[Federal Register Volume 62, Number 249 (Tuesday, December 30, 1997)]
[Notices]
[Pages 67896-67897]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33810]


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DEPARTMENT OF JUSTICE

Antitrust Division
[Civil Action No. 497-CF 564 E]


Public Comment and Response on Proposed Final Judgment; United 
States and State of Texas v. Allied Waste Industries, Inc.

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16 (b)-(h), the United States of America hereby publishes below the 
comment received on the proposed Final Judgment in United States and 
State of Texas v. Allied Waste Industries, Inc., Civil Action No. 497-
CV 564 E, filed in the United States District Court for the Northern 
District of Texas, together with the United States' response to the 
comment.
    Copies of the comment and response are available for inspection in 
Room 215 of the U.S. Department of Justice, Antitrust Division, 325 7th 
Street, N.W., Washington, DC 20530, telephone: (202) 514-2481, and at 
the office of the Clerk of the United States District Court for the 
Northern District of Texas, Room 310, 501 W. 10th Street, Fort Worth, 
TX 76102. 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.
Independent Environmental Services, Inc.,
October 10, 1997.
J. Robert Kramer II
Chief, Litigation II Section
Antitrust Division
United States Department of Justice
1401 H Street, N.W., Suite 3000
Washington, DC 20530

    Dear Mr. Kramer: This letter addresses our company's concerns 
regarding the merger or takeover of USA Waste Services, Inc., Fort 
Worth by Allied Waste Industries, Inc., Fort Worth. Our company, 
Independent Environmental Services, Inc. (IESI), is an independent 
hauler located and doing business in Tarrant County. To my 
knowledge, we are the only independent hauler in the municipal 
residential business in Tarrant County and one of a very few 
competing in the commercial and industrial business in Tarrant 
County. As I am sure you are aware, Allied Waste Industries controls 
all of the assets that were owned by USA Waste Services, Triple A 
Waste Services, Consolidated Waste Services, Laidlaw Waste 
Industries, Sanifill, and Tarrant County Waste. This combination has 
reduced competition in our market and has resulted in higher 
landfill disposal fees to independent competitors like IESI. As you 
are no doubt aware, the large public solid waste companies often 
seek to control their markets and eliminate competition by charging 
excessive disposal rates to independent operators like IESI.
    IESI received a letter from Laidlaw advising us of the 
opportunity to purchase air space at their newly acquired Crow 
Landfill as well as additional space at their existing Turkey Creek 
Landfill. We submitted a proposal to buy air space at the Crow 
Landfill. My concern is that I also received a letter and phone call 
from Allied/Laidlaw, which raises our cost of disposal 23% for 
residential and compacted industrial waste. I have also been advised 
that my front load commercial disposal rates have been increased 
63.4%.
    When David Bickel from the US Justice Department interviewed me, 
I expressed a concern that only Waste Management and Sanifill/USA 
Waste owned landfills that were strategically and economically 
located for disposal in Tarrant County. It is also interesting to 
point out that, prior to the Allied acquisition, Sanifill was not a 
competitor in the hauling business and was very competitive and 
accommodating and desirous of our disposal business. These recent 
price increases by Allied/Laidlaw represent a strategic plan to 
leverage this capacity and utilize it against us, particularly, 
since our disposal alternatives are extremely limited.
    Allied/Laidlaw has seen fit to measure our front loader trucks 
differently than the truck manufacturer and the 2 previous landfill 
owners. I cannot help but think the term ``anti-competitive, 
monopolistic, unfair practices, price gouging, and driving the 
little guy out of business'' all aptly describe the action taken by 
Allied/Laidlaw. It is also rumored that BFI would be purchasing the 
air space at Crow. The rumor is supported by the fact that Allied/
Laidlaw needs disposal capacity in another market where BFI can 
accommodate their needs. From an accounting perspective, you can 
imagine the ``pencil whipping'' that can take place in that type of 
an arrangement. A deal could easily be structured or better yet, two 
deals easily structured in which anyone reviewing the merits would 
have no idea of the actual accommodations that have taken place. It 
also further enhances my belief of the desire by the Laidlaw 
management to drive us out of business.
    I'm sure that your decision to approve (subject to conditions) 
the Allied acquisition did not contemplate the current activities 
demonstrated by Allied/Laidlaw. If your final judgment is not yet 
final, we would like to discuss our concerns so that our company may 
continue to survive.
    Your immediate concern to this problem is appreciated.

[[Page 67897]]

    Respectfully yours,
Charles ``Mickey'' Flood,
President and CEO.
U.S. Department of Justice,
Antitrust Division, 1401 H Street, City Center Building, Washington, 
DC 20530,
December 8, 1997.

Mr. Charles ``Mickey'' Flood
President and CEO
Independent Environmental Services, Inc.
3330 North Beach Street
Haltom City, TX 76111
Re: United States, et al., v. Allied Waste Industries, Inc., C.A. 
No. 497-CV 564 E (N.D. TX)
    Dear Mr. Flood: This letter responds to your letter dated 
October 10, 1997 commenting on the proposed Final Judgment in the 
above-captioned civil antitrust case challenging the acquisition by 
Allied Waste Industries, Inc. (``Allied'') of the Crow Landfill in 
Tarrant County, Texas owned by USA Waste Services, Inc. The 
Complaint alleges that the acquisition violates Section 7 of the 
Clayton Act, as amended, 15 U.S.C. 18, because it is substantially 
likely to lessen competition for the disposal of municipal solid 
waste (``MSW'') generated in Tarrant County. Under the proposed 
Final Judgment Allied is required to divest 880,000 cubic yards of 
disposal space at the Crow Landfill to a purchaser(s) who would have 
the right to use this airspace for five years or the life of the 
Crow Landfill, whichever is longer. Allied is also required to 
divest 560,000 cubic yards of disposal space at the Turkey Creek 
Landfill to a purchaser(s) who would have the right to use the 
airspace for a ten-year period.
    In your letter you expressed concern that since acquiring the 
Crow Landfill Allied has increased disposal rates and changed the 
way trucks are measured that dispose of waste. You indicated in a 
telephone conversation with the staff that when USA Waste owned the 
Crow Landfill that the front-load hopper on the truck was not 
measured for waste being deposited. Your letter indicates that your 
disposal rates increased by 23% and the change in the method of 
measuring trucks has resulted in a total 63.4% increase to IESI. 
Additionally, your letter states that before the acquisition, USA 
Waste was not a competitor in the hauling business and therefore the 
Crow Landfill was desirous of IESI's disposal business. As Allied is 
also in the hauling business, you believe the acquisition represents 
a plan to raise prices for disposal which will place IESI at a 
disadvantage in competing with Allied for hauling business since 
there are few disposal alternatives to IESI. Your letter indicates 
that large waste companies seek to control markets by charging 
``excessive'' disposal rates to independent haulers, and you believe 
BFI, a large waste company, will be sold the airspace in return for 
assets by Allied in another location.
    We have looked into the concerns expressed in your letter. We 
can report that Allied has increased the rates at the Crow Landfill 
(now called Mill Valley) and claims that the increase is necessary 
because of capital costs for the upkeep and maintenance of the 
landfill. We understand the rates at the Crow Landfill are now $6 
for compacted MSW and $4.70 for loose MSW. Our investigation has 
revealed that these prices are set at levels which are generally 
comparable to prices charged at other landfills in the Tarrant 
County area. With regard to the measuring of trucks, it is our 
understanding that the other landfill operated by Allied specified 
in the Complaint, Turkey Creek, and the landfills in the Tarrant 
County area not owned by Allied all measure trucks in the same 
fashion as now used by Allied at Mill Valley.
    Although the price increases instituted by Allied do not appear 
out of line with prevailing prices in the Tarrant County area, the 
increase reinforces the belief of the United States that a Final 
Judgment requiring Allied to sell airspace at the Crow Landfill (now 
Mill Valley) and the Turkey Creek Landfill is necessary to protect 
competition both in landfills and hauling in the Tarrant County 
area. Divestiture will allow one or more purchasers to obtain 
airspace rights that they can use to compete directly for local 
solid waste contracts or to resell to other local haulers. As you 
know, Allied has started the process of obtaining bids for airspace 
rights. As we understand the bidding process so far, the prices 
being offered for the airspace are at levels which could allow the 
winning bidder(s) to resell space at prices below those being 
currently charged by Allied. Your company has an opportunity to bid 
on that airspace and we understand it has done so.
    Your letter also expresses a concern that BFI, a large national 
waste company, is bidding for and may win the airspace rights. 
Should BFI be a bidder in the process or become the winning bidder, 
this development would not necessarily constitute an anticompetitive 
effect of the merger. The antitrust laws are not designed to promote 
the interests of any one competitor but to protect competition as a 
whole. We will, however, examine any proposed sale to ensure that it 
complies with the terms of the Final Judgment.
    The Antitrust Division appreciates you bringing your concerns to 
our attention and hopes this response will alleviate them. Pursuant 
to the Antitrust Procedures and Penalties Act, a copy of your letter 
and this response will be published in the Federal Register and 
filed with the Court. Thank you for your interest in the enforcement 
of the antitrust laws.
    Sincerely yours,
J. Robert Kramer II,
Chief, Litigation II Section.
[FR Doc. 97-33810 Filed 12-29-97; 8:45 am]
BILLING CODE 4410-11-M