concentration substantially in a highly concentrated market;

 b. eliminating substantial head-to-head competition between Gold Lance and 

 CJC;

 c. substantially increasing the risk of coordinated interaction;

 d. substantially increasing the risk of unilateral effects in class rings sold

 through the retail distribution channel;

 e. increasing prices for class rings.

H. VIOLATIONS CHARGED

24. The agreements described in paragraph 5 violate Section 5 of the Federal Trade

Commission Act, as amended, 15 U.S.C. § 45.

25. The proposed acquisition of the class ring assets of Town & Country and CJC by

Class Rings, Inc., and the acquisition of stock in Class Rings, Inc., by Town & Country, 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.

WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on this

_____ day of ___________, 1996, issues its complaint against said respondents.

Donald S. Clark

Secretary

SEAL:
6
ANALYSIS TO AID PUBLIC COMMENT ON 

THE PROVISIONALLY ACCEPTED CONSENT ORDER

The Federal Trade Commission (“the Commission”) has accepted for public comment an

agreement containing a consent order with Class Rings, Inc., Castle Harlan Partners II, L.P.

(“Castle Harlan”), and the Town & Country Corporation (“Town & Country”). This agreement

has been placed on the public record for sixty days for reception of comments from interested

persons.

Comments received during this period will become part of the public record. After sixty

days, the Commission will again review the agreement and the comments received and will

decide whether it should withdraw from the agreement or make final the agreement’s order.

The Commission’s investigation of this matter concerns the proposed acquisition by

Class Rings, Inc., a wholly owned subsidiary of Castle Harlan, of certain assets of Town &

Country and CJC Holdings, Incorporated (“CJC”). The Commission’s proposed complaint

alleges that Town & Country and CJC are two of four major manufacturers of class rings in the

United States.

The agreement containing consent order would, if finally accepted by the Commission,

settle charges that the acquisitions may substantially lessen competition in the manufacture and

sale of class rings in the United States. The Commission has reason to believe that the

acquisitions and agreements violate Section 5 of the Federal Trade Commission Act and the

acquisitions would have anticompetitive effects and would violate Section 7 of the Clayton Act

and Section 5 of the Federal Trade Commission Act if consummated, unless an effective remedy

eliminates such anticompetitive effects.

The Commission’s Complaint alleges that class rings are a uniquely American
2

phenomenon and that class ring purchasers would not switch to other products even if prices for

class rings increased significantly. The top four manufacturers of class rings -- Jostens, Inc.,

CJC, Town & Country, and Herff Jones, Inc. -- account for over 95% of all class rings sold. 

Moreover, CJC and Town & Country combined account for over 90% of class rings sold in retail

jewelry stores and mass merchandisers. The Complaint further alleges that new entry into class

rings or expansion by the fringe class ring manufacturers would not be timely or likely to deter or

offset reductions in competition resulting from the proposed acquisitions. The Commission’s

Complaint alleges that the proposed acquisitions would lessen competition by eliminating

competition between CJC and Town & Country, and would lead to higher prices.

The proposed order accepted for public comment contains provisions that would prohibit 

Class Rings, Inc., and Castle Harlan from acquiring Gold Lance, Inc. (“Gold Lance”), a

subsidiary of Town & Country. The purpose of this provision is to ensure the continuation of

Gold Lance as an independent competitor in the manufacture and sale of class rings and to

remedy the lessening of competition as alleged in the Commission’s Complaint. In effect, this

order is equivalent to an injunction preventing the acquisition of Gold Lance by Class Rings,

Inc., and Castle Harlan, and keeps Gold Lance in the hands of Town & Country, a company well

positioned to compete in the marketplace.

Moreover, the proposed order prohibits Class Rings, Inc., and Castle Harlan, for a period

of ten years, from purchasing any interest in Town & Country or any assets from Town &

Country used for the design, manufacture, or sale of class rings without the prior approval of the

Commission. The proposed order also prohibits Town & Country, for a period of ten years, from

purchasing any interest in Castle Harlan or Class Rings, Inc., or any assets from Castle Harlan or
3

Class Rings, Inc., used for the design, manufacture, or sale of class rings without the prior

approval of the Commission. Town & Country, however, may purchase assets from Class Rings,

Inc., or Castle Harlan totaling not more than $2 million in any twelve month period. The purpose

of these provisions is to ensure that Class Rings, Inc. and Town & Country remain independent

from each other, thereby fostering a competitive environment for the sale of class rings.

The proposed order also prohibits Castle Harlan and Class Rings, Inc., for a period of one

year from the date this proposed order becomes final, from employing or seeking to employ any

person who is or was employed at any time during calendar year 1996 by Gold Lance or Town &

Country in the design, manufacture or sale of class rings. The purpose of this provision is to

ensure that Town & Country, through Gold Lance, remains a viable competitor in the

manufacture and sale of class rings

An interim agreement was also entered into by the parties and the Commission that

requires Class Rings, Inc., Castle Harlan, and Town & Country to be bound by the terms of the

proposed order, as if it were final, from the date that Class Rings, Inc. and Castle Harlan signed

the proposed order.

The purpose of this analysis is to invite public comment concerning the proposed order. 

This analysis is not intended to constitute an official interpretation of the agreement and order or

to modify their terms in any way.
Statement of Commissioner Mary L. Azcuenaga

Concurring in Part and Dissenting in Part

in Class Rings, Inc., File No. 961-0067

Today the Commission accepts for public comment a consent agreement resolving

allegations that the proposed acquisitions by Class Rings, Inc., a newly created subsidiary of

Castle Harlan Partners II, L.P., of certain assets of Town & Country Corp. (two subsidiaries,

Gold Lance, Inc., and L.G. Balfour, Inc.) and CJC Holdings, Inc., would be unlawful. The

proposed order prohibits the acquisition of Gold Lance.

I concur, except with respect to the prior approval provisions in Paragraphs III and IV of

the proposed order, which are inconsistent with the "Statement of Federal Trade Commission

Policy Concerning Prior Approval and Prior Notice Provisions" ("Prior Approval Policy

Statement" or "Statement"). In its Statement, the Commission announced that it would "rely on"

the Hart-Scott-Rodino premerger notification requirements in lieu of imposing prior approval or

prior notice provisions in its orders. Although the Commission reserved its power to use prior

approval or notice "in certain limited circumstances," it cited only a single situation in which a

prior approval clause might be appropriate, that is, "where there is a credible risk that a

company" might attempt the same merger. 

The complaint does not allege any facts showing a "credible risk" that the parties might

attempt to acquire Gold Lance a second time. Nor am I aware of any reason to think that the

parties have a concealed plan or intention to circumvent the order by doing so. Of course, as
evidenced by their premerger notification report filed pursuant to the requirements of the HartScott-Rodino Act, the parties wanted to acquire Gold Lance, but every merger case involves

parties who want to combine firms or assets. 

As I understand it, the primary reason for assuming that the parties will try again is that

they seemed so much to want to consummate this transaction. The intensity of the parties’

interest in a proposed transaction as perceived by the Commission (even assuming that we can

distinguish between the vigor of their legal representation and the intensity of their own feelings)

has no established predictive value of the likelihood that parties will again attempt a transaction

now known to be viewed unfavorably by the FTC. In addition, the intensity of their feelings as

perceived by the Commission is unlikely to result in an evenhanded selection of exceptions to

our prior approval policy.

It also has been suggested that one reason for imposing a prior approval requirement is

that the Commission is prohibiting the acquisition of Gold Lance, rather than allowing it subject

to a divestiture requirement, under which the Commission supervises the divestiture. In fact,

however, the choice of remedy is not predictive of the likelihood of recurrence. Once a

divestiture has been accomplished, the Commission has no greater ability to deter a particular

transaction than it will here.

I am most sympathetic to the concern that if the parties attempted to repeat the transaction

in the future, the Commission might be faced with a significant duplicative expenditure of

resources. That is one of the reasons I dissented from the Commission’s Prior Approval Policy
 See Dissenting Statement of Commissioner Mary L. Azcuenaga in The Vons Companies, 1

Inc., Docket No. C-3391 (May 24, 1996).

Statement. Dissenting Statement of Commissioner Mary L. Azcuenaga on Decision to Abandon

Prior Approval Requirements in Merger Orders, 4 CCH Trade Reg. Rep. ¶ 13,241 at 20,992

(1995). But given that we have the policy, it seems to me incumbent on the Commission either

to live by it or to change it.1