EU fines Intel billion-plus

I've posted several times previously (most recently here) about the legal battles between Intel and AMD, and the related battles between Intel and various regulators (Korea, Japan, EU). Last June, Korea fined Intel $25 million for offering improper rebates to customers:

Intel offered about $37 million in rebates over 2 1/2 years to Samsung and Trigem on the condition that they wouldn't buy from Advanced Micro, according to commission's statement.

The EU has just handed down a fine that makes Korea's look like chump change:

The European Union fined Intel Corp. a record euro1.06 billion ($1.44 billion) on Wednesday, ordering the world's biggest computer chip maker to stop illegal sales tactics that shut out its Silicon Valley rival AMD.

The findings are detailed in the article linked, and are too lengthy to quote here, but they are similar to the Korean case:

Wrapping up an eight-year probe, the EU says Intel gave rebates to manufacturers Acer, Dell, HP, Lenovo and NEC for buying all or almost all their x86 computer processing units, or CPUs, from Intel and paid them to stop or delay the launch of personal computers based on AMD chips.

Intel has denied the validity of the findings and says they will appeal within the next sixty days.

I have no knowledge of who is right or wrong in this case, but obviously a fine of this size indicates the importance of reviewing your trade promotion policies carefully. For American readers who will try to draw solace from the fact that the fines have been overseas, I draw your attention to this part of the article:

[EU Competition Commissioner] Kroes said she hoped the administration of President Barack Obama would join Europe in subjecting corporations to closer anti-trust scrutiny.

This week, one of America's top antitrust officials, Christine Varney, signaled a return to tougher enforcement as the Obama administration dropped a strict interpretation of antitrust rules that saw regulators shun major action against monopolies over the last eight years.

Kroes said Varney's words gave her hope that current "close cooperation" and information exchanges with the Federal Trade Commission "could go in a very positive way" in the future.

"The more competition authorities are joining us in our philosophy, the better it is for it is a global world," she said. "The more who are doing the job ... and with the same approach then the better it is."

Possibly big price discrimination decision

Time will tell how big this is, but a food distributor in Pennsylvania won a Robinson-Patman suit against a supplier for discriminatory pricing and against Sodexho for inducing discriminatory pricing.

Feesers filed its complaint against Michael Foods and Sodexho on March 17, 2004, alleging price discrimination in violation of the Robinson-Patman Act. A three-week bench trial took place in early 2008 before Judge Sylvia Rambo in the federal district court in Harrisburg, which resulted in the April 27, 2009 decision.

At trial, Michael Foods and Sodexho argued that Feesers and Sodexho were not in "actual competition" for purposes of the Robinson-Patman Act because Sodexho provides food management services to its customers, whereas Feesers is a food distributor. The court found, however, that both Feesers and Sodexho procure and distribute food for the same institutional customers and, thus, are in actual competition for the same food dollar.

Although the injunctions issued by the district court are binding only as to Michael Foods and Sodexho, it is now clear that price discrimination by food suppliers against distributors such as Feesers and in favor of large-volume food management companies and GPOs such as Sodexho will not be tolerated by the courts.

This law blog quotes attorneys for the two sides, who disagree (no surprise) as to the importance of the decision:

Kessler [Feeser's attorney] told us Wednesday that the decision could have a major impact on the food distribution industry. In recent years, he explained, food management companies like Sodexo--which provide procurement and management services for cafeterias at schools, hospitals, and prisons--have used their large client base as leverage to extract better pricing deals from suppliers. That's hurt distributors like Feesers. "Sodexho [said to its clients], 'We don't compete with distributors so you can give huge discounts,' " Kessler told us.

Peggy Zwisler of Latham & Watkins, who represented Michael Foods at trial, disputed Kessler's view of Judge Rambo's opinon. She told us it's "very fact specific" and does not have broad implications. She also said that Michael Foods has "strong grounds for appeal" and it intends to do so.

The decision is here.

I am not an attorney, so take my opinions with several grains of salt, but it seems to me that the most significant point in the decision is that no proof of competitive harm is required, that harm can be assumed from the size of the price differential. My understanding is that this interpretation, if upheld, would make such suits easier to win in the future.

“Competitive injury” is established prima facie by proof of “a substantial price discrimination between competing purchasers over time.” In order to establish a prima facie violation of section 2(a), Feesers does not need to prove that Michael Foods’ price discrimination actually harmed competition, i.e., that the discriminatory pricing caused Feesers to lose customers to Sodexho. Rather, Feesers need only prove that (a) it competed with Sodexho to sell food and (b) there was price discrimination over time by Michael Foods. This evidence gives rise to a rebuttable inference of “competitive injury” under § 2(a). The inference, if it is found to exist, would then have to be rebutted by defendants’ proof that the price differential was not the reason that Feesers lost sales or profits.

Leibowitz to be appointed FTC chair

Jon Leibowitz is to be appointed today to chair the Federal Trade Commission. Leibowitz is currently a member of the commission, so President Obama will need to make another appointment to fill the vacancy.

Leibowitz's views on Robinson-Patman enforcement are unknown (since nobody bothers to talk about it much). He has taken strong positions on privacy issues, which could have impact on on-line marketing practices, and possibly on some in-store practices (e.g., studying shopper behavior via camera, and possibly even collection of loyalty card info).

Leibowitz for FTC?

Washington rumors are that FTC Commissioner Jon Leibowitz will be promoted to head up the commission after Barack Obama takes over on Tuesday.

Leibowitz, a Democratic commissioner with broad Capitol Hill experience, is expected to be named to head the FTC, at first in an acting capacity, the sources said. Commissioner William Kovacic, a Republican, now holds that job.

The five-person FTC also has an open seat.

The rumors go on to say that Einer Elhauge, a Harvard law professor who has advised the new president, will be appointed to head the Justice Department's antitrust division.

The MAP enforcers

Apparently there is a new service industry springing up to help manufacturers enforce minimum advertised price (MAP) policies.

Tiny companies like NetEnforcers -- with only 56 staffers jammed into a dim, spare cubicle farm in Arizona -- wield economic power far beyond their size. These companies scour hundreds of thousands of Web sites daily, looking for retailers offering bargains below the "minimum advertised price," or MAP, set by manufacturers on an array of consumer goods.

When NetEnforcers finds items like cameras, handbags or ovens for sale at too-low prices, as it claims to do 5,000 to 10,000 times a day, it alerts its clients, including Sony Corp., Black & Decker Corp., Cisco Systems, JVC Kenwood Holdings and Samsung.

MAP is slightly different from reseller price maintenance (RPM) in that MAP deals with policies involving advertised price, whereas RPM deals with efforts by a manufacturer to set a selling price, whether advertised or not. Both types of policies are getting a lot of attention these days, and my guess is that the level of attention is likely to escalate considerably in 2009.

The FTC is investigating musical-instrument and audio-gear makers for possible MAP-related antitrust violations. And online retailers such as BabyAge.com and HomeCenter.com have sued manufacturers with MAP or similar price-maintenance policies, alleging antitrust violations.

FTC offers workshops on resale price maintenance

There has been a lot of discussion about what constitutes price-fixing by a manufacturer since the Leegin decision last year: Under what circumstances can a manufacturer dictate prices to its retailers?

If your company might be interested in using some form of price maintenance program, but aren't certain if you would be safe in doing so, you might wish to send your corporate attorneys to these workshops at the Federal Trade Commission.

The Federal Trade Commission today announced that it will hold a series of public workshops early next year to explore, for the purposes of enforcing Section 1 of the Sherman Act and Section 5 of the FTC Act, how to best distinguish between uses of resale price maintenance (RPM) that benefit consumers and those that do not. The Commission expects the workshops to focus on legal doctrines and jurisprudence related to RPM, theoretical and empirical economic research, and business and consumer experiences.

There will be 4-6 workshops in the January-March timeframe, although exact dates haven't been set.

(Thanks to Consumer Goods & Retail Industry Litigation Blog for letting us know about this).

Are slotting allowances anti-competitive?

A law firm's blog, Consumer Goods and Retail Industry Litigation, has an interesting post about a recent study by a couple Norwegian economists: Do Slotting Allowances Harm Retail Competition? Since I let my subscription to the Scandinavian Journal of Economics run out, I can't access the full article (which is probably way over my head anyway), but here's the abstract:

Slotting allowances are fees paid by manufacturers to get access to retailers' shelf space. Both in the USA and Europe, the use of slotting allowances has attracted attention in the general press as well as among policy makers and economists. One school of thought claims that slotting allowances are efficiency enhancing, while another school of thought maintains that slotting allowances are used in an anti-competitive manner. In this paper, we argue that this controversy is partially caused by inadequate assumptions of how the retail market is structured and organized. Using a formal model, we show that there are good reasons to expect anti-competitive effects of slotting allowances. We further point out that competition authorities tend to use an unsatisfactory basis for comparison when analyzing welfare consequences of slotting allowances.

It sounds like the authors are arguing that slotting is anti-competitive. The blog entry summarizes briefly the arguments generally advanced by both sides, but I was pleased to see their conclusion, because it adopted a view that I've long held, that paying slotting fees is probably, in most cases, a violation of the Robinson-Patman Act, because it results in discriminatory pricing (and/or discriminatory allowances):

Price Discrimination - While substantial attention has been devoted to assessing the antitrust implications of slotting fees, commentators and the government often focus on the relatively simple antitrust issues associated with slotting – i.e., whether the fees are a result of collusion or impede entry of new products – but fail to grapple with a much more complicated issue: whether slotting fees give rise to price discrimination concerns under the Robinson Patman Act. Not all retailers and wholesalers charge slotting fees. Price discrimination concerns arise when a vendor pays slotting fees to one retailer, but not the retailer’s competitor. If the vendor does not reduce its product pricing to the retailer’s competitor by the amount of the slotting fee given to the retailer, paying the retailer’s slotting fee may violate the Robinson-Patman Act. For this reason, we believe that, in assessing the legality of slotting fees under the antitrust laws, the fees must be considered along with other discounts and allowances vendors give retailers and wholesalers.

I know of few manufacturers who make slotting payments on anything resembling a proportional basis. OK, let's be honest: Nobody pays them on a proportional basis. Now, some might compensate by offering larger payments of other types to those retailers who get little or no slotting, but I'm pretty sure this seldom happens. Also, since slotting payments are by definition (per FASB 01-9) price reductions rather than marketing allowances, other problems might be created by giving trade promo funding to offset a slotting payment.

When I've posted recently on the possibility of increased regulation of trade promotion in the next administration, I probably should have mentioned slotting fees -- it's one of the few areas of channel marketing that the FTC has paid attention to in recent years, and one that gets some consumer and media attention, and might therefore be an area for action.

Thailand looking at anti-hypermarket laws

The new Thai government is considering legislation that would restrict the growth of big stores.

The long-awaited retail industry regulations have moved at a snail's pace despite operators of small stores calling for years for legislation to regulate the rapid growth of hypermarkets, chain convenience stores and other large operators.

Critics say that the Interior Ministry's current urban planning and building codes are not adequate for the changed business environment, in which chains are squeezing out family businesses. [...]

Under the current draft, which focuses on protecting local retail businesses, existing giant retailers can expand but must comply with new regulations - restricting operating hours, size and proximity to the city centre - to leave room in the market for small players.

In the current global economic downturn, it is likely that populist legislation will be enacted in many countries.

EU fines Dole and Del Monte for banana price-fixing

The European Union fined Dole over $60 million for engaging in price-fixing on bananas. A German company, Weichert, was fined $20mil, but Del Monte will have to pay the fine because they owned Weichert at the time of the violations. Chiquita escaped fines by blowing the whistle:

Chiquita also participated in this activity, but the EU’s competition commission said it could not have opened the investigation without that company’s initial cooperation.

Chiquita escaped a fine of $113 million (83.2 million euros) by bringing the activity forward and applying for leniency, EU officials said in a press release.

Maybe it really could happen here

Back in March, I did a newsletter and blog entry titled Could it happen here?, which noted an increase in regulatory activity related to trade promotion in several places around the world (most notably, investigations of Intel’s channel practices in Korea, Japan, and Europe and repeated investigations of the grocery chains by the UK’s Competition Commission and by the EU). The question, as indicated by the title, was whether similar action might be forthcoming in the US – specifically whether the Robinson-Patman Act might be dug up from wherever it’s buried, dusted off, and actually enforced.

The conclusion I arrived at in March was:

Six months or a year ago, I would have said absolutely not (in fact, I think I did say so in my book). Now I’ll still say “absolutely not” in the short term, but modify it slightly to “probably not, but maybe” in the medium- to longer-term.

Now that another seven months have gone by, I think we’ve moved much closer to a point where there might be serious regulatory action involving trade promo. But I hedged a bit last time, and I’ll continue to hedge now. The current economic turmoil increases the likelihood that the next congress will include a substantial majority favoring populist legislation and strong regulatory oversight of business practices – which pretty much summarizes R-P.

But R-P has so faded from the scene that it might be beyond resuscitation. When I discussed this question recently with a couple knowledgeable observers, Rob Hand of Oracle and Mike Kantor of TPMA, Rob’s comment was, “How many members of Congress even know Robinson-Patman exists?”

As we discussed the question, the three of us came to the conclusion that the phrase “populist legislation and strong regulatory oversight of business practices” applies equally to other legislation – most notably Sarbanes-Oxley – and that a more likely result (somewhere near certainty) is increased enforcement of Sarbox and tighter scrutiny of accounting practices such as those dealt with in FASB 01-9 and 02-16. Those who were hoping for revisions that would weaken Sarbox can kiss that dream goodbye.

Whatever form the regulation takes, I’d be willing to bet my house (not that it’s worth anything at present), that there will be increased regulation of trade promotion in 2009-10. How long the increased pressure will last is another issue, but marketers would be well advised to take a look and see if there are any embarrassing pieces of paper lying around.

Intel fined by South Korea

In the latest development in the ongoing saga of investigations and lawsuits concerning Intel's trade rebate practices, South Korea has fined Intel about $25mil for rebates:

Intel offered about $37 million in rebates over 2 1/2 years to Samsung and Trigem on the condition that they wouldn't buy from Advanced Micro, according to commission's statement. [...]

The commission's description of the funds from Intel is a ``stretch'' because they were used to jointly market products, Trigem said in an e-mailed statement. Samsung Electronics spokesman James Chung declined to comment.

Intel denies the charges and is expected to appeal the ruling.

Bigger than the fine from South Korea, which is probably pretty much a rounding error in Intel's books, is the possibility that this might have an impact on the EU's investigation of Intel and/or on AMD's lawsuit against them in the US, both of which are based on pretty much the same set of facts as the Korean case.

The verdict is a setback for Santa Clara, California-based Intel as it awaits a ruling from the European Union, where regulators can fine companies up to 10 percent of annual sales for antitrust breaches. In 2005, Japan forced Intel to remove clauses restricting Japanese computer makers from using rival chips. Intel has also been sued by Advanced Micro in the U.S.

``An investigation in Korea invariably has some effect on the outcome of investigations in the United States, in the EU and elsewhere,'' said Brendon Carr, a business attorney at the law firm of Hwang Mok Park in Seoul. ``Every domino that falls is a painful one for a global enterprise.''

Previous Intel items, several of which deal with these cases, are here.

Asda wants foreign suppliers excluded from ethics rules

The UK's Competition Commission has recommended creation of a set of ethical guidelines to prevent retailers from using their clout to mistreat suppliers. Asda has said they want foreign suppliers excluded from the rules.

The UK's second biggest grocer has included the demand in its response to the Competition Commission's remedies report, published in February after a two-year inquiry into the £125 billion grocery market.

The Commission provisionally recommended that grocers set up an ombudsman service to help protect small suppliers and farmers and said supermarkets may be forced to appoint compliance officers to ensure they treat suppliers in accordance with a new and wide-ranging code of practice, the Groceries Supply Code of Practice.

If I were a foreign supplier to Asda, this request would make me a bit nervous: What exactly does Asda have in mind doing to me that they don't want the ombudsman to know about?

The Candy Biz Ain't Sweet

The largest candy companies are under attack on multiple fronts for alleged price-fixing:

Giant Eagle filed a federal lawsuit last week that accuses major chocolate makers of conspiring to fix prices to limit competition, according to published reports. The Hershey Co., Mars Inc., Nestlé and Cadbury Schweppes are defendants in the suit that alleges that the companies fraudulently claimed higher material costs and raised prices by more than 15% around the same time period. The suit cites the Canadian Competition Bureau’s ongoing investigation of the companies. The bureau allegedly uncovered communications between executives at the chocolate makers as they made plans to jointly raise prices, according to reports.

In addition to the Canadian investigation and Giant Eagle's suit, I've seen reports of suits by other major retailers (CVS, Meijer, Kroger, etc) and also consumer groups.

That there would be price increases at the same time would not be surprising, given that the product price is dependent to a great extent on commodity prices for ingredients. If though there are memos, as alleged, then that's another matter.

Update to "Could It Happen Here?"

I should have mentioned in my post a few weeks ago, on the likelihood of stronger enforcement of laws regulating trade promotion in the US, that what clearly can happen is private lawsuits by aggrieved parties. We’ve seen a number of such private actions in recent years, some of them resulting in significant penalties (e.g., LePages/3M, Conwood/US Tobacco).

Now a new suit has been filed by a Kia dealer, alleging that his supplier has been offering larger advertising allowances to other Kia deales in his market. Shocking!

According to the lawsuit, dealership vice president Jim Barnett discovered the advertising program in December 2006 when he "inadvertently" opened a Federal Express envelope that had been misdirected to his dealership.

Inside were letters addressed to some of Barnett's competitors, showing that Kia Motors had been providing them with advertising incentives of $10,000 to $35,000 a month in a "Regional Marketing Fund program."

Just a reminder: If you’re sending out a notice about a special program, make sure you don’t mail it to customers who are excluded from the program.

More seriously, even though the article states flatly (and truthfully) in regard to Robinson-Patman that "the government no longer enforces the law," the possibility of suits by customers or competitors is still very real, and potentially (ask US Tobacco, who got hit for $1 billion) very expensive.

Could it happen here?

There seems to be a quickening pace of regulation on issues relating to trade promotion, with most (though not all) the activity taking place outside the US. The question for us Yanks is what, if anything, it means domestically, and what the foreign developments mean to our international operations.

I’ve mentioned in the past the international investigations of Intel regarding pricing and rebate (e.g., Intel Inside) issues. Investigations are ongoing in Japan and Korea, and recently there have been raids on several European retailers and on Intel offices, in connection with the EU’s investigation. In the US, AMD is suing Intel as a private action under the Robinson-Patman Act. In addition, last month the state Attorney General in New York served a subpoena for a state investigation.

But that’s (mostly) old stuff. What is new is a government study of retail concentration and excessive retailer power in the grocery industry in the UK, and calls for a similar study in the EU.

In the UK, the Competition Commission, similar to the FTC in the US, has been investigating retail concentration for the past couple years and has released its preliminary findings.

Suppliers are to get more protection in their dealings with big supermarkets in a bid to ensure fair competition.

An ombudsman will be appointed to resolve disputes between retailers and their food suppliers, the Competition Commission recommends. [ … ]

The commission also said it was concerned about retailers being able to transfer unexpected costs to their suppliers.

Shortly after the report was released, there were calls in Brussels for a similar study on the continent:

In the wake of the Competition Commission's remedies report on the UK market, 439 MEPs have signed a written declaration on investigating the power exerted by large supermarkets in Europe.

The declaration calls for the European Commission to look into “the impacts that concentration of the EU supermarket sector is having on small businesses, suppliers, workers and consumers and, in particular, to assess any abuses of buying power which may follow from such concentration”.

So, the question arises: Is there likely to be anything similar happening in the US? Six months or a year ago, I would have said absolutely not (in fact, I think I did say so in my book). Now I’ll still say “absolutely not” in the short term, but modify it slightly to “probably not, but maybe” in the medium- to longer-term.

The reason for the change is only partially the international tide toward greater scrutiny of trade channel practices. There is also a populist tide running in American politics, and Robinson-Patman is nothing if not populist legislation. In addition, local politicians have found that there are points to be scored by bashing the big boxes (especially Wal-Mart).

There was once a belief that R-P was more vigorously enforced in Democratic administrations than by Republicans. Recent decades have offered little support for that idea – the FTC under Carter and Clinton showed only marginally greater enthusiasm for R-P than the Republicans who preceded and followed them – but the way the leading Democrats have talked in debates might lead one to believe that they would favor at least some increase in enforcement activity. Or that could just be campaign talk.

Even if a new president wished to push the FTC toward a more activist role, it would take some time, since only one commissioner can be replaced each year, and a balance must be maintained between the parties in making appointments.

As a related item, the FTC chair has just resigned to take a job as head counsel for Procter & Gamble. Hmmm … maybe P&G is trying to stay prepared.

Do-Not-Mail?

For a variety of reasons -- email, online billing/payment, and a slowing economy -- the US Postal Service is anticipating a billion dollar deficit this year.

"We cannot afford, literally or figuratively, to begin [the year] . . . more than $1 billion in the red," Postmaster General John E. Potter testified before a Senate subcommittee yesterday. "We would never be able to dig out of that hole."

The one area of growth for the USPS is what they call "standard mail" (recipients are more likely to call it "junk mail" or something less printable).

... standard mail -- advertising circulars, catalogues, fundraising appeals -- has grown to 104 billion pieces in 2007 from 101 billion in 2005.

I'm surprised it's that little, actually. It only works out to about three pieces of mail per day per household -- not all that much really (I suspect I get more than that, but who has time to count before dumping it in the garbage?)

In any case, this mail is very profitable to deliver. Unfortunately, to add to the postal service's woes, eighteen states are considering "do-not-mail" lists, patterned on the popular "do-not-call".

At yesterday's hearing before the Senate subcommittee, Potter talked about the Postal Service's lobbying efforts against "do not mail."

"We're working very hard to inform people about the role that mail plays in the economy, as an employer of millions of Americans," said Potter, adding that it is unclear whether states have the authority to create laws that affect the Postal Service. "Fortunately, no legislation has passed."

There may be some traction to this. Most consumers hate junk mail (though not, I suspect, anywhere nearly as much as they hate telemarketing calls). Marketers should keep an eye on the issue, since the effects on all of us would be huge.

FTC chair resigning to join P&G

Deborah Platt Majoras, who has chaired the Federal Trade Commission for the past four years is resigning.

Majoras, 44, will join Procter & Gamble in June as vice president and general counsel, with primary responsibility for its global antitrust and litigation practice areas, company spokeswoman Robyn Schroeder said.

The White House has not named a replacement, FTC spokeswoman Nancy Judy said. A successor will likely be one of the two other Republican commissioners, William E. Kovacic and J. Thomas Rosch. Commissioner Pamela Jones Harbour is an independent, and Jonathan Leibowitz is the panel's lone Democrat.

The FTC is the agency responsible for enforcing the Robinson-Patman Act. The amount of time they spend doing so can be judged from the fact that it is totally unmentioned in the Washington Post article I've linked to.

EU continuing on Intel probe

The European Union is continuing with its investigation of Intel:

Electricals giant DSGi had its headquarters in Hemel Hempstead raided yesterday, as part of the European Union's investigation of chipmaker Intel.

The EU is investigating allegations that Intel abused its dominance of the market for central processing units.

Intel's own offices in Munich and other retailers' offices were also raided. The investigators are looking for information related to allegations of excessive rebates.

Similar investigations are in progress in Korea and Japan, and a lawsuit has been brought in the US by AMD. In addition, last month the state Attorney General in New York served a subpoena for a state investigation:

Attorney General Andrew M Cuomo of New York issued a wide-ranging subpoena to the Intel Corporation on Thursday as part of an investigation into whether the company violated federal or state antitrust laws in the way it priced and sold microprocessors.

The investigation follows a preliminary look at Intel by Mr. Cuomo’s office over several months and is the latest in a string of legal challenges the company has faced around the world.

Coupon boss indicted

The former head of International Outsourcing Services, the big El Paso coupon clearing house, has been indicted.

For years, Chris Balsiger ran the nation's biggest clearinghouse of discount coupons redeemed by consumers at supermarkets. But he still didn't care too much for the industry.

"It's a lying, cheating, dirty business," he says.

Now the 54-year-old multimillionaire is facing a 27-count federal indictment, charged with leading a scheme that bilked some of the nation's largest coupon-issuers out of at least $250 million. He denies the charges.

He's also being sued by several grocery/CPG companies, including Kraft and Pepsico.

Some of the things they are alleged to have done (such as "gang-cutting") are things I have heard about for years from friends in that side of the business (I have very limited experience with couponing). The article linked here has a lot of fascinating information, like throwing coupons into a cement mixer to make them look used.

SEC closes OfficeMax investigation

The day after I posted the item below, concerning possible vendor allowance problems at Office Depot, the two-year-old SEC investigation of OfficeMax finally ended, with no action against the company, which had cooperated with the Commission and fired six people who were involved in the alleged falsification of documentation.

The Naperville, Ill.-based company had launched an internal review in December 2004 after receiving claims from a vendor alleging that OfficeMax employees requested inappropriate promotional payments and falsified supporting documentation.

The internal investigation was conducted under the direction of the company's audit committee and was completed in March 2005. Six employees were fired in connection with the probe.

In June 2005, the SEC started its investigation, with which the company cooperated. OfficeMax said Thursday in an SEC filing that it was notified last month that the agency had completed the investigation.