[Federal Register Volume 75, Number 191 (Monday, October 4, 2010)]
[Notices]
[Pages 61141-61143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-24838]


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FEDERAL TRADE COMMISSION

[File No. 101 0107]


In the Matter of The Coca-Cola Company; Analysis of Agreement 
Containing Consent Order to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis of 
Agreement Containing Consent Order to Aid Public Comment describes both 
the allegations in the draft complaint and the terms of the consent 
order -- embodied in the consent agreement -- that would settle these 
allegations.

DATES: Comments must be received on or before October 27, 2010.

ADDRESSES: Interested parties are invited to submit written comments 
electronically or in paper form. Comments should refer to ``The Coca-
Cola Company, File No. 101 0107'' to facilitate the organization of 
comments. Please note that your comment -- including your name and your 
state -- will be placed on the public record of this proceeding, 
including on the publicly accessible FTC website, at (http://www.ftc.gov/os/publiccomments.shtm).
    Because comments will be made public, they should not include any 
sensitive personal information, such as an individual's Social Security 
Number; date of birth; driver's license number or other state 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. Comments also 
should not include any sensitive health information, such as medical 
records or other individually identifiable health information. In 
addition, comments should not include any ``[t]rade secret or any 
commercial or financial information which is obtained from any person 
and which is privileged or confidential. . . .,'' as provided in 
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and Commission Rule 
4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing material for which 
confidential treatment is requested must be filed in paper form, must 
be clearly labeled ``Confidential,'' and must comply with FTC Rule 
4.9(c), 16 CFR 4.9(c).\1\
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    \1\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See FTC Rule 4.9(c), 16 CFR 
4.9(c).
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    Because paper mail addressed to the FTC is subject to delay due to 
heightened security screening, please consider submitting your comments 
in electronic form. Comments filed in electronic form should be 
submitted by using the following weblink: (https://ftcpublic.commentworks.com/ftc/coca-cola) and following the 
instructions on the web-based form. To ensure that the Commission 
considers an electronic comment, you must file it on the web-based form 
at the weblink: (https://ftcpublic.commentworks.com/ftc/coca-cola). If 
this Notice appears at (http://www.regulations.gov/search/index.jsp), 
you may also file an electronic comment through that website. The 
Commission will consider all comments that regulations.gov forwards to 
it. You may also visit the FTC website at (http://www.ftc.gov/) to read 
the Notice and the news release describing it.
    A comment filed in paper form should include the ``The Coca-Cola 
Company, File No. 101 0107'' reference both in the text and on the 
envelope, and should be mailed or delivered to the following address: 
Federal Trade Commission, Office of the Secretary, Room H-135 (Annex 
D), 600 Pennsylvania Avenue, NW, Washington, DC 20580. The FTC is 
requesting that any comment filed in paper form be sent by courier or 
overnight service, if possible, because U.S. postal mail in the 
Washington area and at the Commission is subject to delay due to 
heightened security precautions.
    The Federal Trade Commission Act (``FTC Act'') and other laws the 
Commission administers permit the collection of public comments to 
consider and use in this proceeding as appropriate. The Commission will 
consider all timely and responsive public comments that it receives, 
whether filed in paper or electronic form. Comments received will be 
available to the public on the FTC website, to the extent practicable, 
at (http://www.ftc.gov/os/publiccomments.shtm). As a matter of 
discretion, the Commission makes every effort to remove home contact 
information for individuals from the public comments it receives before 
placing those comments on the FTC website. More information, including 
routine uses permitted by the Privacy Act, may be found in the FTC's 
privacy policy, at (http://www.ftc.gov/ftc/privacy.shtm).

FOR FURTHER INFORMATION CONTACT: Jill Frumin, (202-326-2758), Bureau of 
Competition, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 the 
Commission Rules of Practice, 16 CFR 2.34, notice is hereby given that 
the above-captioned consent agreement containing a consent order to 
cease and desist, having been filed with and accepted, subject to final 
approval, by the Commission, has been placed on the public record for a 
period of thirty (30) days. The following Analysis of Agreement 
Containing Consent Order to Aid Public Comment describes the terms of 
the consent

[[Page 61142]]

agreement, and the allegations in the complaint. An electronic copy of 
the full text of the consent agreement package can be obtained from the 
FTC Home Page (for September 27, 2010), on the World Wide Web, at 
(http://www.ftc.gov/os/actions.shtm). A paper copy can be obtained from 
the FTC Public Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW, 
Washington, D.C. 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. All comments should be filed as 
prescribed in the ADDRESSES section above, and must be received on or 
before the date specified in the DATES section.

Analysis of Agreement Containing Consent Order to Aid Public Comment

I. Introduction

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an Agreement Containing Consent Order from 
Respondent The Coca-Cola Company (``TCCC'') to address concerns in 
connection with TCCC's acquisition of its largest bottler and the 
subsequent exclusive license from Dr Pepper Snapple Group, Inc. 
(``DPSG''), to bottle, distribute, and sell the Dr Pepper, Diet Dr 
Pepper, and Canada Dry carbonated soft drink brands of DPSG in certain 
territories. The Consent Agreement, among other things, requires that 
TCCC limit the persons within the company who have access to the 
commercially sensitive confidential information that DPSG may provide 
to TCCC to carry out the distribution functions contemplated by the 
license.
    The DPSG-TCCC license agreement followed TCCC's announced proposed 
acquisition of the North American business of its largest bottler, 
Coca-Cola Enterprises Inc. (``CCE''). CCE is licensed by TCCC and DPSG 
to bottle and distribute many of their carbonated soft drink brands. 
Following the acquisition, TCCC, through its subsidiary Coca-Cola 
Refreshments U.S.A., Inc. (``CCR''), will take on the bottling and 
distribution functions previously performed in the United States by 
CCE.
    The Complaint alleges that TCCC's access to DPSG's commercially 
sensitive confidential marketing and brand plans, without adequate 
safeguards to ensure that TCCC will not misuse the information, could 
lead to anticompetitive conduct that would make DPSG a less effective 
competitor and/or facilitate coordination in the industry. The proposed 
Consent Agreement remedies this concern by limiting access to the DPSG 
commercially sensitive information to TCCC employees who perform 
traditional carbonated soft drink ``bottler functions'' formerly 
performed by CCE and not permitting access to TCCC employees involved 
in traditional ``concentrate-related functions.''

II. Respondent The Coca-Cola Company

    TCCC 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 1 Coca-Cola Plaza, Atlanta, 
Georgia 30313. It is the world's largest soft drink company and makes 
or licenses more than 3,000 drinks under 500 brand names in 200 
countries. In 2009, TCCC's worldwide revenues from the sale of all 
products were about $31 billion.

III. Licensor Dr Pepper Snapple Group, Inc.

    DPSG 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 5301 Legacy Drive, Plano, Texas 
75024. Among other things, DPSG produces the concentrate for the DPSG 
carbonated soft drink brands that are distributed by its bottlers. Some 
of these brands are Dr Pepper, Diet Dr Pepper, Crush, Canada Dry, 
Schweppes, Vernor's, A&W Root Beer, 7-UP, RC Cola, Sunkist, and Squirt. 
In 2009, DPSG's net sales were about $5.5 billion, and its United 
States net sales of carbonated soft drink concentrate were about $1.1 
billion. Dr Pepper Seven Up, Inc., will sign the license with TCCC.

IV. The Bottler

A. Coca-Cola Enterprises Inc.
    CCE is a corporation organized, existing and doing business under 
and by virtue of the laws of the State of Delaware, with its principal 
place of business located at 2500 Windy Ridge Parkway Suite 700, 
Atlanta, Georgia 30039. It is the largest TCCC bottler in North 
America, spanning 46 states and the District of Columbia. In 2009, 
CCE's sales of carbonated soft drinks totaled about $21 billion. CCE's 
North American business operations contributed 70% of this revenue. CCE 
accounts for about 75-80% of TCCC's North America bottler-distributed 
volume, and TCCC products represent over 90% of CCE's total volume.

V. The Transactions

A. The Bottler Acquisition
    On February 25, 2010, TCCC reached an agreement with CCE to acquire 
the North American assets of CCE for $12.3 billion. At the time of the 
agreement, TCCC owned about 34% of CCE. Post-acquisition, the North 
American operations of CCE will be subsumed within a new organization 
known as Coca-Cola Refreshments USA, Inc. (``CCR''). CCR's business 
will comprise CCE's current North American operations, and CCR also 
will have responsibility for the supply chain for still beverages and 
juices, fountain/Freestyle, and national key customer management. Post-
acquisition, Coca-Cola USA will manufacture and supply concentrate and 
engage in consumer brand marketing and innovation with respect to new 
drinks and brands.
B. The DPSG-TCCC License Agreement
    Following the agreement to acquire CCE, TCCC sought a license to 
continue to bottle and distribute the DPSG brands that CCE had 
distributed. (The DPSG license held by CCE was terminated by DPSG as a 
result of the proposed acquisition.) In the DPSG-CCR license agreement, 
TCCC agreed to bottle and distribute DPSG's Dr Pepper brand products 
and Canada Dry products in the former CCE territories, where CCE had 
been producing and distributing these products. TCCC to agreed to pay 
DPSG $715 million for a non-exclusive license to produce and an 
exclusive, twenty-year\2\ license to distribute and sell those brands.
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    \2\ The license agreement is for an initial term of twenty (20) 
years, with automatic renewal for additional twenty (20) year 
periods, unless terminated pursuant to its terms.
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    Under the license agreement, CCR has agreed, among other things to, 
(a) distribute the Dr Pepper brand in all classes of trade based on 
certain TCCC brands; (b) grow the Dr Pepper brand based in some measure 
on certain sales criteria of other bottlers; and (c) advertise, 
promote, and market the Dr Pepper brand and provide sales support for 
such promotions, based in some measure on CCR's advertising, 
promotions, and marketing of certain TCCC brands.
C. The DPSG-CCR Freestyle Agreement
    TCCC also will give Dr Pepper access to TCCC's new proprietary 
``Freestyle'' fountain dispensing equipment. The Freestyle machine has 
a footprint comparable to a traditional lever-based fountain dispenser, 
but it allows users to create more than 120 custom-flavored beverages. 
DPSG values the Freestyle

[[Page 61143]]

Participation Agreement at approximately $115 million.

VI. The Proposed Complaint

    The Commission's Complaint alleges that TCCC and DPSG are direct 
competitors in the highly concentrated and difficult to enter (a) 
branded concentrate and (b) branded direct-store-delivered carbonated 
soft drink markets. The concentrate market is national, and the branded 
soft drink markets are local. Total United States sales of concentrate 
is about $9 billion, and total United States sales of carbonated soft 
drinks, measured at retail, is about $70 billion.
    To carry out the distribution activities currently undertaken by 
the bottler and contemplated under the license agreement, DPSG will 
need to provide commercially sensitive confidential information about 
its marketing plans to CCR, the newly created TCCC bottler subsidiary. 
DPSG currently provides this sort of information to CCE in order for it 
to perform its bottler or distribution functions. The Commission is 
concerned that TCCC's access to this information could enable it to use 
the information in ways that could impair DPSG's ability to compete and 
ultimately injure competition by weakening a competitor or facilitating 
coordination in the industry. The Complaint alleges that TCCC's access 
to DPSG's confidential information could eliminate competition between 
TCCC and DPSG, increase the likelihood that TCCC may unilaterally 
exercise market power, and facilitate coordinated interaction in the 
industry.

VII. The Proposed Consent Order

    Under the proposed Consent Order, to remedy the alleged competitive 
concern associated with access to the DPSG commercially sensitive 
confidential information, TCCC will be required to set up a 
``firewall'' to ensure that persons at TCCC who may be in a position to 
use the DPSG commercially sensitive information in ways that may injure 
DPSG and/or facilitate coordination will not be allowed access to such 
information. Persons at TCCC who are assigned to perform traditional 
``bottler functions''- the kinds of functions that CCE have 
historically performed for DPSG - will be permitted access to the DPSG 
information. Persons responsible for ``concentrate-related functions''- 
the kinds of functions that TCCC engaged in as a competitor of DPSG 
when both had their brands distributed by CCE - will not be permitted 
access to the DPSG information.
    The proposed Consent Agreement provides for the appointment of a 
monitor to assure TCCC's compliance with the Consent Order. The monitor 
will have a fiduciary responsibility to the Commission. The monitor 
will be appointed for a five (5) year term, but the Commission may 
extend or modify the term as appropriate.
    The proposed Consent Agreement contains a prior notice provision 
for subsequent acquisitions by TCCC of its franchised bottlers that 
also are licensed to distribute DPSG products. Under the order, TCCC 
will be required to give the Commission forty-five (45) advance notice 
of a proposed acquisition that is not subject to the Hart-Scott-Rodino 
Act and provide the Commission with all management documents relating 
to the proposed acquisition. If the 45-day period expires without 
Commission action, TCCC will be permitted to consummate the proposed 
acquisition and use DPSG confidential information in the territories of 
the newly acquired bottler as specified in this order. The standard 
Hart-Scott-Rodino procedures and time periods would continue to apply 
for Hart-Scott-Rodino reportable transactions.
    The order, like the DPSG-TCCC license agreement, will have a term 
of twenty (20) years.

VIII. Opportunity for Public Comment

    The Consent Agreement has been placed on the public record for 
thirty (30) days for receipt of comments from interested persons. 
Comments received during this period will become part of the public 
record. After thirty days, the Commission will again review the 
proposed Consent Agreement, as well as the comments received, and will 
decide whether it should withdraw from the Consent Agreement or make 
final the Decision and Order.
    By accepting the Consent Agreement subject to final approval, the 
Commission anticipates that the competitive problem alleged in the 
Complaint will be resolved. The purpose of this analysis is to invite 
and facilitate public comment concerning the Consent Agreement. It is 
not intended to constitute an official interpretation of the proposed 
Consent Agreement, nor is it intended to modify the terms of the 
Decision and Order in any way.
    By direction of the Commission, Commissioner Ramirez recused.

Donald S. Clark,
Secretary.
[FR Doc. 2010-24838 Filed 10-1-10; 12:10 pm]
BILLING CODE 6750-01-S