[Federal Register Volume 60, Number 151 (Monday, August 7, 1995)]
[Notices]
[Pages 40195-40204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19308]



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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Interstate Bakeries Corp. and Continental Baking 
Co.; Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Consent 
Judgment, Stipulation, and Competitive Impact Statement have been filed 
with the United States District Court for the Northern District of 
Illinois, Eastern Division in a civil antitrust case, United States v. 
Interstate Bakeries Corp. and Continental Baking Co., Civ. No. 95 C 
4194.
    On July 20, 1995, the United States filed a Complaint seeking to 
enjoin a transaction by which Interstate agreed to acquire Continental. 
Continental and Interstate are the country's first and third largest 
wholesale commercial bakers and producers of white pan bread (``plain 
old white bread''). The Complaint alleged that the proposed acquisition 
would substantially lessen competition in the sale of white pan bread 
in five markets (Chicago, Milwaukee, central Illinois (Springfield, 
Peoria, Champaign/Urbana), San Diego, and Los Angeles) in violation of 
section 7 of the Clayton Act, 15 U.S.C. 18.
    The proposed Final Judgment requires defendants to divest such 
brand names and possibly other assets as are necessary to create a new 
competitor in the sale of white pan bread in each of the five markets. 
If the required divestitures are not accomplished within nine months, 
the Court will appoint a trustee to complete the sales. The Hold 
Separate Stipulation and Order is intended to facilitate the 
divestitures by requiring defendants to hold separate and maintain 
certain products and plans as economically viable assets pending 
possible divestiture. A Competitive Impact Statement filed by the 
United States describes the Complaint, the proposed Final Judgment, and 
remedies available to private litigants.
    The public is invited to comment to the Justice Department and to 
the Court. Comments should be addressed to Anthony V. Nanni, Chief, 
Litigation I Section, U.S. Department of Justice, Antitrust Division, 
1401 H Street NW., Room 4000, Washington, DC 20530 (telephone: (202) 
307-0207). Comments must be received within sixty days.
    Copies of the Complaint, Hold Separate Stipulation and Order, 
proposed Final Judgment, and Competitive Impact Statement are available 
for inspection in Room 207 of the U.S.Department of Justice, Antitrust 
Division, 325 7th Street, NW., Washington, DC 20530 (telephone: (202) 
514-2841), and at the office of the Clerk of the United States District 
Court for the Northern District of Illinois, Eastern Division, 219 S. 
Dearborn, 20th Floor, Chicago, Illinois, 60604. Copies of these 
materials may be obtained upon request and payment of a copying fee.
Constance K. Robinson,
Director of Operations.
Civil Action No.: 95C 4194
Filed: 7/20/95
Judge Manning

Hold Separate Stipulation and Order

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

I. Definitions

    As used in this Stipulation and Order:
    A. ``Associated Assets'' means:
    (1) All labels used on White Pan Bread in the Relevant Territories;

[[Page 40196]]

    (2) All land, buildings, fixtures, machinery and equipment related 
to the plant;
    (3) All trucks and other vehicles, depots or warehouses, and thrift 
stores utilized by defendants in the distribution of White Pan Bread in 
the Relevant Territories; and
    (4) All route books, customer lists, and other records used in the 
defendants' day-to-distribution of White Pan Bread in the Relevant 
Terrorities.
    B. ``Label'' means all legal rights associated with a brand's 
trademarks, trade names, copyrights, designs, and trade dress, the 
brand's trade secrets; the brand's production knowhow, including, but 
not limited to, recipes and formulas used to produce bread sold under 
the label; and packagaging, marketing and distribution knowhow and 
documentation, such as customer lists and route maps, associated with 
the brand.
    C. ``Continental'' means Continental Baking Company, each division 
or subsidiary thereof, and each officer, director, employee, attorney, 
agent, successor or assignee, or other person acting for or on behalf 
of any of them.
    D. ``Interstate'' means Interstate Bakeries Corporation, each 
division or subsidiary thereof, and each officer, director, employee, 
attorney, agent, successor or assignee, or other person acting for or 
on behalf of any of them.
    E. ``Interstate's Chicago Plant'' means the Interstate bread 
production facility located in Chicago, Illinois and its Associated 
Assets.
    F. ``Interstate's Southern California Plant'' means the Interstate 
bread production facility located in Glendale, California and its 
Associated Assets.
    G. ``Interstate's Central Illinois Plants'' means the Interstate 
bread production facility located in Decatur, Illinois and the 
Interstate bread production facility located in Peoria, Illinois and 
their Associated Assets.
    H. ``Continental's Chicago Plant'' means the Continental bread 
production facility located in Hodgkins, Illinois and its Associated 
Assets.
    I. ``Continental's Southern California Plant'' means the 
Continental bread production facility located in Pomona, California and 
its Associated Assets.
    J. ``Eastern Wisconsin Territory'' means Adams, Brown, Calumet, 
Columbia, Dane, Dodge, Door, Fond du Lac, Forest, Florence, Green, 
Green Lake, Jefferson, Kenosha, Kewaunee, Langlade, Manitowoc, 
Marinette, Marquette, Menominee, Milwaukee, Oconto, Outagamie, Ozaukee, 
Portage, Racine, Rock, Shawano, Sheboygan, Walworth, Washington, 
Waukesha, Waupaca, Waushara, and Winnebago counties in the state of 
Wisconsin.
    K. ``Chicago Territory'' means Boone, Cook, DeKalb, Du Page, 
Grundy, JoDaviess, Kane, Kankakee, Kendall, Lake, Lee, McHenry, Ogle, 
Stephenson, Will, and Winnebago counties in the state of Illinois, and 
Lake and Porter counties in the state of Indiana.
    L. ``Central Illinois Territory'' means Adams, Bond, Brown, Bureau, 
Calhoun, Carroll, Cass, Champaign, Christian, Clark, Clay, Clinton, 
Coles, Crawford, Cumberland, De Witt, Douglas, Edgar, Edwards, 
Effingham, Fayette, Ford, Fulton, Greene, Hancock, Henderson, Henry, 
Iroquois, Jasper, Jersey, Knox, La Salle, Lawrence, Livingston, Logan, 
Macon, Macoupin, Madison, Marion, Marshall, Mason, McDonough, McLean, 
Menard, Mercer, Montgomery, Morgan, Moultrie, Peoria, Piatt, Pike, 
Putnam, Richland, Rock Island, Sangamon, Schuyler, Scott, Shelby, 
Stark, Tazewell, Vermilion, Wabash, Warren, Wayne, Whiteside, and 
Woodford counties in the state of Illinois.
    M. ``Southern California Territory'' means Imperial, Los Angeles, 
Orange, Riverside, San Bernadino, and San Diego counties in the state 
of California.
    N. ``Relevant Territories'' means the Chicago, Eastern Wisconsin, 
Southern California, and Central Illinois Territories.
    O. ``White Pan Bread'' means white bread baked in a pan but shall 
not include hamburger and hot dog buns, or variety breads such as 
French bread and Italian bread.

II. Objectives

    The Final Judgment filed in this case is meant to ensure 
defendants' prompt divestitures for the purpose of establishing viable 
competitors in the sale of White Pan Bread to remedy the 
anticompetitive effects that the United States alleges would otherwise 
result from the acquisition of Continental by Interstate. This Hold 
Separate Stipulation and Order ensures, prior to such divestitures, 
that certain Interstate and Continental labels, plants and marketing 
and sales operations that compete in the Relevant Territories are 
maintained as independent, economically viable, ongoing business 
concerns, and that competition is maintained during the pendency of the 
divestitures.

III. Hold Separate Provisions

    Until the divestitures required by the Final Judgment have been 
accomplished:
    A. Defendants shall preserve, maintain, and continue to operate 
Continental's Chicago and Southern California Plants as independent 
competitors with management and operations held entirely separate, 
distinct and apart from those of Interstate. Defendants shall not 
coordinate the production, marketing or terms of sale of Continental's 
bread products with Interstate's bread products in the Relevant 
Territories. Within thirty (30) days of the entering of this Order, 
defendants shall inform plaintiff of steps taken to comply with this 
provision.
    B. Defendants shall take all steps necessary to ensure that 
Interstate's Chicago, Southern California and Central Illinois Plants 
and Continental's Chicago and Southern California Plants will be 
maintained as economically viable, ongoing business concerns. 
Defendants shall use all reasonable efforts to maintain and increase 
the sales of Interstate's and Continental's White Pan Bread and other 
bread products in the Relevant Territories and otherwise maintain these 
businesses as active competitors in the Relevant Territories.
    C. Defendants shall provide capital and provide and maintain 
sufficient working capital to maintain Interstate's Chicago, Southern 
California, and Central Illinois Plants and Continental's Chicago and 
Southern California Plants as economically viable, ongoing businesses, 
consistent with the requirements of Sections III(A) and (B).
    D. Defendants shall not sell, lease, assign, transfer or otherwise 
dispose of, or pledge as collateral for loans, assets that may be 
required to be divested pursuant to the Final Judgment.
    E. Defendants shall preserve the assets that may be required to be 
divested pursuant to the Final Judgment in a state of repair equal to 
their state of repair as of the date of this Hold Separate Stipulation 
and Order, ordinary wear and tear excepted.
    F. Defendant shall maintain, in accordance with sound accounting 
principles, separate, accurate and complete financial ledgers, books 
and records that report on a periodic basis, such as every four weeks 
or every month, consistent with past practices, the assets, 
liabilities, expenses, revenues and income of Interstate's Chicago, 
Southern California and Central Illinois Plants and Continental's 
Chicago and Southern California Plants.
    G. The production, pricing and promotional plans specific to 
Interstate's Chicago, Southern California, or Central Illinois Plants 
will not be transferred or otherwise made available to persons having 
direct sales or marketing responsibility for Continental's marketing 
and sales of 

[[Page 40197]]
White Pan Bread in any Relevant Territory; and the production, pricing 
and promotional plans specific to Continental's Chicago or Southern 
California Plants, or to Continental's marketing and sales of White Pan 
Bread in any Relevant Territory, will not be transferred or otherwise 
made available to persons having direct sales or marketing 
responsibility for Interstate's marketing and sales of White Pan Bread 
in any Relevant Territory, unless needed to comply with other 
provisions of this Order.
    H. Except in the ordinary course of business, or as is otherwise 
consistent with the requirements of Sections III(A) and (B), defendants 
shall not transfer or terminate, or alter any current employment or 
salary agreements for, any executive-level management, sales, 
marketing, or engineering personnel of Interstate's Chicago, Southern 
California, or Central Illinois Plants or Continental's Chicago or 
Southern California Plants.
    I. Defendants shall not in anyway inhibit the ability of any 
licensee or purchaser under the Final Judgment from hiring any person 
currently an employee of defendants' at any plant that may be divested 
pursuant to the Final Judgment.
    J. Defendants shall take no action that would interfere with the 
ability of any trustee appointed pursuant to the Final Judgment to 
complete the divesture pursuant to the Final Judgment to a suitable 
purchaser or purchasers.
    K. This Hold Separate Stipulation and Order shall remain in effect 
as to each Relevant Territory pending consummation of the divestitures 
contemplated by the proposed Final Judgment as to that Relevant 
Territory, or until further Order of the Court.

    Respectfully submitted,

    Dated:

    For Plaintiff United States of America:
Anne K. Bingaman,
Assistant Attorney General.
Arnold C. Celnicker
Lawrence R. Fullerton
Charles R. Schwidde
Charles Biggio
Anthony Harris
Illinois Bar #01133713
Constance K. Robinson
Evangelina Almirantearena
Anthony V. Nanni
Maurice Stucke
Willie L. Hudgins
Attorneys, U.S. Department of Justice Antitrust Division.
James B. Burns,
U.S. Attorney, N.D. Illinois.
    For Defendant Interstate Bakeries Corporation
Terry M. Grimm
    For Defendant Continental Baking Company
Jay W. Brown
    It is so ordered this 20th day of July, 1995.
Blanche M. Manning,
United States District Court Judge.

Stipulation

    It is stipulated by and between the undersigned parties, by their 
respective attorneys, that:
    1. The Court has jurisdiction over the subject matter of this 
action and over each of the parties hereto, and venue of this action is 
proper in the Northern District of Illinois.
    2. The parties consent that a Final Judgment in the form hereto 
attached may be filed and entered by the Court, upon the motion of any 
party or upon the Court's own motion, at any time after compliance with 
the requirements of the Antitrust Procedures and Penalties Act (15 
U.S.C. 16 (b)-(h)), and without further notice to any party or other 
proceedings, provided that plaintiff has not withdrawn its consent, 
which it may do at any time before the entry of the proposed Final 
Judgment by serving notice thereof on the defendants and by filing that 
notice with the Court.
    3. The parties shall abide by and comply with the provisions of the 
proposed Final Judgment pending entry of the Final Judgment, and shall, 
from the date of the filing of this Stipulation, comply with all the 
terms and provisions thereof as though the same were in full force and 
effect as an order of the Court.
    4. The parties shall abide by and comply with the provisions of the 
Hold Separate Stipulation and Order pending entry of the Hold Separate 
Stipulation and Order, and shall, from the date of the filing of this 
Stipulation, comply with all the terms and provisions thereof as though 
the same were in full force and effect as an order of the Court.
    5. In the event plaintiff withdraws its consent or if the proposed 
Final Judgment is not entered pursuant to this Stipulation, this 
Stipulation shall be of no effect whatever and the making of this 
Stipulation shall be without prejudice to any party in this or any 
other proceeding.

    Dated:

    Respectfully submitted.

    For Plaintiff United States of America
Anne K. Bingaman,
Assistant Attorney General.
Arnold C. Celnicker
Lawrence R. Fullerton
Charles R. Schwidde
Charles Biggio
Anthony Harris
Illinois Bar #01133713
Constance K. Robinson
Evangelina Almirantearena
Anthony V. Nanni
Maurice Stucke
Willie L. Hudgins
Attorneys, U.S. Department of Justice, Antitrust Division.
James B. Burns,
U.S. Attorney, N.D. Illinois.
    For Defendant Interstate Bakeries Corporation
Terry M. Grimm
    For Defendant Continental Baking Company
Jay W. Brown

    So Ordered.

United States District Judge

Final Judgment

    WHEREAS, plaintiff, United States of America, having filed its 
Complaint herein on July 20, 1995, and plaintiff and defendants, by 
their respective attorneys, having consented to the entry of this Final 
Judgment without trial or adjudication of any issue of fact or law 
herein, and without this Final Judgment constituting any evidence 
against or an admission by any party with respect to any issue of law 
or fact herein;
    AND WHEREAS, defendants have agreed to be bound by the provisions 
of this Final Judgment pending its approval by the Court;
    AND WHEREAS, prompt and certain divestiture of certain rights or 
assets and prompt implementation of the Hold Separate Stipulation And 
Order to assure that competition is not substantially lessened are the 
essence of this agreement;
    AND WHEREAS, the parties intend to require defendants to make 
certain 

[[Page 40198]]
divestitures for the purpose of establishing viable competitors in the 
sale of White Pan Bread;
    AND WHEREAS, defendants have represented to plaintiff that the 
divestitures required below can and will be made and that defendants 
will later raise no claims of hardship or difficulty as ground for 
asking the Court to modify any of the divestiture provisions contained 
below;
    NOW, THEREFORE, before the taking of any testimony, and without 
trial or adjudication of any issue of fact or law herein, and upon 
consent of the parties hereto, it is hereby ORDERED, ADJUDGED, AND 
DECREED as follows:

I. Jurisdiction

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

II. Definitions

    As used in this Final Judgment:
    A. ``Interstate'' means defendant Interstate Bakeries Corporation, 
a Delaware corporation with its headquarters in Kansas City, Missouri, 
and includes its successors and assigns, and its subsidiaries, 
directors, officers, managers, agents, and employees.
    B. ``Continental'' means defendant Continental Baking Company, a 
Delaware corporation with its headquarters in St. Louis, Missouri, and 
includes its successors and assigns, and its subsidiaries, directors, 
officers, managers, agents, and employees.
    C. ``Bread Assets'' means:
    (1) Either the Mrs. Karl's Label or the Wonder Label for all bread 
products except White Pan Bread in the Eastern Wisconsin Territory;
    (2) Either the Butternut Label or the Wonder Label for all bread 
products except White Pan Bread in the Chicago Territory;
    (3) Either the Butternut Label or the Sunbeam Label or the Wonder 
Label for all bread products except White Pan Bread in the Central 
Illinois Territory;
    (4) Either the Weber's Label or the Wonder Label for all bread 
products except White Pan Bread in the Southern California Territory;
    (5) Either the Interstate plant located in Chicago, Illinois or the 
Continental plant located in Hodgkins, Illinois;
    (6) Either the Interstate plant located in Glendale, California or 
the Continental plant located in Pomona, California;
    (7) Either the Interstate plant located in Decatur, Illinois or the 
Interstate plant located in Peoria, Illinois;
    (8) All land, buildings, fixtures, machinery and equipment related 
to the above plants;
    (9) All trucks and other vehicles, depots or warehouses, and thrift 
stores utilized by defendants in the distribution of bread products 
under the Relevant Labels in the Relevant Territories; and
    (10) All route books, customer lists, and other records used in the 
defendants' day-to-day distribution of bread products under the 
Relevant Labels in the Relevant Territories.
    D. ``Label'' means all legal rights associated with a brand's 
trademarks, trade names, copyrights, designs, and trade dress; the 
brand's trade secrets; the brand's production knowhow, including, but 
not limited to, recipes and formulas used to produce bread sold under 
the brand; and packaging, marketing and distribution know how and 
documentation, such as customer lists and route maps, associated with 
the brand.
    E. ``Eastern Wisconsin Territory'' means Adams, Brown, Calumet, 
Columbia, Dane, Dodge, Door, Fond du Lac, Forest, Florence, Green, 
Green Lake, Jefferson, Kenosha, Kewaunee, Langlade, Manitowoc, 
Marinette, Marquette, Menominee, Milwaukee, Oconto, Outagamie, Ozaukee, 
Portage, Racine, Rock, Shawano, Sheboygan, Walworth, Washington, 
Waukesha, Waupaca, Waushara, and Winnebago counties in the state of 
Wisconsin.
    F. ``Chicago Territory'' means Boone, Cook, DeKalb, Du Page, 
Grundy, JoDaviess, Kane, Kankakee, Kendall, Lake, Lee, McHenry, Ogle, 
Stephenson, Will, and Winnebago counties in the state of Illinois, and 
Lake and Porter counties in the state of Indiana.
    G. ``Central Illinois Territory'' means Adams, Bond, Brown, Bureau, 
Calhoun, Carroll, Cass, Champaign, Christian, Clark, Clay, Clinton, 
Coles, Crawford, Cumberland, De Witt, Douglas, Edgar, Edwards, 
Effingham, Fayette, Ford, Fulton, Greene, Hancock, Henderson, Henry, 
Iroquois, Jasper, Jersey, Knox, La Salle, Lawrence, Livingston, Logan, 
Macon, Macoupin, Madison, Marion, Marshall, Mason, McDonough, McLean, 
Menard, Mercer, Montgomery, Morgan, Moultrie, Peoria, Piatt, Pike, 
Putnam, Richland, Rock Island, Sangamon, Schuyler, Scott, Shelby, 
Stark, Tazewell, Vermilion, Wabash, Warren, Wayne, Whiteside, and 
Woodford counties in the state of Illinois.
    H. ``Southern California Territory'' means Imperial, Los Angeles, 
Orange, Riverside, San Bernadino, and San Diego counties in the state 
of California.
    I. ``Relevant Labels'' means:
    (1) Either the Mrs. Karl's Label or the Wonder Label for White Pan 
Bread in the Eastern Wisconsin Territory;
    (2) Either the Butternut Label or the Wonder Label for White Pan 
Bread in the Chicago Territory;
    (3) Either the Butternut Label or the Sunbeam Label or the Wonder 
Label for White Pan Bread in the Central Illinois Territory; and
    (4) Either the Weber's Label or the Wonder Label for White Pan 
Bread in the Southern California Territory.
    J. ``Relevant Territories'' means the Chicago Territory, the 
Eastern Wisconsin Territory, the Central Illinois Territory and the 
Southern California Territory.
    K. ``White Pan Bread'' means white bread baked in a pan but shall 
not include hamburger and hot dog buns, or variety breads such as 
French bread and Italian bread.

III. Applicability

    A. The provisions of this Final Judgment apply to the defendants, 
their successors and assigns, their subsidiaries, directors, officers, 
managers, agents, and employees, and all other persons in active 
concert or participation with any of them who shall have received 
actual notice of this Final Judgment by personal service or otherwise.
    B. Defendants shall require, as a condition of the sale or other 
disposition of all or substantially all of the Relevant Labels and the 
Bread Assets, that the acquiring party or parties agree to be bound by 
the provisions of this Final Judgment.
    C. Nothing contained in this Final Judgment is or has been created 
for the benefit of any third party, and nothing herein shall be 
construed to provide any rights to any third party.
    D. The provisions of Section IV through VIII of this Final Judgment 
shall not be effective until the consummation of the acquisition of 
Continental by Interstate.

IV. Divestiture

    A. Defendants are hereby ordered and directed, within nine (9) 
months of entry of this Final Judgment, to grant to one or more 
purchasers a perpetual, royalty-free, assignable, transferable, 
exclusive license to use the Relevant Labels to produce (or have 
produced for it) and sell White Pan Bread in the Relevant Territories, 
together with such Bread Assets as are reasonably necessary in order 
for the acquirer of each Relevant Label to sell White Pan Bread under 
each respective Relevant Label at a level substantially equivalent to 
the average level of White Pan Bread 

[[Page 40199]]
sales of each respective Relevant Label in each Relevant Territory over 
the preceding year, and otherwise to remain a viable competitor in the 
White Pan Bread market in each Relevant Territory. Defendants shall 
cease using a Relevant Label within five (5) days of when a purchaser 
commences its use.
    B. Defendants agree to take all reasonable steps to accomplish 
quickly said divestiture. Plaintiff may, in its sole discretion, extend 
the time period for divestiture for an additional period of time not to 
exceed two months.
    C. In accomplishing the divestiture ordered by this Final Judgment, 
the defendants promptly shall make known, by usual and customary means, 
the availability of the Relevant Labels. The defendants shall provide 
any person making an inquiry regarding a possible purchase with a copy 
of the Final Judgment. The defendants shall also offer to furnish to 
all bona fide prospective purchasers, subject to customary 
confidentiality assurances, all reasonably necessary information 
regarding the Relevant Labels, except such information subject to 
attorney-client privilege or attorney work product privilege. 
Defendants shall provide such information to the plaintiff at the same 
time that such information is made available to any other person. 
Defendants shall permit prospective purchasers of the Relevant Labels 
to have access to personnel and to make such inspection of physical 
facilities and any and all financial, operational, or other documents 
and information as may be relevant to the divestiture required by this 
Final Judgment.
    D. Unless the plaintiff otherwise consents, divestiture under 
Section IV(A), or by the trustee appointed pursuant to Section V, shall 
include such Bread Assets and be accomplished in such a way as to 
satisfy plaintiff, in its sole discretion, that the Relevant Labels can 
and will be used by the purchaser or purchasers as part of viable, 
ongoing businesses engaged in the selling of White Pan Bread at 
wholesale to retail grocery stores and other customers. Divestiture 
shall be made to a purchaser or purchasers for whom it is demonstrated 
to plaintiff's satisfaction that (1) the purchase or purchases are for 
the purpose of competing effectively in the selling of White Pan Bread 
at wholesale to retail grocery stores and other customers; and (2) the 
purchaser or purchasers have the managerial, operational, and financial 
capability to compete effectively in the selling of White Pan Bread at 
wholesale to retail grocery stores and other customers; and (3) none of 
the terms of any agreements between the purchaser or purchasers and 
defendants give defendants the ability artificially to raise the 
purchaser's or purchasers' costs, lower the purchaser's or purchasers' 
efficiency, or otherwise interfere in the ability of the purchaser or 
purchasers to compete effectively.

V. Appointment of Trustee

    A. If defendants have not accomplished the divestiture required by 
Section IV within the time specified therein, defendants shall notify 
plaintiff of that fact in writing. Within ten (10) calendar days of 
that date, plaintiff shall provide defendants with written notice of 
the names and qualifications of not more than two (2) nominees for the 
position of trustee for the required divestiture. Defendants shall 
notify plaintiff within five (5) calendar days thereafter whether 
either or both of such nominees are acceptable. If either or both of 
such nominees are acceptable to defendants, plaintiff shall notify the 
Court of the person upon whom the parties have agreed and the Court 
shall appoint that person as the trustee. If neither nominee is 
acceptable to defendants, they shall furnish to plaintiff, within ten 
(10) calendar days after plaintiff provides the names of its nominees, 
written notice of the names and qualifications of not more than two (2) 
nominees for the position of trustee for the required divestiture. If 
either or both of such nominees are acceptable to plaintiff, plaintiff 
shall notify the Court of the person upon whom the parties have agreed 
and the Court shall appoint that person as the trustee. If neither 
nominee is acceptable to plaintiff, plaintiff shall furnish the Court 
the names and qualifications of its and defendants' proposed nominees. 
The Court may hear the parties as to the nominees' qualifications and 
shall appoint one of the nominees as the trustee.
    B. If defendants have not accomplished the divestiture required by 
Section IV of this Final Judgment at the expiration of the time period 
specified therein, subject to the selection process described in 
Section V(A), the appointment by the Court of the trustee shall become 
effective. The trustee shall then take steps to effect divestiture as 
specified in Section IV(A). The trustee shall have the right, in its 
sole discretion, to include in the package of assets to be divested any 
or all of the Bread Assets in addition to the Relevant Labels.
    C. After the trustee's appointment has become effective, only the 
trustee shall have the right to license the Relevant Labels and to sell 
the Bread Assets. The trustee shall have the power and authority to 
accomplish the divestiture to a purchaser acceptable to plaintiff at 
such price and on such terms as are then obtainable upon the best 
reasonable effort by the trustee, subject to the provisions of Section 
IV of this Final Judgment, and shall have such other powers as this 
Court shall deem appropriate. Defendants shall not object to the 
licensing of the Relevant Labels or the sale of the Bread Assets by the 
trustee on any ground other than the trustee's malfeasance. Any such 
objection by defendants must be conveyed in writing to plaintiff and 
the trustee within fifteen (15) calendar days after the trustee has 
notified defendants of the proposed licensing and sale in accordance 
with Section VI of this Final Judgment.
    D. The trustee shall serve at the cost and expense of defendants, 
shall receive compensation based on a fee arrangement providing an 
incentive based on the price and terms of the divestiture and the speed 
with which it is accomplished, and shall serve on such other terms and 
conditions as the Court may prescribe; provided however, that the 
trustee shall receive no compensation, nor incur any costs or expenses, 
prior to the effective date of his or her appointment. The trustee 
shall account for all monies derived. After approval by the Court of 
the trustee's accounting, including fees for its services, all 
remaining monies shall be paid to defendants and the trust shall then 
be terminated.
    E. Defendants shall take no action to interfere with or impede the 
trustee's accomplishment of the divestiture of the Relevant Labels or 
the Bread Assets and shall use its best efforts to assist the trustee 
in accomplishing the required divestiture. The trustee shall have full 
and complete access to the personnel, books, records, and facilities of 
defendants' overall businesses, and defendants shall develop such 
financial or other information necessary to the divestiture of the 
Relevant Labels and the Bread Assets.
    F. After its appointment becomes effective, the trustee shall file 
monthly reports with the parties and the Court setting forth the 
trustee's efforts to accomplish divestiture of the Relevant Labels and 
the Bread Assets as contemplated under this Final Judgment; provided 
however, that to the extent such reports contain information that the 
trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. Such reports shall include the name, 
address, and telephone number of each person who, during the preceding 
month, made an offer to acquire, expressed an interest in 

[[Page 40200]]
acquiring, entered into negotiations to acquire, or was contracted or 
made an inquiry about acquiring, any interest in the Relevant Labels or 
the Bread Assets, and shall describe in details each contact with any 
such person during that period. The trustee shall maintain full records 
of all efforts made to divest these operations.
    G. Within six (6) months after its appointment has become 
effective, if the trustee has not accomplished the divestiture required 
by Section IV of this Final Judgment, the trustee shall promptly file 
with the Court a report setting forth (1) the trustee's efforts to 
accomplish the required divestiture, (2) the reasons, in the trustee's 
judgment, why the required divestiture has not been accomplished, and 
(3) the trustee's recommendations; provided however, that to the extent 
such reports contain information that the trustee deems confidential, 
such reports shall not be filed in the public docket of the Court. The 
trustee shall at the same time furnish such reports to the parties, who 
shall each have the right to be heard and to make additional 
recommendations consistent with the purpose of the trust. The Court 
shall thereafter enter such orders as it shall deem appropriate in 
order to carry out the purpose of the trust, which shall, if necessary, 
include augmenting the assets to be divested, and extending the trust 
and the terms of the trustee's appointment.
VI. Notification

    Within two (2) calendar days following execution of a contract, 
contingent upon compliance with the terms of this Final Judgment, to 
effect, in whole or in part, any proposed divestiture pursuant to 
Sections IV or V of this Final Judgment, defendants or the trustee, 
whichever is then responsible for effecting the divestiture, shall 
notify plaintiff of the proposed divestiture. If the trustee is 
responsible, it shall similarly notify defendants. The notice shall set 
forth the details of the proposed transaction and list the name, 
address, and telephone number of each person not previously identified 
who offered to, or expressed an interest in or desire to, acquire any 
ownership interest in the business that is the subject of the binding 
contract, together with full details of same. Within fifteen (15) 
calendar days of receipt by plaintiff of such notice, plaintiff may 
request additional information concerning the proposed divestiture and 
the proposed purchaser. Defendants and the trustee shall furnish any 
additional information requested within twenty (20) calendar days of 
the receipt of the request, unless the parties shall otherwise agree. 
Within thirty (30) calendar days after receipt of the notice or within 
twenty (20) calendar days after plaintiff has been provided the 
additional information requested (including any additional information 
requested of persons other than defendants or the trustee), whichever 
is later, plaintiff shall provide written notice to defendants and the 
trustee, if there is one, stating whether or not it objects to the 
proposed divestiture. If plaintiff provides written notice to 
defendants and the trustee that it does not object, then the 
divestiture may be consummated, subject only to defendants' limited 
right to object to the sale under the provisions in Section V(C). 
Absent written notice that the plaintiff does not object to the 
proposed purchaser, a divestiture proposed under Section IV shall not 
be consummated. Upon objection by plaintiff, a divestiture proposed 
under Section IV shall not be consummated. Upon objection by plaintiff, 
or by defendants under the proviso in Section V(C), a divestiture 
proposed under Section V shall not be consummated unless approved by 
the Court.

VII. Affidavits

    Within ten (10) calendar days of the filing of this Final Judgment 
and every thirty (30) calendar days thereafter until the divestiture 
has been completed or authority to effect divestiture passes to the 
trustee pursuant to Section V of this Final Judgment, defendants shall 
deliver to plaintiff an affidavit as to the fact and manner of 
compliance with Sections IV and V of this Final Judgment. Each such 
affidavit shall include the name, address, and telephone number of each 
person who, at any time after the period covered by the last such 
report, made an offer to acquire, expressed an interest in acquiring, 
entered into negotiations to acquire, or was contacted or made an 
inquiry about acquiring, any interest in the Relevant Labels or in the 
Bread Assets, and shall describe in detail each contact with any such 
person during that period. Defendants shall maintain full records of 
all efforts made to divest these operations.

VIII. Financing

    With prior written consent of the plaintiff, defendants may finance 
all or any part of any purchase made pursuant to Sections IV or V of 
this Final Judgment.

IX. Preservation of Assets

    Until the divestitures required by the Final Judgment have been 
accomplished, defendants shall take all steps necessary to comply with 
the Hold Separate Stipulation And Order entered by this Court. 
Defendants shall take no action that would jeopardize the licensing of 
the Relevant Labels or the sale of the Bread Assets.

X. Compliance Inspection

    Only for the purpose of determining or securing compliance with the 
Final Judgment and subject to any legally recognized privilege, from 
time to time:
    A. Duly authorized representatives of the Department of Justice, 
upon written request of the Attorney General or of the Assistant 
Attorney General in charge of the Antitrust Division, and on reasonable 
notice to defendants made to its principal office, shall be permitted:
    1. Access during office hours of defendants to inspect and copy all 
books, ledgers, accounts, correspondence, memoranda, and other records 
and documents in the possession or under the control of defendants, who 
may have counsel present, relating to enforcement of this Final 
Judgment; and
    2. Subject to the reasonable convenience of defendants and without 
restraint or interference from them, to interview officers, employees, 
and agents of defendants, who may have counsel present, regarding any 
such matters.
    B. Upon the written request of the Attorney General or of the 
Assistant Attorney General in charge of the Antitrust Division made to 
defendants' principal office, defendants shall submit such written 
reports, under oath if requested, with respect to enforcement of this 
Final Judgment.
    C. No information or documents obtained by the means provided in 
this Section X shall be divulged by a representative of the Department 
of Justice to any person other than a duly authorized representative of 
the Executive Branch of the United States, except in the course of 
legal proceedings to which the United States is a party (including 
grand jury proceedings), or for the purpose of security compliance with 
this Final Judgment, or as otherwise required by law.
    D. If at the time information or documents are furnished by 
defendants to plaintiff, defendants represent and identify in writing 
the material in any such information or documents to which a claim of 
protection may be asserted under Rule 26(c)(7) of the Federal Rules of 
Civil Procedure, and defendants mark each pertinent page of such 
material, ``Subject to claim of protection under Rule 26(c)(7) of the 
Federal Rules of Civil Procedure,'' then ten (10) calendar days notice 
shall be given by plaintiff to defendants prior to divulging such 
material in any legal 

[[Page 40201]]
proceeding (other than a grand jury proceeding).

XI. Retention of Jurisdiction

    Jurisdiction is retained by this Court for the purpose of enabling 
any of the parties to this Final Judgment to apply to this Court at any 
time for such further orders and directions as may be necessary or 
appropriate for the construction or carrying out of this Final 
Judgment, for the modification of any of the provisions hereof, for the 
enforcement of compliance herewith, and for the punishment of any 
violations hereof.

XII. Termination

    Unless this Court grants an extension, this Final Judgment will 
expire on the tenth anniversary of the date its entry.

XIII. Public Interest

    Entry of this Final Judgment is in the public Interest.

Dated:-----------------------------------------------------------------

----------------------------------------------------------------------
United States District Judge

Competitive Impact Statement

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

I. Nature and Purpose of the Proceeding

    The United States filed a civil antitrust Complaint on July 20, 
1995, alleging that the proposed acquisition of Continental Baking 
Company (``Continental'') by Interstate Bakeries Corporation 
(``Interstate'') would violate Section 7 of the Clayton Act, 15 U.S.C. 
18. Continental and Interstate are the nation's first and third largest 
producers of white pan bread.
    The Complaint alleges that the combination of these major 
competitors would substantially lessen competition in the production 
and sale of white pan bread in five geographic markets: the Chicago 
area; the Milwaukee area; central Illinois (i.e., Peoria, Springfield, 
Champaign/Urbana); the Los Angeles area and the San Diego area. The 
prayer for relief seeks: (1) A judgment that the proposed acquisition 
would violate Section 7 of the Clayton Act; and (2) a permanent 
injunction preventing Interstate from acquiring control of 
Continental's assets or otherwise combining them with its own business 
in these five geographic markets.
    At the same time that the suit was filed, a proposed settlement was 
filed that would permit Interstate to complete its acquisition of 
Continental's assets in other parts of the country, yet preserve 
competition in the markets in which the transaction would raise 
significant competitive concerns. Also filed were a Hold Separate 
Stipulation and Order, a Stipulation, and a proposed Final Judgment.
    The Hold Separate Stipulation and Order would, in essence, require 
Interstate to ensure that, until the divestitures mandated by the Final 
Judgment have been accomplished, Continental's bread production and 
distribution facilities and ancillary assets located in the affected 
markets will be held separate and apart from, and operated 
independently of, other Interstate assets and businesses. Moreover, 
because the Final Judgment may require Interstate to divest either its 
or Continental's plants and ancillary assets in these geographic 
markets, until the divestitures are accomplished, Interstate must 
preserve and maintain both sets of assets as saleable and economically 
viable, ongoing concerns.
    The proposed Final Judgment orders defendants to divest to one or 
more purchasers certain white pan bread labels in each market. 
Additional assets to be divested may include bread production and 
distribution facilities and ancillary assets currently used by 
Interstate or Continental in each market, as may be required by the 
purchaser to be able to sell branded white pan bread at levels 
substantially equivalent to the levels existing before the acquisition. 
Defendants must complete these divestitures within nine months after 
entry of the Final Judgment. If they do not, the Court may appoint a 
trustee to sell the assets.
    The United States, Interstate, and Continental have stipulated that 
the proposed Final Judgment may be entered after compliance with the 
APPA. Entry of the proposed Final Judgment would terminate this action, 
except the Court would retain jurisdiction to construe, modify, or 
enforce the provisions of the proposed Final Judgment and to punish 
violations thereof.

II. Description of the Events Giving Rise to the Alleged Violation

A. The Defendants and the Proposed Transaction

    Interstate, based in Kansas City, Missouri, is the third largest 
wholesale baker in the United States. In 1994, it reported total sales 
of $1.1 billion. Interstate has 14,000 employees, operates 31 
commercial bakeries, and transacts business in 39 states.
    Continental, a subsidiary of St. Louis-based Ralston Purina 
Company, is the nation's largest wholesale baker. In 1994, Continental 
reported total sales of $1.95 billion. It employs 22,000 and operates 
35 commercial bakeries that service 80% of the nation's population.
    On January 8, 1995, Interstate and Continental announced an 
agreement by which Interstate would acquire Continental from its 
parent, Ralston Purina Corporation, for cash and stock. This $450 
million transaction, which would combine Interstate and Continental, 
precipitated the government's suit.

B. The White Pan Bread Industry

    White pan bread describes the ubiquitous, white, sliced, soft loaf 
known to most consumers as ``plain old white bread.'' An American 
household staple, white pan bread is sold in the commercial bread aisle 
of every grocery store, convenience store, and mass merchandiser. White 
pan bread differs significantly in product attributes from other types 
of bread, such as variety bread (e.g., wheat, rye or French) and 
freshly baked in-store breads, in taste, texture, uses, perceived 
nutritional value, keeping qualities, and appeal to various groups of 
consumers. These differing attributes give rise to distinct consumer 
preferences for each type of bread. Many children, for instance, 
strongly prefer to eat white pan bread, and hence, a primary use of 
this bread is for sandwiches in school lunches.
    Because of its unique appeal and its distinguishing attributes, a 
small but significant increase in the price of white pan bread by all 
producers would not be rendered unprofitable by consumers substituting 
other breads. White pan bread is, therefore, an appropriate product 
market in which to assess the competitive effects of the acquisition.
    White pan bread is mass produced on high speed production lines by 
wholesale commercial bakers,\1\ who package and sell it to retailers 
under either their own brand or a private label (i.e., a brand 
controlled by a grocery chain or buying cooperative). Though physically 
similar to private label, branded white pan bread is perceived by 
consumers as fresher, better tasting, and higher quality bread; 
consequently, consumers often pay a premium of twice as much or more 
for branded white pan bread. Competition in the white pan bread market 
takes place on two levels, between different brands of 

[[Page 40202]]
white breads and between branded and private label white bread.

    \1\ The bread is also made by so-called ``captive'' bakers, 
i.e., wholesale commercial bakers which are owned by, and bake bread 
exclusively for, a grocery chain or wholesale grocery buying 
cooperative.
---------------------------------------------------------------------------

C. Competition Between Interstate and Continental

    Interstate and Continental compete directly in producing, 
promoting, and selling both private label and branded white pan bread 
to grocery retailers, who in turn sell it to consumers. Interstate's 
popular Butternut, Sunbeam, Mrs. Karl's and Weber's regional brands and 
Continental's powerhouse national Wonder brand are regarded by 
consumers as particularly close substitutes, for they are very 
comparable in appearance, price, taste, perceived quality and 
freshness.
    Interstate and Continental recognize the rivalry between their 
products in the relevant geographic markets. To avoid losing sales to 
the other, each has engaged in extensive promotional, couponing, and 
advertising campaigns that reduce the prices charged for their branded 
white pan breads to the benefit of consumers. Through these activities, 
Interstate and Continental have each operated as a significant 
competitive constraint on the other's prices for white pan bread.

D. Anticompetitive Consequences of the Acquisition

    The Complaint alleges that Interstate's acquisition of Continental 
would remove the competitive constraint and create (or facilitate 
Interstate's exercise of) market power (i.e., the ability to increase 
process to consumers) in five relevant geographic markets: the Chicago 
area; the Milwaukee area; central Illinois (i.e., Peoria, Springfield, 
Champaign/Urbana); the Los Angeles area and the San Diego area.
    Specifically, the Complaint alleges that the acquisition would 
increase concentration significantly in these already highly 
concentrated, difficult-to-enter markets.\2\ Post-acquisition, 
Interstate would dominate each market. It would control 41% of all 
sales of white pan bread in the Chicago market; 33% in the Milwaukee 
market; 62% in the central Illinois market; 64% in the Los Angeles 
market; and 50% in the San Diego market.

    \2\ The Hirfindahl-Hirschman Index (``HHI'') is a widely-used 
measure of market concentration. Following the acquisition, the 
approximate post-merger HHIs, calculated from 1994 dollar sales, 
would be over: 2250 with a change of 766 for Chicago; 1800 with a 
change of 548 for Milwaukee; 4000 with a change of 974 for central 
Illinois; 4200 with a change of 2035 for Los Angeles; and 2900 with 
a change of 1265 for San Diego. Under the Merger Guidelines, the 
Antitrust Division is likely to challenge any acquisition that 
increases the HHI by 50 points or more in a market in which the 
post-merger HHI will exceed 1800 points.
---------------------------------------------------------------------------

    The Complaint alleges that Interstate's acquisition of Continental 
would likely lead to an increase in prices charged to consumers for 
white pan bread. Following the acquisition, Interstate likely would 
unilaterally raise the price of its own brands, Continental's Wonder, 
or both. Because Interstate and Continental's brands are perceived by 
consumers as close substitutes, Interstate could pursue such a pricing 
strategy without losing so much in sales to competing white pan bread 
brands or to private labels that the price increase would be 
unprofitable. Interstate could, for instance, profitably impose a 
significant increase in the price of the Wonder white pan bread, since 
a substantial portion of any sales lost for that product would be 
recaptured by increased sales of Interstate's other brands. Similarly, 
Interstate could increase the prices of any one of its other popular 
brands of white pan bread, such as Butternut, and much of the sales 
lost by that brand would be picked up by Interstate's Wonder white 
bread brand.
    Since many consumers consider Interstate and Continental brands to 
be closer substitutes than most other branded or private label white 
breads, the competitive discipline provided by rivals after the 
acquisition would be insufficient to prevent Interstate from 
significantly increasing the prices now being charged for Interstate 
and Continental branded white pan bread. Moreover, in response to 
Interstate's price increases, competing bakers would likely increase 
their prices of white pan bread.
    The Complaint alleges that new entry by other wholesale commercial 
bakers, or brand repositioning by existing competitors, in any of the 
five adversely affected geographic markets is unlikely to counteract 
these anticompetitive effects.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment would preserve competition in the sale 
of white pan bread in each of the five relevant geographic markets. 
Within nine months after entry of the Final Judgment, defendants will 
divest certain white pan bread labels, and other assets if necessary, 
to make an economically viable competitor in the sale of white pan 
bread in each geographic market. It may well be that all that is 
required to accomplish this goal is the sale to an existing wholesale 
baker of the exclusive rights to make and sell white pan bread under 
either Continental or Interstate's most popular brand. Depending on the 
purchasers' requirements, however, effective divestiture could also 
require a sale of Interstate or Continental's production and 
distribution facilities. Defendants must take all reasonable steps 
necessary to accomplish the divestitures, and shall cooperate with the 
prospective purchaser or with the trustee. If defendants do not 
accomplish the ordered divestitures within that nine-month time period, 
the Final Judgment provides that the Court will appoint a trustee to 
complete the divestitures.
    If a trustee is appointed, the proposed Final Judgment provides 
that Interstate will pay all costs and expenses of the trustee. The 
trustee's commission will be structured so as to provide an incentive 
for the trustee based on the price obtained and the speed with which 
divestiture is accomplished. After her appointment becomes effective, 
the trustee will file monthly reports with the parties and the Court, 
setting forth the trustee's efforts to accomplish divestiture. At the 
end of six months, if the divestiture has not been accomplished, the 
trustee and the parties will make recommendations to the Court, which 
shall enter such orders as appropriate.
    The relief sought in the various markets alleged in the Complaint 
has been tailored to ensure that consumers of white pan bread will not 
experience unreasonably high prices as a consequence of the 
acquisition.

IV. Remedies Available to Potential Private Litigants

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

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and the defendants have stipulated that the 
proposed Final Judgment may be entered by the Court after compliance 
with the provisions of the APPA, provided that the United States has 
not withdrawn its consent. 

[[Page 40203]]
The APPA conditions entry upon the Court's determination that the 
proposed Final Judgment is in the public interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register. The United States will 
evaluate and respond to the comments. All comments will be given due 
consideration by the Department of Justice, which remains free to 
withdraw its consent to the proposed Final Judgment at any time prior 
to entry. The comments and the response of the United States will be 
filed with the Court and published in the Federal Register.
    Written comments should be submitted to: Anthony V. Nanni, Chief, 
Litigation I Section, Antitrust Division, United States Department of 
Justice, 1401 H Street, NW., Suite 4000, Washington, DC 20530. The 
proposed Final Judgment provides that the Court retains jurisdiction 
over this action, and the parties may apply to the Court for any order 
necessary or appropriate for the modification, interpretation, or 
enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    The United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits of its Complaint against 
defendants Interstate and Continental. The United States is satisfied, 
however, that the divestiture of the assets and other relief contained 
in the Final Judgment will establish viable white pan bread competitors 
in the geographic markets that would otherwise be adversely affected by 
the acquisition. Thus, the Final Judgment would achieve the relief the 
government would have obtained through litigation, but avoids the time, 
expense and uncertainty of a full trial on the merits of the 
government's Complaint.

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

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

    (1) the competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration or relief sought, anticipated effects of 
alternative remedies actually considered, and any other 
considerations bearing upon the adequacy of such judgment;
    (2) the impact of entry of such judgment upon the public 
generally and individuals alleging specific injury from the 
violations set forth in the complaint including consideration of the 
public benefit, if any, to be derived from a determination of the 
issues at trial.

15 U.S.C. 16(e) (emphasis added). As the D.C. Circuit recently held, 
this statute permits a court to consider, among other things, the 
relationship between the remedy secured and the specific allegations 
set forth in the government's complaint, whether the decree is 
sufficiently clear, whether enforcement mechanisms are sufficient, and 
whether the decree may positively harm third parties. See United States 
v. Microsoft, 1995-1 Trade Cas. (CCH) p 71,027, at____(Slip op. 26) 
(D.C. Cir. June 16,. 1995).
    In conducting this inquiry, ``the Court is nowhere compelled to go 
to trial or to engage in extended proceedings which might have the 
effect of vitiating the benefits of prompt and less costly settlement 
through the consent decree process.''\3\ Rather,

    \3\ 119 Cong. Rec. 24598 (1973). See United States v. Gillette 
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest'' 
determination can be made properly on the basis of the Competitive 
Impact Statement and Response to Comments filed pursuant to the 
APPA. Although the APPA authorizes the use of additional procedures, 
15 U.S.C. 16(f), those procedures are discretionary. A court need 
not invoke any of them unless it believes that the comments have 
raised significant issues and that further proceedings would aid the 
court in resolving those issues. See H.R. Rep. 93-1463, 93rd Cong. 
2d Sess. 8-9, reprinted in (1974) U.S. Code Cong. & Ad. News 6535, 
6538.

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

United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. 
para.61,508, at 71,980 (W.D. Mo. 1977).
    Accordingly, with respect to the adequacy of the relief secured by 
the decree, a court may not ``engage in an unrestricted evaluation of 
what relief would best serve the public.'' United States v. BNS, Inc., 
858 F.2d 456, 462 (9th Cir. 1988) quoting United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083 
(1981); see also Microsoft, 1995-1 Trade Cas. at ____ (Slip. op. 22). 
Precedent requires that

    The balancing of competing social and political interests 
affected by a proposed antitrust consent decree must be left, in the 
first instance, to the discretion of the Attorney General. The 
court's role in protecting the public interest is one of insuring 
that the government has not breached its duty to the public in 
consenting to the decree. The court is required to determine not 
whether a particular decree is the one that will best serve society, 
but whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.\4\

    \4\ United States v. Bechtel, 648 F.2d at 666 (citations 
omitted) (emphasis added); see United States v. BNS, Inc., 858 F.2d 
at 463; United States v. National Broadcasting Co., 449 F. Supp. 
1127, 1143 (C.D. Cal. 1978); United States v. Gillette Co., 406 F. 
Supp. at 716. See also Microsoft, 1995-1 Trade Cas. at____(Slip op. 
23) (whether ``the remedies (obtained in the decree are) so 
inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest.' '') (citations omitted).

    The proposed Final Judgment, therefore, should not be reviewed 
under a standard of whether it is certain to eliminate every 
anticompetitive effect of a particular practice or whether it mandates 
certainty of free competition in the future. Court approval of a final 
judgment requires a standard more flexible and less strict than the 
standard required for a finding of liability. ``[A] proposed decree 
must be approved even if it falls short of the remedy the court would 
impose on its own, as long as it falls within the range of 
acceptability or is `within the reaches of public interest.' (citations 
omitted).''\5\

    \5\ United States v. American Tel. and Tel Co., 552 F. Supp. 
131, 150 (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 
460 U.S. 1001 (1983) quoting United States v. Gillette Co., supra, 
406 F. Supp. at 716; United States v. Alcan Aluminum, Ltd., 605 F. 
Supp. 619, 622 (W.D. Ky 1985).
---------------------------------------------------------------------------

VIII. Determinative Documents

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

    Dated: July 21, 1995.

    Respectfully submitted,
Arnold C. Celnicker,
Attorney, Antitrust Division, U.S. Department of Justice.

Certificate of Service

    I hereby certify that on July 21, 1995, I caused a copy of the 
Competitive Impact Statement filed in U.S. v. Interstate Bakeries 
Corporation and Continental Baking Company, Civil No. 95 C 4194, to be 
served, by first class 

[[Page 40204]]
mail, postage prepaid on counsel for defendants Interstate Bakeries 
Corporation and Continental Baking Company, respectively: Terry Grimm, 
Winston & Strawn, 35 West Wacker Drive, Chicago, IL 60604; and Donald 
Hibner, Sheppard, Mullin, Richter & Hampton, 48th Floor, 333 South Hope 
Street, Los Angeles, CA 90071-1448.

    Dated: July 21, 1995.
Arnold C. Celnicker,
Attorney, U.S. Department of Justice, Antitrust Division.
[FR Doc. 95-19308 Filed 8-4-95; 8:45 am]
BILLING CODE 4410-01-M