[Federal Register: August 24, 2006 (Volume 71, Number 164)]
[Notices]
[Page 50084-50097]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24au06-76]
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Mittal Steel Company N.V. 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 Complaint, proposed Final
Judgment, Hold Separate Stipulation and Order, and Competitive Impact
Statement were filed with the United States District Court for the
District of Columbia in United States v.
[[Page 50085]]
Mittal Steel Company N.V. Civil Action No. 1:06CY01360. On August 1,
2006, the United States filed a Complaint to enjoin Mittal Steel
Company N.Y. (``Mittal Steel'') from acquiring Arcelor S.A.
(``Arcelor''). The Complaint alleges that Mittal Steel's acquisition of
Arcelor would substantially lessen competition in the development,
manufacture, and sale of Tin Mill Products in violation of Section 7 of
the Clayton Act, as amended, 15 U.S.C. 18, throughout the United States
east of the Rocky Mountains (the ``Eastern United States''). The
proposed Final Judgment, filed August 1, 2006, requires defendant,
Mittal Steel, to divest one of their three North American tin mills it
will own after the acquisition to preserve competition in the sale of
Tin Mill Products. A Hold Separate Stipulation and Order, entered by
the Court on August 2, 2006, requires defendant to maintain, prior to
divestiture, the competitive independence and economic viability ofthe
assets subject to divestiture under the proposed Final Judgment. A
Competitive Impact Statement filed by the United States describes the
Complaint, proposed Final Judgment, Hold Separate Stipulation and
Order, and the remedies available to private litigants who may have
been injured by the alleged violations.
Copies of the Complaint, proposed Final Judgment, Hold Separate
Stipulation and Order, and Competitive Impact Statement are available
for inspection at the U.S. Department of Justice, Antitrust Division,
325 Seventh Street, NW., Room 215, Washington, D.C. 20530 (telephone:
202-514-2481), and at the Clerk's Office of the United States District
Court for the District of Columbia, Washington, DC. Copies of these
materials may be obtained upon request and payment of a copying fee set
by the U.S. Department of Justice regulations.
Public comment is invited within the statutory 60-day comment
period. Such comments and responses thereto will be published in the
Federal Register and filed with the Court. Comments should be directed
to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division,
U.S. Department of Justice, 1401 H Street, N.W., Suite 3000,
Washington, D.C. 20530 (telephone: 202-307-0924).
J. Robert Kramer: II,
Director of Operations.
United States District Court for the District of Columbia
United States of America, U.S. Department of Justice, Antitrust
Division, 1401 H Street, NW., Suite 3000, Washington, DC 20530.
Plaintiff, v. Mittal Steel Company N.V., Hofplein 20, 15th Floor,
Rotterdam, The Netherlands, 3032. Defendant.
Case No.
JUDGE:
DECK TYPE: Antitrust
DATE STAMP:
Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, brings this civil antitrust
action to obtain equitable and other relief against the defendant,
Mittal Steel Company N.V. (``Mittal Steel''), to prevent its proposed
acquisition of Arcelor S.A. (``Arcelor''), and alleges as follows:
I. Nature of the Action
1. Mittal Steel formally launched a tender offer for Arcelor on May
19, 2006, and on June 25, 2006 the Arcelor board recommended Mittal's
offer to Arcelor's shareholders. The acceptance period for Mittal's
tender offer cJosed on July 13,2006, and Mittal Steel can take
ownership of the shares beginning on August 1, 2006.
2. Mittal Steel is an integrated steelmaker that manufactures,
among other products, finely rolled tin or chrome coated steel sheets
known as ``Tin Mill Products.'' Tin Mill Products are used in
manufacturing steel cans for packaging a wide range of food products
such as soup, fruits, and vegetables, and non-food products such as
paints, aerosols, and shaving cream. Mittal Steel is the second largest
supplier of Tin Mill Products to the portion of the United States east
of the Rocky Mountains (the ``Eastern United States''), accounting for
about 31 percent of Tin Mill Products tonnage sold in 2005.
3. Arcelor accounted for about two percent of Tin Mill Products
tonnage sold in the Eastern United States in 2005. Arcelor acquired its
subsidiary Dofasco Inc. (``Dofasco'') in February 2006. In 2005 Dofasco
accounted for an additional four percent of the Tin Mill Products
tonnage sold in 2005 in the Eastern United States.
4. Mittal Steel's proposed acquisition of Arcelor would eliminate
Arcelor, including its subsidiary Dofasco, as an independent competitor
in the sale of Tin Mill Products in the Eastern United States, further
consolidating an already highly concentrated market. The largest
supplier of Tin Mill Products sold in the Eastern United States,
another integrated steelmaker, accounted for over 44 percent of the
tons sold in 2005. If this merger were not enjoined, the two largest
suppliers of Tin Mill Products would account for over 81 percent of
2005 sales in the Eastern United States.
5. The acquisition would remove current constraints on coordination
and increase the incentives of the two largest firms to coordinate
their behavior. The acquisition would thus substantially increase the
likelihood of coordination and would likely lead to higher prices,
lower quality, less innovation, and less favorable delivery terms in
the Tin Mill Products market in the Eastern United States.
6. Accordingly, the acquisition would substantially lessen
competition in Tin Mill Products in the Eastern United States, in
violation of Section 7 of the Clayton Act.
II. Jurisdiction and Venue
7. Plaintiff United States brings this action against defendant
Mittal Steel under Section 15 of the Clayton Act, as amended, 15 U.S.C.
25, to prevent and restrain the violation by defendant of Section 7 of
the Clayton Act, 15 U.S.C. 18.
8. Defendant manufactures and sells Tin Mill Products in the flow
of interstate commerce. Defendant's activities in developing,
manufacturing and selling Tin Mill Products substantially affect
interstate commerce. This Court has subject matter jurisdiction over
this action and the defendant pursuant to Section 12 of the Clayton
Act, 15 U.S.C. 22, and 28 U.S.C. 1331, 1337(a), and 1345.
9. Venue is proper in this District pursuant to 28 U.S.C. 1391(d).
Furthermore, defendant has consented to venue and personal jurisdiction
in this judicial district.
III. Parties to the Proposed Transaction
10. Defendant Mittal Steel is a Netherlands corporation with its
corporate headquarters and principal place of business in Rotterdam,
The Netherlands, and operations in sixteen countries on four
continents. Mittal Steel produces both flat and long steel products for
all of the major steel consuming sectors, including automotive,
appliance, machinery, and construction. Mittal Steel's total worldwide
revenues exceeded $28 billion in 2005, and its total annual steel
[[Page 50086]]
production exceeded 55 million tons. Mittal Steel produces Tin Mill
Products in Sparrows Point, Maryland and Weirton, West Virginia. In
2005, Mittal Steel sold over 800,000 tons of Tin Mill Products in the
Eastern United States.
11. Arcelor is a Luxembourg corporation with its corporate
headquarters and principal place of business in the City of Luxembourg.
Arcelor, with operations primarily in Europe and Brazil, produces flat
and long products for the automotive, appliance, packaging, and general
industries. In 2005, Arcelor had approximately $41.5 billion in total
worldwide revenues and steel production of 46 million tons.
12. In February 2006 Arcelor acquired Dofasco, a wholly-owned
Canadian subsidiary with its corporate headquarters and principal place
of business in Hamilton, Ontario, Canada. Dofasco shipped 4.8 million
tons of steel and had $3.9 billion in revenues in 2005. Arcelor, which
shipped Tin Mill Products to the Eastern United States primarily from
its European facilities, and Dofasco, which shipped Tin Mill Products
to the Eastern United States from its Canadian facility, sold a
combined 170,615 tons of Tin Mill Products in the Eastern United States
in 2005.
IV. The Proposed Transaction
13. On January 27, 2006, Mittal Steel announced its intention to
launch a hostile tender offer to acquire Arcelor for approximately $23
billion in cash and securities. Mittal Steel simultaneously announced
an agreement to sell Dofasco for approximately $5 billion to a German
steelmaker, ThyssenKrupp A.G. (``ThyssenKrupp''), if Mittal Steel
acquired Arcelor. Arcelor initially resisted the hostile takeover. One
of the steps Arcelor's Board of Directors took to resist the takeover
was to transfer legal title to the shares of Dofasco to an independent
Dutch foundation known as a ``stichting.''
14. Mittal Steel subsequently increased its tender offer to
approximately $33 billion in cash and securities and formally launched
its tender offer on May 19, 2006. After Mittal Steel agreed to improve
the financial, corporate govemance, and other terms of its offer for
Arcelor, the Arcelor Board agreed on June 25, 2006 to recommend
Mittal's offer to Arcelor's shareholders. The acceptance period for
Mittal's initial tender offer, during which 92.6 percent of Arcelor's
shares were tendered, closed on July 13, 2006. Mittal Steel can take
ownership of the shares beginning on August 1, 2006.
V. Trade and Commerce
A. Relevant Product Market
15. Tin Mill Products are finely rolled steel sheets, usually
coated with a thin protective layer of tin or chrome. Tin Mill Products
are manufactured using a sequence of processing steps in which steel is
rolled into successively thinner sheets, then hardened, and finally
coated with either tin or chrome.
16. Tin Mill Products are comprised of three types of steel: Black
plate, electrolytic tin plate (``ETP''), and tin free steel (``TFS'').
Black plate is a light-gauge cold-rolled bare steel sheet that serves
as the substrate for production of both ETP and TFS and can be used
bare for some applications, such as pails or larger containers. Black
plate is coated with tin to produce ETP and with chrome to produce TFS.
ETP and TFS are both used for packaging, although each provides
different advantages and disadvantages (including, inter alia, organic
coating acceptance, strength, surface finish and formability) that are
considered by purchasers in making their purchase decisions.
17. The majority of Tin Mill Products shipments are used to produce
sanitary cans, often referred to as food cans. Other uses include
aerosol cans, general line cans, pails, larger containers, metal
buildings, and oil and fuel filter sheets.
18. For most Tin Mill Products purchasers, including downstream
food can customers, there are no close substitutes for Tin Mill
Products. Packaging alternatives, such as plastic containers, are
generally not viewed by can customers as replacements for products
normally packaged in cans because of cost differences and the
performance advantages associated with cans. Some of the advantages of
steel cans compared to alternative packaging include their longer shelf
life and greater durability, familiarity, and security. Alternative
packaging generally costs at least as much as a steel can and sometimes
costs as much as eight times as much as a can, and significant
additional capital investments are necessary to incorporate alternative
packaging materials into a customer's packaging process.
19. A small but significant increase in the price of Tin Mill
Products would not cause can manufacturers or their downstream
customers to substitute non-Tin Mill Products containers, or otherwise
to reduce their purchases of Tin Mill Products, in sufficient
quantities so as to make such a price increase unprofitable. The use of
alternative packaging containers is driven primarily by capital
equipment investment considerations and by marketing factors such as
consumer convenience, rather than by small but significant changes in
the prices of Tin Mill Products. For example, can customers often use
alternative packaging in order to extend an existing product line, such
as using alternative materials for portable microwavable containers for
soup, while continuing to package the bulk of soup products in steel
cans.
20. Accordingly, the development, manufacture, and sale of Tin Mill
Products is a line of commerce and a relevant product market within the
meaning of Section 7 of the Clayton Act.
B. Relevant Geographic Market
21. The Eastern United States is a geographically distinct market
for the sale of Tin Mill Products. The only Tin Mill Products
manufacturer in the United States west of the Rocky Mountains (the
``Western United States'') is located in California, and it does not
have substantial sales in the Eastern United States due to its distance
from can manufacturers in that part of the country, which tend to be
located in proximity to agricultural regions. That California Tin Mill
Products manufacturer, half owned by one of the two largest Tin Mill
Products producers in the Eastern United States, accounts for over 84
percent of the Tin Mill Products sold in the Western United States but
ships only small quantities to the Eastern United States. Similarly,
Tin Mill Products producers in the Eastern United States generally do
not sell significant quantities in the Western United States because
their treight costs are higher than those of the single manufacturer
located in the Western United States.
22. A small but significant increase in the price of Tin Mill
Products would not cause Tin Mill Products customers in the Eastern
United States to substitute purchases from outside of the Eastern
United States in sufficient quantities so as to make such a price
increase unprofitable.
23. Accordingly, the Eastern United States is a relevant geographic
market within the meaning of Section 7 of the Clayton Act.
C. Anticompetitive Effects
24. Currently, Mittal Steel and its primary competitor account for
over 75 percent of Tin Mill Products sales in the Eastern United
States. Were Mittal Steel to acquire ArceJor, the largest two firms
would account for over 81 percent of such sales. In 2005, Mittal Steel,
Arcelor, Dofasco, and one other firm sold more than 2.1 million tons of
Tin
[[Page 50087]]
Mill Products in the Eastern United States.
25. The market for Tin Mill Products in the Eastern United States
would thus become substantially more concentrated if Mittal Steel were
to acquire Arcelor and its Dofasco subsidiary. Using a measure of
market concentration called the Herfindahl-Hirschman Index (``HHI'')
(defined and explained in Appendix A), the proposed transaction will
increase the HHI in the market for Tin Mill Products in the Eastern
United States by approximately 412 points to a post-acquisition level
of approximately 3,522, well in excess of levels that raise significant
antitrust concerns.
26. Purchasers of Tin Mill Products in the Eastern United States
have benefitted from competition between Mittal Steel and Arcelor
through lower prices, higher quality, more innovation, and better
delivery terms for Tin Mill Products. Arcelor and its subsidiary
Dofasco are known for high quality and innovation, which forces Mittal
Steel and other domestic producers to compete on these aspects as well.
By acquiring Arcelor, Mittal Steel would eliminate that competition.
27. Mittal Steel's elimination of Arcelor as an independent
competitor in the manufacture and sale of Tin Mill Products within the
Eastern United States is likely to facilitate anticompetitive
coordination among the two major Tin Mill Products manufacturers by
making such coordination more profitable and harder to defeat. If the
two largest Tin Mill Products firms in the Eastern United States were
to seek to raise prices or reduce output today, purchasers of Tin Mill
Products could purchase Tin Mill Products from Arcelor and its
subsidiary Dofasco. Arcelor has substantial excess and divertible
capacity in Europe, and Arcelor's Dofasco subsidiary has significant
divertible capacity in Canada. Were Arcelor and Dofasco no longer
available as independent suppliers, the remaining domestic and foreign
fringe producers would likely not have sufficient capacity and/or
incentives to increase production enough to defeat an anticompetitive
price increase or output reduction by the two largest firms. In
particular, the only other incumbent producer located in the Eastern
United States does not have the ability to manufacture cold-rolled
substrate, and its ability to obtain the additional substrate needed to
increase its output is constrained.
D. Entry and Expansion
28. De novo entry into the development, manufacture and sale of Tin
Mill Products is difficult, time-consuming, and costly, and such entry
would not be timely, likely, or sufficient to defeat coordination by
the two largest Tin Mill Products firms in the Eastern United States
post-merger. To produce Tin Mill Products, a firm needs a reliable
source of cold-rolled substrate and a Tin Mill Products finishing
facility. A facility to finish cold-rolled substrate into Tin Mill
Products would likely cost in the range of $60 to $100 million and take
approximately two years to design and build. In addition, entry by a
firm that lacks the ability to manufacture cold-rolled substrate or to
increase its output of cold-rolled substrate would be more risky as it
may not gain access to sufficient substrate to compete effectively. The
cost of entry is largely ``sunk,'' i.e., it cannot be recovered or
converted to other uses, raising the risk to entry, and there is a very
high risk that a new entrant may not receive any profits from its
entry.
29. Significant new foreign entry or expansion of shipments to the
Eastern United States by existing foreign producers is unlikely due to
longer delivery lead times occasioned by the need for oceangoing
transportation, additional shipping costs, trade barriers, the
possibility of future import restrictions, and the reluctance of
foreign Tin Mill Products manufacturers to abandon existing markets
elsewhere in order to enter or expand in the Eastern United States.
Overseas shipping increases the time between order and delivery by up
to four months, which is unacceptable for most customers in the Eastern
United States because their demand requirements fluctuate with hard-to-
predict fruit and vegetable harvests. Capacity constraints also limit
certain foreign producers from expanding their sales into the Eastern
United States.
30. Therefore, entry or expansion by any other finn into the
Eastern United States Tin Mill Products market would not be timely,
likely, or sufficient to deter post-acquisition coordination.
VI. Violation Alleged
31. The effect of the proposed acquisition of Arcelor by Mittal
Steel would be to substantially lessen competition in interstate trade
and commerce, in violation of Section 7 of the Clayton Act, 15 U.S.C.
18.
32. Unless restrained, the transaction will likely have the
following effects, among others:
a. Competition generally in the development, manufacture and sale
of Tin Mill Products in the Eastern United States would be
substantially lessened;
b. Actual and potential competition between Mittal Steel and
Arcelor in the development, manufacture and sale of Tin Mill Products
will be eliminated; and
c. The prices for Tin Mill Products will likely increase, the
quality of Tin Mill Products will likely decline, innovation relating
to Tin Mill Products will likely decline, and the delivery terms
currently offered in the Tin Mill Products market will likely become
less favorable to customers.
VII. Requested Relief
33. Plaintiff requests that:
a. Mittal Steel's proposed acquisition of Arcelor be adjudged and
decreed to be unlawful and in violation of Section 7 of the Clayton
Act, 15 U.S.C. 18;
b. Defendant and all persons acting on its behalf be permanently
enjoined and restrained from consummating the proposed acquisition or
from entering into or carrying out any contract, agreement, plan, or
understanding, the effect of which would be to combine Mittal Steel
with the operations of Arcelor;
c. Plaintiff be awarded its costs for this action; and
d. Plaintiff receive such other and further relief as the case
requires and the Court deems just and proper.
Dated: August 1, 2006.
Respectfully submitted,
For Plaintiff United States of America:
Thomas O. Barnett,
Assistant Attorney General D.C. Bar #426840.
David L. Meyer,
Deputy Assistant Attorney General, D.C. Bar #414420.
J. Robert Kramer II,
Director of Operations.
Maribeth Petrizzi,
Chief, Litigation II Section, D.C. Bar #435204.
Robert W. Wilder,
Acting Assistant Chief, Litigation II Section.
Kerrie J. Freeborn,
John F. Greaney,
Stephen A. Harris,
Lowell Stern (D.C. Bar #440487), Attorneys, U.S. Department of
Justice, Antitrust Division, Litigation II Section, 1401 H Street,
N.W., Suite 3000, Washington, D.C. 20530, (202) 307-0924.
Appendix A--Herfindahl-Hirschman Index Calculations
``HHI'' means the Herfindahl-Hirschman Index, a commonly
accepted measure of market concentration. It 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 thirty, thirty, twenty, and
twenty percent, the BBI is 2600 (30 \2\ + 30 \2\ + 20 \2\ + 20 \2\ =
2600). The HHI takes into account the relative size and distribution
of the firms in a market and approaches zero when a market consists
of a
[[Page 50088]]
large number of firms of relatively equal size. 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 points are
considered to be moderately concentrated and those 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 antitrust
concerns under the Horizontal Merger Guidelines issued by the U.S.
Department of Justice and the Federal Trade Commission. See
Horizontal Merger Guidelines 1.51.
United States District Court for the District of Columbia
United States of America, Plaintiff; v. Mittal Steel Company N.V.,
Defendant
Case No.
DECK TYPE: Antitrust
DATE STAMP:
Final Judgment
Whereas, plaintiff, United States of America, filed its Complaint
on August 1, 2006 and plaintiff and defendant, Mittal Steel Company
N.V., 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, defendant agrees 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 certain rights or assets by the defendant to
assure that competition is not substantially lessened;
And Whereas, plaintiff requires defendant to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
And Whereas, defendant has represented to the United States that
the divestitures required below can and will be made and that defendant
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 trial 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 defendant under Section 7 of the Clayton
Act, as amended, 15 U.S.C. 18.
II. Definitions
As used in this Final Judgment:
A. ``Acquirer'' means the entity or entities to whom defendant
divests either the Dofasco Business or the Selected Business.
B. ``Arcelor'' means Arcelor, S.A., a Luxembourg corporation with
its headquarters in Luxembourg City, Luxembourg, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships, joint ventures, and their directors, officers, managers,
agents, and employees.
C. ``Divested Business'' means either the Dofasco Business or the
Sparrows Point Business or the Weirton Business, whichever is being
offered for sale by the defendant or by a trustee appointed pursuant to
Section V of this Final Judgment.
D. ``Dofasco Business'' means all assets, interests, and rights in
Dofasco Inc. (``Dofasco''), including any additions, improvements, or
expansions made by Arcelor after Arcelor's acquisition of Dofasco on or
about February 20, 2006, and includes but is not limited to:
1. All tangible assets that comprise Dofasco, including research
and development activities, all manufacturing equipment, tooling and
fixed assets, personal property, inventory, office furniture,
materials, supplies, on- or off-site warehouses or storage facilities
and other tangible property, and all assets used exclusively in
connection with the Dofasco business; all licenses, permits and
authorizations issued by any governmental organization relating to
Dofasco; all supply agreements relating to Dofasco; all contracts,
teaming agreements, agreements, leases, certifications, commitments,
and understandings; all customer contracts, lists, accounts, and credit
records relating to Dofasco; and all other records relating to Dofasco;
2. All intangible assets used in the development, production,
servicing, and sale of products by Dofasco, including but not limited
to all patents, licenses and sublicenses, intellectual property,
copyrights, trademarks, trade names, service marks, service names,
technical information, computer software and related documentation,
know-how, trade secrets, drawings, blueprints, designs, design
protocols, specifications for materials, specifications for parts and
devices, safety procedures for the handling of materials and
substances, quality assurance and control procedures, design tools and
simulation capability, and all manuals and technical information
provided to the employees, customers, suppliers, agents or licensees of
Dofasco; all research data concerning historic and current research and
development efforts relating to products produced or sold by Dofasco,
including but not limited to designs of experiments, and the results of
successful and unsuccessful designs and experiments, provided, however,
that Dofasco does not include Dofasco's interest in Sorevco.
E. ``DoSol Joint Venture'' means DoSol Galva Limited Partnership,
the hot dip galvanizing facility located in Hamilton, Ontario, Canada,
that is a joint venture between Dofasco and Arcelor.
F. ``Mittal Steel'' means defendant Mittal Steel Company, N.V., a
Netherlands public limited liability company with its headquarters in
Rotterdam, The Netherlands, its successors and assigns, and its
subsidiaries, divisions, groups, affiliates, partnerships, joint
ventures, and their directors, officers, managers, agents, and
employees.
G. ``QCM'' means Quebec Cartier Mining Company, a producer of iron
ore products, headquartered in Montreal, Quebec, Canada.
H. ``Selected Business'' means whichever of the Sparrows Point
Business or the Weirton Business is selected by the United States in
its sole discretion to be offered for sale by the defendant or by a
trustee appointed pursuant to Section V of this Final Judgment.
I. ``Sorevco'' mean Sorevco and Company, Limited, the hot dip
galvanizing operation located in Montreal, Quebec, Canada, that is a
joint venture between Dofasco and Mittal.
J. ``Sparrows Point Facility'' means the steel making, rolling, and
coating facility owned by Mittal Steel and located in or near Sparrows
Point, Maryland.
K. ``Sparrows Point Business'' means all assets, interests, and
rights in the Sparrows Point Facility, and includes but is not limited
to:
1. All tangible assets used in the development, production,
servicing, and sale of all products produced at the Sparrows Point
Facility, including but not limited to all real property; any
facilities used for research, development, and engineering support, and
any real property associated with those facilities; manufacturing and
sales assets, including all manufacturing equipment, tooling and fixed
assets, capital equipment, vehicles, supplies, personal property,
inventory, office
[[Page 50089]]
furniture, fixed assets and fixtures, materials, on-or off-site
warehouses or storage facilities, and other tangible property or
improvements; all licenses, permits and authorizations issued by any
governmental organization relating to the Sparrows Point Business;
supply agreements; all contracts, teaming agreements, agreements,
leases, certifications, commitments, and understandings relating to the
Sparrows Point Business; all customer contracts, lists, accounts, and
credit records; and all other records maintained by Mittal Steel in
connection with the operation of the Sparrows Point Business; provided,
however, that with respect to any assets covered by Section II(K)(1)
that relate primarily to Mittal's non-divested businesses, but also
relate in part to the Sparrows Point Business, the defendant shall have
the option, subject to the written approval of the United States in its
sole discretion, to substitute equivalent assets or arrangements (a
substituted asset or arrangement will not be deemed equivalent unless
it provides the Sparrows Point Business the same benefits, or enables
the Sparrows Point Business to perform the same function at the same or
less cost); and further provided, that the Sparrows Point Business does
not include Mittal Steel's contract to supply hot-rolled steel to the
The Ford Motor Company, which contract is supplied in part by the
Sparrows Point Facility;
2. All intangible assets currently used exclusively or primarily in
the development, production, servicing, and sale of all products
produced at the Sparrows Point Facility, including but not limited to
all patents, licenses and sublicenses, intellectual property,
copyrights, trademarks, trade names, service marks, service names
(except to the extent such trademarks, trade names, service marks, or
service names contain the trademark or name ``Mittal Steel'' or any
variation thereof), technical information, computer software and
related documentation, know-how, trade secrets, drawings, blueprints,
designs, design protocols, specifications for materials, specifications
for parts and devices, safety procedures for the handling of materials
and substances, quality assurance and control procedures, design tools
and simulation capability, and all manuals and technical information
provided to the employees, customers, suppliers, agents or licensees of
the Sparrows Point Business;
3. With respect to any other identified intangible assets that are
not subject to Section II(K)(2) and that prior to the filing of the
Complaint were used both in connection with the Sparrows Point Business
and in connection with Mittal Steel's non-divested businesses, the
defendant shall provide to the Acquirer a non-exclusive, non-
transferable, fully-paid-up license(s) for such intangible asset(s) to
the extent and for the period of time that defendant has rights to such
intangible assets, provided, however, that any such license may be
transferable to any future purchaser of the Sparrows Point Business;
and
4. All research data concerning historic and current research and
development efforts related to the Sparrows Point Business, including
but not limited to designs of experiments, and the results of
successful and unsuccessful designs and experiments. To the extent that
any such data also relates to historic and current research and
development efforts related to businesses other than the Sparrows Point
Business, providing a non-exclusive copy of such data shall fulfill
defendant's obligations under this provision.
L. ``ThyssenKrupp'' means ThyssenKrupp AG, a German corporation
with its headquarters in Dusseldorf, Germany, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships, joint ventures, and their directors, officers, managers,
agents, and employees.
M. ``Tin Mill Products'' means collectively black plate, i.e.,
light-gauge cold-rolled bare steel sheet; electrolytic tin plate, i.e.,
black-plate electrolytically coated with tin; and tin free steel, i.e.,
black plate electrolytically coated with chromium.
N. ``Weirton Facility'' means the steel making, rolling, and
coating facility owned by Mittal Steel and located in or near Weirton,
West Virginia.
O. ``Weirton Business'' means all assets, interests, and rights in
Weirton Facility, and includes but is not limited to:
1. All tangible assets used in the development, production,
servicing, and sale of all products produced at the Weirton Facility,
including but not limited to all real property; any facilities used for
research, development, and engineering support, and any real property
associated with those facilities; manufacturing and sales assets,
including all manufacturing equipment, tooling and fixed assets,
capital equipment, vehicles, supplies, personal property, inventory,
office furniture, fixed assets and fixtures, materials, on-or off-site
warehouses or storage facilities, and other tangible property or
improvements, including but not limited to all of defendant's rights
and interests in the Half Moon tin warehouse and processing facility
near the Weirton Facility; all licenses, permits and authorizations
issued by any governmental organization relating to the Weirton
Facility; supply agreements; all contracts, teaming agreements,
agreements, leases, certifications, commitments, and understandings
relating to the Weirton Facility; all customer contracts, lists,
accounts, and credit records; and all other records maintained by
Mittal Steel in connection with the operation of the Weirton Business;
provided, however, that with respect to any assets covered by Section
II(O)(I) that relate primarily to Mittal's non-divested businesses, but
also relate in part to the Weirton Business, the defendant shall have
the option, subject to the written approval of the United States in its
sole discretion, to substitute equivalent assets or arrangements (a
substituted asset or arrangement will not be deemed equivalent unless
it provides the Weirton Business the same benefits, or enables the
Weirton Business to perform the same function at the same or less
cost);
2. All intangible assets currently used exclusively or primarily in
the development, production, servicing, and sale of all products
produced at the Weirton Facility, including but not limited to all
patents, licenses and sublicenses, intellectual property, copyrights,
trademarks, trade names, service marks, service names (except to the
extent such trademarks, trade names, service marks, or service names
contain the trademark or name ``Mittal Steel'' or any variation
thereof), technical information, computer software and related
documentation, know-how, trade secrets, drawings, blueprints, designs,
design protocols, specifications for materials, specifications for
parts and devices, safety procedures for the handling of materials and
substances, quality assurance and control procedures, design tools and
simulation capability, and all manuals and technical information
provided to the employees, customers, suppliers, agents or licensees of
the Weirton Business;
3. With respect to any other identified intangible assets that are
not subject to Section II(O)(2) and that prior to the filing of the
Complaint were used both in connection with the Weirton Business and in
connection with Mittal Steel's non-divested businesses, the defendant
shall provide to the Acquirer a non-exclusive, non-transferable, fully
paid-up license(s) for such intangible asset(s) to the extent and for
the period of the time that defendant has rights to such intangible
assets, provided, however, that any such license may be
[[Page 50090]]
transferable to any future purchaser of the Weirton Business; and
4. All research data concerning historic and current research and
development efforts related to the Weirton Business, including but not
limited to designs of experiments, and the results of successful and
unsuccessful designs and experiments. To the extent that any such data
also relates to historic and current research and development efforts
related to businesses other than the Weirton Business, providing a non-
exclusive copy of such data shall fulfill defendant's obligations under
this provision.
III. Applicability
A. This Final Judgment applies to Mittal Steel, as defined above,
and all other persons in active concert or participation with Mittal
Steel who receive actual notice of this Final Judgment by personal
service or otherwise.
B. Defendant shall require, as a condition of the sale or other
disposition of all or substantially all of its assets or of lesser
business units that includes the Divested Business, that the purchaser
agrees to be bound by the provisions of this Final Judgment.
IV. Divestiture
A. In the event defendant acquires Arcelor, defendant is ordered
and directed to divest the Dofasco Business to ThyssenKrupp within (1)
120 calendar days after the filing of the Complaint in this matter or
(2) five (5) days after notice of the entry of this Final Judgment by
the Court, whichever is later. The United States, in its sole
discretion, may agree to one or more extensions of this time period,
not to exceed in total sixty (60) calendar days, and shall notify the
Court in each such circumstance. At its option, defendant may elect to
sell Dofasco to an alternative Acquirer acceptable to the United States
in the sole discretion of the United States. Defendant agrees to use
its best efforts to divest the Dofasco Business as expeditiously as
possible.
B. In the event defendant acquires Arcelor but is unable to
accomplish the divestiture of the Dofasco Business within the time
period specified in Section IV(A), then at the option of the United
States, defendant shall divest either the Sparrows Point Business or
the Weirton Business. The United States shall provide defendant written
notice of its selection. Defendant is ordered and directed, within
ninety (90) calendar days of the receipt of such notice, to divest the
Selected Business in a manner consistent with this Final Judgment to an
Acquirer acceptable to the United States in its sole discretion. The
United States, in its sole discretion, may agree to one or more
extensions of this time period, not to exceed in total sixty (60)
calendar days, and shall notify the Court in each such circumstance.
Defendant agrees to use its best efforts to divest the Selected
Business as expeditiously as possible. Once the United States has
provided defendant with written notice of its selection under Section
IV(B), the defendant will cease to have any obligation under Section
IV(A) to divest the Dofasco Business.
C. In accomplishing the divestiture ordered by the Final Judgment,
defendant promptly shall make known, by usual and customary means, the
availability of the Divested Business. Defendant shall inform any
person making inquiry regarding a possible purchase of the Divested
Business that it will be divested pursuant to this Final Judgment and
provide that person with a copy of this Final Judgment. Defendant shall
offer to furnish to all prospective Acquirers, subject to customary
confidentiality assurances, all information and documents relating to
the Divested Business that customarily are provided in a due diligence
process except such information or documents subject to the attorney-
client or work-product privilege. Defendant shall make available such
information to the United States at the same time that such information
is made available to any other person.
D. Defendant shall provide the Acquirer and the United States
information relating to personnel involved in the research,
development, production, operation, and sale of the products of the
Divested Business to enable the Acquirer to make offers of employment.
Defendant will not interfere with any negotiations by the Acquirer to
employ any employee of the Divested Business whose primary
responsibility is the production, operation, development, or sale of
the products of the Divested Business.
E. Defendant shall permit prospective Acquirers of the Divested
Business to have reasonable access to personnel and to make inspections
of the physical facilities of the Divested Business; access to any and
all environmental, zoning, and other permit documents and information;
and access to any and all financial, operational, and other documents
and information customarily provided as part of a due diligence
process.
F. Defendant shall warrant to the Acquirer of the Divested Business
that each asset of the Divested Business is in a condition and state of
repair equal to the condition and state of repair as of, (1) in the
case that the Selected Business is divested, the date the defendant
publicly announced its intention to acquire Arcelor, i.e., January 27,
2006, or (2) in the case that the Dofasco Business is divested, the
date of the filing of the Complaint in this matter.
G. Defendant shall not take any action that will impede in any way
the permitting, operation, or divestiture of the Divested Business.
H. The defendant will not undertake, directly or indirectly, any
challenges to the environmental, zoning, or other permits relating to
the operation of the Divested Business. If the Selected Business is
divested, the defendant shall warrant to the Acquirer of the Selected
Business that there are no material defects in the environmental,
zoning, or other permits pertaining to the operation of the Selected
Business as operated by the defendant.
I. Nothing in this Final Judgment shall be construed to require the
Acquirer as a condition of any license granted by defendant pursuant to
Sections II(K)(3) or II(O)(3) to extend to defendant the right to use
the Acquirer's improvements to processes used in connection with the
Selected Business.
J. Unless the United States otherwise consents in writing, the
divestiture pursuant to Section IV, or by trustee appointed pursuant to
Section V, of this Final Judgment, shall include the entire business
and assets of the Divested Business, and shall be accomplished in such
a way as to satisfy the United States, in its sole discretion, that the
Divested Business can and will be used by the Acquirer as a viable,
ongoing business engaged in producing Tin Mill Products. The
divestiture, whether pursuant to Section IV or Section V of this Final
Judgment,
1. Shall be made to an Acquirer that, in the United States's sole
judgment, has the intent and capability (including the necessary
managerial, operational, technical and financial capability) to compete
effectively in the production and sale of Tin Mill Products; 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 an
Acquirer and defendant gives defendant the ability unreasonably to
raise the Acquirer's costs, to lower the Acquirer's efficiency, or
otherwise interfere in the ability of the Acquirer to compete
effectively in the production and sale of Tin Mill Products.
[[Page 50091]]
V. Appointment of Trustee To Effect Divestiture
A. If the defendant has not divested the Selected Business pursuant
to Section IV(B) of this Final Judgment within the time period
specified in that Section, defendant shall notify the United States of
that fact in writing. Upon application of the United States, the Court
shall appoint a trustee selected by the United States and approved by
the Court to effect the divestiture of the Selected Business pursuant
to Section IV(B).
B. After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell the Selected Business. The trustee
shall have the power and authority to accomplish the divestiture to an
Acquirer acceptable to the United States 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 this 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 any investment
bankers, attorneys, or other agents, who shall be solely accountable to
the trustee, reasonably necessary in the trustee's judgment to assist
in the divestiture.
C. Defendant shall not object to a sale by the trustee on any
ground other than the trustee's malfeasance. Any such objection by
defendant must be conveyed in writing to the United States and the
trustee within ten (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, on
such terms and conditions as plaintiff approves, and shall account for
all monies derived from the sale of the Selected Business 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 defendant 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
Selected Business and based on a fee arrangement providing the trustee
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. Defendant shall use its 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 personnel, books,
records, and facilities of the Selected Business, and defendant shall
develop financial and other information relevant to such business as
the trustee may reasonably request, subject to customary
confidentiality protection for trade secret or other confidential
research, development, or commercial information. Defendant 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 Selected Business, and shall describe in
detail each contact with any such person. The trustee shall maintain
full records of all efforts made to divest the Selected Business.
G. If the trustee has not accomplished the divestiture of the
Selected Business within six 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 report contains information that the trustee deems
confidential, such report shall not be filed in the public docket of
the Court. The trustee shall at the same time furnish such report to
the plaintiff, 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 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 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. 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 any ownership interest in
the Selected Business.
B. Within fifteen (15) calendar days of receipt by the United
States of such notice, the United States may request from defendant,
the proposed Acquirer, any other third party, or the trustee if
applicable additional information concerning the proposed divestiture,
the proposed Acquirer, and any other potential Acquirer. Defendant 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 (a) thirty (30) calendar days after receipt of the notice
or (b) twenty (20) calendar days after the United States has been
provided the additional information requested from defendant, the
proposed Acquirer, any third party, or the trustee, whichever is later,
the United States shall provide written notice to defendant 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
defendant's 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 upon objection by the United
States, a divestiture proposed under Section IV or Section V shall not
be consummated. Upon objection by defendant under Section V(C), a
divestiture proposed under Section V shall not be consummated unless
approved by the Court.
VII. Financing
Defendant 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 defendant shall take all steps necessary to comply with
the Hold Separate Stipulation and Order entered by this Court.
Defendant shall take no action that would jeopardize the divestiture
order by this Court.
[[Page 50092]]
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, defendant
shall deliver to the United States an affidavit as to the fact and
manner of its compliance with Section IV or V of this Final Judgement.
Each such affidavit shall include the name, address, and telephone
number of each person who, during the preceding thirty 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 interest in the Divested Business, 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 has
taken to solicit buyers for the Divested Business, and to provide
required information to any prospective Acquirer, 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 defendant, 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, defendant shall deliver to the United States an
affidavit that describes in reasonable detail all actions defendant has
taken and all steps defendant has implemented on an ongoing basis to
comply with Section VIII of this Final Judgment. Defendant shall
deliver to the United States an affidavit describing any changes to the
efforts and actions outlined in defendant's earlier affidavits filed
pursuant to this section within fifteen (15) calendar days after the
change is implemented.
C. Defendant shall keep all records of all efforts made to preserve
and divest the Divested Business until one year after a divestiture has
been completed.
X. Compliance Inspection
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 defendant, be
permitted:
1. Access during defendant's office hours to inspect and copy, or
at plaintiff's option, to require defendant 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 informally or on the record, defendant's
officers, 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 the 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 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
defendant to the United States, 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 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 defendant ten (10) calendar days notice prior to divulging such
material in any legal proceeding (other than a grand jury proceeding).
XI. No Reacquisition
Defendant may not reacquire any part of any assets divested during
the term of this Final Judgment, provided, however, that nothing in
this decree shall prevent defendant from (1) reacquiring any of the
assets of QCM, subject to the written consent of the United States in
its sole discretion; or (2) increasing its interest in the DoSol Joint
Venture to 50 percent.
XII. 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.
XIII. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire ten years from the date of its entry.
XIV. Public Interest Determination
Entry of this Final Judgment is in the public interest. The parties
have complied with the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16, including making copies available to the
public of this Final Judgment, the Competitive Impact Statement, and
any comments thereon and the United States' responses to comments.
Based upon the record before the Court, which includes the Competitive
Impact Statement and any comments and response to comments filed with
the Court, entry of this Final Judgment is in the public interest.
Date:------------------------------------------------------------------
Court approval subject to procedures of the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16.
[fxsp0]----------------------------------------------------------------
United States District Judge
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Mittal Steel Company N.V.,
Defendant
Case No.
JUDGE:
DECK TYPE: Antitrust
DATE STAMP:
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. Sec. 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
The United States filed a civil antitrust Complaint on August 1,
2006, seeking to obtain equitable and other relief against defendant
Mittal Steel Company N.V. (``Mittal Steel'') to prevent its proposed
acquisition of
[[Page 50093]]
Arcelor S.A. (``Arcelor''). Mittal Steel and Arcelor, including its
Canadian subsidiary Dofasco Inc. (``Dofasco'' or the ``Dofasco
Business''), are two of only a limited number of suppliers to the
portion of the United States east of the Rocky Mountains (the ``Eastern
United States'') of finely rolled tin or chrome coated steel sheets
(``Tin Mill Products''). Tin Mill Products are used in manufacturing
steel cans for packaging a wide range of food products, such as soup,
fruits, and vegetables, and non-food products, such as paints,
aerosols, and shaving cream. The Complaint alleges that the likely
effect of this acquisition would be to lessen competition substantially
in the development, manufacture and sale of Tin Mill Products in the
Eastern United States, in violation of Section 7 of the Clayton Act.
This loss of competition would likely result in higher prices, lower
quality, less innovation, and less favorable delivery terms to
customers in the Eastern United States Tin Mill Products market.
At the same time the Complaint was filed, the United States filed a
Hold Separate Stipulation and Order and a proposed Final Judgment.
These are designed to remedy the anticompetitive effects of the
acquisition while permitting Mittal Steel to complete its acquisition
of Arcelor. Under the proposed Final Judgment, which is explained more
fully below, the defendants are required to divest certain assets
including Arcelor's Dofasco subsidiary to ThyssenKrupp AG
(``ThyssenKrupp''), a German corporation with its headquarters in
Dusseldorf, Germany, or, if defendant chooses, to another acquirer of
the divested business (``Acquirer'') acceptable to the United States in
its sole discretion. If the defendant is unable to sell the Dofasco
Business to ThyssenKrupp or an alternative acceptable buyer, then the
defendant is required to divest, at the United States's option, either
Mittal Steel's Sparrows Point, Maryland, facility (``Sparrows Point
Business'') or Mittal Steel's Weirton, West Virginia, facility
(``Weirton Business'') to an Acquirer acceptable to the United States
in its sole discretion (with the business so selected referred to as
the ``Selected Business''). The divestiture of either the Dofasco
Business or the Selected Business is designed to enable the Acquirer to
become a viable and active competitor in the Eastern United States Tin
Mill Products market.
The United States and defendant 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 Defendant and the Proposed Transaction
Mittal Steel, a Netherlands corporation, has its corporate
headquarters and principal place of business in Rotterdam, The
Netherlands, and has operations in sixteen countries, located on four
continents. As one of the largest steel producers in the world, Mittal
Steel is primarily engaged in making a variety of steel products for
all the major steel consuming sectors, including automotive, appliance,
machinery, and construction. Among its many steel product lines is Tin
Mill Products. In 2005, Mittal Steel reported total worldwide revenues
that exceeded $28 billion and total annual steel production that
exceeded 55 million tons. Mittal Steel maintains seventeen production
facilities within the United States, and produces Tin Mill Products in
Sparrows Point and Weirton. Mittal Steel operates in the United States
through its wholly-owned subsidiary Mittal Steel USA, located in
Chicago, Illinois, which markets and sells in the United States Tin
Mill Products and other products manufactured by Mittal Steel. Tin Mill
Products manufactured at Mittal Steel's U.S. tin mills are shipped
primarily to customers in the United States. In 2005, Mittal Steel sold
over 800,000 tons of Tin Mill Products in the Eastern United States.
Arcelor, a Luxembourg corporation, has its corporate headquarters
and principal place of business in the City of Luxembourg. Like Mittal
Steel, Arcelor is one of the world's largest steel producers and makes
a variety of steel products for the automotive, appliance, packaging,
and other industries. In 2005, Arcelor reported total worldwide
revenues of approximately $41.5 billion and steel production of 46
million tons. In February 2006, Arcelor acquired Dofasco, a wholly-
owned Canadian subsidiary with its principal place of business in
Hamilton, Ontario, Canada. In 2005, Dofasco shipped 4.8 million tons
and had $3.9 billion in revenues. Among Arcelor's many steel product
lines is Tin Mill Products, which it makes at mills in Europe and
Brazil and at Dofasco's Hamilton mill. In 2005, Arcelor, which shipped
Tin Mill Products to the Eastern United States primarily from its
European facilities, and Dofasco, which shipped Tin Mill Products to
the Eastern United States from its Canadian facility, sold a combined
170,615 tons of Tin Mill Products in the Eastern United States.
On January 27, 2006, Mittal Steel announced its intention to launch
a hostile tender offer to acquire Arcelor for approximately $23 billion
in cash and securities. Mittal Steel simultaneously announced an
agreement to sell Dofasco for approximately $5 billion to ThyssenKrupp
if Mittal Steel acquired Arcelor. Arcelor initially resisted the
hostile takeover. One of the steps Arcelor's Board of Directors took to
resist the takeover was to transfer legal title to the shares of
Dofasco to an independent Dutch foundation known as a ``stichting.''
Mittal Steel subsequently increased its tender offer to
approximately $33 billion in cash and securities and formally launched
its tender offer on May 19, 2006. After Mittal Steel agreed to improve
the financial, corporate governance, and other terms of its offer for
Arcelor, the Arcelor Board agreed on June 25, 2006 to recommend Mittal
Steel's offer to Arcelor's shareholders. The acceptance period for
Mittal's initial tender offer, during which 92.6 percent of Arcelor's
shares were tendered, closed on July 13, 2006. Mittal Steel can take
ownership of the shares beginning on August 1, 2006.
Mittal Steel's acquisition of Arcelor would, among other things,
combine the operations of two significant providers of Tin Mill
Products in the Eastern United States. The United States alleges in its
Complaint that this proposed transaction would lessen competition
substantially in the market for Tin Mill Products in the Eastern United
States, in violation of Section 7 of the Clayton Act.
B. The Competitive Effects of the Transaction on the Tin Mill Products
Market
1. Relevant Product Market: The Development, Manufacture and Sale of
Tin Mill Products
The Complaint alleges that the development, manufacture and sale of
Tin Mill Products is a relevant product market within the meaning of
Section 7 of the Clayton Act. Tin Mill Products are finely rolled steel
sheets, usually coated with a thin protective layer of tin or chrome.
Tin Mill Products are manufactured using a sequence of processing steps
in which steel is rolled
[[Page 50094]]
into successively thinner sheets, then hardened, and finally coated
with either tin or chrome. Tin Mill products are comprised of three
types of steel: black plate, electrolytic tin plate (``ETP''), and tin
free steel (``TFS''). Black plate is a light-gauge cold-rolled bare
steel sheet that serves as the substrate for production of both ETP and
TFS and can be used bare for some applications such as pails or larger
containers. Black plate is coated with tin to produce ETP and with
chrome to produce TFS. ETP and TFS are both used in packaging, although
each provides different advantages and disadvantages (including, inter
alia, organic coating acceptance, strength, surface finish, and
formability) that are considered by purchasers in making their purchase
decisions. The majority of Tin Mill Products are used to produce
sanitary cans, often referred to as food cans. Other uses include
aerosol cans, general line cans, pails, larger containers, metal
buildings, and oil and fuel filter sheets.
For most Tin Mill Products purchasers, including downstream food
can customers, there are no close substitutes for Tin Mill Products.
Packaging alternatives, such as plastic containers, are generally not
viewed by can customers as replacements for products normally packaged
in cans because of cost differences and the performance advantages
associated with cans. Some of the advantages of steel cans compared to
alternative packaging include their longer shelf life and greater
durability, familiarity, and security. Alternative packaging generally
costs at least as much as a steel can and sometimes costs as much as
eight times as much as a can, and significant additional capital
investments are necessary to incorporate alternative packaging
materials into a customer's packaging process.
The Complaint alleges that a small but significant increase in the
price of Tin Mill Products would not cause can manufacturers or their
downstream customers to substitute non-Tin Mill Products containers or
otherwise to reduce their purchases of Tin Mill Products in sufficient
quantities so as to make such a price increase unprofitable. The use of
alternative packaging containers is driven primarily by capital
equipment investment considerations and by marketing factors such as
consumer convenience, rather than by small but significant changes in
the prices of Tin Mill Products. For example, can customers often use
alternative packaging in order to extend an existing product line, such
as using alternative materials to package soup in portable microwavable
containers, while continuing to package the bulk of their soup products
in steel cans. Accordingly, the Complaint alleges that the development,
manufacture, and sale of Tin Mill Products is a line of commerce and a
relevant product market within the meaning of Section 7 of the Clayton
Act.
2. Relevant Geographic Market: Eastern United States
The Complaint also alleges that the Eastern United States is a
geographically distinct market for the sale of Tin Mill Products. The
only Tin Mill Products manufacturer in the United States west of the
Rocky Mountains (the ``Western United States'') is located in
California, and it does not have substantial sales in the Eastern
United States due to its distance from can manufacturers in that part
of the country, which tend to be located in proximity to agricultural
regions. The California Tin Mill Products manufacturer, which is half
owned by one of the two largest Tin Mill Products producers in the
Eastern United States, accounts for more than 84 percent of the Tin
Mill Products sold in the Western United States but ships only small
quantities to the Eastern United States. Similarly, Tin Mill Products
producers in the Eastern United States generally do not sell
significant quantities in the Western United States because their
freight costs are higher than those of the single manufacturer located
in the Western United States.
Customers are reluctant to rely on offshore suppliers of Tin Mill
Products for their general production requirements. More than 89
percent of Tin Mill Products sold in the Eastern United States are
manufactured by firms located either in the Eastern United States or
eastern Canada. Among the factors that tend to limit import penetration
are the longer lead times required for offshore orders, higher shipping
costs, the inability of some importers to provide the full range of
product specifications required by some customers, anti-dumping duties
currently in force against several Japanese producers, and voluntary
self-restraint by importers who are fearful of prompting additional
scrutiny of and tariff protection against imports.
Thus, a small but significant increase in the price of Tin Mill
Products would not cause Tin Mill Products customers in the Eastern
United States to substitute purchases from outside of the Eastern
United States in sufficient quantities so as to make such a price
increase unprofitable. Accordingly, the Eastern United States is a
relevant geographic market in which to assess the competitive effects
of Mittal Steel's proposed acquisition of Arcelor on sales of Tin Mill
Products.
3. Anticompetitive Effects of the Acquisition
The complaint alleges that, in this highly concentrated market for
Tin Mill Products, a combination of Mittal Steel and Arcelor likely
would: (i) Substantially lessen competition generally in the
development, manufacture and sale of Tin Mill Products in the Eastern
United States; (ii) eliminate actual and potential competition between
Mittal Steel and Arcelor in the development, manufacture and sale of
Tin Mill Products; and (iii) increase the prices for Tin Mill Products,
lessen the quality of Tin Mill Products, lessen the innovation relating
to Tin Mill Products, and adversely affect the delivery terms currently
offered to the customers in the Tin Mill Products market.
The market for Tin Mill products in the Eastern United States is
highly concentrated and is dominated by two firms, Mittal Steel, an
integrated steelmaker which accounted for 31 percent of the tons sold
in 2005, and another integrated steelmaker, which accounted for more
than 44 percent of the tons sold in 2005. Luxembourg-based Arcelor is a
significant competitor, which accounted for about two percent of tons
sold in the Eastern United States in 2005. Dofasco, which Arcelor
acquired in February 2006, accounts for about four percent of the tons
sold in 2005 in the Eastern United States. Were Mittal Steel to acquire
Arcelor, the largest two remaining firms would account for more than 81
percent of Tin Mill Products sales in the Eastern United States. In
2005, Mittal Steel and one other firm accounted for more than 2.1
million tons of such sales.
The acquisition of Arcelor by Mittal would thus substantially
increase the concentration in the Eastern United States Tin Mill
Products market. Using a measure of market concentration called the
Herfindahl-Hirschman Index (``HHI'') (defined and explained in Appendix
A), the proposed transaction will increase the HHI in the market for
Tin Mill Products in the Eastern United States by approximately 412
points to a post-acquisition level of approximately 3,522, well in
excess of levels that raise significant antitrust concerns.
Mittal Steel's elimination of Arcelor as an independent competitor
in the manufacture and sale of Tin Mill Products within the Eastern
United States is likely to facilitate anticompetitive coordination
among the two major Tin Mill Products
[[Page 50095]]
manufacturers by making such coordination more profitable and harder to
defeat. If The two largest Tin Mill Products firms in the Eastern
United States were to seek to raise prices or reduce output today,
purchasers of Tin Mill Products could purchase Tin Mill Products from
Arcelor and its subsidiary Dofasco. Arcelor has substantial excess and
divertible capacity in Europe, and Arcelor's Dofasco subsidiary has
significant divertible capacity in Canada. Were Arcelor and Dofasco no
longer available as independent suppliers, the remaining domestic and
foreign fringe producers would likely not have sufficient capacity and/
or incentives to increase sales in the Eastern United States enough to
defeat an anti competitive price increase or output reduction by the
two largest firms. In particular, the only other incumbent producer
located in the Eastern United States lacks the ability to manufacture
cold-rolled substrate, and its ability to obtain the additional
substrate needed to increase its output is uncertain.
De novo entry into the development, manufacture and sale of Tin
Mill Products is difficult, time-consuming, and costly, and such entry
would not be timely, likely, or sufficient to defeat coordination by
the two largest Tin Mill Products firms in the Eastern United States
post-merger. To produce Tin Mill Products, a firm needs a reliable
source of cold-rolled substrate and a Tin Mill Products finishing
facility. Entry by a firm that lacks the ability to manufacture cold-
rolled substrate would be extremely difficult. A facility to finish
cold-rolled substrate into Tin Mill Products would likely cost in the
range of $60 to $100 million and take approximately two years to design
and build. The cost of entry is largely ``sunk,'' i.e., it cannot be
recovered or converted to other uses, raising the risk to entry, and
there is a very high risk that a new entrant may not receive any
profits from its entry.
Significant new foreign entry or expansion of shipments to the
Eastern United States by existing foreign producers is unlikely due to
longer delivery lead times occasioned by oceangoing transportation,
additional shipping costs, trade barriers, the possibility of future
import restrictions, and the reluctance of foreign Tin Mill Products
manufacturers to abandon existing markets elsewhere in order to enter
the Eastern United States market. Overseas shipping increases the time
between order and delivery by up to four months, which is unacceptable
for many customers because their demand requirements fluctuate with
hard-to-predict fruit and vegetable harvests. Capacity constraints also
limit the ability of certain foreign producers from expanding their
sales into the Eastern United States. Therefore, entry or expansion by
any other firm into the Eastern United States Tin Mill Products market
would not be timely, likely, or sufficient to deter post-acquisition
coordination.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment will preserve competition in the market
for Tin Mill Products in the Eastern United States by requiring the
divestiture of one of the three North American tin mills that Mittal
Steel will own following its acquisition of Arcelor: (1) The Dofasco
mill, currently owned by Arcelor; (2) Mittal's Sparrows Point facility;
or (3) Mittal's Weirton facility. The proposed Final Judgment provides
for the divestiture of the entire steel mill and not simply the
finishing lines for Tin Mill Products, and in the case of Dofasco
requires divesting the entirety of Dofasco's steel business. The
proposed Final Judgment sets forth a procedure under which Mittal Steel
is first required to use its best efforts to sell Dofasco to
ThyssenKrupp or an alternative purchaser approved by the United States.
If Mittal Steel is unable to sell Dofasco because it proves impossible
to dissolve the stichting created by Arcelor to hold legal title to its
Dofasco shares, then the Department of Justice can select either the
Sparrows Point or Weirton facilities for divestiture.
The required divestiture of Dofasco will remedy the anticompetitive
effects of the acquisition alleged in the Complaint, and in the event
such a divestiture is not possible, the alternate divestiture of either
Sparrows Point or Weirton (as selected by the United States) would
likewise be sufficient to remedy those effects. The divestiture of the
Dofasco Business or a Selected Business would preserve an independent
competitor with sufficient Tin Mill Products capacity to replace
Arcelor/Dofasco as an impediment to profitable and successful
coordination post-merger. In either case, the preserved competitor
would have modern and efficient facilities located close enough to
customers in the Eastern United States to compete effectively.
The proposed Final Judgment provides that for any divestiture to be
approved, it must be demonstrated to the satisfaction of the United
States, in its sole discretion, that the Divested Business can and will
be used by the Acquirer as a viable ongoing business that will remedy
the competitive harm alleged in the Complaint. The divestiture must be
made to an Acquirer that in the United States's judgment has the intent
and capability (including the necessary managerial, operational,
technical, and financial capability) to compete effectively in the
development, production and sale of Tin Mill Products; the divestiture
also must be accomplished in a manner that satisfies the United States,
in its sole discretion, that none of the terms of any agreement between
an Acquirer and the defendant gives the defendant the ability
unreasonably to raise the Acquirer's costs, reduce the Acquirer's
efficiency, or otherwise interfere in the ability of the Acquirer to
compete effectively in the development, production and sale of Tin Mill
Products. Mittal Steel must take all reasonable steps necessary to
accomplish the divestiture quickly and shall cooperate with prospective
purchasers.
The proposed Final Judgment requires Mittal Steel, within one
hundred and twenty (120) days after the filing of the Complaint, or
five (5) days after notice of the entry of the Final Judgment by the
Court, whichever is later, to divest the Dofasco Business to
ThyssenKrupp. The United States, in its sole discretion, may agree to
one or more extensions of this time period, not to exceed in total
sixty (60) calendar days, and shall notify the Court in each such
circumstance. At its option, defendant may elect to sell the Dofasco
Business to an alternative Acquirer acceptable to the United States in
the sole discretion of the United States. Mittal Steel agrees to use
its best efforts to divest expeditiously the Dofasco Business.\1\
---------------------------------------------------------------------------
\1\ Under the terms of the Hold Separate Stipulation and Order,
Mittal Steel must maintain and preserve the Dofasco Business, the
Sparrows Point Business, and the Weirton Business as ongoing,
economically viable competitive businesses from the date of entry of
the Hold Separate Stipulation and Order until the divestiture
required by the proposed Final Judgment is accomplished. In
addition, the Hold Separate Stipulation and Order requires that
Mittal Steel ensure that Dofasco operates as an independent,
economically viable, and ongoing competitive business concern, held
separate and apart from Mittal Steel's other operations, and that it
will remain independent and uninfluenced by Mittal Steel while the
divestiture of Dofasco is pending or until the United States selects
either the Sparrows Point Business or the Weirton Business for
divestiture.
---------------------------------------------------------------------------
In the event Mittal Steel is unable by virtue of the stichting to
accomplish the divestiture of the Dofasco Business within the period
prescribed by the proposed Final Judgment, then defendant shall divest,
at the option of the United States, either the Sparrows
[[Page 50096]]
Point Business or the Weirton Business. In the event that defendant
does not accomplish the divestiture of the Selected Business within 90
days or within an extension to this time period, not to exceed 60
calendar days, which may be granted by the United States in its sole
discretion, the proposed Final Judgment provides that the Court will
appoint a trustee selected by the United States to effect the
divestiture of the Selected Business.
In the event that a trustee is to be appointed, the proposed Final
Judgment provides that the United States shall select a trustee to be
approved by the Court. If a trustee is appointed, the proposed Final
Judgment provides that defendant will pay all costs and expenses of the
trustee. The trustee's fee arrangement will be structured so as to
provide an incentive for the trustee based on the price and terms of
the divestiture 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 after appointment of the trustee, 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, in order to carry out the purpose of the trust, including
extending the trust or the term of the trustee's appointment.
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 costs 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.
16(a)), the proposed Final Judgment has no prima facie effect in any
subsequent private lawsuit that may be brought against defendant.
V. Procedures Available for Modification of the Proposed Final Judgment
The United States and 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 APPA provides a period of at least sixty 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 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: Maribeth Petrizzi, Chief,
Litigation II Section, U.S. Department of Justice, Antitrust Division,
1401 H St., NW., Suite 3000, 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 proposed 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 defendant. The
United States could have continued the litigation and sought
preliminary and permanent injunctions against Mittal Steel's
acquisition of Arcelor. The United States is satisfied, however, that
the divestitures described in the proposed Final Judgment will avoid
the transaction's anticompetitive effects in the provision of Tin Mill
Products, and, thus, would achieve all or substantially all of the
relief the government would have obtained through litigation, but
without the time and expense of a trial.
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(e)(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(e)(1)(A) and (B).\2\ As the United States Court of Appeals
for the District of Columbia Circuit has held, under the APPA a court
considers, 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).
---------------------------------------------------------------------------
\2\ In 2004, Congress amended the APPA to ensure that courts
take into account the above-quoted list of relevant factors when
making a public interest determination. Compare 15 U.S.C. 16(e)
(2004) with 15 U.S.C. 16(e)(l) (2006) (substituting ``shall'' for
``may'' in directing relevant factors for court to consider and
amending list of factors to focus on competitive considerations and
to address potentially ambiguous judgment terms). On the points
discussed herein, the 2004 amendments did not alter the substance of
the Tunney Act, and the pre-2004 precedents cited below remain
applicable.
---------------------------------------------------------------------------
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 deterrnine 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
[[Page 50097]]
requirements might undermine the effectiveness of antitrust
enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted) \3\
In making its public interest determination, a district court must
accord due respect to the government's prediction as to the effect of
proposed remedies, its perception of the market structure, and its
views of the nature of the case. United States v. Archer-Daniels-
Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003).
---------------------------------------------------------------------------
\3\ 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''); United States v. Gillette Co., 406 F. Supp.
713, 716 (D. Mass. 1975) (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' '').
---------------------------------------------------------------------------
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.' '' United States v. Am. Tel. & Tel. Co., 552 F. Supp.
131, 151 (D.D.C. 1982) (citations omitted) (quoting United States v.
Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), 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 though 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.
In its 2004 amendments to the Tunney Act, Congress made clear its
intent to preserve the practical benefits of utilizing consent decrees
in antitrust enforcement, adding the unambiguous instruction
``[n]othing in this section shall be construed to require the court to
conduct an evidentiary hearing or to require the court to permit anyone
to intervene.'' 15 U.S.C. 16(e)(2). This language codified the intent
of the original 1974 statute, expressed by Senator Tunney in the
legislative history: ``[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). Rather:
[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 responses to
comments in order to determine whether those explanations are
reasonable under the circumstances.
United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. (CCH) ]
61,508, at 71,980 (W.D. Mo. 1977).
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: August 1, 2006.
Respectfully submitted,
Kerrie Freeborn,
John Greaney,
Stephen Harris,
Lowell Stern (DC Bar #440487), Attorneys, U.S. Department of
Justice, Antitrust Division, Litigation II Section, 1401 H Street,
NW., Suite 3000, Washington, DC 20530, (202) 307-0924.
[FR Doc. 06-7090 Filed 8-24-06; 8:45 am]
BILLING CODE 4410-11-M