[Federal Register Volume 63, Number 232 (Thursday, December 3, 1998)]
[Notices]
[Pages 66820-66828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-32148]
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DEPARTMENT OF JUSTICE
Antitrust Division
Proposed Final Judgment and Competitive Impact Statement; United
States of America v. Chancellor Media Corp. and Kunz & Co.
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 been filed with the
United States District Court for the District of Columbia in United
States of America v. Chancellor Media Corporation and Kunz & Company,
Case No. 1:98CV0273. 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 November 12,
1998, alleging that the proposed acquisition of Kunz & Company
(``Kunz'') by Chancellor Media Corporation (``Chancellor'') would
violate Section 7 of the Clayton Act, 15 U.S.C. 18. The Complaint
alleges that Chancellor and Kunz compete head-to-head to sell outdoor
advertising in four counties: (1) Kern County, California; (2) Kings
County, California; (3) Inyo County, California; and (4) Mojave County,
Arizona (collectively ``the Four Counties''). Outdoor advertising
companies sell advertising space, such as on billboards, to local and
national customers. The outdoor advertising business in the Four
Counties is highly concentrated. Chancellor and Kunz have a combined
share of revenue ranging from about 60 percent to a virtual monopoly in
the Four Counties. Unless the acquisition is blocked, competition would
be substantially lessened in the Four Counties, and advertisers would
pay higher prices.
The prayer for relief seeks: (a) an adjudication that the proposed
transaction described in the Complaint would violate Section 7 of the
Clayton Act; (b) preliminary and permanent injunctive relief preventing
the consummation of the transaction; (c) an award to the United States
of the costs of his action; and (d) such other relief as is proper.
Shortly before this suit was filed, a proposed settlement was
reached that permits Chancellor to complete its acquisition of Kunz,
yet preserves competition in the Four Counties where the transaction
raises significant competitive concerns. A Stipulation and proposed
Final Judgment embodying the settlement were filed at the same time the
Complaint was filed.
The proposed settlement requires Chancellor to divest all of the
outdoor advertising assets of:
(1) Kunz in Kern County and Inyo County, California; and in
Mojave County, Arizona; and
(2) Chancellor in Kings County, California.
Unless the plaintiff grants a time extension, Chancellor must divest
these outdoor advertising assets within four (4) months after the
filing of the Complaint in this action. Finally, in the event that the
Court does not, for any reason, enter the Final Judgment within that
four-month period, the divestitures are to occur within five (5)
business days after notice of entry of the Final Judgment.
If Chancellor does not divest the advertising assets in the
specified counties within the divestiture period, the Court, upon
plaintiff's application, is to appoint a trustee to sell the assets.
The proposed Final Judgment also requires that, until the divestitures
mandated by the Final Judgment have been accomplished, Chancellor shall
take all steps necessary to maintain and operate the advertising assets
as active competitors; maintain the management, staffing, sales and
marketing of the advertising assets; and maintain the advertising
assets in operable condition at current capacity configurations.
Further, the proposed Final Judgment requires Chancellor to give the
United States prior notice regarding certain future outdoor advertising
acquisitions
[[Page 66821]]
or agreements pertaining to the sale of outdoor advertising in the Four
Counties.
The plaintiff 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.
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, DC 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 Street, NW., Washington, DC 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, DC 20001.
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.
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Chancellor Media
Corporation and Kunz & Company, Defendants.
[Civil Action No. 982763]
Stipulation and Order
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. Sec. 16), and without further notice to any party or other
proceedings, provided that plaintiff has not withdrawn its consent,
which it may do at any time before the entry of the proposed Final
Judgment by serving notice thereof on defendants and by filing that
notice with the Court.
3. Defendants shall abide by and comply with the provisions of the
proposed Final Judgment pending entry of the Final Judgment by the
Court, or until expiration of time for all appeals of any Court ruling
declining entry of the proposed Final Judgment, and shall, from the
date of the signing of this Stipulation by the parties, comply with all
the terms and provisions of the proposed Final Judgment as though the
same were in full force and effect as an Order of the Court.
4. Defendants shall not consummate the transaction sought to be
enjoined by the Complaint herein before the Court has signed this
Stipulation and order.
5. This Stipulation shall apply with equal force and effect to any
amended proposed Final Judgment agreed upon in writing by the parties
and submitted to the Court.
6. In the event (a) the plaintiff withdraws its consent (as
provided in paragraph 2 above), or (b) the proposed Final Judgment is
not entered pursuant to this Stipulation, the time has expired for all
appeals of any Court ruling declining entry of the proposed Final
Judgment, and the Court has not otherwise ordered continued compliance
with the terms and provisions of the proposed Final Judgment, then the
parties are released from all further obligations under this
Stipulation, and the making of this Stipulation shall be without
prejudice to any party in this or any other proceeding.
7. Defendants represent that the divestitures ordered in the
proposed Final Judgment can and will be made, and that defendants will
later raise no claim of hardship or difficulty as grounds for asking
the Court to modify any of the divestiture provisions contained
therein.
Dated: November 12, 1998.
For Plaintiff United States of America:
Barry L. Creech,
D.C. Bar No.--421070, U.S. Department of Justice, Antitrust Division,
Merger Task Force, 1401 H Street, NW, Suite 4000, Washington, DC 20530,
(202) 307-0001.
For Defendant Kunz & Company:
Riccarda Heising,
Powell, Goldstein, Frazer & Murphy LLP, 191 Peachtree Street, NE, 16th
Floor, Atlanta, GA 30303, (404) 572-6730.
For Defendant Chancellor Media Corporation:
Steven H. Schulman,
Bruce J. Prager,
Latham & Watkins, 1001 Pennsylvania Ave., NW; Suite 1300, Washington,
DC 20004, (202) 637-2184.
So Ordered:
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United States District Judge
Certificate of Service
I, Barry L. Creech, hereby certify that, on November 12, 1998, I
caused the foregoing document to be served on defendants Kunz & Company
and Chancellor Media Corporation by having a copy mailed, first-class,
postage prepaid, to:
Steven H. Schulman, Bruce J. Prager, Latham & Watkins, 1001
Pennsylvania Ave., NW, Suite 1300, Washington, DC 20004, Counsel for
Chancellor Media Corporation
Riccarda Heising, Powell, Goldstein, Frazer & Murphy LLP, 191 Peachtree
Street, NE, 16th Floor, Atlanta, GA 30603, Counsel for Kunz & Company
Barry L. Creech,
D.C. Bar No.--421070
Final Judgment
Whereas, plaintiff, the United States of America, filed its
Complaint in this action on November 12, 1998, and plaintiff 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 essence of this Final Judgment is prompt and
certain divestiture of the outdoor advertising assets in the four
counties identified below to ensure that competition is substantially
preserved;
And whereas, plaintiff requires Chancellor and Kunz to make the
divestitures for the purpose of
[[Page 66822]]
maintaining the current level of competition in the sale of outdoor
advertising;
And whereas, Chancellor and Kunz have represented to the plaintiff
that the divestitures ordered herein can and will be made and that
Chancellor and Kunz will not later raise claims of hardship or
difficulty as grounds for asking the Court to modify any of the
divestitures 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 defendants hereto and
over the subject matter of this action. The Complaint states a claim
upon which relief may be granted against the 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. DOJ means the Antitrust Division of the United States Department
of Justice.
B. Chancellor means defendant Chancellor Media Corporation, a
Delaware corporation with its headquarters in Dallas, Texas, and its
successors, assigns, subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and directors, officers, managers,
agents, and employees, including but not limited to Martin &
MacFarlane, Inc. (``Martin''), a California corporation with its
headquarters in Dallas, Texas.
C. Kunz means defendant Kunz & Company, a California corporation
with its headquarters in Larkspur, California, and its successors,
assigns, subsidiaries, divisions groups, affiliates, partnerships and
joint ventures, and directors, officers, managers, agents, and
employees.
D. Defendants means Chancellor and Kunz.
E. Advertising Assets means the outdoor advertising display faces
owned by:
(1) Kunz in each of these three counties: Kern County, California;
Inyo County, California; and Mojave County, Arizona; and
(2) Chancellor in Kings County, California (collectively ``the Four
Counties'').
This includes all tangible and intangible assets relating to these
display faces, including all real property (owned or leased); all
licenses, permits and authorizations issued by any governmental
organization relating to the operation of the bulletins; and all
contracts, agreements, leases, licenses, commitments and understandings
pertaining to the sale of outdoor advertising on display faces.
F. Acquirer (or ``Acquirers'') means the entity or entities to whom
Chancellor and Kunz divest the Advertising Assets pursuant to this
Final Judgment.
III. Applicability
A. The provisions of this Final Judgment apply to the defendants,
their successors and assigns, their subsidiaries, 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. The defendants shall require, as a condition of the sale or
other disposition of all or substantially all of their outdoor
advertising business in any of the Four Counties, that the acquirer or
acquirers agree to be bound by the provisions of this Final Judgment.
IV. Divestiture
A. Chancellor and Kunz are hereby ordered and directed in
accordance with the terms of this Final Judgment, within four (4)
months 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 divest the Advertising Assets to an Acquirer (or
Acquirers) acceptable to DOJ in its sole discretion.
B. Chancellor and Kunz shall use their best efforts to accomplish
the divestitures as expeditiously and timely as possible. DOJ, in its
sole discretion, may extend the time period for any divestiture 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, Chancellor and Kunz promptly shall make known, by usual and
customary means, the availability of the Advertising Assets described
in this Final Judgment. Chancellor and Kunz 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. Chancellor and Kunz shall also offer to
furnish to all prospective Acquirers, subject to customary
confidentiality assurances, all information regarding the Advertising
Assets customarily provided in a due diligence process except such
information subject to attorney-client privilege or attorney work-
product privilege. Chancellor and Kunz shall make available such
information to DOJ at the same time that such information is made
available to any other person.
D. Chancellor and Kunz shall permit prospective Acquirers of the
Advertising Assets to have reasonable access to personnel and to make
such inspection of the physical facilities of the Advertising Assets
and any and all financial, operational, or other documents and
information customarily provided as part of due diligence process.
E. The defendants shall not take any action that will impede in any
way the divestiture of the Advertising Assets.
F. Divestiture of the Advertising Assets may be made to one or more
Acquires, so long as:
(1) There is only one Acquirer for any particular county's
assets in King and Inyo Counties, California and Mojave County,
Arizona;
(2) There are no more than two Acquirers for the assets in Kern
County California; and
(3) In each instance it is demonstrated to the sole satisfaction
of DOJ that the Advertising Assets will remain viable and the
divestiture of such Advertising Assets will remedy the competitive
harm alleged in the Complaint.
The divestitures, whether pursuant to Section IV or Section V of
this Final Judgment, shall be:
(1) Made to an Acquirer or Acquirers who it is demonstrated to
DOJ's sole satisfaction has or have the intent and capability
(including the necessary managerial, operational, and financial
capability) of competing effectively in the sale of outdoor
advertising; and
(2) Accomplished so as to satisfy DOJ, in its sole discretion,
that none of the terms of any agreement between an Acquirer (or
Acquirers) and Chancellor or Kunz give Chancellor or Kunz the
ability unreasonably to raise the Acquirer's (or Acquirers') costs,
to lower the Acquirer's (or Acquirers') efficiency, or otherwise to
interfere with the ability of the Acquirer (or Acquirers) to compete
effectively.
V. Appointment of Trustee
A. In the event that chancellor and Kunz have not divested the
Advertising Assets within the time specified in Section IV(A) of this
Final Judgment, the Court shall appoint, on application of the United
States, a trustee selected by DOJ in its sole discretion to effect the
divestiture of the Advertising Assets.
B. After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell the Advertising Assets. The
trustee shall have the power
[[Page 66823]]
and authority to accomplish the divestitures at the best price than
obtainable upon a reasonable effort by the trustee, subject to the
provisions of Sections IV and X of this Final Judgment, and shall have
such 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 Chancellor 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.
The trustee shall have the power and authority to accomplish the
divestitures of the Advertising Assets at the earliest possible time to
an Acquirer or Acquirers acceptable to DOJ in its sole discretion, and
shall have such other powers as this Court shall deem appropriate.
Chancellor and Kunz shall not object to a sale by the trustee on any
grounds other than the trustee's malfeasance. Any such objections by
Chancellor and Kunz must be conveyed in writing to the plaintiff and
trustee within ten (10) calendar days after the trustee has provided
the notice required under Section VII of this Final Judgment.
C. The trustee shall serve at the cost and expense of Chancellor,
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 money shall be paid to Chancellor or Kunz, as appropriate,
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 divestitures and the speed with
which they are accomplished.
D. Chancellor and Kunz shall use their best efforts to assist the
trustee in accomplishing the required divestitures, including best
efforts to effect all necessary consents and 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 Chancellor and Kunz 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. Chancellor
and Kunz shall permit prospective Acquirers of the Advertising Assets
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 pursuant to 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 businesses 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 divest 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 DOJ.
VI. Notice
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''),
defendants, without providing advance notification to DOJ, shall not
directly or indirectly acquire any assets of or any interest, including
any financial security, loan, equity or management interest, in any
outdoor advertising business:
(1) In Kern County, California that constitutes the greater of
(a) four display faces or (b) $250,000 in assets over a twelve-month
period (beginning when this Final Judgment is entered and continuing
for the term of the Final Judgment); for the purposes of this
limitation, acquisitions during each twelve-month period shall be
aggregated;
(2) In Inyo County, California; Kings County, California; or
Mojave County, Arizona that constitutes the greater of (a) four
display faces or (b) $250,000 in assets in any one of these counties
during a five-year period; for the purposes of this limitation,
there shall be two consecutive five-year periods. Acquisitions
during each of these five-year periods shall be aggregated, with the
first period ending five years after the Final Judgment is ended,
and the second period beginning immediately upon the expiration of
the first-five year period.
Such notification shall be provided to the DOJ in the same format
as, and per the instructions relating to the Notification and Report
Form set forth in the Appendix to Part 803 of Title 16 of the Code of
Federal Regulations as amended, except that the information requested
in Items 5-9 of the instructions must be provided only about outdoor
advertising operations in the Four Counties. Notification shall be
provided at least thirty (30) days prior to acquiring any such
interest, and shall include, beyond what may be required by the
applicable instructions, the names of the principal representatives of
the parties to the agreement who negotiated the agreement, and any
management or strategic plans discussing the proposed transaction. If
within the 30-day period after notification, representatives of DOJ
make a written request for additional information, defendants 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. This Section shall be broadly construed, and any ambiguity
or uncertainly regarding the filing of notice under this Section shall
be resolved in favor of filing notice.
[[Page 66824]]
VII. Notification
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 divestitures
pursuant to Sections IV or V of this Final Judgment, Chancellor and
Kunz or the trustee, whichever is then responsible for effecting the
divestitures, shall notify DOJ of the proposed divestitures. If the
trustee is responsible, it shall similarly notify Chancellor and Kunz.
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 businesses to be
divested that are the subject of the binding contract, together with
full details of same. Within fifteen (15) calendar days of receipt by
DOJ of notice, DOJ may request from Chancellor or Kunz, the proposed
Acquirer (or Acquirers), or any other third party Acquirer (or
Acquirers) additional information concerning the proposed divestitures
and the proposed Acquirer (or Acquirers). Chancellor and Kunz 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
DOJ has been provided the additional information requested from
Chancellor and Kunz, the proposed Acquirer (or Acquirers), and any
third party, whichever is later, DOJ shall provide written notice to
Chancellor and Kunz and the trustee, if there is one, stating whether
or not it objects to the proposed divestitures. If DOJ provides written
notice to Chancellor and Kunz and the trustee that DOJ does not object,
then the divestitures may be consummated, subject only to Chancellor
and Kunz's limited right to object to the sale under Section V (B) of
this Final Judgment. Absent written notice that DOJ does not object to
the proposed Acquirer (or Acquirers) or upon objection by DOJ, a
divestiture proposed under Section IV or Section V may not be
consummated. Upon objection by Chancellor and Kunz under the provision
in Section V(B), a divestiture proposed under Section V shall not be
consummated unless approved by the Court.
VIII. Affidavits
A. Within twenty (20) calendar days of the filing of the Complaint
in this matter and every thirty (30) calendar days thereafter until the
divestitures have been completed whether pursuant to Section IV or
Section V of this Final Judgment, Chancellor and Kunz shall deliver to
DOJ and affidavit as to the fact and manner of compliance with 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
Chancellor and Kunz have taken to solicit a buyer for the Advertising
Assets and to provide required information to prospective Acquirers.
B. Within twenty (20) calendar days of the filing of the Complaint
in this matter, Chancellor and Kunz shall deliver to DOJ an affidavit
that describes in detail all actions they have taken and all steps they
have implemented on an on-going basis to preserve the Advertising
Assets pursuant to Section IX of this Final Judgment. The affidavit
also shall describe, nut not be limited to, the efforts of Chancellor
and Kunz to maintain and operate the Advertising Assets as active
competitors, maintain the management, staffing, sales, and marketing of
the Advertising Assets, and maintain the Advertising Assets in operable
condition at current capacity configurations. Chancellor and Kunz shall
deliver to DOJ an affidavit describing any changes to the efforts and
actions outlined in their earlier affidavit(s) filed pursuant to this
Section within fifteen (15) calendar days after the change is
implemented.
C. Until one year after such divestiture has been completed,
Chancellor and Kunz shall preserve all records of all efforts made to
preserve the business to be divested and effect the divestitures.
IX. Preservation of Assets
Until the divestitures required by the Final Judgment have been
accomplished, Chancellor and Kunz shall take all steps necessary to
maintain and operate the Advertising Assets as active competitors;
maintain the management, staffing, sales and marketing of the
Advertising Assets; and maintain the Adverting Assets in operable
condition at current capacity configurations. Defendants shall take no
action that would jeopardize the divestitures described in this Final
Judgment. Kunz agrees to abide by the above requirements only to the
extent that its contractual rights and obligations pertaining to the
Advertising Assets to be divested permit it to.
X. Financing
The defendants are ordered and directed not to finance all or any
part of any purchase by an Acquirer (or Acquirers) made pursuant to
Section IV or V of this Final Judgment.
XI. 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 plaintiff, upon the
written request of the Assistant Attorney General in charge of the
Antitrust Division, and on reasonable notice to the defendants made to
their principal offices, shall be permitted:
(1) Access during office hours of the defendants to inspect and
copy all books, ledgers, accounts, correspondence, memoranda, and
other records and documents in the possession or under the control
of the defendants, who may have counsel present, relating to the
matters contained in this Final Judgment; and
(2) Subject to the reasonable convenience of the defendants and
without restraint or interference from any of 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 Assistant Attorney General in
charge of the Antitrust Division, made to the defendants' principal
offices, the defendants shall submit such written reports, under oath
if requested, with respect to any matter contained in the Final
Judgment.
C. No information or documents obtained by the means provided in
Sections VII or XI of this Final Judgment shall be divulged by a
representative of the plaintiff to any person other than a duly
authorized representative of the Executive Branch of this United
States, except in the course of legal proceedings to which the
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 the
defendants to the plaintiff, the defendants represent and identify in
[[Page 66825]]
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 the 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 the plaintiff to the defendants prior to
divulging such material in any legal proceeding (other than a grand
jury proceeding) to which the defendants are not a party.
XII. 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.
XIII. Termination
Unless this court grants an extension, this Final Judgment will
expire upon the tenth anniversary of the date of its entry; however,
all of Kunz's obligations under the terms of this Decree cease once
Kunz irrevocably conveys the Advertising Assets (owned by Kunz) to be
divested to Chancellor.
XIV. Public Interest
Entry of this Final Judgment is in the public interest.
Dated------------------------------------------------------------------
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United States District Judge
[Civil Action No. 1:98CV02763 (Judge Kollar-Kotelly)]
Competitive Impact Statement
Plaintiff, the United States of America, 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
Plaintiff filed a civil antitrust Complaint on November 12, 1998,
alleging that a proposed acquisition of Kunz & Company (``Kunz'') by
Chancellor media Corporation (``Chancellor'') would violate Section 7
of the Clayton Act, 15 U.S.C. 18. The Complaint alleges that Chancellor
and Kunz compete head-to-head to sell outdoor advertising in four
counties: (1) Kern County, California; (2) Kings County, California;
(3) Inyo County, California; and (4) Mojave County, Arizona
(collectively ``the Four Counties''). Outdoor advertising companies
sell advertising space, such as on billboards, to local and national
customers. The outdoor advertising business in the four Counties is
highly concentrated. Chancellor and Kunz have a combined share of
revenue ranging from about 60 percent to a virtual monopoly in the Four
Counties. Unless the acquisition is blocked, competition would be
substantially lessened in the Four Counties, and advertisers would pay
higher prices.
The prayer for relief seeks: (a) an adjudication that the proposed
transaction described in the Complaint would violate Section 7 of the
Clayton Act; (b) preliminary and permanent injunctive relief preventing
the consummation of the transaction; (c) an award to the United States
of the costs of this action; and (d) such other relief as is proper.
Shortly before this suit was filed, a proposed settlement was
reached that permits Chancellor to complete its acquisition of Kunz,
yet preserves competition in the Four Counties where the transaction
raises 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 Chancellor to divest all of the
outdoor advertising assets of:
(1) Kunz in Kern county and Inyo County, California; and in
Mojave County, Arizona; and
(2) Chancellor in Kings County, California
Unless the plaintiff grants a time extension, Chancellor must divest
these outdoor advertising assets within four (4) months after the
filing of the Complaint in this action. Finally, in the event that the
Court does not, for any reason, enter the Final Judgment within that
four-month period, the divestitures are to occur within five (5)
business days after notice of entry of the Final Judgment.
If Chancellor does not divest the advertising assets in the
specified counties within the divestiture period, the Court, upon
plaintiff's application, is to appoint a trustee to sell the assets.
The proposed Final Judgment also requires that, until the divestitures
mandated by the Final Judgment have been accomplished, Chancellor shall
take all steps necessary to maintain and operate the advertising assets
as active competitors; maintain the management, staffing, sales and
marketing of the advertising assets; and maintain the advertising
assets in operable condition at current capacity configurations.
Further, the proposed Final Judgment requires Chancellor to give the
United States prior notice regarding certain future outdoor advertising
acquisitions or agreements pertaining to the sale of outdoor
advertising in the Four Counties.
The plaintiff 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
Chancellor, a large nationwide operator of media businesses,
including outdoor advertising, is a Delaware corporation headquartered
in Dallas, Texas. Chancellor conducts some outdoor advertising business
through its subsidiary, Martin MacFarlane, Inc. (``Martin''), a
California corporation also headquartered in Dallas, Texas. Martin
sells outdoor advertising in many states throughout the United States,
including in each of the Four Counties. In 1997 Chancellor's total
revenues from outdoor advertising were approximately $78 million.
Kunz is a California corporation headquartered in Larkspur,
California. Kunz sells outdoor advertising in Arizona and California,
including in each of the Four Counties. In 1997, its revenues from
outdoor advertising were approximately $6.9 million.
B. Description of the Events Giving Rise to the Alleged Violations
On September 30, 1998, Chancellor entered into an Asset Purchase
Agreement with Kunz. Chancellor agreed to purchase certain assets of
Kunz used or useful in the outdoor advertising business of Kunz in the
United States. The transaction is valued at approximately $39.5
million.
Chancellor and Kunz compete for the business of advertisers seeking
to obtain outdoor advertising space in the Four Counties. The proposed
acquisition of Kunz by Chancellor would eliminate that competition in
violation of Section 7 of the Clayton Act
[[Page 66826]]
C. Anticompetitive Consequences of the Proposed Transaction
The Complaint alleges that the sale of outdoor advertising in the
Four Counties constitutes a relevant product market and a line of
commerce, and that each county constitutes a relevant geographic market
and section of the country for antitrust purposes. Advertisers select
outdoor advertising based upon a number of factors including, inter
alia, the size of the target audience (individuals most likely to
purchase the advertiser's products or services), the traffic patterns
of the audience, and other audience characteristics. Many advertisers
seek to reach a large percentage of their target audience by selecting
outdoor advertising on highways and roads where vehicle traffic is
high, so that the advertising will be frequently viewed by the target
audience, or where the vehicle traffic is close to the advertiser's
location. If outdoor advertising spaces owned by different firms would
efficiently reach that target audience, advertisers benefit from the
competition among outdoor advertising providers to offer better prices
or services. Many local and/or national advertisers purchase outdoor
advertising because outdoor advertising space is less expensive and
more cost-efficient than other media at reaching the advertiser's
target audience with the type of advertising message that the
advertiser prefers to deliver.
Outdoor advertising has prices and characteristics that are
distinct from other advertising media. An advertiser's evaluation of
the importance of these characteristics depends on the type of
advertising message the advertiser wishes to convey and the price the
advertiser is willing to pay to deliver that message. Many advertisers
who use outdoor advertising also advertise in other media, including
radio, television, newspapers and magazines, but use outdoor
advertising when they want a large number of exposures to consumers at
a low cost per exposure. Because each exposure is brief, outdoor
advertising is most suitable for highly visual, limited information
advertising.
For many advertising customers, outdoor advertising's particular
combination of characteristics makes it an advertising medium for which
there are no close substitutes. Such customers who want or need to use
outdoor advertising would not switch to another advertising medium if
outdoor advertising prices increased by a small but significant amount.
Although some local and national advertisers may switch some of their
advertising to other media, rather than absorb a price increase in
outdoor advertising space, the existence of such advertisers would not
prevent outdoor advertising companies in the Four Counties from
profitably raising their prices a small but significant amount. At a
minimum, outdoor advertising companies could profitably raise prices to
those advertisers who view outdoor advertising as a necessary
advertising medium for them, or as a necessary advertising complement
to other media. Outdoor advertising companies negotiate prices
individually with advertisers. During individual price negotiations
between advertisers and outdoor advertising companies, advertisers
provide the outdoor advertising companies with information about their
advertising needs, including their target audience and the desired
exposure. Outdoor advertising companies thus have the ability to charge
advertisers differing rates based in part on the number and
attractiveness of competitive outdoor advertising companies that can
meet a particular advertiser's specific target needs. Because of this
ability to price discriminate among customers, outdoor advertising
companies may charge higher prices to advertisers that view outdoor
advertising as particularly effective for their needs, while
maintaining lower prices for other advertisers.
The Complaint alleges that Chancellor's proposed acquisition of
Kunz would lessen competition substantially in the sale of outdoor
advertising in each of the Four Counties. The proposed transaction
would create further market concentration in already highly
concentrated markets, and Chancellor would control a substantial share
of the outdoor advertising revenues in these markets. Using a measure
of market concentration called the Herfindahl-Hirschman Index
(``HHI''), explained in Appendix A annexed hereto, post acquisition:
a. In Kern County, California, Chancellor's share of the outdoor
advertising market, based on advertising revenues, would increase to
about 83 percent. The approximate post-merger HHI would be 7046,
representing an increase of about 1820.
b. In Kings County, California, Chancellor's share of the
outdoor advertising market, based on advertising revenues, would
increase to about 58 percent. The approximate post-merger HHI would
be 4205, representing an increase of about 714.
c. In Inyo County, California, Chancellor's share of the outdoor
advertising market, based on advertising revenues, would increase to
about 96 percent. The approximate post-merger HHI would be 9232,
representing an increase of about 4030.
d. In Mojave County, Arizona, Chancellor's share of the outdoor
advertising market, based on advertising revenues, would increase to
about 62 percent. The approximate post-merger HHI would be 4340,
representing an increase of about 770.
In each of the Four Counties, Chancellor and Kunz compete head-to-
head and, for many local and/or national advertisers buying space, they
are close substitutes for each other. During individual price
negotiations, advertisers that desire to reach a certain audience can
help ensure competitive prices by ``playing off'' Kunz against
Chancellor. Chancellor's acquisition of Kunz will end this competition.
After the acquisition, such advertisers will be unable to reach their
desired audiences with equivalent efficiency without using Chancellor's
outdoor advertising. Because advertisers seeking to reach these
audiences would have inferior alternatives to the merged entity as a
result of the acquisition, the acquisition would give Chancellor the
ability to raise prices and reduce the quality of its service to some
of its advertisers in each of the Four Counties.
New entry into the advertising market in response to a small but
significant price increase by the merged parties in any of these
markets is unlikely to be timely and sufficient to render the price
increase unprofitable.
For all of these reasons, plaintiff concludes that the proposed
transaction would lessen competition substantially in the sale of
outdoor advertising in the Four Counties, eliminate actual and
potential competition between Chancellor and Kunz, and result in
increased prices and/or reduced quality of services for outdoor
advertisers in each of the Four Counties, all in violation of Section 7
of the Clayton Act.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment would preserve existing competition in
the sale of outdoor advertising space in the Four Counties. It requires
the divestiture of either all Kunz or all Chancellor advertising assets
in each of the Four Counties; thus maintaining the level of competition
that existed premerger, and ensuring that the affected markets will
suffer no reduction in competition as a result of the merger.
Advertisers will continue to have alternatives to the merged firm in
purchasing outdoor advertising. Finally, the ownership structure is
maintained in that the number of competitors who may compete for
advertisers' business will remain unchanged.
[[Page 66827]]
Unless plaintiff grants an extension of time, the divestitures must
be completed within four (4) months after the filing of the Complaint
in this matter or within five (5) business days after notice of entry
of this Final Judgment by the Court, whichever is later. Until the
divestitures take place, Chancellor must maintain and operate the
advertising assets as active competitors; maintain the management,
staffing, sales, and marketing of the advertising assets; and maintain
the advertising assets in operable condition at current capacity
configuration.
The divestitures must be to a purchaser or purchasers acceptable to
the plaintiff in its sole discretion. Unless plaintiff otherwise
consents in writing, the divestitures shall include all the assets of
the outdoor advertising business being divested, and shall be
accomplished in such a way as to satisfy plaintiff, in its sole
discretion, that such assets can and will be used as viable, ongoing
commercial outdoors/advertising businesses. In addition, the purchaser
or purchasers must intend in good faith to continue the operations of
the outdoor advertising businesses as were in effect in the period
immediately prior to the filing of the Complaint, unless any
significant change in the operations planned by a purchaser is accepted
by the plaintiff in its sole discretion. This provision is intended to
ensure that the outdoor advertising businesses to be divested remain
competitive with Chancellor's other outdoor advertising businesses in
the Four Counties.
If Chancellor fails to divest these outdoor advertising assets
within the time periods specified in the Final Judgment, the Court,
upon plaintiff's application, is to appoint a trustee nominated by
plaintiff to effect the divestitures. If a trustee is appointed, the
proposed Final Judgment provides that Chancellor will pay all costs and
expenses of the trustee and any professionals and agents 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 the advertising assets, and based on a fee arrangement providing the
trustee with an incentive based on the price and terms of the
divestitures and the speed with which they are accomplished. After
appointment, the trustee will file monthly reports with the plaintiff,
defendants and the Court, setting forth the trustee's efforts to
accomplish the divestitures ordered under the proposed Final Judgment.
If the trustee has not accomplished the divestitures within six (6)
months after its appointment, the trustee shall promptly file with the
Court a report setting forth (1) the trustee's efforts to accomplish
the required divestitures, (2) the reasons, in the trustee's judgment,
why the required divestitures have not been accomplished and (3) the
trustee's recommendations. At the same time the trustee will furnish
such report to the plaintiff and defendants, who will each have the
right to be heard and to make additional recommendations.
The proposed Final Judgment contains provisions to ensure that
these outdoor advertising assets will be preserved, so that the
advertising assets remain viable competitors after divestiture.
The proposed Final Judgment requires Chancellor to provide at least
thirty (30) days notice to the Department of Justice before acquiring
more than a de minimis interest in any assets of, or any interest in,
another outdoor advertising company in the Four Counties. Such
acquisitions could raise competitive concerns but might be too small to
be reported otherwise under the Hart-Scott-Rodino (``HSR'') premerger
notification statute. Moreover, Chancellor may not agree to sell
outdoor advertising space for any other outdoor advertising company in
the Four Counties without providing plaintiff with notice. Thus, the
provision in the proposed Final Judgment 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 Four
Counties.
The relief in the proposed Final Judgment is intended to remedy the
likely anticompetitive effects of Chancellor's proposed transaction
with Kunz in the Four Counties. Nothing in this Final Judgment is
intended to limit the plaintiff's ability to investigate or to bring
actions, where appropriate, challenging other past or future activities
of defendants in the Four Counties.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
16(a), the proposed Final Judgment has no prima facie effect in any
subsequent private lawsuit that may be brought against defendants.
V. Procedures Available for Modification of the Propose Final
Judgment
The plaintiff 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 plaintiff 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 a least sixty (60) days preceding the
effective date of the proposed Final Judgment within which any person
may submit to the plaintiff 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 plaintiff 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 plaintiff 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, NW; Suite 4000, Washington, DC 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
Plaintiff considered, as an alternative to the proposed Final
Judgment, a full trial on the merits of its Complaint against
defendants. Plaintiff is satisfied, however, that the divestiture and
other relief contained in the proposed Final Judgment will preserve
viable competition in the sale of outdoor advertising space in the Four
Counties. 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.
[[Page 66828]]
VII. Standard of Review Under the APPA for Proposed Final Judgment
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a sixty (60) day
comment period, after which the Court shall determine whether entry of
the proposed Final Judgment ``is in the public interest.'' In making
that determination, the Court may consider--
(1) The competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration or relief sought, anticipated effects of
alternative remedies actually considered and any other
considerations bearing upon the adequacy of such judgment;
(2) The impact of entry of such judgment upon the public
generally and individuals alleging specific injury from the
violations set forth in the complaint including consideration of the
public benefit, if any, to be derived from a determination of the
issues at trial.
15 U.S.C. 16(e).
As the United States Court of Appeals for the D.C. Circuit 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.'' \1\ Rather,
\1\ 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.
[a]bsent 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. para.
61,508, at 71,980 (W.D. Mo. 1977).
Accordingly, with respect to the adequency 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.\2\
\2\ Bechtel, 648 F.2d at 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).
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The proposed Final Judgment, therefore, should not be reviewed
under a standard of whether it is certain to eliminate every
anticompetitive effect of a particular practice or whether it mandates
certainty of free competition in the future. Court approval of a final
judgment requires a standard more flexible and less strict than the
standard required for a finding of liability. ``[A] proposed decree
must be approved even if it falls short of the remedy the court would
impose on its own, as long as it falls within the range of
acceptability or is `within the reaches of public interest.' '' \3\
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\3\ 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, 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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The relief obtained in this case is strong and effective relief
that should fully address the competitive harm posed by the proposed
transaction.
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the plaintiff in
formulating the proposed Final Judgment.
Dated: November 17, 1998.
Respectfully submitted,
Barry L. Creech,
D.C. Bar No.--421070, Merger Task Force, U.S. Department of Justice,
Antitrust Division, 1401 H Street, NW.; Suite 4000, Washington, DC
20530, (202) 307-0001.
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.
Certificate of Service
I, Barry L. Creech, hereby certify that, on November 16, 1998, I
caused the foregoing documents to be served on defendants Kunz &
Company and Chancellor Media Corporation by having a copy mailed,
first-class, postage prepaid, to:
Steven H. Schulman, Bruce J. Prager, Latham & Watkins, 1001
Pennsylvania Ave., NW., Suite 1300, Washington, DC 20004, Counsel for
Chancellor Media Corporation
Riccarda Heising, Powell, Goldstein, Frazer & Murphy LLP, 191 Peachtree
Street, NE., 16th Floor, Atlanta, GA 30603, Counsel for Kunz & Company
Barry L. Creech,
D.C. Bar No.--421070.
[FR Doc. 98-32148 Filed 12-2-98; 8:45 am]
BILLING CODE 4410-11-M
