[Federal Register Volume 63, Number 87 (Wednesday, May 6, 1998)]
[Notices]
[Pages 25071-25080]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11958]
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DEPARTMENT OF JUSTICE
Antitrust Division
[Civil Action No. 98-CIV-2716]
Proposed Final Judgment and Competitive Impact Statement United
States of America, State of New York, and State of Illinois v. Sony
Corporation of America, LTM Holdings, Inc. d/b/a Loews Theatres,
Cineplex Odeon Corporation, and J.E. Seagram Corp.
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 Order, and Competitive Impact Statement have been filed
with the United States District Court for the Southern District of New
York, Case No. 98-CIV-2716. 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, the State of New York, and the State of Illinois
filed a civil antitrust Complaint on April 16, 1998, alleging that the
proposed merger of LTM Holdings, Inc. (``Loews'') and Cineplex Odeon
Corporation (``Cineplex'') would violate Section 7 of the Clayton Act,
15 U.S.C. 18. The Complaint alleges that the proposed merger would have
combined the first and second largest theatre chains in Manhattan and
Chicago. In Manhattan and Chicago, the combined chains would have had
market shares, by revenue, of 67 percent and 77 percent, respectively.
The complaint states that the merger would have reduced competition in
both markets, leading to higher ticket prices and reduced theatre
quality for first-run movies. It also would have allowed the newly
merged firm to reduce competition by lowering film rentals paid to
distributors for first-run movies.
The prayer for relief seeks: (a) Adjudication that the proposed
merger would violate Section 7 of the Clayton Act; (b) permanent
injunctive relief preventing the consummation of the proposed merger;
(c) an award to each plaintiff of the costs of the action; and (d) such
other relief as is proper.
A Stipulation and Order and a proposed Final Judgment were filed
with the court at the same time the Complaint was filed. The proposed
Final Judgment requires Loews and Cineplex to divest 14 theatres in
Manhattan and 11 theatres in the Chicago area to a buyer or buyers,
acceptable to the United States (after consultation with the State of
New York or the State of Illinois as the case may be), that will
continue to operate them as movie theatres. Unless the United States
grants a time extension, the divestitures must be completed within one-
hundred and eighty (180) calendar days after the filing of the
Complaint in this matter or five (5) days after notice of the entry of
the Final Judgment by the Court, whichever is later.
If the divestitures are not completed within the divestiture
period, the Court, upon application of the United States, is to appoint
a trustee selected by the United States to sell the assets. The
proposed Final Judgment also requires that, until the divestitures
mandated by the Final Judgment have been accomplished, Loews and
Cineplex must maintain and operate the 25 theatres to be divested as
active competitors, maintain the management, staffing, sales, and
marketing of the theatres, and maintain the theatres in operable
condition at current capacity configurations. Further, the proposed
Final Judgment requires defendants to give the United States prior
notice regarding future motion picture theatre acquisitions in
Manhattan or Cook County, Illinois.
The plaintiffs and the defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA. Entry of
the proposed Final Judgment would terminate this action, except that
the Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
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 and Order, 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
Southern District of New York, 500 Pearl Street, New York, NY 10007.
[[Page 25072]]
Copies of any of these materials may be obtained upon request and
payment of a copying fee.
Constance K. Robinson,
Director of Operations and Merger Enforcement Antitrust Division.
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 Southern District of New York;
2. The parties stipulate that a Final Judgment in the form hereto
attached may be filed and entered by the Court, upon the motion of any
party or upon the Court's own motion, at any time after compliance with
the requirements of the Antitrust Procedures and Penalties Act (15
U.S.C. 16), and without further notice to any party or other
proceedings, provided that plaintiff the United States has not
withdrawn its consent, which it may do at any time before the entry of
the proposed Final Judgment by serving notice thereof on defendants and
by filing that notice with the Court;
3. The defendants (as defined in paragraph II (B)-(F) of the
proposed Final Judgment attached hereto) shall abide by and comply with
the provisions of the proposed Final Judgment pending entry of the
Final Judgment by the Court, and shall, from the date of the filing 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 their transaction before the
Court has signed this Stipulation and Order;
5. In the event plaintiff United States withdraws its consent, as
provided in paragraph 2 above, or if 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, this
Stipulation shall be of no effect whatever, and the making of this
Stipulation shall be without prejudice to any party in this or any
other proceeding;
6. Loews and Cineplex represent that the divestitures ordered in
the proposed Final Judgment can and will be made, and that Loews and
Cineplex will later raise no claims of hardship or difficulty as
grounds for asking the Court to modify any of the divestiture
provisions contained therein;
7. All parties agree that this agreement can be signed in multiple
counterparts.
Dated: April 16, 1998.
For Plaintiff United States:
Allen P. Grunes (AG 4775),
U.S. Department of Justice, Antitrust Division, Merger Task Force,
1401 H Street, NW, Suite 4000, Washington DC 20530, (202) 307-0001.
For Plaintiff State of New York:
Dennis C. Vacco, Attorney General.
By: Stephen D. Houck (SH 0959),
Assistant Attorney General in Charge, Antitrust Bureau, Office of
the Attorney General, State of New York, 120 Broadway, New York, NY
10271, (212) 416-8280.
For Plaintiff State of Illinois:
James E. Ryan, Attorney General.
By: Christine H. Rosso (CR 3708),
Chief, Antitrust Bureau, Office of the Attorney General, State of
Illinois, 100 West Randolph Street, 13th Floor, Chicago, Illinois
60601, (312) 814-5610.
For Defendants Sony Corporation of America and LTM Holdings,
Inc.:
Ira S. Sacks (IS 2861),
Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New
York, NY 10004, (212) 859-8000.
For Defendant Cineplex Odeon Corporation:
Alan J. Weinschel (AW 5659),
Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY 10153,
(212) 310-8000.
For Defendant J. E. Seagram Corp.:
Kenneth R. Logan (KL 7745),
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, NY
10017, (212) 455-2000.
So ordered:
United States District Judge
Final Judgment
Whereas, plaintiffs, the United States of America, the State of New
York, and the State of Illinois filed their Complaint in this action on
April 16, 1998, and plaintiffs 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, plaintiffs intend Loews and Cineplex, as hereinafter
defined, to be required to preserve competition by promptly divesting
the 14 theatres in Manhattan and 11 theatres in Chicago identified
below;
And whereas, plaintiffs required Loews and Cineplex to make the
divestitures for the purpose of establishing one or more viable
competitors in both Manhattan and Chicago in the exhibition of first-
run motion pictures;
And whereas, Loews and Cineplex have represented to the plaintiffs
that the divestitures ordered herein can and will be made and that
Loews and Cineplex will later raise no 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 parties hereto and
over the subject matter of this action. The Complaint states a claim by
the plaintiffs 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. Loews means defendant LTM Holdings, Inc. d/b/a/ Loews Theatres,
a Delaware corporation with its headquarters in New York, New York, and
its successors, assigns, subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and directors, officers, managers,
agents, and employees.
C. Cineplex means Cineplex Odeon Corporation, an Ontario
corporation with its headquarters in Toronto, Canada, and its
successors, assigns, subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and directors, officers, managers,
agents, and employees.
D. Sony means defendant Sony Corporation of America, a New York
corporation with its headquarters in New York, New York, and its
successors, assigns, subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and directors, officers, managers,
agents, and employees.
E. Seagram means defendant J.E. Seagram Corp., a Delaware
corporation with its headquarters in New York, New York, and its
successors, assigns, subsidiaries (including but not limited to
Universal Studios, Inc.), divisions, groups, affiliates, partnerships
and joint
[[Page 25073]]
ventures, and directors, officers, managers, agents, and employees.
F. Defendants means Loews, Cineplex, Sony and Seagram.
G. The Manhattan theatre assets means the motion picture theatre
businesses operated by Loews and Cineplex under the following names at
the following addresses in Manhattan, New York:
i. Chelsea, 260 West 23rd Street.
ii. Chelsea West, 333 West 23rd Street.
iii. 62nd & First, 400 East 62nd Street.
iv. Ziegfeld, 141 West 54th Street.
v. Park & 86th Street, 125 East 86th Street.
vi. Waverly Twin, 323 Sixth Avenue.
vii. Olympia, 2770 Broadway.
viii. Art Greenwich, 97 Greenwich Avenue.
ix. Metro Twin, 2626 Broadway.
x. Beekman, 1254 Second Avenue.
xi. Regency, 1987 Broadway.
xii. 62nd Street & Broadway, 1871 Broadway.
xiii. 59th Street East, 239 East 59th Street.
xiv. 34th Street Showplace, 238 East 34th Street.
The term Manhattan theatre assets includes all tangible and
intangible assets used in the operation of these theatres including:
All real property (owned or leased); all personal property, inventory,
office furniture, fixed assets and fixtures, materials, supplies, and
other tangible property or improvements used in the operation of the
theatres; all licenses, permits and authorizations issued by any
governmental organization relating to the operation of the theatres;
and all contracts, agreements, leases, licenses, commitments and
understandings pertaining to the theatres including supply agreements
and licenses to exhibit motion pictures.
H. The Chicago theatre assets means the motion picture theatre
businesses operated by Loews and Cineplex under the following names at
the following addresses in Cook County, Illinois:
i. 600 North Michigan, 600 N. Michigan Ave., Chicago.
ii. 900 North Michigan, 900 N. Michigan Ave., Chicago.
iii. Biograph, 2433 N. Lincoln Ave., Chicago.
iv. Bricktown, 6420 W. Fullerton, Chicago.
v. Watertower 1-4, 845 N. Michigan Ave., Chicago.
vi. Watertower 5-7, 175 East Chestnut, Chicago.
vii. Burnham Plaza, 826 S. Wabash, Chicago.
viii. Broadway, 3175 N. Broadway, Chicago.
ix. Hyde Park Quad, 5238 S. Harper, Chicago.
x. River Run Eightplex, 16621 Torrence Ave., Lansing.
xi. Old Orchard Quad, 9400 Skokie Blvd., Skokie.
The term Chicago theatre assets includes all tangible and
intangible assets used in the operation of these theatres including:
All real property (owned or leased); all personal property, inventory,
office furniture, fixed assets and fixtures, materials, supplies, and
other tangible property or improvements used in the operation of the
theatres; all licenses, permits and authorizations issued by any
governmental organization relating to the operation of the theatres;
and all contracts, agreements, leases, licenses, commitments and
understandings pertaining to the theatres including supply agreements
and licenses to exhibit motion pictures.
I. Acquirer means the entity or entities to whom Loews and Cineplex
divest the Manhattan theatre assets or the Chicago theatre assets under
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. Each defendant shall require, as a condition of the sale or
other disposition of all or substantially all of the assets used in its
business of operating motion picture theatres in either Manhattan or
Cook County, Illinois, that the acquiring party or parties agree to be
bound by the provisions of this Final Judgment; provided, however, that
Loews and Cineplex need not obtain such an agreement from an Acquirer
in connection with the divestiture of the Manhattan theatre assets or
the Chicago theatre assets.
IV. Divestiture
A. Loews and Cineplex are hereby ordered and directed in accordance
with the terms of this Final Judgment, within one-hundred and eighty
(180) calendar days after the filing of the Complaint in this matter or
five (5) days after notice of the entry of this Final Judgment by the
Court, whichever is later, to divest the Manhattan theatre assets to an
Acquirer or Acquirers acceptable to DoJ in its sole discretion after
consultation with the State of New York and divest the Chicago theatre
assets to an Acquirer or Acquirers acceptable to DoJ in its sole
discretion after consultation with the State of Illinois.
B. Loews and Cineplex 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, Loews and Cineplex promptly shall make known, by usual and
customary means, the availability of the Manhattan theatre assets and
the Chicago theatre assets described in this Final Judgment. Loews and
Cineplex 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. Loews and
Cineplex shall also offer to furnish to all prospective Acquirers,
subject to customary confidentiality assurances, all information
regarding the Manhattan theatre assets and the Chicago theatre assets
customarily provided in a due diligence process except such information
subject to attorney-client privilege or attorney work-product
privilege. Loews and Cineplex shall make available such information to
DoJ at the same time that such information is made available to any
other person.
D. Loews and Cineplex shall permit prospective Acquirers of the
Manhattan theatre assets and the Chicago theatre assets to have
reasonable access to personnel and to make such inspection of the
physical facilities of the Manhattan theatre assets and the Chicago
theatre assets and any and all financial, operational, or other
documents and information customarily provided as part of a due
diligence process.
E. The defendants shall not take any action that will impede in any
way the operation of the Manhattan theatre assets or the Chicago
theatre assets.
F. Unless DoJ otherwise consents in writing, the divestitures
pursuant to Section IV, or by trustee appointed pursuant to Section V
of this Final Judgment, shall include the entire Manhattan theatre
assets and Chicago theatre assets and be accomplished by selling or
otherwise conveying the Manhattan theatre assets and Chicago theatre
assets to an Acquirer or Acquirers in such a way as to satisfy DoJ in
its sole discretion (after consultation with the State of New York or
the State of Illinois as the case may be), that the Manhattan theatre
assets and the Chicago theatre assets can and will be used by the
Acquirer(s) as part of a viable, ongoing business of exhibition of
first-run films. Divestiture of the
[[Page 25074]]
Manhattan theatre assets and the Chicago theatre assets may be made to
one or more Acquirers provided that in each instance it is demonstrated
to the sole satisfaction of DoJ (after consultation with the State of
New York or the State of Illinois as the case may be) that the
Manhattan theatre assets and the Chicago theatre assets will remain
viable and the divestiture of such assets will remedy the competitive
harm alleged in the complaint. The divestitures, whether pursuant to
Section IV or Section V of this Final Judgment: (1) Shall be made to an
Acquirer or Acquirers who it is demonstrated to DoJ's sole satisfaction
(after consultation with the State of New York or the State of Illinois
as the case may be) has or have the intent and capability (including
the necessary managerial, operational, and financial capability) of
competing effectively in the business of exhibition of first-run films;
(2) shall be accomplished so as to satisfy DoJ, in its sole discretion
(after consultation with the State of New York or the State of Illinois
as the case may be), that none of the terms of any agreement between an
Acquirer and Loews or Cineplex give Loews or Cineplex the ability
unreasonably to raise the Acquirer's costs, to lower the Acquirer's
efficiency, or otherwise to interfere in the ability of the Acquirer to
compete effectively.
V. Appointment of Trustee
A. In the event that Loews and Cineplex have not divested the
Manhattan theatre assets and the Chicago theatre 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
to effect the divestiture of the Manhattan theatre assets and the
Chicago theatre assets.
B. After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell the Manhattan theatre assets and
the Chicago theatre assets. The trustee shall have the power and
authority to accomplish the divestitures at the best price then
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 Loews and Cineplex 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
Manhattan theatre assets divestitures at the earliest possible time to
an Acquirer or Acquirers acceptable to DoJ in its sole discretion
(after consultation with the State of New York), and the Chicago
theatre assets divestitures at the earliest possible time to an Aquirer
or Acquirers acceptable to DoJ in its sole discretion (after
consultation with the State of Illinois), and shall have such other
powers as this Court shall deem appropriate. Loews and Cineplex shall
not object to a sale by the trustee on any grounds other than the
trustee's malfeasance. Any such objections by Loews and Cineplex must
be conveyed in writing to plaintiffs and the 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 Loews and
Cineplex, 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 Loews and Cineplex 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. Loews and Cineplex 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 Loews and Cineplex shall develop financial or other
information relevant to the business to be divested customarily
provided in a due diligence process as the trustee may reasonably
request, subject to customary confidentiality assurances. Loews and
Cineplex shall permit prospective Acquirers of the 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 business 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 thereafer 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
then-existing motion picture theatre in either
[[Page 25075]]
Manhattan in the State of New York or in Cook County in the State of
Illinois. 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 with
respect to defendants' motion picture theatre operations in Manhattan
in the State of New York or in Cook County in the State of Illinois.
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 uncertainty regarding the filing
of notice under this Section shall be resolved in favor of filing
notice.
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, Loews and Cineplex
or the trustee, whichever is then responsible for effecting the
divestitures, shall notify DoJ, and, as the case may be, in the State
of New York or the State of Illinois of the proposed divestitures. If
the trustee is responsible, it shall similarly notify Loews and
Cineplex. 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 Loews or Cineplex,
the proposed Acquirer, or any other third party additional information
concerning the proposed divestitures and the proposed Acquirer. Loews
and Cineplex 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 Loews and Cineplex, the proposed Acquirer, and any third
party, whichever is later, DoJ shall provide written notice to Loews
and Cineplex and the trustee, if there is one, stating whether or not
it objects to the proposed divestitures. If DoJ provides written notice
to Loews and Cineplex and the trustee that DoJ does not object, then
the divestitures may be consummated, subject only to Loews and
Cineplex'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 upon objection by DoJ, a divestiture proposed
under Section IV or Section V may not be consummated. Upon objection by
Loews and Cineplex 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, Loews and Cineplex shall deliver to
DoJ an affidavit as to the fact and manner of compliance with Sections
IV or V of this Final Judgment. Each such affidavit shall include,
inter alia, the name, address, and telephone number of each person who,
at any time after the period coverage 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 Loews and Cineplex have taken to solicit a buyer for the
relevant assets and to provide required information to prospective
Acquirers.
B. Within twenty (20) calendar days of the filing of the Complaint
in this matter, Loews and Cineplex shall deliver to DOJ an affidavit
which describes in detail all actions they have taken and all steps
they have implemented on an on-going basis to preserve the Manhattan
theatre assets and the Chicago theatre assets pursuant to Section IX of
this Final Judgment. The affidavit also shall describe, but not be
limited to, the efforts of Loews and Cineplex to maintain and operate
the Manhattan theatre assets and the Chicago theatre assets as active
competitors, maintain the management, staffing, sales, and marketing of
the Manhattan theatre assets and the Chicago theatre assets, and
maintain the Manhattan and the Chicago theatre assets in operable
condition at current capacity configurations. Loews and Cineplex 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, Loews
and Cineplex 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, Loews and Cineplex shall take all steps necessary to
maintain and operate the Manhattan theatre assets and the Chicago
theatre assets as active competitors, maintain the management,
staffing, sales, and marketing of the Manhattan theatre assets and the
Chicago theatre assets, and maintain the Manhattan theatre assets and
the Chicago theatre assets in operable condition at current capacity
configurations. Defendants shall take no action that would jeopardize
the divestitures described in this Final Judgment.
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
Sections 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 plaintiffs, upon the
written request of the Assistant Attorney General in charge of the
Antitrust Division, the New York Attorney General or the Illinois
Attorney General, and on
[[Page 25076]]
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, the New York Attorney General, or the
Illinois Attorney General 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 VIII or XI of this Final Judgment shall be divulged by a
representative of the plaintiffs to any person other than a duly
authorized representative of the Executive Branch of the United States,
or of each state government, except in the course of legal proceedings
to which at least one of the plaintiffs 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 plaintiffs, the defendants represent and identify in
writing the material in any such information or documents to which a
claim of protection may be asserted under Rule 26(c)(7) of the Federal
Rules of Civil Procedure, and 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 plaintiffs 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
Jurisidiction 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.
XIV. Public Interest
Entry of this Final Judgment is in the public interest.
Dated------------------------------------------------------------------
----------------------------------------------------------------------
United States District Judge
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
Plaintiffs the United States, the State of New York, and the State
of Illinois filed a civil antitrust Complaint on April 16, 1998,
alleging that a proposed merger of LTM Holdings, Inc. (``Loews'') and
Cineplex Odeon Corp. (``Cineplex'') would violate Section 7 of the
Clayton Act, 15 U.S.C. 18. The Complaint alleges that Loews and
Cineplex both operate motion picture theatres throughout the United
States, and that they each operate first-run motion picture theatres in
Manhattan and Chicago. The merger would combine the two leading theatre
circuits in both Manhattan and Chicago and give the newly merged firm a
dominant position in both localities: in Manhattan, the newly merged
firm would have a 67% market share (by revenue) and in Chicago, the
newly merged firm would have a 77% market share (by revenue). As a
result, the combination would substantially lessen competition and tend
to create a monopoly in the markets for theatrical exhibition of first-
run films in both Manhattan and Chicago.
The prayer for relief seeks: (1) an adjudication that the proposed
merger described in the Complaint would violate Section 7 of the
Clayton Act; (b) permanent injunctive relief preventing the
consummation of the transaction; (c) an award to each plaintiff 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 Loews to complete its merger with Cineplex, yet
preserved competition in the markets in which the transactions would
raise significant competitive concerns. A Stipulation and proposed
Final Judgment embodying the settlement were filed at the same time the
Complaint was filed.
The proposed Final Judgment orders Loews and Cineplex to divest 14
theatres in Manhattan and 11 theatres in the Chicago area to an
acquirer acceptable to the United States. Unless the United States
grants a time extension, the divestitures must be completed within one-
hundred and eighty (180) calendar days after the filing of the
Complaint in this matter or five (5) days after notice of the entry of
this Final Judgment by the Court, whichever is later.
If the divestitures are not completed within the divestiture
period, the Court, upon application of the United States, is to appoint
a trustee selected by the United States to sell the assets. The
proposed Final Judgment also requires that, until the divestitures
mandated by the Final Judgment have been accomplished, the defendants
must maintain and operate the 25 theatres to be divested as active
competitors, maintain the management, staffing, sales, and marketing of
the theatres, and maintain the theatres in operable condition at
current capacity configurations. Further, the proposed Final Judgment
requires defendants to give the United States prior notice regarding
future motion picture theatre acquisitions in Manhattan or Cook County,
Illinois.
The plaintiffs and the defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA. Entry of
the proposed Final Judgment would terminate this action, except that
the Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II. The Alleged Violations
A. The Defendants
Sony Corporation of America is a New York corporation with its
headquarters in New York, New York.
LTM Holdings, Inc. is a Delaware corporation which does business
under the name Loews Theatres and has its principal executive offices
in New York, New York. Loews is an indirect wholly
[[Page 25077]]
owned subsidiary of Sony Pictures Entertainment Inc., itself an
indirect wholly owned subsidiary of Sony Corporation of America, which
in turn is an indirect wholly owned subsidiary of Sony Corporation, a
Japanese company. Loews currently operates 139 theatres with 1,035
screens in 16 states. Its annual revenues for the fiscal year ending
February 28, 1997 were approximately $375 million.
Cinceplex is a Canadian corporation headquartered in Toronto,
Ontario. It currently operates a total of 312 theatres with 1,723
screens in the United States, Canada and Hungary. Its United States
operations consist of 911 screens at 175 locations in 13 states and the
District of Columbia. Cineplex had annual revenues of approximately
$500 million in 1996.
J.E. Seagram Corp. is a Delaware corporation headquartered in New
York, New York. Its subsidiary, Universal Studios, Inc., is the largest
shareholder of Cineplex.
B. Description of the Events Giving Rise to the Alleged Violations
On September 30, 1997, Sony Pictures Entertainment Inc., LTM
Holdings, Inc. and Cineplex entered into a merger agreement. Pursuant
to the agreement, Cineplex will become a wholly owned subsidiary of LTM
Holdings, Inc., and Sony Pictures Entertainment will transfer all of
its U.S. theatre assets not owned by LTM Holdings, Inc. to LTM
Holdings, Inc. or its subsidiaries. LTM Holdings, Inc. will then be
renamed Loews Cineplex Entertainment Corporation (``LCE''). Following
the merger, Sony Pictures Entertainment Inc. will own approximately 51%
of LCE and Universal Studios, Inc. will own approximately 26% of LCE.
Loews and Cineplex compete in the theatrical exhibition of first-
run films in Manhattan and Chicago: They compete to obtain films from
film distributors and to attract movie-goers to their theatres. The
proposed merger, and the threatened loss of competition that would be
caused thereby, precipitated the government's suit.
C. Anticompetitive Consequences of the Proposed Transaction
The Complaint alleges that the theatrical exhibition of first-run
films in Manhattan and Chicago each constitutes a line of commerce and
section of the country, or relevant market, for antitrust purposes.
First-run films differ significantly from other forms of entertainment.
The experience of viewing a film in a theatre is an inherently
different experience from a live show, a sporting event, or viewing a
videotape in the home. Ticket prices for first-run films are also
generally very different than for other forms of entertainment. A small
but significant increase in the price of tickets for first-run films
would not cause a sufficient shift to other forms of entertainment to
make the increase unprofitable.
From a movie-goer's standpoint, theatres outside Manhattan and
Chicago are not acceptable substitutes for theatres within those areas.
A small but significant increase in the price of tickets for first-run
films would not cause a sufficient shift to theatres outside Manhattan
or Chicago to make the increase unprofitable.
From a distributor's standpoint, there is no alternative to
screening its first-run films in first-run theatres. Given the high
population densities and number of significant critics in both
Manhattan and Chicago, ``passing'' (i.e., not playing a film in)
Manhattan and Chicago is not a viable option. From the distributor
standpoint as well, a small but significant decrease in prices (i.e., a
decrease in film rental fees) would not cause a sufficient shift by
distributors to other locations to make the decrease unprofitable to
exhibitors.
The Complaint alleges that the merger of Loews and Cineplex would
lessen competition substantially and tend to create a monopoly in the
markets for exhibition of first-run films in Manhattan and Chicago. The
proposed transaction would create further market concentration in
already highly concentrated markets, and the merged firm would control
a majority of box office revenues in those markets. In Manhattan, the
market share possessed by the largest theatre circuit would rise from
46% percent to 67% percent of box office revenues after the proposed
transaction. According to the Herfindahl-Hirschman Index (``HHI''), a
widely-used measure of market concentration defined and explained in
Appendix A, the merged firm's post-transaction HHI in Manhattan would
be 4815, representing an increase of 1911 points. In Chicago, the
market share possessed by the largest theatre circuit would rise from
47% percent to 77% percent of box office revenues after the proposed
transaction. The post-transaction HHI would equal 6438, representing an
increase of 2874 points. These substantial increases in concentration
would likely lead the merged firm to raise ticket prices.
Distributors and exhibitors often break the Manhattan and Chicago
markets into ``zones'' that reflect various neighborhoods--such as, in
Manhattan, the Upper East Side, the East Side, the West Side, Broadway-
Times Square, Chelsea, and Greenwich Village, and in Chicago, Downtown,
Near North, North, Far North, West, South, and Far South. Movies
typically will open and play at only one theatre within a zone. The
merger would convert a number of film zones in which Loews and Cineplex
compete with each other into zones in which there would be no
competition. For instance, in the downtown Chicago zone, the combined
entity would control all seven theatres. The same is true in the north
zone (Old Orchard/Orchard Gardens), the west zone (Bricktown Square/
Norridge) and the far south zone (River Run/River Oaks).
By reducing non-price competition, the merger would also likely
lead to lower quality theatres by reducing the incentive to maintain,
upgrade and renovate theatres in Manhattan and Chicago, thus reducing
the quality of the viewing experience for movie-goer. It also may allow
the merged entity to reduce the number of shows as there no longer
would be competitive pressure to continue early and late shows.
Finally, the merger would also likely lead to distributors
receiving less in revenue for the exhibition of their pictures, either
in the form of reduced (or eliminated) guarantees, higher overhead
allowances for the exhibitors, or a less favorable percentage of the
box office receipts. The reduced revenue remitted to the distributors
could lead to fewer films being produced, or less money being expended
on high quality films, to the ultimate detriment of movie-goers.
New entry into the Manhattan and Chicago markets for exhibition of
first-run films would be highly unlikely to eliminate the
anticompetitive effects of this transaction. Manhattan and Chicago are
two of the most difficult markets in the country to enter: Available
theatre sites are scarce, real estate and construction costs are among
the highest in the nation, and acquiring the necessary permits and
approvals can be difficult and time-consuming. Identifying a site,
planning the development, and constructing a theatre in Manhattan or
Chicago takes several years.
For all of these reasons, plaintiff has concluded that the proposed
transaction would lessen competition substantially in the exhibition of
first-run films in Manhattan and Chicago, eliminate actual and
potential competition between Loews and Cineplex, and likely result in
increased ticket prices and lower quality theatres in both Manhattan
and Chicago. The merger would also likely reduce the rental fees paid
to distributors for films. The
[[Page 25078]]
proposed merger therefore violates Section 7 of the Clayton Act.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment would preserve existing competition in
the theatrical exhibition of first-run films in both Manhattan and
Chicago. It requires the divestiture of 14 theatres in Manhattan: 13
Cineplex theatres (Chelsea, Chelsea West, 1st and 62nd, Ziegfeld, Park
& 86th Street, Waverly Twin, Olympia, Art Greenwich, Metro Twin,
Beekman, Regency, 62nd & Broadway, and 59th Street East) and one Loews
theatre (34th Street Showplace); and 11 theatres in the Chicago area: 8
Cineplex Odeon theatres (600 North Michigan, 900 North Michigan,
Biograph, Bricktown, Watertower 1-4, Watertower 5-7, Burnham Plaza, and
Broadway) and 3 Loews theatres (Hyde Park Quad, River Run Eightplex,
and Old Orchard Quad). The divested theatres constitute slightly more
in box office revenue in Manhattan and in Chicago than the leading firm
is acquiring in each market and, as a result, will reduce the leading
firm's share back to (or actually slightly less than) pre-merger levels
in both markets. The divestitures will preserve choices for
distributors and movie-goers and make it less likely that ticket prices
will increase, rental fees paid to distributors will decrease, and
theatre quality will decline in Manhattan and Chicago as a result of
the transaction.
Two of the divestitures in the Chicago area are outside of the city
limits: Old Orchard Quad and the River Run Eightplex. In a case like
this, where theatres are geographically differentiated and consumers'
willingness to travel is varied, some movie-goers near the border have
options outside the city limits. Accordingly, we have negotiated relief
that includes two theatres outside of Chicago. Both of these theatres
are in close proximity to the city, are near major highways, and are in
zones that would be rendered non-competitive by the merger.
Unless the United States grants an extension of time, the
divestitures must be completed within one-hundred and eighty (180)
calendar days after the filing of the Complaint in this matter or five
(5) days after notice of the entry of this Final Judgment by the Court,
whichever is later. Until the divestitures take place, Loews and
Cineplex must maintain and operate the 25 theatres to be divested as
active competitors, maintain the management, staffing, sales, and
marketing of the theatres, and maintain the theatres in operable
condition at current capacity configurations.
The divestitures must be to a purchaser or purchasers acceptable to
the United States in its sole discretion, after consultation with the
State of New York or the State of Illinois as appropriate. Unless the
United States otherwise consents in writing, the divestitures shall
include all the assets of the theatres being divested, and shall be
accomplished in such a way as to satisfy the United States that such
assets can and will be used as viable, ongoing first-run theatres.
If defendants fail to divest these theatres within the time periods
specified in the Final Judgment, the Court, upon application of the
United States, is to appoint a trustee nominated by the United States
to effect the divestitures. If a trustee is appointed, the proposed
Final Judgment provides that Loews and Cineplex 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 theatres remaining to be divested, 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 parties and the Court, setting for 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 also prohibits the defendants from
acquiring any other threatres in Manhattan or Cook County, Illinois
without providing at least thirty (30) days' notice to the U.S.
Department of Justice. Such acquisitions could raise competitive
concerns but might be too small to be reported otherwise under the
Hart-Scott-Rodino (``HSR'') premerger notification statute.
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 suite in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorney's fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
16(a), the proposed Final Judgment has no prima facie effect in any
subsequent private lawsuit that may be brought against defendants.
V. Procedures Available for Modification of the Proposed Final
Judgment
The parties have stipulated that the proposed Final Judgment may be
entered by the Court after compliance with the provisions of the APPA,
provided that plaintiff United States has not withdrawn its consent.
The APPA conditions entry upon the Court's determination that the
proposed Final Judgment is in the public interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to the 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 U.S. 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 United States considered, as an alternative to the
proposed Final
[[Page 25079]]
Judgment, a full trial on the merits of its Complaint against
defendants. Plaintiff is satisfied, however, that the divestiture of
the Manhattan theatre assets and the Chicago theatre assets and other
relief contained in the proposed Final Judgment will preserve viable
competition in the first-run exhibition of motion pictures in Manhattan
and Chicago. Thus, the proposed Final Judgment would achieve the relief
the government might have obtained through litigation, but avoids the
time, expense and uncertainty of a full trial on the merits of the
Complaint.
VII. Standard of Review Under the APPA for Proposed Final Judgment
The APPA requires that proposed consent 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 adequacy of the relief secured by
the decree, a court may not ``engage in an unrestricted valuation 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).
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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 Co., 406 F. Supp. at 716
(citations omitted); United States v. Alcan Aluminum, Ltd., 605 F.
Supp. 619, 622 (W.D. Ky. 1985).
---------------------------------------------------------------------------
This 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: April 16, 1998.
Respectifully submitted,
Allen P. Grunes (AG 4775),
U.S. Department of Justice, Antitrust Division, 1401 H. Street, NW.;
Suite 4000, Washington, D.C. 20530, (202) 307-0001, Attorney for
Plaintiff the United States.
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 30\2\ + 30\2\ + 20\2\ + 20\2\=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, Allen P. Grunes, hereby certify that on April 16, 1998, I caused
the foregoing document to be served on defendants by having a copy
mailed, first-class, postage prepaid, to:
Ira S. Sacks,
Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New
York, NY 10004, (212) 859-8000.
[[Page 25080]]
Attorney for defendants Sony Corporation of America and LTM
Holdings, Inc.
Alan J. Weinschel,
Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY 10153,
(212) 310-8000.
Attorney for defendant Cineplex Odeon Corporation.
Kenneth R. Logan,
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, NY
10017, (212) 455-2000.
Attorney for defendant J.E. Seagram Corp.
Allen P. Grunes.
[FR Doc. 98-11958 Filed 5-5-98; 8:45 am]
BILLING CODE 4410-11-M
