[Federal Register Volume 62, Number 249 (Tuesday, December 30, 1997)]
[Notices]
[Pages 67897-67901]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33820]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Tom Paige Catering, Inc. and Valley Foods Inc.,
Proposed Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b) through (h), that a proposed Final
Judgment, Stipulation, and Competitive Impact Statement have been filed
with the United States District Court for the Northern District of Ohio
in United States v. Tom Paige Catering, Inc. and Valley Foods Inc.,
Civil Action No. 1:97CV3268.
The Complaint in this case alleges that the defendants formed a
joint venture in order to lessen and eliminate competition for food
service contracts with the Cleveland, Ohio, Head Start program, in
violation of Section 1 of the Sherman Act, 15 U.S.C. 1.
The proposed Final Judgment orders the defendants to dissolve their
joint venture and enjoins them from (A) agreeing with any other food
service contractor to fix prices on food service contracts; (B)
participating in future discussions or communications about the prices
they quote on food service contracts; (C) agreeing with other food
service contractors on the customers or territories they bid for or
serve; (D) entering into any agreement with any non-defendant food
service contractor before notifying the plaintiff. Each defendant is
also required to appoint an antitrust compliance officer and establish
an antitrust compliance program with specified requirements. Public
comment is invited within the statutory 60-day comment period. Such
comments, and responses thereto, will be published in the Federal
Register and filed with the Court. Comments should be directed to
William J. Oberdick, Acting Chief, Great Lakes Field Office, Antitrust
Division, Department of Justice, Plaza 9 Building, 55 Erieview Plaza,
Suite 700, Cleveland OH 44114 (Telephone: 216/522-4074).
Rebecca P. Dick,
Director, Civil Non-Merger Enforcement.
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. 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
[[Page 67898]]
hereto and filing said notice with the Court;
(3) In the event the plaintiff withdraws its consent hereto, this
stipulation 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:
Respectfully submitted,
For the Plaintiff:
Joel I. Klein,
Assistant Attorney General.
A. Douglas Melamed,
Principal Deputy Assistant Attorney General.
Rebecca P. Dick,
Deputy Director of Operations.
Donald M. Lyon, (19207-WA).
William J. Oberdick, (2235703-NY)
Acting Chief, Great Lakes Office.
Attorneys, Antitrust Division, U.S. Department of Justice, Great Lakes
Office, 55 Erieview Plaza, Suite 700, Cleveland, Ohio 44114, Telephone:
(216) 522-4080.
For the Defendants:
Jerome Emoff, Esq.
Tom Paige Catering Co., Inc.
Dennis Haines, Esq.,
Valley Foods, Inc.
Final Judgment
Plaintiff, the United States of America, filed its complaint on
December 16, 1997. Plaintiff and defendants 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. 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 issue of fact or law herein, and upon consent of
the parties, it is hereby ordered, adjudged, and decreed as follows:
I. Jurisdiction
This Court has jurisdiction of the subject matter of this action
and 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. ``Bid'' means an offer, proposal, or quotation, formal or
informal, oral or written, to a potential buyer or its agent.
B. ``Food service contract'' means any agreement to provide meals
to a customer for a period of time, but is not intended to include
contracts for the routine purchase of ordinary supplies by the
defendants.
C. ``Food service contractor'' means anyone engaged in the business
of soliciting and performing food service contracts.
D. ``Person'' means any natural person; public or private
corporation, whether or not organized for profit; governmental entity;
partnership; association; cooperative; sole proprietorship; or other
business or legal entity.
III. Applicability
A. This Final Judgment applies to defendants and to each of their
officers, directors, agents, employees, subsidiaries, successors, 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 the sale or
other disposition of all or substantially all of its assets or stock,
that any acquiring party agrees to be bound by the provisions of this
Final Judgment and that such agreement be filed with the Court.
IV. Dissolution of Joint Venture
The defendants are hereby ordered and directed to dissolve the
joint venture formed by them on April 1, 1994, within seventy five (75)
days of the entry of this Final Judgment, and are enjoined and
restrained from entering into future joint ventures together for the
purpose of bidding on food service contracts.
V. Other Prohibited Conduct
A. Each defendant is hereby enjoined and restrained from agreeing
with any other food service contractor to fix, establish, raise,
stabilize or maintain prices quoted on food service contracts.
B. Each defendant is further enjoined and restrained from
participating in any future discussion with or in the future
communicating with any other food service contractor concerning prices
quoted on food service contracts.
C. Each defendant is further enjoined and restrained from agreeing
with any other food service contractor on customers or territories to
be bid for or served.
D. Each defendant is further enjoined and restrained from entering
into any agreement with any non-defendant food service contractor
regarding food service contracts before notifying the plaintiff.
VI. Compliance Program
Each defendant is ordered to establish and maintain an antitrust
compliance program that shall include designating, within thirty (30)
days of entry of this Final Judgment, an Antitrust Compliance Officer
with responsibility for implementing the antitrust compliance program
and achieving full compliance with this Final Judgment. The Antitrust
Compliance Officer shall, on a continuing basis, be responsible for the
following:
A. Furnishing a copy of this Final Judgment within thirty (30) days
of entry of the Final Judgment to each of defendant's officers and
directors and each of its employees, salespersons, sales
representatives, or agents whose duties include supervisory or direct
responsibility for determining the bid prices submitted on food service
contracts except for employees whose functions are purely clerical;
B. Distributing in a timely manner a copy of this Final Judgment to
any owner, officer, employee or agent who succeeds to a position
described in Section VI(A);
C. Providing each person designated in Sections VI(A) or (B) with a
written explanation in plain language of this Final Judgment, with
examples of conduct prohibited by the Final Judgment, and with
instructions that each person designated in Section VI(A) and (B) shall
report any known violation of the Final Judgment to the Antitrust
Compliance Officer;
D. Arranging for an annual oral briefing to each person designated
in Sections VI (A) or (B) on the meaning and requirements of this Final
Judgment and the antitrust laws, including the advice that such
defendant will make legal advice available to such person regarding any
compliance questions or problems, accompanied by a written explanation
of the type described in Section VI(C);
E. Obtaining from each person designated in Sections VI(A) or (B)
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 defendant'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.
[[Page 67899]]
F. Maintaining (1) a record of all certifications received pursuant
to Section VI(E); (2) a file of all documents related to any alleged
violation of this Final Judgment; and (3) a record of all
communications related to any such violation, that shall identify the
date and place of the communication, the person involved, the subject
matter of the communication, and the results of any related
investigation.
VII. Certification
A. Within seventy five (75) days of the entry of this Final
Judgment, each defendant shall certify to plaintiff whether such
defendant has (1) designated an Antitrust Compliance Officer; (2) has
distributed the Final Judgment in accordance with Section VI(A) and (B)
above; and (3) has provided the explanation and instructions in
accordance Section VI above.
B. For ten years after the entry of this Final Judgment, on or
before its anniversary date, each defendant shall file with the
plaintiff an annual statement as to the fact and manner of its
compliance with the provisions of Section V and VI.
C. If a defendant's Antitrust Compliance Officer learns of any
violation of any of the terms and conditions contained in this Final
Judgment, defendant shall immediately notify the plaintiff and
forthwith take appropriate action to terminate or modify the activity
so as to comply with this Final Judgment.
VIII. Inspection and Compliance
A. For the purpose of determining or securing compliance with this
Final Judgment, and for no other purpose, duly authorized
representatives of plaintiff, upon written request of the Attorney
General or the Assistant Attorney General in charge of the Antitrust
Division, and on reasonable notice to a defendant, shall be permitted,
subject to any legally recognized privilege:
1. Access during that defendant's office hours to inspect and copy
all records and documents in the possession or under the control of
that defendant, which may have counsel present, relating to any matters
contained in this Final Judgment; and
2. To interview that defendant's officers, employees, and agents,
who may have counsel present, regarding any such matters. The
interviews shall be subject to defendant's reasonable convenience.
B. Upon the written request of the Attorney General or the
Assistant Attorney General in charge of the Antitrust Division made to
a defendant at its principal office, defendant shall submit such
written reports, under other if requested, with respect to any of the
matters contained in this Final Judgment as may be requested, subject
to any legally recognized privilege.
C. No information or documents obtained by the means provided in
this Section VIII 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.
D. If at the time information or documents are furnished by a
defendant to plaintiff, defendant represents and identifies in writing
the material in any such information or documents to which a claim of
protection may be asserted under Rule 26(c)(7) of the Federal Rules of
Civil Procedure, and defendant marks each pertinent page of such
material, ``Subject to claim of protection under Rule 26(c)(7) of the
Federal Rules of Civil Procedure,'' then ten (10) days' notice shall be
given by plaintiff to defendant prior to divulging such material in any
legal proceeding (other than a grand jury proceeding), so that
defendant shall have an opportunity to apply to this Court for
protection pursuant to Rule 26(c)(7) of the Federal Rules of Civil
Procedure.
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. 1311-
1314 or a federal grand jury, to determine if a defendant has complied
with this Final Judgment.
IX. Ten-Year Expiration
This Final Judgment will expire on the tenth anniversary of its
date of entry.
X. Construction, Enforcement, Modification and Compliance
Jurisdiction is retained by the Court for the purpose of enabling
any of the parties to this Final Judgment to apply to this Court at any
time for such further orders or directions as may be necessary or
appropriate for the construction or carrying out of this Final
Judgment, for the modification of any of its provisions, for its
enforcement or compliance, and for the punishment of any violation of
its provisions.
XI. 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. 16(b), the United States files this Competitive
Impact Statement relating to the proposed final judgment in United
States v. Tom Paige Catering Co. and Valley Foods, Inc., submitted for
entry in this civil antitrust proceeding.
I. Nature and Purpose of the Proceedings
On December 16, 1997 the United States filed a civil antitrust
complaint under Section 4 of the Sherman Act, as amended, 15 U.S.C. 4,
alleging that the above-named defendants combined and conspired to
lessen and eliminate competition on food service contracts with the
Cleveland, Ohio, Head Start program, in violation of Section 1 of the
Sherman Act, 15 U.S.C. 1.
The complaint seeks a judgment by the Court declaring that the
defendants engaged in an unlawful combination in restraint of trade in
violation of the Sherman Act. It also seeks an order by the Court to
enjoin 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
Tom Paige Catering (``Paige'') is an Ohio corporation doing
business in greater Cleveland, Ohio. Valley Foods, Inc. (``Valley'') is
a Ohio corporation with its principal place of business in Youngstown,
Ohio. Both Paige and Valley have been engaged in the business of
preparing and serving meals on a contract basis.
Since at least 1991, Paige and Valley have bid on contracts for
meals to children enrolled in the Cleveland Head Start program. Head
Start is a program which provides comprehensive developmental services
for low-income, pre-school children, ages three to five, and social
services for their families.
[[Page 67900]]
The meals for the children enrolled in the program are funded entirely
by the federal government through the United States Department of
Agriculture. The funds are administered by the State of Ohio's
Department of Education and managed, locally, by sponsoring
organizations. The Cleveland Head Start program is sponsored by the
Council for Economic Opportunity in Greater Cleveland (``CEOGC''), a
not for profit organization. The GEOGC solicits bids on contracts for
breakfasts, lunches, and snacks for the Head Start program in
accordance with regulations promulgated by the United States Department
of Agriculture and the State of Ohio. The annual value of these
contracts has ranged in recent years from around $300,000 to over
$500,000.
Since at least September 1992, Paige and Valley have been the only
bidders on the meal contracts with Head Start. Beginning in September
of 1994, Paige and Valley bid as a joint venture. The purpose of their
joint venture was to illegally end competition between them. This joint
venture suppressed and eliminated competition among the defendants in
the provision of food service contracts to Head Start and deprived tax
payers of free and open competition in the sale of food contracting
services to Head Start. After the joint venture began, the cost of
meals to Head Start did in fact increase. By way of example, Valley's
winning bid in September 1993 included a bid of $1.01 per meal for cold
lunches. In 1994, the joint venture obtained $1.70 per meal for cold
lunches. It is likely that at least part of the increase in prices was
due to lack of competition between Paige and Valley. Paige and Valley's
joint venture is a contract, combination, or conspiracy in restraint of
trade in violation of 15 U.S.C. 1.
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. 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 proposed final judgment contains three principal forms of
relief. First, the defendants are ordered to dissolve the joint venture
formed by them on April 1, 1994. Second, the defendants are enjoined
from engaging in conduct, either among themselves or with other
competitors, that could have similar anticompetitive effects. Third,
the proposed final judgment places affirmative obligations on the
defendants to pursue a compliance program directed toward avoiding a
repetition of their anticompetitive behavior.
A. Prohibited Conduct
Section IV of the proposed final judgment orders the dissolution of
the defendants' joint venture. Section V broadly enjoins each defendant
from agreeing with other food service contractors to fix prices on food
service contracts (V(A)); from participating in any future discussions
or communications with other food service contractors regarding the
prices quoted on food service contracts (V(B); from entering into
territorial or customer allocation agreements with other food service
contractors (V(C)); and from entering into any agreements regarding
food service contracts with any non-defendant without notifying the
United States (V(D)).
B. Defendants' Affirmative Obligations
Section VI requires that within thirty (30) days of entry of the
final judgment, each defendant adopt an affirmative compliance program
directed toward ensuring that its 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,
within sixty (60) days of the date of its entry, 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 food service
contracts and to certify within seventy-five (75) days that it has
distributed those copies and designated an Antitrust Compliance
Officer. 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 IV requires each defendant to brief each
officer, director and employee engaged in or having responsibility over
pricing of food service contracts 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 or
fine and that the defendant will make legal advice available to such
persons regarding compliance questions or problems.
Section VII requires each defendant provide annual certification to
the plaintiff of the fact and manner of its compliance. Each defendant
annually must obtain (and maintain) certifications from the persons
designated in Section VI. Each such person must certify that the
aforementioned briefing, advice and 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.
Under Section VIII of the final judgment, the Justice Department
will have access, upon reasonable notice, to each defendant's records
and personnel in order to determine compliance with the judgment.
D. Scope of the Proposed Judgment
(1) Persons Bound by the Judgment
The proposed judgment expressly provides in Section III that its
provisions apply to each of the defendants, to each of its officers,
directors, agents and employees, to each of its 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 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 and Section V of the judgment
are designed to ensure that each defendant will act independently in
determining the prices, and terms and conditions at which it will enter
into food service contracts, and that there will be no conspiratorial
restraints on the competition for food service contracts. The
affirmative obligations of Sections VI and VII are designed to insure
that each corporate defendant's employees are aware of their
obligations under the
[[Page 67901]]
decree in order to avoid a repetition of behavior that occurred
limiting competition for food service contracts. Compliance with the
proposed judgment will prevent joint ventures that illegally restrict
competition or foster price collusion and allocation of sales, markets,
and customers by the defendants with each other or between them and
other food service contractors.
IV. Remedies Available to Potential Private Plaintiffs
After entry of the proposed final judgment, any potential 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 that person may have had if the proposed
judgment had not been entered. The proposed judgment may not be used,
however, as prima facie evidence in litigation, pursuant to Section
5(a) of the Clayton Act, as amended, 15 U.S.C. 16(a).
V. Procedures Available for Modification of the Proposed Final
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. 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: William J. Oberdick, Acting Chief, Great
Lakes Office, Plaza 9 Building; 55 Erieview Plaza, Suite 700;
Cleveland, Ohio 44114-1816. 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 withdrawal of 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 will 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 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. 16(b).
Respectfully submitted,
Donald M. Lyon (19207-WA)
William J. Oberdick (2235703-NY)
Acting Chief, Great Lakes Office.
Attorneys, Antitrust Division, U.S. Department of Justice, Great Lakes
Office, 55 Erieview Plaza, Suite 700, Cleveland, Ohio 44114, Telephone:
(216) 552-4080.
[FR Doc. 97-33820 Filed 12-29-97; 8:45 am]
BILLING CODE 4410-11-M