[Federal Register Volume 64, Number 58 (Friday, March 26, 1999)]
[Notices]
[Pages 14758-14769]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-7288]
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DEPARTMENT OF JUSTICE
Antitrust Division
Proposed Final Judgment and Competitive Impact Statement; United
States v. Signature Flight Support Corp. et al.
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Hold Separate Stipulation and Order, Stipulation and Order, and
Competitive Impact Statement have been filed with the United States
District Court for the District of Columbia in United States v.
Signature Flight Support Corporation, et al., Civil Action No. 99-0537.
On March 1, 1999, the United States filed a Complaint alleging that the
proposed acquisition by Signature Flight Support Corporation
(``Signature'') of AMR Combs, Inc. (``Combs'') would violate section 7
of the Clayton Act, 15 U.S.C. 18. Signature and Combs own and operate
competing fixed base operators (``FBOs'') that provide flight support
services at various airports in the United States. The proposal Final
Judgment orders Signature to sell actual or planned FBO businesses at
Palm Springs Regional Airport, Bradley International Airport, and
Denver Centennial Airport, along with certain tangible and intangible
assets. Copies of the Complaint, Hold Separate Stipulation and Order,
Stipulation and Order, 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 20530 and at the office of the Clerk of the United
States District Court for the District of Columbia, 333 Constitution
Avenue, NW., Washington, DC 20001. Copies of any of these materials may
be obtained upon request and payment of a copying fee.
Public comment is invited within 60-days 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).
Constance K. Robinson,
Director of Operations, Antitrust Division.
Hold Separate Stipulation and Order
It is hereby STIPULATED by and between the undersigned parties,
subject to approval and entry by the Court, That:
I. Definitions
As used in this Hold Separate Stipulation and Order:
A. ``Signature'' means Signature Flight Support Corporation, a
Delaware corporation with a principal place of business in Orlando,
Florida, and its successors and assigns, its parents, subsidiaries,
affiliates, and directors, officers, managers, agents, and employees
acting for or on behalf of any of them.
B. ``Combs'' means AMR Combs, Inc., a Delaware corporation
headquartered in Dallas, Texas, its successors, and assigns,
subsidiaries, affiliates, and directors, officers, managers, agents,
and employees acting for or on behalf of any of them. Combs is a wholly
owned subsidiary of AMR Corporation, A Delaware corporation that has
its principal place of business in Fort Worth, Texas, and is a party to
the agreement to sell Combs to Signature.
C. The ``Assets to be Divested'' means all rights, titles and
interests, including all fee, leasehold and real property rights, in
the PSP Assets, the BDI, Assets and the APA Assets;
1. The ``PSP Assets'' means all tangible and intangible assets
controlled by the existing Signature FBO at Palm Springs Regional
Airport, as described in Appendix A to the Final Judgment.
2. The ``BDL Assets'' means all tangible and intangible assets
controlled by the existing Combs FBO at Bradley International Airport,
as described in Appendix B to the Final Judgment, but does not include
the assets related to Combs' commercial jet fueling business, such as
the bulk storage facility and fuel farm.
3. The ``APA Assets'' means all tangible and intangible assets
controlled by the exiting Combs FBO at Centennial Airport, as described
in Appendix C to the Final Judgment.
D. ``APA Airport'' means Centennial Airport, located near Denver,
Colorado.
E. ``BDL Airport'' means Bradley International Airport, located
near Hartford, Connecticut.
F. ``PSP Airport'' means Palm Springs Regional Airport, located two
miles east of Palm Springs, California.
G. ``FBO'' means any or all services related to providing fixed
based operator services to general aviation customers, including, but
not limited to, selling fuel, leasing hangar, ramp, and office space,
providing flight support services, performing maintenance, providing
access to terminal facilities, or arranging for ancillary services such
as rental cars or hotels.
H. ``FBO Facility'' means any and all tangible and intangible
assets required to provide FBO services, including but not limited to
office terminal space, hangars, ramps, a general aviation fuel farm for
Jet A Fuel and aviation gas, and related fueling and maintenance
equipment.
I. ``SunBorne'' means SunBorne Development Corporation, a real
estate development company that conducts business in the Denver,
Colorado area.
J. ``SunBorne FBO Facility'' means the FBO facility that is to be
constructed at APA Airport by SunBorne Development Corporation. The
SunBorne FBO facility is to consist of (1) an office/terminal facility
to occupy the first floor (approximately 15,000 square feet) of a
three-story building to be constructed by SunBorne; (2) one 25,000
square foot hanger to be constructed by SunBorne; (3) a general
aviation fuel farm with storage for 40,000 gallons of Jet A fuel and
20,000 gallons of aviation gas to be constructed by Signature; and (4)
a 10.8 acre ramp.
K. ``SunBorne operator for the SunBorne FBO Facility'' means a
person who, with the approval of SunBorne and of the Arapahoe County
Public Airport Authority, will operate the SunBorne FBO Facility in
Signature's stead.
II. Objectives
The Final Judgment filed in this case is meant to ensure
Signature's prompt divestiture and sale of the BDL Assets, the PSP
Assets, and if necessary, the APA Assets, for the purpose of
maintaining viable competitors in the provision of FBO services at BDL
Airport, PSP Airport, and APA Airport. These actions will remedy the
effects that the United States alleges would otherwise result from
Signature's proposed acquisition of Combs.
This Hold Separate Stipulation and Order has two primary
objectives. With respect to the BDL Assets and the PSP Assets, it
ensures that, prior to such divestitures, each of the assets being
divested be maintained as independent economically viable, ongoing
business concerns, and that competition among FBO facilities at BDL
Airport and at PSP Airport is maintained during the pendency of the
divestitures. With
[[Page 14759]]
respect to the APA Assets, this Order permits Signature to conduct
business at APA Airport using the APA Assets, pending competition of a
new FBO facility at APA Airport (the SunBorne FBO Facility) that will
either be operated by Signature or by a substitute operator. If
Signature does not produce a substitute operator by a date set by the
Final Judgment, Signature must divest the APA Assets by a later date
set by the Final Judgment. This Order ensures that, prior to such
divestiture, the APA Assets be maintained and operated in a fashion
that preserves or improves their existing physical condition should
Signature be required to divest.
III. Hold Separate Provisions for the BDL Assets and the PSP Assets
Unit the divestiture required by the Final Judgment has been
accomplished;
A. Signature shall preserve, maintain, and operate the BDL Assets
and the PSP Assets as independent competitors with management, sales,
services, and operations held entirely separate, distinct and apart
from those of Signature. Signature shall not coordinate the marketing
or sale of services from the BDL Assets' and the PSP Assets' businesses
with the FBO businesses at BDL Airport and PSP Airport that Signature
will own as a result of the acquisition of Combs. Within twenty (20)
calendar days of the filing of the Complaint in this matter. Signature
will inform plaintiff of the steps taken to comply with this provision.
B. Signature shall take all steps necessary to ensure that the PSP
Assets and the BDL Assets will be maintained and operated as
independent, ongoing, economically viable and active competitors in the
sale of FBO services at PSP Airport and at BDL Airport: that the
management governing the PSP Assets and the BDL Assets will not be
influenced by Signature; and that the books, records, competitively
sensitive sales, marketing and pricing information, and decision-making
associated with the PSP Assets and the BDL Assets will be kept separate
and apart from the operations of Signature. Signature's influence over
the PSP Assets and the BDL Assets shall be limited to that necessary to
carry out Signature's obligations under this Order and the Final
Judgment. Signature may receive historical aggregate financial
information (excluding pricing information) relating to the PSP Assets
and the BDL Assets to the extent necessary to allow Signature to
prepare financial reports, tax returns, personnel reports, and other
necessary or legally required reports, and Signature shall use such
information only for such purposes.
C. Signature shall use all reasonable efforts to maintain service
levels at the FBO operations that represent the PSP Assets and the BDL
Assets, and shall maintain, promotional advertising sales, technical
assistance, marketing and merchandising support for the PSP Assets and
the BDL Assets at current or previously approved levels, whichever are
higher.
D. Signature shall provide and maintain sufficient working capital
to maintain the PSP Assets and the BDL Assets as economically viable,
ongoing businesses.
E. Signature shall provide and maintain sufficient lines and
sources of credit to maintain the PSP Assets and the BDL Assets as
economically viable, ongoing businesses.
F. Signature shall take all steps necessary to ensure that the PSP
Assets and the BDL Assets are fully maintained and are in operable
condition at no lower than current service capabilities, and shall
maintain and adhere to normal repair and maintenance schedules for the
PSP Assets and the BDL Assets.
G. Signature shall not, except as part of a divestiture approved by
plaintiff, remove, sell, lease, assign, transfer, pledge or otherwise
dispose of or pledge as collateral for loans, any PSP Assets or any BDL
Assets.
H. Signature shall maintain, in accordance with sound accounting
principles, separate, true, accurate and complete financial ledgers,
books and records that report, on a periodic basis, such as the last
business day of every month, consistent with past practices, the
assets, liabilities, expenses, revenues, income, profit and loss of the
PSP Assets and the BDL Assets.
I. Until such time as the PSP Assets and the BDL Assets are
divested, except in the ordinary course of business or as is otherwise
consistent with this Order. Signature shall not hire, transfer or
terminate, or alter, to the detriment of any employee, any current
employment or salary agreements for any employees who on the date of
the signing of this Agreement work on the sites where the PSP Assets or
the BDL Assets are located.
V. Provisions for the APA Assets
Until the divestiture required by the Final Judgment has been
accomplished:
A. Signature shall use all reasonable efforts to maintain service
levels at the FBO operations that constitute the APA Assets, and shall
maintain, promotional, advertising sales, technical assistance,
marketing and merchandising support for the APA Assets at current or
previously approved levels, whichever are higher.
B. Signature shall provide and maintain sufficient working capital
to maintain the APA Assets as an economically viable, ongoing business.
C. Signature shall provide and maintain sufficient lines and
sources of credit to maintain the APA Assets as an economically viable,
ongoing business.
D. Signature shall take all steps necessary to ensure that the APA
Assets are fully maintained and in operable condition at no lower than
its current service capabilities, and shall maintain and adhere to
normal repair and maintenance schedules for the APA Assets.
E. Signature shall not, except as part of a divestiture approved by
plaintiff, remove, sell, lease, assign, transfer, pledge or otherwise
dispose of or pledge as collateral for loans, any APA Assets.
F. Until such time as the APA Assets are divested, except in the
ordinary course of business or as is otherwise consistent with this
Order, Signature shall not hire, transfer or terminate, or alter, to
the detriment of any employee, any current employment or salary
agreements for any employees, who on the date of the signing of this
Agreement work on the site where the APA Assets are located.
G. Signature shall maintain, in accordance with sound accounting
principles, separate, true, accurate and complete financial ledgers,
books and records that report on a periodic basis, such as the last
business day of every month, consistent with past practices, the
assets, liabilities, expenses, revenues, income, profit and loss of the
APA Assets.
VI. Other Provisions
Until the divestiture required by the Final Judgment has been
accomplished:
A. Signature shall take no action that would interfere with the
ability of any trustee(s) appointed pursuant to the Final Judgment to
complete the divestiture pursuant to the Final Judgment to suitable
purchasers.
B. This Hold Separate Stipulation and Order shall remain in effect
until the divestitures required by the Final Judgment are complete, or
until further Order of the Court.
Respectfully submitted,
[[Page 14760]]
For Plaintiff United States of America.
Nina B. Hale,
Salvatore Massa,
Attorneys, U.S. Department of Justice, Antitrust Division,
Transportation, Energy, and Agriculture Section, 325 Seventh Street,
NW., Suite 500, Washington, DC 20530, (202) 307-6351.
For Defendant Signature Flight Support Corporation.
Bruce Van Allen,
President and Chief Operating Officer.
For Defendants AMR Combs, Inc. and AMR Corporation.
Eugene A. Burrus,
Esquire, AMR Corporation, P.O. Box 619616, MD 5675, Dallas Forth Worth
Airport, TX 75261, (817) 967-1252.
Dated: March 2, 1999.
So Ordered:
Thomas F. Hogan for Judge Royce C. Lamberth,
United States District Judge.
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 United States District Court of the District of Columbia;
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. Sec. 16), 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 Final
Judgment by serving notice thereof on defendants and by filing that
notice with the Court;
3. Defendant Signature (as defined in paragraph II.A 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, or until expiration of time for all appeals of any
court ruling declining entry of the proposed Final Judgment, and shall,
from the date of the signing of this Stipulation, 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; provided,
however, that Signature shall not be obligated to comply with Sections
V through VIII of the proposed Final Judgment unless and until the
closing of any transaction in which Signature directly or indirectly
acquires all or any part of the assets or capital stock of Combs (as
defined in paragraph II.B of the proposed Final Judgment attached
hereto);
4. Defendants shall not consummate the transaction before the Court
has signed this Stipulation and Order as well as the Hold Separate
Stipulation and Order;
5. In the event plaintiff withdraws its consent, as provided in
paragraph 2 above, or in the event 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, then the
parties are released from all further obligations under this
Stipulation, and the making of this Stipulation shall be without
prejudice to any party in this or any other proceeding;
6. The defendant Signature represents that the divestitures ordered
in the proposed Final Judgment can and will be made, and that the
defendant Signature will later raise no claims of hardship or
difficulty as grounds for asking the Court to modify any of the
divestiture provisions contained therein.
Dated: March 1, 1999.
For Plaintiff United States of America:
Nina B. Hale,
Salvatore Massa,
Attorneys, U.S. Department of Justice, Antitrust Division,
Transportation, Energy, and Agriculture Section, 325 Seventh Street,
N.W., Suite 500, Washington, D.C. 20530, (202) 307-6351.
For Defendant Signature Flight Support Corporation.
William Norfolk, Esq.,
Sullivan & Cromwell, 125 Broad Street, New Yor, New York 10004, 212-
558-3512.
For Defendants AMR Combs, Inc. and AMR Corporation
Eugene A. Burrus, Esq.,
AMR Corporation, P.O. Box 619616, MD 5675, Dallas Fort Worth Airport,
TX 75261, (817) 967-1252.
Final Judgment (Proposed)
Whereas, plaintiff, the United States of America (``United
States''), filed its complaint in this action on March 1, 1999, and
plaintiff and defendants, Signature Flight Support Corporation
(``Signature''), AMR Combs, Inc. (``Combs'') and AMR Corporation, 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, the essence of this Final Judgment is prompt and
certain divestiture of certain fixed based operator facilities to
assure that competition is not substantially lessened;
And Whereas, plaintiff requires defendant Signature to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
And Whereas, defendants have represented to plaintiff that the
divestitures ordered herein can and will be made, and that defendants
will later raise no claims of hardship or difficulty as grounds for
asking the Court to modify any of the divestitures or provisions
contained below;
Now, Therefore, before 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 the subject matter of this action
and over each of the parties in this action. The Complaint states a
claim upon which relief may be granted against the defendants, as
defined below, under Section 7 of the Clayton Act, as amended (15
U.S.C. Sec. 18).
II. Definitions
As used in this Final Judgment:
A. ``Signature'' means Signature Flight Support Corporation, a
Delaware corporation with a principal place of business in Orlando,
Florida, and its successors and assigns, its parents, subsidiaries,
affiliates, and directors, officers, managers, agents, and employees
acting for or on behalf of any of them.
B. ``Combs'' means AMR Combs Inc., a Delaware corporation
headquartered in Dallas, Texas, as well as its successors, assigns,
subsidiaries, affiliates, and directors, officers, managers, agents,
and employees acting for or on behalf of any of them. Combs is a wholly
owned subsidiary of AMR Corporation, a Delaware corporation with its
principal place of business in Fort Worth, Texas, and is a party to the
agreement to sell Combs to Signature.
[[Page 14761]]
C. ``APA Airport'' means Centennial Airport, located near Denver,
Colorado.
D. ``BDL Airport'' means Bradley International Airport, located
near Hartford, Connecticut.
E. ``PSP Airport'' means Palm Springs Regional Airport, located two
miles east of Palm Springs, California.
F. The ``Assets to be Divested'' means all rights, titles and
interests, including all fee, leasehold and real property rights, in
the PSP Assets, the BDL Assets, and the APA Assets, as defined below:
1. The ``PSP Assets'' means all tangible and intangible assets
controlled by the existing Signature FBO at Palm Springs Airport, as
described in Appendix A.
2. The ``BDL Assets'' means all tangible and intangible assets
controlled by the existing Combs FBO at Bradley International Airport,
as described in Appendix B, but does not include the assets related to
Combs' commercial jet fueling business, such as the bulk fuel storage
facility and the fuel farm.
3. The ``APA Assets'' means all tangible and intangible assets
controlled by the existing Combs FBO at Denver Centennial Airport, as
described in Appendix C.
G. ``FBO'' means any or all services related to providing fixed
based operator services to general aviation customers, including, but
not limited to, selling fuel, leasing hangar, ramp, and office space,
providing flight support services, performing maintenance, providing
access to terminal facilities, or arranging for ancillary services such
as rental cars or hotels.
H. ``FBO Facility'' means any and all tangible and intangible
assets required to provide FBO services, including but not limited to
office/terminal space, hangars, ramps, a general aviation fuel farm for
Jet A Fuel and aviation gas, and related fueling and maintenance
equipment.
I. ``SunBorne'' means SunBorne Development Corporation, a real
estate development company doing business in the Denver, Colorado area.
J. ``SunBorne FBO Facility'' means the FBO facility that is to be
constructed at APA Airport by SunBorne. The SunBorne FBO facility is to
consist of (1) an office/terminal facility to occupy the first floor
(approximately 15,000 square feet) of a three-floor building to be
constructed by SunBorne; (2) one 25,000 square foot hangar to be
constructed by SunBorne; (3) a general aviation fuel farm with storage
for 40,000 gallons of Jet A fuel and 20,000 gallons of aviation gas to
be constructed by Signature; and (4) a 10.8 acre ramp.
K. ``Substitute operator for the SunBorne FBO Facility'' means a
person who, with the approval of SunBorne and of the Arapahoe County
Public Airport Authority, will operate the SunBorne FBO Facility in
Signature's stead.
III. Applicability
A. The provisions of this Final Judgment apply to defendants, their
successors and assigns, their subsidiaries, affiliates, 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. Signature shall require, as a condition of the sales or other
disposition(s) of all or substantially all of the Assets to be
Divested, that the acquiring party or parties agree to be bound by the
provisions of this Final Judgment.
IV. The SunBorne FBO Facility
A. Signature shall have until September 1, 1999, to find a
substitute operator for the SunBorne FBO Facility that is acceptable to
the United States in its sole discretion. The United States, in its
sole discretion, may extend the time period for finding a substitute
operator by an additional period of time not to exceed thirty (30)
calendar days.
V. Divestiture of the Assets
A. Signature is hereby ordered and directed in accordance with the
terms of this Final Judgment, within one hundred eighty (180) calendar
days after the filing of the Complaint in this matter, or five (5) days
after notice of entry of this Final Judgment by the Court, whichever is
later, to divest the PSP Assets and the BDL Assets as ongoing
businesses to purchasers acceptable to the United States in its sole
discretion. With respect to any of the PSP Assets and the BDL Assets to
be divested in which Signature holds a leasehold interest, Signature
must transfer the entire leasehold including all renewal or option
rights.
B. In addition to divesting the PSP Assets and the BDL Assets,
Signature shall provide to the purchaser of the BDL Assets (which
includes all successors, assigns, parents, subsidiaries, affiliates,
and directors, officers, managers, agents, and employees acting for or
on behalf of the purchaser) the option of access to the existing Combs
jet fuel bulk storage facility and fuel farm for two years. In the
event that the purchaser exercises this option, such access shall be
limited to the storage and delivery of the purchaser's owned Jet A fuel
for use at the BDL Assets. To the extent Signature charges the
purchaser of the BDL Assets for access, the service charge shall be
commercially reasonable and shall be no greater than the fee Signature
charges any other customer for the same types of services associated
with such access.
C. In the event that Signature does not find a substitute operator
for the SunBorne FBO Facility by the date set forth in Paragraph A of
Section IV. Signature is hereby ordered and directed in accordance with
the terms of this Final Judgment, by June 1, 2000, or within 10 (ten)
calendar days after receipt of a certificate of occupancy by SunBorne
Development Corporation for the SunBorne FBO facility, whichever is
sooner, to divest the APA Assets as an ongoing business to a purchaser
acceptable to the United States in its sole discretion. With respect to
any of the APA Assets in which Signature holds a leasehold interest,
Signature must transfer the entire leasehold including all renewal or
option rights.
D. Signature shall use its best efforts to facilitate the
completion of the SunBorne FBO Facility.
E. Signature shall not take any action, direct or indirect, that
will impede in any way the completion of the SunBorne FBO Facility.
F. The plaintiff may, in its sole discretion, relieve Signature of
the obligation to divest the APA Assets based on the plaintiff's
assessment of changed circumstances relating to the completion of the
SunBorne FBO Facility.
G. Signature shall use its best efforts to accomplish each of the
divestitures as expeditiously and timely as possible. The United
States, in its sole discretion, may extend the time period for any of
the divestitures in order to accommodate mandatory municipal, county,
state or federal review.
H. In accomplishing each of the divestitures order by this Final
Judgment. Signature promptly shall make known, by usual and customary
means, the availability of each of Assets to be Divested described in
the Final Judgment. Signature shall inform any person making any
inquiry regarding a possible purchase that the sales are being made
pursuant to this Final Judgment and provide such person with a copy of
this Final Judgment. Signature shall also offer to furnish to all
prospective purchasers, subject to customary confidentiality
assurances, all information regarding the Assets to be Divested
customarily provided in a due diligence process, except such
information subject to attorney-client
[[Page 14762]]
privilege or attorney work-product privilege. Signature shall make
available such information to the plaintiff at the same time that such
information is made available to any other person.
I. Signature shall not interfere with any negotiations by any
purchaser to employ any employee who works at any of the Assets to be
Divested, or whose principal responsibility is operating or managing
any of the Assets to be Divested.
J. Signature shall permit prospective purchasers of each of the
Assets to be Divested to have reasonable access to personnel and to
make such inspection of each of the Assets to be Divested; access to
any and all environmental, zoning, and other permit documents and
information; and access to any and all financial, operational, or other
documents and information customarily provided as part of a due
diligence process.
K. Signature shall not take any action, direct or indirect, that
will impede in any way the operation or value of the Assets to be
Divested.
L. Unless the United States otherwise consents in writing, the
divestitures pursuant to Section V, or by a trustee appointed pursuant
to Section VI of this Final Judgment, shall include all of the Assets
to be Divested, operated in place pursuant to the Hold Separate
Stipulation and Order, and be accomplished by selling or otherwise
conveying all of the Assets to be Divested to purchasers in such a way
as to satisfy the United States, in its sole discretion, that each of
the Assets to be Divested can and will be used by the purchasers as
part of viable, ongoing businesses engaged in providing FBO services at
PSP Airport, at BDL Airport, and at APA Airport. Each of the
divestitures, whether pursuant to Section V or Section VI of this Final
Judgment, shall be made to purchasers for whom it is demonstrated to
the United States' sole satisfaction that: (1) The purchasers have the
capability and intent of competing effectively in the provision of FBO
services at PSP Airport, at BDL Airport, and at APA Airport; (2) the
purchasers have or soon will have the managerial, operational, and
financial capability to compete effectively in the provision of FBO
services at PSP Airport, BDL Airport, and APA Airport; and (3) none of
the terms of any agreement between the purchasers and Signature gives
Signature the ability unreasonable to raise the purchasers' costs, to
lower the purchasers' efficiency, or otherwise to interfere in the
ability of the purchasers to complete effectively.
VI. Appointment of Trustee
A. In the event that Signature has not divested all of the Assets
to be Divested within the times specified in Section V of this Final
Judgment, the Court shall appoint, on application of the United States,
a trustee selected by the United States to effect the divestitures of
those Assets to be Divested that have not been timely divested.
B. After the appointment of a trustee becomes effective, only that
trustee shall have the right to sell the particular Assets to be
Divested (i.e., APA Assets, PSP Assets, and/or BDL Assets). The trustee
shall have the power and authority to accomplish the divestiture(s) at
the best price then obtainable upon a reasonable effort by the trustee,
subject to the provisions of Sections V and VII of this Final Judgment,
and shall have such other powers as the Court shall deem appropriate.
Subject to Section VI(C) of this Final Judgment, the trustee shall have
the power and authority to hire at the cost and expense of Signature
any investment bankers, attorneys, or other agents reasonably necessary
in the judgment of the trustee to assist in the particular
divestiture(s), and such professionals and agents shall be accountable
solely to the trustee. The trustee shall have the power and authority
to accomplish the particular divestiture(s) at the earliest possible
time to purchaser(s) acceptable to the United States in its sole
discretion and shall have such other powers at this Court shall deem
appropriate. Signature shall not object to a sale by trustee on any
grounds other than the trustee's malfeasance. Any such objections by
Signature must be conveyed in writing to plaintiff and the trustee
within ten (10) days after the trustee has provided the notice required
under Section VII of this Final Judgment.
C. A trustee shall serve at the cost and expense of Signature, 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 Signature and the trust shall then be
terminated. The compensation of the trustee and of professionals and
agents retained by the trustee shall be reasonable in light of the
value of each of the divested businesses and based on a fee arrangement
providing the trustee with an incentive based on the price and terms of
the particular divestiture(s) and the speed with which it is
accomplished.
D. Signature shall use its best efforts to assist the trustee in
accomplishing the required divestiture(s), including its best efforts
to effect all necessary 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 Assets to be Divested, and Signature
shall develop financial or other information relevant to the Assets to
be Divested customarily provided in a due diligence process as the
trustee may reasonably request, subject to customary confidentiality
assurances. Signature shall permit prospective acquirers of each of the
Assets to be Divested 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 that trustee's efforts to
accomplish the particular divestiture(s) ordered under 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 any of the Assets to
be Divested, and shall describe in detail each contact with any such
person during this period. The trustee shall maintain full records of
all efforts made to divest the particular Assets to be Divested.
F. If the trustee has not accomplished such divestiture(s) 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 divestiture(s), (2) the reasons, in
the trustee's judgment, why the required divestiture(s) 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
reports to the parties, who shall each have the right to be heard and
[[Page 14763]]
to make additional recommendations consistent with the purpose of the
trust. The Court shall enter thereafter 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 for a period requested by the United States.
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, the proposed divestitures
pursuant to Sections V or VI of this Final Judgment, Signature or a
trustee, whichever is then responsible for effecting the particular
divestiture(s), shall notify plaintiff of the proposed divestiture(s).
If a trustee is responsible, the trustee shall similarly notify
Signature. 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
particular Assets to be Divested that is the subject of the definitive
agreement, together with full details of same. Within fifteen (15)
calendar days of receipt by plaintiff of such notice, the United
States, in its sole discretion, may request from Signature, the
proposed purchaser(s), or any other third party additional information
concerning the proposed divestiture(s) and the proposed purchaser(s).
Signature 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 the plaintiff has been provided the additional
information requested from Signature, the proposed purchaser(s), or any
third party, whichever is later, the United States shall provide
written notice to Signature and the trustee, if there is one, stating
whether or not it objects to the proposed divestiture(s). If the United
States provides written notice to Signature and the trustee that it
does not object, then the divestiture(s) may be consummated, subject
only to Signature's limited right to object to the sales under Section
VI(B) of this Final Judgment. Absent written notice that the United
States does not object to the proposed purchaser or upon objection by
the United States, none of the divestitures proposed under Section V or
Section VI shall be consummated. Upon objection by Signature under the
provision in Section VI(B), a divestiture proposed under Section VI
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
divestiture has been completed whether pursuant to Section V or Section
VI of this Final Judgment, Signature shall deliver to plaintiff an
affidavit as to the fact and manner of compliance with Section V or
Section VI 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 covered 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 each of the Assets to 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 Signature has taken to solicit buyer(s) for each of the
Assets to be Divested and to provide required information to
prospective purchasers, including the limitations, if any, on such
information.
B. Within twenty (20) calendar days of the filing of the Complaint
in this matter, Signature shall deliver to plaintiff an affidavit which
describes in detail all actions Signature has taken and all steps
Signature has implemented on an on-going basis to preserve each of the
Assets to be Divested pursuant to Section IX of this Final Judgment and
the Hold Separate Stipulation and Order entered by the Court. Relating
to the PSP Assets and the BDL Assets, the affidavit also shall
describe, but not be limited to, Signature's efforts to maintain and
operate each of those Assets to be Divested as active competitors,
maintain the management, staffing, research and development activities,
sales, marketing, and pricing of each of those Assets to be Divested,
and maintain the PSP and BDL FBO facilities in operation condition at
current capacity configurations. Relating to the APA Assets, the
affidavit shall describe, but not be limited to, Signature's efforts to
maintain the management, staffing, research and development activities,
sales, marketing, and pricing of the APA Assets, and maintain the APA
FBO facility in an operable condition at current capacity
configurations. Signature shall deliver to plaintiff an affidavit
describing any changes to the efforts and actions outlined in
Signature's earlier affidavit(s) filed pursuant to Section VIII(B)
within fifteen (15) calendar days after the change is implemented.
C. Until one year after each divestiture has been completed,
Signature shall preserve all records of all efforts made to preserve
the Assets to be Divested and effect the divestitures.
IX. Hold Separate Order
Until the divestitures required by the Final Judgment have been
accomplished. Signature shall take all steps necessary to comply with
the Hold Separate Stipulation and Order entered by this Court.
Signature shall take no action that would jeopardize the divestiture of
any of the Assets to Be Divested.
X. Financing
Signature is ordered and directed not to finance all or any part of
any purchase by an acquirer made pursuant to Sections V or VI of this
Final Judgment.
XI. Compliance Inspection
For the purpose of determining or securing compliance with this
Final Judgment, and subject to any legally recognized privilege, from
time to time:
A. Duly authorized representatives of the United States Department
of Justice, upon written request of the Attorney General or the
Assistant Attorney General in charge of the Antitrust Division, and on
reasonable notice to Signature made to its principal offices, shall be
permitted:
1. Access during office hours of Signature to inspect and copy all
books, ledgers, accounts, correspondence, memoranda, and other records
and documents in the possession or under the control of Signature, who
may have counsel present, relating to any matters contained in this
Final Judgment and the Hold Separate Stipulation and Order; and
2. Subject to the reasonable convenience of Signature and without
restraint or interference from them, to interview, either informally or
on the record, its officers, employees, and agents, who may have
counsel present, regarding any such matters.
B. Upon the written request of the Attorney General or of the
Assistant Attorney General in charge of the Antitrust Division, made to
Signature at its principal offices, Signature shall submit such written
reports, under oath if requested, with respect to any of the matters
contained in this Final Judgment and the Hold Separate Stipulation and
Order.
[[Page 14764]]
C. No information nor any documents obtained by the means provided
in Sections VIII or XI of this Final Judgment shall be divulged by a
representative of the United States 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 (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 any of
the defendants to plaintiff, any of the defendants represents and
identifies in writing the material in any such information or documents
for which a claim of protection may be asserted under Rule 26(c)(7) of
the Federal Rules of Civil Procedure, and 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 plaintiff shall give ten
(10) days notice to the defendant(s) prior to divulging such material
in any legal proceeding (other than a grand jury proceeding) to which
that defendant is not a party.
XII. Retention of Jurisdiction
Jurisdiction is retained by this Court for the purpose of enabling
any of the parties to this Final Judgment to apply to this Court at any
time for such further orders and directions as may be necessary or
appropriate 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 on 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
Appendix A--PSP Assets
``PSP Assets'' means all rights, titles, and interests,
including all fee, leasehold and real property rights, in the
following assets owned or controlled by Signature that are used by
Signature to provide fuel or other services to general aviation
customers at PSP Airport.
1. The existing 8,000 square foot Signature terminal and office
buildings.
2. Approximately 21,000 square feet of hangar space, consisting
of the existing Signature hangar buildings and approximately 30,000
square feet of space prepared for hangar use.
3. The existing Signature above-ground fuel farm consisting of
two 20,000 gallon Jet A fuel tanks and one 12,000 gallon avgas tank
with fuel separator sump system that is adjacent to the t-hangars.
4. Approximately 40,000 square feet of ramp space adjacent to
the foregoing buildings.
5. All equipment and supplies necessary and appropriate to
support a viable FBO business at the foregoing facilities, including
but not limited to, existing office furniture, lobby furniture,
phone system, radios, televisions, towing equipment, golf carts,
pickup trucks, refuellers, and ground power units.
6. Contracts (including, but not limited to, customer contracts)
and customer lists related to this location.
7. Approximately 2.5 acres of parking space.
Appendix B--BDL Assets
``BDL Assets'' means all rights, titles, and interests,
including all fee, leasehold and real property rights, in the
following assets owned or controlled by Combs that are used by Combs
to provide fuel or other services to general aviation customers at
BDL Airport.
1. The existing Combs terminal and office buildings.
2. Approximately 50,000 square feet of hangar space, consisting
of the existing Combs hangar buildings: One 30,000 square foot
hangar (Hangar 214); one 20,000 square foot hangar (Storage Hangar).
3. The existing Combs avgas tank, located adjacent to the
commercial airline services building.
4. Approximately 366,000 square feet of ramp space adjacent to
the foregoing buildings.
5. All equipment and supplies necessary and appropriate to
support a viable FBO business at the foregoing facilities, including
but not limited to, existing office furniture, lobby furniture,
phone system, radios, televisions, towing equipment, golf carts,
pickup trucks, refuellers, ground power units.
6. Contracts (including, but not limited to, customer contracts)
and customer lists related to this location.
7. Approximately .9 acres of parking space.
Appendix C--APA Assets
``APA Assets'' means all rights, titles, and interests,
including all fee, leasehold and real property rights, in the
following assets owned or controlled by Combs that are used by Combs
to provide fuel or other services to general aviation customers at
APA Airport.
1. The existing Combs terminal and office buildings.
2. Approximately 40,000 square feet of hangar space, consisting
of the existing Combs hangar buildings: one hangar of 20,000 square
feet (Hangar 9); one hangar of 20,000 square feet (Hangar 10).
3. The existing Combs fuel farm consisting of two 12,000 gallon
Jet A tanks and one 10,000 gallon avgas tank located \1/4\ mile from
the executive terminal between Peoria Street and Dove Valley
Parkway.
4. Approximately 1,000,000 square feet of ramp space adjacent to
the foregoing buildings.
5. All equipment and supplies necessary and appropriate to
support a viable FBO business at the foregoing facilities, including
but not limited to, existing office furniture, lobby furniture,
phone system, radios, televisions, towing equipment, golf carts,
pickup trucks, refuellers, and ground power units.
6. Contracts (including, but not limited to, customer contracts)
and customer lists related to this location.
7. Approximately 5 acres of parking space.
Competitive Impact Statement
The United States, 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
On March 1, 1999, the United States filed a Complaint alleging that
the proposed acquisition by Signature Flight Support Corporation
(``Signature'') of the flight support operations of AMR Combs, Inc.
(``Combs''), a wholly owned indirect subsidiary of AMR Corporation,
would violate Section 7 of the Clayton Act, 15 U.S.C. 18.
The Complaint alleges that Signature and Combs own and operate
fixed base operator (``FBO'') businesses at various airports around the
country. Combs owns and operates eleven FBOs in the United States,
including FBOs at Palm Springs Regional Airport (``PSP Airport''),
Bradley International Airport (``BDL Airport''), and Denver Centennial
Airport (``APA Airport''). The Complaint alleges that Signature and
Combs are the only two providers of FBO services for general aviation
customers at PSP Airport, located two miles east of Palm Springs,
California, and BDL Airport, located near Hartford, Connecticut. the
Complaint further alleges that the proposed acquisition will create a
monopoly for Signature at those two airports, giving it significant
power to raise prices and lower the quality of service. Thus, the
proposed acquisition would have likely lessened competition
substantially in the market for FBO services at PSP Airport and BDL
Airport in violation of Section 7 of the Clayton Act, as amended, 15
U.S.C. 18.
The Complaint also alleges that the proposed acquisition would deny
general aviation customers at APA Airport, where there are currently
two
[[Page 14765]]
competing FBOs, the benefits of additional competition at the airport.
In 2000, when a new FBO facility is built, Signature was to enter the
market as the third FBO. The likely benefits to general aviation
customers at APA Airport from competition among three FBOs would have
been increased choice and lower prices for fuel and hangar rentals.
Signature's proposed acquisition of the Combs FBO at APA Airport would
have eliminated the likelihood of anticipated additional competition
because entry by a different FBO is not likely. Signature is one of
only a few firms positioned to make the necessary commitment for a
start-up operation on the scale desired by the airport board.
Accordingly, Signature's proposed acquisition would have lessened
potential competition in the market for FBO services at APA Airport in
violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. 18.
The prayer for relief in the Complaint seeks: (1) a judgment that
the proposed acquisition would violate Section 7 of the Clayton Act;
and (2) a preliminary and permanent injunction preventing Signature and
Combs from consummating the proposed acquisition.
At the same time the Complaint was filed, the United States also
filed a proposed settlement that would permit Signature to complete its
acquisition of Combs, but requires divestitures that would preserve
competition for general aviation customers at PSP Airport and at BDL
Airport. With regard to APA Airport, the proposed settlement would
require a divestiture unless another firm replaces Signature as the
operator of the new FBO facility, thereby preserving the potential for
competition among three FBOs for general aviation customers at APA
Airport.
This settlement consists of a Hold Separate Stipulation and Order
(``Hold Separate Order''), and a proposed Final Judgment. The proposed
Final Judgment orders Signature to sell the FBO assets at two of the
airport--PSP Airport and BDL Airport--to purchasers who have the
capability to compete effectively in the provision of FBO services to
general aviation customers at those airport. Signature will divest the
existing Signature assets located at PSP (``the PSP Assets''). At BDL
Airport, Signature will divest the existing Combs assets except for
Combs' interests in a bulk jet fuel storage facility and a fuel farm,
which is located in different parts of the airport from the Combs FBO
facility (``the BDL Assets''). Signature must complete the divestitures
of the PSP Assets and the BDL Assets before the later of one hundred
and eighty (180) calendar days after filing of the Complaint, or five
(5) days after entry of the Final Judgment, in accordance with the
procedures specified in the proposed Final Judgment. If Signature
should fail to accomplish the divestitures, a trustee appointed by the
Court would be empowered to divest these assets.
With regard to APA Airport, the proposed Final Judgment takes into
account two facts: the third FBO facility has not yet been built and
Signature would occupy it as a tenant of the builder, a real estate
developer called SunBorne Development Company (``SunBorne'').
Accordingly, the proposed settlement permits Signature to occupy and
operate the existing Combs FBO Facility at APA Airport (``the APA
Assets'') pending SunBorne's construction of the new FBO. Within ten
days of presentation of a certificate of occupancy for the new FBO or
June 1, 2000, whichever is sooner, Signature must divest the APA Assets
and move into the new FBO facility, unless Signature has found a
suitable firm to operate the new FBO facility in its stead.
The Hold Separate Order and the proposed Final Judgment also impose
a hold separate agreement that requires defendant Signature to ensure
that, until the divestitures mandated by the Final Judgment have been
accomplished, the PSP Assets and the BDL Assets will be held separate
and apart from, and operated independently of, Signature's other FBO
assets and businesses. Similarly, the Hold Separate Order and the
proposed Final Judgment require Signature to ensure that, if
divestiture of the APA Assets is required, no steps will be taken that
would denigrate their value.
The parties 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. Events Giving Rise to the Alleged Violation
A. The Parties and the Proposed Transaction
On December 14, 1998, Signature, AMR Services Holding Corp., and
AMR Corporation (the parent of AMR Combs, Inc., and AMR Services
Holding Corp.) entered into an agreement under which Signature would
seek to acquire all of the capital stock of Combs for approximately
$170 million.
Signature is a wholly owned subsidiary of BBA Group PLC, a British
holding company. Signature is a Delaware corporation with its principal
place of business in Orlando, Florida. Signature operates a nationwide
network of forty-two FBOs throughout the United States, including
facilities at PSP Airport and BDL Airport.
Combs is a wholly owned, indirect subsidiary of AMR Corporation,
which is a Delaware corporation with its principal place of business in
Forth Worth, Texas. Combs is a Delaware corporation, headquartered in
Dallas, Texas. It owns and operates eleven FBOs throughout the United
States, including ones at PSP Airport, BDL Airport, and APA Airport.
Combs also manages two FBOs in Mexico and is an equity partner in an
executive aviation center in Hong Kong.
B. The FBO Services Market
FBOs are facilities located at airports that provide flight support
services, including aircraft fueling, ramp and hangar rentals, office
space rentals, and other services to general aviation customers.
General aviation customers include charter, private and corporate
aircraft operators, as distinguished from scheduled commercial
airlines.
FBOs sell aircraft fuel, as well as related support services such
as ramp, hangar and office space rental. The largest source of revenues
for an FBO is its fuel sales. FBOs sell Jet A fuel for jet aircraft,
turboprops and helicopters, and avgas for smaller, piston driven
planes. FBOs do not charge separately for many services offered to
general aviation customers, such as use of customer and pilot lounges,
baggage handling, and flight planning support, rather, they recover the
costs for these services in the price that they charge for fuel. FBOs
do charge separately for certain services, such as hangar rental,
office space rental, ramp parking fees, catering, cleaning the
aircraft, arranging ground transportation and maintenance on the
aircraft. General aviation customers generally buy fuel from the same
FBO from which they obtain those other services.
The Complaint alleges that the provision of FBO services to general
aviation customers at each of the airports--PSP Airport, BDL Airport,
and APA Airport--is a relevant market (i.e., a line of commerce and a
section of the country) under Section 7 of the Clayton Act. General
aviation customers cannot obtain fuel, hangar, ramp and other services
offered at PSP Airport, BDL Airport, or APA Airport, except through an
FBO authorized to sell such products and services by the local airport
[[Page 14766]]
authority. Thus, general aviation customers have no alternatives to
FBOs for these products and services when they land at PSP Airport, BDL
Airport, or APA Airport.
The Complaint also alleges that FBOs at other airports would not
provide economically practical alternatives for general aviation
customers who currently use PSP Airport, BDL Airport, and APA Airport.
Although there are other airports in the same regions as PSP Airport,
BDL Airport, and APA Airport, those other airports are not economically
viable substitutes for passengers flying into PSP Airport, BDL Airport,
or APA Airport. General aviation customers use PSP Airport, BDL
Airport, or APA Airport because of the airport's location, convenience
and facilities. General aviation customers have selected these airports
in part because of their proximity to their ultimate destination
(whether their residence, business or other place); using a different
airport would significantly increase their driving time, reducing the
convenience of maintaining a corporate jet. There are not enough
general aviation customers who have selected PSP Airport, BDL Airport,
or APA Airport as their airport who would switch to other airports to
prevent anticompetitive price increases for fuel and other services at
PSP Airport, BDL Airport, or APA Airport.
C. Competition Between Signature and Combs
1. PSP Airport and BDL Airport. Signature and Combs are direct
competitors in the provision of FBO services to general aviation
customers at PSP Airport and BDL Airport. As the only two FBOs at PSP
Airport and BDL Airport, Signature and Combs compete over price and
service packages. General aviation customers have benefited from
competition between Signature and Combs at PSP Airport and BDL Airport,
receiving lower prices and improved FBO services. The acquisition would
eliminate this competition, creating a monopoly in the market for FBO
services to general aviation customers at PSP Airport and at BDL
Airport.
The prospect of new entry is not likely to check Signature's
resulting ability to raise prices or reduce service. The financial
opportunity that would be created by the anticompetitive effect of this
merger would not be great enough to induce a new entrant to make the
investments needed to enter the FBO business at PSP Airport and BDL
Airport. There are significant sunk costs involved in building an FBO,
including the cost of building hangar and ramp facilities. The revenue
a new FBO operation would have to generate to achieve an acceptable
rate of return on such an investment exceeds the revenues a new entrant
would likely earn. In particular, a new entrant would have to achieve a
large enough share of market revenues to be able to cover the fixed
(including sunk) costs of entry and be profitable at pre-merger prices.
And, the airport authorities' minimum operating standards, which
require an FBO to provide other services beyond hangar rental, fueling
and maintenance, effectively raise the minimum viable scale of entry,
making entry even more difficult. Therefore, new FBO entry on a scale
sufficient to prevent a post-merger price increase is not likely to
occur at PSP Airport and BDL Airport.
2. APA Airport. The market for FBO services at APA Airport is
presently highly concentrated, with only two FBOs competing. Prior to
its proposed acquisition of Combs, Signature was poised to enter as a
third independent competitor early in 2000 when a new FBO facility is
to be competed. In September of 1998, Signature signed a detailed
letter of intent with SunBorne, the real estate developer, to enter as
the tenant operator of an FBO facility at APA Airport in 2000.
For general aviation consumers, the addition of a third,
independent FBO at APA Airport would increase consumer choice and would
have likely resulted in increased price and quality competition to the
benefit of general aviation customers at APA Airport.
Signature's acquisition of Combs significantly lessens the
potential for competition among three FBOs at APA Airport. Entry by a
different firm that would be the third independent FBO is not likely
because Signature was one of only a few firms positioned to make the
necessary commitment for a start-up operation.
D. Anticompetitive Consequences of the Acquisition
The Complaint alleges that Signature's acquisition of Combs would
result in FBO monopolies at PSP Airport and at BDL Airport. The
Complaint further alleges that Signature's acquisition of the Combs FBO
at APA Airport would deprive general aviation customers of the benefits
of additional competition from having three independent FBOs, rather
than just two.
The Complaint alleges that the acquisition of Combs by Signature
would substantially lessen competition and restrain trade unreasonably.
The transaction would have eliminated actual competition between
Signature and Combs in the market for FBO services at PSP Airport and
BDL Airport, resulting in an increase in prices for fuel and other FBO
services. In addition, potential competition at APA Airport would be
substantially lessened, and prices for fuel and other FBO services sold
to general aviation customers at APA Airport would not decrease.
III. Explanation of the Proposed Final Judgment
The United States brought this action because the effect of the
acquisition of Combs by Signature may be substantially to lessen
competition, in violation of Section 7 of the Clayton Act, in the
markets for FBO services provided to general aviation customers at PSP
Airport, BDL Airport, and APA Airport.
A. PSP Airport and BDL Airport Provisions
The risk to competition posed by this acquisition at PSP Airport
and BDL Airport, however, would be eliminated if certain assets,
leases, and agreements currently held by Signature or Combs to operate
their PSP Airport and BDL Airport FBO businesses were sold and assigned
to a purchaser that could operate them as an active, independent and
financially viable competitor. To this end, the provisions of the
proposed Final Judgment are designed to accomplish the sale and
assignment of certain assets and leaseholds to such a purchaser and
thereby prevent the anticompetitive effects of the proposed
acquisition.
Section V of the proposed Final Judgment requires defendant
Signature, within one hundred and eighty (180) calendar days after
filing of the Complaint in this matter, or within five (5) days after
notice of entry of the Final Judgment by the Court, whichever is later,
to divest an FBO business at PSP Airport and an FBO business at BDL
Airport, as set out in Section II.C (i.e., the PSP Assets and the BDL
Assets) of the proposed Final Judgment. Unless the United States
otherwise consents in writing, Signature is required to divest its
present FBO business at PSP Airport, including all hangars, ramp and
office space, fuel farms, and any related terminal and maintenance
facilities located on the property it presently leases as well as any
other leases or options on leases it possesses at PSP Airport.
At BDL Airport, Signature is required to divest Combs's present FBO
operation, including all hangars, ramp and office space, and any
related terminal and maintenance facilities located on the property
Combs presently
[[Page 14767]]
leases, as well as any other leases or options on leases Combs
possesses at BDL Airport. Combs does not have a jet fuel farm at its
FBO location. It obtains fuel for its general aviation customers from
its fuel farm located at BDL Airport's commercial terminal. Combs's
fuel farm serves predominantly commercial aviation customers, and
Combs's commercial fueling business is separate from its FBO business.
The proposed Final Judgment requires Signature, which will own the fuel
farm after the acquisition, to provide the purchaser of the Combs FBO
business with non-discriminatory and unlimited access to the fuel farm
at the commercial terminal for a minimum of two years. Access will be
limited to the storage and delivery of the purchaser's owned Jet A fuel
for FBO use at BDL Airport. Signature may charge the purchaser a
commercially reasonable access charge that is not greater than what it
charges others for the costs associated with the purchaser's use of the
facilities. Of course, the purchaser of the Combs FBO business is free
to build its own fuel farm (which it could do in relatively short
amount of time for a moderate cost), or it may negotiate a longer term
access agreement with Signature.
B. APA Airport Provisions
The risk to competition posed by this acquisition at APA Airport
would be eliminated if the likelihood of entry by a third, independent
FBO remains the same after the transaction as it was before. This could
be accomplished in one of two ways: (1) Signature could go ahead with
its plan to be the operator of the new FBO upon its completion, and
sell the existing Combs FBO business (``the APA Assets'') to a
purchaser that could operate it as an independent and financially
viable competitor; or (2) Signature could find a firm willing to
operate the new FBO instead of Signature, in which case, Signature
could operate the existing Combs business.
Accordingly, Section IV of the proposed Final Judgment gives
Signature until September 1, 1999, to find a substitute operator for
the new FBO facility. If Signature is unsuccessful, Section V of the
proposed Final Judgment requires Signature to move into the new FBO
facility and divest the APA Assets no later than June 1, 2000, or
within ten days of receiving a certificate of occupancy from SunBorne.
Section V further provides that if circumstances relating to the
completion of the new FBO change, the United States may, in its
discretion, relieve Signature of the obligation to sell the APA Assets.
As a result of the obligations imposed on Signature, and the
divestiture required by the proposed Final Judgment, general aviation
customers at APA Airport will be able to reap the benefits of three
competing FBOs in 2000.
C. General Divestiture Provisions
For each of the required divestitures, Signature shall divest such
equipment and supplies as is necessary and appropriate to operate a
viable FBO at PSP Airport, BDL Airport, and APA Airport. Signature
shall transfer its contracts, including customer contracts, and
customer lists, for providing FBO services at each airport. Together
with the equipment, supplies and customer contracts and lists, and the
commitment to access to the fuel farm at BDL Airport at a reasonable
price, these assets will give qualified purchasers the means to
establish themselves as competitive alternatives to Signature. Thus, as
a result of the divestitures required by the proposed Final Judgment,
general aviation consumers at PSP Airport and BDL Airport will continue
to have a choice between two competitive FBOs, and at APA Airport, the
likelihood of their having three competing FBOs has been maintained.
Under the proposed Final Judgment, Signature must take all
reasonable steps necessary to accomplish quickly the divestitures of
the PSP Assets, the BDL Assets, and the APA Assets, and shall cooperate
with prospective purchasers by supplying all information relevant to
the proposed sales. Should Signature fail to complete any of its
divestitures within the required time periods, the Court will appoint,
pursuant to Section VI, a trustee to accomplish the divestitures. The
United States will have the discretion to delay the appointment of the
trustee in order to permit other governmental review (such as the
county or municipal airport authority).
Following the trustee's appointment, only the trustee will have the
right to sell the divestiture assets, and defendant Signature will be
required to pay for all of the trustee's sale-related expenses. The
trustee's compensation will be structured to provide an incentive for
the trustee to obtain the highest price for the assets to be divested,
and to accomplish the divestitures as quickly as possible.
Section VII of the proposed Final Judgment would assure the United
States an opportunity to review any proposed sale, whether by Signature
or by the trustee, before it occurs. Under this provision, the United
States is entitled to receive complete information regarding any
proposed sale or any prospective purchaser prior to consummation. Upon
objection by the United States to a sale of any of the divestiture
assets by the defendant Signature, any proposed divestiture may not be
completed. Should the United States object to a sale of any of the
divested assets by the trustee, that sale shall not be consummated
unless approved by the Court.
Pursuant to Section VI.F, should the trustee not accomplish the
divestitures within six months of appointment, the trustee and the
parties will make a recommendation to the Court, which shall enter such
orders as it deems appropriate to carry out the purpose of the trust,
which may include extending the term of the trustee's appointment.
Under Section IX of the proposed Final Judgment, defendant
Signature must take certain steps to ensure that, until the required
divestitures have been completed, the PSP Assets and the BDL Assets
will be maintained as separate, ongoing, viable FBO businesses and kept
distinct from Signature's other FBO operations. Until such
divestitures, Signature must also continue to maintain and operate the
divestiture assets as viable, independent competitors as PSP Airport
and BDL Airport, using all reasonable efforts to maintain sales of FBO
services to general aviation customers at PSP Airport and BDL Airport.
Until the divestiture, Signature must maintain and operate the APA
Assets as a viable entity, using all reasonable efforts to maintain its
sales of FBO services to general aviation customers at APA Airport.
Signature must maintain all three FBO businesses at PSP Airport, BDL
Airport, and APA Airport, so that they continue to be stable, including
maintaining all records, loans, and personnel for their operation.
Section XI requires the Signature to make available, upon request,
the business records and the personnel of its businesses. This
provision allows the United States to inspect Signature's facilities
and ensure that Signature is complying with the requirements of the
proposed Final Judgment. Section XIII of the proposed Final Judgment
provides that it will expire on the tenth anniversary of its entry by
the Court.
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 suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
[[Page 14768]]
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 the defendants.
V. Procedure for Commenting on the Proposed Final Judgment
The United States and defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the 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 United States 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 United States will
evaluate and respond to the comments. All comments will be given due
consideration by the Department of Justice, which remains free to
withdraw its consent to the proposed Final Judgment at any time prior
to entry. The comments and the response of the United States will be
filed with the Court and published in the Federal Register.
Written comments should be submitted to: Roger W. Fones, Chief,
Transportation, Energy & Agriculture Section, Antitrust Division, 325
Seventh Street, N.W., Suite 500, Washington, D.C. 20530.
VI. Alternatives to the Proposed Final Judgment
The United States considered, as an alternative to the proposed
Final Judgment, a full trail on the merits of its Compliant against
Signature and Combs. The Unites States is satisfied, however, the
divestitures of the assets and other relief contained in the proposed
Final Judgment will preserve viable competition in the provisions of
FBO services to general aviation customers at PSP Airport, BDL Airport,
and APA Airport that otherwise would be affected adversely by the
acquisition. Thus, the compliance with the proposed Final Judgment and
the completion of the sale required by the Judgment would achieve the
relief the government would have obtained through litigation, but
avoids the time, expense, and uncertainty of a full trial on the merits
of the government's 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 trail.
15 U.S.C. 16(e). As the United States Court of Appeals for the D.C.
Circuit has 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, ``the 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. Sec. 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 reprinted in (1974) U.S. Code Cong. & Ad News
6535, 6538.
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absent 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 evaluation of
what relief would best serve the public.'' United States v. BNS, Inc.,
858 F.2d 456, 462 (9th Cir. 1988), quoting 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 interest 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\ United States v. Bechtel, 648 F.2d at 666 (citations
omitted) (emphasis added); see United States v. BNS, Inc., 858 F.2d
at 463; United States v. National Broadcasting Co., 449 F. Supp.
1127, 1143 (C.D. Cal. 1978); United States v. Gillette Co., 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).
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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 practicular practice or whether
in 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.' (citations
omited.).'' \3\
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\3\ United States v. American Tel. and Tel. Co., 552 F.Supp.
131, 150 (D.D.C. 1982), aff'd sub nom, Maryland v. United States,
460 U.S. 1001 (1983), quoting United States v. Gillette Co., Supra,
406 F.Supp. at 716; United States v. Alcan Alumninum, Ltd., 605
F.Supp. 619, 622 (W.D. Ky. 1985)
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VIII. Determinative Materials and Documents
There are no materials or documents that the United States
considered to be determinative in formulating this proposed Final
Judgment. Accordingly,
[[Page 14769]]
none are being filed with this Competitive Impact Statement.
Dated: March 15, 1999.
Respectfully submitted,
Nina B. Hale,
Salvatore Massa,
Trial Attorneys, U.S. Department of Justice, Antitrust Division,
Transportation, Energy and Agriculture Section, Suite 500, 325 Seventh
Street, NW., Washington, DC 20530, (202) 307-6351.
[FR Doc. 99-7288 Filed 3-25-99; 8:45 am]
BILLING CODE 4410-11-M