[Federal Register Volume 64, Number 191 (Monday, October 4, 1999)]
[Notices]
[Pages 53692-53734]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-24882]
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DEPARTMENT OF JUSTICE
Antitrust Division
[Civil No. 1:98 CV 1616 (AA)]
United States, States of Ohio, Arizona, California, Colorado,
Florida, Maryland, Michigan, New York, Texas, Washington and Wisconsin
and Commonwealths of Kentucky and Pennsylvania v. USA Waste Services,
Inc., Dome Merger Subsidiary, and Waste Management, Inc.
Response to Public Comments on Antitrust Consent Decree
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that on September 14, 1999, the
United States filed its responses to public comments on the proposed
Final Judgment in United States, et al. v. USA Waste Services, Inc., et
al., Civil No. 1:98 CV 1616 (AA) (N.D. Ohio, filed July 16, 1998), with
the United States District Court in Cleveland, Ohio.
On July 16, 1998, the United States and 13 states filed a civil
antitrust complaint, which alleges that USA Waste Services proposed
acquisition of Waste Management would violate Section 7 of the Clayton
Act, 15 U.S.C. 18, by substantially lessening competition in waste
collection and/or disposal services, or both, in a number of markets
around the country, including Baltimore, MD; Akron/Canton, Cleveland
and Columbus, OH; Denver, CO; New York, NY; Los Angeles, CA; Detroit,
Flint and Northern Michigan; Miami; FL; Houston, TX; Louisville, KY;
Milwaukee, WI; Philadelphia, Pittsburgh, and Allentown, PA; Tucson, AR;
Portland, OR; and Gainesville, FL.
The proposed Final Judgment, filed on July 16, 1998, requires USA
Waste and Waste Management to divest commercial waste collection and/or
municipal solid waste disposal operations in each of the geographic
areas alleged in the Complaint. A modified version of the proposed
Judgment (``Modified Final Judgment''), filed on September 14, 1999,
would eliminate the defendants' contingent obligation to divest one New
York City transfer station (the Brooklyn Transfer Station, located on
Scott Avenue).
Public comment on the proposed Judgment was invited within the
statutory 60-day comment period. The public comments and the United
States' responses thereto are hereby published in the Federal Register
and have been filed with the Court. Copies of the Complaint Hold
Separate Stipulation and Order, proposed Final Judgment, Competitive
Impact Statement, and the United States' Certificate of Compliance with
Provisions of the Antitrust Procedures and Penalties Act (to which the
public comments and the United States' responses are attached),
proposed Modified Final Judgment, and the Memorandum of the United
States in Support of Entry of the Proposed Modified Final Judgment are
available for inspection in Room 215 of the Antitrust Division,
Department of Justice, 325 7th Street, NW, Washington, DC 20530
(telephone: 202-514-2481), and at the Office of the Clerk of the United
States District Court for the Northern District of Ohio, Eastern
Division, 201 Superior Avenue, Cleveland, OH 44114.
Copies of any of these materials may be obtained upon request and
payment of a copying fee.
Constance K. Robinson,]
Director of Operations & Merger Enforcement Antitrust Division.
Memorandum of the United States in Support of Entry of the Proposed
Modified Final Judgment
I. Introduction
A. The Procedural Background
On July 16, 1998, the United States, and the states of Ohio,
Arizona, California, Colorado, Florida, Maryland, Michigan, New York,
Texas, Washington, and Wisconsin, and the commonwealths of Kentucky and
Pennsylvania filed a civil antitrust complaint, which alleged that USA
Waste Services, Inc.'s (``USA Waste's'') acquisition of Waste
Management, Inc. would violate Section 7 of the Clayton Act, 15 U.S.C.
18. The Complaint alleged that in 19 geographic areas around the
country, the defendants were two of the most significant competitors in
commercial waste collection, or disposal of municipal solid waste
(i.e., operation of landfills, transfer stations and incinerators), or
both services, and that the elimination of competition as a result of
the merger could lead to higher prices or reduced services for
purchasers of waste collection or disposal services.
At the time the Complaint was filed, the parties submitted a
proposal Final Judgment that would require the defendants to divest
assets sufficient to preserve the competition that otherwise would be
lost in each of the markets in which an antitrust violation had been
alleged. The parties also filed--and the Court (per Chief Judge Matia)
entered--a Hold Separate Stipulation and Order, allowing the defendants
to complete their merger transaction, provided that they keep the
assets required to be divested separate from their own business
operations and adhere to the terms of the proposed Final Judgment
pending the United States' compliance with the notice and comment
provisions of the Antitrust Penalties and Procedures Act, 15 U.S.C.
16(b)-(h) (the ``APA'').\1\
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\1\ Nothing in the Hold Separate Order, however, prevents the
defendants from promptly selling the assets required to be divested
to an acceptable purchaser, and in this instance, the defendants
chose to do so prior to APPA compliance. In a series of transaction
beginning in September 1998 and ending in February 1999, the
defendants divested all of the assets available for sale under the
decree (except the Baltimore disposal assets) to Republic Services,
Inc. (``Republic'') for approximately $500 million. In October 1998,
the defendants sold the Baltimore disposal assets to Browning-Ferris
Industries, Inc. (``BFT'') for roughly $60 million over a ten-year
time period.
The United States, after consultation with the relevant states,
concluded that Republic and BFI were both acceptable purchasers
under the terms of the proposed Judgment. The defendants informed
the Court of the pending sales of these assets before consummation.
(See Letter from James R. Weiss, counsel for defendants USA Waste
and Waste Management, to Honorable Ann Aldrich, United States
District Judge, dated October 30, 1998).
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B. The Pending Motion To Enter the Proposed Modified Final Judgment
Today, the United States has filed a Certificate of Compliance with
Provisions of the Antitrust Procedures
[[Page 53693]]
and Penalties Act, certifying that it has notified the public of the
terms of the proposed settlement and fully responded to the public
comments that were received. The parties also have submitted, and moved
the Court to enter, a slightly modified version of the Final Judgment
that was originally proposed. A copy of the proposed Modified Final
Judgment is attached hereto as Exhibit A.
The modification affects only a single waste transfer station in a
single market, New York City, NY.\2\ As originally conceived, the
proposed Final Judgment contained a contingent divestiture, requiring
the defendants to sell the Brooklyn (or ``Scott Avenue'') Transfer
Station, a 1,000 ton/day waste disposal facility located in Brooklyn,
NY, if the proposed Nekboh Transfer Station, previously sold by the
defendants, has not been licensed or permitted within a year after
entry of the proposed Final Judgment. See Final Judgment,
Secs. II(C)(2)(i) and IV(B). The Modified Final Judgment would
eliminate the contingent divestiture of the Scott Avenue Transfer
Station (i.e., remove Secs. II(C)(2)(i) and IV(B) from the decree) and
substitute instead an immediate divestiture of either of two other New
York transfer stations, Gesuale (500 ton/day) or Vacarro (400 ton/
day).\3\
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\2\ To put the proposed modification in perspective, the
proposed Final Judgment orders the defendants to divest ownership
rights in twelve waste transfer stations (including four in New York
City) and disposal rights in as many as five other transfer
stations. In addition, the defendants were ordered to divest
disposal or ownership rights in as many as 18 different landfills.
\3\ The defendants' commitment to sell either the Gesuale or
Vacarro transfer stations and the government's agreement to join the
defendants in moving for the entry of the proposed Modified Final
Judgment, were key elements of a consent decree, filed in December
1998 in federal district court in Brooklyn, NY, and entered in May
1999 in settlement of an antitrust suit brought by the United
States, the State of New York, and others against the defendants'
acquisition of a major New York City waste industry rival, Eastern
Environmental Services, Inc. See Final Judgment in United States,
States of New York and Florida, and Commonwealth of Pennsylvania v.
Waste Management, Inc., Eastern Environmental Services, Inc., et.
al, Civil No. 98-7168 (E.D.N.Y., entered May 25, 1999) (the ``Waste/
Eastern'' case), attached hereto as Exhibit B. The federal district
court in Brooklyn (J. Block), following public notice, comment, and
government response, entered the Waste/Eastern Final Judgment on May
25, 1999, concluding that an exchange of the contingent divestiture
of the Scott Avenue Transfer Station in Brooklyn, NY, for an
immediate divestiture of the Scott Avenue Transfer Station in
Brooklyn, NY, for an immediate divestiture of one of the two smaller
New York transfer stations would be ``in the public interest.'' See
the Waste/Eastern Judgment, Secs. II(D)(2)(c), IV(A)(2), IV(L), and
XIII, Ex. B at 5, 7-8, 12 and 22 (emphasis supplied).
Although this Court must decide for itself whether the Modified
Final Judgment submitted for entry in this case would be in the
public interest, the judgment of the federal district court in
Brooklyn, NY with respect to competitive issues concerning New York
City waste transfer stations has some bearing on that issue.
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C. Reasons Why Entry of the Proposed Modification Would Be in the
Public Interest
As explained below, the United States strongly believes that entry
of the proposed Modified Final Judgment would be in the public
interest. The major reasons for including this transfer station in the
proposed decree are no longer valid. Divestiture of the Scott Avenue
Transfer Station is not necessary to ensure the defendants' continued
cooperation in licensing the Nekboh site since the purchaser of the
Nikboh permit application has the financial resources and economic
incentive to pursue on its own licensing of that transfer station.
Further, divestiture of the Scott Avenue Transfer Station is not
necessary to promote competition in the disposal of the New York City's
commercial waste because that transfer station is incapable of
effectively competing for such waste, having entered into a long term
contract to dispose of the city's residential waste.
Finally, the United States agreed to join the defendants in a
motion to eliminate the Scott Avenue Transfer Station from the pending
Final Judgment in response to the defendant's twin commitments to
divest either of two smaller, but more capable waste disposal
facilities in New York City (Gesuale or Vacarro), and two large New
York City waste transfer stations subsequently acquired by the
defendants from Eastern Environmental Services, Inc. (PJ's and Atlantic
Waste).
In our view, each of these reasons provides an independent basis
for concluding that entry of the proposed Modified Final Judgment would
be in the public interest, and taken together, they appear dispositive
of that issue. (The State of New York, the only state plaintiff whose
interests are directly affected by the proposed modification, has
authorized us to state that it concurs in the motion to enter the
proposed Modified Final Judgment and believes the modification to be in
the public interest.) \4\
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\4\ The other twelve government plaintiffs also concur and urge
the Court to enter the proposed Modified Final Judgment.
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II. Statement of the Case
A. The Complaint, Proposed Final Judgment and Competitive Impact
Statement
Although the Complaint in this case alleges that the defendants'
combination would eliminate competition in a number of waste collection
and disposal markets around the country, the critical issues here
relate to competition in the disposal of New York City waste. In that
market, the Complaint alleged, defendant USA Waste's acquisition of
defendant Waste Management's transfer stations in Brooklyn and Bronx,
NY, would substantially lessen competition in the disposal of the
city's commercial waste.\5\ The Final Judgment sought to remedy this
problem by requiring the defendants to divest Waste Management's only
waste disposal asset in the Bronx--the SPM Transfer Station [Final
Judgment, Secs. II (C)(2)(i)(1) and IV]--and to divest USA Waste's only
disposal assets in Brooklyn, the All City Transfer Station [id,
Sec. II(C)(2)(i)(3) and IV] and an application for a permit to
construct and operate a waste transfer station at 2 North 5th Street, a
site known as the proposed Nekboh Transfer Station [id.,
Sec. II(C)(2)(i)(2) and IV(B)]. The proposed Judgment further provided
that if the divested Nekboh site was not permitted within one year
after entry of the Final Judgment, then the defendants must sell a
fourth waste transfer station in New York, the Brooklyn (or ``Scott
Avenue'') Transfer Station, located at 458 Scott Avenue [id., Sec. II
(c)(2)(i)(4) and IV].
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\5\ Commercial waste is municipal solid waste generated by
commercial establishments such as restaurants or department stores,
private office and apartment buildings. ``Residential waste,'' on
the other hand, is municipal solid waste produced by single family
households and state and municipal agencies. In New York, commercial
waste must be collected and disposed of by private firms.
Residential waste is collected and disposed of by the city, which,
until recently, maintained its own network of disposal facilities.
New York, however, has recently begun contracting with private firms
for disposal of the city's residential waste since the city landfill
must be closed by 2001.
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The defendants' divestiture of the proposed Scott Avenue Transfer
Station was seen as a way both to ensure the defendant's continued
cooperation and assistance in permitting the proposed Nekboh Transfer
Station and to promote competition in disposal of New York City's
commercial waste if, for some reason, that transfer station was not
permitted and built within the prescribed time period.
In August 1998, however, the defendants agreed to divest the Nekboh
permit to Republic, one of the nation's largest waste collection and
disposal firms, which has over $2 billion in total assets. And in early
September 1998, the City of New York awarded the Scott Avenue Transfer
Station a three to five-year contract for the disposal of the city's
residential waste. With the bulk of the facility's available capacity
committed under a long-term municipal contract for disposal of
residential
[[Page 53694]]
waste, if the defendants were to divest the Scott Avenue Transfer
Station, the new owner could not complete effectively in the processing
and disposal of New York City's private commercial waste, the relevant
market the government alleged would be adversely affected by the
defendants' combination.
B. The Defendants' Acquisition of Eastern Environmental Services, Inc.
and the Parties' Resolution of the Competitive Issues Concerning the
New York City Waste Disposal Market
In early fall 1998, the defendants \6\ agreed to acquire Eastern
Environmental Services, Inc. (``Eastern''), a major competitive rival
in the disposal of New York City's residential and commercial waste.
This agreement precipitated another government antitrust suit, filed in
federal district court in Brooklyn, NY, in which the United States and
the State of New York alleged that the transaction, if consummated,
would substantially reduce competition in waste disposal services in
New York.\7\ The parties agreed to settle the Waste/Eastern case in
late December 1998 and, inter alia, to resolve all of the outstanding
issues relating to the defendants' acquisition of competitors in the
New York market.
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\6\ After the defendants USA Waste Services, Waste Management
and Dome Merger Subsidiary merged, they named the new firm ``Waste
Management, Inc.''
\7\ The complaint also alleged the merger would create
competitive problems in collection and disposal markets in
Pennsylvania and Florida, and those states were co-plaintiffs in
that lawsuit.
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The defendants agreed to divest the two New York waste transfer
stations that they would acquire from Eastern, PJ's and Atlantic Waste
Disposal. Waste/Eastern a Final Judgment, Sec. Sec. II(D)(2)(1) and
(b), IV(A)(1), Ex. B at 5, 7-8. They also agreed to divest either of
two smaller waste transfer stations, Gesuale or Vacarro, both located
in New York, NY.\8\ Id. Secs. II(D)(2)(c) and IV(A)(2). Because the
United States and the State of New York concluded that circumstances
had changed and that an immediate divestiture of a transfer station
with capacity for disposal of commercial waste was competitively better
than a contingent divestiture of Scott Avenue Transfer Station, which
no longer had such capacity, they agreed to move for entry of a
Modified Final Judgment that would eliminate the requirement that the
defendants divest the Scott Avenue Transfer Station if the Nekboh site
is not permitted within the prescribed one-year time period. Id.
Sec. IV(L), Ex. B at 12.
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\8\ The defendants later opted to divest the Vacarro Transfer
Station.
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In essence, the United States and the State of New York agreed to a
swap, trading a future divestiture of the capacity-constrained Scott
Avenue Transfer Station for an immediate divestiture of either one of
two small New York transfer stations, both with capacity available for
processing commercial waste, and the two waste transfer stations, PJ's
and Atlantic Waste, that the defendants had agreed to acquire from
Eastern.
The parties filed the proposed Waste/Eastern Judgment on December
31, 1998. Following public notice and response to public comments,\9\
the federal district court in Brooklyn entered the Final Judgment in
the Waste/Eastern case on May 25, 1999, after concluding that that
decree, including the provision requiring the United States and the
State of New York to join the defendants in a joint motion to modify
the Final Judgment in this case, would be ``in the public interest.''
Waste/Eastern Final Judgment, Sec. XIII, Ex. B at 22.
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\9\ In accordance with the APPA, the United States published
notice of the Waste/Eastern Judgment in the New York Times and the
Washington Post, newspapers of general circulation in New York, NY
and Washington, DC. The United States also published a copy of the
complaint, proposed judgment and competitive impact statement in the
Federal Register on February 26, 1999 (64 Fed. Reg. 9527), and
published its responses to the public comments on the Waste/Eastern
decree on June 11, 1999 (64 FR 31638).
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III. Argument
A. Entry of the Modified Final Judgment Would Be in the Public Interest
At this stage of the proceedings, after the United States has
certified its compliance with the public notice and response to comment
requirements of the APPA, the Court must determine whether entry of the
proposed Modified Final Judgment ``is in the public interest.'' 15
U.S.C. 16(e). As noted in our Competitive Impact Statement, in
conducting this inquiry, ``the Court is nowhere compelled to go to
trial or to engage in extended proceedings which might have the effect
of vitiating the benefits of prompt and less costly settlement through
the consent decree process.'' \10\ Rather,
\10\ 119 Cong. Rec. 24598 (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 government's
competitive impact statement and response to comments filed pursuant
to the APPA. Although the APPA authorizes the use of additional
procedures, 15 U.S.C. Sec. 16(f), those procedures are
discretionary. 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. 93-1463, 93rd Cong. 2d Sess. 8-9, reprinted in (1974) U.S.
Code Cong. & Ad. News 6535, 6538.
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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.
United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. (CCH)
para. 61,508, at 71,980 (W.D. Mo. 1977). And ``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.' (citations omittted).'' \11\
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\11\ United States v. American Tel. and Tel. Co., 552 F. Supp.
131, 150 (D.D.C. 1982), aff'd sub nom. Maryland v. United States,
460 U.S. 1001 (1983), quoting United States v. Gillette Co., 406 F.
Supp. 713, 716 (D. Mass. 1975); United States v. Alcan Aluminum,
Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985).
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B. The Public Comments on the Proposed Final Judgment Were Unpersuasive
``[T]his is not a case wherein objectors speak with one voice,''
United States v. Natl. Broadcasting Co., 449 F. Supp. 1127, 1144 (C.D.
Cal. 1978) (distinguishing United States v. Gillette Co., 406 F. Supp.
713, 716 (D. Mass. 1975), where the court confronted ``unified
opposition'' to a proposed consent decree). Rather, in this case, the
13 public comments submitted on the proposed Final Judgment expressed a
wide variety of views, which the United States carefully considered and
addressed, but which ultimately failed to persuade the United States to
withdraw its consent to entry of the proposed Judgment. (See
Certificate of Compliance, Ex. 3-15.)
In its responses to the public comments, the United States
carefully explained why requiring the defendants to make extensive
divestitures (id., Ex. 7-9, 12-15) or imposing more onerous
restrictions on the defendants' business operations post-merger (id.,
Ex. 1, 10) were unwarranted under the circumstances.\12\ In our view,
the proposed Final Judgment, without these additional requirements,
falls well ``within the range of acceptability'' and the broad
``reaches of the public
[[Page 53695]]
interest.'' United States v. AT&T, 552 F. Supp. at 150.
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\12\ The only comments related to the contingent divestiture of
the Scott Avenue transfer Station were from individuals who favored
converting the proposed site for the Nekboh transfer Station into an
open space or a public park (see Certificate of Compliance, Ex. 4-
6), comments which do not implicate the proposed modification.
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C. Removing the Contingent Divestiture of the Scott Avenue Transfer
Station From the Proposed Judgment Would Be in the Public Interest
This case, however, is somewhat atypical because the Modified Final
Judgment that the parties now urge the Court to enter differs somewhat
from the Final Judgment that they originally proposed.\13\ The United
States strongly believes that the difference--removal of the Scott
Avenue Transfer Station from the modified decree--is a minor change
that would make the Modified Final Judgment more effective and
procompetitive than the earlier decree the parties proposed.
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\13\ There is no requirement that the government must republish
the settlement or resolicit public comment simply because it
proposes that the Court enter a modified version of the final
judgment originally proposed. The reported cases interpreting the
APPA strongly suggest that republication is unnecessary. In United
States v. Nat'l. Broadcasting Co., 449 F. Supp. 1127 (C.D. Cal.
1978), modified, 1993-2 Trade Case. (CCH) para. 70,418 (C.D. Cal.
1993), the government amended a proposed consent decree after
comments were received, then submitted the amended proposed judgment
for approval by the court. The court said that ``the requirements of
the APPA concerning publication and consideration of public comments
have been satisfied'' (id. at 1129), and subsequently approved the
decree. Id. at 1145. See also Massachusetts Sch. of Law v. United
States, 118 F.3d 776, 778 (D.C. Cir. 1997) (relating the district
court's decision to enter a consent judgment after several
modifications had been made following the end of the public comment
period). In United States v. American Tel. & Tel. Co., 552 F. Supp.
131, 225 (D.D.C. 1982) (``AT&T''), aff'd sub nom. Maryland v. United
States, 460 U.S. 1001 (1983), Judge Greene approved a proposed
consent decree after the comment period had expired, also on the
condition that the decree be amended to add a new section. In none
of the cases did the court require republication of the amended
proposed consent decree before entry. Rather, by eventually entering
the consent judgments, the court in each case implicitly concluded
that the requirements of the APPA were satisfied by the initial
publication, comment, and response. See, e.g., Nat'l. Broadcasting
Co., 449 F. Supp. at 1129.
In any event, to the extent notice and opportunity to comment is
necessary, it was provided when the United States complied with the
APPA before entry of the Final Judgment in the Waste/Eastern case.
The competitive impact statement filed in that case discussed the
substitution of the Gesuale and Vacarro transfer stations for the
Scott Avenue Transfer Station. 64 Fed. Reg. 9538. The Judgment in
that case was published in The New York Times, prior to its entry,
and thus provided ample notice and opportunity to comment to those
persons affected most directly by the waste disposal relief in the
New York City market. See the Certificate of Compliance in the
Waste/Eastern case, 64 FR 31638, 31639 (July 11, 1999).
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First, the defendants' divestiture of the Scott Avenue Transfer
Station is not necessary to ensure that the Nekboh Transfer Station is
permitted. As noted above, the defendants subsequently sold the permit
application for the Nekboh site to Republic, now the nation's third
largest waste collection and disposal firm. With over $2 billion in
annual revenues, Republic certainly possesses the management skill,
financial wherewithal and economic incentive to pursue on its own a
permit for the proposed Nekboh Transfer Station. In addition, the
proposed Modified Final Judgment requires the defendants to cooperate
and enjoins them from interfering in any way with Republic's efforts to
obtain a permit for the Nekboh site. Modified Final Judgment,
Secs. IV(H) and VIII (B) and (C), Ex. A at 20, 28. Thus, forcing a
divestiture of the Scott Avenue Transfer Station would not advance the
timing on the permitting and opening of the Nekboh site.
Moreover, a divestiture of the defendants' Scott Avenue Transfer
Station would not promote competition in the disposal of New York
City's private commercial waste because as a consequence of a long-term
municipal contract, virtually all of that transfer station's capacity
is committed to processing the city's residential waste.
In short, the compromise the parties reached in the Waste/Eastern
case--returning the Scott Avenue Transfer Station for three transfer
stations that would resolve the competitive problems created by the
defendants' series of acquisitions of rivals in the New York City
market for disposal of commercial waste--not only avoided an expensive
and resource-intensive trial on the merits in that case, but also
obtained immediate relief, not merely a contingent remedy, that would
be more effective than that contained in the proposed Final Judgment in
this case. In these circumstances, the United States strongly believes
that entry of the proposed Modified Final Judgment in this case is
squarely in the public interest.
IV. Conclusion
For the foregoing reasons, and for the reasons set forth in the
United States' Certificate of Compliance with Provisions of the
Antitrust Procedures and Penalties Act, the United States respectfully
requests that this Court enter the proposed Modified Final Judgment.
Dated: September 13, 1999.
Respectfully submitted,
Anthony E. Harris, Illinois Bar No. 1133713,
U.S. Department of Justice, Antitrust Division, Litigation II, 1401 H
Street, NW, Suite 3000, Washington, DC 20530, (202) 307-6583.
Modified Final Judgment
Whereas, plaintiffs, the United States of America, the State of
Ohio, the State of Arizona, the State of California, the State of
Colorado, the State of Florida, the Commonwealth of Kentucky, the State
of Maryland, the State of Michigan, the State of New York, the
Commonwealth of Pennsylvania, the State of Texas, the State of
Washington, and the State of Wisconsin, and defendants USA Waste
Services, Inc. (``USA Waste'') and Waste Management, Inc. (``WMI''), by
their respective attorneys, having consented to the entry of this Final
Judgment without trial or adjudication of any issue of fact or law
herein, and without this Final Judgment constituting any evidence
against or an admission by any party with respect to any issue of law
or fact herein;
And whereas, defendants have agreed 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 the Relevant Disposal Assets and Relevant
Hauling Assets to assure that competition is not substantially
lessened;
And whereas, plaintiffs require defendants to make certain
divestitures for the purpose of establishing one or more viable
competitors in the waste disposal business, the commercial waste
hauling business, or both in the specified areas;
And whereas, defendants have represented to the plaintiffs that the
divestitures ordered herein can and will be made and that defendants
will later raise no claims of hardship or difficulty as grounds for
asking the Court to modify any of the divestiture provisions contained
below;
Now, therefore, before the taking of any testimony, and without
trial or adjudication of any issue of fact or law herein, and upon
consent of the parties hereto, it is hereby Ordered, adjudged, and
decreed as follows:
I
Jurisdiction
This Court has jurisdiction over each of the parties hereto and
over the subject matter of this action. The Complaint states a claim
upon which relief may be granted against defendants, as hereinafter
defined, under Section 7 of the Clayton Act, as amended, 15 U.S.C. 18.
II
Definitions
As used in this Final Judgment:
A. USA Waste means defendant USA Waste Services, Inc., a Delaware
corporation with its headquarters in Houston, Texas, and includes its
successors and assigns, and its subsidiaries (including Dome Merger
[[Page 53696]]
Subsidiary), divisions, groups, affiliates, directors, officers,
managers, agents, and employees.
B. WMI means defendant Waste Management, Inc., a Delaware
corporation with its headquarters in Oak Brook, Illinois, and includes
its successors and assigns, and its subsidiaries, divisions, groups,
affiliates, directors, officers, managers, agent, and employees.
C. Relevant Disposal Assets means, unless otherwise noted, with
respect to each landfill or transfer station listed and described
herein, all tangible assets, including all fee and leasehold and
renewal rights in the listed landfill or transfer station; the garage
and related facilities; offices; landfill- or transfer station-related
assets including capital equipment, trucks and other vehicles, scales,
power supply equipment, interests, permits, and supplies; and all
intangible assets of the listed landfill or transfer station, including
landfill- or transfer station-related customer lists, contracts, and
accounts, or options to purchase any adjoining property. Relevant
Disposal Assets, as used herein, includes each of the following
properties:
1. Landfills and Airspace Disposal Rights
a. Akron/Canton, OH
WMI's Countywide R&D Landfill, located at 3619 Gracemont Street,
SW, East Sparta, OH 44626, and known as the Countywide Landfill;
b. Columbus, OH
USA Waste's Pine Grove Landfill, located at 5131 Drinkle Road, SW,
Amanda, OH 43102;
c. Denver, CO
USA Waste's Front Range Landfill, located at 1830 County Road 5,
Erie, CO 80516-8005; and at purchaser's option, a two-year waste supply
agreement that would require defendants to dispose of a minimum of 150
tons/day of waste at the Front Range Landfill, at disposal fees to be
negotiated between purchaser and defendants;
d. Detroit, MI
USA Waste's Carleton Farms Landfill, located at 28800 Clark Road,
New Boston, MI, subject to two conditions, viz, USA Waste's obligations
to (1) dispose of ash from the Greater Detroit Resource Recovery
Center's incinerator at a separate monofill cell on this site pursuant
to an existing contract, and (2) dispose of waste from the Greater
Detroit Resource Recovery Center's bypass transfer station at this
landfill, until defendants transfer such obligation to another
landfill, which they shall use their best efforts to accomplish
expeditiously;
e. Flint, MI
USA Waste's Brent Run Landfill, located at Vienna Road, Montrose
Township, Genesee County, MI;
f. Houston, TX
(1) USA Waste's Brazoria County Landfill, located at 10310 FM-523,
Angleton, TX 77515; and
(2) Airspace disposal rights at WMI's Security Landfill, located at
19248 Highway 105E, Cleveland, TX, or WMI's Atascocita Landfill,
located at 2020 Atascocita Road, Humble, TX, or both, pursuant to which
defendants will sell to one or more purchasers rights to dispose of at
least 3.0 million tons of waste, over a ten-year period, under the
following minimum terms and conditions:
(a) The purchaser (or all purchasers combined), or their
designee(s), may dispose of up to 360,000 tons of waste/year, or a
maximum of 1,200 tons of waste/day, at either, or both of, WMI's
Security or Atascocita landfills. If more than one person purchases the
airspace disposal rights, the minimum annual and daily disposal rates
for each purchaser shall be specified in its purchase agreement, and
the total of all purchasers' maximum disposal amounts shall be no less
than 360,000 tons/year and 1,200 tons/day;
(b) For each purchaser of airspace rights (or their designee),
defendants must commit to operate the Atascocita Landfill and Security
Landfill gates, scale houses, and disposal areas under terms and
conditions no less favorable than those provided to defendants' own
vehicles or to the vehicles of any municipality in the metropolitan
Houston area, except as to price and credit terms;
(c) At the end of the first five years of the agreement, the
purchaser or purchasers will have been considered to have used a
minimum of 1.4 million tons of airspace and can have no more than 1.6
million tons left to use under the purchase agreements. If there is
more than one purchaser of the airspace, the minimum amounts used
during the first five years shall be specified in their purchase
agreements, but the total amount shall be no more than 1.4 million
tons; and
(d) At the end of the first seven years of the agreement, the
purchaser (or purchasers) will have been considered to have used a
minimum of 2.0 million tons of airspace and can have no more than 1.0
million tons left to use under the purchase agreements. If there is
more than one purchaser of the airspace, the minimum amount used during
the first five years shall be specified in their purchase agreements,
but the total amount shall be no more than 2.0 million tons;
g. Los Angeles, CA
USA Waste's Chiquita Canyon Landfill, located at 29201 Henry Mayo
Drive, Valencia, CA 91355;
h. Louisville, KY
USA Waste's Valley View Landfill, located at 9120 Sulphur Road,
Sulphur, KY 40070;
i. Miami, FL
Airspace disposal rights at USA Waste's Okeechobee Landfill,
controlled by a subsidiary of USA Waste, and located at 10800 NE 128th
Avenue, Okeechobee, FL 34972, pursuant to which defendants will sell a
total of 4.3 million tons of airspace, over a 20-year time period, to
one or more purchasers, under the following minimum terms and
conditions:
(1) The right to dispose of a maximum of 1.8 million tons of South
Florida Waste, over a 20-year time period, as follows:
(a) The purchaser (or purchasers) must commit to dispose of no more
than 600 tons/day, of South Florida Waste;
(b) The total amount of airspace used in each year may not exceed
150,000 tons; and
(2) Three options for additional airspace at Okeechobee Landfill,
exercisable at the sole discretion of the purchaser of the airspace
disposal rights, as follows:
(a) First Option: The right to dispose of an additional 1.0 million
tons of South Florida Waste at the Okeechobee Landfill, for the
remaining term of the agreement, as follows:
(i) The amount of airspace used each weekday must be at least 500
tons, but not more than 800 tons (including tonnage disposed of under
prior air space commitments); and
(ii) the amount of airspace used in the year the option is
exercised, and in each succeeding year over the term of the agreement,
may not exceed 225,000 tons (including tonnage disposed of under prior
air space commitments);
(b) Second Option: Exercisable at any time after the second
anniversary of the agreement, and after exercise of the first option,
the right to dispose of an additional 1.0 million tons of South Florida
Waste at the Okeechobee Landfill, for the remaining term of the
agreement, as follows:
(i) The amount of airspace used each weekday must be at least 600
tons, but
[[Page 53697]]
not more than 1,000 tons/day (including tonnage disposed of under prior
air space commitments); and
(ii) The amount of airspace used in the year Option Two is
exercised and in each succeeding year of the life of the rights may not
exceed 300,000 tons (including tonnage disposed of under prior air
space commitments); and
(c) Third Option: Exercisable any time after the fifth anniversary
of the agreement, and after exercise of the second option, the right to
dispose of an additional 500,000 tons of South Florida Waste, for the
remaining term of the agreement, as follows:
(i) The amount of airspace used must be at least 600 tons/weekday,
but may not exceed 1,100 tons/weekday (including tonnage disposed of
under prior air space commitments);
(ii) The amount of airspace used in the year the third option is
exercised, and in each succeeding year of the life of the rights may
not exceed 300,000 tons/year (including tonnage disposed of under prior
air space commitments); provided, that in any event,
(d) The Okeechobee Landfill Rights shall expire when the purchaser
has used the maximum tonnages available under the rights and any
exercised options, or twenty years from the date of purchase of the
rights, whichever is sooner; and
(e) For each purchaser of airspace rights (or its designee),
defendants must commit to operate the Okeechobee Landfill, and its
gate, scale house, and disposal area under terms and conditions no less
favorable than those provided to defendants' own vehicles or to the
vehicles of any municipality in Florida, except as to price and credit
terms;
j. Milwaukee, WI
USA Waste's Kestrel Hawk Landfill, located at 1989 Oakes Road,
Racine, WI 53406; and WMI's Mallard Ridge Landfill, located at W. 8470
State Road 11, Delavan, WI 53115;
k. New York, NY/Philadelphia, PA
WMI's Modern Landfill & Recycling, located at 4400 Mt. Piscah Road,
York, PA 17402, and known as the Modern Landfill;
l. Northeast Michigan
USA Waste's Whitefeather Landfill, located at 2401 Whitefeather
Road, Pinconning, MI; and Elk Run Sanitary Landfill, located at 20676
Five Mile Highway, Onaway, MI;
m. Pittsburgh, PA
WMI's Green Ridge Landfill, located at 717 East Huntingdon Landfill
Road, Scottdale, PA 15683, and variously known as the Green Ridge
Landfill, the Y&S Landfill, or the Greenridge Reclamation Landfill;
n. Portland, OR
USA Waste's North WASCO Landfill, located at 2550 Steele Road, the
Dalles, OR 97058; and
2. Transfer Stations, Disposal Rights and Throughput Agreements
a. Akron/Canton, OH
Throughput disposal rights of a maximum of 400 tons/day of waste,
for a ten-year time period, at WMI's Akron Central Transfer Station,
located at 389 Fountain Street, Akron, OH, under the following terms
and conditions:
(1) The purchaser (or its designee) can deliver waste to the Akron
Central Transfer Station for processing and, at the purchaser's option,
load the processed waste into the purchaser's (or its designee's)
vehicles for disposal;
(2) For each purchaser of such disposal rights (or its designee),
defendants must commit to operate the listed Akron Central Transfer
Station's gate, scale house, and disposal area under terms and
conditions no less favorable than those provided to defendants' own
vehicles or to the vehicles of any municipality in Ohio, except as to
price and credit terms;
b. Baltimore, MD
Disposal rights of at least 600 tons of waste/day, pursuant to
which defendants will sell to one or more purchasers rights to dispose,
for a five-year time period, under the following terms and conditions:
(1) The purchaser(s) or its designee(s) may dispose of waste at any
one or any combination of the following facilities, as specified in its
purchase agreement: Southwest Resource Recovery Facility (known as
Baltimore RESCO or BRESCO), located at 1801 Annapolis Road, Baltimore,
MD 21230; Baltimore County Resource Recovery Facility, located at 10320
York Road, Cockeysville, MD; Western Acceptance Facility, located at
3310 Transway Road, Baltimore, MD; or Annapolis Junction Transfer
Station, located at 8077 Brock Bridge Road, Jessup, MD 20794. If more
than one person purchases the disposal rights, the minimum daily
disposal rates, and the total of all purchasers' maximum disposal
amounts at all facilities specified shall be no less than 600 tons/day;
(2) For each purchaser of disposal rights (or its designee),
defendants must commit to operate the listed Baltimore, MD area
facilities' gates, scale houses, and disposal areas under terms and
conditions no less favorable than those provided to defendants' own
vehicles or to the vehicles of any municipality in Maryland, except as
to price and credit terms;
c. Cleveland, OH
At purchaser's option, either USA Waste's Newburgh Heights Transfer
Station, located at 3227 Harvard Road, Newburgh Heights, OH 44105 (and
known as the Harvard Road Transfer Station); or all of WMI's right,
title and interest in the Strongsville Transfer Station, located at
16099 Foltz Industrial Parkway, Strongsville, OH; provided, however,
that the City of Strongsville, owner of the transfer station, approves
such sale or assignment. Defendants will exercise their best efforts to
secure the assignment to the purchaser of all their rights, title and
their interests in the Strongsville Transfer Station, and in the event
the purchaser selects Strongsville, defendants will not reacquire any
right, title or interest in the Strongsville transfer station. If the
contract is not assigned, defendants will enter into a disposal rights
agreement with the purchaser (or purchasers), which will provide, in
effect, that the purchaser(s) will enjoy all disposal rights and
privileges now enjoyed by defendants at the Strongsville Transfer
Station, and that defendants will operate the facility's gate, scale
house, and disposal areas under terms and conditions no less favorable
than those provided to defendant's own vehicles or to the vehicles of
any municipality in Ohio, except as to price and credit terms;
d. Columbus, OH
WMI's Reynolds Road Transfer Station, located at 805 Reynolds
Avenue, Columbus, OH 43201;
e. Detroit, MI
WMI's Detroit Transfer Station, located at 12002 Mack Avenue,
Detroit, MI 48215;
f. Houston, TX
USA Waste's Hardy Road Transfer Station, located at 18784 East
Hardy, Houston, TX;
g. Louisville, KY
USA Waste's Poplar Level Road Transfer Station, located at 4446
Poplar Level Road, Louisville, KY;
h. Miami, FL
All USA Waste's right, title, and interest in the Reuters Transfer
Station Rights, as conveyed to Chambers Waste Systems of Florida, a
subsidiary of USA Waste, pursuant to the Final Judgment in United
States v. Reuter Recycling of
[[Page 53698]]
Florida, Inc., 1996-1 Trade Cas. (CCH) para. 71,353 (D.D.C. 1996), a
copy of which is attached as Exhibit A;
i. New York, NY
(1) WMI's SPM Transfer Station, located at 912 East 132nd Street,
Bronx, NY 10452, and all rights and interests, legal or otherwise, that
WMI now enjoys, has had or made use of out of the SPM Transfer Station,
to deliver waste by truck to rail siding at the Oak Point Rail Yard in
the Bronx, NY, and at the Harlem River Yards facility, located at St.
Ann's and Lincoln Avenues at 132nd Street, Bronx, NY 10454;
(2) All right, title, and interest in USA Waste's pending
application to construct and operate a waste transfer station located
at 2 North 5th Street, Brooklyn, NY 11211, and known as the Nekboh
Transfer Station; and
(3) USA Waste's All City Transfer Station, located at 246-252
Plymouth Street, Brooklyn, NY 11202;
j. Philadelphia, PA
USA Waste's Girard Point Transfer Station, located at 3600 South
26th Street, Philadelphia, PA 19145; and USA Waste's Quick Way Inc.
Municipal Waste Transfer Station, located at SE Corner, Bath and
Orthodox Streets, Philadelphia, PA 19137, subject to the conditions
that (1) the existing City of Philadelphia waste contract is
transferred to a WMI transfer station, which defendants must use their
best efforts to accomplish, and (2) until such transfer is effect3ed,
USA Waste will be granted throughput capacity at the Quick Way Transfer
Station to handle this contract.
D. Relevant Hauling Assets, unless otherwise noted, means with
respect to each commercial waste collection route or other hauling
asset described herein, all tangible assets, including capital
equipment, trucks and other vehicles, containers, interests, permits,
supplies [except real property and improvements to real property (i.e.,
buildings)]; and it includes all intangible assets, including hauling-
related customer lists, contracts, and accounts.
Relevant Hauling Assets, as used herein, includes the assets in the
following locations:
1. Akron, OH
USA Waste's and American Waste Corporation's front-end loader truck
(``FEL'') commercial routes that serve the City of Akron and Summit
County, Ohio;
2. Allentown, PA
WMI's FEL commercial routes that serve the cities of Allentown and
Northampton and Lehigh County, PA;
3. Cleveland, OH
WMI's FEL commercial routes that serve the City of Cleveland and
Cuyahoga County, Ohio (not including the northwest quadrant);
4. Columbus, OH
WMI's FEL commercial routes that serve Franklin County, Ohio;
5. Denver, CO
USA Waste's FEL commercial routes that serve the City of Denver,
and Denver and Arapahoe County, CO;
6. Detroit, MI
WMI's FEL commercial routes that serve the City of Detroit and
Wayne County, MI;
7. Houston, TX
WMI's FEL commercial routes that serve the City of Houston, the
Dickinson area, and Harris County, TX;
8. Louisville, KY
USA Waste's FEL commercial routes that serve the City of Louisville
and Jefferson County, KY;
9. Pittsburgh, PA
WMI's FEL commercial routes that serve Allegheny County and
Westmoreland County, PA, and the garage facility (real estate and
improvements) located at the Y&S Landfill;
10. Portland, OR
WMI's FEL commercial routes that serve the City of Portland, OR;
11. Tucson, AZ
USA's Waste's FEL commercial routes that serve the City of Tucson
and Pima County, AZ; and
12. Gainesville, FL
WMI's FEL commercial routes that serve Alachua County, FL.
E. Hauling means the collection of waste from customers and the
shipment of the collected waste to disposal sites. Hauling, as used
herein, does not include collection of roll-off containers.
F. Waste means municipal solid waste.
G. Disposal means the business of disposing of waste into approved
disposal sites.
H. Relevant Area means the county in which the Relevant Hauling
Assets or Relevant Disposal Assets are located and any adjacent city or
county, except with respect to the Modern Landfill [see Section
II(C)(1)(k)], for which the Relevant Area means Philadelphia, PA, and
New York, NY.
I. Relevant State means the state in which the Relevant Disposal
Assets or Relevant Hauling Assets are located, provided however, that
state is a party to this Final Judgment. With respect to the Modern
Landfill [see Section II(C)(1)(k)], the Relevant State means the
Commonwealth of Pennsylvania and the State of New York. With respect to
section VII, the Relevant State means each state in which the disposal
or hauling assets to be acquired are located, provided that state is a
party to this Final Judgment.
J. South Florida Waste means waste collected, or delivered directly
from a transfer station located, in Broward, Dade or Monroe County, FL.
III
Applicability
A. The provisions of this Final Judgment apply to defendants, their
successors and assigns, subsidiaries, directors, officers, managers,
agents, and employees, and all other persons in active concert of
participation with any of them who shall have received actual notice of
this Final Judgment by personal service or otherwise.
B. Defendants shall require, as a condition of the sale or other
disposition of all or substantially all of its assets, or of a lesser
business unit that includes defendants' hauling or disposal businesses
in any Relevant Area, that the acquiring party or parties agree to be
bound by the provisions of this Final Judgment.
IV
Divestitures
A. Defendants are hereby ordered and directed, in accordance with
the terms of this Final Judgment, within one hundred and twenty (120)
calendar days after the filing of the Complaint in this matter, or five
(5) days after notice of the entry of this Final Judgment by the Court,
whichever is later, to sell all Relevant Disposal Assets and Relevant
Hauling Assets as viable, ongoing businesses to a purchaser or
purchasers acceptable to the United States, in its sole discretion,
after consultation with the Relevant State.
B. Defendants shall use their best efforts to accomplish the
divestitures ordered by this Final Judgment as expediously and timely
as possible. The United States, in its sole discretion, after
consultation with the Relevant State, may extend the time period for
any
[[Page 53699]]
divestiture on additional period of time, not to exceed sixty (60)
calendar days.
C. In accomplishing the divestitures ordered by this Final
Judgment, defendants promptly shall make known, by usual and customary
means, the availability of the Relevant Disposal Assets and the
Relevant Hauling Assets. Defendants shall inform any person making an
inquiry regarding a possible purchase that the sale is being made
pursuant to this Final Judgment and provide such person with a copy of
this Final Judgment. Defendants shall also offer to furnish to all bona
fide prospective purchasers, subject to customary confidentiality
assurances, all information regarding the Relevant Disposal Assets and
Relevant Hauling Assets customarily provided in a due diligence process
except such information subject to attorney-client privilege or
attorney work-product privilege. Defendants shall make available such
information to the plaintiffs at the same time that such information is
made available to any other person.
D. Defendants shall not interfere with any negotiations by any
purchaser to employ any USA Waste (or former WMI) employee who works
at, or whose primary responsibility concerns, any disposal or hauling
business that is part of the Relevant Disposal Assets or Relevant
Hauling Assets.
E. Defendants shall permit prospective purchasers of the Relevant
Disposal Assets or Relevant Hauling Assets to have access to personnel
and to any and all environmental, zoning, and other permit documents
and information, and to make inspection of the Relevant Disposal Assets
and Relevant Hauling Assets and of any and all financial, operational,
or to other documents and information customarily provided as part of a
due diligence process.
F. With the exception of the facilities described in Sections
II(C)(2) (e), (h) and (i)(2), defendants shall warrant to each
purchaser of Relevant Disposal Assets or Relevant Hauling Assets that
each asset will be operational of the date sale.
G. Defendants shall not take any action, direct or indirect, that
will impede in any way the operation of the Relevant Disposal Assets or
Relevant Hauling Assets.
H. Defendants shall warrant to each purchaser of Relevant Disposal
Assets or Relevant Hauling Assets that there are no material defects in
the environmental, zoning, or other permits pertaining to the operation
of each asset, and that defendants will not undertake, directly or
indirectly, following the divestiture of each asset, any challenges to
the environmental, zoning, or other permits or applications for permits
or licenses pertaining to the operation of the asset.
I. Unless the United States, after consultation with the Relevant
State, otherwise consents in writing, the divestitures pursuant to
Section IV, or by trustee appointed pursuant to Section V of this
Judgment, shall include all Relevant Disposal Assets and Relevant
Hauling Assets and be accomplished by selling or otherwise conveying
each asset to a purchaser in such a way as to satisfy the United
States, in its sole discretion, after consultation with the Relevant
State, that the Relevant Disposal Assets or Relevant Hauling Assets can
and will be used by the purchaser as part of a viable, ongoing business
or businesses engaged in waste disposal or hauling. The divestitures,
whether pursuant to Section IV or Section V of this Final Judgment,
shall be made to a purchaser (or purchasers) for whom it is
demonstrated to the United State's sole satisfaction, after
consultation with the Relevant State, that: (1) the purchaser(s) has
the capability and intent of competing effectively in the waste
disposal or hauling business in the Relevant Area; (2) the purchaser(s)
has the managerial, operational, and financial capability to compete
effectively in the waste disposal or hauling business in the Relevant
Area; and (3) none of the terms of any agreement between the purchaser
and defendants gives any defendant the ability unreasonably to raise
the purchaser's costs, lower the purchaser's efficiency, or otherwise
interfere in the ability of the purchaser to compete effectively in the
Relevant Area.
J. A purchaser of any Relevant Disposal Asses or Relevant Hauling
Assets under this Final Judgment must demonstrate to the satisfaction
of the United States, after consultation with the Relevant State, that
the purchaser will comply with any and all applicable federal, state
and local environmental and licensing laws.
K. Defendants may enter into an agreement, after review and
approval of the United States, in its sole discretion, after
consultation with the Relevant State, with a purchaser or purchasers of
the Chiquita Canyon, Brazoria or Carleton Farms landfills (See Sections
II (C)(1)(g), and (d)) for disposal of commercially acceptable waste
collected or transferred from defendants' own route operations.
V
Appointment of Trustee
A. In the event that defendants have not sold the Relevant Disposal
Assets or Relevant Hauling Assets within the time specified in Section
IV of this Final Judgment, the Court shall appoint, on application of
the United States, a trustee selected by the United States, to effect
the divestiture of each Relevant Disposal Asset or Relevant Hauling
Asset not sold.
B. After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell the Relevant Disposal Assets or
Relevant Hauling Assets described in Sections II(C) and (D) of this
Final Judgment. The trustee shall have the power and authority to
accomplish any and all divestitures at the best price then obtainable
upon a reasonable effort by the trustee, subject to the provisions of
Sections IV, VI, and IX of this Judgment, and shall have such other
powers as the Court shall deem appropriate. Subject to Section V(C) of
this Judgment the trustee shall have the power and authority to hire at
the cost and expense of defendants any investment bankers, attorneys,
or other agents reasonably necessary in the judgment of the trustee to
assist in the divestitures, and such professionals and agents shall be
accountable solely to the trustee. To assist in the sale of the Brent
Run Landfill, described in Section II II(C)(1)(e) of this Judgment, the
trustee also shall have the power and authority to commit defendants to
supply waste from defendants' routes in the Relevant Area to that
landfill for up to a five-year time period at the best disposal price
then obtainable upon reasonable effort by the trustee. The trustee
shall have the power and authority to accomplish the divestitures at
the earliest possible time to a purchaser or purchasers acceptable to
the United States, in its sole discretion, after consultation with the
Relevant State, and shall have such other powers as this Court shall
deem appropriate. 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
Relevant State and the trustee within ten (10) calendar days after the
trustee has provided the notice required under Section VI of this Final
Judgment.
C. The trustee shall serve at the cost and expense of defendants,
on such terms and conditions as the Court may prescribe, and shall
account for all monies derived from the sale of each Relevant Disposal
Asset or Relevant Hauling Asset sold by the trustee and all
[[Page 53700]]
costs and expenses so incurred. After approval by the Court of the
trustee's accounting, including fees for its services and those of any
professionals and agents retained by the trustee, all remaining money
shall be paid to defendants and the trust shall then be terminated. The
compensation of such trustee and of any professionals and agents
retained by the trustee shall be reasonable in light of the value of
the divested business and based on a fee arrangement providing the
trustee with an incentive based on the price and terms of the
divestiture and the speed with which it is accomplished.
D. Defendants shall use their best efforts to assist the trustee in
accomplishing the required divestitures, including best efforts to
effect all necessary regulatory approvals. The trustee and any
consultants, accountants, attorneys, and other persons retained by the
trustee shall have full and complete access to the personnel, books,
records, and facilities of the businesses to be divested, and
defendants shall develop financial or other information relevant to the
businesses to be divested customarily provided in a due diligence
process as the trustee may reasonably request, subject to customary
confidentiality assurances. Defendants shall permit bona fide
prospective purchasers of each Relevant Disposal Asset or Relevant
Hauling Asset to have reasonable access to personnel and to make such
inspection of physical facilities and any and all financial,
operational or other documents and other information as may be relevant
to the divestitures required by this Final Judgment.
E. After its appointment, the trustee shall file monthly reports
with the parties and the Court setting forth the trustee's efforts to
accomplish the divestitures ordered under this Final Judgment;
provided, however, that 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 business to be divested,
and shall describe in detail each contact with any such person during
that period. The trustee shall maintain full records of all efforts
made to sell the businesses to be divested.
F. If the trustee has not accomplished such divestitures within six
(6) months after its appointment, the trustee thereupon shall file
promptly with the Court a report setting forth (1) the trustee's
efforts to accomplish the required divestitures, (2) the reasons, in
the trustee's judgment, why the required divestitures have not been
accomplished, and (3) the trustee's recommendations; provided, however,
that 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 parties, who shall each have the right to be heard and to
make additional recommendations consistent with the purpose of the
trust. The Court shall enter thereafter such orders as it shall deem
appropriate in order to carry out the purpose of the trust which may,
if necessary, include extending the trust and the term of the trustee's
appointment by a period requested by the United States.
VI
Notice of Proposed Divestitures
Within two (2) business days following execution of a definitive
agreement, contingent upon compliance with the terms of this Final
Judgment, to effect, in whole or in part, any proposed divestiture
pursuant to Sections IV or V of this Final judgment, defendants or the
trustee, whichever is then responsible for effecting the divestiture,
shall notify the United States and the Relevant State of the proposed
divestiture. If the trustee is responsible, it shall similarly notify
defendants. The notice shall set forth the details of the proposed
transaction and list the name, address, and telephone number of each
person not previously identified who offered to, or expressed an
interest in or a desire to, acquire any ownership interest in the
business to be divested that is the subject of the binding contract,
together with full details of same. Within fifteen (15) calendar days
of receipt by the United States and the Relevant State of such notice,
the United States, in its sole discretion, after consultation with the
Relevant State, may request from defendants, the proposed purchaser, or
any other third party additional information concerning the proposed
divestiture and the proposed purchaser. Defendants and the trustee
shall furnish any additional information requested from them within
fifteen (15) calendar days of the receipt of the request, unless the
parties shall otherwise agree. Within thirty (30) calendar days after
receipt of the notice [or within twenty (20) calendar days after the
United States and the Relevant State have been provided the additional
information requested from defendants, the proposed purchaser, and any
third party, whichever is later], the United States, after consultation
with the Relevant State, 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 to
defendants (and the trustee, if applicable) that it does not object,
then the divestiture may be consummated, subject only to defendants'
limited right to object to the sale under Section V(B) of this Final
Judgment. Upon objection by the United States, a divestiture proposed
under Section IV or Section V of this Final Judgment shall not be
consummated. Upon objection by defendants under the provision in
Section V(B), a divestiture proposed under Section V shall not be
consummated unless approved by the Court.
VII
Notice of Future Acquisitions
A. Defendants shall provide each Relevant State with 30 days'
written notice (which period may be shortened by permission of the
Relevant State) before acquiring, directly or indirectly, any interest
in any business, assets (other than in the ordinary course of
business), capital stock, or voting securities of any person that, at
any time during the twelve (12) months immediately preceding such
acquisition, was engaged in waste disposal or small containerized solid
waste hauling in any area listed in Section VII(B), where that person's
annual revenues from waste disposal or small containerized solid waste
hauling in the area were in excess of $500,000 annually, or its total
revenues were in excess of $1,000,000 annually.
B. The notice provisions set forth in Section VII(A) above apply
whenever defendants seek to acquire any interest in any business,
assets (other than in the ordinary course of business), capital stock,
or voting securities of any person that was engaged in waste disposal
or small containerized solid waste hauling in any of the following
areas:
[[Page 53701]]
------------------------------------------------------------------------
Area for which defendants must provide
Relevant State relevant state notice of future
acquisitions
------------------------------------------------------------------------
Arizona...................... Pima Co. (hauling and disposal).
California................... Los Angeles and Riverside (hauling and
disposal); Ventura and Orange Co.
(disposal only).
Colorado..................... Boulder and Denver Co. (hauling and
disposal).
Florida...................... Brevard, Alachua, Marion, Orange,
Osceola, Seminole, Lee, Charlotte,
Sarastoa, Putnam, Volusia and Flagler
Co. (hauling and disposal).
Kentucky..................... Jefferson and Oldham Co. (hauling and
disposal).
Maryland..................... Baltimore City, Baltimore, Anne Arundel,
Harford, Carroll, Howard, Montgomery,
and Prince George's Co. (hauling and
disposal).
Michigan..................... Wayne, Macomb, and Oakland Co. (hauling
and disposal); Genessee, Shiawassee,
Saginaw, Bay, Midland, Wexford, Manistee
and Montgomery Co. (disposal only).
New York..................... New York, Bronx, Kings, Queens, and
Richmond Co. (disposal only).
Ohio......................... Ashtabula, Cuyahoga, Delaware, Fairfield,
Franklin, Geauga, Lake, Licking, Lorain,
Lucas, Mahoning, Medina, Pickaway,
Portage, Stark, Summit, Trumbull, and
Wood Co. (hauling and disposal);
Carroll, Columbiana, Coshocton, Holmes,
Knox, Madison, Tuscarawas, Union and
Wayne Co. (disposal only).
Pennsylvania................. Allegheny, Westmoreland, Washington,
Beaver, Butler, Lehigh, Northampton,
Dauphin, Cumberland, and Perry Co.
(hauling and disposal).
Texas........................ Brazoria, Chambers, Ft. Bend, Galveston,
Harris, Liberty, Montgomery, Walker and
Waller Co. (hauling and disposal).
Washington................... Cowlitz and Clark Co. (hauling and
disposal).
Wisconsin.................... Milwaukee, Waukesha, Racine, Washington,
Kenosha, Ozaukee, Walworth, Jefferson
and Dane Co. (disposal only).
------------------------------------------------------------------------
C. For purposes of this Section VII, the term ``small containerized
solid waste hauling'' means the provision of solid waste hauling
service to commercial customers by providing the customer with a one to
ten cubic yard container, which is picked up mechanically using a
frontload, rearload or sideload truck, and excludes hand pick-up
service, and service using a compacter attached to or part of a
container.
VIII
Defendants' Additional Obligations
Defendants are hereby ordered and directed to, in accordance with
the terms of this Final Judgment:
A. Offer to extend, for an additional ten-year time period, the
Solid Waste Service Agreement, dated August 8, 1996, by and between the
Northeast Maryland Waste Disposal Authority and USA Waste's subsidiary,
Garnet of Maryland, Inc. (attached hereto as Exhibit B), for the
disposal of Anne Arundel County, MD and Howard County, MD waste at the
Annapolis Junction Transfer Station;
B. Use their best efforts, prior to its divestiture, to obtain any
and all licenses and permits to open and operate USA Waste's Nekboh
Transfer Station, described in Section II(C)(2)(i)(2); and for a five-
year period following such divestiture, to cooperate and assist the
purchaser in obtaining any and all licenses or permits required to
operate Nekboh Transfer Station and to refrain from opposing any
application by the purchaser to obtain a license or permit to expand
the Nekboh Transfer Station;
C. For a one-year period following entry of this Final Judgment,
refrain from opposing any application by any person for a permit or
license to operate any waste transfer station in any borough of the
City of New York, NY;
D. For a five-year period following entry of this Final Judgment,
refrain from opposing any application by any person to obtain a license
or permit to expand the remaining capacity or the average daily
capacity of the Emerald Park Landfill, Glacier Ridge Landfill, or
Valley Meadows Landfill, in the Greater Milwaukee, WI area;
E. Refrain from reacquiring any interest in any Relevant Disposal
Assets or Relevant Hauling Assets divested pursuant to the terms of
this Final Judgment, without prior written notice to, and written
consent of, the United States and the Relevant State;
F. Refrain from conditioning the sale of any landfill pursuant to
this Final Judgment on any understanding, agreement or commitment,
written or understood, that the purchaser (or purchasers) will agree to
sell airspace or otherwise permit defendants to dispose of waste in
that landfill; provided, however, that USA Waste's Carleton Farms
Landfill may be divested subject to USA Waste's obligation to dispose
of ash from the Greater Detroit Resource Recovery Center's incinerator
at a separate monofill cell on the Carleton Farms Landfill site;
G. Refrain from taking any action to enforce any agreement or
understanding that would prohibit any person from competing in Alachua
or Marion County, FL; provided, however, that this provision shall not
apply to a current or former employee of defendants (other than any
employee who may be responsible in any way for route operations subject
to divestiture under Sections II(D)(12), IV and V of this Judgment);
and
H. Provide access to the gate, scale house and disposal area of the
WMI Tucson transfer station, located at 5200 West Ina, Tucson, AZ,
under terms and conditions no less favorable than those provided to
defendants' own vehicles or to the vehicles of any county or
municipality in Arizona.
IX
Affidavits
A. Within twenty (20) calendar days of the filing of the Final
Judgment in this matter and every thirty (30) calendar days thereafter
until the divesture has been competed whether pursuant to Section IV or
Section V of this Final Judgment, defendants shall deliver to
plaintiffs an affidavit as to the fact and manner of compliance with
Sections IV or V of this Final Judgment. Each such affidavit shall
include, inter alia, the name, address, and telephone number of each
person who, at any time after the period covered by the last such
report, 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 businesses to be divested,
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 that defendants have taken to solicit a buyer for any and
all Relevant Disposal Assets and Relevant Hauling Assets and to provide
required information to prospective purchasers, including the
limitations, if any, on such information. Assuming the information set
forth in the affidavit is true and complete, any obligation by the
[[Page 53702]]
United States, after consultation with the Relevant State, to
information provided by defendants, including limitations 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 plaintiffs an affidavit
which describes in detail all actions defendants have taken and all
steps defendants have implemented on an on-going basis to preserve the
Relevant Disposal Assets and Relevant Hauling Assets pursuant to
Section X of this Final Judgment and the Hold Separate Stipulation and
Order entered by the Court. The affidavit also shall describe, but not
be limited to, defendants' efforts to maintain and operate each
Relevant Disposal Asset and Relevant Hauling Asset as a viable active
competitor; to maintain separate management, staffing, sales, marketing
and pricing of each asset; and to maintain each asset in operable
condition at current capacity configurations. Defendants shall deliver
to plaintiffs an affidavit describing any changes to the efforts and
actions outlined in defendants' earlier affidavit(s) filed pursuant to
this Section within fifteen (15) calendar days after any such change
has been implemented.
C. For a one-year period following the completion of each
divestiture, defendants shall preserve all records of any and all
efforts made to preserve the Relevant Disposal Assets and Relevant
Hauling Assets that were divested and to effect the ordered
divestitures.
X
Hold Separate Order
Until the divestitures required by the Final Judgment have been
accomplished, defendants shall take all steps necessary to comply with
the Hold Separate Stipulation and Order entered by this Court.
Defendants shall take no action that would jeopardized the sale of any
Relevant Disposal Asset or Relevant Hauling Asset.
XI
Financing
Defendants are ordered and directed not to finance all or any part
of any acquisition by any person made pursuant to Sections IV or V of
this Final Judgment.
XII
Compliance Inspection
For purposes of determining or securing compliance with the Final
Judgment and subject to any legally recognized privilege, from time to
time:
A. Duly authorized representatives of the United States Department
of Justice, upon written request of the Attorney General or of the
Assistant Attorney General in charge of the Antitrust Division, or upon
written request of duly authorized representatives of the Attorney
General's Office of any other plaintiff, and on reasonable notice to
defendants made to their principal offices, shall be permitted:
1. Access during office hours of defendants to inspect and copy all
books, ledgers, accounts, correspondence, memoranda, and other records
and documents in the possession or under the control of defendants, who
may have counsel present, relating to the matters contained in this
Final Judgment and the Hold Separate Stipulation and Order; and
2. Subject to the reasonable convenience of defendants and without
restraint or interference from them, to interview, either informally or
on the record, their officers, employees, and agents, who may have
counsel present, regarding any such matters.
B. Upon the written request of the Attorney General or of the
Assistant Attorney General in charge of the Antitrust Division, or upon
the written request of the Attorney General's Office of any other
plaintiff, defendants shall submit such written reports, under oath if
request, with respect to any matter contained in the Final Judgment and
the Hold Separate Stipulation and Order.
C. No information or documents obtained by the means provided in
Sections in Sections VII or X or this Final Judgment shall be divulged
by a representative of the plaintiffs to any person other than a duly
authorized representative of the Executive Branch of the United States,
or the Attorney General's Office of any other plaintiff, except in the
course of legal proceedings to which the United States or any other
plaintiff 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 plaintiffs, 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, and 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 ten (10) calendar days notice
shall be given by plaintiffs to defendants prior to divulging such
material in any legal proceeding (other than a grand jury proceeding)
to which defendants are not a party.
XIII
Retention of Jurisdiction
Jurisdiction is retained by this Court for the purpose of enabling
any of the parties to this Final Judgment to apply to this Court at any
time for such further orders and directions as may be necessary or
appropriate for the construction or carrying out of this Final
Judgment, for the modification of any of the provisions hereof, for the
enforcement of compliance herewith, and for the punishment of any
violations hereof.
XIV
Termination
Unless this Court grants an extension, this Final Judgment will
expire upon the tenth anniversary of the date of its entry.
XV
Public Interest
Entry of this Final Judgment is in the public interest.
Dated ______, 1998.
----------------------------------------------------------------------
United States District Judge
United States's Certificate Of Compliance With Provisions of the
Antitrust Procedures and Penalties Act
The United States of America hereby certifies that it has complied
with the provisions of the Antitrust Procedures and Penalties Act
(``APPA''), 15 U.S.C. 16(b)-(h), and states:
1. The Complaint in this case, the proposed Final Judgment
(``Judgment''), and the Hold Separate Stipulation and Order (``Hold
Separate Order'') were filed on July 16, 1998. The United States's
Competitive Impact Statement was filed on July 23, 1998.
2. Pursuant to 15 U.S.C. 16(b), the Judgment, Hold Separate Order,
and Competitive Impact Statement were published in the Federal Register
on September 24, 1998 (63 Fed. Reg. 51125). A copy of that Federal
Register notice is attached as Exhibit 1.
3. Pursuant to 15 U.S.C. 16(d), the United States furnished copies
of the Complaint, Hold Separate Order, proposed Judgment and
Competitive Impact Statement to anyone requesting them.
4. Pursuant to 15 U.S.C. 16(c), a summary of the terms of the
proposed Judgment and the Competitive Impact Statement were published
in The Cleveland Plain Dealer, a newspaper of
[[Page 53703]]
general circulation in Cleveland, OH, and in The Washington Post, a
newspaper of general circulation in the District of Columbia. Copies of
the certificates of publication from The Cleveland Plain Dealer and The
Washington Post appear in Exhibit 2.
5. On January 21, 1999, the defendants--USA Waste Services, Inc.;
Dome Merger Subsidiary; and Waste Management, Inc.--filed with the
Court a joint statement describing their communications with employees
of the United States Department of Justice concerning the proposed
Judgment, as required by 15 U.S.C. 16(g).
6. During the 60-day comment period after publication of notice in
the Federal Register, The Cleveland Plain Dealer and The Washington
Post, the United States received a total of 13 written comments on the
proposed settlement. The comments were from:
(a) Recycle Worlds Consulting Corp., Madison, WI (Ex. 3);
(b) Honorable Joseph R. Lenthol, New York State Assemblyman for the
50th District, Brooklyn, NY (Ex. 4);
(c) Sierra Club of New York City Group, New York, NY (Ex. 5);
(d) Neighbors Against Garbage, Brooklyn, NY (Ex. 6);
(e) Red Hook Civic Association, Brooklyn, NY (Ex. 7);
(f) Rose Institute of State and Local Government, Claremont College,
Claremont, CA (Ex. 8);
(g) Gold Fields Mining Corporation, Los Angeles, CA (Ex. 9);
(h) Coastal Waste Management, Sacramento, CA (Ex. 10);
(i) York County Solid Waste and Refuse Authority, York, PA (Ex. 11);
(j) Calvert Trash Systems, Inc., Owings, MD (Ex. 12);
(k) LaPlata Recycling Center and Depository, Bayfield, CO (Ex. 13);
(l) Conrad S. Magnuson, Kingston, NH (Ex. 14); and
(m) Three Rivers Disposal Company, Bozeman, MT (Ex. 15).
7. The United States evaluated and responded to each of the
comments it received. The comments did not convince the United States
that it should withdraw its consent to the proposed settlement.
However, for the reasons set forth in its Memorandum in Support of
Entry of the Modified Final Judgment, the United States was persuaded
to move for a minor modification of the proposed Judgment, which would
eliminate the defendants' obligation to divest the Scott Avenue
Transfer Station in Brooklyn, NY, and substitute a divestiture of one
of two smaller transfer stations, Vaccarro or Gesuale, also in New York
City.
Copies of the comments and the United States's responses appear in
Exhibits 3-15; they are summarized below.
A. General Comment on the Divestiture Relief in the Proposed Judgment
Recycle Worlds, a private waste industry consultant, urged the
United States not to approve any asset divestiture under the proposed
Judgment to one of the major integrated waste collection and disposal
firms, such as Republic Services, Inc.; Allied Waste Industries, Inc.;
or Browning-Ferris Industries, Inc. (Ex. 3). In Recycle Worlds's view,
these firms may be more inclined to cooperate with the defendants in
raising prices in some markets in order to avoid potential price wars
with the defendants elsewhere.
In response, we noted that the United States could not
categorically conclude that selling the consent decree assets to a
large national waste collection and disposal firm, such as Republic,
would be less competitive than a sale to municipal agency or small
independent firm, or that large waste companies are more prone to
collude, when given the opportunity, than small independent firms.
Also, large waste collection and disposal companies may enjoy some
competitive advantages, such as better access to capital and more
extensive experience, that would make them in some respects more
formidable competitors than small independent firms.
In a series of transactions beginning in September 1998 and ending
in early 1999, the United States approved Republic as a purchaser of
all of the waste collection and disposal assets ordered divested under
the Judgment, except the Baltimore area disposal assets, which the
United States approved for sale to BFI in October 1999.
B. Comments on the New York City Divestiture Relief
The United States received four comments on provisions of the
proposed Final Judgment that relate to the divestiture relief in the
New York City area. Three commentators--New York State Assemblyman
Joseph Lenthol (Ex. 4), the Sierra Club of New York City Group (Ex. 5),
and Neighbors Against Garbage (Ex. 6)--expressed considerable concern
that by ordering the defendants to divest the application for a permit
to construct and open the proposed Nekboh Transfer Station in Brooklyn,
NY, the Final Judgment would ensure that the new owner would continue
the attempt to open a transfer station on that site, despite strong
community opposition. The commentators suggested that the United
States's move to amend the proposed Judgment in such a way as to end
the effort to develop the Nekboh site as a waste transfer station
(e.g., requiring the defendants to sell the Nekboh site to a government
agency for development as a public park).
In response, we pointed out that the aesthetic and environmental
concerns that have fueled community opposition to the proposed Nekboh
Transfer Station are unrelated to the competitive concerns that
precipitated the governments' antitrust suit. Issues concerning whether
a waste transfer station should be constructed on the Nekboh site ought
to be presented to, and resolved by, the state and local regulatory
officials responsible for issuing the site's operating permit.
A fourth commentator Red Hook Civic Association (Ex. 7), wanted to
know why the United States did not seek divestiture of defendant USA
Waste's massive proposed Erie Basin Transfer Station, also in Brooklyn,
NY. We noted that Erie Basin, if it is constructed, would primarily
handle the city's residential waste, a market unrelated to the disposal
of commercial waste market in which the United States alleged that the
defendants' merger would substantially eliminate competition.
C. Comments on the California Divestiture Relief
The United States received three comments on those provisions of
the Final Judgment relating to the divestiture relief in the California
market. Two commentators--the Rose Institute of State and Local
Government, Claremont College, CA (Ex. 8), and Gold Fields Mining
Corporation (Ex. 9)--submitted very lengthy papers that questioned our
definition of the relevant geographic market for the disposal of
commercial waste from the City of Los Angeles. As these commentators
see it, the geographic market should be expanded to include public and
private landfills located up to 170 miles east of Los Angeles. This
expanded market would include a massive new landfill, Mesquite
Regional, partly-owned by the defendants. And they would order the
defendants to divest that landfill in order to alleviate the
competitive concerns that they believe the combination would raise in
the expanded geographic market.
The United States noted, in its response, that it made good
economic sense to exclude the remote Mesquite Regional Landfill from
the competitive analysis since it is relatively
[[Page 53704]]
inaccessible to commercial waste haulers from the Los Angeles area.
Given this landfill's 170 mile distance from Los Angeles, it would be
very expensive for haulers to ship and dispose of commercial waste
collected in Los Angeles at Mesquite Regional. Private landfills
located much closer to Los Angeles could profitably raise disposal
prices without fear of losing significant revenues to this distant
landfill. Since Mesquite Regional is not in the relevant market, the
defendants should not be required to divest it in order to obtain
effective relief.
A third commentator, Coastal Waste Management (Ex. 10), questioned
the United States' decision not to allege in its Complaint or seek
relief in the proposed judgment relating to commercial waste hauling in
the Sacramento, CA market. We noted, in response, that based on the
evidence available to us at the time, injunctive relief was not
warranted in the Sacramento hauling market. Coastal, however, remains
free to pursue such a remedy by filing a private antitrust action.
D. Comments on the Divestiture Relief in Other Areas
The York County Solid Waste and Refuse Authority of York County,
PA, was very concerned that the ordered divestiture of Waste
Management's Modern Landfill would adversely affect its contract to
deliver waste to the Authority's incinerator and dispose of ash and
noncombustible waste from the incinerator (Ex. 11). Since the proposed
Judgment orders that the landfill be divested ``subject to'' such
existing contractual commitments, the sale should not affect these
local disposal agreements.
Finally, four commentators--Calvert Waste Systems (Ex. 12), LaPlata
Recycling (Ex. 13), Conrad Magnuson (Ex. 14), and Three Rivers Disposal
(Ex. 15)--complained that the United States should have sought
injunctive relief with respect to several markets not alleged in the
governments' complaint, viz., the eastern shore of Maryland; Bayfield,
CO; Kingston, NH; and Bozeman, MT.
In our response, we noted that the United States did not seek
divestiture relief as to these markets because it was not convinced,
based on information available to it at the time, that the merger would
create serious competitive problems warranting the imposition of this
remedy. Private parties, such as the commentators, certainly remain
free to pursue such relief against the defendants by filing a private
antitrust suit.
8. Pursuant to 15 U.S.C. 16 (b)-(h), the United States has arranged
to publish in the Federal Register by September 27, 1999, a copy of the
comments and the United States's responses.
9. With these steps having been taken, the parties have fulfilled
their obligations under the APPA. Pursuant to the Hold Separate Order
that the Court entered on July 16, 1998, the Court may now enter the
proposed Judgment, if it determines that the entry of the Judgment is
in the public interest. For the reasons set forth in the Competitive
Impact Statement, its responses to the public comments, and in its
Memorandum in Support of Entry of the Proposed Modified Final Judgment,
the United States--and all of the other parties--strongly believe that
the proposed decree, as amended, is in the public interest and that the
Court therefore promptly should enter it.
Dated: September 13, 1999.
Respectfully submitted.
Anthony E. Harris, Illinois Bar No. 1133713,
U.S. Department of Justice, Antitrust Division, Litigation II, 1401 H
Street, NW, Suite 3000, Washington, DC 20530, (202) 307-6583.
Note: Exhibits 1 and 2 were unable to be published in the
Federal Register. A copy can be obtained from the U.S. Department of
Justice, Documents Office, 325 7th St., Room 215, Washington, DC or
(202) 514-2481.
Exhibit 3
U.S. Department of Justice Antitrust Division
August 27, 1999.
Mr. Peter Anderson,
Recycle Worlds Consulting Corp., 4513 Vernon Blvd., Suite 15,
Madison, Wisconsin 53705-4964.
Re: Comment on Proposed Final Judgment in United States, State of
Ohio, et al. v. USA Waste Services, Inc., Waste Management, Inc., et
al., Civil No. 98-1616 (N.D. Ohio, filed July 16, 1998)
Dear Mr. Anderson: This letter responds to your written comment
on the proposed Final Judgment in the above case. The Complaint in
this case charged, among other things, that USA Waste's acquisition
of Waste Management would substantially lessen competition in the
disposal of municipal solid waste in 16 markets throughout the
country. The proposed Judgment, now pending in federal district
court in Cleveland, Ohio, would settle the case by, inter alia,
requiring that the defendants divest waste disposal facilities that
serve each of the disposal markets alleged in the Complaint. In a
series of transactions in August and December 1998, and in January
and February 1999, the United States approved, under the terms of
the Judgment, a sale to Republic Services, Inc. (``Republic'') of
all assets that had been ordered divested (except the Baltimore area
disposal assets). The United States subsequently approved a sale to
Browning Ferris Industries, Inc. (``BFI'') of the Baltimore area
disposal assets.
In your letter, you questioned whether Republic or any other
major waste collection and disposal firm should be allowed to
acquire the assets ordered divested under the proposed decree. As
you see it, a sale to a large national or regional firm is
undesirable because such firms would cooperate with the defendants
and other market participants in raising prices to customers after a
divestiture. Competition would be better served if the waste
collection and disposal assets under the decree were sold to a
municipal agency or a small independent firm, entities which, you
contend, would have a greater incentive to vigorously compete
against the defendants' waste collection and disposal operations.
The United States, however, does not have any evidence that
would lead it categorically to conclude that selling the assets
under the Judgment to a large national waste collection and disposal
firm, such as Republic, would be a less competitive alternative than
a sale to municipal agency or small independent firm, or that large
waste companies are more prone to collude, when given the
opportunity, than small independent firms. Also, it is possible that
large waste collection and disposal companies enjoy some competitive
advantages, such as better access to capital and more extensive
experience, that would make them in some respects more formidable
competitors than small independent firms. Thus, United States did
not object to Republic's purchase of most of the waste collection
and disposal assets that the defendants divested under the proposed
Judgment. And since BFI did not compete in the disposal of waste in
the Baltimore market, the United States saw no reason to prevent
BFI's acquisition of the transfer station disposal capacity divested
by the defendants under the proposed Judgment.
Thank you for bringing your concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. Sec. 16(d), a copy of your
comments and this response will be published in the Federal Register
and filed with the Court.
Sincerely yours,
J. Robert Kramer, II,
Chief, Litigation II Section.
Note: Letter dated 11/27/98 from Peter Anderson of Recycle
Worlds Consulting with attachments was unable to be published in the
Federal Register. A copy can be obtained from the U.S. Department of
Justice, Documents office, 325 7th St., Room 215, Washington, DC or
(202) 514-2481.
Exhibit 4
U.S. Department of Justice Antitrust Division
August 27, 1999.
The Honorable Joseph R. Lenthol, Assemblyman 50th District, Kings
County, New York
State of New York Assembly, 619 Lorimer Street, Brooklyn, NY 11211.
Re: Comment on Proposed Final Judgment in United Statesv. State of
Ohio et al. v. USA Waste Services, Inc., Waste Management, Inc., et
al., Civil No. 98-1616 (N.D. Ohio, filed July 16, 1998)
[[Page 53705]]
Dear Assemblyman Lenthol: This letter responds to your written
comment on the proposed Final Judgment in United States USA Waste
Services, Inc., now pending in federal district court in Cleveland,
Ohio. The Complaint in that case charged, among other things, that
USA Waste's acquisition of Waste Management would substantially
lessen competition in the disposal of New York City's commercial
waste. The proposed final Judgment would settle the case by, inter
alia, requiring the defendants to divest (a) the Waste Management's
SPM Transfer Station in the Bronx, NY; (b) USA Waste's All City
Waste Transfer Station in Brooklyn, NY; and (c) USA Waste's proposed
Nekboh Transfer Station in Brooklyn, NY. See Judgment,
Secs. II(C)(2) (i)(1)-(3), IV(A). To ensure USA Waste's continued
cooperation with the purchaser in its efforts to permit and
construct a transfer station on the Nekboh site, the proposed
Judgment further provides that, if the Nekboh Transfer Station is
not permitted within one year after entry of the decree, USA Waste
must, in addition, divest Waste Management's Scott Avenue Transfer
Station, also in Brooklyn, NY. Judgment, Secs. II(C)(2)(i)(4) and
IV(B).
Your letter raises two issues related to the divestiture of the
Nekboh and Scott Avenue transfer stations. First, you point out that
the proposed Nekboh facility, though much larger than the Scott
Avenue station, is still in the permitting stage and may never
obtain a permit to open and operate. For that reason, you urged that
we amend the consent decree to require an immediate divestiture of
the already-permitted Scott Avenue transfer station. Second, you
note that in any event, the proposed Nekboh facility would be
adjacent to the Eastern District Terminal, ``a beautiful 20 acre
parcel of waterfront property'' recently placed on an open-spaces
list. You suggested that the public interest would be better served
if the Decree contained a prohibition on the use of the Nekboh site
as a waste transfer station.
A. The Contingent Divestiture of the Scott Avenue Transfer Station
After considering your comments, and arguments advanced by the
defendants and others, the United States (and its New York co-
plaintiff, the State of New York) concluded that the divestiture
provisions in the proposed Judgment concerning the defendants' Scott
Avenue Transfer Station should indeed be modified. The United States
and the State of New York agreed to join the defendants in moving
the Court to enter a modified Final Judgment that would replace the
current contingent divestiture of the Scott Avenue Transfer Station
with a requirement that the defendants immediately divest either of
two smaller transfer stations, Gesuale or Vacarro, both in New York
City. That obligation was imposed by a recent consent decree,
entered in federal district court in Brooklyn, NY, that settled
another merger case involving a proposed acquisition by Waste
Management of other transfer stations in the New York market, United
States, States of New York and Pennsylvania, and Commonwealth of
Florida v. Waste Management, Inc., Eastern Environmental Services,
Inc., et al, Civil No. 98-7168 (E.D.N.Y., entered May 25, 1999) (the
``Waste/Eastern case''). The United States agreed to move to modify
the proposed Judgment for basically two reasons.
First, divestiture of the Scott Avenue Transfer Station was
primarily an inducement to defendants to ensure that they continue
their efforts to get the Nekboh site permitted. However, the Nekboh
Transfer Station permit application was divested to a major waste
industry firm, Republic, which is fully capable of vigorously
pursuing the permitting process. In August 1998, defendants sold the
proposed Nekboh Transfer Station (and virtually all of the other
assets under the decree) to Republic Services, Inc. With over $2
billion in annual revenues, Republic is the nation's third largest
waste collection and disposal firm. Republic has the financial
resources and economic incentive to continue pursuing a permit for
the proposed Nekboh Transfer Station without defendants' assistance.
In addition, permanent injunctions in the proposed Judgment prohibit
the defendants from interfering in any way with Republic's efforts
to obtain a permit for that site. Thus, the contingent divestiture
of Scott Avenue is unnecessary to ensure that the defendants
cooperate in the permitting process.
Second, by permitting the defendants to retain the Scott Avenue
Transfer Station, in return for divestiture of the smaller Gesuale
or Vaccarro sites, the United States and the State of New York were
able to obtain a favorable settlement of the subsequent Waste/
Eastern merger case. In September 1998, USA Waste agreed to acquire
Eastern Environmental Services, Inc. (``Eastern''), another major
competitor in the disposal of New York City's commercial waste. In
November 1998, the United States, the State of New York and other
states filed an antitrust suit that sought to block that
acquisition. To resolve the governments' competitive concerns in
that litigation, the defendants agreed to divest two large Brooklyn,
NY transfer stations acquired from Eastern (Atlantic and PJ's) in
return for the governments' agreement to join the defendants in this
case in a motion to modify the proposed Final Judgment to substitute
an immediate divestiture of the Gesuale or Vaccaro transfer station
for a contingent divestiture of the Scott Avenue Transfer Station.
(See Waste/Eastern Final Judgment, Secs. II (D)(2)(a)-(c), IV(A)(2)
and (L), filed in federal district court in Brooklyn, NY on December
31, 1998, and entered on May 25, 1999, after the United States had
responded to all public comments submitted during the 60-day public
comment period.)
In light of the divestiture of the Nekboh proposal to Republic,
a well-financed industry giant, the United States does not believe
that the contingent divestiture of the Scott Avenue transfer station
was necessary to alleviate any competitive concerns arising from USA
Waste's acquisition of Waste Management. And by agreeing to join
Waste Management in seeking to remove that requirement from the Ohio
consent decree, the United States and the State of New York were
able to void a trial on the merits of defendants' acquisition of
Eastern.
B. Prohibiting the Construction of a Waste Transfer Station on the
Nekboh Site
Finally you suggest that we modify the decree to prohibit the
construction of a waste transfer station on the Nekboh site. We
strongly believe that promptly permitting and operation of the
Nekboh transfer station is necessary to provide an important
competitive check on USA Waste in the disposal of New York City's
commercial waste. Nothing in the proposed decree, however, would
preclude New York state and city officials from deciding not to
grant a permit to operate a waste transfer facility on the Nekboh
site. Whether the transfer station receives an operating permit
depends on any number of factors, including a considered assessment
of the environmental impact of the facility. Whether a waste
transfer facility on the Nekboh site will have detrimental effects
is an issue that is best left to the regulatory agency to review and
ultimately resolve.
Thank you for bringing your concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16, a copy of your comment
and this response will be published in the Federal Register and
filed with the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
The Assembly, State of New York; Albany
August 7, 1998.
Honorable Janet Reno, Attorney General of the United States,
Department of Justice, 950 Pennsylvania Avenue, NW, Room 4400,
Washington, DC 20530-0001
Dear Attorney General Reno: I write in regard to the recently
announced agreement between the United States Justice Department and
the New York State Attorney General's Office, with USA Waste and
Waste Management, relative to the proposed merger of these two
corporations. Unfortunately, I find this settlement to be
problematic. I believe, however, that these problems can be resolved
if the following concerns are addressed.
It is my understanding that this agreement would require USA
Waste to divest itself of the Nekboh Transfer Station which it is
planning to operate at 2 North 5th Street in Brooklyn, and that this
divestiture would be conditioned upon USA Waste being granted the
necessary operating permits. I cannot understand why, if this
agreement truly seeks to protect the public from monopoly power, USA
Waste would be required to divest itself of a transfer station it
does not yet, and may never have, the authority to operate. Unless
the administrative hearing process is a mere formality, USA Waste
may never obtain the necessary permits. Should that be the case, the
merged company would instead be required to divest itself of USA
Waste's present transfer station located at 485 Scott Avenue in
Brooklyn. Unfortunately, the Scott Avenue transfer station is a much
smaller facility. It only has the capacity to process approximately
1,000 tons per day, while the proposed Nekboh facility has a
capacity in
[[Page 53706]]
excess of 5,000 tons per day. These are hardly comparable
facilities. The only way in which this agreement would truly serve
to protect the public from an unfair monopoly would be for it to
require the unconditional divestiture of both properties.
In addition, it would be an inexcusable waste of resources to
allow USA Waste to proceed with the permitting process (as would be
required by the consent agreement) since it would only be forced to
divest once it has obtained the necessary permits. In order to save
time and money, the process should be stopped now and USA Waste
should be required to divest itself of these sites immediately.
Although it may not fall within the purview of this settlement,
a provision that would prohibit the future use of the Nekboh
property, as well as the adjacent Eastern District Terminal
property, as a transfer station should be added to this agreement.
The Eastern District Terminal is a beautiful 20-acre parcel of
waterfront property which has recently been placed on the
Environmental Bond Act Open Spaces List. This parcel is truly a
treasure in my community and must be protected at all cost. I urge
you to join our effort to save this irreplaceable piece of land.
For the above reasons, I must object to this settlement. I urge
you to revisit this agreement and revise its terms to (1) require
that USA Waste divest itself unconditionally of both the Nekboh and
Scott Avenue properties, and (2) prohibit the future use of the
Nekboh/Eastern District Terminal property as a waste transfer
station. Thank you for your kind consideration of my comments.
Sincerely,
Joseph R. Lentol,
Assemblyman, 50th A.D.
JRL/jl
cc: Vice President Albert Gore
Exhibit 5
U.S. Department of Justice Antitrust Division
August 27, 1999.
Ms. Rosalind Rowen,
Sierra Club New York City Group, c/o 225 East 6th Street--Suite 3H,
New York, New York 10003.
Re: Comment on Proposed Final Judgment in United States, State of
Ohio, et al. v. USA Waste Services, Inc., Waste Management, Inc., et
al., Civil No. 98-1616 (N.D. Ohio, filed July 16, 19998)
Dear Ms. Rowen: Thank you for your letter commenting on the
Final Judgment submitted for entry in the above case. The Complaint
in this case charged, among other things, that USA Waste's
acquisition of Waste Management would substantially lessen
competition in the disposal of New York City's commercial waste. The
proposed Judgment would settle the competitive concerns with respect
to the New York City market by, inter alia, requiring the defendants
to divest (a) the USA Waste's SPM Transfer Station; (b) USA Waste's
All City Transfer Station; and (c) the pending application by USA
Waste for a permit to construct and operate the Nekboh Transfer
Station, also in Brooklyn, NY. See Judgment, Secs. II (C)(2) (i)(1)-
(3) and IV(A). To ensure the defendants' continued cooperation with
the purchaser in its efforts to get the Nekboh site permitted, the
proposed Judgment further provides that if the Nekboh Transfer
Station does not receive an operating permit within one year after
entry of the Judgment, the defendants must divest the Scott Avenue
Transfer Station, also in Brooklyn, NY. See Judgment, Secs. II
(C)(2)(i)(4) and IV(B). In a transaction approved by the United
States in August 1998, under the terms of the decree, the defendants
divested All City Waste Transfer Station and their application for a
permit for the proposed Nekboh site to Republic Services, Inc.,
which previously did not operate any waste disposal sites in the New
York City area.
Your comment relates solely to those portions of the Judgment
that require USA Waste to divest all title and interest in its
application to construct and operate the Nekboh transfer station in
Brooklyn, New York. See Judgment, Secs. II (C)(1)(i)(2) and IV(A)
and (B). As you point out the site of the proposed Nekboh facility
abuts an area that the state of New York recently identified for
potential preservation under its Clean Water/Clean Air Bond Act.
Though Governor Pataki vetoed legislation that would have provided
funds for purchasing the site for development as a park, he
instructed the state Department of Environmental Conservation to
conduct an environmental assessment of the Nekboh site before
issuing an operating permit for a transfer station on that site.
You requested that we modify the Judgment to permit the Nekboh
site to be sold to the state for development as a public park. We
strongly believe that prompt divestiture of the Nekboh permit
application, and speedy permitting, construction and opening of a
transfer situation on the Nekboh site is essential to ensure
vigorous competition in the disposal of New York City's commercial
waste. Developing this site as a public park would frustrate that
goal.
On the other hand, nothing in the proposed Judgment would
preclude the appropriate New York permitting authorities from
lawfully deciding not to issue a permit to operate a waste transfer
facility on the Nekboh site. Whether Republic obtains an operating
permit for a transfer station on the Nekboh site would depend on a
variety of factors, including an assessment of the environmental
impact of a waste transfer station on that site. Your contention
that constructing the Nekboh waste transfer station would preclude
preservation of the site as a public park should be addressed to the
state and local regulatory agencies that review and ultimately
resolve such issues in the ordinary course of the permitting
process.
Thank you for bringing your concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. section 16(d), a copy of
your comment and this response will be published in the Federal
Register and filed with the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
Note: Letter dated 9/14/98 from Rosalind Rowen of Sierra Club
New York City Group was unable to be published in the Federal
Register. A copy can be obtained from the U.S. Department of
Justice, Document Office, 325 7th St., Room 215, Washington, DC
20530 or (202) 514-2481.
Exhibit 6
U.S. Department of Justice Antitrust Division
August 27, 1999.
Douglas H. Ward, Esquire
Ward, Sommers & Moore, L.L.C., Plaza Office Center, 122 South Swan
Street, Albany, NY 12210.
Re: Comment on Proposed Final Judgment in United States, State of
Ohio, et al. v. USA Waste Services, Inc., Waste Management, Inc., et
al., Civil No. 98-1616 (N.D. Ohio, filed July 16, 1998)
Dear Mr. Ward: Thank you for your letter commenting on the
proposed Final Judgment submitted for entry in the above case. The
proposed Judgment requires the defendants to divest their interest
in the proposed Nekboh Transfer Station, which, if permitted by
local government regulatory officials, would be constructed in
Brooklyn, NY. Your client, Neighbors Against Garbage, strongly
opposes permitting, construction and operation of a waste transfer
station on the Nekboh site. It proposes, instead, that we modify the
proposed Final Judgment to provide an incentive for using the Nekboh
site not as a waste transfer facility, but as a public park.
We strongly believe that divestiture of the Nekboh permit
application to an acceptable purchaser, and prompt permitting,
construction and opening of a waste transfer station on the Nekboh
site are steps that must be taken in order to provide an important
competitive constraint on defendants' disposal operations in the New
York City area. There is, however, nothing in the proposed Judgment
that precludes the responsible New York state and city agencies from
deciding not to issue a permit to operate a waste transfer station
on the Nekboh site. In fact, whether these regulatory agencies
decide to issue an operating permit for the Nekboh site depends on a
variety of factors, including an assessment of the environmental
impact of such a waste disposal facility. For that reason, your
argument that opening a waste transfer station on the Nekboh site
will have devastating environmental effects should be left to the
appropriate state and local regulatory agencies to review and
ultimately resolve.
Thank you for bringing your concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16(d), a copy of your
comment and this response will be published in the Federal Register
and filed with the Court.
[[Page 53707]]
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
Ward, Sommer & Moore, L.L.C., Counselors at Law
September 14, 1998.
J. Robert Kramer II,
Anti Trust Division, Chief Litigation II Sect., United States
Department of Justice, 1401 H Street N.W., Suite 3000, Washington,
DC 20530.
Re: USA Waste et al. v. USA Waste Services Inc., CV 1:98CV1616
Dear Mr. Kramer: The undersigned represents a group known as
Neighbors Against Garbage. In conjunction with numerous individuals
and public representatives, we have participated in New York State
Administrative proceedings opposing the construction and/or
operation of a waste transfer station in Brooklyn New York known as
the Nekboh Transfer Station (attached as Exhibit A). We write to
oppose approval of the Draft Consent Order which will encourage the
construction and operation of this ill-advised and unnecessary waste
transfer station.
Under the terms of the Draft Consent Order, (DCO at
II(c)(1)(i)(2), IV (A) and (B) and VIII [B] and [C]), it appears
that USA Waste must obtain a license for, and transfer its ownership
in, the Nekboh facility within one year from the entry of Final
Judgment, or sell its Brooklyn Transfer Station, located at 485
Scott Ave. While the terms of the agreement are not entirely clear,
it appears to provide an incentive for Waste Management to obtain
prompt permitting for the proposed Nekboh facility. My client and
the parties to this proceeding have steadfastly opposed any use of
this site as a waste transfer station. Recently, after considerable
public outcry, Governor Pataki and Mayor Guiliani convinced the NYS
Department of Environmental Conservation and the NYC Department of
Sanitation to ``go back to the drawing boards'' and conduct a
thorough environmental review of the proposal. We are hopeful that
this is the first step toward rejecting this unnecessary and ill-
conceived plan. Unfortunately, the Draft Consent Order, in pressing
USA Waste to obtain prompt approval of its application, is contrary
to the directive of the Governor and Mayor and the ever growing
factual record which demonstrates that the plan is a bad idea that
will have devastating, adverse impacts on the environment and the
neighborhood.
We suggest that these objectional provisions of the Draft
Consent Order should be modified. We agree with the divestitive
requirement, however, the Consent Order should allow that the site
could (or should) be used for other purposes such as open space or
recreation. Indeed, the agreement should provide an incentive for
dedicating the site for park type purposes. This approach would
conform this Consent Order to the direction of state and local
efforts and would not undercut the recent progress toward an
acceptable community compatible use for the Nekboh site.
Thank you for your attention to this matter.
Very truly yours,
Douglas H. Ward,
Ward, Sommer & Moore, LLC.
DHW/sak
cc: Cathleen Breen
State of New York--Department of Environmental Conservation
In the Matter of the Application of USA Waste Services of NYC, Inc.
For A Permit to Construct and Operate a Solid Waste Management
Facility
DEC Application No. 26101-00013/00008
Petition for Full Party Status of Hon. Howard Golden, Hon.
Sheldon Silver, Neighbors Against Garbage (``NAG''), Hon. Nydia
Valazquez, Hon. Joseph R. Lentol, Hon. Martin Connor, Hon. Joan
Millman, Hon. Felix Ortiz, Hon. Victor L. Robles, Hon. Kenneth
Fisher, Hon. Angel Rodriguez, Hon. Stephen Di Brienza, Hon. Kathryn
E. Freed, El Puente, de Williamsburg, Inc. (``El Puenta''), Make a
Difference Community Action Program (``MADCAP''), Williamsburg
Around the Bridge Block Association (``WABBA''), Northside Community
Development Council, Inc., The Watchperson Project, The Sierra Club,
United Jewish Council of the East Side, Inc., South Manhattan
Development Corporation, Citizens Action Network, Katherine and Alex
Kudiash, and Phil Smrek.
Attorneys for Petitioners
Frank J. Pannizzo, Esq.,
Counsel to the President of the Borough of Brooklyn, Borough Hall--209
Joralemon Street, Brooklyn, New York 11020, (718) 802-3807.
Ward, Sommer & Moore, Llc,
Plaza Office Center, 122 South Swan Street, Albany, New York 12210,
(518) 472-1776.
Brooklyn Legal Services
Foster Maer, Copoation A, 260 Broadway, Brooklyn, NY 11211, (718) 782-
6195.
New York Lawyers for the Public Interest
Sam Sue, Edward Copeland, of counsel, 30 West 21st St., 9th Floor, New
York, NY 10010, (212) 727-2270.
Finder and Cuomo, Llp
Attorney for Petitioner Citizens Action Network, Matthew A. Cuomo, of
counsel, 600 Third Ave., 27th Floor, New York, New York 10016, (212)
599-2244.
Dated: April 23, 1998.
Exhibit 7
U.S. Department of Justice Antitrust Division
August 27, 1999.
Mr. John McGettrick,
Co-Chairman, The Red Hook Civic Association, 178 Coffey Street,
Brooklyn, New York 11231.
Re: Comment on Proposed Final Judgment in United States, State of
Ohio, et al. v. USA Waste Services, Inc., Waste Management, Inc., et
al., Civil No. 98-1616 (N.D. Ohio, filed July 16, 1998)
Dear Mr. McGettrick: Thank you for your letter commenting on the
Final Judgment submitted for entry in the above case. The Complaint
in this case charged, among other things, that USA Waste's
acquisition of Waste Management would substantially lessen
competition in the disposal of New York City's commercial waste. The
proposed Judgment would settle the competitive concerns with respect
to the New York City market by, inter alia, requiring the defendants
to divest: (a) the USA Waste's SPM Transfer Station; (b) USA Waste's
All City Transfer Station; and (c) the pending application by USA
Waste for a permit to construct and operate the Nekboh Transfer
Station, also in Brooklyn, NY. See Judgment, Secs. II (C)(2)(i)(1)-
(3) and IV(A). To ensure the defendants' continued cooperation with
the purchaser in its efforts to get the Nekboh site permitted, the
proposed Judgment further provides that if the Nekboh Transfer
Station does not receive an operating permit within one year after
entry of the Judgment, the defendants must divest the Scott Avenue
Transfer Station, also in Brooklyn, NY. See Judgment,
Secs. II(C)(2)(i)(4) and IV(B).
In a transaction approved by the United States in August 1998,
under the terms of the proposed Judgment, the defendants divested
All City Waste Transfer Station and their application for a permit
for the proposed Nekboh site to Republic Services, Inc., which
previously did not operate any waste disposal sites in the New York
City area.
You have pointed out that although the proposed Final Judgment
orders the defendants to divest a number of waste transfer stations
in Brooklyn and in the Bronx, the Judgment does not order them to
divest their interest in the proposed Erie Basin Marine Transfer
Terminal, a large waste disposal facility that USA Waste had
proposed permitting and constructing in the Red Hook section of
Brooklyn, NY. You asked whether the defendants' retention of this
disposal facility might nullify the effects of the ordered
divestitures, and whether the defendants ought to be forced to
withdraw their proposal to permit and construct the Erie Basin
facility.
As noted above, the Complaint alleged that defendants'
transaction would substantially reduce competition in the disposal
of the city's commercial waste. The proposed Erie Basin site,
however, was designed primarily for handling the city's residential
waste, not its private commercial waste. This waste transfer station
(and others proposed by competitors) would replace disposal capacity
that would be lost when New York City closes its only municipal
landfill, Fresh Kills, in late 2001. Although a portion of the Erie
Basin facility, if permitted, might handle some private commercial
waste, at the moment, whether Erie Basin will be permitted is
somewhat speculative. In any event, we do not see Erie Basin as a
significant competitive factor in the disposal of private commercial
waste, and hence, there was no reason for us to insist that the
defendants divest it to alleviate any competitive concerns regarding
competition in the disposal of New York City's private commercial
waste.
Thank you for bringing your concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16(d), a copy of your
comment and this
[[Page 53708]]
response will be published in the Federal Register and filed with
the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
The Red Hook Civic Association
October 23, 1998.
J. Robert Kramer II,
Chief, Litigation II Section, U.S. Department of Justice, 1401 H
Street NW, Suite 3000, Washington, D.C. 20530.
Re: Public Comment on U.S. v USA Waste Services, Inc., Civ. No. 1:98
CV 1616 (E.D. Ohio 7/16/98)
Dear Mr. Kramer: We would like to comment regarding the adequacy
of the New York City divestitures required as part of the above
captioned Final Judgment (the ``Settlement''). As you know, the
settlement requires the divestiture of the SPM Transfer Station at
912 East 132nd Street in the Bronx, the 2 North 5th Street waste
transfer station in Brooklyn, the Plymouth Street station in
Brooklyn and the Scott Avenue station in Brooklyn (the ``NYC
Divestitures'').
Waste Management is currently bidding to construct a huge new
marine transfer station. The company has recently submitted a
proposal to the New York Department of Sanitation to construct a
huge new marine transfer station (``MTS'') in the Erie Basin in
Brooklyn that would handle between 5,000 and 10,000 tons per day of
solid waste. We understand that Waste Management and USA Waste
already collectively control a substantial majority of the waste
transfer business in New York City. This MTS project would nullify
the competitive effects of the NYC Divestitures. In order to
preserve competition we believe that Waste Management should be
required to withdraw the MTS proposal as a condition of approval of
the merger contemplated by the merger agreement.
Please comment on whether Waste Management has disclosed the
Erie Basin MTS proposal to the Department of Justice and why Waste
Management should not be required to withdraw the Erie Basin MTS
proposal in order to give effect to the NYC Divestitures. Should you
have any questions with regard to the foregoing please do not
hesitate to call me at (718) 424-4040.
Yours very truly,
John McGettrick,
The Red Hook Civic Association.
cc: Dennis Vacco NYAG
Exhibit 8
U.S. Department of Justice Antitrust Division
August 27, 1999.
Dr. Alan Heslop,
Director, The Rose Institute of State and Local Government,
Claremont McKenna College, Adams Hall, 340 E. Ninth Street,
Claremont, CA 91711-6420.
Re: Comment on Proposed Final Judgment in United States, State of
Ohio, et al. v. USA Waste Services, Inc., Waste Management, Inc., et
al., Civil No. 98-1616 (N.D. Ohio, filed July 16, 1998)
Dear Dr. Heslop: This letter responds to your written comment on
the proposed Final Judgment in the above case, now pending in
federal district court in Cleveland, Ohio. The Complaint in that
case charged, among other things, that USA Waste's acquisition of
Waste Management would substantially lessen competition in the
disposal of commercial waste from portions of the City of Los
Angeles. The proposed Judgment would settle the case by, inter alia,
requiring the defendants to divest Chiquita Canyon Landfill, a large
waste disposal site located about 40 miles northeast of the City of
Los Angeles. In a transaction approved by the United States in
August 1998, under the terms of the decree, the defendants divested
the landfill to Republic Services, Inc., which prior to the sale,
did not operate any landfills in the greater Los Angeles area.
Your letter raises two issues related to the competitive effect
of the proposed acquisition in the Los Angeles area. First, you
question the governments' allegation that the relevant geographic
market for purposes of analyzing the effects of the acquisition is
commercial waste from the City of Los Angeles, an area defined in
the Complaint as those parts of the city east of the San Diego
Freeway, Interstate 405. In your view, the relevant market, at a
minimum, should include a five-county area comprising not only the
City of Los Angeles, but also Los Angeles, Ventura, Orange,
Riverside and San Bernardino counties. You note that if the relevant
geographic market is broadly defined to include these areas, then
the United States should have taken into account competition from--
and sought divestiture of--defendants' newly-permitted Mesquite
Regional Landfill, located nearly 170 miles southeast of the city of
Los Angeles.
In defining the relevant geographic market for the disposal of
Los Angeles' commercial waste, the United States took into account
the extent to which each of the private and public landfills in
Southern California could compete for the city's waste. In its
competitive analysis, the United States excluded some firms from the
relevant geographic market because their landfills were legally
prohibited from accepting any municipal solid waste from the City of
Los Angeles (e.g., most of the Los Angeles County landfills). The
United States excluded other facilities (e.g., Mesquite Regional
Landfill) because of their distance from, and relative
inaccessibility to, the Los Angeles area. As noted above, Mesquite
Regional Landfill is located 170 miles from the city. Rail is the
only practical way to transport waste from Los Angeles to that
landfill. With delivered costs in excess of $45/ton (including
transportation and tipping fees costs), the cost of disposing of
commercial waste from the City of Los Angeles at Mesquite Regional
Landfill would be nearly twice as much as the cost of sending such
waste to close-in LA area landfills, which have average tipping fees
of about $23/ton. The four firms that own or operate close-in
landfills can profitably increase their prices for disposal of Los
Angeles's commercial waste by a small but significant amount,
without losing significant business to distant landfills such as
Mesquite Regional. In these circumstances, it made economic sense to
exclude Mesquite Regional and similarly situated landfills from our
competitive analysis in determining the significance of the
defendants' merger in the disposal of Los Angeles's commercial
waste. See U.S. Department of Justice Horizontal Merger Guidelines
Secs. 1.2-1.3 (1997 ed.)
For similar reasons, it made sense to limit the relevant market
to commercial waste that originates in portions of the City of Los
Angeles located east of the San Diego Freeway, Interstate 405.
Private commercial waste generated in areas of the city west of the
freeway can be legally disposed of in several Los Angeles County
landfills, and in our view, the availability of the Los Angeles
County landfills for the disposal of waste from this section of the
city made it unlikely that the merger would substantially reduce
competition for such waste.
Finally, you may have overlooked the fact that expanding the
relevant geographic market to include the distant Mesquite Regional
Landfill would sweep into the market a number of other similarly-
situated large landfills that are not owned or otherwise controlled
by the four firms that operate close-in Los Angeles landfills.
Including these additional firms in the competitive analysis would
substantially diminish, perhaps even eliminate, any anticompetitive
effect of an acquisition by USA Waste of Waste Management, which
would make it difficult to justify requiring that the defendants
divest any Los Angeles area landfills.
Thank you for bringing your concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16(d), a copy of your
comment and this response will be published in the Federal Register
and filed with the Court.
Sincerely yours,
J. Robert Kramer II,
Chief Litigation II Section.
Claremont McKenna College
November 23, 1998.
J. Robert Kramer II,
Chief, Litigation II Section, Antitrust Division, United States
Department of Justice, Suite 3000, 1401 H. Street, NW, Washington,
D.C. 20530.
Re: Proposed Final Judgment and Competitive Impact Statement Federal
Register, Volume 63, Pages 51125 et seq.
Dear Mr. Kramer: The Rose Institute of State and Local
Government at Claremont McKenna College (the ``Rose Institute'')
respectfully submits the following comments concerning the subject
Federal Register request for public comment. We note that the
comments and opinions expressed herein do not necessarily reflect
the opinions of the Trustees of Claremont McKenna College or the
Governors of the Rose Institute, but are the findings of the
scholars and researchers who have worked on the comments.
By way of introduction, the Rose Institute is a non-profit
organization founded in 1973 with a goal of building a comprehensive
and unmatched resource of information on the almost 20 million
people and several hundred local governments in southern California.
It is staffed primarily by the faculty and students of Claremont
McKenna
[[Page 53709]]
College and the Claremont Graduate School, members of the Claremont
University System. The institute specializes in public policy
analysis and its researchers are trained in a wide range of
disciplines, including government, finance, computer science
(including GIS) and environmental regulation and law. While the Rose
Institute has been involved in a number of matters of national
interest, its general policy analyses are focused on matters
affecting California and, in particular, the Los Angeles County and
Inland Empire areas of southern California, including the Counties
of San Bernardino, Riverside, and Imperial.
One of the major public policy issues which has been the focus
of long-term and ongoing research within the Rose Institute is that
of solid waste management--particularly concerning the issues of
non-hazardous solid waste generation, recycling, reuse, and
disposal.
Before the economic recession of the early 1990s, the Rose
Institute undertook to play an important role in assisting public
policy-makers as they reviewed and identified issues related to the
development of plans and methodologies necessary to implement a
waste-by-mail disposal system for southern California. The effects
of the recession and the success of state-mandated waste recycling
requirements delayed what had been projected as a critical need for
waste-by-rail disposal options. Nevertheless, over the past several
months, the Rose Institute has undertaken to review again the
viability and necessity of potential waste-by-rail disposal options
for southern California. A report, entitled ``Regional Solid Waste
Management in Southern California for the New Millennium,'' sets
forth our analysis and conclusions concerning this subject matter
and is nearing final publication status. We expect formally to
release the report in the near future. Nevertheless, because of the
significance of this research for the issues raised in the subject
Federal Register Notice, we have attached a draft copy of the
report, noting that it has yet to be finally formatted, bound, etc.,
before formal release. We respectfully request that it be considered
an integral part of the comments that follow.
During our research for the attached report, we necessarily
reviewed the effects of the merger of Waste Management, Inc. and USA
Waste Services, Inc. While it was not the initial intention of our
research effort to address the specifics of that merger in our
region, when the subject Proposed Final Judgment and Competitive
Impact Statement (``Impact Statement'') appeared in the Federal
Register, the Rose Institute as a matter of objective analysis, and
in light of its research and the realities of waste disposal in our
region, concluded that the Department of Justice had seriously mis-
identified the relevant market area for southern California--at
least with respect to ``disposal assets'' as that term is used in
the Impact Statement.
The comments that follow are strictly limited to issues within
the southern California geographical area. Furthermore, we express
no opinion whether the relevant market area has been properly
defined for purposes of ``hauling assets'' as that term is used in
the Impact Statement. Based on our primary research related to
waste-by-rail, our comments are directed only to ``disposal
assets.''
In short, our conclusion is that the Department of Justice has
mis-identified the relevant market area for waste disposal assets in
Los Angeles and southern California in general and, in doing so, has
provided a clear opportunity for the creation of substantial anti-
competitive effects within the region related to solid waste
disposal. Our detailed comments are attached.
We appreciate the opportunity to submit these comments and would
be pleased to discuss them further with officials at the Department
of Justice or before the United States District Court for the
Northern District of Ohio, Eastern Division.
Sincerely,
Alan Heslop,
Director.
Comments of the Rose Institute of State and Local Government at
Claremont McKenna College Regarding the Department of Justice
Proposed Final Judgment and Competitive Impact Statement \1\ 63 FR
51125 et seq.
Summary of comments and Conclusions
The Rose Institute of State and Local Government (``The Rose
Institute'') at Claremont McKenna College respectfully concludes that
the Department of Justice (``DOJ'') has not correctly defined the
``relevant geographic market'' for municipal solid waste (``MSW'')
disposal in Los Angeles, California.\2\ As a result, DOJ's analysis of
the competitive impacts of the USA Waste/WMI merger in the Los Angeles
area and its recommendations regarding the divestiture of ``Relevant
disposal Assets'' \3\ set forth in the proposed Final Judgment and
Competitive Impact Statement are deficient. Our analysis indicates that
the ``relevant geographic market'' should encompass, at a minimum, the
entire County of Los Angeles and not merely a portion of the City of
Los Angeles. So defined, the proposed Final Judgment and Competitive
Impact Statement would necessarily have reached substantially different
conclusions as to the need for further divestiture of ``Relevant
Disposal Assets'' in the Los Angeles market. These conclusions are
based upon the following:
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\1\ The proposed Final Judgment, Hold Separate Stipulation and
Order, and Competitive Impact Statement were prepared in connection
with a civil antitrust lawsuit filed by the United States of America
and eleven (11) states, including California, in an effort to enjoin
the merger of USA Waste Services, Inc. (``USA Waste'') and Waste
Management, Inc. (``WMI'') as a violation of Section 7 of the
Clayton Act, 15 U.S.C. Sec. 18. On July 16, 1998, a Complaint for
Injunctive Relief Case No. 1:98 CV 1616 (the ``Complaint'') and the
proposed competitive Impact Statement were filed in the United
States District Court for the Northern District of Ohio Eastern
Division.
\2\ The Complaint (page 4) defines ``Los Angeles'' as ``that
area of the City of Los Angeles, CA, located east of Interstate 405,
the San Diego Freeway.''
\3\ The term ``Relevant Disposal Assets'' is defined at 63 FR
51130.
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(1) The definition of the Los Angeles market is overly restrictive
and narrow in that:
(a) It is consistent with California state law establishing a
comprehensive disposal site planning and utilization process that has
been implemented by both the City and County of Los Angeles.\4\
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\4\ The California Integrated Waste Management Act of 1989 (AB
939), as amended, California Public Resources Code Secs. 40000 et
seq.
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(b) It is inconsistent with the City of Los Angeles' own MSW
disposal and contracting practices and ignores Los Angeles County's
state-approved integrated waste management plan and the disposal
realities throughout southern California.
(c) The boundaries chosen appear to be arbitrary, artificial, and
without any meaningful or logical relationship to the demographics,
economics, or natural geographical features or boundaries of the City
of Los Angeles.
(d) It fails to recognize the actual commercial MSW disposal and
marketing practices of WMI in the City of Los Angeles market.
(e) It is inconsistent with the definitions of the geographic
markets for all other metropolitan areas in the proposed Final Judgment
and Competitive Impact Statement, and it appears to bear no
relationship to the definition of ``relevant area'' set forth in the
Hold Separate Stipulation and Order.
(2) The definition of the geographic market of Los Angeles is
inconsistent with the DOJ's prior recent review and action taken
regarding similar waste disposal asset transactions between competitors
of USA Waste and WMI in the Los Angeles area.
(3) The proposed Final Judgment and Competitive Impact Statement
appears to ignore the effects of recent acquisitions of disposal assets
in the region by USA Waste prior to its merger with WMI and thereby
compounds the potential anti-competitive effects of the subject merger.
(4) By expanding the Los Angeles market to include the entire
county, the analysis of the competitive effects of the transaction
would necessarily have included additional landfills in southern
California, as well as outside of the state, in which USA Waste and WMI
own, control, or hold an interest.
For the reasons set forth above, the proposed Final Judgment and
[[Page 53710]]
Competitive Impact Statement should be amended to reflect the realities
of waste disposal in the Los Angeles region consistent with the
analysis contained in these comments. Divestiture of additional
``Relevant Disposal Assets'' in the Los Angeles market should be
required, including the El Sobrante Landfill in western Riverside
County and USA Waste's interest in the Mesquite Regional Landfill
waste-by-rail project in Imperial County.
Introduction
Attached to these comments in the December 1998 report of The Rose
Institute entitled ``Regional Solid Waste Management in Southern
California for the New Millenium'' (``The Rose Report''). We
respectfully request that The Rose Report be read in its entirety to
provide essential background information for the following specific
comments. The report provides an important factual and historical
review of waste disposal in southern California--especially in the City
and County of Los Angeles, and many of the comments that follow make
specific reference to portions of that report.
By way of summary, The Rose Report shows that, for many years,
issues relating to waste management--in particular that of disposal--
have received regional attention in southern California. Long before
the passage of AB 939, which mandates that waste disposal be addressed
through joint city and county planning efforts, the Los Angeles area
had a regional perspective on waste issues. Examples of the
regionalization of waste management include Los Angeles' reliance upon
disposal of organic wastes in San Bernardino ``pig farms'' well into
the 1950s and the proposed development of large regional waste-to-
energy facilities during the 1970s and 1980s. Regionalization is
currently reflected in the formalized planning process for, and
potential embrace of, regional waste-by-rail projects.
The Rose Report concludes that, despite the successes made in
diverting waste from landfills into recyclable markets pursuant to AB
939, with the closure of three (3) large local landfills in the recent
past,\5\ the need for regional waste disposal capacity is critical--
particularly in view of the extended time required to obtain permits
and develop new or expanded landfill capacity in the southern
California area. More importantly, our conclusions are not unique but
reflect the consensus of other observers of the issue in the region.
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\5\ The Lopez Canyon Landfill in the City of Los Angeles, the
BKK Landfill in the City of West Covina, and the prohibition of
acceptance of MSW at the Azusa landfill in the City of Azusa.
---------------------------------------------------------------------------
We believe that, in a very real sense, and in a potentially harmful
manner to consumers and the public interest, DOJ has failed to evaluate
properly both the near and long term anti-competitive effects of the
merger on Los Angeles County, the county with the largest population in
the United States. We further believe that the consequence of the DOJ
analysis, if left unamended, will be to place in one operator--WMI--
overwhelming control of private landfill disposal capacity capable of
serving the City and County of Los Angeles and the entire southern
California area all the way to the eastern border of the State and
south to the border of the United States with Mexico.
Since the late 1980s, the Rose Institute has been a regular
``player'' in the public policy debate over waste management issues for
the southern California region. Our programs have been supported and
attended by most of the major waste management firms operating in
southern California, including WMI, Browning Ferris Industries
(``BFI''), Norcal Waste Systems, Mine Reclamation Corporation, and
others. We have no ``axe to grind'' with any firm, nor are we obviously
``interested'' from a competitive viewpoint. Rather, effective public
policy guides our analyses and interests in this matter and underscore
the obligation we feel to file these comments.
Finally, by way of limitation, the comments that follow are limited
to issues related to the definitions of ``relevant geographic market''
and ``Relevant Disposal Assets'' as they relate to Los Angeles. The
Rose Institute takes no position concerning the ``Relevant Hauling
Assets'' as the term is used in the proposed Hold Separate Stipulation
and Order that is part of the Final Judgment.
Specific Comments
(1) The Definition of Los Angeles Markets Is Overly Restrictive and
Narrow
(a) The Definition of the Los Angeles Market Is Inconsistent With
Applicable California State Law
The California Integrated Waste Management Act (commonly referred
to as AB 939), establishes legal requirements for all California
counties and municipalities to develop and implement a comprehensive
integrated waste management program. Failure of timely compliance with
the mandates of AB 939 can result in civil penalties of up to ten
thousand dollars ($10,000) per day for each day of violation.
Key among the mandated requirements of AB 939 is that each county
must prepare a countywide integrated waste management plan. Part of the
plan includes a Countywide Siting Element that must provide for at
least fifteen (15) years of waste disposal capacity to meet the
county's projected needs. The plan must also include Source Reduction
and Recycling Elements from each of the cities in the county
demonstrating compliance with the statute's waste diversion
mandates.\6\ Each countywide plan is required to be prepared by a
countywide task force made up of representatives of the county and
cities within that county. The role of the task force is to identify
waste management issues of countywide or regional concern, determine
the need for waste facilities that can service more than one
jurisdiction within the county, facilitate the development of multi-
jurisdictional methods for marketing recyclable materials, and resolve
conflicts and inconsistencies between the subject county.\7\ The entire
plan is then submitted to the California Integrated Waste Management
Board in Sacramento for approval. No provision is made within the law
for any city, per se (other than the City and County of San Francisco)
to prepare or implement its own waste disposal siting mechanism. That
mechanism provided for in the Countrywide Siting Element, is, by law,
reserved for the county. However, before submitting the Countywide
Siting Element to the Integrated Waste Management Board, it must first
be approved by a ``majority of the cities within the county, which have
a majority of the population of the incorporated areas of the county.''
\8\
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\6\ The law requires that each county and each city within each
county demonstrate the ability to achieve 25% diversion (recycling)
of generated wastes from landfills by the year 1995 and 50%
diversion by the year 2000.
\7\ California Public Resources Code Sec. 40950.
\8\ California Public Resources Code Sec. 41721.
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No new landfill may be permitted and no existing landfill expanded
within a region covered by an approved Siting Element without first
being identified and included in the approved Siting Element.
In June 1997, the Los Angeles County Solid Waste Management
Committee/Integrated Waste Management Task Force, which included
representatives from the City of Los Angeles, completed its draft of
the Countywide Siting Element. It was subsequently approved in June
1998 by the California Integrated Waste Management Board. While a more
thorough review of a key finding of the
[[Page 53711]]
Siting Element is reserved for discussion below, the unavoidable point
made here is that DJO's definition of the Los Angeles waste market for
purposes of determining ``Relevant Disposal Assets'' is wholly
inconsistent with the basic requirements of state law which addresses
waste disposal issues and practices on a city or countywide basis. Only
the county with the approval of the majority of its cities representing
a majority of the population in that county has the authority to
complete and promulgate a siting plan. Pursuant to law, Los Angeles
County, with Los Angeles City's active involvement and approval, did
precisely that. The geographical extent of that effort is substantially
broader than the Los Angeles market as defined by DOJ.
(b) The Definition of the Los Angeles Market is Inconsistent With the
City Los Angeles' Own Waste Disposal Practices
As reviewed in the Rose Report, the City of Los Angeles has long
relied on disposal of its wastes at locations outside of its
jurisdictional boundaries. As disclosed in the official records from
the waste disposal reporting system maintained by the California
Integrated Waste Management Board, the City of Los Angeles currently
disposes of approximately twenty percent (20%) of its MSW at landfill
facilities outside the City limits. Moreover, official waste disposal
reports indicate that the City of Los Angeles regularly disposes of MSW
in landfills in Orange, Riverside, and Ventura Counties in addition to
landfills in Los Angeles County outside the City limits.\9\ Figure 1
sets forth a map of the region indicating the sites where Los Angeles
City wastes are currently disposed.
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\9\ ``Total Disposal and Export for Jurisdictions Within a
County Region'', November 2, 1998, California Integrated Waste
Management Board.
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USA Waste and WMI landfills that provide MSW disposal services to
the City of Los Angeles include the Azusa Landfill and Lancaster
Landfill in Los Angeles County, the Simi Valley Landfill in Ventura
County, and the El Sobrante Landfill in Riverside County (formerly
owned by Western Waste Industries prior to its 1996 acquisition by USA
Waste). While DOJ's analysis properly identifies the Chiquita Canyon
Landfill (which is located outside of the Los Angeles market as defined
by DOJ) as accepting MSW from the City of Los Angeles, the other USA
Waste/WMI controlled disposal facilities are also important components
in the Los Angeles solid waste management program.
In summary, Los Angeles City's own disposal practices, readily
determined by review of official public records, are at odds with DOJ's
delineation of the geographic market for purposes of identifying
``Relevant Disposal Assets'' to maintain competition in the Los Angeles
marketplace.
(c) The Boundaries of the Los Angeles Market Area Are Arbitrary
Since the DOJ analysis apparently did not consider either the
requirements of state law or the realities of actual disposal practices
for the City of Los Angeles, there may have been some demographic or
other factors relied upon by DOJ in defining the Los Angeles market.
However, nowhere in the Complaint or the proposed final Judgment or
Competitive Impact Statement is there any indication that DOJ relied on
demographic or geographical factors in establishing the market. In any
event, the Rose Institute is not aware of demographic or geographic
features, waste industry practices, or legal constraints that could
logically support a determination by DOJ to confine the relevant market
to an area covering about one-half of the City of Los Angeles.
Specifically, The Rose Institute is quite certain that there are no
``flow control'' legal restrictions in Los Angeles City or county that
could have led the DOJ to restrict the market area to only a portion of
Los Angeles City. Moreover, southern California is renowned for its
``regionalization'' of important social and policy matters such as air
quality control and regulation, mass transportation, water supply and,
as clearly documented in The Rose Report, solid waste disposal.
To illustrate further what we believe to be the illogic of the
limited definition of the relevant area, we set forth in figure 2 a map
of southern California population distribution, prepared employing the
Rose Institute's Geographic Informational systems capabilities. The
population of the Los Angeles market as defined by DOJ is set out
against geographical population distributions in the region on Figure
2. In reviewing the population data, the obvious question is why did
DOJ exclude from its market analysis almost eighty-five percent (85%)
of the region's entire population--much of which is in jurisdictions
that currently accept Los Angeles City's MSW for disposal? Also, why
would DOJ's market analysis only consider a fraction of the total
actual MSW generated by the City? Clearly, when compared to the
geographic market definitions developed for the other metropolitan
areas (discussed more fully below) considered in the Final Judgment and
Competitive Impact Statement, DOJ's analysis of the Los Angeles market
cannot be supported.
(d) The Boundaries of the Los Angeles Market Fail To Recognize the
Actual Commercial Waste Disposal and Marketing Practices of WMI
Substantial amounts of MSW for the entire City of Los Angeles are
disposed at the Bradley West Landfill, owned and operated by WMI and
located within the relevant geographic market. However, the Rose
Institute is not aware of any public information (including MSW
disposal contracts) that either accounts for the generation of MSW in
the area of Los Angeles delineated by DOJ (i.e., east of Interstate 405
in the City of Los Angeles) or distinguishes between MSW generated
``east of the 405'' or ``west of the 405.''
Certainly, given the size and importance of the Los Angeles market,
if such information existed it would be commonly known. Moreover, as
detailed in The Rose Report, the information would be reflected in the
Countywide Siting Element of Los Angeles County (discussed below). The
Siting element specifically recognizes the possibility of using a
number of USA Waste and WMI's landfills located in California, Arizona,
Nevada, and even as far away as Oregon--WMI's Columbia Ridge Landfill.
And, as noted above, the Siting element is, by law, the official
``blueprint'' for waste disposal pians for all 88 cities and the
unincorporated areas in Los Angeles County, including the City of Los
Angeles. Furthermore, even a cursory review of Los Angeles City and
County public records would have revealed numerous and ongoing efforts
of WMI to market these facilities to the City and County. An example is
the 1989-90 proposal by WMI to the Los Angeles county Sanitation
Districts to secure a waste commitment to its RailCycle project in San
Bernardino County and to utilize rail-based transfer station sites in
El Segundo (west of interstate 405) and in the City of Commerce, as
discussed in detail in The Rose Report.
(e) The Definition of Los Angeles Market Is Inconsistent With DOJ's
Analysis of Other Metropolitan Areas
In each and every other city identified in the Complaint (and
unlike the approach taken for Los Angeles), the definition of
``relevant geographic market'' includes not only the entire area and
population of the city, but also the surrounding or adjacent
county(ies). Thus, for example:
[[Page 53712]]
--Baltimore--``means the City and Howard, Baltimore, Carroll, and Anne
Arundel Counties.''
--Cleveland--``means the City of Cleveland and Cuyahoga County.''
--Detroit--``means the City of Detroit and Wayne County.''
--Miami--``means the City of Miami and Broward, Dade, and Monroe
Counties.''
--New York--``means New York, Bronx, Queens, and Richmond Counties.''
--Pittsburgh--``means the City of Pittsburgh and Allegheny and
Westmoreland Counties.''
(Complaint at pages 4 and 5, emphasis supplied.)
The fact of the matter is that Los Angeles is the only municipality
in the Complaint that is restricted to a size smaller than its own
municipal boundaries and which does not also include the county in
which it is, at least in part, situated. The Rose Institute fails
entirely to understand what type of criteria and methodology could have
been utilized by DOJ for treating Los Angeles so differently from every
other metropolitan waste disposal market in the country identified in
the Complaint. Further, we note that a number of the other waste
markets, as defined, have greater populations than the Los Angeles
market, as defined by DOJ, and the market identified for the New York
area has a substantially greater population that approximates the
population of the entire County of Los Angeles. Based upon 1990 cenus
data, the following table sets forth a summary of the populations in
these areas (including the listed counties):
Baltimore.............................................. 1,497,956
Detroit................................................ 1,411,209
Miami.................................................. 3,309,246
New York............................................... 7,703,051
Pittsburgh............................................. 1,708,696
Portion of Los Angeles City Selected by DOJ............ \10\ 2,936,500
Given DOJ's characterization of the New York metropolitan area as the
relevant market area (an area containing many natural potential
barriers to the ``flow'' of MSW to landfills) it would seem that it
should have also characterized the Los Angeles metropolitan areas,
which contains over nine million people in Los Angeles County alone
(current estimate), as the relevant market area. We also note that, in
addition to New York, many of the other jurisdictions also contain some
natural geographical features such as rivers and major waterways (not
present in the Los Angeles area) that might have led an analyst to
conclude that natural barriers exist that affect MSW disposal practices
in the area. In any event, absent some logical explanation from DOJ for
its remarkably different treatment of Los Angeles, one is left only to
speculate over how the conclusions were arrived at.
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\10\ Estimated by use of Geographic Information System
capabilities of the Rose Institute.
---------------------------------------------------------------------------
In the context of the dissimilar treatment by DOJ of the Los
Angeles market compared to other metroplitan areas, we also note that
another key issue arises relating to the absence of any analysis of the
growing importance of transfer stations generally in California, and
particularly in the Los Angeles area.
Whole DOJ correctly analyses the potential for enlarging the
geographical reach for disposal market purposes through the use of
transfer stations (Pages 9 and 10 of the Complaint), it does not
consider this factor in the Los Angeles market analysis. As outlined in
The Rose Report, municipalties in the southern California regio
primarily because of the recycling and waste diversion mandates of AB
939, are moving rapidly to the utilization of ``Materials Recovery
Facility (``MRF'')/Transfer Stations.'' Because of the increase in
waste processing through MRFs and Transfer Stations (which involves the
loading of MSW into larger transfer trucks or containers for shipment
by rail), the practice necessarily facilities the ability to dispose of
MSW at greater and greater distances from the point of generation.
Furthermore, with the closures of Los Angeles City's Lopez Canyon
Landfill and the BKK Landfill in West Covina, and the prohibition on
acceptance of MSW at the Azusa Landfill (the latter two of which are
situated in eastern Los Angeles County), almost 25,000 tons of MSW per
day is now necessarily moving to outlying landfills in the region. Such
closures and the mandates of California law are resulting in a growing
dependence on MRFs/Transfer Stations by local jurisdictions. In fact
and by way of example, of the eighty-eight (88) cities in Los Angeles
County, thirty-eight (38) have now committed, as an official part of
their approved Source Reduction and Recycling Plans to meet state
recycling mandates, to a MRF/Transfer Station strategy.\11\
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\11\ Countywide Siting Element for Los Angeles County, Los
Angeles Country Department of Public Works Environmental Programs
Division, June 1997.
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The resulting reality of this growing dependence on MRFs/Transfer
Stations is that MSW may be taken--and today is being taken--greater
distances from disposal, thus broadening the relevant geographic market
for Los Angeles for the purpose of waste disposal analysis.
As a final point, we would note the inconsistency in DOJ's
definition of ``relevant area'' contained in the Hold Separate
Stipulation and Order (``Order'') \12\ as applied to the Los Angeles
area. In the Order, ``relevant areas'':
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\12\ 63 Federal Register 51127.
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``* * * means the county in which the * * * Relevant Disposal
Assets are located and any adjacent city or county * * *''
The Order goes on to state in the portion on ``Objectives'' \13\
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\13\ Ibid.
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``The Final Judgment * * * is meant to ensure defendants' prompt
divestiture * * * for the purpose of establishing viable competitors in
the waste disposal business * * * in the Relevant Areas * * *''
(emphasis added)
It appears clear that the DOJ used essentially the same standard in
defining ``relevant area'' and in delineating the geographic markets
for all of the other metropolitan areas. However, with respect to Los
Angeles, DOJ used a different and undetermined methodology to define
the geographic market. Had DOJ been consistent and taken the same
approach it took for the other jurisdictions, the definition of the Los
Angeles market would have included Los Angeles County, and the adjacent
counties of Ventura, Orange, Riverside, and San Bernardino. Such a
definition of Los Angeles would have been precisely what the Rose
Institute maintains is consistent with the common understanding of the
Los Angeles market area.
(2) The Definition of the Los Angeles Market Is Inconsistent With DOJ's
Prior Actions
In 1996, DOJ had occasion to review a transaction between BKK
Corporation (a privately-held waste management firm which, as alluded
to above, operated a large regional landfill in eastern Los Angeles
County) and BFI.\14\ The essence of the transaction was the sale of
certain assets of BKK in the Los Angeles area to BFI, including BKK's
interest in two (2) proposed landfill projects located on sites in Los
Angeles and San Bernardino Counties, as well as BKK's waste recycling
operations and transfer station in the City of Los Angeles
(Wilmington). At the time, BFI was the owner of the Sunshine Canyon
Landfill in Granada Hills (in Los Angeles County) and was then seeking
[[Page 53713]]
to obtain final permits and approvals to initiate operations. The
Sunshine Canyon Landfill, however, was closed to operations at all
times relevant to the BKK/BFI transaction.
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\14\ Information concerning this transaction was taken from
conversations with involved counsel.
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The original BKK/BFI transaction documents reviewed by DOJ
contained a provision that would have pre-conditioned the transaction
on the closing of the BKK Landfill in West Covina, even though that
landfill was not part of the transaction. Upon review, DOJ objected to
the condition and refused to approve the transaction until the
condition related to the West Covina landfill had been deleted. The
condition was removed and DOJ approval followed. What is interesting
about this transaction, and DOJ's approach to it, is that even though
BFI did not operate any landfill in the region at the time,\15\ but was
merely seeking to resume operations at its Sunshine Canyon Landfill,
DOJ looked beyond the borders of the City of Los Angeles and, one can
reasonably infer, made an implicit--if not explicit--decision that the
Los Angeles waste disposal market extended into eastern Los Angeles
County.
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\15\ It was the owner/operator of the Azusa Landfill in eastern
Los Angeles County, but that landfill was permitted to receive only
``inert'' wastes and was prohibited by court order from receiving
any MSW.
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We think that DOJ was correct in that prior instance. We think its
current analysis is clearly inconsistent with its past view of the Los
Angeles disposal market and is therefore incorrect.
(3) The Proposed Final Judgment and Competitive Impact Statement Ignore
the Effects of Prior Acquisitions by USA Waste in the Region
Over the past two years, USA Waste has made a number of
acquisitions of landfill assets in southern California--both outright
and by way of merger. For Example, USA Waste acquired the Chiquita
Canyon Landfill from the Laidlaw Company; the Azusa Landfill from BFI;
and the El Sobrante Landfill and Western Waste Industries' interest in
the Mesquite Regional Landfill (a waste-by-rail project in Imperial
County) via a merger with Western Waste.
It is important to note that USA Waste and WMI have not been long-
time competitors in the region. In fact, USA Waste is a relatively new
organization both locally and in the nation generally. However, USA
Waste has acquired many firms in the region that were long-time
competitors of WMI, such as Western Waste Industries. The potentially
significant anti-competitive consequences of USA Waste's recent
acquisitions throughout southern California is raised nowhere in the
proposed Final Judgment and Competitive Impact Statement. We believe
that it should receive serious independent consideration by DOJ. In
fact, USA Waste's acquisitions in California during the last three
years, might not have secured DOJ approval if they had been effected by
WMI acting on its own account.
By ignoring the prior USA Waste acquisitions in its analysis of the
current merger, DOJ is sanctioning a situation in which one private
landfill operator will have overwhelming control of private waste
disposal capacity capable of serving the City and County of Los Angeles
and the entire southern California area all the way to the eastern
border of the State and extending south to the border of the United
States with Mexico! With the merger as approved by DOJ in the
Competitive Impact Statement, WMI will own, control, or hold an
interest in all but three (3) of the large private landfills and
landfill projects serving all of Los Angeles County, the country with
the largest population in the United States.\16\
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\16\ The three major private landfills are BFI's Sunshine Canyon
Landfill, the Chiquita Canyon Landfill to be purchased by Republic
Services, Inc., and the Eagle Mountain Waste-by-Rail project, being
developed by Mine Reclamation Corporation in eastern Riverside
County. Eagle Mountain has been tied up in environmental litigation
for six years. If the litigation is resolved in favor of the
project, it may be several more years before all of the necessary
operating permits could be obtained. See The Rose Report for a more
complete discussion of the waste-by-rail projects.
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Figure 3 shows the general location of private landfills in
southern California and landfills in neighboring states which have been
identified by Los Angeles County in the Countrywide Siting Element
(discussed above) as potential sites for providing landfill disposal
capacity to the area for the next fifteen (15) years. It also lists the
current permitted daily tonnage allowed at each facility and the
remaining capacity (as indicated in the Siting Element). It reveals the
overwhelming number of landfills that are owned and controlled by WMI
in the region and that are specifically identified for future potential
use by the relevant market of Los Angeles County (and City).
Also important is the information set forth on Figure 4, which
displays the relative amounts of MSW currently being disposed in the
same southern California region as shown in Figure 3. As Figure 4 makes
clear, the amounts of MSW disposed in the region can quite easily be
accommodated by WMI facilities in terms of allowable daily capacity for
many years to come. While the potential impact of public landfill
facilities is not set forth in the Figure, as discussed in The Rose
Report, the ability of Los Angeles County to control disposal capacity
sufficient for its own needs within its own boundaries is limited. In
fact, the County, in its approved Siting Element, specifically relies
upon a ``mix'' of public and private disposal options. If it is unable
to permit a significant extension of its Puente Hills Landfill in
eastern Los Angeles County,\17\ its reliance on private disposal
options will be dramatically increased. It is precisely for these
reasons that the County's own plans look to the utilization of other
potential private sites as depicted in the attached maps. Allowed to go
unamended, the VMI merger as currently proposed would result in a
situation where one private operator--WMI--has essential control over
waste disposal capacity for the entire region.
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\17\ The County's land use permit for the facility expires in
the year 2003. Given the long lead time to permit new or expanded
landfills in the region, the County will need to initiate formal
environmental review for that effort in the very near future. The
Rose Report concludes that this effort, in turn, will likely also
include initial implementation of a significant waste-by-rail
operation for the region.
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The Rose Institute strongly believes that any analysis of the
current merger should also include an analysis of recent acquisitions
of disposal assets in southern California by USA Waste, especially the
assets acquired in the acquisition of Western Waste Industries.
(4) At a Minimum, the Los Angeles Market Should Have Included all of
Los Angeles County. The Proper Market Description Would Have Resulted
in Additions to ``Relevant Disposal Assets'' for Los Angeles
For the reasons set forth above, especially those relating to the
solid waste management requirements imposed by California law and the
realities of current actual waste disposal practices in the City of Los
Angeles, we argue that the Los Angeles market should include the entire
County of Los Angeles. In turn, the effect of such a definition should
substantially change DOJ's view of what are--or are not--``Relevant
Disposal Assets'' for the ``true Los Angeles market.'' No secret exists
as to what both the City and County view as the specific landfill
assets that could be considered for inclusion in the ``Relevant
Disposal Assets''; they are enumerated in the Countywide Siting
Element.
As discussed extensively in The Rose Report, implementation of a
waste-by-rail project for the region is both imminent and necessary for
the County
[[Page 53714]]
of Los Angeles and its 88 cities. Recently, the Los Angeles County
Sanitation Districts secured a site for development of a MRF capable of
feeding a waste-by-rail system and have held preliminary discussions
for the purposes of implementing such a system with officials of the
Eagle Mountain, RailCycle, and the Mesquite Regional Landfill projects.
In a letter dated September 13, 1996, from Donald Nellor of the Los
Angeles Sanitation Districts to David Mares of the Planning Department
for Riverside County, Nellor reaffirmed the Sanitation Districts'
continuing commitment to developing waste-by-rail:
There is a clear need for new regional landfills, such as the
Eagle Mountain site . . . The Sanitation Districts continue to be
committed to implementing a waste-by-rail system as one component of
a balanced and multi-faceted approach to effectively manage the
Districts' long-term waste disposal needs.
To date, the only waste-by-rail project that has obtained all of its
major land use and operational permits is the Mesquite Regional
Landfill.
With an expanded view of the market, any consideration of the
competitive impacts of the USA Waste/WMI merger on the waste disposal
market in the City and County of Los Angeles should also take into
account the resulting position of the merged companies throughout all
of southern California. As an example, USA Waste's MRF/Transfer Station
in Carson. California, just south of the Los Angeles City limits, has
been specifically modified to take MSW from the City of Los Angeles to
its El Sobrante Landfill in Riverside County, which it does. As noted
above, Figure 3 sets forth a map of USA Waste's and WMI's landfills in
the region depicting the permitted daily and overall capacities of each
facility. That map shows that more than enough capacity exists among
these facilities to accommodate all of Los Angeles County's needs for
at least the nest 30 years. Furthermore, should the County of Los
Angeles decide to dedicate a wastestream for disposal by rail in order
to promote the development of remote regional landfills, USA Waste, by
virtue of its recent acquisition of Western Waste Industries, has an
interest in the Mesquite Regional Landfill, the only currently
permitted in-state waste-by-rail project.
Finally, in viewing the realities of the entire region, The Rose
Report notes that there is only one jurisdiction outside of Los Angeles
County which may offer disposal capacity held and controlled in the
public sector--Orange County (see The Rose Report for specific
discussion of the history of Orange County's capabilities). Even here,
however, WMI maintains a strong position. In 1995, as part of its
bankruptcy recovery program, Orange County ``pre-sold'' capacity in
their public landfill system. WMI purchased, and still controls,
substantial capacity in that system.
(5) Conclusion--WMI Should Be Required To Divest Additional ``Relevant
Disposal Assets''
For all of the reasons set forth above and in the supporting
analysis contained in The Rose Report, the proposed Final Judgment and
Competitive Impact Statement should be revised to reflect Los Angeles
Count as the ``relevant geographic market'' for purposes of analyzing
the competitive impacts of the USA Waste/WMI merger. The Rose Institute
maintains that a revised definition of the Los Angeles market should
result in the divestiture of additional landfill disposal operations of
the newly-constituted WMI in order to protect the public interest. In
addition, we believe that much of the concern over the creation of an
anti-competitive environment in waste disposal in southern California
could also be lessened by consideration of the divestiture of assets
that were acquired recently by USA Waste, before the instant merger--in
particular, the El Sobrante Landfill in western Riverside County and
the interest of Western Waste, a wholly owned affiliate of USA Waste,
in the Mesquite Regional Landfill waste-by-rail project in Imperial
County. The remaining company would still have full ownership and
developmental rights over the RailCycle waste-by-rail project in San
Bernardino, as well as numerous other landfills and landfill capacity
in California and in nearby out-of-state locations that will compete in
the Los Angeles market.
Finally, we take note of the following. WMI is no ``stranger'' to
the Department of Justice, the Attorneys General of numerous states, or
the district attorneys of many counties in those states, including the
counties in southern California. Its appetite for growth and ability to
control aggressively the markets in which it operates are a matter of
public record. We submit that that is not a public record which
supports granting to the ``new'' WMI an almost exclusive ``franchise''
in waste disposal for southern California for many years to come--a
situation that will exist if the instant merger is allowed to be
completed without substantial reconsideration of the Los Angeles
market. We think the public interest deserves a more relaistic and
complete ayalysis for southern California and its millions of
residents. We respectfully submit these comments to the public record
in this matter.
Exhibit 9
U.S. Department of Justice, Antitrust Division
August 27, 1999.
Joseph Kattan, Esquire
Michael F. Flanagan, Esquire,
Gibson, Dunn & Crutcher, 1050 Connecticut Avenue, NW, Washington, DC
20036-5306.
Re: Comment on Proposed Final Judgment in United States of Ohio, et
al. v. USA Waste Services, Inc. Waste Management, Inc., et al.,
Civil No. 98-161 (N.D. Ohio, filed July 16, 1998)
Dear Messrs. Kattan and Flanagan: This letter responds to your
letter, submitted on behalf of your client, Gold Fields Mining
Corporation (``Gold Fields''), commenting on the proposed Final
Judgment in the above case. The Complaint in that case charged,
among other things, that USA Waste's acquisition of Waste Management
would substantially lessen competition in the disposal of commercial
waste from portions of the City of Los Angeles, The proposed
Judgment would settle the case by, inter alia, requiring the
defendants to divest Chiquita Canyon Landfill, a large USA Waste
landfill located about 40 miles northeast of the City of Los
Angeles. In a transaction approved by the United States in August
1998, under the terms of the decree, the defendants divested that
landfill to Republic Services, Inc., which previously did not
operate any landfills in the greater Los Angeles area.
Your client, Gold Fields, together with Union Pacific Railroad
Company and defendant USA Waste, own Mesquite Regional Landfill.
Gold Fields is very concerned that the proposed divestiture of
defendants' Chiquita Canyon Landfill does not go far enough to
prevent the defendants from exercising market power after the
acquisition. Specifically, Gold Fields is concerned that following
the merger, the defendants will attempt to reduce the disposal
capacity available to the Los Angeles market by using its ownership
interest in Mesquite Regional to prevent this large new landfill
from aggressively competing for commercial waste from the city.
In our view, the relevant geographic market for analyzing the
competitive effects of the USA Waste's acquisition of Waste
Management does not include Mesquite Regional Landfill. In defining
the relevant geographic market for the disposal of Los Angeles's
commercial waste, the United States took into account the extent to
which each of the private and public landfills in Southern
California could compete for the disposal of commercial waste that
originates in the city of Los Angeles. In the course of its
competitive analysis, the United States excluded some firms from its
relevant geographic market because their landfills were legally
prohibited from accepting any
[[Page 53715]]
municipal solid waste from the city of Los Angeles (e.g., most of
the LA County landfills). The United States excluded other disposal
facilities (e.g., Mesquite Regional) because of their distance from,
and relative inaccessibility to, the Los Angeles area.
USA Waste's Mesquite Regional Landfill is located 170 miles from
the City of Los Angeles. Rail is the only practical way to transport
waste from Los Angeles to that landfill. With delivered costs in
excess of $45/ton (including transportation and tipping fee costs),
it would be nearly twice as expensive to dispose of commercial waste
from the City of Los Angeles at Mesquite Regional Landfill as
sending such waste to close-in LA area landfills, which have average
actual landfill tipping fees of about $23/ton.\1\ The four firms
that own or operate landfills reasonably close to Los Angeles can
profitably increase their tipping fees for disposal of Los Angeles's
commercial waste by a small but significant amount without losing
significant business to distant landfills such as Mesquite Regional.
Thus, is makes sense to exclude Mesquite Regional and similar
landfills from the competitive analysis in determining the
significance of the defendants' transaction for the disposal of Los
Angeles' commercial waste. See U.S. Department of Justice Horizonal
Merger Guidelines Sec. Sec. 1.2-1.3 (1997 ed.).
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\1\ In your letter, you point out that the ``posted'' rates at
Los Angeles's transfer stations and resource recovery facilities are
about $45/ton, which would be comparable to the delivered cost of
waste disposal at Mesquite Regional Landfill. Many of Los Angeles's
large haulers, however, receive contractual discounts for waste
disposal at area landfills, and these discounted disposal rates, or
``tipping'' fees, actually average about $23/ton for commercial
waste from the city.
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Finally, you implicitly assume that expanding the relevant
geographic market to include Mesquite Regional Landfill would make
USA Waste's acquisition of Waste Management more, not less,
anticompetitive. However, expanding the market to include this
distant landfill would sweep into the competitive analysis a number
of other large landfills now owned or otherwise controlled by the
four firms that own the close-in Los Angeles landfills. Including in
the market the disposal capacity of those distant firms would
substantially diminish, or even eliminate, the anticompetitive
effects of defendants' transaction, and hence, make it questionable
whether the defendants should be required to divest any Los Angeles
area landfills.
Thank you for bringing your concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16(d), a copy of your
comment and this response will be published in the Federal Register
and filed with the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
Gibson, Dunn & Crutcher, LLP
November 23, 1998.
Via Hand Delivery
J. Robert Kramer, II, Esq.,
Chief, Litigation II Section, Antitrust Division, U.S. Department of
Justice, 1401 H Street, N.W., Suite 3000, Washington, D.C. 20530.
Re: United States v. USA Waste Services, Inc., Civ. No. 1:98 CV 1616
Dear Mr. Kramer: Pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h) (the ``Tunney Act''), we submit
the comments of Gold Fields Mining Corporation (``Gold Fields'') on
the proposed consent decree filed by the Justice Department
contemporaneously with the filing of its complaint in the above-
referenced lawsuit.
In a complaint filed on July 16, 1998, the Department (and a
number of individual states) alleged that the proposed acquisition
of Waste Management, Inc. (``WMI''), by USA Waste Services, Inc.
(``USA Waste''), would violate Section 7 of the Clayton Act, 15
U.S.C. 18.\1\ As required by the Tunney Act, the Department
published a proposed Final Judgment and a Competitive Impact
Statement (``CIS'') in the Federal Register on September 24, 1998.
63 FR 51,126. Under the Tunney Act , the court is required to make a
determination, prior to approving the proposed consent judgment,
that ``the entry of such judgment is the public interest.'' 15
U.S.C. 16(e); see also United States v. Airline Tariff Publ'g Co.,
836 F. Supp. 9, 11 (D.D.C. 1993).
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\1\ The entity resulting from the combination of USA Waste and
WMI is referred to herein as ``Waste Management.''
---------------------------------------------------------------------------
Although the Department is to be commended for intervening and
requiring divestitures to reduce the impact of this anticompetitive
acquisition, the remedy mandated by the consent decree with regard
to one of the markets alleged in that complaint, the Los Angeles
area, is insufficient to cure the competitive harm brought about by
the transaction. The Department's remedy is inadequate because it
leaves the merged company with ownership of sufficient local and
remote disposal assets to harm competition for waste disposal in the
market. If the merged company is able to retain such power and
control, it also will be able to thwart or delay the entry of cost-
effective disposal alternatives for customers in the Los Angeles
market, such as the Mesquite Regional Landfill in Imperial County,
California, which is owned by Gold Fields.
The public interest requires that the decree be modified to
address the competitive harm more effectively. To protect
competition in the Los Angeles market, for the reasons set forth
below, we ask that the Department reexamine its definition of the
Los Angeles market,\2\ which is necessary in order to more
accurately assess the full impact of the transaction. We further
request that the Department require the divestiture of additional
waste disposal assets by the merged entity, in order to further
reduce the merger's anticompetitive effect. Specifically, we request
that the Department require Waste Management, acting through its
wholly owned affiliate Western Waste Industries (``WWI''), to give
up any claim it may have to an ownership stake in the Mesquite
Regional Landfill.
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\2\ As defined in the complaint, Los Angeles means ``that area
of the City of Los Angeles, CA, located east of Interstate 405, the
San Diego Freeway.'' Compl. para. 19.
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I. Factual Background
A. The Complaint and Competitive Impact Statement
The complaint in this matter alleged that USA Waste and WMI are
two of the most significant competitors in the disposal of municipal
solid waste (``MSW'') in a number of markets throughout the country.
Because of the significant competitive positions of both companies,
the complaint alleged that the acquisition would substantially
lessen competition in the disposal of MSW in seventeen geographic
markets throughout the United States, including Los Angeles,
California. Compl. Paras. 45-78. The complaint further alleged the
existence of significant barriers to entry in the MSW disposal
business in the Los Angeles area and other ``difficult-to-enter''
markets, due to a variety of important factors, including various
``federal, state and local safety, environmental, zoning and permit
laws and regulations'' that ``dictate critical aspects'' of the
disposal of MSW, and make the process of obtaining a permit to
construct or expand a disposal site ``an expensive and time-
consuming task.'' Id. para. 76; see also CIS at 8, 10, 63 FR at
51,156 (1998). The Department alleged that the diminution in
competition brought about by the acquisition is likely to result in
consumers paying higher prices and receiving fewer or lesser quality
services for the disposal of MSW. Compl. para. 78. Indeed, the
complaint alleged that operators of local disposal facilities
``can--and do--price discriminate, i.e., charge higher prices to
customers who have fewer local options for waste disposal.'' CIS at
9, 63 FR at 51,156 (1998).
Together with the complaint, the Department filed a proposed
consent decree under which USA Waste was able to complete its
acquisition of WMI, but which required the divestiture of certain
assets in order to preserve competition in the affected markets. As
it relates to the Los Angeles area, the proposed consent decree
required the divestiture of USA Waste's Chiquita Canyon Landfill,
located at 29201 Henry Mayo Drive in Valencia, California. We
understand that an agreement for the divestiture of this facility to
Republic Services, Inc., has been effectuated.
Although we believe that the complaint correctly identified a
number of significant competitive problems created by the proposed
combination of these two large competitors, the remedy set forth in
the proposed consent decree with respect to the Los Angeles area is
insufficient to protect the public interest in preserving present
and future competition for the disposal of MSW generated in the Lost
Angeles area. In particular, the definition of the Los Angeles
market is inconsistent with applicable state law an contrary to the
commercial realities of the Los Angeles marketplace. Consequently,
the remedy set forth in the decree fails to protect the long term
interests of purchasers of MSW disposal capacity in a competitive
market, as the combined entity now has an
[[Page 53716]]
incentive to block or significantly delay the development of the
Mesquite Regional Landfill. However, even if the market definition
set forth in the complaint is correct, the remedy set forth in the
decree still falls short of the minimum needed to protect consumers
in the market defined by the complaint.
B. The Mesquite Regional Landfill
From October 1991 through November 30, 1997, Gold Fields,
Western Waste Industries (``WWI''), which since 1996 has been a
subsidiary of USA Waste,\3\ and SP Environmental Systems, Inc., an
affiliate of Southern Pacific Transportation Company (now known as
Union Systems, Inc., an affiliate of Southern Pacific Transportation
Company (now known as Union Pacific Railroad Company (``UP'')), were
engaged in a venture to explore the feasibility of permitting,
developing, and operating the Mesquite Regional Landfill. The
landfill was to be developed as a MSW regional facility located in
Imperial County, California, 170 miles southeast of Los Angeles. The
parties believed that the enterprise, which could serve as a
disposal site for MSW transported by rail from Los Angeles County
and other parts of Southern California, would lessen the need for,
and reliance upon, urban landfills and provide an environmentally
safe means of disposing of waste at a competitive price.
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\3\ WWI merged with USA Waste in a transaction that closed on
May 7, 1996.
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Gold Fields or Arid Operations, Inc. (``AOI''), its wholly-owned
subsidiary, served as manager of the venture and has undertaken all
permitting and land acquisition activities requested for the
development of the Mesquite Regional Landfill. Gold Fields and AOI
have been actively marketing the project throughout Los Angeles
County, which is expected to be the primary source of MSW for the
facility. Actual construction of the Mesquite Regional Landfill will
begin once a contract is awarded.\4\ It is projected that MSW
disposal will begin within one year of the commencement of
construction.
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\4\ Construction of the facility is the least time-consuming
aspect of market entry. Thus, while the permitting process for a new
MSW disposal facility can last an entire decade, construction of a
facility such as the Mesquite Regional Landfill can be accomplished
within one year.
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The Mesquite Regional Landfill project is the largest permitted
waste-by-rail facility in the United States. During the initial year
of operation, the facility will receive up to 3,400 tons of MSW per
day, an amount that will increase to 20,000 tons per day over the
100-year life of the project.
Although public and private landfill operators frequently
encounter strong opposition to the construction of new landfills and
the expansion of existing facilities in densely populated areas, the
permitting of the Mesquite Regional Landfill has encountered
relatively few difficulties. This is attributable in large measure
to the fact that the site of the Mesquite Regional Landfill is
especially well suited for the development of a landfill. The site
covers 4,250 acres in a deserted portion of the southeastern portion
of Imperial County, California. For the past 13 years, the site has
been used by Gold Fields and its successor for gold mining
activities and as a gravel quarry. The geography of the site--with a
base of dense conglomerate and basement rock--contains no active
faults and provides a low-permeability barrier that will supplement
the engineered leachate and landfill gas containment systems.
The average annual temperature is 74 deg.F, with average highs
during the summer months of 105 deg.F to 110 deg.F, and the mean
annual rainfall is only 4 inches. This arid climate greatly reduces
the potential for leachate to be developed in the landfill. Because
of the desert conditions, only low density populations of plant and
animal species exist in the area. In addition, because the majority
of the site already has been disturbed by mining and gravel
extraction activities, any additional impact on plant and animal
life will be limited. Finally, the site is located in an area where
there are no bodies of water or permanent surface flows.
In September 1995, after three years of public review and
comment, the Environmental Impact Report/Environmental Impact
Statement for the project was finalized, and local land use
approvals and a conditional use permit were issued by Imperial
County. In November 1995, all of the municipalities in Imperial
County reviewed and approved the project, and a Waste Discharge
Order was issued by the California Regional Water Quality Control
Board in December of that year. The California Integrated Waste
Management Board issued a Solid Waste Facilities Permit in March
1997, and earlier this month, the Imperial County Air Pollution
Control District issued an Authority to Construct permit, which
addressed air quality issues for the project. As a result, the
Mesquite Regional Landfill became the only permitted waste-by-rail
project in California. Throughout the permitting process, Gold
Fields and AOI prevailed on all administrative and judicial appeals
filed in state and federal courts by environmental groups opposing
the project.
On November 30, 1997, the venture agreement terminated by its
terms. Since the termination of the venture, Gold Fields has been
engaged in discussion with SPES, UP, and WWI attempting to wind up
the venture. Concurrently, at their sole cost and expense, Gold
Fields and AOI have continued the permitting and marketing programs
for the project. USA Waste, one behalf of WWI, expressed an interest
in participating in the project, however, Gold Fields and USA Waste
have irreconcilable differences over plans for the development of
the Mesquite Regional Landfill which preclude the parties from being
able to conclude a new agreement.
On March 10, 1998, USA Waste, the nation's third largest waste
collection and disposal firm, agreed to acquire WMI, the largest
waste collection and disposal firm in the country. USA waste's
incentive to compete the wind up of the prior venture and negotiate
a new agreement with Gold Fields for the continued development of
the Mesquite Regional Landfill has been significantly reduced
following this acquisition. As a result of the acquisition, the
merged company now controls at least four (4) additional major
proposed and existing remote waste disposal sites that have either
been actively pursuing contracts or are capable of providing waste
disposal services to Los Angeles County by transporting waste to
their landfills via rail--the RailCycle (Bolo Station) landfill
project in California,\5\ and the Butterfield Station, Copper
Mountain, and Franconia landfills in Arizona. Thus, the merged
company now has an incentive to impede the wind up of the venture
and thereby frustrated development of the Mesquite Regional
Landfill, which is intended to provide the assurance of long term
MSW disposal capacity for the Los Angeles area.
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\5\ WMI's RailCycle project in San Bernardino, California is
still in the permitting phase, although WMI is now the subject of a
major criminal investigation arising from a dispute with a local
property owner.
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Prior to the transaction, WWI and subsequently, USA Waste were
committed to the development of the Mesquite Regional Landfill, and
the site was posied to compete with WMI's facilities. A 1995
memorandum by Richard Widrig, a vice president of WWI, set out the
Mesquite Regional Landfill's goal is being ``the lowest cost'' MSW
disposal facility. See July 28, 1995 memorandum from Richard Widrig,
attached hereto as Exhibit A, at 2.\6\ Given its acquisition of
competing sites that were owned prior to the merger by WMI, it is
likely that the combined entity will seek to suprress development of
the Mesquite Regional Landfill site in order to thwart a low-cost
competitive alternative to those sites.
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\6\ Although this memorandum referred to ``many competitors for
this waste stream,'' most of the privately-owned competitive sites
are now owned by Waste Management. Mr. Widrig's memorandum states
that ``[o]ur competition is primarily RailCycle and LaPaz and local
landfills.'' Ex. A, at 2 (emphasis in original). RailCycle, with a
proposed capacity of 430 million tons, is owned by Waste Management.
La Paz, with an estimated capacity of 20 million tons, is jointly
owned by BFI and La Paz County. With the exception of the Chiquita
Canyon facility, which USA Waste was forced to divest, and BFI's
Sunshine Canyon Landfill, both of which are located in northwestern
Los Angeles County, Waste Management owns all of the other major
private landfills in Los Angeles County.
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II. The Development of the Mesquite Regional Landfill Is Essential for
Effective Waste Management in the Los Angeles Area
The Mesquite Regional Landfill project will be an essential
component of the solid waste management program for the Los Angeles
area. The location is also particularly well-suited for the disposal
of MSW from that area. The site is a short rail haul away from Los
Angeles, and offers very large disposal capacity without many of the
environmental problems that frequently plague the development of new
sites. The Mesquite Regional Landfill, as a newly constructed
facility, will be fully lined to comply with current environmental
regulations. By contrast, much of the current capacity in the Los
Angeles area is the result of the expansion of older landfills that
have
[[Page 53717]]
limited or non-existent liner systems. In addition, remote locations
eliminate the traffic congestion and other public health and safety
risks associated with operating a landfill in a heavily populated
area.
Governmental authorities have recognized the need to utilize
remote facilities, such as the Mesquite Regional Landfill, to meet
the MSW disposal needs of the Los Angeles area. For example, Steve
Maguin, the head of the Solid Waste Management Department with the
Los Angeles County Sanitation Districts testified in February 1997
that ``as early as the beginning of the next decade,'' or a little
over a year from the filing of this comment, Los Angeles County
would have to export MSW to other locations. See Eagle Mountain
Public Hearing before Riverside County Planning Commission, dated
Feb. 5, 1997, attached hereto as Exhibit B, at 1.
Mr. Maguin's testimony is consistent with many other projects
over the past ten years. Indeed, these projections played a
substantial role in creating the impetus for the development of the
Mesquite Regional Landfill. For example, as April 1988 study by the
Southern California Association of Governments, titled ``The
Feasibility of Hauling Solid Waste by Railroad From the San Gabriel
Valley to Remote Disposal Sites'' (the ``1988 Study''), attached
hereto as Exhibit C, forecasted a shortfall in the landfill capacity
for Los Angeles County by the end of 1998. 1988 Study, at 1-13. The
projected shortfall in disposal capacity was the driving force
behind the development of the Mesquite Regional Landfill and which
makes development of that facility a matter of significant
importance to Los Angeles area customers. Similarly, the study's
conclusions were not lost on the Los Angeles County Sanitation
Districts, and in May 1991, an Ad Hoc committee was convened to
guide the development of a waste-by-rail system to diversify the
solid waste options available to the metropolitan area. See ``Final
Waste-by-Rail Master Plan,'' County Sanitation Districts of Los
Angeles County, January 1997, attached hereto as Exhibit D, at 1.
In a January 1998 status report on Regional Solid Waste
Management within Los Angeles County, prepared by the County
Sanitation Districts of Los Angeles County, Mr. Charles W. Carry,
the Chief Engineer and General Manager noted that ``[d]evelopment of
a waste-by-rail infrastructure is important to the Sanitation
Districts in the effort to achieve more effective and diverse waste
management in the County.'' See ``Status Report on Regional Solid
Waste Management Within Los Angeles County,'' County Sanitation
Districts of Los Angeles, January 1998, attached hereto as Exhibit
E. The report noted that, because of the closure of three major
solid waste landfills in 1996, which resulted in a net reduction of
about 25% of the County's daily permitted capacity, ``out-of-County
disposal capacity will be heavily relied upon to provide future
needs.'' Id, at 2. Two of the nine major landfills permitted to
accept solid waste in Los Angeles County are projected to close
within the next two years and, without the development of new in-
County capacity, Los Angeles will become dependent on waste export.
III. Remedial Action Is Required To Ensure the Development of a Low-
Cost Disposal Alternative for Los Angeles Area Customers
The complaint and accompanying competitive impact statement
recognized that the proposed combination of USA Waste and WMI would
substantially lessen competition in the disposal of MSW in Los
Angeles. The Department also has recognized that, because the
process of obtaining the permits necessary to construct or expand a
disposal site is both time-consuming and expensive, entry into the
market for the disposal of solid waste is difficult. Compl. para.76;
CIS at 9, 63 FR at 51,156 (1998). Indeed, the Department contends
that ``[s]ignificant new entry into these markets is unlikely to
occur in any reasonable period of time, and is not likely to prevent
exercise of market power after the acquisition.'' CIS at 10; 63 FR
at 51,156 (1998).
Based on the recent landfill permitting activities of Gold
Fields and others in Southern California, seven to ten years is now
commonly accepted as the lead time needed to obtain the necessary
permits to expand an existing facility or to construct a new
facility, with costs associated with the permitting process ranging
from $20 to more than $75 million. Virtually every project will
encounter public and/or political opposition, legal challenges, and
appeals of administrative determinations. Of course, recovering any
such investment is conditioned upon successfully obtaining all of
the required permits. For example, the developer of the Weldon
Canyon proposal in Ventura County spent $14 million over the course
of eleven years before the project failed in the face of public
opposition. See ``Southern California Landfill Capacity Analysis,''
prepared by JBS Associates, dated January 1997, attached hereto as
Exhibit F, at 3.
The Mesquite Regional Landfill offers a low-cost alternative
that can now enter the Los Angeles market because it has essentially
completed the permitting process. This makes the facility a
formidable competitor of Waste Management's disposal sites within
and outside the Los Angeles market, furthering the goal of
diversifying the waste disposal options for Los Angeles.
The remedy proposed by the Department, the divestiture of the
Chiquita Canyon landfill, is inadequate to preserve competition in
the rapidly evolving market in Los Angeles because it will not
affect the merged entity's ability to impede the development of a
promising potential low-cost entrant into the market--the Mesquite
Regional Landfill. Unless the merged entity is forced to relinquish
any claim to the assets of the Mesquite Regional Landfill, the
development of the project is likely to be delayed and consumers in
Los Angeles will be deprived of a major competitor whose goal, as
expressed by WWI's Widrig in 1995, is to make the Mesquite Regional
Landfill the ``lowest cost'' major MSW disposal facility. We
therefore respectfully request that the consent decree be modified
to contain such a remedy.
The inadequate nature of the existing remedy may have resulted
from a failure to appreciate the truly regional nature of waste
disposal in the Los Angeles area, and a corresponding failure to
identify the appropriate market, thereby eliminating from the
Department's analysis the important role of remote sites in
providing disposal services for the Los Angeles metropolitan area.
That market is today regional in scope, owing to changes in the
relative costs of local and remote sites based on a change in the
regulatory regime governing waste disposal. Specifically, in 1989,
California enacted the California Integrated Waste Management Act
(A.B. 939), as amended.\7\ A.B. 939 requires each county, as part of
its Integrated Waste Management Plan, to prepare a Siting Element
demonstrating a minimum of fifteen years of environmentally safe and
technically feasible solid waste disposal capacity. In the
Countywide Siting Element for the Los Angeles area, published in
June 1997 (``County Siting Element''), the Los Angeles County
Department of Public Works' Environmental Programs Division stated
that:
\7\ Cal. Pub. Res. Code Secs. 40,000 et seq.
---------------------------------------------------------------------------
It is important to incorporate into the planning process a
number of alternatives to ensure that solid waste disposal, an
essential public service, continues to be provided to all residents
and businesses in Los Angeles County without interruption during the
planning period and the long term. One of these alternatives is the
development of out-of-County solid waste disposal facilities,
together with the infrastructure necessary to provide access to
these facilities.
Id. at 9-1, attached hereto as Exhibit G. Thus, solid waste
management in Southern California has evolved into a regional system
in which local governments are forced to rely on resources outside
their boundaries to fulfill the mandates of A.B. 939.
A.B. 939 also imposes stringent diversion and recycling
requirements on cities and counties. In order to meet A.B. 939's
diversion mandates, MSW is increasingly processed through Materials
Recovery Facilities (``MRF'')/transfer stations making railhaul
facilities, such as the Mesquite Regional Landfill (which requires
transfer stations for loading intermodal containers), viable full-
fledged competitors with local firms.
Although the cost of transporting MSW by rail to sites such as
Mesquite is somewhat higher than the transportation cost associated
with local disposal, the Mesquite site enjoys a number of
significant cost advantages that ameliorate and overcome this
disadvantage. Labor costs, air emissions reduction credits, and host
fees all are expected to be lower at a remote facility. Indeed, at
the time of projected operation of the facility, these cost
advantages are expected to be decisive. One reason for this is that
the diversion and recycling requirements of A.B. 939 has diminished
some of the cost advantages associated with local MSW disposal.
Because the Act has imposed higher costs on local disposal without
affecting the cost of disposing of MSW at sites such as the Mesquite
Regional Landfill, it has narrowed and in some cases eliminated
altogether the cost advantage associated with local disposal.
Under A.B. 939, 25% of all solid waste generated in California
must be diverted from
[[Page 53718]]
landfill disposal by January 1, 1995, and 50% of all solid waste
must be diverted by January 1, 2000.\8\ Cal. Pub. Res. Code
Sec. 41,850. This diversion requirement imposes significant
increased treatment costs and has resulted in a substantial and
continuing increase in the use of transfer stations and MFRs
throughout Los Angeles County and the surrounding area.\9\ The
services provided by these facilities generally include handling,
processing and loading in transfer trucks or intermodal containers;
transportation from the facility to the landfill; and all landfill
disposal costs.
---------------------------------------------------------------------------
\8\ The estimated statewide division rate for 1997 was 32%. See
Integrated Waste Management Board News Release, titled ``State
Recognizes Communities' Recycling Success on 2nd America Recycles
Day,'' dated Nov. 15, 1998, attached hereto as Exhibit H. More than
100 million tons of solid waste have been diverted from landfills
since 1990. Id.
\9\ For example, based on data submitted in annual reports filed
by local jurisdictions with the California Integrated Waste
Management Board (``CIWMB''), 38 of the 45 jurisdictions within Los
Angeles County for which data was available opted for a strategy of
utilizing MFRs, in addition to transfer stations, to meet the
diversion mandates of A.B. 939. Data compiled by the CIWMB's Solid
Waste Information System indicates that approximately 10,000 tons of
waste per day (approximately 25% of the daily waste stream for the
county) flow through transfer/processing facilities in Los Angeles
County.
---------------------------------------------------------------------------
With these increased handling costs now being imposed on an
increasingly large percentage of the waste stream, the geographic
area within which waste is transported for disposal has broadened
considerably, and the incremental transportation cost of longer
hauls to regional facilities has become much less significant as a
proportion of the overall cost. Posted tip fees at large volume
transfer stations and MRFs in Los Angeles currently average $41 per
ton and range up to $56.65 per ton. Consequently, as the cost
advantages of local disposal dissipate, regional facilities, which
enjoy certain cost advantages of their own, become more competitive.
By means of comparison to the transfer station costs cited above,
the projected total disposal costs at the Mesquite Regional Landfill
are $40-$45 per ton.
Thus, even today, before the depletion of capacity at some of
the major disposal facilities in the Los Angeles area, the Mesquite
Regional Landfill would be cost competitive with in-county
facilities handling waste processed through a MFR or transfer
station. The cost equation will continue to tilt over time in favor
of the Mesquite Regional Landfill if the facility goes forward.
Over the course of the next few years, the difference in the
prince of local and regional disposal will narrow as efforts to meet
the 50% diversion rate by the year 2000 will subject a higher
percentage of the waste flow to additional costs. As Mr. Maguin, the
head of the Los Angeles County Solid Waste Management Department,
recently noted, the County's needs for remote disposal could be
greater still if the County were unsuccessful in meeting its
diversion mandate of 50%. Ex. B, at 2. Although the estimated
statewise diversion rate for 1997 was 32%, data compiled by the
CIWMB's Solid Waste Information System reports that approximately
25% of the daily waste stream for Los Angeles County flows through
transfer/processing facilities in the county. Unless the present
diversion rate improves dramatically, the exhaustion of local
landfill capacity will be accelerated, and the resulting need to
export MSW will be exacerbated in the near future. And, whether or
not the diversion rate improves to the mandated 50% level, the cost
advantage of local disposal will continue to dissipate.
Requiring Waste Management to relinquish any claim to an
interest in the Mesquite Regional Landfill will protect the public
interest for the long term and will effectively constrain Waste
Management's ability to increase disposal costs and lower the
quality of service to the citizens of Los Angeles.
IV. The Harm to Competition Caused by Waste Management's Efforts To
Block Development of the Mesquite Regional Landfill Require
Modification of the Proposed Remedy
Under the Tunney Act, a district court has both the power and
the duty to review antitrust consent decrees and, in an appropriate
case, to exercise its powers to require modification of a decree.
``In order to prevent `judicial rubber stamping,' district courts
are required to make an independent evaluation of proposed decrees:
`Before entering any consent judgment * * * the court shall
determine that the entry of such judgment is in the public
interest.' 15 U.S.C. Sec. 16(e).'' United States v. BNS Inc., 858 F.
2d 456, 459 (9th Cir. 1988) (quoting H.R. Rep. No. 1463, 93d Cong.,
2d Sess. 6 (1974), reprinted in 1974 U.S.C.C.A.N. 6535, 6536)
(internal citation removed). As the Ninth Circuit noted in BNS,
although ``Congress may specifically limit available remedies in
defining the jurisdiction of a federal court * * * [i]n this case,
however, it has not chosen to do so.'' Id. at 462.
In making its independent public interest review, the
independent analysis mandated by the Tunney Act is quite broad:
[T]he statute clearly indicates that the court may consider the
impact of the consent judgment on the public interest, even though
that effect may be on an unrelated sphere of economic activity. For
example, the government's complaint might allege a substantial
lessening of competition in the marketing of grain in a specified
area. It would be permissible for the court to consider the
resulting increase in the price of bread in related areas.
Id. at 463. Thus, even though a court may not ``base its public
interest determination on antitrust concerns in markets other than
those alleged in the government's complaint,'' id. at 462-63, the
court may consider broader potentially adverse effects of a decree,
id. at 464.
Here, the proposed remedy is not in the public interest because,
despite the divestiture of the Chiquita Canyon facility, Waste
Management will dominate the market for MSW disposal in the Los
Angeles area as a result of the transaction. There are nine major
landfills permitted to accept solid waste in Los Angeles County.
Five of the nine, with a combined daily permitted capacity of 22,800
tons, are owned by the county, a city, or other government agency.
Two other facilities, with a combined daily permitted capacity of
11,000 tons are owned by Waste Management and the remaining two
facilities, with a daily permitted capacity of 11,000 tons are owned
by other private companies.
In addition to facilities within the county, the Los Angeles
County Department of Public Works Environmental Programs Division
recently identified 14 existing and four proposed landfills located
outside Los Angeles County (including the Mesquite Regional
Landfill) that had the capability of accepting MSW transported by
rail and/or truck from Los Angeles County. See County Siting
Element, Ex. G, at 9-8. The merged entity owns, controls, or claims
an interest in eight out of the 18 facilities outside the county--
six existing landfills and two proposed sites, including the
Mesquite Regional Landfill. The merged entity's disposal capacity in
these 18 existing and proposed sites exceeds 50% of the total of the
sites.
As a result of the transaction, the merged entity will control
more than half of the capacity that can serve the Los Angeles area
in the near term, when in-County capacity is exhausted. Such control
will give Waste Management an ability to exercise market power that
will not be remedied by the decree. For example, the merged entity
is likely to interfere with the rapid development of the low-cost
Mesquite Regional Landfill.
Given the diminishing supply of MSW disposal capacity within Los
Angeles County, the key to Waste Management ability to exercise
market power is whether other firms will be able to meet the
requirements of customers in the marketplace. See United States v.
E.I. du Pont de Nemours & Co., 351 U.S. 377, 391-92 (1956) (defining
market power as the ``power to control prices or exclude
competition''). This is particularly critical in a market that is
characterized by very significant barriers to entry. ``If entry
barriers are substantial, a market participant may be able to
achieve or maintain market or monopoly power and use that power
anticompetitively because its actions can go unchecked by new
competitors.'' Reazin v. Blue Cross and Blue Shield of Kansas, 899
F.2d 951, 974 (10th Cir. 1990). The ability of an incumbent supplier
to frustrate the entry by competitors into the market entrenches its
dominance by preventing the addition of capacity that would compete
with the incumbent's facilities and restrain its ability to charge
prices above the competitive level. Here, the transaction creates an
incentive for the merged entity to prevent the entry of the low-cost
Mesquite facility.
Prior to the transaction, USA Waste had an interest in only
three of the 18 sites outside Los Angeles County that may be
suitable to serving the County's needs. These are the El Sobrante
facility in Riverside County, the Mesquite Regional Landfill in
Imperial County, and the Copper Mountain facility in Arizona. The
incentives of the merged entity have changed dramatically because of
its
[[Page 53719]]
newly-acquired control of more than 50% of the capacity of suitable
out-of-county sites. Unless the Mesquite Regional Landfill is
allowed to proceed without the interference of the merged entity,
consumers in Los Angeles will be deprived of an entrant that will be
able to constrain the ability of Waste Management to dominate the
market once local capacity is depleted.
The Los Angeles market plainly encompasses out-of-county
facilities, including the Mesquite Regional Landfill. As noted
earlier, Los Angeles County will soon run out of disposal capacity
and will be forced to transfer its MSW to out-of-county facilities.
These facilities are already becoming cost-competitive with within-
county sites and are likely to become more competitive over time as
the diversion requirements of A.B. 939 are implemented. The relevant
geographic market is the geographic area in which sellers of the
particular product operate and to which purchasers can practicably
turn for the product. Tampa Electric Co. v. Nashville Coal Co., 365
U.S. 320, 327 (1961); Standard Oil Co. v. United States, 337 U.S.
293, 299 n.5 (1949). This market necessarily includes the area
within which facilities to which customers will turn for MSW
disposal are located. See United States v. Philadelphia Nat'l Bank,
374 U.S. 321, 359 (1963) (geographic market is ``the `area of
effective competition * * * in which the seller operates, and to
which the purchaser can practicably turn for supplies' ''). The cost
relationship between local and out-of-county locations is such that
customers will be forced to use the out-of-county disposal sites
within the very near future because of the practical depletion of
Los Angeles County facilities. In these circumstances, the area of
effective competition includes out-of-county locations that are
practical alternatives to within-county disposal, an area in which
the merged entity is dominant. In this area, the Mesquite Regional
Landfill is likely to be an important low-cost supplier if its entry
into the market is not frustrated by the USA Waste-WMI transaction.
Gold Fields requests that the Department require Waste
Management to relinquish any claim it may have to the assets of the
Mesquite Regional Landfill venture. Remedies requiring the
forbearance of legal claims, such as that sought there, have been
used by the Department in other consent decrees. In United States v.
Thomson Corp., 1997-1 Trade Cas. (CCH) para. 71,754 (D.D.C. Mar. 7,
1997), the complaint alleged, inter alia, that Thomson Corp.'s
acquisition of West Publishing Co. would likely lessen competition
in the markets for primary and secondary law products because West's
assertion that other legal publishers needed a license in order to
``star paginate'' its publications constituted an important barrier
to entry. At the time, West was involved in litigation over the
validity of its copyright claim. In order to eliminate this barrier
to entry, the consent decree required West to grant other legal
publishers a license to star paginate its publications on specified
terms, effectively forcing West to renounce its claim.
The Department has required a merged entity to relinquish legal
claims as a condition of allowing a transaction to go forward in at
least one prior case. In the consent decree entered into in
connection with the complaint filed in United States v. Borland
Int'l, Inc., Civ. Action No. C91 3666 (MHP) (N.D. Cal. 1992) the
Department challenged the acquisition of Ashton-Tate Corporation by
Borland International, Inc. (``Borland''), the complaint alleged
that the effect of the acquisition would be to substantially lessen
competition in the sale of certain software for IBM and IBM-
compatible personal computers. As set forth in the accompanying
competitive impact statement, ``the United States sought to assure
the continued availability of competitive alternatives by requiring
Borland to relinquish certain copyright claims''. The purpose of the
remedy was ``to protect against the possible exercise of market
power by Borland after the acquisition.'' Thus, the proposed final
judgment enjoined Borland from asserting legal claims, and directed
Borland to dismiss with prejudice a copyright infringement suit that
Ashton-Tate had initiated against another company. See 57 FR 8359
(1992).
The similar remedy sought by Gold Fields here would protect
against the possible exercise of market power by Waste Management
after the acquisition, as local disposal options in the Los Angeles
area are depleted. Such a remedy is necessary to protect the public
interest of consumers in the fast-evolving Los Angeles market.
Sincerely,
Joseph Kattan
Michael F. Flanagan
Appendix of Exhibits to Letter Commenting on Proposed Consent
Decree in United States v. USA Waste Services, Inc., Civ. No. 1:98
CV 1616
Dated: November 23, 1998.
Table of Contents
------------------------------------------------------------------------
Exhibit
------------------------------------------------------------------------
July 28, 1995 memorandum from Richard Widrig.................. A
Eagle Mountain Public Hearing before Riverside County Planning B
Commission, dated Feb. 5, 1997...............................
Southern California Association of Governments study, titled C
``The Feasibility of Hauling Solid Waste by Railroad From the
San Gabriel Valley to Remote Disposal Sites,'' April 21, 1988
``Final Waste-by-Rail Master Plan,'' County Sanitation D
Districts of Los Angeles County, January 1997................
``Status Report on Regional Solid Waste Management Within Los E
Angeles County,'' County Sanitation Districts of Los Angeles,
January 1998.................................................
``Southern California Landfill Capacity Analysis,'' prepared F
by JBS associates, January 1997..............................
Los Angeles County Department of Public Works, Environmental G
Programs Division, County Siting Element, June 1997..........
Integrated Waste Management Board News Release, titled ``State H
Recognizes Communities' Recycling Success on 2nd America
Recycles Day,'' dated Nov. 15, 1998..........................
------------------------------------------------------------------------
Note: Exhibits A through H were unable to be published in the
Federal Register. A copy can be obtained from the U.S. Department of
Justice, Documents office, 325 7th St., Room 215, Washington, DC or
(202) 514-2481.
Exhibit 10
U.S. Department of Justice Antitrust Division
August 27, 1999.
Kirk S. Rimmer, Esquire,
Offices of Arthur M. Traugh, The Pacific Stables Building, 1126
Second Street, Old Sacramento, California 95814.
Re: Comments on Proposed Final Judgment in United States, State of
Ohio, et al. v. USA Waste Services, Inc., Waste Management, Inc., et
al., Civil No. 98-1616 (N.D. Ohio, filed July 16, 1998)
Dear Mr. Rimmer: This letter responds to your comment on the
proposed Final Judgment, submitted on behalf of Coastal Waste
Management (``Coastal''), a small waste hauler in Sacramento, CA.
The Complaint in this case charged, among other things, that USA
Waste's acquisition of Waste Management would substantially lessen
competition in the collection or disposal of municipal solid waste
in a number of markets throughout the country. In California, the
Complaint alleged, the merger would substantially reduce competition
in commercial waste disposal in the City of Los Angeles. The
proposed Judgment, now pending in federal district court in
Cleveland, Ohio, would settle the case with respect to the Los
Angeles market by, inter alia, requiring that the defendants divest
Chiquita Canyon Landfill, a large facility located about 40 miles
north of Los Angeles, CA. In a transaction approved by the United
States in August 1998, under the terms of the decree, the defendants
divested Chiquita Canyon Landfill to Republic Services, Inc., which
prior to the sale did not operate any waste disposal facilities in
the Los Angeles area.
In your letter, you expressed concern that USA Waste's
acquisition of Waste
[[Page 53720]]
Management would also substantially reduce competition in the
collection of commercial waste in the Sacramento area, with the
combined firm controlling 65-80 percent of commercial waste
collection after the merger. To eliminate the alleged adverse
effects of the merger in this market, you suggest that we revise the
proposed Judgment by adding provision that would, among other
things, limit the duration of defendant's commercial waste
collection contracts to no more than two years, with perhaps a
single one-year renewal period.
We believe that the defendants' divestiture of Chiquita Canyon
Landfill to an acceptable purchaser, Republic, alleviated by
competitive concerns created by the defendant's merger in the Los
Angeles, CA market alleged in the Complaint. As to your statement
that additional injunctive relief is necessary to eliminate
competitive problems the merger would create in the Sacramento area,
we note that at the time of the government's Complaint, we had seen
no evidence that the defendant's merger would raise competitive
problems warranting the imposition of the relief that you propose.
Of course, should we find in a subsequent investigation that the
defendant's activities have unreasonably restrained competition in
Sacramento, CA or any other waste collection or disposal market, the
United States will take appropriate legal action, including
requesting that a court impose injunctive relief. Depending on the
nature of the violation, that relief may perhaps be similar to that
which you have outlined in your comment on this decree. In the
meantime, if you believe that your operations have been injured as a
result of the proposed merger, you are certainly free to institute a
private antitrust action for damages or injunctive relief in federal
district court.
Thank you for brining your concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. Sec. 16(d), a copy of your
comment and this response will be published in the Federal Register
and filed with the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
Arthur M. Traugh
September 22, 1998.
United States Department of Justice,
New Case Unit, Attn: Dania Gorriz, 1401 H Street N.W., #3000,
Washington, D.C. 20530.
Dear Ms. Gorriz: I represent Coastal Waste Management, a small
waste hauling company headquartered in Sacramento, California. For
the reasons stated below, I am writing this letter to urge you to
stop the proposed merger of USA Waste and Waste Management
Incorporated (``WMI''), or, in the alternative, if the merger is
allowed to occur, to impose certain operating restrictions on the
merged companies. If the merger is approved without restrictions,
the newly formed waste hauling duopoly will be ripe for a
continuation of predatory business practices.
Summary of The Waste Hauling Business
By way of introduction to waste hauling industry practices, we
submit the following summary.
There are primarily two types of waste hauling:
(1) Small containerized bins range from two to eight cubic yards
in size. They are predominately used to service multifamily
apartments or industrial, retail and commercial businesses on a
weekly or semi-weekly basis, and a customer has typically executed a
contract or service agreement for the servicing of these bins. We
estimate that if the merger is allowed to occur, USA Waste will
control 65-70% of the front-loader small containerized bins in the
Sacramento marketplace, including the only available collection
route not run by the City or County of Sacramento.
(2) Large drop boxes vary in size from fifteen to forty cubic
yards. This service does not typically have a service contract.
Some landfill operations are controlled by a company that is
also a waste hauler, thereby creating a vertically integrated
monopoly. The purchase of a landfill by a small waste hauler is not
economically feasible. The problem of vertically integrated landfill
operations and waste hauling will only be exacerbated by the recent
passage of California Assembly Bill 939, which requires all
California counties to recycle 50% of all accepted waste. A
recycling center controlled by a dominant company that is also a
waste hauler will enable the waste hauler to set monopolistic
pricing against a small independent waste hauler.
Antitrust Problems
Several problems currently exist that reduce competition and
thwart the entrance of new waste haulers into the marketplace. These
problems will be aggravated by the proposed merger. Notably, the
Antitrust Division of the U.S. Department of Justice filed a
complaint against WMI based on the Antitrust Procedures and
Penalties Act (``APPA''), 5 U.S.C. 16(b)-(h), in United States
District Court for the Southern Division of Georgia, Savannah
Division (``Justice Complaint against WMI''). A copy of the final
judgment in that action is enclosed for your ease of reference.
The prohibited conduct set forth in the enclosed judgment has
allegedly occurred, and is continuing to occur, in the Sacramento
marketplace. The trio of predominant waste haulers in Sacramento--
BFI, WMI and USA Waste (collectively the ``Sacramento Controlling
Companies'')--that control more than eighty percent of the front
load marketplace have contracts which mirror the contracts subject
to the judgment in the Justice complaint against WMI. For example,
but without limitation, the prolix fine print contracts of the
Sacramento Controlling Companies have automatic three-year
``rollover'' provisions, no requirement of notice of the expiration
of the contract prior to the automatic three-year renewal, and a
provision for unilateral price increases. The use of the three-year
automatic rollover provision in the contracts of the Sacramento
Controlling Companies has made it nearly impossible for new waste
hauling companies to enter the marketplace, since virtually every
customer is locked into a contract with the Sacramento Controlling
Companies. We can provide written verification that the following
tactics have allegedly been employed by Sacramento Controlling
Companies when other companies have attempted to enter into service
contracts with customers who had a presently existing rollover
contract with the Sacramento Controlling Companies:
(1) Allegedly slandering the new hauler as to capacity, service,
quality of equipment and adequacy of insurance; (2) Keeping service
in place by the predominant hauler after notice was given by the
customer to remove the bins; \1\ (3) Sending invoices to customers
after cancellation of service; (4) Sending accounts to collection
agencies and threatening legal recourse and liquidated damages under
the rollover contracts, thereby chilling the resolve of customers to
use new waste haulers; (5) Repeatedly calling and harassing
customers who terminated their contracts, even though the customers
continually requested that they cease calling; and (6) Reducing
their services to below cost after a new waste hauler has submitted
an offer for services.
---------------------------------------------------------------------------
\1\ This occurs even when the rollover contracts have been
cancelled according to the terms of the contract.
---------------------------------------------------------------------------
When a customer requests a change in service, he or she is sent
a seemingly benign letter or revised agreement which contains the
same egregious terms stated above. Customers have repeatedly
informed my client that they were not aware they were signing
contracts which bound them to automatic three-year rollovers and
unilateral price increases.
Suggestions for Enforcement Policies
We suggest the following policies be imposed on the proposed
merged companies:
1. The same injunction and restraints that are set forth
commencing at page four of the enclosed judgment in the Justice
Complaint against WMI.
2. That enforceability of any contract that is beyond a two-year
period and that previously contained a three-year rollover period be
eliminated.
3. That options for three-year contracts be eliminated unless a
separate document in highlighted bold print plainly states the
three-year term, and the customer separately initials the yearly
term.
4. That rollover contracts beyond one year be eliminated. The
contracts should become month-to-month after the expiration of the
written term.
5. That a selloff of routes in the front loader business be
required to reduce the concentration to below fifty percent in the
Sacramento marketplace.
6. That ownership of landfills by waste haulers be prohibited in
the marketplace where there is greater than fifty percent domination
and no municipal alternative dump location.
My client indicates that there are several other independent
waster hauling companies in Sacramento who share my client's
concerns as set forth in this letter, and I can
[[Page 53721]]
supply you with those names if you so desire. We are attempting to
determine through your office the effect of the previous consent
decrees.
We appreciate your attention to this matter. If you have any
questions please do not hesitate to contact the undersigned.
Kirk S. Rimmer,
Attorney for Coastal Waste and Recycling.
Note: Attachment to the letter from Arthur M. Traugh of the
Pacific Stables Building was unable to be published in the Federal
Register. A copy can be obtained from the U.S. Department of
Justice, Documents Office, 325 7th St., Room 215, Washington, DC or
(202) 514-2481.
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
U.S. Department of Justice Antitrust Division
August 27, 1999.
Mr. William A. Ehrman,
Executive Director, York County Solid Waste and, Refuse Authority,
2700 Blackridge Road, York, PA 17402.
Re: Comment on Proposed Final Judgment in United States, State of
Ohio, et al. v. USA Waste Services, Inc., Waste Management, Inc., et
al., Civil No. 98-1616 (N.D. Ohio, filed July 16, 1998)
Dear Mr. Ehrman: This letter responds to your letter, submitted
on behalf of the York County Solid Waste and Refuse Authority
(``Solid Waste Authority''), commenting on the proposed Final
Judgment pending in federal district court in Cleveland, Ohio. The
Complaint in the case charged, among other things, that USA Waste's
acquisition of Waste Management would substantially lessen
competition in the disposal of municipal solid waste from the New
York, NY and Philadelphia, PA areas. The proposed Judgment would
settle the case with respect to these markets by, inter alia,
requiring that the defendants divest Waste Management's Modern
Landfill, a large facility located in York County, Pennsylvania. See
Judgment, Secs. II(C)(1)(k) and IV(A). In a transaction approved by
the United States in August 1998, under the terms of the decree, the
defendants divested Modern Landfill to Republic Services, Inc.,
which prior to the sale did not operate any waste disposal
facilities in the Philadelphia or New York areas.
In your letter, you expressed concern that the defendants'
divestiture of Modern Landfill may interfere with defendant Waste
Management's contractual commitment to deliver waste to the Solid
Waste Authority's incinerator and dispose of noncombustible material
and ash from the incinerator. You also question whether the
defendants' divestiture of this landfill would promote competition
in the Philadelphia market.
The proposed Judgment does not in any way affect the defendants'
commitment to deliver waste to the Solid Waste Authority. Nor does
it affect in any way their commitment to dispose of material at
Modern Landfill. Under the terms of the proposed Judgment, Waste
Management must divest Modern Landfill subject to any contractual
commitments it has with the Solid Waste Authority to accept
noncombustible material or ash for disposal. See Judgment,
Secs. II(C) and (C)(1)(k), and IV(A) (defining landfill-related
contracts and accounts as among the intangible assets that must be
divested along with Modern Landfill).
As to your concern that divesting Modern Landfill is unnecessary
to alleviate any competitive problems created by the proposed
merger, it suffices to say that Modern would be one of only a
handful of landfills capable of accepting municipal solid waste from
the Philadelphia or New York City area that is not currently owned
or controlled by the defendants. Divesting Modern Landfill to a
capable new competitor such as Republic will surely enhance
competition for the disposal of waste from both of these major
metropolitan areas.
Thank you for bringing your concerns to our attention; we hoe
this information will help alleviate them. Pursuant to the Antitrust
Procedure and Penalties Act, 15 U.S.C. 16(b), a copy of your comment
and this response will be published in the Federal Register and
filed with the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
York County Solid Waste and Refuse Authority
July 24, 1998.
J. Robert Kramer II, Esq.,
Chief, Litigation II Section, Antitrust Division, U.S. Department of
Justice, 140 H Street, NW, Suite 3000, Washington, D.C. 20008.
Re: USA Waste Acquisition of Waste Management Inc.
Dear Mr. Kramer: On behalf of the York County Solid Waste and
Refuse Authority (``Authority''), the following is submitted in
response to the solicitation for written comments concerning the
proposed acquisition of Waste Management Inc. by USA Waste Services
Inc., as reflected in the press release issued by the Pennsylvania
Office of Attorney General on July 16, 1998. As set forth in said
release, Waste Management's Modern Landfill, located in York County,
Pennsylvania, is to be sold pursuant to a proposed settlement
presented to the U.S. District Court for the Northern District of
Ohio in conjunction with a lawsuit filed by the Department of
Justice and various state attorneys general in connection with the
proposed acquisition.
The Authority is a public entity, created under Commonwealth
law, which is responsible for the management of municipal solid
waste generated within the County pursuant to the County-wide Solid
Waste Management Plan, adopted in accordance with Commonwealth law.
In such capacity, the Authority has issued bonds for the
construction of solid waste management facilities, and has entered
into long-term management and disposal services agreements in
furtherance of its responsibilities under the Plan. Among those
agreements, the Authority is party to an agreement executed by Waste
Management of Pennsylvania Inc. and Modern Trash Removal of York,
Inc. This agreement was originally executed in 1990, and
subsequently amended in 1995, and provides for the delivery of waste
to the Authority's Resource Recovery Center and for the disposal of
noncombustible material and ash residue material at the Modern
Landfill until the year 2010 and through mutual agreement, until
2020. The disposal services contemplated by the agreement are
essential to the implementation of the Plan, which provides for
long-term assurance of solid waste management for the citizens of
York County.
The Authority is, by submittal of these written comments,
requesting that the following major concerns be taken into account
by the Department of Justice and the District Court when considering
the proposed settlement as described in the public release discussed
above:
1. The Authority is concerned that divestiture of Modern
Landfill under the terms of the proposed settlement could adversely
impact the ability of Waste Management and Modern Trash Removal of
York to continue waste deliveries to the Resource Recovery Center
and disposal services at the Modern Landfill under the Authority's
existing agreement with those companies;
2. The Authority questions whether divestiture of the Modern
Landfill would enhance competition in the Philadelphia area, which
is more than ninety miles to the east of the Modern Landfill.
Thanking you in advance for your careful consideration of the
comments raised herein, I remain.
Very truly yours,
William A. Ehrman,
Executive Director.
WAE/mc
cc: The Honorable Michael Fisher, Attorney General, Waste Management
of PA, Inc., Modern Trash Removal of York, Inc.
Exhibit 12
U.S. Department of Justice Antitrust Division
August 27, 1999.
Mr. Gregory G. Strott,
President, Calvert Trash Systems, Inc., P.O. Box 9, Owings, Maryland
20736-0009.
Re: Comment on Proposed Final Judgment in United States, State of
Ohio, et al. v. USA Waste Services, Inc., Waste Management, Inc., et
al., Civil No. 98-1616 (N.D. Ohio, filed July 16, 1998)
Dear Mr. Strott: This letter responds to your two letters
commenting on the proposed Final Judgment, currently pending in
federal district court in Cleveland, Ohio. The Complaint in this
case charged, among other things, that USA Waste's acquisition of
Waste Management would substantially lessen competition in the
disposal of commercial waste from the Baltimore, Maryland area. The
proposed Judgment would settle the case by, inter alia, requiring
that the defendants divest disposal capacity at three Baltimore area
transfer stations owned by USA Waste and Waste Management. In a
transaction approved by the United States in early January 1999,
under the terms of the decree, the defendants divested that disposal
capacity to Browning-Ferris Industries, Inc. (``BFT''), which
previously did not own or
[[Page 53722]]
operate any waste transfer stations in the greater Baltimore area.
In your letters, you expressed concern that the proposed
Judgment did not eliminate the effects of USA Waste's acquisition of
Waste Management in several markets that were not alleged in the
governments' Complaint. Specifically, you charged that the
defendants should be: (a) enjoined from entering into any small
container commercial waste hauling agreements that exceed a year
with Baltimore area customers; (b) required to divest their small
container commercial waste hauling operations in southern Maryland;
(c) enjoined from raising their waste disposal prices, presumably at
any of their Maryland facilities; and finally, (d) required to
provide their competitors access to a transfer station on the
Eastern Shore of Maryland on the same terms on conditions as the
defendants enjoy at that facility.
The United States strongly believes that the ordered divestiture
of Baltimore area disposal capacity and other injunctive relief
contained in the proposed Judgment [see Secs. II(C)(2)(b) IV(A),
VII(A)] will alleviate the competitive concerns alleged in the
Complaint by introducing a major new competitor into the waste
disposal market, capable of providing a competitive alternative to
the defendants' own Baltimore area waste disposal facilities.
As to your statement that additional injunctive relief is
necessary to eliminate competitive problems the merger would create
in Baltimore, and the southern and Eastern Shore areas of Maryland,
we note that at the time of the governments' Complaint, we had seen
no evidence that the defendants' merger would raise competitive
problems warranting the imposition of the relief that you propose.
Of course, should we find in a subsequent investigation that the
defendants' activities have unreasonably restrained competition in
these or any other waste collection or disposal markets, the United
States will take appropriate legal action, including requesting that
a court impose injunctive relief. Depending on the nature of the
violation, that relief may perhaps be similar to that you outlined
in your comments on this proposed Judgment. In the meantime, if you
believe that your operations have been injured as a result of the
proposed merger, you are certainly free to institute a private
antitrust action for damages or injunctive relief in federal
district court.
Thank you for bringing your concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16(d), a copy of your
comment and this response will be published in the Federal Register
and filed with the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
Calvert Trash--Systems Inc.
July 28, 1998.
John R. Tennis,
Assistant Attorney General, State of Maryland, Office of the
Attorney General, Antitrust Division, 200 Saint Paul Place,
Baltimore, Maryland 21202-2021.
Re: USA Waste Acquisition of Waste Management
Dear Mr. Tennis: After reading the Final Judgement etc. I find
several things missing:
1. One Year Service Agreements--Why would you include this
provision in BFI/Attwoods merger but not in USA/Waste Management?
2. Southern Maryland Divestiture--With the merger USA/Waste
Management controls approximately 85% of the customer base. Why is
this not part of the Final Judgement?
3. Eastern Shore of Maryland--Waste Management has a possible
preferred deal with Maryland Environment Service for a transfer
facility at the Tri-County Landfill in Easton. All haulers in this
area should have the same ``preferred Deal''.
Please provide answers to my questions, better yet change the
Final Judgement to include One Year Contracts, Southern Maryland
Divestiture and equal disposal rates on Maryland Eastern Shore.
I eagerly await your reply.
Sincerely yours, Calvert Trash Systems, Inc.
Gregory G. Strott,
President.
GGS/jw
cc: Anthony E. Harris Esquire, U.S. Department of Justice, Antitrust
Division, Litigation II Section, Suite 3000, Washington, DC 20005
Calvert Trash Systems
September 15, 1998.
Robert Kramer II,
Chief, Litigation II Section, Antitrust Division, United States
Dept. of Justice, 1401 4th Street, N.W., Washington, D.C. 20530.
Dear Mr. Kramer: The USA/Waste Management merger reminds me of a
song. Is That All There Is?
Is that all the Justice Department is going to do? The
department has really dropped the ball on this deal. My company is
facing disposal fee increase of 14% at Waste Management controlled
facility effective October 1, 1998. Waste Management is also
increasing the rates to their customers by 8%.
Please review your decision and include:
1. One year service agreements.
2. A limit on disposal fee increases.
3. Greater than 50% market share--divest asset. (Southern
Maryland, Eastern Shore Maryland)
Please review and comment.
Sincerely,
P.S. I am waiting for a reply to the first letter I sent to you.
(Copy enclosed.)
Gregory C. Strott,
President, Calvert Trash Systems, Inc.
GGS:jw
cc: John Tennis, Assistant Attorney General, State of Maryland,
Office of Attorney General, Antitrust Division, 200 St. Paul Place,
Baltimore, Maryland 21202-2021
Anthony E. Harris, Esquire, U.S. Department of Justice, Antitrust
Division, Litigation II Section, Suite 3000, Washington, DC 20005
Exhibit 13
U.S. Department of Justice Antitrust Division
August 27, 1999.
Mr. Darry A. Ferguson,
Director, La Plata Recycling Center and Depository, 357 North
Mountain View Drive, P.O. Box 1430, Bayfield, Colorado 81122.
Re: Comment on Proposed Final Judgment in United States, State of
Ohio, et al. v. USA Waste Services, Inc., Waste Management, Inc., et
al., Civil No. 98-1616 (N.D. Ohio, Filed July 16, 1998).
Dear Mr. Ferguson: This letter responds to your letter
commenting on the proposed Final Judgment currently pending in
federal district court in Cleveland, Ohio. The Compliant in the case
charged, among other things, that USA Waste's acquisition of Waste
Management would substantially lessen competition in the collection
or disposal of municipal solid waste in many markets throughout the
country. The Complaint alleges that in Colorado, the proposed merger
would substantially lessen competition in collection and disposal of
commercial waste in the Denver area. The proposed Judgment would
settle the case by, inter alia, requiring that the defendants divest
commercial waste collection operations and landfill disposal
operations in the Denver area. See Judgment, Secs. II (C)(1)(c) and
(D)(5), and IV(A). In a transaction approved by the United States in
August 1998, under the terms of the decree, the defendants divested
the Denver area collection and disposal assets to Republic Services,
Inc., which prior to the sale did not operate any waste collection
or disposal facilities in that market.
In your letter, you expressed concern that the United States
have alleged a competitive problem in, and obtained relief that
would alleviate the competitive effects of, the combination of the
defendant's commercial and residential waste collection operations
in the Bayfield, CO area, a small region of Colorado approximately
150 miles southwest of the Denver metropolitan area.
The United States strongly believes that the ordered divestiture
of defendants' Denver area collection and disposal operations will
alleviate the competitive concerns alleged in the government's
Complaint by introducing a new competitor, Republic, that should
provide a significant competitive alternative to defendants' waste
collection and disposal services in the Denver market.
As to your statement that additional injunctive relief is
necessary to eliminate competitive problems the merger would create
in the Bayfield, CO area, we note that at the time of the
governments' Complaint, we had seen no evidence that the defendants'
merger would create competitive problems warranting the imposition
of the relief that you propose. Of course, should we find in a
subsequent investigation that the defendants' activities have
unreasonably restrained competition in the Bayfield, CO market or
any other waste collection or disposal market, the United States
will take appropriate legal action, including requesting that a
court impose injunctive relief. Depending on the nature of the
violation, that relief may perhaps be similar to that which
[[Page 53723]]
you have outlined in your comment on this decree. In the meantime,
if you believe that your operations have been injured as a result of
the proposed merger, you are certainly free to institute a private
antitrust action for damages or injunctive relief in federal
district court.
Thank you for bringing you concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16(d), a copy of your
comment and this response will be published in the Federal Register
and filed with the Court.
Sincerely yours.
J. Robert Kramer II,
Chief, Litigation II Section.
Plata Recycling Center and Depository
June 26, 1998.
Mr. Fred H. Parmenter, Esq.,
U.S. Department of Justice, Anti-Trust Division, City Center
Building, 1401 H. St, NW., Washington, DC 20530.
Re: Retail Waste Monopoly, Waste Management & USA Waste Services,
Inc Merger, La Plata, Montezuma, and Archuleta, Counties, Colorado
Dear Mr. Parmenter: We are writing you this letter to acquaint
you with the local effect of the pending merger between Waste
Management and USA Waste Services, Inc., the $20 billion merger
between the number 1 and number 4 waste companies in the U.S.
Locally these companies compete under the names of Waste Management
and Baker Sanitation. Prior to this merger the two companies have
competed against each other in the commercial and residential waste
collection markets in our local region.
The LaPlata Recycling Center and Depository is a privately-owned
landfill, recently permitted and constructed under the Subtitle D
requirements of the Resource Conservation Recovery Act. It was
opened in July, 1997 and provided the opportunity for retail waste
collection competition to southwest Colorado. Since opening, our
biggest customer has been Baker Sanitation, a subsidiary of USA
Waste Services, Inc. It should be noted that Waste Management has
not used our landfill even though their landfill is located some 40
miles further south in New Mexico. As a competitor landfill to Waste
Management, Waste Management has elected to burden the consumer with
higher prices rather that use our disposal facility, which meets the
same regulatory stringency as their landfill located some 40 miles
away. Some of these higher prices were mitigated by the competition
created by Baker Sanitation, using our landfill as a disposal site.
Over the last year, the results of their competition can be seen
across the area by a lowering of consumer costs from 20% to 40% for
each category of customer. Examples of the lowering of prices from
competition between the two companies are as follows:
Fort Lewis College had their annual waste cost for 1998
reduced by some 42% (from $68,000 to $39,500) when USA Waste
competitive bidding brought an alternative to the college for Waste
Management.
The town of Bayfield, Colorado had the residential
collection cost for 1998 and future years reduced from $11.80 per
month to $8.90 per month (25% reduction in price) when competitive
bidders to Waste Management came to the area.
The average rural residential consumer had their price
brought down 18%, from $19.25 per month to an average of $16.00 per
month, when the two companies bid for the business.
Now that these two industry giants are merging, the citizens of
the southwest Colorado counties will have no competitive
alternatives and they will again face unregulated price gouging from
the combined entity.
With this letter we are seeking your intervention to have one of
the companies divest their retail operations in the above counties
to maintain the competitive nature of waste collection. As you know,
the merger is proposed to be closed in the next few weeks, so your
attention in the near-term would be greatly appreciated.
Additionally, I will be most happy to visit with you or your
staff concerning this very important issue and the details of our
local needs. I hope your schedule will permit your attention to this
matter, for it is the average resident and each commercial business
who will suffer from the price abuse from the monopoly created by
this merger.
Thank you for the opportunity to discuss this matter with you.
Sincerely,
Darry A. Ferguson,
Director.
Exhibit 14
U.S. Department of Justice Antitrust Division
August 27, 1999.
Mr. Conrad S. Magnuson,
261 Route 125, Kingston, NH 03848.
Re: Comment on Proposed Final Judgment in United States, State of
Ohio, et al., v. USA Waste Services, Inc., Waste Management, Inc.,
et al., Civil No. 98-1616 (N.D. Ohio filed July 16, 1998)
Dear Mr. Magnuson: Thank you for your letter commenting on the
proposed Final Judgment submitted for entry in the above case. Your
letter indicates that you are a caretaker for a city landfill in
Kingston, NH, and that Waste Management, Inc. recently acquired two
local haulers, SDW and Astro, who account for much of the volume of
waste delivered to the city landfill. Waste Management, however, has
assured you that its acquisitions will not affect the amount of
waste it delivers to the Kingston landfill since the company's own
landfill in Rochester, NH, is full. (You have promised to let us
know whether Waste Management later reneges on this commitment.)
In deciding whether entry of the proposed Final Judgment would
be in the public interest, the Court's principal task is to
determine whether the relief contained in the proposed decree
adequately addresses the competitive concerns alleged in the
governments' Complaint. By this standard, we find it very difficult
to see how your private contractual dispute with the defendants
bears on the competitive merits of the proposed Judgment. The
governments' Complaint does not allege that the proposed merger
would create any competitive problems in the Manchester, NH area,
nor does the proposed Judgment contain any relief concerning the
Manchester area. If you believe that the merger would create
significant competitive problems in that area, then you are free to
file a private action against the proposed merger.
Thank you for bringing your concerns to our attention. Pursuant
to the Antitrust Procedures and Penalties Act, 15 U.S.C. Sec. 16(d),
a copy of your comment and this response will be published in the
Federal Register and filed with the decree court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
Note: Letter dated October 14, 1998 from Conrad L. Magnusson was
not able to be published in the Federal Register. A copy can be
obtained from the U.S. Department of Justice, Documents office, 325
7th St., Room 215, Washington, DC or (202) 514-2481.
Exhibit 15
U.S. Department of Justice, Antitrust Division
August 27, 1999.
Daniel J. Roth, Esquire,
Kommers & Roth,
Bridger Professional Center,
517 South 22nd Avenue, Suite 5,
Bozeman, Montana 50718-6842.
Re: Comment on Proposed Final Judgment in United States, State of
Ohio, et al. v. USA Waste Services, Inc., Waste Management, Inc., et
al., Civil No. 98-1616 (N.D. Ohio, filed July 16, 1998)
Dear Mr. Roth: Thank you for your letter commenting on the
proposed Final Judgment submitted for entry in the above case. Your
submission largely consists of copies of a complaint and other
pleadings filed by your client, Three Rivers Disposal Co., in a
lawsuit against defendants USA Waste Services, Inc. and Waste
Management, Inc. in Montana state court. In that suit, Three Rivers
contends that USA Waste's acquisition of Waste Management would
violate Waste Management's agreement not to compete with Three
Rivers in hauling waste in the Bozeman, Montana area.
In deciding whether entry of the Final Judgment would be in the
public interest, the Court's principal task is to determine whether
the relief contained in the proposed decree adequately addresses the
competitive problems that the United States has alleged in its
Complaint. By this standard, it is difficult to see how Three Rivers
Disposal's private contractual dispute bears on the competitive
merits of the proposed Final Judgment in this case. The Complaint in
the case does not allege that the defendants' proposed merger would
create a competitive problem in the Bozeman area, and for that
reason, the proposed Judgment contains no relief relating to the
Bozeman market. Of course, if you believe that the merger would
create significant competitive problems in that area, then you are
free to file a private action against the defendants' proposed
merger, as it appears you have, in fact, done.
Thank you for bringing your concerns to our attention. Pursuant
to the Antitrust
[[Page 53724]]
Procedures and Penalties Act, 15 U.S.C. 16(d), a copy of your
comment and this response will be published in the Federal Register
and filed with the decree court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
Kommers & Roth
September 9, 1998.
Anthony E. Harris,
U.S. Department of Justice,
Antitrust Division--Litigation II Section,
Suite 3000,
Washington, DC 20005.
Re: Three Rivers Disposal, Inc. v. Waste Management, Inc., et al.
Eighteenth Judicial District Court--Gallatin County, Montana Cause
No: DV 98-266
Dear Mr. Harris: Enclosed for your information, and as a comment
to the proposed acquisition of Waste Management, Inc. by USA Waste
Services, Inc., referencing that proposed Consent Decree entered in
the United States District Court, Northern District of Ohio, Eastern
Division, captioned United States of America, et al v. USA Waste
Services, Inc.; Dome Merger Subsidiary; and Waste Management, Inc.,
Cause No: 1:98CV-1616, please find the following pleadings filed in
the Montana Eighteenth Judicial District Court, Gallatin County,
Cause No: DV 98-266:
1. Summons;
2. Verified complaint;
3. Motion For Preliminary Injunction;
4. Brief In Support Of Motion For Preliminary Injunction;
5. Order To Show Cause.
This matter is scheduled for hearing on October 2, 1998, before
the Honorable Mike Salvagni, State of Montana, Eighteenth Judicial
District Court Judge, upon plaintiffs application to enjoin the
waste hauling activities of USA Waste Services, Inc.,
d/b/a Customized Services of Bozeman, Montana and Waste Management,
all of which are alleged to be in violation of a non-competition
agreement contained within that certain asset purchase agreement
attached to plaintiffs' Verified Complaint.
Should you wish to discuss any of this, please do not hesitate
to contact the undersigned.
Sincerely yours,
Daniel J. Roth.
DJR/rss
Enclosures
cc: Jerrold E. Arbini
Montana Eighteenth Judicial District Court, Gallatin County
[Cause No. DV 98-266]
Three Rivers Disposal, Inc., a Montana corporation and Jerrold
E. Arbini, Individually, Plaintiffs, v. Waste Management Partners,
Inc., a Delaware corporation, Waste Management Partners of Bozeman,
Ltd., an Illinois Limited partnership, a/k/a JVCo., Waste Management
of Colorado Inc., a Colorado corporation; U.S.A. Waste Services,
Inc., d/b/a Customized Services of Bozeman, Montana, Harry Ellis,
and WMX Technologies, Inc., a/k/a Waste Management, Inc.,
Defendants.
Order To Show Cause
Pursuant to Motion for Preliminary Injunction of Plaintiffs and
good cause appearing, it is hereby ordered:
That the parties shall appear before this Court on the 2nd day of
October 1998, at 9:30*a.m. at which time Defendants must show cause, if
any they have, why the injunctive relief sought by Plaintiffs should
not be granted.
Dated this 4th day of September, 1998.
Hon. Mike Salvagni,
District Judge.
*Case #2 on the Court's calendar.
Lorraine Van Ausdol,
Clerk of District Court in and for Gallatin County, State of Montana.
By:
Kim Bladeau,
Deputy.
James M. Kommers
Daniel J. Roth
Ralph W. Steele,
Kommers & Roth, Bridger Professional Center, 517 So. 22nd Avenue,
Suite 5, Bozeman, MT 59718, (406) 587-7717
Attorneys for Plaintiffs
Montana Eighteenth Judicial District Court, Gallatin County
[Cause No: DV98-266]
Three Rivers Disposal, Inc., a Montana corporation and Jerrold
E. Arbini, Individually, Plaintiffs, v. Waste Management Partners,
Inc., a Delaware corporation, Waste Management Partners of Bozeman,
Ltd., an Illinois Limited Partnership, a/k/a JVCo., Waste Management
of Colorado, Inc., a Colorado corporation; U.S.A. Waste Services,
Inc., d/b/a Customized Services of Bozeman, Montana, Harry Ellis,
and WMX Technologies, Inc., a/k/a Waste Management, Inc.,
Defendants.
Summons
The State of Montana Sends Greetings to the Above-Named
Defendant:
U.S.A. Waste Services, Inc., d/b/a Customized Services of Bozeman,
Montana
You are hereby summoned to answer the Complaint in this action,
which is filed in the office of the Clerk of Court, a copy of which
is herewith served upon you, and to file your answer and serve a
copy thereof upon the Plaintiffs' attorney within twenty days after
the service of this Summons, exclusive of the day of service; in
case of your failure to appear or answer, judgment will be taken
against you by default for the relief demanded in the Complaint.
Witness my hand and the seal of said Court this 24th day of
August 1998.
Lorraine Van Ausdol,
Clerk of Court.
By: Mary Ann Hostetler,
Deputy Clerk.
James M. Kommers
Daniel J. Roth
Ralph W. Steele,
Kommers & Roth, Bridger Professional Center, 517 So. 22nd Avenue,
Suite 5, Bozeman, MT 59718, (406) 587-7717
Attorneys for Plaintiffs
Montana Eighteenth Judicial District Court, Gallatin County
[Cause No. DV98-266]
Three Rivers Disposal, Inc., a Montana corporation and Jerrold
E. Arbini, Individually, Plaintiffs, v. Waste Management Partners,
Inc., a Delaware corporation, Waste, Management Partners of Bozeman,
Ltd., an Illinois Limited Partnership, a/k/a JVCo., Waste Management
of Colorado, Inc., a Colorado corporation; U.S.A. Waste Services,
Inc., d/b/a Customized Services of Bozeman, Montana, Harry Ellis,
and WMX Technologies, Inc. a/k/a Waste Management, Inc., Defendants.
The State of Montana Sends Greetings to the Above-Named
Defendant:
WMX Technologies, Inc., a/k/a Waste Management, Inc.
You are hereby summoned to answer the Complaint in this action,
which is filed in the office of the Clerk of Court, a copy of which
is herewith served upon you, and to file your answer and serve a
copy thereof upon the Plaintiffs' attorney within twenty days after
the service of this Summons, exclusive of the day of service; in
case of your failure to appear or answer, judgment will be taken
against you by default for the relief demanded in the Complaint.
WITNESS my hand and the seal of said Court this 24th day of
August, 1998.
Lorraine Van Ausdol,
Clerk of Court.
By:
Mary Ann Hostetler,
Deputy Clerk.
James M. Kommers
Daniel J. Roth
Ralph W. Steele,
Kommers & Roth, Bridger Professional Center, 517 South 22nd Avenue,
Suite 5, Bozeman, MT 59718, (406) 587-7717
Attorneys for Plaintiffs
Montana Eighteenth Judicial District Court, Gallatin County
[Cause No. DV98-266]
Three Rivers Disposal, Inc., a Montana corporation and Jerrold
E. Arbini, individually, Plaintiffs, v. Waste Management Partners,
Inc., a Delaware corporation, Waste Management Partners of Bozeman,
Ltd., an Illinois Limited Partnership, a/k/a JVCo., Waste Management
[[Page 53725]]
of Colorado, Inc., a Colorado corporation; U.S.A. Waste Service,
Inc., d/b/a Customized Services of Bozeman, Montana, Harry Ellis,
and WMX Technologies, Inc., a/k/a Waste Management, Inc.,
Defendants.
Verified Complaint
The Plaintiffs, hereinafter for convenience may be collectively
referred to as ``Three Rivers'', for their claim against the
Defendants, states:
1. Three Rivers Disposal, Inc., is a Montana corporation with its
principal place of business in Bozeman, Montana. Jerrold E. Arbini is a
sole shareholder of Three Rivers Disposal, Inc. and is a resident of
Bozeman, Gallatin County, Montana. Three Rivers Disposal is a common
carrier holding a certificate from the Montana Public Service
Commission to provide waste collection within Montana.
Count I of this action is brought to enforce the terms of a written
contract between Three Rivers and the Defendants, that contains a
covenant not to compete in Section 6.7 which is to be performed in
Gallatin, Madison and other counties within Montana. This is the
operating area within which Three Rivers obtains almost all of its
revenues.
Count II of this action claims damages by Three Rivers against
defendants for violation of the Montana Unfair Trade Practices and
Consumer Protection Act of 1973, which may for convenience be referred
to as ``UTPA''.
Count III of this action alleges actions by defendants constituting
international interference with contractual relations.
Count I
2. On or about March 1, 1996, Waste Management of Colorado, Inc., a
Colorado corporation; Waste Management Partners, Inc., a Delaware
corporation; Waste Management Partners of Bozeman, Ltd., an Illinois
Limited Partnership therein referred to as ``JVCo.'', or as sellers,
and Three Rivers Disposal, Inc., a Montana corporation and Jerrold E.
Arbini, purchasers, entered into a buy-back transaction in the form of
an Asset Purchase Agreement through which Three Rivers re-acquired from
the sellers all their right, title, and interest in its refuse
collection business as well as equipment and other assets. The sellers
themselves, as well as acting on behalf of WMX Technologies, Inc., a/k/
a Waste Management, Inc., covenanted they would not have any interest,
direct or indirect, in any business in competition with Three Rivers
Disposal, Inc. WMX Technologies, Inc., a/k/a Waste Management, Inc., is
a necessary party to this action because of the contractual obligations
imposed by its agents or representatives. Additionally, Waste
Management, Inc. owns or controls all of the other defendant
corporations which were signatories to the Asset Purchase Agreement.
Even though Waste Management, Inc. was not a signatory to the Asset
Purchase Agreement, because of its corporate relationship to the
sellers, it is bound by the provisions of the restrictive covenant.
3. Waste Management of Colorado, Inc., Waste Management Partners,
Inc., and Waste Management Partners of Bozeman, Ltd., contracted as
parties to the agreement, neither they nor WMX Technologies, Inc., or
any successors in interest would engage in any business, directly or
indirectly, in competition with Three Rivers in Gallatin County,
Madison County, Park County, Broadwater County and Sweetgrass County,
Montana.
The Asset Purchase Agreement dated March 1, 1996, is attached
hereto as Exhibit ``A'' and incorporated herein by reference.
4. The covenant not to compete specially provides in part:
In the event of a breach of any covenant contained in this
Section 6.7, Three Rivers shall be entitled to an injunction
restraining such breach in addition to any other remedies provided
by law or equity.
Prior to July 16, 1998, U.S.A. Waste Services, Inc. acquired
Customized Services, a business already in direct competition with
Three Rivers.
5. On or about July 16, 1998, U.S.A. Waste Services, Inc., acquired
WMX Technologies, Inc., a/k/a Waste Management, Inc. as well as all of
the sellers' interest in the March 1, 1996 Asset Purchase Agreement,
these sellers being Waste Management Partners, Inc., a Delaware
corporation, Waste Management Partners of Bozeman, Ltd., an Illinois
Limited Partnership, a/k/a JV Co., Waste Management of Colorado, Inc.,
a Colorado corporation, and are now bound by its terms.
6. Defendants, as successors in interest, are now in violation of
the terms of the Asset Purchase Agreement because Customized Services
is in direct competition with Plaintiffs within almost the entire
operating area served by the Plaintiffs' refuse collection business.
U.S.A. Waste Services, Inc. and Defendants operate their business in
competition with Plaintiffs pursuant to a certificate issued by the
Montana Public Service Commission which overlaps and duplicates almost
all of the operating rights set forth in the Plaintiffs' certificate of
public convenience and necessity.
7. Three Rivers tendered written demand to Defendants to cease and
desist any and all competition in violation of Section 6.7 of the Asset
Purchase Agreement by letter dated July 28, 1998.
8. The full nature and extent of Plaintiffs' damages associated
with the Defendants' breach of the contract cannot be ascertained.
Pecuniary compensation would not afford adequate relief because the
Defendants have and will continue to be capable of accessing
confidential and proprietary information such as pricing policies,
customer lists and even the rates charged by Three Rivers, all to the
detriment of Three Rivers. Three Rivers, because of the breach of this
restrictive covenant, will lose their customer base which cannot be
restored, rendering Three Rivers unable to service their debts to
Defendants which results in a double punishment to Three Rivers and
provides a double benefit to Defendants. Plaintiffs have incurred court
costs and attorney fees and other damages for which they are entitled
to indemnification from defendants pursuant to Section 6.2 of the
Agreement well as specific Performance in the form of injunctive relief
pursuant to Section 6.2 of the Agreement as well as Section 6.7 of the
Agreement.
9. Plaintiffs are entitled to an order of specific performance of
the covenant not to compete since both parties anticipated this being
the only equitable remedy when they agreed to injunctive relief in
Section 6.7 in the Asset Purchase Agreement.
Count II
10. Plaintiffs reallege and incorporate by reference all preceding
paragraphs herein.
11. Defendants have violated the Unfair Trade Practices and
Consumer Protection Act, MCA Sec. 30-14-101, et seq. Defendants have
and are now engaged in a wilful, deliberate and intentional course of
conduct which constitutes unfair and discriminatory practices by which
fair and honest competition is destroyed or prevented.
12. The anti-competitive, unfair and discriminatory practices by
defendants include engaging in:
(a) Unfair competition in sales (MCA Sec. 30-14-207), including but
not limited to, submitting and performing exceedingly low bids for
refuse collection services at price levels which are far lower than any
reasonable, competitive price, with the intent to destroy competition
by plaintiffs, a regular established dealer of the same article of
commerce.
(b) Anti-competitive conduct by wrongfully soliciting and taking
over plaintiff's existing customers.
[[Page 53726]]
(c) Price discrimination in violation of Sec. 30-14-901, making it
unlawful for any business to discriminate, directly or indirectly, the
price charged to different purchasers of commodities of like grade and
quality with the affect of substantially lessening, injuring,
destroying or preventing competition with another business.
(d) Purposely and intentionally, with the intent of destroying or
eliminating competition, undercutting pricing and services charged for
refuse collection to purchasers of commodities of like grade and
quality.
13. Some or all of the defendants have engaged in unfair
competition in sales and price discrimination alleged herein because
defendants have possession of and access to confidential and
proprietary information about Three Rivers' collection operation
including Three Rivers' customer base, customer list, rates and pricing
policies.
14. As a result of defendants' violations of the UTPA plaintiffs,
in addition to injunctive relief, are entitled to three (3) times the
amount of actual sustained plus attorney fees and costs provided in MCA
Sec. 30-14-906.
Count III
15. Plaintiffs reallege and incorporate by reference all preceding
allegations contained herein.
16. Defendants and their agents have engaged in a systematic,
intentional course of conduct which has included making false,
misleading and defamatory statements concerning Three River's business
practices and policies to existing customers of Three Rivers in order
to illegally eliminate competition in the relevant service area in
which only the defendants and Three Rivers can service under their
certificates.
17. As a direct and proximate result of defendants' actions,
defendants have caused substantial economic impairment and damage to
Three River in an amount to be determined at trial.
Wherefore, for its claims against Defendants, Plaintiffs demand
judgment as follows:
A. For injunctive relief and specific performance, on an expedited
hearing basis, by preliminary and permanent injunction of this court to
prohibit the Defendants or any of their associated or affiliated
corporations, partnerships, businesses or sole proprietorships from
operating directly or indirectly in violation of the covenant not to
compete within the entire area set forth in Section 6.7 of the
Agreement;
B. For all monetary damages arising from Section 6.7 of the Asset
Purchase Agreement in an amount to be determined;
C. For all monetary damages arising from Section 6.2 for
indemnification for all damages for which Defendants agreed to be
responsible;
D. For all monetary damages arising from the Montana Unfair Trade
Practices and Consumer Protection Act including three (3) times actual
damages plus attorney fees and costs of suit;
E. For all monetary damages arising from defendants interference
with contractual relations in an amount to be determined;
F. For plaintiffs' costs and reasonable attorney fees associated
with prosecuting this action;
G. For such other remedies provided by law or equity contemplated
by the contract terms which may be identified during the course of this
action; and,
H. For such other and further relief deemed just and proper by the
Court.
Dated this 24th day of August, 1998.
Kommers & Roth, 517 S. 22nd Ave., Suite 5, Bozeman, MT 59718-6842,
(406) 587-7717
By:
James M. Kommers
Daniel J. Roth
Ralph W. Steele,
Demand for Jury Trial
Plaintiffs demand that all issues of fact be tried by a jury of
twelve.
Kommers & Roth, 517 S. 22nd Ave., Suite 5, Bozeman, MT 59718-6842,
(406) 587-7717
By:
James M. Kommers
Daniel J. Roth
Ralph W. Steele
Verification
State of Montana, County of Gallatin
Jerrold E. Arbini, being first duly sworn upon oath, deposes and
says as follows:
1. That he is the individual Plaintiff and sole shareholder of
Three Rivers Disposal, Inc. herein; and
2. That he has read the foregoing Complaint, and the information
contained therein is true and accurate to the best of his knowledge and
belief.
Jerrold E. Arbini
Subscribed and Sworn to before me this 24th day of August, 1998.
Daniel J. Roth,
Notary Public, State of Montana, Residing at: Bozeman. May commission
expires: 2/27/99.
Asset Purchase Agreement
This Asset Purchase Agreement (the ``Agreement'') is made this
first day of March, 1996, by and among the following persons and
entities.
(a) WASTE MANAGEMENT OF COLORADO, INC., a Colorado corporation,
referred to as ``WMI Colorado'', herein;
(b) WASTE MANAGEMENT PARTNERS, INC., a Delaware corporation
referred to as ``Partners'' herein; and together with WMI Colorado, the
``Sellers'';
(c) WASTE MANAGEMENT PARTNERS OF BOZEMAN, LTD., an Illinois limited
partnership referred to as ``JVCo.'' herein;
(d) THREE RIVERS DISPOSAL, INC., a Montana corporation referred to
as ``Three Rivers'' herein. Three Rivers is the successor to Three
Rivers Disposal, a Montana general partnership;
(e) JERROLD E. ARBINI, the sole shareholder of Three Rivers, who is
referred to as the ``Owner'' herein.
Recitals
A. On April 5, 1984, Waste Management Inc. (``Partners''), Waste
Management Partners of Bozeman, Ltd. (``JVCo.''), Three Rivers Disposal
(``Company'' or ``Operator'') and Jerrold Arbini (along with
individuals Gross and Nicoletti who no longer have any interest in any
asset dealt with herein) entered into an agreement represented by the
following documents: (i) Limited Partnership Agreement dated April 5,
1984, between Three Rivers Disposal and Sellers (the ``Partnership
Agreement''); (ii) Account Purchase Agreement dated April 5, 1984, by
and among Partners, JVCo., Three Rivers Disposal, Owner and Richard A.
Gross and John Nicoletti; (ii) Operating Agreement dated April 5, 1984,
by and among Partners, JVCo., Owner and Richard A. Gross and John
Nicoletti (and amendment thereto); (iv) Services Agreement dated April
5, 1984, between Partners and Three Rivers Disposal; (v) Cross-Purchase
Agreement dated April 5, 1984, and among Three Rivers, Partners, JVCo.,
Owners and Richard A. Gross and John Nicoletti; (vi) an Acquisition
Participation Agreement No. 1; and (vii) a Lease Agreement (by which
the company leased its permits to JVCo.). These agreements, excluding
the Partnership Agreement, are hereinafter collectively referred to as
the ``Other Agreements''.
B. Partners desire to sell, transfer and assign to Three Rivers and
Three Rivers desires to purchase from Partners all of its right, title
and interest in JVCo. WMI Colorado desires to sell, transfer and assign
to Three Rivers and Three Rivers desires to purchase from WMI Colorado
certain equipment. The parties also desire to restructure certain
obligations among themselves and to settle conflicting claims between
themselves.
[[Page 53727]]
Agreements
In consideration of the premises and the mutual representations,
warranties and covenants and subject to the conditions herein
contained, the parties agree as follows:
1. Purchase and Sale: Closing
Section 1.1 A Summary of Payments: The following is a summary of
the payments agreed to be made for the consideration stated, all as
more particularly described in this Part 1.
$1,156,000.00--JVCo. Consideration (See Section 1.2)
$151,344.00--Equipment purchased (See Section 1.3)
$254,153.68--Back lease payments (See Section 1.4)
$75,000.00--Equipment credit (See Section 1.5)
$1,486,497.68--Total consideration from Three Rivers to Sellers
Section 1.2 JVCo. Interest: Partners agrees to and hereby does
sell, transfer, assign and deliver to Three Rivers at the Closing (as
hereinafter defined) free and clear of all liens, claims and
encumbrances, except for the security interest granted to WMI Colorado
pursuant to Section 6.3 hereof, all of its right, title and interest in
and to JVCo., such general partner interest and limited partner
interest being hereinafter collectively referred to as the ``JVCo.
Interest'', and including without limitation the following: its share
of the capital, profits, losses and distributions of JVCo., its
interest in the accounts receivable of JVCo. and any interest in JVCo.
litigation and/or causes of action which are accrued or unaccrued,
filed or as yet unfiled. Pending litigation includes but is not limited
to litigation against Montana Bank of Bozeman/Norwest Bank. Partners
shall execute and deliver at Closing a Transfer and Assignment in the
form set out on Exhibit 1.2 hereto. Three Rivers shall pay to Partners
the sum of $1,156,000.00 in consideration of said transfer.
Section 1.3 Equipment: WMI Colorado agrees and hereby does
(effective at Closing) sell, transfer, assign and deliver to Three
Rivers free and clear of all liens, claims and encumbrances, except for
the security interest granted to WMI Colorado pursuant to Section 6.3
hereof, the trucks and containers referred to as the ``Equipment'' and
described as follows:
1987 White with Heil SL
2960--96 gallon carts
80 300/400 gallon carts
208--64 gallon carts
Three Rivers shall pay as set out herein a purchase price of
$151,344.00 subject to the credit described at section 1.5 herein. WMI
Colorado shall execute and deliver at Closing an Assignment and Bill of
Sale in the form set out in EXHIBIT 1.3 attached hereto. Sellers shall
obtain and deliver to Three Rivers at closing a document which extends
to Three Rivers the warranty provided by the original manufacturer of
the carts to its first purchaser.
Section 1.4 Accrued and Unpaid Lease Payments: As of October 31,
1995, Three Rivers owes to WMI Colorado the sum of $254,153.68,
representing accrued but unpaid payments for the equipment presently
rented to Three Rivers by WMI Colorado. Three Rivers agrees to repay
such amount at the Time of Closing by delivery of a guaranteed
promissory note in the aggregate principal amount of $254,153.68
payable in thirty-six (36) consecutive monthly installments of
principal together with interest computed at an annual rate equal to
6%. WMI Colorado hereby waives any other rental payments due through
February of 1996. Three Rivers shall pay lease payments under the Lease
Agreement in a timely fashion from and after March 1, 1996, and from
March 1, 1996, the 13.6% of gross paid to Sellers under the original
agreement is suspended.
Section 1.5 Credit of $75,000: As partial consideration for the
agreement to lease set out in Section 1.8, WMI Colorado agrees to
accept and Three Rivers shall transfer to WMI Colorado at Closing the
following equipment:
3 Front End Loader Trucks
60 Front End Loader Containers 6 cy and 8 cy
The three FEL Trucks are identified as follows:
----------------------------------------------------------------------------------------------------------------
Size
# Vin Year Model Body (yd) License
----------------------------------------------------------------------------------------------------------------
1. 211......................... 3770 1989 Peterbuilt........ Amrep............. 42 3U63109
2. 76.......................... 6096 1983 White............. Amrep............. 32 648QXJ
3. 77.......................... 8812 1979 International..... Dempster.......... 28 1N29020
----------------------------------------------------------------------------------------------------------------
This equipment shall be free and clear of all liens, claims and
encumbrances and shall have an agreed value of $75,000, which sum is a
credit as indicated in Section 1.1.
$220,000.00--Cash Payment [See 1.6(a)]
$11,000.00--Cash Payment [See 1.6(b)]
$936,000.00--Promissory Note [See 1.6(c)]
$65,344.00--Promissory Note [See 1.6(d)]
$254,153.68--Promissory Note [See 1.6(e)]
$1,486,497.68--Total Consideration
(a) At Closing Three Rivers shall pay to Partners the sum of
$220,000 as partial payment of the JVCo. consideration described in
Section 1.2.
(b) At Closing Three Rivers shall pay to WMI Colorado the sum of
$11,000 partial payment of the Section 1.3 equipment purchase.
(c) At Closing Three Rivers shall deliver to Partners a guaranteed
note in the face amount of $936,000 which note is the balance of the
JVCo. consideration described in Section 1.1 and 1.2. The terms of this
note shall be as follows: (a) Interest shall be 6% per annum; (b)
Payments shall commence on the first day of the month next following
Closing; (c) Payments shall be in an amount which will retire principal
and interest over ten years in 120 equal, monthly payments; (d) Payment
shall be due on the first of each and every month over the ten-year
period; The form of the note shall be as in EXHIBIT 1.6(c) attached
hereto.
(d) At Closing Three Rivers shall deliver to WMI Colorado a
guaranteed note in the face amount of $65,344.00 which note is the
balance of the Section 1.3 equipment purchase consideration ($151,344
less the $11,000 in cash, less the $75,000 credit). The form and terms
of this note shall be as set out on EXHIBIT 1.6(d) which is attached
hereto.
(e) At Closing Three Rivers shall deliver to WMI Colorado a
guaranteed note in the face amount of $254,153.68 which note reflects
the accrued payment consideration described in Section 1.4. The format
and terms of this note shall be as set forth in EXHIBIT 1.6(e) attached
hereto.
Section 1.7 Returned Vehicles: Three Rivers has returned two 1993
White FEL vehicles and a 1992 Ford Service Truck which were subject to
an oral agreement that is now terminated.
Section 1.8 Lease of Vehicles to Three Rivers: At Closing Three
Rivers shall execute a separate lease agreement with respect to two
1993 White side
[[Page 53728]]
load vehicles, which lease shall be effective from and after March 2,
1996. Said lease shall remain in effect for the shorter of the
following periods: (a) Until June 30, 1996, or (b) until replacement
vehicles (Witkie, automated side loader trucks) purchased by Three
Rivers are delivered. Upon termination of the written lease by the
occurrence of one of the stated conditions, Three Rivers shall return
the leased vehicles to WMI Colorado. The monthly rental payment for
said vehicles shall be $3,949 which sum shall be paid as a monthly
lease payment from Three Rivers to WMI Colorado until return of the
vehicles. Where inconsistent, the lease shall control over the terms of
this paragraph.
Section 1.9 This Section Is Deleted.
Section 1.10 Time of Closing: The Closing of the sale of the JVCo.
Interest (the ``Closing'') shall take place on the date all of the
conditions precedent contemplated by Section 1.11 have been satisfied
or waived and the contents of the escrow contemplated thereby have been
released (the ``Time of Closing''); provided that, if the Closing shall
not have taken place on or before May 30, 1996, any party to this
Agreement shall have the right to terminate this Agreement upon 10 days
written notice to the other parties.
Section 1.11 Escrow: Closing Procedure:
(a) This Agreement shall be executed and delivered on or before
March 1, 1996. Within seven days of such execution and delivery, the
parties shall execute and deliver to counsel for the Sellers the
following documents, to be held in escrow pending their release as
contemplated by paragraph (b) below:
(i) The Sellers shall execute and deliver to counsel such bills of
sale and other instruments in such form as is reasonably satisfactory
to Three Rivers and as shall be sufficient to vest in Three Rivers good
and marketable title to the JVCo. Interest and the Equipment, free and
clear of all liens, claims and encumbrances, except as contemplated by
Section 6.3 hereof;
(ii) Three Rivers shall deliver to Sellers' counsel $220,000 in
cash [see 1.6(a)], the guaranteed promissory note [see 1.6(c)] in the
aggregate principal amount of $936,000, an Amendment to the Partnership
Agreement (prepared by Sellers), and such other documents and
agreements as Sellers may reasonably request; and
(iii) Three Rivers shall deliver to Sellers' counsel such bills of
sale, titles and other instruments as are sufficient to vest in WMI
Colorado good and marketable title, free and clear of all liens, claims
and encumbrances, to the Equipment contemplated by Section 1.5, $11,000
in cash as contemplated by Section 1.6(b) and the guaranteed promissory
notes contemplated by Sections 1.6(d) and 1.6(e) in the amounts of
$65,344 and $254,153.68, respectively.
(b) On the date that the State of Montana approves the transfer to
Three Rivers of the permits presently held by JVCo. or issues new
permits in Three Rivers' name sufficient to permit Three Rivers to
service JVCo.'s customers, counsel for Sellers shall deliver to Sellers
and Three Rivers all of the materials held in escrow by such counsel.
It is the intent of the parties that the permits transferred to Three
Rivers shall not be subject to more onerous conditions than attain to
the current permits, and such permits shall be in form and substance
reasonably acceptable to Three Rivers. If the closing shall not have
occurred on or before May 30, 1996, and any party hereto shall have
terminated this Agreement, counsel for Sellers shall return the cash,
promissory notes and other documents to the parties that delivered such
cash, promissory notes and other agreements to such counsel and the
parties shall have no further rights under this Agreement.
Section 1.12 Rights in Underlying Partners Agreements:
The parties hereby agree and acknowledge that Sellers have no
rights of purchase or repurchase under the Partnership Agreement and/or
under the Other Agreements as the same are referenced in the Recitals
hereto and that Sellers shall cooperate with Three Rivers to obtain all
interest (ownership, leasehold or other interest) in permits, licenses
or other rights issued by the State of Montana or any political
subdivision thereof to JVCo. and which permits, licenses or rights
relate to the business of JVCo.
Section 1.13 Permit Transfer Contingency:
The parties acknowledge that the transfer of the JVCo. interest to
Three Rivers as set out herein is without substantial value to Three
Rivers unless the permits presently held by JVCo. are successfully
transferred to Three Rivers. Immediately upon closing or before, JVCo.
shall apply for approval of said transfer, and the parties shall do all
acts required to successfully transfer said permits. If, for any
reason, the permits are not transferred to Three Rivers on or before
May 30, 1996, then this agreement is null and void. Any consideration
exchanged shall in such event be forthwith returned by transferee to
the transferor. The escrow shall in such event immediately return all
cash and documents to the party who deposited same to escrow.
2. Representations and Warranties of the Sellers
Sellers make the following representations, warranties and
covenants:
Section 2.1 Organization, Power and Authority: Partners is a
corporation duly organized and validly existing under the laws of the
State of Delaware and has full corporate power and authority to enter
into this Agreement and to sell, convey, assign, transfer and deliver
the JVCo. Interest to Three Rivers. WMI Colorado is a corporation duly
organized and validly existing under the laws of the State of Colorado
and has full corporate power and authority to enter into this Agreement
and to sell, convey, assign, transfer and deliver the Equipment to
Three Rivers.
Section 2.2 Title: Partners has good and marketable title to the
JVCo. interest, free and clear of all liens, claims or other
encumbrances of any kind or character. WMI Colorado has good and
marketable title to the Equipment, free and clear of all liens, claims
or other encumbrances of any kind of character.
Section 2.3 Due Authorization: Binding Obligation: The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action of each Seller. This Agreement has been duly
executed and delivered by each Seller and is a valid and binding
obligation of each Seller, enforceable in accordance with its terms.
Section 2.4 Obligations as General Partner: Partners has not,
during the existence of JVCo., incurred any material obligation on
behalf of JVCo. of which Three Rivers was not made aware.
3. Representations and Warranties of Three Rivers
Three Rivers makes the following representation and warranties:
Section 3.1 Organization, Power and Authority: Three Rivers is a
corporation duly organized and validly existing under the laws of the
State of Montana and has full corporate power and authority to enter
into this Agreement and perform its obligations hereunder. Three Rivers
is the successor to Three Rivers Disposal, a Montana general
partnership, and has all rights and obligations of such partnership
under the Partnership Agreement and the Other Agreements.
[[Page 53729]]
Section 3.2 Title: Three Rivers has or by Closing will have good
and marketable title to the equipment listed on Section 1.5, free and
clear of all liens, claims or other encumbrances of any kind or
character.
Section 3.3 Due Authorization/Binding Obligation: The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action of Three Rivers. This Agreement has been
duly executed and delivered by Three Rivers and is a valid and binding
obligation of Three Rivers, enforceable in accordance with its terms.
Section 3.4 Obligations as Limited Partner: Sellers have not,
during the existence of JVCo., incurred any material obligation on
behalf of JVCo. of which Three Rivers was not made aware.
4. Conditions to the Obligations of Three Rivers
The obligation of Three Rivers to purchase the JVCo. interest and
the Equipment and to consummate the transactions contemplated hereby
shall be subject tot he fulfillment at or prior to the Time of Closing
of each of the following conditions:
Section 4.1 Certified Resolutions: Each Seller shall have
delivered to Three Rivers copies of resolutions adopted by the board of
directors of the Sellers authorizing the transactions contemplated by
this Agreement, certified in each case as of the Time of Closing by the
Secretary or Assistant Secretary of the Sellers.
Section 4.2 Releae: WASTE MANAGEMENT OF COLORADO, INC., a Colorado
corporation, and WASTE MANAGEMENT PARTNERS, INC., a Delaware
corporation shall have executed and delivered to Owner and to Three
Rivers a General Release in the form set out at Section 5.2
5. Conditions to Obligations of the Sellers
The obligations of the Sellers to sell the JVCo. Interest and the
Equipment and to consummate the transactions contemplated hereby shall
be subject to the fulfillment at or prior to the Time of Closing of
each of the following conditions:
Section 5.1 Certified Resolutions: Three Rivers shall have
delivered to the Sellers copies of resolutions adopted by the board of
directors of Three Rivers authorizing the transactions contemplated by
this Agreement, certified in each case as of the Time of Closing by the
Secretary or Assistant Secretary of Three Rivers.
Section 5.2 Release: Three Rivers, Owner and JVCo. shall have
executed and delivered each to the Sellers a General Release in the
form set out below:
General Release
In consideration of the execution of that certain Asset Purchase
Agreement, executed and delivered to each releasee herein, and for
other good and valuable consideration Sellers release Buyers and
Buyers release Sellers as set out herein.
For the purpose of this release, ``Sellers'' is defined as the
following entities: Waste Management of Colorado, Inc., a Colorado
corporation, and Waste Management Partners, Inc., a Delaware
corporation.
For the purpose of this release, ``Buyer'' is defined as the
following persons and entities: Jerrold Arbini; Three Rivers
Disposal, a Montana corporation and successor to Three Rivers
Disposal, a Montana general partnership; and Waste Management of
Bozeman, an Illinois limited partnership (referred to as JVCo.).
A release by or in favor of a party herein is a release by or in
favor of that party and by or in favor of that party's predecessors
or affiliates, corporations or entities, and its successors,
assigns, heirs, personal representatives, executors, administrators,
attorneys, employees, agents, servants, and shareholders.
Seller by execution of this Release does release, remise, and
forever discharge Buyer from all actions, causes of action, suits,
debt, controversies, bonds, bills, covenants, agreements, damages,
judgment, claims and demands whatsoever, as such may relate to the
relationship of Seller and Buyer prior to the date hereof or to any
of the assets sold or conveyed pursuant to the Asset Purchase
Agreement, or to any rights or obligations under the Partnership
Agreement or any of the Other Agreements (as those terms are defined
in the Asset Purchase Agreement), which Seller now has, ever had or
hereafter may have against the Buyer; provided, however, that this
General Release shall not release any party from its obligations
under or contemplated by the Asset Purchase Agreement or from
documents required by said agreement and exchanged at Closing of
said purchase, including but not limited to Section 1.9 and Section
6.1(c).
Buyer by execution of this Release does release, remise, and
forever discharge Seller from all actions, causes of action, suits,
debt, controversies, bonds, bills, covenants, agreements, damages,
judgments, claims and demands whatsoever, as such may relate to the
relationship of Seller and Buyer prior to the date hereof or to any
of the assets sold or conveyed pursuant to the Asset Purchase
Agreement, or to any rights or obligations under the Partnership
Agreement or any of the Other Agreements (as those terms are defined
in the Asset Purchase Agreement), which Buyer now has, ever had or
hereafter may have against the Seller; provided, however, that this
General Release shall not release any party from its obligations
under or contemplated by the Asset Purchase Agreement or from
documents required by said agreement and exchanged at Closing of
said purchase, including but not limited to Section 1.9 and Section
6.1(c).
The parties exclude from this release the following: any
liability and/or damages which arise out of or which are alleged to
arise out of the transportation and deposit of refuse to landfills
within the areas serviced by Three Rivers Disposal, Inc., during the
course of the underlying agreements. Should any such claim arise,
liability and apportionment thereof (if any) shall be determined by
state and federal law pertaining to liability arising from the
transportation of refuse and by the underlying documents referenced
in the Recitals hereto.
In executing this General Release, each Releasor acknowledges
that he/she/they have relief on their own judgment and that of their
counsel and have in no way relied on or been induced by any
representation, statement, act of omission to act by any Releasee.
Each Releasor acknowledges he has read and understand that this
is a General Release and intend to be legally bound by it.
Witness the execution hereof this General Release as of the
______ day of ________, 1996.
(Signature Blocks to be inserted for each party indicating name of
party, execution ``by'', and the name and title of the person
signing)
6. Additional Agreement of the Parties
Section 6.1 Amendment of Partnership Agreement:
(a) Partners and Three Rivers shall execute and deliver the
Amendment to the Partnership Agreement in the form attached hereto as
EXHIBIT 6.1, removing Partners as general and a limited partner and
admitting Three Rivers as general and a limited partner. Promptly after
the Time of Closing, Partners and Three Rivers shall cause the
Certificate of Amendment to the Certificate of Limited Partnership to
be filed with the Secretary of State of the State of Illinois.
Effective as of March 1, 1996, the rights of Partners to share in the
revenues of JVCo. with respect to solid waste collection,
transportation and disposal services rendered to the Customer Accounts
of JVCo. (the ``Customer Accounts'') shall terminate.
(b) Effective as of the Time of Closing, the Other Agreements and
the relationship of the parties thereunder (except as specifically set
forth in this Agreement) are hereby terminated.
(c) The parties agree that nothing in this Agreement shall affect
or impair the rights or obligations of any party to the Operating
Agreement which were intended by the parties thereto to survive the
termination of such agreement, specifically the rights and obligations
arising under Sections 6.1 and 6.2 of the Operating Agreement.
[[Page 53730]]
Section 6.2 Indemnification:
(a) Three Rivers and Owner, jointly and severally, agree that they
will defend, indemnify and hold Sellers and their affiliates harmless
from and against any and all indemnifiable damages of the Sellers. For
this purpose, ``indemnifiable damages'' of the Sellers means the
aggregate of all expenses, losses, costs, deficiencies, liabilities and
damages (including attorneys' fees and court costs) incurred or
suffered by the Sellers or any of their directors, agents, employees or
affiliates or their affiliates' directors, agents or employees, as a
result of or in connection with: (i) any inaccurate representation or
warranty made by Three Rivers or Owner in or pursuant to this
Agreement, (ii) any default in the performance of any of the covenants
or agreements made by Three Rivers or Owner in or pursuant to this
Agreement, or (iii) any occurrence, act or omission of Three Rivers or
any shareholder, director, officer, employee, consultant or agent of
Three Rivers or the Owner relating to the provision of services to the
Customer Accounts which occurred prior to or after the Time of Closing,
and causes damage to the Sellers or its affiliates.
(b) Sellers agree that they will defend, indemnify and hold Three
Rivers, Owner, and their affiliates harmless from and against any and
all indemnifiable damages of Three Rivers or Owner. For this purpose,
``indemnifiable damages'' of Three Rivers and Owner means the aggregate
of all expenses, losses, costs, deficiencies, liabilities and damages
(including attorneys' fees and court costs) incurred or suffered by
Three Rivers, Owner, or any of their directors, agents, employees or
affiliates or their affiliates' directors, agents or employees, as a
result of or in connection with: (i) any inaccurate representation or
warranty made by the Sellers in or pursuant to this Agreement, or (ii)
any default in the performance of any of the covenants or agreements
made by the Sellers in or pursuant to this Agreement.
Section 6.3 Security Interest: Three Rivers hereby grants to
Sellers a security interest in the Customer Accounts and the Equipment.
Three Rivers agrees to deliver to Sellers a security agreement (in the
form attached as EXHIBIT 6.3) to secure Three Rivers obligations under
the three guaranteed promissory notes delivered pursuant to Section
1.6(c), 1.6(d) and 1.6(e) hereof. Three Rivers shall further execute
and deliver any documents reasonably requested by Sellers to create
and/or to perfect said security interest.
Section 6.4 Execution of Further Documents: From and after the
Time of Closing, upon the reasonable request of Three Rivers, the
Sellers shall execute, acknowledge and deliver all such further
documents as may be required to convey and transfer to and vest in
Three Rivers the right, title and interest in the JVCo. Interest, and
as may be appropriate otherwise to carry out the transactions
contemplated by this Agreement.
Section 6.5 CIMS Billing System: Sellers will make the CIMS
billing system available to Three Rivers at current pricing until Three
Rivers is able to replace such billing system, which replacement shall
be no later than June 30, 1996. If Three Rivers is unable to replace
the system by that time, a reasonable extension of the use of the
system shall be granted by Sellers at current pricing. All computer
equipment utilized in connection therewith will be returned to Sellers
at such time as the replacement system is operational. Billings shall
be mailed in a timely fashion as measured by the history of Three
Rivers' billing.
Section 6.6 This Section is Deleted.
Section 6.7 Covenant-Not-to-Compete: The Sellers, jointly and
severally, agree and warrant as set out below. As further consideration
for this agreement Sellers have obtained the signature to this covenant
not to compete of Waste Management of Montana, Inc., which corporation,
by its signature hereto, warrants that it has received good and
sufficient consideration for the execution of this covenant not to
compete. For purposes of this Section 6.7 and no other, ``Waste
Management'' shall refer to Waste Management of Colorado, Inc., Waste
Management of Montana, Inc., and Waste Management Partners, Inc.
Waste Management, as defined above, agree that for a period ending
the earlier of (i) ten years from and after the Time of Closing and
(ii) two years after any sale of the assets of or Three Rivers'
interest in the business of JVCo., Waste Management, neither WMX
Technologies, Inc., (which corporation is not a party to this
agreement) nor Waste Management as defined in this paragraph will
engage in (as an individual or as a stockholder, trustee, partner,
financier, agent, employee or representative of any person, firm,
corporation or association), or have any interest, direct or indirect,
in any business in competition with the business of JVCo. and/or Three
Rivers, as that business is constituted at the Time of Closing (whether
or not such business is subsequently carried on by Three Rivers or by
any successor or subsequent purchaser of such business), in any area
within the following Montana counties: Galatin County, Madison County,
Park County, Broadwater County, and Sweetgrass County; provided that
this Covenant-Not-to-Compete shall not prevent the Sellers from
acquiring and holding not to exceed two percent (2%) of the outstanding
shares of any corporation engaged in such a competitive business, if
such shares are available to the general public on a national
securities exchange. In the event of a breach of any covenant contained
in this Section 6.7, Three Rivers shall be entitled to an injunction
restraining such breach in addition to any other remedies provided by
law or equity.
Section 6.8 Right of First Refusal: Three Rivers and Owner hereby
grant to the Sellers a right of first refusal on the business or shares
of Three Rivers as follows:
(a) If Three rivers or Owner desires within ten years from the date
of this agreement to accept an offer to purchase either all or a
majority of the outstanding capital stock of Three Rivers or
substantially all of the assets of Three Rivers or the Purchased
Assets, Sellers shall have a first right of refusal as follows: First,
Three Rivers shall deliver to Sellers a copy of the offer to sell to
Sellers on the same terms and conditions; Second Sellers shall have
thirty days in which to accept said offer upon terms equivalent to
those in the said offer; Third, providing only that Sellers have
properly exercised their right of first refusal as set out herein,
Three Rivers shall sell to Sellers on the terms as defined in this
paragraph. Upon any merger of Three Rivers with or into another entity,
the surviving entity shall be bound by the provisions hereof. Delivery
of an offer to Sellers shall be satisfied by certified mail, return
receipt requested, to the address for Sellers set out in section 8.6.
(b) If the Sellers exercise their right of first refusal within
thirty days after the delivery of such offer, payment shall be made at
the time and in the manner provided for in the offer. If the Sellers do
not accept the offer within thirty days after delivery of the offer to
the Sellers, the Sellers shall be deemed to have rejected the offer and
Three Rivers may then enter into the transaction described in the offer
with the person or persons making such offer during the period of one
hundred twenty days after the receipt thereof upon the terms and
conditions stated therein. If Three Rivers does not enter into the
transaction described in the Offer within such one hundred twenty day
period, the foregoing right of first refusal shall be reinstated.
[[Page 53731]]
7. Miscellaneous Agreements
Section 7.1 The Belgrade Bond: There is presently a performance
bond for the Belgrade contract, which bond has been obtained through
Waste Management and which was obtained at a discounted price available
to and obtained by Waste Management and Sellers. Sellers agree that
said bond or renewal thereof shall continue for a period of five years
from Closing. Actual cost of the bond shall be paid by Three Rivers.
Section 7.2 Manhattan and Three Forks Performance Bonds: For a
period not to exceed five years, Sellers and Waste Management shall
cooperate in obtaining a discounted price for performance bonds
obtained for the Manhattan and Three Forks contracts and shall do so in
the same manner that renewal cooperation is described in Section 7.1.
Section 7.3 National Accounts: Three Rivers has serviced certain
national account customers of Sellers and Sellers' affiliates with
locations in the Montana counties contemplated by Section 6.7. WMI
Colorado agrees to notify such national account customers that Sellers
are no longer able to provide service in those counties and to suggest
that such national account customers contract directly with Three
Rivers. Immediately upon execution of this agreement, Sellers shall
make said notification in writing with a copy thereof to Three Rivers.
Section 7.4 Indemnity: Owner and Three Rivers shall indemnify and
hold Sellers harmless from all costs and expenses of obtaining bonds
under this Part 7.
Owner and Three Rivers shall further indemnify and hold Sellers
harmless from all liability, costs and damages which arise out of the
existence of said bonds; said duty of indemnity shall include but shall
not be limited to providing a defense for Sellers in any litigation on
said bonds and paying all of the following: court costs, attorney fees
and any damages awarded against Sellers in such litigation.
8. General Provisions
Section 8.1 Survival of Representations and Warranties: All of the
representations and warranties of the parties to this Agreement shall
survive the consummation of the transactions contemplated hereby.
Section 8.2 Binding Effect: This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors
and assigns.
Section 8.3 Entire Agreement: This agreement supersedes any and
all other agreements, oral or in writing, between the parties with
respect to the subject of this agreement. This agreement contains all
of the covenants and agreements between the parties with reference to
its subject, and each party acknowledges that no representations,
inducement, promises or agreements have been made by or on behalf of
any party except those covenants and agreements embodied in writing
herein. No agreement, statement or promise not contained herein shall
be binding or valid.
Section 8.4 Headings: The descriptive headings in this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
Section 8.5 Execution in Counterparts: This Agreement may be
executed in any number of counterparts, each of which shall be deemed
an original.
Section 8.6 Notices: Any notice, request, information or other
document to be given hereunder to any of the parties by any other party
shall be in writing and hand delivered, sent by certified mail, postage
prepaid, or by overnight courier service as follows:
(a) If to the Sellers, addressed to both:
Waste Management Partners, Inc., 3003 Butterfield Road, Oak Brook,
Illinois 60521, Attn: General Counsel
Waste Management of Colorado, 3900 S. Wadsworth Blvd., Suite 800,
Lakewood, Colorado 80235, Attn: General Counsel
(b) If to Three Rivers or Owner, addressed to both:
Mr. Jerrold E. Arbini, Three Rivers Disposal, Inc., 8600 Huffine Lane,
P.O. Box 3588, Bozeman, MT 59772
Richard Scheuler, Counsel for Three Rivers, 437 Washington Street, P.O.
Box 8548, Red Bluff, CA 96080
Any party may change the address to which notices hereunder are to
be sent to it by giving written notice of such change of address.
Section 8.7 Severability: If any provision of this Agreement is
determined to be illegal or unenforceable, such provision will be
deemed amended to the extent necessary to conform to applicable law or,
if it cannot be so amended without materially altering the intention of
the parties, it will be deemed stricken and the remainder of the
Agreement will remain in full force and effect.
Section 8.8 Governing Law: This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois
applicable to contracts made and to be performed therein.
In Witness Whereof, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
Waste Management Partners, Inc.
By:--------------------------------------------------------------------
Name:------------------------------------------------------------------
Title:-----------------------------------------------------------------
Waste Management of Montana, Inc.
By: Waste Management of Montana, Inc.
Name:------------------------------------------------------------------
Vice President
Waste Management Partners of Bozeman, Ltd.
By: Waste Management Partners, Inc.
Name:------------------------------------------------------------------
Vice President
Waste Management of Colorado, Inc.
By:--------------------------------------------------------------------
Name:------------------------------------------------------------------
Title:-----------------------------------------------------------------
Three Rivers Disposal, Inc., of Bozeman, Ltd.
By: Jerrold Arbini
Name: Jerrold Arbini
Title: President
Jerrold- Arbini--Owner
Section 8.8 Governing Law: This Agreement shall be governed by and
construed in-accordance with the laws of the State of Illinois
applicable to contracts made and to be performed therein.
In Witness Whereof, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
Waste Management Partners, Inc.
By:
Name: Robert P. Damico
Title: Authorized Signatory
Waste Management of Montana, Inc.
By: Waste Management of Montana, Inc.
Name: Robert P. Damico, President
Waste Management Partners of Bozeman, Ltd.
By:
Waste Management Partners, Inc. General Partner
Name: Robert P. Damico, Authorized Signatory
Waste Management of Colorado, Inc.
By:
Name: Robert P. Damico
Title: President
Three Rivers Disposal, Inc., of Bozeman, Ltd.
By: Jerrold Arbini
Name: Jerrold Arbini
Title: President
Jerrold Arbini--Owner
James M. Kommers
Daniel J. Roth
Ralph W. Steele
Kommers & Roth, Bridger Professional Center, 517 South 22nd Avenue,
Suite 5, Bozeman, MT 59718, (406) 587-7717
[[Page 53732]]
Attorneys for Plaintiffs
Montana Eighteenth Judicial District Court, Gallatin County
[Cause No. DV98-266]
Three Rivers Disposal, Inc., a Montana corporation and Jerrold
E. Arbini, individually, Plaintiffs, v. Waste Management Partners,
Inc., a Delaware corporation, Waste Management Partners of Bozeman,
Ltd., an Illinois Limited Partnership, a/k/a JVCo., Waste Management
of Colorado, Inc., a Colorado corporation; U.S.A. Waste Services,
Inc., d/b/a Customized Services of Bozeman, Montana, Harry Ellis,
and WMX Technologies, Inc., a/k/a Waste Management, Inc.,
Defendants.
Motion for Preliminary Injunction
Plaintiffs, Three Rivers Disposal, Inc. and Jerrold E. Arbini
(hereinafter ``Three Rivers''), moved, on an expedited basis, for a
preliminary injunction pursuant to MCA Secs. 27-19-201(1) and (2). The
applicants are entitled to equitable relief they seek to enforce a
restrictive covenant not to compete under the terms of the Asset
Purchase Agreement dated March 1, 1996. Three Rivers' request for
equitable relief is appropriate because the agreed terms of the Asset
Purchase Agreement, Section 6.7, specifically permits the applicant to
seek specific performance in the form of an injunction restraining
breach of the restrictive covenants in the agreement. No other remedy
would be adequate at law except the injunctive relief agreed to by the
parties and sought by Three Rivers herein.
Direct competition from U.S.A. Waste Services, Inc., a publicly
owned corporation listed on the New York Stock Exchange, d/b/a
Customized Services, Inc., will and has irreparably damaged Three
Rivers through the permanent loss of its customer base within its
entire operating area. Sellers and their successors in interest,
because of the violation of the agreement, have, and will continue to
have, the capacity to access proprietary and confidential information
regarding Three River Disposal, Inc.'s customer lists, rates, and
pricing policies.
The restrictive covenant was obviously intended to prevent the
sellers and any successors in interest from accessing confidential
information such as the rates and customers being served by Three
Rivers. It is irrefutable that substantial economic impairment will
result to Three Rivers because Defendants are systematically sabotaging
Three Rivers' customer base and simultaneously Three Rivers must
service its debt to Defendants under the Asset Purchase Agreement. The
court's failure to grant specific performance in the form of injunctive
relief will result in doubly punishing Three Rivers and doubly
rewarding the Defendants in their breach of the restrictive covenants.
The Plaintiffs have fully and fairly performed all conditions
precedent under their obligation to Defendant, MCA Sec. 27-1-416. There
is no other adequate remedy but injunctive relief to stop the
substantial economic impairment to Three Rivers' business which has and
will continue as a result of Defendants' breach of the restrictive
covenant.
The basis for this motion is stated in the Verified Complaint
concomitantly filed in support of this request for specific
performance, which Plaintiffs incorporate herein by reference.
Venue is proper because the contract as well as the covenant not to
complete is to be performed in Gallatin County and other counties in
the State of Montana. MCA Sec. 25-2-121(1)(b).
The relief sought by this motion is a preliminary injunction of
this court which prohibits Defendants from doing business as Customized
Services or under any assumed business name or through any other kind
or type of affiliation by which they continue to control or operate as
a business in violation of the restrictive covenant. Violation of the
covenant not to compete commenced on or about July 16, 1998, and the
aforementioned irreparable economic damage will continue until an order
of this court prohibits the violation of the restrictive covenant
within the area set forth in the covenant. If there was an adequate
remedy at law, the parties would never have agreed to injunctive relief
in the Asset Purchase Agreement.
Three Rivers must seek injunctive relief to prohibit breach of the
restrictive covenant for the reasons set forth in the Verified
Complaint and this motion. The Verified Complaint seeks relief for
entry of a permanent order enforcing the restrictive covenant within
the area set forth in Section 6.7 of the Asset Purchase Agreement.
Pecuniary compensation will not afford adequate relief because
continued competition will not only result in the substantial economic
impairment to Three Rivers' business but also will significantly affect
their ability to service their debt obligation owed to these very
Defendants arising out of the Asset Purchase Agreement. Three Rivers
has in the past and will presently and in the future be able to service
all of the customers of U.S.A. Waste, Inc., d/b/a Customized Services
if this court grants the injunctive relief sought by Plaintiffs under
authority of MCA Secs. 27-19-102 (1) and (2).
Dated this 26th day of August, 1998.
Kommers & Roth, 517 S. 22nd Ave., Suite 5, Bozeman, MT 59718-6842,
(406) 587-7717
By: Daniel J. Roth
James M. Kommers
Ralph W. Steele
James M. Kommers
Daniel J. Roth
Ralph W. Steele
Kommers & Roth, Bridger Professional Center, 517 South 22nd Avenue,
Suite 5, Bozeman, MT 5718, (406) 587-57717
Attorneys for Plaintiffs
Montana Eighteenth Judicial District Court, Gallatin County
[Cause No. DV98-266]
Three Rivers Disposal, Inc., a Montana corporation and Jerrold
E. Arbini, individually, Plaintiffs, v. Waste Management Partners,
Inc., a Delaware corporation, Waste Management Partners of Bozeman,
Ltd., an Illinois Limited Partnership, a/k/a JVCo., Waste Management
of Colorado, Inc., a Colorado corporation; U.S.A. Waste Services,
Inc., d/b/a Customized Services of Bozeman, Montana, Harry Ellis,
and WMX Technologies, Inc.,
a/k/a Waste Management, Inc., Defendants.
Brief in Support of Motion for Preliminary Injunction
The Motion for Preliminary Injunction is seeking equitable relief
based on a breach of a restrictive covenant which involves the sale of
assets of a refuse collection business in southwest Montana, including
Gallatin County. The Asset Purchase Agreement of March 1, 1996,
contains a covenant not to compete which is in the contract attached to
the Complaint at Section 6.7, pages 16 and 17. The covenant not to
compete states:
Section 6.7 Covenant-Not-to-Compete: The Sellers, jointly and
severally, agree and warrant as set out below. As further
consideration for this agreement Sellers have obtained the signature
to this covenant not to compete of Waste Management of Montana,
Inc., which corporation by its signature hereto, warrants that it
has received good and sufficient consideration for the execution of
this covenant not to compete. For purposes of this Section 6.7 and
no other. `Waste Management' shall refer to Waste Management of
Colorado, Inc., Waste Management of Montana, Inc., and Waste
Management Partners, Inc.
Waste Management, as defined above, agree that for a period
ending the earlier of (I) ten years from and after the Time of
Closing and (ii) two years after any sale of the assets of or Three
Rivers' interest in the business JVCo., Waste Management, neither
WMX Technologies, Inc. (which corporation is not a party to this
agreement) nor Waste Management as defined in this paragraph will
engage in (as an individual or as a stockholder, trustee, partner,
financier, agent, employee or representative of any person, firm,
corporation or association), or have any
[[Page 53733]]
interest, direct or indirect, in any business in competition with
the business of JVCo. and/or Three Rivers, as that business is
constituted at the Time of Closing (whether or not such business is
subsequently carried on by Three Rivers or by any successor or
subsequent purchaser of such business), in any area within the
following Montana counties: Gallatin County, Madison County, Park
County, Broadwater County, and Sweetgrass County; provided that this
Covenant-Not-to-Compete shall not prevent the Sellers from acquiring
and holding not to exceed two percent (2%) of the outstanding shares
of any corporation engaged in such a competitive business, if such
shares are available to the general public on a national securities
exchange. In the event of a breach of any covenant contained in this
Section 6.7, Three Rivers shall be entitled to an injunction
restraining such breach in addition to any other remedies provided
by law or equity.
A preliminary injunction is appropriate under the facts of this
case because the terms of the contract satisfies the statutory
requirements for specific performance. MCA Sec. 27-19-103(5) prescribes
certain injunctive actions involving breach of contract except when
``the performance of which would not be specifically enforced.''
[emphasis added] Further, all parties to the agreement anticipated
injunctive relief because the contract states:
In the event of a breach of any covenant contained in this
Section 6.7, Three Rivers shall be entitled to an injunction
restraining such breach in addition to any other remedies provided
by law or equity.
This case arises out of a violation of Section 6.7 concerning the
restrictive covenant not to compete contained in the Asset Purchase
Agreement. The Montana Public Service Commission regulates entry of
carriers into the collection of solid waste but its jurisdictional
authority does not encompass the rates charged by refuse removal
companies. See, Rozel Corporation v. Department of Public Service
Regulation, Public Service Commission, 226 Mont. 237, 735 .2d 282, 285
(1987).
This case involves two refuse collection businesses which hold a
common carrier certificate issued by the Montana Public Service
Commission. MCA Sec. 27-19-203 permits entry of a restraining order
even though a matter be subject to Public Service Commission
proceedings.
The Defendants are operating contrary to the restrictive covenants
of the Asset Purchase Agreement as a result of the acquisition by
U.S.A. Waste Services, Inc. of all of the remaining Defendants on or
after July 16, 1998. This acquisition by U.S.A. Waste Services, Inc.
resulted in retaining the corporate name of Waste Management, Inc. The
acquisition by U.S.A. Waste Services, Inc. of Customized Services,
which is and will be in direct competition with Three Rivers, occurred
prior to July 16, 1998.
The applicable portions of MCA Secs. 27-19-201(1) and (2)
empowering the court to enter a preliminary injunction are as follows:
27-19-201. When preliminary injunction may be granted. An
injunction order may be granted in the following cases:
(1) When it appears that the applicant is entitled to the relief
demanded and the relief of any part of the relief consists in
restraining the commission or continuance of the act complained of,
either for a limited period or perpetually;
(2) When it appears that the commission or continuance of some
act during the litigation would produce a great or irreparable
injury to the applicant;
Plaintiffs are clearly entitled to the relief demanded because the
parties agreed in writing, in Section 6.7 of the agreement, to specific
performance and injunctive relief. In addition, Defendants have failed
to refuse to acknowledge the cease and desist letter served upon them
weeks ago. More importantly, the Defendants' have and will continue to
have illegal access to confidential and proprietary information about
Three Rivers' collection operation. This permits defendants to continue
to economically ravage Plaintiffs' disposal business. Defendants
continued operation in violation of the restrictive covenant not only
substantially diminishes gross revenues, but it is from these very
revenues Three Rivers is required to make significant monthly payments
to service the substantial debt owed to Defendants as a result of the
Buy-Back Agreement. Three Rivers has no adequate remedy at law other
than the immediate remedy of injunctive relief.
The injunctive relief sought herein is particularly appropriate
under the doctrine of specific performance. Although this relief is not
allowed under some circumstances, (see, MCA Sec. 27-19-103), the
present case falls squarely under the statutory provision permitting
specific performance as a remedy because the parties anticipated and
agreed to this remedy as part of the consideration in their agreement.
MCA Sec. 27-1-411(4) provides in part:
Specific performance of an obligation may be compelled when:
* * * * *
(4) it has been expressly agreed in writing, between the parties
to the contract, that specific performance thereof may be required
by either party or that damages shall not be considered adequate
relief.
The Montana Supreme Court in Halcro v. Moon, 226 Mont. 121, 733
P.2d 1305 (1987), held 027-1-411(4) MCA provides that ``specific
performance may be compelled when the parties to a contract have
expressly agreed in writing that specific performance shall be an
available remedy.'' Id. 733 P.2d 1307.
Additionally authority for the entry of injunctive relief in this
case is found in Marco and Company LLC. v. Deaconess/Billings Clinic
Health System, 55 St. Rep. 91, 1998 WL 67544, ______Mont.______,
______P.2d______, (February 12, 1998) (opinion not published, copy
attached). The supreme court found the district court in error for
failure to follow the agreement of the parties providing for injunctive
relief. The Montana Supreme Court affirmed and followed Maxted v.
Barrett, 198 Mont. 81, 86,643 P.2d 1161, (1982), in the Marco case
affirming that the Montana court will enforce specific enforcement of
remedies agreed upon by parties in written agreements, including, the
remedy of injunction.
This court should therefore enter the injunctive relief requested
at the conclusion of the hearing on the Order to Show Cause why the
Motion for Preliminary Injunction should not be granted.
The Defendants are entitled to received reasonable notice of the
time and place of the making of the application for this order
requesting specific performance. MCA Sec. 27-19-301. Plaintiffs request
the matter be set before this Court on an expedited basis. In support
of its Motion for Preliminary Injunction, the Plaintiffs will offer
proof that Defendants are and will be competing in direct violation of
the restrictive covenant set forth in Section 6.7 of the Asset Purchase
Agreement.
Respectfully submitted this 24th day of August, 1998.
Kommers & Roth, 517 S. 22nd Ave., Suite 5, Bozeman, MT 59718-6842,
(406) 587-7717
By:
James M. Kommers
Daniel J. Roth
Ralph W. Steele
Certificate of Service
I, Anthony E. Harris, hereby certify that on August 27, 1999, I
caused copies of the foregoing United States's Certificate of
Compliance with Provisions of the Antitrust Procedures and Penalties
Act to be served on plaintiffs--the states of Ohio, Arizona,
California, Colorado, Florida, Maryland, Michigan, New York, Texas,
Washington and Wisconsin, and the commonwealths of Kentucky and
[[Page 53734]]
Pennsylvania--and defendants USA Waste Services, Inc., Dome Merger
Subsidiary, and Waste Management, Inc., by mailing a copy of the
pleading first-class, postage prepaid, to a duly authorized legal
representative of those parties as follows:
James R. Weiss, Esquire, Preston Gates Ellis & Rouvelas Meeds LLP,
1735 New York Avenue, NW, Washington, DC 20006-8425
Counsel for Defendants USA Waste Services, Inc. and Dome Merger
Subsidiary
Neal R. Stoll, Esquire, Skadden, Arps, Slate, Meagher & Flom, 919
Third Avenue, New York, NY 10022-3897
Counsel for Defendant Waste Management, Inc.
Doreen C. Johnson, Assistant Attorney General, Chief, Antitrust
Section, Ohio Bar No. 0024725,
Mitchell L. Gentile, Senior Attorney, Ohio Bar No. 0022274
Ohio Attorney General's Office, 30 East Broad Street, 16th Floor,
Columbus, OH 43215
Counsel for Plaintiff State of Ohio
Nancy M. Bonnell, Assistant Attorney General, Antitrust Unit, Civil
Division, 1275 West Washington, Phoenix, AZ 85007
Counsel for Plaintiff State of Arizona
Barbara Motz, Acting Assistant Attorney General
Natalie S. Manzo, Deputy Attorney General, Office of the Attorney
General, 300 South Spring Street, Room 5212, Los Angeles, CA 90013
Counsel for Plaintiff State of California
Jan Michael Zavislan, First Assistant Attorney General
Maria E. Berkenkotter, Assistant Attorney General, State Services
Building, 1525 Sherman Street, 5th Floor, Denver, CO 80203
Counsel for Plaintiff State of Colorado
Lizabeth A. Leeds
Douglas L. Kilby
Assistant Attorneys General, Antitrust Section, PL-01, The Capitol,
Tallahassee, FL 32399-1050
Counsel for Plaintiff State of Florida
David R. Vandeventer, Assistant Attorney General, Consumer
Protection, 1024 Capital Center Drive, Frankfort, KY 40601-8204
Counsel for Plaintiff Commonwealth of Kentucky
Ellen S. Cooper, Assistant Attorney General, Chief, Antitrust
Division
John R. Tennis, Assistant Attorney General,
Office of the Attorney General, 200 St. Paul Place, Suite 17,
Baltimore, MD 21202-2021
Counsel for Plaintiff State of Maryland
Paul F. Novak, Assistant Attorney General, Consumer Protection
Division, Franchise/Antitrust Section, P.O. Box 30213, Lansing, MI
48909
Counsel for Plaintiff State of Michigan
Richard E. Grimm
Kay Taylor
Assistant Attorneys General, Antitrust Bureau, Office of the
Attorneys General, State of New York, 120 Broadway, Suite 26-01, New
York, NY 10271
Counsel for Plaintiff State of New York
James A. Donahue, III, Chief Deputy Attorney General
Garrett F. Gallia
Terry A. Lupia
Deputy Attorneys General, 14th Floor, Strawberry Square,
Harrisburg, PA 17120
Counsel for Plaintiff Commonwealth of Pennsylvania
Mark Tobey
Kim Van Winkle
Assistant Attorneys General, P.O. Box 12548, Austin, TX 78711-2548
Counsel for Plaintiff State of Texas
Marta Lowy, Assistant Attorney General, Office of the Attorney
General, 900 4th Avenue, Suite 2000, Seattle, WA 98164-1012
Counsel for Plaintiff State of Washington
Edwin J. Hughes, Assistant Attorney General, Wisconsin Department of
Justice, P.O. Box 7857, Madison, WI 53707-7857
Counsel for Plaintiff State of Wisconsin
Anthony E. Harris, Esquire,
Illinois Bar No. 1133713, U.S. Department of Justice, Antitrust
Division, 1401 H Street, NW, Suite 3000, Washington, DC 20530, (202)
307-0924.
[FR Doc. 99-24882 Filed 10-1-99; 8:45 am]
BILLING CODE 4410-11-M
