[Federal Register Volume 60, Number 48 (Monday, March 13, 1995)]
[Notices]
[Pages 13452-13454]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6045]
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
United States, State of Florida and State of Maryland, v.
Browning Ferris Industries, Inc.; Public Comments and Response on
Proposed Final Judgment
Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C.
16(c)-(h), the United States publishes below the comments received on
the proposed Final Judgment in United States, State of Florida and
State of Maryland v. Browning Ferris Industries, Inc., Civil Action No.
94-2588, filed in the United States District Court for the District of
Columbia, together with the United States' responses to those comments.
Copies of the comments and responses are available for inspection
and copying in room 3233 of the Antitrust Division, U.S. Department of
Justice, 10th Street and Pennsylvania Avenue, N.W., Washington, D.C.
and for inspection and copying at the Office of the Clerk of the United
States District Court for the District of Columbia, United States
Courthouse, 333 Constitution Avenue, N.W., Washington, D.C.
Constance K. Robinson,
Director of Operations.
Comments on the Proposed Final Judgment and the United States'
Responses to the Comments
United States of America, State of Florida, by and through its
Attorney General Robert A. Butterworth, and State of Maryland, by
and through its Attorney General J. Joseph Curran, Jr., Plaintiffs
vs. Browning-Ferris Industries, Inc., Defendant. Civil Action No.:
1:94CV02588.
Pursuant to the requirements of the Antitrust Procedures and
Penalties Act (``APPA''), 15 U.S.C. 16(b)-(h), the United States
hereby files the attached comments on the proposed Final Judgment in
the above-captioned civil antitrust proceeding, together with the
United States' responses to those comments.
This action was commenced on December 1, 1994, when the United
States, the State of Maryland (``Maryland'') and the State of
Florida (``Florida'') filed a Complaint that the acquisition by
Browning-Ferris Industries, Inc. (``BFI'') of the ordinary voting
shares of Attwoods plc (``Attwoods'') violated Section 7 of the
Clayton Act because the effects of the acquisition may be
substantially to lessen competition in interstate trade and commerce
for small containerized hauling services in the following relevant
markets: Baltimore, MD; Broward County, FL; Chester County, PA; Clay
County, FL; Duval County, FL; Polk County, FL; the Southern Eastern
Shore of Maryland; Sussex County, DE; and Western Maryland.
At the same time the United States, Maryland, and Florida filed
a proposed Final Judgment, a Stipulation signed by the parties
stipulating to entry of the Final Judgment, and a Hold Separate
Stipulation and Order. Shortly thereafter the United States filed a
Competitive Impact Statement. The proposed Final Judgment requires
BFI to divest certain Attwoods' assets in Chester County, PA; Clay
County, FL; Duval County, FL; the Southern Eastern Shore of
Maryland; Sussex County, DE; and Western Maryland. It also requires
BFI to offer new, less restrictive contracts to its small
containerized hauling customers in Broward County, FL; Polk County,
FL; and the greater Baltimore, MD metropolitan area. The Hold
Separate Stipulation and Order requires BFI to preserve, hold, and
continue to operate the assets that may be divested under the Final
Judgment as separate ongoing businesses. The Stipulation provides
that the proposed Final Judgment may be entered by the Court after
the completion of the procedures required by the APPA.
The APPA requires a sixty-day period for the submission of
public comments on the proposed Final Judgment, 15 U.S.C. 16(b). In
this case, the sixty-day comment period commenced on December 15,
1994 and terminated on February 13, 1995. During this period, the
United States received two comments on the proposed Final Judgment.
The United States considered the comments and sent written responses
to the commenting parties.\1\
\1\The Comments and Responses are attached as Exhibit A.
---------------------------------------------------------------------------
Pursuant to 15 U.S.C. 16(e), the proposed Final Judgment can be
entered only after the Court determines that the Judgment is in the
public interest. The focus of this determination is whether the
relief provided by the proposal Final Judgment is adequate to remedy
the antitrust violation alleged in the Complaint.\2\
\2\United States v. Bechtel Corp., 1979-1 Trade Cases (CCH)
62,430 (N.D. Cal. 1979), aff'd, 648 F.2d 660, 665 (9th Cir. 1981),
cert. denied, 454 U.S. 1083 (1982).
---------------------------------------------------------------------------
Both comments expressed concern about the contracts used by BFI
with its small containerized hauling customers. One of the comments
expressed concern that the contract currently in use by BFI in the
greater Baltimore metropolitan area is one-sided. The other comment
stated that the new contracts required to be used by BFI in Broward
County, FL under the proposed Final Judgment were being used by BFI
as marketing tools to the disadvantage of small haulers. That
comment suggested that BFI should be required to cancel all its
existing contracts immediately and implement the new contracts all
at one time. The comment went on to suggest that the combination of
BFI and Attwoods' municipal franchises would permit BFI to subsidize
cheaper prices in the small containerized hauling service market to
the detriment of other haulers.
The United States explained in its responses to these comments
that, in the greater Baltimore area, the concern about BFI's use of
restrictive customer contracts has been expressly rectified by the
proposed Final Judgment. BFI is required to use less restrictive
customer contracts that do not have the effects complained of in the
comment. The Department also explained that, in Broward County, FL,
BFI was being required to phase in the new contracts rapidly--within
one year. The proposed Final Judgment requires that the new
contracts be made available immediately to all new customers and all
customers signing new contracts. A one year period to convert all
other customers seemed reasonable in order to avoid unnecessary
confusion and the probable higher cost of immediately converting all
customers to the new contract. Finally, the Department explained
that using franchised business, in which municipal entities solicit
bids and award contracts to serve consumers within their boundaries,
to subsidize the small containerized hauling market would likely
occur only if bidding for franchises is not competitive. The
Department was not persuaded, given the number of actual and
potential bidders for municipal franchises in the Florida markets,
that the acquisition raised any concerns in the market for bidding
on municipal franchises.
After careful consideration of the comments, the United States
continues to believe that, for the reasons stated in the responses
to the comments and in the Competitive Impact Statement, the
proposed Final Judgment would be adequate to remedy the risks to
competition presented by the proposed acquisition and, therefore,
the proposed Final Judgment is in the public interest.
After the comments and responses have been published in the
Federal Register, pursuant to 15 U.S.C. 16(d) of the APPA, the
United States will move this Court for entry of the proposed Final
Judgment.
Dated: March 2, 1995.
Respectfully submitted,
Nancy H. McMillen,
Peter H. Goldberg,
Eva Almirantearena,
Attorneys, Antitrust Division, Department of Justice.
Eastern Trans-Waste of Maryland, Inc.
December 15, 1994.
Anthony V. Nanni,
Chief, Litigation I Section, Antitrust Division, U.S. Dept. of
Justice, 1401 H Street NW., Suite 4000, Washington, DC 20530
Re: BFI's Settlement
Dear Mr. Nanni: As I am sure you are well aware the matter of
EWI's takeover by BFI is of grave concern. I am an owner of a small
women-owned refuse business and I am writing this letter to voice my
awareness regarding various unethical procedures being practiced by
big business. Small business concerns are being gobbled up by big
business. This development should alert all interested in economic
fairplay, because these unfair and illegal practices can lead to
[[Page 13453]] monopoly control and higher prices for the consumer.
Two such deceitful practices that I would like to bring to your
attention are BFI's attempts to restrain trade with their one-sided
contracts and their new attempt to gain control by backing a small-
disadvantaged refuse company.
Specifically, Browning-Ferris regularly restrains trade by
having their customers sign one-sided refuse service agreements.
Once the customer gets into these deceptive agreements it seems
impossible to get out.
Exhibit A
December 6, 1994.
Basically, the contract states that in order to terminate
service you have to give them sixty day written notice (Certified
Mail) before end of contract date. However, if you do not give this
notice before the sixty day period the contract means the agreement
is automatically renewed for three years. Being that most customers
do not anticipate a formidable increase, the notification period
usually passes unnoticed.
So, consequently BFI waits for the sixty days to pass and then
proceeds to inform the customer the service price will increase. The
increase is usually substantially higher than the original contract
price and when the customer tries to seek a more competitive price
BFI threatens to sue for the remainder of the contract. Although
there is a contract, it is unfair and deceptive not allowing the
customer any recourse action once the price increase is established.
Under these circumstances the customer is able to void the contract
due to deceitful terms, but the majority of the customers are
ignorant to this fact. To illustrate this matter Fleet Maintenance,
a small business located in Clinton, Maryland, was engaged in a
contract with BFI and the price was considerably raised. Fleet
proceeded to search for a more competitive price, so they contacted
my company, Eastern Trans-Waste (ETW). ETW quoted a price that was
fifty percent lower than BFI's price. Consequently, Fleet informed
BFI that they would be cancelling service and if they didn't like it
they would have to sue them. However, BFI didn't attempt to sue,
instead they lowered the price of service, but only to drive out the
competitor. In the majority of similar cases customers are
intimidated by the contract and feel caught in a legal trap, which
results lead to accepting the higher price. This depicts how trade
is restrained by not allowing customers to shop for preferable
prices, which seriously demeans our beliefs that we life in a fair
and competitive society.
The other method that reflects the current situation would be
BFI's attempt to gain control by backing a small-disadvantaged
refuse business. Bethesda Naval Hospital recently put out to bid a
recycling job which was offered only to small disadvantaged
concerns. Due to this fact only one company submitted a bid.
Consequently the contract was awarded to Heritage Recyclers; at an
exorbitant price for the scope of the contract. Needless to say BFI
has furnished all the equipment on this job with their name on said
equipment and is performing the services.
As a result BFI has been gaining a larger market share by
utilizing a variety of unfair and unethical tactics. All of the
methods they employ undermine the long-term interests of small
business in the refuse field. Therefore, you must see how this
takeover of EWI is of crucial importance to the small business
owner.
Although I have been concentrating on BFI and their unethical
practices, I would like to point out that Waste Management also
participates in these same methods that undermine the long-term
interests of small business. Whereas, ETW is only one small business
voicing this complaint there are others who have had business taken
from them by big business and would be willing to reveal the
scandalous procedures that were utilized.
Knowing that you are a busy person I would like to thank you for
this opportunity to express my feelings on this matter and I look
forward to a response.
Sincerely,
Kimberly A. Robb,
President, Eastern Trans-Waste of Maryland, Inc.
Department of Justice, Antitrust Division
City Center Building, 1401 H Street, NW., Washington, DC 20530
March 1, 1995.
AVN: NHM
60-4953-0059
Kimberly A. Robb,
President, Eastern Trans-Waste of Maryland, Inc., 1402 Richie
Marlboro Road, Capitol Heights, Maryland 20743
Re: United States V. Browning-Ferris Industries, Inc.; Civ. Action
No.: 1:94CV02588 (D.D.C. Dec. 1, 1994)
Dear Ms. Robb: This letter responds to your letter dated
December 15, 1994 commenting on the proposed Final Judgment in the
above-referenced civil antitrust case, which challenges the
acquisition of the assets of Attwoods plc (``Attwoods'') by
Browning-Ferris Industries, Inc. (``BFI''). The Complaint alleges
that the acquisition, as originally structured, violated Section 7
of the Clayton Act, as amended, 15 U.S.C. Sec. 18, because its
effects may be substantially to lessen competition in small
containerized hauling services in the following relevant markets:
Baltimore, MD; Broward County, FL; Chester County, PA; Clay County,
FL; Duval County, FL; Polk County, FL; the Southern Eastern Shore of
Maryland; Sussex County, DE; and Western Maryland. Under the
proposed Final Judgment, BFI would be required to divest Attwoods'
assets in Chester County, PA; Clay County, FL; Duval County, FL; the
Southern Eastern Shore of Maryland; Sussex County, DE; and Western
Maryland. BFI would also be required to offer new, less restrictive
contracts to its small containerized hauling customers in Broward
County, FL; Polk County, FL; and the greater Baltimore, MD
metropolitan area.
You expressed concern that BFI regularly restrains trade by
having their customers sign one-sided refuse service agreements. You
note that once the customer signs one of these agreements ``it seems
impossible to get out.'' Letter at p. 1. You specifically mention a
provision requiring the customer to give BFI written notice 60 days
or more before the end of the contract and that if this date is
missed, the agreement is automatically renewed for three years. You
further state that, once the contract is renewed, BFI increases its
price to the customer and threatens to sue the customer if the
customer tries to seek a more competitive price.
The Department believes the proposed Final Judgment eliminates
the concerns expressed in your letter. Specifically, Parts VIII A
and B of the proposed Final Judgment require BFI to offer contracts
to small containerized hauling customers in your area\1\ that make
it considerably easier for a customer to benefit from price
competition for that customer's business. The initial term of the
new contract is only one year (instead of the three year current
term). The renewal term is only one year, instead of three. The
customer can give notice much later under the new contract (up to 30
days from the end of the contract term rather than prior to 60 days
from the end of the term), making it more likely the customer will
have time to terminate the contract should it receive an attractive
offer from a competitor. Furthermore, the liquidated damages
provision of BFI's contract has been substantially decreased from
six times the customer's average monthly charges. Under the proposed
Final Judgment, customers may terminate the contract during their
first 10 months as a BFI customer by paying only two times its prior
average monthly charges and, after 10 months, an amount equal to one
month's average charges. The Department believes these changes
reduce a substantial barrier to entry into small containerized
hauling service and will increase the likelihood that the customer
will not '`feel caught in a legal trap'' (letter at p. 2).
\1\The area in Maryland affected by this portion of the proposed
Final Judgment is Anne Arundel County, Baltimore City, Baltimore
County, Calvert County, Carroll County, Harford County, Howard
County, Montgomery County and Prince George's County.
---------------------------------------------------------------------------
Your letter expresses a second concern. You appear to describe a
situation in which a small business set-aside bid was performed by
BFI, rather than the small business that was awarded the bid. The
acquisition that is the subject matter of this complaint and
proposed Final Judgment has no effect on the alleged conduct you
describe. This is not the type of matter that is subject to being
remedied as part of a proposed acquisition and does not appear to be
a matter within the jurisdiction of the Antitrust Division. The
Department does appreciate your interest in enforcing the antitrust
laws and any information relevant to that enforcement in the
appropriate forum is welcome.
We appreciate you bringing your concerns to our attention, and
hope that this information will help to alleviate them. Final
Judgment would adequately safeguard competition for small
containerized hauling service in the markets alleged in the
complaint. Pursuant to the Antitrust Procedures and Penalties Act, a
copy of your letter and this response will be published in the
Federal Register and filed with the Court.
[[Page 13454]] Sincerely yours,
Anthony V. Nanni,
Chief, Litigation I Section.
Coastal Carting Limited, Inc.
Garbage and Trash Removal, 2316 S.W. 56th Terrace, West Hollywood,
Florida 33021
February 8, 1995.
Anthony V. Nanni,
Chief, Litigation One Section, Anti-Trust Division, United States
Department of Justice, 1401 H Street, NW., Suite 4000, Washington,
DC 20530
Re: Browning-Ferris Industries, Acquisition of Attwoods PLC, Civil
action No.: 94-2588, United States of America, State of Florida, and
State of Maryland vs. Browning-Ferris Industries, Inc., United
States District Court for the District of Columbia
To Whom It May Concern: I am writing because I am very concerned
about the acquisition of Attwoods by Browning-Ferris Industries and
its effect upon my business.
Finally, BFI has utilized the Contract that as attached Exhibit
``B'' of the proposed Final Judgment as a marketing tool to
discredit the smaller haulers. BFI is out in the market place
telling the customer if he is not happy with the service provided by
BFI, they can terminate the contract with minimum cost to the
customer.
My suggestion is to terminate all the existing agreements
immediately and then have BFI compete with us with them using the
new Contract.
Finally, BFI will be able to subsidize their competitive
commercial work by the monies made on the ``combined'' franchises of
BFI and Attwoods allowing BFI to subsidize competitive prices,
thereby, keeping the small hauler from competing in the market place
where they can compete.
Once again, I am concerned about the effect this transaction
will have on the market place and my business. Please feel free to
contact me at your earliest convenience regarding these issues and I
hope you will strongly consider my concerns.
Very truly yours,
Frank D'Agostino,
President, Coastal Carting Ltd., Inc.
Department of Justice Antitrust Division
City Center Building, 1401 H Street, NW., Washington, DC 20530
March 1, 1995.
AVN: NHM
60-4953-0059
Frank D'Agostino,
President,
Coastal Carting Limited, Inc.,
2316 SW. 56th Terrace,
West Hollywood, Florida 33021
Re: United States v. Browning-Ferris Industries, Inc.; Civ. Action
No.: 1:94CV02588 (D.D.C. Dec. 1, 1994)
Dear Mr. D'Agostino: This letter responds to your letter dated
February 8, 1995 commenting on the proposed Final Judgment in the
above-referenced civil antitrust case, which challenges the
acquisition of the assets of Attwoods plc (``Attwoods'') by
Browning-Ferris Industries, Inc. (``BFI''). The Complaint alleges
that the acquisition, as originally structured, violated Section 7
of the Clayton Act, as amended, 15 U.S.C. Sec. 18, because its
effects may be substantially to lessen competition in small
containerized hauling services in the following relevant markets:
Baltimore, MD; Broward County, FL; Chester County, PA; Clay County,
FL; Duval County, FL; Polk County, FL; the Southern Eastern Shore of
Maryland; Sussex County, DE; and Western Maryland. Under the
proposed Final Judgment, BFI would be required to divest Attwoods'
assets in Chester County, PA; Clay County, FL; Duval County, FL; the
Southern Eastern Shore of Maryland; Sussex County, DE; and Western
Maryland. BFI would also be required to offer new, less restrictive
contracts to its small containerized hauling customers in Broward
County, FL; Polk County, FL; and the greater Baltimore, MD
metropolitan area.
Your letter expresses concern that BFI is using the less
restrictive contracts the proposed Final Judgment requires it to use
in Broward County, FL as a marketing tool to discredit the smaller
haulers. You suggest that BFI should be required immediately to
terminate all of its existing, more restrictive contracts, and
compete using only the new contract. The Department considered
requiring BFI to terminate all existing contracts immediately and to
switch all of its customers to the new contract at once. The
Department believed that this would result in much confusion and
potentially high cost. Part VIII D of the proposed Final Judgment
requires BFI to offer the new contract to all new customers and all
customers that sign contracts effective beginning on the date BFI
acquires a majority of the Attwoods' ordinary shares. That paragraph
also requires that BFI offer the new contract to all other customers
by December 1, 1995. As a result, BFI is required to offer the new
contract to all of its Broward County customers within one year of
the filing of the Complaint and proposed Final Judgment. The
Department believes that this rapid phase-in of the contracts will
enhance competition by getting the contracts into use quickly, but
without the confusion and cost of an immediate switch of all
customers to the new contract.
You also state that you are concerned that BFI will be able to
subsidize their competitive commercial work through monies obtained
from franchises previously controlled by Attwoods. The Department
understands you to be referring to franchises for residential (and
sometimes residential and commercial) solid waste hauling
periodically put up for bid by municipal authorities.
Your concern appears to be that combining Attwoods' franchises
with those already controlled by BFI will enable BFI to offer lower
prices to its commercial small containerized hauling customers,
undercutting your ability to compete with BFI in the commercial
small containerized hauling market. This assumes that BFI will be
able to obtain supracompetitive profits from the franchises to
undercut other firms in the commercial small containerized hauling
market. This subsidization could only happen if the bidding for
franchises is not competitive. The Department is not aware of any
evidence that the market for bidding on franchises in your area is
not competitive.
While we understand your concerns, we believe that the proposed
Final Judgment would adequately safeguard competition for small
containerized hauling service in the markets alleged in the
Complaint. Pursuant to the Antitrust Procedures and Penalties Act, a
copy of your letter and this response will be published in the
Federal Register and filed with the Court.
Sincerely yours,
Anthony V. Nanni,
Chief, Litigation I Section.
Certificate of Service
I hereby certify that on this date I have caused to be served by
first class mail, postage prepaid, a copy of the foregoing Comments
on the Proposed Final Judgment and the United States' Responses to
the Comments upon the following persons, counsel for defendant in
the matter of United States of America v. Browning-Ferris
Industries, Inc.:
Rufus Wallingford, Esquire, Executive Vice President and General
Counsel, 757 North Eldridge Street, Houston, Texas 77079, (713) 870-
7670
Martha J. Talley, DC Bar No. 246330, Dewey Ballantine, 1775
Pennsylvania Ave. NW., Washington, DC 20006, (202) 862-1014
Dated: March 2, 1995.
Nancy H. McMillen,
Attorney, Litigation I Section, Antitrust Division, Department of
Justice.
[FR Doc. 95-6045 Filed 3-10-95; 8:45 am]
BILLING CODE 4410-01-M