[Federal Register Volume 60, Number 33 (Friday, February 17, 1995)]
[Notices]
[Pages 9399-9406]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-3889]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Sabreliner Corporation; 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 and
Competitive Impact Statement have been filed with the United States
District Court for the District of Columbia in United States of America
v. Sabreliner Corporation.
The Complaint in this case alleges that the acquisition of Midcoast
Aviation, Inc. (``Midcoast'') by Sabreliner Corporation
(``Sabreliner'') may substantially lessen competition in the sale of
jet fuel to transient general aviation aircraft at Lambert-St. Louis
International airport (``Lambert'') in violation of Section 7 of the
Clayton Act.
Sabreliner and Midcoast are the only two fixed base operators
(``FBOs'') at Lambert Field. Fixed base operators provide terminaling
services, such as aircraft cleaning, de-icing and fueling to general
aviation aircraft. These services are typically included in the price
of jet fuel sold to the general aviation customer. This acquisition,
left unchallenged, would result in a monopoly in the provision of jet
fuel to transient general aviation customers at Lambert.
The proposed Final Judgment requires Sabreliner to divest either
its transient general aviation fueling facilities at Lambert, or, if
necessary to attract a purchaser, its entire FBO operation at Lambert.
If defendant does not complete the divestiture by the allotted time, a
trustee will be appointed to conduct the divestiture.
Public comment on the proposed Final Judgment 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 Roger W. Fones, Chief, Transportation,
Energy, and Agriculture Section, Antitrust Division, Room 9104,
Judiciary Center Building, 555 4th Street, NW., Washington, DC 20001
(202-307-6351).
Constance K. Robinson,
Director of Operations, Antitrust Division.
United States of America; Plaintiff; vs. Sabreliner Corporation,
a corporation; Defendant.
[Docket Number: 95-0241]
Stipulation
It is stipulated by and between the undersigned parties, by their
respective attorneys, as follows:
(1) 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 District for the District of Columbia.
(2) The parties consent that a Final Judgment in the form hereto
attached may be filed 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 plaintiff 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 defendant and by filing that
notice with the Court.
(3) In the event plaintiff withdraws its consent or if the proposed
Final Judgment is not entered pursuant to this Stipulation, this
Stipulation shall be of no effect whatever, and the making of this
Stipulation shall be without prejudice to any party in this or any
other proceeding.
Dated: November 2, 1994.
[[Page 9400]] For Plaintiff United States of America:
Anne K. Bingaman,
Assistant Attorney General.
Steven C. Sunshine,
Deputy Asst. Attorney General.
Constance K. Robinson,
Director of Operations.
Roger W. Fones,
May Jean Moltenbrey,
Kelly Signs,
Stephen B. Donovan,
Attorneys.
For Defendant Sabreliner Corporation:
Winthrop, Stimson, Putnam & Roberts,
By: John Gillick,
A Member of the Firm.
Final Judgment
Whereas, plaintiff, United States of America, having filed its
Complaint herein on February 6, 1995, and plaintiff and defendant, 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 such issue;
And whereas, defendant has agreed to be bound by the provisions of
this Final Judgment pending its approval by the Court;
And whereas, prompt and certain divestiture is the essence of this
agreement, and defendant has represented to plaintiff that the
divestiture required below can and will be made and that defendant will
later raise no claims of hardship or difficulty as grounds for asking
the Court to modify any of the divestiture 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 defendant under Section 7 of the
Clayton Act, as amended (15 U.S.C. 18).
II
Definitions
As used in this Final Judgment:
A. ``TWA'' means Trans World Airlines, Inc., each of its
predecessors, successors, divisions, subsidiaries, and affiliates, each
person directly or indirectly, wholly or in part, owned or controlled
by it, or which owns or controls it, and each partnership or venture to
which any of them is a party, and each officer, director, employee,
attorney, agent, or other person acting for or on behalf of any of
them.
B. ``Midcoast'' means Midcoast Aviation, Inc., each of its
predecessors, successors, divisions, subsidiaries, and affiliates, and
each person directly or indirectly, wholly or in part, owned or
controlled by it, or which owns or controls it, and each partnership or
venture to which any of them is a party, and each officer, director,
employee, attorney, agent, or other person acting for or on behalf of
any of them.
C. ``Sabreliner'' means defendant Sabreliner Corporation, each of
its predecessors, successors, divisions, subsidiaries, and affiliates,
each person directly or indirectly, wholly or in part, owned or
controlled by it, or which owns or controls it, and each partnership or
venture to which any of them is a party, and each officer, director,
employee, attorney, agent, or other person acting for or on behalf of
any of them.
D. ``Sabreliner's Transient Fuel Service Business'' means the
following assets, owned or controlled by Sabreliner, that are or have
been used at Lambert Field to provide fuel and other services to
general aviation customers:
1. 5,000 square feet of ramp space located west of Hangar 6;
2. Office space (with associated office equipment), which includes
pilot's lounge/flight planning room and access to lobby area,
restrooms, conference facilities and canteen;
3. Space on the north side of Hangar 6 sufficient to park any
fueling trucks required by the purchaser; and
4. Non-discriminatory access to the Fuel Delivery Cabinet on the
west end of Sabreliner's fuel farm, the right to draw from Sabreliner's
jet fuel tanks at least 2500 gallons of jet fuel per day, and the right
to purchase that jet fuel directly from the fuel supplier from whom
Sabreliner obtains its fuel.
E. ``Sabreliner's Cargo and General Aviation Business'' means the
following assets, owned or controlled by Sabreliner, that are or have
been used at Lambert Field to provide fuel and other services to
general aviation and based cargo customers:
1. Sabreliner's entire leasehold interest in its tank farm, and all
improvements and assets used in the business, including five fuel
tanks, truck loading cabinet, and associated equipment;
2. All rolling stock, including the fuel trucks, deicing vehicle,
ramp tugs, auxiliary power unit and courtesy van;
3. Office space (with associated office equipment), including
pilot's lounge/flight planning room and access to lobby area,
restrooms, conference facilities and canteen; and
4. The entire ramp area around the west of hangers 6 and 7,
comprising approximately eleven (11) acres, subject to access easements
of any subtenants in Hangers 6 and 7.
F. ``Person'' means any natural person, corporation, association,
firm, partnership, or other business or legal entity.
G. ``Lambert Field'' means Lambert St. Louis International Airport.
III
Applicability
A. The provisions of this Final Judgment shall apply to the
defendant, to defendant's successors and assigns, to defendant's
subsidiaries, affiliates, directors, officers, managers, agents, and
employees, and to 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.
B. The provisions of Sections IV through VIII of this Final
Judgment shall be applicable only upon the consummation of the
acquisition of Midcoast by Sabreliner.
C. Defendant shall require, as a condition of the sale or other
disposition of all or substantially all of their assets or stock, or of
the assets required to be divested herein, that the acquiring party
agree to be bound by the provisions of this Final Judgment.
D. Nothing herein shall suggest that any portion of this Final
Judgment is or has been created for the benefit of any third party, and
nothing herein shall be construed to provide any rights to any third
party.
IV
Divestiture of Sabreliner's Transient Fuel Business
A. Defendant is hereby ordered and directed to divest, to an
eligible purchaser, all of its direct and indirect ownership and
control of Sabreliner's Transient Fuel Business or Sabreliner's Cargo
and General Aviation Business. Nothing contained herein shall preclude
Sabreliner from dealing with or contracting for services from the
divested entity in the ordinary course of business.
B. Divestiture of Sabreliner's leasehold interest in any of the
assets of Sabreliner's Transient Fuel Service [[Page 9401]] Business or
Sabreliner's Cargo and General Aviation Business may be by transfer of
the entire leasehold interest or by sublease. If divestiture of any or
all of the assets is by sublease, each such sublease shall be for the
entire term of Sabreliner's lease, including the same rights for
renewal Sabreliner has, and the sublease shall specify, for the entire
period of the sublease:
1. The price, or a formula for computing the price, for each and
every payment due from the purchaser to Sabreliner pursuant to the
sublease, including rent, and any uplift or other service charge for
the use of Sabreliner's fuel tanks; and
2. The terms and conditions under which Sabreliner may evict the
purchaser or exercise any other rights for breach of the sublease; and
3. That the airport authority must specifically approve any action
by Sabreliner to exercise any rights under the sublease against the
purchaser, unless such approval is arbitrarily and unreasonably
withheld in the event of a breach of the sublease by the purchaser, in
which case defendant must give a minimum of thirty (30) days notice to
plaintiff prior to exercising any rights against the purchaser.
C. If defendant has not accomplished the required divestiture prior
to May 1, 1995, plaintiff may, if its sole discretion, extend this time
period for an additional period of time not to exceed two months.
D. Defendant agrees to take all reasonable steps to accomplish
quickly said divestiture. In carrying out its obligation to divest the
Sabreliner's Transient Fuel Business, defendant may divest these
operations alone, or may divest along with these operations any other
assets of Sabreliner.
E. In accomplishing the divestiture ordered by this Final Judgment,
the defendant promptly shall make known in the United States and in
other major countries, by usual and customary means, the availability
of Sabreliner's Transient Fuel Business for sale as an ongoing
business. The defendant shall notify any person making an inquiry
regarding the possible purchase of this operation that the sale is
being made pursuant to this Final Judgment and provide such person with
a copy of the Final Judgment. The defendant shall also offer to furnish
to all bona fide prospective purchasers of Sabreliner's Transient Fuel
Business, subject to customary confidentiality assurances, all
pertinent information regarding Sabreliner's Cargo and General Aviation
Business, including Sabreliner's Transient Fuel Business except such
information subject to attorney-client privilege or attorney work
product privilege. Defendant shall make available such information to
the plaintiff at the same time that such information is made available
to any other person. Defendant shall permit prospective purchasers of
Sabreliner's Transient Fuel Business to have access to personnel at
Sabreliner's Cargo and General Aviation Business, including
Sabreliner's Transient Fuel Business, and to make such inspection of
physical facilities and any and all financial, operational, or other
documents and information as may be relevant to the sale required by
this Final Judgment.
F. Unless the plaintiff otherwise consents, divestiture under
Section IV.A., or by the trustee appointed pursuant to Section V, shall
be accomplished in such a way as to satisfy plaintiff, in its sole
discretion, that Sabreliner's Transient Fuel Business or Sabreliner's
Cargo and General Aviation Business can and will be operated by the
purchaser as a viable, ongoing business engaged in the provision of
fuel and other services to general aviation and cargo customers at
Lambert Field. Divestiture shall be made to a purchaser for whom it is
demonstrated to plaintiff's satisfaction that (1) the purchase is for
the purpose of competing effectively in the provision of fuel and other
services to general aviation customers at Lambert Field; (2) the
purchaser has the managerial, operational, and financial capability to
compete effectively in the provision of fuel and other services to
general aviation customers at Lambert Field; and (3) none of the terms
of any sublease between the purchaser and Sabreliner give Sabreliner
the ability artificially to raise the purchaser's costs, lower the
purchaser's efficiency, or otherwise interfere in the ability of the
purchaser to provide fuel and other services to general aviation
customers at Lambert Field. If the divestiture is of Sabreliner's
Transient Fuel Business, it must be demonstrated to plaintiff's
satisfaction that the purchaser can operate a transient fueling
business on a stand-alone basis with costs and efficiency comparable to
those achieved by Sabreliner's current integrated general aviation and
cargo business.
G. Except to the extent otherwise approved by plaintiff, any assets
divested pursuant to this Final Judgment shall be divested free and
clear of all mortgages, encumbrances and liens to Sabreliner or TWA.
V
Appointment of Trustee
A. If defendant has not accomplished the divestiture required by
Section IV of the Final Judgment by March 15, 1995, defendant shall
notify plaintiff of that fact. Within ten (10) days of that date, or
twenty (20) days prior to the expiration of any extension granted
pursuant to Section IV(B), whichever is later, plaintiff shall provide
defendant with written notice of the names and qualifications of not
more than two (2) nominees for the position of trustee for the required
divestiture. Defendant shall notify plaintiff within ten (10) days
thereafter whether either or both of such nominees are acceptable. If
either or both of such nominees are acceptable to defendant, plaintiff
shall notify the Court of the person upon whom the parties have agreed
and the Court shall appoint that person as the trustee. If neither of
such nominees is acceptable to defendant, they shall furnish to
plaintiff, within ten (10) days after plaintiff provides the names of
its nominees, written notice of the names and qualifications of not
more than two (2) nominees for the position of trustee for the required
divestiture. If either or both of such nominees are acceptable to
plaintiff, plaintiff shall notify the Court of the person upon whom the
parties have agreed and the Court shall appoint that person as the
trustee. If neither of such nominees is acceptable to plaintiff, it
shall furnish the Court the names and qualifications of its proposed
nominees and the names and qualifications of the nominees proposed by
defendant. The Court may hear the parties as to the qualifications of
the nominees and shall appoint one of the nominees as the trustee.
B. If defendant has not accomplished the divestiture required by
Section IV of this Final Judgment at the expiration of the time period
specified in Section IV(C),the appointment by the Court of the trustee
shall become effective. The trustee shall then take steps to effect
divestiture of Sabreliner's Transient Fuel Service Business. The
trustee shall have the right, in its sole discretion, to include in the
package of assets to be divested any or all of the assets of
Sabreliner's Cargo and General Aviation Business.
C. After the trustee's appointment has become effective, only the
trustee shall have the right to sell Sabreliner's Transient Fuel
Service Business and Sabreliner's General Aviation and Cargo Business.
The trustee shall have the power and authority to accomplish the
divestiture to a purchaser acceptable to plaintiff at such price and on
such terms [[Page 9402]] as are then obtainable upon a reasonable
effort by the trustee, subject to the provisions of Section VIII of
this Final Judgment, and shall have such other powers as this Court
shall deem appropriate. Defendant shall not object to a sale of
Sabreliner's Transient Fuel Service Business or any or all Sabreliner's
Cargo and General Aviation Business by the trustee on any grounds other
than the trustee's malfeasance. Any such objection by defendant must be
conveyed in writing to plaintiff and the trustee within fifteen (15)
days after the trustee has notified defendant of the proposed sale in
accordance with Section VIII of this Final Judgment.
D. The trustee shall serve at the cost and expense of defendant,
shall receive compensation based on a fee arrangement providing an
incentive based on the price and terms of the divestiture and the speed
with which it is accomplished, and shall serve on such other terms and
conditions as the Court may prescribe; provided, however, that the
trustee shall receive no compensation, nor incur any costs or expenses,
prior to the effective date of his or her appointment. The trustee
shall account for all monies derived from a sale of Sabreliner's Cargo
and General Aviation Business and all costs and expenses incurred in
connection therewith. After approval by the Court of the trustee's
accounting, including fees for its services, all remaining monies shall
be paid to defendant and the trust shall then be terminated.
E. Defendant shall take no action to interfere with or impede the
trustee's accomplishment of the divestiture of Sabreliner's Transient
Fuel Service Business or any or all of Sabreliner's Cargo and General
Aviation Business and shall use its best efforts to assist the trustee
in accomplishing the required divestiture. The trustee shall have full
and complete access to the personnel, books, records, and facilities of
Sabreliner's overall business, and defendant shall develop such
financial or other information relevant to Sabreliner's Cargo and
General Aviation Business.
F. After its appointment becomes effective, the trustee shall file
monthly reports with the parties and the Court setting forth the
trustee's efforts to accomplish divestiture of Sabreliner's Transient
Fuel Service Business or any or all of Sabreliner's Cargo and General
Aviation Business as contemplated 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
thirty (30) 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 ownership interest in Sabreliner's
Cargo and General Aviation Business, 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 these operations.
G. Within six months after its appointment has become effective, if
the trustee has not accomplished the divestiture required by Section VI
of this Final Judgment, 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; 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. The
trustee shall at the same time furnish such report to the parties, who
shall each have the right to be heard and to make additional
recommendations consistent with the purpose of the trust. The Court
shall thereafter enter such orders as it shall deem appropriate in
order to carry out the purpose of the trust, which shall, if necessary,
include augmenting the assets to be divested, and extending the trust
and the term of the trustee's appointment.
VI
Notification
Immediately following entry of a binding contract, contingent upon
compliance with the terms of this Final Judgment, to effect any
proposed divestiture pursuant to Sections IV or V of this Final
Judgment, defendant or the trustee, whichever is then responsible for
effecting the divestiture, shall notify plaintiff of the proposed
divestiture. If the trustee is responsible, it shall similarly notify
defendant. 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 desire to, acquire any ownership interest in the
business that is the subject of the binding contract, together with
full details of same. Within fifteen (15) days of receipt by plaintiff
of such notice, plaintiff may request additional information concerning
the proposed divestiture and the proposed purchaser. Defendant and/or
the trustee shall furnish any additional information requested within
twenty (20) days of the receipt of the request, unless the parties
shall otherwise agree. Within thirty (30) days after receipt of the
notice or within twenty (20) days after plaintiff has been provided the
additional information requested (including any additional information
requested of persons other than defendant or the trustee), whichever is
later, plaintiff shall provide written notice to defendant and the
trustee, if there is one, stating whether or not it objects to the
proposed divestiture. If plaintiff provides written notice to defendant
and/or the trustee that it does not object, then the divestiture may be
consummated, subject only to defendant's limited right to object to the
sale under the provisions in Sections VI(C). Absent written notice that
the plaintiff does not object to the proposed purchaser, a divestiture
proposed under Section IV shall not be consummated. Upon objection by
plaintiff, a divestiture proposed under Section V shall not be
consummated. Upon objection by plaintiff, or by defendant under the
priviso in Sections VI(C), a divestiture proposed under Section V shall
not be consummated unless approved by the Court.
VII
Affidavits
Upon filing of this Final Judgment and every thirty (30) days
thereafter until the divestiture has been completed or authority to
effect divestiture passes to the trustee pursuant to Section V of this
Final Judgment, defendant shall deliver to plaintiff an affidavit as to
the fact and manner of compliance with Sections IV and V of this Final
Judgment. Each such affidavit shall include 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 ownership interest in
Sabreliner's Transient Fuel Business or Sabreliner's Cargo and General
Aviation Business, and shall describe in detail each contact with any
such person during that period. Defendant shall maintain full records
of all efforts made to divest these operations.
VIII
Financing
With prior consent of the plaintiff, defendant may finance all or
any part of [[Page 9403]] any purchase made pursuant to Sections IV or
V of this Final Judgment.
IX
Preservation of Assets
Until the divestitures required by the Final Judgment have been
accomplished:
A. Defendant shall take all steps necessary to assure that
Sabreliner's Cargo and General Aviation Business will be maintained as
separate and independent economically viable, ongoing businesses with
Midcoast's assets required for the provision of Midcoast's transient
fuel services (including leaseholds, contracts, management, operations,
and books and records) separate, distinct and apart from those of
Sabreliner. The defendant shall use all reasonable efforts on behalf of
Sabreliners's Cargo and General Aviation Business to maintain and
increase sales of transient fuel and other services to general aviation
customers at Lambert Field, and otherwise maintain the business as a
viable and active competitor at Lambert Field.
B. The defendant shall not sell, lease, assign, transfer or
otherwise dispose of, or pledge as collateral for loans (except such
loans as are currently outstanding or replacements of substitutes
therefore), assets required to be divested pursuant to Sections IV or V
except that any component of such assets as is replaced in the ordinary
course of business with a newly purchased component may be sold or
otherwise disposed of, provided the newly purchased component is so
identified as a replacement component for one to be divested.
C. The defendant shall provide capital and provide and maintain
sufficient working capital to maintain Sabreliner's Cargo and General
Aviation Business, as viable, ongoing businesses consistent with the
requirements of Section IX(A).
D. The defendant shall preserve the assets required to be divested
pursuant to Section IV and V, except those replaced with newly acquired
assets in the ordinary course of business, in a state of repair equal
to their state of repair as of the date of this Final Judgment,
ordinary wear and tear excepted. Defendant shall preserve the
documents, books and records of Midcoast until the date of divestiture
of Sabreliner' Transient Fuel Business and shall preserve the
documents, books and records of Sabreliner's Cargo and General Aviation
Business until the date of divesture of that business.
E. Except in the ordinary course of business, or as is otherwise
consistent with the requirements of Section IX, the defendant shall
refrain from terminating or altering one or more current employment,
salary, or benefit agreements for one or more executive, managerial,
sales, marketing, engineering, or other technical personnel of
Sabreliner's Cargo and General Aviation Business, including its
Transient Fuel Business, and shall refrain from transferring any
employee so employed without the prior approval of plaintiff.
F. Defendant shall refrain from taking any action that would
jeopardize the sale of Sabreliner's Cargo and General Aviation
Business.
X
Compliance Inspection
For the purposes of determining or securing compliance with the
Final Judgment and subject to any legally recognized privilege, from
time to time:
A. Duly authorized representatives of the Department of Justice
shall, upon written request of the Attorney General or of the Assistant
Attorney General in charge of the Antitrust Division, and on reasonable
notice to defendant made to its principal office, be permitted:
1. Access during office hours of such defendant to inspect and copy
all books, ledgers, accounts, correspondence, memoranda, and other
records and documents in the possession or under the control of such
defendant, who may have counsel present, relating to any matters
contained in this Final Judgment; and
2. Subject to the reasonable convenience of such defendant and
without restraint or interference from it, to interview officers,
employees, and agents of such defendant, who may have counsel present,
regarding any such matters.
B. Upon the written request of the Attorney General or of the
Assistant Attorney General in charge of the Antitrust Division made to
defendant's principal office, such defendant shall submit such written
reports, under oath if requested, with respect 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 X shall be divulged by a representative of the Department
of Justice 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.
D. If at the time information or documents are furnished by
defendant to plaintiff, defendant represents and identifies 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 defendant marks each pertinent page of such
material, ``Subject to claim of protection under Rule 26(c)(7) of the
Federal Rules of Civil Procedure,'' then ten (10) days notice shall be
given by plaintiff to defendant prior to divulging such material in any
legal proceeding (other than a grand jury proceeding).
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
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:
----------------------------------------------------------------------
United States District Judge
Competitive Impact Statement
United States of America, Plaintiff, v. Sabreliner Corporation,
Defendant.
Case Number 1:95CV00241
Judge: Stanley Sporkin
Deck Type: Antitrust
Date Stamp: 02/06/95
Pursuant to Section 2(b) of the Antitrust Procedures and Penalties
Act (``APPA''), 15 U.S.C. (b)-(h), the United States of America files
this Competitive Impact Statement relating to the proposed Final
Judgment submitted for entry with the consent of Sabreliner Corporation
in this civil antitrust proceeding.
I
Nature and Purpose of the Proceeding
On February 6, 1995, the United States filed a Complaint alleging
that the [[Page 9404]] acquisition of Midcoast Aviation, Inc.
(hereinafter ``Midcoast'') by Sabreliner Corporation, (hereinafter
``Sabreliner'') was a violation of Section 7 of the Clayton Act (15
U.S.C. 18). The Complaint alleges that the effect of the merger may be
substantially to lessen competition for the sale of jet fuel by fixed
base operators (``FBOs'') to general aviation aircraft at St. Louis-
Lambert International Airport. Sabreliner and Midcoast are the only two
providers of jet fuel for transient general aviation customers at
Lambert Field.
On February 6, 1995, the United States and defendant also filed a
Stipulation by which they consented to the entry of a proposed Final
Judgment designed to eliminate the anticompetitive effects of the
merger. Under the proposed Final Judgment, as explained more fully
below, Sabreliner would be required to sell or assign, by May 1, 1995,
certain assets and leasehold interests. If it should fail to do so, a
trustee appointed by the Court would be empowered to divest these
assets.
The United States and Sabreliner have agreed that the proposed
Final Judgment may be entered after compliance with the APPA. Entry of
the proposed Final Judgment will terminate the action, except that the
Court will retain jurisdiction to construe, modify and enforce the
Final Judgment, and to punish violations of the Final Judgment.
II
Events Giving Rise to the Alleged Violation
On November 2, 1994, Sabreliner, Midcoast, and Trans World
Airlines, Inc. (the parent of Midcoast) entered into an agreement under
which Sabreliner would acquire all of the stock of Midcoast for
approximately $7.2 million.
Sabreliner, engaged primarily in the business of repairing and
overhauling jet aircraft, also operates a FBO service at Lambert Field
in St. Louis. Sabreliner's total revenues for fiscal 1994 were over
$100 million.
Midcoast has FBO facilities at Adams Field in Little Rock, AK, Bi-
State Parks in Cahokia, IL, and St. Louis-Lambert in St. Louis, MO.
From these facilities, Midcoast performs repairs, maintenance, and
overhauls in addition to other FBO services, including jet fueling.
Midcoast had revenues of $41 million in 1993.
FBOs provide aircraft terminaling services to general aviation
aircraft customers, typically charter operators or other private
operators that provide transportation for business executives. These
services principally involve aircraft fueling services and maintenance
services, such as aircraft cleaning and de-icing, and also the
provision of such facilities as lounges for passengers and flight
crews, ground transportation, and canteens. Last year, general aviation
customers purchased around $1 billion of jet fuel from FBOs nationwide.
General aviation customers flying into airports other than the
airport where they are based are called ``transients.'' If transient
general aviation customers need to purchase fuel away from home, they
must purchase fuel from an FBO.
Pilots of corporate and charter jets select the airports to which
they will fly based on where their passengers need to go, or where
their passengers need to be picked up. The pilots will then choose then
FBO at that airport offering the most favorable combination of fuel
prices and services. There are no alternative sources to which the
pilots would switch to obtain jet fuel if the FBOs raise prices.
Although Lambert Field is one of several airports in the St. Louis
area servicing general aviation aircraft, Lambert is the only airport
in St. Louis that provides commercial scheduled domestic and
international service. In addition, Lambert offers close proximity to
downtown St. Louis. Both of these features make Lambert attractive to
general aviation passengers.
Because of the large volume of commercial traffic served by
Lambert, however, the airport is frequently very congested. To avoid
this congestion, general aviation pilots prefer to use other airports
in the St. Louis area, which accommodate primarily general aviation
traffic. General aviation aircraft usually will fly into Lambert only
if it is necessary to satisfy a passenger's travel requirements. Those
pilots that select Lambert as their destination airport, therefore, are
not likely to change their flight plan to obtain lower fuel prices at
other airports.
The Complaint alleges that the sale of jet fuel to transient
general aviation customers is a relevant product market for antitrust
purposes. The Complaint further alleges that Lambert-St. Louis
International Airport is a relevant geographic market within the
meaning of Section 7 of the Clayton Act. The Complaint refers to the
relevant market as the ``Lambert transient general aviation jet fuel
market.''
Sabreliner and Midcoast have been the only two FBOs providing, and
capable of providing in the future, fueling services to general
aviation aircraft at Lambert Field. Based on jet fuel sales revenue,
Sabreliner has 15% of that market and Midcoast has 85%. Transient
general aviation customers have benefited from competition between
these two firms, receiving lower jet fuel prices and improved FBO
services. As a result of its acquisition of Midcoast, Sabreliner now
has a monopoly of the Lambert transient general aviation jet fuel
market, which, absent relief, will likely cause general aviation
customers to pay higher prices for jet fuel and received diminished
services.
The St. Louis Airport Authority has committed to expanding the
amount of space available at Lambert for scheduled commercial traffic
and is unlikely to allocate more space to accommodate another FBO in
the near future. Therefore, an increase in the price of jet fuel to
transient general aviation customers will not be defeated by a new
entrant.
III
Explanation of The Proposed Final Judgment
The United States brought this action because the effect of the
acquisition of Midcoast by Sabreliner may be substantially to lessen
competition, in violation of Section 7 of the Clayton Act, in the
Lambert transient general aviation jet fuel market. The risk to
competition posed by this acquisition, however, would be eliminated if
the assets and leases currently held by Sabreliner to operate its
Lambert transient general aviation fueling business were sold and
assigned to a purchaser that could operate them as an active,
independent and financially viable competitor. To this end, the
provisions of the proposed Final Judgment are designed to accomplish
the sale and assignment of certain assets and leaseholds to such a
purchaser and thereby prevent the anticompetitive effects of the
proposed acquisition.
Section IV of the proposed Final Judgment requires defendant
Sabreliner, by May 1, 1995, to divest either its Transient Fuel Service
Business as defined in Section II. D, or its Cargo and General Aviation
Business, as defined in Section II. E of the proposed Final Judgment.
Divestiture of one of the two groups of assets and leaseholds will cure
the potential anticompetitive consequences of Sabreliner's acquisition
of Midcoast.
The first group, Sabreliner's Transient General Aviation Business,
includes the assets and leases a prospective purchaser would need to
effectively operate a stand-alone transient general aviation fueling
business. Should a purchaser elect to acquire and operate
[[Page 9405]] these assets, the competition lost through Sabreliner's
acquisition of Midcoast would be restored. However, Sabreliner's
current revenue stream from its transient general aviation fueling
business may be too small to attract, or viably support, a satisfactory
purchaser. Accordingly, the second group, Cargo and General Aviation
Business, is a broader package that includes assets that Sabreliner
currently operates to provide fuel and other services to both cargo and
general aviation aircraft at Lambert Field.
Under the proposed Final Judgment, Sabreliner must take all
reasonable steps necessary to accomplish quickly the divestiture of one
of the two specified groups of assets, and shall cooperate with bona
fide prospective purchasers by supplying all information relevant to
the proposed sale. Should Sabreliner fail to complete its divestiture
by May 1, 1995, the Court will appoint, pursuant to Section V, a
trustee to accomplish the divestiture. The United States will have the
discretion to delay the appointment of the trustee for up to an
additional two months should it appear that the assets can be sold in
the extended time period.
Following the trustee's appointment, only the trustee will have the
right to sell the divestiture assets, and defendant Sabreliner will be
required to pay for all of the trustee's sale-related expenses. It will
be in the sole discretion of the trustee to sell either package of
assets, or any combination of those assets, necessary to accomplish a
timely divestiture of Sabreliner's Transient Fuel Service Business.
Section VI of the proposed Final Judgment would assure the United
States an opportunity to review any proposed sale, whether by
Sabreliner or by the trustee, before it occurs. Under this provision,
the United States is entitled to receive complete information regarding
any proposed sale or any prospective purchaser prior to consummation.
Upon objection by the United States to a sale of the divestiture assets
by the defendant Sabreliner, a proposed divestiture may not be
completed. Should the United States object to a sale of the divested
assets by the trustee, that sale shall not be consummated unless
approved by the Court.
Pursuant to Section V.G., should the trustee not accomplish the
divestiture within six months of appointment, the trustee and the
parties will make recommendations to the Court, which shall enter such
orders as it deems appropriate to carry out the purpose of the trust,
which may include extending the trust or the term of the trustee's
appointment.
Under Section IX of the proposed Final Judgment, defendant
Sabreliner must take certain steps to ensure that, until the required
divestiture has been completed, the divestiture assets--Sabreliner's
cargo and general aviation business--will be maintained as a separate,
ongoing, viable business and kept distinct from Midcoast's assets and
facilities at Lambert. Until such divestiture, Sabreliner must also
continue to maintain and operate the business as a viable, independent
competitor at Lambert Field, using all reasonable efforts to maintain
and increase transient fuel sales. Sabreliner must maintain the
business, so that it continues to be salable, including maintaining all
records, loans, and personnel necessary for its operation.
Section X requires the defendant to make available, upon request,
the business records and the personnel of its business. This provision
allows the United States to inspect and ensure that the defendant is
complying with the requirements of the proposed Final Judgment. Section
XII of the proposed Final Judgment provides that it will expire on the
tenth anniversary of its entry by the Court.
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 defendant.
V
Procedure for Commenting on the Proposed Final Judgment
The United States and defendant have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least 60 days preceding the
effective date of the proposed Final Judgment within which any person
may submit to the United States written 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 the comments,
determine whether it should withdraw its consent, and respond to
comments. 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: Roger W. Fones, Chief,
Transportation, Energy & Agriculture Section, Antitrust Division,
Judiciary Center Building, 555 4th Street, N.W., Room 9104, Washington,
DC 20001.
VI
Altneratives to the Proposed Final Judgment
The proposed Final Judgment requires that the divestiture assets be
sold to a purchaser with the capability and present intent of operating
them as part of a viable, ongoing business capable of providing
transient general aviation fueling services at Lambert Field. Thus,
compliance with the proposed Final Judgment and the completion of the
sale required by the Judgment should resolve the competitive concerns
raised by the acquisition.
Litigation is, of course, always an alternative to a consent decree
in a Section 7 case. The United States rejected this alternative
because the sale required under the proposed Final Judgment should
prevent the acquisition by Sabreliner of Midcoast from having a
significant anticompetitive effect in the relevant market alleged.
The United States is satisfied that the proposed Final Judgment
fully resolves the anticompetitive effects of the proposed merger
alleged in the Complaint. Although the proposed Final Judgment may not
be entered until the criteria established by the APPA (15 U.S.C.
16(b)(-(h)) have been satisfied, the public will benefit immediately
from the safeguards in the proposed Final Judgment because the
defendant has stipulated to comply with the terms of the Judgment
pending its entry by the Court.
VII
Determinative Materials and Documents
There are no materials or documents that the United States
considered to be determinative in formulating this proposed Final
Judgment. Accordingly, [[Page 9406]] none are being filed with this
Competitive Impact Statement.
Dated: February 6, 1995.
Respectfully submitted.
Roger W. Fones,
Chief.
Donna N. Kooperstein,
Assistant Chief.
Jonathan D. Lee,
Attorney.
Certificate of Service
I hereby certify that I am an attorney for the United States in
this action, and have caused a true and correct copy of the foregoing
Complaint, Stipulation, proposed Final Judgment, and Competitive Impact
Statement, to be served by first class mail and February 6, 1995 for
the defendant at the address below:
John Gillick,
Winthrop, Stimson, Putnam & Roberts.
For defendant Sabreliner Corporation.
Jonathan D. Lee,
Attorney in Charge.
[FR Doc. 95-3889 Filed 2-16-95; 8:45 am]
BILLING CODE 4410-01-M