[Federal Register Volume 61, Number 217 (Thursday, November 7, 1996)]
[Notices]
[Pages 57701-57712]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28617]
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DEPARTMENT OF JUSTICE
Antitrust Division
Proposed Final Judgment and Competitive Impact Statement; United
States of America v. American Radio Systems Corporation, The Lincoln
Group, L.P. and Great Lakes Wireless Talking Machine LLC
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation, and Competitive Impact Statement have
[[Page 57702]]
been filed with the United States District Court for the District of
Columbia in United States v. American Radio Systems Corporation, The
Lincoln Group, L.P. and Great Lakes Wireless Talking Machine LLC, Civ.
Action No. 96-2459. The proposed Final Judgment is subject to approval
by the Court after the expiration of the statutory 60-day public
comment period and compliance with the Antitrust Procedures and
Penalties Act. 15 U.S.C. 16(b)-(h).
The United States filed a civil antitrust Complaint on October 24,
1996, alleging that the proposed acquisition of assets of The Lincoln
Group, L.P. (``Lincoln'') by American Radio Systems Corporation
(``ARS'') would violate Section 7 of the Clayton Act, 15 U.S.C. 18, and
that the Joint Sales Agreement (``JSA'') between ARS and Great Lakes
Wireless Talking Machine LLC (``Great Lakes'') violates Section 1 of
the Sherman Act, 15 U.S.C. 1. The Complaint alleges that ARS and
Lincoln own and operate three and four radio stations respectively in
the Rochester, New York area. In addition, ARS has a JSA with a radio
station owned by Great Lakes (WNVE-FM), allowing ARS post-merger to
control the sale of advertising time on an eighth station as well. This
acquisition would allow ARS to control advertising time on six of the
top eight radio stations in the Rochester area. As a result, the
combination of these companies would substantially lessen competition
in the sale of radio advertising time in Rochester, New York and the
surrounding area.
Moreover, the Complaint alleges that, beginning at least as early
as October 1, 1995 and continuing to this day, ARS and Great Lakes
entered into a contract, the purpose of which is the elimination of all
pricing competition between two rival radio stations, to the detriment
of purchasers of radio advertising time in the Rochester area. As such,
it constitutes an illegal contract in restraint of interstate trade and
commerce.
The proposed Final Judgment orders ARS to divest WHAM-AM and WVOR-
FM, both currently owned by Lincoln, and WCMF-AM, currently owned by
ARS. Unless the United States grants a time extension, ARS must divest
these radio stations either within six months after the filing of the
Final Judgment, or within five (5) business days after notice of entry
of the Final Judgment, whichever is later. If ARS does not divest WHAM-
AM, WVOR-FM and WCMF-AM within the divestiture period, the Court may
appoint a trustee to sell the assets. The proposed Final Judgment also
requires ARS to ensure that, until the divestiture mandated by the
Final Judgment has been accomplished, all of Lincoln's present stations
(including WHAM-AM and WVOR-FM) will be operated independently as
viable, ongoing businesses, and kept separate and apart from ARS' other
Rochester radio stations. Further, the proposed Final Judgment requires
ARS to give the United States prior notice as to certain future radio
station acquisitions in Rochester.
In addition, the Final Judgment requires ARS and Great Lakes to
terminate the JSA that allows ARS to sell radio advertising time for
WNVE within five (5) business days after receiving notice of entry of
the Final Judgment, and to cease and desist from entering into any
future joint sales agreements between them in the Rochester, New York
Metro Survey Area. ARS and Great Lakes also must terminate their
``Option Agreement'' dated September 28, 1995, between them, within
five (5) business days after receiving notice of the entry of the Final
Judgment, unless ARS has first assigned this agreement to any entity or
entities acquiring WHAM-AM, WVOR-FM or WCMF-AM. Furthermore, the
proposed Final Judgment requires ARS and Great Lakes to give the United
States prior notice before entering any future agreements that would
grant ARS or Great Lakes the right to sell advertising time or to
establish advertising prices for non-ARS radio stations in Rochester.
A Competitive Impact Statement filed by the United States describes
the Complaint, the proposed Final Judgment, and remedies available to
private litigants.
Public comment is invited within the statutory 60-day comment
period. Such comments, and the responses thereto, will be published in
the Federal Register and filed with the Court. Written comments should
be directed to Craig W. Conrath, Chief, Merger Task Force, Antitrust
Division, 1401 H Street, NW, Suite 4000, Washington, D.C. 20530
(telephone: 202-307-0001). Copies of the Complaint, Stipulation,
proposed Final Judgment and Competitive Impact Statement are available
for inspection in Room 215 of the Antitrust Division, Department of
Justice, 325 7th St., NW, Washington, D.C. 20530 (telephone: 202-514-
2481), and at the office of the Clerk of the United States District
Court for the District of Columbia, Third Street and Constitution
Avenue, NW, Washington, D.C. 20001.
Copies of any of these materials may be obtained upon request and
payment of a copying fee.
Constance K. Robinson,
Director of Operations, Antitrust Division.
Stipulation
It is stipulated by and between the undersigned parties, by their
respective attorneys, as follows:
(1) The Court has jurisdiction over the subject matter of this
action and over each of the parties hereto, and venue of this action is
proper in the United States District Court for the District of
Columbia.
(2) The parties stipulate that a Final Judgment in the form hereto
attached may be filed and entered by the Court, upon the motion of any
party or upon the Court's own motion, at any time after compliance with
the requirements of the Antitrust Procedures and Penalties Act (15
U.S.C. 16), and without further notice to any party or other
proceedings, provided that the United States of America (hereinafter
``United States'') has not withdrawn its consent, which it may do at
any time before the entry of the proposed Final Judgment by serving
notice thereof on the parties and by filing that notice with the Court.
(3) The defendants shall abide by and comply with the provisions of
the proposed Final Judgment pending entry of the Final Judgment, and
shall, from the date of the signing of this Stipulation, comply with
all the terms and provisions of the proposed Final Judgment as though
the same were in full force and effect as an order of the Court.
[[Page 57703]]
(4) The parties recognize that there could be a delay in obtaining
approval by or a ruling of a government agency related to the
divestitures required by Section IV of the Final Judgment,
notwithstanding the good faith efforts of American Radio Systems
Corporation (``ARS'') and any prospective Acquirer. In this
circumstance, the United States will, in the exercise of its sole
discretion, acting in good faith, give special consideration to
forebearing from applying for the appointment of a trustee pursuant to
Section V of the Final Judgment, or from pursuing legal remedies
available to it as a result of such delay, provided that: (i) ARS has
entered into one or more definitive agreements to divest the Lincoln
Assets and WCMF-AM Assets, and such agreements and the Acquirer or
Acquirers have been approved by the United States; (ii) All papers
necessary to secure any governmental approvals and/or rulings to
effectuate such divestitures (including but not limited to FCC, SEC and
IRS approvals or rulings) have been filed with the appropriate agency;
(iii) Receipt of such approvals are the only closing conditions that
have not been satisfied or waived; and (iv) ARS has demonstrated that
neither it nor the prospective Acquirer or Acquirers are responsible
for any such delay.
(5) In the event the United States withdraws its consent, as
provided in paragraph 2 above, or if the proposed Final Judgment is not
entered pursuant to this Stipulation, this Stipulation shall be of no
effect whatever, and the making of this Stipulation shall be without
prejudice to any party in this or any other proceeding.
(6) The defendants represent that the divestitures and contract
terminations ordered in the proposed Final Judgment can and will be
made, and that the defendants will later raise no claims of hardship or
difficulty as grounds for asking the Court to modify any of the
divestiture or termination provisions contained therein.
Dated: October 24, 1996.
For Plaintiff United States of America:
Craig W. Conrath,
U.S. Department of Justice, Antitrust Division, Merger Task Force, 1401
H Street, N.W., Suite 4000, Washington, D.C. 20005, (202) 307-5779.
For Defendant American Radio Systems Corporation:
James R. Loftis, III, Collier Shannon Rill & Scott, PLLC, 3050 K
Street, N.W., Suite 400, Washington, DC 20007, (202) 342-8480.
For Plaintiff State of New York:
Dennis C. Vacco,
Attorney General of the State of New York.
John H. Carley,
Deputy Attorney General, Public Advocacy.
Stephen D. Houck,
Assistant Attorney General, Chief, Antitrust Bureau.
By:
Stephen D. Houck.
Richard L. Schwartz,
Deputy Chief, Antitrust Bureau.
George R. Mesires,
Assistant Attorney General, 120 Broadway, Suite 2601, New York, New
York 10271, (202) 416-8275.
For Defendant the Lincoln Group, L.P.:
Jason L. Shrinsky,
Kaye Scholer Fierman Hays & Handler, LLP, 901 15th Street, N.W., Suite
1100, Washington, DC 20005.
For Defendant, Great Lakes Wireless Talking Machine LLC:
Stephen P. Morris,
Morris & Morris, 30 Corporate Woods, Suite 120, Rochester, NY 14623,
(716) 292-5750.
Certificate of Service
I, Dando B. Cellini, hereby certify that on October 24, 1996, I
caused a copy of the foregoing Complaint, Motion for Entry of
Stipulation and Order, Stipulation, form of Order, United States'
Explanation of Consent Decree Procedures and Competitive Impact
Statement filed this day in United States and State of New York v.
American Radio Systems, et. al to be served on all parties by having a
copy mailed, first class, postage prepaid, to:
Plaintiff State of New York:
George R. Mesires,
Assistant Attorney General, State of New York, 120 Broadway, Suite
2601, New York, New York 10271.
Defendant the Lincoln Group, L.P.:
Jason L. Shrinsky,
Kaye Scholer Fierman Hays & Handler, LLP, 901 15th Street, NW., Suite
1100, Washington, DC 20005.
Defendant American Radio Systems Corporation:
James R. Loftis, III,
Collier Shannon Rill & Scott, PLLC, 3050 K Street, N.W., Suite 400,
Washington, DC 20007, (202) 342-8480.
Defendant Great Lakes Wireless Talking Machine LLC:
Stephen P. Morris,
Morris & Morris, 30 Corporate Woods, Suite 120, Rochester, NY 14623,
(716) 292-5750.
Dando B. Cellini
Dated: October 24, 1996.
Final Judgment
Case Number: 1:96CV02459
Judge: Norma Holloway Johnson
Deck Type: Antitrust
Date Stamp: 10/24/96
No. ______.
Whereas, plaintiffs, the United States of America (hereinafter
``United States'') and the State of New York (hereinafter ``New
York''), having filed their Complaint herein on October 24, 1996, and
defendants, 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 purpose of this Final Judgment is prompt and
certain divestiture of certain assets to assure that competition is not
substantially lessened;
And whereas, plaintiffs require defendants to make certain
divestitures and contract terminations for the purpose of remedying the
loss of competition alleged in the Complaint;
And whereas, defendants have represented to plaintiffs that the
divestitures and contract terminations 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 or termination provisions contained below;
Now, therefore, before the taking of any testimony, and without
trial or
[[Page 57704]]
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 ARS and Lincoln, as
hereinafter defined, under Section 7 of the Clayton Act, as amended (15
U.S.C. 18), and against defendants ARS and Great Lakes, as hereinafter
defined, under Section 1 of the Sherman Act, as amended (15 U.S.C. 1).
II. Definitions
As used in this Final Judgment:
A. ``ARS'' means defendant American Radio Systems Corporation, a
Delaware corporation with its headquarters in Boston, MA, and includes
its successors and assigns, its subsidiaries, and directors, officers,
managers, agents, and employees acting for or on behalf of ARS.
B. ``Lincoln'' means defendant The Lincoln Group, L.P., a New York
limited partnership with its headquarters in Syracuse, NY, and includes
its successors and assigns, its subsidiaries, and directors, officers,
managers, agents, and employees acting for or on behalf of Lincoln.
C. ``Great Lakes'' means defendant Great Lakes Wireless Talking
Machine LLC, a New York limited liability company with its headquarters
in East Rochester, New York, and includes its successors and assigns,
its subsidiaries, and directors, officers, managers, agents and
employees acting for or on behalf of Great Lakes.
D. ``Lincoln Assets'' means all of the assets, tangible or
intangible, used in the operation of the WHAM-AM and WVOR-FM radio
stations in Rochester, New York, including but not limited to: All real
property (owned and leased) used in the operation of these two
stations; all broadcast equipment, personal property, inventory, office
furniture, fixed assets and fixtures, materials, supplies and other
tangible property used in the operation of these two stations; all
licenses, permits and authorizations and applications therefor issued
by the Federal Communications Commission (``FCC'') and other
governmental agencies relating to these two stations; all contracts,
agreements, leases, and commitments of Lincoln pertaining to these two
stations and their operations; all trademarks, service marks, trade
names, copyrights, patents, slogans, programming materials and
promotional materials relating to these two stations; and all logs and
other records maintained by Lincoln or these two stations in connection
with each station's business.
E. ``WCMF-AM Assets'' means all of the following assets: all real
property (owned and leased) used solely in the operation of radio
station WCMF-AM; all broadcast equipment used solely in the operation
of radio station WCMF-AM; and all licenses, permits, and authorizations
and applications therefor issued by the Federal Communications
Commission (``FCC'') and other governmental agencies relating to radio
station WCMF-AM.
F. ``ARS Rochester Radio Stations'' means the following radio
stations: WCMF-FM, WRMM-FM, WPXY-FM, and WHTK-AM.
G. ``Non-ARS Radio Station'' means any radio station licensed to a
community in the Rochester Area that is not an ARS Rochester Radio
Station.
H. ``Rochester Area'' means the Rochester, New York Metro Survey
Area as identified by The Arbitron Radio Market Report for Rochester
(Summer 1996), and includes the following six counties: Monroe, Wayne,
Ontario, Livingston, Genesee and Orleans.
I. The ``WNVE Joint Sales Agreement'' means the agreement between
ARS and Great Lakes dated September 28, 1995, entitled ``Joint Sales
Agreement.
J. The ``WNVE Option Agreement'' means the agreement between ARS
and Great Lakes dated September 28, 1995, entitled ``Option
Agreement.''
K. ``WNVE'' means WNVE-FM, a radio station owned by Great Lakes and
located in South Bristol, New York.
L. The ``Asset Purchase Agreement'' means the agreement between ARS
and Lincoln dated February 23, 1996, entitled ``Asset Purchase
Agreement.''
M. ``Acquirer'' means the entity or entities to whom ARS divests
the Lincoln Assets and/or the WCMF-AM Assets under this Final Judgment.
III. Applicability
A. The provisions of this Final Judgment apply to each of the
defendants, their successors and assigns, their subsidiaries,
affiliates, directors, officers, managers, agents and employees, and
all other persons in active concert or participation with any of them
who shall have received actual notice of this Final Judgment by
personal service or otherwise.
B. Each defendant shall require, as a condition of the sale or
other disposition of all or substantially all of the assets used in its
business of owning and operating its portfolio of radio stations in the
Rochester Area, that the acquiring party or parties agree to be bound
by the provisions of this Final Judgment; provided, however, defendants
need not obtain such an agreement from an Acquirer, as defined herein,
or from any future purchaser of WNVE.
IV. Divestiture of Lincoln Assets and WCMF-AM
A. ARS is hereby ordered and directed, in accordance with the terms
of this Final Judgment, within six (6) months after the filing of this
Final Judgment, or within five (5) business days after notice of entry
of this final judgment, whichever is later, to divest the Lincoln
Assets and WCMF-AM Assets to an Acquirer acceptable to the United
States, in its sole discretion, after consulting with New York. Unless
the United States otherwise consents in writing, the divestitures
pursuant to Section IV of this Final Judgment or by the trustee
appointed pursuant to Section V, shall be accomplished in such a way as
to satisfy the United States, in its sole discretion after consulting
with New York, that the Lincoln Assets and WCMF-AM Assets can and will
be used by an Acquirer as viable, ongoing commercial radio businesses.
The divestitures, whether pursuant to Section IV or V of this Final
Judgment, shall be made (i) to an Acquirer that, in the sole judgment
of the United States after consulting with New York, has the capability
and intent of competing effectively, and has the managerial,
operational and financial capability to compete effectively as a radio
station operator in the Rochester Area; and (ii) pursuant to an
agreement the terms of which shall not, in the sole judgment of the
United States after consulting with New York interfere with the ability
of the purchaser to compete effectively.
B. ARS agrees to use its best efforts to divest the Lincoln Assets
and WCMF-AM Assets, and to obtain all regulatory approvals necessary
for such divestitures, as expeditiously as possible. The United States,
in its sole discretion, may extend the time period for the divestitures
for two (2) additional thirty (30)-day periods of time, not to exceed
sixty (60) calendar days in total.
C. In accomplishing the divestitures ordered by this Final
Judgment, ARS promptly shall make known, by usual and customary means,
the availability of the Lincoln Assets and, unless relieved of this
obligation by compliance with paragraph E of this Section, the WCMF-AM
Assets. ARS shall inform any person making a bona fide inquiry
regarding a possible purchase that the
[[Page 57705]]
sale is being made pursuant to this Final Judgment and provide such
person with a copy of the Final Judgment. ARS shall make known to any
person making an inquiry regarding a possible purchase of the Lincoln
Assets or WCMF-AM Assets that the assets described in Section II (D)
and (E) are being offered for sale. ARS and Lincoln shall also offer to
furnish to all bona fide prospective purchasers, subject to customary
confidentiality assurances, all information regarding the Lincoln
Assets and, unless relieved of this obligation by compliance with
paragraph E of this Section, WCMF-AM Assets customarily provided in a
due diligence process, except such information that is subject to
attorney-client privilege or attorney work-product privilege. ARS shall
make available such information to plaintiffs at the same time that
such information is made available to any other person.
D. ARS and Lincoln shall permit bona fide prospective purchasers of
the Lincoln Assets and, unless relieved of this obligation by
compliance with paragraph E of this Section, WCMF-AM Assets, to have
access to personnel and to make such inspection of the assets, and any
and all financial, operational or other documents and information
customarily provided as part of a due diligence process.
E. ARS may fully comply with those portions of Section IV and V
that pertain to the divestiture of the WCMF-AM Assets by entering,
within forty (40) days of the filing of this Final Judgment, into a
binding agreement to divest the WCMF-AM Assets to an Acquirer approved
by the United States, in its sole judgment after consulting with New
York.
V. Appointment of Trustee
A. In the event that ARS has not divested the Lincoln Assets and
WCMF-AM Assets within the time periods specified in Section IV above,
the Court shall appoint, on application of the United States, a trustee
selected by the United States to effect the divestiture of the assets.
B. After the trustee's appointment has become effective, only the
trustee shall have the right to sell the Lincoln Assets and WCMF-AM
Assets. The trustee shall have the power and authority to accomplish
the divestiture at the best price then obtainable upon a reasonable
effort by the trustee, subject to the provisions of Section V and VIII
of this Final Judgment and consistent with FCC regulations, and shall
have other powers as the Court shall deem appropriate. Subject to
Section V(C) of this Final Judgment, the trustee shall have the power
and authority to hire at the cost and expense of ARS any investment
bankers, attorneys or other agents reasonably necessary in the judgment
of the trustee to assist in the divestiture, and such professionals or
agents shall be solely accountable to the trustee. The trustee shall
have the power and authority to accomplish the divestiture at the
earliest possible time to a purchaser acceptable to the United States,
in its sole judgment after consulting with New York, and shall have
such other powers as this Court shall deem appropriate. ARS shall not
object to the sale of the Lincoln Assets and WCMF-AM Assets by the
trustee on any grounds other than the trustee's malfeasance. Any such
objection by ARS must be conveyed in writing to plaintiffs and the
trustee no later than fifteen (15) calendar days after the trustee has
provided the notice required under Section VIII of this Final Judgment.
C. The trustee shall serve at the cost and expense of ARS, on such
terms and conditions as the Court may prescribe, and shall account for
all monies derived from the sale of the assets sold by the trustee and
all costs and expenses so incurred. After approval by the Court of the
trustee's accounting, including fees for its services and those of any
professionals and agents retained by the trustee, all remaining monies
shall be paid to ARS and the trustee's services 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 divestiture 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. ARS shall take no action to interfere with or impede the
trustee's accomplishment of the divestiture of the Lincoln Assets and
WCMF-AM Assets, and shall use its best efforts to assist the trustee in
accomplishing the required divestiture, including best efforts to
effect all necessary regulatory approvals. Subject to a customary
confidentiality agreement, the trustee shall have full and complete
access to the personnel, books, records, and facilities related to the
Lincoln Assets and WCMF-AM Assets, and ARS shall develop such financial
or other information as may be necessary to the divestiture of the
Lincoln Assets and WCMF-AM Assets. ARS shall permit prospective
purchasers of the Lincoln Assets and WCMF-AM Assets to have access to
personnel and to make such inspection of physical facilities and any
and all financial, operational or other documents and information as
may be relevant to the divestiture required by this Final Judgment.
E. After its appointment becomes effective, the trustee shall file
monthly reports with ARS, the plaintiffs and the Court, setting forth
the trustee's efforts to accomplish divestiture of the Lincoln Assets
and WCMF-AM Assets as contemplated 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 Lincoln Assets and WCMF-AM
Assets, 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 divest these operations.
F. Within six (6) months after its appointment has become
effective, if the trustee has not accomplished the divestiture required
by Section IV of this Final Judgment, the trustee shall promptly file
with the Court a report setting forth (1) the trustee's efforts to
accomplish the required divestiture, (2) the reasons, in the trustee's
judgment, why the required divestiture has not been accomplished, and
(3) the trustee's recommendations; 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 reports to
ARS, the United States and New York, who shall each have the right to
be heard and to make additional recommendations. The Court shall
thereafter enter such orders as it shall deem appropriate to accomplish
the purpose of this Final Judgment, which shall, if necessary, include
extending the term of the trustee's appointment.
VI. Termination of Joint Sales Agreement and Option to Purchase
ARS and Great Lakes are hereby ordered and directed, within five
(5) business days after notice of entry of this Final Judgment, to
terminate the WNVE Joint Sales Agreement, and to cease and desist from
entering into any joint sales agreements between them in the Rochester
Area. ARS and Great Lakes are further ordered and directed, within five
(5) business days after notice
[[Page 57706]]
of entry of this Final Judgment, to terminate the WNVE Option
Agreement, unless said Option Agreement has theretofore been assigned
by ARS to an Acquirer approved in advance by the United States, in its
sole judgment after consulting with New York.
VII. Preservation of Assets/Hold Separate
Until the divestiture of the Lincoln Assets required by Section IV
of the Final Judgment has been accomplished.
A. ARS and Lincoln shall continue to take all steps necessary to
ensure that WHAM-AM, WPXY-FM, WVOR-FM and WHTK-AM, until divested
pursuant to Section IV, are maintained as separate, independent,
ongoing, economically viable and active competitors to ARS and that,
except as necessary to comply with Section IV and paragraphs B and C of
this Section of the Final Judgment, the management of said stations,
including the performance of decision-making functions regarding
marketing and pricing, will be kept separate and apart from, and not
influenced by, ARS.
B. ARS and Lincoln shall use all reasonable efforts to maintain and
increase sales of advertising time by WHAM-AM, WPXY-FM, WVOR-FM and
WKTK-AM, until divested pursuant to Section IV, and shall maintain at
1995 or previously approved levels for 1996, whichever are higher,
promotional advertising, sales, marketing and merchandising support for
such radio stations.
C. ARS and Lincoln shall take all steps necessary to ensure that
the assets used by Lincoln in the operation of WHAM-AM, WPXY-FM, WVOR-
FM and WHTK-AM are fully maintained until divested pursuant to Section
IV. Lincoln's sales and marketing employees shall not be transferred or
reassigned to any non-Lincoln ARS station, except for transfer bids
initiated by employees pursuant to ARS' regular, established job
posting policy, provided that ARS gives plaintiffs and Acquirer ten
(10) days' notice of such transfer.
D. Neither ARS not Lincoln shall, except as part of a divestiture
approved by the United States after consulting with New York or in
connection with the consummation of the Asset Purchase Agreement, sell
any Lincoln Assets.
E. ARS and Lincoln shall take no action that would jeopardize the
sale of the Lincoln Assets.
F. ARS and Lincoln shall appoint a person or persons to oversee the
assets to be held separate and who will be responsible for ARS' and
Lincoln's compliance with Section VII of this Final Judgment.
VIII. Notification
Within two (2) business days following execution of a binding
agreement to divest, including all contemplated ancillary agreements
(e.g., financing), to effect, in whole or in part, any proposed
divestiture pursuant to Section IV or V of this Final Judgment, ARS or
the trustee, whichever is then responsible for effecting the
divestiture, shall notify plaintiffs of the proposed divestiture. If
the trustee is responsible, it shall similarly notify ARS. 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 Lincoln Assets or the WCMF-AM
Assets, together with full details of same. Within fifteen (15)
calendar days of receipt by plaintiffs of such notice, plaintiffs may
request from ARS, the proposed purchaser or purchasers, any other third
party, or the trustee, if applicable, additional information concerning
the proposed divestiture, the proposed purchaser, and any other
potential purchaser. ARS and the trustee shall furnish any additional
information requested within fifteen (15) calendar days of the receipt
of the request. Within thirty (30) calendar days after receipt of the
notice or within twenty (20) calendar days after plaintiffs have been
provided the additional information, whichever is later, the United
States after consulting with New York shall provide written notice to
ARS and the trustee, if there is one, stating whether or not it objects
to the proposed divestiture. If the United States fails to object
within the period specified, or if the United States provides written
notice to ARS and the trustee, if there is one, that it does not
object, then the divestiture may be consummated, subject only to ARS'
limited right to object to the sale under Section V (B) of this Final
Judgment. A divestiture proposed under Section IV shall not be
consummated if the United States objects to the identity of the
proposed purchaser or purchasers. Upon objection by the United States,
or by ARS under the proviso in Section V (B), a divestiture proposed
under Section V shall not be consummated unless approved by the Court.
IX. Financing
ARS is ordered and directed not to finance all or any part of any
purchase by an Acquirer made pursuant to Sections IV or V of this Final
Judgment without the prior written consent of the United States.
X. Affidavits
A. Within twenty (20) calendar days of the filing of this Final
Judgment and every thirty (30) calendar days thereafter until the
divestiture has been completed, whether pursuant to Section IV or
Section V of this Final Judgment, ARS shall deliver to plaintiffs an
affidavit as to the fact and manner of ARS' compliance with Section 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, was contacted by
ARS, or their representatives, made an offer to acquire, expressed an
interest in acquiring, entered into negotiations to acquire, or made an
inquiry about acquiring, any interest in the Lincoln Assets or the
WCMF-AM Assets, and shall describe in detail each contact with any such
person during that period. Each such affidavit shall also include a
description of the efforts that ARS has taken to solicit a buyer for
the Lincoln Assets and the WCMF-AM Assets.
B. Within twenty (20) calendar days following the entry of this
Final Judgment, ARS and Great Lakes shall deliver to plaintiffs an
affidavit as to the fact and manner of their compliance with Section VI
of this Final Judgment.
C. Within twenty (20) calendar days of the filing of this Final
Judgment, ARS shall deliver to plaintiffs an affidavit which describes
in reasonable detail all actions ARS has taken and all steps ARS has
implemented on an on-going basis to preserve WHAM-AM, WPXY-FM, WVOR-FM
and WHTK-AM pursuant to Section VII of this Final Judgment. ARS shall
deliver to plaintiffs an affidavit describing any changes to the
efforts and actions outlined in its earlier affidavit(s) filed pursuant
to this Section within fifteen (15) calendar days after such change is
implemented.
D. ARS shall preserve all records of all efforts made to preserve
WHAM-AM, WPXY-FM, WVOR-FM and WHTK-AM and to divest the Lincoln Assets
and the WCMF-AM Assets.
XI. Notice
A. Unless such transaction is otherwise subject to the reporting
and waiting period requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''),
ARS, without providing advance notification to the plaintiffs, shall
not directly or indirectly acquire any assets of or any interest,
including any financial, security, loan, equity or management interest,
in any
[[Page 57707]]
Non-ARS Radio Station; provided, however, that, where not inconsistent
with the HSR Act, ARS need not provide notice under this provision for
an acquisition of any one, but not more than one, of any Class A
Licensed FM radio station in the Rochester Area other than WDKX, 103.9
FM, and WMAX, 106.7 FM, or their successors.
B. ARS and Great Lakes, without providing advance notification to
the plaintiffs, shall not directly or indirectly enter into any
agreement or understanding that would allow ARS or Great Lakes to
market or sell advertising time or to establish advertising prices for
any Non-ARS Radio Station.
C. Notification described in (A) and (B) above shall be provided to
the plaintiffs in the same format as, and per the instructions relating
to, the Notification and Report Form set forth in the Appendix to Part
803 of Title 16 of the Code of Federal Regulations as amended, except
that, in the case of ARS, the information requested in Items 5-9 of the
instructions must be provided only with respect to ARS Rochester Radio
Stations. Notification shall be provided at least thirty (30) days
prior to acquiring any such interest or entering any such agreement
covered in (A) or (B) above, and shall include, beyond what may be
required by the applicable instructions, the names of the principal
representatives of the parties to the agreement who negotiated the
agreement, and any management or strategic plans discussing the
proposed transaction. If within the 30-day period after notification,
representatives of the plaintiffs make a written request for additional
information, ARS or Great Lakes shall not consummate the proposed
transaction or agreement until twenty (20) days after submitting all
such additional information, Early termination of the waiting periods
in this paragraph may be requested and, where appropriate, granted in
the same manner as is applicable under the requirements and provisions
of the HSR Act and rules promulgated thereunder.
D. This Section shall be broadly construed and any ambiguity or
uncertainty regarding the filing of notice under this Section shall be
resolved in favor of filing notice.
XII. Compliance Inspection
For the purpose 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 plaintiffs, including
consultants and other persons retained by the plaintiffs, shall, upon
written request of the United States Attorney General, or of the
Assistant Attorney General in charge of the Antitrust Division, or of
the New York Attorney General, and on reasonable notice to defendants
made to their principal offices, 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 any matters
contained in this Final Judgment; and
(2) Subject to the reasonable convenience of defendants and
without restraint or interference from them, to interview directors,
officers, employees and agents of defendants, who may have counsel
present, regarding any such matters.
B. Upon the written request of the United States Attorney General,
or of the Assistant Attorney General in charge of the Antitrust
Division, or of the New York Attorney General, made to defendants'
principal offices, defendants shall submit such written reports, under
oath if requested, with respect to any of the matters contained in this
Final Judgment as may be requested.
C. No information or documents obtained by the means provided in
this Section XII shall be divulged by any representative of the United
States or New York to any person other than a duly authorized
representative of the Executive Branch of the United States or the
State of New York, except in the course of legal proceedings to which
either 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 any
defendant to plaintiffs, and such defendant represents and identifies
in writing the material in any such information or documents to which a
claim of protection may be asserted under Rule 26(c)(7) of the Federal
Rules of Civil Procedure, and such defendant marks each pertinent page
of such material, ``Subject to claim of protection under Rule 26(c)(7)
of the Federal Rules of Civil Procedure,'' then ten (10) calendar days'
notice shall be given by plaintiffs to such defendant prior to
divulging such material in any legal proceeding (other than a grand
jury proceeding) to which such defendant is not a party.
XIII. Retention of Jurisdiction
Jurisdiction is retained by this Court at any time for such further
orders and directions as may be necessary or appropriate for the
construction, implementation or modification of any provisions of this
Final Judgment, for the enforcement of compliance herewith, and for the
punishment of any violation 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:-----------------------------------------------------------------
----------------------------------------------------------------------
United States District Judge
Competitive Impact Statement
The United States, pursuant to Section 2(b) of the Antitrust
Procedures and Penalties Act (``APPA''), 15 U.S.C. 16(b)-(h), files
this Competitive Impact Statement relating to the proposed Final
Judgment submitted for entry in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
The plaintiffs filed a civil antitrust Complaint on October 24,
1996, alleging that the proposed acquisition of The Lincoln Group, L.P.
(``Lincoln'') by American Radio Systems Corporation (``ARS'') would
violate Section 7 of the Clayton Act, 15 U.S.C. 18, and that the Joint
Sales Agreement (``JSA'') between ARS and Great Lakes Wireless Talking
Machine LLC (``Great Lakes'') violates Section 1 of the Sherman Act, 15
U.S.C. 1. The Compliant alleges that ARS and Lincoln own and operate
three and four radio stations respectively in the Rochester, New York
area. In addition, ARS has a JSA with a radio station owned by Great
Lakes (WNVE-FM), allowing ARS post-merger to control the sale of
advertising time on an eighth station as well. This acquisition would
allow ARS to control advertising time on six of the top eight radio
stations in the Rochester area. As a result, the combination of these
companies would substantially lessen competition in the sale of radio
advertising time in Rochester, New York and the surrounding area.
Moreover, the Complaint alleges that, beginning at least as early
as October 1, 1995 and continuing to this day, ARS and Great Lakes
entered into a contract, the purpose of which is the elimination of all
pricing competition between two rival radio stations, to the detriment
of purchasers of radio advertising time in the Rochester area. As such,
it constitutes an illegal contract in restraint of interstate trade and
commerce.
[[Page 57708]]
The prayer for relief seeks: (a) Adjudication that ARS's proposed
acquisition of Lincoln would violate Section 7 of the Clayton Act; (b)
adjudication that ARS' JSA with Great Lakes is a violation of Section 1
of the Sherman Act; (c) preliminary and permanent injunctive relief
preventing the consummation of the proposed acquisition and enjoining
the continuation of the JSA; (d) an award to the United States of the
costs of this action; and (e) such other relief as is proper.
Shortly before this suit was filed, a proposed settlement was
reached that permits ARS to complete its acquisition of Lincoln, yet
preserves competition in the market for which the transaction would
raise significant competitive concerns. A Stipulation and proposed
Final Judgment embodying the settlement were filed at the same time the
Complaint was filed.
The proposed Final Judgment orders ARS to divest WHAM-AM and WVOR-
FM, both currently owned by Lincoln, and WCMF-AM, currently owned by
ARS. Unless the United States grants a time extension, ARS must divest
these radio stations either within six months after the filing of the
Final Judgment, or within five (5) business days after notice of entry
of the Final Judgment, whichever is later. If ARS does not divest WCMF-
AM and the Lincoln Assets within the divestiture period, the Court may
appoint a trustee to sell the assets. The proposed Final Judgment also
requires ARS to ensure that, until the divestiture mandated by the
Final Judgment has been accomplished, all of Lincoln's present stations
(including WHAM-AM and WVOR-FM) will be operated independently as
viable, ongoing businesses, and kept separate and apart from ARS' other
Rochester radio stations. Further, the proposed Final Judgment requires
ARS to give the United States prior notice as to certain future radio
station acquisitions in Rochester.
In addition, the Final Judgment requires ARS and Great Lakes to
terminate the JSA that allows ARS to sell radio advertising time for
WNVE within five (5) business days after receiving notice of entry of
the Final Judgment, and to cease and desist from entering into any
future joint sales agreements between them in the Rochester, New York
Metro Survey Area. ARS and Great Lakes also must terminate their
``Option Agreement'' dated September 28, 1995, between them, within
five (5) business days after receiving notice of the entry of the Final
Judgment, unless ARS has first assigned this agreement to any entity or
entities acquiring either the Lincoln Assets or WCMF-AM. Furthermore,
the proposed Final Judgment requires ARS and Great Lakes to give the
United States prior notice before entering any future agreements that
would grant ARS or Great Lakes the right to sell advertising time or to
establish advertising prices for non-ARS radio stations in Rochester.
The plaintiffs and the defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA. Entry of
the proposed Final Judgment would terminate this action, except that
the Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II. The Alleged Violations
A. The Defendants
Defendant ARS is a Delaware corporation with its headquarters in
Boston, Massachusetts. It currently owns and operates 62 radio stations
in 14 metropolitan areas in the United States. In 1995, ARS reported
total net revenues of approximately $97 million. ARS owns three radio
stations in Rochester, and sells advertising for one other radio
station (WNVE) under a JSA.
Lincoln is a New York limited partnership headquartered in
Syracuse, New York. Lincoln owns four radio stations in Rochester and
two in Salem, Ohio. Great Lakes is a New York limited partnership
headquartered in East Rochester, New York. It owns one radio station in
Rochester, WNVE-FM
B. Description of the Events Giving Rise to the Alleged Violations
On February 23, 1996, ARS agreed to purchase Lincoln for
approximately $30.5 million. As a result of the proposed transaction;
ARS would own or have the right to sell advertising for six of the top
eight radio stations in Rochester.
ARS and Great Lakes formerly competed for the business of local and
national companies seeking to advertise in the Rochester area. This
competition ended after ARS and Great Lakes entered into a JSA on
September 28, 1995, giving ARS exclusive control over the sale of
advertising on Great Lakes' radio station, WNVE-FM. The JSA eliminated
rivalry between direct competitors, to the detriment of radio
advertisers, without realizing any procompetitive benefits.
The proposed acquisition between ARS and Lincoln and the JSA
between ARS and Great Lakes precipitated the Government's suit.
C. Anticompetitive Consequences of the Proposed Merger
1. Sale of Radio Advertising Time in Rochester. The Complaint
alleges that the provision of advertising time on radio stations
serving the Rochester, New York Metro Survey Area (``MSA'') constitutes
a line of commerce and section of the country, or relevant market, for
antitrust purposes. The Rochester MSA is the geographical unit for
which Arbitron furnishes radio stations, advertisers, and advertising
agencies in Rochester with data to aid in evaluating radio audience
size and composition. The Rochester MSA includes six counties: Monroe;
Wayne; Ontario; Livingston; Genesee and Orleans. Local and national
advertising that is placed on radio stations within the Rochester MSA
is aimed at reaching listening audiences in the Rochester MSA, and
radio stations outside of the Rochester MSA do not provide effective
access to this audience. Thus, advertisers would not buy enough
advertising time from radio stations located outside of the Rochester
MSA to defeat a small but significant nontransitory increase in radio
advertising prices within the Rochester MSA.
Radio advertising time is sold by radio stations directly or
through their national representatives. Radio stations generate almost
all of their revenues from the sale of advertising time to local and
national advertisers.
Many local and national advertisers purchase radio advertising time
in Rochester because such advertising is preferable to advertising in
other media for their specific needs. For such advertisers, radio time:
may be less expensive and more cost-efficient than other media at
reaching the advertiser's target audience (individuals most likely to
purchase the advertiser's products or services); may reach certain
target audiences that cannot be reached as effectively through other
media; or may offer promotional opportunities to advertisers that they
cannot exploit as effectively using other media. For these reasons,
many local and national advertisers in Rochester who purchase radio
advertising time view radio either as a necessary advertising medium
for them, or as a necessary advertising complement to other media.
Although some local and national advertisers may switch some of
their advertising to other media rather than absorb a price increase in
radio advertising time in Rochester, the existence of such advertisers
would not prevent radio stations from profitably raising their prices a
small but
[[Page 57709]]
significant amount to those advertisers who have strong preferences for
using radio over other media for some or all of their advertising
campaigns. Radio stations, which negotiate prices individually with
advertisers, can identify those advertisers with strong radio
preferences. Consequently, radio stations can charge different
advertisers different rates. Because of this ability to price
discriminate between different customers, radio stations may charge
higher prices to advertisers that view radio as particularly effective
for their needs, while maintaining lower prices for other advertisers.
2. Harm to Competition. The Complaint alleges that ARS' proposed
acquisition of Lincoln would lessen competition substantially in the
provision of radio advertising time in the Rochester MSA. The proposed
acquisition would create further market concentration in an already
highly concentrated market, and ARS would control a substantial share
of the advertising revenues in the market. ARS presently controls
approximately 34% of all radio advertising revenues in Rochester
(including its JSA with Great Lakes), and its market share would rise
to approximately 64% after the proposed merger. According to the
Herfindahl-Hirschman Index (``HHI''), a widely-used measure of market
concentration defined and explained in Exhibit A hereto, the pre-merger
HHI in this market is 2704, which would rise to 4744 after the merger,
with a change of 2040. This substantial increase in concentration will
reduce competition and lead to higher prices and reduced services.
Advertisers select radio stations to reach a large percentage of
their target audience based upon a number of factors, including, inter
alia, the size of the station's audience and the characteristics of its
audience. Many advertisers seek to reach a large percentage of their
target audience by selecting those stations whose audience best
correlates to their target audience. If a number of stations
efficiently reach that target audience, advertisers benefit from the
competition among such stations to offer better prices or services.
Today, several ARS and Lincoln stations compete head-to-head to reach
the same audiences and, for many local and national advertisers buying
time in Rochester, they are close substitutes for each other based on
their specific audience characteristics.
During price negotiations between advertisers and radio stations,
advertisers will provide the stations with information about their
advertising needs, including their target audience and the desired
frequency and timing of ads. Radio stations thus have the ability to
charge advertisers differing prices after assessing the number and
attractiveness of alternative radio stations that can meet a particular
advertiser's specific target audience needs.
After the merger, advertisers attempting to reach certain audiences
who now mostly listen to ARS and Lincoln stations would face less
desirable choices if they buy time solely from firms other than the
merged entities in order to reach these audiences. Because advertisers
seeking to reach these audiences would have inferior alternatives to
the merged entity as a result of the merger, the acquisition would give
ARS the ability to raise its rates and reduce the quality of its
service.
The Department also considered how the proposed merger would
concentrate Rochester's strongest radio signals into the hands of a
single entity. After the merger, ARS would own four of the seven Class
B FM license radio stations in the Rochester area, and would have
controlled advertising on a fifth Class B FM license radio station
through its JSA with Great Lakes. ARS would also own the area's only
clear channel AM station. The merger would therefore have given ARS
control over advertising on six of Rochester's eight most powerful
radio signals.
If ARS raised prices or lowered services to those advertisers who
buy ARS and Lincoln stations because of their strength in delivering
access to certain specific audiences, non-ARS radio stations in
Rochester would not be induced to change their formats to attract a
greater share of the same listeners and to serve better those
advertisers seeking to reach such listeners. Successful radio stations
are unlikely to undertake a format change solely in response to small
but significant increases in price being charged to advertisers by a
multi-station firm such as ARS, because they would likely have to give
up their existing audiences. Less successful stations that change
format may still not attract enough listeners to provide a suitable
alternative to the merged entity.
New entry into the Rochester radio advertising market is highly
unlikely in response to a price increase by the merged parties. No
unallocated radio broadcast frequencies exist in Rochester. Also,
stations located in adjacent communities cannot boost their power so as
to enter the Rochester market without interfering with other stations
on the same or similar frequencies, a violation of Federal
Communications Commission (``FCC'') regulations.
For these reasons, the Department concludes that the merger as
proposed would substantially lessen competition in the sale of radio
advertising time in the Rochester MSA, eliminate actual competition
between ARS and Lincoln, and result in increased rates for radio
advertising time in the Rochester MSA, all in violation of Section 7 of
the Clayton Act.
D. The JSA is an Illegal Restraint of Trade
The complaint alleges that the JSA between ARS and Great Lakes
violates Section 1 of the Sherman Act. Before entering into the JSA,
Great Lakes station WNVE-FM competed with ARS Station WCMF-FM for
advertisers. Advertisers regularly played one of these stations off
against the other to obtain better rates and increased services. In the
fall of 1995, ARS and Great Lakes entered into a JSA pursuant to which
ARS exclusively prices and sells all radio advertising time on WNVE-FM.
In return, ARS pays Great Lakes a monthly lump sun.
The JSA gives ARS complete control over the sale of the inventory
of its direct competitor. In so doing, the JSA eliminates one of the
most important forms of competition between two firms in an open
market: independent pricing. The agreement thus gives rise to the
inference that it will have anticompetitive effects.
This is the first JSA assessed by the Department. The FCC, though
not purporting to address antitrust issues, have suggested that, at
least in certain circumstances (without addressing the circumstances
present here), some JSAs may be beneficial. Accordingly, the Department
considered whether the JSA possessed any redeeming procompetitive
virtues. However, the creators of this JSA have not offered any
plausible procompetitive justifications for the JSA, and our
examination revealed none.
Based on our investigation, we found that this JSA did not improve
either the operations of the radio stations or the quality of their
products. The JSA did not integrate the management or operations of the
two stations. Nor did the JSA create any procompetitive benefits for
advertisers. Indeed, the Department uncovered evidence that the JSA was
created for the simple purpose of ending price competition between the
two stations. As one key participant explicitly acknowledged, the JSA
was entered into because the two stations ``were fighting needlessly
over the advertising dollar.''
[[Page 57710]]
Given the JSA's inherently suspect nature and conspicuous lack of
procompetitive virtues, the JSA is an unreasonable restraint that
violates Section 1 of the Sherman Act. See Federal Trade Comm'n v.
Indian Federation of Dentists, 476 U.S. 447, 459 (1986).\1\ Moreover,
though not necessary to the conclusion that this JSA is anticompetitve,
our investigation uncovered evidence that, following the creation of
the JSA, advertising prices increased despite a decline in
listenership.
---------------------------------------------------------------------------
\1\ The Department recognizes that JSAs may differ both in their
terms and in their potential for realizing procompetitive
efficiencies.
---------------------------------------------------------------------------
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment would preserve competition in the sale
of radio advertising time in the Rochester MSA. It requires the
divestiture of WHAM-AM, WVOR-FM and WCMF-AM. It ends ARS' control of
WNVE advertising time. This relief will reduce the market share ARS
would have achieved through the merger from over 60 percent to about 40
percent of the Rochester radio market. The divestitures will preserve
choices for advertisers and help ensure that radio advertising rates in
Rochester do not increase, and that services do not decline.
Unless the United States grants an extension of time, ARS must
divest WHAM-AM, WVOR-FM and WCMF-AM either within six months after the
Final Judgment has been filed or within five (5) business days after
notice of entry of the Final Judgment, whichever is later. Until the
divestitures take place, all stations now owned by Lincoln will be
maintained as independent competitors to the other stations in the
Rochester MSA, including the ARS stations.
If ARS fails to divest WHAM-AM, WVOR-FM and WCMF-AM within the time
periods specified in the Final Judgment, the Court, upon application of
the United States, shall appoint a trustee nominated by the United
States to effect these divestitures. If a trustee is appointed, the
proposed Final Judgment provides that ARS will pay all costs and
expenses of the trustee and any professionals agent retained by the
trustee. The compensation paid to the trustee and any persons retained
by the trustee shall be both reasonable in light of the value of WHAM-
AM, WVOR-FM and WCMF-AM, and based on a fee arrangement providing the
trustee with an incentive based on the price and terms of the
divestiture and the speed with which it is accomplished. After
appointment, the trustee will file monthly reports with ARS, the
plaintiffs and the Court, setting forth the trustee's efforts to
accomplish the divestiture ordered under the proposed Final Judgment.
If the trustee has not accomplished the divestiture within six (6)
months after its appointment, the trustee shall promptly file with the
Court a report setting forth (1) the trustee's efforts to accomplish
the required divestiture, (2) the reasons, in the trustee's judgment,
why the required divestiture has not been accomplished, and (3) the
trustee's recommendations. At the same time, the trustee will furnish
such report to ARS and the plaintiffs, who will each have the right to
be heard and to make additional recommendations.
The proposed Final Judgment requires that ARS maintain all stations
now owned by Lincoln separate and apart from ARS, pending divestiture.
The Judgment also contains provisions to ensure that these Lincoln
stations will be preserved, so that the stations after divestiture will
remain viable, aggressive competitors.
In addition, the proposed Final Judgment requires ARS and Great
Lakes to terminate the WNVE Joint Sales Agreement within five (5)
business days after notice of entry of the Final Judgment, and to cease
and desist from entering into any future joint sales agreements between
them in the Rochester area. This prohibition prevents the parties from
re-entering what the Department has already determined would be an
illegal contract, and is designed to prevent a recurrence of a
violation of Section 1 of the Sherman Act, not merely as a way to guard
against another possible violation of Section 7 of the Clayton Act.
Moreover, ARS and Great Lakes must terminate the WNVE Option
Agreement (which gives ARS the right to purchase WNVE) within five (5)
business days after notice of entry of the Final Judgment, unless the
option has been assigned to one of the entities that is buying either
WHAM-FM, WVOR-FM or WCMF-AM. This prohibition prevents further
increases in concentration by ARS without providing the government with
adequate notice.
The proposed Final Judgment also prohibits ARS from entering into
certain agreements with other Rochester radio stations without
providing at least thirty (30) days' notice to the Department of
Justice. Specifically, ARS must notify the Department before acquiring
any significant interest in another Rochester radio station, except for
acquisition of one additional Class A-License FM radio station in the
Rochester MSA other than WDKX-FM or WMAX-FM. Acquisitions beyond this
would raise competitive concerns but might be too small to be otherwise
reportable under the Hart-Scott-Rodino (``HSR'') premerger notification
process.
Moreover, ARS and Great Lakes may not agree to sell radio
advertising time for any other Rochester radio station, or have any
other Rochester radio station sell advertising time for them, without
providing the United States with notice. This provision ensures that
the Department will receive advance notice of any acquisition, or
agreements, through which ARS or Great Lakes would increase the amount
of advertising time on radio stations that they can sell. In
particular, this provision requires ARS and Great Lakes to notify the
Department before they enter into any joint sales agreements
(``JSAs''), where one station takes over another station's advertising
time, or enter into any local marketing agreements (``LMAs''), where
one station takes over another station's broadcasting and advertising
time, in the Rochester area. Agreements whereby ARS sells advertising
for or manages other area radio station would effectively increase ARS'
market share in the Rochester MSA. In analyzing the Rochester radio
market, the Department treated ARS' present JSA station as if ARS owned
it outright. Despite their clear competitive significance, JSAs
probably would not be reportable to the Department under HSR. Thus,
this provision in the decree ensures that the Department will receive
notice of and be able to act, if appropriate, to stop any agreements
that might have anticompetitive effects in the Rochester market.
The relief in the proposed Final Judgment is intended to remedy the
competitive effects of the proposed acquisition of Lincoln by ARS, and
to eliminate a contract between ARS and Great Lakes that constitutes an
illegal restraint of trade. Nothing in this Final Judgment is intended
to limit the plaintiffs' ability to investigate or to bring actions,
where appropriate, challenging other past or future activities of ARS
or Great Lakes in the Rochester MSA, including their entry into other
JSAs, LMAs, or other agreements related to the sale of advertising
time.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may
[[Page 57711]]
bring suit in federal court to recover three times the damages the
person has suffered, as well as costs and reasonable attorneys' fees.
Entry of the proposed Final Judgment will neither impair nor assist the
bringing of any private antitrust damage action. Under the provisions
of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the proposed Final
Judgment has no prima facie effect in any subsequent private lawsuit
that may be brought against defendants.
V. Procedures Available for Modification of the Proposed Final Judgment
The plaintiffs and the defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to the United States written comments regarding the
proposed Final Judgment. Any person who wishes to comment should do so
within sixty (60) days of the date of publication of this Competitive
Impact Statement in the Federal Register. The United States will
evaluate and respond to the comments. All comments will be given due
consideration by the Department of Justice, which remains free to
withdraw its consent to the proposed Final Judgment at any time prior
to entry. The comments and the response of the United States will be
filed with the Court and published in the Federal Register.
Written comments should be submitted to: Craig W. Conrath, Chief,
Merger Task Force, Antitrust Division, United States Department of
Justice, 1401 H Street, N.W.; Suite 4000, Washington, D.C. 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and that the parties may apply to the
Court for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
The plaintiffs considered, as an alternative to the proposed Final
Judgment, a full trial on the merits of their Complaint against
defendants. The plaintiffs are satisfied, however, that the divestiture
of the Lincoln Assets, the termination of the JSA between ARS and Great
Lakes, and other relief contained in the proposed Final Judgment will
preserve viable competition in the sale of radio advertising time in
the Rochester MSA. Thus, the proposed Final Judgment would achieve the
relief the Government would have obtained through litigation, but
avoids the time, expense and uncertainty of a full trial on the merits
of the Complaint.
VII. Standard of Review Under the APPA for Proposed Final Judgment
The APPA requires that proposed consent judgment in antitrust cases
brought by the United States be subject to a sixty (60) day comment
period, after which the court shall determine whether entry of the
proposed Final Judgment ``is in the public interest.'' In making that
determination, the court may consider--
(1) The competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration or relief sought, anticipated effects of
alternative remedies actually considered, and any other
considerations bearing upon the adequacy of such judgment;
(2) the impact of entry of such judgment upon the public
generally and individuals alleging specific injury from the
violations set forth in the complaint including consideration of the
public benefit, if any, to be derived from a determination of the
issues at trial.
15 U.S.C. 16(e). As the United States Court of Appeals for the D.C.
Circuit recently held, this statute permits a court to consider, among
other things, the relationship between the remedy secured and the
specific allegations set forth in the government's complaint, whether
the decree is sufficiently clear, whether enforcement mechanisms are
sufficient, and whether the decree may positively harm third parties.
See United States v. Microsoft, 56 F.3d 1448, 1461-62 (D.C. Cir. 1995).
In conducting this inquiry, ``[t]he Court is nowhere compelled to
go to trial or to engage in extended proceedings which might have the
effect of vitiating the benefits of prompt and less costly settlement
through the consent decree process.'' \2\ Rather,
\2\ 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 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. 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. Rep. 93-1463, 93rd Cong.
2d Sess. 8-9 (1974), reprinted in U.S.C.C.A.N. 6535, 6538.
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[a]bsent a showing of corrupt failure of the government to discharge
its duty, the Court, in making its public interest 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. para.
61,508, at 71,980 (W.D. Mo. 1977).
Accordingly, with respect to the adequacy of the relief secured by
the decree, a court may not ``engage in an unrestricted evaluation of
what relief would best serve the public.'' United States v. BNS, Inc.,
858 F.2d 456, 462 (9th Cir. 1988), citing United States v. Bechtel
Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083
(1981); see also Microsoft, 56 F.3d at 1460-62. Precedent requires that
the balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.\3\
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\3\ Bechtel, 648 F.2d 666 (citations omitted) (emphasis added);
see BNS, 858 F.2d at 463; United States v. National Broadcasting
Co., 449 F. Supp. 1127, 1143 (C.D. Cal. 1978); Gillette, 406 F.
Supp. at 716. See also Microsoft, 56 F.3d at 1461 (whether ``the
remedies [obtained in the decree are] so inconsonant with the
allegations charged as to fall outside of the `reaches of the public
interest' '') (citations omitted).
The proposed Final Judgment, therefore, should not be reviewed under a
standard of whether its it certain to eliminate every anticompetitive
effect of a particular practice or whether it mandates certainty of
free competition in the future. Court approval of a final judgment
requires a standard more flexible and less strict than the standard
required for a finding of liability. ``[A] proposed decree must be
approved even if it fall 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 inter-
est.' '' \4\
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\4\ United States v. American Tel. and Tel Co., 552 F. Supp.
131, 151 (D.D.C. 1982), aff'd. sub nom. Maryland v. United States,
460 U.S. 1001 (1983), quoting Gillette Co. 406 F. Supp. at 716
(citations omitted); United States v. Alcan Aluminum, Ltd., 605 F.
Supp. 619, 622 (W.D. Ky. 1985).
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[[Page 57712]]
This is strong and effective relief that should fully address the
competitive harm posed by the proposed merger and the JSA.
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Respectfully submitted,
Dando B. Cellini,
Merger Task Force, U.S. Department of Justice, Antitrust Division, 1401
H Street, N.W.; Suite 4000, Washington, D.C. 20530, (202) 307-0001.
Dated: October 24, 1996.
Exhibit A--Definition of HHI and Calculations for Market
``HHI'' means the Herfindahl-Hirschman Index, a commonly accepted
measure of market concentration. It is calculated by squaring the
market share of each firm competing in the market and then summing the
resulting numbers. For example, for a market consisting of four firms
with shares of thirty, thirty, twenty, and twenty percent, the HHI is
2600 (302 + 302 + 202 + 202 = 2600). The HHI takes
into account the relative size and distribution of the firms in a
market and approaches zero when a market consists of a large number of
firms of relatively equal size. The HHI increases both as the number of
firms in the market decreases and as the disparity in size between
those firms increases.
Markets in which the HHI is between 1000 and 1800 points are
considered to be moderately concentrated, and those in which the HHI is
in excess of 1800 points are considered to be concentrated.
Transactions that increase the HHI by more than 100 points in
concentrated markets presumptively raise antitrust concerns under the
Merger Guidelines. See Merger Guidelines Sec. 1.51.
[FR Doc. 96-28617 Filed 11-6-96; 8:45 am]
BILLING CODE 4410-01-M
