[Federal Register: November 25, 2002 (Volume 67, Number 227)]
[Notices]
[Page 70620-70623]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25no02-86]
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DEPARTMENT OF JUSTICE
Antitrust Division
Responses to Public Comments on Proposed Final Judgment in United
States v. The Manitowoc Co., Inc., et al.
Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C.
Sec. 16(b)-(h), the United States hereby publishes the two public
comments on the proposed Final Judgment in United Statesv. The
Manitowoc Co., Inc., Grove Investors, Inc., and National Crane Corp.,
Civil No. 1:02 CV 01509 (RL), filed in the United States District Court
for the District of Columbia, together with the government's responses
to the comments.
On July 31, 2002, the United States filed a Complaint that alleged
that The Manitowoc Company Inc.'s proposed acquisition of Grove
Investors, Inc. (and its subsidiary, National Crane Corp.) would
violate Section 7 of the Clayton Act, 15 U.S.C. 18, by substantially
lessening competition in production and sale of medium- and heavy-lift
boom trucks in North America. The proposed Final Judgment, requires the
defendants to divest either Manitowoc's
[[Page 70621]]
or Grove's boom truck business to a purchaser acceptable to the United
States.
Public comment was invited within the statutory 60-day comment
period. The public comments and the United State's responses thereto
are hereby published in the Federal Register, and shortly thereafter
these documents will be attached to a Certificate of Compliance with
Provisions of the Antitrust Procedures and Penalties Act and filed with
the Court, together with a motion urging the Court to enter the
proposed Judgment. Copies of the Complaint, Hold Separate Stipulation
and Order, proposed Final Judgment, and the Competitive Impact
Statement are currently available for inspection in Room 200 of the
Antitrust Division, Department of Justice, 325 7th Street, NW.,
Washington, DC 20530 (telephone: 202-514-2481) and at the Clerk's
Office, United States District Court for the District of Columbia, 333
Constitution Avenue, NW., Washington, DC 20001. (The United State's
Certificate of Compliance with Provisions of the Antitrust Procedures
and Penalties Act will be made available at the same locations shortly
after they are filed with the Court.) Copies of any of these materials
may be obtained upon request and payment of a copying fee.
Constance K. Robinson,
Director of Operations, Antitrust Division.
U.S. Department of Justice, Antitrust Division
November 11, 2002.
Mr. Richard M. Beine,
President, Busey Truck Equipment, Inc., 1840 S. Farmington Road,
Jackson, M0 63755.
Re: Comment on Proposed Final Judgment in United States v. The
Manitowoc Co., Inc., Grove Investors, Inc., and National Crane
Corp., No. 1:02CV01509 (D.C.C., filed July 31, 2002).
Dear Mr. Beine: This letter responds to your September 25th
letter, commenting on the proposed Final Judgment submitted for
entry in the above case. The government's Complaint in the case
charged that a combination of Manitowoc and Grove would
substantially reduce competition in production and sale of medium-
and heavy-lift boom truck in North America. The proposed Judgment
would resolve these competitive concerns by requiring defendants
promptly to divest either Manitowoc's Grove's boom truck business.
In your comment, you observed that defendant Manitowoc has
consistently failed to provide support for its line of unloader and
tailgator products. In February 2002, long before the government
filed its proposed Judgment in this case, you offered to purchase
this line of products from Manitowoc. Manitowoc, however, has failed
to respond to your offer.
The gravamen of Busey Truck's complaint is Manitowoc's apparent
unwillingness to sell its unloader and tailgator product lines.
However, we can find no competitive justification for requiring a
divestiture of Manitowoc's unloader and tailgator product lines.
Unloaders and tailagors are small material handling vehicles similar
to forklifts that are primarily used for loading and unloading
delivery trucks and in warehouse stocking operatings. The United
States is unaware of any evidence that suggests a combination of
Manitowoc and Grove would adversely affect competition in the
production and sale of unloader and tailgator products. Unloaders
and tailgators are, at best, minor complements to, not competitive
alternatives for, medium- and heavy-lift boom trucks. Divestitures
of unloader and tailgator product lines unloader and tailgator
product lines is not required either to cure an alleged violation or
to ensure the viability of the divested boom truck assets. The
Judgment, as currently written, fully addressed the competitive
issues raised by Manitowoc's acquisition of Grove's boom truck
business.
Thank you for bringing your concern to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. Sec. 16(d), a copy of your
comment and this response will be published in the Federal Register
and filed with the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
Busey Truck Equip., Inc.
J. Robert Kramer II,
Chief, Litigation II Section, Antitrust Division, US Department of
Justice, 1401 H Street NW Suite 3000, Washington DC 20530.
September 25, 2002.
Re: The Manitowoc Co., Inc.
Dear Sir: In February 2002, we had our attorney prepare a letter
of intent to the Manitowoc Co to express our interest in purchasing
the Trolley Boom Line (Unloaders, tailgators) of products. They have
never responded to our letter of intent. May 1, 2002 FEMCO a
subsidiary of the Manitowoc Co informed us they would be taking over
management of this line of products.
Our primary interest in acquiring the Trolley Boom Line
(unloaders, tailgators) of products is because Manitowoc has
continuously failed to provide the product support needed for this
product as it is such a small part of their conglomeration. Sir,
these trolley booms are our business' lifeblood.
When we tried to purchase this line in February we had the
support of all of the dealers that already sell this line. They
believe we can continue on the great USTC name of these trolley
booms.
We are still interested in the purchase of the Trolley Boom Line
of products. We have the expertise and experience needed to support
this product line. However we have no interest in the purchasing of
the Boom Truck Line ran out of Georgetown TX.
We trust these comments are relevant to your inquiry of the
Manitowoc Co Inc. Please contact us if you need any other
information.
Thank you,
Richard M. Beine,
President,
rbeine@atprs.net.
U.S. Department of Justice, Antitrust Division
November 11, 2002.
Mr. S.M. Oliva,
President, Citizens for Voluntary Trade, 2000 F Street, NW, Suite
315, Washington, DC 20006.
Re: Comment on Proposed Final Judgment in United States v. The
Manitowoc Co., Inc., Grove Investors, Inc., and National Crane
Corp., No. 1:02CV01509 (D.D.C., filed July 31, 2002).
Dear Mr. Oliva: This letter responds to the comment on the
proposed Final Judgment (``Judgment''), which you submitted on
behalf of Citizens for Voluntary Trade (``CVT''), a nonprofit
association that purportedly provides supporters of capitalism and
individual rights an opportunity to participate in public policy
discussions related to antitrust and government regulation of
business. The Complaint in this case charged that a combination of
Manitowoc and Grove would substantially reduce competition in
medium- and heavy-lift boom trucks. The proposed Judgment would
resolve the serious competitive concerns by requiring defendants to
divest either Manitowoc's or Grove's boom truck business.
In its comment, CVT asserted that the Court should not require
defendants to divest either Manitowoc's or Grove's boom truck
business until after the United States demonstrates that defendants'
combination actually will result in higher prices charged to
purchasers of medium- and heavy-lift boom trucks. Even then, CVT
contends, the Court should not order a divestiture since consumers
can simply decide not to purchase boom trucks. In essence, CVT's
argument is that the antitrust laws are an unnecessary (and perhaps
unconstitutional) government infringement on defendants' contracting
freedom, and in that context, the boom truck business divestiture
ordered by the proposed Judgment is an unauthorized government
``taking'' of defendants' private property.
In determining whether to enter the proposed Judgment, the Court
must decide whether entry of the Judgment would be in the ``public
interest.'' To make that determination the Court, inter alia, must
carefully review the relationship between the relief that has been
ordered in the proposed Judgment and the allegations of the
government's Complaint. Applying that standard in this case, the
Court's entry of the proposed Judgment surely would be ``within the
reaches'' of the public interest (United States v. Bechtel Corp.,
Inc., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083
(1981)), for it would alleviate the serious competitive concerns
regarding the proposal to combine two of the nation's three major
boom truck producers by requiring defendants promptly to divest one
of their boom truck businesses. To require the government to prove
the allegations of its Complaint before the Court rules on the
appropriateness of the parties' agreed-upon
[[Page 70622]]
relief would effectively turn every government antitrust case into a
full-blown trial on the merits of the parties' claims, and thereby
seriously undermine the effectiveness of antitrust enforcement by
use of consent decrees. And in any event, the government is not
required to demonstrate, as CVT asserts, an actual post-merger price
increase in order to establish that an acquisition will prove
anticompetitive. ``Section 7 is, after all, concerned with
probabilities, not certainties.'' F.T.C. v. H.J. Heinz Co., 246 F.3d
708, 719 (D.C. Cir. 2001) (emphasis original, citations omitted).
As to CVT's suggestion that the antitrust laws constitute an
unconstitutional infringement upon freedom to contract, the Supreme
Court has consistently held, in a line of cases stretching as far
back as Standard Oil, that is it not the antitrust laws that impair
individual freedom to contract, but private agreements or acts that
unduly diminish competition and tend to raise prices to consumers.
By purging our nation's economy of such private restraints on
competition, the antitrust laws protect and enhance, not undermine,
individual freedoms, and these laws do not otherwise contravene the
Constitution. See also United States v. Standard Oil Co., 221 U.S.
1, 52-70, esp. 58, 68-70 (1911). See also United States v. E.I.
duPont de Nemours & Co., 366 U.S. 316, 327 (1961) (``If the Court
concludes that other measures will not be effective to redress a
violation, and that complete divestiture is a necessary element of a
effective relief, the Government cannot be denied the latter remedy
because economic hardship, however severe, may result. * * * This
proposition is not novel; it is deeply rooted in antitrust law and
has never been successfully challenged.'')
Thank you for bringing your concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16(d), a copy of your
comment and this response will be published in the Federal Register
and filed with the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
United States of America, Plaintiff, v. The Manitowoc Company, Inc.,
Grove Investors, Inc., and National Crane Corp., Defendants; Comments
of Citizens for Voluntary Trade to the Proposed Final Judgment
[Case No. 02CV0159]
Judge: Royce Lamberth
Pursuant to 15 U.S.C. 16(b)-(h) and the Federal Register notice
filed by the United States on August 22, 2002, Citizens for
Voluntary Trade respectfully submits the following comments to the
proposed final judgment filed by the parties on July 31, 2002.
Introductory Statement
Citizens for Voluntary Trade (``CVT'') is a District of Columbia
nonprofit association organized in 2002. CVT's mission is to provide
supporters of capitalism and individual rights with opportunities to
participate in public policy discussions related to antitrust and
government regulation of business. CVT performs this function, in
part, by filing comments in antitrust cases brought by the
Department of Justice, the Federal Trade Commission, and other
federal and state regulatory agencies.
Neither CVT nor its members have a financial interest in the
outcome of this case. CVT has no pre-existing relationship with the
defendants, and has not received any financial support from the
defendants or any outside corporation in connection with this case.
Comments
The government employs a simple premise in this case: Combining
the first and third largest boom truck crane manufacturers will harm
consumers by increasing prices and reducing innovation. As with most
pre-merger prosecutions, the government can produce no evidence to
prove their allegations; instead, the public is forced to accept
speculation as to what might happen in the future. Relieved of any
burden to present facts, the government can easily demonstrate the
possibility of consumer harm, and thus justify its preemptive acts
against the defendant companies.
CVT believes, however, that ignoring facts is dangerous. It's
one thing to draw inferences from limited facts; it's quite another
to predict outcomes without any factual basis. The latter is a
function best left to gypsies and psychics. The Department of
Justice's track record shows they are poor predictors of events that
may never take place. Traditionally, governments limit themselves to
prosecuting defendants after the alleged crime has taken place. With
the exception of antitrust, there is no other area of law where the
government grants itself the power to act before any crime (or
victim) is established.
The government claims, in rebuttal, that the defendants
committed a crime just by agreeing to merge. This, they say, is
evidence of anticompetitive actions that violate the Clayton Act.\1\
But if this is a crime, then where's the victim? The government says
consumers are the victim, because the merger will ``increase the
likelihood'' of price increases.\2\ This begs two questions. First,
will the merger actually increase prices, or does it just raise the
mathematical probability of such an act? And second, assuming prices
are raised post-merger, does this constitute an actual harm to
consumers? We believe the answer to both questions is no.
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\1\ Complaint at 3.
\2\ Id. at 2.
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The government relies on market concentration to judge the
``likelihood'' of price increases. They claim that the defendants,
left to merge without government interference, would control 60% of
the relevant market. Furthermore, the merged defendants and the
remaining principal competitor would control 90% of the market.\3\
The government concludes the reduction of large competitors from
three to two raises the ``likelihood'' of price increases. That's
hardly a given. While the combined Manitowoc-National Crane company
would have a 60% market share, the number-two firm would still have
30%. While it is likely that Manitowoc could increase prices due to
its higher market share, it's just as likely the remaining
competitor could lower their own prices in an effort to attract new
customers. This could, conceivably, increase the competitor's market
share and reduce Manitowoc's dominance. In any case, both scenarios
are ``likely,'' and the government offers no conclusive evidence to
favor its own scenario has a greater probability of prevailing.
Since the government won't allow the merger to occur, we'll never
know.
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\3\ Id. at 7.
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Even if a price increase did occur post-merger, it would not, by
itself, constitute a harm to consumers. Certainly it wouldn't injure
any legal rights of consumers. Nothing in federal law or the United
States Constitution guarantee individuals the right to affordable
medium- and heavy-lift boom trucks. The survival of the human race
does not depend on the continued availability of such trucks. Nor
does a price increase for such trucks deny any general
constitutional right enjoyed by consumers, such as the right to free
speech or due process of law. Indeed, ``consumers'' are not a group
recognized by the Constitution; that document only addresses the
rights of individuals. To the extent the Constitution recognizes
groups at all, it is in the context of general citizenship
(separating U.S. citizens from ``Indians not taxed,'' for example
\4\ or to remedy historical wrongs against a particular group, as
was the case with the Reconstruction amendments.\5\ In all other
contexts, the Constitution frowns upon arbitrary classification of
citizens.\6\
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\4\ U.S. Const. art. I, Sec. 2, cl. 3.
\5\ U.S. Const. amends. XIII, XIV, & XV.
\6\ See, e.g., U.S. Const. art. IV, Sec. 2, cl. 1.
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Consumers are not a historically oppressed class. Quite the
contrary, American consumers enjoy an unprecedented level of power
to dictate economic outcomes. Unlike the traditionally centrally
planned economies of Europe, the American marketplace is principally
governed by consumer demand. If customers don't want a product, they
don't buy it, and the product's producer will fail to make a profit.
Producers are typically in the business of satisfying customer
demands. At the same time, however, it is understood that the
producers own their businesses. A firm can produce as much or as
little of their product as they choose, and may charge whatever
price they want; the customer has the right to reject the producer's
price. But in a market economy, the consumer cannot demand a
producer turn over his goods to them. Capitalism requires the
voluntary trade of goods and services; that is, trade according to
mutually agreeable terms.
The government wants none of that. Instead, under the facade of
``antitrust'' laws, the Department of Justice seeks to award
consumers the ability to demand goods and services free of the
constraints of voluntary trade. If producers want to raise the
prices they ask of consumers, the government smears that behavior as
``anticompetitive.'' Antitrust theory itself holds that just above
any price increase initiated by producers is presumptively bad. This
despite the fact that increased prices lead to increased profits,
which in turn allow producers to increase
[[Page 70623]]
their capacity, develop new and improved products, and focus on
improving overall customer service. No firm could provide superior
products to customers at a sustained loss.
The government understands this, though they're loathe to admit
it. In paragraph 17 of the complaint in this case, the Department of
Justice describes some of the reasons for the dominance of just
three firms in the boom truck market: ``superior production capacity
and capability, strong dealer networks, broad product lines and
strong reputation for safety and reliability.'' The government
notes, correctly, that it would be difficult for any new competitor
to quickly enter the market because they would need to ``establish a
strong reputation'' in order to effectively compete with the
dominant firms. \7\ But this is not a weakness of the market, but a
strength. Every factor the government lists above is the result of
honest, ethical activity. Manitowoc's superior production capacity
is not the result of coercion. National Crane's strong reputation is
not derived from violent acts against competitors. This,
essentially, is the difference between ``market power'' derived from
free trade, and ``political power'' derived from the use of force.
The government's case fails to make this crucial distinction.
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\7\ Complaint at 7.
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The remedy in the proposed final judgment replaces market power
with political power. The defendants are forced to divest one of
their crane businesses to a yet-to-be-determined third party. The
government says this will protect competition. It does no such
thing. ``Competition'' only exists in a capitalist economy; a forced
divestiture is hardly capitalist, since it's neither voluntary nor
based on respect for property rights. In a capitalist system, the
marketplace decides economic outcomes. In the Department of
Justice's system, however, economic outcomes are decided by
government mandates. Such is the case here. The government dislikes
the potential post-merger structure of the boom truck market, so
they brought this case to rearrange things to their liking. If the
government did not have a monopoly on the use of political force, it
would not be able to obtain this result.
And far from ``protecting'' consumers, the government's remedy
here denies consumers the fundamental right to act for themselves.
The government assumes consumers won't pay any price increase that
may result from the merger. But there's no proof of this hypothesis
in the record. Consumers often pay higher prices if they feel the
product is worth it, or it they believe that the product will
improve in the future. Consumers are certainly a far better judge of
these things than attorneys at the Department of Justice. The final
judgment's remedy wrecks all that, however. By employing its
political power, the government has stripped consumers of their
economic power.
Finally, there is an obvious contradiction in the government
recognizing the factors behind Manitowoc's dominance on the one
hand, but ignoring these same factors in fashioning the final
judgment's remedy. The government says a new firm is unlikely to
enter the market because of the need to ``establish a strong
reputation,'' among other things. So how does creating a new
competitor by force accomplish this? Does the government believe
that a reputation can be established simply by handing a corporation
assets and customers they didn't actually earn? If that's the case,
why doesn't the Department of Justice simply allocate resources and
market shares in all sectors of American industry? They obviously
consider their judgment superior to consumers.
Conclusion
The government claims to serve the ``public interest'' in
presenting this proposed final judgment. But it's unclear what those
interests are. It's certainly not legal interests, since no
constitutional or statutory right of consumers was violated by the
defendants. And it's not economic interests, since a capitalist
economy is built on voluntary actions free of government
interference. ``Free competition enforced by law is a grotesque
contradiction in terms,'' \8\ not to mention a highly unstable way
to govern an economy. The companies prosecuted in this case did
compete and are competing. The government just doesn't like the
outcome of that competition, so they've come to court seeking to
overrule the judgment of consumers and producers. The result of the
government's actions is to introduce fear and uncertainty into a
market that previously functioned well. It's hard to see how that
serves any identifiable ``public interest.''
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\8\ Ayn Rand, Antitrust: The Rule of Unreason, in The Voice of
Reason 255 (Leonard Peikoff, ed., 1990).
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Since it is unlikely the Department of Justice will see the
error of its ways, CVT respectfully asks the Court to consider our
comments and take appropriate action. We believe the only just
action here is to reject entry of the proposed final judgment, and
to dismiss the government's complaint with prejudice.
Dated: October 18, 2002.
Respectfully Submitted,
Citizens for Voluntary Trade
S.M. Oliva,
President, 2000 F Street, N.W., Suite 315, Washington, DC 20006;
Telephone: (202) 223-0071; Facsimile: (760) 418-9010; E-mail:
info@voluntarytrade.org.
[FR Doc. 02-29779 Filed 11-22-02; 8:45 am]
BILLING CODE 4410-11-M