[Federal Register Volume 75, Number 106 (Thursday, June 3, 2010)]
[Notices]
[Pages 31465-31477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13394]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States, State of Illinois, State of Colorado, and State of
Indiana v. AMC Entertainment Holdings, Inc. and Kerasotes Showplace
Theatres, LLC Proposed Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. Section 16(b)-(h), that a proposed Final
Judgment, Stipulation and Competitive Impact Statement have been filed
with the United States District Court for the District of Columbia in
United States of America, State of Illinois, State of Colorado, and
State of Indiana v. AMC Entertainment Holdings, Inc. and Kerasotes
Showplace Theatres, LLC, Civil Action No. 1:10-cv-00846. On May 21,
2010, the United States and co-plaintiffs filed a Complaint alleging
that the proposed acquisition of most of the assets of Kerasotes
Showplace Theatres, LLC by AMC Entertainment Holdings, Inc. would
violate Section 7 of the Clayton Act, 15 U.S.C. 18 by lessening
competition for theatrical exhibition of first-run films in the
Chicago, Denver and Indianapolis metropolitan areas. The proposed Final
Judgment, filed at the same time as the Complaint, requires AMC
Entertainment Holdings, Inc. to divest first-run, commercial movie
theatres, along with certain tangible and intangible assets, in those
three cities in order to proceed with the proposed $275 million
transaction.
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 at http://www.usdoj.gov/atr,
and at the Office of the Clerk of the United States District Court for
the District of Columbia, Washington, DC. 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 Section, Antitrust Division,
United States Department of Justice, 450 Fifth Street, NW., Suite 4000,
Washington, DC 20530 (telephone: 202-307-0468).
Patricia A. Brink,
Deputy Director of Operations, Antitrust Division.
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA, U.S. Department of Justice, Antitrust
Division, 450 Fifth Street, NW., Suite 4000, Washington, DC 20530,
STATE OF ILLINOIS, Office of the Attorney General, State of
Illinois, 100 West Randolph Street, 13th Floor, Chicago, Illinois
60601, STATE OF COLORADO, Office of the Colorado Attorney General,
1525 Sherman St., Seventh Floor, Denver, Colorado 80203, and STATE
OF INDIANA, Consumer Protection Division, Office of the Indiana
Attorney General, Indiana Government Center South, 302 W.
Washington, 5th Floor, Indianapolis, IN 46204, Plaintiffs, v. AMC
ENTERTAINMENT HOLDINGS, INC., 920 Main Street, Kansas City, Missouri
64105 and KERASOTES SHOWPLACE THEATRES, LLC, 224 North Des Plaines,
Suite 200, Chicago, Illinois 60661, Defendants.
Civil Action No: 1:10-cv-00846
Judge: Kennedy, Henry H.
Filed: 5/21/2010.
Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, and the States of Illinois,
Colorado, and Indiana, acting through their Attorneys General, bring
this civil antitrust action to prevent AMC Entertainment Holdings, Inc.
(``AMC'') from acquiring most of the assets of Kerasotes Showplace
Theatres, LLC (``Kerasotes''). If the acquisition is permitted, it
would combine under common ownership the two leading, and in some cases
only, mainstream movie theatres showing first-run commercial movies in
certain parts of the metropolitan areas of Chicago, Denver, and
Indianapolis. The transaction would substantially lessen competition
and tend to create a monopoly in mainstream theatres in these markets
in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
I. Jurisdiction and Venue
1. This action is filed by the United States pursuant to Section 15
of the Clayton Act, as amended, 15 U.S.C. 25, to obtain equitable
relief and to prevent a violation of Section 7 of the Clayton Act, as
amended, 15 U.S.C. 18. The States of Illinois, Colorado and Indiana
bring this action under Section 16 of the Clayton Act, 15 U.S.C. 26, to
prevent the defendants from violating Section 7 of the Clayton Act, as
amended, 15 U.S.C. 18.
2. Defendants have consented to personal jurisdiction in this
District. In addition, defendant AMC, through its subsidiary, AMC
Entertainment, Inc., operates theatres in this District. The licensing
and exhibition of first-run, commercial films is a commercial activity
that substantially affects, and is in the flow of, interstate trade and
commerce. Defendants' activities in purchasing equipment, services, and
supplies as well as licensing films for their theatres substantially
affect interstate commerce. The Court has jurisdiction over the subject
matter of this action and jurisdiction over the parties pursuant to 15
U.S.C. 22, 25, and 26, and 28 U.S.C. 1331, 1337(a), and 1345.
3. Venue in this District is proper under 15 U.S.C. 22 and 28
U.S.C. 1391(c).
II. Defendants and the Proposed Transaction
4. Defendant AMC is a Delaware corporation with its headquarters in
Kansas City, Missouri. It is the holding company of AMC Entertainment,
Inc. AMC owns or operates 304 theatres containing 4,574 screens in
locations throughout the United States and four foreign countries.
Measured by number of screens, AMC is the second-largest theatre
circuit in the United States.
5. Defendant Kerasotes is a Delaware corporation with its principal
place of business in Chicago, Illinois. It owns or operates 96 theatres
with 973 screens in various states. Kerasotes is the sixth-largest
theatre circuit in the United States.
6. On January 19, 2010, AMC and Kerasotes signed a purchase and
sale agreement, under which AMC acquired Kerasotes (with the exception
of three theatres that will be retained by the Kerasotes family) for
approximately $275 million.
III. Background of the Movie Industry
7. Theatrical exhibition of feature length motion picture films
(``movies'') provides a major source of out-of-home entertainment in
the United States.
[[Page 31466]]
8. Viewing movies in the theatre is a popular pastime. Over 1.4
billion movie tickets were sold in the United States in 2009, with
total box office revenue exceeding $10.6 billion.
9. Companies that operate movie theatres are called ``exhibitors.''
Some exhibitors own a single theatre, whereas others own a circuit of
theatres within one or more regions of the United States. Established
exhibitors include Regal, Carmike, and Cinemark, as well as AMC and
Kerasotes.
10. Exhibitors set ticket prices for each theatre based on a number
of factors, including the presence and competitive decisions of nearby
comparable theatres.
IV. Relevant Markets
A. Product Market
11. Movies are a unique form of entertainment. The experience of
viewing a movie in a theatre differs from live entertainment (e.g., a
stage production), a sporting event, or viewing a movie in the home
(e.g., on a DVD or via pay-per view).
12. Home viewing of movies is not a reasonable substitute for
viewing movies in a theatre. When consumers watch movies in their
homes, they typically lose several advantages of the theatre
experience, including the size of screen, the sophistication of sound
systems, the opportunity to watch in 3-D, and the social experience of
viewing a movie with other patrons. Additionally, the most popular,
newly released or ``first-run'' movies are not available for home
viewing.
13. Differences in the pricing of various forms of entertainment
also reflect their lack of substitutability in the eyes of consumers.
Ticket prices for movies are generally different from prices for other
forms of entertainment. Tickets for most forms of live entertainment
are typically significantly more expensive than movie tickets. Renting
a DVD for home viewing is usually significantly less expensive than
viewing a movie in a theatre.
14. AMC and Kerasotes operate movie theatres that exhibit first-
run, commercial movies (``mainstream theatres''). Mainstream theatres
typically are multi-plex movie theatres that show a wide variety of
first-run, commercial movies in order to attract all ages of
moviegoers, from children to seniors. Mainstream theatres typically
offer basic concessions, such as popcorn, candy and soft drinks.
15. Mainstream theatres do not compete significantly with ``sub-
run'' theatres specializing in exhibiting movies after the four-to-
five-week first run has ended, with theatres specializing in art movies
or foreign language movies, or with ``premiere'' theatres which
typically offer full-service dining, alcoholic beverages, an adults-
only environment, and other luxury services and amenities not found in
mainstream theatres.
16. Tickets at mainstream theatres usually cost significantly more
than tickets at sub-run theatres. Movies exhibited at sub-run theatres
are no longer new releases, and moviegoers generally do not regard sub-
run movies as adequate substitutes for first-run movies.
17. Theatres that show art movies and foreign language movies are
also not reasonable substitutes for mainstream theatres. Commercial
movies typically appeal to different patrons than other types of
movies, such as art movies or foreign language movies. For example, art
movies tend to appeal more universally to mature audiences. Theatres
that primarily exhibit art movies often contain auditoriums with fewer
seats than mainstream theatres. Typically, art movies are released less
widely than commercial movies.
18. Premiere theaters do not typically serve as a competitive
constraint on mainstream theaters. Premiere theatres often show first-
run, commercial movies, but typically have more restrictive admission
policies (e.g., minors must be accompanied by adults for all movies),
charge higher ticket prices (sometimes as much as double the admission
charged by typical first-run theatres), serve alcoholic beverages, and
often offer full-service restaurants or in-service dining. Premiere
theatres also differ from mainstream theatres in the luxury items and
amenities they offer to their guests. For instance, in addition to
expanded food and beverage offerings, premiere theatres often feature
reserved seating, leather and reclining seats, wait service, and
complimentary refills of popcorn and sodas. Because of these
differences, premiere theatres attract an audience that is distinct
from the audience for mainstream theatres.
19. The relevant product market within which to assess the
competitive effects of this transaction is the exhibition of first-run,
commercial movies in mainstream theatres.
B. Geographic Markets
20. Moviegoers typically are not willing to travel very far from
their homes to attend a movie. As a result, geographic markets for
mainstream theatres are relatively local.
Chicago, Illinois Area
21. AMC and Kerasotes account for a substantial portion of the
mainstream theatre screens and ticket sales in three areas of the
Chicago metropolitan area--the North Suburban Chicago area, the Upper
Southwest Suburban Chicago area, and the Lower Southwest Suburban
Chicago area.
22. The North Suburban Chicago area, in and around the communities
of Glenview and Skokie, encompasses AMC's Northbrook Court 14,
Kerasotes' Glen 10, AMC's Gardens 13, Kerasotes' Village Crossing 18,
and Kerasotes' Showplace 12 (Niles) theatres. There are no other
mainstream theatres in this North Suburban Chicago area.
23. The Upper Southwest Suburban Chicago area, in and around the
city of Naperville, encompasses AMC's Cantera 30 and Kerasotes'
Showplace 16 (Naperville) theatres. There are no other mainstream
theatres in this Upper Southwest Suburban Chicago area.
24. The Lower Southwest Suburban Chicago area, in and around the
village of Bolingbrook, encompasses AMC's Woodridge 18 and Kerasotes'
Showplace 12 (Bolingbrook) theatres. There is only one other non-party
mainstream theatre in this Lower Southwest Suburban area--a 16-screen
Cinemark.
25. Moviegoers who reside in these three suburban Chicago, Illinois
areas are reluctant to travel significant distances out of each of
these areas to attend a movie except in unusual circumstances. The
relevant geographic markets in which to assess the competitive effects
of this transaction are the North Suburban Chicago, Upper Southwest
Suburban Chicago, and Lower Southwest Suburban Chicago areas.
Denver, Colorado Area
26. AMC and Kerasotes account for a substantial portion of the
mainstream theatre screens and ticket sales in two areas of the Denver
metropolitan area.
27. The Upper Northwest Denver area, in and around the cities of
Louisville and Broomfield, encompasses Kerasotes' Colony Square 12 and
AMC's Flatiron Crossing 14 theatres. There are no other mainstream
theatres in this Upper Northwest Denver area.
28. The Lower Northwest Denver area, in and around the cities of
Westminster and Arvada, encompasses AMC's Westminster Promenade 24 and
Kerasotes' Olde Town 14 theatres. There are no other mainstream
theatres in this Lower Northwest Denver area.
29. Moviegoers who reside in these two Denver, Colorado areas are
reluctant
[[Page 31467]]
to travel significant distances out of each of these areas to attend a
movie except in unusual circumstances. The relevant geographic markets
in which to assess the competitive effects of this transaction are the
Upper Northwest Denver and Lower Northwest Denver areas.
Indianapolis, Indiana Area
30. AMC and Kerasotes account for a substantial portion of the
first-run movie screens and ticket sales in two areas of the
Indianapolis metropolitan area.
31. The North Indianapolis area, in and around the community of
Glendale, encompasses AMC's Castleton Square 14 and Kerasotes' Glendale
Town 12 theatres. There is only one other non-party mainstream theatre
in this North Indianapolis area--a Regal theatre with 14 screens.
32. The South Indianapolis area, in and around the city of
Greenwood, encompasses AMC's Greenwood 14 and Kerasotes' Showplace 16
and IMAX. There are no other mainstream theatres in this South
Indianapolis area.
33. Moviegoers who reside in these Indianapolis, Indiana areas are
reluctant to travel significant distances out of each of these areas to
attend a movie except in unusual circumstances. The relevant geographic
market in which to assess the competitive effects of this transaction
are the North Indianapolis and the South Indianapolis areas.
C. The Relevant Markets
34. A small but significant post-acquisition increase in movie
ticket prices at mainstream theatres in the relevant geographic markets
would not cause a sufficient number of customers to shift to other
alternatives, including to other forms of entertainment, to non-
mainstream theatres, or to mainstream theatres outside the relevant
geographic markets described above in sufficient numbers to make such a
price increase unprofitable for the newly combined entity. Therefore,
the relevant markets in which to assess the competitive effects of this
transaction are the mainstream theatres in the North Suburban Chicago,
Upper Southwest Suburban Chicago, Lower Southwest Suburban Chicago,
Upper Northwest Denver, Lower Northwest Denver, North Indianapolis, and
South Indianapolis areas.
V. Competitive Effects
35. Exhibitors compete on multiple dimensions to attract moviegoers
to their theatres over the theatres of their rivals. They compete over
the quality of the viewing experience. They compete to offer the most
sophisticated sound and viewing systems, best picture clarity, nicest
seats with best views, and cleanest floors and lobbies for moviegoers.
Exhibitors also compete on price, knowing that if they charge too much
(or do not offer sufficient discounted tickets for matinees, seniors,
children, etc.), moviegoers might visit rival theatres.
36. In the geographic markets of the North Suburban Chicago area,
the Upper Southwest Suburban Chicago area, the Lower Southwest Suburban
Chicago area, the Upper Northwest Denver area, the Lower Northwest
Denver area, the North Indianapolis area, and the South Indianapolis
area, AMC and Kerasotes compete head-to-head for moviegoers. These
geographic markets are concentrated, and in each market AMC and
Kerasotes are the other's most significant competitor, given their
proximity to one another and similarity in size and quality of viewing
experience. Competition between AMC and Kerasotes spurs each to improve
its quality and keeps prices in check.
Chicago, Illinois Area
37. In the North Suburban Chicago area, the proposed transaction
would give the combined entity control of all five mainstream theatres
in that area, with 83 out of 83 total screens and a 100% share of 2009
box office revenues, which totaled approximately $24.9 million. Using a
measure of market concentration called the Herfindahl-Hirschman Index
(``HHI''), explained in Appendix A, the transaction would yield a post-
transaction HHI of approximately 10,000, representing an increase of
4,856.
38. In the Upper Southwest Suburban Chicago area, the proposed
transaction would give the newly combined entity control of the only
two mainstream theatres in that area, with 46 out of 46 total screens
and a 100% share of 2009 box office revenues, which totaled
approximately $16.4 million. The transaction would yield a post-
transaction HHI of approximately 10,000, representing an increase of
4,875.
39. In the Lower Southwest Suburban Chicago area, the proposed
transaction would give the newly combined entity control of two of the
three mainstream theatres in that area, with 30 out of 46 total screens
and a 53.0% share of 2009 box office revenues, which totaled
approximately $12.3 million. The transaction would yield a post-
transaction HHI of approximately 5,017, representing an increase of
1,221.
Denver, Colorado Area
40. In the Upper Northwest Denver area, the proposed transaction
would give the newly combined entity control of the only two mainstream
theatres in that area, with 26 out of 26 total screens and a 100% share
of 2009 box office revenues, which totaled approximately $5.3 million.
The transaction would yield a post-transaction HHI of approximately
10,000, representing an increase of 4,356.
41. In the Lower Northwest Denver area, the proposed transaction
would give the newly combined entity control of the only two mainstream
theatres in that area, with 38 out of 38 total screens and a 100% share
of 2009 box office revenues, which totaled approximately $13.3 million.
The transaction would yield a post-transaction HHI of approximately
10,000, representing an increase of 3,669.
Indianapolis, Indiana Area
42. In the North Indianapolis area, the proposed transaction would
give the newly combined entity control of two of the three mainstream
theatres in that area, with 26 out of 40 total screens and a 76.1%
share of 2009 box office revenues, which totaled approximately $9.3
million. The transaction would yield a post-transaction HHI of
approximately 6,357, representing an increase of 2,689.
43. In the South Indianapolis area, the proposed transaction would
give the newly combined entity control of the only two mainstream
theatres in that area, with 30 out of 30 total screens and a 100% share
of 2009 box office revenues, which totaled approximately $10.1 million.
The transaction would yield a post-transaction HHI of approximately
10,000, representing an increase of 4,838.
44. The proposed transaction would likely lessen competition
significantly in the relevant markets. Today, if AMC or Kerasotes were
to increase its prices at a theatre in one of the relevant markets, and
the other did not follow, the theatre that increased its prices might
lose business to the other. The proposed transaction would eliminate
this pricing constraint and is therefore likely to lead to higher
prices for moviegoers, which could take the form of a higher adult
evening ticket price or reduced discounting, e.g., for matinees,
children, seniors, and students.
45. The proposed transaction would also eliminate competition
between AMC and Kerasotes over the quality of the viewing experience in
each of the geographic markets at issue. The combined entity would have
reduced
[[Page 31468]]
incentives to maintain, upgrade, and renovate its theatres in the
relevant markets, and to improve those theatres' amenities and
services, thus reducing the quality of the viewing experience for a
moviegoer.
46. The presence in some of the relevant geographic markets of
other non-party mainstream theatres would be insufficient to replace
the competition lost due to the transaction and thus render
unprofitable post-transaction increases in ticket prices or decreases
in quality by the newly combined entity.
VI. Entry
47. Sufficient and timely entry that would deter or counteract the
anticompetitive effects alleged above is unlikely. Exhibitors are
reluctant to locate new mainstream theatres near existing theatres
unless the population density, demographics, or the quality of existing
theatres makes new entry viable. Those conditions do not exist in any
of the relevant geographic markets.
VII. Violation Alleged
48. The plaintiffs hereby reincorporate paragraphs 1 through 47.
49. The effect of the proposed transaction would be to lessen
competition substantially in the relevant geographic markets in
violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
50. The transaction would likely have the following effects, among
others: (a) Prices for first-run, commercial movie tickets in
mainstream theatres would likely increase to levels above those that
would prevail absent the transaction; and (b) the quality of mainstream
theatres and the mainstream theatre viewing experience in the relevant
geographic areas would likely decrease below levels that would prevail
absent the transaction.
VIII. Requested Relief
51. The plaintiffs request: (a) Adjudication that the proposed
transaction would violate Section 7 of the Clayton Act; (b) permanent
injunctive relief to prevent the consummation of the proposed
transaction; (c) an award to each plaintiff of its costs in this
action; and (d) such other relief as is proper.
Dated: May 21, 2010.
For Plaintiff United States of America
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Christine A. Varney,
Assistant Attorney General, Antitrust Division
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Molly S. Boast,
Deputy Assistant Attorney General
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William F. Cavanaugh, Jr.,
Deputy Assistant Attorney General
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Patricia A. Brink,
Deputy Director of Operations
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John R. Read,
Chief
David Kully,
Assistant Chief
Litigation III
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Gregg I. Malawer, (DC Bar No. 481685)
Nina B. Hale
Bennett J. Matelson, (DC Bar No. 454551)
Creighton J. Macy,
U.S. Department of Justice, Antitrust Division, 450 5th Street, NW.,
Suite 4000, Washington, DC 20530, Telephone: (202) 616-5943, Fax:
(202) 514-7308, E-mail: [email protected], Attorneys for
Plaintiff the United States
Dated: May 21, 2010.
For Plaintiff State of Illinois:
Lisa Madigan,
Attorney General
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By: Robert Pratt, Chief, Antitrust Bureau, Office of the Attorney
General, State of Illinois, 100 West Randolph Street, 13th Floor,
Chicago, Illinois 60601, Telephone: (312) 814-3722, Fax: (312) 814-
4209, E-mail: [email protected]
For Plaintiff State of Colorado:
John Suthers,
Attorney General
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By: Devin Laiho, Assistant Attorney General, Antitrust Enforcement,
Office of the Colorado Attorney General, 1525 Sherman St., Seventh
Floor, Denver, Colorado 80203, Telephone: (303) 866-5079, Fax: (303)
866-5691, E-mail: [email protected]
For Plaintiff State of Indiana:
Greg Zoeller,
Attorney General
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By: Abigail Lawlis Kuzma, Director and Chief Counsel, Consumer
Protection Division, Office of the Indiana Attorney General, Indiana
Government Center South, 302 W. Washington, 5th Floor, Indianapolis,
IN 46204, Telephone: (317) 234-6843, Fax: (317) 232-7979, E-mail:
[email protected]
Appendix A
Definition of HHI and Calculations for Market
``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 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 and approaches zero when a
market consists of a 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 1,000 and 1,800 points are
considered to be moderately concentrated, and those in which the HHI
is in excess of 1,800 points are considered to be concentrated.
Transactions that increase the HHI by more than 100 points in
concentrated markets presumptively raise antitrust concerns under
the Merger Guidelines. See Merger Guidelines 1.51.
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA, STATE OF ILLINOIS, STATE OF COLORADO
and STATE OF INDIANA, Plaintiffs, v. AMC ENTERTAINMENT HOLDINGS,
INC., and KERASOTES SHOWPLACE THEATRES, LLC, Defendants.
Civil Action No: 10-0846
Judge:
Filed: 5/21/2010.
Final Judgment
Whereas, Plaintiffs, United States of America, State of Illinois,
State of Colorado, and State of Indiana, filed their Complaint on May
21, 2010, the Plaintiffs and Defendants, AMC Entertainment Holdings,
Inc. (``AMC'') and Kerasotes Showplace Theatres, LLC (``Kerasotes''),
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, Defendants agree to be bound by the provisions of this
Final Judgment pending its approval by the Court;
And Whereas, the essence of this Final Judgment is the prompt and
certain divestiture of certain rights or assets by the Defendants to
assure that competition is not substantially lessened;
And Whereas, Plaintiffs require Defendants to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
And Whereas, Defendants have represented to the Plaintiffs that the
divestitures required below can and will be made and that Defendants
will later raise no claim of hardship or difficulty as grounds for
asking the Court to modify any of the divestiture provisions contained
below;
Now Therefore, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is ordered, adjudged and decreed:
[[Page 31469]]
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 Defendants under Section 7 of the Clayton
Act, as amended (15 U.S.C. 18).
II. Definitions
As used in this Final Judgment:
A. ``Acquirer'' or ``Acquirers'' means the entity or entities to
which AMC divests the Divestiture Assets.
B. ``AMC'' means defendant AMC Entertainment Holdings, Inc., a
Delaware corporation with its principal place of business in Kansas
City, Missouri, its successors and assigns, and its subsidiaries,
divisions, groups, affiliates, partnerships and joint ventures, and
their directors, officers, managers, agents, and employees.
C. ``Kerasotes'' means defendant Kerasotes Showplace Theatres, LLC,
a Delaware corporation with its principal place of business in Chicago,
Illinois, its successors and assigns, and its subsidiaries, divisions,
groups, affiliates, partnerships and joint ventures, and their
directors, officers, managers, agents, and employees.
D. ``Landlord Consent'' means any contractual approval or consent
that the landlord or owner of one or more of the Divestiture Assets, or
of the property on which one or more of the Divestiture Assets is
situated, must grant prior to the transfer of one of the Divestiture
Assets to an Acquirer.
E. ``Divestiture Assets'' means the following theatre assets:
------------------------------------------------------------------------
Theatre Address
------------------------------------------------------------------------
1............... AMC Cantera 30............ 28250 Diehl Road,
Warrenville, IL 60555.
2............... Kerasotes Showplace 12 1221 West Boughton Road,
(Bolingbrook). Bolingbrook, IL 60440.
3............... Kerasotes Glen 10......... 1850 Tower Drive,
Glenview, IL 60026.
4............... AMC Gardens 13............ 4999 Old Orchard Shopping
Center, Skokie, IL 60077,
5............... Kerasotes Colony Square 12 1164 West Dillon Road,
Louisville, CO 80027.
6............... Kerasotes Olde Town 14.... 5550 Wadsworth Boulevard,
Arvada, CO 80002.
7............... Kerasotes Showplace 12 6102 N. Rural Street,
(Glendale 10) OR AMC Indianapolis, IN 46220.
Castleton Square 14. 6020 East 82nd Street,
Indianapolis, IN 46250.
8............... AMC Greenwood 14.......... 461 South Greenwood Park
Drive, Greenwood, IN
46142.
------------------------------------------------------------------------
The term ``Divestiture Assets'' includes:
1. All tangible assets that comprise the business of operating
mainstream theatres that exhibit first-run, commercial movies,
including, but not limited to, real property and improvements, research
and development activities, all equipment, fixed assets, and fixtures,
personal property, inventory, office furniture, materials, supplies,
and other tangible property and all assets used in connection with the
Divestiture Assets; all licenses, permits, and authorizations issued by
any governmental organization relating to the Divestiture Assets; all
contracts (including management contracts), teaming arrangements,
agreements, leases, commitments, certifications, and understandings
relating to the Divestiture Assets, including supply agreements; all
customer lists (including loyalty club data at the option of the
Acquirer(s), copies of which may be retained by AMC at its option),
contracts, accounts, and credit records; all repair and performance
records and all other records relating to the Divestiture Assets;
2. All intangible assets used in the development, production,
servicing, and sale of the Divestiture Assets, including, but not
limited to, all patents, licenses and sublicenses, intellectual
property, copyrights, trademarks, trade names, service marks, service
names, technical information, computer software (except Defendants'
proprietary 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, all
research data concerning historic and current research and development
relating to Divestiture Assets, quality assurance and control
procedures, design tools and simulation capability, all manuals and
technical information Defendants provide to their own employees,
customers, suppliers, agents, or licensees, and all research data
concerning historic and current research and development efforts
relating to the Divestiture Assets; provided, however, that this term
does not include assets that the Defendants do not own or that AMC is
not legally able to transfer.
III. Applicability
A. This Final Judgment applies to AMC and Kerasotes, as defined
above, and all other persons in active concert or participation with
any of them who receive actual notice of this Final Judgment by
personal service or otherwise.
B. If, prior to complying with Sections IV and V of this Final
Judgment, Defendants sell or otherwise dispose of all or substantially
all of their assets or of lesser business units that include the
Divestiture Assets, they shall require the purchaser to be bound by the
provisions of this Final Judgment. Defendants need not obtain such an
agreement from the acquirers of the assets divested pursuant to this
Final Judgment.
IV. Divestitures
A. AMC is ordered and directed, within sixty (60) calendar days
after the filing of the Complaint in this matter, or five (5) calendar
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 one or more Acquirer(s)
acceptable to the United States in its sole discretion (after
consultation with the State of Illinois, the State of Colorado, and the
State of Indiana, as appropriate). The United States, in its sole
discretion, may agree to one or more extensions of this time period,
and shall notify the Court in such circumstances. AMC agrees to use its
best efforts to divest the Divestiture Assets as expeditiously as
possible.
B. In accomplishing the divestitures ordered by this Final
Judgment, AMC promptly shall make known, by usual and customary means,
the availability of the Divestiture Assets. AMC 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. AMC shall offer
to furnish to all prospective Acquirers, subject to customary
confidentiality assurances, all
[[Page 31470]]
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 privilege or work-product
doctrine. AMC shall make available such information to the Plaintiffs
at the same time that such information is made available to any other
person.
C. AMC shall provide the Acquirer(s) and the United States
information relating to the personnel involved in the operation of the
Divestiture Assets to enable the Acquirer(s) to make offers of
employment. Defendants will not interfere with any negotiations by the
Acquirer(s) to employ any Defendant employee whose primary
responsibility is the operation of the Divestiture Assets.
D. AMC shall permit prospective Acquirer(s) of the Divestiture
Assets to have reasonable access to personnel and to make inspections
of the physical facilities of the Divestiture Assets; 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. AMC shall warrant to Acquirer(s) of the Divestiture Assets that
each asset will be operational on the date of sale.
F. Defendants shall not take any action that will impede in any way
the permitting, operation, or divestitures of the Divestiture Assets.
At the option of the Acquirer(s), AMC shall enter into an agreement for
products and services, such as computer support services, that are
reasonably necessary for the Acquirer(s) to effectively operate the
Divestiture Assets during a transition period. The terms and conditions
of any contractual arrangements meant to satisfy this provision must be
commercially reasonable for those products and services for which the
agreement is entered and shall remain in effect for no more than three
months, absent approval of the United States, in its sole discretion
(after consultation with the State of Illinois, the State of Colorado,
and the State of Indiana, as appropriate).
G. AMC shall warrant to the Acquirer(s) that there are no material
defects in the environmental, zoning, or other permits pertaining to
the operation of each asset. Following the sale of the Divestiture
Assets, Defendants 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 (after consultation with the State of
Illinois, the State of Colorado, and the State of Indiana, as
appropriate) otherwise consents in writing, the divestitures made
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 (after consultation with the State of
Illinois, the State of Colorado, and the State of Indiana, as
appropriate) that the Divestiture Assets can and will be used by the
Acquirer(s) as part of a viable, ongoing business of operating
mainstream theatres that exhibit first-run, commercial movies.
Divestitures of the Divestiture Assets may be made to one or more
Acquirers, provided that in each instance it is demonstrated to the
sole satisfaction of the United States (after consultation with the
State of Illinois, the State of Colorado, and the State of Indiana, as
appropriate) that the Divestiture Assets will remain viable and the
divestitures of such assets will remedy the competitive harm alleged in
the Complaint. The divestitures, whether pursuant to Section IV or
Section V of this Final Judgment.
(1) Shall be made to Acquirers that, in the United States' sole
judgment (after consultation with the State of Illinois, the State of
Colorado, and the State of Indiana, as appropriate) have the intent and
capability (including the necessary managerial, operational, technical,
and financial capability) of competing effectively in the business of
mainstream theatres exhibiting first-run, commercial movies; and
(2) Shall be accomplished so as to satisfy the United States, in
its sole discretion (after consultation with the State of Illinois, the
State of Colorado, and the State of Indiana, as appropriate) that none
of the terms of any agreement between Acquirers and Defendants give the
ability unreasonably to raise the Acquirers' costs, to lower the
Acquirers' efficiency, or otherwise to interfere in the ability of the
Acquirers to compete effectively.
V. Appointment of Trustee
A. If AMC has not divested the Divestiture Assets within the time
period specified in Section IV(A), AMC 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 divestitures 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
divestitures to Acquirer(s) acceptable to the United States (after
consultation with the State of Illinois, the State of Colorado, and the
State of Indiana, as appropriate) 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, VI, and VII 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 AMC 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. Defendants shall not object to a sale by the trustee on any
ground other than the trustee's malfeasance. Any such objections by
Defendants 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 VII.
D. The trustee shall serve at the cost and expense of AMC, 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 AMC 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
Divestiture Assets and based on a fee arrangement providing the trustee
with an incentive based on the price and terms of the divestitures and
the speed with which it is accomplished, but timeliness is paramount.
E. Defendants shall use their best efforts to assist the trustee in
accomplishing the required divestitures. 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 business to be divested, and Defendants
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. Defendants shall take no action to interfere
with or to impede the
[[Page 31471]]
trustee's accomplishment of the divestitures.
F. After its appointment, the trustee shall file monthly reports
with the parties and the Court setting forth the trustee's efforts to
accomplish the divestitures 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 divestitures 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 divestitures, (2)
the reasons, in the trustee's judgment, why the required divestitures
have not been accomplished, and (3) the trustee's recommendations. 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. 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. Landlord Consent
A. If AMC is unable to effect the divestitures required herein due
to the inability to obtain the Landlord Consent for any of the
Divestiture Assets, AMC shall divest alternative theatre assets that
compete effectively with the theatres for which the Landlord Consent
was not obtained. The United States shall, in its sole discretion
(after consultation with the State of Illinois, the State of Colorado,
and the State of Indiana, as appropriate) determine whether such
theatre assets compete effectively with the theatres for which landlord
consent was not obtained.
B. Within five (5) business days following a determination that
Landlord Consent cannot be obtained for the Divestiture Assets, AMC
shall notify the United States and propose an alternative divestiture
pursuant to Section VI(A). The United States shall have then ten (10)
business days in which to determine whether such theatre assets are a
suitable alternative pursuant to Section VI(A). If AMC's selection is
deemed not to be a suitable alternative, the United States shall in its
sole discretion select the theatre assets to be divested (after
consultation with the State of Illinois, the State of Colorado, and the
State of Indiana, as appropriate).
C. If the trustee is responsible for effecting the divestitures, it
shall notify both the United States and AMC within five (5) business
days following a determination that Landlord Consent cannot be obtained
for the Divestiture Assets. AMC shall thereafter have five (5) business
days to propose an alternative divestiture pursuant to Section VI(A).
The United States shall have then ten (10) business days in which to
determine whether such theatre assets are suitable alternative pursuant
to Section VI(A). If AMC's selection is deemed not to be a suitable
competitive alternative, the United States shall in its sole discretion
select the theatre assets to be divested (after consultation with the
State of Illinois, the State of Colorado, and the State of Indiana, as
appropriate).
VII. Notice of Proposed Divestitures
A. Within two (2) business days following execution of a definitive
divestiture agreement, AMC or the trustee, whichever is then
responsible for effecting the divestitures required herein, shall
notify the United States (and, as appropriate, the State of Illinois,
the State of Colorado, and the State of Indiana), of any proposed
divestitures required by Sections IV or V of this Final Judgment. If
the trustee is responsible, it shall similarly notify Defendants. The
notice shall set forth the details of the proposed divestitures 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 (the State of Illinois, the State of Colorado, and the State of
Indiana) of such notice, the United States may request from Defendants,
the proposed Acquirer(s), any other third party, or the trustee, if
applicable, additional information concerning the proposed
divestitures, the proposed Acquirer(s), and any other potential
Acquirer(s). Defendants and the trustee shall furnish any additional
information requested within fifteen (15) calendar days of the receipt
of the request, unless the parties shall otherwise agree.
C. Within thirty (30) calendar days after receipt of the notice or
within twenty (20) calendar days after the United States has been
provided the additional information requested from Defendants, the
proposed Acquirer(s), any third party, and the trustee, whichever is
later, the United States shall provide written notice to Defendants and
the trustee, if there is one, stating whether or not it objects to the
proposed divestitures. If the United States provides written notice
that it does not object, the divestitures may be consummated, subject
only to Defendants' limited right to object to the sale under Section
V(C) of this Final Judgment. Absent written notice that the United
States does not object to the proposed Acquirer(s) or upon objection by
the United States, a divestiture proposed under Section IV or Section V
shall not be consummated. Upon objection by Defendants under Section
V(C), a divestiture proposed under Section V shall not be consummated
unless approved by the Court.
VIII. Financing
Defendants shall not finance all or any part of any purchase made
pursuant to Section IV or V of this Final Judgment.
IX. Hold Separate
Until the divestitures required by this Final Judgment have been
accomplished, Defendants shall take all steps necessary to comply with
the Hold Separate Stipulation and Order entered by this Court.
Defendants shall take no action that would jeopardize the divestitures
ordered by this Court.
X. 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 divestitures have been completed under Sections IV or V, AMC shall
deliver to the United States an affidavit as to the fact and manner of
its compliance with Sections 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
[[Page 31472]]
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 AMC has taken to solicit buyers for the Divestiture Assets, and
to provide required information to prospective purchasers, 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 AMC, 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, AMC shall deliver to the United States an affidavit
that describes in reasonable detail all actions Defendants have taken
and all steps Defendants have implemented on an ongoing basis to comply
with Section IX of this Final Judgment. AMC shall deliver to the United
States an affidavit describing any changes to the efforts and actions
outlined in AMC's earlier affidavits filed pursuant to this section
within fifteen (15) calendar days after the change is implemented.
C. Defendants shall keep all records of all efforts made to
preserve and divest the Divestiture Assets until one year after such
divestitures have been completed.
XI. 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 duly authorized representatives of the United States
Department of Justice Antitrust Division (``DOJ''), 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 Defendants, be permitted:
(1) Access during Defendants' office hours to inspect and copy, or
at plaintiffs' option, to require Defendants to provide hard copy or
electronic copies of, all books, ledgers, accounts, records, data, and
documents in the possession, custody, or control of Defendants,
relating to any matters contained in this Final Judgment; and
(2) To interview, either informally or on the record, Defendants'
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 Defendants.
B. Upon the written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division,
Defendants 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, 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
Defendants to the United States, Defendants represent and identify in
writing the material in any such information or documents to which a
claim of protection may be asserted under Rule 26(c)(1)(G) of the
Federal Rules of Civil Procedure, and Defendants mark each pertinent
page of such material, ``Subject to claim of protection under Rule
26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the
plaintiffs shall give Defendants ten (10) calendar days notice prior to
divulging such material in any legal proceeding (other than a grand
jury proceeding).
XII. Notification
Unless such transaction is otherwise subject to the reporting and
waiting period requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''),
AMC, without providing advance notification to the DOJ, shall not
directly or indirectly acquire any assets of or any interest, including
any financial, security, loan, equity or management interest, in the
business of theatres exhibiting first-run, commercial movies in Cook
County, Illinois; Dupage County, Illinois; Adams County, Colorado;
Boulder County, Colorado; Jefferson County, Colorado; Marion County,
Indiana; and Johnson County, Indiana during a ten year period.
Unless such transaction is otherwise subject to the reporting and
waiting period requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''),
Kerasotes, without providing advance notification to the DOJ, shall not
directly or indirectly acquire any assets of or any interest, including
any financial, security, loan, or equity interest, in the business of
theatres exhibiting first-run, commercial movies in Cook County,
Illinois during a ten year period. Notwithstanding the preceding
sentence, in no event shall Kerasotes be required to provide advance
notification under this provision of any of the following activities:
(i) engaging in a sale/leaseback, developer-financed or similar
transaction, or developing internally using its own or third-party
financing, in each case with respect to a newly developed theatre; or
(ii) making an acquisition of not more than two percent of the
outstanding voting securities of a publicly-traded company with
theatres exhibiting first-run, commercial movies where such investment
is made ``solely for the purpose of investment'' as that term is
construed under 15 U.S.C. 802.9.
Such notification shall be provided to the DOJ in the same format
as, and per the instructions relating to the Notification and Report
Form set forth in the Appendix to Part 803 of Title 16 of the Code of
Federal Regulations as amended, except that the information requested
in Items 5 through 9 of the instructions must be provided only about
mainstream theatres that exhibit first-run, commercial movies.
Notification shall be provided at least thirty (30) calendar days prior
to acquiring any such interest, and shall include, beyond what may be
required by the applicable instructions, the names of the principal
representatives of the parties to the agreement who negotiated the
agreement, and any management or strategic plans discussing the
proposed transaction. If within the 30-day period after notification,
representatives of the DOJ make a written request for additional
information, Defendants shall not consummate the proposed transaction
or agreement until thirty (30) days after submitting all such
additional information. Early termination of the waiting periods in
this paragraph may be requested and, where appropriate, granted in the
same manner as is applicable under the requirements and provisions of
the HSR Act and rules promulgated thereunder. This Section shall be
broadly construed and any ambiguity or uncertainty regarding the filing
of notice under this Section shall be resolved in favor of filing
notice.
XIII. No Reacquisition
AMC may not reacquire any part of the Divestiture Assets divested
under
[[Page 31473]]
this Final Judgment during the term of this Final Judgment.
XIV. 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.
XV. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire ten (10) years from the date of its entry.
XVI. 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 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, STATE OF ILLINOIS, STATE OF COLORADO,
and STATE OF INDIANA, Plaintiffs, v. AMC ENTERTAINMENT HOLDINGS,
INC., and KERASOTES SHOWPLACE THEATRES, LLC, Defendants.
Civil Action No.: 1:10-cv-00846
Judge Kennedy, Henry, H.
Filed: 5/21/2010.
Competitive Impact Statement
Plaintiff, United States of America, 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
On January 19, 2010, Defendant AMC Entertainment Holdings, Inc.
(``AMC'') agreed to acquire most of the assets of Defendant Kerasotes
Showplace Theatres, LLC (``Kerasotes''). Plaintiffs filed a civil
antitrust complaint on May 21, 2010, seeking to enjoin the proposed
acquisition and to obtain equitable relief. The Complaint alleges that
the acquisition, if permitted to proceed, would combine under common
ownership the two leading, and in some cases, only mainstream movie
theatres exhibiting first-run, commercial movies in parts of the
metropolitan areas of Chicago, Denver, and Indianapolis. The likely
effect of this acquisition would be to lessen competition substantially
for exhibition of first-run, commercial movies in mainstream theatres
in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
At the same time the Complaint was filed, the Plaintiffs also filed
a Hold Separate Stipulation and Order (``Hold Separate'') and a
proposed Final Judgment, which are designed to eliminate the
anticompetitive effects of the acquisition. Under the proposed Final
Judgment, which is explained more fully below, AMC and Kerasotes are
required to divest eight theatres located in the Chicago, Denver, and
Indianapolis areas to acquirer(s) acceptable to the Plaintiffs.
Under the terms of the Hold Separate, Defendants will take certain
steps to ensure that the eight theatres to be divested are operated as
competitively independent, economically viable and ongoing business
concerns, that they will remain independent and uninfluenced by the
consummation of the acquisition, and that competition is maintained
during the pendency of the ordered divestiture.
The Plaintiffs and Defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA. Entry of
the proposed Final Judgment would terminate this action, except that
the Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II. Description of the Events Giving Rise to the Alleged Violation
A. The Defendants and the Proposed Transaction
AMC is a Delaware corporation with its headquarters in Kansas City,
Missouri. It is the holding company of AMC Entertainment, Inc. AMC owns
or operates 304 theatres containing 4,574 screens in locations
throughout the United States and four foreign countries. Measured by
number of screens, AMC is the second-largest theatre exhibitor in the
United States and had revenues of approximately $2.26 billion in 2009.
Kerasotes is a Delaware corporation with its principal place of
business in Chicago, Illinois. It owns or operates 96 theatres with 973
screens in various states. Kerasotes is the sixth-largest theatre
exhibitor in the United States and earned revenue of approximately
$327.7 million in 2009.
On January 19, 2010, AMC and Kerasotes signed a purchase and sale
agreement under which AMC will acquire all the outstanding membership
units of Kerasotes, with the exception of three theatres which will be
retained by the Kerasotes family, for approximately $275 million.
The proposed transaction, as initially agreed to by Defendants on
January 19, 2010, would lessen competition substantially as a result of
AMC's acquisition of Kerasotes. This acquisition is the subject of the
Complaint and proposed Final Judgment filed by the Plaintiffs on May
21, 2010.
B. The Competitive Effects of the Transaction on the Exhibition of
First-Run, Commercial Movies in Mainstream Theatres
The Complaint alleges that the exhibition of first-run, commercial
movies in mainstream theatres in areas the Complaint defines as North
Suburban Chicago, Upper Southwest Suburban Chicago, Lower Southwest
Suburban Chicago, Upper Northwest Denver, Lower Northwest Denver, North
Indianapolis, and South Indianapolis constitute lines of commerce and
relevant markets for antitrust purposes.
1. The Relevant Product and Geographic Markets
The exercise of defining a relevant market helps analyze the
competitive effects of a horizontal transaction. Market definition
identifies an area of competition and enables the identification of
market participants and the measurement of market shares and
concentration. This exercise is useful to the extent it illuminates the
transaction's likely competitive effects.
The Complaint alleges that the relevant product market within which
to assess the competitive effects of this transaction is the exhibition
of first-run, commercial movies in mainstream theatres. Mainstream
theatres are movie theatres that exhibit a variety of first-run,
commercial movies to attract moviegoers of all ages and offer basic
concessions, such as popcorn, candy and soft drinks. According to the
Complaint, the experience of viewing a film in a theatre is an
inherently different experience from other forms of entertainment, such
as a live show, a
[[Page 31474]]
sporting event, or viewing a movie in the home (e.g., on a DVD player
or via pay-per-view). Reflecting the significant differences between
viewing a movie in a theatre and other forms of entertainment, ticket
prices for movies are generally very different from prices for other
forms of entertainment. Live entertainment is typically significantly
more expensive than a movie ticket, whereas renting a DVD for home
viewing is usually significantly cheaper than viewing a movie in a
theatre.
The Complaint alleges that moviegoers generally do not regard
theatres showing ``sub-run'' movies, art movies, or foreign language
movies as adequate substitutes for mainstream theatres showing first-
run movies. The Complaint also alleges that ``premiere'' theaters do
not typically serve as competitive constraints on mainstream theaters.
Although premiere theatres show first-run, commercial movies, they
typically have more restrictive admission policies (e.g., minors must
be accompanied by adults for all movies), charge higher ticket prices,
serve alcoholic beverages, and often have full-service restaurants or
in-service dining.
The Complaint defines seven relevant geographic markets in the
Chicago, Denver, and Indianapolis areas in which to measure the
competitive effects of this transaction. Each geographic market
contains a number of mainstream theatres--most of which are owned by
the Defendants--at which consumers can view first-run, commercial
movies. The Complaint identifies the relevant geographic markets as
follows: North Suburban Chicago, Upper Southwest Suburban Chicago,
Lower Southwest Suburban Chicago, Upper Northwest Denver, Lower
Northwest Denver, North Indianapolis, and South Indianapolis.
Chicago, Illinois Area
According to the Complaint, the North Suburban Chicago area, in and
around the communities of Glenview and Skokie, encompasses AMC's
Northbrook Court 14, AMC's Gardens 13, Kerasotes' Glen 10, Kerasotes'
Village Crossing 18, and Kerasotes' Showplace 12 (Niles) theatres.
There are no other mainstream theatres in the North Suburban Chicago
area.
The Upper Southwest Suburban Chicago area, in and around the city
of Naperville, encompasses AMC's Cantera 30 and Kerasotes' Showplace
Naperville 16 (Naperville) theatres. There are no other mainstream
theatres in the Upper Southwest Suburban Chicago area.
The Lower Southwest Suburban Chicago area, in and around the
village of Bolingbrook, encompasses AMC's Woodridge 18 and Kerasotes'
Showplace 12 (Bolingbrook) theatres. There is only one non-party
mainstream theatre in the Lower Southwest Suburban Chicago area--a 16-
screen theatre operated by Cinemark.
Denver, Colorado Area
The Upper Northwest Denver area, in and around the cities of
Louisville and Broomfield, encompasses AMC's Flatiron Crossing 14 and
Kerasotes' Colony Square 12 theatres. There are no other mainstream
theatres in the Upper Northwest Denver area.
The Lower Northwest Denver area, in and around the cities of
Westminster and Arvada, encompasses AMC's Westminster Promenade 24 and
Kerasotes' Olde Town 14 theatres. There are no other mainstream
theatres in the Lower Northwest Denver area.
Indianapolis, Indiana Area
The North Indianapolis area, in and around the community of
Glendale, encompasses AMC's Castleton Square 14 and Kerasotes' Glendale
Town 12 theatres. There is only one other non-party mainstream theatre
in the North Indianapolis area--a Regal theatre with 14 screens.
The South Indianapolis area, in and around the city of Greenwood,
encompasses AMC's Greenwood 14 and Kerasotes' Showplace 16 and IMAX.
There are no other mainstream theatres in the South Indianapolis area.
According to the Complaint, the relevant markets in which to assess
the competitive effects of this transaction are the mainstream theatres
in the above-mentioned areas: North Suburban Chicago, Upper Southwest
Suburban Chicago, Lower Southwest Suburban Chicago, Upper Northwest
Denver, Lower Northwest Denver, North Indianapolis, and South
Indianapolis areas. A small but significant post-acquisition increase
in movie ticket prices by a hypothetical monopolist of mainstream
theatres in those areas would not cause a sufficient number of
customers to shift to other alternatives, including to other forms of
entertainment, to non-mainstream theatres, or to mainstream theatres
outside the relevant geographic markets described above to make such a
price increase unprofitable.
2. Competitive Effects in the Relevant Markets
The Complaint alleges that exhibitors that operate mainstream movie
theatres compete on multiple dimensions. Exhibitors compete over the
quality of the viewing experience. They compete to offer the most
sophisticated sound and viewing systems, best picture clarity, nicest
seats with the best views, and cleanest floors and lobbies for
moviegoers. Such exhibitors also compete on price, knowing that if they
charge too much (or do not offer sufficiently discounted tickets for
matinees, seniors, children, etc.), moviegoers will choose to view
movies at rival theatres.
According to the Complaint, the proposed transaction is likely to
eliminate these multiple dimensions of competition between AMC and
Kerasotes. In each of the relevant markets, AMC and Kerasotes are each
other's most significant competitor, given their close proximity to one
another and to moviegoers, and the similarity in their theatres' size
and quality of viewing experience. Their competition spurs each to keep
its prices in check and improve its quality. For example, Kerasotes
expanded its discounts on matinees at its Bolingbrook 12 theatre, in
Lower Southwest Suburban Chicago, after AMC opened its Woodridge 18
theatre nearby. Kerasotes retrofitted its Bolingbrook 12 theatre, in
Lower Southwest Suburban Chicago, in response to AMC's opening its
Woodridge 18 theatre nearby.
As alleged in the Complaint, each of the relevant markets would see
a significant increase in market concentration under a measure called
the Herfindahl-Hirschman Index (``HHI''), explained in Appendix A of
the Complaint. In the area with the least change in concentration--the
Lower Southwest Suburban Chicago area--the proposed transaction would
give the newly combined entity control of two of the only three
mainstream theatres in that area. In that market the post-transaction
HHI would rise to roughly 5,017, representing an increase of 1,221
points. In other markets, the proposed acquisition would place all of
the mainstream theatres under AMC's control, creating a local monopoly
and yielding a post-transaction HHI of 10,000--the maximum.
In the seven relevant markets today, were AMC or Kerasotes to
increase ticket prices and the other were not to follow, the exhibitor
that increased price would likely suffer financially, as a substantial
number of its customers would patronize the other exhibitor's theatre.
After the transaction, the newly combined entity would recapture such
losses, making profitable price increases that would have been
unprofitable before the transaction. Likewise, the proposed transaction
would eliminate competition between AMC and Kerasotes over the quality
of the viewing experience at their theatres in each of the geographic
markets at issue.
[[Page 31475]]
After the transaction, the newly combined entity would have a reduced
incentive to maintain, upgrade, and renovate its theatres in the
relevant markets, and to improve its theatres' amenities and services,
thus reducing the quality of the viewing experience.
The Complaint alleges that the presence of the other mainstream
theatres in certain of the relevant geographic markets would be
insufficient to replace the competition lost due to the transaction,
and thus render unprofitable post-transaction increases in ticket
prices or decreases in quality by the newly combined entity.
Finally, the Complaint alleges that the entry of a mainstream
theatre that would deter or counteract an increase in movie ticket
prices or a decline in theatre quality is unlikely in all of the
relevant markets. Exhibitors are reluctant to locate new theatres near
existing theatres unless the population density and demographics makes
new entry viable or the existing theatres do not have stadium seating.
Those conditions do not exist in any of the relevant markets. All of
these markets currently have mainstream theatres with stadium seating.
Given the number of existing comparable theatres, population density
and demographics in the relevant markets, demand for additional
mainstream theatres in the areas at issue is not likely to support
entry of a new theatre.
For all of these reasons, the Plaintiffs have concluded that the
proposed transaction would lessen competition substantially in the
exhibition of first-run, commercial movies in mainstream theatres in
the North Suburban Chicago area, Upper Southwest Suburban Chicago area,
Lower Southwest Suburban Chicago area, Upper Northwest Denver area,
Lower Northwest Denver area, North Indianapolis area, and the South
Indianapolis area, eliminate actual and potential competition between
AMC and Kerasotes, and likely result in increased ticket prices and
lower quality theatres in those markets. The proposed transaction
therefore violates Section 7 of the Clayton Act.
III. Explanation of the Proposed Final Judgment
The divestiture requirement of the proposed Final Judgment will
eliminate the anticompetitive effects of the acquisitions in each
relevant geographic market, establishing new, independent, and
economically viable competitors. The proposed Final Judgment requires
AMC, within sixty (60) calendar days after the filing of the Complaint,
or five (5) days after the notice of the entry of the Final Judgment by
the Court, whichever is later, to divest, as viable ongoing businesses,
a total of eight theatres in the seven relevant geographic markets in
the Chicago, Denver, and Indianapolis areas: Kerasotes Glen 10 and AMC
Gardens 13 (North Suburban Chicago), AMC Cantera 30 (Upper Southwest
Suburban Chicago), Kerasotes Showplace 12 (Bolingbrook) (Lower
Southwest Suburban Chicago), Kerasotes Colony Square 12 (Upper
Northwest Denver), Kerasotes Olde Town 14 (Lower Northwest Denver),
Kerasotes Showplace 12 or AMC Castleton Square 12 (North Indianapolis),
and AMC Greenwood 14 (South Indianapolis). The assets must be divested
in such a way as to satisfy the Plaintiffs that the theatres can and
will be operated by the purchaser as viable, ongoing businesses that
can compete effectively in the relevant markets as mainstream theatres
exhibiting first-run, commercial movies. AMC must take all reasonable
steps necessary to accomplish the divestiture quickly and shall
cooperate with prospective purchasers.
Until the divestitures take place, AMC and Kerasotes must maintain
the sales and marketing of the theatres, and maintain the theatres in
operable condition at current capacity configurations. Until the
divestitures take place, AMC and Kerasotes must not transfer or
reassign to other areas within the company their employees with primary
responsibility for the operation of the theatres, except for transfer
bids initiated by employees pursuant to Defendants' regular,
established job-posting policies.
In the event that AMC does not accomplish the divestitures within
the periods prescribed in the proposed Final Judgment, the Final
Judgment provides that the Court will appoint a trustee selected by the
United States to effect the divestitures. If a trustee is appointed,
the proposed Final Judgment provides that AMC will pay all costs and
expenses of the trustee. The trustee's commission will be structured so
as to provide an incentive for the trustee based on the price obtained
and the speed with which the divestitures are accomplished. After his
or her appointment becomes effective, the trustee will file monthly
reports with the Court and the parties, setting forth his or her
efforts to accomplish the divestiture. At the end of six (6) months, if
the divestitures have not been accomplished, the trustee and the
plaintiffs 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.
If AMC is unable to effect the divestitures required herein due to
their inability to obtain the landlords' consent, Section VI of the
proposed Final Judgment requires AMC to divest alternative theatre
assets that compete effectively with the theatres for which the
landlord consent was not obtained. This provision will insure that any
failure by AMC to obtain landlord consent does not thwart the relief
obtained in the proposed Final Judgment.
The proposed Final Judgment also prohibits AMC from acquiring any
other theatres in counties that correspond to the relevant geographic
markets and Kerasotes from acquiring any other theatres in Cook County,
Illinois, without providing at least thirty (30) days notice to the
United States Department of Justice. Such acquisitions could raise
competitive concerns but might be too small to be reported under the
Hart-Scott-Rodino (``HSR'') premerger notification statute.
The divestiture provisions of the proposed Final Judgment will
eliminate the anticompetitive effects of AMC's acquisition of
Kerasotes.
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
attorney's 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 Plaintiffs 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 Plaintiffs have not withdrawn
their 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
[[Page 31476]]
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.
Written comments should be submitted to: John R. Read, Chief,
Litigation III, Antitrust Division, United States Department of
Justice, 450 5th Street, 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 Plaintiffs considered, as an alternative to the proposed Final
Judgment, a full trial on the merits against Defendants. The Plaintiffs
could have continued the litigation and sought preliminary and
permanent injunctions against AMC's acquisition of Kerasotes. The
Plaintiffs are satisfied, however, that the divestiture of assets
described in the proposed Final Judgment will preserve competition for
the provision of exhibition of first-run, commercial movies in the
relevant markets identified by the United States. Thus, the proposed
Final Judgment would achieve all or substantially all of the relief the
Plaintiffs 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)(1)(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 (DC Cir. 1995); see generally United States v. SBC
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public
interest standard under the Tunney Act); United States v. InBev N.V./
S.A., 2009-2 Trade Cas. (CCH) ]76,736, 2009 U.S. Dist. LEXIS 84787, No.
08-1965 (JR), at *3, (D.D.C. Aug. 11, 2009) (noting that the court's
review of a consent judgment is limited and only inquires ``into
whether the government's determination that the proposed remedies will
cure the antitrust violations alleged in the complaint was reasonable,
and whether the mechanism to enforce the final judgment are clear and
manageable.'') \1\
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\1\ 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)(1) (2006); see also SBC Commc'ns,
489 F. Supp. 2d at 11 (concluding that the 2004 amendments
``effected minimal changes'' to Tunney Act review).
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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.DC 2001). InBev, 2009 U.S. Dist. LEXIS 84787, at
*3. 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).\2\ 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.DC 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).
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\2\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); 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.DC 1982) (citations omitted) (quoting United
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd
sub nom. Maryland
[[Page 31477]]
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; see also InBev, 2009
U.S. Dist. LEXIS 84787, at *20 (``the `public interest' is not to be
measured by comparing the violations alleged in the complaint against
those the court believes could have, or even should have, been
alleged''). 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. Microsoft, 56 F.3d 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.\3\
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\3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 (D.
DC 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: May 21, 2010.
Respectfully submitted,
/s/--------------------------------------------------------------------
Gregg I. Malawer (DC Bar No. 481685),
Nina Hale,
Bennett Matelson (DC Bar No. 454551),
Creighton J. Macy,
U.S. Department of Justice Antitrust Division 450 5th Street, NW.,
Suite 4000, Washington, DC 20530, Telephone: (202) 616-5943, Fax:
(202) 514-7308, E-mail: [email protected], Attorneys for
Plaintiff the United States
[FR Doc. 2010-13394 Filed 6-2-10; 8:45 am]
BILLING CODE 4410-11-P