[Federal Register Volume 60, Number 246 (Friday, December 22, 1995)]
[Notices]
[Pages 66557-66565]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31054]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States and State of Texas v. Kimberly-Clark Corporation
and Scott Paper Company; Proposed Final Judgment and Competitive Impact
Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. section 16(b)-(h), that a proposed Final
Judgment, Stipulation, and Competitive Impact Statement have been filed
with the United States District Court for the Northern District of
Texas, Dallas Division in United States and State of Texas v. Kimberly-
Clark Corporation and Scott Paper Company, Civil No. 3:95 CV 3055-P, as
to both defendants.
On December 12, 1995, the United States and the State of Texas
filed a Complaint alleging that the proposed merger of Kimberly-Clark
Corporation (``Kimberly-Clark'') and Scott Paper Company (``Scott'')
would violate Section 7 of the Clayton Act, 15 U.S.C. Section 18. The
Complaint further alleges that the merger of Kimberly-Clark and Scott
would lessen competition substantially and tend to create a monopoly in
the sale of consumer facial tissue and baby wipes in the United States.
The proposed Final Judgment, filed the same time as the Complaint,
requires Kimberly-Clark to divest the Scott baby wipes brands, Baby
Fresh and Wash A Bye Baby and
[[Page 66558]]
the Scott facial tissue brand, Scotties, along with certain tangible
and intangible assets.
Public comment is invited within the statutory 60-day comment
period. Such comments and responses thereto will be published in the
Federal Register and filed with the Court. Comments should be directed
to Anthony V. Nanni, Chief, Litigation I Section, Antitrust Division,
United States Department of Justice, 1401 H Street, N.W., Suite 4000,
Washington, D.C. 20530 (telephone: 202/307-6694).
Constance K. Robinson,
Director of Operations.
United States District Court, Northern District of Texas, Dallas
Division
United States of America and State of Texas, Plaintiffs, v.
Kimberly-Clark Corporation and Scott Paper Company, Defendants.
Civil Action No.: 3:95 CV 3055-P. Filed: December 12, 1995.
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 Texas.
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. Sec. 16(b)-(h)), and without further notice to any party or
other proceedings, provided that either plaintiff has not withdrawn its
consent, which either or both may do at any time before the entry of
the proposed Final Judgment by serving notice thereof on 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 of the Final Judgment as though they were in full
force and effect as an order of the Court.
4. In the event either 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: December 12, 1995.
For Plaintiff United States:
Anne K. Bingaman
Assistant Attorney General, District of Columbia #369900.
Lawrence R. Fullerton,
Deputy Asst. Attorney General, District of Columbia #251264.
Constance K. Robinson,
Director of Operations, District of Columbia #244800.
Charles E. Biggio, Sr. Counsel,
State of New York (no bar no. assigned)
Anthony V. Nanni, Chief,
Litigation I Section State of New York (no bar number assigned).
Anthony E. Harris, Attorney,
State of Illinois #01133713, Antitrust Division, U.S. Department of
Justice, 1401 H Street, N.W., Suite 4000, Washington, D.C. 20530, (202)
307-6583.
For Plaintiff State of Texas:
Dan Morales,
Attorney General of Texas
Jorge Vega,
First Assistant Attorney General
Laquita A. Hamilton,
Deputy Attorney General
Thomas P. Perkins, Jr.,
Assistant Attorney General, Chief, Consumer Protection Div.
Mark Tobey,
Assistant Attorney General, Antitrust Section, State of Texas
#22082960, P.O. Box 12548, Austin TX 78711-2548, (512) 463-2185.
For Defendant Kimberly-Clark Corp.:
William O. Fifield, Esquire,
State of Illinois #0080332, Sidley & Austin, One First National Plaza,
Chicago, Illinois 60603, (312) 853-7474
For Defendant Scott Paper Company:
Michael L. Weiner, Esquire,
State of New York (no bar number assigned) Skadden, Arps, Slate,
Meagher & Flom, 919 Third Avenue, New York, New York 10022-3897, (212)
735-2632
Executed on: December 11, 1995.
United States District Court, Northern District of Texas, Dallas
Division
United States of American and State of Texas. Plaintiffs, v.
Kimberly-Clark Corporation and Scott Paper Company, Defendants.
Civil No.: 3:95 CF 3055-P. Filed: December 12, 1995.
Final Judgment
Whereas, plaintiffs, the United States of American and the State of
Texas, having filed their Complaint herein on December 12, 1995, and
plaintiffs 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 and
assets to assure that competition is not substantially lessened are the
essence of this agreement;
And whereas, plaintiffs require defendants to make certain
divestitures for the purpose of establishing viable competitors in the
sale of baby wipes and facial tissue;
And whereas, defendants have represented to plaintiffs that the
divestitures required below can and will be made and that defendants
will later raise no claims of hardship or difficulty as grounds for
asking the Court to modify any of the divestiture provisions contained
below;
New, 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 defendants under Section 7 of the Clayton
Act, as amended (15 U.S.C. 18).
II. Definitions
As used in this Final Judgment:
A. ``Kimberly-Clark'' means defendant Kimberly-Clark Corporation, a
Delaware corporation with its headquarters in Dallas, Texas, and
includes its successors and assigns, and its subsidiaries, directors,
officers, managers, agents, and employees.
B. ``Scott'' means defendant Scott Paper Company, a Pennsylvania
corporation with its headquarters in Boca Raton, Florida, and includes
its successors and assigns, and its subsidiaries, directors, officers,
managers, agents, and employees.
C. ``Relevant Wet Wipes Assets'' means:
(1) The Dover, Delaware plant of Scott, including all tangible
assets used by Scott in connection with its business of researching,
developing, making, having made, packaging, distributing, or selling
products of the Dover plant, including but not limited to: the
manufacturing plant and associated web making, converting, packaging
and distributing equipment and facilities, inventory, real property,
and any other interests, or tangible assets or
[[Page 66559]]
improvements, associated with the Dover plant;
(2) A twenty-five year, exclusive, royalty-free and assignable
license, perpetually renewable at the licensee's option, to make, have
made, use or sell in the United States any label of any baby wipes
product currently produced at the Dover, Delaware plant, including but
not limited to the Baby Fresh, Wash-a-Bye Baby, Baby Fresh Gentle
Touch, and Kid Fresh labels, and any improvement to or line extension
of those labels; and
(3) All intangible assets, wherever located, that relate in any way
to the tangible assets and labels described above (including but not
limited to: manufacturing, converting, packaging and distribution know-
how); exclusive, assignable rights to all patents, proprietary
technology, supply contracts, and business information solely dedicated
to the tangible assets or the labels described above; rights in real
and personal property; and nonexclusive, assignable rights to all
related patents, proprietary technology and business information used
in connection with, but not solely dedicated to the tangible assets or
the labels described above.
D. ``Relevant Facial Tissue Assets'' means:
(1) A twenty-five year, exclusive, royalty-free and assignable
license, perpetually renewable at the licensee's option, to make, have
made, use or sell in the United States any facial tissue under the
Scotties label, and a covenant that defendants shall not make, have
made, use or sell in the United States any facial tissue under the
Scott or Scotties label;
(2) Any two of the following four tissue mills: the Scott tissue
mill in Marinette, Wisconsin; the Scott tissue mill in Ft. Edward, New
York; the Kimberly-Clark Lakeview tissue mill in Neenah, Wisconsin; and
the Kimberly-Clark Badger-Globe tissue mill in Neenah, Wisconsin;
provided, however, that in the event a purchaser elects to purchase the
Marinette, WI tissue mill of Scott, defendants shall not be required to
divest the DRC tissue machine and associated converting assets, located
in an adjacent facility on the Marinette tissue mill site and not
currently used for making facial tissue, in which case defendants
shall, at the option of the purchaser, enter into an arrangement with
respect to the measures necessary to separate the DRC tissue machine
from the rest of the Marinette tissue mill, including but not limited
to a long-term agreement to provide, on a nondiscriminatory basis,
shared utilities, such as water, electric, steam, and treatment of
waste or effluent;
(3) At the purchaser's option. (a) a commitment by defendants to
enter into up to a three-year agreement to sell to purchaser, at such
rates as to which purchaser and defendants may agree, as much as 25,000
metric tons/year of tissue parent rolls; and (b) a commitment by
defendants to enter into up to a three-year agreement to buy from the
purchaser, at such rates as to which purchaser and defendants may
agree, as much as 25,000 metric tons/year of tissue parent rolls;
(4) All tangible assets used solely in connection with the business
of making, having made, using, converting, packaging, distributing, or
selling any product from any of the tissue mills identified in Section
II(D)(2), including but not limited to: the tissue mill and associated
papermaking, converting, packaging and distribution equipment and
facilities; real property; or tangible assets or improvements,
associated with the tissue mill; and
(5) All intangible assets, not otherwise addressed above, wherever
located, that relate in any way solely to the tangible assets described
above or the Scotties label (including but not limited to: papermaking,
converting, packaging and distributing know-how); exclusive, assignable
rights to all patents, proprietary technology, supply contracts, and
business information and rights in real and personal property solely
dedicated to the tangible assets or the Scotties label; and
nonexclusive, assignable rights to all related patents, proprietary
technology and business information used in connection with, but not
solely dedicated to the tangible assets or the Scotties label.
E. ``Label'' means all legal rights associated with a brand's
trademarks, trade names, copyrights, designs, and trade dress (and any
improvements, extensions or modifications); the brand's trade secrets;
know-how or other proprietary information for making, having made,
using and selling the brand, including, but not limited to, packaging,
sales, marketing and distribution know-how and documentation, such as
customer lists.
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 Wet Wipes
Assets and Relevant Facial Tissue Assets, that the purchaser or
purchasers agree to be bound by the provisions of this Final Judgment.
IV. Divestitures
A. Defendants are hereby ordered and directed, within 150 days
after filing of the Final Judgment, to divest to a purchaser the
Relevant Wet Wipes Assets, in accordance with the procedures specified
in this Final Judgment.
Defendants are ordered and directed, within 180 days after filing
of the Final Judgment, to divest to one or more purchasers the Relevant
Facial Tissue Assets, in accordance with the procedures specified in
this Final Judgment.
B. Defendants agree to take all reasonable steps to accomplish the
divestitures as expeditiously and timely as possible. Plaintiffs may,
in their sole discretion, extend the time period for any divestiture
for an additional period of time not to exceed two months.
C. In accomplishing the divestitures ordered by this Final
Judgment, defendants promptly shall make known, by usual and customary
means, the availability of the Relevant Wet Wipes Assets and Relevant
Facial Tissue Assets. Defendants shall provided any person making an
inquiry regarding a possible purchase with a copy of the Final
Judgment. Defendants shall also offer to furnish to all bona fide
prospective purchasers, subject to customary confidentiality
assurances, all reasonably necessary information regarding the Relevant
Wet Wipes Assets and the Relevant Facial Tissue Assets, except such
information subject to attorney-client privilege or attorney work
product privilege. Defendants shall make available such information to
plaintiffs at the same time that such information is made available to
any other person. Defendants shall permit prospective purchasers of the
Relevant Wet Wipes Assets and Relevant Facial Tissue Assets 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 divestitures required by this
Final Judgment.
D. Unless plaintiffs otherwise consent in writing, divestitures
under Section IV(A), or by the trustee appointed pursuant to Section V,
shall include the Relevant Wet Wipes Assets and Relevant Facial Tissue
Assets and be
[[Page 66560]]
accomplished in such a way as to satisfy plaintiffs, in their sole
discretion, that the Relevant Wet Wipes Assets and Relevant Facial
Tissue Assets can and will be used by the purchaser or purchasers as
part of viable, ongoing businesses engaged in the selling of baby wipes
and facial tissue at wholesale to retail stores. Each divestiture shall
be made to a purchaser or purchasers for whom it is demonstrated to
plaintiffs' satisfaction that (1) the purchase or purchases are for the
purpose of competing effectively in making and selling branded baby
wipes and/or facial tissue at wholesale to retail stores and other
customers; and (2) the purchaser or purchasers have or soon will have
the managerial, operational, and financial capability to compete
effectively in making and selling branded baby wipes and/or facial
tissue at wholesale to retail stores; and (3) none of the terms of any
agreement 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. Although Sections II(D)(2) and IV(A) require a
sale of any two of four tissue mills, plaintiffs can, in their sole
discretion, approve a divestiture involving a sale of less than two
tissue mills listed in Section II(D), if convinced that such
divestiture is sufficient to satisfy their competitive concerns.
E. Defendants shall exercise any residual right in any label
licensed pursuant to this Final Judgment solely for the purpose of
protecting their lawful intellectual property rights. Defendants shall
not, in any circumstance, exercise any such right to impair or inhibit
in any way a licensee's ability to compete, and they shall not exercise
such right, directly or indirectly, to obtain competitively-sensitive
information pertaining to any licensee.
V. Appointment of Trustee
A. If defendants have not accomplished any divestiture required by
Section IV within the time specified therein, defendants shall notify
plaintiffs of that fact in writing. Within ten (10) calendar days of
their receipt of such written notice, plaintiffs 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 plaintiffs 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, plaintiffs 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 plaintiffs, within ten (10) calendar days after plaintiffs
provide the names of their 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 plaintiffs, plaintiffs 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 plaintiffs, plaintiffs 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 either of the divestitures
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 the
divestiture(s) specified in Section IV(A).
C. After the trustee's appointment has become effective, only the
trustee shall have the right to sell the Relevant Wet Wipes Assets or
Relevant Facial Tissue Assets. The trustee shall have the power and
authority to accomplish the divestiture(s) to a purchaser acceptable to
plaintiffs 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
sale of the Relevant Wet Wipes Assets or Relevant Facial Tissue Assets
by the trustee on any grounds other than the trustee's malfeasance. Any
such objection by defendants must be conveyed in writing to plaintiffs
and the trustee no later than 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 which provides 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
(other than related to the selection process), 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 Wet Wipes
Assets or Relevant Facial Tissue Assets and shall use its best efforts
to assist the trustee in accomplishing the required divestiture.
Subject to a customary confidentiality agreement, the trustee shall
have full and complete access to the personnel, books, records, and
facilities related to the Relevant Wet Wipes Assets or the Relevant
Facial Tissue Assets, and defendants shall develop such financial or
other information necessary to the divestiture of the Relevant Wet
Wipes Assets and Relevant Facial Tissue 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 Wet Wipes
Assets and Relevant Facial Tissue 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 acquiring, entered into negotiations to acquire, or was
contacted or made an inquiry about acquiring, any interest in the
Relevant Wet Wipes Assets and Relevant Facial Tissue Assets, and shall
describe in detail each contact with any such person during that
period. The trustee shall maintain full records of all efforts made to
divest these operations.
G. Within six (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,
[[Page 66561]]
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 term of the trustee's appointment.
VI. Notification
Within two (2) business days following execution of a definitive
agreement, 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 plaintiffs 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 assets that are the subject of the finding
contract, together with full details of same. Within fifteen (15 )
calendar days of receipt by plaintiffs of such notice, plaintiffs 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 plaintiffs have been provided the
additional information requested (including any additional information
requested of persons other than defendants or the trustee), whichever
is later, plaintiffs shall proved written notice to defendants and the
trustee, if there is one, stating whether or not it objects to the
proposed divestiture. If plaintiffs provided written notice to
defendants and the trustee that it does not object, then the
divestiture may be consummated, subject only to defendant's limited
right to object to the sale under the provisions in Section V(C).
Absent written notice that the plaintiffs do not object to the proposed
purchaser, a divestiture proposed under Section IV shall not be
consummated. Upon objection by either plaintiff, a divestiture proposed
under Section IV shall not be consummated. Upon objection by either
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 plaintiffs an affidavit as to the fact and manner of
compliance with Section IV and V of this Final Judgment. Each such
affidavit shall include, inter alia, 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 Wet Wipes
Assets or Relevant Facial Tissue 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 plaintiffs, 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:
A. Defendants shall take all steps necessary to ensure that the
Relevant Wet Wipes Assets will be maintained as an independent,
ongoing, economically viable and active competitor in the sale of baby
wipes in the United States, with proprietary technology, management
operations, books, records and competitively-sensitive sales, marketing
and pricing information and decision-making kept separate and apart
from, and not influenced by, that of Kimberly-Clark's Huggies baby
wipes business.
B. Defendants shall operate the Relevant Facial Tissue Assets to
ensure a distinct and economically viable product line, which actively
competes in the sale of facial tissue in the United States, with
competitively-sensitive sales, marketing and pricing information and
decision-making kept separate and apart from, and not influenced by,
that of Kimberly-Clark's Kleenex facial tissue business.
C. Defendants shall use all reasonable efforts to maintain and
increase sales of baby wipes under any label required to be divested
pursuant to Sections II(C) and IV(A) and facial tissue under the
Scotties label, and they shall maintain at 1995 or previously approved
levels, whichever is higher, promotional, advertising, marketing and
merchandising support for baby wipes under labels in the Relevant Wet
Wipes Assets and facial tissue under the Scotties label.
D. Defendants shall take all steps necessary to ensure that the
Relevant Wet Wipes Assets and Relevant Facial Tissue Assets are fully
maintained inoperable condition at their current capacity
configurations, and shall maintain and adhere to normal repair and
maintenance schedules for such assets.
E. Defendants shall not, except as part of a divestiture approved
by plaintiffs, sell any Relevant Wet Wipes Assets or Relevant Facial
Tissue Assets, other than in the ordinary course of business.
F. Defendants shall take no action that would jeopardize the sale
or license of the Relevant Wet Wipes Assets or the Relevant Facial
Tissue Assets. Within 21 days after filing of the Final Judgment,
defendants shall discontinue making and selling facial tissue under the
Scott label and make and sell facial tissue under the Scotties label;
provided, however, that defendants may sell inventory of facial tissue
produced under the Scott Label until such inventory is depleted.
X. Compliance Inspection
Only for the purposes of determining or securing compliance with
the Final Judgment and subject to any legally recognized privilege from
time to time.
A. Duly authorized representatives of the United States Department
of Justice, upon written request of the Attorney General or of the
Assistant Attorney General in charge of the Antitrust Division, or of
the Attorney General of the State of Texas, and on reasonable notice to
defendants made to their principal offices, 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
[[Page 66562]]
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, or of
the Attorney General of the State of Texas, made to defendants'
principal offices, 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 either
plaintiff to any person other than a duly authorized representative of
the Executive Branch of the United States or of the State of Texas,
except in the course of legal proceedings to which the United States is
a party (including grand jury proceedings), or for the purpose of
securing compliance with this Final Judgment, or as otherwise required
by law.
D. If at the time information or documents are furnished by
defendants to plaintiffs, 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 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 of its entry.
XIII. Public Interest
Entry of this Final Judgment is in the public interest.
Dated: ---------------------------------------------------------------
----------------------------------------------------------------------
United States District Judge
United States District Court, Northern District of Texas, Dallas
Division
United States of America and State of Texas, Plaintiffs, v.
Kimberly-Clark Corporation and Scott Paper Company, Defendants.
Civil No. 3:95 CV 3055-P. Filed December 12, 1995.
Competitive Impact Statement
The United States, pursuant to Section 2(b) of the Antitrust
Procedures and Penalties Act (``APPA''), 15 U.S.C. Sec. 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 and the State of Texas filed a civil antitrust
Complaint on December 12, 1995, which alleges that Kimberly-Clark
Corporation's proposed acquisition of Scott Paper Company (``Scott'')
would violate Section 7 of the Clayton Act, 15 U.S.C. Sec. 18.
Kimberly-Clark and Scott are the nation's first and third leading
sellers of facial tissue, and its leading sellers of baby wipes.
The Complaint alleges that the combination of these rivals would
substantially lessen competition in production and distribution, and
raise prices to consumers in retail sale, of facial tissue and baby
wipes in the United States. 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 Kimberly-Clark from
acquiring control of Scott's facial tissue and baby wipes businesses or
otherwise combining them with its own business in the United States.
At the time the suit was filed, the United States and State of
Texas also filed a proposed settlement that would permit Kimberly-Clark
to complete its acquisition of Scott's other assets, but require
divestitures of baby wipes and facial tissue assets in a way that will
preserve competition in the markets. This settlement consists of a
Stipulation and a proposed Final Judgment.
The proposed Final Judgment orders defendants to divest to one or
more purchasers Scott's Scotties facial tissue label, any two
or four United States tissue mills currently operated by Kimberly-Clark
or Scott, all of Scott's baby wipes labels, and Scott's wet wipes plant
used to produce baby wipes and other products. Certain tangible and
intangible assets that relate to these assets and labels must also be
divested. Defendants must complete the divestiture of the Scott facial
tissue business within 180 days, and the divestiture of the wet wipes
business within 150 days, after December 12, 1995, in accordance with
the procedures specified in the proposed Final Judgment.
The Stipulation and Final Judgment require Kimberly-Clark to ensure
that, until the divestitures mandated by the Final Judgment have been
accomplished, Scott's facial tissue and baby wipes businesses and
associated assets will be held separate from, and operated
independently of, other, competing Kimberly-Clark facial tissue and
baby wipes businesses. Kimberly-Clark must preserve and maintain these
assets as saleable and economically viable, ongoing concerns, with
competitively-sensitive business information and decision-making
divorced from that of competing Kimberly-Clark businesses.
The United States, the State of Texas, Kimberly-Clark, and Scott
have also 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 that 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
Kimberly-Clark, based in Dallas, Texas, is a leading producer of
consumer paper products, including disposable diapers, feminine care
products, facial tissue and baby wipes. In 1994, Kimberly-Clark
reported total sales of $7.3 billion. Kimberly-Clark makes
Kleenex facial tissue and Huggies brand baby wipes.
Scott, based in Boca Raton, Florida, is also a leading producer of
consumer paper products, including bath tissue, facial tissue and baby
wipes. In 1994, Scott reported total sales of $3.5 billion. Among its
other brands, Scott makes and sells Scotties facial tissue
(recently renamed Scott and Baby Fresh and Wash A
Bye Baby baby wipes.
On July 16, 1995, Kimberly-Clark agreed to acquire Scott for cash
and stock in a transaction that would create a firm with global sales
of about $12 billion. This transaction, which would combine leading
competitors in two major markets, precipitated the governments' suit.
[[Page 66563]]
B. The Transaction's Effects in the Facial Tissue Industry
Facial tissue is a soft, thin, pliable and absorbent sheet of
paper, typically folded and packed in a box. It is primarily used to
catch a sneeze, blow a nose, or remove make-up. There are no good
substitutes for facial tissue.
For all practical purposes, the retail facial tissue market is
dominated by three major firms--Kimberly-Clark, Scott and Procter &
Gamble--which together account for nearly 90 percent of sales of facial
tissue, a $1.34 billion dollar market. Kimberly-Clark's popular
Kleenex is by far the leading brand of facial tissue sold,
commanding 48.5 percent of all sales.
Scott's Scotties facial tissue, a value brand offering
consumers more product for the money, has a 7 percent share of sales,
but significantly greater presence and consumer acceptance in the
Northeast, where the brand was first introduced. Procter & Gamble, the
only other significant firm, makes Puffs, which has about a
30 percent market share.\1\
\1\ The approximate post-merger Herfindahl-Hirschman Index
(``HHI'') for the facial tissue market, based on 1994 dollar sales,
would be 4031, with an increase in the HHI as a result of the merger
of 705 points.
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Scott's market share, however, understates its competitive
significance. As a value brand, Scotties has, in the past,
imposed a significant constraint on Kimberly-Clark's prices for facial
tissue. Kimberly-Clark's Kleenex likewise has been a
significant constraint on prices of Scotties facial tissue.
The Complaint alleges that Kimberly-Clark's acquisition of Scott
would remove these constraints, and provide Kimberly-Clark both the
power and the incentive to increase unilaterally and profitably the
price of either, or both, brands of facial tissue. Kimberly-Clark's
acquisition of Scott would also increase the likelihood of cooperative
increases in the price of consumer facial tissue, since the merger
would leave Kimberly-Clark with a single significant rival, Procter &
Gamble's Puffs, in the facial tissue market.
Because entry into the facial tissue market is difficult, requiring
a significant investment in plant equipment and brand building,
successful new entry or repositioning after the merger is unlikely to
restore the competition lost through Kimberly-Clark's removal of Scott
from the marketplace.
C. The Transaction's Effect in the Baby Wipes Industry
Baby wipes are soft, moist and absorbent sheets of paper substrate,
about the size of a wash cloth, that are packaged in a plastic tub or
canister. Consumer use baby wipes to clean babies, especially during a
diaper change. Stronger, softer and more convenient or sanitary than
any alternative product, baby wipes are a popular staple of families
with babies, and are bought by 95 percent of such households. There are
no good substitutes for baby wipes.
Kimberly-Clark and Scott are the nation's two largest and most
significant manufacturers of baby wipes. Scott's Baby Fresh
and Wash A Bye Baby baby wipes account for about 31 percent
of all baby wipes sold, while Kimberly-Clark's Huggies baby
wipes command nearly 25 percent of all sales. They are each other's
primary competitor and most significant constraint on prices for baby
wipes. Kimberly-Clark and Scott aggressively compete in pricing,
promotion, and product innovation.
Following its acquisition of Scott, Kimberly-Clark would control
nearly 60 percent of all baby wipes sold,\2\ and leave it seven times
larger than its next largest competitor in a market with $500 million
in annual sales. By eliminating Scott, the Complaint alleges, Kimberly-
Clark would acquire market power that would enable it unilaterally to
increase prices to consumers of either, or both, Huggies,
Baby Fresh and Wash A Bye Baby wipes. New market
entry is difficult, time-consuming and unlikely, and hence cannot be
expected to constrain the unlawful effects of Kimberly-Clark's
acquisition of Scott.
\2\ The approximate post-merger HHI for the relevant market
based on 1994 dollar sales would be over 3137, with a change in the
HHI concentration index resulting from the merger of 1501 points.
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D. Harm to Competition as a Consequence of the Acquisition
The Complaint alleges that the transaction would have the following
effects, among others: competition generally in the facial tissue and
baby wipes markets will be substantially lessened; actual and potential
competition between Kimberly-Clark and Scott in the market for facial
tissue and baby wipes will be eliminated in the United States; prices
for facial tissue and baby wipes in the United States are likely to
increase; and product innovation in facial tissue and baby wipes in the
United States will suffer.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment would preserve competition in
production and retail sale of branded baby wipes and facial tissue in
the United States. Within 150 days after filing the proposed Final
Judgment, defendants must divest Scott's wet wipes plant in Dover,
Delaware; grant a 25-five year, royalty-free, exclusive and assignable,
perpetually renewable license for the baby wipes labels produced at
that plant; and divest other associated assets--sell, in essence, the
entire Scott baby wipes business and brands. Within 180 days after
filing the proposed Final Judgment, defendants must similarly divest
Scott's Scotties brand facial tissue business, grant a 25-
year, royalty-free, exclusive and assignable, perpetually renewable
license for the Scotties facial tissue label, and divest any
two of four tissue mills specified in the Final Judgment and associated
assets. These businesses must be sold to a purchaser or purchasers who
demonstrate to the sole satisfaction of the United States and the State
of Texas that they will be an economically viable and effective
competitor, capable of maintaining or surpassing Scott's market
performance in the sale of branded baby wipes and consumer facial
tissue in the United States.
Until the ordered divestitures take place, defendants must take all
reasonable steps necessary to accomplish the divestitures, and
cooperate with any prospective purchaser. If defendants do not
accomplish the ordered divestitures within the specified 150 and 180
day time periods, the Final Judgment provides for procedures by which
the Court shall appoint a trustee to complete the divestitures.
Defendants must cooperate fully with the trustee.
If a trustee is appointed, the proposed Final Judgment provides
that Kimberly-Clark will pay all costs and expenses of the trustee. The
trustee's compensation will be structured so as to provide an incentive
for the trustee to obtain the highest price for the assets to be
divested, and to accomplish the divestiture as quickly as possible.
After the effective date of his or her appointment, the trustee shall
serve under such other conditions as the Court may prescribe. After his
or 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 shall promptly file
with the Court a report setting forth the trustee's efforts to
accomplish the divestiture, explaining why the divestiture has not been
accomplished, and making recommendations. The trustee's report will be
furnished to the parties and shall
[[Page 66564]]
be filed in the public docket, except to the extent the report contains
information the trustee deems confidential. The parties will each have
the right to make additional recommendations to the Court. The Court
shall enter such orders as it deems appropriate to carry out the
purpose of the trust.
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.
Sec. 16(a)), the proposed Final Judgment has no prima facie effect in
any subsequent private lawsuit that may be brought against defendants.
The proposed Final Judgment provides that nothing therein contained
shall be construed to provide any rights to any third party.
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. 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, N.W., Suite 4000, Washington, D.C. 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 Kimberly-Clark and Scott. The United States is satisfied,
however, that the divestiture of the assets and other relief contained
in the proposed Final Judgment will preserve viable competition in the
production and sale of facial tissue and baby wipes that would
otherwise be adversely affected by the acquisition. Thus, the proposed
Final Judgment would achieve the relief the governments would have
obtained through litigation, but avoids the time, expense and
uncertainty of a full trial on the merits of the governments'
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 DC 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) para.71,027, at ____ (Slip op.
26) (DC 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. Sec. 16(f), those procedures are discretionary. A court
need not invoke any of them unless if 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.
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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).
[[Page 66565]]
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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).
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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: December 12, 1995.
Respectfully submitted,
Anthony E. Harris,
Attorney, State of Illinois # 01133713, Antitrust Division, U.S.
Department of Justice, 1401 H. Street NW., suite 4000, Washington, DC
20530, (202) 307-6583.
[FR Doc. 95-31054 Filed 12-21-95; 8:45 am]
BILLING CODE 4410-01-M