[Federal Register Volume 64, Number 198 (Thursday, October 14, 1999)]
[Notices]
[Pages 55728-55730]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-26845]
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FEDERAL TRADE COMMISSION
[File No. 981 0030]
Ceridian Corporation; Analysis 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 to
Aid Public Comment describes both the allegations in the draft
complaint that accompanies the consent agreement 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 December 13, 1999.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 600 Pennsylvania Ave., NW, Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Michael Moiseyev, FTC/S-2308, 600
Pennsylvania Ave., NW, Washington, DC 20580. (202) 326-2682.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and section 2.34 of
the Commission's 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 sixty (60) days. The following Analysis to Aid
Public Comment describes the terms of the consent 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 29, 1999), on the World Wide Web, at ``http://
www.ftc.gov/os/actions97.htm.'' A paper copy can be obtained from the
FTC Public Reference Room, Room H-
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130, 600 Pennsylvania Avenue, NW, Washington, DC 20580, either in
person or by calling (202) 326-3627.
Public comment is invited. Comments should be directed to: FTC/
Office of the Secretary, Room 159, 600 Pennsylvania, Ave., NW,
Washington, DC 20580. Two paper copies of each comment should be filed,
and should be accompanied, if possible, by a 3\1/2\ inch diskette
containing an electronic copy of the comment. Such comments or views
will be considered by the Commission and will be available for
inspection and copying at its principal office in accordance with
Section 4.9(b)(6)(ii) of the Commission's Rules of Practice (26 CFR
4.9(b)(6)(ii)).
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted, subject
to public comment, an agreement containing a proposed Consent Order
from Ceridian Corporation (``Ceridian''), which is designed to remedy
the anticompetitive effects resulting from Ceridian's acquisitions of
NTS Corporation and Trendar Corporation. Under the terms of the
agreement, Ceridian will grant licenses to providers of truck stop fuel
desk automation systems to process transactions originated by
Ceridian's fleet cards, and will grant licenses to fleet card issuers
to have their cards processed through Ceridian's Trendar fuel desk
automation system.
The proposed Consent Order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
proposed Consent Order and the comments received, and will decide
whether it should withdraw from the proposed Consent Order or make
final the proposed Order.
Pursuant to an asset exchange agreement executed in January, 1998,
Ceridian, through its wholly owned subsidiary Comdata Network, Inc.
(``Comdata''), acquired substantially all of the assets of NTS. In
March, 1995, Comdata Holdings Corporation, a subsidiary of Ceridian,
acquired Trendar Corporation. Because the price of Trendar was below
$15 million, it was not reportable under the Hart-Scott-Rodino
Antitrust Improvements Act. The proposed Complaint alleges that these
two acquisitions violated 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, in the market for the provision of fleet card
services to over-the-road trucking companies and the market for truck
stop fuel desk automation systems.
Fleet Card Services for Over-the-Road Trucking Companies
The services provided by fleet card issuers are of critical
importance to over-the-road trucking companies. Fleet cards physically
resemble traditional credit cards in that they are plastic laminated
cards with embossed numbers on the front and a magnetic stripe on the
back. Fleet cards are similar to traditional credit cards in that they
provide a means by which cardholders can make purchases at retail
locations that accept the card. Fleet cards issued on behalf of
trucking companies provide additional services that go beyond the
capabilities of traditional credit cards, allowing trucking companies
to control the type, volume and frequency of their drivers' purchases,
and capture important information relating to the transactions, such as
drivers' odometer readings and vehicle identification numbers. Because
of the specialized features of these fleet cards, traditional credit
cards and other types of fleet cards are not acceptable substitutes.
Comdata is the largest provider of fleet card services to over-the-road
trucking companies in the United States. At the time Ceridian acquired
NTS, NTS and Comdata were substantial, actual competitors in that
market.
Fuel Purchase Desk Automation Systems
Fuel purchase desk automation systems are the means by which most
truck stops process fleet card transactions. Fuel purchase desk
automation systems used by truck stops can process multiple card
issuers' fleet cards with a single device, thereby minimizing the
physical space truck stops must allocate to point of sale (``POS'')
equipment and the training required for fuel purchase desk attendants.
Such systems report transactions data and other information to the
fleet card issuer, process the approval or rejections of requested
transactions, and interface with fueling pumps. Comdata's fuel purchase
desk automation system, Trendar, is the dominant means by which truck
stops process fleet card transactions.
Fleet cards and fuel purchase desk automation systems are
complementary products, and both products exhibit strong network
effects. Demand for a fleet card rises with the number of truck stops
that accept the card, which in turn depends on the number of fuel
purchase desk automation systems that accept the card. Similarly,
demand for a fuel purchase desk automation system rises with the number
of fleet cards that can use the system. Effective entry into either
market alleged in the complaint would be difficult, time consuming and
unlikely to be successful without access to a substantial portion of
the other market.
Effects of the Acquisitions
The acquisitions of NTS and Trendar resulted in Comdata's having a
dominant position in both the fleet card services market and the fuel
purchase desk automation systems market. In addition, the acquisitions
raised barriers to entry in both markets, because effective entry into
either market now requires Comdata's acquiescence. In the absence of
the two acquisitions, Comdata would have had strong incentives to
ensure that its fleet card was accepted on as many fuel purchase desk
automation systems as possible, and Trendar would have maximized its
value by accepting as many fleet cards as possible, and Trendar would
have maximized its value by accepting as many fleet cards as possible.
With the acquisitions, however, these incentives became skewed: Comdata
now must consider the impact on its Trendar system of allowing a
competing fuel purchase desk automation system to process its card, and
the impact on its fleet card business of allowing a rival fleet card to
be processed on the Trendar system.
The market for the provision of fleet card services for over-the-
road trucking companies is highly concentrated. Comdata controls the
majority of that market and, with its acquisition of NTS, is more than
five times larger than its nearest competitor. At the time of its
acquisition, NTS was Comdata's closest competitor in the market for
fleet card services for over-the-road trucking companies. The market
for fuel purchase desk automation systems is also highly concentrated.
At the time of its acquisition by Comdata, Trendar was the leading
supplier of truck stop fuel purchase desk automation systems in the
United States. Trendar remains the nation's leading supplier of truck
stop fuel purchase desk automation systems.
Ceridian's acquisitions of NTS and Trendar have given Comdata the
power to control new entry into, and expansion by incumbent providers
in, both the market for the provision of fleet card services to over-
the-road trucking companies and the market for truck stop fuel purchase
desk automation systems. By acquiring Trendar, Comdata gained control
of the predominant means by
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which fleet cards are processed by truck stops. Comdata therefore has
the ability to preclude or delay new entry into the fleet card market,
and to discipline or disadvantage new entrants or incumbent providers
of fleet cards who seek to compete effectively with Comdata, by denying
them access to Trendar's POS system or by granting access only on
discriminatory terms. The investigation revealed evidence that Comdata
has delayed or denied some fleet card competitors access to Trendar and
Comdata has increased the fees to other firms for Trendar access.
Similarly, by acquiring NTS, Comdata enhanced its control over the
means by which over-the-road trucking companies purchase fuel.
In addition, both acquisitions increased the difficulty of entry
into the fuel purchase desk automated system market. Comdata can defend
Trendar's dominant position in that market by denying new entrants
access to the fleet card protocols needed to process Comdata and NTS
cards, or by granting access only on discriminatory terms. The
investigation revealed evidence that Comdata has sought to impede
entry. Given Comdata's dominance in the fleet card market, truck stop
operators are unlikely to accept a POS system that cannot process
Comdata's fleet cards. Because of the complementary nature of the fleet
card and fuel purchase desk automation systems products, a new entrant
that is unable to secure access to Comdata's products would have to
enter both markets simultaneously. Such entry would be time consuming
and costly, and is much less likely to be successful.
The Proposed Consent Order
While litigation with a goal of forcing the divestiture of NTS and
Trendar was an alternative considered by the Commission, the proposed
Consent Order effectively remedies the competitive effects of the two
acquisitions without the delay and expenditure of resources that would
be incurred with litigation. The proposed Consent Order requires
Ceridian to grant fleet card issuers access to Comdata's Trendar fuel
purchase desk automation system, and to grant fuel purchase desk
automation systems suppliers the right to process Comdata's fleet
cards. While access to the Trendar network and the NTS card could also
have been accomplished through divestiture, the Commission concluded
that divestiture was not necessary to resolve the competitive concerns
raised by the two transactions, in part because numerous firms have
indicated that they intend to take advantage of the terms of the
proposed Consent Order to enter or expand their presence in the two
markets.
In order to remedy the concerns in the fleet card services market,
the Consent Order requires Comdata, for a period of three years, to
grant a ten-year license to effect transactions on the Trendar system
to any company providing, or seeking to provide, fleet card services.
The order requires Comdata to refer any requests for such a license to
a third-party developer approved by the Commission, that will perform
all programming or other services necessary to enable the licensee to
process transactions on the Trendar system. Once such programming
services are completed by the third-party developer, Comdata is
required to promptly disseminate the software to all truck stops on the
Trendar network. Comdata is further required to provide licensees with
equal access to any upgrades or modifications to the Trendar system,
and is prohibited from basing any transaction fees charged to truck
stops for processing the Comdata card, as well as access to the Comdata
card, on whether such truck stops accept any other firm's fleet cards.
In order to remedy concerns in the fuel purchase desk automation
systems market, the Consent Order requires Comdata, for a period of
three years, to grant a ten-year license to all incumbent suppliers of
fuel purchase desk automation systems, and to the first three new
system providers that request a license. The license awarded to new
system providers shall be transferable, ensuring that if a better
positioned entrant emerges in the future, it will be able to acquire a
license.
In order to qualify for a license, new system providers must meet
certain established criteria. Under the Consent Order, Comdata is
required to promptly provide all licensees with all information or
assistance necessary to enable the licensee to effect Comdata card
transactions in a manner comparable to the way in which those
transactions are processed on the Trendar system. The Order permits
Comdata to certify that a licensee's system is capable of processing
Comdata card transactions using criteria set forth in the Consent
Order, and, if Comdata denies such certification, it must provide a
compete enumeration for the reasons for such denial. The Order further
requires Comdata to grant licensees complete and equal access to all
Comdata card functions, upgrades and new developments. Finally, the
Order provides that Comdata may not discriminate against any supplier
of fuel purchase desk automation systems by charging transaction fees
to truck stops that are based on which fuel purchase desk automation
system the truck stop uses.
The Consent Order contains additional provisions that are designed
to prevent the flow of confidential information obtained from Comdata's
competitors between Comdata's fleet card and fuel purchase desk
automation system businesses. Under the Order, Comdata is prohibited
from providing any non-public information obtained from fuel purchase
desk automation system providers to its Trendar business. Likewise, the
Order prohibits Comdata from providing any non-public information
obtained from fleet card issuers to its Comdata card business.
In order to ensure Comdata's compliance with the terms of the
Order, the Commission is allowed to appoint a trustee to monitor any
disputes, claims or controversies arising under the Order. The order
specifically permits the monitor-trustee to prepare a report for the
Commission relating to any failure by Comdata to certify either a fuel
purchase desk automation system or a new fleet card and any failure by
the third-party developer to provide programming and certification
services to fleet card issuers in a timely manner. The trustee is also
permitted, where appropriate, to report to the Commission regarding
Ceridian's compliance with the Order.
The purpose of this analysis is to facilitate public comment on the
proposed Order, and it is not intended to constitute an official
interpretation of the agreement and proposed Order or to modify their
terms in any way.
By direction of the Commission.
Benjamin I. Berman,
Acting Secretary.
[FR Doc. 99-26845 Filed 10-13-99; 8:45 am]
BILLING CODE 6750-01-M