[Federal Register Volume 63, Number 61 (Tuesday, March 31, 1998)]
[Notices]
[Pages 15432-15437]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8398]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Rochester Gas & Electric Corp.; Proposed Final
Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation, and Competitive Impact Statement have been filed with the
United States District Court for the Western District of New York in
United States v. Rochester Gas & Electric Corporation, 97-CV-6294T. 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).
On June 24, 1997, the United States filed a civil antitrust
complaint under Section 4 of the Sherman Act, as amended, 15 U.S.C. 4,
alleging that defendant Rochester Gas and Electric (``RG&E'') entered
into a contract with the University of Rochester (``University'' or
``UR''), in which RG&E promised UR a number of benefits, including
electricity at reduced rates, in exchange for the University's promise
not to compete against RG&E in the sale of electricity to consumers.
The complaint alleges that this agreement violated Section 1 of the
Sherman Act, 15 U.S.C. 1, and seeks a judgment by the Court declaring
the defendant's agreement to be an unlawful restraint of trade. The
complaint also seeks an order by the Court to enjoin the defendant from
other activities in the future having a similar purpose or effect.
The United States and defendant have stipulated that the proposed
consent judgment may be entered after compliance with the APPA, unless
the United States withdraws its consent. The Court's entry of the
proposed final judgment will terminate this civil action against RG&E,
except that the Court will retain jurisdiction over the matter for
possible further proceedings to construe, modify or enforce the
judgment, or to punish violations of any of its provisions.
The proposed consent judgment contains three principal forms of
relief. First, RG&E is enjoined from enforcing an anticompetitive
agreement with the University. Second, RG&E is enjoined from entering
into future agreements with the University or any other competitor or
potential competitor that could have similar anticompetitive effects.
Third, the proposed final judgment places affirmative obligations on
RG&E to pursue an antitrust compliance program directed toward avoiding
a repetition of its anticompetitive behavior.
Public comment is invited within sixty days of the publication of
this notice. Such comments, and responses thereto, will be published in
the Federal Register and filed with the Court. Written comments should
be directed to Roger W. Fones, Chief, Transportation, Energy and
Agriculture Section, Antitrust Division, 325 Seventh Street, NW., Suite
500, Washington, DC 20530 (telephone: (202) 307-6351). Copies of the
Complaint, Stipulation, proposed Final Judgment and Competitive Impact
Statement are available for inspection in Room 215 of the U.S.
Department of Justice, Antitrust Division, 325 Seventh Street, NW.,
Washington, DC 20430 (telephone: (202) 514-2481) and at the office of
the Clerk of the United States District Court Western District of New
York 272 U.S. Courthouse, 100 State Street, Rockester, New York 14614-
1368.
Copies of any of these materials may be obtained upon request and
payment of a copying fee.
Rebecca P. Dick,
Director of Civil Non-Merger Enforcement, Antitrust Division.
Stipulation
It is stipulated by and between the undersigned partics, by their
respective attorneys, that:
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 Western District of New York.
2. The parties consent that a Consent 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(b)-(h)), 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 Consent
Judgment by serving notice thereof on defendant and by filing that
notice with the Court.
3. Plaintiff is instructed to file and publish its competitive
impact statement pursuant to 15 U.S.C. 16(b) within 30 days of the
filing of this stipulation.
4. The parties shall abide by and comply with the provisions of the
proposed Consent Judgment pending entry of the Consent Judgment, and
from the date of the filing of this Stipulation, shall comply with all
the terms and provisions of the Consent Judgment as though they were in
full force and effect as an order of the Court.
5. In the event plaintiff withdraws its consent, or if the proposed
Consent Judgment is not entered pursuant to this Stipulation, this
Stipulation and the Consent Judgment shall be of no effect whatever and
shall be without prejudice to any party in this or any other
proceeding.
Dated: February 20, 1998
[[Page 15433]]
For Plaintiff Untied States of America
Joel I. Klein,
Acting Assistant Attorney General.
A. Douglas Melamed,
Deputy Assistant Attorney General.
Rebecca P. Dick,
Deputy Director of Operations.
Roger W. Fones,
Transportation, Energy & Agriculture Section.
Lade Alice Eaton, Nina Hale, Rebekah J. French, Janet R. Urban,
Attorneys, Department of Justice, Antitrust Division--Suite 500, 325
Seventh Street, N.W., Washington, D.C. 20004, (202) 307-6351.
Donna Kooperstein,
Assistant Chief, Transportation, Energy, & Agriculture Section.
For Defendant Rochester Gas and Electric Corporation
David M. Schraver,
NIXON, Hargrave, Devans & Doylellp, Clinton Square, P.O. Box 1051,
Rochester, New York 14603, (716) 263-1341.
Order
It is so ordered, this 20th day of February, 1998.
Michael A. Telesca,
United States District Judge.
Consent Judgment
Plaintiff, United States of America, filed it Complaint on June 24,
1997. Plaintiff and defendant, by their respective attorneys, have
consent to the entry of this Consent Judgment without trial or find
adjudication of any issue of fact or law. This Consent Judgment shall
not be evidence against or an admission by any party with respect to
any issue of fact of law. Defendant has denied any wrongdoing or
violation of law. Therefore, before the taking of any testimony and
without trial or find adjudication of any issue of fact of law herein,
and upon consent of the parties, it is hereby
Ordered, Adjudged, and Decreed, as follows:
I. Jurisdiction
This Court has jurisdiction of the subject matter of this action
and of each of the parties consenting hereto.
II. Background
Plaintiff's claims in this action are based primarily upon allege
conduct related to a provision contained in the Individual Service
Agreement between The University of Rochester and Rochester Gas and
Electric Corporation, dated March 31, 1994, which provision reads:
6.3 Study of Alternatives: The University may, during the term
of this Agreement, study alternatives to the acquisition of energy
from RG&E as the University deems appropriate; provided, however,
that the University shall not solicit or join with other customer of
RG&E to participate in any plan designed to provide them with
electric power and/or thermal energy from any source other than
RG&E.
III. Definitions
As used herein, the term.
(A) ``Agreement'' means any contract, arrangement, or
understanding, formal or informal, oral or written, between two or more
persons;
(B) ``Defendant'' or ``RG&E'' means Rochester Gas and Electric
Corporation, its domestic and foreign parents, predecessors,
divisions, subsidiaries, affiliates, and partnerships, and all
directors, officers, employees, agents and representatives of the
foregoing; the terms ``subsidiary'' and ``affiliate'' refer to any
person in which the defendant holds (50 percent or more) ownership
or control;
(C) ``Document'' means all ``writings and recordings'' as that
phrase is defined in Rule 1001(1) of the Federal Rules of Evidence;
(D) ``Including'' means including but not limited to;
(E) ``Joint venture'' means a unified or integrated method of doing
business in which the parties share substantially in the profits,
losses and risks of the interprise;
(F) ``Person'' means any natural person, corporation, firm,
company, sole proprietorship, partnership, association, institution,
governmental unit, or other legal entity;
(G) ``Retail marketing agreement'' means any agreement pursuant to
which RG&E acts as a retailer of electricity at an unregulated price or
of other related products of services on behalf of a national or
regional providers of such electricity, products or services, so long
as the agreement does not result in the provider or RG&E being the only
provider or retailer of electricity at an unregulated price or such
other products or services in Monroe Country;
(H) ``The University'' means the University of Rochester in
Rochester, NY.
(I) ``Unregulated price'' means a price of the sale of electricity
other than (1) a price which is the result of a regulatory proceeding,
order or acceptance of tariff filings, setting or approving specific
uniform rates applicable to a class of classes of customers; or (2) a
price set by negotiation between a supplier and a customer at a minimum
floor price dictated by statute, regulation or order.
IV. Applicability
This Consent Judgment applies to the defendant and to each of its
successors and assigns, and to all other persons in active concert or
participation with any of them who shall have received actual notice of
the Consent Judgment by personal service or otherwise.
V. Injunction
RG&E, by this Consent Judgment, shall be enjoined from:
(A) enforcing any clause in any contract with The University of
Rochester containing the language quoted in Section II, above, or from
including any provision containing that language, without the reference
to the University, in an any other flexible rate contract (entered into
pursuant to RG&E's Service Classification No. 10 or any replacement to
Service Classification No. 10) for its retail electric services;
(B) enforcing or attempting to enforce Paragraph 10 of the
Memorandum of Understanding, dated October 27, 1993, between RG&E and
the University;
(C) entering into or enforcing a covenant or agreement not to
compete in the retail sale of electricity with any competitor or
potential competitor in the retail sale of electricity; provided,
however, that such an agreement not to compete that is reasonably
ancillary to the following types of agreements shall not be interpreted
as a violation of this Consent Judgment:
(1) employment contracts;
(2) personal service contracts;
(3) agreements regarding the sale or purchase of a business;
(4) joint ventures or partnerships;
(5) retail marketing agreements;
(6) consulting agreements; and
(7) portfolio management contracts.
VI. Exception
Nothing in this Consent Judgment shall prohibit RG&E from engaging
in any conduct which is exempt from or immune under the antitrust laws.
VII. Term
(A) This Consent Judgment shall expire ten years from the date of
initial filing, unless earlier terminated pursuant to this Section.
(B) This Consent Judgment shall terminate upon demonstration by
RG&E that less than 50% of the non-residential retail sales of
electricity made at unregulated prices in Monroe County, New York, were
made by RG&E. The percentage threshold in this Paragraph must be: (1)
Satisfied in terms of kilowatt-hours of electricity sold; and (2)
measured as an average over a consecutive six month period.
(C) The procedure for making the determination described in
Paragraph B, above is as follows:
(1) Defendant RG&E shall notify the United States in writing when
it
[[Page 15434]]
believes the threshold stated in Paragraph B has been satisfied over
the requisite period, and shall submit to the United States all
supporting data and information.
(2) The United States shall object to the defendant in writing
within 60 days of receiving the notice and supporting data and
information if the United States condluces that RG&E has not
demonstrated that the condition has been satisfied.
(3) If the United States does not object within 60 days, this
Consent Judgment shall terminate without further act of either party or
of this Court.
(4) If the United States does object, the termination will not
become effective except by order of this Court.
VIII. Compliance Program
(A) The defendant is ordered to maintain an antitrust compliance
program which shall include designating, within 30 days of entry of
this Consent Judgment, an Antitrust Compliance Officer with
responsibility for implementing the antitrust compliance program and
achieving compliance with this Consent Judgment. The Antitrust
Compliance Officer shall, on a continuing basis, supervise the review
of the current and proposed activities of the defendant to ensure that
they comply with this Consent Judgment.
(B) The Antitrust Compliance Officer shall:
(1) Distribute, within 60 days of the entry of this Consent
Judgment, a copy of this Consent Judgment to all officers and employees
with responsibility for making electric power and planning acquisition
of electric power and generating capacity;
(2) Distribute in a timely manner a copy of this Consent Judgment
to any officer or employee who succeeds to a position described in
Section VIII(B)(1);
(3) Brief annually in writing or orally those persons designated in
Section VIII(B)(1) on the meaning and requirements of this Consent
Judgment and the antitrust laws and advise them that the defendant's
legal advisers are available to confer with them regarding compliance
with the Consent Judgment and the antitrust laws;
(4) Obtain from each officer or employee designated in Section
VIII(B)(1) a written certification that he or she: (a) has read,
understands, and agrees to abide by the terms of this Consent Judgment;
and (b) has been advised and understands that his or her failure to
comply with this Consent Judgment may constitute contempt of court; and
(5) Maintain a record of recipients to whom the Consent Judgment
has been distributed and from whom the certification in Section
VIII(B)(4) has been obtained.
(C) At any time, if the defendant's Antitrust Compliance Officer
learns of any past or future violations of Section V of this Consent
Judgment, the defendant shall, within 45 days after such knowledge is
obtained or sooner if feasible, take appropriate action to terminate or
modify the activity so as to comply with this Consent Judgment.
IX. Certification
Within 75 days after the entry of this Consent Judgment, the
defendant shall certify to the plaintiff whether it has designated an
Antitrust Compliance Officer and has distributed the Consent Judgment
in accordance with Section VIII above.
X. Plaintiff Access
(A) To determine or secure compliance with this Consent Judgment
and for no other purpose, duly authorized representatives of the
plaintiff shall, upon written request of the Assistant Attorney General
in charge of the Antitrust Division, and on reasonable notice to the
defendant in accordance with Section XI(C) below, be permitted, subject
to any legally recognized privilege:
(1) Reasonable access during the defendant's normal business hours
to inspect and copy all non-privileged documents in the possession or
under the control of the defendant, who may have counsel present,
relating to actions enjoined under Section V, termination under Section
VII, and the compliance program under Section VIII of this Consent
Judgment; and
(2) Subject to the reasonable convenience of the defendant and
without restraint or interference from it, to interview officers,
employees or agents of the defendant, who may have counsel present,
regarding such matters.
(B) Upon the written request of the Assistant Attorney General in
charge of the Antitrust Division made to the defendant's principal
office, the defendant shall submit such written reports, under oath if
requested, relating to any matters described in Section X(A)(1) as may
be reasonably requested, subject to any legally recognized privilege.
(C) No information or documents obtained by the means provided in
Section X shall be divulged by the plaintiff to any person other than a
duly authorized representative of the Executive Branch of the United
States, except in the course of legal proceedings to which the United
States is a party, or for the purpose of securing compliance with this
Consent Judgment, or as otherwise required by law.
(D) If at the time information or documents are furnished by the
defendant to the plaintiff, the 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 (relating to trade secret or other
confidential research, development or commercial information), and the
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 10 days' notice shall be given by the plaintiff to
the defendant prior to disclosing such material in any legal proceeding
(other than a grand jury proceeding).
XI. Further Elements of the Consent Judgment
(A) Whenever notice must be provided to a party pursuant to the
terms of this Consent Judgment, such notice shall be made by first
class mail, return receipt requested, addressed to the following:
To RG&F; Michael T. Tomanino, Esq., Senior Vice President and General
Counsel, Rochester Gas and Electric Corporation, 89 East Avenue,
Rochester, New York 14649.
To the United States: Joel I. Klein, Assistant Attorney General,
Antitrust Division, United States Department of Justice, 10th Street
and Pennsylvania Avenue, N.W., Washington, D.C., Washington, D.C.
20530.
or to such other person whom the parties may designate from time to
time.
(B) Jurisdiction is retained by this Court for the purpose of
enabling any of the parties to this Consent Judgment to apply to this
Court at any time for further orders and directions as may be necessary
or appropriate to carry out or construe this Consent Judgment, to
modify or terminate any of its provisions, to enforce compliance, and
to punish violations of its provisions.
(C) Entry of this Consent Judgment is in the public interest.
Dated: ____________________, 1998.
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Hon. Michael A. Telesca,
United States District Judge.
Competitive Impact Statement
Pursuant to Section 2 of the Antitrust Procedures and Penalties Act
(``APPA''), 15 U.S.C. 16(b), the United States files this Competitive
Impact Statement
[[Page 15435]]
relating to the proposed consent judgment in United States v. Rochester
Gas and Electric Corporation, submitted for entry in this civil
antitrust proceeding.
I. Nature and Purpose of the Proceedings
On June 24, 1997, the United States filed a civil antitrust
complaint under Section 4 of the Sherman Act, as amended, 15 U.S.C. 4,
alleging that defendant Rochester Gas and Electric (``RG&E'') entered
into a contract with the University of Rochester (``University'' or
``UR''), in which RG&E promised UR a number of benefits, including
electricity at reduced rates, in exchange for the University's promise
not to compete against RG&E in the sale of electricity to consumers.
The complaint alleges that this agreement violated Section 1 of the
Sherman Act, 15 U.S.C. 1, and seeks a judgment by the Court declaring
the defendant's agreement to be an unlawful restraint of trade. The
complaint also seeks an order by the Court to enjoin the defendant from
other activities in the future having a similar purpose or effect.
The United States and defendant have stipulated that the proposed
consent judgment may be entered after compliance with the APPA, unless
the United States withdraws its consent. The Court's entry of the
proposed judgment will terminate this civil action against RG&E, except
that the Court will retain jurisdiction over the matter for possible
further proceedings to construe, modify or enforce the judgment, or to
punish violations of any of its provisions.
II. Description of the Practices Giving Rise to the Alleged
violations of the Antitrust Laws
By the early 1990's regulated electricity rates in New York state
had become so high that industrial customers were beginning to look for
alternatives to high-priced power, either by relocating to other states
or by generating their own electricity.\1\ In 1993, the New York Public
Service Commission (``PSC'') adopted new regulations that permitted
utilities to negotiate individual prices with certain customers
(``flexible rate contracts'') rather than charge a uniform tariff. The
PSC intended to afford utilities the flexibility to compete with their
largest customers' other supply options.
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\1\ Re Competitive Opportunities Available to Customers of
Electric and Gas Service, 93-M-0229, Order Instituting Proceeding
(March 19, 1993) (``March 19 Order'').
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In the meantime, the University of Rochester, a major customer of
RG&E, learned that by building a modern, efficient plant to replace the
decades-old steam plant used to heat and cool its buildings, it could
produce the steam it needed and also produce--or cogenerate--
electricity as a byproduct at a negligible cost. The University formed
a study group to analyze and evaluate the cogeneration option, and
concluded that a 23 Megawatt (MW) plant would be the optimal size for
the University's steam and electricity needs. Such a plant would
generate up to one-third more electricity that the University needed,
but under New York law, the University could sell the excess
electricity to other retail customers in competion with RG&E. PSL
section 2(13). In addition, such a plant would be cost effective even
if the University continued to buy its electric power form RG&E and
sold all the power produced by the congeneration plant to others. Thus,
the University was a potential competitor from RG&E in the retail
electricity market. On July 20, 1993, the University's Board of
Trustees authorized construction of a 23 MW plant and allocated $1.3
million to begin the project.
The cogeneration project came to a halt in October 1993, when RG&E
induced the University to enter into a Memorandum of Understanding
(``MOU''). In part, the MOU resembles an ordinary--and legal--
requirements contract between buyer and seller: RG&E agreed to supply
the University with electricity at discounted rates, and the University
agreed to purchase of all of its power needs from RG&E for seven years.
But the MOU did not stop there--RG&E obtained the University's
commitment not to compete for RG&E customers. The bar on competition is
unrelated to the electric requirements contract and prohibits the
University for seven years for even studying any ``alternative sources
of electric power and gas supply'' unless the ``studies and the
activities associated with them shall be confined to the service of the
University's own needs.'' This provision was intended to and did
prevent the University from meeting its steam requirements--which were
wholly separate from its demand for electricity--in a manner that would
bring it into competition with RG&E.
RG&E and the University formalized the agreement set forth in the
MOU by entering a flexible rate contract (the ``Individual Service
Agreement'' or ``ISA'') about six months later. Like the MOU, the ISA
includes provisions that are not necessary for the respective
commitments by the University and RG&E to buy and sell electricity for
the University's needs but rather simply prevent UR from competing with
RG&E.
The University may not solicit RG&E customers or seek to
supply them with electricity;
The University may not join in any plan intended to supply
electricity to RG&E customers;
The University may not participate in any plan to provide
any RG&E customers with thermal energy; and
The University may not work with a developer to provide
steam to UR and sell electricity to RG&E customers.\2\
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\2\ These restrictions are set forth in Section 6.3 of the ISA,
which reads as follows:
``Study of Alternatives: The University may, during the term of
this Agreement, study alternatives to the acquisition of energy from
RG&E as the University deems appropriate; provided, however, that
the University shall not solicit or join with other customers of
RG&E to participate in any plan designed to provide them with
electric power and/or thermal energy from any source other than
RG&E.''
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As a result of the agreement not to compete, the University
abandoned its plans to build the cogeneration plant and enter the
retail electric market, depriving RG&E's customers of a competitive
alternative. By in effect ``paying'' the University--a potential
competitor--not to build the new cogeneration plant, RG&E was free to
demand higher prices from the customers the University's plant
otherwise could have served.
III. Explanation of the Proposed Consent Judgment
The United States and the defendants have stipulated that a consent
judgment, in the form filed with the Court, may be entered by the Court
at any time after compliance with the APPA, 15 U.S.C. 16(b)-(h). The
proposed judgment provides that the entry of the judgment does not
constitute any evidence against or an admission by any party with
respect to any issue of fact or law. Under the provisions of Section
2(e) of the APPA, entry of the proposed judgment is conditioned upon
the Court finding that its entry will be in the public interest.
The proposed judgment contains three principal forms of relief.
First, RG&E is enjoined from enforcing its anticompetitive agreement
with the University. Second, RG&E is enjoined from entering into future
agreements with the University or any other competitor or potential
competitor that could have similar anticompetive effects. Third, the
proposed judgment places affirmative obligations on RG&E to pursue an
antitrust compliance program directed toward avoiding a repetition of
its anticompetitive behavior.
[[Page 15436]]
A. Prohibited Conduct
Section V(A) of the proposed judgment prohibits RG&E from enforcing
the non-compete language in the ISA and enjoins RG&E from including
that language in any flexible rate contract with any other customer.
Section V(B) prevents RG&E from enforcing Paragraph 10 of its
Memorandum of Understanding with the University, which confines the
University's study of alternative energy sources to the service of the
University's own needs. Section V(C) broadly enjoins RG&E from entering
into or enforcing any agreement not to compete in the retail sale of
electricity with any competitor or potential competitor, except where
the agreement not to compete is reasonably necessary to achieve the
legitimate purposes of certain, specified, common contractual
arrangements.
B. Defendant's Affirmative Obligations
Section VIII requires that within thirty (30) days of entry of the
judgment, the defendant adopt an affirmative compliance program
directed toward ensuring that its employees comply with the antitrust
laws. The program must include the designation of an Antitrust
Compliance Officer responsible for compliance with the judgment and
reporting any violations of its terms. Section VIII further requires
that each defendant furnish a copy of the judgment, within sixty (60)
days of the date of its entry, to all officers and employees with
responsibility for marketing electric power and planning acquisition of
electric power and generating capacity. Section IX requires RG&E to
certify within seventy-five (75) days that it has distributed those
copies and designated an Antitrust Compliance Officer. Copies of the
judgment also must be distributed to anyone who succeeds to a position
described above.
Furthermore, Section VIII requires RG&E to brief all officers and
employees with responsibility for marketing electric power and planning
acquisition of electric power and generating capacity as to the
defendant's policy regarding compliance with the Sherman Act and with
the judgment, including the advice that his or her violation of the
judgment could constitute contempt of court.
Under Section X of the proposed judgment, the Justice Department
will have access, upon reasonable notice, to each defendant's records
and personnel in order to determine compliance with the judgment.
C. Scope of the Proposed Consent Judgment
(1) Persons Bound
The proposed judgment expressly provides in Section IV that its
provisions apply to RG&E, to each of its successors and assigns, and to
all other persons in active concert or participation with any of them
who receive actual notice of the terms of the judgment.
(2) Duration
Section VII provides that the judgment will expire on the tenth
anniversary of its entry. The judgment may be terminated earlier in the
event of a substantial restructuring of the retail electricity industry
in RG&E's service area. The decree terminates if RG&E demonstrates that
there has been substantial entry by others into retail sales of
electricity made at unregulated prices in Monroe County, New York.
Section VII establishes the procedure for making this determination.
(3) Exception
The exception set forth in Section VI of the proposed judgment
states that the judgment does not alter RG&E's right to engage in
conduct that is exempt from or immune under the antitrust laws. The
conduct alleged in the compliant, however, is not immune from the
antitrust laws,\3\ and the proposed judgment prohibits similar
anticompetitive conduct by RG&E in the future.
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\3\ See United States v. Rochester Gas & Elec. Corp., No. 97-CV-
6294T (W.D.N.Y. Feb. 17, 1998) (order denying defendant's summary
judgment motion seeking state action immunity).
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D. Effect of the Proposed Judgment on Competition
The prohibitions in Section V are designed to ensure that the
defendant will compete for retail electric customers and will not limit
competition by agreement with competitors or potential competitors who
may be able to serve RG&E customers. The eliminating of the prohibited
language has had an immediate procompetitive effect. The University has
issued a request for proposals to build a cogeneration plant.
The general prohibition of Section V (C) ensures that RG&E will not
make future agreements in the future with UR or any other firm to pre-
empt new competition before it can even occur. Because future
competition will likely come from new market entrants who do not
currently compete, the proposed consent judgment explicitly enjoins
agreements with potential competitors, some of whom like the University
may be current customers of RG&E.
Section V(C)'s prohibition on RG&E entering into any agreement not
to compete contains some enumerated exceptions. The exceptions include,
for example, employment contracts and contracts to sell a business,
which often include agreements not to compete for a limited time period
that are ancillary to a lawful purpose. Agreements not to compete in
the specific types of contracts specified in Section V(C) are not
prohibited by the proposed judgment, but remain subject to the
antitrust laws.
RG&E continues to be a virtual monopolist for retail sales of
electricity in its service area and a broad prohibition on non-compete
clauses with potential competitors is particularly important so long as
RG&E maintains its current market dominance. If, however, the retail
electric market in RG&E's service territory became subject to effective
competition, the prohibition of Section V(C) would no longer be
necessary to protect consumers of electricity. In a competitive market,
an arrangement between RG&E and one of its numerous competitors would
not be likely to restrict output or raise price. Moreover, without
market power, RG&E will have less incentive or ability to enter into
anticompetitive agreements. For these reasons, Section VI provides that
the judgment will terminate once RG&E has less than 50% of the retail
sales subject to competitive pricing in its present service area
(Monroe County). It is RG&E's burden to establish that this threshold
of effective retail electric competition has been satisfied. If the
threshold is met, it will mean that barriers to entry into this
formerly regulated monopoly market have been removed, and that actual
entry has occurred on a significant scale. Unless this substantial
restructuring of the industry occurs, the judgment remains in effect.
IV. Remedies Available to Potential Private Plaintiffs
After entry of the proposed judgment, any potential plaintiff who
might have been damaged by the alleged violation will retain the same
right to sue for monetary damages and any other legal and equitable
remedies which that person may have had if the proposed judgment had
not been entered. The proposed judgment may not be used, however, as
prima facie evidence in litigation, pursuant to Section 5(a) of the
Clayton Act, as amended, 15 U.S.C. 16(a).
[[Page 15437]]
V. Procedures Available for Modification of the Proposed Judgment
The proposed judgment is subject to a stipulation between the
government and the defendant which provides that the government may
withdraw its consent to the proposed judgment any time before the Court
has found that entry of the judgment is in the public interest. By it's
terms, the proposed judgment provides for the Court's retention of
jurisdiction of this action in order to permit any of the parties to
apply to the Court for such orders as may be necessary or appropriate
for the modification of the judgment, including the demonstration of
retail market conditions outlined in Section VI of the decree.
As provided by the APPA (15 U.S.C. 16), any person wishing to
comment upon the proposed judgment may, for a sixty-day (60) period
subsequent to the publishing of this document in the Federal Register,
submit written comments to the United States Department of Justice,
Antitrust Division, Attention: Roger W. Fones, 325 Seventh Street,
N.W., Washington, D.C. 20530. Such comments and the government's
response to them will be filed with the Court and published in the
Federal Register. The government will evaluate all such comments to
determine whether there is any reason for withdrawal of its content to
the proposed judgment.
VI. Alternative to the Proposed Judgment
The alternative to the proposed judgment considered by the
Antitrust Division was a full trial of the issues on the merits and on
relief. The Division considered the substantive language of the
proposed judgment to be of sufficient scope and effectiveness to make
litigation on the issues unnecessary, as the judgment provides all of
the relief sought against the violations alleged in the compliant.
VII. Determinative Materials and Documents
No materials or documents were considered determination by the
United States in formulating the proposed judgment. Therefore, none are
being filed pursuant to the APPA, 15 U.S.C. 16(b).
Department of Justice Antitrust Division
By:--------------------------------------------------------------------
Jade Alice Eaton,
Transportation, Energy, and Agriculture Section, 325 Seventh Street,
N.W., Suite 500, Washington, D.C. 20530, (202) 307-6316.
[FR Doc. 98-8398 Filed 3-30-98; 8:45 am]
BILLING CODE 4410-11-M
