[Federal Register Volume 61, Number 78 (Monday, April 22, 1996)]
[Notices]
[Pages 17721-17728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9767]



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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Georgia-Pacific Corporation; Proposed Final 
Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec. 16 (b)-(h), that a proposed Final 
Judgment, Stipulation and Order, and Competitive Impact Statement have 
been filed with the United States District Court in Delaware, Civil No. 
96-164, as to defendant, Georgia-Pacific Corporation (``Georgia-
Pacific'').
    On March 29, 1996, the United States filed a Complaint alleging 
that the proposed acquisition by Georgia-Pacific of the gysum business 
assets of Domtar, Inc. (``Domtar'') would violate Section 7 of the 
Clayton Act, 15 U.S.C. Sec. 18. The proposed Final Judgment, filed the 
same time as the Complaint, requires Georgia-Pacific to divest its 
Buchanan, New York and Wilmington, Delaware gypsum board plants, 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 J. Robert Kramer, Chief, Litigation II Section, Antitrust Division, 
United States Department of Justice, 1401 H Street, N.W., Suite 3000, 
Washington, D.C. 20530 (telephone: 202/307-0924).
    Copies of the Complaint, 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, N.W., Washington, D.C. 20530, (telephone: 202/307-0924).
    Copies of the Complaint, 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, N.W., Washington, D.C. 20530, (202) 514-2841. Copies of 
these materials may be obtained upon request and payment of a copying 
fee.
Constance K. Robinson,
Director of Operations.

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 vence of this action is 
proper in the District of Delaware.
    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 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 defendant 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 from 
the date of the filing of this Stipulation, shall 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 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: March 29, 1996.

    For Plaintiff, United States:
Anne K. Bingaman,
Assistant Attorney General District of Columbia #369900.
Anthony V. Nanni,
Chief, Litigation I Section, State of New York (no bar number 
assigned).
Willie L. Hudgins,
Asst. Chief, Litigation II Section, State of Virginia #01547.
John Schmoll,
Attorney, State of Wisconsin #1013897, Antitrust Division, U.S. 
Department of Justice, 1401 H Street, NW, Suite 4000, Washington, DC 
20530, (202) 307-5780.
Gregory M. Sleet,
US Attorney,
By: Richard G. Andrews,
AUSA, State of Delaware #2199, 1201 Market Street, Suite 1100, 
Wilmington, Delaware 19899, (302) 573-6277.
    For Defendant, Georgia-Pacific Corp.
Donald L. Flexner,
Esquire, Crowell & Morning 1001 Pennsylvania Avenue, N.W. Washington, 
DC 20004-2595 (202) 624-2500.
Matthew B. Lehr,
Esquire, State of Delaware #2370, Morris, Nichols, Arsht & Tunnell, 
1201 Market Street, Wilmington, Delaware 19801, (302) 575-7281.

O r d e r

    It is so ordered, this 29th of March, 1996.

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United States District Judge

Final Judgment

    Whereas, plaintiff, United States of America, having filed its 
Complaint herein on March 29, 1996, and plaintiff and defendant, 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

[[Page 17722]]

admission by any party with respect to any issue of law or fact herein;
    And whereas, defendant has agreed to be bound by the provisions of 
this Final Judgment pending its approval by the Court;
    And whereas, the essence of this Final Judgment is prompt and 
certain divestiture of assets to assure that competition is not 
substantially lessened;
    And whereas, plaintiff requires defendant to make certain 
divestitures for the purpose of establishing viable competition in the 
production and sale of gypsum board;
    And whereas, defendant has represented to plaintiff that the 
divestitures ordered herein can and will be made and that defendant 
will later raise no claims of hardship or difficulty as grounds 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 which 
relief may be granted against defendant under Section 7 of the Clayton 
Act, as amended (15 U.S.C. Sec. 18).

II. Definitions

    As used in this Final Judgment:
    A. ``Georgia-Pacific'' or ``defendant'' means defendant Georgia-
Pacific Corporation, a Georgia corporation headquartered in Atlanta, 
Georgia, and includes its successors and assigns, and its subsidiaries, 
directors, officers, managers, agents, and employees acting for or on 
behalf of any of them.
    B. ``The Northeast Region'' means the District of Columbia and the 
states of Maine, Vermont, New Hampshire, Rhode Island, Connecticut, 
Massachusetts, New York, New Jersey, Delaware, Pennsylvania, Maryland, 
and Virginia.
    C. ``Gypsum Board Assets'' means: (1) all rights, titles and 
interests, including all fee and all leasehold and renewal rights, in 
Georgia-Pacific's Buchanan, New York gypsum board plant and related 
warehouses and docking facilities (the ``Buchanan Plant'') including, 
but not limited to, all real property, capital equipment, fixtures, 
inventories, contracts (including but not limited to customer 
contracts), customer lists, trucks and other vehicles, interests, 
assets or improvements related exclusively to the production, 
distribution and sale of gypsum board at the Buchanan Plant; and
    (2) All rights, titles and interests, including all fee and all 
leasehold and renewal rights, in Georgia-Pacific's Wilmington, Delaware 
gypsum board plant and related warehouses and docking facilities (the 
``Wilmington Plant'') including, but not limited to, all real property, 
capital equipment, fixtures, inventories, contracts (including but not 
limited to customer contracts), customer lists, trucks and other 
vehicles, interests, assets or improvements related exclusively to the 
production, distribution and sale of gypsum board at the Wilmington 
Plant.
    D. ``Gypsum board'' means material that consists primarily of a 
solid, flat core of processed gypsum between two sheets of paper 
surfacing, and which is used principally for constructing or repairing 
interior walls and ceilings of commercial and residential buildings.

III. Applicability

    A. The provisions of this Final Judgment apply to the defendant, 
its successors and assigns, 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. Defendant shall require, as a condition of the sale or other 
disposition of all or substantially all of the Gypsum Board Assets, 
that the purchaser or purchasers agree to be bound by the provisions of 
this Final Judgment.

IV. Divestitures

    A. Georgia-Pacific is hereby ordered and directed in accordance 
with the terms of this Final Judgment, within one hundred and fifty 
(150) calendar days after the filing of this Final Judgment, to:
    (i) Divest the Gypsum Board Assets to a purchaser or purchasers;
    (ii) Enter into a perpetual, non-exclusive license (or licenses, as 
the case may be) with the purchaser or purchasers, transferable to any 
future purchaser of the Wilmington or Buchanan Plants, to use, in 
manufacturing gypsum board at such Plants, all intangible assets, 
wherever located, that have been used in the last six (6) months in the 
manufacture of gypsum board at such Plants, including but not limited 
to, trade secrets and know-how, but excluding patents for the DENS 
products, trademarks, trade names, service marks, and service names; 
and
    (iii) At the option of the purchaser or purchasers, enter into a 
supply contract for gypsum rock (which may or may not include 
transportation) and/or gypsum linerboard paper sufficient to meet all 
or part of the capacity requirements of the Buchanan and Wilmington 
Plants over a period of up to ten (10) years; provided that the terms 
and conditions of any contractual arrangement meant to satisfy this 
provision must be related reasonably to market conditions for gypsum 
rock and/or gypsum linerboard paper.
    B. Divestiture of Georgia-Pacific's leasehold interest, if any, in 
the Gypsum Board Assets shall be by transfer of the entire leasehold 
interest, which shall be for the entire remaining term of such 
leasehold, including any renewal rights.
    C. Defendant agrees to use its best efforts to accomplish the 
divestitures as expeditiously and timely as possible. Plaintiff, in its 
sole discretion, may extend the time period for any divestiture for two 
additional periods of time not to exceed sixty (60) calendar days in 
toto.
    D. In accompanying the divestitures ordered by this Final Judgment, 
defendant promptly shall make known, by usual and customary means, the 
availability of the Gypsum Board Assets and the licenses and supply 
contracts described in Section IV (A) of this Final Judgment 
(collectively, the ``Divestiture Package''). Defendant shall inform any 
person making an inquiry regarding a possible purchase that the sale is 
being made pursuant to this Final Judgment and provide such person with 
a copy of this Final Judgment. Defendant shall make known to any person 
making an inquiry regarding a possible purchase of the Divestiture 
Package that the assets described in Section II (C) and the licenses 
and supply contracts described in Section IV (A) of this Final Judgment 
are being offered for sale and that the Buchanan and Wilmington Plants 
and related assets may be purchased as a two-plant package or sold 
separately to two different purchasers. Defendant shall also offer to 
furnish to all bona fide prospective purchasers, subject to customary 
confidentiality assurances, all information regarding the Divestiture 
Package customarily provided in a due diligence process except such 
information subject to attorney-client privilege or attorney work-
product privilege. Defendant shall make available such information to 
plaintiff at the same time that such information is made available to 
any other person.
    E. Defendant shall not interfere with any negotiations by any 
purchaser or

[[Page 17723]]

purchasers to employ any Georgia-Pacific employee who works at, or 
whose principal responsibility is the manufacture, sale or marketing of 
gypsum board produced at Georgia-Pacific's Buchanan and Wilmington 
Plants.
    F. Defendant shall permit prospective purchasers of the Divestiture 
Package to have access to personnel and to make such inspection of the 
Gypsum Board Assets, the intangible assets relating to the licenses 
described in Section IV (A) of this Final Judgment, and any and all 
financial, operational, or other documents and information customarily 
provided as part of a due diligence process.
    G. Unless plaintiff otherwise consents in writing, the divestiture 
pursuant to Section IV (A), or by the trustee appointed pursuant to 
Section V of this Final Judgment, shall include the Divestiture Package 
and be accomplished by selling or otherwise conveying the assets 
described in Section II (C) and by entering into the licenses and 
supply contracts described in Section IV (A) of this Final Judgment, to 
one or two purchasers, in such a way as to satisfy plaintiff, in its 
sole discretion, that the Divestiture Package can and will be used by 
the purchaser or purchasers as part of a viable, ongoing business or 
businesses engaged in the manufacture and sale of gypsum board. The 
divestiture, whether pursuant to Section IV or Section V of this Final 
Judgment, shall be made to a purchaser or purchasers for whom it is 
demonstrated to plaintiff's sole satisfaction that: (1) The purchaser 
or purchasers have the capability and intent of competing effectively 
in the manufacture and sale of gypsum board in the Northeast Region; 
(2) the purchaser or purchasers have or soon will have the managerial, 
operational, and financial capability to compete effectively in the 
manufacture and sale of gypsum board in the Northeast Region; and (3) 
none of the terms of any agreement between the purchaser or purchasers 
and defendant give defendant the ability unreasonably to raise the 
purchaser's or purchasers' costs, to lower the purchaser's or 
purchasers' efficiency, or otherwise to interfere in the ability of the 
purchaser or purchasers to compete effectively in the Northeast Region.

V. Appointment of Trustee

    A. In the event that Georgia-Pacific has not divested the 
Divestiture Package within the time specified in Sections IV (A) or (C) 
of this Final Judgment, the Court shall appoint, on application of the 
United States, a trustee selected by the United States to effect the 
divestiture of the Divestiture Package.
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the Gypsum Board Assets and enter 
into the licenses and supply contracts described in Section IV (A) of 
this Final Judgment. The trustee shall have the power and authority to 
accomplish the divestiture at the best price then obtainable upon a 
reasonable effort by the trustee, subject to the provisions of Sections 
V and VI of this Final Judgment, and shall have such other powers as 
the Court shall deem appropriate. Subject to Section V (C) of this 
Final Judgement, the trustee shall have the power and authority to hire 
at the cost and expense of defendant any investment bankers, attorneys, 
or other agents reasonably necessary in the judgment of the trustee to 
assist in the divestiture, and such professionals and agents shall be 
accountable solely to the trustee. The trustee shall have the power and 
authority to accomplish the divestiture at the earliest possible time 
to a purchaser or purchasers acceptable to plaintiff, and shall have 
such other powers as this Court shall deem appropriate. Defendant shall 
not object to a sale by the trustee on any grounds other than the 
trustee's malfeasance. Any such objections by defendant must be 
conveyed in writing to plaintiff and the trustee within ten (10) 
calendar days after the trustee has provided the notice required under 
Section VI of this Final Judgment.
    C. The trustee shall serve at the cost and expense of defendant, on 
such terms and conditions as the Court may prescribe, and shall account 
for all monies derived from the sale of the assets sold by the trustee 
and all costs and expenses so incurred. After approval by the Court of 
the trustee's accounting, including fees for its services and those of 
any professionals and agents retained by the trustee, all remaining 
money shall be paid to Georgia-Pacific and the trust shall then be 
terminated. The compensation of such trustee and of any professionals 
and agents retained by the trustee shall be reasonable in light of the 
value of the Divestiture Package and based on a fee arrangement 
providing the trustee with an incentive based on the price and terms of 
the divestiture and the speed with which it is accomplished.
    D. Defendant shall use its best efforts to assist the trustee in 
accomplishing the required divestiture. The trustee and any 
consultants, accountants, attorneys, and other persons retained by the 
trustee shall have full and complete access to the personnel, books, 
records, and facilities of defendant, and defendant shall develop 
financial or other information relevant to such assets as the trustee 
may reasonably request, subject to reasonable protection for trade 
secret or other confidential research, development, or commercial 
information. Defendant shall take no action to interfere with or to 
impede the trustee's accomplishment of the divestiture.
    E. After its appointment, the trustee shall file monthly reports 
with the parties and the Court setting forth the trustee's efforts to 
accomplish the divestiture order under this Final Judgment. If the 
trustee has not accomplished such divestiture within six (6) months 
after its appointment, the trustee thereupon shall file promptly 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 report 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 enter thereafter such orders as it shall deem 
appropriate in order to carry out the purpose of the trust, which may, 
if necessary, include extending the trust and the term of the trustee's 
appointment by a period requested by the United States.

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, Georgia-Pacific 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 defendant. 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 a desire to, 
acquire any ownership interest in the assets that are 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 from defendant, the proposed purchaser or 
purchasers,

[[Page 17724]]

or any other third party additional information concerning the proposed 
divestiture and the proposed purchaser or purchasers. Defendant and the 
trustee shall furnish any additional information requested within 
fifteen (15) 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 from 
defendant, the proposed purchaser or purchasers, and any third party, 
whichever is later, plaintiff shall provide written notice to defendant 
and the trustee, if there is one, stating whether or not it objects to 
the proposed divestiture. If plaintiff provides written notice to 
defendant 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 Section V (B) of this Final Judgment. Absent written 
notice that plaintiff does not object to the proposed purchaser or upon 
objection by plaintiff, a divestiture proposed under Section IV shall 
not be consummated. Upon objection by plaintiff, or by defendant under 
the proviso in Section V (B), a divestiture proposed under Section V 
shall not be consummated unless approved by the Court.

VII. Affidavits

    A. Within twenty (20) calendar days of the filing of this Final 
Judgment and every thirty (30) calendar days thereafter until the 
divestitures have been completed whether pursuant to Section IV or 
Section V of this Final Judgment, Georgia-Pacific shall deliver to 
plaintiff an affidavit as to the fact and manner of compliance with 
Sections IV or 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, 
entering into negotiations to acquire, or was contacted or made an 
inquiry about acquiring, any interest in the Divestiture Package, and 
shall describe in detail each contact with any such person during that 
period. Each such affidavit shall further describe in detail any 
negotiations, including negotiations concerning the terms, conditions 
and price, between a purchaser or purchasers of the Gypsum Board Assets 
and Georgia-Pacific for the license(s) and supply contract(s) for 
gypsum rock and/or gypsum linerboard paper described in Section IV (A) 
of this Final Judgment.
    B. Within twenty (20) calendar days of the filing of this Final 
Judgment, Georgia-Pacific shall deliver to plaintiff an affidavit which 
describes in detail all actions Georgia-Pacific has taken and all steps 
Georgia-Pacific has implemented on an on-going basis to preserve the 
Gypsum Board Assets pursuant to Section IX of this Final Judgment and 
describes the functions, duties and actions taken by or undertaken at 
the supervision of the individual(s) described at Section IX (F) of 
this Final Judgment with respect to Georgia-Pacific's efforts to 
preserve the Gypsum Board Assets. The affidavit also shall describe, 
but not be limited to, Georgia-Pacific's efforts to maintain and 
operate the Gypsum Board Assets as an active competitor, maintain the 
management, sales, marketing and pricing of the Gypsum Board Assets 
apart from Georgia-Pacific's gypsum business, maintain and increase 
sales of gypsum board producted at the Buchanan and Wilmington Plants, 
and maintain the Gypsum Board Assets in operable condition at current 
or greater capacity configurations. Georgia-Pacific shall deliver to 
plaintiff an affidavit describing any changes to the efforts and 
actions outlined in Georgia-Pacific's earlier affidavit(s) filed 
pursuant to this Section within fifteen (15) calendar days after the 
change is implemented.
    C. Defendant shall preserve all records of all efforts made to 
preserve and divest the Divestiture Package.

VIII. Financing

    With prior written consent of the plaintiff, defendant 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. Defendant shall take all steps necessary to ensure that the 
Gypsum Board Assets will be maintained and operated as an independent, 
ongoing, economically viable and active competitor in the manufacture 
and sale of gypsum board in the Northeast Region; and that, except as 
necessary to comply with Section IX (B) of this Final Judgment, the 
management of the Gypsum Board Assets will not be influenced by 
Georgia-Pacific and the books, records, and competitively sensitive 
sales, marketing and pricing information associated with the Gypsum 
Board Assets will be kept separate and apart from Georgia-Pacific's 
other gypsum board business.
    B. Defendant shall use all reasonable efforts to maintain and 
increase sales of gypsum board produced at its Buchanan and Wilmington 
Plants, and defendant shall maintain at 1995 or previously approved 
levels, whichever are higher, promotional, advertising, sales, 
marketing and merchandising support for gypsum board sold from the 
Buchanan and Wilmington Plants. Georgia-Pacific's sales and marketing 
employees responsible for sales of gypsum board from the Buchanan and 
Wilmington Plants shall not be transferred or reassigned to other 
plants of defendant.
    C. Defendant shall take all steps necessary to ensure that the 
Gypsum Board Assets are fully maintained in operable condition at no 
lower than their current rated capacity configurations, and shall 
maintain and adhere to normal maintenance schedules for the Gypsum 
Board Assets.
    D. Defendant shall not, except as part of a divestiture approved by 
plaintiff, remove, sell or transfer any of the Gypsum Board Assets, 
including all intangible assets that relate to the licenses described 
in Section IV (A) of this Final Judgment, other than gypsum board and 
related products sold in the ordinary course of business.
    E. Defendant shall take no action that would jeopardize the 
divestiture of the Divestiture Package.
    F. Defendant shall appoint a person or persons to oversee the 
Gypsum Board Assets, and who will be responsible for defendant's 
compliance with Section IX of this Final Judgment.

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, and on 
reasonable notice to defendant made to its principal offices, shall be 
permitted:
    (1) Access during office hours of defendant to inspect and copy all 
books, ledgers, accounts, correspondence, memoranda, and other records 
and documents in the possession or under the control of defendant, who 
may have counsel present, relating to enforcement of this Final 
Judgment; and
    (2) Subject to the reasonable convenience of defendant and without 
restraint or interference from it, to interview its officers, 
employees, and agents, 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

[[Page 17725]]

Antitrust Division, made to defendant's principal offices, defendant 
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 
Section X of this Final Judgment shall be divulged by a representative 
of plaintiff 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 securing compliance with 
this Final Judgment, or as otherwise required by law.
    D. If at the time information or documents are furnished by 
defendant to plaintiff, defendant represents and identifies in writing 
the material in any such information or documents to which a claim of 
protection may be asserted under Rule 26(b)(7) of the Federal Rules of 
Civil Procedure, and defendant marks each pertinent page of such 
material, ``Subject to claim of protection under Rule 26(c)(7) of the 
Federal Rules of Civil Procedure,'' then ten (10) calendar days notice 
shall be given by plaintiff to defendant 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 modification of any of the provisions hereof, for the 
enforcement of compliance herewith, and for the punishment of any 
violation 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

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

    On March 29, 1996, the United States filed a civil antitrust 
Complaint,) which alleges that Georgia-Pacific Corporation's 
(``Georgia-Pacific'') proposed acquisition of the gypsum business of 
Domtar Inc. (``Domtar'') would violate Section 7 of the Clayton Act, 15 
U.S.C. Sec. 18. The Complaint alleges that the combination of the third 
and fourth largest gypsum board sellers in the Northeast Region would 
lessen competition substantially in the production and sale of gypsum 
board in the Northeast Region. As defined in the Complaint, the 
Northeast Region encompasses Washington, D.C. and the states of Maine, 
New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New 
York, New Jersey, Pennsylvania, Delaware, Maryland, and Virginia. The 
prayer for relief in the Complaint seeks: (1) a judgment that the 
proposed acquisition would violate Section 7 of the Clayton Act; and 
(2) a permanent injunction preventing Georgia-Pacific from acquiring 
control of Domtar's gypsum business, or otherwise combining such 
business with Georgia-Pacific's own business in the United States.
    When the Complaint was filed, the United States also filed a 
proposed settlement that would permit Georgia-Pacific to complete its 
acquisition of Domtar's gypsum business, but require certain 
divestitures that will preserve competition in the Northeast Region. 
This settlement consists of a Stipulation and Order and a proposed 
Final Judgment.
    The proposed Final Judgment orders Georgia-Pacific to divest to one 
or more purchases its Buchanan, New York and Wilmington, Delaware 
gypsum board plants, and certain related tangible and intangible 
assets. Georgia-Pacific must complete the divestiture of these plants 
and related assets within one hundred and fifty (150) calendar days 
after the date on which the proposed Final Judgment was filed (i.e., 
March 29, 1996), in accordance with the procedures specified therein.
    The Stipulation and Order and proposed Final Judgment require 
Georgia-Pacific to ensure that, until the divestitures mandated by the 
proposed Final Judgment have been accomplished, the two gypsum board 
plants and related assets to be divested will be maintained and 
operated as an independent, ongoing, economically viable and active 
competitor. Georgia-Pacific must preserve and maintain the gypsum board 
plants to be divested as saleable and economically viable, ongoing 
concerns, with competitively sensitive business information and 
decision-making divorced from that of Georgia-Pacific's gypsum board 
business. Thus, subject to Georgia-Pacific's obligation to preserve the 
assets to be divested, the two plants will be operated independent of, 
and in competition with, Georgia-Pacific, pending divestiture. Georgia-
Pacific will appoint a person or persons to monitor and ensure its 
compliance with these requirements of the proposed Final Judgment.
    The United States and Georgia-Pacific 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 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. Georgia-Pacific, Domtar and the Proposed Transaction
    Georgia-Pacific, based in Atlanta, Georgia, is a diversified 
producer of building products and pulp and paper, with net sales of 
over $12 billion for its 1994 fiscal year. Operating ten gypsum board 
plants in the United States, Georgia-Pacific is the nation's third 
largest gypsum products manufacturer, with an annual capacity to 
produce approximately 3.1 billion square feet of gypsum board. In 1995, 
Georgia-Pacific's United States gypsum board sales totaled about $251 
million.
    Domtar, Inc., a Canadian corporation headquartered in Montreal, 
Canada, operates its gypsum business in the United States through its 
wholly owned subsidiaries, Domtar gypsum, Inc., and Domtar Industries, 
Inc., with offices in Ann Arbor, Michigan. The fourth largest producer 
and seller of gypsum board in the United States, Domtar has the annual 
capacity to produce about four billion square feet of gypsum board in 
North America. In 1995, Domtar's United States gypsum board sales 
totaled about $221 million.
    On November 8, 1995, Georgia-Pacific agreed to acquire certain 
stock and all the gypsum manufacturing operations of Domtar and its 
subsidiaries in a cash transaction valued at $350 million. For $280 
million, Georgia-Pacific will acquire Domtar's nine U.S. gypsum board 
plants, one gypsum linerboard paper mill, and two plants producing 
gypsum joint treatment. Georgia-Pacific

[[Page 17726]]

also proposes to acquire for $70 million Domtar's forty-nine percent 
interest in a gypsum quarry in Mexico, four Canadian gypsum board 
plants, one Canadian gypsum plaster plant, one Canadian gypsum joint 
treatment plant and a Canadian gypsum products warehouse. This 
transaction, which would take place in a concentrated oligopolistic 
industry, precipitated the government's suit.
B. The Transaction's Effects in the Northeast Region
    The Complaint alleges that the manufacture of gypsum board 
constitutes a line of commerce, or relevant product market, for 
antitrust purposes, and that the Northeast Region constitutes a section 
of the country, or relevant geographic market. The Complaint alleges 
the effect of Georgia-Pacific's acquisition may be to lessen 
competition substantially in the manufacture and sale of gypsum board 
in the Northeast Region.
    Gypsum board consists of processed gypsum rock sandwiched between 
sheets of liner board paper. Sometimes called drywall, wallboard or 
sheetrock, gypsum board is used to construct and repair interior walls 
and ceilings in residential and commercial buildings. No good economic 
functional substitutes exist for gypsum board.
    Gypsum board customers in the Northeast Region have been served 
almost exclusively by gypsum board manufacturing plants located in the 
Region. Gypsum board is a bulky, fragile and heavy product and is 
cumbersome and expensive to ship long distances. It is generally sold 
on a delivered price basis, and freight is an important cost component. 
As a result, competition is regional, with producers selling the 
majority of gypsum board to buyers within a 500 mile radius of the 
producing plant. Domtar services the Northeast Region from its 
Newington, New Hampshire and Camden, New Jersey gypsum board plants, 
and Georgia-Pacific serves the Region from its Buchanan, New York and 
Wilmington, Delaware plants.
    The Complaint alleges that Georgia-Pacific's acquisition of Domtar 
would increase the likelihood of coordinated pricing activity among 
gypsum board in manufacturers serving the Northeast Region and will 
increase the likelihood of anticompetitive price increases for 
consumers there. The acquisition would increase concentration 
significantly in the already highly concentrated, difficult-to-enter 
Northeast Region. If the proposed acquisition were to proceed, Georgia-
pacific and the two largest producers in the Northeast Region, United 
States Gypsum Co. and National Gypsum Co., each with approximately 30 
percent of the market, would control collectively about 90 percent of 
the gypsum board sales in the Northeast Region. Using the Herfindahl-
Hirschman Index (``HHI'') as a measure of market concentration (HHI is 
defined and explained in Appendix A to the Complaint), the acquisition 
increases the HHI by over 400 points to over a 2700 post-merger level 
in the Northeast Region.
    The structure of the gypsum board industry is fertile grounds for 
anticompetitive coordination. For example, gypsum board is a 
homogeneous product, and price is an important dimension of 
competition. Capacity, production and pricing information is widely 
available and price changes are normally announced well in advance of 
implementation. In addition, at least once every generation this 
century, civil or criminal actions have exposed successful price-fixing 
agreements among the dominant gypsum board manufacturers. See United 
States v. Gypsum Industries Association, et al., E25-215 (S.D.N.Y. 
1922); United States v. United States Gypsum Co., 333 U.S. 364 (1948); 
Wall Products Co. v. National Gypsum Co., 326 F. Supp. 295 (N.D. Cal. 
1971); United States v. United States Gypsum Co., et al., 600 F.2d 414 
(3rd Cir. 1979).
    New entry in the Northeast Region is unlikely to restore the 
competition lost through Georgia-Pacific's removal of Domtar from the 
marketplace. De novo entry into gypsum board manufacturing requires a 
significant capital investment and likely would take over two years 
before the gypsum board plant comes on-line.
    Furthermore, manufacturers with gypsum board plants outside the 
Northeastern United States are unlikely to offer significant 
competition in the Northeast Region. With their capacity largely 
devoted to servicing the needs of customers concentrated around their 
plants, which are far from the Northeast, manufacturers outside the 
Northeast Region have neither the ability nor the incentive to ship 
sufficient quantities of gypsum board to defeat a small but significant 
nontransitory price increase in the Northeast Region. Collectively, the 
outside manufacturers represent less than six percent of the footage of 
gypsum board sold in the Northeast Region in 1995. Historically, 
whether in times of strong or weak demand, manufacturers located 
outside the Northeast have not had anything more than a small share of 
the sales in there.
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 Northeast Region 
will be lessened substantially; actual and potential competition 
between Georgia-Pacific and Domtar in the Northeast Region will be 
eliminated; and prices for gypsum board in the Northeast Region are 
likely to increase above competitive levels.

III

Explanation of the Proposed Final Judgment

    The proposed Final Judgment would preserve competition in the 
production and sale of gypsum board in the Northeast Region by placing 
in independent hands the two gypsum board plants used by Georgia-
Pacific to serve the Northeast Region prior to this acquisition. Within 
one hundred and fifty (150) calendar days after filing the proposed 
Final Judgment, Georgia-Pacific must divest its Wilmington, Delaware 
and Buchanan, New York gypsum board plants and related assets. Georgia-
Pacific shall enter into a supply contract for gypsum rock and/or 
gypsum liner board paper which at the option of the purchaser(s) may be 
up to 10 years and sufficient to meet all or part of the Buchanan and 
Wilmington plants' requirements at terms reasonably related to market 
conditions. The plants and related assets will be sold to one or more 
purchasers who demonstrate to the sole satisfaction of the United 
States that they will be an economically viable and effective 
competitor, capable of maintaining or surpassing Georgia-Pacific's pre-
acquisition market performance in the sale of gypsum board in the 
Northeast Region.
    Until the ordered divestitures take place, Georgia-Pacific must 
take all reasonable steps necessary to accomplish the divestitures, and 
cooperate with any prospective purchaser. If Georgia-Pacific does not 
accomplish the ordered divestitures within the specific one hundred and 
fifty (150) calendar days, which may be extended by up to sixty (60) 
calendar days by the United States, the proposed Final Judgment 
provides for procedures by which the Court shall appoint a trustee to 
complete the divestitures. Georgia-Pacific must cooperate fully with 
the trustee.
    If a trustee is appointed, the proposed Final Judgment provides 
that Georgia-Pacific will pay all costs and expenses of the trustee. 
The trustee's compensation will be structured so as to

[[Page 17727]]

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 the divestiture. At the end of six 
(6) months, if the divestiture has not been accomplished, the trustee 
shall file promptly with the Court a report which sets forth the 
trustee's efforts to accomplish the divestiture, explains why the 
divestiture has not been accomplished, and makes any recommendations. 
The trustee's report will be furnished to the parties and shall be 
filed in the public docket, except to the extent the report contains 
information the trustee deems confidential. The parties each will 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 
attorney's fees. Entry of the proposed Final Judgment neither will 
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 Georgia-
Pacific or Domtar.

V

Procedures Available for Modification of the Proposed Final Judgment

    The United States and Georgia-Pacific 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 should comment 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: J. Robert Kramer, Chief, 
Litigation II Section, Antitrust Division, United States Department of 
Justice, 1401 H Street, N.W., Suite 3000, 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 
Georgia-Pacific. The United States is satisfied, however, that the 
divestiture of the assets and other relief contained in the production 
and sale of gypsum board that otherwise would be affected adversely by 
the acquisition. Thus, the proposed 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 (60) 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. Sec. 16(e) (emphasis added). As the Court of Appeals for the 
District of Columbia Circuit recently held, the APPA 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 74,822 (D.C. Cir. 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.'' 119 Cong. Rec. 24598 (1973). 
Rather,

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. (CCH) 
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 74,829-74,833. 
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.


[[Page 17728]]


United States v. Bechtel, 648 F.2d at 666 (citation omitted) (emphasis 
added).
    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). 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).

VIII

Determinative Documents

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

    Respectfully submitted,

    Executed on: April ____, 1996.
----------------------------------------------------------------------
John Schmoll,
Attorney, State of Wisconsin #1013897 Dept. of Justice, Antitrust 
Division, 1401 H Street, N.W., Suite 4000, Washington, D.C. 20530, 
(202) 307-5780.
----------------------------------------------------------------------
Gregory M. Sleet,
United States Attorney,
    By:
Richard G. Andrews,
Esquire, State of Delaware #2199, 1201 Market Street, Suite 1100, 
Wilmington, Delaware 19899, (302) 573-6277.
[FR Doc. 96-9767 Filed 4-19-96; 8:45 am]
BILLING CODE 4410-01-M