[Federal Register Volume 63, Number 61 (Tuesday, March 31, 1998)]
[Notices]
[Pages 15432-15437]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8398]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Rochester Gas & Electric Corp.; 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)-(h), that a proposed Final Judgment, 
Stipulation, and Competitive Impact Statement have been filed with the 
United States District Court for the Western District of New York in 
United States v. Rochester Gas & Electric Corporation, 97-CV-6294T. 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. 16(b)-(h).
    On June 24, 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 defendant Rochester Gas and Electric (``RG&E'') entered 
into a contract with the University of Rochester (``University'' or 
``UR''), in which RG&E promised UR a number of benefits, including 
electricity at reduced rates, in exchange for the University's promise 
not to compete against RG&E in the sale of electricity to consumers. 
The complaint alleges that this agreement violated Section 1 of the 
Sherman Act, 15 U.S.C. 1, and seeks a judgment by the Court declaring 
the defendant's agreement to be an unlawful restraint of trade. The 
complaint also seeks an order by the Court to enjoin the defendant from 
other activities in the future having a similar purpose or effect.
    The United States and defendant have stipulated that the proposed 
consent 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 RG&E, 
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.
    The proposed consent judgment contains three principal forms of 
relief. First, RG&E is enjoined from enforcing an anticompetitive 
agreement with the University. Second, RG&E is enjoined from entering 
into future agreements with the University or any other competitor or 
potential competitor that could have similar anticompetitive effects. 
Third, the proposed final judgment places affirmative obligations on 
RG&E to pursue an antitrust compliance program directed toward avoiding 
a repetition of its anticompetitive behavior.
    Public comment is invited within sixty days of the publication of 
this notice. Such comments, and responses thereto, will be published in 
the Federal Register and filed with the Court. Written comments should 
be directed to Roger W. Fones, Chief, Transportation, Energy and 
Agriculture Section, Antitrust Division, 325 Seventh Street, NW., Suite 
500, Washington, DC 20530 (telephone: (202) 307-6351). 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 Seventh Street, NW., 
Washington, DC 20430 (telephone: (202) 514-2481) and at the office of 
the Clerk of the United States District Court Western District of New 
York 272 U.S. Courthouse, 100 State Street, Rockester, New York 14614-
1368.
    Copies of any of these materials may be obtained upon request and 
payment of a copying fee.
Rebecca P. Dick,
Director of Civil Non-Merger Enforcement, Antitrust Division.

Stipulation

    It is stipulated by and between the undersigned partics, by their 
respective attorneys, that:
    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 Western District of New York.
    2. The parties consent that a Consent 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(b)-(h)), 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 Consent 
Judgment by serving notice thereof on defendant and by filing that 
notice with the Court.
    3. Plaintiff is instructed to file and publish its competitive 
impact statement pursuant to 15 U.S.C. 16(b) within 30 days of the 
filing of this stipulation.
    4. The parties shall abide by and comply with the provisions of the 
proposed Consent Judgment pending entry of the Consent Judgment, and 
from the date of the filing of this Stipulation, shall comply with all 
the terms and provisions of the Consent Judgment as though they were in 
full force and effect as an order of the Court.
    5. In the event plaintiff withdraws its consent, or if the proposed 
Consent Judgment is not entered pursuant to this Stipulation, this 
Stipulation and the Consent Judgment shall be of no effect whatever and 
shall be without prejudice to any party in this or any other 
proceeding.

    Dated: February 20, 1998

[[Page 15433]]

For Plaintiff Untied States of America

Joel I. Klein,
Acting Assistant Attorney General.
A. Douglas Melamed,
Deputy Assistant Attorney General.
Rebecca P. Dick,
Deputy Director of Operations.
Roger W. Fones,
Transportation, Energy & Agriculture Section.
Lade Alice Eaton, Nina Hale, Rebekah J. French, Janet R. Urban,
Attorneys, Department of Justice, Antitrust Division--Suite 500, 325 
Seventh Street, N.W., Washington, D.C. 20004, (202) 307-6351.
Donna Kooperstein,
Assistant Chief, Transportation, Energy, & Agriculture Section.

For Defendant Rochester Gas and Electric Corporation

David M. Schraver,
NIXON, Hargrave, Devans & Doylellp, Clinton Square, P.O. Box 1051, 
Rochester, New York 14603, (716) 263-1341.

Order

    It is so ordered, this 20th day of February, 1998.
Michael A. Telesca,
United States District Judge.

Consent Judgment

    Plaintiff, United States of America, filed it Complaint on June 24, 
1997. Plaintiff and defendant, by their respective attorneys, have 
consent to the entry of this Consent Judgment without trial or find 
adjudication of any issue of fact or law. This Consent Judgment shall 
not be evidence against or an admission by any party with respect to 
any issue of fact of law. Defendant has denied any wrongdoing or 
violation of law. Therefore, before the taking of any testimony and 
without trial or find adjudication of any issue of fact of 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 each of the parties consenting hereto.

II. Background

    Plaintiff's claims in this action are based primarily upon allege 
conduct related to a provision contained in the Individual Service 
Agreement between The University of Rochester and Rochester Gas and 
Electric Corporation, dated March 31, 1994, which provision reads:

    6.3  Study of Alternatives: The University may, during the term 
of this Agreement, study alternatives to the acquisition of energy 
from RG&E as the University deems appropriate; provided, however, 
that the University shall not solicit or join with other customer of 
RG&E to participate in any plan designed to provide them with 
electric power and/or thermal energy from any source other than 
RG&E.

III. Definitions

    As used herein, the term.
    (A) ``Agreement'' means any contract, arrangement, or 
understanding, formal or informal, oral or written, between two or more 
persons;
    (B) ``Defendant'' or ``RG&E'' means Rochester Gas and Electric 
Corporation, its domestic and foreign parents, predecessors, 
divisions, subsidiaries, affiliates, and partnerships, and all 
directors, officers, employees, agents and representatives of the 
foregoing; the terms ``subsidiary'' and ``affiliate'' refer to any 
person in which the defendant holds (50 percent or more) ownership 
or control;
    (C) ``Document'' means all ``writings and recordings'' as that 
phrase is defined in Rule 1001(1) of the Federal Rules of Evidence;
    (D) ``Including'' means including but not limited to;
    (E) ``Joint venture'' means a unified or integrated method of doing 
business in which the parties share substantially in the profits, 
losses and risks of the interprise;
    (F) ``Person'' means any natural person, corporation, firm, 
company, sole proprietorship, partnership, association, institution, 
governmental unit, or other legal entity;
    (G) ``Retail marketing agreement'' means any agreement pursuant to 
which RG&E acts as a retailer of electricity at an unregulated price or 
of other related products of services on behalf of a national or 
regional providers of such electricity, products or services, so long 
as the agreement does not result in the provider or RG&E being the only 
provider or retailer of electricity at an unregulated price or such 
other products or services in Monroe Country;
    (H) ``The University'' means the University of Rochester in 
Rochester, NY.
    (I) ``Unregulated price'' means a price of the sale of electricity 
other than (1) a price which is the result of a regulatory proceeding, 
order or acceptance of tariff filings, setting or approving specific 
uniform rates applicable to a class of classes of customers; or (2) a 
price set by negotiation between a supplier and a customer at a minimum 
floor price dictated by statute, regulation or order.

IV. Applicability

    This Consent Judgment applies to the defendant and to each of its 
successors and assigns, and to all other persons in active concert or 
participation with any of them who shall have received actual notice of 
the Consent Judgment by personal service or otherwise.

V. Injunction

    RG&E, by this Consent Judgment, shall be enjoined from:
    (A) enforcing any clause in any contract with The University of 
Rochester containing the language quoted in Section II, above, or from 
including any provision containing that language, without the reference 
to the University, in an any other flexible rate contract (entered into 
pursuant to RG&E's Service Classification No. 10 or any replacement to 
Service Classification No. 10) for its retail electric services;
    (B) enforcing or attempting to enforce Paragraph 10 of the 
Memorandum of Understanding, dated October 27, 1993, between RG&E and 
the University;
    (C) entering into or enforcing a covenant or agreement not to 
compete in the retail sale of electricity with any competitor or 
potential competitor in the retail sale of electricity; provided, 
however, that such an agreement not to compete that is reasonably 
ancillary to the following types of agreements shall not be interpreted 
as a violation of this Consent Judgment:
    (1) employment contracts;
    (2) personal service contracts;
    (3) agreements regarding the sale or purchase of a business;
    (4) joint ventures or partnerships;
    (5) retail marketing agreements;
    (6) consulting agreements; and
    (7) portfolio management contracts.

VI. Exception

    Nothing in this Consent Judgment shall prohibit RG&E from engaging 
in any conduct which is exempt from or immune under the antitrust laws.

VII. Term

    (A) This Consent Judgment shall expire ten years from the date of 
initial filing, unless earlier terminated pursuant to this Section.
    (B) This Consent Judgment shall terminate upon demonstration by 
RG&E that less than 50% of the non-residential retail sales of 
electricity made at unregulated prices in Monroe County, New York, were 
made by RG&E. The percentage threshold in this Paragraph must be: (1) 
Satisfied in terms of kilowatt-hours of electricity sold; and (2) 
measured as an average over a consecutive six month period.
    (C) The procedure for making the determination described in 
Paragraph B, above is as follows:
    (1) Defendant RG&E shall notify the United States in writing when 
it

[[Page 15434]]

believes the threshold stated in Paragraph B has been satisfied over 
the requisite period, and shall submit to the United States all 
supporting data and information.
    (2) The United States shall object to the defendant in writing 
within 60 days of receiving the notice and supporting data and 
information if the United States condluces that RG&E has not 
demonstrated that the condition has been satisfied.
    (3) If the United States does not object within 60 days, this 
Consent Judgment shall terminate without further act of either party or 
of this Court.
    (4) If the United States does object, the termination will not 
become effective except by order of this Court.

VIII. Compliance Program

    (A) The defendant is ordered to maintain an antitrust compliance 
program which shall include designating, within 30 days of entry of 
this Consent Judgment, an Antitrust Compliance Officer with 
responsibility for implementing the antitrust compliance program and 
achieving compliance with this Consent Judgment. The Antitrust 
Compliance Officer shall, on a continuing basis, supervise the review 
of the current and proposed activities of the defendant to ensure that 
they comply with this Consent Judgment.
    (B) The Antitrust Compliance Officer shall:
    (1) Distribute, within 60 days of the entry of this Consent 
Judgment, a copy of this Consent Judgment to all officers and employees 
with responsibility for making electric power and planning acquisition 
of electric power and generating capacity;
    (2) Distribute in a timely manner a copy of this Consent Judgment 
to any officer or employee who succeeds to a position described in 
Section VIII(B)(1);
    (3) Brief annually in writing or orally those persons designated in 
Section VIII(B)(1) on the meaning and requirements of this Consent 
Judgment and the antitrust laws and advise them that the defendant's 
legal advisers are available to confer with them regarding compliance 
with the Consent Judgment and the antitrust laws;
    (4) Obtain from each officer or employee designated in Section 
VIII(B)(1) a written certification that he or she: (a) has read, 
understands, and agrees to abide by the terms of this Consent Judgment; 
and (b) has been advised and understands that his or her failure to 
comply with this Consent Judgment may constitute contempt of court; and
    (5) Maintain a record of recipients to whom the Consent Judgment 
has been distributed and from whom the certification in Section 
VIII(B)(4) has been obtained.
    (C) At any time, if the defendant's Antitrust Compliance Officer 
learns of any past or future violations of Section V of this Consent 
Judgment, the defendant shall, within 45 days after such knowledge is 
obtained or sooner if feasible, take appropriate action to terminate or 
modify the activity so as to comply with this Consent Judgment.

IX. Certification

    Within 75 days after the entry of this Consent Judgment, the 
defendant shall certify to the plaintiff whether it has designated an 
Antitrust Compliance Officer and has distributed the Consent Judgment 
in accordance with Section VIII above.

X. Plaintiff Access

    (A) To determine or secure compliance with this Consent Judgment 
and for no other purpose, duly authorized representatives of the 
plaintiff shall, upon written request of the Assistant Attorney General 
in charge of the Antitrust Division, and on reasonable notice to the 
defendant in accordance with Section XI(C) below, be permitted, subject 
to any legally recognized privilege:
    (1) Reasonable access during the defendant's normal business hours 
to inspect and copy all non-privileged documents in the possession or 
under the control of the defendant, who may have counsel present, 
relating to actions enjoined under Section V, termination under Section 
VII, and the compliance program under Section VIII of this Consent 
Judgment; and
    (2) Subject to the reasonable convenience of the defendant and 
without restraint or interference from it, to interview officers, 
employees or agents of the defendant, who may have counsel present, 
regarding such matters.
    (B) Upon the written request of the Assistant Attorney General in 
charge of the Antitrust Division made to the defendant's principal 
office, the defendant shall submit such written reports, under oath if 
requested, relating to any matters described in Section X(A)(1) as may 
be reasonably requested, subject to any legally recognized privilege.
    (C) No information or documents obtained by the means provided in 
Section X 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 
Consent Judgment, or as otherwise required by law.
    (D) If at the time information or documents are furnished by the 
defendant to the plaintiff, the 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 (relating to trade secret or other 
confidential research, development or commercial information), and the 
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 10 days' notice shall be given by the plaintiff to 
the defendant prior to disclosing such material in any legal proceeding 
(other than a grand jury proceeding).

XI. Further Elements of the Consent Judgment

    (A) Whenever notice must be provided to a party pursuant to the 
terms of this Consent Judgment, such notice shall be made by first 
class mail, return receipt requested, addressed to the following:

To RG&F Michael T. Tomanino, Esq., Senior Vice President and General 
Counsel, Rochester Gas and Electric Corporation, 89 East Avenue, 
Rochester, New York 14649.
To the United States: Joel I. Klein, Assistant Attorney General, 
Antitrust Division, United States Department of Justice, 10th Street 
and Pennsylvania Avenue, N.W., Washington, D.C., Washington, D.C. 
20530.

or to such other person whom the parties may designate from time to 
time.
    (B) Jurisdiction is retained by this Court for the purpose of 
enabling any of the parties to this Consent Judgment to apply to this 
Court at any time for further orders and directions as may be necessary 
or appropriate to carry out or construe this Consent Judgment, to 
modify or terminate any of its provisions, to enforce compliance, and 
to punish violations of its provisions.
    (C) Entry of this Consent Judgment is in the public interest.

    Dated: ____________________, 1998.

----------------------------------------------------------------------
Hon. Michael A. Telesca,
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

[[Page 15435]]

relating to the proposed consent judgment in United States v. Rochester 
Gas and Electric Corporation, submitted for entry in this civil 
antitrust proceeding.

I. Nature and Purpose of the Proceedings

    On June 24, 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 defendant Rochester Gas and Electric (``RG&E'') entered 
into a contract with the University of Rochester (``University'' or 
``UR''), in which RG&E promised UR a number of benefits, including 
electricity at reduced rates, in exchange for the University's promise 
not to compete against RG&E in the sale of electricity to consumers. 
The complaint alleges that this agreement violated Section 1 of the 
Sherman Act, 15 U.S.C. 1, and seeks a judgment by the Court declaring 
the defendant's agreement to be an unlawful restraint of trade. The 
complaint also seeks an order by the Court to enjoin the defendant from 
other activities in the future having a similar purpose or effect.
    The United States and defendant have stipulated that the proposed 
consent judgment may be entered after compliance with the APPA, unless 
the United States withdraws its consent. The Court's entry of the 
proposed judgment will terminate this civil action against RG&E, 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

    By the early 1990's regulated electricity rates in New York state 
had become so high that industrial customers were beginning to look for 
alternatives to high-priced power, either by relocating to other states 
or by generating their own electricity.\1\ In 1993, the New York Public 
Service Commission (``PSC'') adopted new regulations that permitted 
utilities to negotiate individual prices with certain customers 
(``flexible rate contracts'') rather than charge a uniform tariff. The 
PSC intended to afford utilities the flexibility to compete with their 
largest customers' other supply options.
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    \1\ Re Competitive Opportunities Available to Customers of 
Electric and Gas Service, 93-M-0229, Order Instituting Proceeding 
(March 19, 1993) (``March 19 Order'').
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    In the meantime, the University of Rochester, a major customer of 
RG&E, learned that by building a modern, efficient plant to replace the 
decades-old steam plant used to heat and cool its buildings, it could 
produce the steam it needed and also produce--or cogenerate--
electricity as a byproduct at a negligible cost. The University formed 
a study group to analyze and evaluate the cogeneration option, and 
concluded that a 23 Megawatt (MW) plant would be the optimal size for 
the University's steam and electricity needs. Such a plant would 
generate up to one-third more electricity that the University needed, 
but under New York law, the University could sell the excess 
electricity to other retail customers in competion with RG&E. PSL 
section 2(13). In addition, such a plant would be cost effective even 
if the University continued to buy its electric power form RG&E and 
sold all the power produced by the congeneration plant to others. Thus, 
the University was a potential competitor from RG&E in the retail 
electricity market. On July 20, 1993, the University's Board of 
Trustees authorized construction of a 23 MW plant and allocated $1.3 
million to begin the project.
    The cogeneration project came to a halt in October 1993, when RG&E 
induced the University to enter into a Memorandum of Understanding 
(``MOU''). In part, the MOU resembles an ordinary--and legal-- 
requirements contract between buyer and seller: RG&E agreed to supply 
the University with electricity at discounted rates, and the University 
agreed to purchase of all of its power needs from RG&E for seven years.
    But the MOU did not stop there--RG&E obtained the University's 
commitment not to compete for RG&E customers. The bar on competition is 
unrelated to the electric requirements contract and prohibits the 
University for seven years for even studying any ``alternative sources 
of electric power and gas supply'' unless the ``studies and the 
activities associated with them shall be confined to the service of the 
University's own needs.'' This provision was intended to and did 
prevent the University from meeting its steam requirements--which were 
wholly separate from its demand for electricity--in a manner that would 
bring it into competition with RG&E.
    RG&E and the University formalized the agreement set forth in the 
MOU by entering a flexible rate contract (the ``Individual Service 
Agreement'' or ``ISA'') about six months later. Like the MOU, the ISA 
includes provisions that are not necessary for the respective 
commitments by the University and RG&E to buy and sell electricity for 
the University's needs but rather simply prevent UR from competing with 
RG&E.
     The University may not solicit RG&E customers or seek to 
supply them with electricity;
     The University may not join in any plan intended to supply 
electricity to RG&E customers;
     The University may not participate in any plan to provide 
any RG&E customers with thermal energy; and
     The University may not work with a developer to provide 
steam to UR and sell electricity to RG&E customers.\2\
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    \2\ These restrictions are set forth in Section 6.3 of the ISA, 
which reads as follows:
    ``Study of Alternatives: The University may, during the term of 
this Agreement, study alternatives to the acquisition of energy from 
RG&E as the University deems appropriate; provided, however, that 
the University shall not solicit or join with other customers of 
RG&E to participate in any plan designed to provide them with 
electric power and/or thermal energy from any source other than 
RG&E.''
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    As a result of the agreement not to compete, the University 
abandoned its plans to build the cogeneration plant and enter the 
retail electric market, depriving RG&E's customers of a competitive 
alternative. By in effect ``paying'' the University--a potential 
competitor--not to build the new cogeneration plant, RG&E was free to 
demand higher prices from the customers the University's plant 
otherwise could have served.

III. Explanation of the Proposed Consent Judgment

    The United States and the defendants have stipulated that a consent 
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 judgment provides that the entry of the 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 judgment is conditioned upon 
the Court finding that its entry will be in the public interest.
    The proposed judgment contains three principal forms of relief. 
First, RG&E is enjoined from enforcing its anticompetitive agreement 
with the University. Second, RG&E is enjoined from entering into future 
agreements with the University or any other competitor or potential 
competitor that could have similar anticompetive effects. Third, the 
proposed judgment places affirmative obligations on RG&E to pursue an 
antitrust compliance program directed toward avoiding a repetition of 
its anticompetitive behavior.

[[Page 15436]]

A. Prohibited Conduct

    Section V(A) of the proposed judgment prohibits RG&E from enforcing 
the non-compete language in the ISA and enjoins RG&E from including 
that language in any flexible rate contract with any other customer. 
Section V(B) prevents RG&E from enforcing Paragraph 10 of its 
Memorandum of Understanding with the University, which confines the 
University's study of alternative energy sources to the service of the 
University's own needs. Section V(C) broadly enjoins RG&E from entering 
into or enforcing any agreement not to compete in the retail sale of 
electricity with any competitor or potential competitor, except where 
the agreement not to compete is reasonably necessary to achieve the 
legitimate purposes of certain, specified, common contractual 
arrangements.

B. Defendant's Affirmative Obligations

    Section VIII requires that within thirty (30) days of entry of the 
judgment, the defendant adopt an affirmative compliance program 
directed toward ensuring that its employees comply with the antitrust 
laws. The program must include the designation of an Antitrust 
Compliance Officer responsible for compliance with the judgment and 
reporting any violations of its terms. Section VIII further requires 
that each defendant furnish a copy of the judgment, within sixty (60) 
days of the date of its entry, to all officers and employees with 
responsibility for marketing electric power and planning acquisition of 
electric power and generating capacity. Section IX requires RG&E to 
certify within seventy-five (75) days that it has distributed those 
copies and designated an Antitrust Compliance Officer. Copies of the 
judgment also must be distributed to anyone who succeeds to a position 
described above.
    Furthermore, Section VIII requires RG&E to brief all officers and 
employees with responsibility for marketing electric power and planning 
acquisition of electric power and generating capacity as to the 
defendant's policy regarding compliance with the Sherman Act and with 
the judgment, including the advice that his or her violation of the 
judgment could constitute contempt of court.
    Under Section X of the proposed 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.

C. Scope of the Proposed Consent Judgment

(1) Persons Bound
    The proposed judgment expressly provides in Section IV that its 
provisions apply to RG&E, to each of its successors and assigns, and to 
all other persons in active concert or participation with any of them 
who receive actual notice of the terms of the judgment.
(2) Duration
    Section VII provides that the judgment will expire on the tenth 
anniversary of its entry. The judgment may be terminated earlier in the 
event of a substantial restructuring of the retail electricity industry 
in RG&E's service area. The decree terminates if RG&E demonstrates that 
there has been substantial entry by others into retail sales of 
electricity made at unregulated prices in Monroe County, New York. 
Section VII establishes the procedure for making this determination.
(3) Exception
    The exception set forth in Section VI of the proposed judgment 
states that the judgment does not alter RG&E's right to engage in 
conduct that is exempt from or immune under the antitrust laws. The 
conduct alleged in the compliant, however, is not immune from the 
antitrust laws,\3\ and the proposed judgment prohibits similar 
anticompetitive conduct by RG&E in the future.
---------------------------------------------------------------------------

    \3\ See United States v. Rochester Gas & Elec. Corp., No. 97-CV-
6294T (W.D.N.Y. Feb. 17, 1998) (order denying defendant's summary 
judgment motion seeking state action immunity).
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D. Effect of the Proposed Judgment on Competition

    The prohibitions in Section V are designed to ensure that the 
defendant will compete for retail electric customers and will not limit 
competition by agreement with competitors or potential competitors who 
may be able to serve RG&E customers. The eliminating of the prohibited 
language has had an immediate procompetitive effect. The University has 
issued a request for proposals to build a cogeneration plant.
    The general prohibition of Section V (C) ensures that RG&E will not 
make future agreements in the future with UR or any other firm to pre-
empt new competition before it can even occur. Because future 
competition will likely come from new market entrants who do not 
currently compete, the proposed consent judgment explicitly enjoins 
agreements with potential competitors, some of whom like the University 
may be current customers of RG&E.
    Section V(C)'s prohibition on RG&E entering into any agreement not 
to compete contains some enumerated exceptions. The exceptions include, 
for example, employment contracts and contracts to sell a business, 
which often include agreements not to compete for a limited time period 
that are ancillary to a lawful purpose. Agreements not to compete in 
the specific types of contracts specified in Section V(C) are not 
prohibited by the proposed judgment, but remain subject to the 
antitrust laws.
    RG&E continues to be a virtual monopolist for retail sales of 
electricity in its service area and a broad prohibition on non-compete 
clauses with potential competitors is particularly important so long as 
RG&E maintains its current market dominance. If, however, the retail 
electric market in RG&E's service territory became subject to effective 
competition, the prohibition of Section V(C) would no longer be 
necessary to protect consumers of electricity. In a competitive market, 
an arrangement between RG&E and one of its numerous competitors would 
not be likely to restrict output or raise price. Moreover, without 
market power, RG&E will have less incentive or ability to enter into 
anticompetitive agreements. For these reasons, Section VI provides that 
the judgment will terminate once RG&E has less than 50% of the retail 
sales subject to competitive pricing in its present service area 
(Monroe County). It is RG&E's burden to establish that this threshold 
of effective retail electric competition has been satisfied. If the 
threshold is met, it will mean that barriers to entry into this 
formerly regulated monopoly market have been removed, and that actual 
entry has occurred on a significant scale. Unless this substantial 
restructuring of the industry occurs, the judgment remains in effect.

IV. Remedies Available to Potential Private Plaintiffs

    After entry of the proposed 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).

[[Page 15437]]

V. Procedures Available for Modification of the Proposed Judgment

    The proposed judgment is subject to a stipulation between the 
government and the defendant which provides that the government may 
withdraw its consent to the proposed judgment any time before the Court 
has found that entry of the judgment is in the public interest. By it's 
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 judgment, including the demonstration of 
retail market conditions outlined in Section VI of the decree.
    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: Roger W. Fones, 325 Seventh Street, 
N.W., Washington, D.C. 20530. 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 content to 
the proposed judgment.

VI. Alternative to the Proposed Judgment

    The alternative to the proposed judgment considered by the 
Antitrust Division was a full trial of the issues on the merits and on 
relief. The Division considered 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 all of 
the relief sought against the violations alleged in the compliant.

VII. Determinative Materials and Documents

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

Department of Justice Antitrust Division

By:--------------------------------------------------------------------
Jade Alice Eaton,
Transportation, Energy, and Agriculture Section, 325 Seventh Street, 
N.W., Suite 500, Washington, D.C. 20530, (202) 307-6316.
[FR Doc. 98-8398 Filed 3-30-98; 8:45 am]
BILLING CODE 4410-11-M