[Federal Register Volume 64, Number 112 (Friday, June 11, 1999)]
[Notices]
[Pages 31638-31647]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-14469]
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DEPARTMENT OF JUSTICE
Antitrust Division
[Civil No. 98 CV 7168 (FB)(MDG)]
United States, State of New York, Commonwealth of Pennsylvania
and State of Florida v. Waste Management, Inc., Ocho Investment Corp.,
Eastern Environmental Services, Inc.; Response to Public Comments on
Antitrust Consent Decree
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that on May 21, 1999, the United
States filed its responses to public comments on the proposed Final
Judgment in United States v. Waste Management, Inc. and Eastern
Environmental Services, Inc., Civil No. 98 CV 7168 (FB)(MDG) (E.D.N.Y.,
filed Dec. 31, 1998), with the United States District Court in
Brooklyn, New York.
On November 17, 1998, the United States, New York, Pennsylvania and
Florida filed a Complaint, which alleged that Waste Management's
proposed acquisition of Eastern Environmental
[[Page 31639]]
would violate Section 7 of the Clayton Act, 15 U.S.C. 18, by
substantially lessening competition in waste collection and/or disposal
in nine markets around the country, including the New York, NY
(disposal of commercial and residential municipal solid waste);
Pittsburgh and Bethlehem/Allentown, PA (disposal of municipal solid
waste); Carlisle/Chambersburg, PA area (collection of commercial waste
and disposal of municipal solid waste); and Miami/Ft. Lauderdale, and
suburban Tampa, FL (collection of commercial waste). The proposed Final
Judgment, filed on December 31, 1998, requires Waste Management and
Eastern to divest commercial waste collection and/or municipal solid
waste disposal operations in each of the geographic areas alleged in
the Amended Complaint.
Public comment was invited within the statutory 60-day comment
period. The public comments and the United States's responses thereto
are hereby published in the Federal Register and have been filed with
the Court. Copies of the Amended Complaint, Hold Separate Stipulation
and Order, proposed Final Judgment, Competitive Impact Statement, and
the United States's Certificate of Compliance wit Provisions of the
Antitrust Procedures and Penalties Act (to which the public comments
and the United States's responses are attached) are available for
inspection in Room 215 of the Antitrust Division, Department of
Justice, 325 7th Street, NW, Washington, D.C. 20530 (telephone: 202-
514-2481) and at the Office of the Clerk of the United States District
Court for the Eastern District of New York, 225 Cadman Plaza East,
Brooklyn, New York 11201.
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.
United States's Certificate of Compliance With Provisions of the
Antitrust Procedures and Penalties Act
The United States of America hereby certified that it has complied
with the provisions of the Antitrust Procedures and Penalties Act
(``APPA''), 15 U.S.C. 16(b)-(h), and states;
1. The Complaint in this case was filed on November 17, 1998, and
an Amended Complaint was filed on December 1, 1998. The proposed Final
Judgment (``Judgment'') and the Hold Separate Stipulation and Order
(``Hold Separate Order'') were filed on December 31, 1998. The
government's Competitive Impact Statement was filed on February 2,
1999.
2. Pursuant to 15 U.S.C. 16(b), the Judgment, Hold Separate Order,
and Competitive Impact Statement were published in the Federal Register
on February 26, 1999 (64 Fed. Reg. 9527). A copy of the notice is
attached as Exhibit 1.
3. Pursuant to 15 U.S.C. 16(d), the United States furnished copies
of the Amended Complaint, Hold Separate Order, proposed Final Judgment
and Competitive Impact Statement to anyone requesting them.
4. Pursuant to 15 U.S.C. 16(c), a summary of the terms of the
proposed Judgment and the Competitive Impact Statement were published
in The New York Times, a newspaper of general circulation in New York,
NY, and in the The Washington Post, a newspaper of general circulation
in the District of Columbia. Copies of the certificates of publication
from The New York Times and The Washington Post appear in Exhibit 2.
5. On January 11, 1999, the defendants--Waste Management, Inc.,
Eastern Environmental Services, Inc., and Ocho Acquisition
Corporation--filed with the Court a joint statement describing their
communications with employees of the United States Department of
Justice concerning the proposed Final Judgment, as required by 15
U.S.C. 16(g).
6. During the 60-day comment period after publication of notice in
the Federal Register, The New York Times and The Washington Post, the
United States received five written comments on the proposed
settlement. These comments were from: (a) the Pulaski County, Kentucky
Solid Waste Management District; (b) the Environmental Committee of the
Pocono Mountains Chamber of Commerce in Stroudsburg, Pennsylvania; (c)
the Schuylkill County, Pennsylvania Office of Solid Waste and Resource
Management; (d) the Monroe County, Pennsylvania Municipal Waste
Management Authority; (e) Recycle Worlds Consulting Corporation of
Madison, Wisconsin.
7. The United States evaluated and responded to each of the
comments it received. The comments did not convince the United States
that it should withdraw its consent to the proposed settlement. The
complete text of the comments and the responses appear in Exhibits 3-7;
they are summarized below.
A. The Pulaski County, KY Comment
The Pulaski County Solid Waste Management District complained that
a combination of Waste Management and Eastern would substantially
eliminate competition in the collection and disposal of the county's
residential waste. In our response, we point out that Pulaski County
has entered into a long-term contract for collection and disposal of
its waste, which does not expire until sometime in the year 2002. Under
these circumstances, we note, it is highly unlikely that the merger had
eliminated any existing competition between the defendants in waste
collection or disposal services. In our views, it is simply to early to
predict whether the merger would eliminate any significant potential
competition that may occur after the contract expires in 2002.
B. The Monroe County, PA Comments
The Monroe County Municipal Solid Waste Authority and the Pocono
Mountains Chamber of Commerce, both based in Stoudsburg, PA, asserted
that the governments should have sought and obtained divestiture relief
that would eliminate the anticompetitive effects of the defendants'
merger in Monroe County, Pennsylvania. In that market, these
commentators point out, a combination of Waste Management and Eastern
would control eighty percent of more of the collection and disposal of
the county's municipal waste. In its response, the United States
pointed out that the proposed Final Judgment requires the defendant to
divest the Waste Management commercial hauling routes in the Scranton/
Wilkes-Barre, PA area, which is about 30 miles from the major
population center of Monroe Country, and that the earlier Final
Judgment in United States v. USA Waste Services, Inc. and Waste
Management, Inc., No. 1:98 CV 1616 (N.D. Ohio, filed July 17, 1998),
requires Waste Management to divest commercial waste hauling routes in
the Allentown, PA area, which is only about 20 miles south of Monroe
County. These divestiutes, once approved by the courts, would install
in each of these areas one or more new competitors whose operations
would be sufficiently close to provide a serious competitive check on
the combination's ability to raise prices after consummating their
merger.
C. The Schuylkill County Comment
The Schuylkill County Office of Solid Waste and Resource Management
(``OSWRM''), based in Pottsville, PA, similarly complained that the
governments should have sought and obtained divestiture relief that
would eliminate the anticompetitive effects of the merger in Schuylkill
County, PA. OSWRM alleged that the merger would leave Waste Management
as the
[[Page 31640]]
dominant commercial waste hauler in Schuylkill County.
In our response, we pointed out that the United States did not seek
relief with respect to commercial hauling in Schuylkill County because
the amount of commerce was relatively small (Eastern's operations had
less than $1 million in annual revenue), and Schuylkill County, like
Monroe County, is reasonable close to two areas in which divestitures
mandated by the pending final Judgment and the consent decree in USA
Waste case would establish independent competitiors fully capable of
disciplining an exercise of market power by Waste Management after it
merges with Eastern.
D. The Recycle Worlds Consulting Corp. Comment
RecycleWorlds, a private waste industry consultant, expressed
concern that the Final Judgment would not halt the wave of mega-mergers
currently sweeping through the nation's waste industry. In this rapidly
consolidating industry, some markets, RecycleWorlds explained, may
become dominated by a handful of large integrated waste collection and
disposal firms, and more prone to collusive price increases by the few
remaining competitors. To prevent Waste Management from squeezing waste
collection competitors by increasing the prices at landfills sites at
which they dispose their waste, RecycleWorlds would require Waste
Management to divest its waste collection operations or its waste
disposal operations in any market in which it competes with Eastern.
Failing that, RecycleWorlds urged the government not to approve any
asset divestiture under the Judgment to any of the handful of major
integrated waste firms, such as Republic, Allied or BFI. These firms
may be more inclined to cooperate with Waste Management in raising
prices in some markets in order to avoid potential price wars with
Waste Management elsewhere.
In its response, the United States noted that it does not believe
that requiring Waste Management to divest all collection or disposal
operations in any overlap market would be more procompetitive than the
divestitures ordered by the pending Judgment. Indeed, pursuing Recycle
World's alternative may result in Waste Management obtaining vast
market power in waste collection or in waste disposal services since,
in effect, if Waste Management agrees to divest one line of business it
can obtain an overwhelming market share in the other line. As to
Recycle World's second point, the United States will not approve any
proposed divestiture under the Judgment that may substantially lessen
competition in any market. To that end, the Antitrust Division recently
rejected Waste Management's proposal to divest these assets under the
decree to Allied Waste Services, Inc. Allied, the nation's third
largest waste industry firm, had agreed to acquire Browning-Ferris
Industries, Inc., the industry's second firm. The pervasive competitive
overlaps between the Allied/BFI operations and the disposal and
collection operations ordered divested under the Judgment convinced the
United States that the proposed divestiture would not advance
competition in any market.
8. Pursuant to 15 U.S.C. 16(b)-(h), the United States has arranged
to publish in the Federal Register by May 29, 1999, a copy of the
comments and the United States's responses.
9. With these steps having been taken, the parties have fulfilled
their obligations under the APPA. Pursuant to the Hold Separate Order
that the Court entered on December 31, 1998, the Court may now enter
the proposed Judgment, if it determines that the entry of the Judgment
is in the public interest. For the reasons set forth in the Competitive
Impact Statement, and in its responses to the public comments, the
United States strongly believes that the Judgment is in the public
interest and that the Court therefore promptly should enter it.
Dated: May 20, 1999.
Respectfully submitted,
Anthony E. Harris, Esquire (AH 5876)
U.S. Department of Justice, Antitrust Division, 1401 H Street, NW,
Suite 3000, Washington, DC 20530, (202) 307-6583.
Exhibit 1
Exhibit 1 was unable to be published in the Federal Register. A
copy can be obtained from the Documents Office of the U.S.
Department of Justice, Antitrust Division, 325 7th Street, NW., Room
215, Washington, DC 20530, or call (202) 514-2481. It is can also be
obtained from the Federal Register, Volume 64 No. 38, Page 9527-9541
dated Friday, February 26, 1999.
Exhibit 2
Exhibit 2 Advertising Order forms was unable to be published in
the Federal Register. A copy can be obtained from the Document
Office of the U.S. Department of Justice, Antitrust Division, 325
7th Street, NW, Room 215, Washington, DC or (202) 514-2481.
Exhibit 3
March 26, 1999.
J. Robert Kramer II,
Chief, Litigation II, Anti-Trust Division, United States Department
of Justice, 1401 H Street N.W., Suite 3000, Washington, DC 20530
Re: United States of America, State of New York, Commonwealth of
Pennsylvania, and State of Florida vs. Waste Management, Inc., Ocho
Acquisition Corp., and Eastern Environmental Services, Inc.
United States District Court/Eastern District of New York Case
Number: 98-7168
Dear Mr. Kramer: This letter will advise of my representation of
the Pulaski County (KY) Solid Waste Management District. The
District Board has approved a Resolution opposing the acquisition of
Eastern Environmental Services, Inc., by Waste Management, Inc. The
Resolution is enclosed, and is submitted to you pursuant to the
public comment period, and should be included as comment on the
acquisition and above-referenced litigation and proposed final
judgment therein.
If you need any additional information relative to this matter,
please do not hesitate to contact me at one of the above-listed
telephone numbers or address. Thank you for your assistance in this
regard.
Very truly yours,
Jeffrey Scott Lawless,
Travis, Pruitt & Lawless.
Enclosure: Resolution
cc:
Board Members
Solid Waste Coordinator
Resolution of the Board of the Pulaski County Solid Waste
Management District
Whereas the Pulaski County Solid Waste Management District is a
Solid Waste Management District established pursuant to the provisions
of Chapter 109 of the Kentucky Revised Statutes, and as such is given
the authority to operate and contract for services relative to the
operation of solid waste management facilities, and said district is
further given the authority under the Pulaski County Solid Waste
Management Ordinance, to make, amend, revoke, and enforce reasonable
rules and regulations, governing the storage, collection,
transportation, processing, and disposal of solid waste, and shall
prepare, update, implement, and maintain the Solid Waste Management
Plan for the Pulaski County geographical area, said County being a
political subdivision of the Commonwealth of Kentucky, with an
estimated population of 56,000, and;
Whereas, as of or about 1996, there were within Pulaski County,
Kentucky, two independent, locally owned entities engaged in the
collection and transportation of solid waste, said entities being ``B &
M Sanitation Service, Inc.'' and ``G & W Disposal, Inc.'' and since
that time, said entities
[[Page 31641]]
have been acquired, either by merger or stock acquisition, by Waste
Management Inc., and;
Whereas, as of 1999, there were five (5) landfills operating in the
Commonwealth of Kentucky, within a one-hundred (100) mile radius of
Pulaski County, which engage in the processing or disposal of solid
waste, being more particularly identified (with the respective owners
of each) as follows:
(1) Lilly, Kentucky (Waste Management, Inc.)
(2) Williamsburg, Kentucky (Waste Management, Inc.)
(3) Irvine, Kentucky (Waste Management, Inc.)
(4) Pulaski Landfill (Eastern Environmental Services, Inc.)
(5) Stanford, Kentucky (Republic)
and;
Whereas, the District is a party to an agreement with G & W
Disposal, Inc., (now Waste Management, Inc.) for the provision of solid
waste collection services to citizens and residents of Pulaski County,
Kentucky, and the District is further a party to an Agreement with
Pulaski Grading, Inc. (a subsidiary of Eastern Environmental Services,
Inc.), for the provision of solid waste disposal services to and for
the benefit of the citizens and residents of Pulaski county, Kentucky,
and that said agreements expire by their terms during calendar year
2002, and;
Whereas, the United States Department of Justice and others have
initiated an action in the United States District Court for the Eastern
District of New York, styled United States of America, State of New
York, Commonwealth of Pennsylvania, and State of Florida v. Waste
Management, Inc., Ocho Acquisition Corp., and Eastern Environmental
Services, Inc., 98-7168, contesting the acquisition (hereinafter the
``Acquisition'') of Eastern Environmental Services, Inc. (hereinafter
``Eastern''), and Waste Management, Inc., (hereinafter ``Waste
Management'') and according to the pleadings of record therein, the
Acquisition ``would substantially reduce competition in disposal of
municipal solid waste in'' five highly concentrated markets, `'and that
it would substantially lessen competition in commercial waste
collection services in four highly concentrated'' markets, and further,
it is alleged that ``the loss of competition would likely result in
consumers paying higher prices and receiving fewer or lesser quality
services for the collection and disposal of waste'', and;
Whereas on December 31, 1998, the Plaintiffs in the aforementioned
litigation filed a Proposed Settlement that would permit Waste
Management to complete its acquisition of Eastern, but would require
said Defendants to divest certain waste collection and disposal assets
in such a way as to preserve competition in the market areas identified
in the pleadings; and,
Whereas, pursuant to the Competitive Impact Statement filed of
record in the aforementioned action:
Significant new entry into [affected waste collection and
disposal] markets would be difficult, time consuming, and unlikely
to occur soon. Many customers of commercial waste collection firms
have entered into ``Evergreen'' contracts, tieing them to a market
incumbent for indefinitely long periods of time. In competing for
uncommitted customers, market incumbents can price discriminate,
i.e. selectively (and temporarily) charge unbeatably low prices to
customers targeted by entrants, a tactic that would strongly
discourage a would-be competitor for competing for such accounts,
which, if won, may be very unprofitable to serve. The existence of
long-term contracts are price discrimination substantially increases
any would-be new entrant's costs and time necessary for it to build
its customer base and obtain efficient scale and route density to
become an effective competitor in the market.
and, the District does hereby adopt said statement as its own finding,
as a correct and accurate statement of the nature of waste collection
activity as its exists in Pulaski County, Kentucky, as the District has
in the past entered into such extended contracts for the provision of
collection and disposal services (specifically, the most recent
contracts being of a ten year duration), and;
Whereas the District does hereby make a finding that the
acquisition by Waste Management of aforementioned Pulaski County-area
solid waste collectors, and the proposed acquisition by Waste
Management of Eastern, significantly reduces the competitive options of
the District and its citizens, for the collection and disposal of
residential and commercial waste, and would likely result in an
increase (or a refusal to negotiate further reductions) in the fees and
charges for collection and disposal of the residential and commercial
waste of the District and its citizens, and;
Whereas, as was noted in the Competitive Impact Statement, and the
District does hereby find:
Entry into the disposal of municipal solid waste is difficult.
Government permitting laws and regulations make obtaining a permit
to construct or expand a disposal site an expensive and time-
consuming task. Significant new entry into these markets is unlikely
to occur in any reasonable period of time, and is not likely to
prevent exercise of market power after the [Acquisition].
and
[In the Pulaski County geographic area] Waste Management's
acquisition of Eastern would remove a significant competitor in
disposal of municipal solid waste. With the elimination of Eastern,
[Waste Management] will no longer compete as aggressively since it
will not have to worry about losing business to Eastern. The
resulting substantial increase in concentration, loss of
competition, and absence of reasonable prospect of significant new
entry or expansion by market incumbents likely ensure that customers
will pay substantially higher prices for disposal of municipal solid
waste, collection of [residential or] commercial waste, or both,
following the [Acquisition], and;
Whereas, the District desires to eliminate the anti-competitive
effects of the Acquisition in collection and disposal of municipal
solid waste from Pulaski County, Kentucky.
Now, therefore, be it hereby resolved, by the Board of the Pulaski
County Solid Waste Management District, as follows:
(A) That the Pulaski County Solid Waste Management District opposes
and objects to the Acquisition of Eastern Environmental Service, Inc.,
by Waste Management, Inc.
(B) The the Pulaski County Solid Waste Management District
respectfully requests that the United States Department of Justice,
Anti-Trust Division, modify the proposed Final Judgment as follows:
1. That Eastern Environmental Services, Inc., be required to
sell, on or before a reasonable date certain, its interest in the
Pulaski Landfill, (located at Dixie Ben Road, Pulaski County,
Kentucky, being License Number 100-00008, issued by the Natural
Resources and Environmental Protection Cabinet, Division on Waste
Management), to the Pulaski County Solid Waste Management District,
Pulaski County, Kentucky, or any other purchaser acceptable to both
the United States, the Commonwealth of Kentucky, and the Pulaski
County Solid Waste Management District.
Or alternatively:
2. That Waste Management, Inc. or Eastern Environmental
Services, Inc., be required to open and obtain a continuous
operating permit issued by the Kentucky Department of Natural
Resources for the operation of a landfill to be located in Pulaski
County, Kentucky, and that said landfill be thereupon leased to the
District for a term of years, subject to the approval of the
Commonwealth of Kentucky, and the District.
Or alternatively:
3. That Waste Management be required to develop, construct, and
implement an alternative solid waste management or disposal
facility, whereby the efficiency of extracting ``recovered
material'' is increased, waste requiring disposal is reduced, solid
waste is managed in an environmentally
[[Page 31642]]
protected manner, and solid waste is converted to beneficial by-
products or materials; and that such facility be operated jointly
with, or solely by, the Pulaski County Solid Waste Management
District, for a period not to exceed twenty years.
(C) That this Resolution be communicated to the United States
Department of Justice, Anti-Trust Division, to the attention of the
following: J. Robert Kramer, II, Chief, Litigation II, Anti-Trust
Division, United States Department of Justice, 1401 H Street N.W.,
Suite 3000, Washington, DC 20503.
and that said comments be evaluated by the United States Department of
Justice, so that the concerns of the residents and citizens of Pulaski
County, Kentucky may be addressed and included in such manners as the
United States Department of justice Antitrust Division may, under the
circumstances, consider appropriate.\1\
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\1\ Although some acquisitions, like some snakes, are
beneficial, the Kentucky Court of Appeals once noted that ``may
snakes are poisonous, and only the zoologist, herpetologist, or
experienced woodsman is able to distinguish those which are not''
Lawson v. Commonwealth, 164 S.W.2d 972 (1942). The District would
therefore defer to the good judgment of the ``experienced woodsmen''
of the Department of Justice's Anti-Trust Division.
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Adopted this the 18th day of March, 1999.
Pulaski County Solid Waste Management District
Charles T. Estes,
Board Chairman.
Attest: Donna Turner,
Secretary.
Jeffrey Scott Lawless, Attorney,
Travis, Pruitt & Lawless, P.O. Drawer 30, Somerset, KY 42502-0030.
Jeffrey Scott Lawless, Esquire,
Travis, Pruitt & Lawless, 207 East Mt. Vernon Street, Post Office
Drawer 30, Somerset, KY 42502-0030
Re: Comment on Proposed Final Judgment in United States, State of
New York, et al, v. Waste Management, Inc., Eastern Environmental
Services, Inc., No. 98 CV 7168 (JB) (E.D.N.Y., December 31, 1998)
Dear Mr. Lawless: This letter responds to your letter of March
26, 1999 commenting on the Final Judgment in this case on behalf of
your client, the Pulaski County, Kentucky Solid Waste Management
District. The Amended Compliant in this case charged, among other
things, that Waste Management's acquisition of Eastern Environmental
would substantially lessen competition in collection or disposal of
municipal solid waste in 12 markets in New York, Pennsylvania, and
Florida. The proposed consent decree, now pending in federal
district court in Brooklyn, New York, would settle the case by
requiring the defendants to divest a number of waste collection
routes and waste disposal facilities in the markets alleged in the
Complaint.\1\ This relief, if approval by the Court, would establish
one or more new competitors in each of the markets for which relief
was sought, replacing the competitive rivalry lost when Waste
Management acquired Eastern Environmental.
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\1\ The markets alleged in the Amended Complaint, and for which
divestiture relief was obtained in the Final Judgment, include the
disposal of municipal solid waste in the Pittsburgh, Carlisle-
Chambersburg, and Bethlehem, PA areas, and in New York City, NY
(commercial and residential); and collection of commercial waste in
the Carlisle-Chambersburg, Bethlehem, and Scranton, PA; suburban
Tampa (Hillsborough Co.) and Miami/Ft. Lauderdale, FL (Dade and
Broward counties) areas.
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In your letter, you express concern that neither the complaint
nor the proposed Judgment address the competitive effects of the
merger in the collection and disposal of residential waste in
Pulaski County, Kentucky. A combination of Waste Management and
Eastern Environmetal would control four of the five landfills within
a 100 mile radius radius of Pulaski County.
The United States did not allege that a combination of Waste
Management and Eastern Environmental would raise serious competitive
problems in the collection and disposal of Pulaski County because
the county has long-term agreements with Waste Management and with
Eastern Environmental, which provide that the residential waste will
be collected by Waste Management and that disposal of that waste
will be handled by Eastern Environmental. These agreements, which do
not expire until at 2002, effectively preclude competition between
Waste Management and Eastern for the county's collection and
disposal of waste. In addition, in this case, we believe that it
would be difficult to predict what the competitive landscape will
look like in 2002 when Pulaski County is once again in the market
for a firm to collect and to dispose of its resident's waste. For
that reason, we were not prepared to allege, or attempt to prove,
that the proposed merger would be anticompetitive in Pulaski County,
KY.
Thank you for bringing your concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16(d), a copy of your
comment and this response will be published in the Federal Register
and filed with the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
Exhibit 4
J. Robert Cramer, II
Chief, Litigation II Section, Antitrust Division, U.S.
Department of Justice, 1401 H Street NW, Suite 3000, Washington, DC
20530
cc: Pennsylvania Attorney General Fisher
Dear J. Robert Cramer, II: The Pocono Mountains Chamber of
Commerce Environmental Committee would like to offer its comments on
the issue referenced above.
Our Committee serves the Chamber of Commerce's Executive
Committee and Board of Directors, reviewing environmental issues and
advising on appropriate Executive Committee and Board actions. The
Environmental Committee also comments directly, where appropriate,
on environmental issues impacting Monroe County. The Environmental
Committee feels the referenced merger does not serve the best
interests of Monroe County citizens.
The results of the merger is that one parent company will
control collection and disposal of a disproportionate amount of the
county's municipal waste. The county's other haulers are independent
operators. These haulers will be unable to compete for commercial
waste collection and municipal collection contracts. And, since none
of these smaller companies owns a disposal facility, Waste
Management will control their tipping fees. Recent history has shown
that the independents are charged higher tipping fees than Waste
Management charges its own haulers.
Since the merger a number of commercial businesses have
contacted the Environmental Committee, reporting that their
commercial collection rates have nearly tripled. While our committee
understands that Waste Management has submitted a divestiture plan
intended to alleviate concerns of this nature, this plan has done
nothing to relieve the onerous effect the merger has had on Monroe
County.
Our informed opinion is that approval of the merger will
adversely effect the interest of Monroe County's citizens and
businesses.
Thank you for the opportunity to file these comments. Please
contact us if we can answer any other questions.
Respectfully,
Michael Beckenbach,
Chairman, Pocono Mountains Chamber of Commerce Environmental Committee.
Mr. Michael Beckenbach,
Chairman, Environment Committee, Pocono Mountains Chamber of
Commerce, c/o Gallagher & Gallagher, Stroudsburg Division, 701 Main
Street, Stroudsburg, PA 18360
Re: Comment on Proposed Final Judgment in United States, State of
New York, et al. v. Waste Management, Inc., Eastern Environmental
Services, Inc., No. 98 CV 7168 (JB) (E.D.N.Y., December 31, 1998)
Dear Mr. Beckenbach: This letter responds to your letter of
April 10, 1999 commenting on the Final Judgment in the above case.
The Amended Complaint in the case charged, among other things, that
Waste Management's acquisition of Eastern Environmental would
substantially lessen competition in collection or disposal of waste
in a number of markets throughout the Northeast and in Florida. In
northeastern Pennsylvania, the Amended Complaint alleged, the merger
would substantially reduce competition in the collection of
commercial waste in the Scranton/Wilkes-Barre market. The proposed
Final Judgment now pending in federal district court in Brooklyn,
New York would settle the case with respect to the Scranton market
by, inter alia, requiring Waste Management to divest its front-end
loader commercial waste
[[Page 31643]]
collection routes that service Luzerne and Lackawanna counties,
which comprise much of the greater metropolitan Scranton/Wilkes-
Barre, PA area. This divestiture, if approved by the Court, would
establish an independent competitor in the market for which relief
was sought, and replace the competitive rivalry lost when Waste
Management acquired Eastern Environmental.
In your letter, you express concern that neither the complaint
in this case nor the proposed consent decree address the competitive
effects of the merger in Monroe County, PA, in which a combination
of Waste Management and Eastern would dominate municipal and
commercial waste collection services, controlling over eighty
percent of all waste collected. The combined firm has already
substantially increased its prices for collection of municipal
waste. We believe that the proposed Judgment, and the pending decree
in the earlier USA Waste/Waste Management case,\1\ address this
competitive issue.
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\1\ United States v. USA Waste Services, Inc., Waste Management,
Inc., et al., No. 1:98 CV 1616 (N.D. Ohio, filed July 17, 1998). The
consent decree in the USA Waste case ordered Waste Management to
divest its commercial waste collection routes that service the City
of Allentown, and Lehigh and Northampton counties. Those routes were
sold to Republic Services, Inc., which installed a large independent
competitor in the commercial waste collection market in the
Allentown, PA area.
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Monroe County is a thinly populated area that abuts and lies
directly southeast of the Scranton/Wilkes-Barre area. Its business
and population center--Stroudsburg--is about 30 miles from the
Scranton/Wilkes-Barre area and about 25 miles north of the city of
Allentown and Northampton and Lehigh counties in Pennsylvania.
The divestitures of commercial waste collection routes ordered
by this Judgment and the decree in the USA Waste case would
establish independent commercial waste haulers in the Scranton/
Wilkes-Barre and Allentown areas. Given the proximity of these
markets to Monroe County, the rivalry offered by the new competitors
should be sufficient to discipline any post-merger exercise of
market power by the combined Waste Management and Eastern in the
collection of commercial waste. These new competitors may also be
capable of vigorous competition in the collection of the county's
residential waste, a market not addressed in our complaint or the
consent decree.
In addition, the next two largest waste haulers in Monroe County
following Waste Management's acquisition of Eastern would be Hopkins
and Muscaro, each of which is about the same size as Eastern in
Monroe County. Thus, after the merger, there may be as many as four
other competitors in the market--Hopkins, Muscaro, and the two
decree firms--capable of competing as vigorously as Eastern prior to
its acquisition by Waste Management.
Thank you for bringing your concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16(d), a copy of your
comment and this response will be published in the Federal Register
and filed with the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
Exhibit 5
J. Robert Kramer, II,
Chief, Litigation II Section, Antitrust Division, U.S. Department of
Justice, 1401 H Street, NW., Suite 3000, Washington, DC 20530
Re: United States, et al. v. Waste Management, Ocho Acquisition
Corp. and, Eastern Environmental Services, Inc. Civil No. 98 CV 7168
(FB)
Dear Mr. Kramer: On behalf of the residents of Schuylkill
County, please consider the contents of this letter as public
comment in response to a proposed final judgment in the above
referenced matter which was advertised in the Federal Register on
February 26, 1999 pursuant to the provisions of the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16(b)-(h).
The County of Schuylkill is a political subdivision established
by Pennsylvania law and is authorized by Act 101, the Municipal
Waste Planning, Recycling and Waste Reduction Act of 1988, to
provide for disposal capacity for municipal waste generated within
its boundaries. For the past nine years, this has been accomplished
by providing individuals, municipalities and the commercial sector
reasonable and cost effective municipal waste collection and
disposal alternatives through capacity assurance and operation
contracts with permitted waste processing and disposal facilities.
The County also licenses haulers of municipal waste, which allows
the County to properly track the disposition of its waste. The
ability of the County to provide this valuable service has been
substantially impaired by the recent merger of Waste Management,
Inc. and Eastern Environmental Services, Inc. The County believes
that the proposed settlement does not meet the requirements of the
Clayton Antitrust Act and is not in the public interest for reasons
listed below.
1. Schuylkill County is located in East Central Pennsylvania and
is in fact adjacent to market areas named in the complaint as being
adversely affected from a competitive standpoint by the merger. A
regional map is enclosed with this letter identifying the municipal
waste hauling, processing and disposal operations that serve
Schuylkill County. The County has identified that the result of the
merger would be that one company would control the collection and
disposal of approximately 66% of the County's municipal waste
stream. This figure is backed-up by two sources of information: (1)
PA Dept. Of Environmental Protection's Waste Destination Reports and
(2) the County's hauler licensing database which indicates the
merged companies would own 95% of the commercial front-end load
container capacity; 44% of the rear-load capacity; and 60% of the
roll-off container capacity.
2. Remaining haulers within the county are small, independent
companies that are unable to compete in two important and specific
areas, commercial waste collection and municipal contracting. The
independent haulers do not have the necessary equipment to conduct
commercial collection effectively. Also, the small companies cannot
compete effectively for large municipal contracts. Typically, the
only hauling companies that bid on municipal contracts in Schuylkill
County are Waste Management, Pine Grove Hauling Co. (Eastern) and
J.P. Mascaro. Mascaro usually is the high bidder due to the long
distance to their nearest disposal facility. The result of the
merger has been, and will be, a substantial reduction in competition
in those specific areas.
3. Since the merger, it is well documented that Waste Management
has raised its rates significantly for the collection of commercial
and residential waste.
4. The proposed settlement agreement has already been
implemented with the requirement that the companies divest certain
relevant assets. However, these divestitures have no effect on the
competitive disadvantages created by the merger in this area.
5. The County encourages municipal governments to join together
to bid waste collection contracts to more cost effectively manage
their municipal waste streams. However, with no competitive bidders,
those efforts will fail.
Consequently, the County feels that the proposed judgement
provides no relief in the area from the anti-competitive effects of
the merger of Waste Management and Eastern Environmental, and the
public interests will not be served by the approval of the proposed
consent decree.
The County appreciates this opportunity to file written
comments. Please contact me if you have any questions or require
additional information.
Sincerely,
Wayne Bowen,
County Environmental Coordinator.
Enclosures.
cc:
Board of County Commissioners
U.S. Senator Specter
U.S. Senator Santorum
U.S. Rep. Holden
Senator Rhoades
Rep. Argall
Rep. Allen
Rep. Lucyk
William McDonnell, PADEP NE Regional Office
Jim Snyder, PADEP Central Office
Bob Shafer
Michael O'Rourke, Esq.
Mark Scarbinsky
Mary Kay Bernosky, Esq.
The Major MSW Hauling Operations and Processing/Disposal
Facilities Serving Schuylkill County Map of April 1999 was not able
to be published in the Federal Register. A copy can be obtained from
the Documents Office of the U.S. Department of Justice, Antitrust
Division, 325 7th Street, NW., Room 215, Washington, DC 20530 or
(202) 514-2481.
[[Page 31644]]
Major MSW Hauling Operations and Processing/Disposal Facilities
Servicing Schuylkill County, April 1999
Hauling Operations
In-County
Waste Management
1. Pottsville (consolidated with Deitrick Coal Twp.)
2. Frackville (consolidated with Deitrick Coal Twp.)
Eastern Environmental
3. Pine Grove Hauling, Port Clinton (consolidated with Deitrick
Coal Twp.)
4. Pine Grove Hauling, Schuylkill Haven (formerly Minchoff)
(consolidated with Deitrick Coal Twp.)
Other major or potential major competitors
None
Out-of-County
Waste Management
5. Deitrick Sanitation, Coal Twp., Northumberland Co.
6. Waste Management, Allentown, Lehigh County
7. Waste Management, Scranton, Lackawanna County
8. Grand Central Sanitation, Pen Argyl, Northampton County
Eastern Environmental
9. Altamere, Mt Carmel, Northumberland Co. (consolidated with
Deitrick Coal Twp.)
10. Pine Grove Hauling, Lansford, Carbon County (formerly
Knepper Sanitation) (consolidated with Deitrick Coal Twp.)
Other Major or Potential Major Competitors
11. BFI, Leesport, Berks Co.
12. Mascaro, Nantocke, Luzerne Co., Reading, Berks Co., Lehigh
Co.
13. Republic, Allentown, Lehigh Co. (acquired routes from Waste
Management Allentown per Justice Department)
14. Slusser, Hazleton, Luzerne Co.
15. Carbon Service, Lehighton, Carbon Co.
Disposal/Transfer Facilities
In-County
Waste Management
16. BSC transfer station, Pottsville (currently not accepting
waste)
Eastern Environmental
17. Coldren Transfer Station, Port Clinton (Pine Grove Hauling)
18. Pine Grove Landfill
Other Major or Potential Major Competitors
19. Tamaqua Transfer Station
20. NSLA Transfer Station
21. CES Landfill, Foster Twp.
Out-of-County
Waste Management
22. Deitrick Transfer Station Coal Twp., Northumberland Co.
23. Transfer Station, New Smithville, Lehigh Co.
24. Grand Central Landfill, Pen Argyl, Northampton Co.
25. Dauphin Meadows Landfill, Dauphin Co.
26. Modern Landfill, York Co.
27. Pottstown Landfill, Montgomery Co.
28. G.R.O.W.S. Landfill, Bucks Co.
29. Tullytown Landfill, Bucks Co.
Eastern Environmental
30. Bethlehem Landfill, Northampton, Co.
31. Alliance Landfill, Lackawanna Co.
Other Major or Potential Major Competitors
32. Mascaro Transfer Facility, Lehigh Co.
33. Keystone Landfill, Lackawanna Co.
34. Chrin Landfill, Northampton Co.
35. Pioneer Crossing Landfill (Mascaro), Berks Co.
36. Conestoga Landfill (BFI), Berks Co.
Impact of Waste Management/Eastern Merger
Number of hauling operations controlled by merger--10 (67%)
Controlled by others--5 (33%)
Number of disposal facilities controlled by merger--9 (64%)
Controlled by others--5 (36%)
Number of transfer facilities controlled by merger--4 (57%)
Controlled by others--3 (43%)
Total controlled by merger--23 (64%)
Controlled by others--13 (36%)
Mr. Wayne Bowen,
Environmental Coordinator, Office of Solid Waste and Resource
Management, Schuykill County Courthouse, 401 North Second Street,
Pottsville, Pennsylvania 17901-2528
Re: Comment on Proposed Final Judgment in United States, State of
New York, et al. v. Waste Management, Inc., Eastern Environmental
Services, Inc., No. 98 CV 7168 (JB) (E.D.N.Y., December 31, 1998)
Dear Mr. Bowen: This letter responds to your letter of April 26,
1999 commenting on the Final Judgment in the above case. The Amended
Complaint in the case charged, among other things, that Waste
Management's acquisition of Eastern Environmental would
substantially lessen competition in collection or disposal of waste
in a number of markets throughout the Northeast and in Florida. In
south central Pennsylvania, the Amended Complaint alleged, the
merger would substantially reduce competition in the collection of
commercial waste in the Scranton/Wilkes-Barre market. The proposed
Final Judgment now pending in federal district court in Brooklyn,
New York would settle the case with respect to the Scranton/Wilkes-
Barre market by, inter alia, requiring Waste Management to divest
its front-end loader commercial waste collection routes that service
Luzerne and Lackawanna counties, which comprise much of the greater
metropolitan Scranton/Wilkes-Barre PA area. This divestiture, if
approved by the Court, would establish an independent competitor in
the market for which relief was sought, and replace the competitive
rivalry lost when Waste Management acquired Eastern Environmental.
In your letter, you express concern that neither the Complaint
in this case nor the proposed Judgment address the competitive
effects of the merger in Schuylkill County, PA, in which a
combination of Waste Management and Eastern Environmental would
dominate municipal and commercial waste collection services,
controlling over eighty percent of all waste collected. The combined
firm has already substantially increased its prices for collection
of municipal waste. We believe that the proposed Judgment, and the
pending decree in the earlier USA Waste/Waste Management case,\1\
may address the competitive issues you have raised.
---------------------------------------------------------------------------
\1\ United States v. USA Waste Services, Inc., Waste Management,
Inc., et al., No. 1:98 CV 1616 (N.D. Ohio, filed July 17, 1998). The
consent decree in the USA Waste case ordered Waste Management to
divest its commercial waste collection routes that service the City
of Allentown, and Lehigh and Northampton counties. Those routes were
divested to Republic Services, Inc., which installed a very large
independent competitor into the commercial waste collection market
in the Allentown, PA area.
---------------------------------------------------------------------------
Schuylkill County is a thinly populated area that abuts and lies
directly southwest of the Scranton/Wilkes-Barre area. Though the
county's business and population center, Pottsville, is about 40
miles from the Scranton/Wilkes-Barre area, it is only about 25 miles
west of the city of Allentown and Northampton and Lehigh counties in
Pennsylvania.
As you point out, the Final Judgment does not require Waste
Management to divest any of the commercial route operations that it
acquired from Eastern in Schuylkill County. The Division did not
seek divestiture relief with respect to that market for several
reasons. First, the total amount of commercial waste collection
business that Waste Management assumed through acquiring Eastern was
small, less than $1 million in annual revenues. Second, Schuylkill
County abuts several counties in which the Judgment required Waste
Management to divest route operations. The divestitures of
commercial waste collection routes mandated by this Judgement and
the decree in the USA Waste case, once implemented, would establish
relatively large independent commercial waste haulers in both the
Scranton/Wilkes-Barre and Allentown areas. Given the proximity of
these markets to Schuylkill County, rivalry offered by the new
competitors may be sufficient to discipline any exercise of market
power in commercial waste collection by the combined Waste
Management and Eastern. Also, the new commercial waste hauling
competitors established by these judgments may be capable of
offering vigorous competition in the collection of the country's
residential waste, a market not addressed in our complaint or the
consent decree.\2\
---------------------------------------------------------------------------
\2\ In general, barriers to entry into the collection of
residential waste are not as formidable as those that impede entry
into the collection of commercial waste. For this reason, the
Division did not challenge the combination's effect on the market
for collecting the county's residential waste. Of course, entry into
collection of residential waste could be very difficult in those
situations in which the area's disposal facilities are controlled by
a waste collection rival. That is not the case here.
---------------------------------------------------------------------------
Finally, I should point out that the Judgment and the decree in
the USA Waste case mandate that Waste Management divest two large
landfills, Modern and Bethlehem, that you indicate also service the
Schuylkill County market. The divestitures of these landfills will
introduce additional competition in the disposal of waste from the
Schuylkill County area.
Thank you for bringing your concerns to our attention; we hope
this information will
[[Page 31645]]
help alleviate them. Pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. Sec. 16(d), a copy of your comment and this
response will be published in the Federal Register and filed with
the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
Exhibit 6
April 22, 1999.
J. Robert Kramer, II,
Chief, Litigation II Section, Antitrust Division, U.S. Department of
Justice, 1401 H Street, NW, Suite 3000, Washington, DC 20530
Re: United States, et al. v. Waste Management, Inc., Ocho
Acquisition Corp. and Eastern Environmental Services, Inc. Civil No.
98 CV 7168 (FB)
Dear Mr. Kramer: Please consider the contents of this letter as
public comment in response to an invitation for public comment on
proposed Final Judgment in the above referenced matter which was
advertised in the Federal Register on February 26, 1998 pursuant to
the provision of the Antitrust Procedures and Penalties Act, 15
U.S.C. 16(b)-(h).
The Monroe County Municipal Waste Management Authority is a
political subdivision established by Pennsylvania law under the
Municipal Authorities Act, of 1945. The Authority by agreement with
the County, and as authorized by ACT 101 is responsible for
implementing the County's Municipal Waste Management Plan. The
Authority operates a waste management system highlighted by the
licensing of all municipal waste haulers within the County, and
providing individuals, municipalities, and companies reasonable and
cost effective municipal waste collection and disposal alternatives
through contracts with disposal and transfer facilities. The ability
of the Authority to provide this service has been substantially
impacted by the recent merger of Waste Management Inc. and Eastern
Environmental Services, Inc. The Authority believes that the
proposed settlement does not meet the requirements of the Clayton
Antitrust Act, and is not in the public interest for the following
reasons.
Monroe County is located in northeastern Pennsylvania near, and
in fact adjacent to market areas named in the complaint as being
adversely affected from a competitive standpoint by the merger. A
regional map is enclosed with these comments identifying the
location in Monroe County. In earlier comments, a copy of which is
enclosed, the Authority identified that the net result of the merger
would be that one company would control the collection of
approximately 72% of the County's municipal waste stream, and the
disposal of approximately 82% of the municipal waste generated
within the county.
Remaining haulers within the County are small, independent
companies which are unable to compete in two important and specific
areas, commercial waste collection and municipal contracting.
Furthermore, none of these small independent haulers own disposal
facilities, and are required to dispose of the waste at facilities
owned by Waste Management which controls disposal fees, often
charging independent haulers a higher tipping fee for disposal than
is charged to its own hauling company.
The independent haulers do not have the necessary equipment to
conduct commercial collection effectively, or to transport municipal
waste loads long distance to obtain competitive tipping rates. Also,
the small companies cannot compete effectively for large municipal
contracts. In addition to Waste Management and Eastern, only one
company has responded to municipal requests for competitive bidding.
The result of the merger has been, and will be, a substantial
reduction in competition in those specific areas.
Since the above merger, it is well documented that Waste
Management has nearly tripled rates for the commercial collection of
municipal waste. Copies of relevant information in this regard is
enclosed. The Authority has been inundated with telephone calls and
written communications complaining of the new pricing structures.
The Authority has been urging municipal governments to join
together to bid waste collection contracts to more effectively
mandate the municipal waste stream. However, with no competitive
bidders, those efforts will fail.
The proposed settlement agreement has already been implemented
with the requirement that the companies divest certain relevant
assets. However, these divestitures have had no effect on the
competitive disadvantages created by the merger in this area.
Consequently, we feel that the proposed judgment provides no
relief in this area from the anti-competitive effects of the merger
of Waste Management and Eastern Environmental, and the public
interest will not be served by the approval of the consent degree in
this case.
We appreciated the opportunity to file written comments. Kindly
contact the undersigned if we can provide further information, or
answer any questions.
Sincerely,
Dean D.W. DeLong,
Executive Director.
Enclosures to Exhibit 6 letter from Dean D.W. DeLong, Executive
Director of Municipal Waste Management Authority of Stroudsburg, PA
was unable to be published in the Federal Register. A copy be
obtained form the Document Office of the U.S. Department of Justice,
Antitrust Division, 325 7th Street, N.W., Room 215, Washington, D.C.
20530 or (202) 514-2481.
Mr. Dean D.W. DeLong,
Executive Director, Monroe County Municipal Waste Management
Authority, 912 Main Street, Suite 203, Stroudsburg, PA 18360
Re: Comment on Proposed Final Judgment in United States, State of
New York, et al. v. Waste Management, Inc., Eastern Environmental
Services, Inc., No. 98 CV 7168 (JB) (E.D.N.Y., December 31, 1998)
Dear Mr. DeLong: This letter responds to your letter of April
22, 1999 commenting on the Final Judgment in the above case. The
Amended Complaint in the case charged, among other things, that
Waste Management's acquisition of Eastern Environmental would
substantially lessen competition in collection or disposal of waste
in a number of markets throughout the Northeast and in Florida. In
northeastern Pennsylvania, the Amended Complaint alleged, the merger
would substantially reduce competition in the collection of
commercial waste in the Scranton/Wilkes-Barre market. The proposed
Final Judgment now pending in federal district court in Brooklyn,
New York would settle the case with respect to the Scranton market
by, inter alia, requiring Waste Management to divest its front-end
loader commercial waste collection routes that service Luzerne and
Lackawanna counties, which comprise much of the greater metropolitan
Scranton/Wilkes-Barre, PA area. This divestiture, if approved by the
Court, would establish an independent competitor in the market for
which relief was sought, and replace the competitive rivalry lost
when Waste Management acquired Eastern Environmental.
In your letter, you express concern that neither the Complaint
in this case nor the proposed Judgment address the competitive
effects of the merger in Monroe County, PA, in which a combination
of Waste Management and Eastern Environmental would dominate
municipal and commercial waste collection services, controlling over
eighty percent of all waste collected. The combined firm has already
substantially increased its prices for collection of municipal
waste. We believe that the proposed Judgment, and the pending decree
in the earlier USA Waste/Waste Management case,\1\ address the
competitive issues you have raised.
---------------------------------------------------------------------------
\1\ United States v. USA Waste Services, Inc., Waste Management,
Inc., et al., No. 1:98 CV 1616 (N.D. Ohio, filed July 17,1998). The
consent decree in the USA Waste case ordered Waste Management to
divest its commercial waste collection routes that service the City
of Allentown, and Lehigh and Northampton counties. Those routes were
divested to Republic Services, Inc., which installed a large
independent competitor in the commercial waste collection market in
the Allentown, PA area.
---------------------------------------------------------------------------
Monroe county is a thinly populated area that abuts and lies
directly southeast of the Scranton/Wilkes-Barre area. Its business
and population center--Stroudsburg--is about 30 miles form the
Scranton/Wilkes-Barre area and about 25 miles north of the city of
Allentown and Northampton and Lehigh counties in Pennsylvania.
The divestitures of commercial waste collection routes mandated
by this Judgment and the decree in the USA Waste case, once
implemented, would establish a relatively large independent
commercial waste hauler in both the Scranton/Wilkes-Barre and
Allentown areas. Given the proximity of these markets to Monroe
County, the rivalry offered by the new competitors should be
sufficient to discipline any exercise of market power by the
combined Waste Management and Eastern Environmental in the
collection of commercial waste. The new competitors established by
these antitrust judgments may also be capable of vigorous
competition in
[[Page 31646]]
the collection of the county's residential waste, a market not
addressed in our complaint or the consent decree.\2\
---------------------------------------------------------------------------
\2\ In general, barriers to entry into the collection of
residential waste are not as formidable as those that impede entry
into the collection of commercial waste. For this reason, the
Division did not challenge the combination's effect on the market
for collecting the county's residential waste. Of course, as you
point out, entry into collection of residential waste could be very
difficult in those situations in which the area's disposal
facilities are controlled by a waste collection rival. That is not
the case here. In Monroe County, there is at least one other major
independent landfill (owned by DeNaples) that accepts significant
amounts of the county's waste. Moreover, the closest landfill owned
by Eastern Environmental apparently accepted less than 200 tons of
waste annually from Monroe County, and hence did not compete
directly against the Waste Management landfill.
---------------------------------------------------------------------------
In addition, the next two largest waste haulers in Monroe County
following Waste Management's acquisition of Eastern would be Hopkins
and Muscaro, each of which is about the same size as Eastern in
Monroe County. Thus, after the merger, there may be as many as four
other competitors in the market--Hopkins, Muscaro, and the two
decree firms--capable of competing as vigorously as Eastern prior to
its acquisition by Waste Management.
Thank you for bringing your concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16(d), a copy of your
comment and this response will be published in the Federal Register
and filed with the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
Exhibit 7
Exhibit 7 letter with attachments from Peter Anderson of Recycle
Worlds Consulting of Madison, WI dated April 27, 1999 was unable to
be published in the Federal Register. A copy can be obtained from
the Document Office of the U.S. Department of Justice, Antitrust
Division, 325 7th Street, NW, Room 215, Washington, DC 20530 or
(202) 514-2481.
May 20, 1999.
Mr. Peter Anderson,
President, RecycleWorlds Consulting Corp., 4513 Vernon Blvd., Suite
15, Madison, Wisconsin 53705-4964
Re: Comment on Proposed Final Judgment in United States, State of
New York, et al. v. Waste Management, Inc., Eastern Environmental
Services, Inc., No. 98 CV 7168(JB) (E.D.N.Y., December 31, 1998)
Dear Mr. Anderson: This letter responds to your April 27, 1999
comment on the proposal Final Judgment in the above case. The
Amended Complaint charged, among other things, that Waste
Management's acquisition of Eastern Environmental would
substantially lessen competition in collection or disposal of
municipal solid waste in 12 markets in New York, Pennsylvania, and
Florida. The proposed consent decree, now pending in Federal
district court in Brooklyn, New York, would settle the case by
requiring the defendants to divest a number of waste collection
routes and waste disposal facilities in the markets alleged in the
Complaint.\1\ This relief, if approved by the Court, would establish
one or more new competitors in each of the markets for which relief
was sought, replacing the competitive rivalry lost when Waste
Management acquired Eastern Environmental.
---------------------------------------------------------------------------
\1\ The markets alleged in the Amended Compliant, and for which
divestiture relief was obtained in the Final Judgment, include the
disposal of municipal solid waste in the Pittsburgh, Carlisle-
Chambersburg, and Bethlehem, PA areas, and in New York City, NY
(commercial and residential); and collection of commercial waste in
the Carlisle-Chambersburg, Bethlehem, and Scranton, PA; suburban
Tampa (Hillsborough Co.) and Miami/FT. Lauderdale, FL (Dade and
Broward counties) areas.
---------------------------------------------------------------------------
In a transaction approved by the United States and the State of
New York, Waste Management divested to Republic Services, Inc. the
rights to Eastern's proposal to dispose of New York City's
residential waste in early January 1999, See Judgment section IV(B),
On April 20, 1999, the United States, however, rejected Waste
Management's proposal to sell the other waste collection and
disposal assets under this decree to Allied Waste Industries, Inc.
(``Allied''). Such a sale, we concluded, would raise serious
competitive concerns in waste collection or disposal, or both, in
virtually all of the markets for which the Judgment has ordered
relief.\2\ Of course, if Waste Management has not divested these
assets to an acceptable purchaser within five days after entry of
the Judgment, the United States will promptly seek, and the Court
will likely appoint, a trustee to complete the sale. See Judgment
sections V(A) and (B) and Hold Separate Stipulation and Order,
section IV(F).
---------------------------------------------------------------------------
\2\ In early March 1999, Allied announced that it had agreed to
acquire Browning-Ferris Industries, Inc., for $7.5 billion. Allied
is the Nation's fourth largest waste collection and disposal firm;
BFI is the Nation's second largest waste firm. That combination
would, by itself, raise serious competition concerns in a number of
waste disposal and collection markets throughout the country.
Selling the assets under the decree to a combination of Allied/BFI
would result in a significant reduction in actual and potential
competition in waste disposal services thought the Northeast--a
regional market including major cities along the Eastern seaboard,
such as New York, Boston, Philadelphia, Baltimore and Washington--as
well as a reduction in localized competition for waste disposal
services in the Pittsburgh, PA area, and for commercial waste
collection services in the Miami/Ft. Lauderdale, FL area, and
potentially in the Carlisle-Chambersburg, PA area.
---------------------------------------------------------------------------
In your comment, you assert that the diversitures ordered by
this Judgment do not go far enough to eliminate the competitive
problems in the Nation's waste industry. To be sure, the decree in
this case and in other recent Government antitrust cases (e.g.,
United States v. USA Waste, Inc., Waste Management, Inc., No. 1:98
1616 (N.D. Ohio, filed July 21, 1998)) have not prevented the wave
of consolidations, currently sweeping through this industry. Indeed,
several recent mega mergers have significantly reduced the number of
major competitors, and that has perhaps made several waste markets
and more susceptible to collusive post-merger price increases. To
cure these competitive problems, you propose a fairly ``dramatic
remedy,'' i.e., require that Waste Management divest all of its
waste disposal or collection operations in markets where there are
substantial competitive overlaps between its operations and those of
Eastern. If this not not done, then you propose that we ensure that
the assets divested under the Judgment are not sold to a large
integrated national waste firm, but to a municipal agency or a small
stand-along independent--entities that, in your view, may have a
greater incentive to vigorously compete against defendants'
operations.
We do not believe that requiring Waste Management to divest all
of its waste collection or disposal operations in any market in
which its operations overlap with Eastern's would produce a more
procompetitive result than the relief currently in the Judgment.
Indeed, pursuing your proposal would permit Waste Management to
acquire the lion's share of any number of waste collection or
disposal markets, since, in effect, you propose that if Waste
Management agrees to abandon one line of business, it would be free
to monopolize the other.
We do, however, agree with your conclusion that Waste
Management's divestiture of the decree assets to a firm such as
Allied/BFI is undesirable because it would significantly reduce
competition and enhance opportunities for cooperative post-merger
price increases. We have so informed Waste Management, and we are
prepared to have management and sale to these crucial waste assets
transferred to a trustee, if Waste Management does not promptly
divest these operations to a purchases acceptable to the United
States.
Thank you for bringing your concerns to our attention; we hope
this information will help alleviate them. Pursuant to the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16(d), a copy of your
comment and this response will be published in the Federal Register
and filed with the Court.
Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
Certificate of Service
I certify that on May 20, 1999, I caused a copy of the foregoing
United States's Certificate of Compliance with Provisions of the
Antitrust Procedures and Penalties Act to be served on the parties in
this case by mailing the pleading first-class, postage prepaid, to
[[Page 31647]]
a duly-authorized legal representative of each of the parties, as
follows:
Jonathan L. Greenblatt, Esquire,
Steven C. Sunshine, Esquire,
Michael Strub, Jr., Esquire,
Shearman & Sterling, 801 Pennsylvania Avenue, NW, Washington, D.C.
20004-2604.
James R. Weiss, Esquire,
Preston Gates Ellis & Rouvelas Meeds LLP, 1735 New York Avenue, NW,
Washington, DC 20006-8425.
Counsel for Defendants Waste Management, Inc. and Ocho Acquisition
Corp.
Neal R. Stoll, Esquire,
Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, NY
10022-3897.
Counsel for Defendant Eastern Environmental Services, Inc.
Richard E. Grimm,
Kay Taylor,
Assistant Attorneys General, Antitrust Bureau, Office of the Attorney
General, State of New York, 120 Broadway, Suite 26-01, New York, NY
10271.
Counsel for Plaintiff State of New York
James A. Donahue, III,
Chief Deputy Attorney General,
Benjamin L. Cox,
Deputy Attorney General, 14th Floor, Strawberry Square, Harrisburg, PA
17120.
Counsel for Plaintiff Commonwealth of Pennsylvania
Lizabeth A. Leeds,
Douglas L. Kilby,
Assistant Attorneys General, Antitrust Section, PL-01, The Capitol,
Tallahassee, FL 32399-1050
Counsel for Plaintiff State of Florida
Anthony E. Harris, Esq. AH 5876,
U.S. Department of Justice, Antitrust Division, 1401 H Street, NW,
Suite 3000, Washington, DC 20530, (202) 307-6583.
[FR Doc. 99-14469 Filed 6-10-99; 8:45 am]
BILLING CODE 4410-11-M
