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Notice

United States v. Republic Services, Inc. and Allied Waste Industries, Inc., Proposed Final Judgment and Competitive Impact Statement

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Start Preamble

Notice is hereby given pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h), that a Complaint, Hold Separate Stipulation and Order, proposed Final Judgment, and Competitive Impact Statement have been filed with the U.S. District Court for the District of Columbia in United States v. Republic Services, Inc. and Allied Waste industries, Inc., No. 1:00CV02311. The civil antitrust Complaint, filed on September 27, 2000, alleges that the Republic Services, Inc.'s (“Republic”) acquisition of Allied Waste Industries, Inc.'s Akron/Canton, Ohio small container commercial waste hauling assets would substantially lessen competition in the waste collection industry in the Akron/Canton, Ohio market in violation of section 7 of the Clayton Act, 15 U.S.C. 18. The Akron/Canton market is defined as the cities of Akron and Canton, Ohio and counties of Summit, Stark and Portage, Ohio. The proposed Final Judgment, filed at the same time as the Complaint, requires Republic to divest its Akron/Canton, Ohio small container commercial waste collection assets.

Public comment is invited within the statutory 60-day comment period. Such comments and responses thereto will be published in the Federal Register and filed with the Court. Comments should be directed to J. Robert Kramer II, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 1401 H Street, NW., Suite 3000, Washington, DC 20530 (telephone: 202-307-0924).

Copies of the Complaint, Hold Separate Stipulation and Order, proposed Final Judgment, and the Competitive Impact Statement are available for inspection in Room 215 of the U.S. Department of Justice, Antitrust Division, 325 7th Street, NW., Washington, DC (telephone: 202-514-2481) and at the office of the Clerk of the U.S. District Court for the District of Columbia, Washington, DC. Copies of Start Printed Page 66767these materials may be obtained upon request and payment of a copying fee.

Start Signature

Constance K. Robinson,

Director of Operations & Merger Enforcement.

End Signature

Hold Separate Stipulation and Order

It is hereby stipulated and agreed by and between the undersigned parties, subject to approval and entry by the Court, that:

I. Definitions

As used in this Hold Separate Stipulation and Order:

A. “Allied” means defendant Allied Waste Industries, Inc., a Delaware corporation with its headquarters in Scottsdale, Arizona, and includes its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures, and their directors, officers, managers, agents, and employees.

B. “Republic” means defendant Republic Service, Inc., a Delaware corporation with its headquarters in Ft. Lauderdale, Florida, and includes its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures, and their directors, officers, managers, agents, and employees.

C. “Relevant Akron/Canton Assets” means Republic's front-end loader truck small container commercial routes 91, 92, 94, 96, and 97 that serve Summit, Stark, and Portage counties, Ohio.

Relevant Akron/Canton Assets includes, with respect to each of Republic's small container routes listed above, all tangible assets (including capital equipment, trucks and other vehicles, containers, interests, permits, and supplies); and all intangible assets (including hauling-related customer lists, contracts, leasehold interests, and accounts related to each such route).

II. Objectives

The Final Judgment filed in this case is meant to ensure Republic's prompt divestiture of the Relevant Akron/Canton Assets for the purpose of establishing one or more viable competitors in the commercial waste hauling business, to remedy the effects that the United States alleges would otherwise result from Republic's acquisition of certain Allied assets. This Hold Separate Stipulation and Order ensures, prior to such divestiture, that the Relevant Akron/Canton Assets remain independent, economically viable, and ongoing business concerns that will remain independent and uninfluenced by Republic; and that competition is maintained during the pendency of the ordered divestitures.

III. Jurisdiction and Venue

The Court has jurisdiction over the subject matter of this action and over each of the parties hereto, and venue of this action is proper in the United States District Court for the District of Columbia.

IV. Compliance With and Entry of Final Judgment

A. The parties stipulate that a Final Judgment in the form attached hereto as Exhibit A may be filed with and entered by the Court, upon the motion of any party or upon the Court's own motion, at any time after compliance with the requirements of the Antitrust Procedures and Penalties Act (15 U.S.C. 16), and without further notice to any party or other proceedings, provided that the United States has not withdrawn its consent, which it may do at any time before the entry of the proposed Final Judgment by serving notice thereof on defendants and by filing that notice with the Court.

B. Defendants shall abide by and comply with the provisions of the proposed Final Judgment, pending the Judgment's entry by the Court, or until expiration of time for all appeals of any Court ruling declining entry of the proposed Final Judgment, and shall, from the date of the signing of this Stipulation by the parties, comply with all the terms and provisions of the proposed Final Judgment as though the same were in full force and effect as an order of the Court.

C. Defendants shall not consummate the transactions sought to be enjoined by the Complaint herein before the Court has signed this Hold Separate Stipulation and Order.

D. This Stipulation shall apply with equal force and effect to any amended proposed Final Judgment agreed upon in writing by the parties and submitted to the Court.

E. In the event (1) the United States has withdrawn its consent, as provided in Section IV(A) above, or (2) the proposed Final Judgment is not entered pursuant to this Stipulation, the time has expired for all appeals of any Court ruling declining entry of the proposed Final Judgment, and the Court has not otherwise ordered continued compliance with the terms and provisions of the proposed Final Judgment, then the parties are released from all further obligations under this Stipulation, and the making of this Stipulation shall be without prejudice to any party in this or any other proceeding.

F. Republic represents that the divestitures ordered in the proposed Final Judgment can and will be made, and that defendants will later raise no claim of mistake, hardship, or difficulty of compliance as grounds for asking the Court to modify any of the provisions contained therein.

V. Hold Separate Provisions

Until the divestitures required by the Final Judgment have been accomplished:

A. Republic shall preserve, maintain, and operate the Relevant Akron/Canton Assets as independent, ongoing, economically viable competitive businesses, with management, sales, and operations of such assets held entirely separate, distinct, and apart from the other operations of Republic. Republic shall not coordinate the marketing of, or negotiation or terms of sale by, any Relevant Akron/Canton Asset with its other operations. Within twenty (20) days after the filing of the Hold Separate Stipulation and Order, or thirty (30) days after the entry of this Order, whichever is later, Republic will inform the United States of the steps Republic has taken to comply with this Hold Separate Stipulation and Order.

B. Republic shall take all steps necessary to ensure that (1) the Relevant Akron/Canton Assets will be maintained and operated as independent, ongoing, economically viable and active competitors in the commercial waste hauling business; (2) the management of the Relevant Akron/Canton Assets will not be influenced by Republic; and (3) the books, records, competitively sensitive sales, marketing and pricing information, and decision-making concerning the Relevant Akron/Canton Assets will be kept separate and apart from Republic's other operations. Republic's influence over the Relevant Akron/Canton Assets shall be limited to that necessary to carry out defendant Republic's obligations under this Hold Separate Stipulation and Order and the proposed final Judgment.

C. Republic shall use all reasonable efforts to maintain and increase the sales and revenues of the Relevant Akron/Canton Assets, and shall maintain at 2000 or at previously approved levels for 2001, whichever are higher, all promotional, advertising, sales, technical assistance, marketing, and merchandising support for the Relevant Akron/Canton Assets.

D. Republic shall provide sufficient working capital to maintain the Relevant Akron/Canton Assets as economically viable and competitive, ongoing businesses, consistent with the requirements of Section V (A) and (B).

E. Republic shall take all steps necessary to ensure that the Relevant Start Printed Page 66768Akron/Canton Assets are fully maintained in operable condition at no lower than their current capacity or sales, and shall maintain and adhere to normal repair and maintenance schedules for the Relevant Akron/Canton Assets.

F. Republic shall not, except as part of a divestiture approved by the United States in accordance with the terms of the proposed Final Judgment, remove, sell, lease, assign, transfer, pledge, or otherwise dispose of any of the Relevant Akron/Canton Assets.

G. Republic shall maintain, in accordance with sound accounting principles, separate, accurate, and complete financial ledgers, books, and records that report on a periodic basis, such as the last business day of every month, consistent with past practices, the assets, liabilities, expenses, revenues, and income of the Relevant Akron/Canton Assets.

H. Except in the ordinary course of business or as is otherwise consistent with this Hold Separate Stipulation and Order. Republic shall not hire, transfer, terminate, or otherwise alter the salary agreements for any Republic employee who, on the date of Republic's signing of this Hold Separate Stipulation and Order, either: (1) Works with a Relevant Akron/Canton Asset, or (2) is a member of management referenced in Section V(I) of this Hold Separate Stipulation and Order.

I. Until such time as the Relevant Akron/Canton Assets are divested pursuant to the terms of the final Judgment, the Relevant Akron/Canton Assets shall be managed by Raul Rodriguez. Mr. Rodriguez shall have complete managerial responsibility for the Relevant Akron/Canton Assets, subject to the provisions of this Order and the proposed Final Judgment. In the event that Mr. Rodriguez is unable to perform his duties, defendants shall appoint, subject to the approval of the United States, a replacement within ten (10) working days. Should Republic fail to appoint a replacement acceptable to the United States within ten (10) working days, the United States shall appoint a replacement.

J. Republic shall take no action that would interfere with the ability of any trustee appointed pursuant to the Final Judgment to complete the divestitures pursuant to the Final Judgment to purchasers acceptable to the United States.

K. This Hold Separate Stipulation and Order shall remain in effect until consummation of the divestitures contemplated by the proposed Final Judgment or until further order of the Court.

Dated: October 27, 2000

For Plaintiff, United States of America.

Arthur A. Feiveson,

IL Bar #3125793, U.S. Department of Justice, Antitrust Division, Litigation II Section, 1401 H Street, NW, Suite 3000, Washington, DC 20530, (202) 307-0901.

For Defendant Republic Services, Inc.

Paul B. Hewitt,

Akin, Gump, Strauss, Hauer & Feld, 1333 New Hampshire Avenue, NW, Suite 400, Washington, DC 20036, (202) 887-4120.

For Defendant Allied Waste Industries, Inc.

Tom D. Smith,

Jones, Day, Reavis & Pogue, 51 Louisiana Avenue, NW, Washington, DC 20001-2113, (202) 879-3971

Order

It Is So Ordered on this __ day of __2000.______,

United States District Judge

Pursuant to LCvR7.1(k), the following are the attorneys entitled to be notified of the entry of the Order

Arthur A. Fieveson, Esq., United States Department of Justice, Antitrust Division, Litigation II, 1401 H Street, NW., Suite 3000, Washington, DC 20530.

Paul B. Hewitt, Esq., Akin, Gump, Strauss, Hauer & Feld, 1333 New Hampshire Avenue, NW., Suite 400, Washington, DC 20036.

Tom D. Smith, Esq., Jones, Day, Reavis & Pogue, 51 Louisiana Avenue, NW., Washington, DC 20001-2113

Final Judgment

Whereas, plaintiff, the United States of America, having filed its Complaint in this action on September 27, 2000, and plaintiff and defendants, Republic Services, Inc. (“Republic”) and Allied Waste Services, Inc., (“Allied”), by their respective attorneys, having consented to the entry of this Final Judgment without trial or adjudication of any issue of fact or law herein, and without this Final Judgment constituting any evidence against or an admission by any party with respect to any issue of law or fact herein;

And Whereas, defendants have agreed to be bound by the provisions of this Final Judgment pending its approval by the Court;

And Whereas, the essence of this Final Judgment is the prompt and certain divestiture of the Relevant Republic Assets by Republic to assure that competition is not substantially lessened;

And Whereas, the United States requires Republic to make certain divestitures for the purpose of remedying the loss of competition alleged in the Complaint;

And Whereas, defendants have represented to the United States that the divestitures required below, can and will be made and that defendants will later raise no claims of hardship or difficulty as grounds for asking the Court to modify any of the divestiture or other injunctive 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:

I. Jurisdiction

This Court has jurisdiction over each of the parties hereto and over the subject matter of this action. The Complaint states a claim upon which relief may be granted against defendants under Section 7 of the Clayton Act, as amended, 15 U.S.C. 18.

II. Definitions

As used in this Final Judgment:

A. “Acquirer” or “Acquirers” means the entity or entities to whom Republic divests the Relevant Republic Assets.

B. “Allied” means defendant Allied Waste Industries, Inc., a Delaware corporation with its headquarters in Scottsdale, Arizona, and includes its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures, and their directors, officers, managers, agents, and employees.

C. “Hauling” means the collection of waste from customers and the shipment of the collected waste to disposal sites. Hauling, as used herein, does not include collection of roll-off containers.

D. “MSW” means municipal solid waste, a term of art used to describe solid putrescible waste generated by households and commercial establishments such as retail stores, offices, restaurants, warehouses, and non-manufacturing activities in industrial facilities. MSW does not include special handling waste (e.g., waste from manufacturing processes, regulated medical waste, sewage, and sludge), hazardous waste, or waste generated by construction or demolition sites.

E. “Relevant Republic Assets” means with respect to each commercial waste collection route or other hauling asset described herein, all tangible assets, including capital equipment, trucks and other vehicles, containers, interests, permits, supplies; and if requested by the purchaser, real property and improvements to real property (i.e., buildings and garages). It also includes all intangible assets, including hauling-Start Printed Page 66769related customer lists, contracts, leasehold interests, and accounts related to each such route or asset.

Relevant Republic Assets includes the following: Republic's front-end loader truck small container routes (hereinafter, “commercial routes”) 91, 92, 94, 96, and 97 that serve Summit, Stark, and Portage counties, Ohio.

F. “Republic” means defendant Republic Services, Inc., a Delaware corporation with its headquarters in Ft. Lauderdale, Florida, and includes its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures, and their directors, officers, managers, agents, and employees.

G. “Small container commercial waste collection service” means the business of collecting MSW from commercial and industrial accounts, usually in “dumpsters” (i.e., a small container with one to ten cubic yards of storage capacity), and transporting or “hauling” such waste to a disposal site by use of a front- or rear-end loader truck. Typical commercial waste collection customers include office and apartment buildings and retail establishments (e.g., stores and restaurants).

III. Applicability

A. This Final Judgment applies to Republic and Allied, as defined above, and all other persons in active concert or partipation with any of them who receive actual notice of this Final Judgment by personal service or otherwise.

B. Republic shall require, as a condition of the sale or other disposition of all or substantially all of its assets, or of lesser business units that include defendant's Relevant Republic Assets, that the Acquirer or Acquirers agree to be bound by the provisions of this Final Judgment.

IV. Divestitures

A. Republic is hereby ordered and directed, within one hundred and twenty (120) calendar days after the filing of the Complaint in this matter, or five (5) days after notice of the entry of this Final Judgment by the Court, whichever is later, to divest the Relevant Republic Assets in a manner consistent with this Final Judgment to an Acquirer(s) acceptable to the United States in its sole discretion. Republic agrees to use its best efforts to accomplish the divestitures ordered by this Final Judgment as expeditiously and timely as possible. The United States, in its sole discretion, may agree to an extension of this time period of up to sixty (60) calender days, and shall notify the Court in such circumstances.

B. In accomplishing the divestitures ordered by this Final Judgment. Republic promptly shall make known, by usual and customary means, the availability of the Relevant Republic Assets. Republic shall inform any person making an inquiry regarding a possible purchase of the Relevant Republic Assets that they are being divested pursuant to this Final Judgment and provide that person with a copy of this Final Judgment. Republic shall also offer to furnish to all prospective Acquirers, subject to customary confidentiality assurances, all information and documents relating to the Relevant Republic Assets customarily provided in a due diligence process except such information or documents subject to the attorney-client or work-product privileges. Republic shall make available such information to the United States at the same time that such information is made available to any other person.

C. Republic shall provide the Acquirer(s) and the United States information relating to the personnel involved in the operation and management of the Relevant Republic Assets to enable the Acquirer to make offers of employment. Republic and Allied will not interfere with any negotiations by the Acquirer(s) to employ any Republic employee whose primary responsibility is the operation or management of the Relevant Republic Assets.

D. Republic shall permit prospective Acquirer(s) of the Relevant Republic Assets to have reasonable access to personnel and to make inspections of the physical facilities; access to any and all environmental, zoning, and other permit documents and information; and access to any and all financial, operational, or other documents and information customarily provided as part of a due diligence process.

E. Republic shall warrant to all Acquirers of the Relevant Republic Assets that each asset will be operational on the date of sale.

F. Republic and Allied shall not take any action that will impede in any way the permitting, operation, or divestiture of the Relevant Republic Assets.

G. Republic shall warrant to the Acquirer(s) of the Relevant Republic Assets that there are no material defects in the environmental, zoning, or other permits pertaining to the operation of each asset, and that following the divestiture of the Relevant Republic Assets, Republic and Allied will not undertake, directly or indirectly, any challenges to the environmental, zoning, or other permits or applications for permits or licenses relating to the operation of the Relevant Republic Assets.

H. Unless the United States otherwise consents in writing, the divestiture pursuant to Section IV, or by trustee appointed pursuant to Section V of this Final Judgment, shall include the entire Relevant Republic Assets, and shall be accomplished in such a way to satisfy the United States, in its sole discretion, that the Relevant Republic Assets can and will be used by the Acquirer(s) as part of a viable, ongoing waste hauling business. Divestiture of the Relevant Republic Assets may be made to one or more Acquirers, provided that in each instance it is demonstrated to the sole satisfaction of the United States that the Relevant Republic Assets will remain viable and the divestiture of such assets will remedy the competitive harm alleged in the Complaint. The divestitures, 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 managerial, operational, technical, and financial capability) of competing effectively in the waste hauling business; 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 an Acquirer or Acquirers and Republic gives Republic or Allied the ability unreasonably to raise the Acquirer's costs, to lower the Acquirer's efficiency, or otherwise to interfere in the ability of the Acquirer to compete effectively.

V. Appointment of Trustee

A. If Republic has not divested the Relevant Republic Assets within the time period specified in Section IV(A), Republic shall notify the United States of that fact in writing. Upon application of the United States, the Court shall appoint a trustee selected by the United States and approved by the Court to effect the divestiture of the Relevant Republic Assets.

B. After the appointment of a trustee becomes effective, only the trustee shall have the right to sell the Relevant Republic Assets. The trustee shall have the power and authority to accomplish the divestiture to an Acquirer or Acquirers acceptable to the United States at such price on such terms as are then obtainable upon reasonable effort by the trustee, subject to the provisions of Sections IV, V, and VI of this Final Judgment, and shall have such other power as this Court deems appropriate. Subject to Section V(D) of this Final Start Printed Page 66770Judgment, the trustee may hire at the cost and expense of Republic any investment bankers, attorneys, or other agents, who shall be solely accountable to the trustee, reasonably necessary in the trustee's judgment to assist in the divestiture.

C. Republic and Allied shall not object to a sale by the trustee on any ground other than the trustee's malfeasance. Any such objections by Republic or Allied must be conveyed in writing to the United States and the trustee within ten (10) calendar days after the trustee has provided the notice required under Section VI.

D. The trustee shall serve at the cost and expense of Republic, 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 Republic and the trust shall then be terminated. The compensation of the trustee and any professionals and agents retained by the trustee shall be reasonable in light of the value of the Relevant Republic Assets and based on a fee arrangement providing the trustee with an incentive based on the price and terms of the divestiture and the speed with which it is accomplished, but timeliness is paramount.

E. Republic shall use its best efforts to assist the trustee in accomplishing the required divestiture. The trustee and any consultants, accountants, attorneys, and other persons retained by the trustee shall have full and complete access to the personnel, books, records, and facilities of the business to be divested, and Republic shall develop financial and other information relevant to such business as the trustee may reasonably request, subject to reasonable protection for trade secret or other confidential research, development, or commercial information. Republic and Allied 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 that such reports contain information that the trustee deems confidential, such reports shall not be filed in the public docket of the Court. Such reports shall include the name, address, and telephone number of each person who, during the preceding month, made an offer to acquire, expressed an interest in acquiring, entered into negotiations to acquire, or was contracted or made an inquiry about acquiring any interest in the Relevant Republic 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 Relevant Republic Assets.

G. If the trustee has not accomplished such divestiture within six months after its appointment, the trustee shall promptly file with the Court a report setting forth (1) the trustee's efforts to accomplish the required divestiture, (2) the reasons, in the trustee's judgment, why the required divestiture has not been accomplished, and (3) the trustee's recommendations. To the extent that such reports contain information that the trustee deems confidential, such reports shall not be filed in the public docket of the Court. The trustee shall at the same time furnish such report to the plaintiff 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 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, Republic 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 Republic. The notice shall set forth the details of the proposed divestiture and list the name, address, and telephone number of each person not previously identified who offered or expressed an interest in or desire to acquire any ownership interest in the Relevant Republic 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 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. 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 defendants, the proposed Acquirer or Acquirers, any third party, and the trustee, whichever is later, the United States shall provide written notice to Republic 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 upon objection by the United States, a divestiture proposed under Section IV or Section V shall not be consummated. Upon objection by defendants under Section V(C), a divestiture proposed under Section V shall not be consummated unless approved by the Court.

VII. Financing

Defendants shall not finance all or any part of any purchase made pursuant to Section IV or V of this Final Judgment.

VIII. Hold Separate

Until the divestitures required by this Final Judgment have been accomplished, Republic shall take all steps necessary to comply with the Hold Separate Stipulation and Order entered by this Court. Republic and Allied shall take no action that would jeopardize the divestitures ordered by this Court.

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(s) has been completed under Section IV or V, Republic shall deliver to the United States an affidavit as to the fact and manner of its compliance with Section IV or V of this Final Judgment. Each such affidavit shall include the name, address, and telephone number of each person who, during the preceding thirty days, made an offer to acquire, expressed an interest in acquiring, entered into negotiations to acquire, or was contacted or made an inquiry about acquiring, any interest in the Relevant Republic 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 Republic has taken to solicit buyers for the Relevant Republic Assets, and to provide required Start Printed Page 66771information to prospective 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 Republic, including limitation on information, shall be made within fourteen (14) days of receipt of such affidavit.

B. Within twenty (20) calendar days of the filing of the Complaint in this matter, Republic shall deliver to the United States and affidavit that describes in reasonable detail all actions Republic has taken and all steps Republic has implemented on an ongoing basis to comply with Section VIII of this Final Judgment. Republic shall deliver to the United States an affidavit describing any changes to the efforts and actions outlined in Republic's earlier affidavits filed pursuant to this section within fifteen (15) calendar days after the change is implemented.

C. Republic shall keep all records of all efforts made to preserve and divest the Relevant Republic Assets until one year after such divestiture(s) has been completed.

X. Compliance Inspection

A. 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, including consultants and other persons retained by the United States, shall, upon written request of a duly authorized representative of the Assistant Attorney General in charge of the Antitrust Division, and on reasonable notice to defendants, be permitted:

(1) Access during defendants' office hours to inspect and copy, or at plaintiff's option demand defendants provide copies of, all books, ledgers, accounts, records and documents in the possession or control of defendants, who may have counsel present, relating to any matters contained in this Final Judgment; and

(2) To interview, either informally or on the record, defendants' officers, employees, or agents, who may have their individual counsel present, regarding such matters. The interviews shall be subject to the interviewees' reasonable convenience and without restraint or interference by defendants.

B. Upon the written request of the Assistant Attorney General in charge of the Antitrust Division, defendants shall submit such written reports, under oath if requested, relating to any of the matters contained in this Final Judgment as may be requested.

C. No information or documents obtained by the means provided in this section shall be divulged by the United States to any person other than an authorized representative of the executive branch of the United States, except in the course of legal proceedings to which the United States is a party (including grand jury proceedings), or for the purpose of securing compliance with this Final Judgment, or as otherwise required by law.

D. If at the time information or documents are furnished by defendants to the United States, defendants represent and identify in writing the material in any such information or documents to which a claim of protection may be asserted under Rule 26(c)(7) of the Federal Rules of Civil Procedure, and defendants mark each pertinent page of such material, “Subject to claim of protection under Rule 26(c)(7) of the Federal Rules of Civil Procedure,” then the United States shall give defendants ten (10) calendar day notice prior to divulging such material in any legal proceeding (other than a grand jury proceeding).

XI. No Reacquisition

Republic may not reacquire any part of the Relevant Republic Assets during the term of this Final Judgment.

XII. Retention of Jurisdiction

This Court retains jurisdiction to enable any party to this Final Judgment to apply to this Court at any time for further orders and directions as may be necessary or appropriate to carry out or construe this Final Judgment, to modify any of its provisions, to enforce compliance, and to punish violations of its provisions.

XIII. Expiration of Final Judgment

Unless this Court grants an extension, this Final Judgment shall expire ten years from the date of its entry.

XIV. Public Interest Determination

Entry of this Final Judgment is in the public interest.

Date:

Court approval subject to procedures of Antitrust Procedures and Penalties Act, 15 U.S.C. 16

United States District Judge

Judge: Ricardo M. Urbina.

Deck Type: Antitrust.

Competitive Impact Statement

The United States, pursuant to Section 2(b) of the Antitrust Procedures and Penalties Act (“APPA”), 15 U.S.C. 16(b)-(h), files this Competitive Impact Statement relating to the proposed Final Judgment submitted for entry in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

The United States filed a civil antitrust Complaint on September 27, 2000, seeking to enjoin the acquisition of certain waste hauling assets by Republic Services, Inc. (“Republic”) from Allied Waste Industries, Inc. (“Allied”). Republic and Allied had entered into agreements pursuant to which Republic would acquire waste hauling assets from Allied in the Akron/Canton, Ohio area. The Complaint alleges that the likely effects of these acquisitions would be to substantially lessen competition for waste collection services in the Akron/Canton area in violation of Section 7 of the Clayton Act, 15 U.S.C. Section 18, resulting in consumers paying higher prices and receiving fewer services for the collection of waste.

At the time the Complaint was filed, the United States also filed a proposed Final Judgment and a Hold Separate Stipulation and Order that would permit Republic to complete its acquisition of the Allied assets, provided divestitures of certain waste collection assets are accomplished in such a way as to preserve competition in the market. Under the proposed Final Judgment, which is explained more fully below, Republic is required within 120 days after September 27, 2000, or five (5) days after notice of the entry of the Final Judgment by the Court, whichever is later, to divest as viable, ongoing business operations certain waste hauling assets in the Akron/Canton area. Under the terms of the Hold Separate Stipulation and Order, Republic is required to take certain steps to ensure that the assets to be divested will be preserved and held separate from Republic's other assets and businesses until the divestiture is accomplished. Republic has appointed, subject to the United States' approval, an individual to manage the assets to be divested and ensure the defendants' compliance with the requirements of the proposed Final Judgment and Hold Separate Order.

The United States and the defendants have stipulated that the proposed Final Judgment may be entered after compliance with the APPA. Entry of the proposed Final Judgment would terminate this action, except that the Start Printed Page 66772Court 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

Republic, with revenues of approximately $1.8 billion in its 1998 fiscal year, is engaged in providing waste collection and disposal services throughout the United States. Allied, with revenues in 1999 of approximately $6 billion, is the nation's second-largest waste hauling and disposal company, operating throughout the United States. Pursuant to a Put/Call Agreement dated December 6, 1999 and a Letter Agreement dated August 1, 2000, Republic will acquire from Allied certain waste-hauling and disposal assets in the Akron/Canton area. This acquisition is the subject of the Complaint and proposed Final Judgment filed by the United States on September 27, 2000.

B. The Competitive Effects of the Transaction

Waste collection firms, or “haulers,” contract to collect municipal solid waste (“MSW”) from residential and commercial customers; they transport the waste to private and public disposal facilities (e.g., transfer stations, incinerators and landfills), which, for a fee, process and legally dispose of waste. In the Akron/Canton area, Republic and Allied compete in operating small container waste collection routes and waste disposal facilities.

Small container commercial waste collection service is the collection of MSW from commercial businesses such as office and apartment buildings and retail establishments (e.g., stores and restaurants) for shipment to, and disposal at, an approved disposal facility. Because of the type and volume of waste generated by commercial accounts and the frequency of service required, haulers organize commercial accounts into special routes, and use specialized equipment to store, collect and transport waste from these accounts to approved disposal sites. This equipment—one to ten cubic yard containers for waste storage, plus front-end and rear-end loader trucks for collection and transportation—is uniquely well suited for the provision of small container commercial waste collection service. Providers of other types of waste collection services (e.g., residential and roll-off services) are not good substitutes for small container commercial waste collection firms. In their waste collection efforts, other firms use different waste storage equipment (e.g., garbage cans or semi-stationary roll-off containers) and different trucks (e.g., side-load trucks), which, for a variety of reasons, cannot be conveniently or efficiently used to store, collect or transport waste generated by commercial accounts, and hence, are rarely used on small container commercial waste collection routes. For purposes of antitrust analysis, the provisions of small container commercial waste collection services constitutes a line of commerce, or relevant service, for analyzing the effects of the acquisition.

The Complaint alleges that the provision of small container commercial waste collection services takes place in compact, highly localized geographic markets. It is expensive to ship waste long distances in either collection or disposal operations. To minimize transportation costs and maximize the scale, density and efficiency of their waste collection operations, small container commercial waste collection firms concentrate their customers and collection routes in small areas. Firms with operations concentrated in a distant area cannot easily compete against firms whose routes and customers are locally based. Sheer distance may significantly limit a distant firm's ability to provide commercial waste collection service as frequently or conveniently as that offered by local firms with nearby routes. Also, local commercial waste collection firms have significant cost advantages over other firms, and can profitably increase their charges to local commercial customers without losing significant sales to firms outside the area.

Applying that analysis, the Complaint alleges that the Akron/Canton, Ohio area constitutes a section of the country, or relevant geographic market, for the purpose of assessing the competitive effects of a combination of Republic and Allied in the provision of small container commercial waste collection services. The Akron/Canton area includes the Cities of Akron and Canton, Ohio; and Summit, Stark and Portage counties, Ohio. In the Akron/Canton area, Republic's acquisition of Allied's assets would reduce from four to three the number of major firms competing in small container commercial waste collection service. After the acquisition, Republic would control approximately 35% of the total market revenue, which exceeds $25 million annually.

New entry into this market would be difficult and time consuming and is unlikely to be sufficient to constrain any post-merger price increase. Many customers of commercial waste collection firms have entered into long-term contracts, tying them to a market incumbent for indefinitely long periods of time. In competing for uncommitted customers, market incumbents can price discriminate, i.e., selectively (and temporarily) change unbeatably low prices to customers targeted by entrants, a tactic that would strongly discourage a would-be competitor from competing for such accounts, which, if won, may be unprofitable to serve. Taken together, the prevalence of long-term contracts and the ability of market incumbents to price discriminate substantially increases any would-be new entrant's costs and the time necessary for it to build its customer base and obtain efficient scale and route density to become an effective competitor in the market.

The Complaint alleges that a combination of Republic and Allied in Akron/Canton would likely lead to an increase in prices charged to consumers of small container commercial waste collection services. The acquisition would diminish competition by enabling the few remaining competitors to engage more easily, frequently and effectively in coordinated pricing interaction that harms consumers.

III. Explanation of the Proposed Final Judgment

The divestiture provisions of the proposed Final Judgment will eliminate the anticompetitive effects of the acquisition in small container commercial waste collection services in the Akron/Canton area by establishing a new, independent and economically viable competitor in the markets. The proposed Final Judgment requires Republic, within 120 days after September 27, 2000, or five (5) days after notice of the entry of the Final Judgment by the Court, whichever is later, to divest, as a viable, ongoing business or businesses its small container commercial waste collection assets (e.g., routes, trucks, containers, and customer lists) relating to the Akron/Canton market to a purchaser acceptable to the United States in its sole discretion.

These assets must be divested in such a way as to satisfy the United States that the operaitons can and will be operated by the purchaser or purchasers as a viable, ongoing business that can compete effectively in the relevant Start Printed Page 66773market. Republic must take all reasonable steps necessary to accomplish the divestiture quickly and shall cooperate with prospective purchasers.

In the event that Republic does not accomplish the divestiture within the above-described period, the proposed Final Judgment provides that the Court will appoint a trustee selected by the United States to effect the divestitures. If a trustee is appointed, the proposed Final Judgment provides that Republic will pay all costs and expenses of the trustee. The trustee's commission will be structured so as to provide an incentive for the trustee based on the price obtained and the speed with which the divestiture is accomplished. After his or her appointment becomes effective, the trustee will file monthly reports with the parties and the Court, setting forth its efforts to accomplish the divestiture. At the end of six months, if the divestiture has not been accomplished, the trustee and the parties will make recommendations to the Court, which shall enter such orders as appropriate in order to carry out the purpose of the trust, including extending the trust or the term of the trustee's appointment.

The relief sought in the Akron/Canton area will maintain the pre-acquisition structure of the market and thereby ensure that consumers of small container commercial waste collection services will continue to receive the benefits of competition—lower prices and better service.

IV. Remedies Available to Potential Private Litigants

Section 4 of the Clayton Act (15 U.S.C. 15) provides that any person who has been injured as a result of conduct prohibited by the antitrust laws may bring suit in federal court to recover three times the damages the person has suffered, as well as costs and reasonable attorneys' fees. Entry of the proposed Final Judgment will neither impair nor assist the bringing of any private antitrust damage action. Under the provisions of Section 5(a) of the Clayton Act (15 U.S.C. 16(a), the proposed Final Judgment has no prima facie effect in any subsequent private lawsuit that may be brought against the defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

The United States and the 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 days preceding the effective date of the proposed Final Judgment within which any person may submit to the United States written comments regarding the proposed Final Judgment. Any person who wishes to comment should do so within 60 days of the date of publication of this Competitive Impact Statement in the Federal Register. The United States will evaluate and respond to the comments. All comments will be given due consideration by the Department of Justice, which remains free to withdraw its consent to the proposed Final Judgment at any time prior to entry. The comments and the response to the United States will be filed with the Court and published in the Federal Register. Written comments should be submitted to: J. Robert Kramer II, Chief, Litigation II Section, Antitrust Division, United States Department of Justice, 1401 H Street, N.W., Suite 3000, Washington, D.C. 20530.

The proposed Final Judgment provides that the Court retains jurisdiction over this action, and the parties may apply to the Court for any order necessary or appropriate for the modification, interpretation or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

The United States considered, as an alternative to the proposed Final Judgment, a full trial on the merits against defendants Republic and Allied. The United States could have continued the litigation and sought preliminary and permanent injunctions against Republic's acquisition of the Allied assets. The United States is satisfied, however, that the divestiture of hauling assets will preserve competition for small container commercial waste collection services in the Akron/Canton area. To this end, the United States is convinced that the proposed relief, once implemented by the Court, will prevent Republic's acquisition of the Allied assets from having adverse competitive effects.

VII. Standard of Review Under the APPA for the Proposed Final Judgment

The APPA requires that proposed consent judgments in antitrust cases brought by the United States be subject to a sixty-day comment period, after which the court shall determine whether entry of the proposed Final Judgment “is in the public interest.” In making that determination, the Court may consider—

(1) The competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration or relief sought, anticipated effects of alternative remedies actually considered, and any other considerations bearing upon the adequacy of such judgment;

(2) The impact of entry of such judgment upon the public generally an individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, if any, to be derived from a determination of the issues at trial.

15 U.S.C. 16(e). As the 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. Microsoft Corp., 56 F.3d 1448, 1458-62 (D.C. Cir. 1995).

In conducting this inquiry “the Court is nowhere compelled to go to trial or to engage in extended proceedings which might have the effect of vitiating the benefits of prompt and less costly settlement through the consent decree process.” [1] Rather,

absent a showing of corrupt failure of the government to discharge its duty, the Court, in making its public interest finding, should * * * carefully consider the explanations of the government in the competitive impact statement and its responses to comments in order to determine whether those explanations are reasonable under the circumstances.

United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. (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 Start Printed Page 66774(9th Cir. 1988) (quoting United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083 (1981)); see also Microsoft, 56 F.3d 1448 (D.C. cir. 1995). Precedent requires that

the balancing of competing social and political interests affected by a proposed antitrust consent decree must be left, in the first instance, to the discretion of the Attorney General. The court's role in protecting the public interest is one of insuring that the government has not breached its duty to the public in consenting to the decree. The court is required to determine not whether a particular decree is the one that will best serve society, but whether the settlement is “within the reaches of the public interest.” More elaborate requirements might undermine the effectiveness of antitrust enforcement by consent decree. [2]

The proposed Final Judgment, therefore, should not be reviewed under a standard of whether it is certain to eliminate every anticompetitive effect of a particular practice or whether it mandates certainty of free competition in the future. Court approval of a final judgment requires a standard more flexible and less strict than the standard required for a finding of liability. “[A] proposed decree must be approved even if it falls short of the remedy the court would impose on its own, as long as it falls within the range of acceptability or is ‘within the reaches of public interest’ ” [3]

Moreover, the Court's role under the Tunney Act is limited to reviewing the remedy in relation 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 “[t]he court's authority to review the decree depends entirely on the government's exercising its prosecutorial discretion by bringing a case in the first place,” it follows that the court “is only authorized to review the decree itself,” and not to “effectively redraft the complaint” to inquire into other matters that the United States might have but did not pursue. Id. at 1459-60.

VIII. Determinative Documents

There are no determinative materials or documents within the meaning of the APPA that were considered by the United States in formulating the proposed Final Judgment.

Dated: October 23, 2000.

Respectfully submitted.

Arthur A. Feiveson,

IL Bar #3125793, U.S. Department of Justice, Antitrust Division, Litigation II Section, 1401 H Street, NW, Suite 3000, Washington, DC 20530, (202) 307-0901.

Filed: 9/27/00.

Certificate of Service

I hereby certify that copies of the Competitive Impact Statement have been served upon Republic Services, Inc. and Allied Waste Industries, Inc. by U.S. mail, postage prepaid, to the attorneys listed below, this 23rd day of October, 2000.

Counsel for Defendant Allied Waste Industries, Inc., Tom D. Smith, Jones, Day, Reavis & Pogue, 51 Louisiana Avenue, NW, Washington, DC 20001-2113.

Counsel for Defendant Republic Services, Inc., Paul B. Hewitt, Akin. Gump, Strauss, Hauer & Feld, 1333 New Hampshire Avenue, NW, Suite 400, Washington, DC 20036.

Arthur A. Feiveson,

IL Bar #3125793, U.S. Department of Justice, Antitrust Division, Suite 3000, 1401 H Street, NW, Washington, DC 20530, (202) 307-0901.

End Preamble

Footnotes

1.  119 Cong. Rec. 24,598 (1973) see also United States v. Gillette Co. 406 F. Supp. 713, 715 (D. Mass. 1975), aff'd sub norm. Maryland v. United States, 406 U.S. 1001 (1983). A “public interest” determination can be made properly on the basis of the Competitive Impact Statement and Response to Comments filed pursuant to the APPA. Although the APPA authorizes the use of additional procedures, see 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. 93-1463, at 8-9 (1974), reprinted in 1974 U.S.C.C.A.N. 6535, 6538.

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2.  Bechtel Corp., 648 F.2d at 666 (citations omitted and emphasis added); see BNS, Inc., 858 F.2d at 463; United States v. National Broad Co., 449 F. Supp. 1127, 1143 (C.D. Cal. 1978); s v. Gillette Co., 406 F. Supp. at 716; see also United States v. American Cyanamid Co., 719 F.2d 558, 565 (2d Cir. 1983), cert. denied, 465 U.S. 1101 (1984).

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3.  United States v. American Tel. and Tel. Co., 552 F.Supp. 131, 150 (D.D.C. 1982) (citations omitted) quoting Gillette Co., 406 F. Supp. at 716; United States v. Alcan Aluminum, Ltd., 605 F.Supp. 619, 622 (W.D. Ky. 1985).

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[FR Doc. 00-28541 Filed 11-6-00; 8:45 am]

BILLING CODE 4410-11-M