[Federal Register Volume 66, Number 167 (Tuesday, August 28, 2001)]
[Notices]
[Pages 45326-45339]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-21645]
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
United States v. Premdor Inc., Premdor U.S. Holdings, Inc.,
International Paper Company, and Masonite Corporation; Proposed Final
Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. Secs. 16(b)-(h), that a proposed Final
Judgment, Hold Separate Stipulation and Order, and Competitive Impact
Statement were filed with the U.S. District Court for the District of
Columbia in United States v. Premdor Inc., Premdor U.S. Holdings, Inc.,
International Paper Company, and Masonite Corporation, Civ. Action No.
1:01CV01696. On August 3, 2001, the United States filed a Complaint
alleging that Premdor Inc.'s acquisition of Masonite Corporation and
related assets would violate section 7 of the Clayton Act, 15 U.S.C.
18. The proposed Final Judgment, filed the same time as the Complaint,
requires defendants to divest Masonite Corporation's doorskin
manufacturing facility located in Towanda, Pennsylvania.Copies of the
Complaint, proposed Final Judgment, Hold Separate Stipulation and
Order, and Competitive Impact Statement are available for inspection at
the U.S. Department of Justice, Antitrust Division, 325 Seventh Street,
NW., Room 215, Washington, DC 20530 (telephone: 202-514-2481), and at
the Clerk's Office of the United States District Court for the District
of Columbia, Washington, DC.
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 J. Robert Kramer II, Chief, Litigation II Section, Antitrust
Division, U.S. Department of Justice, 1401 H Street, NW., Suite 3000,
Washington, DC 20530 (telephone: 202-307-0924).
Mary Jean Moltenbrey,
Director of Civil NonMerger Enforcement.
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
United States of America, Plaintiff, v. Premdor Inc., 1600 Britannia
Road East, Mississauga, Ontario, Canada L4W 1J2; Premdor U.S. Holdings
Inc., One North Dale Mabry Highway, Suite 950, Tampa, Florida 33609;
International Paper Company, 400 Atlantic Street, Stamford, Connecticut
06921; and Masonite Corporation, 1 South Wacker Drive, Chicago,
Illinois 60606; Defendants.
[Civil No.: 01 1696]
Hold Separate Stipulation and Order
It is hereby stipulated and agreed by and between the undersigned
parties, subject to approval and entry by the Court, that:
I. Definitions
As used in this Hold Separate Stipulation and Order:
A. ``Acquirer'' or ``Acquirers'' means the entity or entities to
whom the Towanda Facility is divested.
B. ``Premdor'' means defendant Premdor Inc., a Canadian corporation
with its headquarters in Mississauga, Ontario, Canada, its successors
and assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and their directors, officers,
managers, agents, and employees.
C. ``Premdor U.S.'' means defendant Premdor U.S. Holdings, Inc., a
Florida corporation and a wholly owned subsidiary of Premdor with its
headquarters in Tampa, Florida, its successors and assigns, and its
subsidiaries, divisions, groups, affiliates, partnerships and joint
ventures, and their directors, officers, managers, agents, and
employees.
D. ``IP'' means defendant International Paper Company, a New York
corporation with its headquarters in Stamford, Connecticut, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates,
[[Page 45327]]
partnerships and joint ventures, and their directors, officers,
managers, agents, and employees.
E. ``Masonite'' means defendant Masonite Corporation, a Delaware
corporation and a wholly owned subsidiary of IP with its headquarters
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.
F. ``Doorskin'' means the facing components used in the manufacture
of an interior flush door; two doorskins are required for each door--
one for the front facing and one for the rear facing of the door.
G. ``Molded Doorskin'' means a hardboard doorskin made from a
fibrous mat that has been molded under extreme pressure and at a high
temperature into a raised panel design.
H. ``Proprietary Premdor Product'' means any product manufactured
by Masonite in which Premodor has an ownership interest and which
Masonite has agreed in writing not to sell to anyone other than
Premdor.
I. ``Towanda Facility'' means Masonite's Molded Doorskin production
facility located in Towanda, Pennsylvania including:
(1) All tangible assets that comprise the Towanda Facility,
including research and development activities, all manufacturing
equipment, tooling and fixed assets, personal property, inventory,
materials, supplies, components, parts, designs and other tangible
property or assets used at the Towanda Facility (provided, however,
that all manufacturing equipment, tooling and fixed assets, personal
property, inventory, materials, supplies, components, parts, designs
and other tangible property or assets used exclusively in the
production of any Proprietary Premdor Product are excluded from the
provisions of this subparagraph); all licenses, permits and
authorizations issued by any governmental organization relating to the
Towanda Facility; all contracts, teaming arrangements, agreements
(including supply agreements), leases, commitments, certifications, and
understandings relating to the Towanda Facility (provided, however,
that any contracts, teaming arrangements, agreements (including supply
agreements), leases, commitments, certifications, and understandings
between Masonite and/or IP and Premdor and/or Premdor U.S. are excluded
from this subparagraph); all lists, contracts, accounts, and credit
records of customers (provided, however, that any contracts, accounts,
and credit records relating exclusively to Premdor and/or Premdor U.S.
are excluded from this subparagraph); all repair, performance, and
Towanda Facility records and all other records relating to the Towanda
Facility; and
(2) Any and all intangible assets used in the development,
production, servicing and sale of Molded Doorskins at the Towanda
Facility, including, but not limited to: (a) Subject to the right of
Premdor and Premdor U.S., for 180 days from the date of the
consummation of the divestiture pursuant to Section IV or VI of the
proposed Final Judgment, to use up any Premdor co-branded packaging or
promotional material, exclusive use of the CraftMaster, Canterbury,
Carmelle, Carolina, Carrera, Caspian, Castille, Classique, Clermont,
Colonist, Harvest, Canyon, Corinth, Coventry, Cremona, Hakuju,
Maletero, Mesa, Morning Sun, Natural Trugrain Harvest, and Trugrain
Natural brand names and all other intellectual property rights used in
connection with the production of Molded Doorskins at the Towanda
Facility, including all blueprints and engineering drawings needed for
the manufacture of dies used in the Molded Doorskin presses at the
Towanda facility; (b) all information, documents and computer records,
relating to the production, sales, marketing or distribution of any
products sold under any of the brand names identified in section
I(2)(a), including all files relating to purchasers (other than Premdor
and Premdor U.S.) of Molded Doorskins or doors manufactured with Molded
Doorskins; (c) with respect to all other intellectual property rights
currently used or currently planned to be used in connection with the
production of Molded Doorskins at both the Towanda Facility and other
nondivested Molded Doorskin production facilities, a transferable
license; (d) all existing licenses and sublicenses relating exclusively
to the Towanda Facility; (e) a transferable sublicense, exclusive in
the Acquirer(s) of the Towanda Facility, to all other existing license
and sublicenses relating to the Towanda Facility; and (f) all research
or market evaluations relating exclusively to the Towanda Facility or
to customers and copies of all other research market evaluations or
information relating to plans for, improvements or updates to, or
product line extensions of Masonite's Molded Doorskin business in
existence as of the date the Towanda Facility is divested. Intellectual
property rights comprise, but are not limited to, patents, licenses and
sublicenses, technical information, copyrights, trademarks, trade
names, service marks, service names, computer software and related
documentation, know-how, trade secrets, drawings, blueprints, designs,
design protocols, specifications for parts and devices, safety
procedures for the handling of materials and substances, quality
assurance and control procedures, design tools and simulation
capability, all manuals and technical information provided to
employees, customers, supplies, agents, or licensees, and all research
data concerning historic and current research and development efforts
relating to Masonite's Molded Doorskin business including, but not
limited to, designs of experiments and the results of successful and
unsuccessful designs and experiments. Intellectual property rights do
not include rights to the ``Masonite'' brand name or to any Proprietary
Premdor Product.
(3) The Towanda Facility does not include IP corporate documents,
intellectual property owned by IP or other materials regularly
maintained at IP headquarters that were not part of the Purchase
Agreement.
J. ``The North American Molded Products Business'' means Masonite's
Molded Doorskin business, including:
(1) Production facilities located in Towanda, Pennsylvania and
Laurel Mississippi, and all tangible assets that comprise the Towanda
Facility and the Laurel Facility, including research and development
activities, all manufacturing equipment, tooling and fixed assets,
personal property, inventory, materials, supplies, and components,
parts, design and other tangible property or assets used at the Towanda
Facility and the Laurel Facility (provided, however, that all
manufacturing equipment, tooling and fixed assets, personal property,
and inventory, materials, supplies, components, parts, designs and
other tangible property or assets used exclusively in the production of
any Property Premdor Product are excluded from the provisions of this
subparagraph); all licenses, permits and authorizations issued by any
governmental organization relating to the Towanda Facility and the
Laurel Facility; all contracts, teaming arrangements, agreements
(including supply agreements), leases, commitments, certifications, and
understandings relating to the Towanda Facility and the Laurel Facility
(provided, however, that any contracts, terming arrangements,
agreements (including supply agreements), leases, commitments,
certifications, and understandings between Masonite and/or IP and
Premdor and/or Premdor U.S.
[[Page 45328]]
are excluded from this subparagraph); all lists, contracts, accounts,
and credit records of customers (provided, however, that any contracts,
accounts, and credit records relating exclusively to Premdor and/or
Premdor U.S. are excluded from this subparagraph); all repair,
performance, and Towanda Facility and Laurel Facility records and all
other records relating to the Towanda Facility and the Laurel Facility.
(2) Any and all intangible assets used in the development,
production, servicing and sale of Molded Doorskins at the Towanda
Facility and the Laurel Facility, including, but not limited to: (a)
Subject to the right of Premdor and Premdor U.S., for 180 days from the
date of the consummation of the divestiture pursuant to Section IV or
VI of the proposed Final Judgment, to use up any Premdor co-branded
packaging or promotional material, and CraftMaster, Canterbury,
Carmelle, Carolina, Carrera, Caspian, Castille, Clermont, Colonist,
Harvest, Canyon, Corinth, Coventry, Cremona, Hakuju, Maletero, Mesa,
Morning Sun, Natural, Trugrain Harvest, and Trugrain Natural brand
names and all other intellectual property rights used in connection
with the production of Molded Doorskin at the Towanda Facility and the
Laurel Facility; (b) all existing licenses and sublicenses relating
exclusively to the Towanda Facility and the Laurel Facility; and (c)
all research, market evaluations or information relating to plans for;
improvements or updates to, or product line extensions of Masonite's
Molded Doorskin business. Intellectual property rights comprise, but
are not limited to, patents, licenses and sublicenses, technical
information, copyrights, trademarks, trade names, service marks,
service names, computer software and related documentation, know-how,
trade secrets, drawings, blueprints, designs, design protocols,
specifications for parts and devices, safety procedures for the
handling of materials and substances, quality assurance and control
procedures, design tools and simulation capability, and manuals and
technical information provided to employees, customers, suppliers,
agents, or licenses, and all research data concerning historic and
current research and development efforts relating to Masonite's Molded
Doorskin business including, but not limited to, designs of experiments
and the results of successful and unsuccessful designs and experiments.
Intellectual property rights to not include rights to any Property
Premdor Product; and,
(3) The Illinois Corporate Offices, the Research Center and the
Sales and Marketing Offices of Masonite, including all information
maintained at these locations, all written and electronic records and
files of these locations, and all tangible and intangible property and
assets located at them, with the exception of such information,
records, files and property that do not concern the production, sale,
marketing, or distribution of Molded Doorskin or doors manufactured
with Molded Doorskins in North America.
(4) The North American Molded Products Business does not include IP
corporate documents, intellectual property owned by IP or other
materials regularly maintained at IP headquarters that were not part of
the Purchase Agreement.
K. ``Purchase Agreement'' means the Purchase Agreement by and among
IP, Premdor and Premdor U.S. dated as of September 30, 2000 and
includes all associated schedules and any subsequent modifications to
revisions of that agreement.
II. Objectives
The proposed Final Judgment filed in this case is meant to ensure
defendants' promote divestiture of the Towanda Facility for the purpose
of establishing a viable competitor in the Molded Doorskin business in
order to remedy the effects that the United States alleges would
otherwise result from Premdor's acquisition of the Masonite business
IP. This Hold Separate Stipulation and Order ensures, prior to such
divestitures, that the Towanda facility and the North American Molded
Products Business remain independent, economically viable, and ongoing
business concerns that will remain independent and uninfluenced by
Premdor's acquisition of the Masonite business of IP, and that
competition is maintained during the pendency of the ordered
divestitures.
III. Jurisdiction and Venue
The Court has jurisdiction over the subject matter of this action
and over each of the parties hereto, and venue of this action in proper
in the United States District Court for the District of Columbia.
IV. Compliance With and Entry of Final Judgment
A. Each defendant, upon signing his Hold Separate Stipulation and
Order, thereby stipulates that a Final Judgment in the form attached
hereto as Exhibit A may be filed with and entered by the Court, upon
the motion of any party or upon the Court's own motion, at any time
after compliance with the requirements of the Antitrust Procedures and
Penalties Act (15 U.S.C. Sec. 16), and without further notice to any
party or other proceedings, provided that the United States has not
withdrawn its consent, which it may do at any time before the entry of
the proposed Final Judgment by serving notice thereof on defendants and
by filing that notice with the Court.
B. Each defendant, upon signing his Hold Separate Stipulation and
Order, thereby stipulates that it shall abide by and comply with the
applicable provisions of the proposed Final Judgment, pending the
Judgment's entry by the Court, or until expiration of time for all
appeals of any Court ruling declining entry of the proposed Final
Judgment, and shall, from the date of the signing of this Stipulation
by the parties, comply with all the applicable terms and provisions of
the proposed Final Judgment as though the same were in full force and
effect as an order of the Court.
C. Each defendant, upon signing this Hold Separate Stipulation and
Order, thereby stipulates that it shall not consummate the transaction
sought to be enjoined by the Complaint herein before the Court has
signed this Hold Separate Stipulation and Order, and before each
defendant has signed this Stipulation.
D. This Stipulation shall apply with equal force and effect to any
amended proposed Final Judgment agreed upon in writing by the parties
and submitted to the Court.
E. In the event (1) the United States has withdrawn its consent, as
provided in Section IV(A) above, or (2) the proposed Final Judgment is
not entered pursuant to this Stipulation, the time has expired for all
appeals of any Court ruling declining entry of the proposed Final
Judgment, and the Court has not otherwise ordered continued compliance
with the terms and provisions of the proposed Final Judgment, then the
parties are released from all further obligations under this
Stipulation, and the making of this Stipulation shall be without
prejudice to any party in this or any other proceeding.
F. Defendants represent that the divestitures ordered in the
proposed Final Judgment can and will be made, and that defendants will
later raise no claim of mistake, hardship or difficulty of compliance
as grounds for asking the Court to modify any of the provisions
contained therein.
[[Page 45329]]
V. Hold Separate Provisions
Until the divestiture required by the proposed Final Judgment has
been accomplished, and subject to the provisions of Section VI of this
Order:
A. Defendants shall preserve, maintain, and operate the North
American Molded Products Business as an independent, ongoing,
economically viable competitive business, with management, research,
design, development, production, promotions, marketing, sales and
operations of such assets held entirely separate, distinct and apart
from those of the defendants' other operations. Defendants Premdor and
Premdor U.S. shall not coordinate the production, marketing, or terms
of sale of any products with those produced by or sold by the North
American Molded Products Business, except to the extent necessary to
sell Molded Doorskins to Premdor or Premdor U.S. Within twenty (20)
days after the entry of the Hold Separate Stipulation and Order,
defendants will inform the United States of the steps defendants have
taken to comply with this Hold Separate Stipulation and Order.
B. Defendants shall take all steps necessary to ensure that (1) the
North American Molded Products Business will be maintained and operated
as an independent, ongoing, economically viable and active competitor
in the Molded Doorskin industry; (2) the management of the North
American Molded Products Business facility will not be influenced by
defendants; and (3) the books, records, competitively sensitive sales,
marketing and pricing information, and decision-making concerning
research, development, marketing, production, distribution or sales of
products by or under any of the North American Molded Products Business
will be kept separate and apart from the other operations of
defendants.
C. Defendants shall use all reasonable efforts to maintain the
research, development, sales and revenues of the products produced by
or sold by the North American Molded Products Business, and shall
maintain at 2001 levels all promotional, advertising, sales, technical
assistance, marketing and merchandising support for the Towanda
Facility.
D. Defendants shall provide sufficient working capital and lines
and sources of credit to continue to maintain the North American Molded
Products Business as economically viable and competitive, ongoing
business, consistent with the requirements of Section V(A) and (B).
E. Defendants shall take all steps necessary to ensure that the
Towanda Facility is fully maintained in operable condition at no less
than its current capacity and sales, and shall maintain and adhere to
normal repair and maintenance schedules for the Towanda Facility.
F. Defendants shall not, except as stated in the Purchase Agreement
or as part of a divestiture approved by the United States in accordance
with the terms of the proposed Final Judgment, remove, sell, lease,
assign, transfer, pledge or otherwise dispose of any asset of the North
American Molded Products Business, subject to the provisions of Section
VI of this Order. Except as stated in the Purchase Agreement,
defendants shall not remove originals or make copies of any of the
information, records, files or property of the North American Molded
Products Business, other than the regular course of business, and
defendants shall not permit review or disclosure of such information,
records, files or property to defendants Premdor or Premdor U.S.,
provided, however, that Premdor and Premdor U.S. may have access to
such information, records, files or property to the extent necessary to
comply with the provisions of the Final Judgment and this Order, to
obtain and maintain financing to consummate the transactions stated in
the Purchase Agreement, and to make any disclosure mandated under the
securities laws of the United States or Canada. Premdor and Premdor
U.S. shall provide the monitoring trustee, if any, appointed under the
proposed Final Judgment timely notice identifying: (1) Which, if any,
Premdor or Premdor U.S. employees have been given access to any of the
information, records, files or property of the North American Molded
Products Business; (2) the information, records, files or property of
the North American Molded Products Business to which such employees
have been given access; and (3) the reason for such access. In no event
shall employees of Premodor and Premdor U.S. with direct responsibility
for sales and marketing have access to any of the information, records,
files or property of the North American Molded Products Business.
G. Defendants shall maintain, in accordance with sound accounting
principles, separate, accurate and complete financial ledgers, books
and records that report on a periodic basis, such as the last business
day of every month, consistent with past practices, the assets,
liabilities, expenses, revenues and income of the North American Molded
Products Business.
H. Defendants shall take no action that would jeopardize, delay or
implede the sale of the Towanda Facility.
I. Defendants' employees with primary responsibility for the
research, design, development, promotion, distribution, sale, and
operation of the North American Molded Products Business shall not be
transferred or reassigned to other ares within the company except for
transfer bids initiated by employees pursuant to defendants' regular,
established job posting policy. Defendants shall provide the United
States with ten (10) calendar days notice of such transfer.
J. Prior to consummation of their transaction, defendants shall
appoint Peter Heist to oversee and to be responsible for defendants'
compliance with this section. Peter Heist shall have complete
managerial responsibility for the North American Molded Products
Business, subject to the provisions of the proposed Final Judgment. In
the event such person is unable to perform his duties, defendants shall
appoint, subject to the approval of the Untied States, a replacement
within ten (10) working days. Should a replacement acceptable to the
Untied States not be appointed within this time period, the United
States shall appoint a replacement.
K. Defendants shall take no action that would interfere with the
ability of any trustee appointed pursuant to the proposed Final
Judgment to monitor each defendant's compliance with the terms of the
proposed Final Judgment and this Hold Separate Stipulation and Order
applicable to it, or to complete the divestitures pursuant to the
proposed Final Judgment to an Acquirer or Acquirers acceptable to the
United States.
L. This Hold Separate Stipulation and Order shall remain in effect
until consummation of the divestitures required by the proposed Final
Judgment or until further order of the Court.
VI. Partition Plan
A. Defendants may present to the Department of Justice a plan
within twenty-eight (28) days of this Order to partition from the
Masonite business the Towanda Facility and any other assets of the
North American Molded Products Business that are necessary to create a
viable Molded Doorskin business. In the event the Department of Justice
rejects the partition plan or in the event that the defendants do not
submit a partition plan, defendants are ordered and directed to hold
separate the North American Molded Products Business until the
divestiture of the Towanda Facility is complete. Acceptance of the
partition plan is in the sole discretion of the Department of Justice.
If the
[[Page 45330]]
Department of Justice approves the partition plan submitted by
defendants, Premdor U.S. can take control of the North American Molded
Products Business with the exception of the Towanda Facility.
B. Premdor and Pemdor U.S. shall ensure to the satisfaction of the
Department of Justice that the operations of the Towanda Facility shall
not be disrupted.
Respectfully submitted,
For Plaintiff United States of America
J. Brady Dugar, Esq.,
Virginia Bar No.: 31685, United States Department of Justice,
Antitrust Division, Litigation II Section, 1401 H Street, N.W.,
Suite 300, Washington, D.C. 20530, (202) 616-5125.
For Defendants Premdor, Inc., and Premdor U.S. Holding Inc.
Keith D. Shugarman, Esq.,
D.C. Bar No.: 416534, Goodwin Procter LLP, 1717 Pennsylvania Avenue,
N.W., Washington, D.C. 20006, (202) 974-1020.
International Paper Company and Masonite Corporation
James R. Loftis III, Esq.
D.C. Bar No.: 25627
Danielle K. Moskowitz, Esq.,
D.C. Bar No.: 452132, Gibson, Dunn & Crutcher LLP, 1050 Connecticut
Avenue, N.W., Washington, D.C. 20036-5307, (202) 955-8500
Order
It Is So Ordered by the Court, this __________ day of __________,
2001.
----------------------------------------------------------------------
United States District Judge
Final Judgment
Whereas, plaintiff, United States of America, filed its Complaint
on August 3, 2001, plaintiff and defendants, Premdor Inc.
(``Premdor''), Premdor U.S. Holdings, Inc. (``Premdor U.S.''),
International Paper Company (``IP''), and Masonite Corporation
(``Masonite''), 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 issued of fact
or law;
And Whereas, defendants agree to be bound by the provisions of this
Final Judgment pending its approval by the Court;
And Whereas, the essence of this Final Judgment is the prompt and
certain divestiture of certain rights or assets by the defendants to
assure that competition is not substantially lessened;
And Whereas, plaintiff requires defendants to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the complaint;
And Whereas, defendants Premdor and Premdor U.S. have represented
to the United States that the divestitures required below can and will
be made, and defendants IP and Masonite have represented that as of the
time of signing the stipulation to the entry of this Final Judgment,
the divestiture required below can and will be made, and each defendant
agrees that it will later raise no claim of hardship or difficulty as
grounds for asking the Court to modify any of the divestiture
provisions contained below;
Now Therefore, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is Ordered, Adjudged and Decreed:
I. Jurisdiction
This Court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states a claim upon which
relief may be granted against 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 the Towanda Facility is divested.
B. ``Premdor'' means defendant Premdor Inc., a Canadian corporation
with its headquarters in Mississauga, Ontario, Canada, its successors
and assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and their directors, officers,
managers, agents, and employees.
C. ``Premdor U.S.'' means defendant Premdor U.S. Holdings, Inc., a
Florida corporation and a wholly owned subsidiary of Premdor with its
headquarters in Tampa, Florida, its successors and assigns, and its
subsidiaries, divisions, groups, affiliates, partnerships and joint
ventures, and their directors, officers, managers, agents, and
employees.
D. ``IP'' means defendant International Paper Company, a New York
corporation with its headquarters in Stamford, Connecticut, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, and their directors,
officers, managers, agents, and employees.
E. ``Masonite'' means defendant Masonite Corporation, a Delaware
corporation and a wholly owned subsidiary of IP with its headquarters
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.
F. ``Doorskin'' means the facing components used in the manufacture
of an interior flush door; two doorskins are required for each door--
one for the front facing and one for the rear facing of the door.
G. ``Molded Doorskin'' means a hardboard doorskin made from a
fibrous mat that has been molded under extreme pressure and at a high
temperature into a raised panel design.
H. ``Proprietary Premdor Product'' means any product manufactured
by Masonite in which Premdor has an ownership interest and which
Masonite has agreed in writing not to sell to anyone other than
Premdor.
I. ``Towanda Facility'' means Masonite's Molded Doorskin production
facility located in Towanda, Pennsylvania including:
(l) All tangible assets that comprise the Towanda Facility,
including research and development activities, all manufacturing
equipment, tooling and fixed assets, personal property, inventory,
materials, supplies, components, parts, designs and other tangible
property or assets used at the Towanda Facility (provided, however,
that all manufacturing equipment, tooling and fixed assets, personal
property, inventory, materials, supplies, components, parts, designs
and other tangible property or assets used exclusively in the
production of any Proprietary Premdor Product are excluded from the
provisions of this subparagraph); all licenses, permits and
authorizations issued by any governmental organization relating to the
Towanda Facility; all contracts, teaming arrangements, agreements
(including supply agreements), leases, commitments, certifications, and
understandings relating to the Towanda Facility (provided, however,
that any contracts, teaming arrangements, agreements (including supply
agreements), leases, commitments, certifications, and understandings
between Masonite and/or IP and Premdor and/or Premdor U.S. are excluded
from this subparagraph); all lists, contracts, accounts, and credit
records of customers (provided, however, that any contracts, accounts,
and credit records relating exclusively to Premdor and/or Premdor U.S.
are excluded from this subparagraph); all repair, performance, and
Towanda Facility records and all other records relating to the Towanda
Facility; and
(2) Any and all intangible assets used in the development,
production, servicing and sale of Molded Doorskins at the Towanda
Facility, including, but
[[Page 45331]]
not limited to: (a) Subject to the right of Premdor and Premdor U.S.
for 180 days from the date of the consummation of the divestiture
pursuant to Section IV or VI of this Final Judgment, to use up any
Premdor co-branded packaging or promotional material, exclusive use of
the CraftMaster, Canterbury, Carmelle, Carolina, Carrera, Caspian,
Castille, Classique, Clermont, Colonist, Harvest, Canyon, Corinth,
Coventry, Cremona, Hakuju, Maletero, Mesa, Morning Sun, Natural,
Trugrain Harvest, and Trugrain Natural brand names and all other
intellectual property rights used in connection with the production of
Molded Doorskins at the Towanda Facility, including all blueprints and
engineering drawings needed for the manufacture of dies used in the
Molded Doorskin presses at the Towanda Facility; (b) all information,
documents and computer records, relating to the production, sales,
marketing or distribution of any products sold under any of the brand
names identified in section I(2)(a), including all files relating to
purchasers (other than Premdor and Premdor U.S.) of Molded Doorskins or
doors manufactured with Molded Doorskins; (c) with respect to all other
intellectual property rights currently used or currently planned to be
used in connection with the production of Molded Doorskins at both the
Towanda Facility and other nondivested Molded Doorskin production
facilities, a transferable license; (d) all existing licenses and
sublicenses relating exclusively to the Towanda Facility; (e) a
transferable sublicense, exclusive in the Acquirer(s) of the Towanda
Facility, to all other existing licenses and sublicenses relating to
the Towanda Facility; and (f) all research or market evaluations
relating exclusively to the Towanda Facility or to customers and copies
of all other research, market evaluations or information relating to
plans for, improvements or updates to, or product line extensions of
Masonite's Molded Doorskin business in existence as of the date the
Towanda Facility is divested Intellectual property rights comprise, but
are not limited to, patents, licenses and sublicenses, technical
information, copyrights, trademarks, trade names, service marks,
service names, computer software and related documentation, know-how,
trade secrets, drawings, blueprints, designs, design protocols,
specifications for parts and devices, safety procedures for the
handling of materials and substances, quality assurance and control
procedures, design tools and simulation capability, all manuals and
technical information provided to employees, customers, suppliers,
agents, or licensees, and all research data concerning historic and
current research and development efforts relating to Masonite's Molded
Doorskin business including, but not limited to, designs of experiments
and the results of successful and unsuccessful designs and experiments.
Intellectual property rights do not include rights to the ``Masonite''
brand name or to any Proprietary Premdor Product.
(3) The Towanda Facility does not include IP corporate documents,
intellectual property owned by IP or other materials regularly
maintained at IP headquarters that were not part of the Purchase
Agreement.
J. ``The North American Molded Products Business'' means Masonite's
Molded Doorskin business, including:
(1) Production facilities located in Towanda. Pennsylvania and
Laurel Mississippi, and all tangible assets that comprise the Towanda
Facility and the Laurel Facility, including research and development
activities, all manufacturing equipment, tooling and fixed assets,
personal property, inventory, materials, supplies, components, parts,
designs and other tangible property or assets used at the Towanda
Facility and the Laurel Facility (provided, however, that all
manufacturing equipment, tooling and fixed assets, personal property,
inventory, materials, supplies, components, parts, designs and other
tangible property or assets used exclusively in the production of any
Proprietary Premdor Product are excluded from the provisions of this
subparagraph); all licenses, permits and authorizations issued by any
governmental organization relating to the Towanda Facility and the
Laurel Facility; all contracts, teaming arrangements, agreements
(including supply agreements), leases, commitments, certifications, and
understandings relating to the Towanda Facility and the Laurel Facility
(provided, however, that any contracts, teaming arrangements,
agreements (including supply agreements), leases, commitments,
certifications, and understandings between Masonite and/or IP and
Premdor and/or Premdor U.S. are excluded from this subparagraph); all
lists, contracts, accounts, and credit records of customers (provided,
however, that any contracts, accounts, and credit records relating
exclusively to Premdor and/or Premdor U.S. are excluded from this
subparagraph); all repair, performance, and Towanda Facility and Laurel
Facility records and all other records relating to the Towanda Facility
and the Laurel Facility;
(2) Any and all intangible assets used in the development,
production, servicing and sale of Molded Doorskins at the Towanda
Facility and the Laurel Facility, including, but not limited to: (a)
Subject to the right of Premdor and Premdor U.S., for 180 days from the
date of the consummation of the divestiture pursuant to Section IV or
VI of this Final Judgment, to use up any Premdor co-branded packaging
or promotional material, the CraftMaster, Canterbury, Carmelle,
Carolina, Carrera, Caspian, Castille, Classique, Clermont, Colonist,
Harvest, Canyon, Corinth, Coventry, Cremona, Hakuju, Maletero, Mesa,
Morning Sun, Natural, Trugrain Harvest, and Trugrain Natural brand
names and all other intellectual property rights used in connection
with the production of Molded Doorskins at the Towanda Facility and the
Laurel Facility; (b) all existing licenses and sublicenses relating
exclusively to the Towanda Facility and the Laurel Facility; and (c)
all research, market evaluations or information relating to plans for,
improvements or updates to, or product line extensions of Masonite's
Molded Doorskin business. Intellectual property rights comprise, but
are not limited to, patents, licenses and sublicenses, technical
information, copyrights, trademarks, trade names, service marks,
service names, computer software and related documentation, know-how,
trade secrets, drawings, blueprints, designs, design protocols,
specifications for parts and devices, safety procedures for the
handling of materials and substances, quality assurance and control
procedures, design tools and simulation capability, all manuals and
technical information provided to employees, customers, suppliers,
agents, or licensees, and all research data concerning historic and
current research and development efforts relating to Masonite's Molded
Doorskin business including, but not limited to, designs of experiments
and the results of successful and unsuccessful designs and experiments.
Intellectual property rights do not include rights to any Proprietary
Premdor Product; and,
(3) The Illinois Corporate Offices, the Research Center and the
Sales and Marketing Offices of Masonite, including all information
maintained at these locations, all written and electronic records and
files of these locations, and all tangible and intangible property and
assets located at them, with the exception of such information,
records, files and property that do not concern the production, sale,
[[Page 45332]]
marketing, or distribution of Molded Doorskins or doors manufactured
with Molded Doorskins in North America.
(4) The North American Molded Products Business does not include IP
corporate documents, intellectual property owned by IP or other
materials regularly maintained at IP headquarters that were not part of
the Purchase Agreement.
K. ``Purchase Agreement'' means the Purchase Agreement by and among
IP, Premdor and Premdor U.S. dated as of September 30, 2000 and
includes all associated schedules and any subsequent modifications to
or revisions of that agreement.
III. Applicability
A. This Final Judgment applies to Premdor, Premdor U.S., IP, and
Masonite, as defined above, and to 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. Defendants shall require, as a condition of the sale of other
disposition of all or substantially all of their assets or of lesser
business units that include the Towanda Facility, that the purchaser
agrees to be bound by the provisions of this Final Judgment, provided,
however, that defendants need not obtain such an agreement from the
Acquirer(s).
IV. Divestiture
A. Defendants are ordered and directed within (a) the earlier of
(1) one hundred-fifty (150) calendar days after the filing of the
Compliant in this matter, of (2) one hundred-twenty (120) calendar days
after the closing of the transaction in the Purchase Agreement, or, if
later, (b) five (5) calendar days after the entry of the Final
Judgment, to:
(1) Divest the Towanda Facility in manner consistent with this
Final Judgment as a viable, ongoing business to Acquirers acceptable to
the United States in its sole discretion;
(2) At the option of the Acquirer(s) enter an agreement to supply,
for a maximum period of 12 months from the date of the consummation of
a divestiture pursuant to Section IV or Section VI of this Final
Judgment, at a price not greater than the cost of production, any
reasonably necessary number of the dies used by Masonite to produce the
full range of Molded Doorskins designs and sizes that Masonite has the
ability to produce as of the date of the consummation of a divestiture
pursuant to Section IV or Section VI of this Final Judgment.
(3) At the option of the Acquirer(s), enter into and agreement to
supply, for as maximum period of 12 months from the date of the
consummation of a divestiture pursuant to Section IV or Section VI of
this Final Judgment, reasonable levels of transitional and
manufacturing start-up support that will enable the Acquirer(s) to
produce Molded Doorskins.
B. The United States, in its sole discretion, may extend the time
period for the divestiture two additional periods of time, not to
exceed thirty (3) calendar days each, and shall notify the Court in
such circumstances. Defendants agree to use their best efforts to
divest the Towanda Facility as expeditiously as possible.
C. In accomplishing the divestiture ordered by this Final Judgment,
defendants promptly shall make known, by usual and customary means, the
availability of the Towanda Facility. Defendants shall inform any
person making inquiry regarding a possible purchase of the Towanda
Facility that it is being divested pursuant to this Final Judgment and
provide that person with a copy of this Final Judgment. Defendants
shall offer to furnish to all prospective Acquirers, subject to
customary confidentiality assurances, all information and documents
relating to the Towanda Facility customarily provided in a due
diligence process except: (1) such information or documents subject to
the attorney-client or work-product privileges, and (2) such
information or documents consisting solely of information relating to
purchases by Premdor and Premdor U.S. Defendants shall make available
such information to the United States at the same time that such
information is made available to any other person.
D. Defendants shall provide the Acquirer(s) and the United States
information relating to any IP or Masonite personnel involved in the
research, design, production, operation, development, marketing, and
sale of Molded Doorskins to enable the Acquirer(s) to make offers of
employment. Defendants will not interfere with any negotiations by the
Acquirer(s) to make offers of employment. Defendants will not interfere
with any negotiations by the Acquirer(s) to employ any person whose
primary responsibility is the research, design, production, operation,
development, marketing or sale of Molded Doorskins. Defendants are
prohibited from soliciting or making any offers or counteroffers of
employment to any employee of the North American Molded Products
Business except with respect to: (1) personnel at or with
responsibility for the Laurel Facility; (2) personnel at the West
Chicago research and development facility.
E. Defendants, or if the transaction contemplated in the Purchase
Agreement has closed, defendant Premdor shall permit prospective
Acquirers of the Towanda Facility to have reasonable access to
personnel and to make inspections of the physical facilities of the
Towanda Facility; access to any and all environmental, zoning, and
other permit documents and information; and access to any and all
financial, operations, or other documents and information customarily
provided as part of a due diligence process (except such information or
documents subject to the attorney-client or work-product privileges or
consisting solely of information relating to purchases by Premdor and/
or Premdor U.S.).
F. Defendants shall warrant to the Acquirer(s) of the Towanda
Facility that each asset will be operational on the date of sale.
G. Defendants warrant that they have the authority to convey all
intellectual property described in Section II.I under the definition of
Towanda Facility free and clear of any encumbrances, contractual
commitments or obligations to third parties.
H. Defendants shall not take any action that will impede in any way
the permitting, operation, or divestiture of the Towanda Facility.
I. Defendants shall not take any action that will impede or exclude
their customers from buying Molded Doorskins produced by the
Acquirer(s) of the Towanda Facility for two years from the date of the
consummation of the divestiture pursuant to Section IV or VI of this
Final Judgment.
J. Defendants shall not take any action that will impede or exclude
their customers from selling doors manufactured with Molded Doorskins
produced by the Acquirer(s) of the Towanda Facility for two years from
the date of the consummation of the divestiture pursuant to Section IV
or VI of this Final Judgment.
K. Defendants shall warrant to the Acquirer(s) of the Towanda
Facility that there are no material defects in the environmental,
zoning or other permits pertaining to the operation of each assets, and
that following the sale of the Towanda Facility, defendants will not
undertake, directly or indirectly, any challenges to the environmental,
zoning or other permits relating to the operation of the Towanda
Facility.
L. Unless the United States otherwise consents in writing, the
divestiture pursuant to Section IV, or by trustee appointed pursuant to
Section VI, of
[[Page 45333]]
this Final Judgment, shall include the entire Towanda Facility, and
shall be accomplished in such a way as to satisfy the United States, in
its sole discretion, that the Towanda Facility can and will be used by
the Acquirer(s) as part of a viable, ongoing Molded Doorskin business.
The divestiture, whether pursuant to Section IV or Section VI of this
Final Judgment.
(1) Shall be made to an Acquirer (or Acquirers) that, in the United
Stat's sole judgment, has the intent and capability (including the
necessary managerial, operational, technical and financial capability)
of competing effectively in the manufacture and sale of Molded
Doorskins; and
(2) Shall be accomplished so as to satisfy the United States, in
its sole discretion, than none of the terms of any agreement between an
Acquirer (or Acquirers) and any of the defendants gives any of the
defendants the ability unreasonably to raise the Acquirer's costs, to
lower the Acquirer's efficiency, or otherwise to interfere in the
ability of the Acquirer(s) to compete effectively.
V. Appointment of Monitoring Trustee
A. Immediately upon the filing of this Final Judgment, the United
States may, in its sole discretion, appoint a monitoring trustee,
subject to approval by the Court.
B. The trustee shall have the power and authority to monitor
defendants' compliance with the terms of this Final Judgment and the
Hold Separate Stipulation and Order entered by this Court and shall
have such powers as this Court deems appropriate. Subject to Section
V(C) of this Final Judgment, the monitoring trustee may hire at the
cost and expense of defendant Premdor any consultants, accountants,
attorneys, or other persons, who shall be solely accountable to the
monitoring trustee, reasonably necessary in the monitoring trustee's
judgment.
C. Defendants shall not object to actions taken by the monitoring
trustee in fulfillment of the monitoring trustee's responsibilities
under any Order of this Court on any ground other than the monitoring
trustee's malfeasance. Any such objections by defendants must be
conveyed in writing to the United States and the monitoring trustee
within ten (10) calendar days after the action taken by the monitoring
trustee giving rise to the defendants' objection.
D. The monitoring trustee shall serve at the cost and expense of
defendant Premdor, on such terms and conditions as the plaintiff
approves. The compensation of the monitoring trustee and any
consultants, accountants, attorneys, and other persons retained by the
monitoring trustee shall be on reasonable and customary terms
commensurate with the individuals experience and responsibilities.
E. The monitoring trustee shall have no responsibility or
obligation for the operation of defendants' businesses.
F. Defendants shall use their best efforts to assist the monitoring
trustee in monitoring defendants' compliance with their individual
obligations under this Final Judgment and under the Hold Separate
Stipulation and Order. The monitoring trustee and any consultants,
accountants, attorneys, and other persons retained by the monitoring
trustee shall have full and complete access to the personnel, books,
records, and facilities of the North American Molded Products Business,
subject to reasonable protection for trade secret or other confidential
research, development, or commercial information or any applicable
privileges. Defendants shall take no action to interfere with or to
impede the monitoring trustee's accomplishment of its responsibilities.
G. After its appointment, the monitoring trustee shall file monthly
reports with the United States and the Court setting forth the
defendants' efforts to comply with their individual obligations under
this Final Judgment and under the Hold Separate Stipulation and Order.
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.
H. The monitoring trustee shall serve until the divestiture of the
Towanda Facility is finalized pursuant to either Section IV or Section
VI of this Final Judgment.
VI. Appointment of a Trustee To Effect the Divestiture
A. If the Towanda Facility has not been divested within the time
period specified in Section IV(A), defendants shall notify the United
States of that fact in writing. If a monitoring trustee has been
appointed under Section V of this Final Judgment, the monitoring
trustee shall immediately assume the sole power and authority to effect
the divestiture of the Towanda Facility. If a monitoring trustee has
not been appointed, 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 Towanda Facility.
B. Upon the appointment of a trustee and expiration of the time
specified in Section IV(A) of this Final Judgment, only the trustee
shall have the right to sell the Towanda Facility. 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 efforts by the
trustee, subject to the provisions of Sections IV, VI, and VII of this
Final Judgment, and shall have such other powers as this Court deems
appropriate. Subject to Section VI(C) of this Final Judgment, the
trustee may hire at the cost and expense of defendant Premdor, any
investment bankers, attorneys, or other agents, who shall be solely
accountable to the trustee, reasonably necessary in the trustee's
judgment to assist in the divestiture.
C. Defendants shall not object to a sale by the trustee on any
ground other than the trustee's malfeasance. Any such objections by
defendants must be conveyed in writing to the United States and the
trustee within ten (10) calendar days after the trustee has provided
the notice required under Section VII.
D. The trustee shall serve at the cost and expense of defendant
Premdor, on such terms and conditions as the plaintiff 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. Upon receipt of
such monies, the trustee shall place the monies in an interest bearing
account. 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, including accrued
interest, 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 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 divestiture. The trustee and any
consultants, account's, 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 or any applicable privileges. Provided, however,
that the trustee shall not make available to
[[Page 45334]]
prospective Acquirers any such information or documents consisting
solely of information relating to purchases by Premdor and Premdor U.S.
Defendants shall take no action to interfere with or to impede the
trustee's accomplishment of its responsibilities.
F. After its appointment, the trustee shall file monthly reports
with the United States and the Court setting forth the trustee's
efforts to accomplish the divestiture ordered under this Final
Judgment. To the extent such reports contain information that the
trustee deems confidential, such reports shall not be filed in the
public docket of the Court. Such reports shall include the name,
address, and telephone number of each person who, during the preceding
month, made an offer to acquire, expressed an interest in acquiring,
entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring, any interest in the Towanda Facility, and
shall describe in detail each contact with any such person. The trustee
shall maintain fully records of all efforts made to divest the Towanda
Facility.
G. If the trustee has not accomplished such divestiture within six
months after its becomes responsible for selling the Towanda Facility,
the trustee shall promptly file with the Court a report setting forth
(1) the trustee's efforts to accomplish the required divestiture, (2)
the reasons, in the trustee's judgment, why the required divestiture
has not been accomplished, and (3) the trustee's recommendations. To
the extent such reports contain information that the trustee deems
confidential, such reports shall not be filed in the public docket of
the Court. The trustee shall at the same time furnish such report to
the plaintiff who shall have the right to make additional
recommendations consistent with the purpose of the trust. The Court
thereafter shall enter such orders as it shall deem appropriate to
carry out the purpose of the Final Judgment, which may, if necessary,
include extending the trust and the term of the trustee's appointment
by a period requested by the United States.
VII. Notice of Proposed Divestiture
A. Within two (2) business days following execution of a definitive
divestiture agreement, defendants or the trustee, whichever is then
responsible for effecting the divestiture required herein, shall notify
the United States of any proposed divestiture required by Section IV or
VI of this Final Judgment. If the trustee is responsible, it shall
similarly notify defendants. 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 Towanda Facility, 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 proposal Acquirer(s), any other third party, or the trustee if
applicable additional information concerning the proposed divestiture,
the proposed Acquirer(s), and any other potential Acquirer. Defendants
and the trustee shall furnish any additional information requested
within fifteen (15) calendar days of the receipt of the request, unless
the parties shall otherwise agree.
C. Within thirty (30) calendar days after receipt of the notice or
within twenty (20) calendar days after the United States has been
provided the additional information requested from defendants, the
proposed Acquirer(s), any third party and the trustee, whichever is
later, the United States shall provide written notice to defendants and
the trustee, if there is one, stating whether or not it objects to the
proposed 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 VI(C) of
this Final Judgment. Absent written notice that the United States does
not object to the proposed Acquirer(s) or upon objection by the United
States, a divestiture proposed under Section IV or Section VI shall not
be consummated. Upon objection by defendants under Section VI(C), a
divestiture proposed under Section VI shall not be consummated unless
approved by the Court.
VIII. Financing
Defendants shall not finance all or any part of any purchase made
pursuant to Section IV or VI of this Final Judgment.
IX. Hold Separate
Until the divestiture required by this Final Judgment has been
accomplished, defendants shall take all steps necessary to comply with
their individual obligations under the Hold Separate Stipulation and
Order entered by this Court. Defendants shall take no action that would
jeopardize the divestiture order by this Court.
X. Affidavits
A. Within twenty (20) calendar days of the filing of the Complaint
in this matter, and every thirty (30) calendar days thereafter until
the divestiture has been completed under Section IV or VI, defendants,
or if the transaction contemplated in the Purchase Agreement has
closed, defendant Premdor shall deliver to the United States an
affidavit as to the fact and manner of its compliance with Section IV
or VI of this Final Judgment. Each such affidavit shall include the
name, address, and telephone number of each person who, during the
preceding thirty days, made an offer to acquire, expressed an interest
in acquiring, entered into negotiations to acquire, or was contacted or
made an inquiry about acquiring, any interest in the Towanda Facility,
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 defendants have taken to solicit buyers for the Towanda
Facility, 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 defendants,
including limitation on information, shall be made within fourteen (14)
days of receipt of such affidavit.
B. Within twenty (20) calendar days of the filing of the Complaint
in this matter, defendants shall deliver to the United States an
affidavit that describes in reasonable detail all actions defendants
have taken and all steps defendants have implemented on an ongoing
basis to comply with Section IX of this Final Judgment. Defendants
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 individually keep all records of each of their
individual efforts made to preserve and divest the Towanda Facility
until one year after such divestiture has been completed.
XI. Compliance Inspection
A. For the purposes of determining or securing compliance with this
Final Judgment, or of determining whether the Final Judgment should be
modified or vacated, and subject to any legally recognized privilege,
from time to time duly authorized representatives of the United States
Department of Justice, including consultants and other persons retained
by the United States, shall, upon written request of a duly authorized
representative of the Assistant Attorney General in charge of the
Antitrust Division, and on
[[Page 45335]]
reasonable notice to defendants, be permitted.
(1) Access during defendants' office hours to inspect and copy, or
at plaintiff's option, to require defendants provide copies of, all
books, ledgers, accounts, records 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 a duly authorized representative of
the Assistant Attorney General in charge of the Antitrust Division,
defendants shall submit written reports, under oath if requested,
relating to any of the matters contained in this Final Judgment as may
be requested.
C. No information or documents obtained by the means provided in
this section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States, except in the course of legal proceedings to which the United
States is a party (including grand jury proceedings), or for the
purpose of securing compliance with this Final Judgment, or as
otherwise required by law.
D. If at the time information or documents are furnished by
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)(7) of the Federal
Rules of Civil Procedure, defendants mark each pertinent page of such
material. ``Subject to claim of protection under Rule 26(c)(7) of the
Federal Rules of Civil Procedure,'' then the United States shall give
defendants ten (10) calendar days notice prior to divulging such
material in any legal proceeding (other than a grand jury proceeding).
XII. No Reacquisition
Defendants may not reacquire any part of the Towanda Facility
during the term of this Final Judgment.
XIII. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
XIV. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire ten years from the date of its entry.
XV. Public Interest Determination
Entry of this Final Judgment is in the public interest.
Dated:________, 2001
Court approval subject to procedures of the Antitrust Procedures
and Penalties Act, 15 U.S.C. 16
----------------------------------------------------------------------
United States District Judge
Competitive Impacts Statement
The United States, pursuant to the Antitrust Procedures and
Penalties Act (``APPA''), 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.
1. Nature and Purpose of This Proceeding
On August 3, 2001, the United States filed a Compliant alleging
that the proposed acquisition of the Masonite business of International
Paper Company (``IP'') by Premdor Inc. (``Premdor'') would
substantially lessen competition in violation of section 7 of the
Clayton Act, as amended, 15 U.S.C. 18. The Compliant alleges that
Premdor and IP, through its subsidiary Masonite Corporation
(``Masonite''), are two of the three largest firms involved in the
production of interior molded doors. As alleged in the Complaint, the
transaction will substantially lessen competition in the development,
manufacture and sale of interior molded doorskins and interior molded
doors in the United States, thereby harming consumers. Accordingly, the
Complaint seeks among other things: (1) a judgment that the proposed
acquisition would violate Section 7 of the Clayton Act; and (2)
permanent injunctive relief that would prevent defendants from carrying
out the acquisition or otherwise combining their businesses or assets.
At the same time the Complaint was filed, the United States also
filed a proposed settlement that would permit Premdor to acquire the
Masonite business, provided that Premdor divests its Towanda,
Pennsylvania doorskin manufacturing facility, along with intellectual
property, research capabilities and other assets needed to be a viable
doorskin manufacturer. The settlement consists of proposed Final
Judgment and a Hold Separate Stipulation and Order.
The proposed Final Judgment orders defendants to divest the Towanda
facility to an acquirer approved by the United States. Defendants must
complete the divestiture with 150 calendar days after the filing of the
Complaint in this matter, or within 120 calendar days after the closing
of Premdor's acquisition of the Masonite business, whichever is
earlier. If defendants do not complete the divestiture within the
prescribed time, then, under the terms of the proposed Final Judgment,
this Court will appoint a trustee to sell the Towanda facility.
The Hold Separate Stipulation and Order and the proposed Final
Judgment require defendants to preserve, maintain and continue to
operate the North American operations of the Masonite business as an
independent, ongoing, economically viable competitive business, with
the management, sales and operations held separate from Premdor's other
operations. The Hold Separate Stipulation and Order allows the
defendants to submit to the United States a plan for partitioning the
Towanda facility from the remainder of Masonite's North American
operations. If the defendants submit a partition plan that is
acceptable to the United States, then, after the transaction closes,
Premdor can take control of all of Masonite's North American operations
other than the Towanda facility and any other partitioned assets. The
partitioned assets must continue to be held separate until they are
divested to a suitable acquirer.
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
this Court would retain jurisdiction to construe, modify or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II. Description of the Events Giving Rise to the Alleged Violation of
the Antitrust Laws
A. The Defendants
1. Premdor
Premdor is a Canadian corporation with its corporate headquarters
and principal place of business in Mississauga, Ontario, Canada.
Premdor produces interior and exterior doors. Its line of wood doors
includes molded, louvered and custom-made commercial and architectural
doors. Premdor is the largest manufacturer and merchandises of interior
molded doors in the world. It manufactures, merchandises and sells
[[Page 45336]]
interior molded doors to distributors, wholesalers, home centers and
building-supply dealers across Canada, the United States, Mexico,
Europe, Asia and the Middle East. Sale of interior molded doors in the
United States accounted for about 23 percent of Premdor's total 2000
sales of approximately $1.29 billion. Premdor also holds a 48.5 percent
equity stake in Firbramold, S.A. (``Fibramold''), a Chilean
manufacturer of interior molded doorskins. Fibramold is a Chilean
closed corporation owned by Premdor, Forestal Terranova S.A., and
Citifor (Chile) Holdings Limitada. Premdor is Fibramold's only
significant interior molded doorskin customer in the United States.
2. Premdor U.S. Holdings, Inc. (``Premdor U.S.'')
Premdor U.S. a wholly owned subsidiary of Premdor, is a Florida
corporation with its corporate headquarters and principal place of
business in Tampa, Florida. Premdor U.S. owns Premdor's U.S. facilities
involved in the manufacture and sale of doors.
3. IP
IP is a New York corporation with its corporate headquarters and
principal place of business in Stamford, Connecticut. Its businesses
include printing paper, packaging, distribution, chemical and petroleum
products and building materials. IP operates in nearly fifty countries
and exports its products to more than 130 nations. In 2000, IP reported
net sales of approximately $28.2 billion.
4. Masonite
Masonite, a wholly owned subsidiary of IP, is a Delaware
corporation with its corporate headquarters and principal place of
business in Chicago, Illinois. Masonite is one of the world's largest
manufacturers of fiberboard, which is processed into a variety of
products, including molded doorskins. Masonite manufacturers interior
molded doorskins in the United States at plants in Laurel, Mississippi
and Towanda, Pennsylvania. Masonite sells interior molded doorskins to
all of the non-vertically door manufacturers in the United States. In
2000, Masonite reported total sales of approximately $465 million,
approximately half of which was generated through sales of interior
molded doorskins.
B. The Proposed Acquisition
On or about September 30, 2000, IP, Premdor and Premdor U.S.
entered into a purchase agreement whereby Premdor, through Premdor
U.S., agreed to purchase IP's Masonite business. Premdor U.S. agreed to
purchase 100 percent of the shares of Masonite, International Paper
Masonite Holding Company Ltd. and Pintu Acquisition Company, Inc., as
well as certain other assets and intellectual property rights. The
purchase price for the transaction is approximately $500 million,
subject to post-closing adjustments.
C. The Competitive Effects of the Acquisition
1. The Interior Molded Doorskin and Interior Molded Door Markets
As alleged in the Complaint, a doorskin is the component which
makes up the front and back of the flush door; two doorskins are
required for each flush door. These are several varieties of
doorskins--a molded doorskin is formed from a fibrous mat that is
molded into a raised panel design in a press under extreme pressure and
at high temperatures. Molded doorskins are designed to provide the
appearance of solid wood doors at a much lower price. A molded doorskin
is the largest input cost of a molded door, comprising up to 70 percent
of the cost of manufacturing a molded door. The Complaint alleges that
the sale of interior molded doorskin in the United States for use in
manufacturing interior molded doors is a relevant product market within
the meaning of section 7 of the Clayton Act.
The Complaint also alleges that the sale of interior molded doors
in the United States is a relevant product market within the meaning of
section 7 of the Clayton Act. Interior molded doors are a type of flush
door used primarily in residential construction and remodeling for
closets, rooms, and hallways. Other types of flush doors include those
made with hardboard and veneered doorskin. Both hardboard and veneered
doorskins are flat, unlike a molded doorskin which has a raised panel
design. The Complaint alleges that hardboard and veneered doors are not
substitutes for molded doors, as they are used in different
applications than molded doors. Moreover, changes in price of molded
doors have, in the past, had no impact on the demand for hardboard or
veneered doors.
2. Anticompetitive Consequences of the Acquisition
The markets for interior molded doorskin (the ``upstream market'')
and for interior molded doors (the ``downstream market'') are closely
connected--interior molded doorskins are the primary input in the
manufacture of interior molded doors. There are only two major
competitors in each market, one of which is a vertically integrated
firm, not to party to this action (hereinafter the ``non-party firm''),
that therefore competes in both markets. Masonite presently is the
largest competitor in the interior molded doorskin market and is not
vertically integrated into the interior molded door market. Premdor is
one of two players in the interior molded doors market and is a small,
but significant, participant in the interior molded doorskin market.
The proposed transaction, therefore, would combine two competitors in
the interior molded doorskin market and result in the combined Premdor/
Masonite firm being vertically integrated into both the interior molded
doorskin and interior molded door markets. In 2000, Masonite and the
non-party firm manufactured the vast majority of all doorskins used to
manufacture interior molded doors in the United States. Masonite sell
its doorskins to non-vertically integrated door manufacturers, and
Premdor is Masonite's largest purchaser of interior molded doorskins.
Premdor also participates in the interior molded doorskin market
through its joint venture, Fibramold. The non-party firm uses the vast
majority of its interior molded doorskin production in the production
of its own molded doors; the rest of its interior molded doorskin
production is sold to non-vertically integrated door manufacturers.
There are also a number of small doorskin manufacturers that sell
interior molded doorskins in the United States, however, none of these
sells even one percent of the interior molded doorskins sold in the
United States.
Premdor is the world's largest producer of interior molded doors.
In 2000, Premdor sold over 40 percent of all interior molded doors sold
in the United States. Premdor's principal competitor in the downstream
interior molded door market is the non-party firm. The approximately
nine smaller, non-vertically integrated door manufacturers each sells
five percent or less of the interior molded doors sold in the United
States. The non-integrated door manufacturers in the United States
purchase almost all of their interior molded doorskin from either
Masonite or the non-party firm.
But for several impediments to coordination that result from the
current structure of the upstream and downstream markets, the markets
for interior molded doorskins and interior molded doors sold to U.S.
consumers would be more conducive to anticompetitive coordination of
output and price by the market participants.
[[Page 45337]]
Despite the high concentration and homogeneous products of these
markets--characteristics that tend to make coordination possible--the
evidence developed in the investigation of the proposed transaction
revealed at least four significant factors in the current structure of
these markets that make coordination less likely. Based upon the
evidence specific to this case, including documents obtained from the
defendants, each of these factors would be lessened or eliminated if
the proposed transaction were consummated.
The most significant impediment to coordination is Premdor's
potential expansion in the interior molded doorskin market. Due to the
substantial volume of interior molded doorskins that it uses, Premdor
could become a more significant producer by expanding further into the
production of doorskins. If Masonite and the non-party firm were to
coordinate, their increased doorskin prices would harm Premdor, giving
it an incentive to expand significantly its output of doorskins, which
would disrupt the coordination between Masonite and the non-party firm.
As the Compliant alleges, In 1998, Premdor purchased a 48.5 percent
equity interest in Fibramold. Following that investment, Premdor began
using some of its internally produced molded doorskins in the
manufacture of interior molded doors sold in the United States.
Recognizing Premdor's potential to expand significantly its
participation in the U.S. market for doorskin production, Masonite
began negotiating lower interior molded doorskin prices for Premdor. In
March 1999, Premdor, Masonite and LP signed a strategic Alliance
agreement in which Masonite agreed to lower the price of interior
molded doorskins sold to Premdor in exchange for Premdor's agreement,
inter alia, to certain volume commitments. The Strategic Alliance,
which has stated term of five years, gives Premdor an incentive in the
form of lower prices to refrain from further vertical integration--if
either party decides to further vertically integrate, the other party
may terminate the agreement on ninety days notice.
After Masonite began lowering its interior molded doorskin prices
to Premdor pursuant to the Strategic Alliance, Masonite also began
lowering its prices to the other interior molded door manufacturers.
Under the current market structure, Masonite has an incentive to keep
the other door manufacturers competitive with Premdor to maintain a
broader customer base. If Premdor were to acquire Masonite, the price-
constraining effect of Premdor's potential expansion in the interior
molded doorskin market would be eliminated.
In addition, Masonite acts as a significant competitive constraint
in the interior molded door market. Premdor and the non-party firm have
an incentive to attempt to coordinate pricing by reducing output.
Coordination would reduce the output of interior molded doors, and lead
to higher door prices. However, such an output reduction would also
reduce the output of interior molded doorskins sold in the United
States, harming Masonite. Thus, Masonite would have an incentive to
disrupt such coordination through increased sales to the other non-
vertically integrated door manufacturers. After the proposed
transaction, a vertically integrated Premdor/Masonite combination will
not have the same incentive to defeat coordination in the interior
molded door market by increasing sales to the non-integrated door
manufacturers since the combined company would be competing against
those door manufacturers, and would benefit from an increase in the
prices of interior molded doors.
The non-party firm acts as a significant competitive constraint in
both the upstream and downstream markets. Documentary evidence obtained
from the defendants suggests that the non-party firm, as a fully
vertically integrated manufacturer, has certain cost advantages over
Masonite and Premdor that it has used to lower prices to build market
share. This differing cost structure among the dominant firms is an
impediment to coordination. The evidence from the defendants suggests
that post-acquisition, the cost structures of the two vertically
integrated firms would be more closely aligned, decreasing the
opportunity for the non-party firm to increase its market share
profitably through lower prices, and thus increasing the non-party
firm's incentive to coordinate with the combined Premdor/Masonite. In
fact, Masonite recognized that the non-party firm's incentive to gain
market share by lowering price would diminish if it faced a strong,
integrated competitor.
Finally, the asymmetries of information available to the firms
about the upstream and downstream markets impede coordination. Masonite
specializes in interior molded doorskin production, whereas its most
significant competitor, the non-party firm, competes in both the
interior molded doorskin and interior molded door markets. The
differences in vertical integration between the two firms create
information asymmetries that would make it difficult for the firms to
monitor and punish deviations from attempted coordination on the terms
of sale of interior molded doorskins. For example, since the non-party
firm uses internally most of the doorskins it produces, Masonite lacks
an ability to observe a market price for the non-party firm's doorskins
and the number of doorskins that it produces. Similarly, since Masonite
does not sell in the downstream market, it lacks information about the
non-party firm's production and pricing in the interior molded door
market. Moreover, despite the Strategic Alliance between Premdor and
Masonite, there are significant gaps in the information each party has
about the market in which the other party participates. The proposed
acquisition would eliminate much of the information uncertainty by
adding Premdor's downstream market information to Masonite's upstream
market information, enhancing the combined firm's ability to detect
deviations by the on-party firm on any coordinated price increase
It is unlikely that the non-vertically integrated molded door
manufacturers would be able to expand their output to defeat any
anticompetitive coordination between the two vertically integrated
firms post-acquisition. Each of these manufacturers is dependent on
Masonite or the non-party firm for the majority of its molded
doorskins. Since molded doorskins represent up to 70 percent of the
cost of producing a molded door, post-acquisition the two vertically
integrated firms could weaken their downstream rivals by raising their
molded doorskin prices.
Entry into the U.S. interior molded doorskin market is unlikely to
be timely, likely or sufficient to prevent the exercise of market power
that the two dominant, vertically-integrated firms would be able to
collectively exercise following the merger. While several foreign
interior molded doorskin producers have limited sales in North America,
they collectively lack the capacity, quality and reliability to disrupt
a coordinated effort to restrict output of interior molded doorskins,
and ultimately, doors.
Finally, any merger-specific efficiencies that may be generated by
the transaction are outweighed by the likely anticompetitive effects.
While vertical integration may allow the combined Premdor/Masonite to
lower the cost of producing interior molded doors, Premdor and Masonite
can obtain the benefits of vertical integration without also enhancing
the likelihood of coordination in the relevant markets by
[[Page 45338]]
allowing Premdor to acquire a portion of Masonite. The proposed Final
Judgment allows Premdor to acquire Masonite's interior molded doorskin
production facilities in Laurel, Mississippi and Carrick-on-Shannon
Ireland, giving Premdor sufficient capacity to supply all of its
current requirements. However, the proposed Final Judgment also
requires the divestiture of Masonite's Towanda Facility, which will
create an independent manufacturer of interior molded doorskins that
will impede the combined Premdor/Masonite's ability to coordinate with
the non-party firm.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment requires Premdor to divest the Towanda
Facility to a purchaser, approved by the United States, that can
compete effectively in the interior molded doorskin market, and thereby
remedy the anticompetitive effects alleged in the Complaint
Specifically, the proposed Final Judgment requires Premdor to divest
the assets related to the production of molded doorskins at the Towanda
Facility: including the Towanda plant; the exclusive right world-wide
to the ``CraftMaster'' name; the exclusive right world-wide to the
molded doorskin design names (i.e. Colonist, Classique, etc.); a
license to all of the research and development, and other intellectual
property related to the manufacture and sale of molded doorskins; the
Towanda customer list; and the right to hire Masonite's sales,
marketing and distribution employees, as well as the employees of the
Towanda Facility and certain other employees. This will allow the
purchaser of the Towanda Facility to manufacture and sell all of the
designs and sizes of interior molded doorskins that Masonite currently
sells in the United States. The proposed Final Judgment also gives the
acquirer of the Towanda Facility the option to enter into transitional
agreements for up to twelve months for the supply of dies needed to
manufacture interior molded doorskins, as well as for services required
to run the Towanda Facility.
Defendants must use their best efforts to divest the Towanda
Facility as expeditiously as possible. The proposed Final Judgment
provides that the Towanda Facility be divested in such a way as to
satisfy the United States, in its sole discretion, that the acquirer
can and will use the assets as part of a viable, ongoing business.
The proposed Final Judgment allows for the appointment of a trustee
to monitor defendants' compliance with the terms of the proposed Final
Judgment and the Hold Separate Stipulation and Order. If the defendants
are unable to divest the Towanda Facility in the time allowed, the
Final Judgment also allows for the appointment of a trustee to effect
the divestiture. If a trustee is appointed, the proposed Final Judgment
provides that defendants must cooperate fully with the trustee and
defendant Premdor must pay all of the trustee's costs and expenses. Any
trustee appointed to effect the divestiture will have his or her
compensation structured to provide an incentive for the trustee based
on the price and terms of the divestiture and the speed with which it
is accomplished. After any trustee appointment becomes effective, the
trustee will file monthly reports with the United States and this Court
setting forth either the defendants' or the trustee's efforts,
whichever is applicable, to accomplish the required divestiture.
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 district court to recover
three times the damages the person has suffered, as well as the costs
of bringing a lawsuit 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 effect as prima facie evidence in any subsequent private lawsuit
that may be brought against defendants.
V. Procedures Available for Modification of the Proposed Final Judgment
The parties have stipulated that the proposed Final Judgment may be
entered by this Court after compliance with the provisions of the APPA,
provided that the United States has not withdrawn its consent. The APPA
conditions entry of the decree upon this 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. The United States will
evaluate and respond to the comments. All comments will be given due
consideration by the Department of Justice, which remains free to
withdraw its consent to the proposed Final Judgment at any time prior
to entry. The comments and the response of the United States will be
filed with this Court and published in the Federal Register. Written
comments should be submitted to: J. Robert Kramer II, Chief, Litigation
II Section, Antitrust Division, United States Department of Justice,
1401 H Street, N.W., Suite 3000, Washington, DC 20530.
The proposed Final Judgment provides that this Court retains
jurisdiction over this action, and the parties may apply to this 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 is satisfied, however, that the divestiture of the
Towanda Facility, and other relief contained in the proposed Final
Judgment will establish, preserve and ensure a viable competitor in the
relevant markets identified by the United States. Thus, the United
States is convinced that the proposed Final Judgment, once implemented
by the Court, will prevent Premdor's acquisition of the Masonite
business of IP from having adverse competitive effects.
VII. Standard of Review Under the APPA for Proposed Final Judgment
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a sixty (60) day
comment period, after which the court shall determine whether entry of
the proposed Final Judgment is ``in the public interest.'' In making
that determination, the court may consider--
(1) the competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration or relief sought, anticipated effects of
alternative remedies actually considered, and any other
considerations bearing upon the adequacy of such judgment.
(2) the impact of entry of such judgment 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.
[[Page 45339]]
15 U.S.C. 16(e) (emphasis added). As the Court of Appeals for the
District of Columbia has held, the APPA permits a court to consider,
among other things, the relationship between the remedy secured and the
specific allegations set forth in the government's complaint, whether
the decree is sufficiently clear, whether enforcement mechanisms are
sufficient, and whether the decree may positively harm third parties.
See United States v. Microsoft Corp., 56 F. 3d 1448. 1458-62 (DC Cir.
1995).
In conducting this inquiry, ``the Court is nowhere compelled to go
to trail 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.'' \1\ Rather,
---------------------------------------------------------------------------
\1\ 119 Cong. Rec. 24,598 (1973). See United States v. Gillette
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest''
determination can be made properly on the basis of the Competitive
Impact Statement and Response to Comments filed pursuant to the
APPA. Although the APPA authorizes the use of additional procedures,
those procedures are discretionary (15 U.S.C. 16(f)). A court need
not invoke any of them unless it believes that the comments have
raised significant issues and that further proceedings would aid the
court in resolving those issues. See H.R. Rep. No. 93-1463, 93rd
Cong. 2d Sess. 8-9 (1974), reprinted in 1974 U.S.C.C.A.N. 6535,
6538.
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.\2\
---------------------------------------------------------------------------
\2\ United States v. Mid-American Dairymen, Inc., 1977-1 Trade
Cas. (CCH) para. 61,508, at 71,980 (W.D. Mo. 1977), see also United
States v. Loew's Inc., 783 F. Supp. 211, 214 (S.D.N.Y. 1992); United
States v, Columbia Artists Mgmt., Inc., 662 F. Supp. 865, 870
(S.D.N.Y. 1987).
Accordingly, with respect to the adequacy of the relief secured by
the decree, a court may not ``engate in an unrestricted evaluation of
what relief would best serve the public.'' United States v. BNS, Inc.,
858 F.2d 456, 462-63 (9th Cir. 1988), quoting United States v. Bechtel
Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083
---------------------------------------------------------------------------
(1981); see also Microsoft, 56 F.3d at 1458. Precedent requires 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.\3\
---------------------------------------------------------------------------
\3\ United States v. Bechtel Corp., 648 F.2d at 666 (citations
omitted) (emphasis added); see United States v. BNS, Inc., 858 F. 2d
at 463, United States v. National Broadcasting Co., 449 F. Supp.
1127, 1143 (C.D. Cal. 1978); United States v. Gillette Co., 406 F.
Supp. at 716. See also United States v. American Cyanamid Co., 719
F.2d 558, 565 (2d Cir. 1983), cert. denied, 465 U.S. 1101 (1984).
The proposed Final Judgment, therefore, should not be reviewed
under a standard of whether it is certain to eliminate every
anticompetitive effect of a particular practice or whether it mandates
certainty of free competition in the future. Court approval of a final
judgment requires a standard more flexible and less strict than the
standard required for a finding of liability. A ``proposed decree must
be approved even if it falls short of the remedy the court would impose
on its own, as long as it falls within the range of acceptability or is
within the reaches of public interest.'' \4\
---------------------------------------------------------------------------
\4\ United States v. American Tel. & Tel. Co., 552 F. Supp. 131,
151 (D.D.C. 1982) (quoting Gillette, 406 F. Supp. at 716), aff'd sub
nom. Maryland v. United States, 460 U.S. 1001 (1983); United States
v. Alcan Aluminum, Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985);
United States v. Carrols Dev. Corp., 454 F. Supp. 1215, 1222
(N.D.N.Y. 1979).
---------------------------------------------------------------------------
Moreover, the court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States
alleges 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. Since 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 might have but did
not pursue.
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Dated: August 3, 2001, Washington, DC.
Respectfully submitted,
J. Brady Dugan, Joseph M. Miller, Joan Farragher, Karen Y. Douglas,
Paul E. O'Brien, Michael Bodosky,
Attorneys, U.S. Department of Justice, Antitrust Division,
Litigation II Section, 1401 H Street, NW., Suite 3000, Washington,
D.C. 20530; 202-616-5125.
[FR Doc. 01-21645 Filed 8-27-01; 8:45 am]
BILLING CODE 4410-11-M