[Federal Register Volume 61, Number 195 (Monday, October 7, 1996)]
[Notices]
[Pages 52459-52465]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25336]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Ixtlera de Santa Catarina, S.A. de C.V. and MFC 
Corporation; Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S. Sec. 16(b)-(h), that a proposed Final Consent 
Judgment, Stipulation and Competitive Impact Statement have been filed 
with the United States District Court for the Eastern District of 
Pennsylvania in the above-captioned case.
    On September 26, 1996, the United States filed a civil antitrust 
Complaint to prevent and restrain Ixtlera de Santa Catarina, S.A. de 
C.V. (``Ixtlera'') and MFC Corporation from conspiring to fix prices 
and allocate the sales volume of tampico fiber imported and sold in the 
United States in violation of Section 1 of the Sherman Act (15 U.S.C. 
Sec. 1). Tampico fiber is a vegetable fiber grown in Mexico and used as 
a filler in industrial and consumer brushes.
    The Complaint alleges that the defendants agreed with unnamed co-
conspirators to (1) fix the prices of tampico fiber imported into the 
United States; (2) fix the resale prices charged in the United States 
distributors; and (3) allocate tampico fiber sales among United States 
distributors.
    The proposed Final Judgment would prohibit the defendants from 
entering into any agreement or understanding with any other processor 
or distributor of tampico fiber to:
    (1) Raise, fix, or maintain the price or other terms or conditions 
for the sale or supply of tampico fiber;
    (2) Allocate sales, territories or customers for tampico fiber;
    (3) Eliminate or discourage new entry into the tampico fiber 
market; and
    (4) Eliminate or otherwise restrict the supply of tampico fiber to 
any customer.
    The proposed Final Judgment would also prohibit defendants form 
communicating with any other processor, supplier or distributor 
regarding future price information, information regarding sales volume, 
the location or identity of customers, eliminating or discouraging new 
entrants into the tampico fiber market, or eliminating or restricting 
the supply of tampico fiber to any customer. In addition, the proposed 
Final Judgment would prohibit the defendants from adhering to any 
resale pricing policy and defendant Ixtlera from suggesting resale 
prices and form terminating or threatening to terminate any distributor 
for that distributor's pricing. Finally, the proposed Final Judgment 
would also prohibit Ixtlera from merging with the Mexican tampico fiber 
processor Fibras Saltillo, S.A. de C.V. without providing the Antitrust 
Division with ninety (90) days notice to review the transaction.
    Public comment is invited within the statutory sixty (60) day 
period. Such comments will be published in the Federal Register and 
filed with the Court. Comments should be addressed to Robert E. 
Connolly, Chief, Middle Atlantic Office, U.S. Department of Justice, 
Antitrust Division, The Curtis Center, 6th and Walnut Streets, Suite 
650 West, Philadelphia, PA 19106 (telephone number 215-597-7405).
Rebecca P. Dick,
Deputy Director of Operations.

In the United States District Court for the Eastern District of 
Pennsylvania

    United States of America, Plaintiff, v. Ixtlera de Santa 
Catarina, S.A. de C.V.; and MFC Corporation, Defendants. Civil 
Action No. 95-6515, Judge Jay C. Waldman.

Stipulation

    It is stipulated by and between the undersigned parties, by their 
respective attorneys, that:
    (1) The parties consent that a final judgment in the form hereto 
attached may be filed and entered by the Court at any time after the 
expiration of the sixty (60) day period for public comment provided by 
the Antitrust Procedures and Penalties Act, 15 U.S.C. Sec. 16(b)-(h), 
without further notice to any party or other proceedings, either upon 
the motion of any party or upon the Court's own motion, provided that 
plaintiff has not withdrawn its consent as provided herein;
    (2) The plaintiff may withdraw its consent hereto at any time 
within said period of sixty (60) days by serving notice thereof upon 
the other party hereto and filing said notice with the Court;
    (3) In the event the plaintiff withdraws its consent hereto, this 
application shall be of no effect whatever in this or any other 
proceeding and the making of this stipulation shall not in any manner 
prejudice any consenting party to any subsequent proceedings.

    Dated: September 26, 1996.

    For the Plaintiff:
Joel I. Klein,
Acting Assistant Attorney General.
Rebecca P. Dick,
Deputy Director of Operations.
Robert E. Connolly,
Chief, Middle Atlantic Office.

    Respectfully submitted,
Edward S. Panek,
Michelle A. Pionkowski,
Roger L. Currier,
Joseph Muoio,
Attorneys, Antitrust Division, U.S. Department of Justice, Middle 
Atlantic Office, The Curtis Center, Suite 650W, 7th and Walnut Streets, 
Philadelphia, PA 19106, Tel.: (215) 597-7401.

    For the Defendants:
Gordon B. Spivack,
Ixtlera de Santa Catarina, S.A. de C.V.
Roxann E. Henry,
MFC Corporation.

Final Judgment

    Plaintiff, the United States of America, filed its complaint on 
September 26, 1996. Plaintiff and defendants, by their respective 
attorneys, have consented to the entry of this final judgment without 
trial or adjudication of any issue of fact or law. This final judgment 
shall not be evidence against or an admission by any party to any issue 
of fact or law.

[[Page 52460]]

Defendants have agreed to be bound by the provisions of this final 
judgment pending its approval by the Court.
    Therefore, before the taking of any testimony and without trial or 
adjudication of any such issue of fact or law herein, and upon consent 
of the parties, it is hereby ordered, adjudged, and decreed as follows:

I

Jurisidiction

    This Court has jurisdiction of the subject matter of this action 
and of each of the parties consenting hereto. The complaint states a 
claim upon which relief may be granted against defendants under Section 
1 of the Sherman Act, 15 U.S.C. Sec. 1.

II

Definitions

    As used in this final judgment:
    A. ``Agreement'' means any contract, agreement or understanding, 
whether oral or written, or any term or provision thereof.
    B. ``Person'' means any individual, corporation, partnership, 
company, sole proprietorship, firm or other legal entity.
    C. ``Tampico fiber'' is a natural vegetable fiber produced by the 
lechugilla plant and grown in the deserts of northern Mexico. It is 
harvested by individual farmers, processed, finished and exported to 
the United States and worldwide, where it is used as brush filling 
material for industrial and consumer brushes. It is available in 
natural white, bleached white, black, gray and a wide variety of 
mixtures.
    D. ``Resale price'' means any price, price floor, price ceiling, 
price range, or any mark-up, formula or margin of profit relating to 
tampico fiber sold by distributors.

III

Applicability

    A. This final judgment applies to each of the defendants and to 
their owners, officers, directors, agents, employees, subsidiaries, 
successor and assigns, and to 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. Each defendant shall require, as a condition of any sale or 
other disposition of all, or substantially all, of its stock or assets 
used in the manufacture or sale of tampico fiber, that the acquiring 
party or parties agree to be bound by the provisions of this final 
judgment, and that such agreement be filed with the Court.

IV

Prohibited Conduct

    As to tampico fiber imported into or sold in the United States:
    A. Each defendant is enjoined and restrained from directly or 
indirectly entering into, adhering to, maintaining, furthering, 
enforcing or claiming any rights under any contract, agreement, 
arrangement, understanding, plan, program, combination or conspiracy 
with any other processor, supplier or distributor of tampico fiber to:
    (1) Raise, fix, or maintain the prices or other terms or conditions 
for the sale or supply of tampico fiber;
    (2) Allocate sales volumes, territories or customers for tampico 
fiber;
    (3) Discourage or eliminate any new entrant into the tampico fiber 
market; or
    (4) Restrict or eliminate the supply of tampico fiber to any 
customer;
    B. Each defendant is enjoined and restrained from communication 
with any processor, supplier or distributor (other than its own 
processor, supplier or distributor) of tampico fiber regarding any 
current or future price, price change, discount, or other term or 
condition of sale charged or quoted or to be charged or quoted to any 
customer or potential customer for tampico fiber, whether communicated 
in the form of a specific price or in the form of information from 
which such specific price may be computed;
    C. Each defendant is enjoined and restrained from distributing to 
any processor, supplier or distributor (other than its own processor, 
supplier or distributor) of tampico fiber price lists or other pricing 
material that is used, has been used, or will be used in computing 
prices or terms or conditions of sale charged or to be charged for 
tampico fiber;
    D. Each defendant is enjoined and restrained from communicating 
with any processor, supplier or distributor (other than its own 
processor, supplier or distributor) of tampico fiber regarding 
information pertaining to the volume of sales of tampico fiber or the 
location or identity of customers;
    E. Each defendant is enjoined and restrained from communicating 
with any processor, supplier or distributor regarding discouraging or 
eliminating any new entrant into the tampico fiber market or 
restricting or eliminating the supply of tampico fiber to any customer;
    F. Ixtlera is enjoined and restrained from directly or indirectly 
entering into, adhering to, maintaining, furthering, enforcing or 
claiming any right under any contract, agreement, understanding, plan 
or program with any distributor to fix or maintain the prices at which 
tampico fiber sold by Ixtlera may be resold or offered for sale by any 
distributor;
    G. Ixtlera is enjoined and restrained from directly or indirectly 
adopting, promulgating, suggesting, announcing or establishing any 
resale pricing policy for tampico fiber;
    H. Ixtlera is enjoined and restrained from threatening any 
distributor with termination or terminating any distributor on the 
basis of that distributor's pricing; or discussing with any present or 
potential distributor any decision regarding termination of any other 
distributor for any reason directly or indirectly related to the other 
distributor's resale pricing, provided, however, that nothing herein 
shall prohibit Ixtlera from terminating a distributor for any reason 
other than the distributor's resale pricing;
    I. MFC is enjoined and restrained from directly or indirectly 
entering into, adhering to, maintaining, furthering, enforcing or 
claiming any right under any contract, agreement, understanding, plan 
or program with any supplier to fix or maintain the prices at which 
tampico fiber may be resold or offered for sale by MFC or any other 
distributor;
    J. Each defendant is enjoined and restrained from participating or 
engaging directly or indirectly through any trade association, 
organization or other group in any activity which is prohibited in IV 
(A)-(I) above; and
    K. Ixtlera is enjoined and retrained from merging with, acquiring 
all or part of the assets or securities of, or selling all or part of 
its assets or securities to the Mexican tampico fiber processor Fibras 
Saltillo, S.A. de C.V., or its owners, officers, directors, agents, 
employees, subsidiaries, successors and assigns without first providing 
plaintiff with at least 90 days written notice prior to closing the 
transaction for the purpose of investigation the proposed transaction. 
Such notification shall include a complete description, English, of the 
proposed transaction and the reasons therefor. Ixtlera agrees to 
provide promptly all information, with English translations, reasonably 
requested by plaintiff in connection with its investigation of the 
proposed transaction, consents to the jurisdiction of the Court to 
adjudicate the legality of the proposed or consummated transaction 
under the antitrust laws of the United States and waives any objections 
to venue. Nothing in this paragraph shall prohibit Miguel Schwarz, 
Marx, principal of Ixtlera, from divesting to any person, without

[[Page 52461]]

notice, the 27.5 percent interest in Fibras Saltillo, S.A. de C.V. 
which he currently holds.

V

Permitted Conduct

    A. Other than Section IV(A) of this final judgment, nothing 
contained in this final judgment shall prohibit a defendant from 
negotiating or communicating with any processor, supplier or 
distributor of tampico fiber or with any agent, broker or 
representative of such processor, supplier or distributor solely in 
connection with bona fide proposed or actual purchases of tampico fiber 
from, or sale or tampico fiber to, that processor, supplier or 
distributor.
    B. Nothing contained in this final judgment shall prohibit 
defendant MFC from unilaterally deciding to resell tampico fiber at 
prices suggested by its supplier. However, any instance in which a 
supplier suggests the prices at which MFC should resell tampico fiber 
shall be reported in writing with a copy to MFC's Antitrust Compliance 
Officer. This report shall state the date, time and place of the 
communication, whether it was oral or written, the name and title of 
the other person or persons involved in the communication, briefly 
describe the pricing information provided, and if the communication was 
written, have attached a copy of the document containing the reference 
to the suggested resale prices. Such reports shall be retained in the 
files of MFC, and copies thereof shall be delivered to the Antitrust 
Division by the defendant on or about each anniversary date of this 
final judgment.
    C. Nothing contained in this final judgment shall prohibit Miguel 
Schwarz Marx from obtaining information as to the prices Fibras 
Saltillo charged A&L Mayer Associates, Inc. or any successor to A&L 
Mayer Associates, Inc. that serves as a conduit between Fibras Saltillo 
and its United States distributor for tampico fiber so long as the 
pricing information is at least six months old and is used solely to 
protect the value of Schwarz's investment in Fibras Saltillo under 
Mexican law.
    D. Nothing contained in this final judgment shall prevent (1) MFC 
from being Ixtlera's exclusive distributor for tampico fiber in the 
United States, (2) MFC and Ixtlera from conducing negotiations 
regarding such an exclusive distributorship, or (3) Ixtlera from 
deciding to appoint another company as its exclusive distributor in the 
United States.

VI

Compliance Program

    Each defendant shall establish within thirty (30) days of entry of 
this final judgment and shall thereafter for so long as it or its 
employees are engaged in the manufacture or sale of tampico fiber, 
maintain a program to insure compliance with this final judgment, which 
program shall include at a minimum the following:
    A. Designating an Antitrust Compliance Officer responsible, on a 
continuing basis, for achieving compliance with this final judgment and 
promptly reporting to the Department of Justice any violation of the 
final judgment;
    B. Within sixty (60) days after the date of entry of this final 
judgment, furnishing a copy thereof to each of its own, its 
subsidiaries', and its affiliates' (1) officers, (2) directors, and (3) 
employees or managing agents who are engaged in, or have responsibility 
for or authority over, the pricing of tampico fiber; and advising and 
informing each such person that his or her violation of this final 
judgment could result in a conviction for contempt of court and 
imprisonment, a fine, or both;
    C. Within seventy five (75) days after the date of entry of this 
final judgment, certifying to the plaintiff whether it has designated 
an Antitrust Compliance officer and has distributed the final judgment 
in accordance with Sections VI (A) and (B) above;
    D. Within thirty (30) days after each such person becomes an 
officer, director, employee or agent of the kind described in Section 
VI (B), furnishing to him or her a copy of this final judgment together 
with the advice specified in Section VI (B);
    E. Annually distributing the final judgment to each person 
described in Sections VI (B) and (D);
    F. Annually briefing each person described in Sections VI (B) and 
(D) as to the defendant's policy regarding compliance with the Sherman 
Act and with this final judgment, including the advice that such 
defendant will make legal advice available to such persons regarding 
any compliance questions or problems;
    G. Annually obtaining (and maintaining) from each person described 
in Sections VI (B) and (D) a certification that he or she:
    (1) Has read, understands, and agrees to abide by the terms of this 
final judgment;
    (2) Has been advised of and understands the company's policy with 
respect to compliance with the Sherman Act and the final judgment;
    (3) Has been advised and understands that his or her non-compliance 
with the final judgment may result in conviction for criminal contempt 
of court and imprisonment, a fine, or both; and
    (4) Is not aware of any violation of the final judgment that has 
not been reported to the Antitrust Compliance Officer; and
    H. On or about each anniversary date of the entry of the final 
judgment, submitting to the plaintiff an annual declaration as to the 
fact and manner of its compliance with this final judgment, including 
any reports responsive to Section V of this final judgment.

VII

Inspection and Compliance

    For the purpose of determining or securing compliance with this 
final judgment and subject to any legally recognized privilege, from 
time to time:
    A. Duly authorized representatives of the Department of Justice 
shall, upon written request of the Attorney General or of the Assistant 
Attorney General in charge of the Antitrust Division, and on reasonable 
notice to a defendant made to its principal office, be permitted:
    (1) Access, during office hours of such defendant, to inspect and 
copy all books, ledgers, accounts, correspondence, memoranda and other 
records and documents in the possession or under the control of such 
defendant, which may have counsel present, relating to any matters 
contained in this final judgment; and
    (2) Subject to the reasonable convenience of such defendant and 
without restraint or interference from it, to interview officers, 
employees and agents of such defendant, who may have counsel present, 
regarding any such matters;
    B. Upon the written request of the Attorney General or of the 
Assistant Attorney General in charge of the Antitrust Division made to 
a defendant's principal office, such defendant shall submit such 
written reports, under oath if requested, with respect to any of the 
matters contained in this final judgment, as may be requested;
    C. No information or documents obtained by the means provided in 
this Section VII of the final judgment shall be divulged by any 
representative of the Department of Justice to any person other than a 
duly authorized representative of the Executive Branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party, or for the purpose of securing compliance with this 
final judgment, or as otherwise required by law;

[[Page 52462]]

    D. If at the time information or documents are furnished by a 
defendant to plaintiff, such 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(c)(7) of the Federal 
Rules of Civil Procedure, and such 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) days notice 
shall be given by plaintiff to such defendant prior to divulging such 
material in any legal proceeding (other than a grand jury proceeding) 
to which such defendant is not a party; and
    E. Nothing set forth in this final judgment shall prevent the 
Antitrust Division from utilizing other investigative alternatives, 
such as Civil Investigative Demand process provided by 15 U.S.C. 
Secs. 1311-1314 or a federal grand jury, to determine if the defendant 
has complied with this final judgment.

VIII

Retention of Jurisdiction

    Jurisdiction is retained by this Court for the purpose of: (1) 
enabling any of the parties to this final judgment to apply to this 
Court at any time for such further orders or 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 
violations hereof; and (2) adjudicating the legality of any merger or 
acquisition of assets or securities described in Section IV (K) above.

IX

Ten Year Expiration

    This final judgment will expire on the tenth anniversary of its 
date of entry.

X

Public Interest

    Entry of this final judgment is in the public interest.

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

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

Competitive Impact Statement

    Pursuant to Section 2 of the Antitrust Procedures and Penalties Act 
(``APPA''), 15 U.S.C. Sec. 16(b), the United States files this 
Competitive Impact Statement relating to the proposed final judgment as 
to United States v. Ixtlera de Santa Catarina, S.A. de C.V. and MFC 
Corporation, submitted for entry in this civil antitrust proceeding.

I

Nature and Purpose of the Proceedings

    On September 26, 1996, the United States filed a civil antitrust 
complaint alleging that under Section 4 of the Sherman Act, as amended, 
15 U.S.C. Sec. 4, the above-named defendants combined and conspired 
with others from at least as early as January 1990 to April 1995, to 
lessen and eliminate competition in the sale of tampico fiber in the 
United States, in violation of Section 1 of the Sherman Act, 15 U.S.C. 
Sec. 1. A companion criminal information against Ixtlera de Santa 
Catarina, S.A. de C.V. (``Ixtlera'') and MFC Corporation (``MFC'') was 
filed on September 26, 1996. The civil complaint alleges that as part 
of the conspiracy, the defendants and co-conspirators among other 
things:
    (a) Fixed the prices at which tampico fiber was imported into the 
United States;
    (b) Fixed the resale prices for tampico fiber charged by their 
exclusive United States distributors; and
    (c) Allocated sales between such distributors.
    The complaint seeks a judgment by the Court declaring that the 
defendants engaged in unlawful combinations and conspiracies in 
restraint of trade in violation of the Sherman Act. It also seeks an 
order by the Court to enjoin and restrain the defendants from any such 
activities or other activities having a similar purpose or effect in 
the future.
    The United States and defendants have stipulated that the proposed 
final judgment may be entered after compliance with the APPA, unless 
the United States withdraws its consent.
    The Court's entry of the proposed final judgment will terminate 
this civil action against these defendants, except that the Court will 
retain jurisdiction over the matter for possible further proceedings to 
construe, modify or enforce the judgment, or to punish violations of 
any of its provisions.

II

Description of the Practices Giving Rise to the Alleged Violations of 
the Antitrust Laws

    As defined in the complaint, tampico fiber is a natural vegetable 
fiber produced by the lechuguilla plant and grown in the deserts of 
northern Mexico. It is harvested by individual farmers, processed, 
finished and exported worldwide, where it is used as brush filling 
material for industrial and consumer brushes. It is available in 
natural white, bleached white, black, gray and a wide variety of 
mixtures.
    The complaint further alleges that defendant MFC had United States 
sales of tampico fiber of approximately $14,699,000 during the period 
from January of 1990 through April of 1995. During this time, the 
defendants sold and shipped substantial quantities of tampico fiber in 
a continuous and uninterrupted flow of interstate commerce from the 
processing facility of Ixtlera in Mexico through its exclusive United 
States distributor, MFC, a company headquartered in Texas, to MFC's 
customers throughout the United States, including those located in the 
Eastern District of Pennsylvania. Similarly, the complaint alleges that 
non-defendant co-conspirators sold and shipped additional substantial 
quantities of tampico fiber in a continuous and uninterrupted flow of 
interstate commerce from another processing facility in Mexico through 
their exclusive United States distributor to customers throughout the 
United States, including some located in the Eastern District of 
Pennsylvania.
    The complaint alleges that the defendants and co-conspirators 
engaged in three forms of concerted action and states three causes of 
action: (1) An agreement to fix import prices, (2) an agreement to fix 
resale prices, and (3) an agreement to allocate sales. Essentially, the 
complaint alleges that defendants and their co-conspirators fixed the 
prices at which tampico fiber was sold to their two respective 
exclusive United States distributors, agreed on the resale prices to be 
charged by those two distributors and agreed to a percentage allocation 
of sales volume between those distributors.
    The defendants and their co-conspirators went far beyond suggesting 
and adhering to suggested resale prices. Resale price sheets were 
provided by Ixtlera and the co-conspirator processor to MFC and the co-
conspirator distributor. As a condition of becoming and remaining a 
United States distributor of tampico fiber, the co-conspirator 
distributor agreed by written contract with its supplier to sell at the 
prices listed on the price sheet. From at least January 1990 on, both 
MFC and the co-conspirator distributor had identical price sheets 
supplied by Ixtlera and the co-conspirator processor, and the majority 
of tampico fiber sales were made by those distributor at these list 
prices or other agreed-upon prices. MFC made the sales with its two top 
executives' knowledge of and participation in the collusive agreement 
with their putative competitor.
    The use of resale price maintenance by the defendants and co-
conspirators was designed to and had the effect of monitoring and 
enforcing the horizontal

[[Page 52463]]

price-fixing and sales volume allocation agreements between the 
defendants and co-conspirators. The defendants' conduct had the effect 
of lessening or eliminating competition between the two United States 
distributors of tampico fiber in order to maintain prices at 
artificially high and non-competitive levels.
    In furtherance of the conspiracy, the defendants and their co-
conspirators, among other things, periodically met, discussed and 
agreed to new import and resale prices for tampico fiber, and met, 
discussed and compared the annual sales volumes of their United States 
distributors to ensure they were at or about the percentages the 
defendants and co-conspirators had agreed upon for each.

III

Explanation of the Proposed Final Judgment

    The United States and the defendants have stipulated that a final 
judgment, in the form filed with the Court, may be entered by the Court 
at any time after compliance with the APPA, 15 U.S.C. Sec. 16(b)-(h). 
The proposed final judgment provides that the entry of the final 
judgment does not constitute any evidence against or an admission by 
any party with respect to any issue of fact or law. Under the 
provisions of Section 2(e) of the APPA, entry of the proposed final 
judgment is conditioned upon the Court finding that its entry will be 
in the public interest.
    The United States has filed a criminal information charging 
Ixtlera, MFC and unnamed co-conspirators with a conspiracy to fix the 
prices and allocate sales of tampico fiber imported into and sold in 
the United States, in violation of the Sherman Act (15 U.S.C. Sec. 1).
    The United States does not routinely file both civil and criminal 
cases involving the same underlying conduct. It is appropriate to do so 
in this case, however, because of the extent of the control of the 
market by a small number of companies conspiring to eliminate price 
competition in the sale of tampico fiber in the United States through a 
comprehensive scheme of fixing the prices of imported tampico fiber, 
allocating sales volumes between their exclusive distributors, and 
agreeing upon the prices at which distributors would resell tampico 
fiber within the United States.
    The proposed final judgment contains three principal forms of 
relief. First, the defendants are enjoined from repeating the conduct 
they undertook in connection with the tampico fiber conspiracy and from 
certain other conduct that could have similar anticompetitive effects. 
Second, in light of their overwhelming shares of the tampico fiber 
market in the United States and of evidence that they have previously 
discussed consolidating operations, Ixtlera is prohibited from merging 
with its co-conspirator processor, Fibras Saltillo, S.A. de C.V., 
without providing the Antitrust Division ninety (90) days notice. Such 
a transaction, if consummated, would likely nullify the prophylactic 
measures pertaining to horizontal conduct contained in both this 
proposed final judgment and the final judgment entered by the Court 
against Fibras Saltillo on August 20, 1996. Third, the proposed final 
judgment places affirmative burdens on the defendants to pursue an 
antitrust compliance program directed toward avoiding a repetition of 
the tampico fiber conspiracy.

A. Prohibited Conduct

    Section IV of the proposed final judgment broadly enjoins each 
defendant from conspiring to fix prices, allocate sales, discourage or 
eliminate new entrants, or otherwise restrict or eliminate the supply 
of tampico fiber sold to any customer in the United States, (IV (A)); 
from communicating pricing, sales volume and customer information to 
any processor, supplier or distributor of tampico fiber other than its 
own (IV (B), (C) and (D)); from communicating regarding discouraging or 
eliminating new entrants (IV (E)); from engaging in resale price 
maintenance (IV (F)-(I)); and from joining any group whose aims or 
activities are prohibited by Sections IV (A)-(I) of the proposed final 
judgment (IV (J)). Finally, Ixtlera is enjoined from merging with, 
acquiring the stock or assets of, or selling its stock or assets to 
Fibras Saltillo, S.A. de C.V., a major processor of tampico fiber and a 
co-conspirator, without providing the Antitrust Division ninety (90) 
days notice.
    Specifically, as regards tampico fiber sold in the United States, 
Sections IV (A)-(E) of the proposed final judgment provide as follows:
    Section IV (A) of the proposed final judgment enjoins each 
defendant from agreeing with any other processor, supplier or 
distributor of tampico fiber to (1) raise, fix, or maintain the prices 
or other terms or conditions for the sale or supply of tampico fiber; 
(2) allocate sales volumes, territories or customers for tampico fiber; 
(3) discourage or eliminate any new entrant into the tampico fiber 
market; or (4) restrict or eliminate the supply of tampico fiber to any 
customer.
    Section IV (B) of the proposed final judgment enjoins each 
defendant from communicating with any processor, supplier or 
distributor (other than its own processor, supplier or distributor) of 
tampico fiber regarding any current or future price, price change, 
discount, or other term or condition of sale charged or quoted or to be 
charged or quoted to any customer or potential customer for tampico 
fiber, whether communicated in the form of a specific price or in the 
form of information from which such specific price may be computed.
    Section IV (C) of the proposed final judgment enjoins each 
defendant from distributing to any processor, supplier or distributor 
(other than its own processor, supplier or distributor) of tampico 
fiber price lists or other pricing material that is used, has been 
used, or will be used in computing prices or terms or conditions of 
sale charged or to be charged for tampico fiber.
    Section IV (D) of the proposed final judgment enjoins each 
defendant from communicating with any processor, supplier or 
distributor (other than its own processor, supplier or distributor) of 
tampico fiber regarding information pertaining to the volume of sales 
of tampico fiber or the location or identity of customers.
    Section IV (E) of the proposed final judgment enjoins each 
defendant from communicating with any processor, supplier or 
distributor regarding discouraging or eliminating any new entrant into 
the tampico fiber market or restricting or eliminating the supply of 
tampico fiber to any customer.
    Section IV (F) of the proposed final judgment enjoins Ixtlera from 
directly or indirectly entering into, adhering to, maintaining, 
furthering, enforcing or claiming any right under any contract, 
agreement, understanding, plan or program with any distributor to fix 
or maintain the prices at which tampico fiber sold by Ixtlera may be 
resold or offered for sale by any distributor.
    Section IV (G) of the proposed final judgment enjoins Ixtlera from 
directly or indirectly adopting, promulgating, suggesting, announcing 
or establishing any resale pricing policy for tampico fiber.
    Section IV (H) of the proposed final judgment enjoins Ixtlera from 
threatening any distributor with termination or terminating any 
distributor on the basis of that distributor's pricing; or discussing 
with any present or potential distributor any decision regarding 
termination of any other distributor for any reason directly or 
indirectly related to the latter distributor's resale pricing, 
provided, however, that nothing herein shall

[[Page 52464]]

prohibit Ixtlera from terminating a distributor for any reason other 
than the distributor's resale pricing;
    Section IV (I) of the proposed final judgment enjoins MFC from 
directly or indirectly entering into, adhering to, maintaining, 
furthering, enforcing or claiming any right under any contract, 
agreement, understanding, plan or program with any supplier to fix or 
maintain the prices at which tampico fiber may be resold or offered for 
sale by MFC or any other distributor.
    Section IV (J) of the proposed final judgment enjoins each 
defendant from participating or engaging directly or indirectly through 
any trade association, organization or other group in any activity 
which is prohibited in IV (A)-(I).
    Section IV (K) of the proposed final judgment enjoins Ixtlera from 
merging with, acquiring all or part of the assets or securities of, or 
selling all or part of its assets or securities to the Mexican tampico 
fiber processor Fibras Saltillo, S.A. de C.V., or its owners, officers, 
directors, agents, employees, subsidiaries, successors and assigns 
without first providing plaintiff with at least ninety (90) days 
written notice prior to closing the transaction. Such notification 
shall include a complete description, in English, of the proposed 
transaction and the reasons therefor. Ixtlera agrees to provide 
promptly all information, with English translations, reasonably 
requested by plaintiff in connection with its investigation of the 
proposed transaction, consents to the jurisdiction of the Court to 
adjudicate the legality of the proposed or consummated transaction 
under the antitrust laws of the United States, and waives any 
objections to venue. Nothing in this paragraph shall prohibit Miguel 
Schwarz Marx, principal of Ixtlera, from divesting to any person, 
without notice, the 27.5 percent interest in Fibras Saltillo, S.A. de 
C.V. which he currently holds.

B. Permitted Conduct

    Four exceptions to the broad prohibitions of Section IV of the 
proposed final judgment are contained in Section V.
    Section V (A) permits any necessary negotiations or communications 
with any processor, supplier or distributor of tampico fiber or with 
any agent, broker or representative of such processor, supplier or 
distributor in connection with bona fide proposed or actual purchases 
of tampico fiber from, or sale of tampico fiber to, that processor, 
supplier or distributor.
    Section V (B) makes it clear that nothing contained in the proposed 
final judgment would prohibit MFC from unilaterally deciding to resell 
tampico fiber at prices suggested by its supplier. However, any 
instance of this must be reported and the reports must be retained in 
MFC's files.
    Section V (C) makes it clear that although Miguel Schwarz Marx, an 
owner and officer of Ixtlera, is otherwise prohibited from discussing 
with or obtaining information from Fibras Saltillo regarding Fibras 
Saltillo's prices, volume, customers or marketing plans for tampico 
fiber (IV (A)-(E)), as a 27.5 percent owner of Fibras Saltillo, he can 
have limited access to historical pricing information of Fibras 
Saltillo to A&L Mayer Associates, Inc. (Associates) or Associates 
successor that serves as a conduit between Fibras Saltillo and its 
United States distributor (currently Brush Fibers, Inc.), provided such 
information is at least six months old and is used solely to protect 
the value of Schwarz's investment in Fibras Saltillo under Mexican law.
    Section V (D) makes it clear that nothing contained in the final 
judgment would prevent (1) MFC from continuing to act as Ixtlera's 
exclusive distributor for tampico fiber in the United States; (2) MFC 
and Ixtlera from conducting negotiations regarding such an exclusive 
distributorship; or (3) Ixtlera from deciding to appoint another 
company as its exclusive distributor in the United States.

C. Defendants' Affirmative Obligations

    Section VI requires that within thirty (30) days of entry of the 
final judgment, the defendants adopt or pursue an affirmative 
compliance program directed toward ensuring that their employees comply 
with the antitrust laws. More specifically, the program must include 
the designation of an Antitrust Compliance Officer responsible for 
compliance with the final judgment and reporting any violations of its 
terms. It further requires that each defendant furnish a copy of the 
final judgment to each of its officers and directors and each of its 
employees who is engaged in or has responsibility for or authority over 
pricing of tampico fiber within sixty (60) days of the date of entry, 
and to certify that it has distributed those copies and designated an 
Antitrust Compliance Officer within seventy-five (75) days. Copies of 
the final judgment also must be distributed to anyone who becomes such 
an officer, director or employee within thirty (30) days of holding 
that position and to all such individuals annually.
    Furthermore, Section VI requires each defendant to brief each 
officer, director and employee engaged in or having responsibility over 
pricing of tampico fiber as to the defendant's policy regarding 
compliance with the Sherman Act and with the final judgment, including 
the advice that his or her violation of the final judgment could result 
in a conviction for contempt of court and imprisonment, a fine or both 
and that the defendant will make legal advice available to such persons 
regarding compliance questions or problems. The defendants annually 
must obtain (and maintain) certifications from each such person that 
the aforementioned briefing, advice and a copy of the final judgment 
were received and understood and that he or she is not aware of any 
violation of the final judgment that has not been reported to the 
Antitrust Compliance Officer. Finally, each defendant must submit to 
the plaintiff an annual declaration as to the fact and manner of its 
compliance with the final judgment.
    Under Section VII of the final judgment, the Justice Department 
will have access, upon reasonable notice, to the defendants' records 
and personnel in order to determine defendants' compliance with the 
judgment.

D. Scope of the Proposed Judgment

(1) Persons Bound by the Decree
    The proposed judgment expressly provides in Section III that its 
provisions apply to each of the defendants and each of their owners, 
officers, directors, agents and employees, subsidiaries, successors and 
assigns and to all other persons who receive actual notice of the terms 
of judgment.
    In addition, Section III of the judgment prohibits each of the 
defendants from selling or transferring all or substantially all of its 
stock or assets used in its tampico fiber business unless the acquiring 
party files with the Court its consent to be bound by the provisions of 
the judgment.
(2) Duration of the Judgment
    Section IX provides that the judgment will expire on the tenth 
anniversary of its entry.

E. Effect of the Proposed Judgment on Competition

    The prohibition terms of Section IV of the final judgment are 
designed to ensure that each defendant will act independently in 
determining the prices, and terms and conditions at which it will sell 
or offer to sell tampico fiber, and that there will be no 
anticompetitive restraints (horizontal or vertical) in the tampico 
fiber market. The affirmative obligations of Sections

[[Page 52465]]

VI and VII are designed to ensure that each corporate defendant's 
employees are aware of their obligations under the decree in order to 
avoid a repetition of the conspiracies in the tampico fiber industry 
that led to this case and the companion criminal proceeding. Compliance 
with the proposed judgment will deter price collusion, allocation of 
sales, markets and customers, concerted activities in restricting new 
entrants and customers, and resale price restraints by each of the 
defendants with each other and with other tampico fiber processors and/
or distributors.

IV

Remedies Available to Potential Private Plaintiffs

    After entry of the proposed final judgment, any potential private 
plaintiff who might have been damaged by the alleged violation will 
retain the same right to sue for monetary damages and any other legal 
and equitable remedies which he or she may have had if the proposed 
judgment had not been entered. The proposed judgment may not be used, 
however, as prima facie evidence in private litigation, pursuant to 
Section 5(a) of the Clayton Act, as amended, 15 U.S.C. Sec. 16(a).

V

Procedures Available for Modification of the Proposed Consent Judgment

    The proposed final judgment is subject to a stipulation between the 
government and the defendants which provides that the government may 
withdraw its consent to the proposed judgment any time before the Court 
has found that entry of the proposed judgment is in the public 
interest. By its terms, the proposed judgment provides for the Court's 
retention of jurisdiction of this action in order to permit any of the 
parties to apply to the Court for such orders as may be necessary or 
appropriate for the modification of the final judgment.
    As provided by the APPA (15 U.S.C. Sec. 16), any person wishing to 
comment upon the proposed judgment may, for a sixty-day (60) period 
subsequent to the publishing of this document in the Federal Register, 
submit written comments to the United States Department of Justice, 
Antitrust Division, Attention: Robert E. Connolly, Chief, Middle 
Atlantic Office, Suite 650 West, 7th and Walnut Streets, Philadelphia, 
Pennsylvania 19106. Such comments and the government's response to them 
will be filed with the Court and published in the Federal Register. The 
government will evaluate all such comments to determine whether there 
is any reason for it to withdraw its consent to the proposed judgment.

VI

Alternative to the Proposed Final Judgment

    The alternative to the proposed final judgment considered by the 
Antitrust Division was a full trial of the issues on the merits and on 
relief. The Division considers the substantive language of the proposed 
judgment to be of sufficient scope and effectiveness to make litigation 
on the issues unnecessary, as the judgment provides appropriate and 
fully effective relief against the violations alleged in the complaint.

VII

Determinative Materials and Documents

    No materials or documents were considered determinative by the 
United States in formulating the proposed Final Judgment. Therefore, 
none are being filed pursuant to the APPA, 15 U.S.C. Sec. 16(b).

  Dated:---------------------------------------------------------------
Joel I. Klein,
Acting Assistant Attorney General.
Rebecca P. Dick,
Deputy Director of Operations.
Robert E. Connolly,
Chief, Middle Atlantic Office.

    Respectfully submitted,
Edward S. Panek,
Michelle A. Pionkowski,
Roger L. Currier,
Joseph Muoio,
Attorneys, Antitrust Division, U.S. Department of Justice, Middle 
Atlantic Office, The Curtis Center, Suite 650W, 7th and Walnut Streets, 
Philadelphia, PA 19106, Tel.: (215) 597-7401.

Certificate of Service

    I, Edward S. Panek, an attorney with the United States Department 
of Justice, Antitrust Division, hereby certify that on September 26, 
1996, copies of the Complaint, Stipulation, Proposed Final Judgment and 
Competitive Impact Statement were served, by mail, on counsel of record 
as follows.
    Counsel for Ixtlera de Santa Catarina, S.A. de C.V.:

Gordon B. Spivack, Esquire, Coudert Brothers, 1114 Avenue of the 
Americas, New York, NY 10036-7703

    Counsel for MFC Corporation:

Roxann E. Henry, Esquire, Howrey & Simon, 1299 Pennsylvania Avenue, 
NW., Washington, DC 20004-2402
Edward S. Panek,
Attorney, Antitrust Division, U.S. Department of Justice, Middle 
Atlantic Office, The Curtis Center, Suite 650W, 7th and Walnut Streets, 
Philadelphia, PA 19106, Tel.: (215) 597-7401.
[FR Doc. 96-25336 Filed 10-4-96; 8:45 am]
BILLING CODE 4410-01-M