[Federal Register Volume 61, Number 181 (Tuesday, September 17, 1996)]
[Notices]
[Pages 48971-48982]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23700]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. USA Waste Services, Inc. and Sanifill, Inc.;
Proposed Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. Secs. 16 (b) through (h), that proposed Final
Judgment, Stipulation, and Competitive Impact Statement have been filed
with the United States District Court in the District of Columbia in
United States v. USA Waste Services, Inc. and Sanifill, Inc., Civil
Action No. 1:96CV02031.
On August 30, 1996, the United States filed a Complaint alleging
that the proposed acquisition by USA Waste Services, Inc. of the stock
of Sanifill, Inc. would violate Section 7 of the Clayton Act, 15 U.S.C.
18. The proposed Final Judgment, filed the same time as the Complaint,
requires the companies, among other things, to divest a dry waste
landfill and certain commercial and residential hauling assets in
Houston, Texas; make available certain municipal solid waste landfill
capacity rights in the Houston area and the Johnstown, Pennsylvania
area; and amend specified waste hauler contract terms in the Johnstown
area in a way which fosters competition.
Public comment is invited within the statutory 60-day comment
period. Such comments and response thereto will be published in the
Federal Register and filed with the Court. Comments should be directed
to J. Robert Kramer, 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).
Copies of the Complaint, Stipulation and Order, Proposed Final
Judgment, and Competitive Impact Statement are available for inspection
in Room 215 of the U.S. Department of Justice, Antitrust Division, 325
7th Street, N.W., Washington, D.C. 20530, (202) 514-2841. Copies of
these materials may be obtained upon request and payment of a copying
fee.
Constance K. Robinson,
Director of Operations.
In the United States District Court for the District of Columbia
United States of America, State of Texas, by and through its
Attorney General, Dan Morales and Commonwealth of Pennsylvania, by
and through its Attorney General, Thomas W. Corbett, Jr. Plaintiffs,
v. USA Waste Services, Inc., and Sanifill, Inc. Defendants.
[Civil Action No.: 1:96-CZ02031]
Filed: August 30, 1996.
Judge Gladys Kessler
Stipulation on Jurisdiction and Agreed Final Judgment
It is stipulated by and between the undersigned parties, through
their respective attorneys, that:
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 District of Columbia.
2. The parties consent that a Final Judgment in the form hereto
attached may be filed and entered by the Court, upon the motion of any
party or upon the Court's own motion, at any time after compliance with
the requirements of the Antitrust Procedures and Penalties Act (15
U.S.C. 16(b)-(h)), and without further notice to any party or other
proceedings, provided that plaintiffs have not withdrawn their consent,
which they may do at any time before the entry of the proposed Final
Judgment by serving notice thereof on defendants and by filing that
notice with the Court.
3. The parties shall abide by and comply with the provisions of the
proposed Final Judgment pending entry of the Final Judgment, and shall,
from the date of the filing of this Stipulation, comply with all the
terms and provisions thereof as though the same were in full force and
effect as an order of the Court.
4. In the event plaintiffs withdraw their consent or if the
proposed Final Judgment is not entered pursuant to this Stipulation,
this Stipulation shall have no effect whatever and the making of this
Stipulation shall be without prejudice to any party in this or any
other proceeding.
Dated: August 30, 1996.
Respectfully submitted,
For Plaintiff United States of America:
Anne K. Bingaman,
Assistant Attorney General.
Lawrence R. Fullerton,
Deputy Assistant Attorney General.
[[Page 48972]]
Constance K. Robinson,
Director of Operations.
J. Robert Kramer II,
PA Bar # 23963.
Willie L. Hudgins,
DC Bar # 37127.
David R. Bickel,
DC Bar # 393409.
Joel A. Christie,
WI Bar # 1019438.
Michael K. Hammaker,
DC Bar # 233684.
Attorneys, U.S. Department of Justice, Antitrust Division, 1401 H
St., NW., Suite 3000, Washington, DC 20530, (202) 307-1168.
For Plaintiff State of Texas:
Dan Morales,
Attorney General of Texas.
Jorge Vega,
First Assistant Attorney General.
Laquita A. Hamilton,
Deputy Attorney General for Litigation.
Thomas P. Perkins, Jr.,
Chief, Consumer Protection Division.
Mark Tobey,
Assistant Attorney General, Deputy Chief for Antitrust.
Amy R. Krasner,
Assistant Attorney General, TX Bar No. 00791050.
Office of the Attorney General of Texas, P.O. Box 12548, Austin, TX
78711-2548, (512) 463-2185.
For Plaintiff Commonwealth of Pennsylvania:
Thomas W. Corbett, Jr.,
Attorney General of Pennsylvania.
Carl S. Hisiro,
Chief Deputy Attorney General.
James A. Donahue, III,
Senior Deputy Attorney General.
Carron M. Trainer,
Deputy Attorney General.
Garrett S. Gallia,
Deputy Attorney General.
Office of the Attorney General of Pennsylvania, Antitrust Section,
14th Floor, Strawberry Square, Harrisburg, PA 17120, (717) 787-4530.
For Defendant USA Waste Services, Inc.:
Gregory T. Sangalis,
Vice-President, General Counsel, and Secretary.
For Defendant Sanifill, Inc.:
Kirk K. Van Tine,
DC Bar # 257139, Baker & Botts, LLP, 1299 Pennsylvania Ave., NW,
Washington, DC 20004.
Attorneys for Sanifill, Inc.
So ordered on this ____, day of 1996.
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United States District Court Judge
Certification of Service
I hereby certify that a copy of the foregoing has been served upon
USA Waste Services, Inc., Sanifill, Inc., the Office of the Attorney
General of the State of Texas, and the Office of the Attorney General
of the Commonwealth of Pennsylvania, by placing a copy of the United
States' Explanation of Consent Decree Procedures in the U.S. mail,
directed to each of the above-named parties at the addresses given
below, this 30th day of August, 1996.
USA Waste Services, Inc.: c/o James R. Weiss, Preston, Gates, Suite
500, 1735 New York Ave., NW., Washington, DC 20006.
Sanifill, Inc.: c/o Kirk K. Van Tine, Baker & Botts, LLP, 1299
Pennsylvania Ave., NW., Washington, DC 20004.
State of Pennsylvania: James A. Donahue, III, Senior Deputy Attorney
General, Antitrust Section, 14th Floor, Strawberry Square, Harrisburg,
PA 17120.
State of Texas: Mark Tobey, Assistant Attorney General, Deputy Chief
for Antitrust, Office of the Attorney General of Texas, P.O. Box 12548,
Austin, TX 78711-2548.
David R. Bickel,
Attorney, U.S. Department of Justice, Antitrust Division, 1401 H
Street, N.W., Suite 3000, Washington, D.C. 20503, (202) 307-1168.
Final Judgment
Whereas, plaintiffs, United States of America (``United States''),
the State of Texas (``Texas''), and the Commonwealth of Pennsylvania
(``Pennsylvania''), having filed their Complaint herein on August 30,
1996, and plaintiffs and defendants, by their respective attorneys,
having consented to the entry of this Final Judgment without trial or
adjudication of any issue of fact or law herein, and without this Final
Judgment constituting any evidence against or an admission by any party
with respect to any issue of law or fact herein;
And whereas, defendants have agreed to be bound by the provisions
of this Final Judgment pending its approval by the Court;
And whereas, prompt and certain divestiture of certain assets, the
provision of certain disposal airspace rights, and the prompt
modification of contract terms to assure that competition is not
substantially lessened is the essence of this agreement;
And whereas, the parties intend to require defendants to divest, as
viable business operations, the Divestiture Assets specified herein;
And whereas, defendants have represented to plaintiffs that the
divestiture and contract changes required below 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 or contract 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 the subject matter of this action
and over each of the parties hereto. The Complaint states a claim upon
which relief may be granted against the 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. ``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. Solid waste hauling includes hand
pick-up, containerized pick-up and roll-off service.
B. ``USA Waste'' means defendant USA Waste Services, Inc., a
Delaware corporation with its headquarters in Dallas, Texas, and its
successors and assigns, their subsidiaries, affiliates, directors,
officers, managers, agents and employees.
C. ``Sanifill'' means Sanifill, 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. ``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.
E. ``Johnstown Area'' means Cambria County, Pennsylvania; Blair
County, Pennsylvania; Indiana County, Pennsylvania; Somerset County,
Pennsylvania; and northeast Westmoreland County, Pennsylvania.
[[Page 48973]]
F. ``Houston Hauling Assets'' means the frontload commercial
business of Sanifill that provides solid waste hauling services in the
Houston Area, and, at the option of the purchaser, the rearload
residential business of Sanifill presently served by Sanifill's
Channelview garage located at 999 Ashland in Channelview, Texas. These
assets include all customer lists, contracts and accounts, including
all contracts for disposal of solid waste at disposal facilities, and,
with respect to the rearload residential business, assignable
contracts, all trucks, containers, equipment, material, and supplies
associated with these assets.
G. ``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
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. These assets are
not required to include the assets of any hauling business in operation
at the Sunray site.
H. ``Airspace Rights'' means the right of independent private
haulers to dispose municipal solid waste at the Pellegrene Landfill in
the Johnstown Area over a ten-year period beginning on the date of the
divestiture as described more fully in Section IX.
I. ``Airspace Assets'' means the right to dispose, over a ten-year
period beginning on the date of the divestiture, 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 in Angleton, Texas.
J. ``Divestiture Assets'' refers to the Houston Hauling Assets,
Sunray Assets, and Airspace Assets.
K. ``Small Container'' means a 1 to 10 cubic yard container.
L. ``Small Containerized Solid Waste Hauling Service'' means
providing solid waste hauling service to commercial customers by
providing the customer with a Small Container that is picked up
mechanically using a frontload, rearload, or sideload truck, and
expressly excludes hand pick-up service, and service using a compactor
attached to or part of a small container.
M. ``Customer'' means a Small Containerized Solid Waste Hauling
Service customer.
III
Applicability
A. The provisions of this Final Judgment apply to the defendants,
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 Final Judgment by personal service
or otherwise.
B. Defendants shall require, as a condition of the sale or other
disposition of all or substantially all of the Divestiture Assets, that
the acquiring party or parties agree to be bound by the provisions of
this Final Judgment.
IV
Divestiture of Assets
A. Defendants are hereby ordered and directed, within 90 days from
the filing of this Final Judgment, to divest the Divestiture Assets,
unless the United States, after consultation with Texas, consents that
only some portion of the Divestiture Assets need be divested.
Defendants are further ordered and directed to notify plaintiffs 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 purchaser 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 Final
Judgment, defendants promptly shall make known, by usual and customary
means, the availability of the Divestiture Assets and Airspace Rights
described in this Final Judgment. Defendants shall inform any person
making an inquiry regarding a possible purchase that the sale is being
made pursuant to this Final Judgment and provide such person with a
copy of this Final Judgment. Defendants shall also offer to furnish to
all bona fide prospective purchasers, subject to customary
confidentiality assurances, all information regarding the Divestiture
Assets customarily provided in a due diligence process except such
information subject to attorney-client or work-product privileges.
Defendants shall make available such information to plaintiffs 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.
D. Defendants shall not require of the purchaser or purchasers, as
a condition of sale, that any current employee of the Divestiture
Assets be offered or guaranteed continued employment after the
divestiture.
E. Defendants shall take all reasonable steps to accomplish quickly
the divestiture contemplated by this Final Judgment.
F. As part of the sale of the Airspace Assets, defendants 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, defendants will operate the gate, scale house,
and disposal area under terms and conditions no less favorable than
those provided by defendants' 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 Defendants 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.
[[Page 48974]]
Defendants 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 Final Judgment. Any such
objections by defendants must be conveyed in writing to plaintiffs and
the trustee within ten (10) days after the trustee has provided the
notice required under Section VI.
B. The trustee shall serve at the cost and expense of defendants,
on such terms and conditions as the Court may prescribe, and shall
account for all monies derived from the sale of 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, all
remaining money shall be paid to defendants 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. Defendants shall use their best efforts to assist the trustee in
accomplishing the required divestiture. The trustee and any
consultants, accountants, attorney, and other persons retained by the
trustee shall have full and complete access to the personnel, books,
records, and facilities of the Divestiture Assets, and defendants 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. Defendants 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 parties and the Court setting forth the trustee's efforts to
accomplish the divestiture order under this 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 parties, who shall each have the right to be heard
and to make additional recommendations consistent with the purposes 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. Defendants shall give 30 days' notice to the United States,
Texas, and Pennsylvania 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 or the Johnstown Area where that
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 defendants from acquiring less than five (5)
percent of the stock of a publicly traded company.
F. Defendants shall give 30 days' notice to the United States,
Texas, and Pennsylvania 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 or the
Johnstown 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 defendants from acquiring less than five
(5) percent of the stock of a publicly traded company.
G. The purchaser or purchasers of the 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 defendants during the life
of this decree. Furthermore, the purchaser or purchasers of the
Divestiture Assets, or any of them, shall notify plaintiffs 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 Final
Judgment.
VI
Notification
A. Defendants or the trustee, whichever is then responsible for
effecting the divestiture required herein, shall notify plaintiffs of
any proposed divestiture required by Section IV or V of this Final
Judgment. If the trustee is responsible, it shall similarly notify
defendants. 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 Divestiture Assets
or any of them, together with full details of the same. Within fifteen
(15) days after receipt of the notice, plaintiffs may request
additional information concerning the proposed divestiture, the
proposed purchaser, and any other potential purchaser. Defendants 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 defendants 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 defendants and the trustee, if
there is one, that it does not object, then the divestiture may be
consummated, subject only to defendant's limited right to object to the
sale under Section V.A. Upon objection by the United States, after
consultation with Texas, or by defendants under Section V.A, the
proposed divestiture shall not be accomplished unless approved by the
Court.
B. Thirty (30) days from the date when defendants consummate the
acquisition, but in no event later than October 30, 1996, and every
thirty (30) days thereafter until the divestiture has been completed,
defendants shall deliver to plaintiffs a written report as to the fact
and manner of compliance with Section IV of this 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 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. Defendants shall maintain full records of all efforts made to
divest the Divestiture Assets or any of them.
[[Page 48975]]
VII
Financing
Defendants shall not finance all or any part of any purchase made
pursuant to Sections IV or V of this Final Judgment without the prior
written consent of the United States, after consultation with Texas and
Pennsylvania.
VIII
Prohibited Conduct
With respect to the Johnstown Area, defendants are enjoined and
restrained as follows:
A. Except as set forth in paragraph VIII.B. and G., defendants
shall not enter into any contract with a Customer for a service
location that:
(1) Has an initial term longer than one (1) year;
(2) Has any renewal term longer than one (1) year;
(3) Requires that the Customer give defendants notice of
termination more than thirty (30) days prior to the end of any initial
term or renewal term;
(4) Requires that the Customer pay liquidated damages in excess of
three times the greater of its prior monthly charge or its average
monthly charge over the most recent six months during the first year of
the initial term of the Customer's contract;
(5) Requires that the Customer pay liquidated damages in excess of
two times the greater of its prior monthly charge or its average
monthly charge over the most recent six months after the Customer has
been a Customer of a defendant for a continuous period in excess of one
(1) year;
(6) Requires the Customer to give defendants notice of any offer by
or to another solid waste hauling firm or requires the Customer to give
defendants a reasonable opportunity to respond to such an offer for any
period not covered by the contract (sometimes referred to as a ``right
to compete'' clause);
(7) Is not easily readable (e.g., formatting and typeface) or is
not labeled, in large letters, SERVICE CONTRACT; or
(8) Requires a Customer to give defendants the right or opportunity
to provide hauling service for recyclables or more than one solid waste
hauling service for a Customer unless the Customer affirmatively
chooses to have defendant do so by so stating on the front of the
contract.
B. Notwithstanding the provisions of paragraph VIII.A. of this
Final Judgment, defendants may enter into a contract with a Customer
for a service location with an initial term in excess of one year
provided that:
(1) The Customer has acknowledged in writing that the defendants
have offered to the Customer the form contracts defendants are required
under VIII.A. and D. to offer generally to Customers by notice in the
form attached hereto as Exhibit B;
(2) The Customer has the right to terminate the contract after one
year by giving notice to defendants thirty (30) days or more prior to
the end of that one year period;
(3) The contract otherwise complies with the provisions of
paragraph VIII.A. (2)-(8); and
(4) The number of service locations subject to contracts permitted
under subparagraph B. does not exceed 25% of the total number of
service locations for small containerized solid waste hauling service
in any year.
C. From the date of the filing of an executed Stipulation,
defendants shall offer to new Customers with service locations only
contracts that conform to the requirements of paragraphs VIII.A. or B.
of this Final Judgment, except as provided in VIII.G.
D. Except as provided in VIII.G., within thirty (30) days following
the entry of this Final Judgment, defendants shall send to all existing
Customers with service locations with contracts having an initial term
longer than one year and which otherwise do not conform with paragraph
VIII.B. a notice in the form attached hereto as Exhibit A. If the
customer elects to accept the offered contract language, defendants
shall execute such an agreement.
E. Except as provided in VIII.G., for each Customer with a contract
having an initial term longer than one year and that otherwise does not
conform to paragraphs VIII.B. that enters a renewal term 120 days after
entry of this Final Judgment, defendants shall send a reminder to that
Customer, in the form attached hereto as Exhibit B, ninety (90) days or
more prior to the effective date of the renewal term. This remainder
may be sent to the Customer as part of a monthly bill, but if it is, it
must be displayed on a separate page and in large print.
F. Upon entry of this Final Judgment, defendants may not enforce
those contract provisions that are inconsistent with this Final
Judgment.
G. Notwithstanding the provisions of this Final Judgment,
defendants may enter into contracts with municipal or governmental
entities that are not in compliance with paragraphs VIII.A.-F. provided
that those contracts are awarded to defendants on the basis of a formal
request for bids or a formal request for proposals issued by the
Customer.
H. Notwithstanding the provisions of this Final Judgment,
defendants shall not be required to do business with any Customer.
I. Defendants may not oppose any efforts by any persons to amend
any county plans to add any landfill, to permit a new landfill, or to
permit expansion of an existing landfill.
IX
Airspace Rights
A. Defendants shall provide the Airspace Rights at the Pellegrene
Landfill, located at SR 2019 Lucisboro Road in Homer City, Pennsylvania
as follows:
(1) Defendants are obligated to accept up to 200 tons per day and
up to 62,400 tons per year during the ten-year period;
(2) Subject to applicable county plans, these Airspace Rights will
be available to any independent private hauler for waste collected in
the Pennsylvania counties of Cambria, Blair, Westmoreland, and Somerset
until the tonnage limits in IX.A(1) are met; and
(3) Defendants will provide these Airspace rights under terms and
conditions no less favorable than those provided to defendants'
vehicles or the vehicles of any municipality in the Johnstown area,
except as to price and credit terms.
B. For purposes of measuring the tonnage of airspace rights
provided under Section IX,
(1) Construction and demolition or other Type 4 materials and waste
delivered in transfer trailers are not included in the tonnage limits
set forth in IX.A.(1);
(2) ``Independent private hauler'' refers to any private firm, not
including municipalities, providing solid waste collection services,
but no disposal services, in the Johnstown Area.
X
Preservation of Assets
Until the divestitures required by the Final Judgment have been
accomplished:
A. Defendants 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.
[[Page 48976]]
B. Defendants 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 Sanifill's solid waste hauling and
disposal businesses.
C. Defendants shall use all reasonable efforts to maintain and
increase sales of solid waste hauling and disposal services provided by
the Divestiture Assets, and they shall maintain at 1995 or previously
approved levels, whichever is higher, promotional, advertising, sales,
marketing and merchandising support for such services.
D. Defendants shall take all steps necessary to ensure that the
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 Divestiture Assets.
E. Defendants shall not, except as part of a divestiture approved
by plaintiffs, remove, sell or transfer any Divestiture Assets, other
than solid waste hauling and disposal services provided in the ordinary
course of business.
F. Defendants shall take no action that would jeopardize the sale
of Divestiture Assets.
G. Defendants shall appoint a person with oversight responsibility
for the Divestiture Assets to insure compliance with this section of
the Final Judgment.
XI
Compliance Inspection
For the purpose of determining or securing compliance with this
Final Judgment, and subject to any legally recognized privilege, from
time to time.
A. Duly authorized representatives of the United States, Texas, or
Pennsylvania, 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 or the Attorney General of the Commonwealth of
Pennsylvania, respectively, and on reasonable notice to defendants 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 defendants, which
may have counsel present, relating to any matters contained in this
Final Judgment; and
2. subject to the reasonable convenience of defendants and without
restraint or interference from them, to interview defendants'
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 or the Attorney General of the Commonwealth of Pennsylvania,
respectively, made to defendants at their principal offices, defendants
shall submit such written reports, under oath if requested, with
respect to any of the matters contained in this Final Judgment as may
be requested.
C. No information nor any documents obtained by the means provided
in this Section XI shall be divulged by any representative of the
United States or the Office of the Attorney General of Texas or of the
Office of the Attorney General of Pennsylvania 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 or of the
Office of the Attorney General of Pennsylvania, except in the course of
legal proceedings to which the United States, Texas or Pennsylvania is
a party (including grand jury proceedings), or for the purpose of
securing compliance with this Final Judgment, or as otherwise required
by law.
D. If at the time information or documents are furnished by
defendants to plaintiffs, defendants 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 defendants mark each pertinent page of such
material, ``Subject to claim of protection under Rule 26(c)(7) of the
Federal Rules of Civil Procedure,'' then plaintiffs shall give ten (10)
days notice to defendants prior to divulging such material in any legal
proceeding (other than a grand jury proceeding) to which any defendant
is not a party.
XII
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, implementation, or modification of
any of the provisions of this Final Judgment, for the enforcement of
compliance herewith, and for the punishment of any violations hereof.
XIII
Termination
This Final Judgment will expire on the tenth anniversary of the
date of its entry.
XIV
Public Interest
Entry of this Final Judgment is in the public interest.
Dated:-----------------------------------------------------------------
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. 16
----------------------------------------------------------------------
United States District Judge
Notice to Customers
Dear Valued Customer:
[Insert name of local operating company] is offering a new one
year contract to all small containerized solid waste hauling
customers with service locations in [insert market here]. We would
like to take this opportunity to offer this contract to you. Of
course, if you prefer, you can continue with your existing contract.
In most cases, this new contract will have terms that are more
advantageous to customers than their current contracts. This new
contract has the following features:
An initial term of one year (unless you request a
longer term);
A renewal term of one year;
At the end of your initial term, you may take no action
and your contract will renew or you can choose not to renew the
contract by simply giving us notice at any time up to 30 days prior
to the end of your term;
If you can request a contract with a term longer than
one year, you can cancel that contract after one year by giving us
notice at any time up to 30 days prior to the end of the first year;
If you terminate the contract at any other time, you
will be required to pay, as liquidated damages, no more than three
times the greater of your prior monthly or average monthly charge.
If you've been a customer continuously for more than one year, the
liquidated damages would be reduced to two times the greater of your
prior monthly or average monthly charge;
You will not be required to give us notice of any offer
from another waste hauling firm or to give us an opportunity to make
a counteroffer although you may do so if you wish;
You will be able to choose on the contract which
specific types of waste hauling services you would like us to
perform.
You may obtain a new contract containing these terms by calling
[insert telephone number or sales rep name and number].
[[Page 48977]]
Exhibit A
If you prefer, you may continue with your existing contract. If
you retain your existing contract, we will not enforce any terms
that are inconsistent with the new form contract terms.
We thank you for your business and look forward to a continued
relationship with you. If you have any questions, please call
[insert contact person and phone number].
Reminder to Customers
Your contract will automatically renew on [MM/DD/YY] unless we
receive your cancellation by [MM/DD/YY].
You may also obtain a new form contract with some terms more
advantageous to you than your current contract.
You may obtain a new contract containing these terms by calling
[insert telephone number or sales rep name and number].
Exhibit B
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 proceeding.
I
Nature and Purpose of the Proceeding
On August 30, 1996, the United States filed a civil antitrust
Complaint which alleges that the proposed acquisition of the voting
stock of Sanifill, Inc. (``Sanifill'') by USA Waste Services, Inc.
(``USA Waste'') would violate Section 7 of the Clayton Act, 15 U.S.C.
Sec. 18. The Complaint alleges that the combination of these two
significant competitors would lessen competition substantially in the
provisions of small containerized waste hauling services and landfill
disposal services in the Houston, Texas and Johnstown Pennsylvania
areas. As defined in the Complaint, the Houston area encompasses Harris
County, Texas; Chambers County, Texas; Brazoria County, Texas, Fort
Bend County, 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''). The Johnstown area
encompasses Indiana County, Pennsylvania; Somerset County,
Pennsylvania; Cambria County, Pennsylvania; northeastern Westmorland
County, Pennsylvania; and Blair County, Pennsylvania, including the
municipalities located, in whole or in part, in those counties
(``Johnstown market''). 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 USA Waste
from acquiring control of Sanifill.
When the Complaint was filed, the United States also filed a
proposed settlement that would permit USA Waste to complete its
acquisition of Sanifill, but require certain divestitures and contract
modifications that will preserve competition in the Houston and
Johnstown markets. This settlement consists of a Stipulation and Order
and a proposed Final Judgment.
The proposed Final Judgment orders USA Waste to divest the Sanifill
garage located at 999 Ashland, Channelview, Texas 77530; Sanifill's
frontload commercial hauling business that provides solid waste hauling
services in the Houston market, most of the rearload residential
business of Sanifill presently served by Sanifill's Channelview
facility (``Houston Hauling Assets''), and USA Waste's North County
Landfill located at 2015 Wyoming, League City, Texas (``Houston
Landifill Site'').
In addition, USA Waste is ordered to sell the right to use landfill
capacity for up to 2,000,000 tons of municipal solid waste (``MSW'')
over a ten year period beginning on the date of divestiture (and capped
at an annual total of 270,000 tons) at one or both of the following
sites in the Houston market: the Hazelwood Landfill located at 4719
Tri-City Beach Road, Baytown, Texas 77520 and the Brazoria County
Landfill located at 10310 FM 523, Angleton, Texas. (``Houston Airspace
Assets''). USA Waste must complete the divestiture of the Houston
Assets, the Houston Landfill Site, and the Houston Airspace Assets
within ninety (90) days after the date on which the proposed Final
Judgment was filed (i.e., August 30, 1996), in accordance with the
procedures specified therein.
The Stipulation and Order and proposed Final Judgment requires USA
Waste to ensure that, until the divestitures mandated by the proposed
Final Judgment have been accomplished, the Houston Hauling Assets and
the Houston Landfill Site 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 Final Judgment.
Further, the proposed Final Judgment orders USA Waste to take
certain actions to eliminate any anticompetitive impact from the
proposed acquisition on the Johnstown market. USA Waste is ordered to
offer less restrictive service contracts to their small container solid
waste hauling customers in the Johnstown market. It must provide at
least 30 days written notice to the U.S. Department of Justice and the
Commonwealth of Pennsylvania Attorney General's Office in advance of
its purchase of any significant waste hauling or waste disposal company
in the Johnstown market. It shall not oppose the addition of any
landfill, existing or new, to any county landfill plan in the Johnstown
market. And further, USA Waste shall make available a total of 200 tons
per day of MSW landfill capacity over a ten year period beginning on
the date of divestiture at the following site in the Johnstown market:
the Pellegrene Landfill located at SR 2019 Lucisboro Road, Homer City,
Pennsylvania 15748. The Pelligrene Landfill capacity shall be made
available by the defendants for use by any and all independent private
MSW haulers.
The United States and the defendants have stipulated that the
proposed Final Judgment may be entered after compliance with the APPA.
Entry of the proposed Final Judgment would terminate the action, except
that the Court would retain jurisdiction to construe, modify, or
enforce the provisions of the proposed Final Judgment and to punish
violations thereof.
II
Description of the Events Giving Rise to the Alleged Violation
USA Waste is the third largest solid waste hauling and disposal
company in the nation, and several municipal, commercial, industrial
and residential customers in 24 states. In 1995, USA Waste had total
revenues of over $730 million.
Sanifill is one of the top ten companies in the solid waste hauling
and disposal business in the United States with operations in 23
states, the District of Columbia, Puerto Rico, Mexico and Canada. In
1995, Sanifill had total revenues of about $257 million.
On June 22, 1996, USA Waste agreed to acquire all of the voting
stock of Sanifill for a purchase price of $1.5 billion. This
transaction, which would take place in the highly concentrated Houston
and Johnstown small container hauling and landfill disposal industries,
precipitated the government's suit.
[[Page 48978]]
The Transaction's Effects in the Houston and Johnstown Markets
A. The Solid Waste Hauling Industry
The Complaint alleges 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 and
the Johnstown area constitute appropriate sections of the country, or
relevant geographic markets. The Complaint alleges the effect of USA
Waste's acquisition may be to lessen competition substantially in the
provision of small containerized hauling services in the Houston and
Johnstown markets and landfill disposal services in the Houston market.
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 noncompactible 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-of 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. Local laws or regulations may
further localize markets. For example, flow control regulations in
Pennsylvania can designate the facilities where trash picked up within
a geographic area must be disposed. Other local regulations may
prohibit the depositing of trash from outside a particular jurisdiction
in disposal facilities located within that jurisdiction. By designating
certain disposal facilities, these laws and regulations can dictate
which disposal facilities can compete for waste from these local
jurisdictions and how a hauler can set up its routes.
The Complaint alleges that USA Waste's acquisition of Sanifill
would substantially lessen competition for the provision of small
containerized hauling service in the Houston and Johnstown markets.
Actual and potential competition between USA Waste and Johnstown for
the provision of small containerized hauling service in the Houston and
Johnstown markets will be eliminated.
USA Waste and Sanifill are two of the largest providers of small
containerized hauling service in the Houston and Johnstown markets. In
the Houston market, USA Waste has a 24 percent share and Sanifill has a
7 percent share. The acquisition would increase the Herfindahl-
Hirschmann Index (HHI) by about 325 to about 2225.
In the Johnstown market, USA Waste has a 31 percent share and
Sanifill has a 14 percent share. The acquisition would increase the HHI
by about 850 to about 2550.
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 markets, 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
[[Page 48979]]
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 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 costs, 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 are referred to as a MSW
(Type 1) landfill or to 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.
USA Waste's acquisition of Sanifill would substantially lessen
competition for the provision of MSW landfill and dry waste landfill
service in the Houston market. Actual and potential competition between
USA Waste and Sanifill for the provision of MSW and dry waste landfill
service in the Houston market will be eliminated.
USA Waste and Sanifill are two leading providers of MSW landfill
and dry waste landfill services in the Houston market. There are nine
MSW landfills (owned by four firms) and approximately 18 dry waste
landfills (owned by seven firms) in the Houston area. USA Waste and
Sanifill each operate one MSW landfill; Sanifill has 11 dry waste
landfills (four operating) and USA Waste has one dry waste landfill.
As a result of the acquisition, the concentration of MSW and dry
waste landfill services in the Houston market will be substantially
increased, which is likely to result in price increases. The
acquisition would increase the HHI in MSW landfill disposal service by
225 points to 3550; and in dry waste landfills by 650 points to 4000.
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 landfill 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 Complaint alleges that the transaction would have the following
effects, among others: competition for the provision of small
containerized hauling service in the Houston and Johnstown markets and
landfill disposal service in the Houston market will be substantially
lessened; actual and potential competition between USA Waste and
Sanifill in the provision of small containerized hauling service and
landfill disposal service in the Houston market will be eliminated; and
prices for small containerized hauling service in the Houston and
Johnstown markets and landfill disposal service in the Houston market
are likely to increase above competitive levels.
III
Explanation of the Proposed Final Judgment
A. The Houston Market
The provisions of the proposed Final Judgment are designed to
eliminate the anticompetitive effects of the acquisition in small
containerized hauling services in the Houston market by establishing a
new, independent and economically viable competitor in that market. The
proposed Final Judgment requires USA Waste and Sanifill, within 90 days
of August 30, 1996, to divest, as viable ongoing businesses, the
Houston Hauling Assets, Houston Landfill Site and the Houston Airspace
Assets. The divestitures would include the small containerized hauling
service assets, landfill disposal assets, and such other assets as may
be necessary to insure the viability of the small container and
landfill businesses. If USA Waste and Sanifill cannot accomplish these
divestitures within the above-described period, the Final Judgment
provides that, upon application (after consultation with the State of
Texas) by the United States as plaintiff, the Court will appoint a
trustee to effect divestiture.
The proposed Final Judgment provides that the assets must be
divested in such a way as to satisfy plaintiff United States (after
consultation with the State of 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. The
defendants 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 Final Judgment provides
that USA Waste and Sanifill 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 trustee will file monthly reports with the
parties and the Court, setting forth the trustee's efforts to
accomplish divestiture. At the end of six months, if the divestiture
has not been accomplished, the trustee and the parties will make
recommendations to the Court which shall enter such orders as
appropriate in order to carry out the purpose of the trust, including
extending the trust or the term of the trustee's appointment.
In addition, the proposed 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 Sanifill to sell
the rights to disposal of 2 million tons of MSW waste over ten years at
their only two MSW landfills in the area. The Final Judgment limits the
amount disposed of in any one year to 270,000 tons and requires that
USA Waste and Sanifill 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 270,000 ton limit is approximately
80%
[[Page 48980]]
of the total capacity used in 1995 at the Sanifill MSW landfill.
Sanifill will retain some of the hauling operations that used this
landfill in 1995 and needs some capacity to compete for large disposal
contracts against its two larger landfill competitors in the area. The
availability of this significant capacity limits the impact of any
increase in MSW landfill concentration in the Houston market. The
availability of this landfill capacity further 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 Final Judgment mandates that
USA Waste also divest its sole dry waste (Type 4) landfill in the
Houston area market. USA Waste's divestiture of the North County
Landfill eliminates 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 Final Judgment that
defendants provide 30 days written notice of any proposed purchase of
significant waste hauling or disposal companies in the Houston market
insures 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.
B. The Johnstown Market
The proposed Final Judgment also requires USA Waste and Sanifill to
offer less restrictive contracts to small containerized hauling
customers in the Johnstown area market. These changes to the contracts
involve substantially shortening the term of contracts USA Waste and
Sanifill use from three years to one year, substantially reducing the
amount of liquidated damages, and eliminating other terms that could
make entry more difficult. The proposed Final Judgment generally
requires that these revised contracts shall be offered immediately to
all new small containerized hauling customers. Within 30 days of the
entry of the proposed Final Judgment, USA Waste and Sanifill must offer
the revised contract to all their non-municipal small containerized
hauling service customers in the Johnstown market. These changes in the
contract will make it easier for a new entrant to gain customers and
set up an efficient route or for a small hauler to expand its route if
prices increase. In the Johnstown area, a rural market in which most
haulers offer rearload small containerized hauling services and there
are a number of small containerized haulers, contract relief should
substantially eliminate any anticompetitive effects in the small
containerized hauling market.
The proposed Final Judgment further limits any anticompetitive
effect in the small containerized hauling market related to the USA
Waste acquisition of Sanifill in the Johnstown market in several ways.
First, the defendants are required to make available specified MSW
landfill airspace rights to independent haulers for a ten year period.
Defendants are obliged to accept up to 200 tons per day and up to
62,400 tons per year during this period at the Pelligrene landfill
under non-price terms no less favorable than those provided to
defendants' vehicles or the vehicles of any municipality in the
Johnstown market. Second. USA Waste and Sanifill are required to
refrain from opposing in any way the addition of new or existing
landfills to any county landfill plan in the Johnstown market from
entry of the Final Judgment and refrain from opposing any permit
application for a new landfill or expansion of an existing landfill for
a period of ten years. Finally, the requirement that defendants provide
at least 30 days written notice of any proposed purchase of significant
waste hauling or disposal companies in the Johnstown area market
insures that the U.S. Department of Justice and the Commonwealth of
Pennsylvania Attorney 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.
The United States concluded divestiture was not necessary in the
Johnstown market. It determined that a change in the type of contracts
used with small containerized hauling service in this market, combined
with the additional notice and landfill capacity agreements reached
with the parties, will adequately address the competitive concerns
posed by USA Waste's acquisition of Sanifill. A number of factors led
to that decision, including the number of existing competitors in the
market; the size of the population; the number, location and density of
commercial establishments requiring small containerized hauling
service; and the extensive use of rear-end load mixed (hand and
containerized) collection routes. Absent the long-term contracts and
limitations on landfill access, these firms could be expected to expand
significantly their containerized hauling operations in response to an
anticompetitive price increase. Requiring USA Waste and Sanifill to
offer less restrictive contracts within the market and to provide
access to landfill capacity to independent haulers eliminates a major
barrier to entry and expansion, thus constraining any possible
anticompetitive price increase by the post-acquisition firm.
The relief sought in the various markets alleged in the Complaint
has been tailored to insure that, given the specific conditions in each
market, the relief will protect consumers of small containerized
hauling services and landfill disposal services from higher prices and
poorer quality service in those markets that might otherwise result
from the acquisition.
IV
Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act (15 U.S.C. 15) provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act (15 U.S.C.
16(a)), the proposed Final Judgment has no prima facie effect in any
subsequent private lawsuit that may be brought against defendant.
V
Procedures Available for Modification of the Proposed Final Judgment
The United States and defendant have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least 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 who wishes to comment should do so within
sixty (60) days of the date of publication of this Competitive Impact
Statement in the Federal Register. The 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 judgment at any time prior to entry. The
comments and the response of the United States will be filed with the
Court and
[[Page 48981]]
published in the Federal Register. Written comments should be submitted
to: J. Robert Kramer II, Chief, Litigation II Section, Antitrust
Division, United States Department of Justice, 1401 H Street, N.W.,
Suite 3000, Washington, D.C. 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, litigation against defendants USA Waste and Sanifill.
The United States could have brought suit and sought preliminary and
permanent injunctions against USA Waste's acquisition of the voting
stock Sanifill. The United States is satisfied, however, that the
divestiture of the described assets, the provision of significant
landfill capacity to competitors, and the contract relief outlined in
the proposed Final Judgment will encourage viable waste hauling and
disposal competitors in the markets identified by the United States as
requiring the relief implemented. The United States is satisfied that
the proposed relief will prevent the acquisition from having
anticompetitive effects in those markets. The divestiture, the
provision of landfill capacity and the proposed contractual relief will
restore the markets to the structure that existed prior to the
acquisition, will preserve the existence of independent competitors in
those areas, and will allow for new entry and expansion by existing
firms in those markets where contract relief is sought. For the reasons
discussed above, infra at pages 17-18, the United States concluded
divestiture was not necessary in the Johnstown market because the
contractual, notification, and landfill capacity agreements reached
with the parties adequately address the competitive concerns.
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-day comment
period, after which the court shall determine whether entry of the
proposed Final Judgment ``is in the public interest.'' In making that
determination, the court may consider--
(1) The competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration or relief sought, anticipated effects of
alternative remedies actually considered, and any other
considerations bearing upon the adequacy of such judgment;
(2) The impact of entry of such judgment upon the public
generally and individuals alleging specific injury from the
violations set forth in the complaint including consideration of the
public benefit, if any, to be derived from a determination of the
issues at trial.
15 U.S.C. 16(e) (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 (D.C. 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.'' \1\ Rather,
\1\ 119 Cong. Rec. 24598 (1973). See, United States v. Gillette
Co., 406 F.Supp. 713, 715 (D.Mass. 1975). A ``public interest''
determination can be made properly on the basis of the Competitive
Impact Statement and Response to Comments filed pursuant to the
APPA. Although the APPA authorizes the use of additional procedures,
15 U.S.C. Sec. 16(f), those procedures are discretionary. A court
need not invoke any of them unless it believes that the comments
have raised significant issues and that further proceedings would
aid the court in resolving those issues. See, H.R. 93-1463, 93rd
Cong. 2d Sess. 8-9, reprinted in (1974) U.S. Code Cong. & Ad. News
6535, 6538.
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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. 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.\2\
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\2\ United States v. Bechtel, 648 F.2d at 666 (citations
omitted) (emphasis added); see United States v. BNS. Inc., 858 F.2d
at 463; United States v. National Broadcasting Co., 449 F. Supp.
1127, 1143 (C.D. Cal. 1978); United States v. Gillette Co., 406 F.
Supp. at 716. See also United States v. American Cynamid Co., 719
F.2d at 565.
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).'' \3\
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\3\ 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) quoting United States v. Gillette Co., supra, 406
F. Supp. at 716; United States v. Alcan Aluminum, Ltd., 505 F. Supp.
619, 622 (W.D. Ky 1985).
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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.
For Plaintiff United States of America:
Dated: September 6, 1996.
J. Robert Kramer II,
PA Bar #23963.
Willie L. Hudgins,
DC BAR #37127.
Attorneys, U.S. Department of Justice, Antitrust Division.
David R. Bickel,
DC Bar #393409.
Joel A. Christie,
WI Bar #1019438.
Michael K. Hammaker,
DC Bar #233684.
[[Page 48982]]
Attorneys, U.S. Department of Justice, Antitrust Division, 1401 H
St., N.W., Washington, D.C. 20530, (202) 307-1168.
Certification of Service
I hereby certify that a copy of the foregoing has been served upon
USA Waste Services, Inc., Sanifill, Inc., the Office of the Attorney
General of the State of Texas, and the Office of the Attorney General
of the Commonwealth of Pennsylvania, by placing a copy of this
Competitive Impact Statement in the U.S. mail, directed to each of the
above-named parties at the addresses given below, this 6th day of
September, 1996.
USA Waste Services, Inc.: c/o James R. Weiss, Preston, Gates, Suite
500, 1735 New York Ave., NW, Washington, DC 20006
Sanifill, Inc.: c/o Kirk K. Van Tine, Baker & Botts, LLP, 1299
Pennsylvania Ave., NW, Washington, DC 20004
State of Pennsylvania: James A. Donahue, III, Senior Deputy Attorney
General, Antitrust Section, 14th Floor, Strawberry Square, Harrisburg,
PA 17120
State of Texas: Mark Tobey, Assistant Attorney General, Deputy Chief
for Antitrust, Office of the Attorney General of Texas, P.O. Box 12548,
Austin, TX 78711-2548
David R. Bickel,
Attorney, U.S. Department of Justice, Antitrust Division, 1401 H
Street, N.W., Suite 3000, Washington, D.C. 20530, (202) 307-1168.
[FR Doc. 96-23700 Filed 9-16-96; 8:45 am]
BILLING CODE 4410-01-M
