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Brunswick in FTC Probe
Over Stern Drive Sales

Brunswick Says FTC Has Begun
Antitrust Probe on Sales Practices

Wall Street Journal
8 December 1997
By Susan Carey
Brunswick Corp. confirmed it is the subject of an antitrust investigation by the Federal Trade Commission over sales practices relating to the company's stern-drive marine engines.

A Brunswick official said the company became aware of the inquiry in late October. He said Brunswick has been asked to provide "information and analyses" on certain sales programs, but has had "only limited conversations with the FTC staff." He said the company, which makes boats, marine engines, bowling-center equipment, billiards tables and fishing gear, "is not in a position to talk about specific [sales] practices."

The official added that Brunswick "believes the [sales] practices are in compliance with all laws." Because the Lake Forest, Ill., company doesn't deem the investigation "material," it hasn't disclosed it in filings with the Securities and Exchange Commission, he said.

Brunswick shares fell $1.8125 each, or 5.7%, to $29.9375 Friday in New York Stock Exchange composite trading, even as the broader market rallied.

In Washington, a spokeswoman for the FTC declined to confirm or deny an investigation is under way.

Buyer Says It Was Subpoenaed

The inquiry came to light last Thursday when Independent Boat Builders Inc., a Benton, Ill., cooperative that buys Brunswick engines on behalf of 35 independent boat makers, said it had been served with a subpoena in connection with an FTC probe of Brunswick.

According to David Ball, chief executive of the cooperative, the subpoena indicated that the FTC in July began looking at whether Brunswick was engaging in unfair competition by entering into sales agreements with marine distributors so they wouldn't use the goods of a competitor. Mr. Ball says Brunswickholds 50% of the market for outboard engines and 90% of the market for stern-drive engines.

Brunswick was the subject of another FTC antitrust investigation that the company said ended early this year after the agency decided no action was warranted. That probe centered on sales practices relating to Brunswick's sales to Tracker Marine LP, a boat builder in which Brunswick has a joint-venture interest.

Prior Allegations

Brunswick has been dogged by other allegations of unfair sales practices in its boat and marine-engine businesses. In early 1995, it settled a suit with Minneapolis-based Genmar Industries Inc., that alleged Brunswick sought to monopolize the sale of recreational boats and engines. Brunswick paid $22.5 million to Genmar, its primary boat competitor.

The Independent Boat Builders cooperative separately sued Brunswick in federal court in Little Rock, Ark., in 1995, alleging monopolistic practices designed to force competitors out of the market. Brunswick countersued in 1996, alleging that that the co-op conspired to restrain trade. Brunswick won a protective court order soon after that prohibited the co-op from disclosing information related to the case.

But the FTC subpoena of Independent Boat Builders' pretrial discovery information "opened up a Pandora's box," according to Mr. Ball. He said the Arkansas case is scheduled to go to trial in March.

Copyright © 1997 Dow Jones & Company, Inc. 

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