[Federal Register: October 31, 2005 (Volume 70, Number 209)]
[Notices]
[Page 62330-62340]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31oc05-59]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Cal Dive International, Inc. et al.; Proposed
Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Hold Separate Stipulation and Order, and Competitive Impact Statement
have been filed with the United States District Court for the District
of Columbia in United States of America v. Cal Dive International, Inc.
et al., Civil Action No. 1:05CV02041. On October 18, 2005, the United
States filed a Complaint alleging that the proposed acquisition by Cal
Dive International, Inc. of certain saturation diving assets of Stolt
Offshore, Inc. and S&H Diving, LLC would violate Section 7 of the
Clayton Act, 15 U.S.C. 18. The Complaint alleges that the acquisition
would substantially reduce competition in the market for saturation
diving services in the United States Gulf of Mexico. The proposed Final
Judgment requires Cal Dive to divest two vessels and a separate
saturation diving system.
Copies of the Complaint, proposed Final Judgment, Hold Separate
Stipulation and Order, and Competitive Impact Statement are available
for inspection at the Department of Justice, Antitrust Division,
Antitrust Documents Group, Room 215, 325 7th Street, NW., Washington,
DC 20530 (telephone: 202-514-2481), on the Department of Justice's Web
site at http://www.usdoj.gov/atr, and at the Office of the Clerk of the
United States District Court for the District of Columbia. Copies of
these materials may be obtained from the Antitrust Division upon
request and payment of the copying fee set by Department of Justice
regulations.
Public comments is invited within 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. Comments should be directed
to Donna N. Kooperstein, Chief, Transportation, Energy & Agriculture
Section, Antitrust Division, Department of Justice, 325 7th Street,
NW., Suite 500, Washington, DC 20530 (telephone: 202-307-6349).
Dorothy B. Fountain,
Deputy Director of Operations, Antitrust Division.
United States District Court for the District of Columbia
United States of America, U.S. Department of Justice, Antitrust
Division, 325 7th Street, NW., Suite 500, Washington, DC 20530;
Plaintiff, v. Cal Dive International, Inc., 400 N. Sam Houston Parkway
E, Suite 400, Houston, Texas 77060, Stolt Offshore, S.A., Dolphin
House, Windmill Road, Sunbury-on-Thames, Middlesex, TW 16 THT, England,
Stolt Offshore, Inc., 10787 Clay Road, Houston, Texas 77041, and S&H
Diving, LLC, 10787 Clay Road, Houston, Texas 77041, Defendants
Case Number 1:05CV02041.
Judge: Emmet G. Sullivan.
[[Page 62331]]
Deck Type: Antitrust.
Date Stamp: 10/18/2005.
Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, brings this civil action to
enjoin permanently the proposed acquisition by Cal Dive International,
Inc. (``Cal Dive'') of certain assets of Stolt Offshore, Inc. and S&H
Diving, LLC (hereinafter collectively ``Stolt''), and complains and
alleges as follows:
1. On or about April 11, 2005, Cal Dive entered into an agreement
to purchase certain assets from Stolt, including a number of diving
support vessels, saturation diving systems, and other assets used by
Stolt to compete in the provision of saturation diving services in the
United States Gulf of Mexico.
2. Cal Dive and Stolt are two of only three major providers of
saturation diving services to offshore pipeline construction companies
and to owners and operators of pipelines, platforms and other offshore
structures located in the United States Gulf of Mexico. As two of the
largest providers of these services, Cal Dive and Stolt regularly
compete directly for saturation diving projects.
3. Cal Dive's acquisition of Stolt's saturation diving assets would
eliminate Stolt as a competitor for the provision of saturation diving
services in the United States Gulf of Mexico. As a result, purchasers
of these services likely will face higher prices and reduced service.
The proposed transaction would substantially reduce competition among
providers of saturation diving services in the United States Gulf of
Mexico, in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
I. Jurisdiction and Venue
4. This complaint is filed by the United States under Section 15 of
the Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain the
defendants from violating Section 7 of the Clayton Act, as amended, 15
U.S.C. 18.
5. The defendants are engaged in interstate commerce and in
activities substantially affecting interstate commerce. Cal Dive and
Stolt provide saturation diving services, pipelay services, and other
support services to customers located in multiple states in and around
the United States Gulf of Mexico. The defendants' sales of saturation
diving services in the United States represent a regular, continuous
and substantial flow of interstate commerce, and have had a substantial
effect upon interstate commerce.
6. This Court has subject matter jurisdiction over this action
pursuant to 28 U.S.C. 1331, 1337 and Section 15 of the Clayton Act, 15
U.S.C. 25.
7. The defendants have consented to personal jurisdiction and venue
in this judicial district.
II. The Defendants and the Transaction
8. Cal Dive International, Inc. is a corporation organized and
existing under the laws of the state of Minnesota. Its corporate
headquarters are located in Houston, Texas, and its primary subsea and
marine services operations are located in Morgan City, Louisiana. Cal
Dive provides a full range of marine contracting services in both
shallow and deep water. Cal Dive employs more than 300 full-time
supervisors, divers, tenders and support staff, making it the largest
provider of diving services in the United States Gulf of Mexico. Cal
Dive's total revenues in 2004 exceeded $540 million, including more
than $45 million for saturation diving services in the United States
Gulf of Mexico.
9. Stolt Offshore, Inc., with headquarters in Houston, Texas, is a
corporation organized and existing under the laws of the state of
Louisiana. S&H Diving, LLC, is a Louisiana limited liability company,
with offices in Houston, Texas. Stolt Offshore S.A., the ultimate
parent of both Stolt Offshore, Inc. and S&H Diving, LLC, is a major
international marine contractor registered in Luxembourg, with 2004
revenues in excess of $1.2 billion worldwide. In the United States Gulf
of Mexico, Stolt offers construction and installation engineering
services for conventional pipelines, subsea tiebacks, heavy lift
salvage, and subsea inspection, maintenance and repair services. Stolt
is one of the largest providers of saturation diving services in the
United States Gulf of Mexico. In 2004, Stolt had revenues in excess of
$30 million from saturation diving services in the United States Gulf
of Mexico.
10. On or about April 11, 2005, Cal Dive and Stolt entered into an
Asset Purchase Agreement, pursuant to which Cal Dive agreed to
purchase, and Stolt agreed to sell, certain assets for a purchase price
of $125 million dollars. Pursuant to the Asset Purchase Agreement, Cal
Dive would acquire, among other assets, all of the saturation diving
systems, vessels and related equipment currently used by Stolt to
provide saturation diving services in the United States Gulf of Mexico.
III. Trade and Commerce
A. Background
11. Much of the world's oil and gas reserves are located in
offshore areas, including in the United States Gulf of Mexico. Marine
contractors design, engineer, fabricate, and install offshore drilling
and production rigs, platforms and other structures, which are used to
extract crude oil and natural gas from commercially significant subsea
reservoirs. Marine contractors, using pipelay vessels, also install
undersea pipelines that transport crude oil, natural gas, and other
natural resources from production sites to other sites offshore and
onshore.
12. Human divers perform a wide variety of services for marine
contractors as well as the owners and operators of offshore pipelines,
platforms and other structures. Divers are used in subsea construction
projects, for inspection, maintenance and repair services, and for
recovery and salvage after structures are damaged by weather or
accident. Divers can perform these services either by surface diving or
saturation diving.
13. Surface divers can perform diving services only in relatively
shallow depths. Following each dive, surface divers must undertake
time-consuming decompression procedures to allow their bodies to adjust
to the lower pressure that exists at the surface.
14. Saturation diving systems permit divers to work for prolonged
periods and at much greater depths, without undergoing decompression
after each dive. During saturation diving operations, divers live for
as long as several weeks in airtight chambers aboard diving vessels.
The pressure in those chambers is maintained at a level that is
equivalent to the pressure at the subsea work site. Saturation diving
systems are typically rated to depths of between 600 and 1,000 feet of
sea water. A saturation diving system typically consists of one or more
saturation chambers, one or more diving bells, and related safety,
monitoring and life support systems and equipment. Saturation diving
systems can be permanently installed on a vessel, or they can be
portable, which allows them to be transported from one vessel to
another.
15. A vessel must maintain a fixed position while a saturation dive
is in progress. This can be accomplished either by anchor-and-chain
mooring systems or through dynamic positioning. Some saturation diving
projects require dynamically-positioned vessels because of harsh
weather,
[[Page 62332]]
environmental concerns, water depth, or pipeline congestion on the sea
floor.
B. Relevant Product Market
16. The relevant product market affected by this transaction is
``saturation diving services,'' the provision of human diving services
utilizing saturation diving systems, diving support vessels and other
assets. Providers and customers of saturation diving services analyze
the specific characteristics of a saturation diving project to
determine which resources, such as dynamically positioned vessels or
saturation chambers of a particular size, are required or are most
economical for completing the project. Saturation diving service
providers often bid against one another for projects, and are
relatively more constrained in the prices they can charge for a
particular project by competitors who have comparably more suitable
resources available for completing that project.
17. For projects that utilize divers at substantial depths or for
extended periods, surface diving is not a safe or cost-effective
substitute for saturation diving services. Other underwater
technologies, such as remotely operated vehicles or atmospheric diving
suits, have significant practical, technical and cost limitations. It
is thus unlikely that a sufficient number of customers would switch
away from saturation diving services to make a small but significant
nontransitory increase in the price of those services unprofitable.
18. Saturation diving services is a relevant antitrust product
market and a line of commerce within the meaning of Section 7 of the
Clayton Act.
C. Relevant Geographic Market
19. Cal Dive and Stolt compete with each other for the provision of
saturation diving services in the United States Gulf of Mexico. In the
event of an increase in the price of saturation diving services in the
United States Gulf of Mexico, it is unlikely that a sufficient number
of other providers of saturation diving services operating outside of
the United States Gulf of Mexico would bid their services in this
market such that a price increase would be unprofitable.
20. The United States Gulf of Mexico is a relevant geographic
antitrust market and a section of the country within the meaning of
Section 7 of the Clayton Act.
IV. Anticompetitive Effects
A. Market Concentration
21. The relevant market is highly concentrated and would become
significantly more concentrated as a result of the proposed
transaction. An appropriate measure of concentration in the market for
saturation diving services is capacity, calculated on the basis of the
number of saturation diving systems used by each competitor in the
relevant geographic market. Prior to the transaction, Cal Dive accounts
for more than 30%, and Stolt for approximately 20%, of all saturation
diving systems competing in the United States Gulf of Mexico.
22. The transaction would increase substantially the concentration
in the market for saturation diving services in the United States Gulf
of Mexico. The number of significant competitors in that market would
be reduced from three to two. As measured by the Herfindahl-Hirschman
Index (``HHI''), which is commonly employed in merger analysis and is
defined and explained in Appendix A to this Complaint, the proposed
transaction would increase the HHI by more than 1100, resulting in a
post-merger HHI of approximately 3000.
B. Loss of Competition
23. The proposed transaction is likely to substantially reduce
competition in the market for saturation diving services in the United
States Gulf of Mexico. The transaction would combine the saturation
diving assets of two of the largest providers of saturation diving
services in the United States Gulf of Mexico, giving Cal Dive more than
half of the capacity in the market.
24. Customers for saturation diving services in the United States
Gulf of Mexico have benefitted from competition between Cal Dive and
Stolt. Cal Dive and Stolt each possess similar types of saturation
diving systems and vessels that provide the two companies the ability
to effectively bid against each other for a wide variety of saturation
diving jobs, including those that call for either dynamically
positioned vessels or vessels with anchor-and-chain mooring systems.
Many customers consider Cal Dive and Stolt to be the most attractive
competitors in the market for saturation diving services in the United
States Gulf of Mexico because of their size, vessels, experience, and
reputation for safety. The two companies often directly compete against
one another for particular projects, bidding similar combinations of
resources. This direct and close competition has resulted in lower
prices and higher quality in saturation diving services than would
otherwise have existed.
25. If Cal Dive's proposed acquisition of Stolt's saturation diving
assets is consummated, the competition between Cal Dive and Stolt will
be eliminated, and the market for saturation diving services in the
United States Gulf of Mexico will become substantially more
concentrated. This loss of competition increases the likelihood of
unilateral action by Cal Dive to increase prices and diminish the
quality or quantity of services or of coordinated action by the
remaining players in the market to achieve the same ends.
C. Entry and Expansion
26. Entry by a new saturation diving services provider or expansion
by an existing fringe competitor would be difficult, time consuming and
expensive. It would require obtaining saturation diving systems,
suitable vessels and related equipment and the divers and other
personnel necessary to provide saturation diving services. It also
would require establishing the operational experience and reputation
for safety demanded by customers in the market. Redeployment of
saturation diving assets from outside the United States Gulf of Mexico
is unlikely to constrain a price increase in the relevant market.
Therefore, new entry or expansion would not be timely, likely or
sufficient to thwart the competitive harm of the acquisition.
V. Violations Alleged
27. The effect of Cal Dive's proposed acquisition of the saturation
diving support assets of Stolt, if it were consummated, may be
substantially to lessen competition in the provision of saturation
diving services in interstate trade and commerce in the United States
Gulf of Mexico, in violation of Section 7 of the Clayton Act, 15 U.S.C.
18. Unless restrained, the transaction will likely have the following
effects, among other:
a. Actual and potential competition between Cal Dive and Stolt in
the provision of saturation diving services would be eliminated;
b. Competition generally in the provision of saturation diving
services would be eliminated or substantially lessened;
c. Prices of saturation diving services would increase; and
d. Quality and service levels in the provision of saturation diving
services would decrease.
Request for Relief
The United States requests that:
1. the proposed transaction be adjudged to violate Section 7 of the
Clayton Act;
2. the defendants be permanently enjoined from carrying out the
Asset Purchase Agreement dated April 11, 2005, or from entering into or
carrying out any agreement, understanding, or
[[Page 62333]]
plan, the effect of which would be to allow Cal Dive to merge with or
acquire any of the saturation diving equipment, saturation diving
vessels, or other saturation diving assets of Stolt;
3. the United States be awarded costs of this action;
4. the United States have such other relief as the Court may deem
just and proper.
Dated: October 18, 2005.
Respectfully submitted,
For Plaintiff United States
Thomas O. Barnett,
Acting Assistant Attorney General.
J. Bruce McDonald,
Deputy Assistant Attorney General.
Dorothy B. Fountain,
Deputy Director of Operations.
Donna N. Kooperstein,
Chief, Transportation, Energy, and Agriculture Section.
William H. Stallings,
Assistant Chief, Transportation, Energy, and Agriculture Section.
Jennifer L. Cihon (OH Bar 0068404),
Angela L. Hughes (DC Bar 303420),
John M. Snyder (DC Bar 456921),
Bethany K. Hipp (GA Bar 141678),
Trial Attorneys, U.S. Department of Justice, Antitrust Division, 325
7th St., NW., Suite 500, Washington, DC 20530, Telephone: 202/307-
3278.
Appendix A--Definition of ``HHI''
The term ``HHI'' means the Herfindahl-Hirschman Index, a
commonly accepted measure of market concentration. The HHI is
calculated by squaring the market share of each firm competing in
the market and then summing the resulting numbers. For example, for
a market consisting of four firms with shares of 30, 30, 20, and 20
percent, the HHI is 2,600 (302 + 302 +
202 + 202 = 2,600). The HHI takes into account
the relative size and distribution of the firms in a market. It
approaches zero when a market is occupied by a large number of firms
of relatively equal size and reaches its maximum of 10,000 when a
market is controlled by a single firm. The HHI increases both as the
number of firms in the market decreases and as the disparity in size
between those firms increases.
Markets in which the HHI is between 1000 and 1800 are considered
to be moderately concentrated, and markets in which the HHI is in
excess of 1800 points are considered to be highly concentrated.
Transactions that increase the HHI by more than 100 points in highly
concentrated markets presumptively raise significant antitrust
concerns under the Department of Justice and Federal Trade
Commission 1992 Horizontal Merger Guidelines.
Certificate of Service
I hereby certify that on October 18, 2005, I caused a copy of the
foregoing Complaint, proposed Final Judgment, Hold Separate Stipulation
and Order and Plaintiff United States' Explanation of Consent Decree
Procedures to be served on counsel for defendants in this matter in the
manner set forth below:
By electronic mail and hand delivery:
Counsel for Defendant Cal Dive International, Inc., Daniel L.
Wellington (DC Bar 273839), Neely B. Agin (DC Bar
456005), Fulbright & Jaworski LLP, 801 Pennsylvania Avenue,
NW., Washington, DC 20004-2623, Tel: (202) 662-4574, Fax: (202) 662-
4643.
Counsel for Defendants Stolt Offshore S.A., Stolt Offshore, Inc., and
S&H Diving LLC, Paul C. Cuomo (DC Bar 457793), Sean F. Boland
(DC Bar &249318), Howrey LLP, 1299 Pennsylvania Avenue, NW.,
Washington, DC 20004-2402, Tel: (202) 783-0800, Fax: (202) 383-6610.
Jennifer L. Cihon (OH Bar 0068404),
Department of Justice, Antitrust Division, 325 Seventh Street, NW.,
Suite 500, Washington, DC 20530, (202) 307-3278, (202) 616-2441
(Fax).
The United States District Court for the District of Columbia
United States of America, Plaintiff, v. Cal Dive International, Inc.,
Stolt Offshore S.A., Stolt Offshore, Inc., and S&H Diving, LLC,
Defendants
Case No. Judge Deck Type: Antitrust Filed:
Proposed Final Judgment
Whereas, plaintiff, United States of America, filed its Complaint
on October 18, 2005, plaintiff and defendants, by their respective
attorneys, have consented to the entry of this Final Judgment without
trial or adjudication of any issue of fact or law, and without this
Final Judgment constituting any evidence against or admission by any
party regarding any issue of fact or law;
And whereas, the defendants have stipulated solely for purposes of
this action that the Court has personal jurisdiction over the
defendants;
And whereas, the defendants agree to be bound by the provisions of
this Final Judgment pending its approval by the Court;
And whereas, the essence of this Final Judgment is the prompt and
certain divestiture of a saturation diving system and diving support
vessels by defendant Cal Dive to assure that competition is not
substantially lessened;
And Whereas, the United States requires defendant Cal Dive to make
certain divestitures for the purpose of remedying the loss of
competition alleged in the Complaint;
And Whereas, the defendants have represented to the United States
that the divestiture required below can and will be made and that the
defendants will later raise no claim of hardship or difficulty as
grounds for asking the Court to modify any of the divestiture
provisions contained below;
Now therefore, before any testimony is taken, without trail or
adjudication of any issue of fact or law, and upon consent of the
parties, it is ordered, adjudged and decreed:
I. Jurisdiction
This court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states a claim upon which
relief may be granted against the defendants under section 7 of the
Clayton Act, as amended, 15 U.S.C. 18.
II. Definitions
As used in this Final Judgment:
A. ``Acquirer'' or ``Acquirers'' means the entity or entities to
whom defendant Cal Dive divests the Saturation Diving Assets.
B. ``Cal Dive'' means Cal Dive International, Inc., a corporation
organized and existing under the laws of the state of Minnesota with
its headquarters in Houston, Texas, its successors and assigns, and its
subsidiaries, divisions, groups, affiliates, partnerships, joint
ventures, and their directors, officers, managers, agents, and
employees.
C. ``Person'' means any natural person, corporation, association,
firm, partnership, or other business or legal entity.
D. ``Saturation Diving Assets'' means the vessel designated as the
Seaway Defender, the vessel designated as the Midnight Carrier, and the
saturation diving system designated as the Torch Saturation Diving
System.
E. ``Stolt'' means Stolt Offshore S.A., a Luxembourg registered
company, its United States subsidiary, Stolt Offshore, Inc., a
corporation organized and existing under the laws of the state of
Louisiana, with headquarters in Houston, Texas, and S&H Diving LLC, a
Louisiana limited liability company with offices in Houston, Texas.
F. ``Torch Saturation Diving System'' means the portable saturation
diving system that Cal Dive purchased from Torch Offshore, Inc. that
has six major components: a four-man single lock saturation chamber, a
transfer lock (TUP), a two-man diving bell, a main umbilical, a control
van, and a supply van.
III. Applicability
This Final Judgment applies to the defendants, Cal Dive and Stolt,
and all
[[Page 62334]]
other persons in active concert or participation with any of them who
receive actual notice of this Final Judgment by personal service or
otherwise.
IV. Divestiture
A. Defendant Cal Dive is hereby ordered and directed (1) to divest
the Torch Saturation Diving System and the vessel designated as the
Midnight Carrier within sixty (60) calendar days after the date of
filing of the Complaint in this matter, or within five (5) days after
notice of the entry of this Final Judgment by the Court, whichever is
later; and (2) to divest the vessel designated as the Seaway Defender
within ninety (90) calendar days after the date of the filing of the
Complaint in this matter, or within five (5) days after notice of the
entry of this Final Judgment by the Court, whichever is later. The
divestitures must be made in a manner consistent with this Final
Judgment to an Acquirer or Acquirers acceptable to the United States in
its sole discretion. The United States, in its sole discretion, may
agree to extend each time period up to thirty (30) calendar days, and
shall notify the Court in such circumstances. Defendant Cal Dive agrees
to use its best efforts to divest the Saturation Diving Assets as
expeditiously as possible.
B. In accomplishing the divestiture ordered by this Final Judgment,
defendant Cal Dive promptly shall make known, by usual and customary
means, the availability of the Saturation Diving Assets. Defendant Cal
Dive shall inform any person making inquiry regarding a possible
purchase of the Saturation Diving Assets that they are being divested
pursuant to this Final Judgment and provide that person with a copy of
this Final Judgment. The defendants shall offer to furnish to each
prospective Acquirer, subject to customary confidentiality assurances,
all information and documents relating to the Saturation Diving Assets
customarily provided in a due diligence process except such information
or documents subject to the attorney-client or work-product privileges.
The defendants shall make available such information and documents to
the United States at the same time that such information and documents
are made available to any other person.
C. The defendants shall provide to each Acquirer of some or all of
the Saturation Diving Assets, and to the United States, the name and
current contact information (if known) for each individual who is
currently, or who, to the best of the defendants' knowledge, has been
involved at any time since June 1, 2004, whether onshore or offshore,
in the operation of the specific Saturation Diving Assets to be
acquired by the Acquirer or in the provision of diving services by or
with any of the specific Saturation Diving Assets to be acquired by the
Acquirer, including divers, diving tenders, and diving supervisors or
superintendents. The defendants shall not impede or interfere with any
negotiations by the Acquirer or Acquirers to employ any person who has
worked with, or whose principal responsibilities have concerned, any of
the Saturation Diving Assets.
D. Consistent with customary due diligence processes and subject to
customary confidentiality assurances, the defendants shall permit each
prospective Acquirer of some or all Saturation Diving Assets to have
reasonable access to personnel and to make inspection of the Saturation
Diving Assets; access to any and all environmental and other permit
documents and information; and access to any and all financial,
operational, or other documents and information.
E. Defendant Cal Dive also agrees to divest the Saturation Diving
Assets in a condition and state of repair equal to their condition and
state of repair as of the date Cal Dive acquires them, ordinary wear
and tear excepted.
F. The defendants will not undertake, directly or indirectly, any
challenges to any permits or certification relating to the operation of
the Saturation Diving Assets, or otherwise take any action to impede
the divestiture or operation of the Saturation Diving Assets.
G. The divestiture of the Saturation Diving Assets shall be
accomplished in such a way as to satisfy the United States, in its sole
discretion, that the Saturation Diving Assets will be operational or
made operational by the Acquirer or Acquirers, will be used by the
Acquirer or Acquirers as part of a viable, ongoing business engaged in
the provision of saturation diving services in the United States Gulf
of Mexico, and will remedy the competitive harm alleged in the
Complaint. The divestiture, whether pursuant to Section IV or Section V
of this Final Judgment:
1. Shall be made to an Acquirer or Acquirers that, in the United
States's sole judgment, has the intent and capability (including the
necessary operational, technical, and financial capability) to compete
effectively in the saturation diving business in the United States Gulf
of Mexico; and
2. Shall be accomplished so as to satisfy the United States, in its
sole discretion, that none of the terms of any agreement between the
Acquirer or Acquirers and defendant Cal Dive gives the defendants the
ability unreasonably to raise the Acquirer's or Acquirers' costs, to
lower the Acquirer's or Acquirers' efficiency, or otherwise to
interfere in the ability of the Acquirer or Acquirers to compete
effectively.
V. Appointment of Trustee
A. If defendant Cal Dive has not divested the Saturation Diving
Assets within the time period specified in Section IV(A), defendant Cal
Dive shall notify the United States of that fact in writing. Upon
application of the United States, in its sole discretion, the Court
shall appoint a trustee selected by the United States and approved by
the Court to effect the divestiture of the Saturation Diving Assets.
B. After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell the Saturation Diving Assets. The
trustee shall have the power and authority to accomplish the
divestiture to an Acquirer or Acquirers acceptable to the United
States, in its sole discretion, at such price and on such terms as are
then obtainable upon reasonable effort by the trustee, subject to the
provisions of Sections IV, V and VI of the Final Judgment, and shall
have such other powers as this Court deems appropriate. Subject to
Section V(D) of this Final Judgment, the trustee may hire at the cost
and expense of defendant Cal Dive any investment bankers, attorneys, or
other agents, who shall be solely accountable to the trustee,
reasonable necessary in the trustee's judgment to assist in the
divestiture.
C. The defendants shall not object to a sale of the Saturation
Diving Assets by the trustee on any ground other than the trustee's
malfeasance. Any such objections by the defendants must be conveyed in
writing to the United States and the trustee within 10 (10) calendar
days after the trustee has provided the notice required under Section
VI.
D. The trustee shall serve at the cost and expense of defendant Cal
Dive, on such terms and conditions as the United States approves, and
shall account for all monies derived from the sale of the Saturation
Diving Assets and for all costs and expenses so incurred. After
approval by the Court of the trustee's accounting, including fees for
its services and those of any professionals and agents retained by the
trustee, all remaining money shall be paid to the defendant Cal Dive
and the trust shall then be terminated. The compensation of the trustee
and any professionals and agents retained by the trustee shall be
reasonable in light of the value of the Saturation Diving Assets and
based on a fee arrangement providing the trustee
[[Page 62335]]
with an incentive based on the price and terms of the divestiture and
the speed with which it is accomplished, but timeliness is paramount.
E. The defendants shall use their best efforts to assist the
trustee in accomplishing the required divestiture. The trustee and any
consultants, accountants, attorneys, and other persons retained by the
trustee shall have full and complete access to the Saturation Diving
Assets and the personnel, books, and records of the Saturation Diving
Assets, and defendant Cal Dive shall develop financial and other
information relevant to the Saturation Diving Assets as the trustee may
reasonably request, subject to reasonable protection for trade secret
or other confidential research, development, or commercial information.
The defendants shall take no action to interfere with or to impede the
trustee's accomplishment of the divestiture.
F. After its appointment, the trustee shall file monthly reports
with the United States and the Court setting forth the trustee's
efforts to accomplish the divestiture ordered under this Final
Judgment. To the extent such reports contain information that the
trustee deems confidential, such reports shall not be filed in the
public docket of the Court. Such reports shall include the name,
address, and telephone number of each person who, during the preceding
month, made an offer to acquire, expressed an interest in acquiring,
entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring, the Saturation Diving Assets and shall
describe in detail each contact with any such person. The trustee shall
maintain full records of all efforts made to divest the Saturation
Diving Assets.
G. If the trustee has not accomplished such divestiture within six
(6) months after its appointment, the trustee shall promptly file with
the Court a report setting forth (1) the trustee's efforts to
accomplish the required divestiture; (2) the reasons, in the trustee's
judgment, why the required divestiture has not been accomplished; and
(3) the trustee's recommendations. To the extent such reports contains
information that the trustee deems confidential, such reports shall not
be filed in the public docket of the Court. The trustee shall at the
same time furnish such report to the United States who shall have the
right to make additional recommendations consistent with the purpose of
the trust. The Court thereafter shall enter such orders as it shall
deem appropriate to carry out the purpose of the Final Judgment, which
may, if necessary, include, without limitation, extending the trust and
the term of the trustee's appointment by a period requested by the
United States.
VI. Notice of Proposed Divestiture
A. Within two (2) business days following execution of a definitive
divestiture agreement, defendant Cal Dive or the trustee, whichever is
then responsible for effecting the divestiture required herein, shall
notify the United States of any proposed divestiture required by
Section IV or V of this Final Judgment. If the trustee is responsible,
it shall similarly notify defendant Cal Dive. The notice shall set
forth the details of the proposed divestiture and list the name,
address, and telephone number of each person not previously identified
who offered or expressed an interest in or desire to acquire the
Saturation Diving Assets, together with full details of the same.
B. Within fifteen (15) calendar days of receipt by the United
States of such notice, the United States may request from the
defendants, the proposed Acquirer or Acquirers, any other third party,
or the trustee if applicable, additional information concerning the
proposed divestiture, the proposed Acquirer or Acquirers and any other
potential Acquirer or Acquirers. The defendants and the trustee shall
furnish any additional information requested within fifteen (15)
calendar days of the receipt of the request, unless the parties shall
otherwise agree.
C. Within thirty (30) calendar days after receipt of the notice or
within twenty (20) calendar days after the United States has been
provided the additional information requested from the defendants, the
proposed Acquirer or Acquirers, any third party, and the trustee,
whichever is later, the United States shall provide written notice to
defendant Cal Dive and the trustee, if there is one, stating whether or
not it objects to the proposed divestiture. If the United States
provides written notice that it does not object, the divestiture may be
consummated, subject only to defendants' limited right to object to the
sale under Section V(C) of this Final Judgment. Absent written notice
that the United States does not object to the proposed Acquirer or
Acquirers or upon objection by the United States, a divestiture
proposed under Section IV or Section V shall not be consummated. Upon
objection by the defendants under Section V(C), a divestiture proposed
under Section V shall not be consummated unless approved by the Court.
VII. Financing
The defendants shall not finance all or any part of any purchase
made pursuant to Section IV or V of this Final Judgment.
VIII. Hold Separate
Until the divestiture required by this Final Judgment has been
accomplished, the defendants shall take all steps necessary to comply
with the Hold Separate Stipulation and Order entered by this Court. The
defendants shall take no action that would jeopardize, delay, or impede
the divestiture order by this Order.
IX. Affidavits
A. Within twenty (20) calendar days of the filing of the Complaint
in this matter, and every thirty (30) calendar days thereafter until
the divestiture has been completed under Section IV or V, the
defendants shall deliver to the United States an affidavit that
describes the fact and manner of their compliance with Section IV or V
of this Final Judgment. Each such affidavit shall include the name,
address, and telephone number of each person who, during the preceding
thirty (30) calendar days, made an offer to acquire, expressed an
interest in acquiring, entered into negotiations to acquire, or was
contacted or made an inquiry about acquiring any or all of the
Saturation Diving Assets, and shall describe in detail each contact
with any such person during that period. Each such affidavit shall also
include a description of the efforts defendant Cal Dive has taken to
solicit buyers for the Saturation Diving Assets, and to provide
required information to any prospective Acquirer or Acquirers,
including the limitations, if any, on such information. Assuming the
information set forth in the affidavit is true and complete, any
objection by the United States to information provided by the
defendants, including limitations on the information, shall be made
within fourteen (14) calendar days of receipt of such affidavit.
B. Within twenty (20) calendar days of the filing of the Complaint
in this matter, the defendants shall deliver to the United States an
affidavit that describes in reasonable detail all actions the
defendants have taken and all steps the defendants have implemented on
an ongoing basis to comply with Section VIII of this Final Judgment.
The defendants shall deliver to the United States an affidavit
describing any changes to the efforts and actions outlined in the
defendants' earlier affidavits filed pursuant to this section
[[Page 62336]]
within fifteen (15) calendar days after the change is implemented.
C. Defendant Cal Dive shall keep all records of all efforts made to
preserve and to divest the Saturation Diving Assets until one year such
divestiture has been completed.
X. Compliance Inspections
A. For purposes of determining or securing compliance with this
Final Judgment, or of determining whether the Final Judgment should be
modified or vacated, and subject to any legally recognized privilege,
from time to time duly authorized representatives 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 the defendants, be
permitted:
1. Access during the defendants' office hours to inspect and copy,
or at the United States, option to require the defendants to provide
copies of, all books, ledgers, accounts, records and documents in the
possession, custody, or control of the defendants, relating to any
matters contained in this Final Judgment; and
2. To interview, either informally or on the record, the
defendants' officers, employees, or agents, who may have their
individual counsel present, regarding such matters. The interviews
shall be shall be subject to the reasonable convenience of the
interviewee and without restraint or interference by the defendants.
B. Upon the written request of a duly authorized representative of
the Assistant Attorney General in charge of the Antitrust Division, the
defendants shall submit written reports, or responses to written
interrogatories, 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 United States 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 the
defendants to the United States, the defendants represent and identify
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 the defendants mark each pertinent page
of such material, ``Subject to claim of protection under Rule 26(c)(7)
of the Federal Rules of Civil Procedure,'' then the United States shall
give the defendants ten (10) calendar days notice prior to divulging
such material in any legal proceeding (other than a grand jury
proceeding).
XI. Notification
Unless such transaction is otherwise subject to the reporting and
waiting period requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, 15 U.S.C. 18a, for three years
after entry of this Final Judgment, defendant Cal Dive, without
providing advance notification to the Department of Justice, shall not
directly or indirectly acquire any saturation chamber that, to the best
of Cal Dive's knowledge, has been operated in or located in the United
States Gulf of Mexico at any time since October 1, 2002, whether as
part of a portable saturation diving system or as part of saturation
diving system built into a vessel, or any interest, including any
financial, security, loan, equity or management interest in, any
company that owns or operates such a saturation chamber. Such
notification shall be provided to the Department of Justice in the same
format as, and per the instructions relating to, the Notification and
Report Form set forth in the Appendix to Part 803 of Title 16 of the
Code of Federal Regulations as amended. Notification shall be provided
at least thirty (30) calendar days prior to the acquisition, and shall
include, beyond what may be required by the applicable instructions,
the names of the principal representatives of the parties to the
agreement who negotiated the agreement, and any management or strategic
plans discussing the proposed transaction.
XII. No Reacquisition
Defendant Cal Dive may not reacquire any of the Saturation Diving
Assets during the term of this Final Judgment.
XIII. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
XIV. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire ten years from the date of its entry.
XV. Public Interest Determination
Entry of this Final Judgment is in the public interest, and the
parties have complied with the procedures of the Antitrust Procedures
and Penalties Act, 15 U.S.C. 16.
Dated:
-----------------------------------------------------------------------
United States District Judge
Certificate of Service
I hereby certify that on October 18, 2005, I caused a copy of the
foregoing Complaint, proposed Final Judgment, Hold Separate Stipulation
and Order and Plaintiff United States' Explanation of Consent Decree
Procedures to be served on counsel for defendants in this matter in the
manner set forth below:
By electronic mail and hand delivery:
Counsel for Defendant Cal Dive International, Inc., Daniel L.
Wellington (D.C. Bar 273839), Neely B. Agin (D.C. Bar
456005), Fullbright & Jaworski LLP, 801 Pennsylvania Avenue,
NW., Washington, DC 20004-2623, Tel: (202) 662-4574, Fax: (202) 662-
4643.
Counsel for Defendants Stolt Offshore S.A., Stolt Offshore, Inc. and
S&H Diving LLC, Paul C. Cuomo (D.C. Bar 457793), Sean F.
Boland (D.C. Bar 249318), Howrey LLP, 1299 Pennsylvania
Avenue, NW., Washington, DC 20004-2402, Tel: (202) 783-0800, Fax: (202)
383-6610.
Jennifer L. Cihon (OH Bar 0068404)
Department of Justice, Antitrust Division, 325 Seventh Street, NW.,
Suite 500, Washington, DC 20530, (202) 307-3278, (202) 616-2441
(Fax).
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Cal Dive International, Inc.,
Stolt Offshore S.A., Stolt Offshore, Inc., and S&H Diving, LLC,
Defendants
Civil Case No.: 1:05CV02041
Judge: Emmet G. Sullivan
Deck Type: Antitrust
Date Stamp: October 20, 2005
Competitive Impact Statement
Plaintiff United States of America (``United States''), pursuant to
section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or
``Tunney Act''), 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.
[[Page 62337]]
I. Nature and Purpose of the Proceeding
Defendant Cal Dive International, Inc. (``Cal Dive'') and
defendants Stolt Offshore, Inc. and S&H Diving, LLC (collectively
``Stolt'') entered into an Asset Purchase Agreement dated April 11,
2005, pursuant to which Cal Dive will acquire certain assets from
Stolt, including a number of diving support vessels, saturation diving
systems, and other assets used by Stolt to provide saturation diving
services in the United States Gulf of Mexico. The United States filed a
civil antitrust Complaint on October 18, 2005, seeking to enjoin the
proposed acquisition. The Complaint alleges that the likely effect of
this acquisition would be to reduce competition substantially for
saturation diving services in the United States Gulf of Mexico in
violation of section 7 of the Clayton Act, 15 U.S.C. 18. As a result,
purchasers of these services likely would face higher prices and
reduced service.
At the same time the Complaint was filed, the United States also
filed a Hold Separate Stipulation and Order and proposed Final
Judgment, which are designed to eliminate the anticompetitive effects
of the acquisition. Under the proposed Final Judgment, which is
explained more fully below, Cal Dive is required to divest the vessel
designated as the Seaway Defender, the vessel designated as the
Midnight Carrier, and the saturation diving system designated as the
Torch Saturation Diving System (collectively, the ``Saturation Diving
Assets''). Under the terms of the Hold Separate Stipulation and Order
and proposed Final Judgment, Cal Dive will take certain steps to ensure
that, prior to such divestiture, the Saturation Diving Assets will
remain independent of the rest of Cal Dive's assets and will be
maintained in the same condition and state of repair as of the date Cal
Dive acquired them, and that competition is maintained during the
pendency of the ordered divestiture.
The United States and Defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA. Entry of
the proposed Final Judgment would terminate this action, except that
the Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II. Description of the Events Giving Rise to the Alleged Violation
A. The Defendants and the Proposed Transaction
Cal Dive is a corporation organized and existing under the laws of
the state of Minnesota. Its corporate headquarters are located in
Houston, Texas, and its primary subsea and marine services operations
are based in Morgan City, Louisiana. Cal Dive provides a full range of
marine contracting services, which includes marine construction,
robotic services, manned diving, and decommissioning services, in both
shallow and deep water. Cal Dive employs more than 300 full-time
supervisors, divers, tenders and support staff, making it the largest
provider of diving services in the United States Gulf of Mexico. Cal
Dive's total revenues in 2004 exceeded $540 million, including more
than $45 million for saturation diving services in the United States
Gulf of Mexico.
Stolt Offshore, Inc., with headquarters in Houston, Texas, is a
corporation organized and existing under the laws of the state of
Louisiana. S&H Diving, LLC, is a Louisiana limited liability company,
with offices in Houston, Texas. Stolt Offshore S.A., the ultimate
parent of both Stolt Offshore, Inc. and S&H Diving, LLC, is a major
international marine contractor registered in Luxembourg, with 2004
revenues in excess $1.2 billion worldwide. In the United States Gulf of
Mexico, Stolt offers construction and installation engineering services
for conventional pipelines; subsea tiebacks; heavy lift salvage; and
subsea inspection, maintenance and repair services. Stolt is one of the
largest providers of saturation diving services in the United States
Gulf of Mexico. In 2004, Stolt had revenues in excess of $30 million
from saturation diving services in the United States Gulf of Mexico.
Pursuant to the April 11, 2005 Asset Purchase Agreement, Cal Dive
will acquire, among other assets, all of the saturation diving systems,
diving support vessels and related equipment currently used by Stolt to
provide saturation diving services in the United States Gulf of Mexico.
The total purchase price is approximately $125 million.
The proposed transaction, as initially agreed to by Defendants,
would reduce competition substantially for saturation diving services
in the United States Gulf of Mexico. This acquisition is the subject of
the Complaint and proposed Final Judgment filed by the United States on
October 18, 2005.
B. The Saturation Diving Services Industry
Much of the worlds's oil and gas reserves are located in offshore
areas, including in the United States Gulf of Mexico. Marine
contractors design, engineer, fabricate, and install offshore drilling
and production rigs, platforms, and other structures, which are used to
extract crude oil and natural gas from commercially significant subsea
reservoirs. Marine contractors, using pipelay vessels, also install
undersea pipelines that transport crude oil, natural gas and other
natural resources from the production sites offshore and onshore.
Human divers perform a wide variety of services for marine
contractors and owners and operators of offshore pipelines, platforms
and other structures. Divers are used for subsea construction projects,
for subsea inspection, maintenance and repair services, and for
recovery and salvage after structures are damaged by weather or
accident. Divers can perform these services either by surface diving or
saturation diving.
Surface divers can perform diving services only in relatively
shallow depths, generally not deeper than 150 feet of sea water.
Surface divers must go through a time-consuming decompression process
following each diver to allow their bodies to adjust to the lower
pressure that exists at the surface.
Saturation divers can work for prolonged periods and at much
greater depths, without undergoing decompression after each dive.
During saturation diving operations, divers live for as long as several
weeks in airtight chambers aboard diving vessels. The pressure in those
chambers is maintained at a level that is equivalent to the pressure at
the subsea work site. The divers travel from the saturation chamber to
the subsea work site in similarly pressurized closed capsules called
bells that allow the divers to remain at constant pressure during their
descent to the sea floor.
Saturation diving systems are typically rated to allow divers to
work at depths between 600 and 1,000 feet of sea water. A saturation
diving system typically consists of one or more saturation chambers,
one or more diving bells, and related safety, monitoring and life
support systems and equipment. Saturation diving systems can be
permanently installed on a vessel, or they can be portable, in which
case they can be transported from one vessel to another.
[[Page 62338]]
A vessel must maintain a fixed position during a saturation dive.
This can be accomplished either by anchor-and-chain mooring systems,
which require surveyors to determine the appropriate anchor placement,
or through dynamic positioning systems, which position vessels using
satellite technology. Generally, vessels positioned by anchor and chain
mooring systems operate in shallower waters. Vessels with dynamic
positioning systems are more often used in deeper water, in areas with
many pipelines on the sea floor and in hazardous weather conditions.
Some saturation diving projects require a dynamically positioned
vessel. Other projects can be executed using either mode of
positioning.
C. The Competitive Effects of the Transaction on Saturation Diving
Services in the United States Gulf of Mexico
Cal Dive's proposed acquisition of the Saturation Diving Assets
will substantially reduce competition for saturation diving services in
the United States Gulf of Mexico. Saturation diving services are the
provision of human diving services utilizing saturation diving systems.
Providers and customers of saturation diving services analyze the
specific characteristics of a saturation diving project to determine
which resources, such as dynamically positioned vessels or saturation
chambers of a particular size, are required or are most economical for
completing the project. Saturation diving service providers often bid
against one another for projects, and are relatively more constrained
in the prices they can charge for a particular project by competitors
who have comparably more suitable resources available for completing
that project.
Surface diving is not a safe or cost-effective substitute for
saturation diving services for projects that utilize divers at
substantial depths or for extended periods. Other underwater
technologies, such as remotely operated vehicles or atmospheric diving
suites, have significant practical, technical and cost limitation that
prevent them from being viable alternatives to saturation diving.
Cal Dive and Stolt compete with one another for the provision of
saturation diving services in the United States Gulf of Mexico. In the
event of an increase in the price of saturation diving services in the
United States Gulf of Mexico, it is unlikely that a sufficient number
of other providers of saturation diving services operating outside the
United States Gulf of Mexico would bid their services inside the United
States Gulf such that a price increase would be unprofitable. Therefore
the relevant geographic market where the transaction will substantially
reduce competition for saturation diving services is the United States
Gulf of Mexico.
Cal Dive and Stolt are the two of the largest providers of
saturation diving services in the United States Gulf of Mexico. Their
combined market share in that market, measured on the basis of the
number of saturation diving systems used in the United States Gulf of
Mexico, is approximately 50 percent.
Customers of saturation diving services in the United States Gulf
of Mexico have benefitted from competition between Cal Dive and Stolt.
Cal Dive and Stolt each possess similar types of saturation diving
systems and vessels that provide the two companies the ability to
effectively bid against one another for a wide variety of saturation
diving jobs, including those that call for dynamically positioned
vessels and those that call for vessels equipped with anchor-and-chain
mooring systems. Many customers consider Cal Dive and Stolt to be the
two most attractive competitors for saturation diving services in the
United States Gulf of Mexico because of their size, vessels,
experience, and reputation for safety. The two companies often directly
compete against one another for particular projects, bidding similar
combinations of resources. This direct and close competition has
resulted in lower prices and higher quality in saturation diving
service than would otherwise have existed.
The transaction would increase substantially concentration in the
market for saturation diving services in the United States Gulf of
Mexico. As measured by the Herfindahl-Hirschman Index (``HHI''), which
is commonly employed in merger analysis and is defeated and explained
in the Appendix A to the Complaint, the proposed transaction would
increase the HHI relating to the number of saturation diving systems by
more than 1100, resulting in a post merger HHI of approximately 3000.
By eliminating competition between Cal Dive and Stolt, the
transaction would reduce the number of significant competitors in the
market for saturation diving services in the United States Gulf of
Mexico from three to two. This loss of competition increases the
likelihood of unilateral action by Cal Dive to increase prices and
diminish the quality or quantity of services, or of coordinated action
by the remaining players in the market to achieve the same ends.
Entry by a new saturation diving services provider or expansion by
an existing fringe competitor would be difficult, time consuming and
expensive. It would require obtaining saturation diving systems,
suitable vessels and related equipment, as well as the divers and other
personnel necessary to provide saturation diving services. It also
would require establishing the operational experience and reputation
for safety demanded by customers in the market. Redeployment of
saturation diving assets from outside the United States Gulf of Mexico
is unlikely to constrain a price increase in the relevant market.
Therefore, new entry or expansion would not timely, likely, or
sufficient thwart the competitive harm of the proposed acquisition.
For these reasons, the United States concluded that Cal Dive's
proposed acquisition of the Saturation Diving Assets will likely
substantially lessen competition, in violation of Section 7 of the
Clayton Act, in the provision of saturation diving services in the
United States Gulf of Mexico.
III. Explanation of the Proposed Final Judgment
A. Divestiture
The divestiture requirements of the proposed Final Judgment will
maintain competition for saturation diving services in the United
States Gulf of Mexico by allowing independent competitors to acquire
the Saturation Diving Assets. The proposed Final Judgment requires Cal
Dive to divest the portable saturation diving system designated the
Torch Saturation Diving System and the vessel designated as the
Midnight Carrier, an anchor-and-chain mooring vessel capable of
accommodating a portable saturation diving system, within sixty (60)
calendar days after the filing of the Complaint in this matter, or
within five (5) days after notice of the entry of this Final Judgment
by the Court, whichever is later, and to divest the vessel designated
as the Seaway Defender, a dynamically positioned vessel with a built-in
saturation diving system, within ninety (90) days after the Complaint
in this matter, or within five (5) days after notice of the entry of
this Final Judgment by the Court, whichever is later. The United States
may extend each time period available to Cal Dive to complete the
divestiture up to an additional thirty (30) days.
The Saturation Diving Assets must be divested in such a way as to
satisfy the United States, in its sole discretion, that the Saturation
Diving Assets will be operational or made operational by the acquirer
or acquirers and will be used
[[Page 62339]]
by the acquirer or acquirers as part of a viable, ongoing business
engaged in the provision of saturation diving services in the United
States Gulf of Mexico. Cal Dive must take all reasonable steps
necessary to accomplish the divestiture quickly and shall cooperate
with prospective purchasers. The Defendants must also provide acquirers
information relating to personnel that are or have been involved, at
any time since June 1, 2004, in the operation of, or provision of
diving services by, the Saturation Diving Assets, including divers,
diving tenders, and diving supervisors or superintendents. The
Defendants further must refrain from interfering with any negotiations
by the acquirer or acquirers to employ any of the personnel that are or
have been involved in the operation of, or provision of diving services
by, any of the Saturation Diving Assets.
The proposed Final Judgment also requires Cal Dive, for a period of
three years after the entry of the Final Judgment, to provide advance
notice to the Department of Justice before acquiring any saturation
chamber that has been operated in or located in the United States Gulf
of Mexico at any time since October 1, 2002, whether as a part of a
portable saturation diving system or as part of a saturation diving
system built into a vessel, or any interest in any company that owns or
operates such a saturation chamber. Further, the proposed Final
Judgment restricts Cal Dive from reacquiring any of the Saturation
Diving Assets during the term of the proposed Final Judgment.
B. Use of a Divestiture Trustee
In the event that Cal Dive does not accomplish the divestiture
within the periods prescribed in the proposed Final Judgment, the
proposed Final Judgment provides that the Court will appoint a trustee
selected by the United States to effect the divestiture. If a trustee
is appointed, the proposed Final Judgment provides that Cal Dive will
pay all the costs and expenses of the trustee. The trustee's commission
will be structured so as to provide an incentive for the trustee based
on the price obtained and the speed with which the divestiture is
accomplished. After his or her appointment becomes effective, the
trustee will file monthly reports with the Court and the United States
setting forth his or her efforts to accomplish the divestiture. At the
end of six months, if the divestiture has not been accomplished, the
trustee and the United States will make recommendations to the Court,
which shall enter such orders as appropriate to carry out the purpose
of the trust, including extending the trust or the term of the
trustee's appointment.
The divestiture provisions of the proposed Final Judgment will
eliminate the anticompetitive effects of the proposed acquisition. The
divestitures of the Saturation Diving Assets will preserve competition
in the market for saturation diving services by maintaining an
independent and economically viable competitor in the United States
Gulf of Mexico.
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 three times the damages
the person has suffered, as well as cost and reasonable attorneys'
fees. Entry of the proposed Final Judgment will neither impair nor
assist the bringing of any private antitrust damage action. Under the
provisions of section 5(a) of the Clayton Act, 15 U.S.C. Sec. 16(a),
the proposed Final Judgment has no prima facie effect in any subsequent
private lawsuit that may be brought against Defendants.
V. Procedures Available for Modification of the Proposed Final Judgment
The United States and Defendants 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 APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
persons 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 the date of publication of this Competitive
Impact Statement in the Federal Register. All comments received during
this period will be considered by the Department of Justice, which
remains free to withdraw its consent to the proposed Final Judgment at
any time prior to the Court's entry of judgment. 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: Donna N. Kooperstein,
Chief, Transportation, Energy & Agriculture Section, Antitrust
Division, United States Department of Justice, 325 Seventh Street, NW.,
Suite 500, Washington, DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
The United States considered, as an alternative to the proposed
Final Judgment, a full trial on the merits against Defendants. The
United States could have continued the litigation and sought
preliminary and permanent injunctions against Cal Dive's acquisition of
certain Stolt assets. The United States is satisfied, however, that the
divestiture of assets described in the proposed Final Judgment will
preserve competition in the market for saturation diving services in
the United States Guld of Mexico.
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 sixty (60) day
comment period, after which the Court shall determine whether entry of
the proposed Final Judgment ``is in the public interest.'' 15 U.S.C.
16(c)(1). In making that determination, the Court shall consider;
(A) the competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration of relief sought, anticipated effects of
alternative remedies actually considered, whether its terms are
ambiguous, and any other competitive considerations bearing upon the
adequacy of such judgment that the court deems necessary to a
determination of whether the consent judgment is in the public
interest; and
(B) the impact of entry of such judgment upon competition in the
relevant market or markets, 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(c)(1)(A) & (B). As the United States Court of Appeals for
the District of Columbia Circuit 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.
[[Page 62340]]
Microsoft Corp., 56 F.3d 144B, 1458-62 (D.C. Cir. 1995).
``Nothing in this section shall be construed to require the court
to conduct an evidentiary hearing or to require the court to permit
anyone to itnervene.'' 15 U.S.C. 16(e)(2). Thus, in conducting this
inquiry, ``[t]he 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.'' 119 Cong. Rec. 24,598 (1973)(statement of Senator
Tunney).\1\ Rather.
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\1\ See United States v. Gillette Co., 406 F. Supp. 713, 716 (D.
Mass. 1975)(recognizing it was not the court's duty to settle;
rather, the court must only answer ``whether the settlement achieved
[was] within the reaches of the public interest''). A ``public
interest'' determination can be made properly on the basis of the
Competitive Impact Statement and Response to Comments filed by the
Department of Justice 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.
[a]bsent 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 responss to comments in order
to determine whether those explanations are reasonable under the
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circumstances.
United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. (CCH) ]
61,508, at 71,980 (W.D. Mo. 1977).
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) (citing United States v. Bechtel
Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d
at 1460-62. Courts have held that:
[t]he 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
effectivness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\
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\2\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); Gillette, 406 F. Supp. at 716
(noting that, in this way, the court is constrained to ``look at the
overall picture not hypercritically, nor with a microscope, but with
an artist's reducing glass''); see generally Microsoft, 56 F.3d at
1461 (discussing whether ``the remedies [obtained in the decree are]
so inconsonant with the allegations charged as to fall outside of
the `reaches of the public interest' '').
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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 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 interests.' '' United
States v. AT&T Corp. 552 F. Supp 131, (D.D.C. 1982) (citation omitted)
(quoting Gillette, 406 F. Supp. at 716), 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) (approving the
consent decree even through the court would have imposed a greater
remedy).
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. Because the ``court's
authority to review the decree depends entirely on the government's
exercising its prosecutorial discretion by bringing a 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 did not pursue. Id.
at 1459-60.
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Dated: October 20, 2005.
Respectfully submitted,
Jennifer L. Cihon (OH Bar 0068404)
Angela L. Hughes (DC Bar 303420)
John M. Snyder (DC Bar 456921)
Bethany K. Hipp (GA Bar 141678).
Certificate of Service
I hereby certify that on October 20, 2005, I caused a copy of the
foregoing Competitive Impact Statement to be served on counsel for
defendants in this matter in the manner set forth below:
By electronic mail and hand delivery:
Counsel for Defendant Cal Dive International, Inc., Daniel L.
Wellington (D.C. Bar 273839), Neely B. Agin (D.C. Bar
456005), Fulbright & Jaworski LLP, 801 Pennsylvania Avenue,
NW., Washington, DC 20004-2623, Tel: (202) 662-4574, Fax: (202) 662-
4643.
Counsel for Defendants Stolt Offshore S.A., Stolt Offshore, Inc. and
S&H Diving LLC, Paul C. Cuomo (D.C. Bar 457793), Sean F.
Boland (D.C. Bar 249318), Howrey LLP, 1299 Pennsylvania
Avenue, NW., Washington, DC 20004-2402, Tel: (202) 783-0800, Fax: (202)
383-6610.
Jennifer L. Cihon (OH Bar 0068404,
Department of Justice, Antitrust Division, 325 Seventh Street, NW.,
Suite 500, Washington, DC 20530, (202) 307-3278, (202) 616-2441
(Fax).
[FR Doc. 05-21510 Filed 10-28-05; 8:45 am]
BILLING CODE 4410-11-M