Fair Trade Act: FTC rules that joint marketing within a department store group is not concerted action.
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[2016/05/16]
On 12 May 2016, the Fair Trade Commission (FTC) issued a written interpretation in which it stated that joint marketing activities undertaken by enterprises within a single department store group according to group decisions are unlikely to constitute concerted action. The FTC stated that the Fair Trade Act defines “concerted action” as actions whereby enterprises that are in a competitive relationship at the same stage of an industry supply chain restrict each other’s business activities by mutual understanding, in a manner sufficient to affect the functioning of the market. However, group companies form a single operating group organized by a controlling company, and the economic activities of each group member are conducted according to the directives of a single decision-making entity for the group, with the aim of maximizing the profits of the group as a whole. Under this mode of operation, individual group members are not economically independent and are not able to make decisions autonomously, and the instructions that they carry out are unitary decisions made by a single management team. The FTC believes that in these circumstances, group members’ joint activities do not meet the definition of “concerted action,” in that they are not “enterprises in a competitive relationship at the same stage of production or distribution,” and are not acting by “mutual understanding” between such enterprises. Therefore the FTC concludes that for department store enterprises within the same group to carry out joint marketing activities does not amount to concerted action.
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