[Federal Register: December 17, 2003 (Volume 68, Number 242)]
[Notices]
[Page 70295-70303]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17de03-98]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States and the State of Florida v. Waste Management, Inc.,
and Allied Waste Industries, Inc.; Complaint, Proposed Final Judgment
and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a Complaint, proposed Final
Judgment, Hold Separate Stipulation and Order, and Competitive Impact
Statement were filed with the U.S. District Court for the District of
Columbia in United States and State of Florida v. Waste Management,
Inc., and Allied Waste Industries, Inc., Civ. Action No. 1:03CV02076.
On October 14, 2003, the United States and the State of Florida filed a
Complaint, which sought to enjoin Waste Management, Inc. (``Waste
Management'') from acquiring certain small container commercial hauling
assets in Broward County, Florida from Allied Waste Industries, Inc.
(``Allied''). The Complaint alleged that Waste Management's acquisition
of these small container commercial hauling assets from Allied would
substantially lessen competition resulting in higher prices for small
container commercial hauling services in Broward County, Florida in
violation of the Clayton Act, as amended, 15 U.S.C. 18. The proposed
Final Judgment, also filed on October 14, 2003, requires defendants to
divest contracts and accounts on selected Allied small container
commercial hauling routes, to preserve competition in the provision of
small container commercial hauling services. A Competitive Impact
Statement filed by the United States describes the Complaint, the
proposed Final Judgment, and the remedies available to
[[Page 70296]]
private litigants who may have been injured by the alleged violations.
Copies of the Complaint, proposed Final Judgment, Hold Separate
Stipulation and Order, and Competitive Impact Statement are available
for inspection at the U.S. Department of Justice, Antitrust Division,
325 Seventh Street, NW., Suite 215, Washington, DC 20530 (telephone:
202-514-2481), and at the Clerk's Office of the United States District
Court for the District of Columbia, Washington, DC. Copies of these
materials may be obtained upon request and payment of a copying fee.
Public comment is invited within the statutory 60-day comment
period. Such comments and responses thereto will be published in the
Federal Register and filed with the Court. Comments should be directed
to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division,
U.S. Department of Justice, 1401 H Street, NW., Suite 3000, Washington,
DC 20530 (telephone: 202-307-0924).
Dorothy B. Fountain,
Deputy Director of Operations, Antitrust Division.
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
In the matter of: UNITED STATES OF AMERICA, Department of
Justice, Antitrust Division, 1401 H Street, NW, Suite 3000,
Washington, DC 20530, and STATE OF FLORIDA, Office of the Attorney
General, Plaza 1--The Capitol, Tallahassee, Florida 32399-1050,
Plaintiffs, v. WASTE MANAGEMENT, INC., 1001 Fannin Street, Suite
4000 Houston, Texas 7702, and ALLIED WASTE INDUSTRIES, INC., 15880
Greenway-Hayden Loop, Suite 100, Scottsdale, Arizona 85260,
Defendants.
Case No. 1:03CV02076
JUDGE: James Robertson
DECK TYPE: ANTITRUST
DATE STAMP: October 14, 2003
Complaint for Injunctive Relief
Plaintiff United States of America (``United States''), acting
under the direction of the Attorney General of the United States,
and Plaintiff State of Florida (``Florida''), acting under the
direction of its Attorney General, bring this civil antitrust action
to enjoin the acquisition by Defendant Waste Management, Inc.
(``Waste Management'') of certain commercial waste collection and
hauling assets (hereinafter referred to as ``small container
commercial hauling assets'') from Defendant Allied Waste Industries,
Inc. (``Allied'') and to obtain equitable and other relief as is
appropriate. Plaintiffs complain and allege as follows:
1. Pursuant to an asset purchase agreement and a stock
agreement, both dated August 15, 2003, Waste Management plans to
acquire from Allied certain small container commercial hauling
assets. The proposed transaction would lessen competition
substantially as a result of Waste Management's acquisition of small
container commercial hauling assets in Broward County, Florida.
2. Defendants Waste Management and Allied are two of only three
significant providers of small container commercial hauling services
in Broward County. Unless the acquisition is enjoined, consumers of
small container commercial hauling services in Broward County will
likely pay higher prices and receive fewer services as a consequence
of the elimination of the vigorous competition between Waste
Management and Allied.
I. Jurisdiction and Venue
3. The United State brings this action under section 15 of the
Clayton Act, 15 U.S.C. 25, to prevent and restrain the violation by
Defendants of section 7 of the Clayton Act, 15 U.S.C. 18. Florida
brings this action under Section 16 of the Clayton Act, 15 U.S.C.
26, to prevent and restrain the violation by Defendants of Section 7
of the Clayton Act, 15 U.S.C. 18.
4. Defendants Waste Management and Allied are located in and
transact business in the District of Columbia. Venue is therefore
proper in this District under Section 12 of the Clayton Act, 15
U.S.C. 22 and 28 U.S.C. 1391(c).
5. Defendants Waste Management and Allied collect municipal
solid waste from residential, commercial, and industrial customers.
In their waste collection businesses, Waste Management and Allied
make sales and purchases in interstate commerce, ship waste in the
flow of interstate commerce, and engage in activities that
substantially affect interstate commerce. The Court has jurisdiction
over this action and over the parties pursuant to 15 U.S.C. 22 and
28 U.S.C. 1331 and 1337.
II. Definitions
6. ``Broward County'' means Broward County, Florida.
7. ``MSW'' means municipal solid waste, a term of art used to
describe solid putrescible waste generated by households and
commercial establishments such as retail stores, offices,
restaurants, warehouses, and non-manufacturing activities in
industrial facilities. MSW does not include special handling waste
(e.g., waste from manufacturing processes, regulated medical waste,
sewage, and sludge), hazardous waste, or waste generated by
construction or demolition sites.
8. ``Small container hauling'' means the business of collection
MSW from commercial and industrial accounts, usually in
``dumpsters'' (i.e., a small container with one to ten cubic yards
of storage capacity), and transporting or ``hauling'' such waste to
a disposal site by use of a front-end or rear-end load truck.
Typical commercial waste collection customers include office and
apartment buildings and retail establishments (e.g., stores and
restaurants). Small container commercial hauling, as used herein,
does not include collection of roll-off containers.
III. Defendants and the Transaction
9. Waste Management is a Delaware corporation with its principal
office in Houston, Texas. Waste Management is the nation's largest
waste hauling company. It is engaged in providing waste collection
and disposal services throughout the United States. In 2002, Waste
Management reported total revenues of approximately $11.1 billion.
10. Allied is a Delaware corporation with its principal office
in Scottsdale, Arizona. Allied is the nation's second largest waste
hauling company. It is engaged in providing waste collection and
disposal services throughout the United States. In 2002, Allied
reported total revenues of approximately $5.5 billion.
11. On August 15, 2003, Defendants Waste Management and Allied
entered into an asset purchase agreement and a stock purchase
agreement purchase to which Waste Management would acquire from
Allied, inter alia, small container commercial hauling assets in
Broward County, Florida.
IV. Trade and Commerce
A. The Relevant Service Market
12. Waste collection firms, or haulers, collect MSW from
residential, commercial, and industrial establishments and transport
the waste to a disposal site, such as a transfer station, landfill,
or incinerator, for processing and disposal. Private waste haulers
typically contract directly with customers for the collection of
waste generated by commercial accounts. MSW generated by residential
customers, on the other hand, is often collected either by local
governments or by private haulers pursuant to contracts bid by, or
franchises granted by, municipal authorities.
13. Small container commercial hauling differs in many important
respects from the collection of residential or other types of waste.
An individual commercial customer typically generates substantially
more MSW than a residential customer. To handle this high volume of
MSW efficiently, haulers provide commercial customers with dumpsters
for storing the waste. Haulers organize their commercial accounts
into routes, and collect and transport the MSW generated by these
accounts in vehicles uniquely well suited for commercial waste
collection--primarily front-end load trucks. Less frequently,
haulers may use more maneuverable, but less efficient, rear-end load
trucks, especially in those areas in which a collection route
includes narrow alleyways or streets. Front-end load trucks are
unable to navigate narrow passageways easily and cannot efficiently
collect the waste located in them.
14. On a typical small container commercial hauling route, an
operator drives a front-end load truck to the customer's container,
engages a mechanism that grasps and lifts the container over the
front of the truck, and empties the container into the vehicle's
storage section where the waste is compacted and stored. The
operator continues along the route, collecting MSW from each of the
commercial accounts, until the vehicle is full. The operator then
drives the front-end load truck to a disposal facility, such as a
transfer station, landfill, or incinerator, and empties the contents
of the vehicle. Often, the operator returns to the route and repeats
the process.
15. In contrast to a commercial collection route, a residential
waste collection route is
[[Page 70297]]
significantly more labor intensive. The customer's MSW is stored in
much smaller containers (e.g., garbage bags or trash cans) and
instead of front-end load trucks, waste collection firms routinely
use rear-end load or side-load trucks manned by larger crews
(usually, two-person or three-person teams). On residential routes,
crew generally hand-load the customer's MSW, typically by tossing
garbage bags and emptying trash cans into the vehicle's storage
section. Because of the differences in the collection processes,
residential customers and commercial customers usually are organized
into separate routes. Likewise, other types of collection
activities, such as the use of roll-off containers (typically used
for construction debris) and the collection of liquid or hazardous
waste, are rarely combined with commercial waste collection. This
separation of routes is due to differences in the hauling equipment
required, the volume of waste collected, health and safety concerns,
and the ultimate disposal option used.
16. The differences in the types and volume of MSW collected and
in the equipment used in collection services distinguish small
container commercial hauling from all other types of waste
collection activities. These differences mean that small container
commercial building firms can profitably increase their charges for
small container commercial hauling services without losing
significant sales or revenues to firms engaged in the provision of
other types of waste collection services. Thus, small container
commercial hauling is a line of commerce, or relevant service, for
purposes of analyzing the effects of the acquisition under Section 7
of the Clayton Act.
B. The Relevant Geographic Market
17. Small container commercial hauling services are generally
provided in highly localized areas because to operate efficiently
and profitably, a hauler must have sufficient density in its
commercial waste collection operations (i.e., a large number of
commercial accounts that are reasonably close together). In
addition, a front-end load or rear-end load vehicle cannot be
efficiently driven long distances without collecting significant
amounts of MSW, which makes it economically impractical for a small
container commercial hauling firm to service metropolitan areas from
a distant base. Haulers, therefore, generally establish garages and
related facilities within each major local area served.
18. Generally, haulers compete for small container commercial
hauling customers in ``open'' competition or through competition for
municipal franchises. In open competition work, a hauler competes
for individual customers, whereas in franchise work, the hauler is
awarded a municipal contract that permits the hauler to provide
service to all of the small container commercial customers in that
municipality. The municipality decides whether it will grant a
franchise or allow haulers to compete for customers in open
competition.
19. Local small container commercial hauling firms in Broward
County can profitably increase prices to customers in the open areas
of Broward County--that is, those not covered by a municipal
franchise--without losing sales to a municipal franchise, or to more
distant competitors. The open areas of Broward County is a section
of the county, or relevant geographic market, for purposes of
analyzing the effects of the acquisition under Section 7 of the
Clayton Act.
C. Reduction in Competition as a Consequence of the Acquisition
20. Defendants Waste Management and Allied directly compete to
provide small container commercial hauling services for open
competition in open areas of Broward County, Florida. Waste
Management and Allied each account for a substantial share of total
revenues from commercial waste collection services in Broward
County.
21. The proposed acquisition would reduce from three to two the
number of significant firms that compete to provide small container
commercial hauling services in open areas of Broward County,
Florida. After the acquisition, Waste Management would control over
68 percent of total market revenues, which exceed $40 million
annually. Using a standard measure of market concentration called
the ``HHI'' (defined and explained in Appendix A), the post-merger
HHI for small container commercial hauling would be approximately
5490, an increase of 2063 points over the pre-merger HHI of 3428.
D. Entry Into Commercial Waste Collection of MSW
22. Significant new entry into small container commercial
hauling business is difficult and time-consuming. A new entrant into
small container commercial hauling cannot provide a significant
competitive constraint on the prices charged by market incumbents
until it achieves minimum efficient scale and operating efficiencies
comparable to existing firms. In order to obtain a comparable
operating efficiency, a new firm must achieve route density similar
to existing firms. However, an incumbent's use of price
discrimination and long-term contracts prevents new entrants from
winning a large enough base of customers to achieve efficient routes
in sufficient time to constrain the post-acquisition firm from
significantly raising prices. Differences in the service provided by
an incumbent hauler to each customer permit the incumbent to meet
competition easily from new entrants by pricing its services lower
to any individual customer that wants to switch to the new entrant.
An incumbent's use of three-to-five year contracts, which may
contain large liquidated damage provisions for contract termination,
automatically renew, or permit specified price increases, make it
more difficult for a customer to switch to a new hauler and obtain
lower prices for its collection service. These contracts increase
the cost and time required by an entrant to form an efficient route,
reducing the likelihood that the entrant will ultimately be
successful.
E. Harm to Competition
23. The acquisition of Allied's small container commercial
hauling assets by Waste Management would remove a significant
competitor in the small container commercial hauling business in a
market that is already highly concentrated and difficult to enter.
In this market, the resulting substantial increase in concentration,
loss of competition, and absence of any reasonable prospect of
significant new entry or expansion by market incumbents likely will
result in higher prices for small container commercial hauling
services.
V. Violation Alleged
24. Waste Management's proposed acquisition of Allied's small
container commercial hauling assets in Broward County, Florida will
lessen competition substantially and tend to create a monopoly in
interstate trade and commerce in violation of Section 7 of the
Clayton Act.
25. The transaction likely will have the following effects,
among others:
a. Competition for small container commercial hauling services
in open areas of Broward County, Florida will be lessened
substantially; and
b. Prices charged by small container commercial hauling firms in
open areas of Broward County, Florida will likely increase.
VI. Requested Relief
Plaintiffs request:
1. That Waste Management's proposed acquisition of Allied's
small container commercial hauling assets in Broward County, Florida
be adjudged and decreed to be unlawful and in violation of Section 7
of the Clayton Act;
2. That Defendants be permanently enjoined from carrying out the
acquisition of small container commercial hauling assets in the
asset purchase and stock purchase agreements dated August 15, 2003,
or from entering into or carrying out any agreement, understanding,
or plan, the effect of which would be to exchange those assets
between the Defendants;
3. That Plaintiffs receive such other and further relief as the
case requires and the Court deems proper; and
4. That Plaintiffs recover the costs of this action.
Dated: October 14, 2003.
Respectfully submitted,
FOR PLAINTIFF UNITED STATES:
/s/----------
R. Hewitt Pate
Assistant Attorney General.
/s/----------
J. Bruce McDonald
Deputy Assistant Attorney General.
/s/----------
Dorothy B. Fountain
Deputy Director of Operations.
/s/----------
Maribeth Petrizzi
Chief Litigation II Section.
/s/----------
Paul A. Moore III
Maryland Bar.
Karen Y. Douglas
Trial Attorneys, United States Department of Justice, Antitrust
Division, Litigation II
[[Page 70298]]
Section, 1401 H Street, N.W., Suite 3000, Washington, D.C. 20530,
(202) 307-0924.
FOR PLAINTIFF STATE OF FLORIDA:
CHARLES J. CRIST, Jr.
Attorney General.
By:
/s/----------
L. CLAYTON ROBERTS
Executive Deputy Attorney General.
PATRICIA A. CONNERS
Director, Antitrust Division
LIZABETH A. LEEDS
Senior Assistant Attorney General
Florida Bar No. 0457991
NICHOLAS J. WEILHAMMER
Assistant Attorney General, Office of the Attorney General,
Antitrust Division, PL-01, The Capitol, Tallahassee, Florida 32399-
1050, Phone: (850) 414-3600, Fax: (850) 488-9134.
Appendix A--Herfindahl-Hirschman Index Calculations
``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 thirty, thirty, twenty, and
twenty percent, the HHI is 2600 (30\2\ + 30\2\ +20\2\ + 20\2\ =
2600). The HHI takes into account the relative size and distribution
of the firms in a market and approaches zero when a market consists
of a large number of firms of relatively equal size. 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. Transactions that increase the HHI by more than 100
points in highly concentrated markets presumptively raise antitrust
concerns under the Horizontal Merger Guidelines issued by the U.S.
Department of Justice and the Federal Trade Commission. See Merger
Guidelines Sec. 1.51.
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA, and STATE OF FLORIDA, Plaintiffs, v.
WASTE MANAGEMENT, INC., and ALLIED WASTE INDUSTRIES, INC.,
Defendants.
Civil No: 1:03CV02076.
JUDGE: James Robertson.
DECK TYPE: Antitrust.
FILED: October 14, 2003.
Final Judgment
Whereas, Plaintiffs, the United States of America (``United
States'') and the State of Florida (``Florida''), filed their
Complaint on October 14, 2003, and Plaintiffs and Defendants, Waste
Management, Inc. (``Waste Management'') and Allied Waste Industries,
Inc. (``Allied''), by their respective attorneys, have consented to
the entry of this Final Judgment without trial or adjudication of
any issue of fact or law, and without this Final Judgment
constituting 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 assets by Defendant Waste
Management to ensure that competition is not substantially lessened;
And whereas, Plaintiffs require Defendant Waste Management to
make certain divestitures in order to remedy the loss of competition
alleged in the Complaint;
And whereas, Defendants have represented to Plaintiffs that the
divestitures required below can and will be made and that Defendants
will later raise no claims of hardship or difficulty as grounds for
asking the Court to modify any of the divestitures or other
injunctive provisions contained below;
And whereas, Defendant Waste Management shall be enjoined from
acquiring the assets to be divested, except as provided in this
Final Judgment;
Now, therefore, before any testimony is taken, and without trial
or adjudication of any issue of fact or law, 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 Waste
Management divests the Relevant Hauling Assets.
B. Allied means Defendant Allied Waste Industries, Inc., a
Delaware corporation with its headquarters in Scottsdale, Arizona,
its successors and assigns, and its subsidiaries, division, groups,
affiliates, partnerships, joint ventures, and their directors,
officers, managers, agents, and employees.
C. MSW means municipal solid waste, a term of art used to
describe solid putrescible waste generated by households and
commercial establishments such as retail stores, offices,
restaurants, warehouses, and non-manufacturing activities in
industrial facilities. MSW does not include special handling waste
(e.g., waste from manufacturing processes, regulated medical waste,
sewage, and sludge), hazardous waste, or waste generated by
construction or demolition sites.
D. Relevant Hauling Assets means Allied's small container
commercial hauling routes 501, 901, 902, 903, 904, 906, 907, 909,
912, 914, and 915 that operate out of Allied's Broward County,
Florida division located at 2380 College Avenue, Davie, Florida
33317 including:
(1) All tangible assets, including capital equipment, trucks and
other vehicles, containers, interests, supplies, and if requested by
the purchaser, real property and improvements to real property
(i.e., buildings and garages);
(2) All intangible assets, including hauling-related customer
lists, leasehold interests, permits, and contracts and accounts
related to each small container commercial hauling route, and any
contract or account serviced in whole or in part on any of the
routes listed above; and
(3) Relevant Hauling Assets does not include accounts and
contracts serviced in unincorporated Broward County, accounts
serviced through a franchise agreement, and accounts and contracts
serviced in the City of Margate.
E. Small container commercial hauling means the business of
collecting MSW from commercial and industrial accounts, usually in
``dumpsters'' (i.e., a small container with one to ten cubic yards
of storage capacity), and transporting or ``hauling'' such waste to
a disposal site by use of a front- or rear-end loader truck. Typical
small container commercial hauling customers include office and
apartment buildings and retail establishments (e.g., stores and
restaurants). Small container commercial hauling, as used herein,
does not include collection of roll-off containers.
F. Waste Management means Defendant Waste Management, Inc., a
Delaware corporation with its headquarter in Houston, Texas, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships, joint ventures, and their directors,
officers, managers, agents, and employees.
III. Applicability
A. This Final Judgment applies to Waste Management and Allied,
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 the Relevant Hauling Assets, that
the Acquirer agree to be bound by the provisions of this Final
Judgment.
IV. Divestiture
A. Defendant Waste Management is ordered and directed, within
ninety calendar days after the filing of the Complaint in this
matter, or five days after notice of the entry of this Final
Judgment by the Court, whichever is later, to divest the Relevant
Hauling Assets in a manner consistent with this Final Judgment to an
Acquirer acceptable to the United States in its sole discretion,
after consultation with Florida. The United States, in its sole
discretion, after consultation with Florida, may agree to an
extension of this time period of up to sixty calendar days, and
shall notify the Court in such circumstances. Defendants agree to
use their best efforts to divest the Relevant Hauling Assets as
expeditiously as possible.
B. In accomplishing the divestiture ordered by this Final
Judgment, Defendant Waste Management promptly shall make known, by
[[Page 70299]]
usual and customary means, the availability of the Relevant Hauling
Assets. Defendants shall inform any person making inquiry regarding
a possible purchase of the Relevant Hauling Assets that they are
being divested pursuant to this Final Judgment and provide that
person with a copy of this Final Judgment. Defendants shall offer to
furnish to all prospective Acquirers, subject to customary
confidentiality assurances, all information and documents relating
to the Relevant Hauling Assets, whichever is then available for
sale, customarily provided in a due diligence process except such
information or documents subject to the attorney-client or work-
produce privileges.
C. Defendants shall provide the United States and Florida, and
each prospective Acquirer of the Relevant Hauling Assets,
information relating to the personnel involved in the operation and
management of the Relevant Hauling Assets to enable the Acquirer to
make offers of employment. Defendants will not interfere with any
negotiations by the Acquirer to employ any of Defendants' employees
whose primary responsibility is the operation or management of the
Relevant Hauling Assets.
D. Defendants shall permit each prospective Acquirer of the
Relevant Hauling Assets to have reasonable access to personnel and
to make inspections of the physical facilities; 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 the
a due diligence process.
E. Defendant Waste Management shall warrant to the Acquirer of
the Relevant Hauling Assets that each asset will be operational on
the date of sale.
F. Defendants shall not take any action that will impede in any
way the permitting, operation, or divestiture of the Relevant
Hauling Assets.
G. Defendant Waste Management shall warrant to the Acquirer of
the Relevant Hauling Assets that there are no material defects in
the environmental, zoning or other permits pertaining to the
operation of each asset, and that following the sale of the Relevant
Hauling Assets, Defendants will not undertake, directly or
indirectly, any challenges to the environmental, zoning, or other
permits relating to the operation of the Relevant Hauling Assets.
H. Unless the United States, in its sole discretion, after
consultation with Florida, otherwise consents in writing, the
divestiture pursuant to Section IV, or by trustee appointed pursuant
to Section V, of this Final Judgment shall include the entire
Relevant Hauling Assets, and shall be accomplished in such a way as
to satisfy the United States, in its sole discretion, after
consultation with Florida, that the divested assets will be used by
the Acquirer, as part of a viable, ongoing small container
commercial hauling business. Divestiture of the Relevant Hauling
Assets may be made to an Acquirer, provided that it is demonstrated
to the sole satisfaction of the United States, after consultation
with Florida, that the Relevant Hauling Assets will remain viable
and the divestiture of such assets 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 Florida, has the intent and
capability, including managerial, operational, and financial
capability, to compete effectively in the small container commercial
hauling business; and
2. Shall be accomplished so as to satisfy the United States, in
its sole discretion, after consultation with Florida, that none of
the terms of any agreement between an Acquirer and Defendant Waste
Management gives Defendant Waste Management the ability unreasonably
to raise the Acquirer's costs, to lower the Acquirer's efficiency,
or otherwise to interfere in the ability of the Acquirer to compete
effectively.
V. Appointment of Trustee
A. If Defendant Waste Management has not divested the Relevant
Hauling Assets within the time period specified in Section IV.A.,
Defendant Waste Management shall notify the United States of that
fact in writing. Upon application of the United States, in its sole
discretion, the Court shall appoint a trustee selected by the United
States and approved by the Court to effect the divestiture of the
Relevant Hauling Assets.
B. After the appointment of the trustee becomes effective, only
the trustee shall have the right to sell the Relevant Hauling
Assets.
C. The trustee shall have the power and authority to
accomplished the divestiture to an Acquirer acceptable to the United
States, in its sole discretion, after consultation with Florida, 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.E. of this Final
Judgment, the trustee may hire at the cost and expense of Defendant
Waste Management any 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.
D. Defendant Waste Management shall not object to a sale by the
trustee on any ground other than the trustee's malfeasance. Any such
objections by Defendant Waste Management must be conveyed in writing
to the United States, Florida, and the trustee within ten calendar
days after the trustee has provided the notice required under
Section VI.
E. The trustee shall serve at the cost and expense of Defendant
Waste Management, on such terms and conditions as the United States
approves, and shall account for all monies derived from the sale of
the Relevant Hauling Assets sold by the trustee and all costs and
expenses so incurred. After approval by the Court of the trustee's
accounting, including fees for its services and those of any
professionals and agents retained by the trustee, all remaining
money shall be paid to Defendant Waste Management 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 Relevant Hauling Assets, and based on a
fee arrangement providing the trustee with an incentive based on the
price and terms of the divestiture and the speed with which it is
accomplished, but timeliness is paramount.
F. Defendants shall use their best efforts to assist the trust
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.
G. After its appointment, the trustee shall file monthly reports
with the United States, Florida, and the Court setting forth the
trustee's efforts to accomplish the divestiture ordered under this
Final Judgment. To the extent that such reports contain information
that the trustee deems confidential, such reports shall not be filed
in the public docket of the Court. Such reports shall include the
name, address, and telephone number of each person who, during the
preceding month, made an offer to acquire, expressed an interest in
acquiring, entered into negotiations to acquire, or was contacted or
made an inquiry about acquiring, any interest in the Relevant
Hauling Assets, and shall describe in detail each contact with any
such person. The trustee shall maintain full records of all efforts
of all efforts made to divest the Relevant Hauling Assets.
H. If the trustee has not accomplished such divestiture within
six (6) 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
that 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 Florida. The United States, in its
sole discretion, after consultation with Florida, 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, including 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 business days following execution of a definitive
divestiture agreement, Defendant Waste Management or the trustee,
whichever is then responsible for
[[Page 70300]]
effecting the divestiture required herein, shall notify the United
States and Florida of any proposed divestiture required by Section
IV or V of this Final Judgment. If the trustee is responsible, it
shall similarly notify Defendant Waste Management. 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 the Relevant Hauling Assets
together with full details of the same.
B. Within fifteen calendar days of receipt by the United States
and Florida of such notice, the United States, in its sole
discretion, after consultation with Florida, may request from
Defendants, the proposed Acquirer or Acquirers, 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
the United States and Florida any additional information requested
within fifteen calendar days of the receipt of the request, unless
the parties shall otherwise agree.
C. Within thirty calendar days after receipt of the notice or
within twenty calendar days after the United States and Florida have
been provided the additional information requested from Defendants,
the proposed Acquirer, any third party, and the trustee, whichever
is later, the United States, after consultation with Florida, 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
Defendant Waste Management's limited right to object to the sale
under Section V.D. of this 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
Defendant Waste Management under Section V.D., 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 calendar days of the filing of the Complaint in
this matter, and every thirty calendar days thereafter until the
divestiture has been completed under Section IV or V, Defendants
shall deliver to the United States and to Florida an affidavit as to
the fact and manner of its 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 the Relevant Hauling
Assets, 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 Relevant Hauling Assets, and to provide required information
to each 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 Florida, to
information provided by Defendants, including limitations on
information, shall be made within fourteen days of receipt of such
affidavit.
B. Within twenty calendar days of the filing of the Complaint in
this matter, Defendants shall deliver to the United States and
Florida 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 Florida an
affidavit describing any changes to the efforts and actions outlined
in Defendants' earlier affidavits filed pursuant to this section
within fifteen calendar days after the change is implemented.
C. Defendants shall keep all records of all efforts made to
preserve the Relevant Hauling Assets, and to divest the Relevant
Hauling Assets, 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 Department of Justice, including consultants and other
persons retained by the United States, upon written request of a
duly authorized representative of the Assistant Attorney General in
charge of the Antitrust Division, or a duly authorized
representative of the Florida Attorney General's Office, and on
reasonable notice to Defendants, be permitted:
1. Access during Defendants' office hours to inspect and copy,
or at the United States' or Florida'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, or a duly authorized representative of the Florida
Attorney General's Office, Defendants shall submit such 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 and sections IV and VI above shall be divulged by the
Plaintiffs to any person other than an authorized representative of
the executive branch of the United States, or the Florida Attorney
General's Office, except in the course of legal proceedings to which
the United States or Florida is a party (including grand jury
proceedings), or for the purpose of securing compliance with this
Final Judgment, or as otherwise required by law.
D. If at the time information or documents are furnished by
Defendants to Plaintiffs, Defendants represent and identify in
writing the material in any such information or documents 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 Plaintiffs
shall give Defendants ten calendar days notice prior to divulging
such material in any legal proceeding (other than a grand jury
proceeding).
XI. Notice
A. Defendant Waste Management shall provide written advance
notification to representatives of the Antitrust Division of the
United States Department of Justice and the Florida Attorney
General's Office during the period ending four years after the Final
Judgment is entered before acquiring, directly or indirectly, any
interest in any assets (other than in the ordinary course of
business), capital stock, or voting securities of any small
container commercial hauling business that, at any time during the
twelve months immediately preceding such acquisition, were used to
provide small container commercial hauling services in Broward
County, Florida, where that business's small container commercial
hauling assets generated in excess of $500,000 in revenues per year
or where total revenues were in excess of $1 million per year.
B. Such written notification shall be provided to
representatives of the Antitrust Division and the Florida Attorney
General's Office at least thirty days prior to acquiring any such
interest, which period may be shortened by permission of the
Antitrust Division and the Florida Attorney General's Office.
XII. No Reacquisition
Defendant Waste Management may not reacquire, lease, or control
any part of the Relevant Hauling Assets during the term of this
Final Judgment.
XIII. 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
[[Page 70301]]
directions as may be necessary or appropriate to carry out or
construe this Final Judgment, to modify any of its provisions, to
enforce compliance, and to punish violations of its provisions.
XIV. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire ten years form the date of its entry.
XV. Public Interest Determination
Entry of this Final Judgment is in the public interest.
Date:------------------------------------------------------------------
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Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. 16.
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UNITED STATES DISTRICT JUDGE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA, and STATE OF FLORIDA, Plaintiffs, v.
WASTE MANAGEMENT, INC., and ALLIED WASTE INDUSTRIES, INC.,
Defendants.
Cast No.: 1:03CV02076.
JUDGE: James Robertson.
DECK TYPE: Antitrust.
Competitive Impacts Statement
Plaintiff United States of America (``United States''), pursuant
to Section 2(b) of the Antitrust Procedures and Penalties Act
(``APPA''), 15 U.S.C. 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 Waste Management, Inc. (``Waste Management'') and
Defendant Allied Waste Industries, Inc. (``Allied'') entered into an
asset purchase agreement and a stock purchase agreement, both dated
August 15, 2003, pursuant to which Waste Management would acquire
from Allied, inter alia, certain small container commercial hauling
assets in Broward County, Florida. The United States and the State
of Florida (``Florida'') filed a civil antitrust Complaint on
October 14, 2003, seeking to enjoin the proposed acquisition. The
Complaint alleges that the likely effect of this acquisition would
be to lessen competition substantially for small container
commercial hauling services in Broward County, Florida in violation
of Section 7 of the Clayton Act. This loss of competition would
result in consumers paying higher prices and receiving fewer
services for the collection of small container commercial waste.
At the same time the Complaint was filed, the United States also
filed a Hold Separate Stipulation and Order and proposed Final
Judgment, which are designed to eliminate the anticompetitive
effects of the acquisition. Under the proposed Final Judgment, which
is explained more fully below, Waste Management is required within
90 days after the filing of the Complaint, or five days after notice
of the entry of the Final Judgment by the Court, Whichever is later,
to divest, as a viable business operation, specified small container
commercial hauling assets located in Broward County, Florida. Under
the terms of the Hold Separate Stipulation and Order, Waste
Management is required to take certain steps to ensure that the
assets to be divested are fully maintained in operable condition at
no less than the state they were in at the time the United States,
Florida, and Defendants agreed to the divestitures outlined below
and held separate from its other assets and businesses.
The United States, Florida, 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
Waste Management, with 2002 revenues of approximately $11.1
billion, is the nation's largest waste collection and disposal
company, operating throughout the United States. Allied, with 2002
revenues of approximately $5.5 billion, is the nation's second
largest waste collection and disposal company. The proposed
transaction, as initially agreed to by Defendants on August 15,
2003, would lessen competition substantially as a result of Waste
Management's acquisition of Allied's small container commercial
hauling assets in Broward County, Florida. This acquisition is the
subject of the Complaint and proposed Final Judgment filed by the
United States and Florida on October 14, 2003.
B. The Competitive Effects of the Transaction on Competition in
Small Container Commercial Hauling
Municipal solid waste (``MSW'') is solid, putrescible waste
generated by households and commercial establishments. Waste
collection firms, or haulers, contract to collect MSW from
residential and commercial customers and transport the waste to
private and public disposal facilities (e.g., transfer stations,
incinerators, and landfills), which, for a fee, process and legally
dispose of the waste. Small container commercial hauling is one
component of MSW collection, which also includes residential and
other waste collection. Waste Management and Allied compete in the
collection of small container commercial waste in Broward County,
Florida.
Small container commercial hauling is the collection of MSW in
one to ten cubic yard containers, usually from commercial businesses
such as office and apartment buildings and retail establishments
(e.g., stores and restaurants) for shipments to, and disposal at, an
approved disposal facility. Because of the type and volume of waste
generated by commercial accounts and the frequency of service
required, haulers organize small container commercial accounts into
their own special routes, and generally use specialized equipment to
store, collect, and transport waste from these accounts to approved
disposal sites. This equipment (e.g., one- to ten-cubic-yard
containers for waste storage, and front-end load vehicles commonly
used for collection and transportation) is uniquely well-suited for
small container commercial hauling. Providers of other types of
waste collection services (e.g., residential and roll-off services)
are not good substitutes for small container commercial hauling
firms. In their waste collection efforts, these firms use different
waste storage equipment (e.g., garbage cans or semi-stationary roll-
off containers) and different vehicles (e.g., rear-load, side-load,
or roll-off trucks), which, for a variety of reasons, cannot be
conveniently or efficiently used to store, collect, or transport
waste generated by commercial customers, and hence, are rarely used
on small container commercial hauling routes. In the event of a
small but significant and nontransitory increase in price for small
container commercial hauling, customers would not switch to any
other alternative. Thus the Complaint alleges that the provision of
small container commercial hauling constitutes a line of commerce,
or relevant service, for purposes of analyzing the effects of the
transaction.
The Complaint alleges that the provision of small container
commercial hauling service takes place in compact, highly localized
geographic markets. The geographic markets are compact and highly
localized because it is expensive to ship waste long distances in
either collection or disposal operations. To minimize
transportations costs and maximize the scale, density, and
efficiency of their waste collection operations, small container
commercial hauling firms concentrate their customers and collection
routes in small areas. Firms with operations concentrated in a
distant area cannot easily compete against firms whose routes and
customers are locally based. Distance may significantly limit a
remote firm's ability to provide commercial waste hauling service as
frequently or conveniently as that offered by local firms with
nearby routes. Also, local small container commercial hauling firms
have significant cost advantages over other firms and can profitably
increase their charges to local small container commercial hauling
customers without losing significant sales to firms outside the
area.
Small container commercial haulers in Broward County, Florida
compete for customers either in ``open'' competition or through
competition for municipal franchises. In open competition areas,
haulers compete to service individual customers. In areas where
commercial hauling is controlled by the respective municipality,
small container commercial haulers compete to be awarded a municipal
contract, or franchise, that permits the hauler to provide service
to all of the small container commercial customers in that
municipality. The municipality decides whether to grant a franchise
or to allow haulers to compete for customers in open competition.
Local small container commercial hauling firms in Broward County can
profitably increase prices to customers in the open areas of Broward
County--that is, those customers not covered by a municipal
[[Page 70302]]
franchise--without losing sales to a municipal franchise, or to more
distant competitors.
Applying this analysis, the Complaint alleges that the open
competition areas of Broward County, Florida constitute a section of
the country, or relevant geographic market, for the purpose of
assessing the competitive effects of a combination of Waste
Management and Allied in the provision of small container commercial
hauling services.
There are significant entry barriers into the provision of small
container commercial hauling services. A new entrant in the small
container commercial hauling business must achieve a minimum
efficient scale and operating efficiencies comparable to those of
existing firms in order to provide a significant competitive
constraint on the prices charged by market incumbents. In order to
obtain comparable operating efficiencies, a new firm must achieve
route density similar to existing firms. An efficient route usually
handles eighty or more customers or containers each day. Because
most customers have their waste collected once of twice a week, a
new entrant must have several hundred customers in close proximity
to construct an efficient route. However, the common use of price
discrimination and long-term contracts by existing small container
commercial hauling firms can leave too few customers available to
the entrant in a sufficiently confined geographic area to create an
efficient route. The incumbent firm can selectively and temporarily
charge an unbeateably low price to specified customers targeted by
new entrants. Long-term contracts often run for three to five years
and may automatically renew or contain large liquidated damage
provisions for contract termination. Such terms make it more costly
or difficult for a customer to switch to a new hauler and obtain
lower prices for its collection service. Because of these factors, a
new entrant may find it difficult to compete by offering its
services at pre-entry price levels comparable to the incumbent's
prices. Also, a new entrant may face an increase in the cost and
time required to form an efficient route, which may limit the
entrant's ability to build an efficient route and reduce the
likelihood that the entrant ultimately will be successful.
The need for route density, the use of long-term contracts with
restrictive terms, and the ability of existing firms to price
discriminate raise significant barriers to entry by new firms, which
will likely be forced to compete at lower than entry price levels.
Such barriers in the market for small container commercial hauling
services have allowed incumbent firms to raise prices successfully.
In Broward County, Florida, Waste Management's acquisition of
Allied's small container commercial hauling assets would reduce from
three to two the number of significant firms that compete to provide
small container commercial hauling. After the acquisition, Waste
Management would control over 68 percent of total market revenues,
which exceed $40 million annually. There is only one other
significant small container commercial hauling competitor in this
market.
The Complaint alleges that a combination of Waste Management and
Allied in Broward County would remove a significant competitor in
small container commercial hauling. In this market the resulting
increase in concentration, loss of competition, loss of competition,
and absence of any reasonable prospect of entry or expansion by
market incumbents likely will result in higher prices for small
container commercial hauling.
III. Explanation of the Proposed Final Judgment
The divestiture requirement of the proposal Final Judgment will
eliminate the anticompetitive effects of the acquisition in small
container commercial hauling in Broward County, Florida by
establishing a new, independent, and economically viable competitor.
The proposed Final Judgment requires Waste Management, within ninety
days after the filing of the Complaint, or five days after notice of
the entry of the Final Judgment by the Court, whichever is later, to
divest, as a viable ongoing business, small container commercial
hauling assets (e.g., routes, trucks, containers, and customer
lists) in Broward County, Florida. The assets must be divested in
such a way as to satisfy the United States in its sole discretion,
after consultation with Florida, that the operations can and will be
operated by the purchaser as a viable, ongoing business that can
compete effectively in the relevant market. Defendants must take all
reasonable steps necessary to accomplish the divestiture quickly and
shall cooperate with prospective purchasers.
In the event that Defendants do not accomplish the divestiture
within the periods prescribed in the proposed Final Judgment, the
Final Judgment provides that the Court will appoint a trustee
selected by the United States to effect the divestiture. If a
trustee is appointed, the proposed Final Judgment provides that
Waste Management will pay all costs and expenses of the trustee. The
trustee's commission will be structured so as to provide an
incentive for the trustee based on the price obtained and the speed
with which the divestiture is accomplished. After his or her
appointment becomes effective, the trustee will file monthly reports
with the Court, the United States, and Florida, setting forth his or
her efforts to accomplish the divestiture. At the end of six months,
if the divestiture has not been accomplished, the trustee, the
United States, and Florida, 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.
The divestiture provisions of the proposed Final Judgment will
eliminate the anticompetitive effects of the acquisition in the
provision of small container commercial hauling services in Broward
County, Florida. Under the proposed Final Judgment, Waste Management
is required to divest customers and contracts on eleven of Allied's
routes (routes 901, 902, 903, 904, 906, 907, 909, 912, 914, 915, and
501, except for specific portions of these routes that did not raise
significant competitive concerns, including accounts and contracts
serviced in parts unincorporated Broward County, accounts serviced
through franchise agreements, and accounts and contracts serviced in
the City of Margate) to a new, independent, and economically viable
competitor in Broward County, Florida. In addition, Waste Management
agrees that, if an Allied customer has a single contract with
accounts and service locations that are on both a route to be
divested and a route Waste Management will acquire, Waste Management
will divest the entire contract. The divested assets produce annual
revenues of over $8 million from small container commercial hauling
service in the open competition areas of Broward County, which
represents over 80 percent of Allied's revenues generated in the
open competition areas.
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 attorney's 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, Florida, and Defendants have stipulated that
the proposed Final Judgment may be entered by the Court after
compliance with the provisions of the APPA, provided that the United
States has not withdrawn its consent. The APPA conditions entry upon
the Court's determination that the proposed Final Judgment is in the
public interest.
The APPA provides a period of at least 60 days preceding the
effective date of the proposed Final Judgment within which any
person may submit to the United States written commends regarding
the proposed Final Judgment. Any person who wishes to comment should
do so within sixty days of the date of publication of this
Competitive Impact Statement in the Federal Register. The United
States will evaluate and respond to the comments. All comments will
be given due consideration by the Department of Justice, which
remains free to withdraw its consent to the proposed Final Judgment
at any time prior to entry. The comments and the response of the
United States will be filed with the Court and published in the
Federal Register.
Written comments should be submitted to: Maribeth Petrizzi,
Chief, Litigation II Section, Antitrust Division, United States
Department of Justice, 1401 H Street, NW., Suite 3000, Washington,
DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the
Court for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
[[Page 70303]]
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 Defendants. The
United States could have continued the litigation and sought
preliminary and permanent injunctions against Waste Management's
acquisition of certain assets from Allied. The United States is
satisfied, however, that the divestiture of assets described in the
proposed Final Judgment will preserve competition for the provision
of small container commercial hauling services in the relevant
market identified by the United States and Florida.
VII. Standard of Review Under the APPA for the Proposed Final Judgment
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a sixty-day comment
period, after which the Court shall determine whether entry of the
proposed Final Judgment ``is in the public interest.'' In making
that determination, the Court may consider:
(1) The competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration or relief sought, anticipated effects of
alternative remedies actually considered, and any other
considerations bearing upon the adequacy of such judgment;
(2) The impact of entry of such judgment upon the public
generally and individuals alleging specific injury from the
violations set forth in the complaint including consideration of the
public benefit, if any, to be derived from a determination of the
issues at trial.
15 U.S.C. 16(e). As the United States Court of Appeals for the
District of Columbia Circuit held, the APPA permits a court to
consider, among other things, the relationship between the remedy
secured and the specific allegations set forth in the government's
complaint, whether the decree is sufficiently clear, whether
enforcement mechanisms are sufficient, and whether the decree may
positively harm third parties. See United States v. Microsoft, 56
F.3d 1448, 1458-62 (D.C. Cir. 1995).
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).\1\ Rather:
\1\ See 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. 16(f), those procedures are discretionary. A
court need not invoke any of them unless it believes that the
comments have raised significant issues and that further proceedings
would aid the court in resolving those issues. See H.R. Rep. No. 93-
1463, 93rd Cong., 2d Sess. 8-9 (1974), reprinted in 1974
U.S.C.C.A.N. 6535, 6538.
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[a]bsent a showing of corrupt failure of the government to
discharge its duty, the Court, in making its public interest
finding, should * * * carefully consider the explanations of the
government in the competitive impact statement and its responses to
comments in order to determine whether those explanations are
reasonable under the circumstances.
United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. (CCH)
]61,508, at 71,980 (W.D. Mo. May 17, 1977).
Accordingly, with respect to the adequacy of the relief secured
by the decree, a court may not ``engage in an unrestricted
evaluation of what relief would best serve the public.'' United
States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (citing
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981));
see also Microsoft, 56 F.3d at 1460-62. Case law requires that:
[t]he balancing of competing social and political interests
affected by a proposed antitrust consent decree must be left, in the
first instance, to the discretion of the Attorney General. The
court's role in protecting the public interest is one of insuring
that the government has not breached its duty to the public in
consenting to the decree. The court is required to determine not
whether a particular decree is the one that will best serve society,
but whether the settlement is ``within the reaches of the public
interest.'' More elaborate requires might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\
---------------------------------------------------------------------------
\2\ Cf. BNS, 858 F.2d at 463 (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' '').
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The proposed final Judgment, therefore, should not be reviewed
under a standard of whether it is certain to eliminate every
anticompetitive effect of a particular practice or whether it
mandates certainty of free competition in the future. Court approval
of a final judgment requires a standard more flexible and less
strict than the standard required for a finding of liability. ``[A]
proposed decree must be approved even if it falls short of the
remedy the court would impose on its own, as long as it falls within
the range of acceptability or is `within the reaches of public
interest.' '' United States v. Am. Tel. & Tel. Co., 552 F. Supp.
131, 151 (D.D.C. 1982) (citations omitted) (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 Compliant, 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: November 19, 2003.
Respectfully submitted,
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Paul A. Moore III, Maryland Bar, U.S. Department of Justice,
Antitrust Division, Litigation II Section, 1401 H Street, NW, Suite
3000, Washington, DC 20530, (202) 514-8380.
Certificate of Service
I hereby certify that a copy of the foregoing has been served
upon Waste Management, Inc., Allied Waste Industries, Inc., and the
State of Florida by placing a copy of this Competitive Impact
Statement in the U.S. mail, first class and postage prepaid,
directed to each of the above-named parties at the addresses given
below, this 19th day of November, 2003.
Counsel for Defendant Waste Management, Inc., Melanie Sabo, Esquire,
Preston Gates Ellis & Rouvelas Meeds LLP, 1735 New York Avenue, NW,
Suite 500, Washington, DC 20006; (202) 628-1700.
Counsel for Defendant Allied Waste Industries, Inc., Mia F. Cohen,
Esquire, Jones Day Reavis & Pogue, 51 Louisiana Avenue, NW,
Washington, DC 20001-2113, (202) 879-3971.
Counsel for Plaintiff State of Florida, Lizabeth A. Leeds, Esquire,
Senior Assistant Attorney General, Office of the Attorney General,
Antitrust Division, PL-01, The Capitol, Tallahassee, Florida 32399-
1050, Phone: (850) 414-3600, Fax: (850) 488-9134.
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Paul A. Moore III, U.S. Department of Justice, Antitrust Division,
Litigation II Section, 1401 H Street, NW, Suite 3000, Washington, DC
20530, (202) 307-0938
[FR Doc. 03-31053 Filed 12-16-03; 8:45 am]
BILLING CODE 4410-11-M