[Federal Register Volume 64, Number 112 (Friday, June 11, 1999)]
[Notices]
[Pages 31624-31638]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-14470]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States of America v. Imetal, DBK Minerals, Inc., English
China Clays, plc, and English China Clays, Inc.; Proposed Final
Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. Sections 16(b) through (h), that a Complaint,
Hold Separate Stipulation and Order, and a proposed Final Judgment were
filed with the United States District Court for the District of
Columbia in United States v. Imetal, DBK Minerals, Inc., English China
Clays, plc, and English China Clays, Inc., Civil No. 99-1018 on April
26, 1999. A Competitive Impact Statement was filed on May 24, 1999. The
Complaint alleged that the proposed acquisition of English China Clays
(``ECC'') by Imetal would violate Section 7 of the Clayton Act, 15
U.S.C. Section 18, in the markets for water-washed and calcined kaolin
and fused silica in the United States and in the
[[Page 31625]]
market for paper-grade ground calcium carbonate (``GCC'') in the
Southeastern United States. The Southeastern U.S. was defined as the
thirteen states of North Carolina, South Carolina, Georgia, Florida,
Alabama, Tennessee, Kentucky, Mississippi, Louisiana, Arkansas,
Missouri, Texas, and Virginia. The proposed Final Judgment, filed at
the same time as the Complaint, requires Imetal, among other things,
to: (1) divest production facilities and associated reserves for water-
washed and calcined kaolin; (2) sell its interest in Alabama
Carbonates, L.P., a joint venture that makes paper-grade GCC, as well
as substantial GCC reserves; and (3) sell the fused silica operations
of ECC.
A Competitive Impact Statement filed by the United States describes
the Complaint, the proposed Final Judgment, the industry, and the
remedies to be implemented by Imetal. Copies of the Complaint, Hold
Separate Stipulation and Order, proposed Final Judgment, and
Competitive Impact Statement are available for inspection in Room 215
of the U.S. Department of Justice, Antitrust Division, 325 7th Street,
NW, Washington, DC, and at the office of the Clerk of the United States
District Court for the District of Columbia, Washington, DC. Copies of
any of these materials may be obtained upon request and payment of a
copying fee.
Public comment is invited within the statutory 60-day comment
period. Such comments and response thereto will be published in the
Federal Register and filed with the Court. Comments should be directed
to J. Robert Kramer II, Chief, Litigation II Section, Antitrust
Division, United States Department of Justice, 1401 H Street, NW, Suite
3000, Washington, DC 20530 (telephone: 202-307-0924).
Constance K. Robinson,
Director of Operations.
United States District Court, District of Columbia
[Civil No: 99-1018]
United States of America, Plaintiff, v. Imetal, DBK Minerals,
Inc., English China Clays, PLC and English China Clays, Inc.,
Defendants.
Hold Separate Stipulation and Order
It is hereby stipulated and agreed by and between the undersigned
parties, subject to approval and entry by the Court, that:
I. Definitions
As used in this Hold Separate Stipulation and Order:
A. ``Imetal'' means defendant Imetal, a French corporation with its
headquarters in Paris, France, and includes its successors and assigns,
and its subsidiaries, divisions, groups, affiliates, partnerships,
joint ventures, directors, officers, managers, agents, and employees.
B. ``ECC'' means defendant English China Clays, plc, a United
Kingdom corporation with its headquarters in Reading, England, and its
subsidiary, defendant English China Clays, Inc., A Delaware corporation
with its headquarters in Roswell, Georgia, and their successors and
assigns, and their subsidiaries, divisions, groups, affiliates,
partnerships, joint ventures, directors, officers, managers, agents,
and employees.
C. ``DBK'' means DBK Minerals, Inc., a Delaware subsidiary of
Imetal, with its headquarters in Dry Branch, Georgia, and includes its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships, joint ventures, directors, officers,
managers, agents, and employees.
D. ``DBK Plant'' means the kaolin plant of DBK located in Dry
Branch, Georgia.
E. ``Kaolin Assets'' means the Sandersville #1 plant of ECC and
Kaolin Reserves inclusive of:
(1) All tangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling kaolin
from the Sanderville #1 Plant, including research and development
activities, and real property containing the Sandersville #1 Plant and
the Kaolin Reserves; all rights, titles, and interests, including all
fee and leasehold rights, all manufacturing, personal property,
inventory, office furniture, fixed assets and fixtures, materials,
supplies, on-site and off-site warehouses or storage facilities, and
other tangible property or improvements; all licenses, permits and
authorizations; all contracts, agreements, leases, commitments and
understandings; all customers lists and credit records; and all other
records maintained by Imetal or ECC in connection with the operation of
Sandersville #1 Plant and the Kaolin Reserves;
(2) All intangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling kaolin
from the Sandersville #1 Plant, including but not limited to a non-
exclusive, transferable, royalty-free license to use all patents,
licenses and sublicenses, intellectual property, technical information,
know-how trade secrets, specifications for materials, and quality
assurance and control procedures utilized by ECC at the Sandersville #1
Plant.
F. ``DBK Plant Assets'' means the DBK Plant inclusive of:
(1) All tangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling kaolin,
including calcined kaolin, from the DBK Plant, including research and
development activities, and real property containing the DBK Plant,
Kaoline Reserves and Calcined Kaolin Reserves; all rights, titles, and
interests, including all fee and leasehold rights, all manufacturing,
personal property, inventory, office furniture, fixed assets and
fixtures, materials, supplies, on-site warehouses or storage
facilities, and other tangible property or improvements; all licenses,
permits and authorizations; all contracts, agreements, leases,
commitments and understandings; all customers lists and credit records;
and all other records maintained by Imetal in connection with the
operation of the DBK Plant;
(2) All intangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling kaolin
from the DBK Plant, including but not limited to a non-exclusive,
transferable, royalty-free license to use all patents, licenses and
sublicenses, intellectual property, technical information, know-how,
trade secrets, specifications for materials, and quality assurance and
control procedures utilized by Imetal or DBK at the DBK Plant.
G. ``GCC'' means ground calcium carbonate.
H. ``GCC Assets'' means DBK's interests in Alabama Carbonates, L.P.
(``Alabama Carbonates''), a limited partnership between Carbonate
Corporation, a subsidiary of Omya, Inc., and Georgia Marble Stone
Corporation (``Georgia Marble''), a subsidiary of DBK, located in
Sylacauga, Alabama, which manufactures GCC products in slurry form for
use in paper production.
I. ``GCC Reserves'' means economically recoverable calcium
carbonate stone reserves located in the Sylacauga, Alabama area of a
minimum pureness quality suitable for slurry products produced and sold
to the paper industry.
J. ``GCC Reserve Assets'' means GCC Reserves in quantities
sufficient to ensure that Alabama Carbonates will have available to it
500,000 tons per year of crushed, washed and reduced to size stone
suitable to use as feedstock for a period of thirty (30) years.
Determination of the amount of GCC Reserves needed to meet this
standard shall take into account the amount of any GCC Reserves that
any principal or affiliate of Alabama Carbonates (other
[[Page 31626]]
than the defendants) owns, leases or has an option on, and are
available to Alabama Carbonates. In the event that Alabama Carbonates,
the purchaser of the GCC Assets, or Georgia Marble's joint venturer in
Alabama Carbonates and the seller cannot agree on the amount of GCC
Reserves that must be divested to meet the standard set forth above or
the fair market value of such reserves, such issue may be submitted to
binding arbitration in accordance with Section IX of the Final Judgment
in this case.
K. ``Fused Silica Assets'' means the fused silica plant of Minco,
Inc. acquired from Minco Acquisition Corp. in 1998, inclusive of:
(1) All tangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling fused
silica; including research and development activities; all rights,
titles, and interest, including all fee and leasehold rights; all
manufacturing, personal property, inventory, office furniture, fixed
assets and fixtures, materials, supplies, on-site warehouses or storage
facilities, and other tangible property or improvements; all licenses,
permits and authorizations; all contracts, agreement, leases,
commitments and understandings; all customer lists and credit records;
and all other records maintained by Imetal in connection with the
operation of the fused silica plant divested;
(2) All intangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling fused
silica, including but not limited to a non-exclusive, transferable,
royalty-free license to use all patents, licenses and sublicenses,
intellectual property, technical property, technical information, know-
how, trade secrets, specifications for materials, and quality assurance
and control procedures utilized by Minco in the production of fused
silica.
L. ``Fused Magnesia Assets'' means the fused magnesia plant
acquired from Minco Acquisition Corp. in 1998, inclusive of:
(1) All tangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling fused
magnesia; including research and development activities, all rights,
titles, and interests, including all fee and leasehold rights; all
manufacturing, personal property, inventory, office furniture, fixed
assets and fixtures, materials, supplies, on-site warehouses or storage
facilities, and other tangible property or improvements; all licenses,
permits and authorizations; all contracts, agreements, leases,
commitments and understandings; all customer lists and credit records;
and all other records maintained by Minco in connection with the
operation of the fused magnesia plant divested;
(2) All intangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling fused
magnesia including but not limited to a non-exclusive, transferable,
royalty-free license to use all patents, licenses and sublicenses,
intellectual property, technical information, know-how, trade secrets,
specifications for materials, and quality assurance and control
procedures utilized by Minco in the production of fused magnesia.
M. ``Kaolin Reserves'' means kaolin clay suitable for producing
kaolin of minimum pureness quality suitable for products produced and
sold to the paper industry and at a location and in quantities and
qualities sufficient to ensure the operation and viability of the
Kaolin Assets or, if divested pursuant to the Final Judgment in this
case, the DBK Plant Assets, at full capacity for a period of twenty
(20) years.
N. ``Calcined Kaolin Reserves'' means kaolin clay suitable for
producing calcined kaolin of minimum pureness quality suitable for
products produced and sold to the paper industry and at a location and
in quantities and qualities sufficient to ensure the operation and
viability of the Calcined Assets or, if divested pursuant to the Final
Judgment in this case, the calcining assets of the DBK Plant Assets, at
full capacity for a period of twenty (20) years.
O. ``Calcining Assets'' means a plant or plants with two (2)
calciners suitable for producing calcined kaolin sold to the paper
industry, other than the calcining facilities in Sandersvillle,
Georgia, with a combined capacity of approximately 85,000 to 100,000
tons of calcined kaolin per year, inclusive of:
(1) All tangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling
calcined kaolin, including research and development activities; real
property containing Calcining Assets and Calcined Kaolin Reserves; all
rights, titles and interests including all fee and leasehold rights,
all manufacturing, personal property, inventory, office furniture,
fixed assets and fixtures, materials, supplies, on-site warehouses or
storage facilities, and other tangible property or improvements; all
licenses, permits and authorizations; all contracts, agreements,
leases, commitments and understandings; all customers lists and credit
records; and all other records maintained by Imetal or ECC in
connection with the operation of the Calcining Assets and the Calcined
Kaolin Reserves;
(2) All intangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling
calcined kaolin from the Calcining Assets and the Calcined Kaolin
Reserves, including but not limited to a non-exclusive, transferable,
royalty-free license to use all patents, licenses and sublicenses,
intellectual property, technical information, know-how, trade secrets,
specifications for materials, quality assurance and control procedures
utilized by Imetal or ECC at the Calcining Assets.
P. ``Sandersville #1 Plant'' means the water-washed kaolin plant of
ECC with a capacity of 850,000 tons annually located in Sandersville,
Georgia.
Q. ``ECC Kaolin Business'' means the entire United States water-
washed and calcined kaolin business acquired by Imetal from ECC,
including the operation of ECC's Sandersville #1 Plant, Sandersville #2
Plant and the Wrens Plant.
R. ``Hold Separate Assets'' means the ECC Kaolin Business, the
Fused Silica Assets and the Fused Magnesia Assets collectively.
II. Objectives
The Final Judgment filed in this case is meant to ensure Imetal's
prompt divestiture of the Kaolin Assets, Calcining Assets, GCC Assets,
GCC Reserve Assets, and Fused Silica Assets for the purposes of
creating viable competitors in the development, production and sale of
each of these products and to remedy the effects that the United States
alleges would otherwise result from Imetal's proposed acquisition of
ECC. This Hold Separate Stipulation and Order ensures the timely and
complete transfer of these assets and maintains the separation of the
ECC and Imetal water-washed kaolin, calcined kaolin, GCC for
papermaking, fused silica and fused magnesia businesses as independent,
viable competitors until the required divestitures are complete.
III. Jurisdiction and Venue
The Court has jurisdiction over the subject matter of this action
and over each of the parties hereto, and venue of this action is proper
in the United States District Court for the District of Columbia.
[[Page 31627]]
IV. Compliance With and Entry of Final Judgment
A. The parties stipulate that a Final Judgment in the form attached
hereto may be filed with and entered by the Court, upon the motion of
any party or upon the Court's own motion, at any time after compliance
with the requirements of the Antitrust Procedures and Penalties Act (15
U.S.C. Sec. 16), and without further notice to any party or other
proceedings, provided that 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.
B. Defendants shall abide by and comply with the provisions of the
proposed Final Judgment, pending the Judgment's entry by the Court, or
until expiration of time for all appeals of any Court ruling declining
entry of the proposed Final Judgment, and shall, from the date of the
signing of this Stipulation by the parties, comply with all the terms
and provisions of the proposed Final Judgment as though the same were
in full force and effect as an order of the Court.
C. This Stipulation shall apply with equal force and effect to any
amended proposed Final Judgment agreed upon in writing by the parties
and submitted to the Court.
D. In the event (1) the United States has withdrawn its consent, as
provided in Section IV(A) above, or (2) the proposed Final Judgment is
not entered pursuant to this Stipulation, the time has expired for all
appeals of any Court ruling declining entry of the proposed Final
Judgment, and the Court has not otherwise ordered continued compliance
with the terms and provisions of the proposed Final Judgment, then the
parties are released from all further obligations under this
Stipulation, and the making of this Stipulation shall be without
prejudice to any party in this or any other proceeding.
E. Defendants represent that the divestitures ordered in the
proposed Final Judgment can and will be made, and that defendants will
later raise no claim of hardship or difficulty as grounds for asking
the Court to modify any of the divestiture provisions contained
therein.
V. Hold Separate Provisions
A. Imetal shall preserve, maintain, and operate the Hold Separate
Assets as independent competitive businesses, with management,
research, development, production, sales and operations of such assets
held entirely separate, distinct and apart from those of Imetal. Imetal
shall not coordinate its production, marketing or sale of any products
with that of any of Judgment. Imetal may, subject to the use of
firewalls acceptable to the United States, plan the post-divestiture
integration of its DBK and ECC kaolin busineses.
D. Imetal shall provide and maintain sufficient working capital to
maintain the Hold Separate Assets as viable, ongoing businesses,
consistent with current business plans.
E. Imetal shall provide and maintain sufficient lines and sources
of credit to maintain the Hold Separate Assets as viable, ongoing
businesses.
F. Imetal shall maintain, on behalf of the Hold Separate Assets, in
accordance with sound accounting practices, separate, true and complete
financial ledgers, books and records reporting the profit and loss and
liabilities of each of the businesses on a monthly and quarterly basis.
G. Imetal shall use all reasonable efforts to maintain and increase
the sales of each of the Hold Separate Assets to be divested, such as
maintaining at 1998 or previously approved levels for 1999, whichever
are higher, internal research and development funding, sales,
marketing, and support for the Hold Separate Assets.
H. Imetal shall not sell, lease, assign, transfer or otherwise
dispose of, or pledge as collateral for loans, assets that may be
required to be divested pursuant to the Final Judgment.
I. Imetal shall preserve the assets that may be required to be
divested pursuant to the Final Judgment in a state of repair equal to
their state of repair as of the date of this Order, ordinary wear and
tear excepted.
J. Except in the ordinary course of business or as is otherwise
consistent with this Order, defendants shall not transfer or terminate,
or alter, to the detriment of any employee, any current employment or
salary agreements for any employee who, on the date of entry of this
Order, works for any of the Hold Separate Assets. Defendants shall not
solicit to hire any individual who, on the date of entry of this Order,
was an employee of any of the assets to be divested under the Final
Judgment.
K. Within ten (10) days of the filing of this Hold Separate
Stipulation and Order, defendants shall appoint one or more persons who
shall have complete managerial responsibility for the Hold Separate
Assets, subject to the provisions of this Order and the Final Judgment,
until such time as this Order is terminated. In the event that such
manager(s) is unable to perform his or her duties, Imetal shall appoint
from the current management of the Hold Separate Assets, subject to the
plaintiff's approval, a replacement within ten (10) working days.
Should Imetal fail to initially appoint a manager acceptable to the
United States, or fail to appoint any replacement required within ten
(10) working days, the United States shall appoint the manager.
L. Imetal shall take no action that would interfere with the
ability of any trustee appointed pursuant to the Final Judgment to
complete the divesture pursuant to the Final Judgment to a suitable
purchaser.
M. This Order shall remain in effect as to the ECC Kaolin Business
until the divesture of the Kaolin or DBK Plant Assets required by the
Final Judgment is complete, or until further Order of the Court. This
Order shall remain in effect as to the Fused Silica Assets and Fused
Magnesia Assets until the divestiture of the Fused Silica Assets
required by the Final Judgment is complete, or until further Order of
the Court.
Dated: April 26, 1999.
For Plaintiff United States of America
Patricia G. Chick,
Esquire, D.C. Bar #266403, U.S. Department of Justice, Antitrust
Division, Litigation II Section, 1401 H Street, N.W., Suite 3000,
Washington, D.C. 20005, (202) 307-0946.
For Defendants Imetal and DBK Minerals, Inc.:
George M. Chester, Jr.,
Esquire, D.C. Bar #238196, James R. Atwood, Esquire, Covington &
Burling, 1201 Pennsylvania Avenue, N.W., Washington, D.C. 20044-7566,
(202) 662-6000.
For Defendant English China Clays, Plc and English China Clays, Inc.
William R. Norfolk,
Esquire, Sullivan & Cromwell, 125 Broad Street, New York, NY 10004-
2498, (212) 558-4000.
It is ordered by the Court, this ______ day of April, 1999.
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United States District Judge.
[Civil No.: 99-1018]
United States of America, Plaintiff, v. Imetal, DBK Minerals,
Inc., English China Clays, Plc, and English China Clays, Inc.,
Defendants.
Final Judgment
Whereas, plaintiff, the United States of America, and defendants
Imetal (``Imetal''), DBK Minerals, Inc. (``DBK''), English China Clays,
plc and English China Clays, Inc. (together ``ECC''), by their
respective attorneys, having consented to the entry of this Final
Judgment without trial or adjudication
[[Page 31628]]
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 having consented that
this Final Judgment shall settle all claims made by plaintiff in its
Complaint filed April 26, 1999;
And whereas, defendants have agreed to bound by the provisions of
this Final Judgment pending its approval by the Court;
And whereas, the essence of this Final Judgment is, in the event of
the acquisition of ECC by Imetal, the prompt and certain divestiture of
the identified assets to assure that competition is not substantially
lessened;
And whereas, plaintiff requires defendants to make certain
divestitures for the purpose of establishing a viable competitor in the
water-washed kaolin, calcined kaolin, ground calcium carbonate
(``GCC''), and fused silica businesses specified in the Complaint;
And whereas, defendants have represented to the plaintiff that the
divestitures ordered herein can and will be made and that defendants
will later raise no claims of hardship or difficulty as grounds for
asking the Court to modify any of the divestiture provisions 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
upon which relief may be granted against defendants, as hereinafter
defined, under Section 7 of the Clayton Act, as amended, 15 U.S.C.
Sec. 18.
II. Definitions
As used in this Final Judgment:
A. ``Imetal'' means defendant Imetal, a French corporation with its
headquarters in Paris, France, and includes its successors and assigns,
and its subsidiaries, divisions, groups, affiliates, partnerships,
joint ventures, directors, officers, managers, agents, and employees.
B. ``ECC'' means defendant English China Clays, plc, a United
Kingdom corporation with its headquarters in Reading, England, and its
subsidiary, defendant English China Clays, Inc., a Delaware corporation
with its headquarters in Roswell, Georgia, and their successors and
assigns, and their subsidiaries, divisions, groups, affiliates
partnerships, joint ventures, directors, officers, managers, agents,
and employees.
C. ``DBK'' means DBK Minerals, Inc., a Delaware subsidiary of
Imetal, with its headquarters in Dry Branch, Georgia, and includes its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships, joint ventures, directors, officers,
managers, agents, and employees.
D. ``DBK Plant'' means the kaolin plant of DBK located in Dry
Branch, Georgia.
E. ``Kaolin Assets'' means the Sandersville #1 plant of ECC and the
Kaolin Reserves inclusive of:
(1) All tangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling kaolin
from the Sandersville #1 Plant, including research and development
activities, and real property containing the Sandersville #1 Plant and
the Kaolin Reserves; all rights, titles, and interests, including all
fee and leasehold rights, all manufacturing, personal property,
inventory, office furniture, fixed assets and fixtures, materials,
supplies, on-site and off-site warehouses or storage facilities, and
other tangible property or improvements; all licenses, permits and
authorizations; all contracts agreements, leases, commitments and
understandings; all customer lists and credit records; and all other
records maintained by Imetal or ECC in connection with the operation of
the Sandersville #1 Plant and the Kaolin Reserves;
(2) All intangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling kaolin
from the Sandersville #1 Plant, including but not limited to a non-
exclusive, transferable, royalty-free license to use all patents,
licenses and sublicenses, intellectual property, technical information,
know-how, trade secrets, specifications for materials, and quality
assurance and control procedures utilized by ECC at the Sandersville #1
Plant.
F. ``DBK Plant Assets'' means the DBK Plant inclusive of:
(1) All tangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling kaolin,
including calcined kaolin, from the DBK Plant, including research and
development activities, and real property containing the DBK Plant,
Kaolin Reserves and Calcined Kaolin Reserves; all rights titles, and
interests, including all fee and leasehold rights, all manufacturing,
personal property, inventory, office furniture, fixed assets and
fixtures, materials, supplies, on-site warehouses or storage
facilities, and other tangible property or improvements; all licenses,
permits and authorizations; all contracts, agreements, leases,
commitments and understandings; all customers lists and credit records;
and all other records maintained by Imetal in connection with the
operation of the DBK Plant;
(2) All intangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling kaolin
from the DBK Plant, including but not limited to a non-exclusive,
transferable, royalty-free license to use all patents, licenses and
sublicenses, intellectual property, technical information, know-how,
trade secrets, specifications for materials, and quality assurance and
control procedures utilized by Imetal or DBK at the DBK Plant.
G. ``GCC'' means ground calcium carbonate.
H. ``GCC Assets'' means DBK's interests in Alabama Carbonates, L.P.
(``Alabama Carbonates''), a limited partnership between Carbonate
Corporation, a subsidiary of Omya, Inc., and Georgia Marble Stone
Corporation (``Georgia Marble''), a subsidiary of DBK, located in
Sylacauga, Alabama, which manufactures GCC products in slurry form for
use in paper production.
I. `` GCC Reserve'' means economically recoverable calcium
carbonate stone reserves located in the Sylacauga, Alabama area of a
minimum pureness quality suitable for slurry products produced and sold
to the paper industry.
J. ``GCC Reserve Assets'' means GCC Reserves in quantities
sufficient to ensure that Alabama Carbonates will have available to it
500,000 tons per year of crushed, washed and reduced to size stone
suitable to use as feedstock for a period of thirty (30) years.
Determination of the amount of GCC Reserves needed to meet this
standard shall take into account the amount of any GCC Reserves that
any principal or affiliate of Alabama Carbonates (other than the
defendants) owns, leases or has an option on, and are available to
Alabama Carbonates. In the event that Alabama Carbonates, the purchaser
of the GCC Assets, or Georgia Marble's joint venturer in Alabama
Carbonates and the seller cannot agree on the amount of GCC Reserves
that must be divested to meet the standard set forth above or the fair
market value of such reserves, such issue may be submitted to binding
arbitration in accordance with Section IX of this Final Judgment.
[[Page 31629]]
K. ``Fused Silica Assets'' means the fused silica plant of Minco,
Inc. acquired from Minco Acquisition Corp. In 1998, inclusive of:
(1) All tangible assets in connection with the business of making,
having made, using, packaging, distributing, or selling fused silica,
including research and development activities; all rights, titles, and
interest, including all fee and leasehold rights; all manufacturing,
personal property, inventory, office furniture, fixed assets and
fixtures, materials, supplies, on-site warehouses or storage
facilities, and other tangible property or improvements; all licenses,
permits and authorizations; all contracts, agreements, leases,
commitments and understandings; all customer lists and credit records;
and all other records maintained by Minco in connection with the
operation of the fused silica plant divested;
(2) All intangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling fused
silica, including but not limited to a non-exclusive, transferable,
royalty-free license to use all patents, licenses and sublicenses,
intellectual property, technical information, know-how, trade secrets,
specifications for materials, and quality assurance and control
procedures utilized by Minco in the production of fused silica.
L. ``Fused Magnesia Assets'' means the fused magnesia plant
acquired from Minco Acquisition Corp. in 1998, inclusive of:
(1) All tangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling fused
magnesia, including research and development activities; all rights,
titles, and interests, including all fee and leasehold rights; all
manufacturing, personal property, inventory, office furniture, fixed
assets and fixtures, materials, supplies, on-site warehouses or storage
facilities, and other tangible property or improvements; all licenses,
permits and authorizations; all contracts, agreements, leases,
commitments and understandings; all customer lists and credit records;
and all other records maintained by Minco in connection with the
operation of the fused magnesia plant divested;
(2) All intangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling fused
magnesia, including but not limited to a non-exclusive, transferable,
royalty-free license to use all patents, licenses and sublicenses,
intellectual property, technical information, know-how, trade secrets,
specifications for materials, and quality assurance and control
procedures utilized by Minco in the production of fused magnesia.
M. ``Kaolin Reserves'' means kaolin clay suitable for producing
kaolin of minimum pureness quality suitable for products produced and
sold to the paper industry and at a location and in quantities and
qualities sufficient to ensure the operation and viability of the
Kaolin Assets or, if divested pursuant to this Final Judgment, the DBK
Plant Assets, at full capacity for a period of twenty (20) years.
N. ``Calcined Kaolin Reserves'' means kaolin clay suitable for
producing calcined kaolin of minimum pureness quality suitable for
products produced and sold to the paper industry and at a location and
in quantities and qualities sufficient to ensure the operation and
viability of the Calcined Assets or, if divested pursuant to this Final
Judgment, the calcining assets of the DBK Plant Assets, at full
capacity for a period of twenty (20) years.
O. ``Calcining Assets'' means a plant or plants with two (2)
calciners suitable for producing calcined kaolin sold to the paper
industry, other than the calcining facilities in Sandersville, Georgia,
with a combined capacity of approximately 85,000 to 100,000 tons of
calcined kaolin per year, inclusive of:
(1) All tangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling
calcined kaolin, including research and development activities; real
property containing Calcining Assets and Calcined Kaolin Reserves; all
rights, titles and interests including all fee and leasehold rights,
all manufacturing, person property, inventory, office furniture, fixed
assets and fixtures, materials, supplies, on-site warehouses or storage
facilities, and other tangible property or improvements; all licenses,
permits and authorizations; all contracts, agreements, leases,
commitments and understandings; all customers lists and credit records;
and all other records maintained by Imetal or ECC in connection with
the operation of the Calcining Assets and the Calcined Kaolin Reserves;
(2) All intangible assets used in connection with the business of
making, having made, using, packaging, distributing, or selling
calcined kaolin from the Calcining Assets and the Calcined Kaolin
Reserves, including but not limited to a non-exclusive, transferable,
royalty-free license to use all patents, licenses and sublicenses,
intellectual property, technical information, know-how, trade secrets,
specifications for materials, and quality assurance and control
procedures utilized by Imetal or ECC at the Calcining Assets.
P. ``Sandersville #1 Plant'' means the water-washed kaolin plant of
ECC with a capacity of 850,000 tons annually located in Sandersville,
Georgia.
III. Applicability
A. The provisions of this Final Judgment apply to the defendants,
their successors and assigns, 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. Defendants shall require, as a condition of the sale of all or
substantially all of its assets or of lesser business units that
include its water-washed kaolin, calcined kaolin, GCC, or fused silica
businesses or assets, that the purchaser or purchasers agree to be
bound by the provisions of this Final Judgment.
IV. Divestitures
A. Defendants 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 Hold Separate Stipulation and
Order in this case, or within five (5) days after notice of entry of
the Final Judgment, whichever is later, to sell the Kaolin Assets or at
their option the DBK Plant Assets, the Calcining Assets, the GCC Assets
and the Fused Silica Assets as viable, ongoing businesses to a
purchaser or purchasers acceptable to the United States in its sole
discretion and to sell the GCC Reserve Assets to the purchaser of the
GCC Assets, to Georgia Marble's joint venturer in Alabama Carbonates,
or to Alabama Carbonates.
B. Defendants are also ordered to enter into, at the option of
Alabama Carbonates, a short-term contract to supply Alabama Carbonates
with crushed, washed and reduced to size calcium carbonate stone
suitable to use as feedstock for slurry products produced and sold to
the paper industry in quantities and quality and at terms and
conditions substantially similar to those of the existing supply and
services agreements between Georgia Marble and Alabama Carbonates and
which is acceptable to the United States in its sole discretion. Such
contract shall have a term of either three (3) years from the
divestiture of the GCC Assets and GCC Reserve Assets or two (2) years
from the conclusion of any arbitration permitted by Section IX of this
Final Judgment,
[[Page 31630]]
whichever is longer, and shall be terminable by Alabama Carbonates on
six months' notice. The United States, in its sole discretion, may
extend the term of the short-term contract for periods of time not to
exceed one year in total.
C. Defendants shall use their best efforts to accomplish said
divestitures as expeditiously as possible. The United States, in its
sole discretion, may extend the time period for any divestitures for an
additional period of time not to exceed sixty (60) calendar days.
D. In accomplishing the divestitures ordered by this Final
Judgment, defendants shall make known promptly, by usual and customary
means, the availability of the Kaolin Assets or at their option the DBK
Plant Assets, the Calcining Assets, the GCC Assets, and the Fused
Silica Assets. Defendants 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. Defendants shall also offer to furnish to all prospective
purchasers, subject to customary confidentiality assurances, all
information regarding these assets customarily provided in a due
diligence process, except such information as is subject to attorney-
client privilege or attorney work-product privilege. Defendants shall
make such information available to the United States at the same time
that such information is made available to any other person. In the
event that defendants enter into an agreement to negotiate exclusively
with a prospective purchaser for the divestiture of any asset to be
divested, defendants' obligations to furnish information to other
prospective purchasers may be suspended during such period of exclusive
negotiations, provided however, that nay such suspension of this
obligation shall not affect the time period within which defendants
must sell the asset.
E. As customarily provided as part of a due diligence process,
defendants shall permit prospective purchasers of the assets to have
access to personnel and to make inspection of such assets; access to
any and all zoning, building, and other permit documents and
information; and access to any and all financial, operational, or other
documents and information.
F. Defendants shall not interfere with any negotiations by any
purchaser or purchasers to employ any DBK or ECC employee who works at,
or whose principal responsibility concerns, any aspect of the Kaolin
Assets (or, if appropriate, the DBK Plant Assets), the Calcining
Assets, the GCC Assets, the GCC Reserve Assets or the Fused Silica
Assets.
G. Defendants shall not take any action, direct or indirect, that
would impede in any way the operation of any business connected with
the assets to be divested, or take any action, direct or indirect, that
would impede the divestiture of any asset.
H. Defendants shall warrant to any and all purchasers of the Kaolin
Assets, the DBK Plant Assets, the Calcining Assets, the GCC Assets and
the Fused Silica Assets that each existing asset will be operational on
the date of sale.
I. Unless the United States otherwise consents in writing, the
divestitures pursuant to Section IV, whether by defendants or by
trustee appointed pursuant to Section VI of this Final Judgment, shall
include the entire Kaolin Assets (or, of appropriate, the DBK Plant
Assets), Calcining Assets, GCC Assets, GCC Reserve Assets and Fused
Silica Assets, or such other assets as may be substituted or
additionally included by the Trustee under Section VI of the Final
Judgment. Such divestitures shall be accomplished by selling or
otherwise conveying the assets to a purchaser or purchasers in such a
way as to satisfy the United States, in its sole discretion, that the
assets can and will be used by the purchaser as viable ongoing
businesses, engaged in the water-washed kaolin, calcined kaolin for
papermaking, GCC for papermaking or fused silica businesses. The
divestitures, whether pursuant to Section IV or Section VI of this
Final Judgment, shall be made to a purchaser or purchasers who, as
demonstrated to the United States' sole satisfaction: (1) has the
capability and intent of competing effectively in the water-washed
kaolin, calcined kaolin for papermaking, GCC for papermaking or fused
silica businesses; (2) has or soon will have the managerial,
operational, and financial capability to compete effectively in the
water-washed kaolin, calcined kaolin for papermaking, GCC for
papermaking or fused silica businesses; and (3) is not hindered by the
terms of any agreement between the purchaser and defendants which gives
defendants the ability unreasonably to raise the purchaser's costs,
lower the purchaser's efficiency, or otherwise interfere with the
ability of the purchaser to compete.
J. Defendants shall warrant to the purchaser of the Kaolin Assets,
the Calcining Assets, the GCC Assets, the GCC Reserve Assets, the Fused
Silica Assets and the Fused Magnesia Assets that there are no material
defects in the environmental, zoning or other permits pertaining to the
operation of each asset, and that with respect to the Kaolin Assets,
the Calcining Assets, the GCC Assets, the GCC Reserve Assets, the Fused
Silica Assets and the Fused Magnesia Assets, defendants will not
undertake, directly or indirectly, following the divestiture of any
such asset, any challenges to the environmental, zoning, or other
permits pertaining to the operation of the assets.
K. In the event that there is a divestiture by either the
defendants or the trustee of the DBK Plant Assets, including at least
two calciners with capacity of approximately 85,000 to 100,000 tons of
calcined kaolin per year, such divestiture shall satisfy the
requirements of this Final Judgment to divest the Kaolin Assets and the
Calcining Assets.
V. Notice of Proposed Divestitures
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 divestiture
pursuant to Section IV or VI of this Final Judgment, defendants or the
trustee, whichever is then responsible for effecting the divestiture,
shall notify the United States of the proposed divestiture. If the
trustee is responsible, it shall similarly notify defendants. The
notice shall set forth the details of the proposed transaction and
shall 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 business to be
divested that is the subject of the binding contract, together with
full details of same. Within fifteen (15) calendar days of receipt of
the United States of a divestiture notice, the United States, in its
sole discretion, may request from defendants, the proposed purchaser,
or any other third party additional information concerning the proposed
divestiture and the proposed purchaser. Defendants 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 the
United States has been provided the additional information requested
from the defendants, the proposed purchaser, and any third party,
whichever is later, the United States shall provide written notice to
defendants and the trustee, if there is one, stating whether or not it
objects to the proposed divestiture. If
[[Page 31631]]
the United States provides written notice to defendants (and the
trustee, if applicable) that it does not object, then the divestiture
may be consummated, subject only to defendants' limited right to object
to the sale under Section VI(B) of this Final Judgment. Upon objection
by the United States, a divestiture proposed under Section IV or
Section VI may not be consummated. Upon objection by defendants under
the provision in Section VI(B), a divestiture proposed under Section VI
shall not be consummated unless approved by the Court.
VI. Appointment of Trustee
A. In the event that defendants have not divested any of the Kaolin
Assets or DBK Plant Assets, Calcining Assets, GCC Assets, the GCC
Reserve Assets, or Fused Silica Assets within the time period specified
in Section IV of this Final Judgment, the Court shall appoint, on
application of the United States, a trustee selected by the United
States, to effect the divestiture of each such asset. The trustee shall
have the right, in its sole discretion, to sell either the DBK Plant
Assets or the Kaolin Assets. The trustee shall have the right, in its
sole discretion, to additionally include in the sale of the Fused
Silica Assets the Fused Magnesia Assets. The trustee shall also have
the right, in its sole discretion, and upon notice to the defendants
and approval of the United States, to require the divestiture of
additional related assets reasonably necessary to divest the Kaolin
Assets, the Calcining Assets, and the Fused Silica Assets as viable
stand-alone businesses including, but not limited to, sales and
marketing facilities and organizations, research and development
facilities and organizations. In any such event, all of the obligations
of the defendants under the Final Judgment shall apply to the added
assets as well.
B. After the appointment of a trustee become effective, only the
trustee shall have the right to divest any assets. The trustee shall
have the power and authority to accomplish any and all divestitures of
assets at the best price then obtainable upon a reasonable effort by
the trustee, subject to the provisions of Sections IV and VI of this
Final Judgment, and shall have such other powers as the Court shall
deem appropriate. Subject to Section VI(C) of this Final Judgment, the
trustee shall have the power and authority to hire at the cost and
expense of the defendants any investment bankers, attorneys, or other
agents reasonably necessary in the judgment of the trustee to assist in
the divestitures, and such professionals and agents shall be
accountable solely to the trustee. The trustee shall have the power and
authority to accomplish the divestitures at the earliest possible time
to a purchaser or purchasers acceptable to the United States, in its
sole discretion, and shall have such other powers as this Court shall
deem appropriate. Defendants shall not object to a divestiture by the
trustee on any ground other than the trustee's malfeasance. Any such
objections by defendants must be conveyed in writing to the United
States and the trustee within ten (10) calendar days after the trustee
has provided the notice required under Section V of this Final
Judgment.
C. The trustee shall serve at the cost and expense of defendants,
on such terms and conditions as the Court may prescribe, and shall
account for all monies derived from the sale of each asset 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 defendants 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 assets and based on a fee arrangement providing
the trustee with an incentive based on the price and terms of the
divestiture, and the speed with which it is accomplished.
D. Defendants shall use their best efforts to assist the trustee in
accomplishing the required divestitures, including their best efforts
to effect all necessary 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 each of the businesses to be divested, and
defendants shall develop such financial or other information relevant
to the businesses to be divested customarily provided in a due
diligence process as the trustee may reasonably request, subject to
customary confidentiality assurances. Defendants shall permit
prospective purchasers of each of the Kaolin Assets, the Calcining
Assets, the GCC Assets, the GCC Reserve Assets, or the Fused Silica
Assets, or other assets being sold by the trustee, 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 under this Final Judgment;
provided, however, that to the extent such reports contain information
that the trustee deems confidential, such reports shall not be filed in
the public docket of the Court. Such reports shall include the name,
address and telephone number of each person who, during the preceding
month, made an offer to acquire, expressed an interest in acquiring,
entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring, any interest in any of the assets 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 sell the assets to be divested.
F. If the trustee has not accomplished such divestitures within
six(6) months after its appointment, the trustee thereupon shall file
promptly with the Court a report setting forth (1) the trustee's
efforts to accomplish the required divestitures, (2) the reasons, in
the trustee's judgment, why the required divestitures have not been
accomplished, and (3) the trustee's recommendations; provided, however,
that to the extent such reports contain information that the trustee
deems confidential, such reports shall not be filed in the public
docket of the Court. The trustee shall at the same time furnish such
report to the parties, who shall each have the right to be heard and to
make additional recommendations consistent with the purpose of the
trust. The Court shall enter thereafter such orders as it shall deem
appropriate in order to carry out the purpose of the trust which may,
if necessary, include extending the trust and the term of the trustee's
appointment for a period of time requested by the United States.
VII. Affidavits
A. Within twenty (20) calendar days of the filing of the Hold
Separate Stipulation and Order in this matter and every thirty (30)
calendar days thereafter until the divestitures have been completed
pursuant to Section IV or VI of this Final Judgment, defendants shall
deliver to the United States an affidavit as to the fact and manner of
compliance with Section IV or VI of this Final Judgment. Each such
affidavit shall include, inter alia, the name, address, and telephone
number of each person who, at any time after the period covered by the
last such report, made an offer to acquire, expressed an interest in
acquiring, entered into negotiations to
[[Page 31632]]
acquire, or was contacted or made an inquiry about acquiring, any
interest in any of the assets 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
defendants have taken to solicit a buyer for any and all of the Kaolin
Assets or DBK Plant Assets, the Calcining Assets, the GCC Assets, the
GCC Reserve Assets, or the Fused Silica Assets and to provide required
information to prospective purchasers, including the limitations, if
any, on such information. Assuming the information set forth in the
affidavit is true and complete, any objection by the United States to
information provided by defendants, including limitations on
information, shall be made within fourteen (14) days of receipt of such
affidavit.
B. Within twenty (20) calendar days of the filing of the Hold
Separate Stipulation and Order in this matter, defendants shall deliver
to plaintiff an affidavit which describes in detail all actions
defendants have taken and all steps defendants have implemented on an
on-going basis to preserve the Kaolin Assets, the DBK Plant Assets, the
Calcining Assets, the GCC Assets, and the Fused Silica Assets pursuant
to Section VIII of this Final Judgment and the Hold Separate
Stipulation and Order entered by the Court. The affidavit also shall
describe, but not be limited to, defendants' efforts to maintain and
operate each of the Kaolin Assets, the DBK Plant Assets, the Calcining
Assets, the GCC Assets, and the Fused Silica Assets as an active
competitor, maintain the management, staffing, sales, marketing and
pricing of each asset, and maintain each asset in operable condition at
current capacity configurations. Defendants shall deliver to plaintiff
an affidavit describing any changes to the efforts and actions outlined
in defendants' 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,
defendants shall preserve all records of all efforts made to preserve
the Kaolin Assets, the DBK Plant Assets, the Calcining Assets, the GCC
Assets, and the Fused Silica Assets and to effect the ordered
divestitures.
VIII. Firewall
A. During the period of any supply contract for dry processed
calcium carbonate between Imetal and Alabama Carbonates, Imetal shall
construct and maintain in place a firewall that prevents any
information about the purchaser's requirements, purchases, or future
requirements for dry processed calcium carbonate from flowing to any
other Imetal employee involved in the production, sale or marketing of
GCC for paper by Imetal or the former ECC. To implement this provision,
Imetal is required to identify those employees of Imetal or of the
former ECC who are involved in the production, sale or marketing of GCC
for paper, and all such identified employees shall be prohibited from
receiving any information about Alabama Carbonates' requirements,
purchases, or future requirements for dry processed calcium carbonate.
All other employees of Imetal or the former ECC who receive any such
information shall be prohibited for passing on such information to the
identified employees.
B. Imetal shall, within ten (10) business days of the entry of the
Hold Separate Stipulation and Order, submit to the Department of
Justice a document setting forth in detail its procedure to effect
compliance with this provision. The Department of Justice shall have
the sole discretion to approve Imetal's compliance plan and shall
notify Imetal within three (3) business days whether it approves or
rejects Imetal's compliance plan. In the event that Imetal's compliance
plan is rejected, the reasons for the rejection shall be provided to
Imetal and Imetal shall be given the opportunity to submit, within two
(2) business days of receiving the notice of rejection; a revised
compliance plan. If the parties cannot agree on a compliance plan
within an additional three (3) business days, a plan will be devised by
the Department of Justice and implemented by Imetal.
IX. Arbitration
A. In the event that Alabama Carbonates, the purchaser of the GCC
Assets, or Georgia Marble's joint venturer in Alabama Carbonates and
the seller of the GCC Reserve Assets cannot agree on the amount of GCC
Reserves that need to be divested or the fair market value of such
reserves, any of those persons may elect to settle the issue through
binding arbitration. The seller shall enter into a reasonable
arbitration agreement, acceptable to the United States in its sole
discretion, to govern such arbitration. The agreement shall provide
that:
(1) Any controversy to be settled by arbitration shall be submitted
to the American Arbitration Association;
(2) The arbitrator appointed shall be one acceptable to the United
States in its sole discretion;
(3) The United States shall provide its assistance to the
arbitrator and may submit evidence;
(4) Rules and procedures shall be adopted to ensure that the
controversy shall be completed within four months from the appointment
of the arbitrator and any ward made pursuant to any arbitration shall
be final and binding on the parties to the arbitration.
B. When any such controversy is submitted to arbitration,
defendants shall promptly notify the United States in writing and shall
promptly serve a copy of the final award on the United States.
C. If any such controversy is submitted to arbitration, the period
of time provided by Section IV(A) of this Final Judgment for the
defendants to accomplish the divestiture required shall be tolled
during the period of the arbitration. Following the conclusion of such
arbitration, the United States shall, if necessary, extend the period
of time provided in Section IV(A), to provide the defendants up to
sixty (60) days in which to complete the divestiture.
X. Hold Separate Order
Until the divestitures required by the Final Judgment have been
accomplished, defendants shall take all steps necessary to comply with
the Hold Separate Stipulation and Order entered by this Court.
Defendants shall take no action that would jeopardize the sale of the
Kaoline Assets, the DBK Plant Assets, the Calcining Assets, the GCC
Assets, the Fused Silica Assets, or the Fused Magnesia Assets.
XI. Financing
Defendants are ordered and directed not to finance all or any part
of any acquisition made pursuant to Sections IV or VI of this Final
Judgment.
XII. 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 United States Department
of Justice, upon written request of the Assistant Attorney General in
charge of the Antitrust Division, and on reasonable notice to
defendants made to their principal offices, shall be permitted:
(1) Access during office hours of defendants to inspect and copy
all books, ledgers, accounts, correspondence, memoranda, and other
records and documents in the possession or under the control of
defendants, who may
(2) Subject to the reasonable convenience of defendants and without
[[Page 31633]]
restraint or interference from 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 Attorney General or the
Assistant Attorney General in charge of the Antitrust Division,
defendants shall submit such written reports, under oath if requested,
with respect to any matter contained in the Final Judgment and the Hold
Separate Stipulation and Order.
C. No information or documents obtained by the means provided in
Sections VI or VII of this Final Judgment shall be divulged by a
representative of the United States to any person other than a duly
authorized representative of the Executive Branch of the United States,
except in the course of legal proceedings to which the United States is
a party (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
defendants to the United States, defendants represent and identify in
writing the material in any such information or documents as to which a
claim of protection may be asserted under Rule 26(c)(7) of the Federal
Rules of Civil Procedure, and 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 United States to defendants prior to
divulging such material in any legal proceeding (other than a grand
jury proceeding) to which defendants are not a party.
XIII. Retention of Jurisdiction
Jurisdiction is retained by this Court for the purpose of enabling
any of the parties to this Final Judgment to apply to this Court at any
time for such further orders and directions as may be necessary or
appropriate for the construction or carrying out of this Final
Judgment, for the modification of any of the provisions hereof, for the
enforcement of compliance herewith, and for the punishment of any
violations hereof.
XIV. Termination
Unless this Court grants an extension, this Final Judgment will
expire upon the tenth anniversary of the date of its entry.
XV. Public Interest
Entry of this Final Judgment is in the public interest.
Dated ______, 1999.
----------------------------------------------------------------------
United States District Judge.
[Civil No: 99 1018]
Judge Gladys Kessler
Filed: April 26, 1999.
United States of America Plaintiff, v. Imetal, DBK Minerals,
Inc., English China Clays, plc, and English China Clays, Inc.,
Defendants.
Competitive Impact Statement
The United States, pursuant to Section 2(b) of the Antitrust
Procedures and Penalties Act (``APPA''), 15 U.S.C. Sec. 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
On April 26, 1999, the United States file a civil antitrust
Complaint alleging that the proposed acquisition of English China
Clays, plc (``ECC'') by IMETAL (``Imetal'') would violate Section 7 of
the Clayton Act, 15 U.S.C. Sec. 18, with respect to four relevant
products. The Complaint alleges that Imetal and ECC are two of five
U.S. producers of water-washed kaolin; two of four U.S. producers of
calcined kaolin for use in paper-making; the only two producers in the
Southeastern United States of ground clacium carbonate (``GCC'') in
slurry form for the paper industry (``paper-grade GCC''); and the two
leading U.S. producers of fused silica. The request for relief seeks:
(1) a judgement that the proposed merger would violate Section 7 of the
Clayton Act; (2) inductive relief preventing consummation of the
proposed acquisition; (3) an award of costs to the plaintiff; and (4)
such other relief as the Court may deem just and proper.
When the Complaint was filed, the United States also filed a
proposed Final Judgment and a Hold Separate Stipulation and Order that
would settle the lawsuit. The proposed settlement permits Imetal to
acquire ECC, but requires divestitures that will preserve competition
in the four relevant product markets alleged in the Complaint. The
proposed Final Judgment orders defendants to divest production
facilities and associated assets, as defined in the proposed Final
Judgment, for water-washed kaolin, calcined kaolin, and fused silica,
to divest Imetal's interest in Alabama Carbonates, L.P., a joint
venture that make paper-grade GCC, and to divest substantial GCC
reserves. Defendants must accomplish these divestures within one
hundred and eighty (180) calendar days after the filing of the proposed
Final Judgment in this matter, or five (5) days after notice of the
entry of the proposed Final Judgment by the Court, whichever is later,
to purchaser acceptable to the Antitrust Division of the United States
Department of Justice (``DOJ''). If the defendants do not do so within
the time frame in the proposed Final Judgment, a trustee appointed by
the Court would be empowered for an additional six months to sell those
assets. If the trustee is unable to do so in that time, the Court could
enter such orders as it shall deem appropriate to carry out the purpose
of the trust which may, if necessary, include extending the trust and
the trustees' appointment by a period requested by the United States.
In addition, under the terms of the Hold Separate Stipulation and
Order, defendants must hold specified assets to be divested separate
and apart from their other businesses until the required divestitures
have been accomplished. Defendants must, until the required
divestitures are accomplished, preserve and maintain the specified
assets to be divested as saleable and economically viable ongoing
concerns.
The plaintiff and defendants have stipulated that the proposed
Final judgment may be entered after compliance with the APPA. Entry of
the proposed Final Judgment would terminate the 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. Description of the Event Giving Rise to the Alleged Violation
A. The Defendants and the Proposed Transaction
Imetal is a French corporation with headquarters in Paris, France.
It produces building materials, industrial metals, and industrial
minerals worldwide. In the United States, Imetal produces kaolin
through its DBK Minerals, Inc. subsidiary (``DBK'') at a plant in Dry
Branch, Georgia and at a plant in Jeffersonville, Georgia; dry-
processed GCC through The Georgia Marble Company (``Georgia Marble''),
a subsidiary of DBK, at a number of locations throughout the United
States, including its plant in Sylacauga, Alabama; paper-grade GCC
through a joint venture, Alabama Carbonates, L.P., in Sylacauga,
Alabama, in which Georgia marble has a 50 percent ownership interest;
and fused silica, through its G-E Minerals, Inc. subsidiary at a plant
in Greenville, Tennessee. In 1997, Imetal reported
[[Page 31634]]
total sales in excess of 10 billion French francs.
ECC is a United Kingdom Corporation with headquarters in Reading,
England. It produces industrial minerals, pigments and chemicals
worldwide. In the United States, ECC produces kaolin through its
English China Clays, Inc. subsidiary at two plants in Sandersville,
Georgia and at a plant in Wrens, Georgia; and paper-grade GCC at a
plant in Sylacauga, Alabama and at plants in Maryland and Wisconsin. In
addition, in 1998, ECC purchased Minco Acquisition Corporation, a
company that produces fused silica and fused magnesia at plants in
Midway, Tennessee. In 1997, ECC reported total sales of about 850
million pounds Sterling.
On January 11, 1999, Imetal announced a cash tender offer for all
of the shares of ECC. This transaction, which would increase
concentration in the already highly concentrated markets for water-
washed kaolin clay, calcined kaolin clay and fused silica in the United
States, and would increase concentration in the already highly
concentrated market for paper-grade GCC in the Southeastern United
States, precipitated the government's suit.\1\
---------------------------------------------------------------------------
\1\ On April 27, 1999, Imetal consummated its cash tender offer,
subject to the terms of the proposed settlement filed in this case.
---------------------------------------------------------------------------
B. The Markets
Water-Washed Kaolin
Kaolin is a clay consisting of a crystalline hydrated aluminum
silicate, ususlly found as the mineral kaolinite. The clay is mined in
open pit quarries, and processed using crushing and grinding equipment.
Water-washed kaolin is treated with water and flotation, which removes
impurities and separates the kaolin by particle size. It is sold in a
number of different grades, differentiated generally by particle size
and brightness.
The vast majority of water-washed kaolin is used in paper-making,
both as a pigment in coating formulations and as a filler in the body
of paper. In coating formulations, kaolin is typically used in
conjunction with other pigments, such as GCC. The kaolin has unique
properties, however, and the other pigments are typically used as a
complement, rather than a replacement, for water-washed kaolin. Kaolin
is used as a filler primarily in paper that is made using an acid
process, where calcium carbonate fillers cannot generally be used.
Thus, for many paper companies, no good substitute exists for
water-washed kaolin. A small but significant increase in the price of
water-washed kaolin would not cause a significant number of paper
customers currently purchasing water-washed kaolin to substitute other
products.
Much of the world's highest quality kaolin deposits are found in a
relatively small area in Georgia. All of the U.S. producers of water-
washed kaolin are located in Georgia, and sell products from their
plants in Georgia throughout the United States.
Calcined Kaolin
Calcined kaolin is water-washed kaolin that has been further
processed by calcining or baking at a temperature of about 1000 degrees
Centigrade under controlled conditions. The high temperature alters the
structure of the water-washed kaolin, resulting in a whiter and
brighter kaolin that has a higher refractive index. Because of its
higher brightness, calcined kaolin is used in paper-making applications
that require greater opacity than that provided by water-washed kaolin.
Calcined kaolin costs more than twice as much as regular water-washed
kaolin.
For many paper customers, no good substitute exists for calcined
kaolin. A a small but significant increase in the price of calcined
kaolin would not cause a significant number of paper customers
currently purchasing calcined kaolin to substitute other products.
All of the U.S. producers of calcined kaolin for paper-making are
located in Georgia, and sell their products from plants in Georgia to
paper companies throughout the United States.
GCC for Paper Coating Applications
Natural calcium carbonate is typically found in the ground in
marble or limestone deposits. The stone is quarried and then processed
through a series of screening and dry grinding steps into particles of
various sizes, ranging down to about two (2) microns. The dry-processed
GCC can also be further ground using a wet-grinding process into
particle sizes as small as one (1) micron or less. GCC varies in color
depending on the reserves from which it is quarried. The purest GCC
comes from calcitic marble deposits. These high bright deposits are
scarce, and some of the finest high bright deposits are located in the
Sylacauga, Alabama area.
Paper-making requires the brightest white GCC. The vast majority of
GCC sold for paper-making is wet-processed and sold in slurry form.
Most of the GCC consumed in paper-making, but most PCC used in paper-
making is used as filler. GCC is preferred over PCC in coating
applications because of its runnability, higher printability and gloss.
A small but significant increase in the price of GCC would not
cause a significant number of paper customers currently purchasing GCC
for coating applications to substitute other products.
Paper-grade GCC, unlike water-washed and calcined kaolin, is
produced in a number of locations throughout the United States. Because
of high transportation costs, sales of GCC tend to be regional rather
than nationwide.
Fused Silica
Fused silica is formed by melting pure non-crystalline silicon
dioxide at high temperatures. This process creates a material with a
low coefficient of thermal expansion which improves resistance to
extreme heat, corrosion, abrasion, and electrical non-conductivity.
Fused silica is used in sophisticated applications such as investment
castings and epoxy molding compounds used in the electronics industry,
as well as in refractory applications.
There are no economical substitutes for fused silica. A small but
significant increase in the price of fused silica would not cause a
significant number of current fused silica customers to substitute
other products. Domestic producers of fused silica generally have a
single plant, and sell their products throughout the United States.
C. Harm to Competition as a Result of the Proposed Transaction
Water-washed Kaolin
Imetal and ECC compete with each other in the development,
production and sale of water-washed kaolin in the United States--a
market which is now highly concentrated and would become substantially
more concentrated as a result of the proposed acquisition. There are
only five U.S. producers of water-washed kaolin. ECC is the largest,
and Imetal is the third largest. The proposed transaction would reduce
the number of firms making water-washed kaolin to four and create a
single firm with well over 50% of domestic production capacity. The
acquisition would consolidate the industry into two large players--the
combined Imetal/ECC and Engelhard Corp.--and two relatively small
players--Thiele Kaolin Company and J.M. Huber. It would eliminate the
direct competition between Imetal and ECC that has benefited consumers,
and likely lead to higher prices through increased opportunities for
coordination
[[Page 31635]]
and from the elimination of a significant competitor in an
oligopolistic market.
Moreover, new entry into the development, production and sale of
water-washed kaolin is unlikely to occur and unlikely to be timely or
sufficient to defeat a post-acquisition price increase. Building a
water-washed kaolin plant could cost $100 million or more and take a
minimum of two years. In addition, entry into the production of water-
washed kaolin would require the location, testing and acquisition of
substantial kaolin reserves to justify the investment in the plant.
Calcined Kaolin
The market for calcined kaolin for paper-making is even more
concentrated than is the market for water-washed kaolin. There are only
four producers, and ECC and Imetal are the second and third largest,
respectively. (Engelhard is the industry leader and Thiele is the
smallest participant.) The proposed transaction would reduce the number
of firms making calcined kaolin for paper-making to only three,
eliminating the direct competition between Imetal and ECC that has
benefited consumers. The acquisition would likely lead to higher prices
for calcined kaolin for paper-making.
New entry is unlikely to occur and would not be timely or
sufficient to defeat a post-acquisition price increase. To be an
effective competitor, any new entrant would require at least two
calciners with substantial capacity (estimated at 85,000 to 100,000
tons annually) in order to be able to supply large paper customers'
requirements and to be considered a credible source. Construction of a
single calciner (with the necessary attendant infrastructure) could
cost a minimum of $30 million and require at least two years, sometimes
much longer, for permitting and construction. In addition, any entrant
not already in the water-washed kaolin business would also face the
barriers to entry into that business.
GCC for Paper Coating
There are only four firms that make paper-grade GCC in the United
States: Omya, Inc., ECC, Alabama Carbonates, and Columbia River
Carbonates (in Washington State). Only two of these firms are located
in the Southeastern United States. One is ECC and the other is Alabama
Carbonates, which is a joint venture owned 50% by Omya and 50% by
Imetal's Georgia Marble. Both are in Sylacauga, Alabama.
Imetal and ECC compete in the sale of paper-grade GCC in the
Southeastern United States. ECC has substantial high bright reserves of
GCC in the Sylacauga area, which it quarries and processes at its
Sylacauga plant. The plant does both dry processing and wet processing,
and sells wet-processed GCC in slurry form for use in paper-making.
Georgia Marble has many hundreds of years of GCC reserves in the
Sylacauga area, which it quarries and dry processes at its Sylacauga
plant, across the street from the ECC plant. Georgia Marble does not
have a wet processing plant, but it has a 50% interest in the Alabama
Carbonates joint venture, which has a wet processing plant right next
to the Georgia Marble facility.
Alabama Carbonates was formed as a joint venture between Georgia
Marble and Omya in 1990 for the purpose of selling paper-grate GCC in
thirteen states in the southeastern U.S. Under the terms of the joint
venture, both Omya and Georgia Marble agreed to sell paper-grade GCC in
the designated are only through the joint venture.\2\ Georgia Marble
supplies the raw material which it quarries, crushes, washes, and dry
processes into feedstock suitable for the wet processing plant at an
agreed-upon price. Omya operates the wet-processing plant, sells the
paper-grade GCC and collects a fee for these services.
---------------------------------------------------------------------------
\2\ There is a limited exception in the joint venture agreement
for certain pre-existing customers of the venturers.
---------------------------------------------------------------------------
Transport costs for GCC are high. As a result, GCC sales, unlike
sales of water-washed and calcined kaolin, tend to be regional. ECC and
Alabama Carbonates are the only companies that compete directly with
each other for sales of paper-grade GCC in the Southeastern United
States.
The proposed transaction would likely result in unilateral price
increases to customers in the Southeastern United States. Entry is
unlikely to occur, and would not be timely or sufficient to defeat a
post-acquisition increase in the price of paper-grade GCC. The only
other producer of paper-grade GCC is Omya, which would have no
incentive to ship into the Southeast for the purpose of defeating its
own price increase and, in any event, is barred from doing so by the
terms of its joint venture agreement.\3\ A de novo entrant would have
to acquire substantial high bright reserves in the Southeast, establish
a quarry and build a processing plant. While the quarry and plant would
require considerable expenditures of money and take substantial time,
the most significant barrier is obtaining appropriate reserves. Paper-
grade GCC requires high bright reserves, which are a scarce resource
and are generally believed to be largely unavailable in the Southeast
because they are owned primarily by Georgia Marble and ECC.
---------------------------------------------------------------------------
\3\ Columbia River Carbonates, the fourth producer of paper-
grade GCC, is another joint venture in which Omya is a participant.
---------------------------------------------------------------------------
Fused Silica
Imetal and ECC are the two leading producers of fused silica in the
United States. They account for more than 80% of domestic fused silica
production, and more than 95% of the fused silica sold in the United
States for investment castings. The two companies compete significantly
with each other, and are each other's only meaningful competition in
sales of fused silica for investment castings. The only other producer,
Pemco, accounts for a tiny percentage of sales.
Imetal and ECC face competition from other domestic producers and
from imports in sales of fused silica for refractories. Overall,
however, according to the defendants' documents, the two firms account
for almost two-thirds of the total fused silica sales.
The proposed transaction would eliminate the direct competition
between Imetal and ECC that has benefited consumers, and would create a
single firm with a virtual monopoly in the sales of fused silica for
investment castings and an overwhelming share of total domestic sales
of fused silica. This concentration would likely result in unilateral
price increases to consumers of fused silica.
Aluchem, Inc., an industrial minerals company, has announced plans
to build a new plant in Alabama that will be capable of making fused
silica. This planned entry by Aluchem, Inc. is not likely to be
sufficient to deter an anticompetitive price increase, however. New
entry is very difficult, time consuming and costly, and sufficient new
entry is unlikely to occur and would not be timely or sufficient to
defeat a post-acquisition fused silica price increase.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment requires substantial divestitures with
respect to each of the products that is the subject of the Complaint.
These divestitures are designed to ensure that the competition that
would be eliminated by the proposed acquisition will be preserved and
maintained. Under the terms of the proposed Final Judgment, defendants
must accomplish these divestitures within one hundred and eighty (180)
calendar days after the filing of that proposed Final Judgment, or five
(5) days after notice of the entry of the proposed Final Judgment by
the Court, whichever is later, to a purchaser
[[Page 31636]]
acceptable to United States. If defendants fail to divest the assets
within this period, a trustee, selected by the United States, will be
appointed by the Court to sell the assets. Section VI of the proposed
Final Judgment, which provides for the appointment of a trustee,
contains a ``Crown Jewel'' provision that empowers the trustee to sell
additional assets if necessary to effect certain of the divestitures.
If a trustee is appointed, the proposed Final Judgment provides
that defendants will pay all costs and expenses of the trustee. After
the trustee's appointment becomes effective, the trustee will file
monthly reports with the parties and the Court, setting forth the
trustee's efforts to accomplish divestiture. At the end of six months,
if any divestiture has not been accomplished, the trustee and the
parties will make recommendations to the Court, which shall enter such
orders as appropriate in order to carry out the purpose of the trust,
including extending the trust and the term of the trustee's
appointment.
Kaolin
With respect to water-washed and calcined kaolin, Section IV of the
proposed Final Judgment requires defendants to divest the Sandersville
No. 1 water-washed kaolin plant of ECC, with an annual capacity of
850,000 tons, and to divest two calciners, with a minimum annual
capacity of 85,000-100,000 tons. Alternatively, defendants may at their
option sell the DBK plant in Dry Branch, Georgia. This plant includes
both a water-washed kaolin plant with capacity of slightly over one
million tons, and a calcined kaolin plant.
In all cases, the plant divestiture requires divestiture of all
tangible and intangible assets used in connection with those plants,
and divestiture of sufficient kaolin reserves to operate the plant at
full capacity for 20 years.
Currently, DBK has two plants: the DBK plant, and a 300,000 ton
capacity plant in Jeffersonville, Georgia, which it acquired in 1997
when it purchased Nord Kaolin Co. The Jeffersonville plant is largely
idled, except for the calcined at that location. The proposed
transaction thus would give the combined company about 1 million tons
more water-washed kaolin capacity than ECC had before the tender offer.
Divestiture of the DBK plant would eliminate any increase in
concentration in water-washed kaolin resulting from the acquisition.
The Sandersville No. 1 plant is only slightly smaller than the DBK
plant. In plaintiff's view, it is sufficiently close to DBK's stand-
alone capacity that a purchaser of that plant could be an effective
replacement for DBK in the market.
With respect to calcined kaolin, ECC currently has 4 calciners,
with a total capacity of about 200,000 tons, making calcined kaolin for
paper-making. DBK currently has 3 calciners, with a total capacity of
about 105,000 tons, devoted to this product. Even after the required
divestiture, the proposed transaction would result in some increased
concentration in capacity for calcined kaolin for paper-making. From
what plaintiff learned during the course of its investigation, however,
the required divestiture should be sufficient for the purchaser to be a
viable, effective new entrant into that market. Accordingly, plaintiff
concluded that this divestiture is likely to substantially mitigate any
anticompetitive effects of the proposed transaction with respect to
calcined kaolin for paper-making.
GCC for Paper-Coating
With respect to paper-grade GCC, Section IV of the proposed Final
Judgment requires defendants to divest Georgia Marble's interest in the
Alabama Carbonates limited partnership.\4\ Pending divestiture of
Georgia Marble's interest in Alabama Carbonates, the Hold Separate
Stipulation and Order requires Imetal to resign its seats on the
Alabama Carbonates Management Committee and to assign to its joint
venturer its right to name committee members.
---------------------------------------------------------------------------
\4\ Under the provisions of the proposed Final Judgment,
defendants must divest this interest to a purchaser or purchasers
acceptable to the United States. Under the terms of the limited
partnership agreement, however, Georgia Marble's joint venturer,
Omya, has a contractual right to prior notice of any sale of the
interest and a right to match any offer for that interest.
---------------------------------------------------------------------------
Section IV of the proposed Final Judgment also requires defendants
to divest sufficient GCC reserves for Alabama Carbonates to operate at
its maximum stated contractual capacity of 500,000 tons for 30 years.
These reserves must be economically recoverable, located in the
Sylacauga, Alabama area, and of minimum pureness quality suitable for
paper-grade GCC. Defendants must divest these reserves to the purchaser
of Georgia Marble's interest, to Omya, or to Alabama Carbonates.
The divestiture of reserves is designed to ensure that Alabama
Carbonates will be able to operate independently of Georgia Marble.
Currently, Alabama Carbonates relies on Georgia Marble for its raw
material and for all dry processing of its feedstock. Such dependence
on the company that, after the proposed transaction, will be its only
competitor, raises obvious competitive problems. In order to operate
independently the limited partnership must have its own reserves and
its own processing facilities. The plaintiff concluded as a result of
its investigation that 30 years' reserves was the minimum that the
limited partnership would need to consider making the required
investments in processing facilities.
The proposed Final Judgment permits defendants, in calculating the
quantity of reserves required to be divested, to take into account any
economically recoverable reserves Omya already owns, uses or has an
option on in the Sylacauga area that are of suitable quality and are
available to Alabama Carbonates. The proposed Final Judgment further
provides that, if Alabama Carbonates, Omya, or the purchaser of Georgia
Marble's interest in Alabama Carbonates cannot agree with the
defendants (or with the trustee if the trustee is the seller) on the
amount of GCC Reserves to be divested to provide 500,000 tons of
feedstock for 30 years, or cannot agree on the fair market value of
those reserves, they may submit those issues to binding arbitration.
Section IX of the proposed Final Judgment sets forth the procedures to
be followed in the event of such arbitration.
This provision for arbitration is designed to address two somewhat
different concerns. First, defendants maintain that Omya already has
extensive high bright GCC reserve holdings in the Sylacauga area and
that Alabama Carbonates therefore does not need substantial additional
reserves in order to be a viable independent competitor. As a result of
its investigation, the United States disagreed and was unwilling to
agree to a proposed settlement without a sufficient divestiture of GCC
reserves to enable the joint venture to be a viable independent
competitor. The arbitration provision permitted the parties to reach a
settlement agreement that satisfies the United States' competitive
concerns, while at the same time providing defendants with a mechanism
for assuring themselves that they are protected against an unnecessary
sale of their reserves.
Second, given the contractual provisions of the Alabama Carbonates
limited partnership agreement, there is a high likelihood that
defendants will have no choice but to sell the GCC reserves to Omya. In
such a situation, where there is a single buyer, the market forces that
operate in a typical negotiation on price are absent. Defendants sought
the option of
[[Page 31637]]
arbitration to provide them a modicum of protection in their
negotiations. There is precedent for this in other Antitrust Division
consent decrees that have ordered divestiture to a particular buyer.
In addition to the divestiture provisions outlined above, Section
IV of the proposed Final Judgment requires defendants, at the option of
Alabama Carbonates, to supply the joint venture with feedstock for a
period up to three years. This provision is designed to provide Alabama
Carbonates with a reasonable transition period to make the investment
required for it to be self-sufficient in the long term. The proposed
Final Judgment further requires defendants to erect a firewall (Section
VIII) during the term of any such supply contract, to ensure that no
one at the combined Imetal/ECC with responsibility for paper-grade GCC
receives any competitively sensitive information about Alabama
Carbonates' requirements or purchases.
Fused Silica
Section IV of the proposed Final Judgment requires defendants to
divest the fused silica plant of ECC, together with all tangible and
intangible assets used in connection with the plant. This divestiture
would eliminate any anticompetitive effects of the proposed transaction
with respect to fused silica.
ECC acquired this fused silica plant within the last year when it
acquired Minco. Minco also operates a fused magnesia plant, at the same
location, that defendants wish to retain. The two plants are separate
businesses and there is no overlap between ECC and Imetal with respect
to fused magnesia, so retention of the fused magnesia businesses should
not pose a problem under Section 7 of the Clayton Act. It may be,
however, that the two plants together are more readily saleable than is
the fused silica plant alone. For this reason, Section VI of the
proposed Final Judgment provides that if the fused silica plant goes to
a trustee for sale, the trustee may also sell the fused magnesia plant
(together with all tangible and intangible assets used in connection
with that plant).
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
16(a), the proposed Final Judgment has no prima facie effect in any
subsequent private lawsuit that may be brought against defendants.
V. Procedures Available for Modification of the Proposed Final
Judgment
The United States and defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least sixty days preceding the
effective date of the proposed Final Judgment within which any person
may submit to the United States written comments regarding the proposed
Final Judgment. Any person who wishes to comment should do so within
sixty days of the date of publication of this Competitive Impact
Statement in the Federal Register. The United States will evaluate and
respond to the comments. All comments will be given due consideration
by the Department of Justice, which remains free to withdraw its
consent to the proposed Final Judgment at any time prior to entry. The
comments and the response of the United States will be filed with the
Court and published in the Federal Register.
Written comments should be submitted to: J. Robert Kramer, II,
Chief, Litigation II Section, Antitrust Division, United States
Department of Justice, 1401 H Street, NW., Suite 3000, Washington, DC
20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
The United States considered, with respect to kaolin, simply
requiring divestiture of the DBK plant. Diverstitute of the DBK plant
has two advantages over divestiture of the Sandersville No. 1 water-
washed kaolin plant: (1) it would essentially put the purchaser in the
same position as Imetal before the tender offer; and (2) unlike
Sandersville No. 1, the DBK plant has been operated as a stand-alone
business and has a clear track record as such.
The United States ultimately adopted the framework of the proposed
Final Judgment, however, because it concluded that a divestiture of the
Sandersville No. 1 plant could, under the proper circumstances,
effectively redress the likely anticompetitive effects of the proposed
transaction. During the course of the investigation, defendant ECC
entered into pre-settlement negotiations and signed a preliminary
Letter of Intent with Thiele Kaolin Company for the sale of the
Sandersville No. 1 plant. A purchase by Thiele would cause higher
concentration than would result if the Sandersville No. 1 plant were
sold to a firm outside the kaolin industry. However, both defendants
and Thiele argued that the additional capacity would permit Thiele to
better compete for large paper customers against the two industry
leaders. While the United States did not ``pre-approve'' a sale to
Thiele--the parties did not have a definitive agreement, and their
Letter of Intent did not address at all some issues that would be
important to plaintiff's evaluation of any proposed sale--plaintiff
concluded that a divestiture of the type contemplated in the Letter of
Intent could satisfy the United States' competitive concerns with
respect to water-washed kaolin. Plaintiff therefore concluded that
defendants should be permitted to try to divest the Sandersville No. 1
plant if they so chose.
The United States also considered, as an alternative to the
proposed Final Judgment, a full trial on the merits against Imetal and
ECC. The United States is satisfied that the divestitures required by
the proposed Final Judgment will facilitate continued viable
competition in the four relevant product markets alleged in the
Complaint and will effectively prevent the anticompetitive effects that
the Complaint alleges would result from the proposed acquisition.
VII. Standard of Review Under the APPA for the Proposed Final
Judgment
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a sixty-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
[[Page 31638]]
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. Sec. 16(e). As the Court of Appeals for the District of
Columbia Circuit held, the APPA 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, 1458-62 (D.C. Cir. 1995).
The courts have recognized that the term ```public interest' take[s]
meaning from the purposes of the regulatory legislation.'' NAACP v.
Federal Power Comm'n, 425 U.S. 662, 669 (1976). Since the purpose of
the antitrust laws is to preserve ``free and unfettered competition as
the rule of trade,'' Northern Pacific Railway Co. v. United States, 356
U.S. 1, 4 (1958), the focus of the ``public interest'' inquiry under
the APPA is whether the proposed Final Judgment would serve the public
interest in free and unfettered competition. United States v. American
Cyanamid Co., 719 F.2d 558, 565 (2d Cir. 1983), cert. denied, 465 U.S.
1101 (1984); United States v. Waste Management, Inc., 1985-2 Trade Cas.
para.66,651, at 63,046 (D.D.C. 1985). In conducting this inquiry, ``the
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.''
\5\ Rather,
---------------------------------------------------------------------------
\5\ 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. Sec. 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. 93-1463, 93rd
Cong. 2d Sess. 8-9, reprinted in (1974) U.S. Code Cong. & Ad. News
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 evaluation of
what relief would best serve the public.'' United States v. BNS, Inc.,
858 F.2d 456, 462 (9th Cir. 1988), quoting United States v. Betchtel
Corp., 648 F.2d 660, 666 (9th Cir.), cert denied, 454 U.S. 1083 (1981).
See also Microsoft, 56 F.3d 1448 (D.C. Cir. 1995). 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.\6\
\6\ United States v. Bechtel, 648 F.2d at 666 (citations
omitted) (emphasis added); see United States v. BNS, Inc., 858 F.2d
at 463; United States v. National Broadcasting Co., 449 F. Supp.
1127, 1143 (C.D. Cal. 1979); United States v. Gillette Co., 406 F.
Supp. at 716. See also United States v. American Cyanamid Co., 719
F.2d at 565.
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A proposed consent decree in an agreement between the parties which
is reached after exhaustive negotiations and discussions. Parties do
not hastily and thoughtlessly stipulate to a decree because, in doing
so, they
waive their right to litigate the issues involved in the case and
thus save themselves the time, expense, and inevitable risk of
litigation. Naturally, the agreement reached normally embodies a
compromise; in exchange for the saving of cost and the elimination
of risk, the parties each give up something they might have won had
they proceeded with the litigation.
United States v. Armour & Co., 402 U.S. 673, 681 (1971).
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 proposed final
judgment requires a standard more flexible and less strict that 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.' (citations
omitted).'' \7\
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\7\ United States v. American Tel. and Tel Co., 552 F. Supp.
131, 150 (D.D.C. 1982), aff'd sub nom. Mayland v. United States, 460
U.S. 1001 (1983), Quoting United States v. Gillette Co., supra, 406
F. Supp. at 716; United States v. Alcan Aluminum, Ltd., 605 F. Supp.
619, 622 (W.D. Ky. 1985).
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VIII. Determinative Documents
The only determinative document, within the meaning of the APPA,
that was considered by the United States in formulating the proposed
Final Judgment is the preliminary Letter of Intent between defendant
ECC and Thiele Kaolin Company, a copy of which is attached as Exhibit
A.
Respectfully submitted.
Dated: May 24, 1999.
For Plaintiff United States of America:
Patricia G. Chick,
D.C. Bar #266403, Trial Attorney, U.S. Department of Justice, Antitrust
Division, 1401 H Street, N.W., Suite 3000, Washington, DC 20530,
Telephone: (202) 307-0946, Facsimile: (202) 514-9033.
Exhibit A
Exhibit A cannot 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, N.W., Room 215,
Washington, D.C. 20530, (202) 514-2481.
[FR Doc. 99-14470 Filed 6-10-99; 8:45 am]
BILLING CODE 4410-11-M
