IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA,
Plaintiff,
v.
ALCOA INC. and, REYNOLDS METALS COMPANY,
Defendants.
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Civil Action No.:
Filed: May 3, 2000
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FINAL JUDGMENT
WHEREAS, Plaintiff, the United States of America ("United States"), filed its complaint
in this action on May 3, 2000, and Plaintiff and Defendants Alcoa Inc. ("Alcoa") and Reynolds
Metals Company ("Reynolds"), by their respective attorneys, having consented to the entry of
this
Final Judgment without trial or adjudication of any issue of fact or law herein, and without this
Final Judgment constituting any evidence against or an admission by any party with respect to
any
issue of law or fact herein;
AND WHEREAS, Defendants have agreed to be bound by the provisions of this Final
Judgment and the provisions of the Hold Separate Stipulation and Order pending their approval
by the Court;
AND WHEREAS, the essence of the Final Judgment is the prompt and certain divestiture
of the identified assets to assure that competition is not substantially lessened;
AND WHEREAS, Plaintiff requires Defendants to make certain divestitures for the
purpose of remedying the loss of competition alleged in the Complaint;
AND WHEREAS, Defendants have represented to the Plaintiff that the divestitures
ordered herein can and will be made and that Defendants will later raise no claims of hardship or
difficulty as grounds for asking the Court to modify any of the provisions contained below;
NOW, THEREFORE, before the taking of any testimony, and without trial or
adjudication of any issue of fact or law herein, and upon consent of the parties hereto, it is hereby
ORDERED, ADJUDGED, AND DECREED as follows:
I.
JURISDICTION
This Court has jurisdiction over the subject matter of this action and over each of the
parties hereto. The Complaint states a claim upon which relief may be granted against the
Defendants, as hereinafter defined, under Section 7 of the Clayton Act, as amended (15 U.S.C.
§
18).
II.
DEFINITIONS
As used in this Final Judgment:
- "Alcoa" means defendant Alcoa Inc., a Pennsylvania corporation with its
headquarters in
Pittsburgh, Pennsylvania, and its successors, assigns, subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, and directors, officers, managers, agents, and
employees.
- "Chemical Grade Alumina" or "CGA" means the alumina product resulting from
the
refining of bauxite ore in alumina refineries, except that the alumina is removed from the
production stream prior to calcining in kilns used to produce SGA. This uncalcined
alumina is known as Chemical Grade Alumina or CGA, and is sold as "wetcake" or is
dried and sold as "dry hydrate." CGA is used in numerous downstream products.
- "Corpus Christi Assets" means all assets, interests and rights owned by Reynolds at
Reynolds' alumina refinery located near Corpus Christi, Texas, which are used or held for
use for alumina refining (the "Corpus Christi Refinery", a/k/a the "Sherwin Refinery"),
including:
- all tangible assets, including the alumina refining facility located at the Corpus
Christi Refinery and the real property on which the Corpus Christi Refinery is
situated; the real property to which the Corpus Christi Refinery is adjacent and that
is reasonably necessary to the refining and sale of SGA or CGA from the Corpus
Christi Refinery; refining assets relating to the Corpus Christi Refinery, including
capital equipment, vehicles, supplies, personal property, inventory, office furniture,
fixed assets and fixtures, materials, on-site warehouses or storage facilities,
railcars, port facilities, ships, boats, barges and other tangible property or
improvements; all licenses, permits and authorizations issued by any governmental
organization relating to the Corpus Christi Refinery; all contracts, agreements,
leases, commitments and understandings pertaining to the operations of the Corpus
Christi Refinery; all supply agreements relating to the Corpus Christi Refinery,
including, at the purchaser's option, all agreements, commitments and
understandings for the supply of bauxite to the Corpus Christi Refinery; all
customer lists, accounts, and credit records; and other records maintained by
Reynolds in connection with the operations of the Corpus Christi Refinery.
- all intangible assets, including but not limited to all patents, licenses and
sublicenses, trademarks, trade names, service marks, service names (except to the
extent such trademarks, trade names, service marks and service names contain the
trademark REYNOLDS and Knight, Horse and Dragon Design; or the names
"Reynolds," "Reynolds Metals Company," "Reynolds Aluminum" or any variation
thereof, or any trademark containing REYNOLDS, REY, REYNO, or a Knight,
Horse and Dragon Design); intellectual property, technical information, know-how, trade secrets,
drawings, blueprints, designs, design protocols; specifications
for materials, specifications for parts and devices, safety procedures for the
handling of materials and substances; quality assurance and control procedures;
design tools and simulation capability; all research data concerning historic and
current research and development efforts relating to the operations of the Corpus
Christi Refinery, including design of experiments and the results of unsuccessful
designs and experiments; all plans pertaining to output and production of the
Corpus Christi Refinery; and all manuals and technical information Reynolds
provides to its employees, customers, suppliers, agents or licensees in connection
with the operations of the Corpus Christi Refinery.
- "Divestiture Assets" means the Worsley Interest and the Corpus Christi Assets.
- "Reynolds" means defendant Reynolds Metals Company, a Delaware corporation
with its
headquarters in Richmond, Virginia, and its successors, assigns, subsidiaries, divisions,
groups, affiliates, partnerships and joint ventures, and directors, officers, managers,
agents, and employees.
- "Smelter Grade Alumina" or "SGA" means the alumina product resulting from the
refining
and calcining of bauxite ore in alumina refineries that is smelted to make aluminum metal.
- "Worsley Interest" means all of Reynolds' interest in the Worsley Joint Venture,
established by agreement dated February 7, 1980, and subsequently amended; provided,
however, that the Worsley Interest does not include the trademarks REYNOLDS and
Knight, Horse and Dragon Design; or the names "Reynolds," "Reynolds Metals
Company," "Reynolds Aluminum" or any variation thereof; or any trademark containing
REYNOLDS, REY, REYNO, or a Knight, Horse, and Dragon Design.
III.
APPLICABILITY
- The provisions of this Final Judgment apply to Alcoa and Reynolds, as defined
above, and
all other persons in active concert or participation with any of them who shall have
received actual notice of this Final Judgment by personal service or otherwise.
- Defendants shall require, as a condition of the sale or other disposition of all or
substantially all of the Divestiture Assets, that the acquiring party or parties agree to be
bound by the provisions of this Final Judgment.
IV.
DIVESTITURE OF ASSETS
- Defendants are hereby ordered and directed in accordance with the terms of this
Final
Judgment, within two hundred seventy (270) days from either the filing of the Complaint
in this matter or five (5) days after notice of entry of this Final Judgment by the Court,
whichever is later, to divest the Worsley Interest as an interest in a viable, ongoing
business. Defendants are further ordered and directed in accordance with the terms of this
Final Judgment, within one hundred eighty (180) days from either the filing of the
Complaint in this matter or five (5) days after notice of entry of this Final Judgment by the
Court, whichever is later, to divest the Corpus Christi Assets as a viable, ongoing
business, to a purchaser or purchasers acceptable to the United States in its sole
discretion.
- Defendants shall use their best efforts to accomplish the divestitures as
expeditiously and
timely as possible. The United States, in its sole discretion, may extend the time period for
any divestiture by an additional period of time not to exceed sixty (60) calendar days.
- In accomplishing the divestitures ordered by this Final Judgment, Defendants
promptly
shall make known, by usual and customary means, the availability of the Divestiture Assets
described in this Final Judgment. Defendants shall inform any person making an inquiry
regarding a possible purchase that the sale is being made pursuant to this Final Judgment
and provide such person with a copy of this Final Judgment. Defendants shall also offer to
furnish to all prospective purchasers, subject to customary confidentiality assurances, all
information regarding the Divestiture Assets customarily provided in a due diligence
process except such information subject to attorney-client privilege or attorney work-product
privilege. Defendants shall make available such information to the Plaintiff at the
same time that such information is made available to any other person.
- Defendants shall permit prospective purchasers of the Divestiture Assets to have
reasonable access to personnel and to make inspection of the Divestiture Assets; access to
any and all environmental, zoning, and other permit documents and information relating to
the Divestiture Assets; and access to any and all financial, operational, or other documents
and information relating to the Divestiture Assets customarily provided as part of a due
diligence process, subject to customary confidentiality assurances.
- Defendants shall provide to any purchaser or purchasers of the Divestiture Assets
information relating to the Reynolds personnel involved in the refining and sale of SGA
and/or CGA in connection with the Worsley Interest and the Corpus Christi Assets to
enable the purchaser or purchasers to make offers of employment. Defendants shall not
interfere with any negotiations by any purchaser or purchasers to employ any Reynolds
employee who works at the Worsley refinery or the Corpus Christi Refinery, or whose
principal responsibility involves the refining and sale of alumina at the Worsley refinery or
the Corpus Christi Refinery.
- Defendants shall warrant to the purchaser or purchasers of the Divestiture Assets
that the
Divestiture Assets will be operational on the date of the divestiture.
- Defendants shall warrant to the purchaser of the Divestiture Assets that all
necessary
environmental, zoning, export and other permits relating to the Divestiture Assets are in
order in all material respects. Defendants will not undertake, directly or indirectly,
following the divestiture of the Divestiture Assets, any challenges to the environmental,
zoning, export or other permits pertaining to the operation of the Divestiture Assets.
- Defendants shall not take any action, direct or indirect, that will impede in any way the
operation of the Divestiture Assets.
- Unless the United States otherwise consents in writing, the divestitures
undertaken
pursuant to Section IV or undertaken by a trustee appointed pursuant to Section V of this
Final Judgment shall include all of the Divestiture Assets. Prior to divestiture, the
Divestiture Assets that are the subject of the Hold Separate Stipulation and Order shall be
operated pursuant to such Hold Separate Stipulation and Order entered by the Court.
The divestitures shall be accomplished by selling or otherwise conveying the Divestiture
Assets to a purchaser or purchasers in such a way as to satisfy the United States, in its sole
discretion, that the Divestiture Assets can and will be used by the purchaser or purchasers
as part of a viable, ongoing business or businesses engaged in the refining and sale of SGA
or CGA. The divestitures, whether pursuant to Section IV or Section V of this Final
Judgment, shall be made to a purchaser or purchasers with respect to whom it is
demonstrated to the United States' sole satisfaction that (a) the purchaser or purchasers
have the intent to compete effectively in the refining and sale of SGA or CGA ; and (b) the
purchaser or purchasers have the managerial, operational, and financial capability to
compete effectively in the refining and sale of SGA or CGA. In addition, none of the
terms of any agreement between the purchaser or purchasers and Defendants, including
any joint venture, governance, operation or shareholder agreements, shall give Defendants
the ability to limit the purchaser's capacity or output, to raise a purchaser's costs, to lower
a purchaser's efficiency, or otherwise to interfere in the ability of the purchaser or
purchasers to compete effectively.
- In connection with the divestiture of the Corpus Christi Assets and the Worsley
Interest,
whether pursuant to Section IV of this Final Judgment or by a trustee appointed pursuant
to Section V, Defendants may negotiate a transitional supply agreement or agreements
with the purchaser or purchasers of these divested assets for the supply of SGA to
Reynolds' smelters previously supplied by these refineries. Any such agreement shall be
on commercially reasonable terms and may have a term of up to three (3) years. Volume
requirements during the first year of any such agreement may be up to 100% of the annual
volumes supplied by these refineries to such smelters during the year prior to the closing
of the merger transaction, up to 75% during the second year and up to 50% during the
third year.
- In connection with the divestiture of the Worsley Interest, whether pursuant to
Section IV
of this Final Judgment or by a trustee pursuant to Section V, Defendants shall assign to
the purchaser or purchasers of the Worsley Interest Reynolds' existing contractual
obligations to supply SGA to Billiton. If Alcoa is unable to obtain any necessary consent
of Billiton or is otherwise unable to effect such an assignment, Alcoa shall enter into an
agreement with the purchaser or purchasers of the Worsley Interest for the supply of such
amount of SGA and on such terms as are called for by the Reynolds/Billiton SGA
contract, to be resold by Alcoa to Billiton in fulfillment of that contract.
- In connection with the divestiture of the Corpus Christi Assets, whether pursuant
to
Section IV of this Final Judgment or by a trustee appointed pursuant to Section V,
Defendants shall offer the purchaser a contract for a term of at least two (2) years for the
supply of bauxite from Reynolds' interest in ABC (Aroaima) Guyana. Such agreement
shall be on commercially reasonable terms and for annual volumes substantially similar to
the annual volumes supplied by ABC (Aroaima) Guyana to the Corpus Christi Refinery
during the year prior to the closing of the transaction.
V.
APPOINTMENT OF TRUSTEE
- In the event that Defendants have not divested any of the Divestiture Assets
within the
time period specified for that asset in Section IV.A of this Final Judgment and for which
the time period has not been extended pursuant to Section IV.B, the Court shall appoint,
on application of the United States, a trustee selected by the United States and approved
by the Court to effect the divestiture of that Divestiture Asset.
- After the appointment of a trustee becomes effective, only the trustee shall have
the right
to divest the Divestiture Assets. The trustee shall have the power and authority to
accomplish the divestitures at the best price then obtainable upon a 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 the Court shall deem appropriate. Subject to Section V(C)
of this Final Judgment, the trustee shall have the power and authority to hire at the cost
and expense of Defendants any investment bankers, attorneys, or other agents reasonably
necessary in the judgment of the trustee to assist in the divestitures, and such professionals
and agents shall be accountable solely to the trustee. The trustee shall have the power and
authority to accomplish the divestitures at the earliest possible time to a purchaser or
purchasers acceptable to the United States in its sole discretion. Defendants shall not
object to a sale by the trustee on any grounds other than the trustee's malfeasance. Any
such objections by Defendants must be conveyed in writing to Plaintiff and the trustee
within ten (10) days after the trustee has provided the notice required under Section VI of
this Final Judgment.
- The trustee shall serve at the cost and expense of Defendants, on such terms and
conditions as the Plaintiff approves, and shall account for all monies derived from the sale
of the assets sold by the trustee and all costs and expenses so incurred. After approval by
the Court of the trustee's accounting, including fees for its services and those of any
professionals and agents retained by the trustee, all remaining money shall be paid to
Defendants and the trust shall then be terminated. The compensation of such trustee and
of professionals and agents retained by the trustee shall be reasonable in light of the value
of the divested business and based on a fee arrangement providing the trustee with an
incentive based on the price and terms of the divestitures and the speed with which they
are accomplished, but timeliness is paramount.
- Defendants shall use their best efforts to assist the trustee in accomplishing the
required
divestitures, including their best efforts to effect all necessary regulatory approvals. The
trustee and any consultants, accountants, attorneys, and other persons retained by the
trustee shall have full and complete access to the personnel, books, records, and facilities
of the businesses to be divested, and Defendants shall develop financial or other
information relevant to the businesses to be divested customarily provided in a due
diligence process as the trustee may reasonably request, subject to customary
confidentiality assurances. Defendants shall permit prospective acquirers of the Divestiture
Assets to have reasonable access to personnel and to make such inspection of physical
facilities and any and all financial, operational or other documents and other information as
may be relevant to the divestitures required by this Final Judgment. Defendants shall take
no action to interfere with or to impede the trustee's accomplishment of the divestitures.
- After its appointment, the trustee shall file monthly reports with the parties and the Court
setting forth the trustee's efforts to accomplish the divestitures ordered under this Final
Judgment; provided however, that to the extent such reports contain information that the
trustee deems confidential, such reports shall not be filed in the public docket of the Court.
Such reports shall include the name, 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 businesses to be divested, and shall describe in detail each contact with
any such person during that period. The trustee shall maintain full records of all efforts
made to divest the businesses to be divested.
- If the trustee has not accomplished such divestitures within six (6) months after its
appointment, the trustee thereupon shall file promptly with the Court a report setting
forth: (1) the trustee's efforts to accomplish the required divestitures; (2) the reasons, in
the trustee's judgment, why the required divestitures have not been accomplished; and (3)
the trustee's recommendations; provided, however, that to the extent such report contains
information that the trustee deems confidential, such report shall not be filed in the public
docket of the Court. The trustee shall at the same time furnish such report to the Plaintiff,
the Court and to Defendants. Plaintiff and Defendants shall each have the right to be
heard and to make additional recommendations consistent with the purpose of this Final
Judgment. The Court shall enter thereafter such orders as it shall deem appropriate in
order to carry out the purpose of the Final Judgment, which may, if necessary, include
extending the trust and the term of the trustee's appointment by a period requested by the
United States.
VI.
NOTIFICATION
- Within two (2) business days following execution of a definitive agreement
Defendants or
the trustee, whichever is then responsible for effecting the divestitures, shall notify Plaintiff
of the proposed divestitures. If the trustee is responsible, it shall similarly notify
Defendants. The notice shall set forth the details of the proposed transaction and list the
name, address, and telephone number of each person not previously identified who offered
to, or expressed an interest in or a desire to, acquire any ownership interest in the business
to be divested that is the subject of the binding contract, together with full details of same.
- Within fifteen (15) calendar days of receipt by Plaintiff of such notice, the United
States, in
its sole discretion, may request from Defendants, the trustee, the proposed purchaser or
purchasers, or any other third party additional information concerning the proposed
divestitures, the proposed purchaser or purchasers, and any other potential purchaser.
Defendants and the trustee shall furnish any additional information requested from them
within fifteen (15) calendar days of the receipt of the request, unless the parties shall
otherwise agree. Within thirty (30) calendar days after receipt of the notice or within
twenty (20) calendar days after the Plaintiff has been provided the additional information
requested from Defendants, the trustee, the proposed purchaser or purchasers, or any
third party, whichever is later, the United States shall provide written notice to Defendants
and the trustee, if there is one, stating whether or not it objects to the proposed
divestitures. If the United States provides written notice to Defendants and the trustee that
it does not object, then the divestitures may be consummated, subject only to Defendants'
limited right to object to the sale under Section V(B) of this Final Judgment. Absent
written notice that the United States does not object to the proposed purchaser or
purchasers or upon objection by the United States, a divestiture proposed under Section
IV or Section V shall not be consummated. Upon objection by Defendants under the
provision in Section V(B), a divestiture proposed under Section V shall not be
consummated unless approved by the Court.
VII.
AFFIDAVITS
- Within twenty (20) calendar days of the filing of the Complaint in this matter and
every
thirty (30) calendar days thereafter until the divestitures have been completed, whether
pursuant to Section IV or Section V of this Final Judgment, Defendants shall deliver to
Plaintiff an affidavit as to the fact and manner of compliance with Section IV or Section V
of this Final Judgment. Each such affidavit shall include, inter alia, the name,
address, and
telephone number of each person who, at any time after the period covered by the last
such report, made an offer to acquire, expressed an interest in acquiring, entered into
negotiations to acquire, or was contacted or made an inquiry about acquiring, any interest
in the business to be divested, and shall describe in detail each contact with any such
person during that period. Each such affidavit shall also include a description of the efforts
that Defendants have taken to solicit a purchaser or purchasers for the Divestiture Assets
and to provide required information to prospective purchasers.
- Within twenty (20) calendar days of the filing of the Complaint in this matter,
Defendants
shall deliver to Plaintiff an affidavit which describes in detail all actions Defendants have
taken and all steps Defendants have implemented on an on-going basis to preserve the
Divestiture Assets pursuant to Section VIII of this Final Judgment and the Hold Separate
Stipulation and Order entered by the Court. The affidavit also shall describe, but not be
limited to, Defendants' efforts to maintain and operate the Divestiture Assets as active
competitors, maintain the management, staffing, research and development activities,
sales, marketing, and pricing of the Divestiture Assets, and to maintain the Divestiture
Assets in operable condition at current capacity configurations. Defendants shall deliver to
Plaintiff an affidavit describing any changes to the efforts and actions outlined in
Defendants' earlier affidavit(s) filed pursuant to this Section VII(B) within fifteen (15)
calendar days after the change is implemented.
- Until one year after such divestitures have been completed, Defendants shall
preserve all
records of all efforts made to preserve the businesses to be divested and effect the
divestitures.
VIII.
HOLD SEPARATE ORDER
Until the divestitures required by the Final Judgment have been accomplished,
Defendants
shall take all steps necessary to comply with the Hold Separate Stipulation and Order entered by
this Court and to preserve in all material respects the Divestiture Assets. Defendants shall take no
action that would jeopardize the divestiture of the Divestiture Assets.
IX.
FINANCING
Defendants are ordered and directed not to finance all or any part of any purchase by an
acquirer made pursuant to Sections IV or V of this Final Judgment.
X.
COMPLIANCE INSPECTION
For the 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, upon
written
request of a duly authorized representative of the Assistant Attorney General in charge of
the Antitrust Division, and on reasonable notice to Defendants, shall be permitted:
- Access during office hours of Defendants to inspect and copy, or at Plaintiff's
option demand Defendants provide copies of, all books, ledgers, accounts,
correspondence, memoranda, and other records and documents in the possession
or under the control of Defendants, who may have counsel present, relating to any
matters contained in this Final Judgment and the Hold Separate Stipulation and
Order; and
- To interview, either informally or on the record, their officers, employees, and
agents, who may have their individual counsel present, regarding any such matters.
The interviews shall be subject to the interviewee's reasonable convenience and
without restraint or interference from the Defendants.
- Upon the written request of the Assistant Attorney General in charge of the
Antitrust
Division Defendants shall submit written reports, under oath if requested, with respect to
any of the matters contained in this Final Judgment and the Hold Separate Stipulation and
Order.
- No information nor any documents obtained by the means provided in Sections
VII or X
of this Final Judgment shall be divulged by a representative of the United States to any
person other than a duly authorized representative of the Executive Branch of the United
States, except in the course of legal proceedings to which the United States is a party
(including grand jury proceedings), or for the purpose of securing compliance with this
Final Judgment, or as otherwise required by law.
- If at the time information or documents are furnished by Defendants to Plaintiff,
Defendants represent and identify in writing the material in any such information or
documents for which a claim of protection may be asserted under Rule 26(c)(7) of the
Federal Rules of Civil Procedure, and Defendants mark each pertinent page of such
material, "Subject to claim of protection under Rule 26(c)(7) of the Federal Rules of Civil
Procedure," then Plaintiff shall give ten (10) days notice to Defendants prior to divulging
such material in any legal proceeding (other than a grand jury proceeding) to which
Defendants are not a party.
XI.
RETENTION OF JURISDICTION
Jurisdiction is retained by this Court for the purpose of enabling any of the parties to this
Final Judgment to apply to this Court at any time for such further orders and directions as may be
necessary or appropriate for the construction or carrying out of this Final Judgment, for the
modification of any of the provisions hereof, for the enforcement of compliance herewith, and for
the punishment of any violations hereof.
XII.
TERMINATION
Unless this Court grants an extension, this Final Judgment will expire on the tenth
anniversary of the date of its entry.
XIII.
PUBLIC INTEREST
Entry of this Final Judgment is in the public interest.
Dated ______________
Court approval subject
to procedures of Antitrust
Procedures and Penalties Act,
15 U.S.C. § 16.
________________________
United States District Judge
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