[Federal Register: October 31, 2005 (Volume 70, Number 209)]
[Notices]               
[Page 62330-62340]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31oc05-59]                         

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DEPARTMENT OF JUSTICE

Antitrust Division

 
United States v. Cal Dive International, Inc. et al.; Proposed 
Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
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. Cal Dive International, Inc. 
et al., Civil Action No. 1:05CV02041. On October 18, 2005, the United 
States filed a Complaint alleging that the proposed acquisition by Cal 
Dive International, Inc. of certain saturation diving assets of Stolt 
Offshore, Inc. and S&H Diving, LLC would violate Section 7 of the 
Clayton Act, 15 U.S.C. 18. The Complaint alleges that the acquisition 
would substantially reduce competition in the market for saturation 
diving services in the United States Gulf of Mexico. The proposed Final 
Judgment requires Cal Dive to divest two vessels and a separate 
saturation diving system.
    Copies of the Complaint, proposed Final Judgment, Hold Separate 
Stipulation and Order, and Competitive Impact Statement are available 
for inspection at the Department of Justice, Antitrust Division, 
Antitrust Documents Group, Room 215, 325 7th Street, NW., Washington, 
DC 20530 (telephone: 202-514-2481), on the Department of Justice's Web 
site at http://www.usdoj.gov/atr, and at the Office of the Clerk of the 

United States District Court for the District of Columbia. Copies of 
these materials may be obtained from the Antitrust Division upon 
request and payment of the copying fee set by Department of Justice 
regulations.
    Public comments 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 Donna N. Kooperstein, Chief, Transportation, Energy & Agriculture 
Section, Antitrust Division, Department of Justice, 325 7th Street, 
NW., Suite 500, Washington, DC 20530 (telephone: 202-307-6349).

Dorothy B. Fountain,
Deputy Director of Operations, Antitrust Division.

United States District Court for the District of Columbia

United States of America, U.S. Department of Justice, Antitrust 
Division, 325 7th Street, NW., Suite 500, Washington, DC 20530; 
Plaintiff, v. Cal Dive International, Inc., 400 N. Sam Houston Parkway 
E, Suite 400, Houston, Texas 77060, Stolt Offshore, S.A., Dolphin 
House, Windmill Road, Sunbury-on-Thames, Middlesex, TW 16 THT, England, 
Stolt Offshore, Inc., 10787 Clay Road, Houston, Texas 77041, and S&H 
Diving, LLC, 10787 Clay Road, Houston, Texas 77041, Defendants
Case Number 1:05CV02041.
Judge: Emmet G. Sullivan.

[[Page 62331]]

Deck Type: Antitrust.
Date Stamp: 10/18/2005.

Complaint

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil action to 
enjoin permanently the proposed acquisition by Cal Dive International, 
Inc. (``Cal Dive'') of certain assets of Stolt Offshore, Inc. and S&H 
Diving, LLC (hereinafter collectively ``Stolt''), and complains and 
alleges as follows:
    1. On or about April 11, 2005, Cal Dive entered into an agreement 
to purchase certain assets from Stolt, including a number of diving 
support vessels, saturation diving systems, and other assets used by 
Stolt to compete in the provision of saturation diving services in the 
United States Gulf of Mexico.
    2. Cal Dive and Stolt are two of only three major providers of 
saturation diving services to offshore pipeline construction companies 
and to owners and operators of pipelines, platforms and other offshore 
structures located in the United States Gulf of Mexico. As two of the 
largest providers of these services, Cal Dive and Stolt regularly 
compete directly for saturation diving projects.
    3. Cal Dive's acquisition of Stolt's saturation diving assets would 
eliminate Stolt as a competitor for the provision of saturation diving 
services in the United States Gulf of Mexico. As a result, purchasers 
of these services likely will face higher prices and reduced service. 
The proposed transaction would substantially reduce competition among 
providers of saturation diving services in the United States Gulf of 
Mexico, in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.

I. Jurisdiction and Venue

    4. This complaint is filed by the United States under Section 15 of 
the Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain the 
defendants from violating Section 7 of the Clayton Act, as amended, 15 
U.S.C. 18.
    5. The defendants are engaged in interstate commerce and in 
activities substantially affecting interstate commerce. Cal Dive and 
Stolt provide saturation diving services, pipelay services, and other 
support services to customers located in multiple states in and around 
the United States Gulf of Mexico. The defendants' sales of saturation 
diving services in the United States represent a regular, continuous 
and substantial flow of interstate commerce, and have had a substantial 
effect upon interstate commerce.
    6. This Court has subject matter jurisdiction over this action 
pursuant to 28 U.S.C. 1331, 1337 and Section 15 of the Clayton Act, 15 
U.S.C. 25.
    7. The defendants have consented to personal jurisdiction and venue 
in this judicial district.

II. The Defendants and the Transaction

    8. Cal Dive International, Inc. is a corporation organized and 
existing under the laws of the state of Minnesota. Its corporate 
headquarters are located in Houston, Texas, and its primary subsea and 
marine services operations are located in Morgan City, Louisiana. Cal 
Dive provides a full range of marine contracting services in both 
shallow and deep water. Cal Dive employs more than 300 full-time 
supervisors, divers, tenders and support staff, making it the largest 
provider of diving services in the United States Gulf of Mexico. Cal 
Dive's total revenues in 2004 exceeded $540 million, including more 
than $45 million for saturation diving services in the United States 
Gulf of Mexico.
    9. Stolt Offshore, Inc., with headquarters in Houston, Texas, is a 
corporation organized and existing under the laws of the state of 
Louisiana. S&H Diving, LLC, is a Louisiana limited liability company, 
with offices in Houston, Texas. Stolt Offshore S.A., the ultimate 
parent of both Stolt Offshore, Inc. and S&H Diving, LLC, is a major 
international marine contractor registered in Luxembourg, with 2004 
revenues in excess of $1.2 billion worldwide. In the United States Gulf 
of Mexico, Stolt offers construction and installation engineering 
services for conventional pipelines, subsea tiebacks, heavy lift 
salvage, and subsea inspection, maintenance and repair services. Stolt 
is one of the largest providers of saturation diving services in the 
United States Gulf of Mexico. In 2004, Stolt had revenues in excess of 
$30 million from saturation diving services in the United States Gulf 
of Mexico.
    10. On or about April 11, 2005, Cal Dive and Stolt entered into an 
Asset Purchase Agreement, pursuant to which Cal Dive agreed to 
purchase, and Stolt agreed to sell, certain assets for a purchase price 
of $125 million dollars. Pursuant to the Asset Purchase Agreement, Cal 
Dive would acquire, among other assets, all of the saturation diving 
systems, vessels and related equipment currently used by Stolt to 
provide saturation diving services in the United States Gulf of Mexico.

III. Trade and Commerce

A. Background
    11. Much of the world's oil and gas reserves are located in 
offshore areas, including in the United States Gulf of Mexico. Marine 
contractors design, engineer, fabricate, and install offshore drilling 
and production rigs, platforms and other structures, which are used to 
extract crude oil and natural gas from commercially significant subsea 
reservoirs. Marine contractors, using pipelay vessels, also install 
undersea pipelines that transport crude oil, natural gas, and other 
natural resources from production sites to other sites offshore and 
onshore.
    12. Human divers perform a wide variety of services for marine 
contractors as well as the owners and operators of offshore pipelines, 
platforms and other structures. Divers are used in subsea construction 
projects, for inspection, maintenance and repair services, and for 
recovery and salvage after structures are damaged by weather or 
accident. Divers can perform these services either by surface diving or 
saturation diving.
    13. Surface divers can perform diving services only in relatively 
shallow depths. Following each dive, surface divers must undertake 
time-consuming decompression procedures to allow their bodies to adjust 
to the lower pressure that exists at the surface.
    14. Saturation diving systems permit divers to work for prolonged 
periods and at much greater depths, without undergoing decompression 
after each dive. During saturation diving operations, divers live for 
as long as several weeks in airtight chambers aboard diving vessels. 
The pressure in those chambers is maintained at a level that is 
equivalent to the pressure at the subsea work site. Saturation diving 
systems are typically rated to depths of between 600 and 1,000 feet of 
sea water. A saturation diving system typically consists of one or more 
saturation chambers, one or more diving bells, and related safety, 
monitoring and life support systems and equipment. Saturation diving 
systems can be permanently installed on a vessel, or they can be 
portable, which allows them to be transported from one vessel to 
another.
    15. A vessel must maintain a fixed position while a saturation dive 
is in progress. This can be accomplished either by anchor-and-chain 
mooring systems or through dynamic positioning. Some saturation diving 
projects require dynamically-positioned vessels because of harsh 
weather,

[[Page 62332]]

environmental concerns, water depth, or pipeline congestion on the sea 
floor.
B. Relevant Product Market
    16. The relevant product market affected by this transaction is 
``saturation diving services,'' the provision of human diving services 
utilizing saturation diving systems, diving support vessels and other 
assets. Providers and customers of saturation diving services analyze 
the specific characteristics of a saturation diving project to 
determine which resources, such as dynamically positioned vessels or 
saturation chambers of a particular size, are required or are most 
economical for completing the project. Saturation diving service 
providers often bid against one another for projects, and are 
relatively more constrained in the prices they can charge for a 
particular project by competitors who have comparably more suitable 
resources available for completing that project.
    17. For projects that utilize divers at substantial depths or for 
extended periods, surface diving is not a safe or cost-effective 
substitute for saturation diving services. Other underwater 
technologies, such as remotely operated vehicles or atmospheric diving 
suits, have significant practical, technical and cost limitations. It 
is thus unlikely that a sufficient number of customers would switch 
away from saturation diving services to make a small but significant 
nontransitory increase in the price of those services unprofitable.
    18. Saturation diving services is a relevant antitrust product 
market and a line of commerce within the meaning of Section 7 of the 
Clayton Act.
C. Relevant Geographic Market
    19. Cal Dive and Stolt compete with each other for the provision of 
saturation diving services in the United States Gulf of Mexico. In the 
event of an increase in the price of saturation diving services in the 
United States Gulf of Mexico, it is unlikely that a sufficient number 
of other providers of saturation diving services operating outside of 
the United States Gulf of Mexico would bid their services in this 
market such that a price increase would be unprofitable.
    20. The United States Gulf of Mexico is a relevant geographic 
antitrust market and a section of the country within the meaning of 
Section 7 of the Clayton Act.

IV. Anticompetitive Effects

A. Market Concentration
    21. The relevant market is highly concentrated and would become 
significantly more concentrated as a result of the proposed 
transaction. An appropriate measure of concentration in the market for 
saturation diving services is capacity, calculated on the basis of the 
number of saturation diving systems used by each competitor in the 
relevant geographic market. Prior to the transaction, Cal Dive accounts 
for more than 30%, and Stolt for approximately 20%, of all saturation 
diving systems competing in the United States Gulf of Mexico.
    22. The transaction would increase substantially the concentration 
in the market for saturation diving services in the United States Gulf 
of Mexico. The number of significant competitors in that market would 
be reduced from three to two. As measured by the Herfindahl-Hirschman 
Index (``HHI''), which is commonly employed in merger analysis and is 
defined and explained in Appendix A to this Complaint, the proposed 
transaction would increase the HHI by more than 1100, resulting in a 
post-merger HHI of approximately 3000.
B. Loss of Competition
    23. The proposed transaction is likely to substantially reduce 
competition in the market for saturation diving services in the United 
States Gulf of Mexico. The transaction would combine the saturation 
diving assets of two of the largest providers of saturation diving 
services in the United States Gulf of Mexico, giving Cal Dive more than 
half of the capacity in the market.
    24. Customers for saturation diving services in the United States 
Gulf of Mexico have benefitted from competition between Cal Dive and 
Stolt. Cal Dive and Stolt each possess similar types of saturation 
diving systems and vessels that provide the two companies the ability 
to effectively bid against each other for a wide variety of saturation 
diving jobs, including those that call for either dynamically 
positioned vessels or vessels with anchor-and-chain mooring systems. 
Many customers consider Cal Dive and Stolt to be the most attractive 
competitors in the market for saturation diving services in the United 
States Gulf of Mexico because of their size, vessels, experience, and 
reputation for safety. The two companies often directly compete against 
one another for particular projects, bidding similar combinations of 
resources. This direct and close competition has resulted in lower 
prices and higher quality in saturation diving services than would 
otherwise have existed.
    25. If Cal Dive's proposed acquisition of Stolt's saturation diving 
assets is consummated, the competition between Cal Dive and Stolt will 
be eliminated, and the market for saturation diving services in the 
United States Gulf of Mexico will become substantially more 
concentrated. This loss of competition increases the likelihood of 
unilateral action by Cal Dive to increase prices and diminish the 
quality or quantity of services or of coordinated action by the 
remaining players in the market to achieve the same ends.
C. Entry and Expansion
    26. Entry by a new saturation diving services provider or expansion 
by an existing fringe competitor would be difficult, time consuming and 
expensive. It would require obtaining saturation diving systems, 
suitable vessels and related equipment and the divers and other 
personnel necessary to provide saturation diving services. It also 
would require establishing the operational experience and reputation 
for safety demanded by customers in the market. Redeployment of 
saturation diving assets from outside the United States Gulf of Mexico 
is unlikely to constrain a price increase in the relevant market. 
Therefore, new entry or expansion would not be timely, likely or 
sufficient to thwart the competitive harm of the acquisition.

V. Violations Alleged

    27. The effect of Cal Dive's proposed acquisition of the saturation 
diving support assets of Stolt, if it were consummated, may be 
substantially to lessen competition in the provision of saturation 
diving services in interstate trade and commerce in the United States 
Gulf of Mexico, in violation of Section 7 of the Clayton Act, 15 U.S.C. 
18. Unless restrained, the transaction will likely have the following 
effects, among other:
    a. Actual and potential competition between Cal Dive and Stolt in 
the provision of saturation diving services would be eliminated;
    b. Competition generally in the provision of saturation diving 
services would be eliminated or substantially lessened;
    c. Prices of saturation diving services would increase; and
    d. Quality and service levels in the provision of saturation diving 
services would decrease.

Request for Relief

    The United States requests that:
    1. the proposed transaction be adjudged to violate Section 7 of the 
Clayton Act;
    2. the defendants be permanently enjoined from carrying out the 
Asset Purchase Agreement dated April 11, 2005, or from entering into or 
carrying out any agreement, understanding, or

[[Page 62333]]

plan, the effect of which would be to allow Cal Dive to merge with or 
acquire any of the saturation diving equipment, saturation diving 
vessels, or other saturation diving assets of Stolt;
    3. the United States be awarded costs of this action;
    4. the United States have such other relief as the Court may deem 
just and proper.

Dated: October 18, 2005.

     Respectfully submitted,

For Plaintiff United States

Thomas O. Barnett,

Acting Assistant Attorney General.

J. Bruce McDonald,

Deputy Assistant Attorney General.

Dorothy B. Fountain,

Deputy Director of Operations.

Donna N. Kooperstein,

Chief, Transportation, Energy, and Agriculture Section.

William H. Stallings,
Assistant Chief, Transportation, Energy, and Agriculture Section.

Jennifer L. Cihon (OH Bar 0068404),
Angela L. Hughes (DC Bar 303420),
John M. Snyder (DC Bar 456921),
Bethany K. Hipp (GA Bar 141678),

Trial Attorneys, U.S. Department of Justice, Antitrust Division, 325 
7th St., NW., Suite 500, Washington, DC 20530, Telephone: 202/307-
3278.

Appendix A--Definition of ``HHI''

    The term ``HHI'' means the Herfindahl-Hirschman Index, a 
commonly accepted measure of market concentration. The HHI 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 
percent, the HHI is 2,600 (302 + 302 + 
202 + 202 = 2,600). The HHI takes into account 
the relative size and distribution of the firms in a market. It 
approaches zero when a market is occupied by a large number of firms 
of relatively equal size and reaches its maximum of 10,000 when a 
market is controlled by a single firm. 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 are considered 
to be moderately concentrated, and markets 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 significant antitrust 
concerns under the Department of Justice and Federal Trade 
Commission 1992 Horizontal Merger Guidelines.

Certificate of Service

    I hereby certify that on October 18, 2005, I caused a copy of the 
foregoing Complaint, proposed Final Judgment, Hold Separate Stipulation 
and Order and Plaintiff United States' Explanation of Consent Decree 
Procedures to be served on counsel for defendants in this matter in the 
manner set forth below:
    By electronic mail and hand delivery:

Counsel for Defendant Cal Dive International, Inc., Daniel L. 
Wellington (DC Bar 273839), Neely B. Agin (DC Bar 
456005), Fulbright & Jaworski LLP, 801 Pennsylvania Avenue, 
NW., Washington, DC 20004-2623, Tel: (202) 662-4574, Fax: (202) 662-
4643.
Counsel for Defendants Stolt Offshore S.A., Stolt Offshore, Inc., and 
S&H Diving LLC, Paul C. Cuomo (DC Bar 457793), Sean F. Boland 
(DC Bar &249318), Howrey LLP, 1299 Pennsylvania Avenue, NW., 
Washington, DC 20004-2402, Tel: (202) 783-0800, Fax: (202) 383-6610.

Jennifer L. Cihon (OH Bar 0068404),

Department of Justice, Antitrust Division, 325 Seventh Street, NW., 
Suite 500, Washington, DC 20530, (202) 307-3278, (202) 616-2441 
(Fax).

The United States District Court for the District of Columbia

United States of America, Plaintiff, v. Cal Dive International, Inc., 
Stolt Offshore S.A., Stolt Offshore, Inc., and S&H Diving, LLC, 
Defendants
Case No. Judge Deck Type: Antitrust Filed:

Proposed Final Judgment

    Whereas, plaintiff, United States of America, filed its Complaint 
on October 18, 2005, plaintiff and defendants, 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, the defendants have stipulated solely for purposes of 
this action that the Court has personal jurisdiction over the 
defendants;
    And whereas, the 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 a saturation diving system and diving support 
vessels by defendant Cal Dive to assure that competition is not 
substantially lessened;
    And Whereas, the United States requires defendant Cal Dive to make 
certain divestitures for the purpose of remedying the loss of 
competition alleged in the Complaint;
    And Whereas, the defendants have represented to the United States 
that the divestiture required below can and will be made and that the 
defendants will later raise no claim of hardship or difficulty as 
grounds for asking the Court to modify any of the divestiture 
provisions contained below;
    Now therefore, before any testimony is taken, without trail 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 the 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'' or ``Acquirers'' means the entity or entities to 
whom defendant Cal Dive divests the Saturation Diving Assets.
    B. ``Cal Dive'' means Cal Dive International, Inc., a corporation 
organized and existing under the laws of the state of Minnesota with 
its headquarters in Houston, Texas, its successors and assigns, and its 
subsidiaries, divisions, groups, affiliates, partnerships, joint 
ventures, and their directors, officers, managers, agents, and 
employees.
    C. ``Person'' means any natural person, corporation, association, 
firm, partnership, or other business or legal entity.
    D. ``Saturation Diving Assets'' means the vessel designated as the 
Seaway Defender, the vessel designated as the Midnight Carrier, and the 
saturation diving system designated as the Torch Saturation Diving 
System.
    E. ``Stolt'' means Stolt Offshore S.A., a Luxembourg registered 
company, its United States subsidiary, Stolt Offshore, Inc., a 
corporation organized and existing under the laws of the state of 
Louisiana, with headquarters in Houston, Texas, and S&H Diving LLC, a 
Louisiana limited liability company with offices in Houston, Texas.
    F. ``Torch Saturation Diving System'' means the portable saturation 
diving system that Cal Dive purchased from Torch Offshore, Inc. that 
has six major components: a four-man single lock saturation chamber, a 
transfer lock (TUP), a two-man diving bell, a main umbilical, a control 
van, and a supply van.

III. Applicability

    This Final Judgment applies to the defendants, Cal Dive and Stolt, 
and all

[[Page 62334]]

other persons in active concert or participation with any of them who 
receive actual notice of this Final Judgment by personal service or 
otherwise.

IV. Divestiture

    A. Defendant Cal Dive is hereby ordered and directed (1) to divest 
the Torch Saturation Diving System and the vessel designated as the 
Midnight Carrier within sixty (60) calendar days after the date of 
filing of the Complaint in this matter, or within five (5) days after 
notice of the entry of this Final Judgment by the Court, whichever is 
later; and (2) to divest the vessel designated as the Seaway Defender 
within ninety (90) calendar days after the date of the filing of the 
Complaint in this matter, or within five (5) days after notice of the 
entry of this Final Judgment by the Court, whichever is later. The 
divestitures must be made in a manner consistent with this Final 
Judgment to an Acquirer or Acquirers acceptable to the United States in 
its sole discretion. The United States, in its sole discretion, may 
agree to extend each time period up to thirty (30) calendar days, and 
shall notify the Court in such circumstances. Defendant Cal Dive agrees 
to use its best efforts to divest the Saturation Diving Assets as 
expeditiously as possible.
    B. In accomplishing the divestiture ordered by this Final Judgment, 
defendant Cal Dive promptly shall make known, by usual and customary 
means, the availability of the Saturation Diving Assets. Defendant Cal 
Dive shall inform any person making inquiry regarding a possible 
purchase of the Saturation Diving Assets that they are being divested 
pursuant to this Final Judgment and provide that person with a copy of 
this Final Judgment. The defendants shall offer to furnish to each 
prospective Acquirer, subject to customary confidentiality assurances, 
all information and documents relating to the Saturation Diving Assets 
customarily provided in a due diligence process except such information 
or documents subject to the attorney-client or work-product privileges. 
The defendants shall make available such information and documents to 
the United States at the same time that such information and documents 
are made available to any other person.
    C. The defendants shall provide to each Acquirer of some or all of 
the Saturation Diving Assets, and to the United States, the name and 
current contact information (if known) for each individual who is 
currently, or who, to the best of the defendants' knowledge, has been 
involved at any time since June 1, 2004, whether onshore or offshore, 
in the operation of the specific Saturation Diving Assets to be 
acquired by the Acquirer or in the provision of diving services by or 
with any of the specific Saturation Diving Assets to be acquired by the 
Acquirer, including divers, diving tenders, and diving supervisors or 
superintendents. The defendants shall not impede or interfere with any 
negotiations by the Acquirer or Acquirers to employ any person who has 
worked with, or whose principal responsibilities have concerned, any of 
the Saturation Diving Assets.
    D. Consistent with customary due diligence processes and subject to 
customary confidentiality assurances, the defendants shall permit each 
prospective Acquirer of some or all Saturation Diving Assets to have 
reasonable access to personnel and to make inspection of the Saturation 
Diving Assets; access to any and all environmental and other permit 
documents and information; and access to any and all financial, 
operational, or other documents and information.
    E. Defendant Cal Dive also agrees to divest the Saturation Diving 
Assets in a condition and state of repair equal to their condition and 
state of repair as of the date Cal Dive acquires them, ordinary wear 
and tear excepted.
    F. The defendants will not undertake, directly or indirectly, any 
challenges to any permits or certification relating to the operation of 
the Saturation Diving Assets, or otherwise take any action to impede 
the divestiture or operation of the Saturation Diving Assets.
    G. The divestiture of the Saturation Diving Assets shall be 
accomplished in such a way as to satisfy the United States, in its sole 
discretion, that the Saturation Diving Assets will be operational or 
made operational by the Acquirer or Acquirers, will be used by the 
Acquirer or Acquirers as part of a viable, ongoing business engaged in 
the provision of saturation diving services in the United States Gulf 
of Mexico, and 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 or Acquirers that, in the United 
States's sole judgment, has the intent and capability (including the 
necessary operational, technical, and financial capability) to compete 
effectively in the saturation diving business in the United States Gulf 
of Mexico; and
    2. Shall be accomplished so as to satisfy the United States, in its 
sole discretion, that none of the terms of any agreement between the 
Acquirer or Acquirers and defendant Cal Dive gives the defendants the 
ability unreasonably to raise the Acquirer's or Acquirers' costs, to 
lower the Acquirer's or Acquirers' efficiency, or otherwise to 
interfere in the ability of the Acquirer or Acquirers to compete 
effectively.

V. Appointment of Trustee

    A. If defendant Cal Dive has not divested the Saturation Diving 
Assets within the time period specified in Section IV(A), defendant Cal 
Dive 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 Saturation Diving Assets.
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the Saturation Diving Assets. The 
trustee shall have the power and authority to accomplish the 
divestiture to an Acquirer or Acquirers acceptable to the United 
States, in its sole discretion, 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 the 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 Cal Dive any investment bankers, attorneys, or 
other agents, who shall be solely accountable to the trustee, 
reasonable necessary in the trustee's judgment to assist in the 
divestiture.
    C. The defendants shall not object to a sale of the Saturation 
Diving Assets by the trustee on any ground other than the trustee's 
malfeasance. Any such objections by the defendants must be conveyed in 
writing to the United States and the trustee within 10 (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 Cal 
Dive, on such terms and conditions as the United States approves, and 
shall account for all monies derived from the sale of the Saturation 
Diving Assets and for 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 the defendant Cal Dive 
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 Saturation Diving Assets and 
based on a fee arrangement providing the trustee

[[Page 62335]]

with an incentive based on the price and terms of the divestiture and 
the speed with which it is accomplished, but timeliness is paramount.
    E. The 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 Saturation Diving 
Assets and the personnel, books, and records of the Saturation Diving 
Assets, and defendant Cal Dive shall develop financial and other 
information relevant to the Saturation Diving Assets as the trustee may 
reasonably request, subject to reasonable protection for trade secret 
or other confidential research, development, or commercial information. 
The 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 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, the Saturation Diving Assets and shall 
describe in detail each contact with any such person. The trustee shall 
maintain full records of all efforts made to divest the Saturation 
Diving Assets.
    G. 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 such reports contains 
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 who 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, without limitation, 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 Cal Dive or the trustee, whichever is 
then responsible for effecting the divestiture required herein, shall 
notify the United States of any proposed divestiture required by 
Section IV or V of this Final Judgment. If the trustee is responsible, 
it shall similarly notify defendant Cal Dive. 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 the 
Saturation Diving Assets, together with full details of the same.
    B. Within fifteen (15) calendar days of receipt by the United 
States of such notice, the United States may request from the 
defendants, the proposed Acquirer or Acquirers, any other third party, 
or the trustee if applicable, additional information concerning the 
proposed divestiture, the proposed Acquirer or Acquirers and any other 
potential Acquirer or Acquirers. The 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 has been 
provided the additional information requested from the defendants, the 
proposed Acquirer or Acquirers, any third party, and the trustee, 
whichever is later, the United States shall provide written notice to 
defendant Cal Dive 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 this Final Judgment. Absent written notice 
that the United States does not object to the proposed Acquirer or 
Acquirers or upon objection by the United States, a divestiture 
proposed under Section IV or Section V shall not be consummated. Upon 
objection by the defendants under Section V(C), a divestiture proposed 
under Section V shall not be consummated unless approved by the Court.

VII. Financing

    The 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, the defendants shall take all steps necessary to comply 
with the Hold Separate Stipulation and Order entered by this Court. The 
defendants shall take no action that would jeopardize, delay, or impede 
the divestiture order by this Order.

IX. Affidavits

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestiture has been completed under Section IV or V, the 
defendants shall deliver to the United States an affidavit that 
describes 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 (30) calendar 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 or all of the 
Saturation Diving 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 defendant Cal Dive has taken to 
solicit buyers for the Saturation Diving Assets, and to provide 
required information to any prospective Acquirer or Acquirers, 
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 to information provided by the 
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 filing of the Complaint 
in this matter, the defendants shall deliver to the United States an 
affidavit that describes in reasonable detail all actions the 
defendants have taken and all steps the defendants have implemented on 
an ongoing basis to comply with Section VIII of this Final Judgment. 
The defendants shall deliver to the United States an affidavit 
describing any changes to the efforts and actions outlined in the 
defendants' earlier affidavits filed pursuant to this section

[[Page 62336]]

within fifteen (15) calendar days after the change is implemented.
    C. Defendant Cal Dive shall keep all records of all efforts made to 
preserve and to divest the Saturation Diving Assets until one year such 
divestiture has been completed.

X. Compliance Inspections

    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, 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 the defendants, be 
permitted:
    1. Access during the defendants' office hours to inspect and copy, 
or at the United States, option to require the defendants to provide 
copies of, all books, ledgers, accounts, records and documents in the 
possession, custody, or control of the defendants, relating to any 
matters contained in this Final Judgment; and
    2. To interview, either informally or on the record, the 
defendants' officers, employees, or agents, who may have their 
individual counsel present, regarding such matters. The interviews 
shall be shall be subject to the reasonable convenience of the 
interviewee and without restraint or interference by the defendants.
    B. Upon the written request of a duly authorized representative of 
the Assistant Attorney General in charge of the Antitrust Division, the 
defendants shall submit written reports, or responses to written 
interrogatories, 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 the 
defendants to the United States, the 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 the 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 the defendants ten (10) calendar days notice prior to divulging 
such material in any legal proceeding (other than a grand jury 
proceeding).

XI. Notification

    Unless such transaction is otherwise subject to the reporting and 
waiting period requirements of the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976, as amended, 15 U.S.C. 18a, for three years 
after entry of this Final Judgment, defendant Cal Dive, without 
providing advance notification to the Department of Justice, shall not 
directly or indirectly acquire any saturation chamber that, to the best 
of Cal Dive's knowledge, has been operated in or located in the United 
States Gulf of Mexico at any time since October 1, 2002, whether as 
part of a portable saturation diving system or as part of saturation 
diving system built into a vessel, or any interest, including any 
financial, security, loan, equity or management interest in, any 
company that owns or operates such a saturation chamber. Such 
notification shall be provided to the Department of Justice in the same 
format as, and per the instructions relating to, the Notification and 
Report Form set forth in the Appendix to Part 803 of Title 16 of the 
Code of Federal Regulations as amended. Notification shall be provided 
at least thirty (30) calendar days prior to the acquisition, and shall 
include, beyond what may be required by the applicable instructions, 
the names of the principal representatives of the parties to the 
agreement who negotiated the agreement, and any management or strategic 
plans discussing the proposed transaction.

XII. No Reacquisition

    Defendant Cal Dive may not reacquire any of the Saturation Diving 
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 
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 from the date of its entry.

XV. Public Interest Determination

    Entry of this Final Judgment is in the public interest, and the 
parties have complied with the procedures of the Antitrust Procedures 
and Penalties Act, 15 U.S.C. 16.

Dated:
-----------------------------------------------------------------------

United States District Judge

Certificate of Service

    I hereby certify that on October 18, 2005, I caused a copy of the 
foregoing Complaint, proposed Final Judgment, Hold Separate Stipulation 
and Order and Plaintiff United States' Explanation of Consent Decree 
Procedures to be served on counsel for defendants in this matter in the 
manner set forth below:
    By electronic mail and hand delivery:

Counsel for Defendant Cal Dive International, Inc., Daniel L. 
Wellington (D.C. Bar 273839), Neely B. Agin (D.C. Bar 
456005), Fullbright & Jaworski LLP, 801 Pennsylvania Avenue, 
NW., Washington, DC 20004-2623, Tel: (202) 662-4574, Fax: (202) 662-
4643.
Counsel for Defendants Stolt Offshore S.A., Stolt Offshore, Inc. and 
S&H Diving LLC, Paul C. Cuomo (D.C. Bar 457793), Sean F. 
Boland (D.C. Bar 249318), Howrey LLP, 1299 Pennsylvania 
Avenue, NW., Washington, DC 20004-2402, Tel: (202) 783-0800, Fax: (202) 
383-6610.

Jennifer L. Cihon (OH Bar 0068404)

Department of Justice, Antitrust Division, 325 Seventh Street, NW., 
Suite 500, Washington, DC 20530, (202) 307-3278, (202) 616-2441 
(Fax).

United States District Court for the District of Columbia

United States of America, Plaintiff, v. Cal Dive International, Inc., 
Stolt Offshore S.A., Stolt Offshore, Inc., and S&H Diving, LLC, 
Defendants
Civil Case No.: 1:05CV02041
Judge: Emmet G. Sullivan
Deck Type: Antitrust
Date Stamp: October 20, 2005

Competitive Impact Statement

    Plaintiff United States of America (``United States''), pursuant to 
section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or 
``Tunney Act''), 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.

[[Page 62337]]

I. Nature and Purpose of the Proceeding

    Defendant Cal Dive International, Inc. (``Cal Dive'') and 
defendants Stolt Offshore, Inc. and S&H Diving, LLC (collectively 
``Stolt'') entered into an Asset Purchase Agreement dated April 11, 
2005, pursuant to which Cal Dive will acquire certain assets from 
Stolt, including a number of diving support vessels, saturation diving 
systems, and other assets used by Stolt to provide saturation diving 
services in the United States Gulf of Mexico. The United States filed a 
civil antitrust Complaint on October 18, 2005, seeking to enjoin the 
proposed acquisition. The Complaint alleges that the likely effect of 
this acquisition would be to reduce competition substantially for 
saturation diving services in the United States Gulf of Mexico in 
violation of section 7 of the Clayton Act, 15 U.S.C. 18. As a result, 
purchasers of these services likely would face higher prices and 
reduced service.
    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, Cal Dive is required to divest the vessel 
designated as the Seaway Defender, the vessel designated as the 
Midnight Carrier, and the saturation diving system designated as the 
Torch Saturation Diving System (collectively, the ``Saturation Diving 
Assets''). Under the terms of the Hold Separate Stipulation and Order 
and proposed Final Judgment, Cal Dive will take certain steps to ensure 
that, prior to such divestiture, the Saturation Diving Assets will 
remain independent of the rest of Cal Dive's assets and will be 
maintained in the same condition and state of repair as of the date Cal 
Dive acquired them, and that competition is maintained during the 
pendency of the ordered divestiture.
    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. Description of the Events Giving Rise to the Alleged Violation

A. The Defendants and the Proposed Transaction
    Cal Dive is a corporation organized and existing under the laws of 
the state of Minnesota. Its corporate headquarters are located in 
Houston, Texas, and its primary subsea and marine services operations 
are based in Morgan City, Louisiana. Cal Dive provides a full range of 
marine contracting services, which includes marine construction, 
robotic services, manned diving, and decommissioning services, in both 
shallow and deep water. Cal Dive employs more than 300 full-time 
supervisors, divers, tenders and support staff, making it the largest 
provider of diving services in the United States Gulf of Mexico. Cal 
Dive's total revenues in 2004 exceeded $540 million, including more 
than $45 million for saturation diving services in the United States 
Gulf of Mexico.
     Stolt Offshore, Inc., with headquarters in Houston, Texas, is a 
corporation organized and existing under the laws of the state of 
Louisiana. S&H Diving, LLC, is a Louisiana limited liability company, 
with offices in Houston, Texas. Stolt Offshore S.A., the ultimate 
parent of both Stolt Offshore, Inc. and S&H Diving, LLC, is a major 
international marine contractor registered in Luxembourg, with 2004 
revenues in excess $1.2 billion worldwide. In the United States Gulf of 
Mexico, Stolt offers construction and installation engineering services 
for conventional pipelines; subsea tiebacks; heavy lift salvage; and 
subsea inspection, maintenance and repair services. Stolt is one of the 
largest providers of saturation diving services in the United States 
Gulf of Mexico. In 2004, Stolt had revenues in excess of $30 million 
from saturation diving services in the United States Gulf of Mexico.
    Pursuant to the April 11, 2005 Asset Purchase Agreement, Cal Dive 
will acquire, among other assets, all of the saturation diving systems, 
diving support vessels and related equipment currently used by Stolt to 
provide saturation diving services in the United States Gulf of Mexico. 
The total purchase price is approximately $125 million.
    The proposed transaction, as initially agreed to by Defendants, 
would reduce competition substantially for saturation diving services 
in the United States Gulf of Mexico. This acquisition is the subject of 
the Complaint and proposed Final Judgment filed by the United States on 
October 18, 2005.
B. The Saturation Diving Services Industry
    Much of the worlds's oil and gas reserves are located in offshore 
areas, including in the United States Gulf of Mexico. Marine 
contractors design, engineer, fabricate, and install offshore drilling 
and production rigs, platforms, and other structures, which are used to 
extract crude oil and natural gas from commercially significant subsea 
reservoirs. Marine contractors, using pipelay vessels, also install 
undersea pipelines that transport crude oil, natural gas and other 
natural resources from the production sites offshore and onshore.
    Human divers perform a wide variety of services for marine 
contractors and owners and operators of offshore pipelines, platforms 
and other structures. Divers are used for subsea construction projects, 
for subsea inspection, maintenance and repair services, and for 
recovery and salvage after structures are damaged by weather or 
accident. Divers can perform these services either by surface diving or 
saturation diving.
    Surface divers can perform diving services only in relatively 
shallow depths, generally not deeper than 150 feet of sea water. 
Surface divers must go through a time-consuming decompression process 
following each diver to allow their bodies to adjust to the lower 
pressure that exists at the surface.
    Saturation divers can work for prolonged periods and at much 
greater depths, without undergoing decompression after each dive. 
During saturation diving operations, divers live for as long as several 
weeks in airtight chambers aboard diving vessels. The pressure in those 
chambers is maintained at a level that is equivalent to the pressure at 
the subsea work site. The divers travel from the saturation chamber to 
the subsea work site in similarly pressurized closed capsules called 
bells that allow the divers to remain at constant pressure during their 
descent to the sea floor.
    Saturation diving systems are typically rated to allow divers to 
work at depths between 600 and 1,000 feet of sea water. A saturation 
diving system typically consists of one or more saturation chambers, 
one or more diving bells, and related safety, monitoring and life 
support systems and equipment. Saturation diving systems can be 
permanently installed on a vessel, or they can be portable, in which 
case they can be transported from one vessel to another.

[[Page 62338]]

    A vessel must maintain a fixed position during a saturation dive. 
This can be accomplished either by anchor-and-chain mooring systems, 
which require surveyors to determine the appropriate anchor placement, 
or through dynamic positioning systems, which position vessels using 
satellite technology. Generally, vessels positioned by anchor and chain 
mooring systems operate in shallower waters. Vessels with dynamic 
positioning systems are more often used in deeper water, in areas with 
many pipelines on the sea floor and in hazardous weather conditions. 
Some saturation diving projects require a dynamically positioned 
vessel. Other projects can be executed using either mode of 
positioning.
C. The Competitive Effects of the Transaction on Saturation Diving 
Services in the United States Gulf of Mexico
    Cal Dive's proposed acquisition of the Saturation Diving Assets 
will substantially reduce competition for saturation diving services in 
the United States Gulf of Mexico. Saturation diving services are the 
provision of human diving services utilizing saturation diving systems. 
Providers and customers of saturation diving services analyze the 
specific characteristics of a saturation diving project to determine 
which resources, such as dynamically positioned vessels or saturation 
chambers of a particular size, are required or are most economical for 
completing the project. Saturation diving service providers often bid 
against one another for projects, and are relatively more constrained 
in the prices they can charge for a particular project by competitors 
who have comparably more suitable resources available for completing 
that project.
    Surface diving is not a safe or cost-effective substitute for 
saturation diving services for projects that utilize divers at 
substantial depths or for extended periods. Other underwater 
technologies, such as remotely operated vehicles or atmospheric diving 
suites, have significant practical, technical and cost limitation that 
prevent them from being viable alternatives to saturation diving.
    Cal Dive and Stolt compete with one another for the provision of 
saturation diving services in the United States Gulf of Mexico. In the 
event of an increase in the price of saturation diving services in the 
United States Gulf of Mexico, it is unlikely that a sufficient number 
of other providers of saturation diving services operating outside the 
United States Gulf of Mexico would bid their services inside the United 
States Gulf such that a price increase would be unprofitable. Therefore 
the relevant geographic market where the transaction will substantially 
reduce competition for saturation diving services is the United States 
Gulf of Mexico.
    Cal Dive and Stolt are the two of the largest providers of 
saturation diving services in the United States Gulf of Mexico. Their 
combined market share in that market, measured on the basis of the 
number of saturation diving systems used in the United States Gulf of 
Mexico, is approximately 50 percent.
    Customers of saturation diving services in the United States Gulf 
of Mexico have benefitted from competition between Cal Dive and Stolt. 
Cal Dive and Stolt each possess similar types of saturation diving 
systems and vessels that provide the two companies the ability to 
effectively bid against one another for a wide variety of saturation 
diving jobs, including those that call for dynamically positioned 
vessels and those that call for vessels equipped with anchor-and-chain 
mooring systems. Many customers consider Cal Dive and Stolt to be the 
two most attractive competitors for saturation diving services in the 
United States Gulf of Mexico because of their size, vessels, 
experience, and reputation for safety. The two companies often directly 
compete against one another for particular projects, bidding similar 
combinations of resources. This direct and close competition has 
resulted in lower prices and higher quality in saturation diving 
service than would otherwise have existed.
    The transaction would increase substantially concentration in the 
market for saturation diving services in the United States Gulf of 
Mexico. As measured by the Herfindahl-Hirschman Index (``HHI''), which 
is commonly employed in merger analysis and is defeated and explained 
in the Appendix A to the Complaint, the proposed transaction would 
increase the HHI relating to the number of saturation diving systems by 
more than 1100, resulting in a post merger HHI of approximately 3000.
    By eliminating competition between Cal Dive and Stolt, the 
transaction would reduce the number of significant competitors in the 
market for saturation diving services in the United States Gulf of 
Mexico from three to two. This loss of competition increases the 
likelihood of unilateral action by Cal Dive to increase prices and 
diminish the quality or quantity of services, or of coordinated action 
by the remaining players in the market to achieve the same ends.
    Entry by a new saturation diving services provider or expansion by 
an existing fringe competitor would be difficult, time consuming and 
expensive. It would require obtaining saturation diving systems, 
suitable vessels and related equipment, as well as the divers and other 
personnel necessary to provide saturation diving services. It also 
would require establishing the operational experience and reputation 
for safety demanded by customers in the market. Redeployment of 
saturation diving assets from outside the United States Gulf of Mexico 
is unlikely to constrain a price increase in the relevant market. 
Therefore, new entry or expansion would not timely, likely, or 
sufficient thwart the competitive harm of the proposed acquisition.
    For these reasons, the United States concluded that Cal Dive's 
proposed acquisition of the Saturation Diving Assets will likely 
substantially lessen competition, in violation of Section 7 of the 
Clayton Act, in the provision of saturation diving services in the 
United States Gulf of Mexico.

III. Explanation of the Proposed Final Judgment

A. Divestiture
    The divestiture requirements of the proposed Final Judgment will 
maintain competition for saturation diving services in the United 
States Gulf of Mexico by allowing independent competitors to acquire 
the Saturation Diving Assets. The proposed Final Judgment requires Cal 
Dive to divest the portable saturation diving system designated the 
Torch Saturation Diving System and the vessel designated as the 
Midnight Carrier, an anchor-and-chain mooring vessel capable of 
accommodating a portable saturation diving system, within sixty (60) 
calendar days after the filing of the Complaint in this matter, or 
within five (5) days after notice of the entry of this Final Judgment 
by the Court, whichever is later, and to divest the vessel designated 
as the Seaway Defender, a dynamically positioned vessel with a built-in 
saturation diving system, within ninety (90) days after the Complaint 
in this matter, or within five (5) days after notice of the entry of 
this Final Judgment by the Court, whichever is later. The United States 
may extend each time period available to Cal Dive to complete the 
divestiture up to an additional thirty (30) days.
    The Saturation Diving Assets must be divested in such a way as to 
satisfy the United States, in its sole discretion, that the Saturation 
Diving Assets will be operational or made operational by the acquirer 
or acquirers and will be used

[[Page 62339]]

by the acquirer or acquirers as part of a viable, ongoing business 
engaged in the provision of saturation diving services in the United 
States Gulf of Mexico. Cal Dive must take all reasonable steps 
necessary to accomplish the divestiture quickly and shall cooperate 
with prospective purchasers. The Defendants must also provide acquirers 
information relating to personnel that are or have been involved, at 
any time since June 1, 2004, in the operation of, or provision of 
diving services by, the Saturation Diving Assets, including divers, 
diving tenders, and diving supervisors or superintendents. The 
Defendants further must refrain from interfering with any negotiations 
by the acquirer or acquirers to employ any of the personnel that are or 
have been involved in the operation of, or provision of diving services 
by, any of the Saturation Diving Assets.
    The proposed Final Judgment also requires Cal Dive, for a period of 
three years after the entry of the Final Judgment, to provide advance 
notice to the Department of Justice before acquiring any saturation 
chamber that has been operated in or located in the United States Gulf 
of Mexico at any time since October 1, 2002, whether as a part of a 
portable saturation diving system or as part of a saturation diving 
system built into a vessel, or any interest in any company that owns or 
operates such a saturation chamber. Further, the proposed Final 
Judgment restricts Cal Dive from reacquiring any of the Saturation 
Diving Assets during the term of the proposed Final Judgment.
B. Use of a Divestiture Trustee
    In the event that Cal Dive does not accomplish the divestiture 
within the periods prescribed in the proposed Final Judgment, the 
proposed 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 Cal Dive will 
pay all the 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 and the United States 
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 and the United States will make recommendations to the Court, 
which shall enter such orders as appropriate 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 proposed acquisition. The 
divestitures of the Saturation Diving Assets will preserve competition 
in the market for saturation diving services by maintaining an 
independent and economically viable competitor in the United States 
Gulf of Mexico.

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 cost 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. Sec.  16(a), 
the proposed Final Judgment has no prima facie effect in any subsequent 
private lawsuit that may be brought against Defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States 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 sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
persons may submit to the United States written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register. All comments received during 
this period will be considered by the Department of Justice, which 
remains free to withdraw its consent to the proposed Final Judgment at 
any time prior to the Court's entry of judgment. 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: Donna N. Kooperstein, 
Chief, Transportation, Energy & Agriculture Section, Antitrust 
Division, United States Department of Justice, 325 Seventh Street, NW., 
Suite 500, 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 Defendants. The 
United States could have continued the litigation and sought 
preliminary and permanent injunctions against Cal Dive's acquisition of 
certain Stolt assets. The United States is satisfied, however, that the 
divestiture of assets described in the proposed Final Judgment will 
preserve competition in the market for saturation diving services in 
the United States Guld of Mexico.

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 (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(c)(1). In making that determination, the Court shall consider;

    (A) the competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration of relief sought, anticipated effects of 
alternative remedies actually considered, whether its terms are 
ambiguous, and any other competitive considerations bearing upon the 
adequacy of such judgment that the court deems necessary to a 
determination of whether the consent judgment is in the public 
interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, 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(c)(1)(A) & (B). As the United States Court of Appeals for 
the District of Columbia Circuit has 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.

[[Page 62340]]

Microsoft Corp., 56 F.3d 144B, 1458-62 (D.C. Cir. 1995).
    ``Nothing in this section shall be construed to require the court 
to conduct an evidentiary hearing or to require the court to permit 
anyone to itnervene.'' 15 U.S.C. 16(e)(2). Thus, 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 by the 
Department of Justice 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, 6538-39.

[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 responss 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. 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. Courts have held 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 requirements might undermine the 
effectivness of antitrust enforcement by consent decree.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\
---------------------------------------------------------------------------

    \2\ 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, 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 interests.' '' United 
States v. AT&T Corp. 552 F. Supp 131, (D.D.C. 1982) (citation 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 through 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 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: October 20, 2005.

Respectfully submitted,

Jennifer L. Cihon (OH Bar 0068404)
Angela L. Hughes (DC Bar 303420)
John M. Snyder (DC Bar 456921)
Bethany K. Hipp (GA Bar 141678).

Certificate of Service

    I hereby certify that on October 20, 2005, I caused a copy of the 
foregoing Competitive Impact Statement to be served on counsel for 
defendants in this matter in the manner set forth below:
    By electronic mail and hand delivery:

Counsel for Defendant Cal Dive International, Inc., Daniel L. 
Wellington (D.C. Bar 273839), Neely B. Agin (D.C. Bar 
456005), Fulbright & Jaworski LLP, 801 Pennsylvania Avenue, 
NW., Washington, DC 20004-2623, Tel: (202) 662-4574, Fax: (202) 662-
4643.
Counsel for Defendants Stolt Offshore S.A., Stolt Offshore, Inc. and 
S&H Diving LLC, Paul C. Cuomo (D.C. Bar 457793), Sean F. 
Boland (D.C. Bar 249318), Howrey LLP, 1299 Pennsylvania 
Avenue, NW., Washington, DC 20004-2402, Tel: (202) 783-0800, Fax: (202) 
383-6610.

Jennifer L. Cihon (OH Bar 0068404,

Department of Justice, Antitrust Division, 325 Seventh Street, NW., 
Suite 500, Washington, DC 20530, (202) 307-3278, (202) 616-2441 
(Fax).
[FR Doc. 05-21510 Filed 10-28-05; 8:45 am]

BILLING CODE 4410-11-M