[Federal Register Volume 62, Number 110 (Monday, June 9, 1997)]
[Notices]
[Pages 31456-31462]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14933]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Martin Marietta Materials, Inc. et al.; Proposed
Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. Sec. 16(b)-(h), that a proposed Final
Judgment, Stipulation and Order, and Competitive Impact Statement have
been filed with the United States District Court in the Southern
District of Indiana, in United States versus Martin Marietta Materials,
Inc., et al, Civil No. IP97-854C-T/G.
On May 27, 1997, the United States filed a Complaint alleging that
the proposed acquisition by Martin Marietta of the stock of American
Aggregates would violate Section 7 of the Clayton Act, 15 U.S.C.
Sec. 18. The proposed Final Judgment, filed the same time as the
Complaint, requires Martin Marietta to divest the Harding Street,
Indianapolis, Indiana aggregate quarry and related assets that it will
obtain in connection with the acquisition of American Aggregates.
Public comment is invited within the statutory 60-day comment
period. Such comments and responses thereto will be published in the
Federal Register and filed with the Court. Comments should be directed
to J. Robert Kramer, Chief, Litigation II Section, Antitrust Division,
United States Department of Justice, 1401 H Street, N.W., Suite 3000,
Washington, D.C. 20530 (telephone: 202/307-0924).
Constance K. Robinson,
Director of Operations.
United States District Court for the Southern District of Indiana
Stipulation and Order
United States of America, Plaintiff, v. Martin Marietta
Materials, Inc.; CSR Limited; CSR America, Inc.; and American
Aggregates Corporation, Defendants. Civil No.: IP97-854C-T/G; Filed:
5/27/97; Judge John Daniel Tinder.
It is stipulated by and between the undersigned parties, by their
respective attorneys, as follows:
1. The Court has jurisdiction over the subject matter of this
action and over each of the parties hereto, and venue of this action is
proper in the United States District Court for the Southern District of
Indiana.
2. The parties stipulate that a Final Judgment in the form hereto
attached may be filed and entered by the Court, upon the motion of any
party or upon the Court's own motion, at any time after compliance with
the requirements of the Antitrust Procedures and Penalties Act (15
U.S.C. Sec. 16), and without further notice to any party or other
proceedings, provided that the plaintiff has not withdrawn its consent,
which it may do at any time before the entry of the proposed Final
Judgment by serving notice thereof on defendants and by filing that
notice with the Court.
3. Defendants shall abide by and comply with the provisions of the
proposed Final Judgment pending entry of the Final Judgment 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, comply with all the terms and provisions of the
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 Final Judgment agreed upon in writing by the parties
and submitted to the Court.
5. In the event (a) the plaintiff has withdrawn its consent, as
provided in paragraph 2 above, or (b) 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.
6. Defendants represent that the divestiture ordered in the
proposed Final Judgment can and will be made, and that the 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.
Dated: May 23, 1997.
For Plaintiff United States
Frederick H. Parmenter,
[[Page 31457]]
U.S. Department of Justice, Antitrust Division, Litigation II
Section, Suite 3000, Washington, D.C. 20005, (202) 307-0620.
Judith A. Stewart,
United State Attorney.
Harold R. Bickham,
Assistant United States Attorney, Southern District of Indiana.
For Defendant Martin Marietta Materials, Inc.
Raymond A. Jacobsen, Jr.,
McDermott, Will & Emery, 1850 K Street, N.W., Washington, D.C.
20006-2296, (202) 778-8028.
Scott Megregian,
McDermott, Will & Emery, 1850 K Street, N.W., Washington, D.C.
20006-2296, (202) 778-8096.
For Defendants CSR Limited, CSR America, Inc. and American Aggregates
Corporation
C. Benjamin Crisman, Jr.,
Skadden, Arps, Slate, Meagher & Flom, 1440 New York Avenue, N.W.,
Washington, D.C. 20005-2111, (202) 371-7330.
Alec Y. Chang,
Skadden, Arps, Slate, Meagher & Flom, 1440 New York Avenue, N.W.,
Washington, D.C. 20005-2111.
Order
It is so ordered, this 27th day of May, 1997.
Sarah Evans Baker,
United States District Judge.
Final Judgment
Whereas, plaintiff, the United States of America, having filed its
Complaint herein on May 22, 1997, and plaintiff and defendants, by
their respective attorneys, having consented to the entry of this Final
Judgment without trial or adjudication of any issue of fact or law
herein, and without this Final Judgment constituting any evidence
against or an admission by any party with respect to any issue of law
or fact herein;
And Whereas, defendants have agreed to be bound by the provisions
of this Final Judgment pending its approval by the Court;
And Whereas, the essence of this Final Judgment is prompt and
certain divestiture of 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
production and sale of aggregate in Marion County, Indiana;
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 the
subject matter of this action. The Complaint states a claim upon which
relief may be granted against defendants under Section 7 of the Clayton
Act, as amended (15 U.S.C. Sec. 18).
II. Definitions
As used in this Final Judgment:
A. ``Martin'' means defendant Martin Marietta Materials, Inc., a
North Carolina corporation headquartered in Raleigh, North Carolina,
and includes its successors and assigns, and its subsidiaries,
directors, officers, managers, agents, and employee acting for or on
behalf of any of them.
B. ``American Aggregates'' means defendant American Aggregates
Corporation, a Delaware corporation headquartered in Dayton, Ohio, and
includes it successors and assigns, and its subsidiaries, directors,
officers, managers, agents, and employees acting for or on behalf of
any them.
C. ``CSR America'' means defendant CSR America, Inc., a Georgia
corporation headquarters in Atlanta, Georgia (of which American
Aggregates is a subsidiary), and includes its successors and assigns,
and its subsidiaries, directors, officers, managers, agents, and
employees acting for or on behalf of any of them.
D. ``CSR'' means defendant CSR Limited, a company formed under the
laws of Australia and headquarters in Sydney, New South Wales (of which
CSR America is a subsidiary), and includes its successors and assigns,
and its subsidiaries, directors, officers, managers, agents, and
employees acting for or on behalf of any of them.
E. ``Aggregate'' means crushed stone and gravel produced at
quarries, mines, or gravel pits used to manufacture asphalt concrete
and ready mix concrete. ``Stone products'' refer to any products
produced at a quarry.
F. ``Asphalt concrete'' means material that is used principally for
paving and is produced by combining and heating asphalt cement (also
referred to in the industry as ``liquid asphalt'' or ``asphalt oil'')
with aggregate.
G. ``Ready mix concrete'' means a material used in the construction
of buildings, highways, bridges, tunnels, and other products and is
produced by mixing a cementing material (commonly portland cement) and
aggregate with sufficient water to cause the cement to set and bind.
H. ``Marion County'' refers to Marion County, Indiana.
Indianapolis, Indiana is located in Marion County.
I. Unless otherwise agreed to by the Department of Justice, in its
sole discretion. ``Assets to be Divested'' means:
(1) All rights, titles, and interests, including all fee and all
leasehold and rights, in American Aggregates' Harding Street,
Indianapolis, Indiana quarry located at 4200 South Harding Street,
Indianapolis, Indiana 46217, and the related maintenance facilities and
administration buildings (the ``Harding Street Quarry'') including, but
not limited to, all real property, capital equipment, fixtures,
inventories, trucks, and other vehicles, stone crushing equipment,
power supply equipment, scales, interests, permits, assets or
improvement related to the production, distribution, and safe of
aggregate and stone products at the Harding Street Quarry; and
(2) All intangible assets, including customer lists, contracts to
supply third parties aggregate and stone products, and contracts
permitting third parties to operate hot-mix plants and concrete plants
at the Harding Street Quarry, associated with the Harding Street
Quarry.
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 person service or otherwise.
B. Defendants shall require, as a condition of the sale or other
disposition of all Assets to be Divested, that the purchaser agree to
be bound by the provisions of this Final Judgment.
IV. Divestiture
A. Martin is 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 this Final Judgment, or five (5) days
after its entry by the Court, whichever is later, to divest the Assets
to be Divested to a purchaser acceptable to the plaintiff, in its sole
discretion.
B. Martin shall use its best efforts to accomplish the divestiture
as expeditiously and timely as possible. The United States in its sole
determination may extend the time period for any divestiture an
additional
[[Page 31458]]
period of time not to exceed sixty (60) calendar days.
C. In accomplishing the divestitures ordered by this Final
Judgment, Martin promptly shall make known, by usual and customary
means, the availability of the Assets to be Divested described in this
Final Judgment. Martin 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. Martin shall also offer to furnish to all bona fide
prospective purchasers, subject to customary confidentiality
assurances, all information regarding the Assets to be invested
customarily provided in a due diligence process except such information
subject to attorney-client privilege or attorney work-product
privilege. Martin shall make available such information to the
plaintiff at the same time that such information is made available to
any other person.
D. Martin shall not interfere with any negotiations by any
purchaser to employ any Martin (or former CSR, CSR America, or American
Aggregates) employee who works at, or whose principal responsibility is
the manufacture, sale or marketing of aggregate or stone products
produced by the Assets to be Divested.
E. Martin shall permit prospective purchasers of the Assets to be
Divested to have access to personnel and to make such inspection of the
Assets to be Divested, access to any and all environmental, zoning, and
other permit documents and information; and access to any and all
financial, operations, or other documents and information customarily
provided as part of a due diligence process.
F. Martin shall warrant to the purchaser of the Assets to be
Divested that the Assets to be Divested will be operational on the date
of sale.
G. Martin shall not take any action, direct or indirect (not
including otherwise lawful competitive price action, expansion of
capacity or similar competitive conduct), that will impede in any way
the operation of the Harding Street Quarry.
H. Martin shall warrant to the purchaser of the Assets to be
Divested that there are no known defects in the environmental, zoning,
or other permits pertaining to the operation of the Assets to be
Divested and that Martin will not undertake, directly or indirectly,
following the divestiture of the Assets to be Divested any challenges
to the environmental, zoning, or other permits pertaining to the
operation of the Assets to be Divested.
I. Unless the United States otherwise consents in writing, the
divestiture pursuant to Section IV, or by trustee appointed pursuant to
Section V of this Final Judgment, shall include the Assets to be
Divested and be accomplished by selling or otherwise conveying the
Assets to be Divested to a purchaser in such a way as to satisfy
plaintiff, in its sole discretion, that the Assets to be Divested can
and will be used by the purchaser as part of a viable, ongoing business
or businesses engaged in the manufacture and sale of aggregate, and
stone products. The divestiture, whether pursuant to Section IV or
Section V of this Final Judgment, shall be made to a purchaser for whom
it is demonstrated to the plaintiff's sole satisfaction: (1) has the
capability and intent of competing effectively in the production and
sale of aggregate and stone products in Marion County; (2) has or soon
will have the managerial, operational, and financial capability to
compete effectively in the manufacture and sale of aggregate and stone
products in Marion County; and (3) none of the terms of any agreement
between the purchaser and Martin give Martin the ability unreasonably
to raise the purchaser's costs, to lower the purchaser's efficiency, or
otherwise to interfere in the ability of the purchaser to compete
effectively in Marion County.
V. Appointment of Trustee
A. In the event that Martin has not divested the Assets to be
Divested within the time 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
the Assets to be Divested.
B. After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell the Assets to be Divested
described in Section II, I of this Final Judgment. 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 Sections IV and VIII of this Final Judgment, and
shall have such other powers as the Court shall deem appropriate.
Subject to Sections V(C) and VIII of this Final Judgment, the trustee
shall have the power and authority to hire at the cost and expense of
Martin any investment bankers, attorneys, or other agents reasonably
necessary in the judgment of the trustee to assist in the divestiture,
and such professionals and agents shall be accountable solely to the
trustee. The trustee shall have the power and authority to accomplish
the divestiture at the earliest possible time to a purchaser acceptable
to the plaintiff, and shall have such other powers as this Court shall
deem appropriate. Martin shall not object to a sale by the trustee on
any grounds other than the trustee's malfeasance. Any such objections
by Martin must be conveyed in writing to the plaintiff and the trustee
within ten (10) calendar days after the trustee has provided the notice
required under Section VI of this Final Judgment.
C. The trustee shall serve at the cost and expense of Martin, on
such terms and conditions as the Court may prescribe, and shall account
for all monies derived from the sale of the assets sold by the trustee
and all costs and expenses so incurred. After approval by the Court of
the trustee's accounting, including fees for its services and those of
any professionals and agents retained by the trustee, all remaining
money shall be paid to Martin 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 Assets to be Divested 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. Martin shall use its best efforts to assist the trustee in
accomplishing the required divestiture, including best effort 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 Martin, and Martin shall develop financial or other
information relevant to the Assets to be Divested as the trustee may
reasonably request, subject to reasonable protection for trade secrets
or other confidential research, development, or commercial information.
Martin shall permit prospective acquirers of the assets to have 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 divestiture 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 divestiture 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,
[[Page 31459]]
address and telephone number of each person who, during the preceding
month, made an offer to acquire, expresses an interest in acquiring,
entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring, any interest in 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
divest the Assets to be Divested.
F. If the trustee has not accomplished such divestiture 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 divestiture, (2) the reasons, in the
trustee's judgment, why the required divestiture has 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 by a period requested by the United States.
VI. Notification
Within two (2) business days following execution of a definitive
agreement, contingent upon compliance with the terms of this Final
Judgment, to effect, in whole or in part, any proposed divestiture
pursuant to Sections IV of V of this Final Judgment, Martin or the
trustee, whichever is then responsible for effecting the divestiture,
shall notify the plaintiff of the proposed divestiture. If the trustee
is responsible, it shall similarly notify Martin. The notice shall set
forth the details of the proposed transaction and list the name,
address, and telephone number of each person not previously identified
who offered to, or expressed an interest in or a desire to, acquire any
ownership interest in the assets to be Divested that are the subject of
the binding contract, together with full details of same. Within
fifteen (15) calendar days of receipt by the plaintiff of such notice,
the plaintiff may request from Martin, the proposed purchaser, or any
other third party additional information concerning the proposed
divestiture and the proposed purchaser. Martin and the trustee shall
furnish any additional information requested 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 plaintiff has been
provided the additional information requested from Martin, the proposed
purchaser, and any third party, whichever is later, the plaintiff shall
provide written notice to Martin and the trustee, if there is one,
stating whether or not it objects to the proposed divestiture. If the
plaintiff provides written notice to Martin and the trustee that it
does not object, then the divestiture may be consummated, subject only
to Martin's limited right to object to the sale under Section V(B) of
this Final Judgment. Absent written notice that the plaintiff does not
object to the proposed purchaser or upon objection by the plaintiff, a
divestiture proposed under Section IV shall not be consummated. Upon
objection by the plaintiff, or by Martin under the proviso in Section
V(B), a divestiture proposed under Section V shall not be consummated
unless approved by the Court.
VII. Affidavits
A. Within twenty (20) calendar days of the filing of this Final
Judgment and every thirty (30) calendar days thereafter until the
divestitures have been completed whether pursuant to Section IV or
Section V of this Final Judgment, Martin shall deliver to the plaintiff
an affidavit as to the fact and manner of compliance with Sections IV
or V of this Final Judgment. Each such affidavit shall include, inter
alia, the name, address, and telephone number of each person who, at
any time after the period covered by the last such report, made an
offer to acquire, expressed an interest in acquiring, entered into
negotiations to acquire, or was contacted or made an inquiry about
acquiring, any interest in the 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 Martin has taken to solicit a buyer for the relevant
assets.
B. Within twenty (20) calendar days of the filing of this Final
Judgment, Martin shall deliver to the plaintiff an affidavit which
describes in detail all actions Martin has taken and all steps Martin
has implemented on an on-going basis to preserve the Assets to be
Divested 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, Martin's efforts to maintain and
operate the Assets to be Divested as an active competitor, maintain the
management, sales, marketing and pricing of the Assets to be Divested,
and maintain the Assets to be Divested in operable condition at current
capacity configurations. Martin shall deliver to the plaintiff an
affidavit describing any changes to the efforts and actions outlined in
Martin's earlier affidavit(s) filed pursuant to this Section within
fifteen (15) calendar days after the change is implemented.
C. Martin shall preserve all records of all efforts made to
preserve and divest the Assets to be Divested.
VIII. 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 divesture of
the Assets to be Divested.
IX. Financing
Martin is ordered and directed not to finance all or any part of
any purchase by an acquirer made pursuant to Sections IV or V of this
Final Judgment without prior written consent of the plaintiff.
X. Compliance Inspection
For the 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 Attorney General or of the
Assistant Attorney General in charge of the Antitrust Division, and on
reasonable notice to Martin made to its principal offices, shall be
permitted:
(1) Access during office hours of Martin to inspect and copy all
books, ledgers, accounts, correspondence, memoranda, and other records
and documents in the possession or under the control of Martin, who may
have counsel present, relating to the matters contained in this Final
Judgment and the Hold Separate Stipulation and Order; and
(2) Subject to the reasonable convenience of Martin and without
restraint or interference from it, to interview, either informally or
on the record, its officers, employees, and agents, who may have
counsel present, regarding any such matters.
B. Upon the written request of the Attorney General of the
Assistant Attorney General in charge of the
[[Page 31460]]
Antitrust Division, made to Martin's principal offices, Martin shall
submit such written reports, under oath if requested, with respect 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 VII or X of this Final Judgment shall be divulged by a
representative of the plaintiff to any person other than a duly
authorized representative of the Executive Branch of the United States,
except in the course of legal proceedings to which the United States is
a party (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 Martin
to the plaintiff, Martin represents and identifies in writing the
material in any such information or documents to which a claim of
protection may be asserted under Rule 26(c)(7) of the Federal Rules of
Civil Procedure, and Martin marks each pertinent page of such material,
``Subject to claim of protection under Rule 26(c)(7) of the Federal
Rules of Civil Procedure,'' then ten (10) calendar days notice shall be
given by the plaintiff to Martin prior to divulging such material in
any legal proceeding (other than a grand jury proceeding) to which
Martin is not a party.
XI. 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.
XII. Termination
Unless this Court grants an extension, this Final Judgment will
expire on the tenth anniversary of the date of its entry.
XIII. Public Interest
Entry of this Final Judgment is in the public interest.
Dated:---------------------------------------------------------------
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United States District Judge
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 May 27, 1997, the United States filed a civil antitrust
complaint, which alleges that the proposed acquisition by Martin
Marietta Materials, Inc. (``Martin'') of American Aggregates
Corporation (``American Aggregates'') from CSR America, Inc. (``CSR
America'') which is a subsidiary of CSR Limited (``CSR'') would violate
Section 7 of the Clayton Act, 15 U.S.C. Sec. 18. The Complaint alleges
that a combination of the two most significant competitors in the
aggregate market in Marion County, Indiana would lessen competition in
the production and sale of aggregate in Marion County. The prayer for
relief in the Complaint seeks: (1) A judgment that the proposed
acquisition would violate Section 7 of the Clayton Act; and (2) a
permanent injunction preventing Martin from acquiring control of
American Aggregates' aggregate business, or otherwise combining such
business with Martin's own business in the United States.
When the Complaint was filed, the United States, also filed a
proposed settlement that would permit Martin to complete its
acquisition of American Aggregates' aggregate business, but require a
certain divestiture that will preserve competition in Marion County.
This settlement consists of a Stipulation and Order, a proposed Final
Judgment and a Hold Separate Stipulation and Order.
The proposed final Judgment orders Martin to divest certain Marion
County assets--American Aggregates, Harding Street, Indianapolis,
Indiana quarry and certain related tangible and intangible assets.
Martin must complete the divestiture of this quarry and related assets
within one hundred and eighty (180) calendar days after the date on
which the proposed Final Judgment was filed (i.e., May 27, 1997) in
accordance with the procedure specified therein.
The Stipulation and Order, proposed Final Judgment and Hold
Separate Stipulation and Order require Martin to ensure that, until the
divestiture mandated by the proposed Final Judgment has been
accomplished, the Harding Street Quarry and related assets to be
divested will be maintained and operated as an independent, ongoing,
economically viable and active competitor. Martin must preserve and
maintain the quarry to be divested as a saleable and economically
viable, ongoing concern, with competitively sensitive business
information and decision-making divorced from that of Martin's
aggregate business. Martin will appoint a person to monitor and ensure
its compliance with these requirements of the proposed Final Judgment.
The United States 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 this action, except that
the Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II. Description of the Events Giving Rise to the Alleged Violation
A. Martin, American Aggregates and the Proposed Transaction
Martin is engaged in the business of producing and selling
aggregate in Marion County. In Marion County, Martin operates the
Kentucky Avenue Quarry which produces aggregate. In 1995, Martin had
sales of $660 million.
Through its wholly owned subsidiary, American Aggregates, CSR is
engaged in the business of producing and selling aggregate in Marion
County. CSR operates two aggregate quarries in or near Marion County
that produce aggregate which is used to manufacture asphalt concrete
and ready-mix concrete. In 1996, American Aggregates had sales of $120
million.
On February 21, 1997, Martin agreed to acquire all of the
outstanding voting securities of American Aggregates, excluding its
Michigan operations, from CSR America which is wholly owned by CSR. The
purchase price is approximately $234.5 million. This transaction, which
would take place in the highly concentrated Marion County aggregate
industry, precipitated the government's suit.
B. The Transaction's Effects in Marion County
The Complaint alleges that, the production and sale of aggregate
constitutes a line of commerce, or relevant product market, for
antitrust purposes, and that Marion County constitutes a section of the
country, or relevant geographic market. The complaint alleges that the
effect of Martin's acquisition may be to lessen competition
substantially in the production and sale of aggregate in Marion County.
Aggregate is material that is used to manufacture asphalt concrete
and ready-mix concrete. A considerable amount of the asphalt concrete
and ready-mix concrete manufactured for use in Marion County is used on
[[Page 31461]]
highways and roads built for the Indiana Department of Transportation
and local jurisdictions located within Marion County. No good economic
functional substitutes exist for aggregate. Manufacturers and buyers of
aggregate recognize aggregate as a distinct product.
Producers of aggregate located in or near Marion County sell and
compete with each other for sales of aggregate in Marion County. Due to
high transportation costs and long delivery time, producers of
aggregate not located in Marion County or in close proximity to Marion
County do not sell a significant amount of aggregate for use within
Marion County.
The Complaint alleges that Martin's acquisition of American
Aggregates would substantially lessen competition for the production
and sale of aggregate in Marion County. Actual and potential
competition between Martin and American Aggregates for the production
and sale of aggregate in Marion County will be eliminated.
Martin and American Aggregates are the only producers of aggregate
in Marion County and are two of only three significant producers in
close proximity to Marion County. American Aggregates and Martin sell
the vast majority of all the aggregate used to manufacture asphalt
concrete and ready mix concrete for road and highway construction
projects in Marion County contracted for by the Indiana Department of
Transportation and local jurisdictions within Marion County. The
Indiana Department of Transportation, through its contracts for highway
construction, is indirectly the largest purchaser of aggregate in
Marion County.
The acquisition of American Aggregates by Martin would create a
dominant aggregate company in Marion County. It would reduce the number
of significant competitors operating aggregate facilities in Marion
County or in close proximity to Marion County from three to two, and
significantly reduce the number of competitors located in Marion County
supplying aggregate used to manufacture asphalt concrete and ready mix
concrete manufactured for highways in Marion County.
As a result of the acquisition, Martin would have significant
control over the aggregate market in Marion County, giving it market
power to increase the price of aggregate in Marion County. Prices for
aggregate are likely therefore to increase. In response to such a price
increase, purchasers could not switch to another producer of aggregate.
New entry in Marion County is unlikely to restore the competition
lost through Martin's removal of American Aggregates from the
marketplace. De novo entry into the production and sale of aggregate
requires a significant capital investment and likely would take over
two years before any new aggregate production facility could begin
production. State and local zoning provisions make it very difficult to
open an aggregate production facility in or near Marion County.
C. Harm to Competition as a Consequence of the Acquisition
The Complaint alleges that the transaction would have the following
effects, among others: competition for the production and sale of
aggregate in Marion County will be substantially lessened; actual and
potential competition between Martin and American Aggregates in the
production and sale of aggregate in Marion County will be eliminated;
and prices for aggregate in Marion County are likely to increase above
competitive levels.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment would preserve competition in the
production and sale of aggregate in Marion County by placing in
independent hands American Aggregates' Harding Street, Indianapolis,
Indiana aggregate quarry used by American Aggregates to serve Marion
County, thus maintaining the existing level of suppliers in the market
place. In response to a price increase from Martin, purchasers would be
able to turn to another producer with significant capacity to produce
aggregate in Marion County.
Within one hundred and eighty (180) calendar days after filing the
proposed Final Judgment, Martin must divest American Aggregates'
Harding Street aggregate quarry and related assets which are located in
Marion County. The Harding Street quarry and related assets will be
sold to a purchaser who demonstrates to the sole satisfaction of the
United States that they will be an economically viable and effective
competitor, capable of competing effectively in the production and sale
of aggregate in Marion County.
Until the ordered divestiture takes place, Martin must take all
reasonable steps necessary to accomplish the divestiture and cooperate
with any prospective purchaser. If Martin does not accomplish the
ordered divestiture within the specified one hundred and eighty (180)
calendar days which may be extended by up to sixty (60) calendar days
by the United States in its sole discretion, the proposed Final
Judgment provides for procedures by which the Court shall appoint a
trustee to complete the divestiture. Martin must cooperate fully with
the trustee.
If a trustee is appointed, the proposed Final Judgment provides
that Martin will pay all costs and expenses of the trustee. The
trustee's compensation will be structured so as to provide an incentive
for the trustee to obtain the highest price then available for the
assets to be divested, and to accomplish the divestiture as quickly as
possible. After the effective date of his or her appointment, the
trustee shall serve under such other conditions as the Court may
prescribe. After his or her appointment becomes effective, the trustee
will file monthly reports with the parties and the Court, setting forth
the trustee's efforts to accomplish the divestiture. At the end of six
(6) months, if the mandated divestiture has not been accomplished, the
trustee shall file promptly with the Court a report that sets forth the
trustee's efforts to accomplish the divestiture, explain why the
divestiture has not been accomplished, and make any recommendations.
The trustee's report will be furnished to the parties and shall be
filed in the public docket, except to the extent the report contains
information the trustee deems confidential. The parties each will have
the right to make additional recommendations to the Court. The Court
shall enter such orders as it deems appropriate to carry out the
purpose of the trust.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act (15 U.S.C. Sec. 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
attorney's fees. Entry of the proposed Final Judgment neither will
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.
Sec. 16(a)), the proposed Final Judgment has no prima facie effect in
any subsequent private lawsuit that may be brought against Martin, CSR,
CSR America or American Aggregates.
V. Procedures Available for Modification of the Proposed Final Judgment
The United States and the defendants have stipulated that the
proposed Final Judgment may be entered by the Court
[[Page 31462]]
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 (60) 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 should comment within sixty (60)
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 commetns should be submitted to: J. Robert Kramer, 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, as an alternative to the proposed
Final Judgment, a full trial on the merits of its Complaint against the
defendants. The United States is satisfied, however, that the
divestiture of the assets and other relief contained in the proposed
Final Judgment will preserve viable competition in the production and
sale of aggregate in Marion County that otherwise would be affected
adversely by the acquisition. Thus, the proposed Final Judgment would
achieve the relief the government would have obtained through
litigation, but avoids the time, expense and uncertainty of a full
trial on the merits of the government's Complaint.
VII. Standard of Review Under the APPA for Proposed Final Judgment
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a sixty (60) day
comment period, after which the court shall determine whether entry of
the proposed Final Judgment ``is in the public interest.'' In making
that determination, the court may consider--
(1) The competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration or relief sought, anticipated effects of
alternative remedies actually considered, and any other
considerations bearing upon the adequacy of such judgment;
(2) The impact of entry of such judgment upon the public
generally and individuals alleging specific injury from the
violations set forth in the complaint including consideration of the
public benefit, if any, to be derived from a determination of the
issues at trial.
15 U.S.C. Sec. 16(e) (emphasis added). As the Court of Appeals for the
District of Columbia Circuit recently 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 (DC Cir. 1995).
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.'' 119 Cong. Rec. 24598 (1973).
Rather,
absent 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. (CCH)
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. Bechtel
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.
United States v. Bechtel, 648 F.2d 660, 666 (9th Cir. 1981) (emphasis
added).
The proposed Final Judgment, therefore, should not be reviewed
under a standard of whether it is certain to eliminate every
anticompetitive effect of a particular practice or whether it mandates
certainty of free competition in the future. Court approval of a final
judgment requires a standard more flexible and less strict than the
standard required for a finding of liability. ``[A] proposed decree
must be approved even if it falls short of the remedy the court would
impose on its own, as long as it falls within the range of
acceptability or is `within the reaches of public interest.' ''
(citations omitted). United States v. American Tel. and Tel. Co., 552
F. Supp. 131, 150 (D.D.C. 1982), aff'd sub nom., Maryland v, United
States, 460 U.S. 1001 (1983).
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Executed on: May 23, 1997.
Respectfully submitted.
Frederick H. Parmenter,
Attorney, Department of Justice, Antitrust Division, Suite 3000, 1401 H
Street, NW., Washington, DC 20530, (202) 307-0620.
[FR Doc. 97-14933 Filed 6-6-97; 8:45 am]
BILLING CODE 4410-11-M
