[Federal Register: September 10, 2008 (Volume 73, Number 176)]
[Notices]
[Page 52679-52689]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10se08-67]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Raycom Media, Inc.; Proposed Final Judgment and
Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)(h), that a proposed Final Judgment, Hold
Separate Stipulation and Order, and Competitive Impact Statement have
been filed with the United States District Court for the District of
Columbia in United States of America v. Raycom Media, Inc., Civil
Action No. 1:08-cv-01510. On August 28, 2008, the United States filed a
Complaint alleging that the acquisition by Raycom Media, Inc. of WWBT-
TV, a Richmond, Virginia, broadcast television station, from Lincoln
Financial Media Company violates section 7 of the Clayton Act, 15
U.S.C. 18. The proposed Final Judgment, filed the same time as the
Complaint, requires Raycom to divest its Richmond, Virginia, broadcast
television station WTVR-TV, along with certain related assets.
Copies of the Complaint, proposed Final Judgment, and Competitive
Impact Statement are available for inspection at the Department of
Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth
Street, NW., Suite 1010, Washington, DC 20530 (telephone: 202-514-
2481), on the Department of Justice's Web site (http://www.usdoj.gov/
atr), and at the Office of the Clerk of the United States District
[[Page 52680]]
Court for the District of Columbia. Copies of these materials may be
obtained from the Antitrust Division upon request and payment of the
copying fee set by Department of Justice regulations.
Public comment is invited within 60 days of the date of this
notice. Such comments, and responses thereto, will be published in the
Federal Register and filed with the Court. Comments should be directed
to John R. Read, Chief, Litigation III, Antitrust Division, Department
of Justice, Washington, DC 20530 (telephone: 202-307-0468).
Patricia Brink,
Deputy Director, Office of Operations.
United States District Court for the District of Columbia
United States of America, Department of Justice, Antitrust Division,
450 5th Street, NW., Suite 4000, Washington, DC 20530, Plaintiff,
v.
Raycom Media, Inc., RSA Tower, 20th Floor, 201 Monroe Street,
Montgomery, AL 36104, Defendant.
Civil Action No.: l:08-cv-01510
Assigned To: Urbina, Ricardo M.
Assign. Date: 08/28/2008
Description: Antitrust
Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, brings this civil action to
obtain equitable relief against defendant Raycom Media, Inc.
(``Raycom''), and complains and alleges as follows:
1. The United States brings this suit to prevent Raycom from
continuing to own two of the top four broadcast television stations in
Richmond, Virginia. On April 1, 2008, Raycom consummated a transaction
with Lincoln Financial Media Company (``Lincoln''), in which Raycom
acquired WWBT-TV, the Richmond, Virginia, affiliate of the National
Broadcasting Corporation (``NBC'') (the ``acquisition''). Raycom at
that time already owned and continues to own WTVR-TV, the Richmond,
Virginia, affiliate of CBS Broadcasting Inc. (``CBS''). In 2007, WWBT-
TV earned approximately 32 percent and WTVR-TV earned approximately 23
percent of the broadcast television spot advertising revenues in the
Richmond market.
2. The acquisition eliminated substantial head-to-head competition
between WWBT-TV and WTVR-TV. Unless remedied, the loss of WWBT-TV as an
independent significant competitor will substantially lessen
competition for the sale of broadcast television spot advertising in
the Richmond market, in violation of Section 7 of the Clayton Act, as
amended, 15 U.S.C. 18.
I. Jurisdiction and Venue
3. This Complaint is filed and this action is instituted under
section 15 of the Clayton Act, as amended, 15 U.S.C. 25, to prevent and
restrain Defendant from violating Section 7 of the Clayton Act, 15
U.S.C. 18.
4. Raycom sells broadcast television spot advertising to
advertisers, a commercial activity that substantially affects and is in
the flow of interstate commerce. This Court has jurisdiction over the
subject matter of this action pursuant to sections 15 and 16 of the
Clayton Act, 15 U.S.C. 25, 26, and 28 U.S.C. 1331, 1337.
5. The Defendant has consented to personal jurisdiction and venue
in this judicial district.
II. The Defendant
6. Raycom Media, Inc. is a Delaware corporation with its
headquarters in Montgomery, Alabama.
7. Raycom is one of the country's largest television broadcasters.
It currently owns and/or operates forty-six television stations in
thirty-five markets and eighteen states. Raycom also distributes
syndicated television programming and provides event management,
information system support, and website design and hosting services.
III. Trade and Commerce
A. Relevant Product Market
8. Broadcast television stations attract viewers through their
programming and then sell access to their viewers to businesses and
others that want to advertise their products and services. Broadcast
television programming is transmitted by broadcast television stations,
for free, over the air to television receivers. Broadcast television
programming is also simultaneously retransmitted, as aired, by cable
television systems (systems that deliver programming, for a fee,
through wires into homes), and satellite television systems (systems
that deliver programming over the air, for a fee, to home satellite
receivers). Sales of ``spot'' advertising generate the majority of a
broadcast television station's revenues. Broadcast television spot
advertising is purchased by advertisers that want to target potential
customers in specific localized geographic markets. It differs from
network and syndicated television advertising, which is sold by the
major television networks and producers of syndicated programs on a
nationwide basis and broadcast in every market where the network or
syndicated program is aired. Spot advertising is sold either directly
by the station or through its national representative on a localized,
market-by-market basis.
9. Broadcast television spot advertising possesses attributes that
collectively set it apart from advertising using other types of media.
Television combines sight, sound, and motion, thereby creating a
memorable and effective advertisement. Moreover, of all media,
broadcast television spot advertising reaches the largest percentage of
all potential customers in a particular desired target audience and is
therefore especially effective in introducing and establishing the
image of a product. A significant number of advertisers view broadcast
television spot advertising as a necessary advertising medium for which
there is no close substitute. Such customers would not switch to
another advertising medium--such as radio, cable, internet, or
newspaper--or some combination thereof, if broadcast television spot
advertising prices increased by a small but significant amount.
10. In the Richmond DMA, cable television advertising is not a
meaningful substitute for broadcast television spot advertising because
the viewership of cable television networks, even when the networks are
combined and packaged together, is significantly smaller than the
viewership of broadcast television stations and is more demographically
homogeneous. Additionally, unlike broadcast television advertising, it
is generally difficult for advertisers to place last minute
advertisements on cable television. Other media, such as radio,
newspapers, internet or billboards, are even less desirable substitutes
for broadcast television advertising. Satellite television advertising
is not a substitute because satellite television providers cannot limit
the distribution of their advertisements to a particular DMA, and
therefore do not sell advertising in competition with local broadcast
television stations.
11. Broadcast television stations generally can identify
advertisers with strong broadcast television advertising preferences.
Broadcast television stations negotiate prices individually with
advertisers; consequently, broadcast television stations can charge
different advertisers different prices. In the event of a price
increase in broadcast television spot advertising,
[[Page 52681]]
some advertisers may shift some of their advertising to other media
rather than absorb a price increase. However, the existence of such
advertisers would not prevent broadcast television stations from
profitably raising prices by a small but significant amount for a
substantial number of advertisers that would not shift to other media
or broadcast television stations.
12. Accordingly, the sale of broadcast television spot advertising
is a relevant product market within the meaning of section 7 of the
Clayton Act.
B. Relevant Geographic Market
13. A Designated Marketing Area (``DMA'') is a non-overlapping
geographic area defined by A. C. Nielsen Company, a firm that surveys
television viewers and furnishes television stations, advertisers, and
advertising agencies with data to aid in evaluating audience size and
composition. The Richmond DMA encompasses the city of Richmond.
Virginia, and the surrounding counties in which stations within the
Richmond DMA receive the largest share of viewers.
14. Advertisers use broadcast television stations within the
Richmond DMA to reach the largest possible number of viewers within the
entire DMA. Advertising on television stations outside the Richmond DMA
is not an effective alternative for these advertisers because such
stations are not viewed by a significant number of potential customers
within the Richmond DMA. Thus, if there were a small but significant
price increase in broadcast television spot advertising prices within
the Richmond DMA, an insufficient number of advertisers would switch
their advertising time purchases to television stations outside the
Richmond DMA to render the price increase unprofitable.
15. Accordingly, the Richmond DMA is a relevant geographic market
for the sale of broadcast television spot advertising within the
meaning of section 7 of the Clayton Act.
C. Anticompetitive Effects
16. Broadcast television stations compete for advertisers by
providing advertisers access to their viewers. A station attracts
viewers by selecting shows that appeal to the greatest number of
viewers, and also tries to differentiate itself from other stations by
appealing to specific demographic groups. Advertisers, in turn, are
interested in using broadcast television spot advertising to reach a
large audience, as well as to reach a high proportion of the type of
viewers that are most likely to buy their products.
17. Broadcast station ownership in the Richmond DMA is highly
concentrated. Unremedied, Raycom's acquisition of WWBT-TV would give it
control of two of the top four broadcast stations in the Richmond DMA
and sales of over 50 percent of the total broadcast television spot
advertising revenues in the Richmond DMA. Using a measure of
concentration called the Herfindahl-F-lirschnian Index (``HHI''),
defined and explained in Appendix A, combining the ownership of WWBT-TV
and WTVR-TV substantially increases the HHI from approximately 2400 to
approximately 3800, well above the 1800 threshold at which the Division
normally considers a market to be highly concentrated.
18. Prior to the transaction, WWBT-TV, the local NBC affiliate, and
WTVR-TV, the local CBS affiliate, competed vigorously for advertisers
because the demographic makeup of their viewers makes them close
substitutes for a significant number of advertisers. The two stations
competed head-to-head for a substantial number of advertisers seeking a
desired audience, forcing the stations to offer better terms to win an
advertiser's business. These advertisers would find it difficult or
impossible to obtain competitive rates with the threat to ``buy
around'' WWBT-TV and WTVR-TV, because they would be unable to as
effectively reach their desired audiences without purchasing
advertising from Raycom's stations. Thus, without divestiture of one of
its Richmond stations, Raycom's acquisition of WWBT-TV substantially
reduces competition for broadcast television spot advertising in the
Richmond DMA.
D. Entry
19. De novo entry into the Richmond DMA is unlikely, because the
Federal Communications Commission (``FCC'') regulates entry through the
issuance of licenses. These licenses are difficult to obtain because
the availability of spectrum is limited, and the regulatory process
associated with obtaining a license is lengthy. Even if a new signal
became available, commercial success would come, at best, over a period
of many years, because all major broadcast networks are already
affiliated with a licensee in the Richmond DMA, the contracts last for
many years, and the broadcast networks rarely switch licensees when the
contracts expire. Thus, entry into the Richmond DMA broadcast
television spot advertising market would not be timely, likely, or
sufficient to deter Raycom from unilaterally raising prices.
IV. Violation Alleged
20. Each and every allegation in paragraphs I through 19 of this
Complaint is here realleged with the same force and effect as though
said paragraphs were here set forth in full.
21. The effect of Raycom's acquisition of WWBT-TV would be to
substantially lessen competition in interstate trade and commerce, in
violation of Section 7 of the Clayton Act.
22. Raycom's acquisition of WWBT-TV will likely have the following
effects, among others:
a. Competition in the sale of broadcast television spot advertising
in the Richmond DMA would be substantially lessened;
b. Actual and potential competition between WWBT-TV and WTVR-TV in
the sale of broadcast television spot advertising in the Richmond DMA
would be eliminated; and
c. The prices for broadcast television spot advertising in the
Richmond DMA would likely increase.
23. Unless restrained, the acquisition will violate Section 7 of
the Clayton Act, as amended, 15 U.S.C. 18.
V. Requested Relief
24. Plaintiff requests:
a. That Raycom's acquisition of WWBT-TV be adjudged to violate
Section 7 of the Clayton Act, as amended, 15 U.S.C. 18;
b. That Raycom be ordered to divest WTVR-TV in accord with the
attached Hold Separate Stipulation and Order and proposed Final
Judgment;
c. That a proposed Final Judgment giving effect to the divestiture
be entered by the Court after compliance with the Antitrust Procedures
and Penalties Act, 15 U.S.C. 16;
d. That the United States be awarded the costs of this action; and
e. That the United States be granted such other and further relief
as the Court may deem just and proper.
Dated: August 28, 2008.
Respectfully submitted,
For Plaintiff United States:
Deborah A. Garza,
Acting Assistant Attorney General.
Ann Marie Blaylock (D.C. Bar No. 967825),
Trial Attorney, Litigation III Section, Antitrust Division, United
States Department of Justice, 450 Fifth Street, NW., Suite 4000,
Washington, DC 20530, (202) 616-5932, Facsimile: (202) 514-7308,
ann.blaylock@usdoj.gov.
Patricia A. Brink,
Deputy Director, Office of Operations.
John R. Read (D.C. Bar No. 419373),
Chief, Litigation III Section,
Nina B. Hale,
Assistant Chief, Litigation III Section.
[[Page 52682]]
Certificate of Service
I hereby certify that on August 28, 2008, I caused a copy of the
foregoing Complaint to be served on the defendant in this matter in the
manner set forth below:
By facsimile and U.S. mail:
Counsel for Defendant Raycom Media, Inc.,
Everett J. Bowman, Esq.,
Robinson Bradshaw & Hinson, 101 North Tryon St., Suite 1900,
Charlotte, NC 28246, Telephone: (704) 377-8329, Facsimile: (704)
373-3929, E-mail: ebowman@rbh.com.
Ann Marie Blaylock (D.C. Bar. No. 967825),
Litigation III Section, Antitrust Division, United States Department
of Justice, 450 Fifth Street, NW., Suite 4000, Washington, DC 20530,
(202) 616-5932, Facsimile: (202) 514-7308, ann.blaylockusdoj.gov.
Appendix A
Definition of HHI
The term HH1 means the Herfindahl-Hirschman Index, a commonly
accepted measure of market concentration. The HHI is calculated by
squaring the market share of each firm competing in the market and then
summing the resulting numbers. For example, for a market consisting of
four firms with shares of 30, 30, 20, and 20 percent, the HHI is 2,600
(30\2\ + 30\2\ + 20\2\ + 20\2\ = 2,600). The HHI takes into account the
relative size and distribution of the firms in a market. It approaches
zero when a market is occupied by a large number of firms of relatively
equal size and reaches its maximum of 10,000 when a market is
controlled by a single firm. The HHI increases both as the number of
firms in the market decreases and as the disparity in size between
those firms increases.
Markets in which the HHI is between 1000 and 1800 are considered to
be moderately concentrated, and markets in which the HHI is in excess
of 1800 points are considered to be highly concentrated. Transactions
that increase the HHI by more than 100 points in highly concentrated
markets presumptively raise significant antitrust concerns under the
Department of Justice and Federal Trade Commission 1992 Horizontal
Merger Guidelines.
United States District Court for the District of Columbia
United States of America, Plaintiff,
v.
Raycom Media, Inc., Defendant.
Civil Action No.: l:08-cv-01510
Assigned To: Urbina, Ricardo M.
Assign. Date: 08/28/2008
Filed: 8/28/08.
Final Judgment
Whereas, plaintiff, United States of America, filed its Complaint
on August 28, 2008, the United States and defendant, Raycom Media, Inc.
(``Raycom''), 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 defendant to assure
that competition is not substantially lessened;
And whereas, the United States requires defendant to make a certain
divestiture for the purpose of remedying the loss of competition
alleged in the Complaint;
And whereas, defendant has represented to the United States that
the divestiture required below can and will be made and that it 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 to which defendant divests the
Divestiture Assets.
B. ``Raycom'' means defendant Raycom Media, Inc., a Delaware
limited liability company with its headquarters in Montgomery, Alabama,
its successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, and their directors,
officers, managers, agents, and employees.
C. ``DMA'' means designated market area as defined by A.C. Nielsen
Company based upon viewing patterns and used by the Investing In
Television BIA Market Report 2007 (2nd edition). DMAs are ranked
according to the number of households therein and are used by
broadcasters, advertisers and advertising agencies to aid in evaluating
television audience size and composition.
D. ``Richmond market'' means the Richmond, Virginia, DMA broadcast
television market.
E. ``WTVR-TV'' means the broadcast television station WTVR-TV
located in the Richmond market owned by defendant.
F. ``Divestiture Assets'' means all of the assets, tangible or
intangible, used in the operation of WTVR-TV, including, but not
limited to, all real property (owned or leased), broadcast equipment,
office equipment, office furniture, fixtures, materials, supplies, and
other tangible property used in the operation of the station; all
licenses, permits, authorizations, and applications therefor issued by
the Federal Communications Commission (``FCC'') and other government
agencies relating to the station; all contracts (including programming
contracts and rights), agreements, network affiliation agreements,
leases, and commitments and understandings of defendant relating to the
operation of WTVR-TV; all trademarks, service marks, trade names,
copyrights, patents, slogans, programming materials, and promotional
materials relating to WTVR-TV; all customer lists, contracts, accounts,
and credit records; and all logs and other records maintained by
defendant in connection with WTVR-TV.
III. Applicability
A. This Final Judgment applies to Raycom, as defined above, and all
other persons in active concert or participation with Raycom who
receive actual notice of this Final Judgment by personal service or
otherwise.
B. If, prior to complying with section IV and V of this Final
Judgment, Defendant sells or otherwise disposes of all or substantially
all of its assets or of lesser business units that include the
Divestiture Assets, defendant shall require the purchaser to be bound
by the provisions of this Final Judgment.
[[Page 52683]]
Defendant need not obtain such an agreement from the acquirer of the
assets divested pursuant to this Final Judgment.
IV. Divestiture
A. Defendant is ordered and directed, within thirty (30) calendar
days after the filing of the Complaint in this matter or five (5) days
after notice of the entry of this Final Judgment by the Court,
whichever is later, to divest the Divestiture Assets 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 60 calendar days in total, and shall notify the Court in
such circumstances. With respect to divestiture of the Divestiture
Assets by defendant or the trustee appointed pursuant to section V of
this Final Judgment, if applications have been filed with the FCC
within the period permitted for divestiture seeking approval to assign
or transfer licenses to the Acquirer of the Divestiture Assets, but an
order or other dispositive action by the FCC on such applications has
not been issued before the end of the period permitted for divestiture,
the period shall be extended with respect to divestiture of the
Divestiture Assets for which FCC approval has not been issued until
five (5) days after such approval is received. Defendants agree to use
their best efforts to accomplish the divestitures set forth in this
Final Judgment and to seek all necessary regulatory approvals as
expeditiously as possible. This Final Judgment does not limit the FCC's
exercise of its regulatory powers and process with respect to the
Divestiture Assets. Authorization by the FCC to conduct the divestiture
of a Divestiture Asset in a particular manner will not modify any of
the requirements of this decree.
B. In accomplishing the divestiture ordered by this Final Judgment,
defendant promptly shall make known, by usual and customary means, the
availability of the Divestiture Assets. Defendant shall inform any
person making inquiry regarding a possible purchase of the Divestiture
Assets that they are being 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 Divestiture Assets customarily provided in a due diligence process
except such information or documents subject to the attorney-client
privileges or work-product doctrine. Defendant shall make available
such information to the United States at the same time that such
information is made available to any other person.
C. Defendant shall provide the Acquirer and the United States
information relating to the personnel involved in the operation of the
Divestiture Assets to enable the Acquirer to make offers of employment.
Defendant will not interfere with any negotiations by the Acquirer to
employ any defendant employee whose primary responsibility is the
operation of the Divestiture Assets.
D. Defendant shall permit prospective Acquirers of the Divestiture
Assets to have reasonable access to personnel and to make inspections
of the physical facilities of the business to be divested; access to
any and all environmental, zoning, and other permit documents and
information; and access to any and all financial, operational, or other
documents and information customarily provided as part of a due
diligence process.
E. Defendant shall warrant to the Acquirer that each asset will be
operational on the date of sale.
F. Defendant shall not take any action that will impede in any way
the permitting, operation, or divestiture of the Divestiture Assets.
G. Defendant shall warrant to the Acquirer that there are no
material defects in the environmental, zoning, or other permits
pertaining to the operation of each asset, and that following the sale
of the Divestiture Assets, defendant will not undertake, directly or
indirectly, any challenges to the environmental, zoning or other
permits relating to the operation of the Divestiture Assets.
H. 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 Divestiture
Assets, and shall be accomplished in such a way as to satisfy the
United States, in its sole discretion, that the Divestiture Assets can
and will be used by the Acquirer as part of a viable, ongoing
commercial broadcast television business. Divestiture of the
Divestiture Assets must be made to a single Acquirer that can
demonstrate to the sole satisfaction of the United States that the
Divestiture Assets will remain viable and the divestiture of such
assets will remedy the competitive harm alleged in the Complaint. The
divestiture, whether pursuant to section IV or section V of this Final
Judgment,
(1) Shall be made to an Acquirer that, in the United States sole
judgment, has the intent and capability (including the necessary
managerial, technical, operational, and financial capability) of
competing effectively in the commercial broadcast television business
in the Richmond market; and
(2) Shall be accomplished so as to satisfy the United States, in
its sole discretion, that none of the terms of any agreement(s) between
an Acquirer and defendant gives them the ability unreasonably to raise
the Acquirer's costs, to lower the Acquirer's efficiency, or otherwise
to interfere in the ability of the Acquirer to compete effectively.
V. Appointment of Trustee
A. If defendant has not divested the Divestiture Assets within the
time period specified in section IV(A), 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 Divestiture
Assets.
B. After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell the Divestiture Assets. 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 objections 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 the United States approves, and shall
account for all monies derived from the sale of the assets sold by the
trustee and 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
[[Page 52684]]
trustee and any professionals and agents retained by the trustee shall
be reasonable in light of the value of the Divestiture Assets 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 related to the Divestiture Assets and defendant
shall develop financial and other information relevant to such business
as the trustee may reasonably request, subject to reasonable 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, any interest in the Divestiture Assets, and
shall describe in detail each contact with any such person. The trustee
shall maintain full records of all efforts made to divest the
Divestiture Assets.
G. If the trustee has not accomplished the divestiture ordered
under this Final Judgment within six (6) months after its appointment,
the trustee shall promptly file with the Court a report setting forth:
(1) The trustee's efforts to accomplish the required divestiture, (2)
the reasons, in the trustee's judgment. why the required divestiture
has not been accomplished, and (3) the trustee's recommendations. To
the extent such reports contain 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 United States, which 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 Divestiture Assets, together with full details of the same.
B. Within fifteen (15) calendar days of receipt by the United
States of such notice, the United States may request from defendant,
the proposed Acquirer(s), any other third party, or the trustee if
applicable, additional information concerning the proposed divestiture,
the proposed Acquirer(s) 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 thirty (30) calendar days after receipt of the notice or
within twenty (20) calendar days after the United States has been
provided the additional information requested from defendant, the
proposed Acquirer(s), any third party and 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. Without prior 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
ordered by this Court.
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 Judgment.
Each such affidavit shall include the name, address, and telephone
number of each person who, during the preceding thirty (30) calendar
days, made an offer to acquire, expressed an interest in acquiring,
entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring, any interest in the Divestiture Assets, and
shall describe in detail each contact with any such person during that
period. Each such affidavit shall also include a description of the
efforts defendant has taken to solicit buyers for the Divestiture
Assets and to provide required information to prospective Acquirers.
including the limitations, if any, on such information. Assuming the
information set forth in the affidavit is true and complete, any
objection by the United States to information provided by defendant,
including limitation on 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 its 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 Divestiture Assets until one year
[[Page 52685]]
after such divestiture has been completed.
X. Compliance Inspection
A. For the 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 authorized representatives of the United States
Department of Justice, including consultants and other persons retained
by the United States, shall, upon written request of an 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 the option of the United States, to require defendant to provide
hard copy or electronic copies of, all books, ledgers, accounts,
records, data, 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 an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division,
defendant shall submit written reports or response to written
interrogatories, under oath if requested, relating to any of the
matters contained in this Final Judgment as may be requested.
C. No information or documents obtained by the means provided in
this section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States or, pursuant to a customary protective order or waiver of
confidentiality by defendant, the FCC, 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 marks each pertinent page of
such material, ``Subject to claim of protection under Rule 26(c)(7) of
the Federal Rules of Civil Procedure,'' then 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 the Divestiture Assets or
enter into any local marketing agreement, joint sales agreement, or any
other cooperative selling arrangement with respect to the Divestiture
Assets during the term of this Final Judgment.
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:
United States District Judge
United States District Court for the District of Columbia
United States of America, Department of Justice, Antitrust Division,
450 5th Street, NW., Suite 4000, Washington, DC 20530, Plaintiff,
v.
Raycom Media, Inc., RSA Tower, 20th Floor, 201 Monroe Street,
Montgomery, AL 36104, Defendant.
Civil Action No.: l:08-cv-01510
Assigned To: Urbina, Ricardo M.
Assign. Date: 08/28/2008
Description: Antitrust
Competitive Impact Statement
Plaintiff United States of America (``United States''), pursuant to
section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or
``Tunney Act''), 15 U.S.C. 16(b)-(h), files this Competitive Impact
Statement relating to the proposed Final Judgment submitted for entry
in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
Defendant Raycom Media, Inc. (``Raycom'') and Lincoln Financial
Media Company \1\ (``Lincoln'') entered into a Stock Purchase
Agreement, dated November 12, 2007, pursuant to which Raycom acquired
three broadcast television stations from Lincoln. The transaction
closed on April 1, 2008. The United States filed a cMl antitrust
Complaint on August 28, 2008, alleging that Raycom's acquisition of one
of the stations, WWBT-TV, the Richmond, Virginia, affiliate of the
National Broadcasting Corporation, when it already owned WTVR-TV, the
Richmond, Virginia, affiliate of CBS Broadcasting Inc., violates
section 7 of the Clayton Act, 15 U.S.C. 18. The Complaint alleges that
Raycom, as a result of the acquisition, owns two of the top four
broadcast television stations in the Richmond market accounting for
more than half of all broadcast television spot advertising revenue in
2008. Raycom's continued ownership of both WWBT-TV and WTVR-TV would
substantially lessen competition in the sale of broadcast television
spot advertising in Richmond, Virginia, and the surrounding area.
---------------------------------------------------------------------------
\1\ Lincoln is not a party to this lawsuit.
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At the same time the Complaint was filed, the United States also
filed a Hold Separate Stipulation and Order (``Hold Separate'') and
proposed Final Judgment, which are designed to
[[Page 52686]]
eliminate the anticompetitive effects of Raycom's common ownership of
WWBT-TV and WTVR-TV. Under the proposed Final Judgment, which is
explained more fully below, Raycom agrees to divest WTVR-TV. Under the
terms of the Hold Separate Stipulation and Order, Raycom agrees to take
certain steps during the pendency of the proposed divestiture to ensure
that WTVR-TV is operated as a competitively independent, economically
viable and ongoing business concern, that will remain independent and
uninfluenced by Raycom's other broadcast operations, and that
competition is maintained between WWBT-TV and WTVR-TV.
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 Transaction
Defendant Raycom is a Delaware limited liability company with its
headquarters in Montgomery, Alabama. Raycom, through its subsidiaries,
owns approximately 46 television stations in the United States,
including WWBT-TV and WTVR-TV in Richmond, Virginia.
B. The Transaction
On November 12, 2007, Raycom agreed to acquire three broadcast
television stations in three different markets from entities controlled
by Lincoln. In one of those markets--Richmond, Virginia--the
acquisition would result in Raycom owning WWBT-TV and WTVR-TV, two of
the top four broadcast television stations that combined account for
more than 50 percent of the broadcast television spot advertising
revenues in that market. Although a Federal Communications Commission
(``FCC'') rule against duopolies in local markets (``the FCC duopoly
rule'') prohibited Raycom from owning both stations, prior to closing
Raycom planned to seek a temporary waiver of the FCC duopoly rule to
allow the transaction to be completed, and then to divest WTVR-TV to
cure the overlap.
On January 9, 2008, the United States, Raycom, and Lincoln entered
into an agreement by which: The United States agreed to defer filing
suit to enjoin the transaction for a period of ninety days following
the closing of the Raycom-Lincoln transaction, during which period
Raycom was to sell WTVR-TV; Raycom agreed that the United States could
tile the executed Hold Separate Stipulation and Order and a proposed
Final Judgment compelling the sale of WTVR-TV in the event that Raycom
did not sell WTVR-TV within that period; and Raycom agreed to comply by
the terms of the Hold Separate Stipulation and Order requiring Raycom
to preserve and hold separate WTVR-TV, so that competition in the
Richmond broadcast television advertising market would be maintained.
Raycom closed its transaction with Lincoln on April 1, 2008, but
the agreed-upon divestiture has not yet taken place. Therefore, in
accordance with the terms of the January 9, 2008 agreement, the United
States instituted this action.
C. The Competitive Effects of the Transaction
1. The Relevant Product and Geographic Markets
The Complaint alleges that the provision of broadcast television
spot advertising in the Richmond Designated Marketing Area (``Richmond
DMA'') constitutes a line of commerce and section of the country, or
relevant market, for antitrust purposes. Broadcast television spot
advertising comprises the majority of a broadcast television station's
revenues. It is purchased by advertisers who want to target potential
customers in specific geographic markets and differs from network and
syndicated television advertising, both of which are sold by the major
television networks and producers of syndicated programs on a
nationwide basis and broadcast in every market where the network or
syndicated program is aired. Spot advertising is sold either directly
by the station, or through its national representative, on a localized,
market-by-market basis.
The Complaint alleges that broadcast television spot advertising
possesses specific characteristics, such as its combination of sight,
sound, and motion, and broad reach, that collectively differentiate it
from other media. Broadcast television stations are able to identify
advertisers with strong preferences for broadcast television
advertising, and can charge different advertisers different prices. The
Complaint alleges that if broadcast television stations were to raise
the price of spot advertising, some advertisers might shift some of
their advertising to other media rather than absorb a price increase.
However, the existence of such advertisers would not prevent broadcast
television stations from profitably raising prices by a small but
significant amount for a substantial number of advertisers that would
not shift.
The Complaint alleges that the Richmond. Virginia, DMA is the
relevant geographic market. The Richmond DMA \2\ encompasses the city
of Richmond, Virginia, and the surrounding counties in which stations
within the Richmond DMA receive the largest share of viewers.
Advertisers use broadcast television stations within the Richmond DMA
to reach the largest possible number of viewers within the entire DMA.
Advertising on television stations outside the Richmond DMA is not an
effective alternative for advertisers wishing to target viewers within
the Richmond DMA, because such stations are not viewed by a significant
number of potential customers within the Richmond DMA.
---------------------------------------------------------------------------
\2\ A Designated Marketing Area (``DMA'') is a non-overlapping
geographic unit defined by A.C. Nielsen Company, a firm that surveys
television viewers and furnishes television stations, advertisers,
and advertising agencies in a particular area with data to aid in
evaluating audience size and composition. A DMA is used to identify
broadcast television stations whose broadcast signals reach a
specific area and attract the most viewers.
---------------------------------------------------------------------------
2. Anticompetitive Effects of the Transaction
Raycom's acquisition of WWBT-TV substantially lessens competition
in the provision of broadcast television spot advertising time in the
Richmond DMA. Raycom's ownership of WWBT-TV and WTVR-TV gives it
control over two of the top four broadcast stations in the Richmond DMA
and over 50 percent of the broadcast television spot advertising
revenue in the Richmond DMA. Combining the ownership of WWBT-TV and
WTVR-TV substantially increases the already high concentration in the
market, which will reduce competition and lead to higher prices.
Advertisers select broadcast television stations to reach a large
percentage of their target audience based upon a number of factors,
including the size and demographic characteristics of the station's
audience. Many advertisers seek to reach a large percentage of their
target audience by selecting those broadcast television stations whose
audience best correlates to their target audience. If multiple
broadcast television stations efficiently reach that target audience,
advertisers benefit from the competition among such stations to offer
better prices or services. Today, WWBT-TV and WTVR-TV compete
[[Page 52687]]
head-to-head to reach the same audiences and, for many advertisers that
buy broadcast television time in Richmond, they are close substitutes
for each other based on their specific audience characteristics.
Because advertisers seeking to reach a target audience would have fewer
and more expensive alternatives to the merged entity as a result of the
merger, the acquisition would give Raycom the ability to raise its
rates.
The Complaint alleges that new entry into the Richmond broadcast
television spot advertising market is highly unlikely in response to a
Raycom price increase. The FCC regulates entry through the issuance of
licenses. These licenses are difficult to obtain because the
availability of spectrum is limited, and the regulatory process
associated with obtaining a license is lengthy. Even if a new signal
became available, commercial success would come, at best, over a period
of many years, because all major broadcast networks are already
affiliated with a station in the Richmond-DMA, the contracts last for
many years, and the broadcast networks rarely switch licensees when the
contracts expire. Thus, entry into the Richmond DMA broadcast
television spot advertising market would not be timely, likely, or
sufficient to deter Raycom from unilaterally raising prices.
For these reasons, the Division concluded that Raycoms acquisition
of WWBT-TV, when it already owned WTVR-TV, would substantially lessen
competition in the sale of broadcast television spot advertising time
in the Richmond DMA, eliminate actual competition between WWBT-TV and
WTVR-TV, and result in increased rates for broadcast television spot
advertising time in the Richmond DMA, all in violation of section 7 of
the Clayton Act.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment requires that Defendant divest all of
the tangible and intangible assets used in the operation of WTVR-TV,
defined in the Final Judgment as the ``Divestiture Assets.'' The sale
of the Divestiture Assets according to the terms of the proposed Final
Judgment will eliminate the anticompetitive effects of the acquisition
in the Richmond market for broadcast television spot advertising time.
The Divestiture Assets must be divested in such a way as to satisfy the
United States in its sole discretion that WTVR-TV can and will be
operated by the acquirer as a viable, ongoing commercial broadcast
television business; and Defendant must take all reasonable steps
necessary to accomplish the divestiture quickly and shall cooperate
with prospective acquirers. The divestiture will establish a new,
independent, and economically viable competitor.
Unless the United States grants an extension of time, Raycom must
divest WTVR-TV either within thirty (30) calendar days after the
Complaint has been filed or within five (5) days after notice of entry
of the Final Judgment, whichever is later. The United States may, in
its sole discretion, grant one or more extensions of time, which in
total may not exceed sixty (60) calendar days. Until the divestiture
takes place, Raycom will maintain WTVR-TV as an independent competitor
to the other broadcast television stations in the Richmond DMA,
including WWBT-TV. WTVR-TV must be divested in such a way as to satisfy
the United States in its sole discretion that it can and will be
operated by the purchaser as a viable, ongoing business that can
compete effectively in the relevant market. Raycom must take all
reasonable steps necessary to accomplish the divestiture quickly and
shall cooperate with prospective purchasers.
If Raycom fails to divest WTVR-TV within the time periods specified
in the Final Judgment, the Court, upon application of the United
States, shall appoint a trustee nominated by the United States and
approved by the Court to effect the divestiture. If a trustee is
appointed, the proposed Final Judgment provides that Raycom will pay
all costs and expenses of the trustee and any professionals and agents
retained by the trustee. The compensation paid to the trustee and any
persons retained by the trustee shall be both reasonable in light of
the value of WTVR-TV 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. After
appointment, the trustee will file monthly reports with the United
States and the Court, setting forth the trustee's efforts to accomplish
the divestiture ordered under the proposed Final Judgment. If the
trustee has not accomplished the divestiture within six (6) months
after its appointment, the trustee shall promptly file with the Court a
report setting forth (1) the trustee's efforts to accomplish the
required divestiture, (2) the reasons, in the trustee's judgment, why
the required divestiture has not been accomplished, and (3) the
trustee's recommendations. At the same time, the trustee will furnish
such report to the United States, who will have the right to make
additional recommendations consistent with the purpose of the trust. In
such a situation, the Court may enter any order(s) it deems appropriate
to carry out the purpose of the Final Judgment.
The proposed Final Judgment requires that Raycom maintain and
operate WTVR-TV separate and apart from Raycom's other operations,
pending divestiture. The Final Judgment also contains provisions to
ensure that WTVR-TV will be preserved, so that after divestiture it
will remain a viable, aggressive competitor.
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 Defendants.
V. Procedures Available for Modification of the Proposed Final Judgment
The United States and Defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to the United States written comments regarding the
proposed Final Judgment. Any person who wishes to comment should do so
within sixty (60) days of the date of publication of this Competitive
Impact Statement in the Federal Register, or the last date of
publication in a newspaper of the summary of this Competitive Impact
Statement, whichever is later. All comments received during this period
will be considered by the United States 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.
[[Page 52688]]
Written comments should be submitted to: John Read, Chief,
Litigation III Section, Antitrust Division, United States Department of
Justice, 450 5th St., NW., Suite 4000, Washington, DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
The United States considered, as an alternative to the proposed
Final Judgment, a full trial on the merits against Defendant. The
United States could have continued the litigation and sought
preliminary and permanent injunctions against Defendant's acquisition
of WWBT-TV. The United States is satisfied, however, that the
divestiture of assets described in the proposed Final Judgment will
preserve competition for the provision of broadcast television spot
advertising in the relevant market identified by the United States.
Thus, the proposed Final Judgment would achieve all or substantially
all of the relief the United States would have obtained through
litigation, but avoids the time, expense, and uncertainty of a full
trial on the merits of the Complaint.
VII. Standard of Review Under the APPA for the Proposed Final Judgment
The Clayton Act, as amended by the APPA, requires that proposed
consent judgments in antitrust cases brought by the United States be
subject to a sixty-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, in accordance with the statute as amended in 2004, is required
to 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)(l)(A) & (B). In considering these statutory
factors, the court's inquiry is necessarily a limited one as the
government is entitled to ``broad discretion to settle with the
defendant within the reaches of the public interest.'' United States v.
Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally
United States SBC Commc'ns, Inc., 489 F. Supp. 2d I (D.D.C. 2007)
(assessing public interest standard under the Tunney Act).\3\
---------------------------------------------------------------------------
\3\ The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for court to consider and amended the
list of factors to focus on competitive considerations and to
address potentially ambiguous judgment terms. Compare 15 U.S.C.
16(e) (2004), with 15 U.S.C. 16(e)(l) (2006); see also SBC Commc'ns,
489 F. Supp. 2d at 11 (concluding that the 2004 amendments
``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------
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
Microsoft, 56 F.3d at 1458-62. 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; United States v. Alcoa, Inc., 152
F. Supp. 2d 37, 40 (D.D.C. 2001). Courts have held that:
[t]he balancing of competing social and political interests
affected by a proposed antitrust consent decree must be left, in the
first instance, to the discretion of the Attorney General. The
court's role in protecting the public interest is one of insuring
that the government has not breached its duty to the public in
consenting to the decree. The court is required to determine not
whether a particular decree is the one that will best serve society,
but whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\4\
In determining whether a proposed settlement is in the public interest,
a district court ``must accord deference to the government's
predictions about the efficacy of its remedies, and may not require
that the remedies perfectly match the alleged violations.'' SBC
Commc'ns, 489 F. Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461
(noting the need for courts to be ``deferential to the government's
predictions as to the effect of the proposed remedies''); United States
v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003)
(noting that the court should grant due respect to the United States'
prediction as to the effect of proposed remedies, its perception of the
market structure, and its views of the nature of the case).
---------------------------------------------------------------------------
\4\ 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'').
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Courts have greater flexibility in approving proposed consent
decrees than in crafting their own decrees following a finding of
liability in a litigated matter. ``[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). To meet this standard, the United States
``need only provide a factual basis for concluding that the settlements
are reasonably adequate remedies for the alleged harms.'' SBC Commc'ns,
489 F. Supp. 2d at 17.
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
[[Page 52689]]
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. As this Court recently confirmed in SBC Communications,
courts ``cannot look beyond the complaint in making the public interest
determination unless the complaint is drafted so narrowly as to make a
mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
In its 2004 amendments, Congress made clear its intent to preserve
the practical benefits of utilizing consent decrees in antitrust
enforcement, adding the unambiguous instruction that ``[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). The language wrote into the statute
what Congress intended when it enacted the Tunney Act in 1974, as
Senator Tunney explained: ``[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, the procedure for the public interest
determination is left to the discretion of the court, with the
recognition that the court's ``scope of review remains sharply
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC
Commc'ns, 489 F. Supp. 2d at 11.\5\
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\5\ See 107 F. Supp. 2d 10, 17 (D.D.C. 2000) (noting that the
``Tunney Act expressly allows the court to make its public interest
determination on the basis of the competitive impact statement and
response to comments alone''); United States v. Mid-Am. Dairymen,
Inc., 1977-1 Trade Cas. (CCH) ] 61,508, at 71,980 (W.D. Mo. 1977)
(``Absent a showing of corrupt failure of the government to
discharge its duty, the Court, in making its public interest
finding, should * * * carefully consider the explanations of the
government in the competitive impact statement and its responses to
comments in order to determine whether those explanations are
reasonable under the circumstances.''); S. Rep. No. 93-298, 93d
Cong., 1st Sess., at 6 (1973) (``Where the public interest can be
meaningfully evaluated simply on the basis of briefs and oral
arguments, that is the approach that should be utilized.'').
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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 28, 2008.
Respectfully submitted,
Ann Marie Blaylock (D.C. Bar No. 967825),
Trial Attorney, United States Department of Justice, Antitrust
Division, Liberty Square Building, 450 Fifth Street, NW., Suite
4000, Washington, DC 20530, (202) 616-5932, Facsimile: (202) 514-
7308, ann.blaylock@usdoj.gov.
Certificate of Service
I hereby certify that on August 28, 2008, I caused a copy of the
foregoing Competitive Impact Statement to be served on the defendant in
this matter in the manner set forth below:
By facsimile and U.S. mail:
Counsel for Defendant Raycom Media, Inc.
Everett J. Bowman, Esq.,
Robinson Bradshaw & Hinson, 101 North Tryon St., Suite 1900,
Charlotte, NC 28246, Telephone: (704) 377-8329, Facsimile: (704)
373-3929, E-mail: ebowman@rbh.com.
Ann Marie Blaylock (D.C. Bar. No. 967825),
Litigation III Section, Antitrust Division, United States Department
of Justice, 450 Fifth Street, NW., Suite 4000, Washington, DC 20530,
(202) 616-5932, Facsimile: (202) 514-7308, ann.blaylock@usdoj.gov.
[FR Doc. E8-20878 Filed 9-9-08; 8:45 am]
BILLING CODE 4410-11-M