[Federal Register Volume 63, Number 43 (Thursday, March 5, 1998)]
[Notices]
[Pages 10939-10944]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5704]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Norsk Hydro USA Inc., et al.

    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 Middle District of 
Florida in United States v. Norsk Hydro USA Inc., and Farmland 
Industries, Inc., Case No. 98-361-CIV-T-24C. The Compliant in this case 
alleges that Horsk Hydro USA, Inc., entered into a secret agreement 
with Seminole Fertilizer Corp., which had the effect of eliminating 
Seminole as a viable bidder on an ammonia storage facility in Tampa, 
Florida, in violation of Section 1 of the Sherman Act, 15 U.S.C. 1. The 
Complaint also alleges that Farmland Industries, Inc., participated in 
the efforts to reach the agreement and would have benefitted from 
Hydro's purchase of the facility. The proposed Final Judgment enjoins 
Hydro and Farmland from submitting any jointly determined bid for the 
acquisition of any ammonia asset located in the United States that is 
being sold by or under the auspices of a court or agency of the United 
States, unless they (1) disclose to the seller of the asset and the 
person administering the sale of the asset that a joint bid is being 
submitted, and (2) do not, without disclosing to the seller in advance 
of the sale, violate any of the terms or conditions for bidding imposed 
by the seller of the asset or violate any of the terms or conditions 
for bidding imposed by the person administering the sale of the asset. 
Each defendant is required to establish and maintain an antitrust 
compliance program which includes annually briefing its officers and 
directors engaged in the ammonia business on the meaning and 
requirements of the Final Judgment and the antitrust laws.
    Public comment on the proposed Final Judgment is invited during the 
next 60 days. Such comments and responses thereto will be published in 
the Federal Register and filed with the Court. Comments should be 
directed to Nezida S. Davis, Acting Chief, Atlanta Field Office, 
Antitrust Division, Department of Justice, Suite 1176, Richard B. 
Russell Federal Building, 75 Spring Street, SW, Atlanta, Georgia 30303 
(telephone: 404-331-7100).
Rebecca P. Dick,
Director of Civil Non-Merger Enforcement.

Stipulation by the United States and Defendant Norsk Hydro USA, 
Inc.

    It is stipulated by and between the undersigned parties that:
    1. The Court has jurisdiction over the subject matter of this 
action and over each of the parties thereto, and venue of this action 
is proper in the Middle District of Florida, Tampa Division;
    2. The parties consent that a Final Judgment in the form hereto 
attached may be filed and entered by the Court, upon the motion of any 
party or upon the Court's own motion, at any time after compliance with 
the requirements

[[Page 10940]]

of the Antitrust Procedures and Penalties Act (15 U.S.C. 16), provided 
that Plaintiff has not withdrawn its consent, which it may do at any 
time before the entry of the proposed Final Judgment by serving notice 
thereof on Defendant Norsk Hydro USA Inc. and by filing that notice 
with the Court;
    3. In the event Plaintiff withdraws its consent or if the proposed 
Final Judgment is not entered pursuant to this Stipulation, this 
Stipulation shall be of no effect whatsoever, and the making of this 
Stipulation shall be without prejudice to any party in this or in any 
other proceeding; and
    4. This Stipulation and the Final Judgment to which it related are 
for settlement purposes only and do not constitute an admission by 
Defendant Norsk Hydro USA Inc. in this or any other proceeding that 
Section 1 of the Sherman Act, 15 U.S.C. 1, or any other provision of 
law, has been violated.
    This 6th day of February, 1998.
David Mark, Jr.
Attorney for Defendant, Norsk Hydro USA Inc., McDermott, Will & Emery, 
227 West Monroe Street, Chicago, IL 60606, (312) 372-2000.
Karen Sampson Jones.
Belinda A. Barnett.
Attorneys for Plaintiff, U.S. Department of Justice, Antitrust 
Division, 75 Spring Street, S.W. Suite 1176, Atlanta, Georgia 30303, 
(404) 331-7100.

Stipulation by the United States and Defendant Farmland Industries, 
Inc.

    It is stipulated by and between the undersigned parties that:
    1. The Court has jurisdiction over the subject matter of this 
action and over each of the parties thereto, and venue of this action 
is proper in the Middle District of Florida, Tampa Division;
    2. The parties consent that a Final Judgment in the form hereto 
attached may be filed and entered by the Court, upon the motion of any 
party or upon the Court's own motion, at any time after compliance with 
the requirements of the Antitrust Procedures and Penalties Act (15 
U.S.C. 16), provided that Plaintiff has not withdrawn its consent, 
which it may do at any time before the entry of the proposed Final 
Judgment by serving notice thereof on Defendant Farmland Industries, 
Inc. and by filing that notice with the Court;
    3. In the event Plaintiff withdraws its consent or if the proposed 
Final Judgment is not entered pursuant to this Stipulation, this 
Stipulation shall be of no effect whatsoever, and the making of this 
Stipulation shall be without prejudice to any party in this or in any 
other proceeding; and
    4. This Stipulation and the Final Judgment to which it relates are 
for settlement purposes only and do not constitute an admission by 
Defendant Farmland Industries, Inc. in this or any other proceeding 
that Section 1 of the Sherman Act, 15 U.S.C. 1, or any other provision 
of law, has been violated.
    This 18th day of February, 1998.
David Everson,
Attorney for Defendant, Farmland Industries, Inc., Stinson, Mag & 
Fizzell, P.C., 1201 Walnut Street, Suite 2700, Kansas City, Missouri 
64106, (816) 842-8600.

Karen Sampson Jones.
Belinda A. Barnett.
Attorneys for Plaintiff, U.S. Department of Justice, Antitrust 
Division, 75 Spring Street, S.W., Suite 1176, Atlanta, Georgia 30303, 
(404) 331-7100.

Final Judgment

    Whereas plaintiff, United States of America, having filed its 
Complaint in this action of ____________________ and plaintiff and 
defendants, by their respective attorneys, having consented to the 
entry of this Final Judgment without trial or adjudication of any issue 
of fact or law; and without this Final Judgment constituting any 
evidence against, or any admission by, any party with respect to any 
such issue of fact or law.
    And Whereas defendants have agreed to be bound by the provisions of 
this Final Judgment pending its approval by the Court.
    Now, Therefore, before any testimony is taken, and without trial or 
adjudication of any issue of fact or law, and upon the consent of the 
parties,
    It Is Hereby Ordered, Adjudged and Decreed as follows:

I. Jurisdiction

    This Court has jurisdiction over the subject matter of this action 
and over each of the parties consenting to this Final Judgment. The 
Complaint states a claim upon which relief may be granted against each 
defendant under Section 1 of the Sherman Act (15 U.S.C. 1).

II. Definitions

    As used in this Final Judgment:
    A. Hydro means defendant Norsk Hydro USA Inc. and its parents, 
subsidiaries, successors and assigns, directors, officers, managers, 
agents, and employees engaged in the ammonia business, and any other 
person acting for, on behalf of, or under the control of them with 
respect to the ammonia business.
    B. Farmland means defendant Farmland Industries, Inc. and its 
parents, subsidiaries, successors and assigns, directors, officers, 
managers, agents, and employees engaged in the ammonia business, and 
any other person acting for, on behalf of, or under the control of them 
with respect to the ammonia business.
    C. Ammonia asset means any asset used principally in the 
manufacture, processing, production, storage, distribution, or sale of 
ammonia and whose purchase price exceeds $750,000.
    D. Ammonia business means the manufacturing, processing, 
production, storage, distribution, or sale of ammonia.
    E. Jointly determined bid or ``joint bid'' means any combining, 
pooling, or supplementing of resources, money, or property in 
connection with an actual or proposed offer for property which is to be 
sold through a bid process.
    F. Person means any individual, association, cooperative, 
partnership, corporation, or other business or legal entity.

III. Applicability

    This Final Judgment shall apply to defendants Hydro and Farmland, 
including each of their directors, officers, managers, agents, 
employees, parents, subsidiaries, and successors and assigns engaged 
now or in the future in the ammonia business, and to all other persons 
in active concert or participation with each defendant in the ammonia 
business who shall have received actual notice of this Final Judgment 
by personal service or otherwise.

IV. Prohibited Conduct

    Defendants are enjoined and restrained from submitting any jointly 
determined bid for the acquisition of any ammonia asset located in the 
United States that is being sold by or under the auspices of a court or 
agency of the United States.

V. Limiting Conditions

    A. Nothing in Section IV shall prohibit defendants from submitting 
any jointly determined bid for the acquisition of any ammonia asset 
located in the United States that is being sold by or under the 
auspices of a court or agency of the United States so long as, before 
or at the time of submitting any such jointly determined bid, the 
defendants:
    1. Disclose to the seller of the asset and the person administering 
the sale of the asset that a jointly determined bid is being submitted 
and with whom the joint bid is being submitted; and
    2. Do not, without disclosing to the seller in advance of the sale, 
violate any of the terms or conditions for bidding imposed by the 
seller of the asset or

[[Page 10941]]

violate any of the terms or conditions for bidding imposed by the 
person administering the sale of the asset.
    B. Section IV shall not apply to any purchases by defendants, 
either jointly or separately, that are for the benefit of, on behalf 
of, or in the name of, Farmland Hydro L.P. Section IV shall apply to 
any jointly determined bid submitted by either defendant and any third 
person or to any jointly determined bid submitted by defendants that is 
not made for the benefit of, on behalf of, or in the name of Farmland 
Hydro L.P.

VI. Compliance

    A. Defendants are ordered to establish and maintain an antitrust 
compliance program which shall include designating, within thirty (30) 
days of entry of this Final Judgment, an Antitrust Compliance Officer 
with responsibility for accomplishing the antitrust compliance program 
and with the purpose of achieving compliance with this Final Judgment. 
The Antitrust Compliance Officer shall, on a continuing basis, 
supervise the review of the current and proposed activities of the 
defendants to ensure compliance with this Final Judgment. The Antitrust 
Compliance Officer shall be responsible for accomplishing the following 
activities:
    1. Distributing, within ninety (90) days of entry of this Final 
Judgment, a copy of this Final Judgment to all officers and directors, 
and any person who otherwise manages defendants with respect to the 
ammonia business;
    2. Distributing in a timely manner a copy of this Final Judgment to 
any person who succeeds to a position described in Section VI(A)(1);
    3. Briefing annually defendants' officers and directors engaged in 
the ammonia business on the meaning and requirements of this Final 
Judgment and the antitrust laws;
    4. Obtaining annually from each officer or employee designated in 
Section VI(A) (1) and (2) a written certification that he or she: (a) 
Has read, understands, and agrees to abide by the terms of this Final 
Judgment; (b) understands that failure to comply with this Final 
Judgment may result in conviction for criminal contempt of court; and 
(c) is not aware of any violation of the Final Judgment that has not 
been reported to the Antitrust Compliance Officer;
    5. Maintaining a record of recipients from whom the certification 
required by Section VI(A)(4) has been obtained; and
    6. Prior to the submission of any jointly determined bid, 
distributing a copy of this Final Judgment to any person with whom 
defendants submit a jointly determined bid for the acquisition of any 
ammonia asset that is being sold by or under the auspices of a court or 
agency of the United States.
    B. Defendants are also ordered to file with this Court and serve 
upon plaintiff, within ninety (90) days after the date of entry of this 
Final Judgment, affidavits as to the fact and manner of compliance with 
this Final Judgment.
    C. If defendants' Antitrust Compliance Officer learns of any 
violations of the Final Judgment defendants shall forthwith take 
appropriate action to terminate or modify the activity so as to assure 
compliance with this Final Judgment.

VII. Plaintiff Access

    A. For the purpose of determining or securing compliance with this 
Final Judgment, and subject to any legally recognized privilege, duly 
authorized representatives of the plaintiff shall, upon written request 
by the Assistant Attorney General in charge of the Antitrust Division, 
and on reasonable notice to defendants, be permitted:
    1. Access during defendants' office hours to inspect and copy all 
records and documents in its possession or control 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 defendants' 
officers, employees, or agents engaged in the ammonia business, who may 
have counsel present, regarding such matters.
    B. Upon written request by the Assistant Attorney General in charge 
of the Antitrust Division, each defendant shall submit such written 
reports, under oath if requested, relating 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 VII shall be divulged by the plaintiff to any person other 
than a duly authorized representative of the Executive Branch of the 
United States, except in the course of legal proceedings to which the 
United States is a party, 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 
defendants to plaintiff, defendants represent and identify 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 defendants mark each pertinent page of such 
material, ``Subject to claim of protection under Rule 26(c)(7) of the 
Federal Rules of Civil Procedure,'' then 20 days' notice shall be given 
by plaintiff to defendants prior to divulging such material in any 
legal proceeding (other than a grand jury proceeding) to which that 
defendant is not a party.

VIII. Retention of Jurisdiction

    Jurisdiction is retained by this Court for the purpose of enabling 
any of the parties to this Final Judgment to apply to this Court at any 
time for such further orders and directions as may be necessary or 
appropriate to carry out or construe this Final Judgment, to modify or 
terminate any of its provisions, to enforce compliance herewith, and to 
punish any violations of its provisions. Nothing in this provision 
shall give standing to any person not a party to this Final Judgment to 
seek any relief related to it.

IX. Term

    This Final Judgment will expire on the tenth anniversary of its 
date of entry.

X. Public Interest

    Entry of this Final Judgment is in the public interest.

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

    Court approval subject to the Antitrust Procedures and Penalties 
Act, 15 U.S.C. 16.

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

Competitive Impact Statement

    Pursuant to Section 2(b) of the Antitrust Procedures and Penalties 
Act, 15 U.S.C. Sec. 16(b)-(h), the United States submits this 
Competitive Impact Statement relating to the proposed Final Judgment 
submitted for entry with the consent of Norsk Hydro USA Inc. 
(``Hydro'') and Farmland Industries, Inc. (``Farmland'') in this civil 
antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On February 19, 1998, the United States filed a civil antitrust 
complaint alleging that defendants and others conspired unreasonably to 
restrain competition in violation of Section 1 of the Sherman Act, 15 
U.S.C. 1. The Complaint alleges that defendants Hydro and Farmland met 
with representatives of Seminole Fertilizer Corporation (``Seminole'') 
\1\ on March 5,

[[Page 10942]]

1992, and discussed sharing pipeline capacity and the cost of bidding 
on an ammonia tank and pipeline interest, hereinafter referred to as 
the Tampa Facility, then being auctioned pursuant to bankruptcy 
proceedings. At the conclusion of the meeting, defendants and Seminole 
reached a tentative agreement, which was later reduced to writing. The 
Complaint also alleges that on March 9 and March 10, 1992, Defendant 
Hydro and Seminole discussed the terms of the agreement by telephone on 
several occasions and that they executed the written agreement two 
hours before the scheduled auction of the Tampa Facility on March 12, 
1992. The agreement provided that Seminole would give bid support of up 
to $2.5 million to Defendant Hydro, if necessary, to defeat a competing 
bid. In exchange, Defendant Hydro agreed to give Seminole increased 
pipeline capacity if defendant Hydro was the successful bidder.
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    \1\ Seminole, a wholly owned subsidiary of Tosco Corporation, 
sold all of its assets in May 1993. Before its assets were sold, 
defendant maintained its corporate offices in Stamford, Connecticut, 
and was a manufacturer and distributor of phosphatic fertilizer. It 
operated production and storage facilities in central Florida, near 
Tampa. The staff filed a complaint, a proposed Final Judgment, and 
related papers against Seminole on June 18, 1997. The Final Judgment 
was entered by the Honorable Elizabeth A. Kovachevich and filed on 
September 19, 1997.
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    This agreement had the effect of eliminating Seminole, Defendant 
Hydro's chief rival, as a viable competing bidder for the Tampa 
Facility, because it required Seminole to assist Hydro in bidding up 
the price in the face of any bid, including a bid by Seminole alone--
against Hydro. Almost immediately after signing the agreement, Seminole 
stated that it was no longer going to attend the auction of the Tampa 
Facility. At the auction on the afternoon of March 12, there were no 
bids for the Tampa Facility other than the one previously submitted by 
Defendant Hydro, a bid which the bankruptcy trustee had hoped to top.
    Defendants' intentions were to have the Tampa Facility become an 
asset of their joint venture, Farmland Hydro L.P. (``FHLP''), if 
Defendant Hydro was the successful bidder. Defendant Farmland 
participated in the negotiations leading to the March 12 agreement, 
assented to Defendant Hydro's execution of the agreement on its behalf 
as a partner in FHLP, and directly benefited from the agreement because 
of its partnership with Defendant Hydro.
    On February 19, 1998, the United States and defendants filed a 
Stipulation by which they consented to the entry of a proposed Final 
Judgment following compliance with the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h). The proposed Final Judgment, as 
will be discussed in detail in Section IV.A., would order defendants to 
refrain from submitting any jointly determined bid for the acquisition 
of any ammonia asset (as defined in the Final Judgment) located in the 
United States that is being sold by or under the auspices of a court or 
agency of the United States, unless defendants disclose to the seller 
of the asset and the person administering the sale of the asset that a 
jointly determined bid is being submitted and with whom the joint bid 
is being submitted. The Final Judgment also prohibits defendants from 
violating any of the terms or conditions for bidding imposed by the 
seller of the asset or from violating any of the terms or conditions 
for bidding imposed by the person administering the sale of the asset, 
without disclosing such to the seller in advance of the sale. By its 
terms, the Final Judgment does not apply to any purchases by 
defendants, either jointly or separately, that are for the benefit of, 
on behalf of, or in the name of FHLP. The judgment does, however, apply 
to any jointly determined bid submitted by either defendant and any 
third person or to any jointly determined bid submitted by defendants 
that is not made for the benefit of, on behalf of, on in the name of 
FHLP.

II. Defendants

    Defendant Hydro is a subsidiary of Norsk Hydro a.s (``Norsk AS''), 
a Norwegian corporation, which is majority owned by the Norwegian 
government. Hydro is headquartered in New York City, New York, and is a 
holding company for various subsidiaries. One of the indirect 
subsidiaries of Hydro, Hydro Agri Ammonia, Inc. (``Hydro Agri''), is a 
wholesale distributor of ammonia headquartered in Tampa, Florida. At 
the time of the alleged violation, Norsk AS controlled approximately 
twenty-five percent of the world trade ammonia.
    Defendant Farmland is a cooperative headquartered in Kansas City, 
Missouri, which provides products and services to its members, who are 
primarily farmers and ranchers. Through FHLP, which Farmland formed 
with an affiliate of Hydro in November 1991, Farmland is also engaged 
in manufacturing and distributing phosphatic fertilizers.

III. The Tampa Facility and Events Leading up to the Alleged 
Violation

A. The Tampa Facility

    The Tampa Facility, which consists of an ammonia terminal located 
in the Port of Tampa, Florida, and a one-half interest in a pipeline 
system connected to the ammonia terminal,\2\ is used for storing, 
handling, and delivering anhydrous ammonia, one of the raw materials 
used in the manufacture of phosphatic fertilizers. Located on 
approximately 17\1/2\ acres of land leased from the Tampa Port 
Authority, the Tampa Facility has a single tank with a 35,000 metric 
ton storage capacity. It services five nearby phosphatic fertilizer 
plants,\3\ where the ammonia is combined with phosphoric acid to create 
diammonium phosphate. The Tampa Facility is able to service by truck or 
rail other phosphatic fertilizer plants not connected to it. During the 
early 1990's the Tampa Facility was owned by the Royster Company 
(``Royster''), now known as Mulberry Phosphates, Inc. (``MPI'').
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    \2\ Seminole owned the other one-half interest in the pipeline, 
along with a separate ammonia terminal (consisting of two ammonia 
tanks) that also was connected to the pipeline.
    \3\ If Seminole had been successful in acquiring the Tampa 
Facility, it would have been the exclusive supplier to those five 
plants.
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B. The Bankruptcy of Royster and the Failed Auction

    Royster was a manufacturer of phosphatic fertilizers and related 
products for the domestic and export markets. Its principal facilities 
included a plant for the production of diammonium phosphate, located in 
Mulberry, Florida, and the Tampa Facility. Royster filed for bankruptcy 
protection on April 8, 1991, after months of experiencing financial 
hardships. Under the reorganization plan submitted to the Bankruptcy 
Court, Royster proposed to liquidate certain assets, including its 
Tampa Facility. Shortly after news of the potential sale of the Tampa 
Facility went public, Defendant Hydro and Seminole separately expressed 
interest in acquiring it. After extensive negotiations with Royster 
officials, Defendant Hydro agreed to purchase the property for $15.5 
million and executed an asset purchase agreement for the property on 
September 25, 1991. The agreement guaranteed Royster the right to 
purchase a continuing supply of ammonia from the terminal for its 
Mulberry plant and contained a through-put provision that permitted it 
to put the ammonia through the pipeline from the terminal to the plant. 
In November of that same year, the Bankruptcy Court ordered that the 
Tampa Facility be sold by auction and that bids be taken against 
Hydro's offer of $15.5 million. The auction was scheduled for March 12, 
1992. It was not until the auction was announced that a third company, 
CF Industries

[[Page 10943]]

(``CF'')\4\, publicly expressed any interest in acquiring the Tampa 
Facility.
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    \4\ CF is a cooperative which has been a major participant in 
the fertilizer business since the mid-1960's and has operated world-
scale phosphatic fertilizer plants in Florida since 1969.
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    On December 18, 1991, the Bankruptcy Court issued an order 
approving bidding procedures in connection with the proposed sale of 
the Tampa Facility. Any third party offer had to: (1) Be substantially 
similar to the one contained in the Hydro Asset Purchase Agreement; (2) 
be at least $1 million more than Defendant Hydro's offer of $15.5 
million; (3) include an offer to enter into a through-put agreement 
with Royster; and (4) include a confidentiality agreement with Royster 
and Defendant Hydro regarding disclosure of the terms of the Royster/
Hydro Through-put Agreement. In addition, the Order required that the 
third party deposit $1 million in escrow no later than the time at 
which it submitted an offer. The money deposited was to remain in 
escrow pending the earlier of (a) the closing of the sale to the third 
party if its offer was approved by the Bankruptcy Court or (b) the 
entry of an order approving the sale of the Tampa Facility to either 
Hydro or another third party bidder. After depositing the $1 million, 
the third party was entitled to receive documents setting forth the 
results of the inspection of the Tampa Facility's tank, the cost of 
repair, the terms of the Royster/Hydro Through-put agreement, and the 
terms of any through-put agreements submitted by any other third 
parties.
    In February 1992, CF deposited $1 million in escrow. Seminole made 
its escrow deposit on March 9, 1992, three days before the auction. At 
the time of the auction, there were four bidders who were qualified to 
bid: Defendant Hydro, CF, Seminole, and Superfos Investments Limited 
(``Superfos'').\5\ CF informed Royster shortly before the auction that 
it would not be bidding, because of environmental concerns it had 
recently identified. Only Defendant Hydro appeared at the auction site 
on the afternoon of March 12 to bid on the Tampa Facility. There having 
been no new bids tendered, Defendant Hydro's standing offer of $15.5 
million was accepted, pending approval by the Bankruptcy Court. In a 
meeting later that afternoon to finalize the details of the sale before 
a March 13 court hearing, Royster representatives discovered that 
Defendant Hydro and Seminole had executed a joint bidding agreement 
approximately two hours before the auction was scheduled to begin.
---------------------------------------------------------------------------

    \5\ Since Superfos was a major creditor of Royster, the 
Bankruptcy Court exempted Superfos from the $1 million escrow 
requirement and gave it permission to submit a credit bid. Thus, 
Superfos could deduct from its bid offer the amount it was owed by 
Royster.
---------------------------------------------------------------------------

    At the hearing the following day, Royster representatives advised 
the Bankruptcy Court of the agreement between Seminole and Defendant 
Hydro. The Bankruptcy Court deferred ratification of the sale and 
ordered discovery to be taken. A few days later, the Bankruptcy Court 
received two anonymous communications regarding the bidding agreement. 
One communication was a letter alleging that Seminole had agreed to 
backstop Defendant Hydro's bid and that Seminole's bid supplement was 
leaked to CF, causing the latter to withdraw. The other communication 
was one of Seminole's internal memoranda written by Steve Yurman, 
Seminole's president, describing the terms of the March 12 agreement. 
After reviewing the information obtained during discovery in light of 
the anonymous correspondence, the Bankruptcy Court, at a hearing on 
March 20, refused to ratify the sale of the Tampa Facility to Defendant 
Hydro and ordered that a second auction be held. At the second auction, 
on June 17, 1992, CF and Defendant Hydro submitted bids, and CF won the 
Tampa Facility with a final bid of $21.6 million. (By the time of the 
second auction, CF had been able to resolve its environmental 
concerns.)

C. Evidence of Collusion

    On February 26, 1992, representatives of Seminole and Defendant 
Hydro and Farmland met at the Rihga Royal Hotel in New York to discuss 
a ``joint venture'' proposal by Seminole. The proposal involved 
Defendant Hydro buying the Tampa Facility and keeping the interest in 
the pipeline, but possibly selling the tank to CF. The meeting 
concluded with no agreements being reached.
    The same parties met again on March 5, 1992, at the same hotel. 
They primarily discussed sharing pipeline capacity and the cost of 
bidding on the terminal. Specifically, Seminole and Defendants Hydro 
and Farmland proposed that Defendant Hydro and Seminole enter into an 
agreement whereby Seminole would supplement Defendant Hydro's bid and 
consent to Royster's transfer of its pipeline interest to Defendant 
Hydro in return for Defendant Hydro giving Seminole extra pipeline 
capacity.\6\ A tentative agreement was reached and Defendant Hydro 
indicated that it would have its attorneys reduce the agreement to 
writing and send Seminole a draft to review. Defendant Hydro sent the 
first written draft to Seminole on March 6, and on March 9 and March 10 
representatives of Defendant Hydro and Seminole discussed, via 
telephone on several occasions, the terms of the draft agreement.
---------------------------------------------------------------------------

    \6\ As owner of the other one-half interest in the Tampa 
Facility's pipeline lease, Seminole already had the right to use 
450,000 tons of the pipeline's 900,000 ton capacity.
---------------------------------------------------------------------------

    On the morning of March 12, officials of Tosco, Seminole and 
Defendants Hydro and Farmland, along with their attorneys, met in 
Tampa, Florida, at the law offices of MacFarlane Ferguson, Defendant 
Hydro's local counsel, to resume negotiating the details of the 
proposed agreement. After hours of negotiations, the parties agreed, in 
part, that (a) Seminole would supplement Defendant Hydro's bid up to 
$2.5 million, if necessary to win the auction, and consent to Royster's 
assignment of its one-half interest in the pipeline lease to Defendant 
Hydro and (b) Defendant Hydro, in return, would give Seminole the right 
to use an extra 40,000 tons of the pipeline's capacity. Almost 
immediately after signing the agreement, Seminole stated that it was no 
longer attending the auction.
    One of Seminole's representatives appeared at the auction moments 
before it started and advised Royster that it was withdrawing from the 
bidding. Later that evening, representatives of Defendant Hydro and 
Seminole talked by telephone and agreed to instruct their counsel to 
confer with one another to prepare for the court hearing the next day.
    In this case, there was virtually no evidence of covert activity, 
which indicated that the subjects of the investigation were not aware 
of, or did not appreciate, the illegal nature of their actions. This 
lack of covertness and the lack of criminal intent it indicates are the 
main reasons this case is being filed civilly rather than criminally. 
See Antiturst Division Manual, Section III.E., at III-12 (October 18, 
1987) (Second Edition).

IV. Explanation of Proposed Final Judgment

A. Prohibited Conduct and Limiting Conditions

    Section IV enjoins defendants from submitting any jointly 
determined bid for the acquisition of any ammonia asset located in the 
United States that is being sold by or under the auspices of a court or 
agency of the United States. Under Section V however, defendants are 
permitted to submit jointly determined bids if two conditions are met, 
i.e.,

[[Page 10944]]

defendants must (1) disclose to the seller of the asset and the person 
administering the sale of the asset that a jointly determined bid is 
being submitted and with whom the joint bid is being submitted, and (2) 
not, without disclosing to the seller in advance of the sale, violate 
any of the terms or conditions for bidding imposed by the seller of the 
asset or violate any of the terms or conditions for bidding imposed by 
the person administering the sale of the asset.
    Similarly, Section V(B) allows jointly determined bids by 
defendants, submitted either jointly or separately, that are for the 
benefit of, on behalf of, or in the name of FHLP. This latter provision 
still does not exempt jointly determined bids that are submitted by 
either defendant and any third person or any jointly determined bids 
submitted by defendants that are not made for the benefit of, on behalf 
of, or in the name of FHLP.

B. Compliance Program and Certification

    Under Section VI of the Final Judgment defendants are required, 
within thirty days of entry of the Final Judgment, to establish and 
maintain an antitrust compliance program which shall include 
designating an Antitrust Compliance Officer with responsibility for 
accomplishing the compliance program. The Antitrust Compliance Officer 
is required to, on a continuing basis, supervise the review of the 
current and proposed activities of the defendant to ensure that it is 
in compliance with the program. The Antitrust Compliance Officer is 
also required to (1) distribute a copy of the Final Judgment to all 
officers and directors, and any person who otherwise manages defendant 
with respect to the ammonia business, (2) distribute in a timely manner 
a copy of the Final Judgment to any person who succeeds to a position 
described in Section (VI)(A)(1) of the Final Judgment, (3) brief 
annually defendant's officers and directors engaged in the ammonia 
business on the meaning and requirements of the Final Judgment and the 
antitrust laws, and (4) obtain annually from each officer or employee 
designated in Section (VI)(A) (1) and (2) of the Final Judgment a 
written certification that he or she: (a) Has read, understands, and 
agrees to abide by the terms of the Final Judgment; (b) understands 
that failure to comply with the Final Judgment may result in conviction 
for criminal contempt of court; and (c) is not aware of any violation 
of the Final Judgment that has not been reported to the Antitrust 
Compliance Officer.
    Moreover, prior to the submission of any jointly determined bid, 
defendants must distribute a copy of the Final Judgment to any person 
with whom defendants submit a jointly determined bid for the 
acquisition of any ammonia asset that is being sold by or under the 
auspices of a court or agency of the United States. Defendants are also 
required to file with the Court and serve upon plaintiff, within ninety 
(90) days after the date of the Final Judgment, affidavits as to the 
fact and manner of their compliance with this Final Judgment. 
Defendants are also required to take appropriate action to terminate or 
modify any activities uncovered that violate any provision of the Final 
Judgment.

V. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 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 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust actions under 
the Clayton Act. Under the provisions of Section 5(a) of the Clayton 
Act, 15 U.S.C. 16(a), the proposed Final Judgment has no prima facie 
effect in any private lawsuit that may be brought against the 
defendants.

VI. Procedures Available for Modification of the Proposed Final 
Judgment

    As provided by the Antitrust Procedures and Penalties Act, any 
person believing that the proposed Final Judgment should be modified 
may submit written comments to Nezida S. Davis, Acting Chief, Atlanta 
Field Office, U.S. Department of Justice, Antitrust Division, 75 Spring 
Street, S.W., Suite 1176, Atlanta, Georgia, 30303, within the 60-day 
period provided by the Act. These comments, and the Department's 
responses, will be filed with the Court and published in the Federal 
Register. 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.

VII. Alternative to the Proposed Final Judgment

    The Department considered, as an alternative to the proposed Final 
Judgment, litigation seeking comparable equitable relief. In the view 
of the Department of Justice, a trial would involve substantial cost to 
the United States and is not warranted because the Proposed Judgment 
provides relief that will remedy the violations of the Sherman Act 
alleged.

VIII. Determinative Materials and Documents

    No materials and documents described in Section 2(b) of the 
Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b), were used in 
formulating the proposed Final Judgment.

    Dated: February 18, 1998.
    Respectfully submitted,
Karen Sampson Jones,
Belinda A. Barnett,
Attorneys for Plaintiff, U.S. Department of Justice, Antitrust 
Division, 75 Spring Street, S.W., Suite 1176, Atlanta, Georgia 30303, 
(404) 331-7100.

[FR Doc. 98-5704 Filed 3-4-98; 8:45 am]
BILLING CODE 4410-11-M