Atlantic Business Products and Candle Business Systems are both large retail office equipment dealers operating in the New York metropolitan area. Atlantic is an authorized dealer of Toshiba and Ricoh copiers. Candle is an authorized dealer of Toshiba, Savin and Risograph copiers. Each of these manufacturers restricts distribution to authorized dealers who have a non-exclusive right to sell in designated territories. Around 1990 the two dealers entered into an agreement whereby they explicitly agreed to refrain from competing for each other?s customers. The agreement provided that they instruct sales people to walk away from potential sales when they learned that the other dealer had already made a sale to the customer. The salesperson was either advised that a particular customer belonged to the other business or they were able to determine that based on the dealer?s sticker on the copier. The two companies also shared inventory. When one company made a sale but did not have the copier in stock the other company would ship the copier directly to the customer.
This customer allocation agreement deprived customers of free and open price competition and had a substantial negative impact on the retail copier market.
Candle Business Systems entered into a settlement on August 5, 2002 where they agreed to an injunction, reporting requirements, a $360,000.00 penalty, a $20,000.00 reimbursement to the state, and a $20,000.00 reimbursement to the New York City School District. Atlantic settled for a $125,000 penalty and $12,500 in costs and fees.
There was also a related criminal case handled by the New York Attorney General?s Office, Division of Criminal Prosecution. In June 2002, Joe Weiss, Chief Executive Officer of Candle, pled guilty to violating the Donnelly Act (a class E felony), received a conditional discharge and Candle agreed to pay the $400,000 in penalties and costs that would be assessed in the civil case. This plea was the result of a year-long investigation in conjunction with the Special Commissioner for Investigation for the New York City School District into anti-competitive conduct in the sale of copiers and duplicators to the New York City Board of Education. The investigation was initiated as a result of misconduct by an employee of Copyworld of America, once the Board of Education’s primary supplier of copiers and duplicators, and later bought by Candle. The investigation revealed a decade-long conspiracy between Candle and Atlantic Business Products, Inc., two of the New York metropolitan area’s largest copier and duplicator retailers, to enter into a customer allocation agreement in violation of the Donnelly Act.
The investigation also led to the indictment of a salesperson for bribery and bid-rigging in connection with the sale of copiers and duplicators to New York City schools. (See People v. Weiss, Consent Judgment, New York v. Candle Business Systems).