[Federal Register Volume 62, Number 64 (Thursday, April 3, 1997)]
[Notices]
[Pages 15920-15929]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8459]
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DEPARTMENT OF JUSTICE
Antitrust Division
Proposed Final Judgment and Competitive Impact Statement; United
States of America versus American Radio Systems Corporation and EZ
Communications, Inc.
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 Competitive Impact Statement have been filed
with the United States District Court for the District of Columbia in
United States v. American Radio Systems and EZ Communications, Inc.
Civ. Action No. 97 CV 405. The proposed Final Judgment is subject to
approval by the Court after the expiration of the statutory 60-day
public comment period and compliance with the Antitrust Procedures and
Penalties Act, 15 U.S.C. Sec. 16(b)-(h).
Plaintiff filed a civil antitrust Compliant on February 27, 1997,
alleging that the proposed acquisition of EZ Communications (``EZ'') by
American Radio Systems Corporation (``ARS'') would violate Section 7 of
the Clayton Act, 15 U.S.C. Sec. 18. The Complaint alleges that ARS and
EZ own and operate numerous radio stations throughout the United
States, and that after the transaction ARS would own eight radio
stations in the Sacramento, California area, including six of the 12
stations authorized and operating as Class B broadcast facilities in
that area. This acquisition would give ARS half of the most
competitively significant radio signals, and a significant share of the
radio advertising market, including a large percentage of advertising
directed to certain target audiences in Sacramento. As a result, the
combination of these companies would substantially lessen competition
in the sale of radio advertising time in Sacramento, California and the
surrounding area.
The prayer for relief seeks: (a) Adjudication that ARS's proposed
acquisition of EZ would violate Section 7 of the Clayton Act,; (b)
preliminary and permanent injunctive relief preventing the consummation
of the proposed acquisition; (c) an award to the United States of the
costs of this action; and (d) such other relief as is proper.
Shortly before this suit was filed, a proposed settlement was
reached that permits ARS to complete its acquisition of EZ, yet
preserves competition in the market for which the transaction would
raise significant competitive concerns. A Stipulation and proposed
Final Judgment embodying the settlement were filed at the same time the
Complaint was filed.
The proposed Final Judgment orders defendants to divest KSSJ-FM.
Unless the United States grants a time extension, defendants must
divest this radio station either within six months after the filing of
the Complaint, or within five (5) business days after notice of entry
of the Final Judgment,
[[Page 15921]]
whichever is later. If defendants do not divest KSSJ-FM within the
divestiture period, the Court shall, upon plaintiff's application,
appoint a trustee to sell the assets. The proposed Final Judgment also
requires defendants to ensure that, until the divestiture mandated by
the Final Judgment has been accomplished, KSSJ-FM will be operated
independently as a viable, ongoing business, and kept separate and
apart from ARS's and EZ's other Sacramento radio stations.
Additionally, the proposed Final Judgment provides that if KSSJ-FM's
Class B license has not been issued by the FCC on or before December
31, 1997, the United States has the right to designate one additional
ARS or EZ Class B radio station for divestiture. Further, the proposed
Final Judgment requires defendants to give plaintiff prior notice
regarding future radio station acquisitions or certain agreements
pertaining to the sale of radio advertising time in Sacramento.
A Competitive Impact Statement filed by the United States describes
the Complaint, the proposed Final Judgment, and remedies available to
private litigants.
Public comment is invited within the statutory 60-day comment
period. Such comments, and the responses thereto, will be published in
the Federal Register and filed with the Court. Written comments should
be directed to Craig W. Conrath, Chief, Merger Task Force, Antitrust
Division, 1401 H Street, NW., Suite 4000, Washington, DC 20530
(telephone: (202) 307-0001). Copies of the Complaint, Stipulation,
proposed Final Judgment and Competitive Impact Statement are available
for inspection in Room 215 of the U.S. Department of Justice, Antitrust
Division, 325 7th Street, NW., Washington, DC 20530 (telephone: (202)
514-2481) and at the office of the Clerk of the United States District
Court for the District of Columbia, 3rd Street and Constitution Avenue,
NW., Washington, DC.
Copies of any of these materials may be obtained upon request and
payment of a copying fee.
Constance K. Robinson,
Director of Operations Antitrust Division.
United States District Court for The District of Columbia
United States of America, Plaintiff, v. American Radio Systems
Corporation and EZ Communications, Inc., Defendants. Civil Action
No. 1:97CV00405, Filed 2/27/97, Judge Oberdorfer.
Stipulation and Order
It is stipulated by and between the undersigned parties, by their
respective attorneys, as follows:
(1) The Court has jurisdiction over the subject matter of this
action and over each of the parties hereto, and venue of this action is
proper in the United States District Court for the District of
Columbia.
(2) The parties stipulate 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), 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 defendants and by filing that
notice with the Court.
(3) Defendants shall abide by and comply with the provisions of the
proposed Final Judgment pending entry of the Final Judgment, or until
expiration of time for all appeals of any Court ruling declining entry
of the proposed Final Judgment, and shall, from the date of the signing
of this Stipulation by the parties, comply with all the terms and
provisions of the proposed Final Judgment as though the same were in
full force and effect as an order of the Court.
(4) Defendants shall not consummate the transaction sought to be
enjoined by the complaint herein before the Court has signed this
Stipulation and Order.
(5) The parties recognize that there could be a delay in obtaining
approval by or a ruling of a government agency related to the
divestiture required by Section IV of the Final Judgment,
notwithstanding the good faith efforts of defendants and any
prospective Acquirer, as defined in the Final Judgment. In this
circumstance, plaintiff will, in the exercise of its sole discretion,
acting in good faith, give special consideration to forbearing from
apply for the appointment of a trustee pursuant to section V of the
Final Judgment, or from pursuing legal remedies available to it as a
result of such delay, provided that: (a) defendants have entered into a
definitive agreement to divest the KSSJ-FM Assets, or, if necessary,
the Optional ARS Station Assets, and such agreement and the Acquirer
have been approved by plaintiff; (b) all papers necessary to secure any
governmental approvals and/or rulings to effectuate such divestiture
(including but not limited to FCC, SEC and IRS approvals or rulings)
have been field with the appropriate agency; (c) receipt of such
approvals are the only closing conditions that have not been satisfied
or waived; and (d) defendants have demonstrated that neither they nor
the prospective Acquirer are responsible for any such delay.
(6) This Stipulation shall apply with equal force and effect to any
amended proposed Final Judgment agreed upon in writing by the parties
and submitted to the Court.
(7) In the event (a) plaintiff withdraws its consent, as provide in
paragraph 2 above, or (b) the proposed Final Judgment is not entered
pursuant to this Stipulation, the time has expired for all appeals of
any Court ruling declining entry of the proposed Final Judgment, and
the Court has not otherwise ordered continued compliance with the terms
and provisions of the proposed Final Judgment, then the parties are
released from all further obligations under this Stipulation, and the
making of this Stipulation shall be without prejudice to any party in
this or any other proceeding.
(8) Defendants represent that the divestiture ordered in the
proposed Final Judgment can and will be made, and that defendants will
alter raise no claim of hardship or difficulty as grounds for asking
the Court to modify any of the divestiture provisions contained
therein.
Dated: February 26, 1997.
For Plaintiff United States of America:
Dando B. Cellim,
U.S. Department of Justice, Antitrust Division, Merger Task Force, 1401
H. Street, N.W., Suite 4000, Washington, D.C. 20005, (202) 307-0829.
For Defendant American Radio Systems Corporation`
James R. Loftis, III,
Joseph J. Simons,
Collier Shannon Rill & Scott, PLLC,
3050 K Street, N.W., Suite 400, Washington, DC 20007, (202) 342-8480.
For Defendant EZ Communications, Inc.
Ray V. Hartwell, III,
Andrew J. Strenio, Jr.,
Hunton & Williams,
1900 K Street, NW, Washington, DC 20006-1109, (202) 955-1639.
Final Judgment
Whereas, plaintiff, the United States of America, having filed its
Complaint herein on February 27, 1997, and defendants American Radio
Systems Corporation (``ARS'') and EZ Communications, Inc. (``EZ''), by
their attorneys, having consented to the entry of this Final Judgment
without trial or adjudication of any issue of fact or law herein, and
without this Final Judgment constituting any evidence against or an
admission by any party with respect to any issue of law or fact herein.
[[Page 15922]]
And whereas, defendants have agreed to be bound by the provisions
of this Final Judgment pending its approval by the Court;
And whereas, the purpose of this Final Judgment is prompt and
certain divestiture of certain assets to assure that competition is not
substantially lessened;
And whereas, plaintiff requires defendants to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
And whereas, defendants have represented to plaintiff that the
divestitures ordered herein can and will be made and that defendants
will later raise no claim 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
over the subject matter of this action. The Complaint states a claim
upon which relief may be granted against defendants ARS and EZ, as
hereinafter defined, under Section 7 of the Clayton Act, as amended (15
U.S.C. 18).
II. Definitions
As used in this Final Judgment:
A. ARS means defendant American Radio Systems Corporation, a
Delaware corporation with its headquarters in Boston, Massachusetts,
and includes its successors and assigns, its subsidiaries, and
directors, officers, managers, agents and employees acting for or on
behalf of ARS.
B. EZ means defendant EZ Communications, Inc., a Virginia
corporation with its headquarters in Fairfax, Virginia, and includes
its successors and assigns, its subsidiaries, and directors, officers,
managers, agents and employees acting for or on behalf of EZ.
C. KSSJ-FM Assets means all of the assets, tangible or intangible,
used in the operation of KSSJ 101.9 FM radio station in the Sacramento
Area, including but not limited to: all real property (owned or leased)
used in the operation of that station; all broadcast equipment,
personal property, inventory, office furniture, fixed assets and
fixtures, materials supplies and other tangible property used in the
operation of that station; all licenses, permits, authorizations and
applications therefor issued by the Federal Communications Commission
(``FCC'') and other government agencies relating to that station; all
contracts, agreements, leases and commitments of defendants pertaining
to that station and its operations; all trademarks, service marks,
trade names, copyrights, patents, slogans, programming materials and
promotional materials relating to that station, and all logs and other
records maintained by defendants or that station in connection with its
business.
D. Sacramento Area means the Sacramento, California Metro Survey
Area as identified by The Arbitron Radio Market Report for Sacramento
(Fall 1996), which is made up of the following counties: El Dorado,
Placer, Sacramento and Yolo.
E. Acquirer means the entity to whom defendants divest the KSSJ-FM
Assets or the Optional ARS Station Assets under this Final Judgment.
F. ARS Radio Station means any radio station owned by ARS or EZ and
licensed to a community in the Sacramento Area, other than KSSJ-FM.
G. Non-ARS Radio Station means any radio station licensed to a
community in the Sacramento Area that is not an ARS Radio Station.
H. Optional ARS Station Assets means the full class B FM radio
station assets designated by plaintiff pursuant to Section IV (B) of
this Final Judgment, and include all the assets, tangible or
intangible, used in the operation of any one radio station with a full
class B license broadcast facility owned by ARS or EZ, so chosen by the
plaintiff, and licensed to a community in the Sacramento Area, other
than KSSJ-FM, including but not limited to all real property (owned or
leased) used in the operation of that station; all broadcast equipment,
personal property, inventory, office furniture, fixed assets and
fixtures, materials, supplies and other tangible property used in the
operation of that station; all licenses, permits, authorizations and
applications therefor issued by the Federal Communications Commission
(``FCC'') and other governmental agencies relating to that station; all
contracts, agreements, leases and commitments of defendants pertaining
to that station and its operations; all trademarks, service marks,
trade names, copyrights, patents, slogans, programming materials and
promotional materials relating to that station, and all logs and other
records maintained by defendants or that station in connection with its
business.
III. Applicability
A. The provisions of this Final Judgment apply to the defendants,
their successors and assigns, their subsidiaries, affiliates,
directors, officers, managers, agents and employees, and all other
persons in active concert or participation with them who shall have
received actual notice of the Final Judgment by personal service or
otherwise.
B. Each defendant shall require, as a condition of the sale or
other disposition of all or substantially all of the assets used in its
business of owning and operating its portfolio of radio stations in the
Sacramento Area, that the acquiring party or parties agree to be bound
by the provisions of this Final Judgment, provided, however, defendants
need not obtain such an agreement from an Acquirer in connection with
the divestiture of the KSSJ-FM Assets or the Optional ARS Station
Assets.
IV. Divestiture
A. Defendants are hereby ordered and directed, in accordance with
the terms of this Final Judgment, within six (6) months after the
filing of the complaint in this action, or within five (5) business
days after notice of entry of this Final Judgment, whichever is later,
to divest the KSSJ-FM Assets to an Acquirer acceptable to plaintiff, in
its sole discretion.
B. In the event that KSSJ-FM's class B FM license has not been
issued by the FCC on or before December 31, 1997, plaintiff shall
thereafter have the right, exercisable at any time during the term of
this Final Judgment, to designate the Optional ARS Station Assets.
Plaintiff's designation shall be communicated to defendants in writing,
which notification shall identify one class B FM station and
accompanying assets that shall constitute the Optional ARS Station
Assets In the event plaintiff designates the Optional ARS Station
Assets pursuant to this Section IV(B), defendants shall, in accordance
with the terms of this Final Judgment, within six (6) months of written
notification to defendants of plaintiff's designation of the Optional
ARS Station Assets, in addition to the KSSJ-FM Assets, divest the
Optional ARS Station Assets to an Acquirer acceptable to plaintiff, in
its sole discretion.
C. Unless plaintiff otherwise consents in writing, the divestiture
pursuant to Section IV of this Final Judgment, or by the trustee
appointed pursuant to Section V, shall include all the KSSJ-FM Assets
and the Optional ARS Station Assets, and shall be accomplished in such
a way as to satisfy plaintiff, in its sole discretion, that the KSSJ-FM
Assets and Optional ARS Station Assets can and will be used by
[[Page 15923]]
an Acquirer as a viable, ongoing commercial radio business. The
divestiture, whether pursuant to Section IV or V of this Final
Judgment, shall be made (1) to an Acquirer that, in the sole judgment
of plaintiff, has the capability and intent of competing effectively,
and has the managerial, operational and financial capability to compete
effectively as a radio station operator in the Sacramento Area; and (2)
pursuant to agreements the terms of which shall not, in the sole
judgment of plaintiff, interfere with the ability of the Acquirer to
compete effectively.
D. Defendants agree to use their best efforts to divest the KSSJ-FM
Assets and the Optional ARS Station Assets, and to obtain all
regulatory approvals necessary for such divestiture, as expeditiously
as possible. Plaintiff, in its sole discretion, may extend the time
period for the divestiture set forth in Section IV (A) or Section IV
(b), as the case may be, for two (2) additional thirty (30)-day periods
of time, not to exceed sixty (60) calendar days in total in each case.
E. In accomplishing the divestiture ordered by this Final Judgment,
defendants promptly shall make known, by usual and customary means, the
availability of the KSSJ-FM Assets and the Optional ARS Station Assets.
Defendants shall inform any person making a bona fide inquiry regarding
a possible purchase that the sale is being made pursuant to this Final
Judgment and provide such person with a copy of the Final Judgment.
Defendants shall make known to any person making an inquiry regarding a
possible purchase of the KSSJ-FM Assets and the Optional ARS Station
Assets, that the assets described in Section II (C) and Section II (H)
are being offered for sale. Defendants shall also offer to furnish to
all bona fide prospective purchasers, subject to customary
confidentiality assurances, all information regarding the KSSJ-FM
Assets and the Optional ARS Station Assets customarily provided in a
due diligence process, except such information that is subject to
attorney-client privilege or attorney work-product privilege.
Defendants shall make available such information to plaintiff at the
same time that such information is made available to any other person.
F. Defendants shall permit bona fide prospective purchasers of the
KSSJ-FM Assets or the Optional ARS Station Assets to have access to
personnel and to make such inspection of the assets and any and all
financial, operational or other documents and information, as is
customary in a due diligence process.
G. Defendants shall not interfere with any efforts by any Acquirer
to employ the general manager or any other employee of KSSJ-FM or the
Optional ARS Station Assets.
V. Appointment of Trustee
A. In the event that defendants have not divested the KSSJ-FM
Assets or the Optional ARS Station Assets within the time periods
specified in Section IV of this Final Judgment, the Court shall
appoint, on application of plaintiff, a trustee selected by plaintiff
to effect the divestiture of the assets.
B. After the trustee's appointment has become effective, only the
trustee shall have the right to sell the KSSJ-FM Assets or the Optional
ARS Station Assets. 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 Section
V and VII of this Final Judgment and consistent with FCC regulations,
and shall have such other powers as the Court shall deem appropriate.
Subject to Section V (C) of this Final Judgment, the trustee shall have
the power and authority to hire at the cost and expense of defendants
any investment bankers, attorneys or other agents reasonably necessary
in the judgment of the trustee to assist in the divestiture, and such
professionals or agents shall be solely accountable to the trustee. The
trustee shall have the power and authority to accomplish the
divestiture at the earliest possible time to a purchaser acceptable to
plaintiff in its sole judgment, and shall have such other powers at
this Court shall deem appropriate. Defendants shall not object to the
sale of the KSSJ-FM Assets or the Optional ARS Station Assets by the
trustee on any grounds other than the trustee's malfeasance. Any such
objection by defendants must be conveyed in writing to plaintiff and
the trustee no later than fifteen (15) calendar days after the trustee
has provided the notice required under Section VII of this Final
Judgment.
C. The trustee shall serve at the cost and expense of defendants,
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 monies shall be paid to defendants, and the trustee's
services 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 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. Defendants shall take no action to interfere with or impede the
trustee's accomplishment of the divestiture of the KSSJ-FM Assets or
the Optional ARS Station Assets, and shall use their best efforts to
assist the trustee in accomplishing the required divestiture, including
best efforts to effect all necessary regulatory approvals. Subject to a
customary confidentiality agreement, the trustee shall have full and
complete access to the personnel, books, records and facilities related
to the KSSJ-FM Assets and the Optional ARS Station Assets, and
defendants shall develop such financial or other information as may be
necessary for the divestiture of the KSSJ-FM Assets and the Optional
ARS Station Assets. Defendants shall permit prospective purchasers of
the KSSJ-FM Assets and Optional ARS Station Assets to have access to
personnel and to make such inspection of physical facilities and any
and all financial, operational or other documents and information as
may be relevant to the divestiture required by this Final Judgment.
E. After its appointment becomes effective, the trustee shall file
monthly reports with defendants, plaintiff and the Court, setting forth
the trustee's efforts to accomplish divestiture of the KSSJ-FM Assets
and the Optional ARS Station Assets as contemplated under this Final
Judgment, provided, however, that to the extent such reports contain
information that the trustee deems confidential, such reports shall not
be filed in the public docket of the Court. Such reports shall include
the name, address and telephone number of each person who, during the
preceding month, made an offer to acquire, expressed an interest in
acquiring, entered into negotiations to acquire, or was contacted or
made an inquiry about acquiring, any interest in the KSSJ-FM Assets or
the Optional ARS Station Assets, and shall describe in detail each
contact with any such person during that period. The trustee shall
maintain full records of all efforts made to divest these assets.
F. Within six (6) months after its appointment has become
effective, if the trustee has not accomplished the divestiture required
by Section IV of this Final Judgment, the trustee shall promptly file
with the Court a report setting forth (1) the trustee's efforts to
accomplish the required divestiture, (2)
[[Page 15924]]
the reasons, in the trustee's judgment, why the required divestiture
has not been accomplished, and (3) the trustee's recommendations;
provided, that to the extent such reports contain information that the
trustee deems confidential, such reports shall not be filed in the
public docket of the Court. The trustee shall at the same time furnish
such reports to plaintiff and defendants, which shall each have the
right to be heard and to make additional recommendations. The Court
shall thereafter enter such orders as it shall deem appropriate to
accomplish the purpose of this Final Judgment, which shall, if
necessary, include extending the term of the trustee's appointment.
VI. Preservation of Assets/Hold Separate
Until the divestiture of the KSSJ-FM Assets required by Section IV
of the Final Judgment has been accomplished.
A. Defendants shall take all steps necessary to operate KSSJ-FM as
a separate, independent, ongoing, economically viable and active
competitor to defendants' other stations in the Sacramento Area, and
shall take all steps necessary to ensure that, except as necessary to
comply with Section IV and paragraphs B and C of this Section of the
Final Judgment, the management of said station, including the
performance of decision-making functions regarding marketing and
pricing, will be kept separate and apart from, and not influenced by,
defendants.
B. Defendants shall use all reasonable efforts to maintain and
increase sales of advertising time by KSSJ-FM and the Optional ARS
Station Assets, and shall maintain at 1996 or previously approved
levels for 1997, whichever are higher, promotional advertising, sales,
marketing and merchandising support for such radio station.
C. Defendants shall take all steps necessary to ensure that the
assets used in the operation of KSSJ-FM and the Optional ARS Station
Assets are fully maintained. KSSJ-FM's and the Optional ARS Station
Assets' sales and marketing employees shall not be transferred or
reassigned to any other station, except for transfer bids initiated by
employees pursuant to defendants' regular, established job posting
policies, provided that defendants give plaintiff and Acquirer ten (10)
days' notice of such transfer.
D. Defendants shall not, except as part of a divestiture approved
by plaintiff, sell any KSSJ-FM Assets or the Optional ARS Station
Assets.
E. Defendants shall take no action that would jeopardize the sale
of the KSSJ-FM Assets or the Optional ARS Station Assets.
F. Defendants shall appoint a person or persons to oversee the
assets to be held separate and who will be responsible for defendants'
compliance with Section VI of this Final Judgment.
VII. Notification
Within two (2) business days following execution of a binding
agreement to divest, including all contemplated ancillary agreements
(e.g., financing), to effect any proposed divestiture pursuant to
Sections IV or V of this Final Judgment, defendants or the trustee,
whichever is then responsible for effecting the divestiture, shall
notify plaintiff of the proposed divestiture. If the trustee is
responsible, it shall similarly notify defendants. The notice shall set
forth the details of the proposed transaction and list the name,
address and telephone number of each person not previously identified
who offered to, or expressed an interest in or a desire to, acquire any
ownership interest in the KSSJ-FM Assets of the Optional ARS Station
Assets, together with full details of same. Within fifteen (15)
calendar days of receipt by plaintiff of such notice, plaintiff may
request from defendants, the proposed purchaser or purchasers, any
other third party, or the trustee, if applicable, additional
information concerning the proposed divestiture, the proposed
purchaser, and any other potential purchaser. Defendants and the
trustee shall furnish any additional information requested within
fifteen (15) calendar days of the receipt of the request. Within thirty
(30) calender days after receipt of the notice or within twenty (20)
calendar days after plaintiff has been provided the additional
information, whichever is later, plaintiff shall provide written notice
to defendants and the trustee, if there is one, stating whether or not
it objects to the proposed divestiture. If plaintiff fails to object
within the period specified, or if the plaintiff provides written
notice to defendant and the trustee, if there is one, that it does not
object, then the divestiture may be consummated, subject only to
defendants' limited right to object to the sale under Section V (B) of
this Final Judgment. A divestiture proposed under Section IV shall not
be consummated if plaintiff objects to it. Upon objection by plaintiff,
or by defendants under the proviso in Section V (B), a divestiture
proposed under Section V shall not be consummated unless approved by
the Court.
VIII. Financing
Defendants are ordered and directed not to finance all or any part
of any purchase by an Acquirer made pursuant to Sections IV or V of
this Final Judgment without the prior written consent of plaintiff.
IX. Affidavits
A. Within twenty (20) calendar days of the filing of this Final
Judgment and every thirty (30) calendar days thereafter until the
divestiture has been completed, whether pursuant to Section IV or
Section V of this Final Judgment, defendants shall deliver to plaintiff
an affidavit as to the fact and manner of defendants' compliance with
Section 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, was contacted by defendants, or their representatives, made an
offer to acquire, expressed an interest in acquiring, entered into
negotiations to acquire, or made an inquiry about acquiring, any
interest in the KSSJ-FM Assets or the Optional ARS Station Assets, and
shall describe in detail each contact with any such person during that
period. Each such affidavit shall also include a description of the
efforts that defendants have taken to solicit a buyer for the KSSJ-FM
Assets or the Optional ARS Station Assets.
B. Within twenty (20) calendar days of the filing of this Final
Judgment, defendants shall deliver to plaintiff an affidavit which
describes in reasonable detail all actions defendants have taken and
all steps defendants have implemented on an on-going basis to preserve
KSSJ-FM or the Optional ARS Station Assets pursuant to Section VI of
this Final Judgment. Defendants shall deliver to plaintiff an affidavit
describing any changes to the efforts and actions outlined in their
earlier affidavit(s) filed pursuant to this section within fifteen (15)
calendar days after such change is implemented.
C. Defendants shall preserve all records of all efforts made to
preserve and divest the KSSJ-FM Assets and the Optional ARS Station
Assets.
X. Notice
A. Unless such transaction is otherwise subject to the reporting
and waiting period requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''),
defendants, without providing advance notification to the plaintiff,
shall not directly or indirectly acquire any assets of or any interest,
[[Page 15925]]
including any financial, security, loan, equity or management interest,
in any Non-ARS Radio Station.
B. Defendants, without providing advance notification to the
plaintiff, shall not directly or indirectly enter into any agreement or
understanding that would allow defendants to market or sell advertising
time or to establish advertising prices for any Non-ARS Radio Station.
C. Notification described in (A) and (B) above shall be provided to
the United States Department of Justice in the same format as, and per
the instructions relating to the Notification and Report Form set forth
in the Appendix to Part 803 of Title 16 of the Code of Federal
Regulations as amended, except that the information requested in Items
5-9 of the instructions must be provided only with respect to ARS Radio
Stations in the Sacramento Area. Notification shall be provided at
least thirty (30) days prior to acquiring any such interest covered in
(A) or (B) above, and shall include, beyond what may be required by the
applicable instructions, the names of the principal representatives of
the parties to the agreement who negotiated the agreement, and any
management or strategic plans discussing the proposed transaction. If
within the 30-day period after notification, representatives of the
plaintiff make a written request for additional information, defendants
shall not consummate the proposed transaction or agreement until twenty
(20) days after submitting all such additional information. Early
termination of the waiting periods in this paragraph may be requested
and, where appropriate, granted in the same manner as is applicable
under the requirements and provisions of the HSR Act and rules
promulgated thereunder.
D. This Section shall be broadly construed and any ambiguity or
uncertainty regarding the filing of notice under this Section shall be
resolved in favor of filing notice.
XI. Compliance Inspection
For the purpose of determining or securing compliance with the
Final Judgment and subject to any legally recognized privilege, from
time to time.
A. Duly authorized representatives of the plaintiff, including
consultants and other persons retained by the plaintiff, shall, upon
written request of the United States Attorney General, or of the
Assistant Attorney General in charge of the Antitrust Division, and on
reasonable notice to defendants made to their principal offices, be
permitted:
(1) Access during office hours of defendants to inspect and copy
all books, ledgers, accounts, correspondence, memoranda and other
records and documents in the possession or under the control of
defendants, who may have counsel present, relating to any matters
contained in this Final Judgment; and
(2) Subject to the reasonable convenience of defendants and without
restraint or interference from defendants, to interview directors,
officers, employees and agents of defendants, who may have counsel
present, regarding any such matters.
B. Upon the written request of the United States Attorney General,
or of the Assistant Attorney General in charge of the Antitrust
Division, made to defendants' principal offices, defendants 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
Section IX or this Section XI shall be divulged by any representative
of the United States 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 plaintiff 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 a
defendant to plaintiff, and 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) calendar 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.
XII. Retention of Jurisdiction
Jurisdiction is retained by this Court at any time for such further
orders and directions as may be necessary or appropriate for the
construction, implementation or modification of any provisions of this
Final Judgment, for the enforcement of compliance herewith, and for the
punishment of any violation hereof.
XIII. Termination
Unless this Court grants an extension, this Final Judgment will
expire upon the tenth anniversary of the date of its entry.
XIV. Public Interest
Entry of this Final Judgment is in the public interest.
Certificate of Service
I, Dando B. Cellini, hereby certify that, on February 27, 1997, I
caused the foregoing documents to be served on defendants American
Radio Systems Corporation and EZ Communications, Inc., by having a copy
mailed, first-class, postage prepaid, to:
James R. Loftis, III,
Joseph J. Simons,
Collier Shannon Rill & Scott, PLLC,
3050 K Street, N.W., Suit 400, Washington, DC 20007, (202) 342-8480,
Counsel for American Radio Systems Corporation.
Ray V. Hartwell, III,
Andrew J. Strenio, Jr.,
Hunton & Williams,
1900 K Street, NW, Washington, DC 20006-1109, (202) 955-1639, Counsel
for EZ Communications, Inc.
Dando B. Cellini.
Competitive Impact Statement
Plaintiff, the United States of America, 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
Plaintiff filed a civil antitrust Complaint on February 27, 1997,
alleging that the proposed acquisition of EZ of Communications (``EZ'')
by American Radio Systems Corporation (``ARS'') would violate Section 7
of the Clayton Act, 15 U.S.C. Sec. 18. The Complaint alleges that ARS
and EZ own and operate numerous radio stations throughout the United
States, and that after the transaction ARS would own eight radio
stations in the Sacramento, California area, including six of the 12
stations authorized and operating as Class B broadcast facilities in
that area.\1\
[[Page 15926]]
This acquisition would give ARS half of the most competitively
significant radio signals, and a significant share of the radio
advertising market, including a large percentage of advertising
directed to certain target audiences in Sacramento. As a result, the
combination of these companies would substantially lessen competition
in the sale of radio advertising time in Sacramento, California and the
surrounding area.
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\1\ The Telecommunications Act of 1996 provides that a party may
own up to a maximum of eight commercial radio stations in a radio
market, not more than five of which are in the same service (AM or
FM). However, a radio market for Federal Communications Commission
(``FCC'') purposes is delineated by examining overlapping principal
community contours. Because ARS defined two separate radio markets
in the Sacramento area for FCC purposes, based upon principal
community contours, it took the position in its FCC filings and with
the Department of Justice that the 1996 Telecommunications in its
FCC filings and with the Department of Justice that the 1996
Telecommunications Act did not require divestiture of any of the six
class B FM signals that it would own after the merger.
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The prayer for relief seeks: (a) adjudication that ARS's proposed
acquisition of EZ would violate Section 7 of the Clayton Act; (b)
preliminary and permanent injunctive relief preventing the consummation
of the proposed acquisition; (c) an award to the United States of the
costs of this action; and (b) such other relief as is proper.
Shortly before this suit was filed, a proposed settlement was
reached that permits ARS to complete its acquisition of EZ, yet
preserves competition in the market for which the transaction would
raise significant competitive concerns. A Stipulation and proposed
Final Judgment embodying the settlement were filed at the same time the
Complaint was filed.
The proposed Final Judgment orders defendants to divest KSSJ-FM.
Unless the United States grants as a time extension, defendants must
divest this radio station either within six months after the filing of
the Complaint, or with five (5) business days after notice of entry of
the Final Judgment, whichever is later. If defendants do not divest
KSSJ-FM within the divestiture period, the Court shall, upon
plaintiff's application, appoint a trustee to sell the assets. The
proposed Final Judgment also requires defendants to ensure that, until
the divestiture mandated by the Final Judgment has been accomplished,
KSSJ-FM will be operated independently as a viable, ongoing business,
and kept separate and apart from ARS's and EZ's other Sacramento radio
stations. Additionally, the proposed Final Judgment provides that if
KSSJ-FM's Class B license has not been issued by the FCC on or before
December 31, 1997, the United States has the right to designate one
additional ARS or EZ Class B radio station for divestiture. Further,
the proposed Final Judgment requires defendants to give plaintiff prior
notice regarding future radio station acquisitions or certain
agreements pertaining to the sale of radio advertising time in
Sacramento.
The plaintiff and the defendants 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. The Alleged Violations
A. The Defendants
Defendant ARS is a Delaware corporation with its headquarters in
Boston, Massachusetts. It currently owns and operates 75 radio stations
in 14 metropolitan areas in the United States. Its 1996 revenues were
approximately $270 million. ARS owns four radio stations authorized and
operating as Class B broadcast facilities in the Sacramento area.
EZ is a Virginia corporation headquartered in Fairfax, Virginia. It
owns and operates twenty-three radio stations in seven metropolitan
areas in the United States. Its 1996 revenues were approximately $118
million. EZ owns two radio stations authorized and operating as Class B
broadcast facilities in the Sacramento area.
B. Description of the Events Giving Rise to the Alleged Violations
On August 5, 1996, ARS agreed to purchase EZ for approximately $655
million. As is more fully discussed below, ARS would control a
significant share of the radio advertising in Sacramento, as well as a
significant percentage of advertising directed to certain target
audiences in Sacramento. The proposed acquisition of EZ by ARS, and the
threatened loss of such competition that would be caused thereby,
precipitated the government's suit.
C. Anticompetitive Consequences of the Proposed Merger
1. Sale of Radio Advertising Time in Sacramento
The Complaint alleges that the provision of advertising time on
radio stations serving the Sacramento, California Metro Survey Area
(``MSA'') constitutes a line of commerce and section of the country, or
relevant market, for antitrust purposes. The Sacramento MSA is the
geographical unit for which Arbitron furnishes radio stations,
advertisers, and advertising agencies in Sacramento with data to aid in
evaluating radio audience size and composition. Advertisers use this
data in making decisions about which radio station or combination of
radio stations can deliver their target audiences in the most efficient
and cost-effective way. Local and national advertising that is placed
on radio stations within the Sacramento MSA is aimed at reaching
listening audiences in the Sacramento MSA, and radio stations outside
of the Sacramento MSA do not provide effective access to this audience.
Thus, if there were a small but significant nontransitory increase in
radio advertising prices within the Sacramento MSA, advertisers would
not buy enough advertising time from radio stations located outside of
the Sacramento MSA to defeat the increase.
Radio stations earn their revenues from the sale of advertising
time to local and national advertisers. Many local and national
advertisers purchase radio advertising time in Sacramento because such
advertising is preferable to advertising in other media for their
specific needs. For such advertisers, radio time: may be less expensive
and most cost-efficient than other media at reaching the advertiser's
target audience (individuals most likely to purchase the advertiser's
products or services); may reach certain target audiences that cannot
be reached as effectively through other media; or may offer promotional
opportunities to advertisers that they cannot exploit as effectively
using other media. For these reasons and others, many local and
national advertisers in Sacramento who purchase radio advertising time
view radio either as a necessary advertising medium for them, or as a
necessary advertising complement to other media.
Although some local and national advertisers may switch some of
their advertising to other media rather than absorb a price increase in
radio advertising time in Sacramento, the existence of such advertisers
would not prevent radio stations from profitably raising their prices a
small but significant amount to those advertisers who have strong
preferences for using radio over other media for some or all of their
advertising campaigns. At a minimum, stations could profitably raise
prices to those advertisers who view radio either as a necessary
advertising medium for them, or as a necessary advertising complement
to other media. Radio stations, which negotiate prices individually
with advertisers, can identify those advertisers with strong radio
preferences. Consequently, radio stations can charge different
advertisers different rates. Because of this ability to price
discriminate among different
[[Page 15927]]
customers, radio stations may charge higher prices to advertisers that
view radio as particularly effective for their needs, while maintaining
lower prices for other advertisers.
2. Harm of Competition
The Complaint alleges that ARS's proposed acquisition of EX would
lessen competition substantially in the provision of radio advertising
time in the Sacramento MSA. The proposed acquisition would create
significant market concentration, and would permit ARS to control a
substantial share of the advertising revenues in Sacramento. The
transaction is likely to lead to further market concentration in view
of the fact that KSSJ-FM has recently been ungraded to a Class B FM
signal, which broadens that station's reach and is therefore likely to
increase its (and hence ARS's) market share. Moreover, the proposed
merger would concentrate many of Sacramento's strongest radio signals
into the hands of ARS. After all transactions are complete, ARS would
own six of the 12 stations in the Sacramento area authorized and
operating as Class B broadcast facilities. Because weaker signals
cannot penetrate as large as listening area, they do not have the
potential to reach as many listeners as strong signals. All else being
equal, concentrated ownership of strong signals is likely to create
more listenship dominance the concentrated ownership of weaker signals.
ARS presently controls approximately 21% of radio advertising
revenues in Sacramento, and its market share would rise to
approximately 36% after the proposed merger. According to the
Herfindahl-Hirschman Index (``HHI''), a widely-used measure of market
concentration defined and explained in Exhibit A hereto, the pre-merger
HHI in this market is 1895, which would rise by 998 points to 2893
after the merger. This substantial increase in concentration,
exacerbated by the upgrade of KSSJ-FM's signal to Class B and the
resultant likely increase of ARS's future market share, will give ARS
the unilateral power to raise advertising prices and reduce the level
of service provided to advertisers in Sacramento.
Furthermore, the proposed transactions would eliminate head-to-head
competition between ARS and EZ for advertisers seeking to reach
specific audiences. Advertisers select radio stations to reach a large
percentage of their target audience based upon a number of factors,
including, inter alia, the size of the station's audience, the
characteristics of its audience, and the geographic reach of a
station's signal. Many advertisers seek to reach a large percentage of
their target audience by selecting those stations whose audience has a
high correlation with their target audience. If a number of stations
efficiently reach that target audience, advertisers benefit from the
competition among such stations to offer better prices or services.
Today, several ARS and EZ stations compete head-to-head to reach the
same audiences and, for many local and national advertisers buying time
in Sacramento, they are close substitutes for each other based on their
specific audience characteristics. The proposed merger would eliminate
such competition, notably including competition for advertisers seeking
to reach female listeners in Sacramento.
Advertisers seeking to reach female listeners in Sacramento
currently help to ensure competitive rates by ``playing off'' ARS
stations against EZ stations. Because the direct competition between
the ARS and EZ stations would be eliminated by the proposed merger, and
because advertisers seeking to reach female listeners would have
inferior alternatives to the merged entity, the acquisition would give
ARS the ability to raise its rates and reduce the quality of its
services to a significant number of its advertisers on its Sacramento
stations. This is particularly true because of the merged entity's
ability to charge different prices to different advertisers.
Format changes are unlikely to deter the anticompetitive
consequences of the proposed merger. If ARS raised prices or reduced
services to those advertisers who buy time on ARS and EZ stations
because of their strength in delivering access to certain specific
audiences, non-ARS radio stations in Sacramento would not be induced to
change their formats to attract those audiences in sufficiently large
numbers to defeat a price increase. Successful radio stations are
unlikely to undertake a format change solely in response to small but
significant increases in price being charged to advertisers by a multi-
station firm such as ARS, because they would likely lose a substantial
portion of their existing audiences. Even if less successful or less
powerful stations did change format, they would still be unlikely to
attract enough listeners to provide suitable alternatives to the merged
entity.
Finally, new entry into the Sacramento radio advertising market is
highly unlikely in response to a price increase by the merged parties.
No unallocated radio broadcast frequencies exist in Sacramento. Also,
stations located in adjacent communities cannot boost their power so as
to enter the Sacramento market without interfering with other stations
on the same or similar frequencies, a violation of Federal
Communications Commission (``FCC'') regulations.
For these reasons, plaintiff concludes that the merger as proposed
would substantially lessen competition in the sale of radio advertising
time in the Sacramento MSA, eliminate actual competition between ARS
and EZ, and result in increased rates for radio advertising time in the
Sacramento MSA, all in violation of Section 7 of the Clayton Act.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment would preserve competition in the sale
of radio advertising time in the Sacramento MSA. It requires the
divestiture of KSSJ-FM, a station oriented toward female listeners, and
one of only 12 radio signals in the Sacramento area authorized and
operating as Class B FM broadcast facilities. Class B signals are the
strongest, and therefore the most competitively significant, radio
broadcasting signals in the Sacramento area. Absent the divestiture,
ARS would have controlled six of 12 of Sacramento's Class B signals.
Such concentrated ownership of the most competitively significant
signals in the area, coupled with the likely increase in ARS's revenue
share following KSSJ-FM's signal upgrade, would enable ARS to maintain
a dominant share of listeners that would be difficult for competing
radio stations to challenge effectively, thereby reducing the choices
available to radio advertisers in Sacramento, and diminishing
competition. The divestiture of KSSJ-FM leaves ARS with five of the 12
Class B FM signals and less than 35 percent of the advertising revenues
in Sacramento, and puts the station in the hands of a competitor, who
will have the competitive benefit of the station's signal upgrade. In
particular, the divestiture of KSSJ-FM, upgraded to a Class B signal,
will permit ARS and the remaining radio stations in Sacramento to
compete vigorously for advertisers seeking to reach female listeners.
Although KSSJ-FM is currently authorized and operating as a Class B
FM station, it is still awaiting the formal issuance of its Class B
license by the FCC. In the event that this license has not been issued
by the FCC on or before December 31, 1997, then the proposed Final
Judgment gives plaintiff the option to designate an additional
Sacramento Class B FM station for divestiture by defendants.
[[Page 15928]]
Unless plaintiff grants an extension of time, defendants must
divest KSSJ-FM either within six months after the Final Judgment has
been filed or within five (5) business days after notice of entry of
the Final Judgment, whichever is later. Until the divestitures take
place, KSSJ-FM will be operated and maintained as an independent
competitor to defendants' other stations in the Sacramento MSA.
If defendants fail to divest KSSJ-FM within the prime periods
specified in the Final Judgment, the Court, upon application of the
plaintiff, shall appoint a trustee nominated by the plaintiff to effect
the divestiture. If a trustee is appointed, the proposed Final Judgment
provides that defendants will pay all costs and expenses of the trustee
and any professionals and agents retained by the trustee. The
compensation paid to the trustee and any persons retained by the
trustee shall be both reasonable in light of the value of KSSJ-FM, 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. After appointment, the trustee will file
monthly reports with defendants, the plaintiff and the Court, setting
forth the trustee's efforts to accomplish the divestiture ordered under
the proposed Final Judgment. If the trustee has not accomplished the
divestiture within six (6) months after its appointment, the trustee
shall promptly file with the Court a report setting forth (1) the
trustee's efforts to accomplish the required divestiture, (2) the
reasons, in the trustee's judgment, why the required divestiture has
not been accomplished, and (3) the trustee's recommendations. At the
same time, the trustee will furnish such report to plaintiff and
defendants, who will each have the right to be heard and to make
additional recommendations.
The proposed Final Judgment requires that defendants maintain KSSJ-
FM separate and apart from their other stations, pending divestiture.
The Judgment also contains provisions to ensure that KSSJ-FM will be
preserved, so that it will remain a viable, aggressive competitor after
divestiture.
The proposed Final Judgment also prohibits defendants from entering
into certain agreements with other Sacramento radio stations without
providing at least thirty (30) days' notice to the Department of
Justice. Specifically, defendants must notify the Department before
acquiring any significant interest in another Sacramento radio station.
Such acquisitions could raise competitive concerns but might be too
small to be otherwise reportable under the Hart-Scott-Rodino (``HSR'')
premerger notification statute. Moreover, defendants may not agree to
sell radio advertising time for any other Sacramento radio station
without providing plaintiff with notice. This provision ensures that
plaintiff will receive advance notice of any acquisition, or
agreements, through which defendants would increase the amount of
advertising time on radio stations that they can sell. In particular,
this provision requires defendants to notify plaintiff before they
enter into any joint sales agreements (``JSAs''), where one station
takes over another station's advertising time, or enter into any local
marketing agreements (``LMAs''), where one station takes over another
station's broadcasting and advertising time, in the Sacramento MSA.
Agreements whereby defendants sell advertising for or manage other area
radio stations would effectively increase defendants' market share in
the Sacramento area MSA. Despite their clear competitive significance,
JSAs probably would not be reportable to the Department of Justice
under the HSR Act. Thus, this provision in the proposed Final Judgment
ensures that the Department will receive notice of and be able to act,
if appropriate, to stop any agreements that might have anticompetitive
effects in the Sacramento market.
The relief in the proposed Final Judgment is intended to remedy the
anticompetitive effects of the proposed acquisition of EZ by ARS.
Nothing in this Final Judgment is intended to limit the plaintiff's
ability to investigate or to bring actions, where appropriate,
challenging other past or future activities of defendants in the
Sacramento MSA.
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 will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
Sec. 16(a), the proposed Final Judgment has no prima facie effect in
any subsequent private lawsuit that may be brought against defendants.
V. Procedures Available for Modification of the Proposed Final Judgment
The plaintiff and the defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to the plaintiff written comments regarding the
proposed Final Judgment. Any person who wishes to comment should do so
within sixty (60) days of the date of publication of this Competitive
Impact Statement in the Federal Register. The plaintiff 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 plaintiff will be filed
with the Court and published in the Federal Register.
Written comments should be submitted to: Craig W. Conrath, Chief,
Merger Task Force, Antitrust Division, United States Department of
Justice, 1401 H Street, N.W., Suite 4000, Washington, D.C. 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and that 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 plaintiff considered, as an alternative to the proposed Final
Judgment, a full trial on the merits of its Complaint against
defendants. The plaintiff is satisfied, however, that the divestiture
of the KSSJ-FM Assets and other relief contained in the proposed Final
Judgment will preserve viable competition in the sale of radio
advertising time in the Sacramento MSA. 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 Complaint.
VII. Standard of Review under the APPA for Proposed Final Judgment
The APPA requires that proposed consent judgments in antitrust
cases
[[Page 15929]]
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).
As the United States Court of Appeals for the D.C. Circuit recently
held, this statute permits a court to consider, among other things, the
relationship between the remedy secured and the specific allegations
set forth in the government's complaint, whether the decree is
sufficiently clear, whether enforcement mechanisms are sufficient, and
whether the decree may positively harm third parties. See United States
v. Microsoft, 56 F.3d 1448, 1461-62 (D.C. Cir. 1995).
In conducting this inquiry, ``[t]he 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.'' \2\ Rather,
\2\ 119 Cong. Rec. 24598 (1073). See United States v. Gillette
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest''
determination can be made properly on the basis of the Competitive
Impact Statement and Response to Comments filed pursuant to the
APPA. Although the APPA authorizes the use of additional procedures,
15 U.S.C. Sec. 16(f), those procedures are discretionary. A court
need not invoke any of them unless it believes that the comments
have raised significant issues and that further proceedings would
aid the court in resolving those issues. See H.R. Rep. 93-1463, 93rd
Cong. 2d Sess. 8-9 (1974), reprinted in U.S.C.C.A.N. 6535, 6538.
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[a]bsent a showing of corrupt failure of the governments to
discharge its duty, the Court, in making its public interest
finding, should * * * carefully consider the explanations of the
government in the competitive impact statement and its responses to
comments in order to determine whether those explanations are
reasonable under the circumstances.
United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. para.
61,508, at 71,980 (W.D. No. 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), citing United States v. Bechtel
Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083
(1981); see also Microsoft, 56 F.3d at 1460-62. 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.\3\
\3\ Bechtel, 648 F.2d at 666 (citations omitted) (emphasis
added); see BNS, 858 F.2d at 463; United States v. National
Broadcasting Co., 449 F. Supp. 1127, 1143 (C.D. Cal. 1978);
Gillette, 406 F. Supp. at 716. See also Microsoft, 56 F.3d at 1461
(whether ``the remedies [obtained in the decree are] so inconsonant
with the allegations charged as to fall outside of the `reaches of
the public interest' '') (citations omitted).
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The proposed Final Judgment, therefore, should not be reviewed under a
standard of whether it is certain to eliminate every anticompetitive
effect of a particular practice or whether it mandates certainty of
free competition in the future. Court approval of a final judgment
requires a standard more flexible and less strict than the standard
required for a finding of liability. ``[A] proposed decree must be
approved even if it falls short of the remedy the court would impose on
its own, as long as it falls within the range of acceptability or is
`within the reaches of public interest.' '' \4\
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\4\ United States v. American Tel. and Tel Co., 552 F. Supp.
131, 151 (D.D.C. 1982), aff'd. sub nom. Maryland v. United States,
460 U.S. 1001 (1983), quoting Gillette Co.. 406 F. Supp. at 716
(citations omitted); United States v. Alcan Aluminum, Ltd., 605 F.
Supp. 619, 622 (W.D. Ky. 1985).
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This is strong and effective relief that should fully address the
competitive harm posed by the proposed merger.
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Respectfully submitted,
Dando B. Cellini,
Merger Task Force, U.S. Department of Justice, Antitrust Division, 1401
H Street, N.W., Suite 4000, Washington, D.C. 20530, (202) 307-0829.
Dated: March 20, 1997.
Exhibit A--Definition of HHI and Calculations for Market
``HHI'' means the Herfindahl-Hirschman Index, a commonly accepted
measure of market concentration. It is calculated by squaring the
market share of each firm competing in the market and then summing the
resulting numbers. For example, for a market consisting of four firms
with shares of thirty, thirty, twenty, and twenty percent, the HHI is
2600 (30\2\+30\2\+20\2\+20\2\=2600). The HHI takes into account the
relative size and distribution of the firms in a market and approaches
zero when a market consists of a large number of firms of relatively
equal size. The HHI increases both as the number of firms in the market
decreases and as the disparity in size between those firms increases.
Markets in which the HHI is between 1000 and 1800 points are
considered to be moderately concentrated, and those in which the HHI is
in excess of 1800 points are considered to be concentrated.
Transactions that increase the HHI by more than 100 points in
concentrated markets presumptively raise antitrust concerns under the
Merger Guidelines. See Merger Guidelines Sec. 1.51.
Certificate of Service
I, Dando B. Cellini, hereby certify that, on March 20, 1997, I
caused the foregoing document to be served on defendants American Radio
Systems Corporation and EZ Communications, Inc. by having a copy
mailed, first-class, postage prepared, to:
James R. Loftis, III,
Joseph J. Simons,
Collier Shannon Rill & Scott, PLLC,
3050 K Street, NW., Suite 400, Washington, DC 20007, (202) 342-8480,
Counsel for American Radio Systems Corporation.
Ray V. Hartwell, III,
Andrew J. Strenio, Jr.,
Hunton & Williams,
1900 K Street, NW., Washington, DC 20006-1109, (202) 955-1639, Counsel
for EZ Communications, Inc.
Dando B. Cellini.
[FR Doc. 97-8459 Filed 4-2-97; 8:45 am]
BILLING CODE 4410-11-M