[Federal Register Volume 60, Number 103 (Tuesday, May 30, 1995)]
[Notices]
[Pages 28168-28177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12561]



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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Topa Equities (V.I.), Ltd.; Public Comments and 
Response on Proposed Final Judgment

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b)-(h), the United States publishes below the comments received on 
the proposed Final Judgment in United States v. Topa Equities (V.I.), 
Ltd, Civil Action No. 1994-179, United States District Court for the 
District of the Virgin Islands St. Thomas/St. John Division, together 
with the response of the United States to the comments.
    Copies of the response and the public comments are available on 
request for inspection and copying in room 3233 of the Antitrust 
Division, U.S. Department of Justice, Tenth Street and Pennsylvania 
Avenue, NW, Washington, DC 20530, and for inspection at the Office of 
the Clerk of the United States District Court for the District of the 
Virgin Islands, United States Courthouse, Federal Building and U.S. 
Courthouse, 5500 Veterans Drive, St. Thomas, United States Virgin 
Islands 00802.
Rebecca P. Dick,
Acting Deputy Director of Operations, Antitrust Division.

United States' Response to Public Comments

[Civil No: 1994-179]

Introduction

    Pursuant to section 2(d) of the Antitrust Procedures and Penalties 
Act (``APPA''), 15 U.S.C. 16(d), the United States responds to public 
comments on the proposed Final Judgment submitted for entry in this 
civil antitrust proceeding. [[Page 28169]] 
    This action began on December 7, 1994, when the United States filed 
a Complaint alleging that Topa Equities (V.I.), Ltd. (hereinafter 
``Topa'') had violated section 3 of the Sherman Act (15 U.S.C. 3). The 
Complaint alleges that through a series of exclusive distribution 
agreements with all major suppliers of distilled spirits, Topa holds a 
monopoly on the wholesale distribution in the Virgin Islands of almost 
every major brand of distilled spirits. The Complaint further alleges 
that these exclusive distribution rights, taken together, are contracts 
in restraint of trade within the meaning of the Sherman Act.
    Simultaneously with the filing of the Complaint, the United States 
filed a proposed Final Judgment, a Competitive Impact Statement 
(``CIS''), and a Stipulation signed by Topa for entry of the proposal 
Final Judgment. The proposed Final Judgment resolves the antitrust 
violation alleged in the Complaint by enjoining Topa from taking any 
action to prevent its suppliers of distilled spirits from canceling 
their distribution arrangements with Topa and appointing new 
wholesalers instead. The proposed Final Judgment also imposes a number 
of restrictions on Topa's business practices in order to prevent Topa 
from unreasonably interfering with the operations of a competitor.
    A summary of the terms of the proposed Final Judgment and CIS and 
directions for the submission of written comments relating to the 
proposal were published in The Washington Post for seven consecutive 
days beginning December 25, 1994, and in The Virgin Islands Daily News 
on December 21-24 and December 27-29, 1994. The proposed Final Judgment 
and CIS were published in the Federal Register on December 30, 1994. 59 
FR 67728 (1994).
    The 60-day period for public comments commenced on December 30, 
1994, and expired on March 2, 1995. The United States received two 
comments on the proposed Final Judgment, from St. Thomas Food Products 
Corp. (``St. Thomas Foods'') and IPV, Inc. trading as A.H. Riise Liquor 
Stores (``A.H. Riise''). Those comments are being filed with the Court 
along with this response. Upon careful consideration of these comments, 
as fully explained below, the United States urges that the proposed 
Final Judgment be entered as originally submitted to the Court.

I. Legal Standards Governing the Court's Public Interest 
Determination

    The procedural requirements of the APPA are intended to eliminate 
secrecy from the consent decree process, to ensure that the Justice 
Department has access to public comments bearing on the consent decree, 
and to create a public record of the reasoning behind the government's 
consent to the decree. Hearings on H.R. 9203, H.R. 9947, and S. 782, 
Consent Decree Bills Before the Subcomm. on Monopolies and Commercial 
Law of the House Judiciary Committee, 93rd Cong. 1st. Sess. 39-40 
(1973) (Statement of Senator Tunney). See also United States v. 
American Tel. and Tel. Co., 552 F. Supp. 131, 148 (D.D.C. 1982), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983).
    The APPA requires the Court to determine whether the entry of the 
decree is ``in the public interest.'' 15 U.S.C. 16(e). The Court's role 
is not to make a de novo determination of facts and issues, but ``to 
determine whether the Department of Justice's explanations were 
reasonable under the circumstances,'' for ``[t]he balancing of 
competing social and political interests affected by a proposed 
antitrust consent decree must be left, in the first instance, to the 
discretion of the Attorney General.'' United States v. Western Electric 
Co., 993 F.2d 1572, 1577 (D.C.Cir.), cert. denied, 114 S.Ct. 487 
(1993), quoting United States v. Bechtel Corp., 648 F.2d 660, 666 (9th 
Cir.), cert. denied, 544 U.S. 1083 (1981). Thus, the ``court is 
required to determine not whether a particular decree is the one that 
will best serve society, but whether the settlement is `within the 
reaches of the public interest.' '' Bechtel Corp., 648 F.2d at 666.
    Congress did not intend to require the courts to follow elaborate 
procedures in making the public interest determination under the APPA. 
To the contrary, Congress was concerned that unduly protracted 
proceedings might interfere with the consent decree process. Thus, 
``the court is adjured to adopt `the least complicated and least time-
consuming means possible.' '' United States v. Gillette Co., 406 
F.Supp. 713, 715 (D.Mass. 1975), (quoting S. Rep. No. 93-298, 93d 
Cong., 1st Sess. 6 (1973); H. Rep. No. 93-1463, 93d Cong., 2d Sess. 8 
(1974)).
    The Court's public interest inquiry must be conducted in light of 
the ``violations set forth in the complaint.'' 15 U.S.C. 16(e)(2). The 
enforcement agency's decision about what charges to bring in its 
complaint is a matter generally ``committed to the agency's absolute 
discretion.'' Heckler v. Chaney, 470 U.S. 821, 831 (1985).

II. Public Comments

A. Comment of St. Thomas Foods

    St. Thomas Foods, a Virgin Island wholesaler of beer, wine, 
distilled spirits, and other products, commented that the proposed 
Final Judgment should be rejected because it does not address the wine 
and beer markets, in which St. Thomas Foods alleges that Topa also has 
a monopoly, and because it does not require Topa to abandon all rights 
to distribute certain brands of distilled spirits. The proposed Final 
Judgment should not be amended in response to this comment.
    The Complaint alleges that Topa maintained, through an 
anticompetitive series of contracts, a monopoly in the wholesale 
distribution of distilled spirits in the Virgin Islands, but it does 
not allege maintenance of a monopoly in the wholesale distribution of 
beer or wine. The United States fully reviewed all of Topa's 
distribution businesses and determined to challenge only conduct 
relating to its distribution of distilled spirits. The determination of 
what conduct to challenge and the scope of any complaint is a matter 
solely within the discretion of the United States. Thus St. Thomas 
Foods' initial comment falls outside the scope of Tunney Act review.
    St. Thomas also questions the relief the United States has 
negotiated with Topa relating to the wholesale market for distilled 
spirits. This is a matter properly before this Court under the Tunney 
Act. As noted in the CIS filed with the Complaint and proposed Final 
Judgment, the United States considered whether to pursue litigation in 
order to win structural relief terminating some of Topa's exclusive 
distribution arrangements with suppliers of distilled spirits. The 
United States concluded that this alternative would place an 
unacceptably large burden on some suppliers, which are among the 
victims of Topa's conduct. The competitive problem in this case arises 
from the fact that Topa has had exclusive distribution agreements with 
all major suppliers of distilled spirits. If some suppliers shift to 
other distributors, exclusive contracts between Topa and remaining 
suppliers would not be anticompetitive; competition among brands would 
mitigate the lack of intra-brand competition in brands sold exclusively 
through a single wholesaler. The Untied States did not have a basis for 
determining which suppliers should be shifted to other distributors, 
nor for urging a court to single out certain suppliers for such 
treatment. Thus the United States concluded that the better course 
would be to permit each supplier to determine, for itself, whether to 
[[Page 28170]] continue to deal through Topa exclusively. The relief 
imposed by the proposed Final Judgment presents an effective means to 
invigorate competition in the wholesale distribution of distilled 
spirits in the Virgin Islands without establishing unnecessary 
regulatory constraints that would interfere with free market forces.

B. Comment of A.H. Riise

    A.H. Riise owns four retail liquor stores in the Virgin Islands and 
probably is the largest retailer of distilled spirits in the territory. 
The defendant, Topa, is A.H. Riise's principal source for distilled 
spirits. A.H. Riise objected that the proposed remedies do not bar Topa 
from interfering with suppliers that want to sell directly to 
retailers. Thus, A.H. Riise urges adoption of a provision prohibiting 
Topa from communicating with any supplier for the purpose, or with the 
effect, of urging, compelling, or coercing the supplier to refrain from 
bypassing the wholesale level of distribution altogether and selling 
directly to a retailer. This suggested provision would allow suppliers 
to violate their exclusive distribution arrangements with Topa in order 
to sell directly to retailers. In addition, A.H. Riise suggests that 
price regulation be imposed, forcing Topa to offer lower prices to A.H. 
Riise and thus enabling A.H. Riise to compete more effectively in the 
tourist duty-free market. Finally, A.H. Riise wants to extend the term 
of the Final Judgment form five years to ten.
    A.H. Riise may be the only retailer large enough to attract direct 
sales from even a small supplier. Conceivably, a supplier might want to 
deal directly with A.H. Riise while distributing through a wholesaler 
to other retailers. Nothing in the proposed Final Judgment impedes this 
type of arrangement, and the provisions A.H. Riise proposes are not 
needed to achieve the full relief in this action of enabling distillers 
to break free of their exclusive agreements with Topa.
    There is no reason to provide for special relief for the duty-free 
market. The interbrand competition that will result from the relief in 
this case will benefit the duty-free market as well as the retail 
market for Virgin Islands consumers.
    A.H. Riise has also urged that the term of the proposed Final 
Judgment be changed to ten years. The five-year duration of the 
proposed Final Judgment is adequate to accomplish its objective. The 
time needed for a supplier of distilled spirits to switch wholesalers 
is limited, probably no more than thirty to sixty days. All that is 
necessary to accomplish the switch is the transfer of existing 
inventory from one warehouse to another. In wholesaling as opposed to 
manufacturing, start-up times are short. In wholesaling, there is no 
need to build a factory, assemble complicated machinery, or arrange for 
supplies of raw materials; basically, all that is needed is a warehouse 
and a truck. Thus, even a new-entrant wholesaler could have its 
business up and running quickly. Sufficient capital to finance 
inventory is necessary, of course. But the necessary level of capital, 
while not trivial, is far from prohibitive. Also, the proposed Final 
Judgment provides that Topa must furnish a copy of the Judgment to each 
supplier, so its term will be well-known in the industry within days of 
its entry by the Court. For these reasons, the term of the proposed 
Final Judgment need be no longer than five years.
    The United States also notes statements, cited by A.H. Riise and 
attributed to the defendant and its counsel in this action, stating 
that the decree is ineffective. This talk is more wishful than 
accurate: The decree is carefully designed to ensure full and effective 
relief. Moreover, the United States assures the Court, the people of 
the Virgin Islands, and the defendant that we will vigorously enforce 
this decree and monitor its success. Should competitive problems in the 
distribution of alcoholic beverages in the Virgin Islands recur, the 
United States stands ready to address them.
    The proposed Final Judgment will make it attractive for certain 
suppliers to find new wholesalers that will more vigorously promote 
their products in the Virgin Islands, thereby correcting the 
competitive harms resulting from Topa's past conduct and increasing 
competition in the local wholesale distilled spirits market. Therefore, 
the proposed Final Judgment should be entered as proposed by the 
parties.

Conclusion

    For the reasons set forth above, entry of the decree as submitted 
by the parties to the Court is in the public interest. St. Thomas 
Foods' comment, A.H. Riise's comment, and this response will be 
published in the Federal Register.

    Dated: May 5, 1995.

    Respectfully submitted,
Anne K. Bingaman,
Assistant Attorney General.
John T. Orr,
Justin M. Nicholson,
James L. Weis,
Attorneys, Antitrust Division, Department of Justice, Richard B. 
Russell Building, Suite 1176, 75 Spring Street, SW., Atlanta, GA 30303, 
(404) 331-7100.
Certificate of Service

    I hereby certify that I have caused a copy of the foregoing UNITED 
STATES' RESPONSE TO PUBLIC COMMENTS to be served upon Ernest Gellhorn, 
2907 Normanstone Lane NW., Suite 100, Washington, DC 20008-2725, by 
first class mail, postage prepaid.


    Dated: May 5, 1995.
Justin M. Nicholson,
Antitrust Division, U.S. Department of Justice, Richard B. Russell 
Building, Suite 1176, 75 Spring Street, SW., Atlanta, GA 30303, (404) 
331-7100.
January 19, 1995
Mr. John T. Orr,
Chief, Atlanta Field Office,
Antitrust Division, Dept. of Justice,
Richard B. Russell Federal Building,
75 Spring Street, SW.,--Suite 1176,
Atlanta, Georgia 30303.

Re: U.S. v. Topa Equities (V.I.), Civil No. 1994-179

    Dear Mr. Orr: I have read with great interest the Complaint, 
Stipulation and proposed Final Judgment in the above referenced 
case, which was provided to me by Mr. James L. Weis of your office. 
This letter is being written to give you my comments on the proposed 
Final Judgment.
    To say the least I am simply amazed at the conclusion of this 
case. Justice has accomplished absolutely nothing after many years 
of investigation and I am sure the expenditure of several hundreds 
of thousands of dollars.
    The Topa Equities (V.I.), Ltd., monopoly remains intact. There 
is no provision in the proposed Final Judgment for any kind of 
divestiture of liquor brands where Topa has an exclusive agency 
arrangement. Therefore Topa remains is full control of 90% plus of 
all the liquor imported and sold in the Virgin Islands. This leaves 
Topa with the same monopoly position they enjoyed prior to the 
extensive investigation of the Dept. of Justice. The fact that the 
Final Judgment precludes Topa from interfering with a supplier 
moving liquor brands from Topa to another agent is simply a joke. 
Topa being fully aware of their mononuclear position in the liquor 
market never would have sued or interfered with a supplier moving 
brands because they are fearful of their monopolistic practices 
becoming public in open court.
    Another observation I have on the proposed Final Judgment is 
that it does not address the Wine and Beer business in the Virgin 
Islands. I am sure that your investigation revealed that Topa also 
controls and monopolizes the Wine and Beer [[Page 28171]] importing/
distributing business in the Virgin Islands. Topa has the exclusive 
agency rights for all the major brands of United States beers, 
Anheuser Busch, Coors and Miller Brewing. Topa also represents many 
of the major brands of imported beers, Becks, Corona, Carlsberg, 
Caribe, Guiness, Tennants, and Red Stripe. This then gives Topa 85% 
market share of all beers of U.S. manufacturer and 70% market share 
of all imported beers. Yet your Final Judgment makes no mention of 
the beer business in the Virgin Islands.
    The same is true of the Wine importing/distribution business in 
the Virgin Islands. Topa owned companies have control of over 80% of 
this business and again the Final Judgment makes no provisions to 
address this monopoly.
    In my opinion the proposed Final Judgment should not be accepted 
by the District Court of the Virgin Islands. The Judgment should be 
sent back to the Dept. of Justice and the investigation reopened to 
address the oversights that I have made above. Topa should be forced 
to divest itself of brands it controls to once and for all end the 
monopoly it has enjoyed for all these years. These brands should not 
only be liquor agencies but should include beer as well as wine. 
Further Topa should be assessed money damages to at least cover the 
costs of the investigation and whatever fines the Court deems 
appropriate.
    All in all I am very dissatisfied with the results of your 
investigation and the proposed Final Judgment. I feel that your 
investigation was a waste of your time, my time and great deal of 
tax payer money.
    Sincerely.
    St. THOMAS FOOD PRODUCT CORP.
Bruce Kimelman.
President
BK/lf
cc. District Court of the Virgin Islands, Division of St. Thomas-St. 
John

February 24, 1995
John T. Orr, Chief, Atlanta Field Office, Antitrust Division, U.S. 
Department of Justice, Richard B. Russell Federal Building, Suite 
1176, 75 Spring Street, Atlanta, GA 30303

Re: United States of America v. Topa Equities (V.I.), Ltd., D.V.I. 
Civil No. 1994-179

    Dear Chief Orr: In response to the Notice published in the 
Federal Register on December 30, 1994 (59 FR 67728), I am submitting 
herewith, on behalf of my client IPV, Inc. trading as A.H. Riise 
Liquor Stores, the enclosed ``Comments of A.H. Riise Liquor Stores 
on Proposed Final Judgment'' in the above case.

    Very truly yours,
Samuel H. Seymour.
SHS/ced
Enclosures
cc: Justin M. Nicholson, Esq., James L. Weis, Esq.

Comments of A.H. Riise Liquor Stores on Proposed Final Judgment

Moore & Bruce
Samuel H. Seymour, Jonathon R. Moore, 1627 Eye Street, NW., Suite 880, 
Washington, DC 20006, Tel: (202) 775-5980, Counsel for IPV, Inc., 
trading as A.H. RIISE LIQUOR SHOPS

Table of Contents

I. The defendant's own comments demonstrate that the proposed final 
judgment is not in the public interest.
II. A.H. Riise is an interested party.
III. The court has the authority to reject the proposed final 
judgment if competition will not be restored.
IV. The proposed final judgment is not in the public interest.
    A. The Proposed Final Judgment Is Premised on a Complaint that 
Overlooks Material Factors in the Relevant Markets.
    1. The proposed Final Judgment Defines Away the Most Immediate 
Prospect for Restoring Competition.
    2. The Complaint, Proposed Final Judgment and CIS Overlook the 
Significance of the Tourist Submarket to the Public Interest.
    3. It Is Contrary to the Public Interest to Permit Defendant's 
Monopolistic Pricing to Continue.
    B. The Remedies in the Proposed Final Judgment Do Not Adequately 
Address the Competitive Harm Identified.
V. At a minimum, any final judgment should expressly recognize and 
protect retailers' rights to deal directly with suppliers, without 
interference from defendant.
VI. The five year duration for the proposed final judgment is 
patently inadequate.
Conclusion.

Exhibits

TOPA Press Release.
``Red-lined'' Proposed Final Judgment Showing Recommended Revisions 
to be in the Public Interest.
Comments of A.H. Riise Liquor Stores on Proposed Final Judgment

    IPV, Inc., trading as A.H. Riise Liquor Stores, P.O. Box 6280, St. 
Thomas, U.S. Virgin Islands 00804-6280 (``A.H. Riise''), through its 
attorneys, hereby responds to the Federal Register notice soliciting 
public comments on the Proposed Final Judgment and Competitive Impact 
Statement (``CIS'') in the above-captioned case, 59 FR 67728 (Dec. 30, 
1994). A.H. Riise respectfully submits that adoption of the Final 
Judgment in the form proposed is not in the public interest, because 
the remedies proposed provide no tangible or immediate prospect for 
achieving the goals set forth in the CIS: The restoration of 
competition in the wholesale market for distilled spirits in the Virgin 
Islands.

I. The Defendant's Own Comments Demonstrate That the Proposed Final 
Judgment Is Not in the Public Interest

    As a threshold matter, before we describe A.H. Riise or analyze the 
Proposed Final Judgment, it is incumbent upon us to bring to the 
attention of the Court and the Department the contemptuous manner in 
which the Defendant holds the Proposed Final Judgment. A Press Release 
issued by Defendant Topa upon the announcement of the settlement with 
the Department states:

    According to Ernest Gellhorn, an antitrust lawyer from 
Washington, D.C. retained by Topa, ``the proposed remedy is all bark 
and no bite.'' Pointing to the decree's ``meaningless provisions 
that would modify contract terms written by suppliers or would make 
supposed scarce warehouse space available to new entrants,'' 
Gellhorn called ``this probably the weakest consent decree ever 
negotiated by the Department of Justice.'' (Emphasis added.)

A copy of Defendant's Press release is attached hereto as Exhibit 1.
    Significantly, the Defendant distributed this Press Release to its 
suppliers two days before the Department filed the Complaint and the 
Proposed Final Judgment with the Court. The message is clear: Nothing 
will change.
    The Court--and the Department--should scrutinize the motives and 
substance behind Defendant's Press Release. It is a red flare. It sends 
a vivid warning: something is seriously wrong with the Proposed Final 
Judgment. The Press Release belies any assertion in the CIS that the 
Proposed Final Judgment is in the public interest.
    Under the circumstances, the only proper course is for the 
Department to withdraw its consent to the Proposed Final Judgment. 
Should it fail to do so, the Court should not rubber stamp the apparent 
oversights or miscalculations that have brought this case to the brink 
of approval, lest it, too, be the subject of Defendant's derision.

II. A.H. Riise is an Interested Party

    A.H. Riise owns and operates four retail stores for distilled 
spirits \1\ in St. Thomas, Virgin Islands. It is among the class of 
retailers of distilled spirits in the Virgin Islands which has ``been 
deprived of the benefits of free and open competition'' by Defendant's 
actions. Complaint, para. 19(c). A.H. Riise is a family-owned business, 
whose current owners are the third and fourth generations of the family 
to be involved [[Page 28172]] in the ownership and management of retail 
liquor businesses in the Virgin Islands.

    \1\ Unless otherwise noted, the defined terms from Section III 
of the Complaint are utilized in these comments.
---------------------------------------------------------------------------

    Defendant Topa is A.H. Riise's major source of supply of distilled 
spirits. Based upon the description of Defendant's business in 
Paragraph 3 of the Complaint, A.H. Riise purchases represent at least 
20% of Defendant's sales in the Virgin Islands. As such, A.H. Riise is 
a significant participant in the market which is the subject of the 
Complaint in this action.
    A.H. Riise is also a major factor in the tourist market for 
distilled spirits in the Virgin Islands. Although conspicuously omitted 
from the Complaint, the Proposed Final Judgment and the CIS, the 
tourist submarket for duty-free distilled spirits in the Virgin Islands 
may represent as much as 60% of the relevant market. On information and 
belief, A.H. Riise's sales constitute more than half of the sales of 
distilled spirits to this submarket. A.H. Riise is among the class of 
retailers most adversely effected by Defendant's monopolistic pricing 
practices and anti-competitive efforts to dissuade suppliers from 
selling directly to retailers.

III. The Court Has the Authority To Reject the Proposed Final 
Judgment if Competition Will Not Be Restored

    The Antitrust Procedures and Penalties Act (the ``Tunney Act'') 
provides in pertinent part that ``before entering any consent judgment 
proposed by the United States * * *, the court shall determine that 
entry of such judgment is in the public interest.'' 15 U.S.C. 16(e). 
The power of the courts in connection with determining the public 
interest and the legal standard of review to be applied is 
comprehensively set forth in United States v. American Tel. & Tel. Co., 
552 F. Supp. 131, 147-153 (D.D.C. 1982), aff'd sub nom Maryland v. 
United States, 460 U.S. 1001 (1983).
    In reviewing the purposes of the Tunney Act, the AT&T Court 
referred to the legislative history, which asserted that previously 
``consent decrees often fail(ed) to provide appropriate relief, either 
because of miscalculations by the Justice Department or because of the 
`great influence and economic power' wielded by antitrust violators.'' 
Id at 148. In support, the Court cited Senator Tunney: ``Regardless of 
the ability and negotiating skill of the Government's attorneys, they 
are neither omniscient nor infallible.'' Id at 148, note 70, citing 119 
Cong. Rec. 3452 (1973). In response, the public comment procedure was 
added to the antitrust laws, along with judicial review based on the 
public interest standard. The express purpose of such review is to 
``eliminate judicial rubber-stamping'' of proposed consent orders 
submitted to courts by the Department. Id at 149.
    Senator Tunney's comments are particularly appropriate in this 
case. As discussed below, it is apparent that the Complaint, the 
Proposed Final Judgment and the CIS overlook highly relevant and 
significant facts relating to the Defendant's anti-competitive 
practices. The legislative history makes it clear that the Court here, 
as the Court did in the recent decision in the United States v. 
Microsoft Corporation, C.A. No. 94-1564 (Memorandum Order dated Feb. 
14, 1995), can and should look beyond the four corners of the complaint 
in determining whether the public interest is being served by the 
Proposed Final Judgment.
    In examining the legal standard to be applied in determining the 
public interest, the AT&T Court stated that antitrust ``decisions 
granting relief after a finding of liability form the most relevant 
yardstick for determining whether the proposed consent decree will 
further antitrust policies.'' After noting that the purpose of 
antitrust remedies is to restore competition and end monopoly power, 
the Court stated that proposed decrees ``must leave the Defendant 
without the ability to resume the action which constituted the 
antitrust violation in the first place. For these reasons, the decree 
should not be limited to past violations; it must also effectively 
foreclose the possibility that antitrust violations will occur or 
reoccur.'' Id at 150. As discussed below, the Proposed Final Judgment 
is particularly deficient in addressing restoration of competition in 
the future. When evaluated under the standards articulated by the AT&T 
Court, the Proposed Final Judgment will be found to be inconsistent 
with the public interest.
    The AT&T Court premised its analysis upon the fundamental purpose 
of the Tunney Act to ``fully promote the goals of the antitrust laws 
and further public confidence in their fair enforcement.'' The Court 
noted that the consent order procedure prior to the enactment of the 
Tunney Act was essentially secret, and thereby ``undermin(ed) 
confidence in the legal system.'' It is submitted that the Defendant's 
arrogant and disparaging characterizations of the Proposed Final 
Judgment should be the catalyst that brings these fundamental concerns 
into sharp focus in the Court's determination of the public interest.

IV. The Proposed Final Judgment Is Not in the Public Interest

A. The Proposed Final Judgment Is Premised on a Complaint That 
Overlooks Material Factors in the Relevant Markets

    Both the Complaint and the Proposed Final Judgment are based on an 
incorrect view of the market for distilled spirits in the Virgin 
Islands. The Department apparently has misunderstood or overlooked 
important facts concerning the channels of distribution in the Virgin 
Islands market, the important of the submarket for distilled spirits 
sold to tourists, and, most importantly, the Defendant's monopolistic 
pricing practices. Accordingly, the Complaint and Proposed Final 
Judgment overlook the only way in which existing market forces can be 
used to restore competition: By permitting suppliers and retailers to 
deal directly with each other without interference from the Defendant.
1. The Proposed Final Judgment Defines Away the Most Immediate Prospect 
for Restoring Competition
    Deficiencies in the Proposed Final Judgment's analysis are first 
evident in the definitional provisions in the Complaint and the 
Proposed Final Judgment. The term ``retailer'' is defined in Paragraph 
7 of the Complaint and Paragraph IID of the Proposed Final Judgment to 
mean ``any person engaged in the business of purchasing distilled 
spirits from wholesalers as defined herein, and reselling them to 
consumers in establishments located in the Virgin Islands * * * 
(Emphasis added.) Significantly, however, some retailers, including 
A.H. Riise, purchase directly from suppliers, and would do so to a 
greater extent if it were not for the Defendant's active interference. 
Yet the possibility that retailers can purchase from suppliers is not 
even recognized by this definition. Accordingly, the one present and 
tangible means by which Defendant's monopoly power can be reduced under 
existing competitive conditions is obviated definitionally.
    The definition of ``supplier'' in Paragraph 8 of the Complaint and 
Paragraph IIE of the Proposed Final Judgment is similarly deficient. 
This definition provides that supplier means ``any licensed 
manufacturer, distiller, or importer of distilled spirits from which 
Defendant or any other licensed wholesaler, as defined herein, 
purchases or has purchased distilled spirits.'' (Emphasis added.) 
Again, the Complaint and the Proposed Final Judgment do not even 
recognize that suppliers do sell [[Page 28173]] directly to retailers 
and would do so to a greater extent if Defendant's interference were 
eliminated. Although Virgin Islands law does not permit vertical 
integration of retailers and wholesalers, Complaint para. 10 and para. 
CIS II, there is no prohibition against retailers dealing directly with 
suppliers.
    In fact, Defendant's monopoly power has enabled it to prevent most 
retailers from obtaining distilled spirits directly from suppliers. 
This interference occurs particularly where Defendant has exclusive 
arrangements with suppliers, and even where it does not. The Proposed 
Final Judgment, as drafted, could be understood by the Defendant to 
sanction its activities in this regard, which could well intensify as a 
result. Failure to recognize that retailers can purchase directly from 
suppliers, and that such arrangements require protection from 
Defendant's monopoly power, are glaring deficiencies in the Complaint.
2. The Complaint, Proposed Final Judgment and CIS Overlook the 
Significance of the Tourist Submarket to the Public Interest
    The Complaint, the Proposed Final Judgment and the CIS also 
conspicuously omit any mention of the tourist market for distilled 
spirits. Tourism is a significant part of the Virgin Islands economy. 
The duty-free rules, which allow visitors from the United States 
mainland to enter up to five bottles per person duty-free into the 
United States from the Virgin Islands,\2\ are important enhancements 
for tourism in the Virgin Islands and, indeed, are a substantial 
feature of the competitive landscape of the market defined by the 
Complaint. Tourists, however, will only purchase distilled spirits 
``duty-free'' in the Virgin Islands if they are priced competitively 
with products that they can purchase on cruise ships and at other 
Caribbean destinations, and, of course, in the continental United 
States.

    \2\ Persons returning to the United States mainland from the 
Virgin Islands are exempted from duty on four liters (the equivalent 
of five fifths) of distilled spirits, plus an additional liter of 
any such product produced in the Virgin Islands. Heading 9804.00.70, 
Harmonized Tariff Schedule of the United States (1995).
---------------------------------------------------------------------------

    Defendant's monopolistic pricing practices have had a material 
adverse impact on commerce in distilled spirits in the Virgin Islands 
in the tourist market, but no one would ever know this from the 
Complaint, the Proposed Final Judgment and the CIS.\3\ Without any 
competition at the wholesale level, Defendant Topa is able to take far 
larger wholesale mark-ups than are customary. Retailers like A.H. Riise 
have had no alternative other than to accept Defendant's monopolistic 
pricing, except in instances where they have been able to by-pass Topa 
and purchase directly from suppliers. Even after cutting their margins 
to the bone, retailers often cannot compete with prices of distilled 
spirits on cruise ships, other Caribbean Islands and, even sometimes on 
the U.S. mainland, since monopolistic margins are exacted by Defendant 
at the wholesale level. Thus, A.H. Riise's sales--and those of other 
retailers--are far lower than they otherwise would be. Accordingly, 
tourists buy less in the Virgin Islands, and the Virgin Islands economy 
loses substantial excise and gross receipts tax revenues, as well as 
lost employment opportunities for retailers and others who serve the 
tourists trade.

    \3\ The impact of Defendant's monopolistic practices is far more 
significant in the tourist market for distilled spirits than in the 
local market. This is because residents of the Virgin Islands have 
no choice but to purchase locally, whereas tourists can buy 
distilled spirits on board cruise ships, on other Caribbean Islands 
or on the U.S. mainland.
---------------------------------------------------------------------------

3. It is Contrary to the Public Interest To Permit Defendant's 
Monopolistic Pricing to Continue
    Since the Complaint does not allege anti-competitive pricing 
practices on the part of Defendant, it is hardly surprising that such 
practices are not remedied in the Proposed Final Judgment. It is 
remarkable that after citing injury to suppliers and retailers, 
Complaint para. 19 (c) and (d), CIS para. IIB, there is no mention of 
injury to consumers. Yet there is no single factor that has a greater 
bearing on the Court's determination of the public interest in this 
case than Defendant's pricing practices. Defendant's monopolistic 
pricing damages consumers--both Virgin Islands residents and tourists--
to the detriment of the Virgin Islands economy.
    On those occasions when suppliers have been willing to sell 
directly to A.H. Riise, often over interference from the Defendant, 
A.H. Riise has been able to substantially reduce prices offered to 
tourists so that they are more competitive with prices offered by 
cruise ship stores, on other Caribbean islands and in the U.S. As a 
result, sales increased dramatically, as did profits. Further, A.H. 
Riise was able to spend considerably more on advertising and promotion 
to encourage cruise ship passengers to purchase distilled spirits in 
the Virgin Islands, rather than at foreign ports.
    These results were demonstrated again recently when A.H. Riise was 
finally able to conclude arrangements to purchase directly from a 
supplier, which had previously sold only through Defendant Topa. 
Without excessive wholesale margins, A.H. Riise was able to lower the 
per unit price by $5.00, which increased the gap between its prices and 
U.S. mainland prices from $1-$2 to $6-$7 per unit. In only a two week 
period, sales increased 500% and profits increased 100%. Corresponding 
increases were realized in revenues paid to the Virgin Islands taxing 
authority.
    Conversely, when the prices it receives from Defendant Topa compel 
retail pricing that a higher, the same or only slightly lower than 
competing sources available to tourists, sales decline, profits are 
non-existent, and resources available for promotion are marginal. In 
A.H. Riise's experience, tourists are generally well-educated on the 
subject of distilled spirits prices. Accordingly, when they can 
purchase distilled spirits at substantial savings, they are inclined to 
make most of their duty-free purchases from retailers in the Virgin 
Islands. Moreover, once tourists see that duty-free prices for 
distilled spirits are lower, they tend to purchase greater amounts of 
other duty-free merchandise in the Virgin Islands as well. Thus, it is 
not difficult to see how monopolistic pricing at the wholesale level 
has an immediate negative and depressing impact on sales, profits and 
promotional activities, with a corresponding impact on employment, tax 
revenues and the Virgin Islands economy.
    In its review of the proposed consent order in United States v. 
Microsoft, supra, the Court recognized that the failure of the 
Department to address significant anti-competitive practices by the 
defendant was grounds for a determination that the proposed order was 
not in the public interest. Notwithstanding the vehement objections of 
the defendant and the Department in that case, the Court refused to 
accept an order that was limited to operating systems software for X86 
microprocessors. There, as here, the proposed Complaint and relief are 
too narrow, and for that reason must be found not to be in the public 
interest.
B. The Remedies in the Proposed Final Judgment Do Not Adequately 
Address the Competitive Harm Identified
    The Complaint and the CIS correctly point out that the Defendant 
has virtual monopoly in the wholesale distilled spirits market in the 
Virgin Islands. Complaint para. 17; CIS para. II B. Certain effects of 
this monopoly are then identified: (1) Retailers are deprived of 
alternative sources for competing products; and (2) suppliers are 
deprived [[Page 28174]] of the benefits of free and open competition, 
in part because Defendant Topa has inherent conflicts of interest in 
the representation of competing products and cannot represent all 
competing brands equally. Complaint, para. 19 (c) and (d); CIS para. II 
B. The CIS then states that the purpose of the Proposed Final Judgment 
is to remedy these effects. But not only are the Complaint and Proposed 
Final Judgment drafted too narrowly, the remedies proposed are also 
ineffective.
    Rather than ordering a breakup of the Defendant, divestiture of the 
acquisitions by which it obtained its monopoly, Complaint para. 17, or 
unilateral termination of its distribution agreements, CIS para. VI, 
the Proposed Final Judgment merely attempts to establish new ground 
rules for the distilled spirits wholesale market in the Virgin Islands 
that purport to make it more likely for new entrants to dilute the 
Defendant's monopoly power and thereby restore a competitive 
environment. There are two main features of the Proposed Final 
Judgment: (1) Permitting suppliers to break exclusive contracts with 
Defendant, but only to deal with another wholesaler; and (2) enjoining 
Defendant from enforcing its rights under Title 12A, Sections 131 and 
132, of the Virgin Islands Code for ``wrongful termination.'' Once new 
entrants appear, the Defendant would be enjoined from (1) interfering 
with any of the potential new entrants' employees and (2) from 
acquiring any stock or interest in such new entrants.\4\ Proposed Final 
Judgment Paras. IV (b), (c), (f) and (g).

    \4\ We have deliberately omitted any analysis of the problem of 
the scarcity of warehouse space, which is given inordinate 
attention. Complaint at para. 16, Proposed Final Judgment para. IV 
E, CIS para. II. Defendant's reference to this issue as ``supposed 
scarce warehouse space'' in its Press Release, Exhibit 1, suggests 
that this issue is be a straw man.
---------------------------------------------------------------------------

    In a moment of candor, the Defendant characterized the foregoing as 
``meaningless provisions'' that are ``all bark and no bite.'' Press 
Release, Exhibit 1. A.H. Riise agrees.
    Rather than providing a mechanism for existing market forces to 
restore competitiveness, the proposed remedies depend on new entrants 
coming into the wholesale distilled spirits business in the Virgin 
Islands. The relief proposed, therefore, is merely hopeful. At best, it 
poses a theoretical framework for competition to develop in the future. 
Whether the proposed remedies will in fact have any immediate and 
tangible effect on the competitive environment in the Virgin Islands 
must depend totally on extrinsic factors, the existence of which are 
unknown or speculative.
    How likely is it that ``new players'' will arrive to compete on the 
new theoretical ``level playing field'' constructed by the Proposed 
Final Judgment? Not likely at all.\5\ To become viable, potential 
entrants will need very substantial capital for inventory and warehouse 
facilities, employees who know the business, and the ability to attract 
suppliers' business. Each of these factors is far more significant to 
entering the market than the elements of the proposed remedies. In 
determining whether the remedies in the Proposed Final Judgment have a 
reasonable chance of achieving their stated goals, the Court should not 
overlook the fact that every potential entrant that has tried to come 
into this market in the last decade has failed. CIS para. 2. At the 
present time, A.H. Riise knows of no company or individual with the 
necessary capital, personnel and know-how that could enter the Virgin 
Islands wholesale market for distilled spirits. Further, based on 
discussions with wholesalers outside the Virgin Islands, little 
incentive to enter the Virgin Islands market is perceived.

    \5\ See CIS para. VI. The only reason that unilateral 
termination of Defendant's exclusive arrangements with suppliers 
might ``place an unacceptably large burden'' on them is if no other 
wholesaler entered the market, notwithstanding the proposed relief.
---------------------------------------------------------------------------

    The lack of confidence that the proposed remedies will achieve 
their stated goals is seen in the CIS. For example, the CIS states: 
``qualified personnel, with the necessary connections with the retail 
trade, are difficult to find in the Virgin Islands. Paragraphs IV(b) 
and IV(c) may help an entrant to hire and retain qualified personnel to 
run a distilled spirits business in the Virgin Islands without undue 
interference from Topa.'' (Emphasis added.) CIS para. III. They also 
may not. Indeed, potential entrants will need substantial capital to 
succeed much more than Topa's noninterference with their employees.
    Moreover, as a practical matter, once suppliers are freed from 
exclusive arrangements with the Defendant, it does not necessarily 
follow that suppliers will switch to new entrants. Indeed, without a 
strong track record, why should a major supplier of distilled spirits 
trust a new entrant to develop its market in the Virgin Islands? The 
CIS recognizes this problem: ``Any disatisfied supplier will be free to 
find an alternative distributor if the supplier chooses to do so* * *'' 
(Emphasis added.) CIS para. III. The CIS candidly admits that suppliers 
will have to be dissatisfied with Topa before they would switch to new, 
unknown wholesalers.
    Because any decision to switch must lie with the suppliers, there 
can be no guarantee that the model in the Proposed Final Judgment will 
restore competition.
    In fact, the ingredients needed to restore this market to a 
competitive one are already in place, but have been overlooked in the 
Proposed Final Judgment. Existing retailers already know the products, 
the suppliers, and the markets. It is the retailers, in their pricing 
and promotion, that make markets for each brand. But for the on-going 
interference by the Defendant, retailers would be in the position now 
to restore competition to the distilled spirits market in the Virgin 
Islands by dealing directly with suppliers. It is therefore contrary to 
the public interest to rely solely upon speculative, future, unknown, 
external factors to enter the wholesale market, as posited by the 
Proposed Final Judgment. Instead, suppliers' and retailers' rights to 
deal with each other need to be recognized--and protected.
V. At a Minimum, Any Final Judgment Should Expressly Recognize and 
Protect Retailers' Rights To Deal Directly With Suppliers, Without 
Interference From Defendant

    Even though the Proposed Final Judgment is deficient in its 
theoretical approach to restoration of competition, A.H. Riise does not 
believe that divestiture or the termination of exclusivity arrangements 
with suppliers are the only remedies that can help erode Defendant's 
monopoly. With slight modifications, the Proposed Final Judgment can be 
rectified to achieve the stated goal of providing retailers with 
alternative sources and freeing suppliers from a single wholesaler that 
also represents their competitors. That remedy is to recognize--and 
protect--suppliers and retailers' rights to deal directly with one 
another without interference from the Defendant. We have attached as 
Exhibit 2 a ``red-lined'' copy of the Proposed Final Judgment on which 
we have made recommended revisions that, with minor modifications, 
would permit the Proposed Final Judgment to achieve the competitive 
goals set forth in the CIS.
    The following language, which could be added after Paragraph IV A 
of the Proposed Final Judgment, would implement this approach: (Topa is 
enjoined and restrained from:)

    Communicating with any supplier, wholesaler or other person for 
the purpose or with the effect of urging, compelling, or coercing 
any supplier or wholesaler to refrain from selling distilled spirits 
to any retailer in the Virgin Islands. Nothing in this paragraph 
[[Page 28175]] of Section IV shall be construed to inhibit Topa from 
negotiating, entering into and adhering to a contract dealing with a 
supplier on an exclusive basis; provided, that such designation 
shall not directly or indirectly prevent any retailer in the Virgin 
Islands from acquiring distilled spirits directly from any supplier.

    The suggested language is derived from the consent order issued in 
United States v. Maryland State Licensed Beverage Association, Inc., 
CCH Trade Reg. Rep. para. 69,261 (D. Md., 1958). In that case, 
distributors and wholesalers were charged with collusion in attempting 
to keep retailers from dealing directly with suppliers. The appropriate 
remedy to enjoin such anti-competitive practices was to recognize 
retailers' and suppliers' rights to deal directly with each other, 
while continuing to permit exclusive arrangements between wholesalers 
and suppliers. The same approach is appropriate here.
    In addition, the current Paragraph D of Section IV of the Proposed 
Final Judgment should be amended as follows:

    (Topa is enjoined and restrained from:)

    D. Refusing to deal with any retailer because that retailer 
deals with another wholesaler or directly with a supplier.'' 
(Suggested revision emphasized.)

In commenting on Paragraph IVD of the Proposed Final Judgment, the CIS 
points out: ``Even if Topa loses some brands to a new or existing 
wholesaler, Topa will retain enormous influence over retailers. This 
provision (as drafted) will prevent Topa from abusing that position in 
the retail trade * * *.'' However, unless language is added to 
Paragraph IVD expressly protecting retailers' and suppliers' rights to 
deal directly with each other, the Proposed Final Judgment could be 
read by Defendant Topa to sanction refusals to deal in circumstances 
where suppliers deal directly with retailers.
    It is imperative that the Proposed Final Judgment expressly 
prohibit Topa's interference with efforts on the part of retailers to 
deal directly with suppliers. It is this omission that poses the 
greatest threat to competition in the Virgin Islands. As one of 
Defendant's attorneys points out in the Press Release, Exhibit 1: ``nor 
will (the Proposed Final Judgment) change how Topa does business 
`because the company is not being asked to anything different from what 
it has been doing over the past five years.' '' One of the things Topa 
has been doing over the past five years is interfering with direct 
supplier-retailer relationships. Unless Topa's behavior changes, 
competition will not be restored to the wholesale distilled spirits 
market in the Virgin Islands.
    Only by recognizing and protecting suppliers' and retailers' rights 
to deal directly with each other can the discipline of competition be 
restored. For example, if A.H. Riise is able to purchase from 
suppliers, there is nothing to prevent the Defendant or other 
wholesalers from selling to A.H. Riise if they can provide better 
price/service/delivery than can be obtained from suppliers directly. 
Presumably the wholesale prices that Defendant and other wholesalers 
can obtain for providing wholesaler functions will be lower than the 
prices retailers will be able to obtain directly. Therefore, there will 
always be a role for the Defendant to play in the Virgin Islands 
distilled spirits wholesale market, provided the Defendant prices 
competitively.

VI. The Five Year Duration for the Proposed Final Judgment Is 
Patently Inadequate

    There is probably no other area that more accurately demonstrates 
Defendant's characterization that the Proposed Final Judgment is the 
``weakest * * * ever negotiated by the Department of Justice'' than the 
five-year term proposed for the order. Proposed Final Judgment para. 
VIII. Defendant has enjoyed its monopoly power for over a decade. Old 
habits die hard. Even if A.H. Riise's recommended modifications in the 
Proposed Final Judgment were to be adopted, such an order should remain 
in effect for a minimum of ten years to give competitive forces an 
opportunity to develop and become viable and effective.

Conclusion

    The Proposed Final Judgment is not in the public interest, because 
it is too narrowly drawn and its remedies will not restore competition 
in the distilled spirits market in the Virgin Islands. The Complaint 
and the proposed remedies totally overlook Defendant's monopolistic 
pricing practices. Moreover, the terms of the Proposed Final Judgment 
which purport to provide fertile soil for potential new entrants to 
enhance competition, in the words of the Defendant, are ``meaningless 
provisions.'' Topa Press Release, Exhibit 1.
    Price competition will be quickly restored if suppliers are freed 
to deal directly with retailers. Competitive pricing in this market is 
in the public interest, because it will boost tourism and tourism-
related commerce, thereby enhancing employment and tax revenues in the 
Virgin Islands. Unfortunately, the Proposed Final Judgment does not 
promote this goal. It should therefore be rejected.
    Conversely, adoption of the Proposed Final Judgment as drafted will 
permit Defendant's monopoly power to go unchecked. Since, as correctly 
characterized by Defendant's Press Release, Exhibit 1, Defendant is not 
required to change its behavior, adoption of the Proposed Final 
Judgment will legitimize and institutionalize its anti-competitive 
practices and monopolistic power. A continuation of these practices 
would be detrimental to suppliers, retailers, the consuming public, 
and, more generally, the economy of the Virgin Islands, and thus, the 
public interest. Therefore, the Proposed Final Judgment should be 
withdrawn and modified as suggested in Exhibit 2.

        Respectfully submitted,
Samual H. Seymour
Jonathan R. Moore

    Note: Retyped by Department of Justice

TOPA Press Release

    Topa Equities (V.I.), Ltd. today announced that it had reached a 
settlement with the Department of Justice closing down the government's 
drawn out investigation of acquisitions by Topa of distilled spirits 
distributors in the early 1980's.
    ``Topa conceded nothing nor did it acknowledge that these 
acquisitions had any effect on competition,'' said Maria Hodge, counsel 
for Topa. ``The case was settled and a proposed consent decree was 
accepted for one reason--to end the five-year investigation.''
    Hodge further stated that ``the decree would have no effect on 
Topa's business activities'' even though the investigation ``had 
examined all of its on-going business activities. Apparently they 
couldn't find anything wrong that could be challenged under the 
antitrust laws except some acquisitions over a decade ago.''
    According to Ernest Gellhorn, an antitrust lawyer from Washington, 
DC retained by Topa, ``the proposed decree is all bark and no bite.'' 
Pointing to the decree's ``meaningless provisions that would modify 
contract terms written by suppliers or that would make supposed scare 
warehouse space available to new entrants,'' Gellhorn called ``this 
probably the weakest consent decree ever negotiated by the Department 
of Justice.''
    Gellhorn also said that the reason that the Department of Justice 
was willing to accept this ``moral defeat'' was that ``after combing 
through ten years of Topa's records and interviewing scores 
[[Page 28176]] of others, the government could not find anything to 
object to about how Topa conducts its business.''
    Topa's decision to settle this matter ``involves no finding or 
acknowledgment of any wrong-doing,'' attorney Hodge emphasized. Nor 
will it change how Topa does business ``because the Company is not 
being asked to do anything different from what it has been doing over 
the past five years.''
    All the government has complained about is that Topa's acquisitions 
resulted in it being the sole wholesale distributor for major distilled 
spirits in the U.S. Virgin Islands. ``What the government fails to 
note,'' according to Ms. Hodge, ``is that Topa has been successful 
because it has served both its suppliers and its customers so well.'' 
Nonetheless, ``it has accepted this settlement in order to end what has 
been a significant drain on the company's resources,'' Hodge said.
    Topa owns West Indies Corp. and Bellows International, Ltd. in the 
U.S. Virgin Islands. ``None of the acquisitions we have made in the 
Virgin Islands have been sought out by us,'' said Topa Chairman, John 
Anderson. ``In several cases, we were asked to help a failing company, 
which in turn allowed many employees to keep their jobs. Our only aim 
has been to be a good employer and a good corporate citizen in the V.I. 
community and a solid performer for our many quality brands.'' Topa 
employees (sic) over 225 employees in the Territory.
    For additional information, please call Maria Hodge (809-774-6845).

December ________, 1994

    Note: Retyped by Department of Justice. Brackets (``[ ]'') 
substituted by Department of Justice for redlining in the original.

Final Judgment

    Plaintiff, United States of America, filed its Complaint on 
December 7, 1994. Plaintiff and defendant, by their respective 
attorneys, have consented to the entry of this Final Judgment without 
trial or adjudication of any issue of fact or law. This Final Judgment 
shall not constitute any evidence against, or any admission by, any 
party with respect to any issue of fact or law. Defendant has agreed to 
be bound by the provisions of this Final Judgment pending its approval 
by the Court. Therefore, before the taking of any testimony, and 
without trial or adjudication of any issue of fact or law, and upon the 
consent of the parties, it is hereby ordered, adjudged and decreed as 
follows:
I
    This Court has jurisdiction over the subject matter of this action 
and each of the parties consenting to this Final Judgment. The 
Complaint states a claim upon which relief may be granted against 
defendant under Section 3 of the Sherman Act (15 U.S.C. Sec. 3).
II
    As used in this Final Judgment:
    A. ``Distilled spirits'' means liquor products of all types 
intended for human consumption, including, but not limited to, whiskey, 
gin, vodka, rum, tequila, brandy, liqueurs and cordials, but excluding 
wine and malt beverages and non-alcoholic beverages.
    B. ``Person'' means any individual, association, cooperative, 
partnership, corporation or other business or legal entity.
    C. ``Virgin Islands'' means the Territory of the Virgin Islands of 
the United States.
    D. ``Retailer'' means any person engaged in the business of 
purchasing distilled spirits from wholesalers [or suppliers], as 
defined herein, and reselling them to consumers in establishments 
located in the Virgin Islands, including such Virgin Islands-located 
establishments as retail liquor stores, grocery stores, convenience 
stores, restaurants and hotels.
    E. ``Supplier'' means any licensed manufacturer, distiller or 
importer of distilled spirits from which defendant or any other 
wholesaler [or any retailer], as defined herein, purchases distilled 
spirits or has purchased distilled spirits within one year prior to 
this Final Judgment.
    F. ``Wholesaler'' means any person holding a wholesaler's license 
for distilled spirits from the government of the Virgin Islands and who 
is engaged in the business of purchasing distilled spirits from 
suppliers and reselling them to other wholesalers or to retailers 
located in the Virgin Islands.
    G. ``Topa Equities (V.I.), Ltd.'' (hereinafter referred to as 
``Topa'') means defendant and its parent (but only to the extent of its 
effective supervision of, or direct involvement in, defendant's 
wholesale distribution of distilled spirits in the Virgin Islands), 
wholesaler subsidiaries, wholesaler affiliates, successors and assigns 
(excluding any independent purchasers), directors, officers, managers, 
agents and employees and any other person acting for or on behalf of 
them.
III
    The provisions of this Final Judgment shall apply to Topa and to 
all other persons in active concert or participation with Topa who 
shall have received actual notice of this Final Judgment by personal 
service or otherwise.
IV
    Topa is enjoined and restrained from:
    A. Taking any action under any contract or under Title 12A, 
Sections 131 and 132, of the Virgin Islands Code to prevent its 
suppliers from canceling their distribution arrangements for distilled 
spirits, whether written or not, with Topa upon thirty days' written 
notice and appointing another wholesaler in its stead. In the event of 
such cancellation of distribution arrangements for distilled spirits by 
a supplier, Topa shall, at the supplier's request, sell back to the 
supplier, at the prices Topa paid to the supplier to purchase the 
products, plus storage, handling and transportation costs, as well as 
all taxes and duties paid by Topa, all distilled spirits that Topa then 
has in its possession that were purchased by Topa from the supplier and 
that have not been sold or otherwise committed, and otherwise assist in 
the orderly disposition of such existing inventory;
    [B.] Communicating with any supplier, wholesaler or other person 
for the purpose or with the effect of urging, compelling, or coercing 
any supplier or wholesaler to refrain from selling distilled spirits to 
any retailer in the Virgin Islands. Nothing in this paragraph of 
Section IV shall be construed to inhibit Topa from negotiating, 
entering into, and adhering to a contract dealing with a supplier on an 
exclusive basis; provided, that such designation shall not directly or 
indirectly prevent any retailer in the Virgin Islands from acquiring 
distilled spirits directly from any supplier.]
    [C.] Entering into with, of enforcing or attempting to enforce 
against, any officer of Topa, any written contract, agreement or 
covenant not to compete in the distilled spirits industry in the Virgin 
Islands; and countering an offer of employment to any officer of Topa 
from any wholesaler with which a Topa supplier has entered into any 
arrangement to distribute its distilled spirits in the Virgin Islands. 
Otherwise, Topa may give its officers raises, bonuses and promotions in 
the ordinary course of business, counter offers of employment from 
distributors not engaged in the distribution of distilled spirits and 
take action against its former officers for the unlawful disclosure of 
trade secrets;
    [D.] Making unsolicited offers of employment to any executive 
employee [[Page 28177]] of any wholesaler with which a supplier has 
entered into any arrangement to distribute its distilled spirits in the 
Virgin Islands for two years following the opening for business of such 
wholesaler, unless such employee has previously resigned from or been 
terminated by such wholesaler;
    [E.] Refusing to deal with any retailer because that retailer deals 
with another wholesaler [or directly with a supplier];
    [F.] Intentionally preventing, or attempting to prevent, any 
wholesaler with which a supplier has entered into any arrangement to 
distribute its distilled spirits in the Virgin Islands from obtaining 
warehouse space for the distribution of distilled spirits. Topa may, in 
the ordinary course of business, seek, retain and acquire warehouse 
space to meet its ordinary and necessary business requirements;
    [G.] Directly or indirectly merging or consolidating with, or 
acquiring securities of, any other wholesaler without obtaining the 
prior written consent of the Antitrust Division of the Department of 
Justice; and
    [H.] Acquiring, without obtaining the prior written consent of the 
Antitrust Division of the Department of Justice, either any quantity in 
excess of 5% of a wholesaler's assets, excluding inventory, applied to 
the wholesale distribution of distilled spirits in the Virgin Islands, 
or any quantity in excess of 30% of a wholesaler's inventory of 
distilled spirits.
    Within thirty days of the entry of this Final Judgment, Topa shall 
cause to be delivered to all suppliers who have contracts then in 
existence with Topa, written or otherwise, by certified letter or its 
equivalent, a copy of this Final Judgment.
V
    For the purpose of determining or securing compliance with this 
Final Judgment and subject to any recognized privilege, from time to 
time:
    A. Duly authorized representatives of the Department of Justice 
shall, upon written request by the Attorney General or by the Assistant 
Attorney General in charge of the Antitrust Division, and on reasonable 
written notice to defendant made to its principal office in Los 
Angeles, California, be permitted:
    1. Access during the office hours of defendent to inspect and copy 
all books, ledgers, accounts, correspondence, memoranda, and other 
records and documents in the possession or under the control of 
defendant, which may have counsel present, relating to any of the 
matters contained in the Final Judgment; and
    2. Subject to the reasonable convenience of defendant and without 
restraint or interference from it, to interview officers, employees and 
agents of defendant, any of whom, together with defendant, may have 
counsel present, regarding any such matters.
    B. Upon written request by the Attorney General or the Assistant 
Attorney General in charge of the Antitrust Division made to 
defendant's principal office in Los Angeles, California, 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 obtained by the means provided in this Final 
Judgment shall be divulged by any 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, 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 be that to which a 
claim of protection may be asserted under Rule 26(c)(7) of the Federal 
Rules of Civil Procedure or as otherwise provided by statute, and the 
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,'' or as otherwise provided by statute, then ten days' notice 
shall be given by the United States to defendant prior to divulging 
such material in any legal proceeding (other than a grand jury 
proceeding) to which defendant is not a party.
VI
    Topa shall:
    A. Establish and implement a plan for monitoring compliance by its 
officers, directors, agents, managers and other employees with the 
terms of the Final Judgment; and
    B. File with this Court and serve upon plaintiff, within ninety 
days after the date of entry of this Final Judgment, an affidavit as to 
the fact and manner of its compliance with this Final Judgment.
VII
    Jurisdiction is retained by this Court for the purpose of enabling 
either 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 modification of any of the 
provisions hereof, for the enforcement of compliance herewith and for 
the punishment of violations hereof.
VIII
    This Final Judgment will expire on the [delete ``fifth''] [tenth] 
anniversary of its date of entry.
IX
    Entry of this Final Judgment is in the public interest.

    Dated:

----------------------------------------------------------------------
United States District Judge, District of the Virgin Islands.

[FR Doc. 95-12561 Filed 5-26-95; 8:45 am]
BILLING CODE 4410-01-M