Consent Agreement dated February 21, 2020
EX-10.1 2 a101aanconsentagreement.htm EXHIBIT 10.1 CONSENT AGREEMENT Exhibit
UNITED STATES OF AMERICA
BEFORE THE FEDERAL TRADE COMMISSION
In the Matter of
File No. 191-0074
AGREEMENT CONTAINING CONSENT ORDER
The Federal Trade Commission (“Commission”) has initiated an investigation of certain acts and practices of Aaron’s Inc. (“Aaron’s” or “Proposed Respondent”), Rent- A-Center, Inc., and Buddy’s Newco, LLC. The Commission’s Bureau of Competition has prepared a draft administrative complaint (“Draft Complaint”). The Bureau of Competition and Proposed Respondent enter into this Agreement Containing Consent Order (“Consent Agreement”) to cease and desist from engaging in such anticompetitive practices to resolve the allegations in the Draft Complaint through a proposed Decision and Order (“Decision and Order”), both of which are attached, to present to the Commission.
IT IS HEREBY AGREED by and between Proposed Respondent, by its duly authorized officers and attorneys, and counsel for the Commission that:
Proposed Respondent Aaron’s, is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Georgia, with its headquarters and principal place of business located at 400 Galleria Parkway SE, Suite 300, Atlanta, Georgia.
Proposed Respondent admits all the jurisdictional facts set forth in the Draft Complaint.
Proposed Respondent waives:
any further procedural steps;
the requirement that the Decision and Order contain a statement of findings of fact and conclusions of law;
all rights to seek judicial review or otherwise to challenge or contest the validity of the Decision and Order entered pursuant to this Consent Agreement; and
any claim under the Equal Access to Justice Act.
This Consent Agreement is for settlement purposes only and does not constitute an admission by Proposed Respondent that the law has been violated as alleged in the
Draft Complaint, or that the facts as alleged in the Draft Complaint, other than jurisdictional facts, are true.
Proposed Respondent shall submit an initial compliance report, pursuant to Commission Rule 2.33, 16 C.F.R. § 2.33, no later than 60 days after the date on which Proposed Respondent executes this Consent Agreement and subsequent compliance reports every 30 days thereafter until the Decision and Order becomes final. After the Decision and Order becomes final, the reporting obligations contained in the Decision and Order shall control and the reporting obligations under this Consent Agreement shall cease. Each compliance report shall set forth in detail the manner in which Proposed Respondent has complied, has prepared to comply, is complying, and will comply with the Consent Agreement and the Decision and Order. Proposed Respondent shall provide sufficient information and documentation to enable the Commission to determine independently whether Proposed Respondent is in compliance with the Consent Agreement and the Decision and Order.
Each compliance report submitted pursuant to Paragraph 5 shall be verified in the manner set forth in 28 U.S.C. § 1746 by the Chief Executive Officer or another officer or employee specifically authorized to perform this function. Commission Rule 2.41(a), 16 C.F.R. § 2.41(a), requires that the Commission receive an original and 2 copies of each compliance report. Proposed Respondent shall file a paper original of each compliance report with the Secretary of the Commission and electronic copies of each compliance report with the Secretary at ***@***, and with the Compliance Division at ***@***. In addition, Proposed Respondent shall provide a copy of each compliance report to the Monitor, if one has been appointed pursuant to the Decision and Order.
This Consent Agreement, and any compliance reports filed pursuant to this Consent Agreement, shall not become part of the public record of the proceeding unless and until the Commission accepts the Consent Agreement. If the Commission accepts this Consent Agreement, the Commission will place it, together with the Draft Complaint, the proposed Decision and Order, an explanation of the provisions of the proposed Decision and Order, and any other information that may help interested persons understand the order on the public record for the receipt of comments for 30 days.
If the Commission accepts this Consent Agreement, the Commission may, without further notice to Proposed Respondent: (a) issue and serve its Complaint (in such form as the circumstances may require), and (b) issue and serve its Decision and Order containing injunctive relief in disposition of the
proceeding. Further, at any time before the Commission issues and serves its Decision and Order, the Commission may withdraw its acceptance of this Consent Agreement pursuant to the provisions of Commission Rule 2.34, 16 C.F.R. §
2.34. If the Commission withdraws its acceptance of this Consent Agreement, the Commission will notify Proposed Respondent and take other actions it considers appropriate.
The Decision and Order shall become final upon service. Delivery of the Complaint and the Decision and Order to Proposed Respondent by any means provided in Commission Rule 4.4(a), 16 C.F.R. § 4.4(a), or by delivery to United States counsel for Proposed Respondent identified in this Consent Agreement, shall constitute
service to Proposed Respondent. Proposed Respondent waives any rights it may have to any other manner of service. Proposed Respondent also waives any rights it may otherwise have to service of any appendices attached or incorporated by reference into the Decision and Order, if Proposed Respondent is already in possession of such appendices, and agrees that it is bound to comply with and will comply with the Decision and Order to the same extent as if it had been served with copies of the appendices.
The Complaint may be used in construing the terms of the Decision and Order and no agreement, understanding, representation, or interpretation not contained in the Decision and Order or the Consent Agreement may be used to vary or contradict the terms of the Decision and Order.
By signing this Consent Agreement, Proposed Respondent represents and warrants that:
it can fulfill all the terms of and accomplish the full relief contemplated by the Decision and Order including, among other things, effectuating all required divestitures, assignments and transfers, and obtaining any necessary approvals from governmental authorities, leaseholders, and other third parties to effectuate the divestitures, assignments, and transfers; and
all parents, subsidiaries, affiliates, and successors necessary to effectuate the full relief contemplated by this Consent Agreement and the Decision and Order are parties to this Consent Agreement and are bound as if they had signed this Consent Agreement and were made parties to this proceeding, or are within the control of parties to this Consent Agreement and the Decision and Order, or will be after the acquisition.
Proposed Respondent has read the Draft Complaint and the proposed Decision and Order. Proposed Respondent agrees to comply with the terms of the proposed Decision and Order from the date it signs this Consent Agreement. Proposed
Respondent understands that once the Commission has issued the Decision and Order, it will be required to file one or more compliance reports setting forth in detail the manner in which it has complied, has prepared to comply, is complying, and will comply with the Decision and Order. When final, the Decision and Order shall have the same force and effect and may be altered, modified, or set aside in the same manner and within the same time as provided by statute for other orders. Proposed Respondent further understands that it may be liable for civil penalties in the amount provided by law for each violation of the Decision and Order.
/s/ John W. Robinson
By: John W. Robinson III
President and Chief Executive Officer Aaron’s Inc.
Dated: August 9, 2019
/s/ Norman Armstrong, Jr.
Norman Armstrong, Jr. King & Spalding LLP Counsel for Aaron’s Inc.
Dated: August 9, 2019
FEDERAL TRADE COMMISSION
/s/ Joseph A. Lipinsky
By: Joseph A. Lipinsky Attorney
/s/ Tina Kondo
Tina Kondo Assistant Director Northwest Region
/s/ Charles Harwood
Charles Harwood Director Northwest Region
/s/ Ian R. Conner
Ian R. Conner Deputy Director
Bureau of Competition
UNITED STATES OF AMERICA
BEFORE THE FEDERAL TRADE COMMISSION
COMMISSIONERS: Joseph J. Simons, Chairman
Noah Joshua Phillips Rohit Chopra
Rebecca Kelly Slaughter Christine S. Wilson
In the Matter of
Docket No. C-
DECISION AND ORDER
The Federal Trade Commission (“Commission”), having initiated an investigation of certain acts and practices of Aaron’s Inc. (“Respondent”), Rent-A-Center, Inc., and Buddy’s Newco, LLC, and Respondent having been furnished thereafter with a copy of the draft Complaint that counsel for the Commission proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge Respondent with violations of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45; and
Respondent, its attorneys, and counsel for the Commission having thereafter executed an Agreement Containing Consent Order (“Consent Agreement”), containing an admission by Respondent of all the jurisdictional facts set forth in the aforesaid draft Complaint, a statement that the signing of said Consent Agreement is for settlement purposes only and does not constitute an admission by Respondent that the law has been violated as alleged in such Complaint, or that the facts as alleged in such Complaint, other than jurisdictional facts, are true, and waivers and other provisions as required by the Commission’s Rules; and
The Commission having thereafter considered the matter and having determined it had reason to believe that Respondent has violated the said Act, and that a Complaint should issue stating its charges in that respect, and having accepted the executed Consent Agreement and placed such Consent Agreement on the public record for a period of thirty (30) days for the receipt and consideration of public comments, now in further conformity with the procedure described in Commission Rule 2.34, 16 C.F.R. § 2.34, the Commission hereby makes the following jurisdictional findings and issues the following Decision and Order (“Order”):
Respondent Aaron’s Inc., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Georgia, with its headquarters and principal place of business located at 400 Galleria Parkway SE, Suite 300, Atlanta, Georgia 30339.
The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the Respondent, and the proceeding is in the public interest.
IT IS HEREBY ORDERED that, as used in this Order, the following definitions shall
“Aaron’s” or “Respondent” means Aaron’s Inc., its directors, officers, partners, employees, agents, representatives, successors, and assigns; and the joint ventures, subsidiaries, partnerships, divisions, groups, and affiliates controlled by Aaron’s Inc., and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.
“Buddy’s” means Buddy’s Newco, LLC, d/b/a Buddy’s Home Furnishings, is a limited liability company organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its principal address at 4705 S. Apopka Vineland Road, Suite 206, Orlando, Florida 32819.
“RAC” means Rent-A-Center, Inc., a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its principal address at 5501 Headquarters Drive, Plano, Texas 75024.
“Commission” means the Federal Trade Commission.
“Aaron’s Franchisee” means a Third Party business owner who operates a RTO Retail Center under the Aaron’s corporate trademark or associated brands.
“Antitrust Laws” means the Federal Trade Commission Act, as amended, 15 U.S.C. § 41 et seq., the Sherman Act, 15 U.S.C. § 1 et seq., and the Clayton Act, 15 U.S.C. § 12 et seq.
“Board Member” means a member of the board of directors or board of managers for a specified entity.
“Competitor” means any Third Party that, directly or through a subsidiary, owns operates, or is a franchisor of, one or more RTO Retail Centers in the United States, including Buddy’s and RAC.
“Consent Agreement” means the Agreement Containing Consent Order.
“Consumer Rental Contracts” means contracts that provide a consumer with a consumer good through a leasing arrangement that terminates when the consumer acquires ownership or the lessor takes repossession of the consumer good. Consumer Rental Contracts are also referred to as rent-to-own contracts, rental purchase agreements, and lease-to-own agreements.
“Executive Team” means Board Members, CEO, President, Executive Vice President, and General Counsel of Respondent, and all employees of Respondent in a senior management position with decision-making authority over Respondent’s business operations.
“Non-Competition Agreement” means any agreement or covenant not to operate an RTO Retail
Center within a specified geographic area for a specified period.
“Third Party” means any natural person, partnership, corporation, association, trust, joint venture, or other business or legal entity other than Respondent.
“Reciprocal Purchase Agreement” means a contingent agreement or series of contingent agreements through which Respondent or an Aaron’s Franchisee agrees to close a RTO Retail Center and sell its Consumer Rental Contracts to a Competitor or its franchisee, and that Competitor or its franchisee agrees to close a different RTO Retail Center and sell its Consumer Rental Contracts to Respondent or an Aaron’s Franchisee.
“RTO Retail Center” means a store with a physical location that primarily offers consumer goods through Consumer Rental Contracts.
IT IS FURTHER ORDERED that:
Respondent shall not, directly or indirectly, enter into, solicit, invite, facilitate, or enable any Third Party to enter into, a Reciprocal Purchase Agreement.
Respondent shall not enforce, in whole or part, any Non-Competition Agreement that was part of, or contingent on, a Reciprocal Purchase Agreement.
In any future franchise agreement or any renewal of an existing franchise agreement, Respondent shall specifically prohibit the Aaron’s Franchisee from entering into a Reciprocal Purchase Agreement with a Third Party.
IT IS FURTHER ORDERED that no employee, officer, Board Member or other representative of Respondent shall serve as a Board Member or officer for a Competitor and Respondent shall not permit any employee, officer, Board Member or other representative of a Competitor to serve as a Board Member for Respondent.
IT IS FURTHER ORDERED that Respondent shall establish and maintain an antitrust compliance program that sets forth the policies and procedures Respondent has implemented to comply with the Order and the Antitrust Laws. The antitrust compliance program shall include:
Designation and retention of an antitrust compliance officer, who may be an existing employee of Respondent, to supervise the design, maintenance, and operation of the program;
Training the Executive Team regarding Respondent’s obligations under this Order and the Antitrust Laws:
Within 30 days after this Order becomes final,
At least annually during the term of the Order, and
Within 30 days of when an individual first becomes a member of the Executive Team;
Policies and procedures for employees and representatives of Respondent to ask questions about, and report violations of, this Order and the Antitrust Laws confidentially and without fear of retaliation of any kind;
Policies and procedures for disciplining employees and representatives of Respondent for failure to comply with this Order and the Antitrust Laws; and
Retention of documents and records sufficient to record Respondent’s compliance with its obligations under this Paragraph IV of this Order, including but not limited to records showing that employees and representatives of Respondent have received all trainings required under this Order during the preceding 2 years.
IT IS FURTHER ORDERED that Respondent shall file verified written reports (“compliance reports”) in accordance with the following:
Respondent shall submit:
An interim compliance report 60 days after the Order is issued;
Annual compliance reports each year on the anniversary of entry of the Order for a period of ten (10) years; and
Additional compliance reports as the Commission or its staff may request;
Each compliance report shall set forth in detail the manner and form in which Respondent intends to comply, is complying, and has complied with this Order. Each compliance report shall contain sufficient information and documentation to enable the Commission to determine independently whether Respondent is complying with the Order. Conclusory statements that Respondent has complied with its obligations under the Order are insufficient. Respondent shall include in its reports, among other information or documentation that may be necessary to demonstrate compliance:
The identity and job title of the antitrust compliance officer;
A description of how Respondent is complying with Paragraph II.B of the Order with respect to each Reciprocal Purchase Agreement in existence prior to the date of this Order and include, if applicable, any amendments, appendices, exhibits, schedules and modifications made thereto; and
With each annual compliance report, provide an electronic Excel spreadsheet listing each RTO Retail Center for which either 1) Respondent or an Aaron’s Franchisee sold the RTO Retail Center’s Consumer Rental Contracts to a Competitor or franchisee of a Competitor, or 2) Respondent or an Aaron’s Franchisee acquired the RTO Retail Center’s Consumer Rental Contracts of a Competitor or franchisee of a Competitor and provide the following information regarding each listed RTO Retail Center:
Whether Respondent or an Aaron’s Franchisee acquired or sold Consumer Rental Contracts and the identity of the affiliated RTO Retail Center;
The address of the RTO Retail Center;
The name of all other parties to the transaction, and if another party was a franchisee, the name of the franchisor of that party;
Whether Respondent or an Aaron’s Franchisee has entered into a Non-
Competition Agreement in connection with the transaction; and
A short summary of the relevant terms of the transaction including, but not limited to: (i) the purchase price and/or valuation of assets; (ii) the closing date of the transaction; and (iii) if Respondent or an Aaron’s Franchisee acquired or sold Consumer Rental Contracts from multiple RTO Retail Centers in the same transaction, the addresses of the other RTO Retail Centers.
Respondent shall verify each compliance report in the manner set forth in 28 U.S.C.
§ 1746 by the Chief Executive Officer or another officer or employee specifically authorized to perform this function. Respondent shall submit an original and 2 copies of each compliance report as required by Commission Rule 2.41(a), 16 C.F.R. § 2.41(a), including a paper original submitted to the Secretary of the Commission and electronic copies to the Secretary at ***@*** and to the Compliance Division at ***@***. In addition, Respondent shall provide a copy of each compliance report to the Monitor if the Commission has appointed one in this matter.
IT IS FURTHER ORDERED that Respondent shall notify the Commission at least 30 days prior to:
The proposed dissolution of Aaron’s Inc.;
The proposed acquisition, merger, or consolidation of Aaron’s Inc; or
Any other change in Respondent including, but not limited to, assignment and the creation or dissolution of subsidiaries, if such change might affect compliance obligations arising out of this Order.
IT IS FURTHER ORDERED that, for purposes of determining or securing compliance with this Order, and subject to any legally recognized privilege, upon written request and five (5) days’ notice to the relevant Respondent, made to its principal place of business as identified in this Order, registered office of its United States subsidiary, or its headquarters office, the notified Respondent shall, without restraint or interference, permit any duly authorized representative of the Commission:
Access, during business office hours of the Respondent and in the presence of counsel, to all facilities and access to inspect and copy all business and other records and all documentary
material and electronically stored information as defined in Commission
Rules 2.7(a)(1) and (2), 16 C.F.R. § 2.7(a)(1) and (2), in the possession or under the control of the Respondent related to compliance with this Order, which copying services shall be provided by the Respondent at the request of the authorized representative of the Commission and at the expense of the Respondent; and
To interview officers, directors, or employees of the Respondent, who may have counsel present, regarding such matters.
IT IS FURTHER ORDERED that in connection with any legal proceeding brought by the Commission against Buddy’s or RAC alleging that Respondent or an Aaron’s Franchisee entered illegal Reciprocal Purchase Agreements, Respondent shall:
Agree to service of process of all Commission subpoenas issued under Rule 3.34 of the Commission Rules of Practice, 16 C.F.R. ¶ 3.34; and
Negotiate in good faith with the Commission to provide a declaration, affidavit, and/or sponsoring witness, if necessary, to establish the authenticity and admissibility of any documents and/or data that Respondent produces or has produced to the Commission.
IT IS FINALLY ORDERED that this Order shall terminate 20 years from the date it is
By the Commission.
April J. Tabor Acting Secretary