[Federal Register: February 10, 2004 (Volume 69, Number 27)]
[Notices]
[Page 6325-6339]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10fe04-129]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. First Data Corporation and Concord EFS, Inc.;
Competitive Impact Statement, Proposed Final Judgment and Complaint
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. section 16(b) through (h), that a proposed
Final Judgment, Amended Hold Separate Stipulation and Order, and
Competitive Impact Statement have been filed with the United States
District Court for the District of Columbia in United States of America
v. First Data Corporation and Concord EFS, Inc., Civil Action No.
03CV02169. On October 23, 2003, the United States filed a Complaint
alleging that the proposed acquisition by First Data of Concord would
violate Section 7 of the Clayton Act, 15 U.S.C. 18. The Complaint
alleges that the acquisition would reduce competition substantially in
the PIN debit network services market by combining Concord's STAR PIN
debit network with the NYCE PIN debit network. First Data owns a
controlling 64 percent interest in NYCE. The proposed Final Judgment
requires
[[Page 6326]]
First Data to divest all of its interests in NYCE. Copies of the
Complaint, proposed Final Judgment, Amended Hold Separate Stipulation
and Order, and Competitive Impact Statement are available for
inspection at the Department of Justice in Washington, DC, in Room
9500, 600 E Street, NW. and at the Office of the Clerk of the United
States District Court for the District of Columbia, Washington, DC.
Public comment is invited within 60 days of the date of this
notice. Such comments, and responses thereto, will be published in the
Federal Register and filed with the Court. Comments should be directed
to Renata Hesse, Chief, Networks and Technology Section, Antitrust
Division, Department of Justice, Suite 9500, 600 E Street, NW.,
Washington, DC 20530, (telephone: 202-307-6200).
J. Robert Kramer, II,
Director of Operations, Antitrust Division.
Competitive Impact Statement
Plaintiff, the United States of America (``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
Defendant first Data Corporation (``First Data'') and Defendant
Concord EFS, Inc. (``Concord'') entered into an Agreement and Plan of
Merger on April 1, 2003, pursuant to which First Data would acquire
Concord in an all-stock transaction then valued at approximately $7
billion. On October 23, 2003, the United States and the States of
Connecticut, Illinois, Louisiana, Massachusetts, New York, Ohio,
Pennsylvania and Texas, and the District of Columbia (``Plaintiff
States'') filed a civil antitrust complaint, seeking to enjoin the
proposed acquisition. The Complaint alleges that the acquisition would
reduce competition substantially in the PIN debit network services
market by combining the STAR and NYCE PIN debit networks, in violation
of section 7 of the Clayton Act, 15 U.S.C. 18.
PIN debit networks provide a fast and secure payment mechanism that
is used at more than one million merchant locations. The acquisition
would have significantly increased the concentration levels in the
already concentrated PIN debit network services market by combining the
largest and third-largest PIN debit networks in the United States, STAR
and NYCE, respectively. This significant increase in market
concentration would likely have substantially reduced competition among
PIN debit networks for merchant customers, resulting in thousands of
merchants paying higher prices and receiving poorer levels of service
for PIN debit network services. Merchants would have passed on at least
some of these higher costs by raising the prices of their goods and
services, to the detriment of tens of millions of consumers throughout
the United States. Accordingly, the complaint sought: (1) a judgment
that the proposed acquisition would violate Section 7 of the Clayton
Act; and (2) permanent injunctive relief that would prevent Defendants
from carrying out the acquisition or otherwise combining their
businesses or assets.
On December 15, 2003, the United States, the Plaintiff States and
the Defendants filed a proposed Final Judgment and Hold Separate
Stipulation and Order, which will eliminate the anticompetitive effects
of the acquisition. Upon the filing of the proposed Final Judgment and
Hold Separate Stipulation and Order, the Defendants announced that they
had extended the date for closing the transaction until April 30, 2004.
On January 9, 2004, the parties filed an Amended Hold Separate
Stipulation and Order.\1\
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\1\ The original Hold Separate Stipulation and Order signed by
the Court on December 15, 2003 prohibited any first Data officer,
director, manager, employee, or agent from serving on the NYCE Board
of Directors after December 30, 2003. This deadline would have
required six First Data employees who were serving on the NYCE Board
to resign. On December 30, 2003, with the consent of all parties,
the Court issued an order extending First Data's deadline concerning
participation on the NYCE Board until January 9, 2004. On January 9,
the parties filed a consent motion requesting that the Court enter
the Amended Hold Separate Stipulation and Order, which the Court
signed on January 13, 2004. The Amended Hold Separate Stipulation
and Order allows First Data to retain its NYCE Board seats for
certain limited specifically enumerated purposes unless the United
States, in its sole discretion, in consultation with the Plaintiff
States, requires First Data's representatives on the NYCE Board to
resign.
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The proposed Final Judgment requires First Data, within 150
calendar days after the Court's signing of the original Hold Separate
Stipulation and Order, or five days after notice of the entry of this
Final Judgment by the Court, whichever is later, to divest all of its
governance rights in NYCE and its entire 64 percent ownership interest
in NYCE (collectively ``NYCE Holdings'').\2\ The requirement that First
Data divest NYCE is equivalent to the relief the United States would
likely have obtained had it prevailed at trial.
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\2\ The term ``NYCE Holdings'' is defined at ]II.G of the Final
Judgment.
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The terms of the Amended Hold Separate Stipulation and Order
require First Data to take certain steps to ensure that NYCE is
operated as a competitively independent, economically viable and
ongoing business concern, that will remain independent and uninfluenced
by the consummation of the acquisition, and that competition is
maintained during the pendency of the ordered divestiture.
The United States, the Plaintiff 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 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. The Defendants and the Proposed Transaction
First Data is a Delaware corporation headquartered in Greenwood
Village, Colorado. In 2002, First Data reported total worldwide
revenues of $7.6 billion. First Data owns 64 percent of NYCE, which
operates the third largest PIN debit network. Citicorp, J.P. Morgan
Chase & Co., FleetBoston Financial and HSBC USA Inc. own the remaining
36 percent of NYCE. First Data also owns substantial merchant and card
issuing processing operations, as well as Western Union, the leading
provider of consumer-to-consumer money transfer services.
Concord is a Delaware corporation headquartered in Memphis,
Tennessee. Concord's revenues in 2002 totaled nearly $2 billion.
Concord operates STAR, the largest PIN debit network. STAR is comprised
of a number of PIN debit networks that Concord acquired over the last
several years. Concord brought MAC in 1999, Cash Station in 2000, and
then STAR in 2001, merging it with the MAC network. Shortly before
Concord acquired STAR, STAR bought the HONOR network, which had
recently acquired the MOST network. Concord also is a leading merchant
processor and provides an array of services to debit card issuers and
ATM owners.
First Data and Concord executed a merger agreement on April 1,
2003. Under that agreement, First Data would acquire Concord through an
all-stock transaction.
[[Page 6327]]
B. Product Market: PIN Debit Network Services
The Complaint alleges that PIN debit network services is a line of
commerce and a relevant antitrust product market within the meaning of
section 7 of the Clayton Act, 15 U.S.C. Sec. 18. During the 1970s, bank
consortiums formed numerous regional electronic funds transfer
(``EFT'') networks to enable their customers to withdraw funds from
ATMs owned by multiple banks. EFT networks were first used for PIN
debit transactions in the early 1980s. It was not until the mid-1990s,
however, that PIN debit transactions became a popular method of payment
for consumers to purchase goods and services at retail stores. PIN
debit transaction volume grew substantially over the past five years
due to merchant and consumer recognition of the advantages of PIN debit
as a form of payment. Today, consumers make over 500 million PIN debit
transactions every month.
A PIN debit network provides the telecommunications and payments
infrastructure that connects a network's participating financial
institutions with merchant locations throughout the United States. A
PIN debit network also performs a number of related functions necessary
for the efficient operation of the network. For example, PIN debit
networks: (1) Promote their brand names among consumers, merchants and
financial institutions; (2) establish rules and standards to govern
their networks; and (3) set fees and assessments for use of the
network's products and services.
To execute a PIN debit transaction, a customer swipes a debit card
at a point-of-sale terminal and enters a PIN on a numeric keypad. After
the PIN is entered, the transaction and card information is sent over
the PIN debit network to the card-issuing financial institution for
authorization. The financial institution sends an electronic message to
the PIN debit network, accepting or rejecting the transaction. The PIN
debit network switches this reply back to the merchant to complete the
transaction. The entire process takes place electronically in several
seconds.
PIN debit networks charge both the merchant and the card-issuing
financial institution a per transaction ``switch'' fee for the
network's routing services. PIN debit networks also set an
``interchange'' fee. The interchange fee is paid by the merchant to the
PIN debit network and then passed through to the card-issuing financial
institution. Generally, the merchant's total charge from the PIN debit
networks for each transaction is the switch fee plus the interchange
fee.
As stated, the Complaint alleges that PIN debit network services is
a relevant antitrust product market. A hypothetical monopolist could
profitably impose a small but significant and nontransitory increase in
the price (``SSNIP'') of all PIN debit network services. Merchants
would not defeat a SSNIP for PIN debit network services by requiring or
encouraging their customers to switch to other payment methods,
including signature debit network services. In particular, PIN debit
networks offer a number of substantial advantages to consumers and
merchants that distinguish them from signature debit networks. PIN
debit networks are generally significantly less expensive to merchants
than signature debit networks. PIN debit networks also often provide a
more secure method of payment than signature debit networks because it
is easier to forge a person's signature than to obtain an individual's
PIN. Because of the increased security of PIN debit network services,
there is no need for the charge-back procedures that allow consumers to
challenge signature debit transactions, thereby saving merchants
additional time and money. PIN debit transactions also generally settle
more quickly than signature debit transactions. Finally, PIN debit
networks often allow for faster execution at the point of sale than
signature debit networks.
Merchants also would not defeat a SSNIP for PIN debit network
services because significant numbers of consumers prefer to use PIN
debit transactions over other forms of payment, particularly at
supermarkets, mass merchandisers and drug stores. Many consumers value
the security and speed of PIN debit transactions, as well as the ``cash
back'' feature that allows them to receive cash at the register when
making a purchase. Consumers cannot receive cash back when making a
signature debit purchase. Today, consumers request cash back in
approximately 20 percent of all PIN debit transactions. Consequently,
many merchants would risk causing substantial customer backlash if they
stopped offering or discouraged PIN debit transactions.
C. Geographic Market: United States
While certain PIN debit networks are stronger in particular areas
of the country, the largest networks, including STAR and NYCE, are
accepted at many merchant locations throughout the United States.
Accordingly, the United States is a relevant geographic market for the
provision of PIN debit network services within the meaning of section 7
of the Clayton Act, 15 U.S.C. 18.
D. Harm to Competition in the PIN Debit Network Services Market
The Complaint alleges the First Data's acquisition of Concord is
likely to substantially reduce competition in the PIN debit network
services market by combining the largest and third-largest PIN debit
networks, STAR and NYCE. The loss of this significant competition would
have caused higher prices and reduced levels of service to merchants
and consumers. The PIN debit network services market is already very
concentrated. As of March 2003, STAR routed approximately 56 percent of
all PIN debit transactions, while Interlink and NYCE accounted for
approximately 15 percent and 10 percent of the PIN debit market,
respectively. Although recent contract losses may reduce STAR's market
share (and increase Interlink's), under the most conservative
estimates, STAR will remain the largest PIN debit network in the United
States, with at least a 35 percent market share. Thus, if the
transaction were completed, the combined STAR/NYCE network would be the
largest PIN debit network, with at least a 45 percent market share.
Together, the combined STAR/NYCE network and Interlink would form a
near duopoly, accounting for more than 80 percent of all PIN debit
transactions.
This highly concentrated market structure would have enabled PIN
debit networks to increase prices and reduce levels of service to
merchant customers. PIN debit networks compete for merchants' business
by convincing merchants to accept their networks and to route debit
transactions to their networks when there is a choice of routing
options. PIN debit networks also compete for merchants by improving
their networks' transmission speed, limiting network down-time and
reducing the number of improperly rejected transactions. Merchants'
ability to choose which PIN debit networks to accept at their stores,
and to control the routing of some PIN debit transactions, constrains
the prices that merchants pay for PIN debit network services and helps
to ensure high quality levels of service.
1. Merchant Threats To Drop PIN Debit Networks
The Complaint alleges that combining STAR and NYCE would have
harmed competition in the PIN debit network services market by reducing
merchants' ability to drop either network. The PIN debit networks take
merchants' threats to drop their networks seriously. The loss merchant
customers can significantly reduce a PIN debit
[[Page 6328]]
network's profits. In addition to the lost switch fees from merchants,
the loss of merchant business can make a PIN debit network less
attractive to its financial institution customers. PIN debit networks
compete for financial institution members based in part on the number
of merchants that accept their networks.
Merchant have prevented or reduced some large price increased from
STAR, NYCE and interlink by credibly threatening to discontinue
acceptance of the networks. During the past two years, STAR, NYCE and
Interlink each reduced planned price increases by more than one third
because of concerns that merchants would drop their networks. This
reduction in the amount of the three leading networks' planned price
increases resulted in more than $100 million in annual savings to
merchant customers.
Merchants' ability to drop a PIN debit network, or to credibly
threaten to do so, depends on several factors, including: (1) A
network's market share; and (2) the number of the network's PIN debit
transactions that are routed over ``single-bugged'' debit cards.
Generally, it is riskier for a merchant to drop a PIN debit network
with a larger market share because of the increased likelihood of
rejected transactions, delays at check-out lines, customer confusion
and embarrassment, lost sales, and customers' use of more costly forms
of payment for merchants. Dropping a PIN debit network with a large
market share is particularly risky if many of the debit cards that can
connect to that network are ``single-bugged'' with only that network. A
single-bugged debit card can connect to only one PIN debit network. For
example, some debit cards are single-bugged only with STAR. If a
merchant does not accept STAR, then card holders with debit cards that
are single-bugged only with STAR cannot execute a PIN debit transaction
at that merchant. In contrast, if a debit card is bugged with STAR and
other PIN debit networks, then a merchant's decision to drop STAR may
not prevent the card holder from making PIN debit transactions at the
merchant if the merchant accepts at least one of the other PIN debit
networks on the debit card.
Combining STAR and NYCE would have made it substantially more
difficult for merchants to drop, or credibly threaten to drop STAR or
NYCE, to prevent future price increases. The merged networks would have
had a large combined market share of at least 45%, a significant
increase over each network's current market share. In addition,
combining STAR and NYCE would have increased substantially the number
of STAR and NYCE PIN debit transactions executed with debit cards that
were single-bugged.
2. Reduced Least-Cost Routing Opportunities
The Complaint also alleges that combining STAR and NYCE would have
reduced competition in the PIN debit network services market for
merchant customers by limiting merchants' opportunities to route PIN
debit transactions to the least expensive network (``least-cost
routing''). Some large merchants, either directly or through their
processors, always route PIN debit transactions to the least expensive
PIN debit network when a debit card is bugged with multiple PIN debit
networks. Other merchants and processors least-cost route when there
are conflicts in the networks' routing rules. Conflicts occur when two
networks both claim ``priority'' status for a particular debit card.
For example, both STAR and NYCE may require merchants (or their
processors) to route PIN debit transactions executed with a particular
debit card over their networks. In such instances, some merchants (and
processors) will route to the less expensive network.
Least-cost routing opportunities constrain PIN debit networks from
increasing prices to merchants, or reducing levels of service, because
they permit merchants, in some circumstances, to route around more
expensive networks, or networks that offer poorer levels of service. In
recent years, major supermarkets and mass merchandisers have obtained
superior prices and levels of service by routing, or threatening to
route, transactions away from one PIN debit network to another network.
Merchants currently have a substantial number of opportunities to
least-cost route PIN debit transactions between STAR and NYCE. A large
number of debit cards can connect to both STAR and NYCE. Further, STAR
and NYCE's routing rules often conflict. The merger would have
prevented merchants from obtaining lower prices and improved levels of
service from STAR and NYCE by leveraging their ability to route PIN
debit transactions away from STAR to NYCE, and vice versa.
E. Timely and Sufficient Entry Is Unlikely
The Complaint alleges that, in the near future, entry or expansion
into the PIN debit network services market is unlikely to defeat the
anticompetitive price increases that the combination of STAR and NYCE
would have caused. There has been virtually no new entry in the PIN
debit network services market for more than five years. Entry and
expansion are difficult because the market is characterized by
substantial ``network effects.'' A network must attract a substantial
number of financial institutions as members, while at the same time
convince a large number of merchants to accept the network. Coordinated
development of both financial institution members and merchant
acceptance is critical because the utility of a particular PIN debit
network to consumers, banks and merchants depends heavily on the
breadth of its acceptance and use.
In addition, most PIN debit networks have adopted rules and
policies that increase the cost of expansion by a small network or
entry by a new market participant. Most significantly, network routing
rules that specify the routing of transactions executed with multi-
bugged cards sometimes can slow the degree to which a new PIN debit
network can expand. Companies (such as First Data and Concord) that own
both merchant processing operations and PIN debit networks also can
make entry or expansion by PIN debit networks more difficult. When a
PIN debit transaction is executed with a multi-bugged card, in some
circumstances, merchant processors can determine which of the multiple
PIN debit networks receives the transaction. Accordingly, companies
that own both merchant processing operations and PIN debit networks may
have some opportunities and incentives to favor their own PIN debit
networks.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment's requirement that First Data divest
its NYCE Holdings will eliminate the anticompetitive effects in the PIN
debit network services market that the transaction would have produced.
First Data's divestiture of its NYCE Holdings will prevent the
combination of STAR and NYCE, the combination of First Data and
Concord's assets that would have violated section 7 of the Clayton Act.
By preventing the combination of STAR and NYCE, the proposed Final
Judgment will ensure that merchants retain their current ability to
obtain competitive prices and levels of service from the two networks,
either by: (1) Dropping, or credibly threatening to drop, STAR and/or
NYCE; or (2) taking advantage of least-cost routing opportunities
between the two networks.
[[Page 6329]]
The proposed Final Judgment requires First Data, within 150
calendar days after the Court's signing of the original Hold Separate
Stipulation and Order,\3\ or five days after notice of the entry of the
Final Judgment by the Court, whichever is later, to divest all of its
NYCE Holdings. Final Judgment ] IV.A. Again, the NYCE Holdings consist
of all of First Data's governance rights in NYCE, and First Data's
entire 64 percent ownership interest in NYCE, including all tangible
assets. Final Judgment ] II.G. The United States agreed to allow First
Data 150 days to divest its NYCE holdings, rather than the 120-day time
period typically required for divestitures to remedy Section 7
violations, because NYCE's minority shareholders, by contract, have 30
days to match any third-party offer to purchase First Data's interests
in NYCE. Had the United States not agreed to the additional 30-day
divestiture period, First Data effectively would have had only 90 days
to find a buyer for its NYCE holdings.
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\3\ The Court signed the original Hold Separate Stipulation and
Order on December 15, 2003.
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In addition to divesting its NYCE Holdings, the proposed Final
Judgment requires First Data to provide certain guarantees to the buyer
of the NYCE holdings, including warranting that: (1) Each asset therein
that was operational as of the date of filing of the Complaint will be
operational on the date of the divestiture; and (2) there are no
material defects in the environmental, zoning or other permits
pertaining to the operation of NYCE. Final Judgment ]] IV.E and G.
The United States, in its sole discretion, after consultation with
the Plaintiff States, may agree to one or more extensions of this time
period, not to exceed in total 90 calendar days. Final Judgment ] IV.A.
The NYCE Holdings must be divest in such a way as to satisfy the United
States in its sole discretion, after consultation with the Plaintiff
States, that NYCE can and will be operated by the purchaser as a
viable, ongoing business that can compete effectively in the relevant
market. Final Judgment ]] IV.A and H. First Data must take all
reasonable steps necessary to accomplish the divestiture quickly and
shall cooperate with prospective acquirers.
If First Data does not accomplish the ordered divestiture within
the prescribed time period, the United States will nominate, and the
Court will appoint, a trustee to assume sole power and authority to
complete the divestiture. Final Judgment ] V.A. If a trustee is
appointed, the proposed Final Judgment provides that First Data will
pay all costs and expenses of the trustee. Final Judgment ]] V.B and D.
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 the divestiture is accomplished. After his or her
appointment becomes effective, the trustee will file monthly reports
with the Court, the United States and the Plaintiff States, setting
forth his or her efforts to accomplish the divestiture. Final Judgment
] V.F. If First Data has not divested its NYCE Holdings at the end of
six months, the United States and the Plaintiff States 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. Final
Judgment ] V.G. Defendants must cooperate fully with the trustee's
efforts to divest First Data's NYCE Holdings to an acquirer acceptable
to the United States. Final Judgment ] V.E.
The proposed Final Judgment filed in this case is meant to ensure
the prompt divestiture by First Data of its NYCE Holdings. The purpose
of the divestiture is to ensure the maintenance of a viable PIN debit
network competitor capable of competing effectively to provide PIN
debit network services and to remedy the anticompetitive effects that
the United States and the Plaintiff States allege would otherwise
result from First Data's acquisition of Concord. See Final Judgment ]
V.H.
The Amendment Hold Separate Stipulation and Order will ensure that
NYCE is maintained and operated as an independent competing PIN debit
network until First Data divests all of its NYCE Holdings. The Order,
except when necessary to carry out First Data's obligations under the
Order, bars First Data from: (1) Serving as an officer, manager, or
employee, or in a comparable position with or for NYCE; (2) exercising
any authority through its representatives on the NYCE Board of
Directors, except for limited specifically enumerated actions; (3)
participating in, attending, or receiving any notes, minutes, or
agendas of, information from, or any documents distributed in
connection with, any nonpublic meeting of NYCE's Board of Directors or
any committee thereof; and (4) voting or permitting to be voted First
Data's NYCE shares. Amended Hold Separate Stipulation and Order ]] V.1
through V.3. In addition, the Order prevents First Data from
communicating to or receiving from any officer, director, manager,
employee, or agent of NYCE any nonpublic information regarding any
aspect of NYCE's business. Amended Hold Separate Stipulation and Order
] V.4. The Order also allows the United States, in its sole discretion,
in consultation with the Plaintiff States, to require all of First
Data's representatives on the NYCE board to resign. If the United
States exercises its discretion to require First Data's NYCE directors
to resign, First Data may only nominate individuals to fill the vacant
NYCE Board seats who are officers or managers of NYCE or a minority
shareholder of NYCE. Amended Hold Separate Stipulation and Order ] V.1.
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 the Defendants.
V. Procedures Available for Modification of the Proposed Final Judgment
The United States, the Plaintiff States and the Defendants have
stipulated that the proposed Final Judgment may be entered in 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. 15 U.S.C. 16(e).
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. 15 U.S.C. 16(b&d). Any person who wishes to comment
should do so within 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 give
due consideration by the United States 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
[[Page 6330]]
Court and published in the Federal Register.
Written comments should be submitted to: Renata B. Hesse, Chief,
Networks & Technology Section, Antitrust Division, United States
Department of Justice, 600 E Street, NW., Suite 9500, 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 against the Defendants. The
United States could have continued the litigation and sought permanent
injunctive relief against First Data's acquisition of Concord. The
United States is satisfied, however, that the divestiture of all of
First Data's interests in NYCE to an independent third party will
achieve all of the relief the United States would have obtained through
litigation and will preserve competition for the provision of PIN debit
network services in the United States.
VII. Standard of Review Under the APPA for the Proposed Final Judgment
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a 60-day comment
period, after which the Court shall determine whether entry of the
proposed Final Judgment ``is in the public interest.'' 15 U.S.C. 16(e).
In making the 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
consideration 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.
Id. The United States Court of Appeals for the District of Columbia
Circuit has held that the statute 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.
United States v. Microsoft Corp., 56 F.3d 1448, 1458-62 (D.C. Cir.
1995).
In conducting this inquiry, ``[t]he 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. 24,598 (1973)
(statement of Senator Tunney.) \4\ Rather:
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\4\ See also United States v. Gillette Co., 406 F. Supp. 713,
716 (D. Mass. 1975) (recognizing it was not the court's duty to
settle; rather, the court must only answer ``whether the settlement
achieved [was] within the reaches of the public interest''). 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 that
further proceedings would aid the court in resolving those issues.
See H.R. Rep. No. 93-1463, 93rd Cong., 2d Sess. 8-9 (1974),
reprinted in 1974 U.S.C.C.A.N. 6535, 6538.
[a]bsent a showing of corrupt failure of the government to discharge
its duty, the Court, in making its public interest finding, should *
* * carefully consider the explanations of the government in the
competitive 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 WL 4532, 1977-1 Trade
Cas. (CCH) ] 61,508, at 71,980 (W.D. Mo. May 17, 1977).
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) (citing United States v. Bechtel Corp., 648
F.2d 660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d at 1460-62.
Rather, the case law requires that:
[t]he balancing act of competing social and political interests 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.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\5\
---------------------------------------------------------------------------
\5\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree)''; Gillette, 406 F. Supp. at 716
(noting that, in this way, the court is constrained to ``look at the
overall picture not hypercritically, nor with a microscope, but with
an artist's reducing glass''). See generally Microsoft, 56 F.3d at
1461 (discussing whether ``the remedies [obtained in the decree are]
so inconsonant with the allegations charged as to fall outside of
the `reaches of the public interest''').
---------------------------------------------------------------------------
The proposed Final Judgment, 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 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.''' United States v. American Tel. & Tel. Co., 552
F. Supp. 131, 151 (D.D.C. 1982) (quoting Gillette, 406 F. Supp. at
716), aff'd sub nom., Maryland v. United States, 460 U.S. 1001 (1983).
See also United States v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622
(W.D. Ky. 1985) (approving the consent decree even though the court
would have imposed a greater remedy).
Moreover, the Court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its Complaint, and does not authorize the Court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459. Because the ``court's
authority to review the decree depends entirely on the government's
exercising its prosecutorial discretion by bringing a case in the first
place,'' it follows that ``the court is only authorized to review the
decree itself,'' and not to ``effectively redraft the complaint'' to
inquire into other matters that the United States might have but did
not pursue. Id. at 1459-60.
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.
Dated: January----, 2004
Respectfully submitted,
For Plaintiff United States:
Joshua H. Soven, Esq.,
Antitrust Division, U.S. Department of Justice, 600 E Street, NW.,
Suite 9500, Washington, DC 20530.
[[Page 6331]]
Final Judgment
Whereas, plaintiff United States of America (``United States''),
the District of Columbia, and the States of Connecticut, Illinois,
Louisiana, Massachusetts, New York, Ohio, Pennsylvania, and Texas
(``plaintiff states''), filed their Complaint on October 23, 2003, and
the United States, plaintiff states, and defendants, First Data
Corporation and Concord EFS, Inc., by their respective attorneys, have
consented to the entry of this Final Judgment without trial:
And whereas, this Final Judgment does not constitute any evidence
against or admission by any party, regarding any issue of fact or law;
And whereas, defendants agree 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 the prompt and
certain divestiture of certain rights or assets by First Data to assure
that competition is not substantially lessened;
And whereas, the United States and plaintiff states require First
Data to make a certain divestiture for the purpose of remedying the
loss of competition alleged in the Complaint;
And whereas, defendants have represented to the United States and
plaintiff states that the divestiture required below can and will be
made and that defendants will later raise no claim of hardship or
difficulty as grounds for asking the Court to modify any of the
divestiture provisions contained below;
Now therefore, without trial and upon consent of the parties, it is
ordered, adjudged and decreed:
I. Jurisdiction
This Court has jurisdiction over the subject matter of and each of
the parties to 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. 18.
II. Definitions
As used in this Final Judgment:
A. ``Acquirer'' means the entity or entities to whom defendant
First Data divests NYCE Holdings.
B. ``Concord'' means Concord EFS, Inc., a Delaware corporation
headquartered in Memphis, Tennessee, and its successors and assigns,
its subsidiaries, divisions, groups, affiliates, partnerships, and
joint ventures, and their directors, officers, managers, agents, and
employees.
C. ``EFT network services'' means the provision to financial
institutions and retailers of shared electronic fund transfer network
services for automatic teller machine (ATM) transactions, online and
offline debit point-of-sale (POS) transactions, electronic benefits
transfer, and point-of-banking transactions.
D. ``EFT processing services'' means the provision to financial
institutions of real-time processing services that support ATM driving
and fully-automated monitoring services, gateway access, and debit card
issuance and authorization solutions.
E. ``First Data'' means First Data Corporation, a Delaware
corporation headquartered in Greenwood Village, Colorado, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships, and joint ventures (excluding those entities
not controlled by First Data), and their directors, officers, managers,
agents, and employees.
F.``NYCE'' means NYCE Corporation, a Delaware corporation
headquartered in Montvale, New Jersey, and its successors and assigns,
its subsidiaries, divisions, groups, affiliates, partnerships, and
joint ventures (excluding those entities not controlled by NYCE), and
their directors, officers, managers, agents, and employees. NYCE
includes its EFT network service business (the NYCE Network) and its
EFT processing services business.
G. ``NYCE Holdings'' means, unless otherwise noted, all of First
Data's governance rights in NYCE, and First Data's entire 64 percent
ownership interest in NYCE, including all of NYCE's rights, titles, and
interests in the following:
1. all tangible assets of NYCE, including facilities and real
property; data centers; assets used for research, development,
engineering or other support to NYCE, and any real property associated
with those assets; manufacturing and sales assets relating to NYCE,
including captial equipment, vehicles, supplies, personal property,
inventory, office furniture, fixed assets and fixtures, materials, on-
or off-site warehouses or storage facilities, and other tangible
property or improvements; all licenses, permits and authorizations
issued by any governmental organization relating to NYCE; all
contracts, joint ventures, agreements, leases, commitments, and
understandings pertaining to the operation of NYCE; supply agreements;
all customer lists, accounts, and credit records; and other records
maintained by NYCE in connection with its operations; and
2. the intangible assets of NYCE, including all patents, licenses
and sublicenses, intellectual property, copyrights, trademarks,
computer software and related documentation, trade names, service
marks, ``bugs,'' services names, technical information, know-how, trade
secrets, drawings, blueprints, designs, design protocols,
specifications for materials, specifications for parts and devices,
data and results concerning historical and current research and
development, quality assurance and control procedures, design tools and
simulation capability, and all manuals and technical information NYCE
provides to its employees, customers, suppliers, agents or licensees in
connection with the NYCE's operations.
H. ``Online debit'' means PIN debit.
I. ``PIN'' means a Personal Identification Number.
J. ``PIN debit'' means a method of electronic card payment by which
consumers purchase goods and services form merchants by swiping a bank
card at a point-of-sale terminal and entering a PIN on a numeric
keypad, upon which the purchase amount is debited from the customer's
bank account and transferred to the retailer's bank.
K. ``PIN debit network'' Means a telecommunications and payment
infrastructure that enables PIN debit transactions by providing the
switch that connects merchants to consumers' demand deposit accounts at
banks.
L. ``PIN debit network services'' means the PIN debit network and
its performance of those related functions necessary for the efficient
operation of the network, including promotion of brand names among
consumers, merchants, and banks; establishment of rules and standards
to govern the networks; and the setting of fees.
III. Applicability
A. This Final Judgment applies to First Data and Concord, as
defined above, and all other persons in active concert or participation
with any of them who receive 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 their assets or of lesser
business units that include NYCE, that the purchaser agrees to be bound
by the provision of this Final Judgment.
IV. Divestiture
A. Defendant First Data is ordered and directed, within one hundred
fifty (150) calendar days after the Court's signing of the Hold
Separate Stipulation and Order in this matter, or five (5) days after
notice of the entry of this Final
[[Page 6332]]
Judgment by the Court, whichever is later, to divest NYCE Holdings in a
manner consistent with this Final Judgment to an Acquireer acceptable
to the United States in its sole discretion, after consultation with
plaintiff states. The United States, in its sole discretion, after
consultation with plaintiff states, may agree to one or more extensions
of this time period, not to exceed in total ninety (90) calendar days,
and shall notify the Court in each such circumstance. Defendant First
Data agrees to use its best efforts to divest NYCE Holdings as
expeditiously as possible.
B. In accomplishing the divestiture ordered by this Final Judgment,
defendant First Data promptly shall make known, by usual and customary
means, the availability of NYCE Holdings. Defendants shall inform any
person making inquiry regarding a possible purchase of NYCE Holdings
that it will be divested pursuant to this Final Judgment and provide
that person with a copy of this Final Judgment. Defendant First Data
shall offer to furnish to all prospective Acquirers, subject to
customary confidentiality assurances, all information and documents
relating to NYCE customarily provided in a due diligence process except
such information or documents subject to the attorney-client or work-
product privilege. Defendant First Data shall make available such
information to the United States and plaintiff states at the same time
that such information is made available to any other person.
C. Defendant First Data shall provide perspective Acquirers of NYCE
Holdings, the United States, and plaintiff states information relating
to the personnel involved in the production, operation, research,
development, and sales at NYCE to enable the Acquirer to make offers of
employment. Defendants will not interfere with any negotiations by the
Acquirer to employ any of NYCE's employees whose responsibilities
includes the production, operation, development, or sale of the
products and services of NYCE.
D. Defendant First Data shall permit prospective Acquirers of NYCE
Holdings to have reasonable access to personnel and to make inspections
of the physical facilities of NYCE; access to any and all
environmental, zoning, and other permit documents and information; and
access to any and all financial, operational, or other documents and
information customarily provided as part of a due diligence process.
E. Defendant First Data shall warrant to the Acquirer of NYCE
Holdings that each asset therein that was operational as of the date of
filing to the Complaint in this matter will be operational on the date
of divestiture.
F. Defendants shall not take any action that will impede in any way
the permitting, operation, or divestiture of NYCE or NYCE Holdings.
G. Defendant First Data shall warrant to the Acquirer of NYCE
Holdings that there are no material defects in the environmental,
zoning, or other permits pertaining to the operation of NYCE, and
following the sale of NYCE Holdings, defendants shall not undertake,
directly or indirectly, any challenges to the environmental, zoning, or
other permits relating to the operation of NYCE.
H. Unless the United States otherwise consents in writing, after
consultation with plaintiff states, the divestiture pursuant to Section
IV, or by trustee appointed pursuant to Section V, of this Final
Judgment, shall include the entire NYCE Holdings as defined in Section
II(G) and shall be accomplished in such a way as to satisfy the United
States, in its sole discretion, after consultation with plaintiff
states, that NYCE can and will be used by the Acquirer as part of a
viable, ongoing business engaged in the provision of EFT network
services, including PIN debit network services, and EFT processing
services. Divestiture of NYCE Holdings may be made to an Acquirer,
provided that it is demonstrated to the sole satisfaction of the United
States, in its sole judgment, after consultation with plaintiff states,
that the divested asset will remain viable and that the divestiture
will remedy the competitive harm alleged in the Complaint. The
divestiture, whether pursuant to Section IV or Section V of this Final
Judgment,
1. Shall be made to an Acquirer that, in the United States' sole
judgment, after consultation with plaintiff states, has the intent and
capability (including the necessary managerial, operational, technical,
and financial capability) to compete effective in the provision of EFT
network services, including PIN debit network services, and EFT
processing services in the United States; and
2. Shall be accomplished so as to satisfy the United States, in its
sole discretion, after consultation with plaintiff states, that none of
the terms of any agreement between an Acquirer and defendants give
defendants the ability unreasonably to raise NYCE's costs, to lower
NYCE's efficiency, or otherwise to interfere in the ability of NYCE to
compete effectively.
V. Appointment of Trustee to Effect Divestiture
A. If defendant First Data has not divested NYCE Holdings within
the time period specified in section IV(A), it shall notify the United
States and plaintiff states of that fact in writing. Upon application
of the United States, in its sole discretion, after consultation with
plaintiff states, the Court shall appoint a trustee selected by the
United States, and approved by the Court to effect the divestiture of
NYCE Holdings.
B. After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell NYCE Holdings. The trustee shall
have the power and authority to accomplish the divestiture of NYCE
Holdings to an Acquirer acceptable to the United States, in its sole
judgment after consultation with plaintiff states, at such price and on
such terms as are then obtainable upon reasonable effort by the
trustee, subject to the provisions of Sections IV, V, and VI of this
Final Judgment, and shall have such other powers as this Court deems
appropriate. Subject to Section V(D) of this Final Judgment, the
trustee may hire at the cost and expense of defendant First Data nay
investment bankers, attorneys, or other agents, who shall be solely
accountable to the trustee, reasonably necessary in the trustee's
judgment to assist in the divestiture.
C. Defendants shall not object to a sale by the trustee on any
ground other than the trustee's malfeasance. Any such objections by
defendants must be conveyed in writing to the United States, plaintiff
states, and the trustee within ten (10) calendar days after the trustee
has provided the notice required under Section VI.
D. The trustee shall serve at the cost and expense of defendant
First Data, on such terms and conditions as the NYCE approves, and
shall account for all monies derived from the sale of NYCE Holdings 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 defendant First Data and the trust shall then be
terminated. The compensation of the trustee and any professionals and
agents retained by the trustee shall be reasonable in light of the
value of the asset 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, but
timeliness is paramount.
[[Page 6333]]
E. Defendants shall use their best efforts to assist the trustee in
accomplishing the required divestiture. The trustee and any
consultants, accountants, attorneys, and other persons retained by the
trustee shall have full and complete access to the personnel, books,
records, and facilities of the business to be divested, and defendants
shall develop financial and other information relevant to such business
as the trustee may reasonably request, subject to customary
confidentiality 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.
F. After its appointment, the trustee shall file monthly reports
with the United States, plaintiff states, and the Court setting forth
the trustee's efforts to accomplish the divestiture ordered under this
Final Judgment. To the extent such reports contain information that the
trustee deems confidential, such reports shall not be filed in the
public docket of the Court. Such reports shall include the name,
address, and telephone number of each person who, during the preceding
month, made an offer to acquire, expressed an interest in acquiring,
entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring, NYCE Holdings and shall describe in detail
each contact with any such person. The trustee shall maintain full
records of all efforts made to divest NYCE Holdings.
G. If the trustee has not accomplished such divestiture within six
months after its appointment, the trustee shall 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. 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 United States and plaintiff
states, and the United States and plaintiff states shall have the right
to make additional recommendations consistent with the purpose of the
trust. The Court thereafter shall enter such orders as it shall deem
appropriate to carry out the purpose of the Final Judgment, 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. Notice of Proposed Divestiture
A. Within two (2) business days following execution of a definitive
divestiture agreement, defendant First Data or the trustee, whichever
is then responsible for effecting the divestiture required herein,
shall notify the United States and plaintiff states 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 divestiture and list
the name, address, and telephone number of each person not previously
identified who offered or expressed an interest in or desire to acquire
any ownership interest in NYCE Holdings, together with full details of
the same.
B. Within fifteen (15) calendar days of receipt by the United
States and plaintiff states of such notice, the United States and
plaintiff states may request from defendants, the proposed Acquirer,
any other third party, or the trustee if applicable, additional
information concerning the proposed divestiture, the proposed Acquirer,
and any other potential Acquirer. Defendants 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.
C. Within thirty (30) calendar days after receipt of the notice or
within twenty (20) calendar days after the United States and plaintiff
states have been provided the additional information requested from
defendants, the proposed Acquirer, any third party, and the trustee,
whichever is later, the United States, in its sole discretion, after
consultation with plaintiff states, shall provide written notice to
defendants and the trustee, if there is one, stating whether or not it
objects to the proposed divestiture. If the United States provides
written notice that it does not object, the divestiture may be
consummated, subject only to defendants' limited right to object to the
sale under section V(C) of the Final Judgment. Absent written notice
that the United States does not object to the proposed Acquirer or upon
objection by the United States, a divestiture proposed under Section IV
or Section V shall not be consummated. Upon objection by defendants
under Section V(C), a divestiture proposed under Section V shall not be
consummated unless approved by the Court.
VII. Financing
Defendants shall not finance all or any part of any purchase made
pursuant to Section IV or V of this Final Judgment.
VIII. Hold Separate
Until the divestiture required by this Final Judgment has 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 divestiture
ordered by this Court.
IX. Affidavits
A. Within twenty (20) calendar days of the Court's signing of the
Hold Separate Stipulation and Order in this matter, and every thirty
(30) calendar days thereafter until the divestiture has been completed
under Section IV or V, defendants shall deliver to the United States
and plaintiff states an affidavit as to the fact and manner of their
compliance with Section IV or V of this Final Judgment. Each such
affidavit shall include the name, address, and telephone number of each
person who, during the preceding thirty days, 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 NYCE Holdings 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 defendants have taken to solicit
buyers for the asset to be divested, and to provide required
information to any prospective Acquirer, including the limitations, if
any, on such information. Assuming the information set forth in the
affidavit is true and complete, any objection by the United States, in
its sole discretion, after consultation with plaintiff states, to
information provided by defendants, including limitations on the
information, shall be made within fourteen (14) calendar days of
receipt of such affidavit.
B. Within twenty (20) calendar days of the Court's signing of the
Hold Separate Stipulation and Order in this matter, defendants shall
deliver to the United States and plaintiff states an affidavit that
describes in reasonable detail all actions defendants have taken and
all steps defendants have implemented on an ongoing basis to comply
with Section VIII of this Final Judgment. Defendants shall deliver to
the United States and plaintiff states an affidavit describing any
changes to the efforts and actions outlined in defendants' earlier
affidavits filed pursuant to this section within fifteen (15) calendar
days after the change is implemented.
[[Page 6334]]
C. Defendants shall keep all records of all efforts made to
preserve and divest NYCE Holdings until one year after such divestiture
has been completed.
X. Compliance Inspection
A. For purposes of determining or securing compliance with this
Final Judgment, or of determining whether the Final Judgment should be
modified or vacated, and subject to any legally recognized privilege,
from time to time duly authorized representatives of the United States,
including consultants and other persons retained by the United States,
shall, upon written request of a duly authorized representative of the
Assistant Attorney General in charge of the Antitrust Division, and on
reasonable notice to defendants be permitted:
1. access during defendants' office hours to inspect and copy, or
at plaintiff's option, to require defendants to provide copies of, all
books, ledgers, accounts, records and documents in the possession,
custody, or control of defendants, relating to any matters contained in
this Final Judgment; and
2. to interview, either informally or on the record, defendants'
officers, employees, or agents, who may have their individual counsel
present, regarding such matters. The interviews shall be subject to the
reasonable convenience of the interviewee and without restraint or
interference by defendants.
B. Upon the written request of a duly authorized representative of
the Assistant Attorney General in charge of the Antitrust Division,
defendants shall submit written reports, under oath if requested,
relating to any of the matters contained in this Final Judgment as may
be requested.
C. No information or documents obtained by the means provided in
this section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States, except in the course of legal proceedings to which the United
States is a party (including grand jury proceedings), or for the
purpose of securing compliance with this Final Judgment, or as
otherwise required by law.
D. If at the time information or documents are furnished by
defendants to the United States, defendants represent and identify in
writing the material in any such information or documents to which a
claim of protection may be asserted under Rule 26(c)(7) of the Federal
Rules of Civil Procedure, and defendants mark each pertinent page of
such material, ``Subject to claim of protection under Rule 26(c)(7) of
the Federal Rules of Civil Procedure,'' then the United States shall
give defendants ten (10) calendar days notice prior to divulging such
material in any legal proceeding (other than a grand jury proceeding).
XI. No Reacquisition
Defendants may not reacquire any ownership interest in NYCE during
the term of this Final Judgment.
XII. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and
directions as may be necessary or appropriate to carry to or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
XIII. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire ten years from the date of its entry.
XIV. Public Interest Determination
Entry of this Final Judgment is in the public interest.
Court approval subject to procedures of the Antitrust Procedures and
Penalties Act, 15 U.S.C. Sec. 16.
United States District Judge
Case Number 1:03CV02169
Judge: Rosemary M. Collyer.
Deck Type: Antitrust.
Date Stamp: 10/23/2003.
United States of America, United States Department of Justice,
Antitrust Division, 600 E Street, NW., Suite 9500, Washington, DC
20530,
State of Connecticut, Office of the Attorney General, 55 Elm Street,
Hartford, CT 06106,
State of Illinois, Office of the Illinois Attorney General, 100 W.
Randolph Street, 13th Floor, Chicago, IL 60601,
State of Louisiana, Department of Justice, 301 Main Street, Suite
1250, Baton Rouge, LA 70801,
Commonwealth of Massachusetts, Office of the Attorney General, One
Ashburton Place, Boston, MA 02108,
State of New York, Office of the Attorney General, 120 Broadway,
Room 26C62, New York, NY 10271,
State of Ohio, Attorney General's Office, 150 E. Gay Street,
Colombus, OH 43215,
State of Texas, Office of the Attorney General, P.O. Box 12548,
Austin, TX 78711,
and
District of Columbia, Office of the Corporation Counsel, 441 4th
Street, NW., Suite 450-N, Washington, DC 20001, Plaintiffs,
v.
First Data Corporation, 6200 South Quebec Street, Greenwood Village,
CO 80111,
and
Concord EFS, Inc., 2525 Horizon Lake Drive, Memphis, TN 38133,
Defendants.
Verified Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, and the states of Connecticut,
Illinois, Louisiana, Massachusetts, New York, Ohio, and Texas and the
District of Columbia (``Plaintiff States''), acting under the direction
of their respective Attorneys General, or other authorized officials,
bring this civil action to enjoin the proposed merger of First Data
Corporation (``First Data'') and Concord EFS, Inc. (``Concord''), and
allege as follows:
1. First Data's acquisition of Concord would combine the largest
and third-largest point-of-sale (``POS'') PIN debit networks in the
United States. POS PIN debit networks are the telecommunications and
payment infrastructure that connects merchants to consumers' demand
deposit accounts at banks. These networks enable consumers to purchase
goods and services from merchants through PIN debit transactions by
swiping their bank card at a merchant's terminal and entering a
Personal Identification Number, or PIN. Within seconds, the purchase
amount is debited from the customer's bank account and transferred to
the retailer's bank.
2. PIN debit networks provide an increasingly important method of
payment for consumers and retailers because PIN debit is the least
expensive, most efficient, and most secure form of card payment. In
2002, customers purchased more than $150 billion in goods and services
using PIN debit networks. PIN debit transaction volume has grown by
more than 20 percent annually over the past 5 years. Today, merchants
accept PIN debit transactions at more than one million retail locations
in the United States.
3. Concord operates STAR, the nation's largest PIN debit network.
STAR currently handles approximately half of all PIN debit transactions
in the United States. First Data owns a controlling interest in NYCE,
the nation's third-largest PIN debit network.
4. PIN debit networks compete for merchants to accept and route
purchases over their networks. A significant number of banks that issue
debit cards participate in more than one PIN debit network. In some
cases, this allows merchants to choose the network over which to route
a transaction; merchants made this choice based on a variety of
factors, including price and network performance. Large merchants
[[Page 6335]]
usually accept the debit cards of many PIN debit networks.
5. First Data's acquisition of Concord would substantially reduce
competition among the PIN debit networks for retail transactions in
violation of section 7 of the Clayton Act, 15 U.S.C. 18. The merger
would make prices for PIN debit network services to merchants less
competitive. Merchants will pass on at least some of the higher costs
of PIN debit transactions by raising the prices of their goods and
services, to the detriment of tens of millions of consumers throughout
the United States. The United States and Plaintiff States therefore
seek an order permanently enjoining the merger.
I. Jurisdiction and Venue
6. This action is filed by the United States under section 15 of
the Clayton Act, 15 U.S.C. 25, to prevent and restrain the Defendants
from violating section 7 of the Clayton Act, 15 U.S.C. 18.
7. The Plaintiff States bring this action under section 16 of the
Clayton Act, 15 U.S.C. 26, to prevent and restrain the Defendants from
violation section 7 of the Clayton Act, 15 U.S.C. 18. The Plaintiff
States, by and through their respective Attorneys General, or other
authorized officials, bring this action in their sovereign capacities
and as parens patriae on behalf of the citizens, general welfare, and
economy of each of their states.
8. First Data and Concord are engaged in interstate commerce and in
activities substantially affecting interstate commerce. First Data and
Concord provide PIN debit network services throughout the United
States. First Data's and Concord's PIN debit networks are engaged in a
regular, continuous, and substantial flow of interstate commerce, and
have had a substantial effect upon interstate commerce as well as
commerce in each of the Plaintiff States. The Court has jurisdiction
over this action pursuant to sections 12 and 15 of the Clayton Act, 15
U.S.C. 22, 25, and 28 U.S.C. 1331, 1337.
9. First Data and Concord transact business and are found in the
District of Columbia, Venue is proper under Section 12 of the Clayton
Act, 15 U.S.C. 22, and 28 U.S.C. 1391(c).
II. The Defendants and the Transaction
10. First Data is a corporation organized and existing under the
laws of Delaware. In 2002, First Data reported total worldwide revenues
of $7.6 billion. First Data is organized into four business groups:
merchant services, payment services, card issuer services, and emerging
payments. First Data's card issuing business offers a comprehensive set
of services to banks that issue debit and credit cards. First Data's
payment services group includes Western Union, the leading provider of
consumer-to-consumer money transfer services.
11. First Data's merchant services segment, which primarily
consists of NYCE and the merchant processing and acquiring business,
was responsible for $2.8 billion of the company's revenues in 2002.
First Data owns 64 percent of NYCE Corporation, which operates the NYCE
PIN debit and ATM network. Four large banks own the remaining 36
percent of NYCE Corporation. In addition, First Data is the nation's
leading merchant processor. A merchant processor connects merchants to
the various payment networks, ensuring that each transaction is sent to
the appropriate network. First Data also acts as a merchant acquirer;
merchant acquirers sponsor merchants into the PIN debit networks,
facilitate settlement, and assume financial responsibility for the
transactions. First Data provides merchant processing and acquiring
services independently and through a series of alliances and
partnerships with major financial institutions.
12. Concord is a corporation organized and existing under the laws
of the state of Delaware. Concord's revenues in 2002 totaled nearly $2
billion. Concord operates STAR, the largest PIN debit and ATM network.
The STAR network is the result of a series of acquisitions of other
large networks over the past several years. Concord bought MAC in 1999
and Cash Station in 2000. Concord then acquired STAR in 2001; STAR
itself had acquired the Honor network, which in turn had acquired MOST.
Concord is also a leading merchant processor and acquirer and provides
an array of services to debit card issuers and ATM owners.
13. On April 1, 2003, First Data and Concord entered into an
Agreement and Plan of Merger, pursuant to which First Data will acquire
Concord in an all-stock transaction valued at approximately $7 billion.
III. The Relevant Market
A. Description of the Product
14. In the late 1970s, bank consortiums formed numerous regional
electronic funds transfer (``EFT'') networks to enable their customers
to withdraw funds from ATMs owned by a variety of different banks. The
EFT networks were first used to handle PIN debit purchases at retailers
in the early 1980s. It was not until the mid-1990s, however, that PIN
debit became a popular method of payment for consumers to purchase
goods and services at retail stores. PIN debit transaction volume has
grown substantially over the past five years due to merchant and
consumer recognition of the advantages of PIN debit as a form of
payment. Today, over 500 million PIN debit transactions are made every
month. Nearly three-quarters of all PIN debit purchases occur at thirty
large retail chains.
15. Many EFT networks, including those operated by First Data and
Concord, route both ATM and PIN debit transactions. Some companies,
however, operate separate ATM and PIN debit networks. For example,
while Interlink is Visa's PIN debit network, Visa operates a separate
ATM network called Plus.
16. A PIN debit network serves as the critical electronic switch
connecting a network's participating financial institutions with
merchants that accept the network. PIN debit networks provide one of
the primary means for consumers to access the money in their checking
accounts. A PIN debit network also performs a number of related
functions necessary for the efficient operation of the network. For
example, PIN debit networks: Promote their brand names among consumers,
merchants, and banks; establish rules and standards to govern their
networks; and set fees and assessments for use of the network's
products and services. Collectively, these products and services are
``PIN debit network services.''
17. To execute a PIN debit transaction, a customer swipes a debit
card at a POS terminal and enters a PIN on a numeric keypad. After the
PIN is entered, the POS terminal transmits the transaction and bank
card information to a ``merchant processor,'' which acts as a conduit
between the merchant and the various PIN debit networks. The merchant
processor sends the information to the appropriate PIN debit network,
which switches the transaction to the issuing bank's ``card
processor.'' The card processor accesses the bank's account database to
verify the PIN and ensure that the customer has sufficient funds to pay
for the purchase. The card processor sends an electronic message to the
PIN debit network accepting or rejecting the transaction. The PIN debit
network switches this reply back to the merchant through the merchant
processor to complete the transaction. The entire authorization process
takes place electronically in just seconds. At the same time, the
merchant acquirer
[[Page 6336]]
``purchases'' the transaction from the merchant, guaranteeing payment
and facilitating settlement of the transaction.
18. A transaction can only be routed over a particular PIN debit
network if the customer's bank issues a debit card that participates in
that network. This participation is signified by placing the network's
logo, or ``bug,'' on the card. To provide their customers with seamless
access to the widest array of merchants, a significant number of banks
place the bug of more than one PIN debit network on their cards. Many
networks, including NYCE, have a ``priority routing'' rule that allows
the card issuer to designate which PIN debit network will serve as the
primary network for PIN debit transactions when the bank bugs its cards
with two or more networks. STAR, by contrast, imposes a network routing
rule, requiring most transactions on cards bearing the STAR bug to be
routed over the STAR network, regardless of whether there are other
bugs on the card.
19. PIN debit networks charge both the merchant and the card-
issuing bank a ``switch'' fee for the network switching services
provided by the network. This fee typically ranges from 2 cents to 4
cents per transaction. The PIN debit networks also set an
``interchange'' fee, which is a fee paid by the merchant to the PIN
debit network. The PIN debit network then passes through the
interchange fee to the card-issuing bank as compensation for permitting
access to the consumer's bank account. The interchange fee is normally
at least 4-5 times as large as the switch fee, ranging from as low as
10 cents to as high as 45 cents, depending on the network, the
merchant, and the size of the transaction. Consequently, the merchant's
total charge for each PIN debit transaction is the interchange fee plus
the switch fee.
20. At some networks, such as NYCE and Interlink, an advisory board
representing the network's bank members has substantial authority over
setting the network's interchange rates and determining the network's
rules, including rules concerning the routing of PIN debit
transactions.
21. The PIN debit network services market is characterized by
significant network effects. Financial institutions are more likely to
join networks that are accepted by many merchants. Conversely,
merchants are more likely to accept networks that have many large
financial institutions as members because the value of a particular PIN
debit network depends in great measure on the breadth of its acceptance
and use.
22. Many debit cards can also execute ``signature'' debit
transactions, in addition to PIN debit transactions. Signature debit
transactions are authenticated like credit card transactions, with the
customer signing for identification rather than entering a PIN. Visa
and MasterCard developed the only two signature debit networks from
their existing credit card infrastructure. In contrast to a PIN debit
transaction, in which the funds are immediately transferred from the
customer's account, a signature debit transaction generally takes
twenty-four to forty-eight hours to settle.
23. PIN debit networks offer a number of substantial advantages to
consumers and merchants that distinguish them from signature debit
networks. PIN debit networks are generally considerably less expensive
to merchants than signature debit networks, due to significantly lower
interchange rates. PIN debit networks also provide a more secure method
of payment than signature debit because it is much easier to forge a
person's signature than to obtain an individual's PIN; consequently,
fraud rates for PIN debit are substantially lower than for signature
debit. Because of the increased security of PIN debit, there is no need
for the complicated and expensive charge-back procedures that allow
consumers to challenge signature debit transactions, thereby saving
merchants additional time and money. PIN debit transactions also settle
instantaneously, guaranteeing the merchant ready access to its
receipts, whereas signature debit transactions usually take a day or
two to settle. Finally, PIN debit networks allow for faster execution
than signature debit networks. With a PIN debit transactions, customers
can enter their PIN as soon as the first product is scanned. By
contrast, customers cannot sign for signature debit transactions until
after the entire order is totaled, prolonging the checkout process.
24.PIN debit networks also allow individuals to receive cash back
at the register when making a purchase, a popular feature with many
consumers. Customers cannot receive cash back when making a signature
debit purchase. Today, customers request cash back in approximately 20
percent of all PIN debit transactions. Customers also value the
additional security provided by PIN verification as opposed to
signature.
B. Relevant Product Market
25. The relevant product market affected by this transaction is the
provision of PIN debit network services. A hypothetical monopolist
could profitably impose a small but significant and nontransitory
increase in the price of all PIN debit network services.
26. Signature debit networks are not in the same product market as
PIN debit networks because signature debit networks are substantially
more expensive and have inferior functionality and features. PIN debit
networks would remain substantially less expensive than signature debit
or credit care networks even after a small but significant
nontransitory increase in price. Merchants would continue to purchase
and promote the use of PIN debit network services because of the low
fraud rate, corresponding lack of charge-backs, speed of execution at
the register, and the cash back feature that many customers demand. As
the President of First Data Merchant Services testified, PIN debit ``is
still the lowest-cost, most efficient, most secure transaction there is
out there in electronic transactions.''
27. Merchants would not defeat a small but significant and
nontransitory increase in the price of PIN debit network services by
requiring or encouraging their customers to switch from PIN debit to
signature debit or other payment methods.
28. The provision of PIN debit network services is a line of
commerce and a relevant product market within the meaning of section 7
of the Clayton Act, 15 U.S.C. 18.
D. Relevant Geographic Market
29. First Data and Concord compete with each other throughout the
United States. Merchants in the United States could not switch to
providers of PIN debit network services located outside of the United
States in the event of a small but significant nontransitory increase
in the price by PIN debit networks in the United States. While certain
networks are stronger in particular areas of the country, the largest
networks essentially operate on a national scale. Accordingly, the
United States is a relevant geographic market within the meaning of
Section 7 of the Clayton Act, 15 U.S.C. 18.
IV. Market Concentration
30. The relevant market is highly concentrated and would become
significantly more concentrated as a result of the proposed
transaction. As of March 2003, the most recent period for which data is
available, Concord accounted for approximately 56 percent of PIN debit
transactions, while First Data had approximately a 10 percent share.
The top four networks--STAR, Visa's Interlink, NYCE, and Pulse--routed
over 90 percent of all PIN debit transactions. Using a standard measure
[[Page 6337]]
of market concentration called the ``HHI'' (defined and explained in
Appendix A), the market is highly concentrated, with a pre-merger HHI
of approximately 3590. First Data's acquisition of Concord would
increase the HHI by approximately 1120, resulting in a post-merger HHI
of approximately 4710. While STAR has recently lost some significant
bank contracts to Interlink and NYCE, under even the most conservative
estimate of future market shares the combined firm would have
approximately a 45 percent post-merger share. Taking into account these
lost contracts, the PIN debit network services market remains highly
concentrated and would become substantially more concentrated as a
result of the merger, with a post-merger HHI greater than 3000.
V. Anticompetitive Effects
A. The Proposed Transaction Will Likely Substantially Reduce
Competition Among PIN Debit Networks
31. First Data's acquisition of Concord will combine the largest
and third-largest PIN debit networks and enable the resulting network
to raise prices and to reduce levels of services to merchants.
32. PIN debit networks compete for merchant business by attempting
to convince merchants to accept their networks and to route to their
networks when there is a choice of routing options. PIN debit networks
also compete for merchants by improving their networks' transmission
speed, limiting network down-time, and reducing the number of
improperly rejected transactions. Merchants' ability to choose which
networks to accept at their stores and their control over the routing
of some transactions acts as a constraint on the price of PIN debit
network services to merchants.
33. While most large merchants generally accept all of the PIN
debit networks, retailers can and have used the threat of dropping a
network to obtain lower prices. For example, in 2001 Visa announced a
substantial rate increase for its PIN debit network, Interlink; STAR,
and later NYCE, followed by announcing comparable price increases. A
number of large retailers responded by stating that if Interlink
implemented the planned price increase, they would no longer accept
Interlink. In response, Interlink delayed and substantially scaled back
its proposed price increase. Then STAR delayed and reduced its planned
price increase to remain competitive. Similarly, NYCE concluded in an
internal document that its ``previously announced pricing [was] now out
of balance with new market realities'' and followed suit.
34. Combining STAR and NYCE will make it substantially more
difficult for merchants to use the possibility of dropping a network to
prevent price increases. The larger the network, the more risky it is
for a merchant to drop that network because of the increased likelihood
of rejected transactions, delays at check-out lines, customer confusion
and backlash, lost sales, and customer use of other forms of payment
that are more costly to the merchant.
35. The PIN debit networks take into account the merchants'
competitive reactions when they make decisions about pricing. Earlier
this year, NYCE was considering raising interchange rates to attract
financial institutions to the network. NYCE's internal analysis of the
market recognized, however, that ``[t]aking a leadership role in POS
interchange does not come without risk to the transaction growth engine
of the NYCE Network and its current revenue stream * * * ''[P]recedent
has been set via major retailers in the past dropping or threatening to
drop a payment card network due to pricing. * * * [T]he risks are
material that certain retailers or segments may decide to `send a
message' and simply stop taking NYCE-branded cards for purchases.''
(emphasis added)
36. First Data's acquisition of Concord will also reduce
competition in the PIN debit market by limiting merchants' ability to
route transactions to the least-cost network. Major supermarkets and
mass merchandisers have obtained superior prices and levels of service
by routing, or threatening to route, transactions away from NYCE to
STAR and vice versa. After the merger, merchants will no longer be able
to seek lower prices and improved service from the combined firm by
playing off NYCE and STAR against each other in this manner.
37. An internal merger planning document acknowledged the likely
effect of First Data's acquisition of Concord on pricing in the PIN
debit network services market: The ``[c]ombination of NYCE and STAR
allows FDC [First Data Corp.] more leeway to set market pricing.''
38. Interchange fees have risen dramatically in the past several
years as the PIN debit network services market has become more highly
concentrated. First Data's acquisition of Concord will likely
exacerbate this trend toward higher pricing by further reducing
competition in the market. Merchants will be forced to pass on a
significant portion of the higher fees to tens of millions of
consumers, in the form of higher prices for all goods and services.
Merchants do not typically pass through increase costs for particular
forms of payment on a per-transaction basis.
39. Any efforts the combined First Data/Concord might make to
expand PIN debit usage after the merger would not prevent the company
from raising prices to merchants that already accept PIN debit. PIN
debit networks are able to charge different prices to merchants based
on the value of the network to the particular company or type of
merchant. For example, First Data and Concord have both recently
offered substantial discounts to quick-service restaurants to encourage
them to deploy PIN pads at all of their locations. At the same time,
First Data and Concord have dramatically raised their merchant fees to
the market as a whole. This ability to engage in price discrimination
will facilitate First Data's exercise of market power post-merger by
allowing it to simultaneously raise prices to merchants that already
accept PIN pads and cut special deals to attract new market segments to
the network.
B. Lack of Countervailing Factors
40. It is unlikely that entry or expansion in the PIN debit network
services market will occur in a timely manner or on a scale sufficient
to undo the competitive harm that the merger will produce. Entry and
expansion are difficult because they require large, sunk investments to
attract bank members, and, to a lesser degree, participating merchants.
Coordinate development of both bank members and merchant acceptance is
critical because the utility of a particular PIN debit network to
customers, banks, and merchants depends not only on the cost and
features of the card, but also on the breadth of its acceptance and
use. These network effects that characterize the PIN debit network
services market make it difficult for small networks to significantly
expand their market share.
41. Banks would have little incentive to join a new or small
network that was attempting to expand market share by offering lower
interchange rates to merchants. To the contrary, a bank would only have
an incentive to join a network if it offered higher interchange rates.
Without such bank participation, a network's attempts to expand would
prove fruitless. Moreover, financial institutions benefit from a market
structure characterized by a limited number of significant PIN debit
networks and face fewer competitive constraints to setting higher
prices to merchants.
[[Page 6338]]
42. The PIN debit networks have adopted rules and policies that
further increase the cost for a network to expand by developing bank
and merchant participation. For example, the networks' priority routing
rules make entry more difficult and less likely. Even if a network
succeeds in convincing banks to add its bug to the banks' debit cards,
the network is unlikely to see many transactions because of the
priority routing rules. In addition, STAR requires its member banks to
use STAR for both ATM and PIN debit network services; this all-or-
nothing requirement makes it more difficult for competing networks to
convince banks to participate in their network. Finally, banks that
want to act as acquirers for STAR ATM and PIN debit transactions must
issue cards that participate in the STAR network. Because a significant
number of banks have substantial ATM or merchant acquiring businesses,
the STAR rule further inhibits potential expansion by competing PIN
debit networks. After the merger, the application of any or all of
these rules to First Data/Concord's combined network would inhibit
entry or expansion by other PIN debit networks.
43. Finally, the combination of First Data's and Concord's merchant
processing businesses with their PIN debit networks will raise barriers
to entry. The combined First Data/Concord will process more than half
of all PIN debit transactions. As the merchant processor, the merged
firm will have significant control over which network routes a
transaction on a double-bugged card. As the owner of the dominant PIN
debit network, First Data will have a significant incentive to exercise
this control after it acquires Concord, inhibiting other PIN debit
networks from expanding their presence in the market.
VI. Violation Alleged
44. The United states and the Plaintiff States hereby incorporate
paragraphs 1 through 43.
45. First Data's acquisition of Concord would likely substantially
lessen competition in the provision of PIN debit network services, in
violation of section 7 of the Clayton Act, 15 U.S.C. 18. The
transaction would likely have the following effects, among others:
(a) competition between First Data and Concord in the provision of
PIN debit network services would be eliminated;
(b) competition generally in the provision of PIN debit network
services would be eliminated or substantially lessened;
(c) prices of PIN debit network services to merchants that
currently use them would likely increase to levels above those that
would prevail absent the merger, forcing merchants to pass on these
increased costs in the form of higher prices for all goods and services
to tens of millions of consumers; and
(d) quality in the provision of PIN debit network services would
likely decrease to levels below those that would prevail absent the
merger.
Request for Relief
46. The United States and the Plaintiff States request:
(a) that the proposed acquisition be adjudged to violate section 7
of the Clayton Act, 15 U.S.C. 18;
(b) that the Defendants be permanently enjoined and restrained from
carrying out the Agreement and Plan of Merger dated April 1, 2003, or
from entering into or carrying out any agreement, understanding, or
plan by which First Data would merge with or acquire Concord, its
capital stock, or any of its assets;
(c) that the United States and the Plaintiff States be awarded
costs of this action;
(d) that as the Court may deem appropriate, the Plaintiff States be
awarded reasonable attorneys fees and costs as permitted by law; and
(e) that the United States and the Plaintiff States have such other
relief as the Court may deem just and proper.
Dated: October 23, 2003.
For Plaintiff United States:
R. Hewitt Pate,
Assistant Attorney General (D.C. Bar No. 473598).
Deborah P. Majoras,
Deputy Assistant Attorney General (D.C. Bar No. 474239).
J. Robert Kramer, II,
Director of Operations.
Renata B. Hesse,
Chief (Calif. Bar No. 148425), N. Scott Sacks, Assistant Chief (D.C.
Bar No. 913087), Networks & Technology Enforcement Section.
Respectfully submitted,
Joshua H. Soven,
(D.C. Bar No. 436633).
Craig W. Conrath,
Minnesota Bar No. 18569), Counsel of Record
Trail Attorneys, U.S. Department of Justice, Antitrust Division,
Networks & Technology Enforcement Section, 600 E Street, NW Suite
9500, Washington, DC 20530, (202) 307-6200.
For Plaintiff State of Connecticut
Richard Blumenthal,
Attorney General.
Steven M. Rutstein,
Assistant Attorney General,
Department Head/Antitrust Department,
Federal Bar No. ct09086.
Rachael O. Davis,
Assistant Attorney General,
Antitrust Department,
Federal Bar No. ct07411.
DC Bar No. 41357 (inactive).
55 Elm Street,
Hartford, Connecticut 06106, Tel: (860) 808-5040. Fax: (860) 808-
5033.
For Plaintiff State of Illinois,
Lisa Madigan,
Attorney General.
Robert W. Pratt,
IL ARDC NO. 2247593,
Chief, Antitrust Bureau.
Liva S. West,
IL ARDC NO. 6276883, Assistant Attorney General, Office of the
Illinois Attorney General, 100 W. Randolph Street, 13th Floor,
Chicago, IL 60601, Tel: 313-814-6021. Fax: 312-814-1154.
October 20, 2003.
Louisiana's Signature Page for the FDC/Concord merger opposition
case
Attorney General,
Richard P. Ieyoub.
Jane Bishop Johnson, 21651,
Louisiana Department of Justice, 301 Main Street, Suite 1250, Baton
Rouge, LA 70801, (225) 342-2754, (225) 342-96537 (FAX).
For the Plaintiff, the Commonwealth of Massachusetts
Thomas F. Reilly,
Attorney General
Betsy S. Whittey, BBO645593,
Assistant Attorney General, Consumer Protection and Antitrust
Division, One Ashburton Place, Boston, MA 02108, 617-727-2200 ext.
2968, 617-727-5765.
For Plaintiff State of New York:
Office of the Attorney General
Jay L. Himes,
Chief, Antitrust Bureau,
N.Y., Attorney No., 1236934
Richard E. Grimm,
Assistant Attorney General, N.Y. Attorney No. 1337138.
Antitrust Bureau,
Office of the Attorney General, 120 Broadway Room 26C62, New York,
New York 10271-0332, Tel: (212) 416-8282, (212) 416-8280, Fax: (212)
416-6015.
United States of America, et al. (State of Ohio) v. First Data
Corporation and Concord EFS, Inc.
For Plaintiff State of Ohio.
Jim Petro,
Attorney General,
State of Ohio.
Mitchell L. Gentile,
OH Bar Number 0022274,
Principal Attorney,
Antitrust Section,
Ohio Attorney General's Office,
150 E. Gay Street,
Columbus, OH 43215-3031,
Tel: 614-466-4328,
Fax: 614-995-0266.
For Plaintiff State of Texas.
Greg Abbott,
[[Page 6339]]
Attorney General of Texas.
Barry R. McBee,
First Assistant Attorney General.
Edward D. Burbach,
Deputy Attorney General for Litigation.
Mark Tobey,
Assistant Attorney General,
Chief, Antitrust Division.
Rebecca Fisher,
Assistant Attorney General,
State Bar No. 07057800.
Office of the Attorney General, P.O. Box 12548, Austin, Texas 78711-
2548, 512/463-2185, 512/320-0975 (Facsimile).
Signature by the State of Texas of Complaint in United States of
America, et al, v. First Data Corporation and Concord EFS, Inc.
Robert J. Spagnoletti,
Corporation Counsel, DC.
Charlotte W. Parker (Bar 186205),
Deputy Corporation Counsel,
Civil Division.
Bennett Rushkoff (Bar 386925),
Senior Counsel,
Don Allen Resnikoff (Bar #386688),
Assistant Corporation Counsel,
Anika Sanders Cooper (Bar #458863),
Assistant Corporation Counsel.
Office of the Corporation Counsel, 441 4th Street, NW., Suite 450-N,
Washington, DC 20001 (202) 727-4170.
Attorneys for the District of Columbia.
Appendix A
Herfindahl-Hirschman Index
``HHI'' means the Herfindahl-Hirschman Index, a commonly
accepted measure of market concentration. It is calculated by
squaring the market share of each firm competing in the market and
then summing the resulting numbers. For example, for a market
consisting of four firms with shares of 30%, 30%, 20%, and 20%, the
HHI is 2600 (30\2\ + 30\2\ + 20\2\ + 20\2\ = 2600). (Note:
Throughout the Compliant, market share percentages have been rounded
to the nearest whole number, but HHIs have been estimated using
unrounded percentages in order to accurately reflect the
concentration of the various markets.) The HHI takes into account
the relative size distribution of the firms in a market and
approaches zero when a market consists of a large number of small
firms. The HHI increases both as the number of firms in the market
decreases and as the disparity in size between those firms
increases.
Markets in which the HHI is between 1000 and 1800 points are
considered to be moderately concentrated, and those in which the HHI
is in excess of 1800 points are considered to be highly
concentrated. See Horizontal Merger Guidelines ] 1.51 (revised Apr.
8, 1997). Transactions that increase the HHI by more than 100 points
in concentrated markets presumptively raise antitrust concerns under
the guidelines issued by the U.S. Department of Justice and Federal
Trade Commission. See id.
[FR Doc. 04-2688 Filed 2-9-04; 8:45 am]
BILLING CODE 4410-11-M