[Federal Register Volume 63, Number 157 (Friday, August 14, 1998)]
[Notices]
[Pages 43726-43729]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-21911]


-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Antitrust Division


Proposed Termination of Judgment

    Notice is hereby given that defendant, National Service Industries, 
Inc. (``NSI''), the successor corporation to National Linen Services 
Corporation (``NLS''), has filed with the United States District Court 
for the Northern District of Georgia, Atlanta Division, a motion to 
terminate the Judgment in United States v. National Linen Service 
Corporation, Civil Action No. 5171, and that the Department of Justice 
(``Department''), in a stipulation also filed with the Court, has 
tentatively consented to termination of the Judgment but has reserved 
the right to withdraw its consent pending receipt of public comments. 
The Complaint in this case (filed April 25, 1955) alleged that NLS had 
monopolized and attempted to monopolize the linen supply business in 
the Southeastern United States, and had also entered into price fixing 
agreements with competing linen suppliers.
    On June 28, 1956, a Judgment was entered against NLS. In 1964, the 
name of National Linen Service Corporation became National Service 
Industries, Inc. The Judgment applies to two subdivisions of NSI's 
textile rental division: National Linen Service and National Healthcare 
Linen Service. The provisions of the Judgment that are still in effect 
prohibit NSI from combining with any linen supply company or laundry to 
fix prices to consumers, allocate territories or customers, or exclude 
any person from engaging in the linen supply business. It further 
enjoins NSI from charging unreasonably low prices for the purpose of 
suppressing competition; offering to supply linens without charge or at 
prices that discriminate between different customers in the same trade 
area, where the effect may be to injure competition (except that NSI is 
permitted to lower its prices or offer rebates to meet competition); 
entering into any requirements contracts; making certain potentially 
defamatory representations to customers about competitors of NSI; 
threatening competitors or customers of competitors; coercing or 
agreeing with suppliers not to sell to competitors of NSI; entering 
into employment contracts with certain non-compete provisions; and from 
acquiring an interest in certain competing firms.
    The Department has filed with the Court a Memorandum setting forth 
the reasons why the Government believes that termination of the 
Judgment would serve the public interest. Copies of NSI's motion 
papers, the Stipulation containing the Government's consent, the 
Government's Memorandum and all further papers filed with the Court in 
connection with this motion will be available for inspection at the 
Legal Procedures Unit of the Antitrust Division, Room 215 North, 
Liberty Place, Washington, DC 20530, and at the Office of the Clerk of 
the United States District Court for the Northern District of Georgia, 
Atlanta Division, 2211 Richard Russell Building, 75 Spring Street, 
S.W., Atlanta, GA 30303-3361. Copies of any of these materials may be 
obtained from the Antitrust Division upon request and payment of the 
copying fee set by Department of Justice regulations.
    Interested persons may submit comments regarding the proposed 
termination of the decree to the Government. Such comments must be 
received by the Division within sixty (60) days and will be filed with 
the Court by the Government. Comments should be addressed to Mary Jean 
Moltenbrey, Chief, Civil Task Force, Antitrust Division, Department of 
Justice, Liberty Place Building, Suite 300, 325 7th Street, N.W., 
Washington, DC 20530.
Rebecca P. Dick,
Director, Civil Non-Merger Enforcement.

Stipulation

    It is stipulated by and between the undersigned parties by their 
respective attorneys that:
    1. Defendant, National Service Industries, Inc. (``NSI''), the 
successor corporation to National Linen Services Corporation, will 
publish at its expense a Notice, in the form attached as Attachment 1, 
in (a) two consecutive issues of Textile Rental and (b) two consecutive 
issues of Industrial Launderer; an Order, in the form attached as 
Attachment 2, directing such publication, may be filed and entered by 
the Court forthwith without further notice to any party or any other 
proceedings.
    2. The United States will publish in the Federal Register a notice 
announcing NSI's motion and the Department's tentative consent to it, 
summarizing the Complaint and Judgment, describing the procedures for 
inspection and obtaining copies of relevant papers, and inviting the 
submission of comments.
    3. An Order in the form attached hereto as Attachment 3 terminating 
the Judgment entered in this cause of action on June 28, 1956, as 
amended, may be filed and entered by the Court, upon the request of any 
party or by the Court sua sponte, at any time more than 70 days after 
the last publication of the notices required by Paragraphs 1 and 2 of 
this stipulation and without further notice to any party or any other 
proceedings, provided that Plaintiff has not withdrawn its tentative 
consent, which it may do at any time before the entry of an Order 
terminating the Consent Decree by filing notice of withdrawal of its 
consent with the Court and serving a copy of said notice upon the other 
party.
    4. In the event plaintiff withdraws its consent, or if the proposed 
Order terminating the decree is not entered pursuant to this 
stipulation, then this stipulation shall be of no effect whatsoever, 
the making of this stipulation shall be without prejudice to any party 
in this or any other proceeding, and the stipulation shall not 
thereafter be used in this or any other action or for any other 
purpose.

    For the Plaintiff, United States of America.
Joel I. Klein,
Assistant Attorney General, Antitrust Division.
A. Douglas Melamed,
Principal Deputy Asst. Attorney General, Antitrust Division.
Rebecca P. Dick,
Director, Civil Non-Merger Enforcement, Antitrust Division.
Mary Jean Moltenbrey,
Chief, Civil Task Force, Antitrust Division.
Susan L. Edelheit,
Asst. Chief, Civil Task Force, Antitrust Division.
Theodore R. Bolema,
Attorney, Antitrust Division, U.S. Department of Justice, Liberty Place 
Building, Suite 300, 325 7th Street, NW., Washington, DC 20530, 
Telephone: (202) 616-5945.

    For the Defendant National Service Industries, Inc.
Eric Queen,
Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, 
NY 10004-1980, Telephone: (212) 859-8077.

Counsel for National Service Industries, Inc.

[[Page 43727]]

Notice of Proposed Termination of the Consent Decree Entered 
Against National Linen Service on June 28, 1956

    Please take notice that National Service Industries, Inc. 
(``NSI''), the successor corporation to National Linen Service 
Corporation, the named defendant in the Consent Decree entered by the 
Court in the above-captioned matter on June 28, 1956, has asked this 
Court to enter a judgment terminating the Consent Decree.
    The United States has filed with the Court a memorandum setting 
forth the reasons why it believes that termination of the Consent 
Decree would serve the public interest. Copies of NSI's motion to 
terminate, the stipulation containing the United States' tentative 
consent, the United States' memorandum, and all further papers filed 
with the court in connection with this motion will be available for 
inspection at the Legal Procedures Unit of the Antitrust Division, Room 
215 North, Liberty Place Building, Washington, DC 20530, and at the 
Office of the Clerk of the United States District Court for the 
Northern District of Georgia, Atlanta Division, 2211 Richard Russell 
Building, 75 Spring Street, S.W., Atlanta, GA 30303-3361. Copies of any 
of these materials may be obtained from the Antitrust Division upon 
request and payment of the copying fee set by Department of Justice 
regulations.
    Interested persons may submit comments regarding the proposed 
termination of the Consent Decree to the United States. Such comments 
must be received by the Antitrust Division within sixty (60) days and 
will be filed with the Court by the United States. Comments should be 
addressed to Mary Jean Moltenbrey, Chief, Civil Task Force, Antitrust 
Division, Department of Justice, 325 7th Street, NW, Suite 300, 
Washington, D.C. 20530.

Order Establishing Notice and Public Comment Procedures for Motion 
To Terminate Consent Decree

    Defendant, National Service Industries, Inc. (``NSI''), the 
successor corporation to National Linen Services Corporation, having 
moved for an order terminating the Consent Decree entered by this court 
in 1956 in this case; Plaintiff, the United States of America, having 
tentatively consented to said motion; Plaintiff having proposed, and 
Defendant have agreed, that notice of the motion and of Plaintiff's 
tentative consent be published at the expense of Defendant, and that 
all interested persons be given an opportunity to submit comments 
concerning the proposed termination of the Consent Decree; and it 
appearing to the Court desirable to invite such comments, and in 
consideration of the stipulation of the parties dated__________, 199__, 
it is:
    Ordered, that the Defendant, NSI, publish at its own expense a 
notice in the form attached hereto as Exhibit ``A'' in two consecutive 
issues of Textile Rental and Industrial Launderer and file proof of 
such publication with the Court; and it is:
    Further Ordered, that copies of all comments received by Plaintiff 
within sixty (60) days after the last publication of a notices required 
by this Order shall be filed with this Court by Plaintiff promptly 
after it receives such comments; and it is:
    Further ordered, that this Court will not rule upon the motion of 
NSI until at least the seventieth (70th) day after the last publication 
of the notice of required by this Order.

    Done, this______ day of__________, 199__.

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

Judgment Terminating Consent Decree

    This cause having come on to be heard on the motion of National 
Service Industries, Inc. (``NSI''), the successor corporation to 
National Linen Service Corporation, for termination of the Judgment 
entered in this case on June 28, 1956, and the United States of America 
having represented to the Court that it has no objection to the motion 
and notice of the motion having been published in the Federal Register, 
Textile Rental and Industrial Launderer and all interested parties 
having been given an opportunity to submit comments concerning the 
proposed termination of the Consent Decree, and the Court having 
considered all papers and comments filed in connection with this 
motion, and the Court finding that is in the public interest to 
terminate the Consent Decree, it is,

    Ordered, Adjudged, and Decreed:
    That said judgment is hereby terminated.

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

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

Memorandum of the United States in Response to the Motion of 
National Service Industries, Inc. for Judgment Terminating Consent 
Decree

    National Service Industries, Inc. (``NSI''), the successor 
corporation to National Linen Service Corporation, has moved this Court 
to terminate the Judgment, entered by this Court on June 28, 1956. In a 
stipulation between NSI and the United States, (1) NIS agreed to 
publish notice of its motion and invitation for comments thereon in 
Textile Rental and Industrial Launderer, (2) the United States agreed 
to publish notice in the Federal Register, and (3) the United States 
tentatively consented to the entry of a judgment terminating the 
Judgment at any time more than 70 days after the last publication of 
such notice.
    This memorandum summarizes the Complaint that initiated this action 
and the resulting Judgment, explains the reason why the United States 
has consented to termination of the Judgement, and discusses the legal 
standards and precedents respecting termination or modification of 
consent decrees. It also discusses the procedures proposed by the 
United States, and agreed to by NSI, for giving public notice of the 
pending motion, obtaining public comment on the motion, and assuring 
the right of the United States to withdraw its consent after any 
comments are received from nonparties.

I

The Complaint and the Judgment

    On April 25, 1955, the United States filed in this Court a civil 
complaint against National Linens Services, Inc. (``NLS''), the leading 
supplier of linen services in the Southeastern United States, charging 
NLS with monopolization and attempted monopolization of the linen 
service business in several Southern states in violation of Section 2 
of the Sherman Act, 15 U.S.C. 2, and also of price fixing in violation 
of Section 1 of the Sherman Act, 15 U.S.C. 1. Specifically, the 
Complaint alleged that the defendant bought out hundreds of 
competitors, suppressed competition by providing service below its 
costs in areas in which the defendant faced competition, gave customers 
rebates and other inducements not to deal with competitors, threatened 
to force competitors out of business, and entered into price fixing 
agreements with several remaining competitors.
    On June 28, 1956, the Judgment was entered against NLS. Several 
provisions relating to notification of third parties of any divestiture 
of certain subsidiaries by NSI have long since expired. The provisions 
still in effect prohibit NSI from engaging in certain conduct in the 
relevant geographic market. Specifically, the Judgment enjoins the 
defendant from combining with any linen supply company or laundry to 
fix prices to consumers, allocate territories or customers, or exclude 
any person from engaging in the linen supply business. The Judgment 
also enjoins the defendant from charging unreasonably

[[Page 43728]]

low prices for the purpose of suppressing competition, and from 
offering to supply linens without charge or at prices that discriminate 
between different customers in the same trade area, where the effect 
may be to injure competition (except that NSI is permitted to lower its 
prices or offer rebates to meet competition). The Judgment further 
enjoins NSI from entering into any requirements contracts, from making 
certain potentially defamatory representations to customers about 
competitors of NSI, from threatening competitors or customers of 
competitors, and from coercing or agreeing with suppliers not to sell 
to competitors of NSI. Finally, the Judgment also enjoins NSI from 
entering into employment contracts with certain non-compete provisions 
and from acquiring an interest in certain competing firms.
    In 1964, the name of National Linen Service Corporation became 
National Service Industries, Inc. The Judgment applies to two 
subdivisions of NSI's textile rental division: National Linen Service 
and National Healthcare Linen Service.

II

Legal Standards Applicable to the Termination of an Antitrust Decree 
With the Consent of the Government

    This Court has jurisdiction to modify or terminate the Judgment 
pursuant to Section XIX of the Judgment, Rule 60(b)(5) of the Federal 
Rules of Civil Procedure, Fed. R. Civ. P.60(b)(5), and ``principles 
inherent in the jurisdiction of the chancery.'' United States v. Swift 
& Co., 286 U.S. 106, 114 (1932).
    Where, as here, the United States tentatively has consented to a 
proposed termination or modification of a judgment in a government 
antitrust case, the issue before the Court is whether termination or 
modification is in the public interest. See, e.g., United States v. 
Western Elec. Co., 993 F.2d 1572, 1576 (D.C. Cir. 1993); United States 
v. Western Elec. Co., 900 F.2d 283, 305 (D.C. Cir. 1990), cert. denied, 
111 S. Ct. 283 (1990); United States v. Loew's, Inc., 783 F. Supp. 211 
(S.D.N.Y. 1992); United States v. Columbia Artists Management, Inc., 
662 F. Supp. 865, 869-70 (S.D.N.Y. 1987), citing United States v. Swift 
& Co., 1975-1 Trade Cas. (CCH) para. 60,201, at 65,702-03, 65,706 (N.D. 
Ill. 1975); cf. United States v. American Cyanamid Co., 556 F. Supp. 
361, 367 (S.D.N.Y. 1983), rev'd. on other grounds, 719 F.2d 558 (2d 
Cir. 1983), cert. denied, 465 U.S. 1101 (1984). This is the same 
standard that a District Court applies in reviewing an initial consent 
judgment in a government antitrust case. See 15 U.S.C. 16(e); Western 
Elec. Co., 900 F.2d at 295; United States v. AT&T, 552 F. Supp. 131, 
147 n.67 (D.D.C. 1982), aff'd sub nom, Maryland v. United States, 406 
U.S. 1001 (1983); United States v. Radio Corp. of Am., 46 F. Supp. 654, 
656 (D. Del. 1942), appeal dismissed, 318 U.S. 796 (1943).
    The Supreme Court has held that where the words ``public interest'' 
appear in federal statutes designed to regulate public sector behavior, 
they ``take meaning from the purposes of the regulatory legislation.'' 
NAACP v. FPC, 425 U.S. 662, 669 (1976); see also System Fed'n No. 91 v. 
Wright, 364 U.S. 642, 651 (1961). The purpose of the antitrust laws, 
the ``regulatory legislation'' involved here, is, of course, to protect 
competition. E.g., United States v. Penn-Olin Chem. Co., 378 U.S. 158, 
170 (1964) (antitrust laws reflect ``a national policy enunciated by 
the Congress to preserve and promote a free competitive economy.'') 
Thus, the relevant question before the Court at this time is whether 
termination of the Judgment would serve the public interest in ``free 
and unfettered competition as the rule of trade.'' Northern Pac. Ry. 
Co. v. United States, 356 U.S. 1, 4 (1958); see also Western Elec. Co., 
900 F.2d at 308; United States v. American Cyanamid, 719 F.2d 558, 565 
(2d Cir. 1983), cert. denied, 405 U.S. 1101 (1984); United States v. 
Loew's, Inc., 783 F. Supp. at 213.
    It has long been recognized that the government has broad 
discretion in settling antitrust litigation on terms that will best 
serve the public interest in competition. See Sam Fox Pub'g Co. v. 
United States, 366 U.S. 683, 689 (1961). The court's role in 
determining whether the initial entry of a consent decree is in the 
public interest, absent a showing of abuse of discretion or a failure 
to discharge its duty on the party of the government, is to determine 
whether the government's explanation is reasoned and not to substitute 
its own opinion, United States v. Mid-America Dairymen, Inc., 1977-1 
Trade Cas. (CCH) para. 61,508, at 71,980 (W.D. Mo. 1977); see also 
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981), 
cert. denied, 454 U.S. 1083 (1981), quoting United States v. National 
Broad. Co., 449 F. Supp. 1127, 1143 (C.D. Cal. 1978). The government 
may reach any of a range of settlements that are consistent with the 
public interest. See, e.g., Western Elec., 900 F.2d at 307-09; Bechtel, 
648 F.2d at 665-66; United States v. Gillette Co., 406 F. Supp. 713, 
716 (D. Mass. 1975). The court's role is to conduct a limited review to 
``insur[e] that the government has not breached its duty to the public 
in consenting to the decree,'' Bechtel, 648 F.2d at 666, through 
malfeasance or by acting irrationally.
    The standard is the same when the government consents to the 
termination or modification of an antitrust judgment. Swift & Co., 
1975-1 Trade Cas. (CCH) para. 60,201, at 65,702-03. Where the 
Department of Justice has offered a reasoned and reasonable explanation 
of why the termination or modification vindicates the public interest 
in free and unfettered competition, and there is no showing of abuse of 
discretion or corruption affecting the government's recommendation, the 
Court should accept the Department's conclusion concerning the 
appropriateness of termination or modification.

III

Reasons Why the United States Tentatively Consents to Termination of a 
Judgment

    The nature of competition for linen services has changed 
dramatically from what it was in 1956 and will undoubtedly continue to 
change in the future. Many new linen suppliers and uniform companies 
have entered the markets in which the defendant operates and not 
compete successfully against NIS. The Judgment has accomplished its 
remedial objective of permitting competition to develop in these 
markets, so that the alleged predatory practices that gave rise to the 
Complaint in 1955 are unlikely to be effective today. The remaining 
injunctive provisions do not proscribe any conduct that is not already 
proscribed by the Sherman Act and case law, and thus no longer serve 
any useful purpose. Indeed, the remaining injunctions may deter 
vigorous competition by NSI that could only benefit consumers. For all 
of the foregoing reasons, the United States concludes that termination 
of the Judgment is in the public interest.

IV

Proposed Procedures for Giving Public Notice of the Pending Motion and 
Inviting Comment Thereon

    The opinion in Swift & Co., 1975-1 Trade Cas. (CCH) para. 60,201, 
at 65,703, articulates a court's responsibility to implement procedures 
that will give nonparties notice of, and an opportunity to comment 
upon, antitrust judgment modifications proposed by consent of the 
parties:

    Cognizant * * * of the public interest in competitive economic 
activity, established

[[Page 43729]]

chancery powers and duties, and the occasional fallibility of the 
Government, the court is, at the very least, obligated to ensure 
that the public, and all interested parties, have received adequate 
notice of the proposed modification. * * * (Footnote omitted.)

    The Department of Justice believes that giving the public notice of 
the filing of a motion to terminate the Judgment in a government 
antitrust case, and an opportunity to comment upon that motion, is 
generally necessary to ensure that both the Department and the Court 
properly assess the public interest. Accordingly, over the years, the 
Department has adopted and refined a policy of consenting to motions to 
modify or terminate antitrust judgments only on condition that an 
effort be undertaken to notify potentially interested persons of the 
pendency of the motion. In the case at bar, the United States has 
proposed, and NSI has agreed to, the following:
    1. The Department will publish in the Federal Register a notice 
announcing NSI's motion and the Department's tentative consent to it, 
summarizing the Complaint and Judgment, describing the procedures for 
inspecting and obtaining copies of relevant papers, and inviting the 
submission of comments.
    2. NSI will publish notice of its motion in two consecutive issues 
of Textile Rental and two consecutive issues of Industrial Launderer. 
These periodicals are trade journals likely to be read by persons 
interested in the markets affected by the Judgment. The published 
notices will provide for public comment during the following 60 days.
    3. The Department of Justice will file with the Court copies of all 
comments that it receives.
    4. The parties will stipulate that the Court will not rule upon the 
motion for at least 70 days after the last publication by defendant of 
the notices described above (and thus for at least 10 days after the 
close of the period for public comments), and the Department will 
reserve the right to respond to comments or withdraw its consent to the 
motion at any time until an order modifying or terminating the Judgment 
is entered.
    This procedure is designed to provide all potentially interested 
persons with notice that a motion to terminate the Judgment is pending 
and an adequate opportunity to comment thereon. NSI has agreed to 
follow this procedure, including publication of appropriate notices. 
The parties are therefore submitting to the Court a separate proposed 
order establishing this procedural approach, asking that it be entered 
forthwith.

V

Conclusion

    For the foregoing reasons, the United States (1) asks the Court to 
enter the order submitted herewith directing publication of notice of 
NSI motion, and (2) tentatively consents to the termination of the 
Judgment herein.

    Dated:
Theodore R. Bolema,
Attorney, Antitrust Division, U.S. Department of Justice, Liberty Place 
Building, Room 300, 325 7th Street, NW., Washington, DC 20530, (202) 
616-5945.

Attorney for the Plaintiff, United States of America

[FR Doc. 98-21911 Filed 8-13-98; 8:45 am]
BILLING CODE 4410-11-M