[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]



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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.
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    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).
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    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.
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    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