[Federal Register Volume 63, Number 87 (Wednesday, May 6, 1998)]
[Notices]
[Pages 25071-25080]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11958]


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DEPARTMENT OF JUSTICE

Antitrust Division
[Civil Action No. 98-CIV-2716]


Proposed Final Judgment and Competitive Impact Statement United 
States of America, State of New York, and State of Illinois v. Sony 
Corporation of America, LTM Holdings, Inc. d/b/a Loews Theatres, 
Cineplex Odeon Corporation, and J.E. Seagram Corp.

    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 Order, and Competitive Impact Statement have been filed 
with the United States District Court for the Southern District of New 
York, Case No. 98-CIV-2716. 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).
    The United States, the State of New York, and the State of Illinois 
filed a civil antitrust Complaint on April 16, 1998, alleging that the 
proposed merger of LTM Holdings, Inc. (``Loews'') and Cineplex Odeon 
Corporation (``Cineplex'') would violate Section 7 of the Clayton Act, 
15 U.S.C. 18. The Complaint alleges that the proposed merger would have 
combined the first and second largest theatre chains in Manhattan and 
Chicago. In Manhattan and Chicago, the combined chains would have had 
market shares, by revenue, of 67 percent and 77 percent, respectively. 
The complaint states that the merger would have reduced competition in 
both markets, leading to higher ticket prices and reduced theatre 
quality for first-run movies. It also would have allowed the newly 
merged firm to reduce competition by lowering film rentals paid to 
distributors for first-run movies.
    The prayer for relief seeks: (a) Adjudication that the proposed 
merger would violate Section 7 of the Clayton Act; (b) permanent 
injunctive relief preventing the consummation of the proposed merger; 
(c) an award to each plaintiff of the costs of the action; and (d) such 
other relief as is proper.
    A Stipulation and Order and a proposed Final Judgment were filed 
with the court at the same time the Complaint was filed. The proposed 
Final Judgment requires Loews and Cineplex to divest 14 theatres in 
Manhattan and 11 theatres in the Chicago area to a buyer or buyers, 
acceptable to the United States (after consultation with the State of 
New York or the State of Illinois as the case may be), that will 
continue to operate them as movie theatres. Unless the United States 
grants a time extension, the divestitures must be completed within one-
hundred and eighty (180) calendar days after the filing of the 
Complaint in this matter or five (5) days after notice of the entry of 
the Final Judgment by the Court, whichever is later.
    If the divestitures are not completed within the divestiture 
period, the Court, upon application of the United States, is to appoint 
a trustee selected by the United States to sell the assets. The 
proposed Final Judgment also requires that, until the divestitures 
mandated by the Final Judgment have been accomplished, Loews and 
Cineplex must maintain and operate the 25 theatres to be divested as 
active competitors, maintain the management, staffing, sales, and 
marketing of the theatres, and maintain the theatres in operable 
condition at current capacity configurations. Further, the proposed 
Final Judgment requires defendants to give the United States prior 
notice regarding future motion picture theatre acquisitions in 
Manhattan or Cook County, Illinois.
    The plaintiffs and the defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.
    A Competitive Impact Statement filed by the United States describes 
the Complaint, the proposed Final Judgment, and remedies available to 
private litigants.
    Public comment is invited within the statutory 60-day comment 
period. Such comments, and the responses thereto, will be published in 
the Federal Register and filed with the Court. Written comments should 
be directed to Craig W. Conrath, Chief, Merger Task Force, Antitrust 
Division, 1401 H Street, NW., Suite 4000, Washington, DC 20530 
(telephone: 202-307-0001).
    Copies of the Complaint, Stipulation and Order, proposed Final 
Judgment, and Competitive Impact Statement are available for inspection 
in Room 215 of the Antitrust Division, Department of Justice, 325 7th 
Street, NW., Washington, DC 20530 (telephone: 202-514-2481) and at the 
office of the Clerk of the United States District Court for the 
Southern District of New York, 500 Pearl Street, New York, NY 10007.

[[Page 25072]]

Copies of any of these materials may be obtained upon request and 
payment of a copying fee.
Constance K. Robinson,
Director of Operations and Merger Enforcement Antitrust Division.

Stipulation and Order

    It is stipulated by and between the undersigned parties, by their 
respective attorneys, as follows:
    1. The Court has jurisdiction over the subject matter of this 
action and over each of the parties hereto, and venue of this action is 
proper in the Southern District of New York;
    2. The parties stipulate that a Final Judgment in the form hereto 
attached may be filed and entered by the Court, upon the motion of any 
party or upon the Court's own motion, at any time after compliance with 
the requirements of the Antitrust Procedures and Penalties Act (15 
U.S.C. 16), and without further notice to any party or other 
proceedings, provided that plaintiff the United States has not 
withdrawn its consent, which it may do at any time before the entry of 
the proposed Final Judgment by serving notice thereof on defendants and 
by filing that notice with the Court;
    3. The defendants (as defined in paragraph II (B)-(F) of the 
proposed Final Judgment attached hereto) shall abide by and comply with 
the provisions of the proposed Final Judgment pending entry of the 
Final Judgment by the Court, and shall, from the date of the filing of 
this Stipulation by the parties, comply with all the terms and 
provisions of the proposed Final Judgment as though the same were in 
full force and effect as an order of the Court;
    4. Defendants shall not consummate their transaction before the 
Court has signed this Stipulation and Order;
    5. In the event plaintiff United States withdraws its consent, as 
provided in paragraph 2 above, or if the proposed Final Judgment is not 
entered pursuant to this Stipulation, the time has expired for all 
appeals of any Court ruling declining entry of the proposed Final 
Judgment, and the Court has not otherwise ordered continued compliance 
with the terms and provisions of the proposed Final Judgment, this 
Stipulation shall be of no effect whatever, and the making of this 
Stipulation shall be without prejudice to any party in this or any 
other proceeding;
    6. Loews and Cineplex represent that the divestitures ordered in 
the proposed Final Judgment can and will be made, and that Loews and 
Cineplex will later raise no claims of hardship or difficulty as 
grounds for asking the Court to modify any of the divestiture 
provisions contained therein;
    7. All parties agree that this agreement can be signed in multiple 
counterparts.

    Dated: April 16, 1998.

    For Plaintiff United States:

Allen P. Grunes (AG 4775),
U.S. Department of Justice, Antitrust Division, Merger Task Force, 
1401 H Street, NW, Suite 4000, Washington DC 20530, (202) 307-0001.

    For Plaintiff State of New York:

 Dennis C. Vacco, Attorney General.
By: Stephen D. Houck (SH 0959),
Assistant Attorney General in Charge, Antitrust Bureau, Office of 
the Attorney General, State of New York, 120 Broadway, New York, NY 
10271, (212) 416-8280.

    For Plaintiff State of Illinois:

James E. Ryan, Attorney General.
By: Christine H. Rosso (CR 3708),
Chief, Antitrust Bureau, Office of the Attorney General, State of 
Illinois, 100 West Randolph Street, 13th Floor, Chicago, Illinois 
60601, (312) 814-5610.

    For Defendants Sony Corporation of America and LTM Holdings, 
Inc.:

Ira S. Sacks (IS 2861),
Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New 
York, NY 10004, (212) 859-8000.

    For Defendant Cineplex Odeon Corporation:

Alan J. Weinschel (AW 5659),
Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY 10153, 
(212) 310-8000.

    For Defendant J. E. Seagram Corp.:

Kenneth R. Logan (KL 7745),
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, NY 
10017, (212) 455-2000.
So ordered:
United States District Judge

Final Judgment

    Whereas, plaintiffs, the United States of America, the State of New 
York, and the State of Illinois filed their Complaint in this action on 
April 16, 1998, and plaintiffs 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 herein, and without 
this Final Judgment constituting any evidence against or an admission 
by any party with respect to any issue of law or fact herein;
    And whereas, defendants have agreed to be bound by the provisions 
of this Final Judgment pending its approval by the Court;
    And whereas, plaintiffs intend Loews and Cineplex, as hereinafter 
defined, to be required to preserve competition by promptly divesting 
the 14 theatres in Manhattan and 11 theatres in Chicago identified 
below;
    And whereas, plaintiffs required Loews and Cineplex to make the 
divestitures for the purpose of establishing one or more viable 
competitors in both Manhattan and Chicago in the exhibition of first-
run motion pictures;
    And whereas, Loews and Cineplex have represented to the plaintiffs 
that the divestitures ordered herein can and will be made and that 
Loews and Cineplex will later raise no claims of hardship or difficulty 
as grounds for asking the Court to modify any of the divestitures 
contained below;
    Now, therefore, before the taking of any testimony, and without 
trial or adjudication of any issue of fact or law herein, and upon 
consent of the parties hereto, it is hereby Ordered, Adjudged, And 
Decreed as follows:

I. Jurisdiction

    This Court has jurisdiction over each of the parties hereto and 
over the subject matter of this action. The Complaint states a claim by 
the plaintiffs upon which relief may be granted against the defendants, 
as hereinafter defined, under Section 7 of the Clayton Act, as amended 
(15 U.S.C. 18).

II. Definitions

    As used in this Final Judgment:
    A. DoJ means the Antitrust Division of the United States Department 
of Justice.
    B. Loews means defendant LTM Holdings, Inc. d/b/a/ Loews Theatres, 
a Delaware corporation with its headquarters in New York, New York, and 
its successors, assigns, subsidiaries, divisions, groups, affiliates, 
partnerships and joint ventures, and directors, officers, managers, 
agents, and employees.
    C. Cineplex means Cineplex Odeon Corporation, an Ontario 
corporation with its headquarters in Toronto, Canada, and its 
successors, assigns, subsidiaries, divisions, groups, affiliates, 
partnerships and joint ventures, and directors, officers, managers, 
agents, and employees.
    D. Sony means defendant Sony Corporation of America, a New York 
corporation with its headquarters in New York, New York, and its 
successors, assigns, subsidiaries, divisions, groups, affiliates, 
partnerships and joint ventures, and directors, officers, managers, 
agents, and employees.
    E. Seagram means defendant J.E. Seagram Corp., a Delaware 
corporation with its headquarters in New York, New York, and its 
successors, assigns, subsidiaries (including but not limited to 
Universal Studios, Inc.), divisions, groups, affiliates, partnerships 
and joint

[[Page 25073]]

ventures, and directors, officers, managers, agents, and employees.
    F. Defendants means Loews, Cineplex, Sony and Seagram.
    G. The Manhattan theatre assets means the motion picture theatre 
businesses operated by Loews and Cineplex under the following names at 
the following addresses in Manhattan, New York:

    i. Chelsea, 260 West 23rd Street.
    ii. Chelsea West, 333 West 23rd Street.
    iii. 62nd & First, 400 East 62nd Street.
    iv. Ziegfeld, 141 West 54th Street.
    v. Park & 86th Street, 125 East 86th Street.
    vi. Waverly Twin, 323 Sixth Avenue.
    vii. Olympia, 2770 Broadway.
    viii. Art Greenwich, 97 Greenwich Avenue.
    ix. Metro Twin, 2626 Broadway.
    x. Beekman, 1254 Second Avenue.
    xi. Regency, 1987 Broadway.
    xii. 62nd Street & Broadway, 1871 Broadway.
    xiii. 59th Street East, 239 East 59th Street.
    xiv. 34th Street Showplace, 238 East 34th Street.

    The term Manhattan theatre assets includes all tangible and 
intangible assets used in the operation of these theatres including: 
All real property (owned or leased); all personal property, inventory, 
office furniture, fixed assets and fixtures, materials, supplies, and 
other tangible property or improvements used in the operation of the 
theatres; all licenses, permits and authorizations issued by any 
governmental organization relating to the operation of the theatres; 
and all contracts, agreements, leases, licenses, commitments and 
understandings pertaining to the theatres including supply agreements 
and licenses to exhibit motion pictures.
    H. The Chicago theatre assets means the motion picture theatre 
businesses operated by Loews and Cineplex under the following names at 
the following addresses in Cook County, Illinois:

    i. 600 North Michigan, 600 N. Michigan Ave., Chicago.
    ii. 900 North Michigan, 900 N. Michigan Ave., Chicago.
    iii. Biograph, 2433 N. Lincoln Ave., Chicago.
    iv. Bricktown, 6420 W. Fullerton, Chicago.
    v. Watertower 1-4, 845 N. Michigan Ave., Chicago.
    vi. Watertower 5-7, 175 East Chestnut, Chicago.
    vii. Burnham Plaza, 826 S. Wabash, Chicago.
    viii. Broadway, 3175 N. Broadway, Chicago.
    ix. Hyde Park Quad, 5238 S. Harper, Chicago.
    x. River Run Eightplex, 16621 Torrence Ave., Lansing.
    xi. Old Orchard Quad, 9400 Skokie Blvd., Skokie.

    The term Chicago theatre assets includes all tangible and 
intangible assets used in the operation of these theatres including: 
All real property (owned or leased); all personal property, inventory, 
office furniture, fixed assets and fixtures, materials, supplies, and 
other tangible property or improvements used in the operation of the 
theatres; all licenses, permits and authorizations issued by any 
governmental organization relating to the operation of the theatres; 
and all contracts, agreements, leases, licenses, commitments and 
understandings pertaining to the theatres including supply agreements 
and licenses to exhibit motion pictures.
    I. Acquirer means the entity or entities to whom Loews and Cineplex 
divest the Manhattan theatre assets or the Chicago theatre assets under 
this Final Judgment.

III. Applicability

    A. The provisions of this Final Judgment apply to the defendants, 
their successors and assigns, their subsidiaries, directors, officers, 
managers, agents, and employees, and 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 the assets used in its 
business of operating motion picture theatres in either Manhattan or 
Cook County, Illinois, that the acquiring party or parties agree to be 
bound by the provisions of this Final Judgment; provided, however, that 
Loews and Cineplex need not obtain such an agreement from an Acquirer 
in connection with the divestiture of the Manhattan theatre assets or 
the Chicago theatre assets.

IV. Divestiture

    A. Loews and Cineplex are hereby ordered and directed in accordance 
with the terms of this Final Judgment, within one-hundred and eighty 
(180) calendar days after the filing of the Complaint in this matter or 
five (5) days after notice of the entry of this Final Judgment by the 
Court, whichever is later, to divest the Manhattan theatre assets to an 
Acquirer or Acquirers acceptable to DoJ in its sole discretion after 
consultation with the State of New York and divest the Chicago theatre 
assets to an Acquirer or Acquirers acceptable to DoJ in its sole 
discretion after consultation with the State of Illinois.
    B. Loews and Cineplex shall use their best efforts to accomplish 
the divestitures as expeditiously and timely as possible. DoJ, in its 
sole discretion, may extend the time period for any divestiture for two 
(2) additional thirty (30) day periods of time, not to exceed sixty 
(60) calendar days in total.
    C. In accomplishing the divestitures ordered by this Final 
Judgment, Loews and Cineplex promptly shall make known, by usual and 
customary means, the availability of the Manhattan theatre assets and 
the Chicago theatre assets described in this Final Judgment. Loews and 
Cineplex shall inform any person making an inquiry regarding a possible 
purchase that the sale is being made pursuant to this Final Judgment 
and provide such person with a copy of this Final Judgment. Loews and 
Cineplex shall also offer to furnish to all prospective Acquirers, 
subject to customary confidentiality assurances, all information 
regarding the Manhattan theatre assets and the Chicago theatre assets 
customarily provided in a due diligence process except such information 
subject to attorney-client privilege or attorney work-product 
privilege. Loews and Cineplex shall make available such information to 
DoJ at the same time that such information is made available to any 
other person.
    D. Loews and Cineplex shall permit prospective Acquirers of the 
Manhattan theatre assets and the Chicago theatre assets to have 
reasonable access to personnel and to make such inspection of the 
physical facilities of the Manhattan theatre assets and the Chicago 
theatre assets and any and all financial, operational, or other 
documents and information customarily provided as part of a due 
diligence process.
    E. The defendants shall not take any action that will impede in any 
way the operation of the Manhattan theatre assets or the Chicago 
theatre assets.
    F. Unless DoJ otherwise consents in writing, the divestitures 
pursuant to Section IV, or by trustee appointed pursuant to Section V 
of this Final Judgment, shall include the entire Manhattan theatre 
assets and Chicago theatre assets and be accomplished by selling or 
otherwise conveying the Manhattan theatre assets and Chicago theatre 
assets to an Acquirer or Acquirers in such a way as to satisfy DoJ in 
its sole discretion (after consultation with the State of New York or 
the State of Illinois as the case may be), that the Manhattan theatre 
assets and the Chicago theatre assets can and will be used by the 
Acquirer(s) as part of a viable, ongoing business of exhibition of 
first-run films. Divestiture of the

[[Page 25074]]

Manhattan theatre assets and the Chicago theatre assets may be made to 
one or more Acquirers provided that in each instance it is demonstrated 
to the sole satisfaction of DoJ (after consultation with the State of 
New York or the State of Illinois as the case may be) that the 
Manhattan theatre assets and the Chicago theatre assets will remain 
viable and the divestiture of such assets will remedy the competitive 
harm alleged in the complaint. The divestitures, whether pursuant to 
Section IV or Section V of this Final Judgment: (1) Shall be made to an 
Acquirer or Acquirers who it is demonstrated to DoJ's sole satisfaction 
(after consultation with the State of New York or the State of Illinois 
as the case may be) has or have the intent and capability (including 
the necessary managerial, operational, and financial capability) of 
competing effectively in the business of exhibition of first-run films; 
(2) shall be accomplished so as to satisfy DoJ, in its sole discretion 
(after consultation with the State of New York or the State of Illinois 
as the case may be), that none of the terms of any agreement between an 
Acquirer and Loews or Cineplex give Loews or Cineplex the ability 
unreasonably to raise the Acquirer's costs, to lower the Acquirer's 
efficiency, or otherwise to interfere in the ability of the Acquirer to 
compete effectively.

V. Appointment of Trustee

    A. In the event that Loews and Cineplex have not divested the 
Manhattan theatre assets and the Chicago theatre assets within the time 
specified in Section IV(A) of this Final Judgment, the Court shall 
appoint, on application of the United States, a trustee selected by DoJ 
to effect the divestiture of the Manhattan theatre assets and the 
Chicago theatre assets.
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the Manhattan theatre assets and 
the Chicago theatre assets. The trustee shall have the power and 
authority to accomplish the divestitures at the best price then 
obtainable upon a reasonable effort by the trustee, subject to the 
provisions of Sections IV and X of this Final Judgment, and shall have 
such other powers as the Court shall deem appropriate. Subject to 
Section V (C) of this Final Judgment, the trustee shall have the power 
and authority to hire at the cost and expense of Loews and Cineplex any 
investment bankers, attorneys, or other agents reasonably necessary in 
the judgment of the trustee to assist in the divestitures, and such 
professionals and agents shall be accountable solely to the trustee. 
The trustee shall have the power and authority to accomplish the 
Manhattan theatre assets divestitures at the earliest possible time to 
an Acquirer or Acquirers acceptable to DoJ in its sole discretion 
(after consultation with the State of New York), and the Chicago 
theatre assets divestitures at the earliest possible time to an Aquirer 
or Acquirers acceptable to DoJ in its sole discretion (after 
consultation with the State of Illinois), and shall have such other 
powers as this Court shall deem appropriate. Loews and Cineplex shall 
not object to a sale by the trustee on any grounds other than the 
trustee's malfeasance. Any such objections by Loews and Cineplex must 
be conveyed in writing to plaintiffs and the trustee within ten (10) 
calendar days after the trustee has provided the notice required under 
Section VII of this Final Judgment.
    C. The trustee shall serve at the cost and expense of Loews and 
Cineplex, on such terms and conditions as the Court may prescribe, and 
shall account for all monies derived from the sale of the assets sold 
by the trustee and all costs and expenses so incurred. After approval 
by the Court of the trustee's accounting, including fees for its 
services and those of any professionals and agents retained by the 
trustee, all remaining money shall be paid to Loews and Cineplex and 
the trust shall then be terminated. The compensation of such trustee 
and of any professionals and agents retained by the trustee shall be 
reasonable in light of the value of the divested business and based on 
a fee arrangement providing the trustee with an incentive based on the 
price and terms of the divestitures and the speed with which they are 
accomplished.
    D. Loews and Cineplex shall use their best efforts to assist the 
trustee in accomplishing the required divestitures, including best 
efforts to effect all necessary consents and regulatory approvals. The 
trustee, and any consultants, accountants, attorneys and other persons 
retained by the trustee, shall have full and complete access to the 
personnel, books, records, and facilities of the businesses to be 
divested, and Loews and Cineplex shall develop financial or other 
information relevant to the business to be divested customarily 
provided in a due diligence process as the trustee may reasonably 
request, subject to customary confidentiality assurances. Loews and 
Cineplex shall permit prospective Acquirers of the assets to have 
reasonable access to personnel and to make such inspection of physical 
facilities and any and all financial, operational or other documents 
and other information as may be relevant to the divestitures required 
by this Final Judgment.
    E. After its appointment, the trustee shall file monthly reports 
with the parties and the Court setting forth the trustee's efforts to 
accomplish the divestitures ordered pursuant to this Final Judgment; 
provided, however, that to the extent such reports contain information 
that the trustee deems confidential, such reports shall not be filed in 
the public docket of the Court. Such reports shall include the name, 
address and telephone number of each person who, during the preceding 
month, made an offer to acquire, expressed an interest in acquiring, 
entered into negotiations to acquire, or was contacted or made an 
inquiry about acquiring, any interest in the businesses to be divested, 
and shall describe in detail each contact with any such person during 
that period. The trustee shall maintain full records of all efforts 
made to divest the business to be divested.
    F. If the trustee has not accomplished such divestitures within six 
(6) months after its appointment, the trustee thereupon shall file 
promptly with the Court a report setting forth (1) the trustee's 
efforts to accomplish the required divestitures, (2) the reasons, in 
the trustee's judgment, why the required divestitures have not been 
accomplished, and (3) the trustee's recommendations; provided, however, 
that to the extent such reports contain information that the trustee 
deems confidential, such reports shall not be filed in the public 
docket of the Court. The trustee shall at the same time furnish such 
report to the parties, who shall each have the right to be heard and to 
make additional recommendations consistent with the purpose of the 
trust. The Court shall enter thereafer such orders as it shall deem 
appropriate in order to carry out the purpose of the trust which may, 
if necessary, include extending the trust and the term of the trustee's 
appointment by a period requested by DoJ.

VI. Notice

    Unless such transaction is otherwise subject to the reporting and 
waiting period requirements of the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''), 
defendants, without providing advance notification to DoJ, shall not 
directly or indirectly acquire any assets of or any interest, including 
any financial, security, loan, equity or management interest, in any 
then-existing motion picture theatre in either

[[Page 25075]]

Manhattan in the State of New York or in Cook County in the State of 
Illinois. Such notification shall be provided to the DoJ in the same 
format as, and per the instructions relating to the Notification and 
Report Form set forth in the Appendix to Part 803 of Title 16 of the 
Code of Federal Regulations as amended, except that the information 
requested in Items 5-9 of the instructions must be provided only with 
respect to defendants' motion picture theatre operations in Manhattan 
in the State of New York or in Cook County in the State of Illinois. 
Notification shall be provided at least thirty (30) days prior to 
acquiring any such interest, and shall include, beyond what may be 
required by the applicable instructions, the names of the principal 
representatives of the parties to the agreement who negotiated the 
agreement, and any management or strategic plans discussing the 
proposed transaction. If within the 30-day period after notification, 
representatives of DoJ make a written request for additional 
information, defendants shall not consummate the proposed transaction 
or agreement until twenty (20) days after submitting all such 
additional information. Early termination of the waiting periods in 
this paragraph may be requested and, where appropriate, granted in the 
same manner as is applicable under the requirements and provisions of 
the HSR Act and rules promulgated thereunder. This Section shall be 
broadly construed and any ambiguity or uncertainty regarding the filing 
of notice under this Section shall be resolved in favor of filing 
notice.

VII. Notification

    Within two (2) business days following execution of a definitive 
agreement, contingent upon compliance with the terms of this Final 
Judgment, to effect, in whole or in part, any proposed divestitures 
pursuant to Sections IV or V of this Final Judgment, Loews and Cineplex 
or the trustee, whichever is then responsible for effecting the 
divestitures, shall notify DoJ, and, as the case may be, in the State 
of New York or the State of Illinois of the proposed divestitures. If 
the trustee is responsible, it shall similarly notify Loews and 
Cineplex. The notice shall set forth the details of the proposed 
transaction and list the name, address, and telephone number of each 
person not previously identified who offered to, or expressed an 
interest in or a desire to, acquire any ownership interest in the 
businesses to be divested that are the subject of the binding contract, 
together with full details of same. Within fifteen (15) calendar days 
of receipt by DoJ of notice, DoJ may request from Loews or Cineplex, 
the proposed Acquirer, or any other third party additional information 
concerning the proposed divestitures and the proposed Acquirer. Loews 
and Cineplex and the trustee shall furnish any additional information 
requested from them within fifteen (15) calendar days of the receipt of 
the request, unless the parties shall otherwise agree. Within thirty 
(30) calendar days after receipt of the notice or within twenty (20) 
calendar days after DoJ has been provided the additional information 
requested from Loews and Cineplex, the proposed Acquirer, and any third 
party, whichever is later, DoJ shall provide written notice to Loews 
and Cineplex and the trustee, if there is one, stating whether or not 
it objects to the proposed divestitures. If DoJ provides written notice 
to Loews and Cineplex and the trustee that DoJ does not object, then 
the divestitures may be consummated, subject only to Loews and 
Cineplex's limited right to object to the sale under Section V(B) of 
this Final Judgment. Absent written notice that DoJ does not object to 
the proposed Acquirer or upon objection by DoJ, a divestiture proposed 
under Section IV or Section V may not be consummated. Upon objection by 
Loews and Cineplex under the provision in Section V(B), a divestiture 
proposed under Section V shall not be consummated unless approved by 
the Court.

VIII. Affidavits

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter and every thirty (30) calendar days thereafter until the 
divestitures have been completed whether pursuant to Section IV or 
Section V of this Final Judgment, Loews and Cineplex shall deliver to 
DoJ an affidavit as to the fact and manner of compliance with Sections 
IV or V of this Final Judgment. Each such affidavit shall include, 
inter alia, the name, address, and telephone number of each person who, 
at any time after the period coverage by the last such report, made an 
offer to acquire, expressed an interest in acquiring, entered into 
negotiations to acquire, or was contacted or made an inquiry about 
acquiring, any interest in the businesses to be divested, and shall 
describe in detail each contact with any such person during that 
period. Each such affidavit shall also include a description of the 
efforts that Loews and Cineplex have taken to solicit a buyer for the 
relevant assets and to provide required information to prospective 
Acquirers.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, Loews and Cineplex shall deliver to DOJ an affidavit 
which describes in detail all actions they have taken and all steps 
they have implemented on an on-going basis to preserve the Manhattan 
theatre assets and the Chicago theatre assets pursuant to Section IX of 
this Final Judgment. The affidavit also shall describe, but not be 
limited to, the efforts of Loews and Cineplex to maintain and operate 
the Manhattan theatre assets and the Chicago theatre assets as active 
competitors, maintain the management, staffing, sales, and marketing of 
the Manhattan theatre assets and the Chicago theatre assets, and 
maintain the Manhattan and the Chicago theatre assets in operable 
condition at current capacity configurations. Loews and Cineplex shall 
deliver to DoJ an affidavit describing any changes to the efforts and 
actions outlined in their earlier affidavit(s) filed pursuant to this 
Section within fifteen (15) calendar days after the change is 
implemented.
    C. Until one year after such divestiture has been completed, Loews 
and Cineplex shall preserve all records of all efforts made to preserve 
the business to be divested and effect the divestitures.

IX. Preservation of Assets

    Until the divestitures required by the Final Judgment have been 
accomplished, Loews and Cineplex shall take all steps necessary to 
maintain and operate the Manhattan theatre assets and the Chicago 
theatre assets as active competitors, maintain the management, 
staffing, sales, and marketing of the Manhattan theatre assets and the 
Chicago theatre assets, and maintain the Manhattan theatre assets and 
the Chicago theatre assets in operable condition at current capacity 
configurations. Defendants shall take no action that would jeopardize 
the divestitures described in this Final Judgment.

X. Financing

    The defendants are ordered and directed not to finance all or any 
part of any purchase by an Acquirer or Acquirers made pursuant to 
Sections IV or V of this Final Judgment.

XI. Compliance Inspection

    For purposes of determining or securing compliance with the Final 
Judgment and subject to any legally recognized privilege, from time to 
time:
    A. Duly authorized representatives of the plaintiffs, upon the 
written request of the Assistant Attorney General in charge of the 
Antitrust Division, the New York Attorney General or the Illinois 
Attorney General, and on

[[Page 25076]]

reasonable notice to the defendants made to their principal offices, 
shall be permitted:
    1. Access during office hours of the defendants to inspect and copy 
all books, ledgers, accounts, correspondence, memoranda, and other 
records and documents in the possession or under the control of the 
defendants, who may have counsel present, relating to the matters 
contained in this Final Judgment; and
    2. Subject to the reasonable convenience of the defendants and 
without restraint or interference from any of them, to interview, 
either informally or on the record, their officers, employees, and 
agents, who may have counsel present, regarding any such matters.
    B. Upon the written request of the Assistant Attorney General in 
charge of the Antitrust Division, the New York Attorney General, or the 
Illinois Attorney General made to the defendants' principal offices, 
the defendants shall submit such written reports, under oath if 
requested, with respect to any matter contained in the Final Judgment.
    C. No information or documents obtained by the means provided in 
Sections VIII or XI of this Final Judgment shall be divulged by a 
representative of the plaintiffs to any person other than a duly 
authorized representative of the Executive Branch of the United States, 
or of each state government, except in the course of legal proceedings 
to which at least one of the plaintiffs is a party (including grand 
jury proceedings,), or for the purpose of securing compliance with this 
Final Judgment, or as otherwise required by law.
    D. If at the time information or documents are furnished by the 
defendants to the plaintiffs, the 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 the 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 ten (10) calendar days 
notice shall be given by the plaintiffs to the defendants prior to 
divulging such material in any legal proceeding (other than a grand 
jury proceeding) to which the defendants are not a party.

XII. Retention of Jurisdiction

    Jurisidiction 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 for the construction or carrying out of this Final 
Judgment, for the modification of any of the provisions hereof, for the 
enforcement of compliance herewith, and for the punishment of any 
violations hereof.

XIII. Termination

    Unless this Court grants an extension, this Final Judgment will 
expire upon the tenth anniversary of the date of its entry.

XIV. Public Interest

    Entry of this Final Judgment is in the public interest.

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

Competitive Impact Statement

    Plaintiff, the United States of America, pursuant to Section 2(b) 
of the Antitrust Procedures and Penalties Act (``APPA''), 15 U.S.C. 
16(b)-(h), files this Competitive Impact Statement relating to the 
proposed Final Judgment submitted for entry in this civil antitrust 
proceeding.

I. Nature and Purpose of the Proceeding

    Plaintiffs the United States, the State of New York, and the State 
of Illinois filed a civil antitrust Complaint on April 16, 1998, 
alleging that a proposed merger of LTM Holdings, Inc. (``Loews'') and 
Cineplex Odeon Corp. (``Cineplex'') would violate Section 7 of the 
Clayton Act, 15 U.S.C. 18. The Complaint alleges that Loews and 
Cineplex both operate motion picture theatres throughout the United 
States, and that they each operate first-run motion picture theatres in 
Manhattan and Chicago. The merger would combine the two leading theatre 
circuits in both Manhattan and Chicago and give the newly merged firm a 
dominant position in both localities: in Manhattan, the newly merged 
firm would have a 67% market share (by revenue) and in Chicago, the 
newly merged firm would have a 77% market share (by revenue). As a 
result, the combination would substantially lessen competition and tend 
to create a monopoly in the markets for theatrical exhibition of first-
run films in both Manhattan and Chicago.
    The prayer for relief seeks: (1) an adjudication that the proposed 
merger described in the Complaint would violate Section 7 of the 
Clayton Act; (b) permanent injunctive relief preventing the 
consummation of the transaction; (c) an award to each plaintiff of the 
costs of this action; and (d) such other relief as is proper.
    Shortly before this suit was filed, a proposed settlement was 
reached that permits Loews to complete its merger with Cineplex, yet 
preserved competition in the markets in which the transactions would 
raise significant competitive concerns. A Stipulation and proposed 
Final Judgment embodying the settlement were filed at the same time the 
Complaint was filed.
    The proposed Final Judgment orders Loews and Cineplex to divest 14 
theatres in Manhattan and 11 theatres in the Chicago area to an 
acquirer acceptable to the United States. Unless the United States 
grants a time extension, the divestitures must be completed within one-
hundred and eighty (180) calendar days after the filing of the 
Complaint in this matter or five (5) days after notice of the entry of 
this Final Judgment by the Court, whichever is later.
    If the divestitures are not completed within the divestiture 
period, the Court, upon application of the United States, is to appoint 
a trustee selected by the United States to sell the assets. The 
proposed Final Judgment also requires that, until the divestitures 
mandated by the Final Judgment have been accomplished, the defendants 
must maintain and operate the 25 theatres to be divested as active 
competitors, maintain the management, staffing, sales, and marketing of 
the theatres, and maintain the theatres in operable condition at 
current capacity configurations. Further, the proposed Final Judgment 
requires defendants to give the United States prior notice regarding 
future motion picture theatre acquisitions in Manhattan or Cook County, 
Illinois.
    The plaintiffs and the defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. The Alleged Violations

A. The Defendants

    Sony Corporation of America is a New York corporation with its 
headquarters in New York, New York.
    LTM Holdings, Inc. is a Delaware corporation which does business 
under the name Loews Theatres and has its principal executive offices 
in New York, New York. Loews is an indirect wholly

[[Page 25077]]

owned subsidiary of Sony Pictures Entertainment Inc., itself an 
indirect wholly owned subsidiary of Sony Corporation of America, which 
in turn is an indirect wholly owned subsidiary of Sony Corporation, a 
Japanese company. Loews currently operates 139 theatres with 1,035 
screens in 16 states. Its annual revenues for the fiscal year ending 
February 28, 1997 were approximately $375 million.
    Cinceplex is a Canadian corporation headquartered in Toronto, 
Ontario. It currently operates a total of 312 theatres with 1,723 
screens in the United States, Canada and Hungary. Its United States 
operations consist of 911 screens at 175 locations in 13 states and the 
District of Columbia. Cineplex had annual revenues of approximately 
$500 million in 1996.
    J.E. Seagram Corp. is a Delaware corporation headquartered in New 
York, New York. Its subsidiary, Universal Studios, Inc., is the largest 
shareholder of Cineplex.

B. Description of the Events Giving Rise to the Alleged Violations

    On September 30, 1997, Sony Pictures Entertainment Inc., LTM 
Holdings, Inc. and Cineplex entered into a merger agreement. Pursuant 
to the agreement, Cineplex will become a wholly owned subsidiary of LTM 
Holdings, Inc., and Sony Pictures Entertainment will transfer all of 
its U.S. theatre assets not owned by LTM Holdings, Inc. to LTM 
Holdings, Inc. or its subsidiaries. LTM Holdings, Inc. will then be 
renamed Loews Cineplex Entertainment Corporation (``LCE''). Following 
the merger, Sony Pictures Entertainment Inc. will own approximately 51% 
of LCE and Universal Studios, Inc. will own approximately 26% of LCE.
    Loews and Cineplex compete in the theatrical exhibition of first-
run films in Manhattan and Chicago: They compete to obtain films from 
film distributors and to attract movie-goers to their theatres. The 
proposed merger, and the threatened loss of competition that would be 
caused thereby, precipitated the government's suit.

C. Anticompetitive Consequences of the Proposed Transaction

    The Complaint alleges that the theatrical exhibition of first-run 
films in Manhattan and Chicago each constitutes a line of commerce and 
section of the country, or relevant market, for antitrust purposes. 
First-run films differ significantly from other forms of entertainment. 
The experience of viewing a film in a theatre is an inherently 
different experience from a live show, a sporting event, or viewing a 
videotape in the home. Ticket prices for first-run films are also 
generally very different than for other forms of entertainment. A small 
but significant increase in the price of tickets for first-run films 
would not cause a sufficient shift to other forms of entertainment to 
make the increase unprofitable.
    From a movie-goer's standpoint, theatres outside Manhattan and 
Chicago are not acceptable substitutes for theatres within those areas. 
A small but significant increase in the price of tickets for first-run 
films would not cause a sufficient shift to theatres outside Manhattan 
or Chicago to make the increase unprofitable.
    From a distributor's standpoint, there is no alternative to 
screening its first-run films in first-run theatres. Given the high 
population densities and number of significant critics in both 
Manhattan and Chicago, ``passing'' (i.e., not playing a film in) 
Manhattan and Chicago is not a viable option. From the distributor 
standpoint as well, a small but significant decrease in prices (i.e., a 
decrease in film rental fees) would not cause a sufficient shift by 
distributors to other locations to make the decrease unprofitable to 
exhibitors.
    The Complaint alleges that the merger of Loews and Cineplex would 
lessen competition substantially and tend to create a monopoly in the 
markets for exhibition of first-run films in Manhattan and Chicago. The 
proposed transaction would create further market concentration in 
already highly concentrated markets, and the merged firm would control 
a majority of box office revenues in those markets. In Manhattan, the 
market share possessed by the largest theatre circuit would rise from 
46% percent to 67% percent of box office revenues after the proposed 
transaction. According to the Herfindahl-Hirschman Index (``HHI''), a 
widely-used measure of market concentration defined and explained in 
Appendix A, the merged firm's post-transaction HHI in Manhattan would 
be 4815, representing an increase of 1911 points. In Chicago, the 
market share possessed by the largest theatre circuit would rise from 
47% percent to 77% percent of box office revenues after the proposed 
transaction. The post-transaction HHI would equal 6438, representing an 
increase of 2874 points. These substantial increases in concentration 
would likely lead the merged firm to raise ticket prices.
    Distributors and exhibitors often break the Manhattan and Chicago 
markets into ``zones'' that reflect various neighborhoods--such as, in 
Manhattan, the Upper East Side, the East Side, the West Side, Broadway-
Times Square, Chelsea, and Greenwich Village, and in Chicago, Downtown, 
Near North, North, Far North, West, South, and Far South. Movies 
typically will open and play at only one theatre within a zone. The 
merger would convert a number of film zones in which Loews and Cineplex 
compete with each other into zones in which there would be no 
competition. For instance, in the downtown Chicago zone, the combined 
entity would control all seven theatres. The same is true in the north 
zone (Old Orchard/Orchard Gardens), the west zone (Bricktown Square/
Norridge) and the far south zone (River Run/River Oaks).
    By reducing non-price competition, the merger would also likely 
lead to lower quality theatres by reducing the incentive to maintain, 
upgrade and renovate theatres in Manhattan and Chicago, thus reducing 
the quality of the viewing experience for movie-goer. It also may allow 
the merged entity to reduce the number of shows as there no longer 
would be competitive pressure to continue early and late shows.
    Finally, the merger would also likely lead to distributors 
receiving less in revenue for the exhibition of their pictures, either 
in the form of reduced (or eliminated) guarantees, higher overhead 
allowances for the exhibitors, or a less favorable percentage of the 
box office receipts. The reduced revenue remitted to the distributors 
could lead to fewer films being produced, or less money being expended 
on high quality films, to the ultimate detriment of movie-goers.
    New entry into the Manhattan and Chicago markets for exhibition of 
first-run films would be highly unlikely to eliminate the 
anticompetitive effects of this transaction. Manhattan and Chicago are 
two of the most difficult markets in the country to enter: Available 
theatre sites are scarce, real estate and construction costs are among 
the highest in the nation, and acquiring the necessary permits and 
approvals can be difficult and time-consuming. Identifying a site, 
planning the development, and constructing a theatre in Manhattan or 
Chicago takes several years.
    For all of these reasons, plaintiff has concluded that the proposed 
transaction would lessen competition substantially in the exhibition of 
first-run films in Manhattan and Chicago, eliminate actual and 
potential competition between Loews and Cineplex, and likely result in 
increased ticket prices and lower quality theatres in both Manhattan 
and Chicago. The merger would also likely reduce the rental fees paid 
to distributors for films. The

[[Page 25078]]

proposed merger therefore violates Section 7 of the Clayton Act.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment would preserve existing competition in 
the theatrical exhibition of first-run films in both Manhattan and 
Chicago. It requires the divestiture of 14 theatres in Manhattan: 13 
Cineplex theatres (Chelsea, Chelsea West, 1st and 62nd, Ziegfeld, Park 
& 86th Street, Waverly Twin, Olympia, Art Greenwich, Metro Twin, 
Beekman, Regency, 62nd & Broadway, and 59th Street East) and one Loews 
theatre (34th Street Showplace); and 11 theatres in the Chicago area: 8 
Cineplex Odeon theatres (600 North Michigan, 900 North Michigan, 
Biograph, Bricktown, Watertower 1-4, Watertower 5-7, Burnham Plaza, and 
Broadway) and 3 Loews theatres (Hyde Park Quad, River Run Eightplex, 
and Old Orchard Quad). The divested theatres constitute slightly more 
in box office revenue in Manhattan and in Chicago than the leading firm 
is acquiring in each market and, as a result, will reduce the leading 
firm's share back to (or actually slightly less than) pre-merger levels 
in both markets. The divestitures will preserve choices for 
distributors and movie-goers and make it less likely that ticket prices 
will increase, rental fees paid to distributors will decrease, and 
theatre quality will decline in Manhattan and Chicago as a result of 
the transaction.
    Two of the divestitures in the Chicago area are outside of the city 
limits: Old Orchard Quad and the River Run Eightplex. In a case like 
this, where theatres are geographically differentiated and consumers' 
willingness to travel is varied, some movie-goers near the border have 
options outside the city limits. Accordingly, we have negotiated relief 
that includes two theatres outside of Chicago. Both of these theatres 
are in close proximity to the city, are near major highways, and are in 
zones that would be rendered non-competitive by the merger.
    Unless the United States grants an extension of time, the 
divestitures must be completed within one-hundred and eighty (180) 
calendar days after the filing of the Complaint in this matter or five 
(5) days after notice of the entry of this Final Judgment by the Court, 
whichever is later. Until the divestitures take place, Loews and 
Cineplex must maintain and operate the 25 theatres to be divested as 
active competitors, maintain the management, staffing, sales, and 
marketing of the theatres, and maintain the theatres in operable 
condition at current capacity configurations.
    The divestitures must be to a purchaser or purchasers acceptable to 
the United States in its sole discretion, after consultation with the 
State of New York or the State of Illinois as appropriate. Unless the 
United States otherwise consents in writing, the divestitures shall 
include all the assets of the theatres being divested, and shall be 
accomplished in such a way as to satisfy the United States that such 
assets can and will be used as viable, ongoing first-run theatres.
    If defendants fail to divest these theatres within the time periods 
specified in the Final Judgment, the Court, upon application of the 
United States, is to appoint a trustee nominated by the United States 
to effect the divestitures. If a trustee is appointed, the proposed 
Final Judgment provides that Loews and Cineplex will pay all costs and 
expenses of the trustee and any professionals and agents retained by 
the trustee. The compensation paid to the trustee and any persons 
retained by the trustee shall be both reasonable in light of the value 
of the theatres remaining to be divested, and based on a fee 
arrangement providing the trustee with an incentive based on the price 
and terms of the divestitures and the speed with which they are 
accomplished. After appointment, the trustee will file monthly reports 
with the parties and the Court, setting for the trustee's efforts to 
accomplish the divestitures ordered under the proposed Final Judgment. 
If the trustee has not accomplished the divestitures within six (6) 
months after its appointment, the trustee shall promptly file with the 
Court a report setting forth (1) the trustee's efforts to accomplish 
the required divestitures, (2) the reasons, in the trustee's judgment, 
why the required divestitures have not been accomplished and (3) the 
trustee's recommendations. At the same time the trustee will furnish 
such report to the plaintiff and defendants, who will each have the 
right to be heard and to make additional recommendations.
    The proposed Final Judgment also prohibits the defendants from 
acquiring any other threatres in Manhattan or Cook County, Illinois 
without providing at least thirty (30) days' notice to the U.S. 
Department of Justice. Such acquisitions could raise competitive 
concerns but might be too small to be reported otherwise under the 
Hart-Scott-Rodino (``HSR'') premerger notification statute.

IV. 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 suite in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorney's fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
16(a), the proposed Final Judgment has no prima facie effect in any 
subsequent private lawsuit that may be brought against defendants.

V. Procedures Available for Modification of the Proposed Final 
Judgment

    The parties have stipulated that the proposed Final Judgment may be 
entered by the Court after compliance with the provisions of the APPA, 
provided that plaintiff United States has not withdrawn its consent. 
The APPA conditions entry upon the Court's determination that the 
proposed Final Judgment is in the public interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the plaintiff written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register. The plaintiff will evaluate 
and respond to the comments. All comments will be given due 
consideration by the U.S. Department of Justice, which remains free to 
withdraw its consent to the proposed Final Judgment at any time prior 
to entry. The comments and the response of the plaintiff will be filed 
with the Court and published in the Federal Register.
    Written comments should be submitted to: Craig W. Conrath, Chief, 
Merger Task Force, Antitrust Division, United States Department of 
Justice, 1401 H Street, NW; Suite 4000, Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and that the parties may apply to the 
Court for any order necessary or appropriate for the modification, 
interpretation or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    Plaintiff United States considered, as an alternative to the 
proposed Final

[[Page 25079]]

Judgment, a full trial on the merits of its Complaint against 
defendants. Plaintiff is satisfied, however, that the divestiture of 
the Manhattan theatre assets and the Chicago theatre assets and other 
relief contained in the proposed Final Judgment will preserve viable 
competition in the first-run exhibition of motion pictures in Manhattan 
and Chicago. Thus, the proposed Final Judgment would achieve the relief 
the government might have obtained through litigation, but avoids the 
time, expense and uncertainty of a full trial on the merits of the 
Complaint.

VII. Standard of Review Under the APPA for Proposed Final Judgment

    The APPA requires that proposed consent judgments in antitrust 
cases brought by the United States be subject to a sixty (60) day 
comment period, after which the Court shall determine whether entry of 
the proposed Final Judgment ``is in the public interest.'' In making 
that determination, the Court may consider--

    (1) The competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration or relief sought, anticipated effects of 
alternative remedies actually considered and any other 
considerations bearing upon the adequacy of such judgment;
    (2) The impact of entry of such judgment upon the public 
generally and individuals alleging specific injury from the 
violations set forth in the complaint including consideration of the 
public benefit, if any, to be derived from a determination of the 
issues at trial.

    15 U.S.C. 16(e).
    As the United States Court of Appeals for the D.C. Circuit held, 
this statute permits a court to consider, among other things, the 
relationship between the remedy secured and the specific allegations 
set forth in the government's complaint, whether the decree is 
sufficiently clear, whether enforcement mechanisms are sufficient and 
whether the decree may positively harm third parties. See United States 
v. Microsoft, 56 F.3d 1448, 1461-62 (D.C. Cir. 1995).
    In conducting this inquiry, ``[t]he Court is nowhere compelled to 
go to trial or to engage in extended proceedings which might have the 
effect of vitiating the benefits of prompt and less costly settlement 
through the consent decree process.''\1\ Rather,

    \1\ 119 Cong. Rec. 24598 (1973). See United States v. Gillette 
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest'' 
determination can be made properly on the basis of the Competitive 
Impact Statement and Response to Comments filed pursuant to the 
APPA. Although the APPA authorizes the use of additional procedures, 
15 U.S.C. 16(f), those procedures are discretionary. A court need 
not invoke any of them unless it believes that the comments have 
raised significant issues and that further proceedings would aid the 
court in resolving those issues. See H.R. Rep. 93-1463, 93rd Cong. 
2d Sess. 8-9 (1974), reprinted in U.S.C.C.A.N. 6535, 6538.
---------------------------------------------------------------------------

[a]bsent a showing of corrupt failure of the government to discharge 
its duty, the Court, in making its public interest finding, should * 
* * carefully consider the explanations of the government in the 
competitive impact statement and its responses to comments in order 
to determine whether those explanations are reasonable under the 
circumstances.

    United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. 
para. 61,508. at 71, 980 (W.D. Mo. 1977).
    Accordingly, with respect to the adequacy of the relief secured by 
the decree, a court may not ``engage in an unrestricted valuation of 
what relief would best serve the public.'' United States v. BNS, Inc., 
858 F.2d 456, 462 (9th Cir. 1988), Citing United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083 
(1981); see also Microsoft, 56 F.3d at 1460-62. Precedent requires 
that,

the balancing of competing social and political interests affected 
by a proposed antitrust consent decree must be left, in the first 
instance, to the discretion of the Attorney General. The court's 
role in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to 
the decree. The court is required to determine not whether a 
particular decree is the one that will best serve society, but 
whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.\2\

    \2\ Bechtel., 648 F.2d at 666 (citations omitted) (emphasis 
added); See BNS, 858 F.2d at 463; United States v. National 
Broadcasting Co., 449 F. Supp. 1127, 1143 (C.D. Cal. 1978); 
Gillette, 406 F. Supp. at 716. See also Microsoft, 56 F.3d at 1461 
(whether ``the remedies [obtained in the decree are] so inconsonant 
with the allegations charged as to fall outside of the `reaches of 
the public interest' '') (citations omitted).
---------------------------------------------------------------------------

    The proposed Final Judgment, therefore, should not be reviewed 
under a standard of whether it is certain to eliminate every 
anticompetitive effect of a particular practice or whether it mandates 
certainty of free competition in the future. Court approval of a final 
judgment requires a standard more flexible and less strict than the 
standard required for a finding of liability. ``[A] proposed decree 
must be approved even if it falls short of the remedy the court would 
impose on its own, as long as it falls within the range of 
acceptability or is `within the reaches of public interest.' ''\3\
---------------------------------------------------------------------------

    \3\ United States v. American Tel. and Tel. Co., 552 F. Supp. 
131, 151 (D.D.C. 1982), aff'd. sub nom. Maryland v. United States, 
460 U.S. 1001 (1983), quoting Gillette Co., 406 F. Supp. at 716 
(citations omitted); United States v. Alcan Aluminum, Ltd., 605 F. 
Supp. 619, 622 (W.D. Ky. 1985).
---------------------------------------------------------------------------

    This is strong and effective relief that should fully address the 
competitive harm posed by the proposed transaction.

VIII. Determinative Documents

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the plaintiff in 
formulating the proposed Final Judgment.

    Dated: April 16, 1998.

    Respectifully submitted,

Allen P. Grunes (AG 4775),

U.S. Department of Justice, Antitrust Division, 1401 H. Street, NW.; 
Suite 4000, Washington, D.C. 20530, (202) 307-0001, Attorney for 
Plaintiff the United States.

Exhibit A Definition of HHI and Calculations for Market

    ``HHI'' means the Herfindahl-Hirschman Index, a commonly accepted 
measure of market concentration. It is calculated by squaring the 
market share of each firm competing in the market and then summing the 
resulting numbers. For example, for a market consisting of four firms 
with shares of thirty, thirty, twenty and twenty percent, the HHI is 
2600 30\2\ + 30\2\ + 20\2\ + 20\2\=2600). The HHI takes into account 
the relative size and distribution of the firms in a market and 
approaches zero when a market consists of a large number of firms of 
relatively equal size. The HHI increases both as the number of firms in 
the market decreases and as the disparity in size between those firms 
increases.
    Markets in which the HHI is between 1000 and 1800 points are 
considered to be moderately concentrated, and those in which the HHI is 
in excess of 1800 points are considered to be concentrated. 
Transactions that increase the HHI by more than 100 points in 
concentrated markets presumptively raise antitrust concerns under the 
Merger Guidelines. See Merger Guidelines Sec. 1.51.

Certificate of Service

    I, Allen P. Grunes, hereby certify that on April 16, 1998, I caused 
the foregoing document to be served on defendants by having a copy 
mailed, first-class, postage prepaid, to:

Ira S. Sacks,
Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New 
York, NY 10004, (212) 859-8000.


[[Page 25080]]


    Attorney for defendants Sony Corporation of America and LTM 
Holdings, Inc.

Alan J. Weinschel,
Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY 10153, 
(212) 310-8000.

    Attorney for defendant Cineplex Odeon Corporation.

Kenneth R. Logan,
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, NY 
10017, (212) 455-2000.

    Attorney for defendant J.E. Seagram Corp.
Allen P. Grunes.
[FR Doc. 98-11958 Filed 5-5-98; 8:45 am]
BILLING CODE 4410-11-M