[Federal Register Volume 75, Number 42 (Thursday, March 4, 2010)]
[Notices]
[Pages 9929-9946]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-4550]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Bemis Company, Inc., et al.; Proposed Final
Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Hold Separate Stipulation and Order, and Competitive Impact Statement
have been filed with the United States District Court for the District
of Columbia in United States v. Bemis Co. et al., Civil Action No.
1:10-cv-00295. On February 24, 2010, the United States filed a
Complaint alleging that the proposed acquisition by Bemis Company, Inc.
(``Bemis'') of the Alcan Packaging Food Americas business of Rio Tinto
plc would violate Section 7 of the Clayton Act, 15 U.S.C. 18, by
substantially lessening competition in the markets for flexible-
packaging rollstock for chunk and sliced natural cheese packaged for
retail sale, flexible-packaging rollstock for shredded natural cheese
packaged for retail sale, and flexible-packaging shrink bags for fresh
meat. The proposed Final Judgment, filed the same time as the
Complaint, requires Bemis to divest the assets of Alcan Packaging Food
Americas related to those markets, including production plants and
assets located in Menasha, Wisconsin and Catoosa, Oklahoma, as well as
certain other tangible and intangible assets. The proposed Final
Judgment also permits Bemis temporarily to occupy certain portions of
the Menasha facility while unrelated operations are relocated and
allows for short-term supply agreements between Bemis and the entity
that acquires the divested assets in order to ensure that customers
continue to receive a reliable supply of the affected products.
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. 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 Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division,
Department of Justice,
[[Page 9930]]
Washington, DC 20530, (telephone: 202-307-0924).
J. Robert Kramer II,
Director of Operations and Civil Enforcement.
United States of America, Department of Justice, Antitrust
Division, 450 5th Street, NW, Suite 8700, Washington, D.C. 20530,
Plaintiff, v. Bemis Company, Inc., One Neenah Center, Neenah, WI
54957 and Rio Tinto plc, 2 Eastbourne Terrace, London, W2 6LG,
United Kingdom and Alcan Corporation, 8770 West Bryn Mawr Avenue,
Chicago, IL 60631, Defendants.
Case No.: Case: 1:10-cv-00295, Assigned To: Kollar-Kotelly, Colleen,
Assign. Date: February 24, 2010, Description: Antitrust, Judge:
Complaint
The United States of America (``United States''), acting under the
direction of the Attorney General, brings this civil antitrust action
against defendants Bemis Company, Inc. (``Bemis''), Rio Tinto plc
(``Rio Tinto''), and Alcan Corporation (``Alcan'') to enjoin Bemis's
proposed acquisition from Rio Tinto of the Alcan Packaging Food
Americas business and to obtain other equitable relief. The United
States complains and alleges as follows:
I. Nature of This Action
1. Bemis announced that it has agreed to purchase the Alcan
Packaging Food Americas business from Rio Tinto for $1.2 billion.
2. Bemis and Alcan are the two leading suppliers in the United
States and Canada of flexible packaging products suitable for a variety
of natural cheese products packaged for retail sale. Bemis and Alcan
are also two of the three primary suppliers of shrink bags for fresh-
meat packaging in the United States and Canada.
3. The proposed acquisition would eliminate competition between
Bemis and Alcan, which for some customers are the two best sources of
flexible packaging for certain natural cheese products. The proposed
acquisition likely also would reduce competition substantially in the
highly concentrated market for shrink bags for fresh-meat packaging. As
a result, the proposed acquisition likely would substantially lessen
competition in the development, production, and sale of flexible
packaging and associated services for chunk, sliced, and shredded
natural cheese packaged for retail sale and for fresh meat in the
United States and Canada in violation of Section 7 of the Clayton Act,
15 U.S.C. 18.
II. The Defendants
4. Bemis is a Missouri corporation headquartered in Neenah,
Wisconsin. In 2008, Bemis and its subsidiaries had total sales of
approximately $3.8 billion, including approximately $2.1 billion of
flexible packaging in the United States. Bemis's flexible packaging for
cheese and meat is produced by its wholly owned, but separately
incorporated, Curwood, Inc. division.
5. Rio Tinto is organized under the laws of and headquartered in
the United Kingdom. Its 2008 sales totaled approximately $58 billion.
Rio Tinto acquired Alcan in 2007.
6. Alcan is a wholly owned subsidiary of Rio Tinto. Alcan is a
Delaware corporation headquartered in Chicago, Illinois. The Alcan
Packaging Food Americas business produces and sells flexible packaging
in the United States, Canada, and Latin America. In 2008, the Alcan
Packaging Food Americas business sold approximately $1.5 billion of
flexible packaging.
III. Jurisdiction and Venue
7. The United States brings this action under Section 15 of the
Clayton Act, 15 U.S.C. 25, to prevent and restrain defendants from
violating Section 7 of the Clayton Act, 15 U.S.C. 18.
8. Defendants themselves, or through wholly owned subsidiaries,
produce and sell flexible packaging and associated services for natural
cheese and fresh meat, among other products, in the flow of interstate
commerce. Defendants' activities in the development, production, and
sale of flexible packaging for natural cheese and fresh meat, among
other products, substantially affect interstate commerce. This Court
has subject-matter jurisdiction over this action pursuant to Section 15
of the Clayton Act, 15 U.S.C. 25 and 28 U.S.C. 1331, 1337(a) and 1345.
9. Defendants have consented to venue and personal jurisdiction in
the District of Columbia. Venue is therefore proper in this District
under Section 12 of the Clayton Act, 15 U.S.C. 22, and 28 U.S.C.
1391(c). Venue is also proper in the District of Columbia for defendant
Rio Tinto under 28 U.S.C. 1391(d).
IV. Background
A. The Flexible-Packaging Industry
10. Flexible packaging is any package the shape of which can be
readily changed. Flexible packaging for food encompasses a wide range
of products, including bags and wrappings for cheeses and meats, snack
bags, and cereal-box liners. Flexible packaging is distinguishable from
rigid packaging, such as jars, cans, cups, trays, and hard plastic
bottles.
11. Varying degrees of design and manufacturing sophistication are
required to produce flexible packaging for different end uses. Some
flexible packaging, such as single-layer packaging, is relatively
simple to manufacture, and customers can choose from a number of
producers for these types of flexible packaging. Flexible packaging for
other end uses, such as natural cheese and fresh meat, however, has
multiple layers, is subject to more rigorous performance standards,
requires greater scientific knowledge and technical know-how to
engineer, and requires that technical support be readily available,
and, therefore, is more difficult to produce and commercialize
successfully.
B. Procurement of Flexible Packaging for Natural Cheese and Fresh Meat
12. Producers of flexible packaging sell their packaging to
producers of food that package their products for wholesale or retail
sale. Customers typically have particular and unique specifications for
their packaging. For example, customers use flexible packaging to
differentiate their products from those of their rivals. Moreover,
customers have different packaging equipment, and the flexible
packaging must be specifically qualified to run on the particular
customer's equipment.
13. Producers of flexible packaging must work closely with
customers to ensure that their packaging material runs efficiently on
their customers' machines, that they meet the promised lead times, and
that they continuously find ways to cut the customer's costs. Producers
must also engage in research and development to deliver better
packaging products in order to compete effectively.
14. Customers of flexible packaging for certain forms of natural
cheese and fresh meat can incur substantial costs to switch between
different flexible-packaging producers. These costs result, in part,
from having to modify existing packaging equipment to make it
compatible with the new producer's films and the downtime associated
with that modification. Customers also incur costs from testing and
qualifying a new supplier.
15. Prices for flexible packaging for natural cheese and fresh meat
are customer-specific and based on, among other things, an individual
customer's unique requirements. The price charged to one customer
likely will be different from the price charged to another customer.
16. Price competition in the relevant markets occurs in two ways.
First, customers may issue a request for proposal, through which they
invite potential suppliers to bid on supplying
[[Page 9931]]
packaging that meets the customers' specifications. Customers evaluate
the competing bids on the basis of, among other things, compliance with
their specifications, price, delivery times, and the services provided
by each producer. Second, price competition may also occur less
formally if a customer seeks or receives an offer from an alternative
supplier and the incumbent is given a chance to respond.
V. Relevant Product Markets
A. Product Markets for Natural-Cheese Packaging
17. Natural cheese is sold in several different forms, including
chunk cheese, sliced cheese, and shredded cheese.
18. The films used in flexible packaging for some natural-cheese
products are sold in the form of rollstock, which is a continuous sheet
of film that is cut for each package. Most natural cheese sold at
retail is packaged using rollstock films. The particular flexible-
packaging rollstock and the services associated with providing it to
customers (``flexible-packaging rollstock'') used for: (a) Chunk and
sliced natural cheese packaged for retail sale; and (b) shredded
natural cheese packaged for retail sale are distinct product markets.
19. Cheese-packaging customers demand a long shelf-life for natural
cheese. The flexible-packaging rollstock for natural cheese must
include a barrier layer that keeps out oxygen to prevent the cheese
from spoiling. The packaging also must prevent moisture from leaking
into or out of the package. Some cheeses emit gasses as they age; such
cheeses require packaging that allows gasses to escape. In addition,
the packaging film must be sufficiently transparent to present the
cheese well to the consumer, but also avoid discoloration from
fluorescent lights. The packaging also must resist abrasion and
cracking during distribution and run smoothly and efficiently on the
customer's filling machines. Finally, the packaging must be inert, so
that the flavor of the cheese is not compromised by the plastic.
1. Flexible-Packaging Rollstock for Chunk and Sliced Natural Cheese
Packaged for Retail Sale Is a Relevant Product Market
20. Chunk natural cheese is sold in bricks of specific sizes,
typically eight, but ranging to thirty-two, ounces. Sliced natural
cheese is typically sold in packages with roughly ten or more slices.
Producers of chunk and sliced natural cheese generally use the same
films for packaging.
21. Specialized rollstock films are designed specifically for
packaging chunk and sliced natural cheese for retail sale. While some
chunk and sliced natural cheeses for retail sale are packaged in other
forms of packaging (e.g., shrink bags or rigid trays), these are more
expensive to purchase than rollstock packaging and cannot be used on
the same packaging equipment as rollstock. A small but significant
increase in the price of flexible-packaging rollstock for chunk and
sliced natural cheese packaged for retail sale likely would not cause
customers faced with such an increase to substitute to other forms of
packaging, or otherwise purchase sufficiently less of that product, so
as to render the price increase unprofitable.
22. Therefore, flexible-packaging rollstock for chunk and sliced
natural cheese packaged for retail sale is a line of commerce and a
relevant product market within the meaning of Section 7 of the Clayton
Act. In 2008, approximately $100 million in sales of this product were
made in the United States and Canada.
2. Flexible-Packaging Rollstock for Shredded Natural Cheese Packaged
for Retail Sale Is a Relevant Product Market
23. Shredded natural cheese packaged for retail sale typically is
packaged in bags, which often come with an easy-open mechanism and an
easy-close attachment. The easy-open mechanism is either laser-scored
or mechanically scored, such that some of the package's layers are
perforated (making the package easy to tear), while leaving the oxygen
and moisture barriers intact (preventing contamination of the product).
The scoring process presents significant challenges to flexible-
packaging producers. The sealing process also is difficult because the
bags typically are filled with cheese while in a vertical position and
the release of cheese into the bags is continuous and fast.
24. Specialized films are designed specifically for shredded
natural cheese packaged for retail sale. A small but significant
increase in the price of flexible-packaging rollstock for shredded
natural cheese packaged for retail sale likely would not cause
customers faced with such an increase to substitute to other forms of
packaging, or otherwise purchase sufficiently less of that product, so
as to render the price increase unprofitable.
25. Therefore, flexible-packaging rollstock for shredded natural
cheese packaged for retail sale is a line of commerce and a relevant
product market within the meaning of Section 7 of the Clayton Act. In
2008, approximately $100 million in sales of this product were made in
the United States.
B. Flexible-Packaging Shrink Bags for Fresh Meat Are a Relevant Product
Market
26. Certain characteristics are common to most flexible-packaging
films for fresh meat (i.e., beef, veal, pork, and lamb). First, most
films for fresh meat contain a layer that prevents oxygen from coming
into contact with the meat. Second, fresh meat films must prevent
moisture from leaking out and contaminants from entering the packaging.
Third, fresh meat films must run effectively on the customer's
packaging equipment. Finally, the sealant must bond through fatty and
oily substances.
27. The most common type of flexible-packaging film for fresh meat
is a shrink bag, which is designed to shrink to the contours of the
contents when heated, forming a tight seal. Shrink bags are
particularly suitable for use with fresh meat, in particular for
wholesale distribution of meat to be cut for retail sale in grocery
stores. Shrink bags and the services associated with providing them to
customers (``flexible-packaging shrink bags'') used for fresh meat
constitute a distinct product market. The shrink bag must be durable to
survive distribution while maintaining its oxygen and moisture barriers
and allowing the meat to retain its flavor. The bag also must meet
shelf-life requirements of 30 days or more and, when used for retail
packaging, have a high degree of transparency for optimal presentation.
28. A small but significant increase in the price of flexible-
packaging shrink bags for fresh meat likely would not cause customers
faced with such an increase to substitute to other forms of packaging,
or otherwise purchase sufficiently less of that product, so as to
render the price increase unprofitable.
29. Therefore, flexible-packaging shrink bags for fresh meat
constitute a line of commerce and a relevant product market within the
meaning of Section 7 of the Clayton Act. In 2008, approximately $800
million in sales of this product were made in the United States.
C. The United States and Canada Is a Relevant Geographic Market
30. Producers of flexible-packaging rollstock for chunk, sliced,
and shredded natural cheese packaged for retail sale and flexible-
packaging shrink bags for fresh meat ship the packaging to customers
throughout the United
[[Page 9932]]
States and Canada. Producers outside the United States and Canada are
not good alternatives for customers in the United States and Canada.
Customers using producers outside the United States and Canada would
face longer lead times and an increased potential for supply-chain
complications. Moreover, major customers demand that producers of
flexible packaging provide frequent technical and operational service
and support at the customer's premises and do not believe that foreign
suppliers can provide the level of service and support they demand. A
small but significant increase in the price of flexible-packaging
rollstock for chunk, sliced, and shredded natural cheese packaged for
retail sale and flexible-packaging shrink bags for fresh meat in the
United States and Canada likely would not cause customers in the United
States and Canada to turn to producers outside the United States and
Canada in sufficient numbers so as to render such a price increase
unprofitable.
31. Accordingly, the United States and Canada is a relevant
geographic market for flexible-packaging rollstock for chunk, sliced,
and shredded natural cheese packaged for retail sale and flexible-
packaging shrink bags for fresh meat within the meaning of Section 7 of
the Clayton Act.
VI. The Proposed Acquisition's Likely Anticompetitive Effects
A. Likely Anticompetitive Effects in the United States and Canada for
Flexible-Packaging Rollstock for Chunk and Sliced Natural Cheese
Packaged for Retail Sale
32. Based on their capabilities and sales history, Bemis and Alcan
are two of only a few competitors that might successfully bid to supply
a customer with flexible-packaging rollstock for chunk and sliced
natural cheese packaged for retail sale. Currently, Bemis and Alcan
account for approximately 37 and 54 percent, respectively, of sales in
the United States and Canada for this product. If the proposed
acquisition is not enjoined, Bemis and Alcan combined would account for
approximately 91 percent of sales in the United States and Canada for
this product. Using a measure of market concentration called the
Herfindahl-Hirschman Index (``HHI'') (explained in Appendix A), the HHI
would increase by more than 3,900 points, resulting in a post-
acquisition HHI of more than 8,000 points.
33. Market shares are best measured using revenues in the markets
for the Relevant Products because suppliers with the capacity to
produce similar goods outside of those markets cannot quickly and
easily shift that capacity to supply customers with the Relevant
Products. Thus, the mere possession of similar capacity does not make a
supplier an ``uncommitted entrant''; meeting the requirements of
customers in a cost-efficient manner also requires specialized know-
how, experience, qualification, and the ability to innovate.
34. Due to Bemis's and Alcan's collective overall expertise in
meeting the needs of customers and other technical and commercial
factors for flexible-packaging rollstock for chunk and sliced natural
cheese packaged for retail sale, including, among other things, price,
delivery times, service, and technical support, Bemis and Alcan
frequently are perceived by each other, by other bidders, and by
customers as being the two strongest competitors in that market.
35. Bemis's bidding behavior often has been constrained by the
possibility of losing business to Alcan. By eliminating Alcan, Bemis
would gain the incentive and likely ability to profitably increase its
bid prices higher than it otherwise would without the acquisition.
Customers have also benefitted from competition between Bemis and Alcan
through higher quality, better supply-chain options (including delivery
times and volume-purchase requirements), technical support, and
numerous innovations. The combination of Bemis and Alcan would
eliminate this other competition and future benefits to the customers.
36. The proposed acquisition, therefore, likely would substantially
lessen competition in the United States and Canada for flexible-
packaging rollstock for chunk and sliced natural cheese packaged for
retail sale, which likely would lead to higher prices, lower quality,
less favorable supply-chain options, reduced technical support, and
less innovation, in violation of Section 7 of the Clayton Act.
B. Likely Anticompetitive Effects in the United States and Canada for
Flexible-Packaging Rollstock for Shredded Natural Cheese Packaged for
Retail Sale
37. Based on their capabilities and sales history, Bemis and Alcan
are two of only a few credible competitors that might successfully bid
to supply a customer with flexible packaging rollstock for shredded
natural cheese packaged for retail sale. Currently, Bemis and Alcan
account for approximately 27 and 49 percent, respectively, of sales in
the United States and Canada for this product. If the proposed
acquisition is not enjoined, Bemis and Alcan combined would account for
approximately 76 percent of sales in the United States and Canada for
this product. The HHI would increase by approximately 2,500 points,
resulting in a post-acquisition HHI of more than 5,600 points.
38. Market shares are best measured using revenues in the markets
for the Relevant Products because suppliers with the capacity to
produce similar goods outside of those markets cannot quickly and
easily shift that capacity to supply customers with the Relevant
Products. Thus, the mere possession of similar capacity does not make a
supplier an ``uncommitted entrant''; meeting the requirements of
customers in a cost-efficient manner also requires specialized know-
how, experience, qualification, and the ability to innovate.
39. Due to Bemis's and Alcan's collective overall expertise in
meeting the needs of customers and other technical and commercial
factors for flexible-packaging rollstock for shredded natural cheese
packaged for retail sale, including, among other things, price,
delivery times, service, and technical support, Bemis and Alcan
frequently are perceived by each other, by other bidders, and by
customers as being the two strongest competitors in that market.
40. Bemis's bidding behavior often has been constrained by the
possibility of losing business to Alcan. By eliminating Alcan, Bemis
would gain the incentive and ability to profitably increase its bid
prices higher than it otherwise would without the acquisition.
Customers have also benefitted from competition between Bemis and Alcan
through higher quality, better supply-chain options, better technical
support, and numerous innovations. The combination of Bemis and Alcan
would eliminate this other competition and future benefits to the
customers.
41. The proposed acquisition, therefore, likely would substantially
lessen competition in the United States and Canada for flexible-
packaging rollstock for shredded natural cheese packaged for retail
sale, which likely would lead to higher prices, lower quality, less
favorable supply-chain options, reduced technical support, and less
innovation, in violation of Section 7 of the Clayton Act.
C. Likely Anticompetitive Effects in the United States and Canada for
Flexible-Packaging Shrink Bags for Fresh Meat
42. Currently, Bemis and Alcan account for approximately 20 and 8
[[Page 9933]]
percent, respectively, of the sales in the United States and Canada for
flexible-packaging shrink bags for fresh meat. If the proposed
acquisition is not enjoined, Bemis and Alcan combined would account for
approximately 28 percent of sales of flexible-packaging shrink bags for
fresh meat in the United States and Canada, and leave Bemis and one
other firm with approximately 93 percent of sales. The HHI would
increase by more than 300 points, resulting in a post-acquisition HHI
of more than 5,000 points.
43. Market shares are best measured using revenues in the markets
for the Relevant Products because suppliers with the capacity to
produce similar goods outside of those markets cannot quickly and
easily shift that capacity to supply customers with the Relevant
Products. Thus, the mere possession of similar capacity does not make a
supplier an ``uncommitted entrant''; meeting the requirements of
customers in a cost-efficient manner also requires specialized know-
how, experience, qualification, and the ability to innovate.
44. Although the third supplier of flexible-packaging shrink bags
for fresh meat is the dominant supplier, some customers desire two or
more suppliers. As a result, Bemis and Alcan often find themselves
competing to be the second supplier, and their price competition exerts
pricing pressure also on the dominant firm. Unless the proposed
acquisition is enjoined, that bidding dynamic would be eliminated
because Bemis and Alcan no longer would bid against one another. In
addition, Bemis's elimination of Alcan as an independent competitor
would result in only two suppliers accounting for nearly all of the
market. Such an increase in concentration likely would make
coordination easier.
45. The proposed acquisition, therefore, likely would substantially
lessen competition in the United States and Canada for flexible-
packaging shrink bags for fresh meat, which likely would lead to higher
prices, lower quality, less favorable supply-chain options, reduced
technical support, and less innovation, in violation of Section 7 of
the Clayton Act.
D. Entry Is Unlikely To Prevent Anticompetitive Harm
46. Some customers in the United States and Canada have attempted
to procure suitable flexible-packaging rollstock for chunk, sliced, and
shredded natural cheese packaged for retail sale from producers that do
not currently produce packaging for these uses. Similarly, some
customers in the United States and Canada have attempted to procure
suitable flexible-packaging shrink bags for fresh meat from producers
beyond Bemis and Alcan and the dominant producer. Most of those
flexible-packaging producers have not been able cost-effectively to
achieve the required specifications or quality requirements. These
suppliers likely would not be able to meet customers' required
specifications or quality requirements cost-effectively within a
commercially reasonable period of time, nor would they likely be able
to produce products that would run efficiently on their customers'
packaging equipment.
47. New entry into the markets for flexible-packaging rollstock for
chunk and sliced natural cheese packaged for retail sale, flexible-
packaging rollstock for shredded natural cheese packaged for retail
sale, and flexible-packaging shrink bags for fresh meat in the United
States and Canada would be costly, difficult, and time consuming. A new
supplier would need to construct production lines capable of producing
films that meet the rigorous standards set forth by major buyers of
such films. Construction of manufacturing facilities would require
millions of dollars of capital investment and the entrant would have to
be committed to research and development. In addition, the technical
know-how necessary to design and successfully manufacture packaging
that is able to run efficiently on customers' equipment cost-
effectively is difficult to obtain.
48. Even after a new entrant has developed the capability to supply
flexible-packaging rollstock for chunk, sliced, and shredded natural
cheese packaged for retail sale and flexible-packaging shrink bags for
fresh meat, the entrant must be qualified by potential customers,
demonstrating that it is capable of manufacturing products that meet
rigorous quality and performance standards. For example, because the
qualifying process for natural cheese typically requires a shelf-life
test, where sample products are wrapped in the candidate packaging and
stored in retail-like conditions for extended periods of time, the
process can take many months. Further, there is no guarantee that the
attempted qualification will be successful, and the entrant may have to
repeat the process multiple times. In such cases, the qualification
process can take multiple years with no guarantee of success. Moreover,
because customer specifications are unique, qualification with one
customer does not guarantee qualification with another.
49. Entry of existing packaging firms is unlikely because the
technical know how necessary to create the packaging for the relevant
products is difficult to obtain. Also, a company would have to pass
each customer's rigorous qualification tests. Entry of existing
packaging firms into the markets for flexible-packaging rollstock for
chunk and sliced natural cheese packaged for retail sale, flexible-
packaging rollstock for shredded natural cheese packaged for retail
sale, and flexible-packaging shrink bags for fresh meat, therefore,
likely would not be timely, likely, and sufficient to defeat a small
but significant increase in price in the relevant markets.
50. As a result of these barriers, entry by new firms or by
existing packaging firms likely would not be timely, likely, and
sufficient to prevent a likely exercise of market power by Bemis after
the acquisition.
VII. The Proposed Acquisition Violates Section 7 of the Clayton Act
51. Bemis's proposed acquisition of the Alcan Packaging Food
Americas business would be likely to substantially lessen competition
in violation of Section 7 of the Clayton Act, 15 U.S.C. 18, in the
United States and Canada for: (1) Flexible-packaging rollstock for
chunk and sliced natural cheese packaged for retail sale; (2) flexible-
packaging rollstock for shredded natural cheese packaged for retail
sale; and (3) flexible-packaging shrink bags for fresh meat.
52. Unless enjoined, the proposed acquisition likely would have the
following anticompetitive effects, among others:
(a) Actual and potential competition between Bemis and Alcan in the
relevant markets would be eliminated;
(b) Competition in the relevant markets likely would be
substantially lessened; and
(c) For the relevant products, prices would likely increase,
quality would likely decrease, supply-chain options would likely be
less favorable, technical support would likely be reduced, and
innovation would likely decline.
VIII. Requested Relief
53. The United States requests that this Court:
(a) Adjudge and decree Bemis's proposed acquisition of the Alcan
Packaging Food Americas business to violate Section 7 of the Clayton
Act, 15 U.S.C. 18;
(b) Enjoin defendants and all persons acting on their behalf from
consummating the proposed acquisition of the Alcan Packaging Food
Americas
[[Page 9934]]
business by Bemis, or from entering into or carrying out any other
agreement, plan, or understanding the effect of which would be to
combine Bemis with the Alcan Packaging Food Americas business;
(c) Award the United States its costs for this action; and
(d) Award the United States such other and further relief as the
Court deems just and proper.
For Plaintiff United States of America:
Christine A. Varney,
Assistant Attorney General, D.C. Bar # 411654.
William F. Cavanaugh, Jr.,
Deputy Assistant Attorney General.
J. Robert Kramer II,
Director of Operations.
Maribeth Petrizzi,
Chief, Litigation II Section, D.C. Bar # 435204.
Dorothy B. Fountain,
Assistant Chief, Litigation II Section, D.C. Bar # 439469.
Rachel Adcox,
Attorney, United States Department of Justice, Antitrust Division,
450 Fifth Street NW., Suite 8700, Washington, DC, 20530 (202) 307-
0924.
Dated: February 24, 2010.
Appendix A--Definition of HHI
The term ``HHI'' means the Herfindahl-Hirschman Index, a commonly
accepted measure of market concentration. The HHI is calculated by
squaring the market share of each firm competing in the market and then
summing the resulting numbers. For example, for a market consisting of
four firms with shares of 30, 30, 20, and 20%, the HHI is 2,600 (30\2\
+ 30\2\ + 20\2\ + 20\2\ = 2,600). The HHI takes into account the
relative size 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 points 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 1,000 and 1,800 points are
considered to be moderately concentrated, and markets in which the HHI
is in excess of 1,800 points are considered to be highly concentrated.
See Horizontal Merger Guidelines ] 1.51 (revised Apr. 8, 1997).
Transactions that increase the HHI by more than 100 points in highly
concentrated markets presumptively raise antitrust concerns under the
Horizontal Merger Guidelines issued by the Department of Justice and
the Federal Trade Commission. See id.
United States of America, Plaintiff, v. Bemis Company, Inc., and
Rio Tinto PLC, and Alcan Corporation, Defendants.
Case No.: 1:10-cv-00295
Judge: Kollar-Kotelly, Colleen
Deck Type: Antitrust
Date Stamp: February 24, 2010
Final Judgment
Whereas, Plaintiff United States of America (``United States'')
filed its Complaint on February 24, 2010, the United States and
defendants Bemis Company, Inc., Rio Tinto plc, and Alcan Corporation,
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 defendants to assure
that competition is not substantially lessened;
And whereas, the United States requires 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 United States 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:
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
whom defendants divest the Divestiture Assets.
B. ``Bemis'' means defendant Bemis Company, Inc., a Missouri
corporation headquartered in Neenah, Wisconsin, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and their directors, officers,
managers, agents, and employees.
C. ``Rio Tinto'' means defendant Rio Tinto plc, organized under the
laws of and headquartered in the United Kingdom, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and their directors, officers,
managers, agents, and employees.
D. ``Alcan'' means defendant Alcan Corporation, a Delaware
corporation that is a wholly owned subsidiary of Rio Tinto
headquartered 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.
E. ``Divestiture Assets'' means:
(1) Alcan's facility located at 905 W. Verdigris Parkway, Catoosa,
Oklahoma 74015 (``Catoosa facility'');
(2) Alcan's facility located at 271 River Street, Menasha,
Wisconsin 54952 (``Menasha facility''); provided, however, that the
tangible assets used exclusively or primarily for the wax-coating
operation located at the Menasha facility shall not be divested
pursuant to this Final Judgment;
(3) The following tangible assets:
(a) All tangible assets (leased or owned) necessary to operate or
used in or for the Catoosa facility and the Menasha facility,
including, but not limited to, all real property and improvements,
manufacturing equipment, product inventory, tooling and fixed assets,
personal property, titles, interests, leases, input inventory, office
furniture, materials, supplies, and other tangible property;
(b) All tangible assets (leased or owned) used exclusively or
primarily for the research and development of any Alcan Relevant
Product in the United States and/or Canada, including, but not limited
to, materials, supplies, and other property; and
(c) All records and documents relating to any Alcan Relevant
Product in the United States and/or Canada, including, but not limited
to, licenses, permits, and authorizations issued by any governmental
organization; contracts, teaming agreements, leases, commitments,
certifications, and understandings, including, but not limited to,
supply agreements; customer lists, contracts, accounts, and credit
records; and repair and performance records.
(4) The following intangible assets:
(a) All intangible assets used exclusively or primarily in the
design, development, production, marketing, servicing, distribution,
and/or sale of
[[Page 9935]]
any Alcan Relevant Product in the United States and/or Canada,
including, but not limited to, all patents, licenses and sub-licenses,
intellectual property, copyrights, trade names or trademarks,
including, but not limited to, ``Halo,'' ``Maraflex,'' ``Clearshield,''
or any derivation thereof, service marks, service names, technical
information, designs, trade dress, and trade secrets; computer
software, databases, and related documentation; know-how, including,
but not limited to, recipes, formulas, and machine settings;
information relating to plans for, improvements to, or line extensions
of, Alcan's Relevant Products; drawings, blueprints, designs, design
protocols, specifications for materials, and specifications for parts
and devices; marketing and sales data; quality assurance and control
procedures; design tools and simulation capability; contractual rights;
manuals and technical information provided by Alcan to its own
employees, customers, suppliers, agents, or licensees; safety
procedures for the handling of materials and substances; research
information and data concerning historic and current research and
development efforts, including, but not limited to, designs and
experiments and the results of successful and unsuccessful designs and
experiments; and
(b) With respect to any intangible assets that are not included in
paragraph II(E)(4)(a), above, and that prior to the filing of the
Complaint in this matter were used in connection with the design,
development, production, marketing, servicing, distribution, and/or
sale of both any Alcan Relevant Product and any other Alcan product, a
non-exclusive, non-transferable license for such intangible assets to
be used for the design, development, production, marketing, servicing,
distribution, and/or sale of any of the Relevant Products or the
operation or use of the Catoosa facility and/or the Menasha facility
for the period of time that defendants have rights to such assets;
provided, however, that any such license is transferable to any future
purchaser of all or any relevant portion of the Divestiture Assets.
F. ``Relevant Products'' means any flexible-packaging rollstock
used for chunk, sliced, and/or shredded natural cheeses packaged for
retail sale and any flexible-packaging shrink bags used for fresh meat.
G. ``Transaction'' means Bemis's proposed acquisition of the Alcan
Packaging Food Americas business.
III. Applicability
A. This Final Judgment applies to Bemis, Rio Tinto, and Alcan, 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 Section 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 Acquirer or Acquirers of the assets divested
pursuant to this Final Judgment.
IV. Divestitures
A. Bemis is ordered and directed, within ninety (90) 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 an Acquirer or Acquirers
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 sixty (60) calendar days in total, and
shall notify the Court in such circumstances. Bemis 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, Bemis promptly shall make known, by usual and customary
means, the availability of the Divestiture Assets. Bemis 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.
Bemis 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 privilege or work-product doctrine. Bemis shall make
available such information to the United States at the same time that
such information is made available to any other person.
C. Bemis shall provide the Acquirer or Acquirers and the United
States information relating to the personnel employed at the Catoosa
facility and the Menasha facility and the personnel otherwise involved
in the design, development, production, marketing, servicing,
distribution, and/or sale of Alcan's Relevant Products to enable the
Acquirer or Acquirers to make offers of employment. Defendants will not
interfere with any negotiations by the Acquirer or Acquirers to employ
any person who is employed at the Catoosa facility or the Menasha
facility or is otherwise involved in the design, development,
production, marketing, servicing, distribution, and/or sale of Alcan's
Relevant Products. Interference with respect to this paragraph
includes, but is not limited to, offering to increase an employee's
salary or benefits other than as a part of a company-wide increase in
salary or benefits. In addition, for each employee who elects
employment by the Acquirer or Acquirers, Bemis shall vest all unvested
pension and other equity rights of that employee and provide all
benefits to which the employee would have been entitled if terminated
without cause.
D. Defendants shall waive all noncompete agreements for any current
or former Alcan employee employed at the Catoosa facility, the Menasha
facility, or otherwise employed in the design, development, production,
marketing, servicing, distribution, and/or sale of any Alcan Relevant
Product.
E. Bemis shall permit prospective Acquirers of the Divestiture
Assets to have reasonable access to personnel and to make inspections
of the physical facilities associated with 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.
F. Bemis shall warrant to the Acquirer or Acquirers that each asset
will be operational on the date of sale.
G. Defendants shall not take any action that will impede in any way
the permitting, operation, use, or divestiture of the Divestiture
Assets.
H. Defendants shall warrant to the Acquirer or Acquirers 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, defendants will not undertake, directly or
indirectly, any challenges to the environmental, zoning, or other
permits relating to the operation of the Divestiture Assets.
I. Bemis shall take all steps necessary to accomplish the transfer
of the leasehold and other rights of possession of the Catoosa facility
to the Acquirer,
[[Page 9936]]
including, but not limited to, invoking and exercising all applicable
early termination, early purchase, or other provisions contained in the
agreements related to the Catoosa facility, and paying all necessary
sums specified in such agreements.
J. Bemis shall warrant that it is divesting Alcan's entire business
relating to each of the Relevant Products and will not manufacture any
Alcan Relevant Product after the date the Divestiture Assets are
divested until the expiration of this Final Judgment. Defendants shall
not solicit business for any Relevant Product that is subject to an
unexpired Alcan customer contract transferred to the Acquirer for a
period of one (1) year from the date of the divestiture of such
contract or the remaining term of the contract, whichever is shorter.
K. The Acquirer of the Menasha facility shall enter into an
agreement with Bemis permitting Bemis to occupy the portions of the
Menasha facility utilized for Alcan's wax-coating operations for a
period of no longer than three (3) years after the date the Transaction
is closed. By no later than three (3) months after the date the
Transaction is closed, Bemis shall create physical barriers that
segregate the wax-coating operations from the portions of the Menasha
facility to be occupied by the Acquirer. Bemis's areas and operations
at the Menasha facility shall be secured separately from those of the
Acquirer so that the Acquirer's areas and operations cannot be accessed
by Bemis and Bemis's areas and operations cannot be accessed by the
Acquirer, other than for facility repair, support, and maintenance
pursuant to a lease or other agreement. At the option of the Acquirer,
the lease agreement may include a provision requiring Bemis to remove
any or all physical barriers erected to segregate its areas and
operations from the Acquirer's areas and operations pursuant to this
paragraph.
L. At the option of the Acquirer of the Divestiture Assets relating
to the ``Maraflex'' products, Bemis shall enter into a supply contract
with that Acquirer for the ``Maraflex'' products sufficient to satisfy
that Acquirer 's obligations under any customer contract for a period
of up to one (1) year. The amount of ``Maraflex'' products produced by
Bemis for the Acquirer pursuant to such a supply contract shall be
limited to the total volume of ``Maraflex'' products produced by Alcan
in 2009 plus one percent, unless otherwise mutually agreed by Bemis and
the Acquirer. The terms and conditions of any contractual arrangement
intended to satisfy this provision must be reasonably related to market
conditions for these products. The United States, in its sole
discretion, may approve an extension of the term of this supply
contract for a period of up to two (2) years. If the Acquirer seeks an
extension of the term of this supply contract, it shall so notify the
United States in writing at least four (4) months prior to the date the
supply contract expires. If the United States approves such an
extension, it shall so notify Bemis in writing at least three (3)
months prior to the date the supply contract expires.
M. At the option of the Acquirer of the Divestiture Assets relating
to the ``Maraflex'' products, Bemis shall enter into a transition
services agreement with that Acquirer sufficient to meet all or part of
that Acquirer's needs for assistance in matters relating to the
development, production, and/or service of the ``Maraflex'' products or
technology for a period of at least six (6) months but no longer than
three (3) years. The terms and conditions of any contractual
arrangement intended to satisfy this provision must be reasonably
related to the market value of the expertise of the personnel providing
any needed assistance.
N. At the option of the Acquirer of the Menasha facility, Bemis
shall enter into a supply contract with that Acquirer for any Relevant
Product produced at Alcan's facility located at 901 Morrison Drive,
Boscobel, Wisconsin 53805 (the ``Boscobel facility''), sufficient to
satisfy that Acquirer's obligations under any customer contract for a
period of up to one (1) year. The amount of Relevant Products produced
by Bemis for the Acquirer pursuant to such a supply contract shall be
limited to the total volume of Relevant Products produced by Alcan at
the Boscobel facility in 2009 plus one percent, unless otherwise
mutually agreed by Bemis and the Acquirer. The terms and conditions of
any contractual arrangement intended to satisfy this provision must be
reasonably related to market conditions for these products. The United
States, in its sole discretion, may approve an extension of the term of
this supply contract for a period of up to one (1) year. If the
Acquirer seeks an extension of the term of this supply contract, it
shall so notify the United States in writing at least four (4) months
prior to the date the supply contract expires. If the United States
approves such an extension, it shall so notify Bemis in writing at
least three (3) months prior to the date the supply contract expires.
O. At the option of Bemis, the Acquirer of the Catoosa facility
shall enter into a supply contract for the ``Clearshield'' products
sufficient to satisfy Alcan's or Bemis's obligations to Alcan
affiliates Danaflex, Maua, and Envaril for a period of up to one (1)
year. The amount of ``Clearshield'' products produced by the Acquirer
for Bemis pursuant to such a supply contract shall be limited to the
total volume of ``Clearshield'' products produced by Alcan for
Danaflex, Maua, and Envaril in 2009 plus one percent, unless otherwise
mutually agreed by Bemis and the Acquirer. The terms and conditions of
any contractual arrangement intended to satisfy this provision must be
reasonably related to market conditions for these products. The United
States, in its sole discretion, may approve an extension of the term of
this supply contract for a period of up to two (2) years. If Bemis
seeks an extension of the term of this supply contract, it shall so
notify the United States in writing at least four (4) months prior to
the date the supply contract expires. If the United States approves
such an extension, it shall so notify the Acquirer in writing at least
three (3) months prior to the date the supply contract expires.
P. At the option of Bemis, the Acquirer or Acquirers shall enter
into an agreement to provide Bemis with a non-exclusive, non-
transferable license for the intangible assets described in paragraph
II(E)(4)(a), above, that prior to the filing of the Complaint in this
matter were used in connection with the design, development,
production, marketing, servicing, distribution, and/or sale of both any
Alcan Relevant Product and any other Alcan product; provided, however,
that any such license is solely for use in connection with the design,
development, production, marketing, servicing, distribution, and/or
sale of products other than the Alcan Relevant Products. The terms and
conditions of any contractual arrangement intended to satisfy this
provision must be reasonably related to market conditions for such
licenses.
Q. At the option of Bemis, the Acquirer of the Divestiture Assets
relating to the ``Clearshield'' products shall enter into an agreement
to provide Bemis with a non-exclusive, non-transferable license to
enable Bemis to produce ``Clearshield'' products for sale outside the
United States and Canada. The terms and conditions of any contractual
arrangement intended to satisfy this provision must be reasonably
related to market conditions for such licenses.
R. At the option of Bemis, the Acquirer of the Menasha facility
shall enter into an agreement with Bemis to
[[Page 9937]]
provide Bemis with rotogravure printing services to be used in
connection with Alcan's wax-coating operation located at the Menasha
facility for a period of up to twelve (12) months. The terms and
conditions of any contractual arrangement intended to satisfy this
provision must be reasonably related to market conditions for these
services.
S. In any instance where a third party has a right to a divested
intangible asset pursuant to an agreement with any defendant, and where
the agreement was entered into prior to the date of the filing of the
Complaint in this matter, the Acquirer of that divested asset shall
enter into an agreement with that third party to provide it with a
right to that asset under terms and conditions sufficient to satisfy
defendants' obligations under the original agreement.
T. Unless the United States otherwise consents in writing, the
divestitures 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 or Acquirers as part of a
viable, ongoing business engaged in the design, development,
production, marketing, servicing, distribution, and sale of the
Relevant Products. Divestiture 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 that the
Divestiture Assets will remain viable and the divestiture 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 an Acquirer or Acquirers that, in the United
States's sole judgment, has the intent and capability (including the
necessary managerial, operational, technical and financial capability)
of competing effectively as a supplier of the Relevant Products; and
(2) Shall be accomplished so as to satisfy the United States, in
its sole discretion, that none of the terms of any agreement between
the Acquirer or Acquirers and defendants give defendants the ability
unreasonably to raise the Acquirer's or Acquirers' costs, to lower the
Acquirer's or Acquirers' efficiency, or otherwise to interfere in the
ability of the Acquirer or Acquirers to compete effectively.
V. Appointment of Trustee
A. If Bemis has not divested the Divestiture Assets within the time
period specified in Section IV(A), Bemis 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 or Acquirers 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 Bemis 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 VI.
D. The trustee shall serve at the cost and expense of Bemis, 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 defendants 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 divestiture 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 trustee's accomplishment of the divestitures.
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 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 his or her
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. Notice of Proposed Divestiture
A. Within two (2) business days following execution of a definitive
divestiture agreement, Bemis shall notify the United States of any
proposed divestiture required by Section IV of
[[Page 9938]]
this Final Judgment. Within two (2) business days following execution
of a definitive divestiture agreement, the trustee shall notify the
United States and defendants of any proposed divestiture required by
Section V of this Final Judgment. 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 defendants,
the proposed Acquirer or Acquirers, any other third party, or the
trustee, if applicable, additional information concerning the proposed
divestiture, the proposed Acquirer or Acquirers, and any other
potential Acquirer. 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 or Acquirers, 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 divestiture. If the United States provides
written notice that it does not object, the divestiture may be
consummated, subject only to defendants' limited right to object to the
sale under Section V(C) of this Final Judgment. Absent written notice
that the United States does not object to the proposed Acquirer or
Acquirers or upon objection by the United States, a divestiture
proposed under Section IV or Section V shall not be consummated. Upon
objection by defendants under Section V(C), a divestiture proposed
under Section V shall not be consummated unless approved by the Court.
VII. Financing
Defendants shall not finance all or any part of any purchase made
pursuant to Section IV or V of this Final Judgment.
VIII. Hold Separate
Until the 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.
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 divestitures have been completed under Section IV or V, Bemis 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 Bemis
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 Bemis, including limitations
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, Bemis 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 VIII of this Final Judgment. Bemis shall deliver to the
United States an affidavit describing any changes to the efforts and
actions outlined in defendants' 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
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 Antitrust Division, 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 the option of the United States, 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 responses to written
interrogatories, under oath if requested, relating to any of the
matters contained in this Final Judgment as may be requested.
C. No information or documents obtained by the means provided in
this Section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States, except in the course of legal proceedings to which the United
States is a party (including grand jury proceedings), 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 United
States shall give defendants ten (10) calendar days notice prior to
divulging such material in any legal proceeding (other than a grand
jury proceeding).
XI. Notification
Unless such transaction is otherwise subject to the reporting and
waiting
[[Page 9939]]
period requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''), Bemis, without
providing advance notification to the Antitrust Division, shall not
directly or indirectly acquire any assets of or any interest
(including, but not limited to, any financial, security, loan, equity,
or management interest) in any company in the business of designing,
developing, producing, marketing, servicing, distributing, and/or
selling any of the Relevant Products in the United States and/or Canada
during the term of this Final Judgment.
Such notification shall be provided to the Antitrust Division 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 the Relevant Products. 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
Antitrust Division make a written request for additional information,
defendants shall not consummate the proposed transaction or agreement
until thirty (30) calendar 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.
XII. No Reacquisition
Defendants may not reacquire any part of the Divestiture Assets
during the term of this Final Judgment.
XIII. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
XIV. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire ten (10) years from the date of its entry.
XV. 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's responses to comments.
Based upon the record before the Court, which includes the Competitive
Impact Statement and any comments and responses 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 of America, Plaintiff, v. Bemis Company, Inc., and
Rio Tinto PLC, and Alcan Corporation, Defendants.
Case: 1:10-cv-00295
Assigned To: Kollar-Kotelly, Colleen
Assign. Date: 02/24/2010
Description: Antitrust
Judge:
Deck Type: Antitrust
Date Stamp:
Competitive Impact Statement
Plaintiff United States of America (``United States''), pursuant to
section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or
``Tunney Act''), 15 U.S.C. 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
Defendants Bemis Company, Inc. and Rio Tinto plc entered into a
Sale and Purchase Agreement, dated July 5, 2009, pursuant to which
Bemis agreed to acquire the Alcan Packaging Food Americas business from
Rio Tinto for $1.2 billion.
The United States filed a civil antitrust Complaint against Bemis,
Rio Tinto, and Alcan Corporation on February 24, 2010, seeking to
enjoin Bemis's acquisition of the Alcan Packaging Food Americas
business. The Complaint alleged that the acquisition likely would
substantially lessen competition in violation of Section 7 of the
Clayton Act, 15 U.S.C. 18, in the United States and Canada, for the
design, development, production, marketing, servicing, distribution,
and sale of: (1) Flexible-packaging rollstock for chunk and sliced
natural cheese packaged for retail sale; (2) flexible-packaging
rollstock for shredded natural cheese packaged for retail sale; and (3)
flexible-packaging shrink bags for fresh meat (hereinafter,
collectively, the ``Relevant Products''). That loss of competition
likely would result in higher prices, decreased quality, less favorable
supply-chain options, reduced technical support, and lesser innovation
in the markets for the Relevant Products.
At the same time the Complaint was filed, the United States filed a
Hold Separate Stipulation and Order (``Hold Separate'') and a proposed
Final Judgment, which are designed to eliminate the anticompetitive
effects of Bemis's acquisition of the Alcan Packaging Food Americas
business. Under the proposed Final Judgment, which is explained more
fully below, Bemis is required to divest all of the intangible assets
(i.e., intellectual property and know-how) related to the production of
Alcan Relevant Products \1\ in the United States and Canada and two of
the plants involved in the production of the Alcan Relevant Products.
Bemis is also required to divest all of the tangible assets necessary
to operate the divested plants and all tangible assets used exclusively
or primarily in the production of any Alcan Relevant Product in the
United States or Canada.
---------------------------------------------------------------------------
\1\ The term ``Alcan Relevant Products'' refers specifically to
those Relevant Products produced by Alcan, rather than to Relevant
Products produced by Bemis or others.
---------------------------------------------------------------------------
The United States and defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA. Entry of
the proposed Final Judgment would terminate this action, except that
the Court would retain jurisdiction to construe, modify, or enforce the
provisions of the Final Judgment and to punish violations thereof.
II. Description of the Events Giving Rise to the Alleged Violations
A. The Defendants
Bemis is a worldwide provider of packaging materials, including
flexible packaging for natural cheese and fresh meat. In 2008, Bemis
and its subsidiaries had total sales of approximately $3.8 billion,
including approximately $2.1 billion in sales of flexible packaging in
the United States.
Rio Tinto is an international mining company headquartered in the
United
[[Page 9940]]
Kingdom, with approximately $58 billion in sales in 2008. Alcan is a
wholly owned subsidiary of Rio Tinto. The Alcan Packaging Food Americas
business produces and sells flexible packaging in the United States,
Canada, and Latin America. In 2008, the Alcan Packaging Food Americas
business sold approximately $1.5 billion of flexible packaging.
B. The Competitive Effects of the Acquisition in the Markets for
Flexible Packaging for Natural Cheese and Fresh Meat
Flexible packaging is any package the shape of which can be readily
changed. Flexible packaging for food encompasses a wide range of
products, including bags and wrappings for cheeses and meats, snack
bags, and cereal-box liners. Flexible packaging is distinguishable from
rigid packaging, such as jars, cans, cups, trays, and hard plastic
bottles.
Varying degrees of design and manufacturing sophistication are
required to produce flexible packaging for different end uses. Some
flexible packaging, such as single-layer packaging, is relatively
simple to manufacture, and customers can choose from a number of
producers for these types of flexible packaging. Flexible packaging for
other end uses, such as natural cheese and fresh meat, however, has
multiple layers, is subject to more rigorous performance standards,
requires greater scientific knowledge and technical know-how to
engineer, and requires that technical support be readily available,
and, therefore, is more difficult to produce and commercialize
successfully.
Bemis and Alcan are the two leading suppliers in the United States
and Canada of flexible packaging products suitable for a variety of
natural cheese products packaged for retail sale. Bemis and Alcan are
also two of the three primary suppliers of shrink bags for fresh-meat
packaging in the United States and Canada.
1. Relevant Product Markets
a. Natural-Cheese Packaging
Natural cheese is sold in several forms, including chunk cheese,
sliced cheese, and shredded cheese. The films used in flexible
packaging for some natural cheese products are sold in the form of
rollstock, which is a continuous sheet of film that is cut for each
package. Most natural cheese sold at retail is packaged using rollstock
films.
Cheese packaging customers demand a long shelf-life for natural
cheese. The flexible-packaging rollstock for natural cheese must
include a barrier layer that keeps out oxygen to prevent the cheese
from spoiling. The packaging must also prevent moisture from leaking
into or out of the package. Some cheeses emit gasses as they age; such
cheeses require packaging that allows gasses to escape. In addition,
the packaging film must be sufficiently transparent to present the
cheese well to the consumer, but also avoid discoloration from
fluorescent lights. The packaging must also resist abrasion and
cracking during distribution and run smoothly and efficiently on the
customer's filling machines. Finally, the packaging must be inert, so
that the flavor of the cheese is not compromised by the plastic.
(i) Flexible-Packaging Rollstock for Chunk and Sliced Natural Cheese
Chunk natural cheese is sold in bricks of specific sizes, typically
eight, but ranging to thirty-two, ounces. Sliced natural cheese is
typically sold in packages with roughly ten or more slices. Producers
of chunk and sliced natural cheese generally use the same films for
packaging. Specialized rollstock films are designed specifically for
packaging chunk and sliced natural cheese for retail sale. While some
chunk and sliced natural cheeses for retail sale are packaged in other
forms of packaging (e.g., shrink bags or rigid trays), these are more
expensive to purchase than rollstock packaging and cannot be used on
the same packaging equipment as rollstock. A small but significant
increase in the price of flexible-packaging rollstock for chunk and
sliced natural cheese packaged for retail sale likely would not cause
customers faced with such an increase to substitute other forms of
packaging, or otherwise purchase sufficiently less of the product, so
as to render the price increase unprofitable. Accordingly, the United
States has alleged that flexible-packaging rollstock for chunk and
sliced natural cheese packaged for retail sale is a line of commerce
and a relevant product market within the meaning of Section 7 of the
Clayton Act.
(ii) Flexible-Packaging Rollstock for Shredded Natural Cheese Packaged
for Retail Sale
Shredded natural cheese packaged for retail sale typically is
packaged in bags, which often come with an easy-open mechanism and an
easy-close attachment. The easy-open mechanism is either laser scored
or mechanically scored, such that some of the package's layers are
perforated (making the package easy to tear), while leaving the oxygen
and moisture barriers intact (preventing contamination of the product).
The scoring process presents significant challenges to flexible-
packaging producers. The sealing process also is difficult because the
bags typically are filled with cheese while in a vertical position and
the release of cheese into the bags is continuous and fast.
Specialized films are designed specifically for shredded natural
cheese packaged for retail sale. A small but significant increase in
the price of flexible-packaging rollstock for shredded natural cheese
packaged for retail sale likely would not cause customers faced with
such an increase to switch to other forms of packaging, or otherwise
purchase sufficiently less of the product, so as to render the price
increase unprofitable. Accordingly, the United States has alleged that
flexible-packaging rollstock for shredded natural cheese packaged for
retail sale is a line of commerce and a relevant product market within
the meaning of Section 7 of the Clayton Act.
b. Flexible-Packaging Shrink Bags for Fresh Meat
Several characteristics are common to most flexible packaging films
for fresh meat (i.e., beef, veal, pork, and lamb). First, most films
for fresh meat contain a layer that prevents oxygen from coming into
contact with the meat. Second, fresh meat films must prevent moisture
from leaking out and contaminants from entering the packaging. Third,
fresh meat films must run effectively on the customer's packaging
equipment. Finally, the sealant must bond through fatty and oily
substances.
The most common type of flexible packaging film for fresh meat is a
shrink bag, which is designed to shrink to the contours of the contents
when heated, forming a tight seal. Shrink bags are particularly
suitable for use with fresh meat, in particular for wholesale
distribution of meat to be cut for retail sale in grocery stores.
Shrink bags used for fresh meat must be durable enough to survive the
rigors of distribution while maintaining its oxygen and moisture
barriers and allowing the meat to retain its flavor. The bag must also
meet shelf-life requirements of 30 days or more and, when used for
retail packaging, have a high degree of transparency for optimal
presentation.
A small but significant increase in the price of flexible-packaging
shrink bags for fresh meat likely would not cause customers faced with
such an increase to substitute to other forms of packaging, or
otherwise purchase sufficiently less of the product, so as to render
the price increase unprofitable.
[[Page 9941]]
Accordingly, the United States has alleged that flexible-packaging
shrink bags for fresh meat constitute a line of commerce and a relevant
product market within the meaning of Section 7 of the Clayton Act.
i. Relevant Geographic Market
Producers of the Relevant Products ship the products to customers
throughout the United States and Canada. Producers outside the United
States and Canada are not good alternatives for customers in the United
States and Canada, and producers outside the United States and Canada
have not been able to obtain significant business from customers in the
United States and Canada. Customers using producers outside the United
States and Canada would face longer lead times and an increased
potential for supply-chain complications. Moreover, major customers
demand that producers of flexible packaging provide frequent technical
and operational service and support at the customer's premises and do
not believe that foreign suppliers can provide the level of service and
support they demand. A small but significant increase in the price of
the Relevant Products in the United States and Canada would not cause a
sufficient number of customers in the United States and Canada to turn
to manufacturers of the Relevant Products outside the United States and
Canada so as to make such a price increase unprofitable. Accordingly,
the United States has alleged that the United States and Canada
comprise a relevant geographic market within the meaning of Section 7
of the Clayton Act.
3. Anticompetitive Effects
a. Flexible-Packaging Rollstock for Chunk and Sliced Natural Cheese
Packaged for Retail Sale
Bemis and Alcan dominate sales of flexible-packaging rollstock for
chunk and sliced natural cheese packaged for retail sale. Due to
Bemis's and Alcan's collective overall expertise in meeting the needs
of customers and other technical and commercial factors for flexible-
packaging rollstock for chunk and sliced natural cheese packaged for
retail sale, including, among other things, price, delivery times,
service, and technical support, Bemis and Alcan frequently are
perceived by each other, by other bidders, and by customers as being
the two strongest competitors in that market. Currently, Bemis and
Alcan account for approximately 37 and 54 percent, respectively, of
sales in the United States and Canada for this product. Absent the
divestitures, Bemis and Alcan combined would account for approximately
91 percent of sales in the United States and Canada for this product.
Market shares are best measured using revenues in the markets for
the Relevant Products because suppliers with the capacity to produce
similar goods outside of those markets cannot quickly and easily shift
that capacity to supply customers with the Relevant Products. Thus, the
mere possession of similar capacity does not make a supplier an
``uncommitted entrant'' as that term is used in the Horizontal Merger
Guidelines; meeting the requirements of customers in a cost-efficient
manner also requires specialized know-how, experience, qualification,
and the ability to innovate.
Bemis's bidding behavior often has been constrained by the threat
of losing business to Alcan. By eliminating Alcan, Bemis would gain the
incentive and likely ability to profitably increase its bid prices
higher than it otherwise would without the acquisition. Customers have
also benefitted from competition between Bemis and Alcan through higher
quality, better supply-chain options (including delivery times and
volume-purchase requirements), technical support, and numerous
innovations. The combination of Bemis and Alcan would eliminate this
other competition and future benefits to the customers.
The proposed acquisition, therefore, likely would substantially
lessen competition in the United States and Canada for flexible-
packaging rollstock for chunk and sliced natural cheese packaged for
retail sale, which likely would lead to higher prices, lower quality,
less favorable supply-chain options, reduced technical support, and
less innovation, in violation of Section 7 of the Clayton Act.
b. Flexible-Packaging Rollstock for Shredded Natural Cheese Packaged
for Retail Sale
Bemis and Alcan are two of only a few credible competitors that
might successfully bid to supply a customer with flexible packaging
rollstock for shredded natural cheese packaged for retail sale.
Although other flexible packaging suppliers market competing products,
customers have stated that Bemis's and Alcan's products are
technologically superior to other available packaging and have uniquely
effective features (e.g., easy-open and reclose mechanisms). Bemis and
Alcan have also massed a collective expertise in meeting the needs of
customers with respect to price, delivery times, service, technical
support, scale, breadth of product offering, and new product
development that other competitors have not been able to match.
Therefore, Bemis and Alcan frequently are perceived by each other, by
other bidders, and by customers as being the two strongest competitors
in that market. Currently, Bemis and Alcan account for approximately 27
and 49 percent, respectively, of sales in the United States and Canada
for this product. Absent the divestitures, Bemis and Alcan combined
would account for approximately 76 percent of sales in the United
States and Canada for this product.
Market shares are best measured using revenues in the markets for
the Relevant Products because suppliers with the capacity to produce
similar goods outside of those markets cannot quickly and easily shift
that capacity to supply customers with the Relevant Products. Thus, the
mere possession of similar capacity does not make a supplier an
``uncommitted entrant'' as that term is used in the Horizontal Merger
Guidelines; meeting the requirements of customers in a cost-efficient
manner also requires specialized know-how, experience, qualification,
and the ability to innovate.
Bemis's bidding behavior often has been constrained by the threat
of losing business to Alcan. By eliminating Alcan, Bemis would gain the
incentive and ability to profitably increase its bid prices higher than
it otherwise would without the acquisition. Customers have also
benefitted from competition between Bemis and Alcan through higher
quality, better supply-chain options, better technical support, and
numerous innovations. The combination of Bemis and Alcan would
eliminate this other competition and future benefits to the customers.
The proposed acquisition, therefore, likely would substantially
lessen competition in the United States and Canada for flexible-
packaging rollstock for shredded natural cheese packaged for retail
sale, which likely would lead to higher prices, lower quality, less
favorable supply-chain options, reduced technical support, and less
innovation, in violation of Section 7 of the Clayton Act.
c. Flexible-Packaging Shrink Bags for Fresh Meat
Currently, Bemis and Alcan account for approximately 20 and 8
percent, respectively, of the sales in the United States and Canada for
flexible-packaging shrink bags for fresh meat. If the proposed
acquisition is not enjoined, Bemis and Alcan combined would account for
approximately 28 percent of
[[Page 9942]]
sales of flexible-packaging shrink bags for fresh meat in the United
States and Canada, and leave Bemis and one other firm with over 90
percent of sales.
Market shares are best measured using revenues in the markets for
the Relevant Products because suppliers with the capacity to produce
similar goods outside of those markets cannot quickly and easily shift
that capacity to supply customers with the Relevant Products. Thus, the
mere possession of similar capacity does not make a supplier an
``uncommitted entrant'' as that term is used in the Horizontal Merger
Guidelines; meeting the requirements of customers in a cost-efficient
manner also requires specialized know-how, experience, qualification,
and the ability to innovate.
Although the third supplier of flexible-packaging shrink bags for
fresh meat is the dominant supplier, some customers desire two or more
suppliers. As a result, Bemis and Alcan often find themselves competing
to be the second supplier, and their price competition exerts pricing
pressure also on the dominant firm. Unless the proposed acquisition is
enjoined, that bidding dynamic would be eliminated because Bemis and
Alcan no longer would bid against one another. In addition, Bemis's
elimination of Alcan as an independent competitor would result in only
two suppliers accounting for nearly all of the market. Such an increase
in concentration likely would make coordination more likely.
The proposed acquisition, therefore, likely would substantially
lessen competition in the United States and Canada for flexible-
packaging shrink bags for fresh meat, which likely would lead to higher
prices, lower quality, less favorable supply-chain options, reduced
technical support, and less innovation, in violation of Section 7 of
the Clayton Act.
d. Entry
Some customers in the United States and Canada have attempted to
procure suitable flexible-packaging rollstock for chunk, sliced, and
shredded natural cheese packaged for retail sale from producers that do
not currently produce packaging for these uses. Similarly, some
customers in the United States and Canada have attempted to procure
suitable flexible-packaging shrink bags for fresh meat from producers
beyond Bemis and Alcan and the dominant producer. Most of those
flexible-packaging producers have not been able cost-effectively to
achieve the required specifications or quality requirements. These
suppliers likely would not be able to meet customers' required
specifications or quality requirements cost-effectively within a
commercially reasonable period of time, nor would they likely be able
to produce Relevant Products that would run efficiently on their
customers' packaging equipment. Indeed, many customers who have looked
for alternative suppliers have not been able to find credible
competitors other than Bemis, Alcan, and, in the case of flexible-
packaging shrink bags for fresh meat, the aforementioned dominant
producer.
New entry into the markets for Relevant Products in the United
States and Canada would be costly, difficult, and time consuming. A new
supplier would need to construct production lines capable of producing
films that meet the rigorous standards set forth by major buyers of
such films. Construction of manufacturing facilities would require
millions of dollars of capital investment, and the entrant would have
to be committed to research and development. In addition, the technical
know-how necessary to design and successfully manufacture packaging
that is able to run efficiently on customers' equipment cost-
effectively is difficult to obtain.
Even after a new entrant has developed the capability to supply the
Relevant Products, the entrant must be qualified by potential
customers, demonstrating that it is capable of manufacturing products
that meet rigorous quality and performance standards. For example,
because the qualifying process for natural cheese typically requires a
shelf-life test, where sample products are wrapped in the candidate
packaging and stored in retail-like conditions for extended periods of
time, the process can take many months. Further, there is no guarantee
that the attempted qualification will be successful, and the potential
entrants may have to repeat the process multiple times. In some cases,
the qualification process has taken multiple years and in other cases
has failed repeatedly. Moreover, because customer specifications are
unique, qualification with one customer does not guarantee
qualification with another.
Entry of existing packaging firms that do not currently produce
Relevant Products is also unlikely because the technical know-how
necessary to create the Relevant Products is difficult to obtain. Also,
a company would have to pass each customer's rigorous qualification
tests. Entry by new firms or by existing packaging firms into the
markets for Relevant Products, therefore, likely would not be timely,
likely, and sufficient to defeat a small but significant post-
acquisition increase in price in the relevant markets.
III. Explanation of the Proposed Final Judgment
The divestitures required by the proposed Final Judgment will
eliminate the anticompetitive effects that would otherwise likely
result from Bemis's acquisition of the Alcan Packaging Food Americas
business. These divestitures will preserve competition in the markets
for the Relevant Products by creating an additional independent,
economically viable competitor to Bemis in the United States and Canada
for each of the Relevant Products.
The Final Judgment requires the divestiture of the entire business
that currently produces the Alcan Relevant Products, which includes all
of the intangible and non-plant tangible assets associated with those
products, as well as two of the four plants currently producing those
products. The divestiture of the intangible assets associated with the
Alcan Relevant Products is critically important, as it is difficult to
obtain the know-how necessary to design and successfully manufacture
packaging that is able to run efficiently on customers' equipment. The
divestiture package must also include plants that are already
successful in producing the Relevant Products, as the know-how required
to create competitive packaging includes specialized knowledge of the
equipment used in producers' and customers' plants. The collective
knowledge and experience of the plant management and employees will
enable an Acquirer to compete successfully with Bemis for the
manufacture and sale of the Relevant Products. Divestiture of all the
plants currently producing the Alcan Relevant Products is not necessary
to remedy the competitive issues presented by the Transaction, however;
once a critical base of knowledge and experience regarding the
production of the Relevant Products is attained, an Acquirer will be
able to create or expand its own physical facilities to accommodate its
business.
To this end, the divestiture assets include: (1) All tangible
assets used exclusively or primarily for the research and development
of any Alcan Relevant Product in the United States or Canada; (2) all
records and documents relating to any Alcan Relevant Product in the
United States or Canada; (3) all intangible assets used exclusively or
primarily in the design, development, production, marketing, servicing,
distribution, or sale of any Alcan Relevant Product in the United
States or Canada; and (4) with respect to any
[[Page 9943]]
intangible assets not included in (3), above, and that prior to the
filing of the Complaint in this matter were used in connection with the
design, development, production, marketing, servicing, distribution, or
sale of both any Alcan Relevant Product and any other Alcan product, a
non-exclusive, non-transferable license for such intangible assets to
be used for the design, development, marketing, servicing,
distribution, or sale of any of the Relevant Products or the operation
or use of the plants to be divested. These assets are to be divested
regardless of whether they are currently used at the plants to be
divested.
The proposed Final Judgment also requires the divestiture of two of
the four plants currently manufacturing the Alcan Relevant Products.
The first of these plants is the Alcan facility located at 905 W.
Verdigris Parkway, Catoosa, Oklahoma (the ``Catoosa facility''), which
exclusively produces flexible-packaging shrink bags for fresh meat. The
second plant is the Alcan facility located at 271 River Street,
Menasha, Wisconsin (the ``Menasha facility''), which produces both
flexible-packaging rollstock for chunk and sliced natural cheese
packaged for retail sale and flexible-packaging rollstock for shredded
natural cheese packaged for retail sale. The Menasha facility also
contains a wax-coating operation that is not associated with the
Relevant Products and will be moved by Bemis to another of its plants.
The other two plants currently producing Alcan Relevant Products
are the Alcan facility located at 901 Morrison Drive, Boscobel,
Wisconsin (the ``Boscobel facility'') and the Alcan facility located at
1500 East Aurora Avenue, Des Moines, Iowa (the ``Des Moines
facility''). The Boscobel facility produces flexible-packaging
rollstock for shredded natural cheese packaged for retail sale and
packaging for processed meat (which is not a Relevant Product), while
the Des Moines facility produces flexible packaging shrink bags for
fresh meat and packaging for processed meat (which is not a Relevant
Product). The Boscobel and Des Moines facilities produce such a
substantial quantity of non-Relevant Products that a divestiture of
those plants likely would require either that the plant be split, with
both Bemis and the Acquirer occupying the plant for a significant
period of time, or that a significant amount of business involving non-
Relevant Products be transferred to the Acquirer.
By contrast, the Catoosa facility exclusively produces Relevant
Products, and the Menasha facility, while also containing a non-
relevant wax-coating operation, is uniquely situated because the wax-
coating operation is largely confined to a discrete area of the plant
and can be moved by Bemis to another facility with minimal disturbance
to the Acquirer. The proposed Final Judgment requires, therefore,
divestiture of the Catoosa facility and all related assets, and of the
Menasha facility and all related assets, with the exception of the wax-
coating operation.
The only near-term issue created by the fact that Bemis will be
divesting only two of the plants currently producing the Relevant
Products is that the Acquirer(s) may not immediately have the capacity
to produce the quantities of Relevant Products currently demanded by
customers. Thus, supply and transition services agreements are
contemplated in the proposed Final Judgment to allow the Acquirer(s)
time to build or adapt its own facilities to accommodate the new
production.
First, because the Alcan shrink bag product known as ``Maraflex''
is not produced at either the Menasha facility or the Catoosa facility,
supply and transition services agreements may be necessary to ensure
that the Acquirer will be able immediately to provide Maraflex products
to customers. Therefore, the proposed Final Judgment provides that, at
the option of the Acquirer of the assets relating to the Maraflex
products, Bemis shall enter into a supply contract with that Acquirer
for Maraflex products sufficient to satisfy that Acquirer's obligations
under any customer contract for a period of up to one (1) year. The
United States, in its sole discretion, may approve an extension of the
term for a period of up to two (2) additional years. In addition, at
the option of the Acquirer of the assets relating to Maraflex products,
Bemis shall enter into a transition services agreement with that
Acquirer sufficient to meet all or part of that Acquirer's needs for
assistance in matters relating to the development, production, and
service of the Maraflex products or technology for a period of at least
six (6) months, but no longer than three (3) years.
Second, the proposed Final Judgment provides for a supply agreement
relating to the provision of flexible-packaging rollstock for shredded
natural cheese packaged for retail sale. Currently, flexible-packaging
rollstock for shredded natural cheese is produced in the Menasha
facility and the Boscobel facility. While the Menasha facility will be
divested to an Acquirer, the Boscobel facility will be retained by
Bemis. As a consequence, an Acquirer's ability immediately to produce
flexible-packaging rollstock for shredded natural cheese may not be
sufficient to satisfy the Acquirer's existing supply obligations or to
allow the Acquirer to expand the business in competition with Bemis.
Therefore, the proposed Final Judgment provides that, at the option of
the Acquirer of the Menasha facility, Bemis shall enter into a supply
contract with that Acquirer for any Relevant Product produced at the
Boscobel facility, sufficient to satisfy that Acquirer's obligations
under any customer contract for a period of up to one (1) year. The
United States, in its sole discretion, may approve an extension of the
term of this supply contract for a period of up to one (1) additional
year.
Third, because Bemis will retain the wax-coating operation
currently housed in the Menasha facility and move it to another of its
plants after the Transaction is closed, the proposed Final Judgment
requires that the Acquirer of the Menasha facility enter into an
agreement with Bemis permitting Bemis to occupy the portions of the
Menasha facility utilized for the wax-coating operation for a period of
no longer than three (3) years after the date the Transaction is
closed. Also, at the option of Bemis, the Acquirer of the Menasha
facility will be required to enter into an agreement with Bemis to
provide Bemis with rotogravure printing services for the wax-coating
operation at the Menasha facility for a period of up to twelve (12)
months.
Finally, the proposed Final Judgment provides for a supply
agreement relating to ``Clearshield,'' which is another Alcan shrink
bag product. Clearshield is produced exclusively at the Catoosa
facility, which is to be divested. However, as a part of the
Transaction, Bemis will be acquiring an obligation to supply
Clearshield to certain of Alcan's South American and New Zealand
affiliates. In order to allow Bemis to meet those obligations, the
proposed Final Judgment provides that, at the option of Bemis, the
Acquirer of the Catoosa facility shall enter into a supply contract for
the Clearshield products sufficient to satisfy Alcan's or Bemis's
obligations to Alcan's South American and New Zealand affiliates for a
period of up to one (1) year. The United States, in its sole
discretion, may approve an extension of the term of this supply
contract for a period of up to two (2) years. In addition, to allow
Bemis to continue to supply the Clearshield products to those
affiliates in the future, the proposed Final Judgment provides that, at
the option of Bemis, the Acquirer of the assets relating to the
[[Page 9944]]
Clearshield products shall enter into an agreement to provide Bemis
with a non-exclusive, non-transferable license to enable Bemis to
produce the Clearshield products for sale outside the United States and
Canada. These agreements, along with the divestiture of the assets
described previously, will ensure that the Acquirer(s) will be able to
immediately and fully compete with Bemis for the production and sale of
Relevant Products.
The proposed Final Judgment also provides that, at the option of
Bemis, the Acquirer(s) must enter into an agreement to provide Bemis
with a non-exclusive, non-transferable license for the intangible
assets used primarily in the design, development, production,
marketing, servicing, distribution, or sale of any Alcan Relevant
Product in the United States or Canada that, prior to the filing of the
Complaint in this matter, were also used in connection with any other
Alcan product. Any such license, however, is to be granted for use
solely in connection with products other than the Alcan Relevant
Products. Bemis will have no rights to the intangible assets used
exclusively in the design, development, production, marketing,
servicing, distribution, or sale of any Alcan Relevant Product in the
United States or Canada.
In addition, because certain of the intangible assets to be
divested currently are encumbered by existing third-party rights, the
proposed Final Judgment provides that the Acquirer of any asset thus
encumbered must enter into an agreement with the affected third party
to provide it with a right to that asset under terms and conditions
sufficient to satisfy defendants' obligations to that third party.
Bemis is also required to provide the Acquirer(s) of the
divestiture assets information relating to personnel involved in the
design, development, production, marketing, servicing, distribution, or
sale of the Alcan Relevant Products to enable them to make offers of
employment, and prevents Bemis, Rio Tinto or Alcan from interfering
with any negotiations by the Acquirer(s) to employ any employee whose
primary responsibility is the design, development, production,
marketing, servicing, distribution, or sale of the Alcan Relevant
Products. The proposed Final Judgment further requires Bemis, Rio
Tinto, and Alcan to waive all noncompete agreements for any current or
former Alcan employee involved in the design, development, production,
marketing, servicing, distribution, or sale of any Alcan Relevant
Product.
In addition, Bemis may not solicit business for any Relevant
Product that is subject to an unexpired Alcan customer contract
transferred to an Acquirer for a period of one (1) year from the date
of the divestiture or the remaining term of the contract, whichever is
shorter. This provision is necessary to ensure that the Acquirer has
the full benefit of the transferred contracts and the time to
demonstrate its ability to independently produce the Relevant Products.
This provision does not prevent a customer from seeking alternative
suppliers at any time that it chooses, subject to the terms and
conditions of its own contract.
The assets required to be divested must be divested in such a way
as to satisfy the United States in its sole discretion that these
assets can and will be operated by the Acquirer(s) as viable, ongoing
businesses that can compete effectively in the design, development,
production, marketing, servicing, distribution, or sale of the Alcan
Relevant Products in the United States and Canada. These assets may be
divested to one or more Acquirers, provided that the asset listed in
paragraphs II(E)(2) of the proposed Final Judgment (the Menasha
facility) is divested to the same purchaser as any tangible or
intangible assets related to the design, development, production,
marketing, servicing, distribution, or sale of the Alcan Relevant
Products produced at the Boscobel facility. Defendants must take all
reasonable steps necessary to accomplish the divestitures quickly and
shall cooperate with prospective purchasers.
In the event that defendants do not accomplish the divestiture
within ninety (90) days after the filing of the Complaint, or five (5)
days after notice of the entry of the Final Judgment of the Court,
whichever is later, the Final Judgment provides that the Court will
appoint a trustee selected by the United States to effect the
divestiture. If a trustee is appointed, the proposed Final Judgment
provides that Bemis 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 and terms obtained and the speed
with which the divestiture is accomplished. After his or her
appointment becomes effective, the trustee will file monthly reports
with the Court and the United States setting forth his or her efforts
to accomplish the divestiture. At the end of six (6) months, if the
divestiture has not been accomplished, the trustee and the United
States will make recommendations to the Court, which shall enter such
orders as appropriate, in order to carry out the purpose of the trust,
including extending the trust or the term of the trustee's appointment.
The divestiture provisions of the proposed Final Judgment will
eliminate the anticompetitive effects that likely would result if Bemis
acquired the Alcan Packaging Food Americas business because the
Acquirer(s) will have the ability to design, develop, produce, market,
service, distribute, and sell the Alcan Relevant Products in the United
States and Canada, in competition with Bemis.
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
[[Page 9945]]
Register. Written comments should be submitted to: Maribeth Petrizzi,
Chief, Litigation II Section, Antitrust Division, United States
Department of Justice, 450 Fifth Street, NW., Suite 8700, Washington,
DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
The United States considered, as an alternative to the proposed
Final Judgment, a full trial on the merits against defendants. The
United States could have continued the litigation and sought
preliminary and permanent injunctions preventing Bemis's acquisition of
the Alcan Packaging Food Americas business. The United States is
satisfied, however, that the divestiture of the assets described in the
proposed Final Judgment will preserve competition for the design,
development, production, marketing, servicing, distribution, and sale
of the Relevant Products in the United States and Canada. 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 in
accordance with the statute, the court 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 (D.C. 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.'').
As the United States Court of Appeals for the District of Columbia
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); 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,
the 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's 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.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). Therefore, 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.
[[Page 9946]]
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 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.'' 489 F. Supp. 2d at 15.
In its 2004 amendments to the Tunney Act,\3\ Congress made clear
its intent to preserve the practical benefits of utilizing consent
decrees in antitrust enforcement, stating: ``[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.\4\
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\3\ The 2004 amendments substituted the word ``shall'' for
``may'' when directing the courts to consider the enumerated factors
and amended the list of factors to focus on competitive
considerations and 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).
\4\ See United States v. Enova Corp., 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: February 24, 2010.
Respectfully submitted.
Rachel J. Adcox,
U.S. Department of Justice, Antitrust Division, Litigation II
Section, 450 Fifth Street, NW., Suite 8700, Washington, DC 20530,
(202) 305-2738.
Certificate of Service
I, Rachel J. Adcox, hereby certify that on February 24, 2010, I
caused a copy of the foregoing Competitive Impact Statement to be
served upon defendants Bemis Company, Inc., Rio Tinto plc, and Alcan
Corporation by mailing the documents electronically to the duly
authorized legal representatives of defendants as follows:
Counsel for Defendant Bemis Company, Inc.:
Stephen M. Axinn, Esq., John D. Harkrider, Esq., Axinn, Veltrop &
Harkrider LLP, 114 West 47th Street, New York, NY 10036, (212) 728-
2200, [email protected], [email protected].
Counsel for Defendants Rio Tinto plc and Alcan Corporation:
Steven L. Holley, Esq., Bradley P. Smith, Esq., Sullivan & Cromwell
LLP, 125 Broad Street, New York, NY 10004, (212) 558-4737,
[email protected], [email protected].
Rachel J. Adcox, Esq.,
United States Department of Justice, Antitrust Division, Litigation
II Section, 450 Fifth Street, NW., Suite 8700, Washington, DC 20530,
(202) 616-3302.
[FR Doc. 2010-4550 Filed 3-3-10; 8:45 am]
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