[Federal Register Volume 63, Number 117 (Thursday, June 18, 1998)]
[Notices]
[Pages 33408-33418]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16216]
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DEPARTMENT OF JUSTICE
Antitrust Division
[Civil No. 96-2031]
Proposed Modified Final Judgment and Memorandum In Support of
Modification
Notice is hereby given that a Modified Final Judgment, Motion to
Modify Final Judgment, Memorandum in Support of the Modification of the
Final Judgment, Stipulation and Order, and Hold Separate Stipulation
and Order have been filed with the United States District Court in the
District of Columbia, in United States et al v. USA Waste Services,
Inc., et al., Civil No. 96-2031.
The existing Final Judgment stems from a 1996 acquisition of
Sanifill, Inc., by USA Waste. The Final Judgment was entered to resolve
competitive concerns that the Antitrust Division had about the impact
of the acquisition in Houston, Texas. Pursuant to the Final Judgment,
USA Waste divested Sanifill's small container commercial hauling assets
and a USA Waste disposal site in Houston and sold 2,000,000 tons of air
space rights for ten years at two USA Waste landfills in the Houston
area. The assets were purchased by TransAmerican Waste Industries, Inc.
On January 26, 1998, TransAmerican and USA Waste entered into an
agreement whereby TransAmerican would be merged into USA Waste, and the
Houston assets TransAmerican purchased from USA Waste would be owned by
USA Waste.
On May 5, 1998, the United States filed a proposed Modified Final
Judgment to modify the Final Judgment in this case. The United States
maintained that the proposed acquisition of TransAmerican's commercial
hauling and disposal assets in the Houston area would violate the
original Final Judgment. The proposed Modified Final Judgment requires
USA Waste to divest the TransAmerican commercial small container and
disposal assets in the Houston area and provide 2,000,000 tons of air
space rights for ten years at two USA Waste landfills in the Houston
area.
The Hold Separate Stipulation and Order and the Stipulation and
Order ensure that the provisions of the proposed Modified Final
Judgment will be observed and that the assets to be divested will be
held separate and maintained as a viable competitive entity until the
divestiture takes place.
Public comments on the proposed Modified Final Judgment should be
directed to J. Robert Kramer, Chief, Litigation II Section, Antitrust
Division, United States Department of Justice, 1401 H Street, NW, Suite
3000, Washington, DC 20530 (telephone: 202/307-0924). Such comments and
responses thereto will be filed with the Court.
Constance K. Robinson,
Director of Operations & Merger Enforcement.
Stipulation and Order
To further the objectives of the Modified Final Judgment filed with
the Court in this matter, it is stipulated by and between the United
States of America (``United States''), the State of Texas (``Texas''),
USA Waste Services, Inc. (``USA Waste''), and TransAmerican Waste
Industries, Inc. (``TransAmerican''), by their respective attorneys, as
follows:
1. The Court has jurisdiction over the subject matter of this
action and over the United States, Texas, USA Waste, and TransAmerican,
and venue of this action is proper in the United States District Court
for the District of Columbia.
2. The parties stipulate that a Modified Final Judgment in the form
hereto attached may be filed and entered by the Court, upon the motion
of any party or upon the Court's own motion, at any time after
completion of the procedures specified in the United States'
Explanation of Procedures filed herewith without further notice to any
party or other proceedings, provided that the United States and Texas
have not withdrawn their consent, which they may do at any time before
the entry of the proposed Modified Final Judgment by serving notice
thereof on USA Waste and TransAmerican and by filing that notice with
the Court.
3. USA Waste and TransAmerican shall abide by and comply with the
provisions of the proposed Modified Final Judgment pending entry of the
[[Page 33409]]
proposed Modified Final Judgment, or until expiration of time for all
appeals of any court ruling declining entry of the proposed Modified
Final Judgment, and shall, from the date of the signing of this
Stipulation, comply with all the terms and provisions of the proposed
Modified Final Judgment as though they were in full force and effect as
an order of the Court.
4. This Stipulation shall apply with equal force and effect to any
amended proposed Modified Final Judgment agreed upon in writing by the
parties and submitted to the Court.
5. In the event (a) the United States and Texas have withdrawn
their consent, as provided in paragraph 2 above, or (b) the proposed
Modified 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 Modified Final Judgment, and the Court has not
otherwise ordered continued compliance with the terms and provisions of
the proposed Modified Final Judgment, then the United States, Texas,
USA Waste, and TransAmerican 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.
6. USA Waste and TransAmerican represent that the divestiture
ordered in the proposed Modified Final Judgment can and will be made,
and that USA Waste and TransAmerican will later raise no claim of
hardship or difficulty as grounds for asking the Court to modify any of
the divestiture provisions contained therein.
Dated: May 5, 1998.
For the United States:
Frederick H. Parmenter
Virginia Bar No.: 18184, U.S. Department of Justice, Antitrust
Division, 1401 H Street, N.W., Suite 3000, Washington, D.C. 20530,
(202) 307-0620.
For the State of Texas
Dan Morales
Texas Attorney General.
Mark Tobey
Assistant Attorney General, Chief, Antitrust Section, Texas Bar No.:
20082960.
Kim Van Winkle
Assistant Attorney General, Texas Bar No.: 24003104.
Office of the Attorney General of Texas, P.O. Box 12548, Austin,
Texas 78711-2546, (512) 463-2185.
For USA Waste Services, Inc.
James R. Weiss
District of Columbia Bar No.: 379798, Preston, Gates, Ellis &
Rouvelas Meeds, 1735 New York Avenue, N.W., Suite 500, Washington,
D.C. 20006-5209, (202) 662-8425.
For TransAmerican Waste Industries, Inc.
J. David Green
Sr. Vice President & General Counsel, TransAmerican Waste
Industries, Inc., 10554 Tanner Road, Houston, Texas 77041, (713)
956-1212.
Order
It is So Ordered, this 6th day of May, 1998.
Gladys Kessler,
United States District Judge.
Modified Final Judgment
Whereas, the United States of America (``United States''), the
State of Texas (``Texas''), and the Commonwealth of Pennsylvania
(``Pennsylvania'') filed a Complaint in this action on August 30, 1996
and a Final Judgment was entered on December 17, 1996.
And whereas, the United States, Texas, USA Waste Services, Inc.
(``USA Waste'') and TransAmerican Waste Industries, Inc.
(``TransAmerican''), by their respective attorneys have consented to
the entry of this Modified Final Judgment without trial or adjudication
of any issue of fact or law herein, and without this Modified Final
Judgment constituting any evidence against or an admission by the
United States, Texas, USA Waste, or TransAmerican with respect to any
issue of law or fact herein;
And whereas, USA Waste and TransAmerican have agreed to be bound by
the provisions of this Modified Final Judgment pending its approval by
the Court.
And whereas, prompt and certain divestiture of the Houston
Divestiture Assets to assure that competition is not substantially
lessened in the Houston Area is the essence of this agreement;
And whereas, USA Waste and TransAmerican have represented to the
United States and Texas that the divestiture required below can and
will be made and that they will later raise no claims of hardship or
difficulty as grounds for asking the Court to modify any of the
divestiture provisions contained below;
And whereas, the United States and Texas believe that entry of this
Modified Final Judgment is in the Public Interest;
Now, therefore, it is hereby Ordered, Adjudged, and Decreed that
this Modified Final Judgment, shall modify the provisions in the Final
Judgment relating to the Houston Divestiture Assets and the Houston
area in the following ways:
I. Definitions
As used in this Modified Final Judgment:
A. Solid waste hauling means the collection and transportation to a
disposal site of municipal solid waste (but not construction and
demolition waste; medical waste; organic waste; special waste, such as
contaminated soil; sludge; or recycled materials) from residential,
commercial and industrial customers.
B. Solid waste disposal means the disposal of Type 1 or 4 solid
waste into disposal sites approved by the Texas Natural Resources
Conservation Commission for Type 1 or Type 4 waste. Type 1 waste is
municipal solid waste and Type 4 waste is dry waste such as
construction and demolition waste.
C. USA Waste means USA Waste Services, Inc., a Delaware corporation
with its headquarters in Houston. Texas, and its successors and
assigns, their subsidiaries, affiliates, directors, officers, managers,
agents and employees.
D. TransAmerican means TransAmerican Waste Industries, Inc., A
Delaware corporation with its headquarters in Houston, Texas and its
successors, and assigns, their subsidiaries, affiliates, directors,
officers, managers, agents and employees.
E. Houston Area means Harris County, Texas; Chambers County, Texas;
Brazoria County, Texas; Fort Bend County, Texas; Montgomery County,
Texas; Walker County, Texas; and Galveston County, Texas.
F. Houston Hauling Assets means the front load commercial business
of TransAmerican that provides solid waste hauling services in the
Houston Area. These assets include all customer lists, contracts and
accounts, including
[[Page 33410]]
all contracts for disposal of solid waste at disposal facilities, all
trucks, containers, equipment, material, and supplies associated with
these assets, and the garages, including all associated equipment,
located at 10554 Tanner Road, Houston, Texas, 77041 and 999 Ashland,
Channelview, Texas 77530.
G. Sunray Assets means the operating, permitted Type 4 landfill
(also known as the North County Landfill) and other related assets of
TransAmerican with an office at 2015 Wyoming in League City, Texas.
These assets include the current permit Number 1849 and permit
application Number 1849A filed with the Texas Natural Resources
Conservation Commission, all customers lists, contracts and accounts,
including all equipment, material, and supplies associated with these
assets.
H. Airspace Assets means the right to dispose, over a ten-year
period of up to a total of 2,000,000 tons of municipal solid waste in
amounts of up to a total of 270,000 tons per year at the Hazelwood
Landfill located at 4971 Tri-City Beach Road in Baytown, Texas and the
Brazoria County Landfill located at 10310 FM 523 in Angleton, Texas.
I. Houston Divestiture Assets refers to the Houston Hauling assets,
Sunray Assets, and Airspace Assets.
J. Small Container means a 1 to 10 cubic yard container.
II. Jurisdiction
This Court has jurisdiction over the subject matter of this action
and over the United States, Texas, USA Waste, and TransAmerican and
venue of this action is proper in the United States District Court for
the District of Columbia.
III. Applicability
A. The provisions of this Modified Final Judgment apply to USA
Waste and TransAmerican, their successors and assignees, their
subsidiaries, affiliates, 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 Modified
Final Judgment by personal service or otherwise.
B. USA Waste and TransAmerican shall require, as a condition of the
sale or other disposition of all or substantially all of the Houston
Divestiture Assets, that the acquiring party or parties agree to be
bound by the provisions of this Modified Final Judgment.
IV. Divestiture of Assets
A. USA Waste and TransAmerican agree within 90 days from the filing
of this Modified Final Judgment to divest the Houston Divestiture
Assets, unless the United States, after consultation with Texas,
consents that only some portion of the Houston Divestiture Assets need
be divested. USA Waste and TransAmerican further agree to notify the
United States and Texas in writing immediately when they have completed
the divestitures.
B. Unless the United States, after consultation with Texas,
otherwise consents, divestiture under Section IV.A, or by the trustee
appointed pursuant to Section V, shall be accomplished in such a way as
to satisfy the United States, in its sole determination after
consultation with Texas, that the Houston Hauling Assets can and will
be operated by the purchaser as a viable, ongoing business engaged in
solid waste hauling, and that the Sunray Assets can and will be
operated by the purchases as a viable, ongoing business engaged in
solid waste disposal in the Houston Area. Divestiture under Section
IV.A or by the trustee, shall be made to a purchaser or purchasers for
whom it is demonstrated to the satisfaction of the United States, after
consultation with Texas, that (1) the purchase or purchases is or are
for the purpose of competing effectively in solid waste hauling, dry
waste disposal, or both, and (2) the purchaser or purchasers has or
have the managerial, operational, and financial capability to compete
effectively in solid waste hauling and/or disposal.
C. In accomplishing the divestitures ordered by this Modified Final
Judgment, USA Waste and TransAmerican promptly shall make known, by
usual and customary means, the availability of the Houston Divestiture
Assets described in this Modified Final Judgment. USA Waste and
TransAmerican shall inform any person making an inquiry regarding a
possible purchase that the sale is being made pursuant to this Modified
Final Judgment and provide such person with a copy of this Modified
Final Judgment. USA Waste and TransAmerican shall also offer to furnish
to all bona fide prospective purchasers, subject to customary
confidentiality assurances, all information regarding the Houston
Divestiture Assets customarily provided in a due diligence process
except such information subject to attorney-client or work-product
privileges. USA Waste and TransAmerican shall make available such
information to the United States and Texas at the same time such
information is made available to any other person. In giving notice of
the availability of the Houston Hauling Assets, defendants shall not
exclude any persons bound by any non-compete obligations to Sanifill,
Inc., or TransAmerican.
D. USA Waste and TransAmerican shall not require of the purchaser
or purchasers, as a condition of sale, that any current employee of the
Houston Divestiture Assets be offered or guaranteed continued
employment after the divestiture.
E. USA Waste and TransAmerican shall take all reasonable steps to
accomplish quickly the divestiture contemplated by this Modified Final
Judgment.
F. As part of the sale of the Airspace Assets, USA Waste and
TransAmerican will include an agreement to accept waste from the
purchaser or anyone designated by the purchaser to dispose of waste at
the landfills. As agents of the purchaser, USA Waste and TransAmerican
will operate the gate, scale house, and disposal area under terms and
conditions no less favorable than those provided to USA Waste's and
TransAmerican's vehicles or the vehicles of any municipality in the
Houston Area, except as to price and credit terms.
V. Appointment of Trustee
A. In the event that USA Waste and TransAmerican have not divested
all of their assets required by Section IV.A by the time set forth in
Section IV.A, the Court shall, on application of the United States,
after consultation with Texas, appoint a trustee selected by the United
States to effect the divestiture required by Section IV.A. After the
appointment of a trustee becomes effective, only the trustee shall have
the right to sell the assets required to be divested pursuant to
Section IV.A. The trustee shall have the power and authority to
accomplish the divestiture at the best price then obtainable upon a
reasonable effort by the trustee, subject to the provisions of Section
VI of this Final Judgment, and shall have such other powers as the
Court shall deem appropriate. USA Waste and TransAmerican shall not
object to a sale by the trustee on any grounds other than the trustee's
malfeasance, or on the grounds that the sale is contrary to the express
terms of this Modified Final Judgment. Any such objections by USA Waste
or TransAmerican must be conveyed in writing to the United States,
Texas, and the trustee within ten (10) days after the trustee has
provided the notice required under Section VI.
B. The trustee shall serve the cost and expense of USA Waste and
TransAmerican, on such terms and conditions as the Court may prescribe,
and shall account for all monies derived from the sale of the assets
sold by the
[[Page 33411]]
trustee and all costs and expenses so incurred. After approval by the
Court of the trustee's accounting, including fees for its services, all
remaining money shall be paid to USA Waste and TransAmerican and the
trust shall then be terminated. The compensation of such trustee shall
be reasonable 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.
C. USA Waste and TransAmerican shall use their best efforts to
assist the trustee in accomplishing the required divestiture. The
trustee and any consultants, accountants, attorneys, and other persons
retained by the trustee shall have full and complete access to the
personnel, books, records, and facilities of the Houston Divestiture
Assets, and USA Waste and TransAmerican shall develop financial or
other information relevant to such assets as the trustee may reasonably
request, subject to reasonable protection for trade secret or other
confidential research, development, or commercial information. USA
Waste and TransAmerican shall take no action to interfere with or to
impede the trustee's accomplishment of the divestiture.
D. After its appointment, the trustee shall file monthly reports
with the United States, Texas, USA Waste, TransAmerican, and the Court
setting forth the trustee's efforts to accomplish the divestiture
ordered under this Modified Final Judgment. If the trustee has not
accomplished such divestiture within six months after its appointment,
the trustee shall thereupon promptly file with the Court a report
setting forth (1) the trustee's efforts to accomplish the required
divestiture, (2) the reasons, in the trustee's judgment, why the
required divestiture has not been accomplished, and (3) the trustee's
recommendations. The trustee shall at the same time furnish such report
to the United States, Texas, USA Waste, and TransAmerican, who shall
each have the right to be heard and to make additional recommendations
consistent with the purpose of the trust. The Court shall thereafter
enter such orders as it shall deem appropriate in order to carry out
the purpose of the trust, which may, if necessary, include extending
the trust and the term of the trustee's appointment by a period
requested by the United States, after consultation with Texas.
E. USA Waste and TransAmerican shall give 30 days notice to the
United States and Texas prior to acquiring any interest that is not
otherwise reportable under the Hart-Scott-Rodino Act in any assets,
capital stock, or voting securities, other than in the ordinary course
of business, of any person that, at any time during the twelve months
immediately preceding the acquisition, was engaged in the solid waste
hauling industry in the Houston Area where the person had small
container revenues in excess of $500,000 per year or total revenues in
excess of $1 million per year. However, nothing herein shall preclude
USA Waste or TransAmerican from acquiring less than five (5) percent of
the stock of a publicly traded company.
F. USA Waste and TransAmerican shall give 30 days notice to the
United States and Texas prior to acquiring any interest that is not
otherwise reportable under the Hart-Scott-Rodino Act in any assets,
capital stock, or voting securities, other than in the ordinary course
of business, of any person that, at any time during the twelve months
immediately preceding the acquisition, was engaged in the municipal
solid waste or dry waste disposal industry in the Houston Area, where
the revenues of that person, when aggregated with the revenues of any
person or persons acquired in the previous six months, exceed the
revenue limits of paragraph E above. However, nothing herein shall
preclude USA Waste or TransAmerican from acquiring less than five (5)
percent of the stock of a publicly traded company.
G. The purchaser or purchasers of the Houston Divestiture Assets,
or any of them, shall not, without the prior written consent of the
United States, after consultation with Texas, sell any of those assets
to, or combine any of those assets with, those of USA Waste or
TransAmerican during the life of this Modified Final Judgment.
Furthermore, the purchaser or purchasers of the Houston Divestiture
Assets, or any of them, shall notify the United States and Texas 45
days in advance of any proposed sale of all or substantially all of the
assets, or change in control over those assets, acquired pursuant to
this Modified Final Judgment.
VI. Notification
A. USA Waste, TransAmerican, or the trustee, whichever is then
responsible for effecting the divestiture required herein, shall notify
the United States and Texas of any proposed divestiture required by
Section IV or V of this Modified Final Judgment. If the trustee is
responsible, it shall similarly notify USA Waste and TransAmerican. The
notice shall set forth the details of the proposed transaction and list
the name, address, and telephone number of each person not previously
identified who offered or expressed an interest or desire to acquire
any ownership interest in the Houston Divestiture Assets or any of
them, together with full details of the same. Within fifteen (15) days
after receipt of the notice, the United States and TransAmerican may
request additional information concerning the proposed divestiture, the
proposed purchaser and any other potential purchaser. USA Waste and
TransAmerican or the trustee shall furnish the additional information
within fifteen (15) days of the receipt of the request. Within thirty
(30) days after receipt of the notice or within fifteen (15) days after
receipt of the additional information, whichever is later, the United
States, after consultation with Texas, shall notify in writing USA
Waste and TransAmerican and the trustee, if there is one, if it objects
to the proposed divestiture. If the United States fails to object
within the period specified, or if the United States notifies in
writing USA Waste and TransAmerican and the trustee, if there is one,
that it does not object, then the divestiture may be consummated,
subject only to USA Waste's and TransAmerican's limited right to object
to the sale under Section V.A. Upon objection by the United States,
after consultation with Texas, or by USA Waste and TransAmerican under
Section V.A, the proposed divestiture shall not be accomplished unless
approved by the Court.
B. Thirty (30) days from the date when USA Waste and TransAmerican
consummate the acquisition, but in no event later than May 30, 1998,
and every thirty (30) days thereafter until the divestiture has been
completed, USA Waste and TransAmerican shall deliver to the United
States and Texas a written report as to the fact and manner of
compliance with Section IV of this Modified Final Judgment. Each such
report shall include, for each person who during the preceding thirty
(30) days made an offer, expressed an interest or desire to acquire,
entered into negotiations to acquire, or made an inquiry about
acquiring any ownership interest in the Houston Divestiture Assets or
any of them, the name, address, and telephone number of that person and
a detailed description of each contact with that person during that
period. USA Waste and TransAmerican shall maintain full records of all
efforts made to divest the Divestiture Assets or any of them.
VII. Financing
USA Waste and TransAmerican shall not finance all or any part of
any purchase made pursuant to Section IV or V of this Modified Final
Judgment without the prior written consent of the
[[Page 33412]]
United States, after consultation with Texas.
VIII. Preservation of Assets
Until the divestitures required by the Modified Final Judgment have
been accomplished:
A. USA Waste and TransAmerican shall take all steps necessary to
ensure that the Houston Hauling Assets will be maintained and operated
in the ordinary course of business and consistent with past practices,
and shall (1) maintain all insurance policies and all permits that are
required for the operation of the assets, and (2) maintain books of
account and records in the usual, regular, and ordinary manner and
consistent with past practices.
B. USA Waste and TransAmerican shall take all steps necessary to
ensure that the Sunray Assets will be maintained and operated as an
independent, ongoing, economically viable and active competitor in the
provision of dry waste disposal services in the Houston Area, with
management operations, books, records and competitively-sensitive
sales, marketing and pricing information and decision-making kept
separate and apart from, and not influenced by, that of TransAmerican's
solid waste hauling and disposal business.
C. USA Waste and TransAmerican shall use all reasonable efforts to
maintain and increase sales of solid waste hauling and disposal
services provided by the Houston Divestiture Assets, and they shall
maintain at 1997 or previously approved levels, whichever is higher,
promotional, advertising, sales, marketing and merchandising support
for such services.
D. USA Waste and TransAmerican shall take all steps necessary to
ensure that the Houston Divestiture Assets are fully maintained in
operable condition, and shall maintain and adhere to normal or
previously approved repair, improvement and maintenance schedules for
the Houston Divestiture Assets.
E. USA Waste and TransAmerican shall not, except as part of a
divestiture approved by the United States and Texas, remove, sell or
transfer any Houston Divestiture Assets, other than solid waste hauling
and disposal services provided in the ordinary course of business.
F. USA Waste and TransAmerican shall take no action that would
jeopardize the sale of the Houston Divestiture Assets.
G. USA Waste and TransAmerican shall appoint a person with
oversight responsibility for the Houston Divestiture Assets to insure
compliance with this section of the Modified Final Judgment.
IX. Compliance Inspection
For the purpose of determining or securing compliance with this
Modified Final Judgment, and subject to any legally recognized
privilege, from time to time.
A. Duly authorized representatives of the United States and Texas
including consultants and other persons retained by the plaintiffs,
shall, upon the written request of the Assistant Attorney General in
charge of the Antitrust Division or the Attorney General of the State
of Texas, respectively, and on reasonable notice to USA Waste and
TransAmerican made to its principal offices, be permitted:
1. Access during office hours to inspect and copy all books,
ledgers, accounts, correspondence, memoranda, and other records and
documents in the possession or under the control of USA Waste and
TransAmerican, which have counsel present, relating to any matters
contained in this Modified Final Judgment; and
2. Subject to the reasonable convenience of USA Waste and
TransAmerican and without restraint or interference from them, to
interview their directors, officers, employees, and agents who may have
counsel present, regarding any such matters.
B. Upon the written request of the Assistant Attorney General in
charge of the Antitrust Division or the Attorney General of the State
of Texas, respectively, made to USA Waste and TransAmerican at their
principal offices, USA Waste and TransAmerican shall submit such
written reports, under oath if requested, with respect to any of the
matters contained in this Modified Final Judgment as may be requested.
C. No information nor any documents obtained by the means provided
in this Section IX shall be divulged by any representative of the
United States or the Office of the Attorney General of Texas to any
person other than a duly authorized representative of the Executive
Branch of the United States or of the Office of the Attorney General of
Texas, except in the course of legal proceedings to which the United
States or Texas is a party (including grand jury proceedings), or for
the purpose of securing compliance with this Modified Final Judgment,
or as otherwise required by law.
D. If at the time information or documents are furnished by USA
Waste and TransAmerican to the United States and Texas, USA Waste and
TransAmerican represent and identify in writing the material in any
such information or documents for which a claim of protection may be
asserted under rule 26(c)(7) of the Federal Rules of Civil Procedure,
and USA Waste and TransAmerican 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 the United States and Texas
shall give ten (10) days notice to USA Waste and TransAmerican prior to
divulging such material in any legal proceeding (other than a grand
jury proceeding) to which USA Waste or TransAmerican is not a party.
X. Retention of Jurisdiction
Jurisdiction is retained by this Court for the purpose of enabling
any of the parties to this Modified 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, implementation, or
modification of any of the provisions of this Modified Final Judgment,
for the enforcement of compliance herewith, and for the punishment of
any violations hereof.
XI. Termination
This Modification Final Judgment will expire on the tenth
anniversary of the date of its entry.
XII. Public Interest
Entry of this Modified Final Judgment is in the public interest.
Dated:-----------------------------------------------------------------
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United States District Judge
Certificate of Service
I hereby certify that copies of the Modified Final Judgment, Motion
of the United States and Texas for Modification of the Final Judgment,
United States' Explanation of Procedures, Hold Separate Stipulation and
Order, Stipulation and Order, and Memorandum of the United States in
Support of Modification of the Final Judgment have been served upon USA
Waste Services, Inc., TransAmerican Waste Industries, Inc., and the
Office of the Attorney General of Texas, by placing copies of the
foregoing documents in the U.S. Mail, directed to each of the foregoing
parties at the addresses given below, this 6th day of May, 1998.
USA Waste Services, Inc., c/o James R. Weiss, Esq., Preston, Gates,
Ellis & Rouvelas Meeds, Suite 500, 1735 New York Avenue, NW.,
Washington, DC 20006-5209.
TransAmerican Waste Industries, Inc., J. David Green, Esq., Sr. Vice
President
[[Page 33413]]
and General Counsel, 10554 Tanner Road, Houston, Texas 77041.
Mark Tobey, Assistant Attorney General, Chief, Antitrust Section,
Office of the Attorney General of Texas, P.O. Box 12548, Austin, Texas
78711-2546.
Frederick H. Parmenter,
U.S. Department of Justice, Antitrust Division, 1401 H Street, NW.,
Suite 3000, Washington, DC 20530.
Memorandum of the United States and Texas in Support of
Modification of the Final Judgment
The United States of America (``United States'') and the State of
Texas (`'Texas'') submit this memorandum in support of their motion to
modify the Final Judgment entered in the above-captioned matter. Filed
with the memorandum is a Stipulation and Order, a Hold Separate
Stipulation and Order, a Motion for Modification of the Final Judgment,
an Explanation of Procedures, and a proposed Modified Final Judgment.
In accordance with the provisions of the Stipulation and Order, USA
Waste Services, Inc. (``USA Waste'') and TransAmerican Waste
Industries, Inc. (``TransAmerican'') have agreed to be bound by the
Modified Final Judgment following consummation of the merge and pending
entry of the Modified Final Judgment. Similarly, in accordance with the
Hold Separate Stipulation and Order, USA Waste and TransAmerican have
agreed to hold the Houston Divestiture Assets separate and maintain
them as competitively viable entities after the consummation of the
merger and entry of the Modified Final Judgment. The proposed Modified
Final Judgment only modifies the provisions of the Final Judgment
relating to the Houston, Texas area. It does not have any impact, and
is not meant to have any impact, on the provisions relating to
Johnstown, Pennsylvania. The modifications are necessary to ensure that
the original intent of the Final Judgment, to prevent competition from
being lessened in the Houston refuse hauling and disposal markets, is
preserved. Consequently, the modifications are in the public interest.
I. Background
On August 30, 1996, the United States filed a civil antitrust
Complaint in the above-styled action alleging that the proposed
acquisition of the voting stock of Sanifill, Inc. (``Sanifill'') by USA
Waste would violate Section 7 of the Clayton Act, 15 U.S.C. 18. The
Complaint alleged that the combination of these competitors would
lessen competition substantially in the provision of small
containerized waste hauling services and landfill disposal services in
the Houston, area, among other geographic locations. The Houston area
encompasses Harris County, Texas; Chambers County, Texas; Brazoria
County, Texas; Fort Bend Count, Texas; Montgomery County, Texas; Walker
County, Texas; and Galveston County, Texas, including the
municipalities located, in whole or in part, in those counties
(``Houston market'').
When the Complaint was filed, the United States also filed a
proposed settlement that was set forth in a proposed Final Judgment
that permitted USA Waste to complete its acquisition of Sanifill, but
required certain divestitures that would preserve competition in the
Houston area. On December 17, 1996 after the comment period required by
the Antitrust Penalties & Procedures Act (``APPA''), 15 U.S.C. 16, had
passed, the Court entered the Final Judgment finding that it was in the
public interest. On January 31, 1997, various waste hauling and
disposal assets located in the Houston area where purchased by
TransAmerican from USA Waste. Section V.G. of the Final Judgment
required: (1) the purchaser of the divested hauling and disposal assets
(e.g., Trans-American) to give the United States and Texas 45 days
notice in advance of any sale of the assets, and (2) the purchaser
would not sell the divested assets to be defendants (e.g., USA Waste)
during the life of the decree.
On February 26, 1998, TransAmerican notified the United States and
Texas, as required by the Final Judgment, that TransAmerican had
undertake to merge itself with USA Waste. The proposed merger of
TransAmerican with USA Waste would permit USA Waste to acquire the
TransAmerican Houston assets that TransAmerican was prohibited from
selling to USA Waste by the Final Judgment. On April 9, 1998, the
United States sent a letter to USA Waste and TransAmerican notifying
them that based on its investigation and consultation with Texas, it
could not give its consent to USA Waste's proposed purchase of the
Houston assets. The United States and Texas were concerned that the
acquisition would substantially lessen competition in the provision of
small containerized waste hauling services and landfill disposal
services in the Houston area. USA Waste and TransAmerican were
substantially informed that the United States would undertake to
enforce the Final Judgment if concerns about small containerized
hauling and landfills in the Houston market were not resolved. The
assets in the Houston area which were of concern to the United States
that USA Waste would require through the merger were: (1) the
TransAmerican frontload commercial assets (``Houston Hauling Assets``).
(2) a TransAmerican Type 4 landfill and related assets (``the Sunray
Assets''), and (3) the rights TransAmerican had acquire to dispose of
2,000,000 tons of municipal solid waster (``MSW'') for ten years at a
maximum rate of 270,000 tons a year at the USA Waste Hazlewood Landfill
located at 4791 Tri-City Beach Road, Baytown, Texas 77520 and the USA
Waste Brazoria County Landfill located at 10310 FM 523, Angleton,
Texas. (``Airspace Assets''). Together the Houston Hauling Assets,
Sunray Assets, and Airspace Assets are known as the Houston Divestiture
Assets.
To prevent competition from being substantially lessened for small
containerized hauling and landfill disposal in the Houston area, and to
permit USA Waste to complete TransAmerican's merger with USA Waste, the
United States has filed with the Court a proposed settlement that
supplements the Final Judgment entered by the Court on December 17,
1996. It requires USA Waste to divest the Houston Divestiture Assets.
The proposed Modified Final Judgment orders USA Waste to divest the
Houston Divestiture Assets. In addition, USA Waste must complete the
divestiture of the Houston Divestiture Assets within ninety (90) days
after the date on which the proposed Modified Final Judgment was filed
(i.e., May 6, 1998), in accordance with the procedures specified
therein.
The Stipulation and Order, Hold Separate Stipulation and Order, and
proposed Modified Final Judgment require USA Waste to ensure that,
until the divestitures mandated by the proposed Modified Final Judgment
have been accomplished, the Houston Hauling Assets and the Sunray
Assets will be maintained and operated as an independent, ongoing,
economically viable and active competitor. USA Waste must preserve and
maintain the assets to be divested as salable, ongoing concerns, with
competitively sensitive business information and decision-making
divorced from that of USA Waste. USA Waste will appoint a person or
persons to monitor and ensure its compliance with these requirements of
the proposed Modified Final Judgment.
The United States, Texas, USA Waste, and TransAmerican have
stipulated that the proposed Modified Final Judgment may be entered
after compliance with the 60-day comment period provided for in the
United States' Explanation of
[[Page 33414]]
Procedures. Entry of the proposed Modified Final Judgment would
terminate any need for action regarding the proposed merger of
TransAmerican with USA Waste, except that the Court would retain
jurisdiction to construe, modify, or enforce the provisions of the
proposed Modified Final Judgment and to punish violations thereof.
II. Description of the Events Giving Rise to the Proposed Modified
Final Judgment
USA Waste is a Delaware corporation with its principal office in
Houston, Texas. USA Waste is engaged in providing nonhazardous solid
waste hauling and/or disposal in 49 states and the District of
Columbia. In 1997, USA Waste had total revenues of over $1.6 billion.
TransAmerican is a Delaware corporation with its principal office
in Houston, Texas. TransAmerican is engaged in providing nonhazardous
solid waste hauling and/or disposal in five states. In 1996
TransAmerican had total revenues of over $16 million.
On January 26, 1998, USA Waste entered into an agreement and plan
of merger whereby TransAmerican's stock would be acquired for
approximately $125,470,000. This transaction is of concern to the
United States and Texas because it would take place in the highly
concentrated Houston small container hauling and landfill disposal
industries and violate the December 17, 1996 Final Judgment entered in
this action.
The Transaction's Effects in the Houston Market
A. The Solid Waste Hauling Industry
The United States asserts that small containerized hauling services
and landfill disposal services constitute lines of commerce, or
relevant product markets, for antitrust purposes, and that the Houston
area constitutes an appropriate section of the country, or relevant
geographic market. The United States maintains that the effect of USA
Waste's acquisition may be to lessen competition substantially in the
provision of small containerized hauling services and landfill disposal
services in the Houston market. As a result, when USA Waste undertook
to acquire TransAmerican, the United States took the position that USA
Waste could not obtain the small containerized hauling and landfill
assets it divested to TransAmerican 18 months ago to resolve
anticompetitive concerns that arose in August 1996, when USA Waste
purchased Sanifill.
Solid waste hauling involves the collection of paper, food,
construction material and other solid waste from homes, businesses and
industries, and the transporting of that waste to a landfill or other
disposal site. These services may be provided by private haulers
directly to residential, commercial and industrial customers, or
indirectly through municipal contracts and franchises.
Service to commercial customers accounts for a large percentage of
total hauling revenues. Commercial customers include restaurants, large
apartment complexes, retail and wholesale stores, office buildings, and
industrial parks. These customers typically generate a substantially
larger volume of waste than that generated by residential customers.
Waste generated by commercial customers is generally placed in metal
containers of one to ten cubic yards provided by their hauling company.
One to ten cubic yard containers are called ``small containers.'' Small
containers are collected primarily by front-end load vehicles that lift
the containers over the front of the truck by means of a hydraulic
hoist and empty them into the storage section of the vehicle, where the
waste is compacted. Specially-rigged rear-end load vehicles can also be
used to service some small container customers, but these trucks
generally are not as efficient as front-end load vehicles and are
limited in the size of containers they can safely handle. Front-end
load vehicles can drive directly up to a container and hoist the
container in a manner similar to a forklift hoisting a pallet; the
containers do not need to be manually rolled into position by a truck
crew as with a rear-end load vehicle. Service to commercial customers
that use small containers is called ``small containerized hauling
service.''
Solid waste hauling firms also provide service to residential and
industrial (or ``roll-off'') customers. Residential customers,
typically households and small apartment complexes that generate small
amounts of waste, use noncontainerized solid waste hauling service,
normally placing their waste in plastic bags or trash cans at curbside.
Rear-end load vehicles are generally used to collect waste from
residential customers and from those commercial customers that generate
relatively small quantities of solid waste, similar in amount and kind
to those generated by residential customers. Generally, rear-end
loaders use a two or three person crew to manually load the waste into
the rear of the vehicle.
Industrial or roll-off customers include factories and construction
sites. These customers either generate non-compactible waste, such as
concrete or building debris, or very large quantities of compactible
waste. They deposit their waste into very large containers (usually 20
to 40 cubic yards) that are loaded onto a roll-off truck and
transported individually to the disposal site where they are emptied
before being returned to the customer's premises. Customers, like
shopping malls, use large, roll-off containers with compactors. This
type of customer generally generates compactible trash, like cardboard,
in very great quantities, it is more economical for this type of
customer to use roll-off service with a compactor than to use a number
of small containers picked up multiple times a week.
There are no practical substitutes for small containerized hauling
service. Small containerized hauling service customers will not
generally switch to noncontainerized service because it is too
impractical and costly for those customers to bag and carry their trash
to the curb for hand pick-up. Small containerized hauling service
customers also value the cleanliness and relative freedom from
scavengers afforded by that service. Similarly, roll-off service is
much too costly and takes up too much space for most small
containerized hauling service customers. Only customers that generate
the largest volumes of solid waste can economically consider roll-off
service, and for customers that do generate large volumes of waste,
roll-off service is usually the only viable option.
Solid waste hauling services are generally provided in very
localized areas. Route density (a large number of customers that are
close together) is necessary for small containerized solid waste
hauling firms to be profitable. In addition, it is not economically
efficient for trash hauling equipment to travel long distances without
collecting significant amounts of waste. Thus, it is not efficient for
a hauler to serve major metropolitan areas from a distant base.
Haulers, therefore, generally establish garages and related facilities
within each major local area served.
The United States asserts that USA Waste's acquisition of
TransAmerican would substantially lessen competition for the provisions
of small containerized hauling service in the Houston market. Actual
and potential competition between USA Waste and TransAmerican for the
provision of small containerized hauling service in the Houston market
will be eliminated.
USA Waste and TransAmerican are two of the largest providers of
small
[[Page 33415]]
containerized hauling service in the Houston market. In the Houston
market, USA Waste has 28 percent share and TransAmerican has a 7
percent share. The acquisition would give USA Waste a 35 percent share
of the market.
Solid waste hauling is an industry highly susceptible to tacit or
overt collusion among competing firms. Overt collusion has been
documented in more than a dozen criminal and civil antitrust cases
brought in the last decade and a half. Such collusion typically
involves customer allocation and price fixing, and where it has
occurred, has been shown to persist for many years.
The elimination of one of a small number of significant
competitors, such as would occur as a result of the proposed
transaction in the alleged market, significantly increases the
likelihood that consumers in these markets are likely to face higher
prices or poorer quality service. A new entrant cannot constrain the
prices of larger incumbents until it achieves minimum efficient scale
and operating efficiencies comparable to the incumbent firms. In small
containerized hauling service, achieving comparable operating
efficiencies requires achieving route density comparable to existing
firms, which typically takes a substantial period of time. A
substantial barrier to entry is created by the use of long-term
contracts coupled with selective pricing reductions to specific
customers to deter new entrants into small containerized hauling
service and to hinder them in winning enough customers to build
efficient routes. Further, even if a new entrant endures and grows to a
point near minimum efficient scale, the entrant will often be purchased
by an incumbent firm and will be removed as a competitive threat.
B. Landfill Disposal Services
Most commercial solid waste is taken by haulers to landfills for
disposal. Access to a suitable municipal solid waste (``MSW'') landfill
at a competitive price is essential to a hauling company performing
commercial containerized hauling service because disposal costs account
for approximately 30-50 percent of the revenues received for this
service. Suitable MSW landfills are difficult and time consuming to
obtain because of the scarcity of appropriate land, high capital cost,
local resident opposition, and government regulation. Several years are
required to process an application, with no guarantee of success.
In Texas, dry waste can be taken to what is referred to as a dry
waste (Type 4) landfill. Access to a suitable landfill at a competitive
price is essential to a hauling company collecting dry waste because
disposal costs can account for over 60% of the revenues for this
service. Dry waste landfills are difficult and time consuming to obtain
because to permit and build a Type 4 landfill in Texas, one must go
through a process similar to that for permitting a Type 1 landfill.
Several years are required to process an application, with no guarantee
of success.
TransAmerican's merger with USA Waste will substantially lessen
competition for landfill service in the Houston market. Actual and
potential competition between USA Waste and TransAmerican for the
provision of MSW and dry waste landfill service in the Houston market
will be eliminated. USA Waste is the largest owner of dry waste
landfill services in the Houston market. In the Houston area, there are
18 Type 4 landfills in the Houston area. USA Waste has eleven dry waste
landfills (four operating) and TransAmerican has one. Concerning Type 1
MSW landfills, there are nine in the Houston area that are owned by
three firms. Through the Final Judgment, TransAmerican obtained access
to the USA Waste Type 1 landfills for a period of ten years thereby
assuring it disposal access for the MSW it hauls.
As a result of the acquisition, the concentration of dry waste
landfill services in the Houston market will be substantially
increased, which is likely to result in price increases. Furthermore, a
small containerized hauling competitor with guaranteed access to Type 1
landfills will be removed from the Houston area. In the Houston market,
there are no alternative types of facilities available for the disposal
of either MSW waste or dry waste. Although dry waste can be taken to
either a MSW or a dry waste landfill, prices at the MSW landfill are
significantly higher than at the dry waste landfill, so that MSW
landfills are not normally used for dry waste. Accordingly, haulers are
not likely to switch to another disposal service despite an increased
concentration in the ownership of MSW or dry landfills and a likely
price increase resulting from the merger.
C. Harm to Competition as a Consequence of the Acquisition
The United States asserts that the transaction would have the
following effects, among others: competition for the provision of small
containerized hauling service and landfill disposal service in the
Houston market will be substantially lessened; actual and potential
competition between USA Waste and TransAmerican in the provision of
small containerized hauling service and landfill disposal service in
the Houston market will be eliminated; and prices for small
contianerized hauling service and landfill disposal service in the
Houston market are likely to increase above competitive levels.
III. Explanation of the Proposed Modified Final Judgment
The provisions of the proposed Modified Final Judgment are designed
to eliminate the anticompetitive effects of the acquisition in small
containerized hauling services in the Houston market by ensuring that
the intent of the provisions of the Final Judgment relating to the
Houston market and the Houston Divestiture Assets entered by the Court
on December 17, 1996 are enforced and a new, independent and
economically viable competitor is established in the Houston market.
The proposed Modified Final Judgment requires USA Waste and
TransAmerican, within 90 days of May 6, 1998, to divest, as viable
ongoing business, the Houston Hauling Assets, Sunray Assets and the
Airspace Assets. The divestitures would include the small containerized
hauling service assets, landfill disposal assets, and such other assets
as may be necessary to ensure the viability of the small container and
landfill businesses. If USA Waste and TransAmerican cannot accomplish
these divestitures within the above-described period, the proposed
Modified Final Judgment provides that, upon application (after
consultation with Texas) by the United States, the Court will appoint a
trustee to effect divestiture.
The proposed Modified Final Judgment provides that these assets
must be divested in such a way as to satisfy the United States (after
consultation with Texas) that the operations can and will be operated
by the purchaser or purchasers as viable, ongoing businesses that can
compete effectively in the relevant market. USA Waste and TransAmerican
must take all reasonable steps necessary to accomplish the
divestitures, shall cooperate with bona fide prospective purchasers
and, if one is appointed, with the trustee.
If a trustee is appointed, the proposed Modified Final Judgment
provides that USA Waste and TransAmerican will pay all costs and
expenses of the trustee. The trustee's commission will be structured so
as to provide an incentive for the trustee based on the price obtained
and the speed with which divestiture is accomplished. After his or her
appointment becomes effective, the
[[Page 33416]]
trustee will file monthly reports with the United States, Texas, USA
Waste, TransAmerican and the Court, setting forth the trustee's efforts
to accomplish divestiture. At the end of six months, if the divestiture
has not been accomplished, the trustee and the United States, Texas,
USA Waste, and TransAmerican 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 or the term of the
trustee's appointment.
In addition, the proposed Modified Final Judgment intends to
eliminate the anticompetitive effects of the acquisition in the Houston
Area market for MSW disposal services by requiring USA Waste and
TransAmerican to sell the rights to dispose of 2 million tons of MSW
waste over ten years at USA Waste's only two MSW landfills in the area.
The proposed Modified Final Judgment limits the amount disposed of in
any one year to 270,000 tons and requires that USA Waste will provide
the necessary services to dispose of the waste to the purchaser or any
agents designated by the purchaser in a nondiscriminatory manner. The
availability of this landfill capacity helps to ensure the success of
any entity purchasing the Houston Hauling Assets in competing with
other haulers in the Houston market.
Pursuant to its terms, the proposed Modified Final Judgment
mandates that USA Waste and TransAmerican divest TransAmerican's sole
dry waste (Type 4) landfill (the North County Landfill) in the Houston
area market. The divestiture of the North County Landfill will help
moderate any possible anticompetitive effect related to the merger and
its impact on dry waste landfills in the Houston area market.
Finally, the requirement of the proposed Modified Final Judgment
that USA Waste and TransAmerican provide 30 days written notice of any
proposed purchase of significant waste hauling or disposal companies in
the Houston market ensures that the U.S. Department of Justice and the
State of Texas General's Office will be able to review, consider and
oppose if necessary any future consolidation in the market for a period
of ten years.
IV. Modification is in the Public Interest
Uncontested motions to modify the Final Judgment are granted if the
proposed modification is within the reaches of the public interest.
See, e.g., United States v. Western Electric Co., 993 F.2d 1572, 1576
(D.D.C. 1993) (Citing United States v. Western Electric Co., 900 F.2d
283, 307 (D.D.C. 1990) (hereinafter Triennial Review)). In the context
of an uncontested motion to modify an existing consent decree, the
``public interest'' standard ``directs the district court to approve an
uncontested modification so long as the resulting array of rights and
obligations is within the zone of settlements consonant with the public
interest today.'' United States v Western Electric 1993 F.2d at 1576
(quoting Triennial Review, 900 F.2d at 307) (emphasis in original).
Thus, ``it is not up to the court to reject an agreed-on change simply
because the proposal diverged from its view of the public interest.
Rather, the court [is] bound to accept any modification that the
Department (with the consent of third parties, we repeat) reasonably
regarded as advancing the public interest.'' United States v. Western
Electric Co., 993 F.2d at 1576. See also United States v. Microsoft
Corp., 56 F.3d 1448, 1461-62 (D.C. Cir. 1995); United States v. Bechtel
Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S.
1083 (1981); United States v. BNS. Inc., 858 F.2d 456, 462
(9th Cir. 1988). 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 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.
Bechtel, 648 F.2d at 666 (emphasis added); See BNS, 858 F.2d at 463;
United States v. National Broadcasting Co., 449 F. Supp. 1127, 1143
(C.D. Cal. 1978) See also Microsoft, 56 F.3d at 1461.
V. Conclusion
For all of the foregoing reasons, the proposed modification is in
the public interest, and the motion to enter the Modified Final
Judgment should be granted. Respectfully submitted.
Dated: May 5, 1998.
For the United States
Frederick H. Parmenter
Virginia Bar No.: 18184, Attorney, U.S. Department of Justice,
Antitrust Division, 1401 H Street, N.W., Washington, D.C. 20530, (202)
307-0620.
For the States of Texas
Dan Morales,
Texas Attorney General.
Mark Tobey,
Assistant Attorney General, Chief, Antitrust Section, Texas Bar No.:
20082960.
Kim Van Winkle,
Assistant Attorney General, Texas Bar No.: 24003104.
Office of the Attorney General of Texas, P.O. Box 12548, Austin, Texas
78711-2546, (512) 463-2185.
Motion of the United States and Texas for Modification of The Final
Judgment
The United States of America (``United States'') and the State of
Texas (``Texas'') move this Court to modify the Final Judgment in the
above-captioned matter as to the provisions relating to the Houston
Divestiture Assets and the Houston area. This motion is based on the
following grounds:
I. Definitions
1. USA Waste means USA Waste Services, Inc., a Delaware corporation
with its headquarters in Houston, Texas, and its successors and
assigns, their subsidiaries, affiliates directors, officers, managers,
agents and employees.
2. Houston Area means Harris County, Texas; Chambers County, Texas;
Brazoria County, Texas; Fort Bend County, Texas; Montgomery County,
Texas; Walker County, Texas; and Galveston County, Texas.
3. Houston Hauling Assets means the frontload commercial business
of TransAmerican that provides solid waste hauling services in the
Houston Area. These assets include all customer lists, contracts and
accounts, including all contracts for disposal of solid waste at
disposal facilities, all trucks, containers, equipment, material, and
supplies associated with these assets, and the garages, including all
associated equipment, located at 10554 Tanner Road, Houston, Texas
77041 and 999 Ashland, Channelview, Texas 77530.
4. Sunray Assets means the operating, permitted Type 4 landfill
(also known as the North County Landfill) and other related assets of
TransAmerican with an office at 2015 Wyoming in League City, Texas.
These assets include the current permit Number 1849 and permit
application Number 1849A filed with the Texas Natural Resource
Conservation Commission, all customer lists, contracts and accounts,
including
[[Page 33417]]
all equipment, material, and supplies associated with these assets.
5. Airspace Assets means the right to dispose, over a ten-year
period of up to a total of 2,000,000 tons of municipal solid waste in
amounts of up to a total of 270,000 tons per year at the Hazlewood
Landfill located at 4971 Tri-City Beach Road in Baytown, Texas and the
Brazoria County Landfill located at 10310 FM 523 in Angleton, Texas.
6. Houston Divestiture Assets means the Houston Hauling Assets,
Sunray Assets, and Airspace Assets.
II. Background and Objectives
1. On August 30, 1996, the United Texas, and Pennsylvania filed a
complaint in the above-cationed case alleging that USA Waste's
acquisition of Sanifill, Inc. (``Sanifill'') violated Section 7 of the
Clayton Act, 15 U.S.C. 18. The complaint alleged that the combination
of USA Waste and Sanifill would substantially lessen competition in
providing hauling and disposal services in the Houston Area and
Johnstown, Pennsylvania.
2. On December 17, 1996, the Court entered a Final Judgment which
directed the defendants to divest the Houston Divestiture Assets and
undertake certain measure in Johnstown to alleviate the competitive
harm of the acquisition.
3. The Houston Divestiture Assets were purchased by TransAmerican
on January 31, 1997.
4. On January 26, 1998, USA Waste entered into an agreement with
TransAmerican pursuant to which USA Waste proposed to merge
TransAmerican with USA Waste. The value of the proposed transaction is
approximately $125,470.000.
5. On February 26, 1998, TransAmerican notified the United States
and Texas as required by the Final Judgment that TransAmerican has
undertaken to merge itself with USA Waste. Section V.G. of the Final
Judgment requires the purchaser of the Houston Divestiture Assets
(e.g., TransAmerican) to give the United States and Texas 45 days
notice in advance of any sale of the Houston Divestiture assets and
that the purchaser shall not sell the Houston Divestiture Assets to the
defendants (e.g., USA Waste) during the life of the decree.
6. On April 9, 1998, the United States sent a letter to USA Waste
and TransAmerican notifying them that based on its investigation
consultations with Texas, it could not give its consent to USA Waste's
proposed purchase of the Houston assets.
7. USA Waste and TransAmerican have agreed to the prompt and
certain divestiture of the Houston Divestiture Assets as a viable
business operation to a third party or parties to assure that
competition is not substantially lessened in the Houston Area.
8. For the purpose of accomplishing the divestiture of the Houston
Divestiture Assets, USA Waste and TransAmerican authorize the United
and Texas to state that they concur in this motion.
9. The United States does not believe that that proposed Modified
Final Judgment is subject to the Antitrust Procedures and Penalties
Act, 15 U.S.C. 16. However, the United States intends to follow the
comment procedures outlined in the attached Explanation of Procedures.
After completion of the procedures, the United States will file another
motion requesting that the Court enter the attached Modified Final
Judgment.
Respectfully submitted.
Dated: May 5th, 1998
For the United States:
Frederick H. Parmenter,
Virginia Bar No.: 18184, U.S. Department of Justice, Antitrust
Division, 1401 H Street, N.W., Suite 3000, Washington, D.C. 20530,
(202) 307-0620.
For The State of Texas
Dan Morales,
Texas Attorney General.
Mark Tobey,
Assistant Attorney General, Chief, Antitrust Section, Texas Bar No.:
20082960.
Kim Van Winkle,
Assistant Attorney General, Texas Bar No.: 24003104.
Office of the Attorney General of Texas, P.O. Box 12548, Austin, Texas
78711-2546, (512) 463-2185.
Hold Separate Stipulation and Order
It is hereby stipulated and agreed by and between the United States
of America, the State of Texas, USA Waste Services, Inc., and
TransAmerican Waste Industries, Inc., subject to approval and entry by
the Court, that:
I. Definitions
As used in this Hold Separate Stipulation and Order:
A. Solid waste hauling means the collection and transportation to a
disposal site of municipal solid waste (but not construction and
demolition waste; medical waste; organic waste; special waste, such as
contaminated soil; sludge; or recycled materials) from residential,
commercial and industrial customers.
B. USA Waste means USA Waste Services, Inc., a Delaware corporation
with its headquarters in Houston, Texas, and its successors and
assigns, their subsidiaries, affiliates, directors, officers, managers,
agents and employees.
C. TransAmerican means TransAmerican Waste Industries, Inc., a
Delaware corporation with its headquarters in Houston, Texas and its
successors and assigns, their subsidiaries, affiliates, directors,
officers, managers, agents and employees.
F. Houston Area means Harris County, Texas; Chambers County, Texas;
Brazoria County, Texas; Fort Bend County, Texas; Montgomery County,
Texas; Walker County, Texas; and Galveston County, Texas.
G. Houston Hauling Assets means the frontload commercial business
of TransAmerican that provides solid waste hauling services in the
Houston Area. These assets include all customer lists, contracts and
accounts, including all contracts for disposal of solid waste at
disposal facilities, all trucks, and containers, equipment, material,
and supplies associated with these assets, and the garages, including
all associated equipment, located at 10554 Tanner Road, Houston, Texas
77041 and 999 Ashland, Channelview, Texas 77530.
H. Sunray Assets means the operating, permitted Type 4 landfill
(also known as the North County Landfill) and other related assets of
USA Waste with an office at 2015 Wyoming in League City, Texas. These
assets include the current permit Number 1849 and permit application
Number 1849A filed with the Texas Natural Resource Conservation
Commission, all customer lists, contracts and accounts, including all
equipment, material, and supplies associated with these assets.
I. Airspace Assets means the right to dispose, over a ten-year
period of up to a total of 2,000,000 tons of municipal solid waste in
amounts of up to a total of 270,000 tons per year at the Hazlewood
Landfill located at 4971 Tri-City Beach Road in Baytown, Texas and the
Brazoria County Landfill located at 10310 FM 523 in Angleton, Texas.
J. Houston Divestiture Assets means to the Houston Hauling Assets,
Sunray Assets, and Airspace Assets.
II. Objectives
The Modified Final Judgment filed in this case is meant to ensure
USA Waste's prompt divestiture of the Houston Divestiture Assets for
the purpose of maintaining a viable competitor in the waste disposal
and hauling business in the Houston area to remedy the effects that the
United States and Texas allege would otherwise result from USA Waste's
proposed acquisition of TransAmerican. This Hold Separate
[[Page 33418]]
Stipulation and Order ensures, prior to such divestiture, that the
Houston Hauling Assets and the Sunray Assets which are being divested
be maintained as independent, economically viable, ongoing business
concerns, and that competition is maintained during the pendency of the
divestiture.
III. Hold Separate Provisions
Until the divestiture required by the Modified Final Judgment has
been accomplished:
A. USA Waste shall preserve, maintain, and operate the Houston
Hauling Assets and the Sunray Assets as independent competitors with
management, sales, and operations held entirely separate, distinct and
apart from those of USA Waste. USA Waste shall not coordinate the
marketing or sale of its waste disposal and hauling business with the
waste disposal and hauling business at the Houston Hauling Assets and
the Sunray Assets. Within thirty (30) days of the entering of this
Order, USA Waste will inform the United States and Texas of the steps
taken to comply with this provision.
B. USA Waste shall take all steps necessary to ensure that the
Houston Hauling Assets and the Sunray Assets will be maintained and
operated as independent, ongoing, economically viable and active
competitors in the waste disposal and hauling business in the Houston
area; and that the management of the Houston Hauling Assets and the
Sunray Assets will not be influenced by USA Waste, and the books,
records, competitively sensitive sales, marketing and pricing
information, and decision-making associated with the Houston Hauling
Assets and the Sunray Assets will be kept separate and apart from the
operations of USA Waste. USA Waste's influence over the Houston Hauling
Assets and the Sunray Assets shall be limited to that necessary to
carry out USA Waste's obligations under this Order and the Modified
Final Judgment.
C. USA Waste shall use all reasonable efforts to maintain and
increase waste disposal and hauling sales at the Houston Hauling Assets
and the Sunray Assets, and shall maintain at 1997 or previously
approved levels, whichever are higher, promotional, advertising, sales,
technical assistance, marketing and merchandising support for the
disposal and hauling of waste associated with the Houston Hauling
Assets and the Sunray Assets.
D. USA Waste shall provide sufficient working capital to maintain
the Houston Hauling Assets and the Sunray Assets as economically
viable, ongoing businesses.
E. USA Waste shall take all steps necessary to ensure that the
Sunray Assets are fully maintained in operable condition at no lower
than its current rated capacity, and shall maintain and adhere to
normal repair and maintenance schedules for the Houston Hauling Assets
and the Sunray Assets.
F. USA Waste shall not, except as part of a divestiture approved by
the United States and Texas, remove, sell, lease, assign, transfer,
pledge or otherwise dispose of any assets of the Houston Hauling Assets
and the Sunray Assets, including intangible assets that relate to the
permits described in Section I of the Modified Final Judgment.
G. USA Waste shall maintain, in accordance with sound accounting
principles, separate, accurate and complete financial ledgers, books
and records that report on a periodic basis, such as the last business
day of every month, consistent with past practices, the assets,
liabilities, expenses, revenues and income of the Houston Hauling
Assets and the Sunray Assets.
H. Except in the ordinary course of business or as is otherwise
consistent with this Hold Separate Agreement, USA Waste and
TransAmerican shall not hire and USA Waste and TransAmerican shall not
transfer or terminate, or alter any current employment or salary
agreements for any USA Waste or TransAmerican employees who (I) on the
date of the signing of this Agreement, work at the Houston Hauling
Assets or the Sunray Assets or (ii) are members of management
referenced in Section III(I) of this Order.
I. Until such time as the Houston Hauling Assets and the Sunray
Assets are divested, the Assets to be Divested shall be managed by Ted
Meyer of TransAmerican. Ted Meyer shall have complete managerial
responsibility for the Houston Hauling Assets and the Sunray Assets,
subject to the provisions of this Order and the Modified Final
Judgment. In the event that Ted Meyer is unable to perform his duties,
USA Waste shall appoint, subject to the United States' and Texas'
approval, a replacement within ten (10) working days. Should USA Waste
fail to appoint a replacement acceptable to the United States and Texas
within ten (10) working days, the United States and Texas shall appoint
a replacement.
J. USA Waste shall take no action that would interfere with the
ability of any trustee appointed pursuant to the Modified Final
Judgment to complete the divestiture pursuant to the Modified Final
Judgment to a suitable purchaser.
K. this Hold Separate Stipulation and Order shall remain in effect
until consummation of the divestiture contemplated by the Modified
Final Judgment or until further Order of the Court.
Dated: May 5, 1998.
For the United States:
Frederick H. Parmenter,
Virginia Bar No.: 18184, U.S. Department of Justice, Antitrust
Division, 1401 H Street, N.W., Suite 3000, Washington, D.C. 20530,
(202) 307-0620.
For the State of Texas
Dan Morales,
Texas Attorney General.
Mark Tobey,
Assistant Attorney General, Chief, Antitrust Section, Texas Bar No.:
20082960.
For USA Waste Services, Inc.
James R. Weiss,
District of Columbia Bar No.: 379798, Preston, Gates, Ellis & Rouvelas
Meeds, 1735 New York Avenue, N.W., Suite 500, Washington, D.C. 20006-
5209, (202) 662-8425.
For TransAmerican Waste Industries, Inc.
J. David Green,
Sr. Vice President & General Counsel, TransAmerican Waste Industries,
Inc., 10554 Tanner Road, Houston, Texas 77041, (713) 956-1212.
Kim Van Winkle,
Assistant Attorney General, Texas Bar No.: 24003104, Office of the
Attorney General of Texas, P.O. Box 12548, Austin, Texas 78711-2546,
(512) 463-2185.
Order
It is so ordered, this 6th day of May, 1998.
Gladys Kessler,
United States District Judge.
[FR Doc. 98-16216 Filed 6-17-98; 8:45 am]
BILLING CODE 4410-11-M
