UNITED STATES OF AMERICA

BEFORE THE FEDERAL TRADE COMMISSION

In the Matter of Docket

No. C-3937

NINE WEST GROUP INC.,

a corporation. PUBLIC

PETITION TO REOPEN AND MODIFY ORDER

Pursuant to Section 5(b) of the Federal Trade Commission Act, 15 U.S.C.

§ 45(b), and Commission Rule 2.51, 16 C.F.R. § 2.51, Nine West Footwear Corporation,

successor-in-interest to Nine West Group Inc. (hereinafter "Nine West") hereby requests

that the above-captioned proceedings be reopened and that Paragraph II of the Decision

and Order of April 1 1,2000 (hereinafter the "Order") be modified to allow Nine West to

take actions to maintain resale prices, other than unilaterally termnating the retailer

without prior notice. ("resale price maintenance".) A copy of the Order is annexed to

this Petition as Exhbit 1.

Parts (A)-(D) of Paragraph II of the Order prohibit Nine West from fixing,

controlling or maintaining the retail price of women's footwear, as well as from coercing

or pressuring any dealer to maintain, adopt or adhere to any resale price.' At the time the

Order was issued setting forth these prohibitions, Commissioners Orson Swindle and

, The Order also contains exemptions for conduct protected under United States v.

Colgate, 250 U.S. 300 (1919), allowing Nine West I) to refuse unilaterally to deal with

retailers who fail to comply with resale prices announced in advance; and 2) to establish

and maintain cooperative advertising programs.
Thomas B. Leary criticized the "overbroad per se condemnation of minimum resale price

maintenance" under Dr. Miles Medical Co. v. John D. Park & Sons, Co., 220 U.S. 373

(1911), and encouraged the Supreme Cour to reevaluate that rule. In June 2007, in

Leegin Creative Leather Products, Inc. v. PSKS, Inc., 127 S. Ct. 2705 (2007), the Court

did precisely that, citing the various procompetitive justifications for minimum resale

price maintenance and holding that the application of a per se rule was unwarranted and

that the rule of reason should apply.

This holding constituted a dramatic change in antitrst law and requires

that the Order in this matter now be reexamined. Because implementation of minium

resale price maintenance agreements currently prohibited by the Order would enable

Nine West to develop and maintain favorable brand integrity more effectively, thereby

enhancing competition at the interbrand level, the Order should be modified to prohibit

those restraints no longer.

Further, considerations of fairness and the public interest likewise

necessitate that Paragraph II of the Order be modified. Nine West is at an unfair

competitive disadvantage because it is prohibited from entering into minmum resale

price maintenance agreements of the kind now available to its competitors under the

Leegin decision. Continuing to prohibit only Nine West from entering into minimum

resale price maintenance agreements that the Supreme Court has acknowledged have

pro competitive effects is decidedly not in the public interest, and therefore such

prohibitions should be vacated.

2
Accordingly, for the reasons set fort below, Nine West respectfully

requests that Paragraph II of the Order be modified to prohibit minimum resale price

maintenance no longer.

Overview of Nine West's Business and the Women's Footwear Market

Nine West manufactures and sells quality women's footwear under a

variety of brand labels, offering its products to retail dealers throughout the United States,

including many of the nation's largest retail chains. (See Declaration of Andrew Cohen

(hereinafter "Cohen Decl") ~ir 5-6 .) Nine West's footwear products range in price from

about $16 to $395 and are marketed to consumers whose footwear needs range from

casual to career to dress and special occasion. (Id. i¡ 7.)

In the market relevant here, Nine West brands compete with

approximately 200 other women's footwear brands, making up a more than $1.8 bilion

market in departent store sales year-to-date July 2007. (Cohen Dee!. ir 8.) Nine West

brands account for about 12.5% of that market, for which there are not significant barrers

to entry. (Id. irir 8-9.) The number of national women's footwear brands that compete

with Nine West and that are sold in departent stores increased by over 40% between

2003 and 2006. (!d. i¡ 9.)

Nine West markets and sells its various brands of footwear though both

large departent stores and specialty retailers. (Cohen Decl ir 6.) Its footwear is also

marketed and sold directly to consumers through specialty and outlet retail stores owned

and operated by an affliate of Nine West. (Id.) To increase sales, Nine West assigns

employees with significant retail experience to coordinate with retailers, providing

guidance on training sales staff and creating "focus areas" or "concept shops" within

3
stores to display the full collection of a Nine West brad in one area. (ld. 'l 10.) Nine

West also employs a cooperative advertising program for its products whereby it shares

the costs of certain retailers' advertising and promotional expenses. (Id. ir i I.)

The Order and the Relief Nine West is Seekin2:

In its Complaint, the Commission alleged that Nine West had engaged in

contracts with certin of its dealers, the substantial terms of which were "to fix, raise,

maintain or stabilize the retail prices at which Nine West products were advertised and

sold to the consuming public". (Complaint ir 6.) Nine West and the Commission entered

into an agreement whereby the Commission issued a Decision and Order that, in pertinent

part, prohibits Nine West from:

(A) fixing, controlling or maintaining the resale price at which any dealer

may advertise, promote, offer for sale or sell Nine West Products2;

(B) requiring, coercing or otherwise pressurig any dealer to maintain,

adopt or adhere to any resale price;

(C) securing or attempting to secure any commitment or assurance from

any dealer concerning the resale price at which the dealer may advertise,

promote, offer for sale or sell Nine West Products;

(D) for a period of ten years from the date on which the Order became

final, adopting, maintaining, enforcing or threatening to enforce any

policy, practice or plan pursuant to which Nine West notifies a dealer in

advance that (I) the dealer is subj ect to warning or partial or temporary

suspension or termination if it sells, offers for sale, promotes or advertises

any Nine West product below any resale price designated by Nine West;

and (2) the dealer will be subject to a greater sanction if it continues or

renews selling, offering for sale, promoting or advertising Nine West

Products below any such designated resale price. (Order ir II.)

2 As defined in the Order, the phrase "Nine West Products" encompasses "all

women's footwear sold under brand labels owned by Nine West, including, but not

limited to, the following: Amalfi, Bandolino, Calico, Capezio, cKlCalvin Klein, Easy

Spirit, Enzo Angiolini, Evan-Picone, Joyce, Nine West, Pappagallo, Selby, Westies, and

9 & Co., that are offered for sale to consumers located in the United States of America

and U.S. terrtories and possessions, or to dealers, by Nine West". (Order ir I.)

4
The Order also contains exemptions for conduct permissible under Colgate, stating that it

does not prohibit Nine West from "announcing resale prices in advance and unilaterally

refusing to deal with those who fail to comply" or "establishing and maintaining

cooperative advertising programs that include conditions as to the prices at which dealers

offer Nine West Products, so long as such advertising programs are not a part of a resale

price maintenance scheme". (Order 'I II.)

Section 5(b) of the Federal Trade Commission Act provides that the

Commssion may reopen an order to consider whether that order should be modified if an

applicant "makes a satisfactory showing that changed conditions of law or fact" require

such modification. 15 U.S.c. § 45(b); see also 16 C.F.R. § 2.51(b). A satisfactory

showing sufficient to require reopening and modification is made when a request to

reopen identifies significant changes in circumstances and shows that the changes

eliminate the need for the order or make its continued application inequitable or harmfuL.

See Louisiana-Pacifc Corp., Docket No. C-2956, Letter to John C. Har (June 5, 1986),

at 4; S. Rep. No. 96-500, 96th Cong., 2d Sess. 9 (1979) (reopening appropriate in

instances involving significant changes or changes causing unfair disadvantage); see also

United States v. Swif & Co., 286 u.s. 106, 119 (1932) (modification warranted by "clear

showing" of changes that elimnate reasons for order or that order causes unanticipated

hardship). The Commission may also modifY an order pursuant to Section 5(b) when,

although changed circumstances would not require reopening, the Commssion

determines that the public interest requires such action. 16 C.F.R. § 2.51(b)(l)(ii).

As demonstrated infra Part T, the Commission should delete parts (A)-(D)

of Paragraph II, modifying the Order to eliminate its minimum resale price maintenance

5
prohibition because the Leegin decision constituted a "changed condition(J of law" - the

very change in the law called for by Commssioners Swindle and Leary. This restraint on

Nine West is inconsistent with the state of antitrust law post-Leegin, as well as out of step

with current economic scholarship regarding effcient distribution of products in a

competitive market. Because the Leegin decision acknowledged pro competitive

justifications for minimum resale price maintenance and held that such price restraints

must be evaluated on a case-by-case basis under the rule of reason, the Commission

should now reconsider Nine West's conduct under that new standard.

Applying the rule of reason, the Order's prohibitions cannot be any longer

justified. Nine West seeks to use minimum resale price maintenance to bolster its efforts

to persuade consumers that its products are more fashionable and of higher quality than

those of its competitors. Retailers playa crucial role in this process by providing

adequate and appropriate floor space, advertising and promoting Nine West's branded

products, actively managing product assortent and flow, and employing highly trained

sales personneL. (See Cohen Decl ir 12.) However, the Order's prohibition of minimum

resale price maintenance currently inhibits Nine West's ability to guarantee its retailers

sufficient profit margins to justifY spending time and money providing these enhanced

serviccs to consumers. (Id. irir 13,15,16.) Full-service dealers are especially reluctant to

commit resources for such services when they know they are in danger of losing sales to

low-end retailers who are able sell Nine West products at lower prices by "free riding"

off their efforts. (Id.) As the Leegin Court noted, minimum resale price maintenance is a

formidable tool for preventing such free riding. Used for that purpose --- the purpose for

which Nine West seeks to employ it - minium resale price maintenance is

6
procompetitive and legal under the rule of reason, and thus Paragraph II's prohibition of

minimum resale price maintenance should be set aside.

Moreover, as demonstrated infra Part II, the Commission should remove

the restraints on Nine West to promote considerations of fairness and the public interest.

At present, Nine West is being unfairly hindered as a result of these prohibitions that

apply to Nine West but not to any of its competitors. The women's footwear market is

highly competitive with low barrers to entr. (Cohen Dec!. ii 9.) Because Nine West's

competitors may employ minimum resale price maintenance to bolster their brands'

images but Nine West may not, the Order is causing competitive injur to Nine West.

(Id. iiii 15, 16.) Eliminating the Order's restrctions in parts (A)-(D) of Paragraph II wil

permit Nine West likewise to use that form of vertical restraint, allowing it to compete

more effectively, to the benefit of consumers.

I. THE SUPREME COURT'S DECISION IN LEEGIN CONSTITUTED A

SIGNIFICANT CHANGE IN THE LAW JUSTIFYING REOPENING AND

MODIFYING THE ORDER CURRENTLY RESTRAINING NINE WEST.

In June, the Supreme Court issued its decision in Leegin expressly

overrling the rule of per se ilegality for minimum resale price maintenance agreements.

The Cour held that such agreements should be evaluated under the rule of reason. This

holding radically altered the landscape of antitrst law, in the process undermning the

Commission's legal basis for its Order restraining Nine West. Indeed, under a rule of

reason analysis there is no basis for continuing the Order's prohibitions set forth in parts

(A)-(D) of Paragraph II.

In its decision, the Leegin Cour acknowledged three procompetitive

justifications for a manufactuer's use ofresa1e price maintenance. First, the Court noted

that a manufacturer's use of vertical price restraints tends to eliminate intrabrand price

7
competition, which in turn encourages retailers to "invest in tangible or intangible

services or promotional efforts that aid the manufacturer's position as against rival

manufacturers", thereby promoting interbrand competition. See Leegin, 127 S. Ct. at

2715. Without such vertical price restraints, the Cour explained, "discounting retailers

can free ride on retailers who fuish services and then capture some of the increased

demand those services generate". Id. Minimum resale price maintenance prevents the

discounter from undercutting the service provider. "With price competition decreased,

the manufacturer's retailers compete among themselves over services." Id. at 2716.

Second, the Court noted that resale price maintenance can increase interbrand competition by facilitating market entry for new firms and brands. Id. "(NJew

manufacturers and manufacturers entering new markets can use the restrictions in order

to induce competent and aggressive retailers to make the kind of investment of capital

and labor that is often required in the distrbution of products unown to the consumer."

Id. (quoting Continental T V, Inc. v. GTE Sylvania, Inc., 433 U.S. 36 (1977)).

Third, the Cour explained that resale price maintenance can increase

interbrand competition "by encouraging retailer services that would not be provided even

absent free riding". Id. Offering a guaranteed margin for retailers while threatening

termination if retailers do not perform adequately is an efficient way of providing an

incentive for retailers to more aggressively and effectively sell a product. Id. For

example, resale price maintenance may be effective for motivating retailers to stock

adequate inventories of a manufacturer's goods, even in the face of uncertain consumer

demand. Id.

8
Under the rule of reason, the pro competitive rationales for minimum

resale price maintenance identified by the Court are plainly applicable to Nine West. For

such companies in the highly competitive women's footwear market, resale price

maintenance agreements are especially useful for assurg that retailers adhere to

marketing policies by which positive brand images may be cultivated and maintained. To

promote brand recognition and loyalty, Nine West relies upon its retailers to provide

adequate and appropriate floor space, advertise and promote Nine West's branded

products, actively manage product assortment and flow, and employ highly trained sales

personnel, thereby bolstering consumer perception of Nine West brands. (See Cohen

Decl. ir 12.) These are expensive tasks, and retailers generally make such financial

investments only if there is assurance of reasonable profit margins. (!d. ir 13.) Likewise,

retailers are reluctant to conduct costly promotional programs if other dealers will

inevitably free ride on those efforts while selling the product at much lower prices. (Jd.)

Minimum resale price maintenance gives retailers the assurance of adequate margins and

prevents such free riding, making retailers more wiling to engage in the desired

promotional programs and thereby enhancing interbrand competition.

Furher, the sale of Nine West products by certain retailers at nearwholesale prices itself damages brand integrity by eroding the consumer perception that

Nine West products are well-made, fashionable and in high demand. Consumers

inherently associate higher-end women's footwear with a particular price range. (Cohen

Decl. ir 14.) When certain retailers constantly offer Nine West products at extremely low,

near-wholesale prices, consumers may incorrectly conclude that Nine West products are

9
lower quality or less desirable, which can result in harm to brand integrity and Nine

West's competitive position generally. (Id.)

In addition, highly competitive conditions in the women's footwear

market today make it unlikely that minmum resale price restraints could be used to

facilitate collusion. There are also not significant impediments to entr into the market,

as reflected by the steadily growing number of brands. (See Cohen Dee!. ii 9.)

Considering the pro competitive rationales for minimum resale price maintenance both

generally and specific to Nine West's case, the Order's prohibition of those restraints

does not survive analysis under the rule of reason.

The Commission has previously vacated an order dependent on a per se

rule that was later abandoned for a rule of reason analysis. In In the Malter or Sharp

Electronics Corp., the Commission set aside a consent order prohibiting Sharp from

imposing teDitorial restrictions on its dealers or defining the class of customers to whom

dealers were permitted to sell Sharp calculators. 112 F.TC. 303 (1989). Observing that

subsequent Supreme Cour decisions required that the rule of reason be applied to

evaluate such vertical restraints, the Commission determined that the law had changed

since it issued the order to an extent necessitating the proceedings be reopened. Id.

Analyzing the vertical restraints Sharp sought to employ under a rule of reason analysis,

the Commission determed Sharp's conduct was procompetitive and set aside the order.

Id

The Court's decision in Leegin is a similarly dramatic change in the law

warranting the Commission's reconsideration of Nine West's conduct under the rule of

reason. Because of the nature of the relevant market and the procompetitive justifications

10
for minimum resale pricc maintenance agreements identified by the Leegin Court and

applicable to Nine West, Paragraph II of the Order should be modified to permit Nine

West to enter into such agreements to the extent it believes necessary to make it a more

effective competitor in the interbrand market.

II. PARAGRAPH II OF THE ORDER SHOULD BE MODIFIED TO

PROMOTE CONSIDERA nONS OF FAIRNESS AND THE PUBLIC

INTEREST.

Under the Order, Nine West is at an unfair competitive disadvantage

because it is prohibited from entering into minimum resale price maintenance agreements

of the kind now available to its competitors under the Leegin decision. (See Cohen Dec!.

1111 i 5, 16.) It is contrary to consumers' interests to apply a rigid per se prohibition of

such agreements to Nine West but not to its competitors. Such a prohibition causes

competitive injury - compromising Nine West's ability to compete with peer companies

while creating ineffciencies and higher costs and causing the market to operate less

effciently for all participants. To continue prohibiting only Nine West from entering into

minimum resale price maintenance agreements that the Supreme Court has acknowledged

have pro competitive effects is decidedly not in the public interest, and thus such

prohibition should be vacated.

Indeed, a decision to modify Paragraph II of the Order to permt Nine

West to employ minimum resale price maintenance would be consistent with

Commssion precedent. The Commission has determined in previous instances that

public interest considerations warranted reopening and modifying orders that prohibited

particular companies from using vertical restraints that were no longer viewed as per se

antitrust law violations and thus were permissible when implemented by competing

11
companies. See In the Matter ofClinique Labs, Inc., 116 FTC. 126, 132-34 (1993)

(vacating prohibition on certain cooperative advertising and promotional programs,

noting that such programs had corne to be evaluated using a rule of reason analysis and

observing that the Commission's order prohibiting Clinique from itself employing such

programs was adversely affecting the company's ability to compete and thus was

contrar to the public interest); In the Matter of us. Pioneer Elecs. Corp., Docket

No. C-2755, 1992 WL 696670 (FTC. Apr. 8, 1992) (vacating prohibition on cooperative

advertising restrictions as contrary to the public interest, noting that "Pioneer has

demonstrated that many of its competitors curently use such programs with respect to

consumer electronic product lines that are directly competitive with the Pioneer lines");

In the Matter of the Magnavox Co., 113 FTC. 255 (1990) (modifying an order that

prohibited certain non-price vertical restraints, noting that Magnavox had "shown that it

is being injured in competing with other firms who are free to and do engage in such

things"); see also In the Matter ofOnkyo Us.A. Corp., 122 F.T.C. 325, 326-27 (1996)

(modifying order to permit Onkyo to implement lawful price restrctive cooperative

advertising programs and to anounce resale prices in advance and terminate dealers who

fail to adhere to such resale prices to thereby "put Onkyo on an equal basis with its

competitors").

12
Conclusion

For all of the reasons stated above and in the accompanying Affdavit of

Andrew Cohen, Nine West respectfully requests that pars (A)-(D) of Paragraph II of the

April I i, 2000 Decision and Order be deleted so as to prohibit minimum resale price

maintenance no longer.

October~2007

CRAVATH, SWAINE & MOORE LLP, ~5~

Ronald S. Rolfe

Member of the Fir

Worldwide Plaza

825 Eighth Avenue

New York, NY 10019-7475

(212) 474-1000

Attorneys for Applicant Nine West

Footwear Corporation

13
Exhibit 1
"Wi.,!,

9810386

UNITED STATES OF AMRICA

BEFORE FIWERAL TRADE COMMISSION

COMMISSIONERS: Robert Pitorsky, Chaian

Sheila F. Anthony

Mozelle W. Thompson

Orson Swindle

Thomas B. Lear

In the Matter of

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NINE WEST GROUP INC., DECISION AN ORDER

a corporation.

DOCKET NO, C-3937

The Federal Trade Commission havig initiated an investigaton of cerain act and

practices of Nine West Group me., hereinafer sometimes refer to as Respondent, and

Respondent having been fushed there with a copy of a drft of Complaint that the

Norteast Regional Offce presented to the Commission for its consderation and which. ¡fissued

by the Commission, would chage Respndent wilh violations of Section 5 of the Federl Trade

Commission Act, as amended. 15 V.S.C. § 45; an

Respondent, its atorney, and counsel for the Conssion having therfter exected an

Agreeient Containig Consent Order ("Consent Agrmen''), cont.ing an adission by

Respondent 0 f all the jursdictional facts set fort in the aforesaid dr of Complaint, a statement

tht the signg of said COß5ent Agrement is for settlement puroses only and doe not

constitute an adssion by Respondet that the law has been violated as alleged in such

Complat, or th the facts as aleged in such Complaint, other th jursdictional facls, ar tre,

and waiver and other provisions as required by th Commssion's Rules; and

The Commission havig thereafter considerd the matter an having detered tht it

had reason to believe that the Respondent has violated the said Act, and that a Complaint should

issue stating its charges in tht respec, and having therpon accepted the executed Consent

Agrement and placed such Agreement on the pub lie record for a perod oftbiit (30) days for

the receipt and consideraton of public comments, now in fuer conformity with the procedure

described in Commssion Rule 2.34,16 C.F.R. § 2.34, the Commission hereby makes the

following jursdictional fidings and issues the following Order:
1. Respondent Nine West Group Jnc. is a corpration org:ani~ei. existing and doing

busincss under and by vine of the laws of the State of Delaware. TIie maílng

address iid principw place of business of Respondeut Nine West Grup is Nine

West Plaz i 129 Westchester Avenue, White Plains, Ncw York 1060-3529.

2. TIie Federal Trade Commission has jurisdiction of the subject mailer of this

proceeding and of the RespoDdem, anu the proceeding is in the public interest,

ORDER

T.

JT JS ORDERED that for the purpose of this ord, the following defintions shall apply:

(A) "Nine West" means Nine West Group Inc., its parnt, Jones Apparel Group, Inc., and

(heir affliates, subsidiiies, divisions and other organzational units of wiy kid, that sold or sell

Niue West Products as defined herein, their successors and assigns and their prsent offcers,

directors, employees, agents, representatives and oth persons ¡\1ing on their behalf. As use

herein, "Nine West" shall not i, constrd to brng with the terms of this order any pruct

that bears or is maketed in packaging tht bears a tradmaik owned by Jones Apparel Group,

Inc. or any of Its prede~essors, subsidiwi~s, unts, divisions or affliaics oth than Nine West

Group Inc.

(E) "Respondnt" means Nine West

(C) "Níne West Prodcts. meas al wom's footwe~ sold uner brand labels ownd

by Nine West, including, but not limted to, th following: Ainlfi, Bandolino, Ciiico, Capezio,

cKfC¡t!vin Klin, Easy Spirt, Ei Angioli, Evan-Picone, Joyce, Nine West, Pappagallo,

Selby, Wcsties, and 9 & Co., that ar offere for sae to consumers locate in the Unite State of

AT1rica an V,S. terntories an possessions, or to dealers, by Niu West

(D) "Dealer" means any peon, corpration or entity not owned by Nine West, or by

any cntity owned or contrlled by Nine West, tht in the coure of its business sells any Nine

West Prducts in or into the Unite States of Amca,

(E) "Resale price" means any price, prce floor, mium price, inaitm di1lOunt,

prce rage, or any mark-up formula or iigin of profit used by any dewer for pricing any

product "Resale prce" includes, but is not limited to, any suggested, establishd, or customa

!'sale price.

2
II.

IT is FURTIR ORDERED that Nine West. directly or indirectly, or through any

cOrToration, subsidiary, division or other device, in coniieciion with th manufacning, offering

for sale, s;\le or distribution of any Nine West Prducts in or into the United States of Amrica in

or affecting "commerce," as defined by the Federal Trade Commission Act, forthwith cease and

desist from:

(A) Pìxing, controllng, or mail1airng the resale prce at which any dealer may

advertse, promote, offer for sale or sell any Nine West Products.

(B) Requiring, coering, or otleiwise pressuring any dealer to maitain, adpt, or adhere

to any resale price.

(C) Securing or attemptig to seeUT" any commitmnt or asswiice frm any dealer

concernng the resiie price at which the denier may advertse, promote, offer for sale or sell any

Nine West Products.

(0) For a period of ten (10) years from the date on which ths ord becomes fmal.

adopting, maitaining, enforcing or tliraienlng to enforce any policy, practice or plan pursuant

to which Respondent notifes a dealer iii advance that: (1) the iler is subject to warg or

piial or temporar suspension or termination if it sells, offers for sale, prmotes or advertses

any Nine West Products below any resale price designted by Respondent; an (2) the dealr wil

be subject to D. greater sacton if it contiues or reews sellig, offeri for sale, promotig or

aivertising any Nine West Prdixts below any such designated resale prie. As used herein, the

plir.se "paral or temp suspension or termtion" include but is not limted to any

disrption,litation, or restrtion of supply: (1) of some, but not iiI, Nin WeSt Pructs; or

(2) 10 some, but not all, dealer locations or biniinesses; or (3) for any delirted duraton As nsed

herein, the phrase "grater s.'lction" includes but is not limte to a paral or tempora

suspension or termation of greater scope or durtion th th one prviously implemente by

Respondent, or a complete susnsion or termatìon.

PROVIDED tht nothng in tls orde shl prolnòit Nin West from arouncing resale

prices In advane an unilateally refuing to deiil with thse who fail to comply. PROVIED

FUTI tht nothng In ths ord shal proluòit Nine West from establishng and maintaing

CoopßTative advertsing prgrs tht includ conditions as to th prices at which dealers offer

Nine West PrdUClS, so long as such advertsin prgranis are nOt a pa of a resal price

matenance schem an do not othrwise violate ths order.

3
II.

IT is FURTHIlR ORDERED that, for a period of five (5) ycar frm the datc on which

this order bccomes final, Nine West shall clearly and conspicuously state the following on any

list, advertising, book, catalogue, or prmotional material where it has sugi.ested any resale price

for any Nine West Products to any dealer:

ALTHOUGH NI WEST MAY SUGGEST RESALE PRICES FOR

PRODUCTS, RETAIERS AR FREE TO DETERMIN ON THEIR OWN

THE PRICES AT WHCH TIEY WIL ADVERTISE AND SELL NINE WEST

PRODUCTS.

IV.

IT iS FURTHE ORDERD that, with thirt (30) days afer the date on which ths

order becomes rinal, Nine West shall mail by first class mail tbe letter attached as Exhibit A,

together with a copy of this order, to each dirtor, offcer, dealer, distrbutor, agent, and saes

representative engaged in the sale of any Nine West Prducts in or into tha United Statcs of

America.

v.

IT IS FUTHR ORDERED tht, for a perod of two (2) years after the date on which

this orùer becomes final, Nine West shall mail by fit class lIail the leter atthed as Exhibit A,

together with a copy ofthis ord, to each new dirctor, offcer, dealer, distbutor. agent, and

sales representative engaged in the sale of any Nine West Prducts in or into the United States of

Amerca, within nine (90) days of the commencement of suh person's employment or

affliation with Nine Wes.

VI.

IT is FURTHR ORDERD th Nine We$t sh notify the Commission aileast th

(30) days prior to any prposed chages in Nine Wes such as dissolution, asignent or sale

reslting in the emerence ofa 8Ucessor corporation, or the creation or dissolution of

subsidiares or an other change in the corporation which may afec compliance obligations

arsing out oftha order.

VII

IT is FURTHR ORDER that, with sixty (60) days afer the date this order becomes

final, and at such other times as the Commission or its staff shl request, Nine West shal fie

4
with the Conimission a verified written report setting forth in detail the maner and fonn in

which Nine West has complied and is complying with this order.

VI.

IT is FURTIER ORDERE that this order shall terinate on April 11,2020.

By the Conuission. ~,gcu.. Donald S. Clark

Secret

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5
UNITED STATES OF AMERICA

BEFORE THE FEDERAL TRADE COMMISSION

In the Matter of Docket

No. C-3937

NINE WEST GROUP INC.,

a corporation. PUBLIC

DECLARATION IN SUPPORT OF PETITON TO REOPEN AND MODIFY ORDER

ANDREW COHEN, Chief Executive Offcer and President of Nine West Footwear

Corporation, successor-in-interest to Nine West Group Inc. (hereinafter "Nine West")

hereby states as follows:

I. My name is Andrew Cohen, and I am Chief Executive Offcer and

President of Nine West. I am familiar with Nine West's operations and the competitive

environment in which it operates.

2. I have read and am familiar with the Commission's Decision and

Order, issued April I I, 2000 in the above-captioned matter (hereinafter the "Order") and

Nine West's Petition to Reopen and Modify filed with the Commission today (hereinafter

the "Petition").

3. The information in this Declaration is based on my personal

knowledge and on information conveyed to me by other senior executives at Nine West.

4. I affrm that to the best of my knowledge and belief, all of the facts

and statements contained in the Petition are tre.
5. Nine West manufactues and sells quality women's footwear under

a variety of brand labels, including Anne Klein, BandoJino, Easy Spirit, Enzo Angiolini,

Joan & David, Nine West and Sam & Libby.

6. Nine West markets and sells its various brands of footwear both

through large department stores and specialty retailers. Its footwear is also marketed and

sold directly to consumers through specialty and outlet retail stores owned and operated

by an affiliate of Nine West.

7. Nine West's footwear products range in price from about $16 to

$395 and are marketed to consumers whose footwear needs range from casual to career to

dress and special occasion.

8. Nine West brands relevant to this application compete with

approximately 200 other women's footwear brands, making up a more than $1.8 billion

market in department store sales year-to-date July 2007. Nine West brands account for

about 12.5% of that market.

9. The women's footwear market is highly competitive, and there are

not significant barriers to entry. The number of national women's footwear brands that

compete with Nine West and that are sold in departent stores increased by over 40%

between 2003 and 2006.

10. To increase sales, Nine West assigns employees with significant

retail experience to coordinate with retailers, providing guidance on training sales staff

and creating "focus areas" or "concept shops" within stores to display the full collection

of a Nine West brand in one area.

11. Nine West also employs a cooperative advertising program for its

products whereby it shares the costs of certain retailers' advertising and promotional

expenses.

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12. To promote brand recognition and loyalty, Nine West relies upon its

retailers to provide adequate and appropriate floor space, advertise and promote Nine

West's branded products, actively manage product assortent and flow, and employ

highly trained sales personnel, thereby bolstering consumer perception of Nine West

brands.

13. Assembling a highly qualified sales and merchandizing staff and

promoting and dedicating floor space to particular brands require financial investments,

which generally retailers make only if there is assurance ofreasonable profit margins.

Retailers are also reluctant to make such investments if other retailers will inevitably free

ride on those efforts while selling the product at much lower prices.

14. Consumers inherently associate higher-end women's footwear with

a particular price range. When certain retailers constantly offer Nine West products at

extremely low, near-wholesale prices, consumers may incorrectly conclude that Nine

West products are lower quality or less desirable, which can result in harm to brand

integrity and Nine West's competitive position generally.

15. We believe that many of Nine West's competitors use some tye of

resale price maintenance program - either "off limts" (no discounting) lists, "break date"

lists (discounting permtted only durng specified sales events or other specified periods) or

refusal to accept returns if suggested retail prices or break dates are not followed. In

addition, many competitive brands are excluded from deparment store point-of-sale

coupons. In some cases the exclusion is required by the vendor, but in other cases, the

exclusion is retailer-driven. In the latter case, the retailer may want to avoid a sales event

markdown rate on a particular brand that vastly exceeds the level at which the vendor is

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known to provide margin support, or the retailer may have offered up exclusion from

point-of-sale events as an incentive for a salon or designer vendor to sell to that retailer.

16. Under the Order, Nine West is at an unfair competitive disadvantage

because it is prohibited from entering into minimum resale price maintenance agreements

ofthe kind now available to its competitors under the Leegin decision.

*****

Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury that the foregoing is true

and correct.

Executed on October 1l, 2007

~t~

Andrew Cohen

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