[Federal Register: June 26, 2003 (Volume 68, Number 123)]
[Notices]
[Page 38090-38098]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26jn03-114]
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
Antitrust Division
United States v. National Council on Problem Gambling, Inc.;
Proposed Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. Section 16(b)-(h), that a proposed Final
Judgment, Stipulation and Competitive Impact Statement have been filed
with the United States District Court for the District of Columbia in
United States of America v. National Council on Problem Gambling, Inc.
(``NCPG''), Civil Action No. 1:03 CV 01279. On June 13, 2003, the
United States filed a Complaint to obtain equitable and other relief to
prevent and restrain violations of Section 1 of the Sherman Act, as
amended, 15 U.S.C. 1. The United States brought this action to enjoin
NCPG from engaging in an allocation along state lines for the provision
of problem gambling services in the United States. The proposed Final
Judgment, filed at the same time as the Complaint, requires NCPG to
eliminate the anticompetitive conduct identified in the Complaint.
Copies of the Complaint, proposed Final Judgment and Competitive
Impact Statement are available for inspection at the U.S. Department of
Justice in Washington, DC in Room 215, 325 Seventh Street, NW., and at
the Office of the Clerk of the United States District Court for the
District of Columbia, Washington, DC.
Public comment is invited within sixty (60) days of the date of
this notice. Such comments, and responses thereto, will be published in
the Federal Register and filed with the Court.
[[Page 38091]]
Comments should be directed to Marvin N. Price, Jr., Chief, Chicago
Field Office, Antitrust Division, U.S. Department of Justice, 209 S.
LaSalle Street, Suite 600, Chicago, IL 60604, (telephone: (312) 353-
7530).
Constance K. Robinson,
Director of Operations.
Stipulation
It is stipulated by and between the undersigned parties, by their
respective attorneys, as follows:
1. A Final Judgment in the form attached hereto may be filed and
entered by the Court, upon the motion of any party or upon the Court's
own motion, at any time after compliance with the requirements of the
Antitrust Procedures and Penalties Act, 15 U.S.C. 16, and without
further notice to any party or other proceedings, provided that
plaintiff has not withdrawn its consent, which it may do at any time
before entry of the proposed Final Judgment by serving notice thereof
on defendant and by filing that notice with the Court.
2. Defendant shall abide by and comply with the provisions of the
proposed Final Judgment pending entry of the Final Judgment by the
Court, or until expiration of time for all appeals of any Court ruling
declining entry of the proposed Final Judgment, and shall, from the
date of the signing of this Stipulation, comply with all the terms and
provisions of the proposed Final Judgment as though the same were in
full force and effect as an order of the Court.
3. This Stipulation shall apply with equal force and effect to any
amended proposed Final Judgment agreed upon in writing by the parties
and submitted to the Court.
4. For purposes of this Stipulation and the accompanying Final
Judgment only, defendant stipulates that: (i) The Complaint states a
claim upon which relief may be granted under Section 1 of the Sherman
Act; (ii) the Court has jurisdiction over the subject matter of this
action and over each of the parties hereto; and (iii) venue of this
action is proper in this Court.
5. In the event plaintiff withdraws its consent, as provided in
paragraph (1) above, or in the event that the Court declines to enter
the proposed Final Judgment pursuant to this Stipulation, the time has
expired for all appeals of any Court ruling declining entry of the
proposed Final Judgment, and the Court has not otherwise ordered
continued compliance with the terms and provisions of the proposed
Final Judgment, then the parties are released from all further
obligations under this Stipulation, and the making of this Stipulation
shall be without prejudice to any party in this or any other
proceeding.
6. Defendant represents that the undertakings ordered in the
proposed Final Judgment can and will be satisfied, and that defendant
will not later raise claims of hardship or difficulty as grounds for
asking the Court to modify any of the undertakings contained therein.
Dated: June 13, 2003.
For Plaintiff United States of America
R. Hewitt Pate,
Acting Assistant Attorney General.
Deborah P. Majoras,
Deputy Assistant Attorney General.
Constance K. Robinson,
Director of Operations.
Marvin N. Price, Jr.,
Chief, Chicago Field Office.
Frank J. Vondrak,
Assistant Chief, Chicago Field Office.
Rosemary Simota Thompson,
Attorney, Chicago Field Office, IL Bar #6204990.
Attorneys, Department of Justice, Antitrust Division, 209 S. LaSalle
Street, Suite 600, Chicago, Illinois 60604. Telephone: (312) 353-
7530. Facsimile: (312) 353-1046.
For Defendant NCPG, Inc.
Sanford M. Saunders, Jr., Greenberg Traurig, LP,
800 Connecticut Avenue, NW., Suite 500, Washington, DC 20006.
Telephone: (202) 331-3130. Facsimile: (202) 261-0150.
Final Judgment
Plaintiff, United States of America, filed its Complaint on June
13, 2003. Plaintiff and defendant, National Council on Problem
Gambling, Inc. (``NCPG''), by their respective attorneys, have
consented to the entry of this Final Judgment without trial or
adjudication of any issue of fact or law. This Final Judgment shall not
constitute any evidence against or an admission by any party with
respect to any issue of fact or law herein.
Therefore, before the taking of any testimony and without trial or
adjudication of any issue of fact or law herein, and upon consent of
the parties, it is hereby
Ordered, adjudged, and decreed, as follows:
I. Jurisdiction
This Court has jurisdiction of the subject matter of this action
and of each of the parties consenting hereto. The Complaint states a
claim upon which relief may be granted against the defendant under
Section 1 of the Sherman Act, 15 U.S.C. 1. Venue is proper in the
District Court for the District of Columbia.
II. Definitions
As used in this Final Judgment:
A. ``Agreement'' means any contract, arrangement, or understanding,
formal or informal, oral or written, between two or more persons, at
least one of which is the NCPG or a member of the NCPG.
B. ``And'' means and/or.
C. ``Any'' means one or more. The term is mutually interchangeable
with ``all'' and each term encompasses the other.
D. ``Certification'' means NCPG's formal approval or endorsement of
training programs for problem or compulsive gambling counselors.
E. ``Communication'' means any disclosure, transfer, or exchange of
information or opinion, however made.
F. ``Customer'' means any person, whether governmental or private,
including casinos, Indian tribes and other entities, who sponsors,
funds, arranges, purchases, solicits, or facilitates the procurement of
any problem gambling services.
G. ``Including'' means including, but not limited to.
H. ``Member'' means any person who is an organizational,
individual, affiliate or any other type of member of the NCPG.
I. ``NCPG'' or ``defendant'' means the National Council on Problem
Gambling, Inc.; any parent, predecessor, or successor of that
organization; any joint venture to which such organization is or was a
party; and each officer, director, employee, attorney, agent,
representative, consultant, or other person acting on behalf of any of
them.
J. ``Person'' means any natural person, corporation, company,
partnership, joint venture, firm, association, proprietorship, agency,
board, authority, commission, office, or other business or legal
entity, whether private or governmental.
K. ``Problem gambling services'' means all services relating to the
treatment or prevention of problem or compulsive gambling, including
dissemination of information regarding problem gambling, telephonic
hot-line or help-line services, training of problem gambling
counselors, certification of various problem gambling training
programs, and provision of any product or service aimed at assisting
problem gamblers.
L. ``Problem gambling services provider'' (``PGSP'') means any
person involved in the provision of problem gambling services,
including the NCPG and any NCPG member.
[[Page 38092]]
M. ``Relating to'' or ``relate to'' means containing, constituting,
considering, comprising, concerning, discussing, regarding, describing,
reflecting, studying, commenting or reporting on, mentioning,
analyzing, or referring, alluding, or pertaining to, in whole or in
part.
N. ``Selling'' means offering for sale or actual sales of any
problem gambling services.
O. ``Year'' means calendar year or the twelve-month period on which
business records are based.
III. Applicability
A. Final Judgment applies to defendant and to those persons in
active concert or participation with defendant who receive actual
notice of this Final Judgment by personal service or otherwise,
including each of defendant's officers, directors, agents, employees,
successors, and assigns.
B. Defendant shall require, as a condition of any merger,
reorganization, or acquisition by any other organization, that the
organization to which defendant is to be merged or reorganized, or by
which it is to be acquired, agree to be bound by the provisions of this
Final Judgment.
C. Nothing contained in this Final Judgment is intended to suggest
or imply that any provision herein is or has been created or intended
for the benefit of any third party and nothing herein shall be
construed to provide any right to any third party.
IV. Prohibited Conduct
Defendant is hereby enjoined from directly or indirectly:
A. Initiating, adopting, or pursuing any agreement, program, or
policy that has the purpose or effect of prohibiting or restraining any
PGSP from engaging in the following practices: (1) selling problem
gambling services in any state or territory or to any customer; or (2)
submitting competitive bids in any state or territory or to any
customer.
B. Adopting, disseminating, publishing, seeking adherence to,
facilitating, or enforcing any agreement, code of ethics, rule, bylaw,
resolution, policy, guideline, standard, certification, or statement
that has the purpose or effect of prohibiting or restraining any PGSP
from engaging in any of the practices identified in Section IV(A)
above, or that states or implies that any of these practices are, in
themselves, unethical, unprofessional, or contrary to the policy of the
NCPG.
C. Adopting, disseminating, publishing, seeking adherence to,
facilitating, or enforcing any standard or policy that has the purpose
or effect of:
(1) Requiring that any PGSP obtain permission from, inform, or
otherwise consult with any other PGSP before selling problem gambling
services or submitting bids for the provision of problem gambling
services in any state or territory or to any customer;
(2) requiring that any PGSP contract with, provide a fee or a
portion of revenues to, or otherwise remunerate any other PGSP as a
result of selling problem gambling services in any state or territory
or to any customer;
(3) sanctioning, penalizing or otherwise retaliating against any
PGSP for competing with any other PGSP; or
(4) creating or facilitating an agreement not to compete between
two or more PGSPs.
V. Permitted Conduct
A. Nothing in this Final Judgment shall prohibit any NCPG member,
acting alone and not on behalf of or in common with defendant or any of
defendant's officers, directors, agents, employees, successors, or
assigns, from negotiating any lawful terms of its business relationship
with any national, state, or local government entity, or any private
entity.
B. Provided that such activities do not violate any provision
contained in Section IV above, nothing in this Final Judgment shall
prohibit any NCPG member from working with another person in a valid
joint venture.
C. Provided that such activities do not violate any provision
contained in Section IV above, nothing in this Final Judgment shall
prohibit the NCPG from sanctioning or terminating a member according to
a process described in the NCPG by-laws.
VI. Notification Provisions
Defendant is ordered and directed to:
A. Publish the Final Judgment and a written notice, in the form
attached as Appendix A to this Final Judgment, in Card Player magazine
within 60 days of the entry of this Final Judgment.
B. Send a written notice, in the form attached as Appendix A to
this Final Judgment, to each current member of NCPG within 30 days of
the entry of this Final Judgment.
C. Send a written notice, in the form attached as Appendix A to
this Final Judgment, to each person who becomes a member of NCPG within
10 years of entry of this Final Judgment. Such notice shall be sent
within 30 days after the person becomes a member of NCPG.
VII. Compliance Program
Defendant is ordered to establish and maintain an antitrust
compliance program which shall include designating, within 30 days of
entry of this Final Judgment, an Antitrust Compliance Officer with
responsibility for implementing the antitrust compliance program and
achieving full compliance with this Final Judgment. The Antitrust
Compliance Officer shall not be an officer or a director of an
affiliate of the NCPG. The Antitrust Compliance Officer shall, on a
continuing basis, be responsible for the following:
A. Furnishing a copy of this Final Judgment and the related
Competitive Impact Statement within 30 days of entry of the Final
Judgment to each of defendant's officers, directors, and employees,
except for employees whose functions are purely clerical or manual and
do not address issues related to the provision of problem gambling
services.
B. Furnishing within 30 days a copy of this Final Judgment and the
related Competitive Impact Statement to any person who succeeds to a
position described in Section VII(A).
C. Arranging for an annual briefing to each person designated in
Section VII(A) or VII(B) on the meaning and requirements of this Final
Judgment and the antitrust laws.
D. Obtaining from each person designated in Section VII(A) or
VII(B), certification that he or she: (1) Has read and, to the best of
his or her ability, understands and agrees to abide by the terms of
this Final Judgment; (2) is not aware of any violation of the Final
Judgment that has not been reported to the Antitrust Compliance
Officer; and (3) understands that any person's failure to comply with
this Final Judgment may result in an enforcement action for civil or
criminal contempt of court against NCPG.
E. Maintaining: (1) A record of certifications received pursuant to
this Section; (2) a file of all documents related to any alleged
violation of this Final Judgment; and (3) a record of all
communications related to any such violation, which shall identify the
date and place of the communication, the persons involved, the subject
matter of the communication, and the results of any related
investigation.
F. Conducting a program at each annual meeting of the NCPG on this
Final Judgment and the antitrust laws.
G. Reviewing codes of ethics, rules, bylaws, resolutions,
guidelines, agreements, and policy statements to ensure adherence with
this Final Judgment.
H. Reviewing the purpose for the information or creation of each
committee and subcommittee of the NCPG in order to ensure its adherence
with this Final Judgment.
[[Page 38093]]
I. Attending all meetings of the NCPG's affiliate committee and
viewing the proceedings to ensure adherence with this Final Judgment.
VIII. Certification
A. Within 60 days after the entry of this Final Judgment,
defendants shall certify to the plaintiff that they have designated an
Antitrust Compliance Officer and have distributed the Final Judgment
and related Competitive Impact Statement in accordance with Section VII
above.
B. For 10 years after the entry of this Final Judgment, on or
before its anniversary date, defendant shall file with plaintiff an
annual statement as to the fact and manner of its compliance with the
provisions of Sections VI and VII, and of any potential violations of
the terms and conditions contained in this Final Judgment.
C. If defendant's Antitrust Compliance Officer learns of any
violations of any of the terms and conditions contained in this Final
Judgment, defendant shall immediately take appropriate action to
terminate or modify the activity so as to comply with this Final
Judgment.
IX. Plaintiff's Access
A. For the purpose of determining or securing compliance with this
Final Judgment or determining whether this Final Judgment should be
modified or terminated, and subject to any legally recognized
privilege, from time to time duly authorized representatives of the
Antitrust Division of the United States Department of Justice,
including consultants and other persons retained by the United States,
shall upon written request of a duly authorized representative of the
Assistant Attorney General in charge of the Antitrust Division, and on
reasonable notice to defendant, be permitted:
1. Access during defendant's office hours to inspect and copy, or
at plaintiff's option, to require defendants to provide copies of all
books, ledgers, accounts, records, and documents in the possession,
custody, or control of defendant, relating to any matters contained in
this Final Judgment; and
2. To interview, either formally or on the record, defendant's
officers, directors, employees, or agents, who may have their
individual counsel present, regarding such matters. The interviews
shall be subject to the reasonable convenience of the interviewee and
without restraint or interference by defendant.
B. Upon the written request of a duly authorized representative of
the Assistant Attorney General in charge of Antitrust Division,
defendant shall submit written reports, under oath if requested,
relating to any of the matters contained in this Final Judgment as may
be requested.
C. No information or documents obtained by the means provided in
this Section shall be divulged by the plaintiff to any person other
than an authorized representative of the Executive Branch of the United
States, except in the course of legal proceedings to which the United
States is a party (including grand jury proceedings), or for the
purpose of securing compliance with this Final Judgment, or as
otherwise required by law.
D. If, at the time information or documents are furnished by
defendant to plaintiff, defendant represents and identifies, in
writing, the material in any such information or documents to which a
claim of protection may be asserted under Rule 26 (c)(7) of the Federal
Rules of Civil Procedure, and defendant marks each pertinent page of
such material, ``subject to claim of protection under Rule 26(c)(7) of
the Federal Rules of Civil Procedure,'' then 10-days notice shall be
given by plaintiff to defendant prior to divulging such material in any
legal proceeding (other than a grand jury proceeding) to which NCPG is
not a party.
X. Duration of the Final Judgment
XI. Construction, Enforcement, Modification, and Compliance
Jurisdiction is retained by this Court for the purpose of enabling
any of the parties to this Final Judgment to apply to this Court at any
time for further orders and directions as may be necessary or
appropriate for the constructions or carrying out of this Final
Judgment, for the modification of any of its provisions, for its
enforcement or compliance, and for the punishment of any violation of
its provisions.
XII. Public Interest
Entry of this Final Judgment is in the public interest.
Appendix A
On June 13, 2003, the Antitrust Division of the United States
Department of Justice filed a civil suit alleging that the National
Council on Problem Gambling, Inc. (``NCPG'') had engaged in certain
practices that violated Section 1 of the Sherman Antitrust Act. NCPG
has agreed to the entry of a civil consent order to settle this
matter. The consent order does not constitute evidence or admission
by any party with respect to any issue of fact or law. The consent
order applies to NCPG and all of its officers, directors, employees,
agents, and assigns.
Under the consent order, NCPG is prohibited from directly or
indirectly initiating, adopting, or pursuing any agreement, program,
or policy that has the purpose or effect of prohibiting or
restraining any Problem Gambling Service Provider (``PGSP'') from:
(1) Selling problem gambling services in any state or territory or
to any customer; or (2) submitting competitive bids in any state or
territory or to any customer. The NCPG is also prohibited from
directly or indirectly adopting, disseminating, publishing, seeking
adherence to or facilitating any agreement, code of ethics, rule,
bylaw, resolution, policy, guideline, standard, certification, or
statement made or ratified by an official that has the purpose or
effect of prohibiting or restraining any PGSP from engaging in any
of the above practices, or that states or implies that any of these
practices are, in themselves, unethical, unprofessional, or contrary
to the policy of the NCPG.
The consent order further provides that the NCPG is prohibited
from adopting or enforcing any standard or policy that has the
purpose or effect of: (1) Requiring that any PGSP obtain permission
from, inform, or otherwise consult with another PGSP before selling
problem gambling services or submitting bids for the provision of
problem gambling services in any state or territory or to any
customer; or (2) requiring that any PGSP contract with, provide a
fee or a portion of revenues to, or otherwise remunerate any other
PGSP as a result of selling problem gambling services in any state
or territory or to any customer. Finally, the NCPG is prohibited
from adopting or enforcing any standard or policy or taking any
action that has the purpose or effect of: (1) Sanctioning,
penalizing or otherwise retaliating against any PGSP for competing
with any other PGSP; or (2) creating or facilitating an agreement
not to compete between two or more PGSP.
The consent order does not prohibit the NCPG from negotiating
any terms of its business relationship with any national, state, or
local government entity, or any private entity. It also does not
prohibit the NCPG member from working with another person in a valid
joint venture to meet the needs of problem gamblers in ways that do
not otherwise violate the consent order. Finally, it does not
prohibit the NCPG from sanctioning or terminating a member pursuant
to its by-laws, as long as such action does not otherwise violate
the consent order.
Copies of the Complaint, proposed Final Judgment and Competitive
Impact Statement are available for inspection at the Department of
Justice in Washington, DC in Room 200, 325 Seventh Street, NW., and
at the Office of the Clerk of the United States District Court for
the District of Columbia in Washington, DC.
Newspaper Notice
Take notice that a proposed Final Judgment has been filed in a
civil antitrust case, United States of America v. National Council
on Problem Gambling, Inc. (``NCPG''), Civil No. ----. On ------, the
United States filed a Complaint to obtain equitable and other relief
to prevent and restrain violations of Section 1 of the
[[Page 38094]]
Sherman Act, as amended, 15 U.S.C. 1. The United States brought this
action to enjoin NCPG from engaging in a territorial allocation
along state lines for the provision of problem gambling services in
the United States. The proposed Final Judgment, filed at the same
time as the Complaint, requires NCPG to eliminate the
anticompetitive conduct identified in the Complaint. A Competitive
Impact Statement filed by the United States describes the Complaint,
the proposed Final Judgment, the industry, and the remedies
available to private litigants who may have been injured by the
alleged violation. Copies of the Complaint, proposed Final Judgment
and Competitive Impact Statement are available for inspection at the
Department of Justice in Washington, DC, in Room 200, 325 Seventh
Street, NW., and the Office of the Clerk of the United States
District Court for the District of Columbia, Washington, DC.
Interested persons may address comments to Marvin N. Price, Jr.,
Chief, Chicago Field Office, Antitrust Division, U.S. Department of
Justice, 209 S. LaSalle Street, Suite 600, Chicago, IL 60604,
(telephone: (312) 353-7530), within sixty (60) days of the date of
this notice.
Competitive Impact Statement
The United States of America, pursuant to section 2(b) of the
Antitrust Procedures and Penalties Act (``APPA''), 15 U.S.C. 16(b)-(h),
files this Competitive Impact Statement relating to the proposed Final
Judgment submitted for entry in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
On June 13, 2003, the United States filed a civil antitrust
Complaint alleging that the National Council on Problem Gambling, Inc.
(``NCPG'') had violated Section 1 of the Sherman Act, 15 U.S.C. 1. The
NCPG is a national trade association controlled by its state
affiliates. Its activities are directed toward advancing the interest
of its state affiliates who offer products and services to address the
social problem of compulsive gambling. The NCPG does not distribute
products or services through its affiliates. All NCPG officers except
one where elected from the ranks of its state affiliates, which control
the NCPG board of directors.
The Complaint alleges that, from at least 1995 until at least 2001,
the NCPG orchestrated an unlawful territorial allocation of problem
gambling products and services along state lines. On June 13, 2003, the
Untied States and the NCPG filed a Stipulation in which they consented
to the entry of a proposed Final Judgment that requires the NCPG to
eliminate the anticompetitive conduct identified in the Complaint.
Under the Final Judgment, the NCPG is prohibited from directly or
indirectly initiating, adopting, or pursuing any agreement, program, or
policy that has the purpose or effect of prohibiting or restraining any
Problem Gambling Service Provider (``PGSP'') from engaging in any of
the following practices: (1) Selling problem gambling services in any
state or territory or to any customer; or (2) Submitting competitive
bids in any state or territory or to any customer. Under the Final
Judgment and thereafter, ``problem gambling services'' include all
services relating to the treatment or prevention of problem or
compulsive gambling, including dissemination of information regarding
problem gambling, telephonic hot-line or help-line services, training
of problem gambling counselors, certification of various problem
gambling training programs, and provision of any product or service
aimed at assisting problem gamblers. The NCPG is also prohibited from
directly or indirectly adopting, disseminating, publishing, seeking
adherence to, facilitating, or enforcing any agreement, code of ethics,
rule, bylaw, resolution, policy, guideline, and standard, certification
or statement that has the purpose or effect of prohibiting or
restraining any PGSP from engaging in any of the above practices, or
that states or implies that any of these practices are, in themselves,
unethical, unprofessional, or contrary to the policy of the NCPG.
The Final Judgment further prohibits the NCPG from adopting,
disseminating, publishing, seeking adherence to, facilitating, or
enforcing any standard or policy that has the purpose or effect of: (1)
Requiring that any PGSP obtain permission from, inform, or otherwise
consult with any other PGSP before selling problem gambling services or
submitting bids for the provision of problem gambling services in any
state or territory or to any customer; or (2) requiring that any PGSP
contract with, provide a fee or a portion of revenues to, or otherwise
remunerate any other PGSP as a result of selling problem gambling
services in any state or territory or to any customer. Finally, the
NCPG is prohibited from adopting or enforcing any standard or policy or
taking any action that has the purpose or effect of: (1) Sanctioning,
penalizing or otherwise retaliating against any PGSP for competing with
any other PGSP; or (2) creating or facilitating an agreement not to
compete between two or more PGSPs.
The United States and the NCPG have agreed that the proposed Final
Judgment may be entered after compliance with the APPA, provided that
the United States has not withdrawn its consent. Entry of the Final
Judgment would terminate the action, except that the Court would retain
jurisdiction to construe, modify, or enforce the Final Judgment's
provisions and to punish violations thereof.
II. Description of Practices Giving Rise to the Alleged Violation of
the Antitrust Laws
A. Description of the Defendant and Its Activities
The NCPS is a not-for-profit corporation organized and existing
under the laws of the State of New York with its principal place of
business in Washington, DC. All state affiliates are members of the
NCPG board of directors. The NCPG's state affiliates, as a group,
control a majority of the seats on its board of directors. The board
has the sole authority to elect the NCPG's officers. As a trade
association, the NCPG lobbies Congress for funding for problem gambling
programs in general, conducts an annual conference, and offers books,
videotapes and other publications about problem gambling.
The NCPG offers a few limited problem gambling services to its
members. It maintains a website and sponsors a national telephone help-
line, which is operated by the Texas affiliate. Other affiliates may
pay to use this help-line in their own states or set up their own help-
lines. The NCPG also sponsors a national gambling counselor
certification program. This program does not train counselors, but
generally accepts training conducted by state affiliates.
B. Description of the State Affiliates and Their Problem Gambling
Services
The NCPG has 34 state affiliates. No state has more than one
affiliate. All of the state affiliates are separately incorporated,
non-profit corporations. The state affiliates provide problem gambling
services to individuals, as well as government entities, casinos,
racetracks, and others who are trying to assist problem gamblers. These
problem gambling services include training and certification program
for problem gambling counselors, telephone help-lines, and responsible
gaming programs, workshops, and educational kits.
The NCPG does not create the services offered by its affiliates,
nor does it significantly help its affiliates create these services.
Each state affiliate creates its own individualized problem gambling
services to meet the perceived needs of its customers. For example,
some state affiliates target problem gambling in various ethnic
populations, while others focus on problem gambling in high schools or
among the eldery.
[[Page 38095]]
Consequently, the types of problem gambling services sold by each state
affiliate are different from those sold by other state affiliates. Each
state affiliate directly markets its problem gambling services.
Public and private parties seeking problem gambling products and
services have few, if any, alternatives to the state affiliates. In
most instances, the only bidder for the business is the NCPG affiliate
within the customer's state. Several state affiliates have also offered
services outside of their borders, which prompted defendant's unlawful
territorial allocation. In a few instances, a party unaffiliated with
the NCPG has submitted a bid for a customer's business.
C. The Illegal Territorial Allocation Agreement
Beginning at least as early as 1995 and continuing until at least
2001, the NCPG, through its officers and directors, and its state
affiliates, facilitated, organized, promoted, and advocated an unlawful
territorial allocation between and among the state affiliates for the
provision of problem gambling services in violation of Section 1 of the
Sherman Act, 15 U.S.C. 1. The territorial allocation was a horizontal
agreement among the state affiliates of the NCPG which was effectuated
by the NCPG. The purpose of this unlawful territorial allocation was to
prevent the NCPG's state affiliates from offering or selling problem
gambling services outside of their home states, thereby eliminating
competition between and among the state affiliates of the NCPG.
Although many of its activities are in the public interest, the
NCPG was acting illegally to curtail competition by establishing the
territorial allocation. Its purpose in doing so reflected the desire of
a controlling majority of its state affiliates to prevent competitive
incursions by other state affiliates. In response to incipient
competition from certain state affiliates, state affiliates met and
agreed with the NCPG to adopt, publish, and enforce resolutions,
policies, guidelines, and certification standards to limit the
provision of problem gambling services across state lines. The
territorial allocation was enforced by threats of sanctions, including
fines and revocation of NCPG membership, and threats to deny national
certification to counselors trained by out-of-state affiliates. These
actions reduced competition among state affiliates, leaving customers
with few, if any, choices other than the affiliate in their state. The
territorial allocation deprived customers of the benefits of free
competition, stifled innovation, and decreased quality.
In contrast to the legitimate, pro-competitive territorial
allocations put into effect by many associations, the territorial
allocation agreed to by the state affiliates and orchestrated by the
NCPG curtailed competition among the state affiliates, without
enhancing economic efficiency. When territorial allocations enhance
economic efficiency, they may be pro-competitive. For example, when a
manufacturer of a product sets up exclusive territories for its
distributors to encourage them to maximize their sales, advertising,
and promotion efforts, while at the same time providing them with
assurance that they, and not other sellers of the manufacturer's
product, will reap the benefits of their efforts, the public as well as
the product manufacturer may benefit from their competitive efforts,
vis-a-vis other competitive products. Thus, by limiting ``intrabrand''
competition for the product, ``interbrand'' competition among the
competing products may be increased. Here, however, there is no
``product'' offered by the NCPG to its state affiliates. the NCPG does
not create problem gambling services or products that it then
distributes through its state affiliates, nor does it make an effort to
identify the best problem gambling services or products among those
sold by its affiliates or to encourage them to adopt any set of best
problem gambling services or products. Instead, each of the state
affiliates independently creates and sells its own problem gambling
services and products, many of which are unique. For example, the
Minnesota affiliate has developed a 60-hour counselor training program
which also is offered as an interactive, web-based course. The
Minnesota affiliate also consults with public policy think-tanks
focused on the problem of compulsive gambling, such as one held at
Harvard University. Other state affiliates, including the Texas
affiliate, create and distribute publications in Spanish to meet the
needs of Hispanic problem gamblers. Still other state affiliates
sponsor programs for troubled teenagers, such as the Washington
affiliate's ``Gambling, Addictions, and At-Risk Youth.'' Thus, the
territorial allocation deprived customers of the benefits of free
competition among the different services offered by different state
affiliates.
The state affiliates agreed to have the NCPG implement and enforce
the territorial allocation agreement in several ways. At a 1995 meeting
in Puerto Rico, the NCPG state affiliates agreed to modify the
Affiliate Guidelines to discourage competition between and among the
state affiliates, requiring an out-of-state affiliate to get permission
from the in-state affiliate before seeking business in that affiliate's
state.
The following year, when some state affiliates continued to bid
out-of-state, the state affiliates passed a resolution imposing
sanctions against any state affiliate that attempted to compete outside
its home state. Later in 1996, the state affiliates agreed with the
NCPG Board Directors to adopt an ``Ethics Resolution'' setting forth
the agreement to allocate territories as an ethical standard. It also
required that a fee or a portion of revenues be paid to the in-state
affiliate who consented to another affiliate providing in-state
services. Affiliates failing to heed the Ethics Resolution were subject
to sanctions, including fines or revocation of NCPG membership. In
1999, the NCPG incorporated the provisions of the Ethics Resolution
into a formal Affiliate Agreement, which was ratified by a majority of
state affiliates.
D. Effects of the Agreement
The unlawful territorial allocation has had the effect of limiting
choice, reducing quality, and stifling innovation in the development
and sale of problem gambling services. Customers have been deprived of
the benefits of free and open competition in the purchase of problem
gambling services, including the benefit of choosing among a variety of
problem gambling services offered by different state affiliates.
Prospectively, eliminating the unlawful territorial allocation will
have the effect of increasing choice, increasing quality, and
encouraging innovation.
The territorial allocation has been effective because the NCPG has
had the means and the will to enforce it against affiliates that have
sought to compete across state lines. Accusations of unethical conduct
have dissuaded customers from contracting with offending affiliates.
Withholding credit for problem gambling counselor training has
prevented affiliates from offering training programs outside their home
states. Threatening affiliates with the loss of NCPG membership also
has served to confine affiliates to their home states because some
states will contract only with the NCPG members.
Although the territorial allocation has been largely effective in
preventing interstate competition, a few affiliates, most notably the
Minnesota affiliate, have sought business outside their home states.
These transgressions frequently precipitated NCPG enforcement actions
that achieved their anti-competitive
[[Page 38096]]
purpose. For example, when the Minnesota affiliate sought a contract
from the State of Nebraska, the NCPG asked that Minnesota withdraw its
bid and support the efforts of the Nebraska affiliate. As a result, the
Minnesota affiliate decided not to actively pursue the contract. When
the Minnesota affiliate offered a gambling counselor training program
in the State of Missouri, the NCPG warned that it would not grant
credit for the training, thereby discouraging students from signing up
for the program. Consequently, the Minnesota affiliate dropped the
program. The in-state program that ultimately was provided was inferior
because it employed less qualified instructors than the Minnesota
affiliate proposed to use. In at least one instance, the Minnesota
affiliate bid successfully in another state. It won a contract with the
Arizona lottery by offering a far more comprehensive program than did
the in-state affiliate. The Arizona affiliate complained to the NCPG,
precipitating a hearing on sanctions against the Minnesota affiliate.
III. Explanation of the Proposed Final Judgment
A. Prohibited Conduct
The proposed Final Judgment prohibits the defendant from engaging
in multiple categories of prohibited conduct. These prohibitions are
intended to prevent the defendant from using a territorial allocation
scheme to pressure PGSPs not to cross state lines to compete for
contracts. These provisions will also bar the defendant from adopting
policies which imply that competition between PGSPs across state lines
in unethical, unprofessional, or contrary to the policy of the NCPG.
Section IV.A of the proposed Final Judgment contains a general
prohibition against any agreement by the defendant that hinders any
PGSP from: (1) Selling problem gambling services in any state or
territory or to any customer; or (2) submitting competitive bids in any
state or territory or to any customer. Section IV.B contains a
prohibition against any agreement, code of ethics, rule, by-law,
resolution, policy, guideline, standard, certification, or statement
which implies that the competitive practices listed in Section IV.A are
unethical, unprofessional, or contrary to NCPG policy. Section IV.C
prohibits the defendant from adopting, disseminating, publishing,
seeking adherence to, facilitating, or enforcing any standard or policy
that: (1) Requires any PGSP to obtain permission from, inform, or
consult with any other PGSP before submitting a bid or making a sale in
any state or territory or to any customer; (2) requires any PGSP to
contract with, provide a fee to, or a portion of revenues to, or
otherwise remunerate any other PGSP as a result of selling in any state
or territory or to any customer; (3) sanctions, penalizes, or otherwise
retaliates against any PGSP for competing with any other PGSP; or (4)
creates or facilitates an agreement not to compete between two or more
PGSPs.
B. Limiting Conditions
Section V of the proposed Final Judgment contains certain limiting
provisions that clarify the scope of the prohibitions in Section IV.
Section V identifies specific activities that are unlikely to restrict
competition and are not prohibited by the decree. Specifically, Section
V.A states that nothing in the proposed Final Judgment limits any
individual NCPG member from acting independently in negotiating any
terms of its business relationships. Section V.B states that NCPG
members may enter into valid joint ventures, as long as such activities
do not violate any of the provisions of Section IV. Finally, Section
V.C states that the NCPG retains the right to sanction or terminate any
member according to the process described in its by-laws, provided that
such activities do not violate any provision contained in Section IV.
C. Additional Relief
Section VI of the proposed Final Judgment requires the defendant to
publish a notice describing the Final Judgment in Card Player magazine,
a gambling industry publication, within sixty (60) days after the
proposed Final Judgment is entered. Section VI also requires that
written notice be sent to all current members of the NCPG within thirty
(30) days after the proposed Final Judgment is entered. A copy of the
written notice also must be sent to each new member of NCPG during the
ten-year life of this Final Judgment.
Section VII requires the defendant to designate an Antitrust
Compliance Officer who shall not be an officer or director of an
affiliate of the NCPG, and to set up an antitrust compliance program to
ensure that its members are aware of and comply with the prohibitions
in the proposed Final Judgment and the antitrust laws. Defendant must
furnish a copy of the Final Judgment and this Competitive Impact
Statement to each of its officers, directors, and non-clerical
employees who address issues related to the provision of problem
gambling services. To ensure compliance with the Final Judgment, the
Antitrust Compliance officer is also required to: (1) Conduct a program
at each NCPG annual meeting on the antitrust laws; (2) review the NCPG
code of ethics, rules, by-laws, resolutions, guidelines, agreements and
policy statements; (3) review the purpose for the creation of each NCPG
committee and sub-committee; and (4) attend all meetings of the NCPG
affiliates committee and review the proceedings.
Section VIII requires the defendant to certify the designation of
an Antitrust Compliance Officer and the distribution of the notice
required by Section VII. It also requires the defendant to submit to
the United States an annual statement regarding defendant's compliance
with the Final Judgment. If the Antitrust Compliance Officer learns of
any violations of the Final Judgment, defendant must take appropriate
steps to terminate the activity so as to comply with the Final
Judgment.
Section IX of the proposed Final Judgment provides that, upon
request of the Department of Justice, the defendant must submit written
reports, under oath, with respect to any of the matters contained in
the Final Judgment. Additionally, the Department of Justice is
permitted to inspect and copy all books and records, and to interview
defendant's officers, directors, employees, and agents.
D. Effect of the Final Judgment
The parties have stipulated that the Court may enter the proposed
Final Judgment at any time after compliance with the APPA. The proposed
Final Judgment states that it shall not constitute any evidence against
or an admission by either party with respect to any issue of fact or
law. Section III of the proposed Final Judgment provides that it shall
apply to the defendant and each of its officers, directors, agents,
employees, successors, and assigns and to any organization to which it
is to be merged or reorganized, or by which it is to be acquired.
The Government believes that the proposed Final Judgment is fully
adequate to prevent the continuation or recurrence of the violations of
Section 1 of the Sherman Act alleged in the Complaint, and that
disposition of this proceeding without further litigation is
appropriate and in the public interest.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover
[[Page 38097]]
three times the damages suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of such actions. Under the provisions of
Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the Final Judgment
has no prima facie effect in any subsequent lawsuits that may be
brought against the defendant.
V. Procedures Available for Modification of the Proposed Final Judgment
The United States and the defendant have stipulated that the
proposed Final Judgment may be entered by the Court after compliance
with the provisions of the APPA, provided that the United States has
not withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest. The Department believes that entry of this Final Judgment is
in the public interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to the United States written comments regarding the
proposed Final Judgment. Any person who wishes to comment should do so
within sixty (60) days of publication of this Competitive Impact
Statement in the Federal Register. The United States will evaluate and
respond to the comments. All comments will be given due consideration
by the Department of Justice, which remains free to withdraw its
consent to the Final Judgment at any time prior to entry. The comments
and the response of the United States will be filed with the Court and
published in the Federal Register.
Written comments should be submitted to: Marvin N. Price, Jr.,
Chief, Chicago Field Office, U.S. Department of Justice, Antitrust
Division, 209 S. LaSalle St., Suite 600, Chicago, Illinois 60604.
Under Section XI of the proposed Final Judgment, the Court will
retain jurisdiction over this action, and the parties may apply to the
Court for orders necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment. The proposed
Final Judgment will expire ten (10) years from the date of its entry.
VI. Alternatives to the Proposed Final Judgment
As an alternative to the proposed Final Judgment, the Department
considered litigation on the merits. The Department rejected that
alternative for two reasons. First, a trial would involve substantial
cost to both the United States and to the defendant and is not
warranted because the proposed Final Judgment provides all the relief
the Government would likely obtain following a successful trial.
Second, the Department is satisfied that the various compliance
procedures to which the defendant has agreed will ensure that the
anticompetitive practices alleged in the Complaint are unlikely to
recur and, if they do recur, will be punishable by civil or criminal
contempt, as appropriate.
VII. Standard of Review Under the APPA for the Proposed Final Judgment
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a 60 day comment
period, after which the Court shall determine whether entry of the
proposed Final Judgment is ``in the public interest.'' In making that
determination, the Court may consider--
(1) The competitive impact of such judgment, including termination
of alleged violations, provisions for enforcement and modification,
duration or relief sought, anticipated effects of alternative remedies
actually considered, and any other considerations bearing upon the
adequacy of such judgment;
(2) The impact of entry of such judgment upon the public generally
and individuals alleging specific injury from the violations set forth
in the complaint including consideration of the public benefit, if any,
to be derived from a determination of the issues at trial.
15 U.S.C. 16(e) (emphasis added).
As the Court of Appeals for the District of Columbia has held, the
APPA permits a court to consider, among other things, the relationship
between the remedy secured and the specific allegations set forth in
the government's complaint, whether the decree is sufficiently clear,
whether enforcement mechanisms are sufficient, and whether the decree
may positively harm third parties. See United States v. Microsoft
Corp., 56 F.3d 1448, 1458-62 (D.C. Cir. 1995).
Including this inquiry, ``the Court is nowhere compelled to go to
trial or to engage in extended proceedings which might have the effect
of vitiating the benefits of prompt and less costly settlement through
the consent decree process.'' \1\ Rather,
\1\ 119 Cong. Rec. 24, 598 (1973). See United States v. Gillette
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest''
determination can be made properly on the basis of the Competitive
Impact Statement and Response to Comments filed pursuant to the
APPA. Although the APPA authorizes the use of additional procedures,
15 U.S.C. 16(f), those procedures are discretionary. A court need
not invoke any of them unless it believes that the comments have
raised significant issues and that further proceedings would aid the
court in resolving those issues. See H.R. Rep. No. 93-1463, 93rd
Cong. 2d Sess. 8-9 (1974), reprinted in 1974 U.S.C.C.A.N. 6535,
6538-39.
---------------------------------------------------------------------------
absent a showing of corrupt failure of the government to discharge
its duty, the Court, in making its public interest finding, should *
* * carefully consider the explanations of the government in the
competitive impact statement and its responses to comments in order
to determine whether those explanations are reasonable under the
circumstances.\2\
---------------------------------------------------------------------------
\2\ United States v. Mid-America Dairymen, Inc., 1977-1 Trade
Cas. (CCH) ] 61,508, at 71,980 (W.D. Mo. 1977); see also United
States v. Loew's Inc., 783 F. Supp. 211, 214 (S.D.N.Y. 1992); United
States v. Columbia Artists Mgmt., Inc., 662 F. Supp. 865, 870
(S.D.N.Y. 1987).
Accordingly, with respect to the adequacy of the relief secured by
the decree, a court may not ``engage in an unrestricted evaluation of
what relief would best serve the public.'' United States v. BNS, Inc.
858 F.2d 456, 462 (9th Cir. 1988), (quoting United States v. Bechtel
Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083
(1981)); see also Microsoft, 56 F.3d at 1458. ``Indeed, the district
court is without authority to `reach beyond the complaint to evaluate
claims that the government did not make and to inquire as to why they
were not made.' '' United States v. Microsoft Corp., 231 F. Supp. 2d
144, 154 (D.D.C. 2002) (quoting Microsoft, 56 F.3d at 1459). Precedent
---------------------------------------------------------------------------
requires that:
the balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.\3\
---------------------------------------------------------------------------
\3\ United States v. Bechtel Corp., 648 F.2d at 666 (emphasis
added); see also United States v. BNS, Inc., 858 F.2d at 462-63
(district court may not base its public interest determination on
antitrust concerns in markets other than those alleged in
government's complaint); United States v. Gillette Co., 406 F. Supp.
at 716 (court will not look at settlement ``hypercritically, nor
with a microscope''); United States v. National Broad. Co., 449 F.
Supp. 1127, 1143 (C.D. Cal. 1978) (same).
The proposed Final Judgment, therefore, should not be reviewed
under a standard of whether it is certain to eliminate every
anticompetitive effect of a particular practice or whether it
[[Page 38098]]
mandates certainty of free competition in the future. Court approval of
a final judgment requires a standard more flexible and less strict than
the standard required for a finding of liability. A ``proposed decree
must be approved even if it falls short of the remedy the court would
impose on its own, as long as it falls within the range of
acceptability or is within the reaches of public interest.'' \4\
---------------------------------------------------------------------------
\4\ Microsoft, 231 F. Supp. 2d at 153 (quoting United States v.
American Tel. & Tel. Co., 552 F. Supp. 131, 151 (D.D.C. 1982),
(citation omitted), aff'd sub nom. Maryland v. United States, 460
U.S. 1001 (1983)); see also United States v. Alcan Aluminum, Ltd.,
605 F. Supp. 619, 622 (W.D. Ky. 1985) (standard is not whether
decree is one that will best serve society, but whether it is within
the reaches of the public interest); United States v. Carrols Dev.
Corp., 454 F. Supp. 1215, 1222 (N.D.N.Y. 1978) (standard is not
whether decree is the best of all possible settlements, but whether
decree falls within the reaches of the public interest).
---------------------------------------------------------------------------
Moreover, the court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its complaint, and does not authorize the court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459. Since the ``court's
authority to review the decree depends entirely on the government's
exercising its prosecutorial discretion by bringing the case in the
first place,'' it follows that the court ``is only authorized to review
the decree itself,'' and not to ``effectively redraft the complaint''
to inquire into other matters that the United States might have but did
not pursue. Id. at 1459-60.
VIII. Determinative Materials and Documents
There are not determinative documents within the meaning of the
APPA that were considered by the United States in formulating the
proposed Final Judgment.
Dated: June 13, 2003.
Respectfully submitted,
Rosemary Simota Thompson,
Attorney, Chicago Field Office, IL Bar #6204990, Department of
Justice, Antitrust Division, 209 S. LaSalle St., Suite 600, Chicago,
Illinois 60604. Telephone: (312) 353-7530. Facsimile: (312) 353-
1046.
[FR Doc. 03-16168 Filed 6-25-03; 8:45 am]
BILLING CODE 4410-11-M