[Federal Register Volume 64, Number 94 (Monday, May 17, 1999)]
[Notices]
[Pages 26782-26790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-12340]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Suiza Foods Corporation and Broughton Foods 
Company; Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Section 16(b) through (h), that a proposed 
Final Judgment, Stipulation and Competitive Impact Statement have been 
filed with the United States District Court for the Eastern District of 
Kentucky, London Division in United States of America v. Suiza Foods 
Corporation and Broughton Foods Company, Civil Action No. 99-CV-130. On 
March 18, 1999, the United States filed a Complaint alleging that the 
proposed acquisition by Suiza Foods Corporation (``Suiza'') of the 
stock of Broughton Foods Company (``Broughton''), would violate Section 
7 of the Clayton Act, 15 U.S.C. 18. The proposed Final Judgment, filed 
on April 22, 1999, requires Suiza to divest the Southern Belle plant 
and related assets in Somerset, Kentucky, pursuant to the Final 
Judgment. Copies of the Complaint, proposed Final Judgment and 
Competitive Impact Statement are available for inspection at the 
Department of Justice in Washington, D.C. in Room 200, 325 Seventh 
Street, N.W., and at the Office of the Clerk of the United States 
District Court for the District of the District of Columbia.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to Craig W. Conrath, Chief, Merger Task Force, Antitrust Division, 
Department of Justice, 1401 H St. N.W., Suite 4000, Washington, D.C. 
20530 (telephone: (202) 307-0001).
Constance K. Robinson,
Director of Operations & Merger Enforcement.
    United States of America, Plaintiff, vs. Suiza Foods 
Corporation, d/b/a Louis Trauth Dairy, Land O'Sun Dairy, and Flav-O-
Rich Dairy, and Broughton Foods Company, d/b/a Southern Belle Dairy, 
Defendants. Civil Action No. 99-CV-130.

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 Eastern District of Kentucky, London Division.
    (2) The parties stipulate that a Final Judgment in the form hereto 
attached

[[Page 26783]]

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 Penalties Act (15 U.S.C. 16), 
and without further notice to any party or other proceedings, provided 
that the plaintiff has not withdrawn its consent, which it may do at 
any time before the entry of the proposed Final Judgment by serving 
notice thereof on defendant and by filing that notice with the Court.
    (3) Defendants shall abide by and comply with the provisions of the 
proposed Final Judgment pending entry of the Final Judgment, or until 
expiration of the time for all appeals of any Court ruling declining 
entry of the proposed Final Judgment, and shall, from the date of the 
filing 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.
    (4) This Stipulation shall apply with equal force and effect to any 
amended proposed Final Judgment agreed upon in writing by the parties 
and submitted to the Court.
    (5) Defendants shall prepare and deliver reports in the form 
required by the provisions of paragraph B of Section VI of the proposed 
Final Judgment commencing no later than twenty (20) calendar days after 
the filing of this Stipulation, and every thirty (30) calendar days 
thereafter pending entry of the Final Judgment.
    (6) In the event the plaintiff withdraws its consent, as provided 
in paragraph 2 above, or if the proposed Final Judgment is not entered 
pursuant to this Stipulation, or 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 continuing compliance with the 
terms and provisions of the proposed Final Judgment, this Stipulation 
shall be of no effect whatsoever, and the making of this Stipulation 
shall be without prejudice to any party in this or any other 
proceeding.
    (7) Defendants represent that the divestiture ordered in the 
proposed Final Judgment can and will be made, and that defendants will 
raise no claim of hardship or difficulty as grounds for asking the 
Court to modify any of the divestiture provisions contained therein.
    (8) Upon entry of this Stipulation as an Order of the Court, and 
consistent with this Stipulation, insofar as the defendants were 
enjoined by Orders of the Court on March 18, 1999, and April 14, 1999, 
from consummating their proposed transaction and from bringing their 
operations under common ownership and control, such previous Orders 
shall be vacated.

Respectfully submitted,
James K. Foster,
Attorney, U.S. Department of Justice, Antitrust division, 1401 H 
Street, N.W., Room 4000, Washington, D.C. 20530, Telephone: (202) 514-
8362, Facsimile: (202) 307-5802.
Paul T. Denis,
Arnold & Porter, 555 Twelfth Street, N.W., Washington, DC 20004, 
Telephone: (202) 942-5000, Facsimile: (202) 942-5999.

Attorney for Defendant Suiza Foods Corporation

Joseph L. Famularo,
United States Attorney, 110 W. Vine Street, Suite 4000, Lexington, 
Kentucky 50407, Telephone: (606) 233-2666.
William J. Kolasky,
Wilmer, Cutler & Pickering, 2445 M Street, NW., Washington, DC 20037, 
Telephone: (202) 663-6357, Facsimile: (202) 663-6363.

Attorney for Defendant Broughton Foods Company

    So Ordered, this ____ day of ________. 1999.

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

Final Judgment

    Whereas plaintiff the United States of America (hereinafter 
``United States''), having filed its Complaint herein, and defendants, 
by their 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 part with respect to any issue of law or 
fact herein;
    And whereas, the defendants have agreed to be bound by the 
provisions of this Final Judgment pending its approval by the Court;
    And whereas, prompt and certain divestiture of certain assets to a 
third party is the essence of this agreement;
    And whereas, plaintiff requires defendants to divest, as a viable 
business, the Southern Belle Dairy so as to ensure, to the sole 
satisfaction of the plaintiff, that the Acquirer will be to continue to 
operate the Southern Belle Dairy as a viable, ongoing business;
    And whereas, defendants have represented to plaintiff that the 
divestiture required below can and will be made as provided in this 
Final Judgment and that defendants will later raise no claims of 
hardship or difficulty as grounds for asking the Court to modify any of 
the divestiture provisions contained below;
    Now, therefore, before the taking of any testimony, and without 
trial or adjudication of any issue of fact or law herein, and upon 
consent of the parties hereto, it is hereby ordered, adjudged, and 
decreed as follows:

I. Jurisdiction

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

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' means the person(s) to whom defendants shall sell 
the Southern Belle Dairy (as defined below).
    B. ``Southern Belle Dairy'' means the entire milk processing plant 
owned by Broughton Foods Company located in Pulaski County, Kentucky, 
and all related assets, including all rights and interests in it, 
including all property and contract rights, all existing inventory, 
accounts receivable, pertinent correspondence and files, customer 
lists, all related customer information, advertising materials, 
contracts or other relationships with suppliers, customers and 
distributors, any rights, contracts and licenses involving intellectual 
property, trademarks, tradenames or brands, computers and other 
physical assets and equipment used for production at, distribution 
from, or associated with, Southern Belle Dairy or any of its 
distribution branches and locations.
    C. ``Suiza Foods Corporation'' means defendant Suiza Foods 
Corporation and includes its successors and assigns, their 
subsidiaries, divisions, groups, partnerships and joint ventures, 
affiliates, directors, officers, managers, agents and employees.
    D. ``Broughton Foods Company'' means defendant Broughton Foods 
Company and includes its successors and assigns, their subsidiaries, 
divisions, groups, partnerships and joint ventures, affiliates, 
directors, officers, managers, agents and employees.

II. Applicability

    A. The provisions of this Final Judgment apply to the 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.

[[Page 26784]]

    B. Southern Belle Diary may not be sold to an Acquirer that has not 
agreed to be bound by the provisions of this Final Judgment

IV. Divestitute of Assets

    A. Suiza Foods Corporation is hereby ordered and directed, within 
six (6) months from the date this Final Judgment is filed with the 
Court, or five (5) calendar days after notice of the entry of this 
Final Judgment by the Court, whichever is later, to divest the Southern 
Belle Dairy to an Acquirer acceptable to the United States in its sole 
discretion. The United States, in its sole discretion, may agree to an 
extension of this time period of up to one (1) month, and shall notify 
the Court in such circumstances.
    B. Unless the United States consents in writing, the divestiture 
pursuant to Section IV, or by trustee appointed pursuant to Section V 
of this Final Judgment, shall include the entire Southern Belle Dairy 
defined above. Divestiture shall be accomplished in such a way as to 
satisfy the United States, in its sole discretion that the Southern 
Belle Dairy can and will be operated by the Acquirer as a viable, 
ongoing business. Divestiture of the Southern Belle Dairy, whether 
pursuant to Section IV or Section V of this Final Judgment, shall be 
made to a purchaser for whom it is demonstrated to the sole 
satisfaction of the United States that (1) the purchase is for the 
purpose of competing effectively in the dairy business, (2) the 
Acquirer has the managerial, operational, and financial capability to 
compete effectively in the dairy business; and (3) that none of the 
terms of any agreement between the Acquirer and defendant give 
defendant the ability unreasonably to raise the Acquirer's costs, to 
lower the Acquirer's efficiency, or otherwise to interfere in the 
ability of the Acquirer to compete effectively.
    C. In accomplishing the divestiture ordered by this Final Judgment, 
Suiza Foods Corporation shall make known, by usual and customary means, 
the availability of the Southern Belle Dairy. Suiza Foods Corporation 
shall provide any person making inquiry regarding a possible purchase a 
copy of the Final Judgment. The defendants shall also offer to furnish 
to any bona fide prospective purchaser, subject to customary 
confidentiality assurance, all information regarding the Southern Belle 
Dairy customarily provided in a due diligence process, except such 
information subject to attorney-client privilege or attorney work 
product privilege. Defendants shall make available such information to 
the plaintiff at the same time that such information is made available 
to any other person. Defendants shall permit bona fide prospective 
purchasers of the Southern Belle Dairy to have access to personnel and 
to make such inspection of physical facilities and any and all 
financial, operational, or other documents and information customarily 
provided as part of a due diligence process.
    D. Defendants shall not interfere with any negotiations by the 
Acquirer to employ any employee whose primary responsibility is the 
production, sale, marketing, or distribution of products from the 
Southern Belle Dairy.
    E. Suiza Foods Corporation shall take all reasonable steps to 
accomplish quickly the divestiture contemplated by this Final Judgment. 
Defendants shall not take any action that will impede in any way the 
operation of the Southern Belle Dairy other than in the ordinary course 
of their other business.

V. Appointment of Trustee

    A. In the event that Suiza Foods Corporation has not divested the 
Southern Belle Dairy within the time period specified in Section IV.A., 
it shall notify the plaintiff of that fact in writing. In the event 
that Suiza Foods Corporation has not divested the Southern Belle Dairy 
within the time period specified in Section IV.A., and upon application 
of the United States, the Court shall appoint a trustee selected by the 
United States to effect the divestiture of the Southern Belle Dairy. 
Unless the plaintiff otherwise consents in writing, the divestiture 
shall be accomplished in such a way as to satisfy the United States, in 
its sole discretion, that the Southern Belle Dairy can and will be 
operated by the Acquirer as a viable on-going business.
    B. After the appointment of a trustee becomes effectively, only the 
trustee shall have the right to sell the Southern Belle Dairy. The 
trustee shall have the power and authority to accomplish the 
divestiture at the best price then obtainable upon a reasonable effort 
by the trustee, subject to the provisions of Sections IV, V and VIII of 
this Final Judgment, and shall have such other powers as the Court 
shall deem appropriate. Subject to Section V.C. of this Final Judgment, 
the trustee shall have the power and authority to hire at the cost and 
expense of defendants any investment bankers, attorneys, or other 
agents reasonably necessary in the judgment of the trustee to assist in 
the divestiture, and such professionals and agents shall be solely 
accountable to the trustee. The trustee shall have the power and 
authority to accomplish the divestiture at the earliest possible time 
to a purchaser acceptable to the United States, and shall have such 
other powers as this Court shall deem appropriate. Defendants shall not 
object to a sale by the trustee on any grounds other than the trustee's 
malfeasance. Any such objections by defendants must be conveyed in 
writing to the plaintiffs and the trustee within ten (10) calendar days 
after the trustee has provided the notice required under Section VI.
    C. The trustee shall serve at the cost and expense of Suiza Foods 
Corporation, 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 Suiza Foods Corporation 
and the trust shall then be terminated. The compensation of such 
trustee and that of any professionals and agents retained by the 
trustee shall be reasonable in light of the value of the Southern Belle 
Dairy and based on a fee arrangement providing the trustee with an 
incentive based on the price and terms of the divestiture and the speed 
with which it is accomplished.
    D. Suiza Foods Corporation shall use its best efforts to assist the 
trustee in accomplishing the required divestiture. 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, and relating to, the Southern Belle Dairy, 
and defendants shall develop financial or other information relevant to 
such assets customarily provided in a due diligence process as the 
trustee may reasonably request, subject to reasonable protection for 
trade secret or other confidential research, development, or commercial 
information. Defendants shall take no action to interfere with or to 
impede the trustee's accomplishment of the divestiture. Defendants 
shall permit prospective acquires of the assets to have reasonable 
access to personnel and to make such inspection of physical facilities 
and any and all financial, operational, or other documents and other 
information as may be relevant to the divestiture required by this 
Final Judgment.
    E. After its appointment, the trustee shall file monthly reports 
with the parties and the Court setting forth the trustee's efforts to 
accomplish the divestiture ordered under this Final

[[Page 26785]]

Judgment; provided, however, that to the extent such reports contain 
information that the trustee deems confidential, such reports shall not 
be filed in the public docket of the Court. Such reports shall include 
the name, address and telephone number of each person who, during the 
preceding month, made an offer to acquire, expressed an interest in 
acquiring, entered into negotiations to acquire, or was contacted or 
made an inquiry about acquiring, any interest in the Southern Belle 
Dairy, and shall describe in detail each contact with any such person 
during that period. The trustee shall maintain full records of all 
efforts made to divest the Southern Belle Dairy. If the trustee has not 
accomplished such divestiture within six (6) months after its 
appointment, the trustee shall thereupon promptly file with the Court a 
report setting forth (1) the trustee's efforts to accomplish the 
required divestiture, (2) the reasons, in the trustee's judgment, why 
the required divestiture has not been accomplished, and (3) the 
trustee's recommendations; provided, however, that to the extent such 
reports contain information that the trustee deems confidential, such 
reports shall not be filed in the public docket of the Court. The 
trustee shall at the same time furnish such report to the parties, who 
shall each have the right to be heard and to make additional 
recommendations consistent with the purpose of the trust. The Court 
shall thereafter enter such orders as it shall deem appropriate in 
order to carry out the purpose of the Final Judgment, which may, if 
necessary, include extending the trust and the term of the trustee's 
appointment by a period requested by the United States.

VI. Notification

    A. Within two (2) business days following execution of a definitive 
agreement, Suiza Foods Corporation or the trustee, whichever is then 
responsible for effecting the divestiture required herein, shall notify 
the plaintiff of any proposed divestiture required by Section IV or V 
of this Final Judgment. If the trustee is responsible, it shall 
similarly notify Suiza Foods Corporation. 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 desire to, acquire any ownership 
interest in the Southern Belle Dairy, together with full details of the 
same. Within fifteen (15) calendar days after receipt of the notice, 
the plaintiff may request from Suiza Foods Corporation, the proposed 
purchaser, or any third party additional information concerning the 
proposed divestiture, the proposed purchaser, and any other potential 
purchaser. Suiza Foods Corporation or the trustee shall furnish the 
additional information within fifteen (15) calendar days of the receipt 
of the request. Within thirty (30) calendar days after receipt of the 
notice or within twenty (20) calendar days after receipt of the 
additional information by the United States, whichever is later, the 
United States shall notify in writing Suiza Foods Corporation and the 
trustee, if there is one, whether or not it objects to the proposed 
divestiture. If the United States notifies in writing Suiza Foods 
Corporation and the trustee, if there is one that it does not object, 
then the divestiture may be consummated, subject only to Suiza Foods 
Corporation's limited right to object to the sale under Section V.B. 
Absent written notice that the United States does not object to the 
proposed purchaser or upon objection by the United States, a 
divestiture proposed under Section IV or V may not be consummated. Upon 
objection by Suiza Foods Corporation under Section V.B., the proposed 
divestiture under Section V shall not be accomplished unless approved 
by the Court.
    B. Twenty (20) calendar days from the date of the filing of this 
Final Judgment, and every thirty (30) calendar days thereafter until 
the divestiture has been completed under Section IV or V, Suiza Foods 
Corporation shall deliver to the plaintiff a written affidavit as to 
the fact and manner of compliance with Section IV or V of this Final 
Judgment. Each such affidavit shall include, for each person who during 
the preceding thirty (30) calendar days made an offer, expressed an 
interest or desire to acquire, entered into negotiations to acquire, or 
made an inquiry about acquiring any ownership interest in all or any 
portion of the Southern Belle Dairy, the name, address, and telephone 
number of that person and a detailed description of each contact with 
that person during that period. Each such affidavit shall also include 
a description of the efforts that Suiza Foods Corporation has taken to 
solicit a buyer for the relevant assets and to provide required 
information to prospective purchasers including the limitations, if 
any, on such information. Assuming the information set forth in the 
affidavit is true and complete, any objection by the United States to 
the information provided by the defendant, including limitations on 
information, shall be made within fourteen (14) calendar days of 
receipt of such affidavit. Suiza Foods Corporation shall maintain full 
records of all efforts made to divest all or any portion of the 
Southern Belle Dairy.

VII. Financing

    Suiza Foods Corporation shall not finance all or any part of any 
purchase of the Southern Belle Dairy made pursuant to Sections IV or V 
of this Final Judgment

VIII. Hold Separate Requirements

    Unless otherwise indicated, from the date of filing of this 
proposed Final Judgment with the Court and until the divestiture 
required by Section IV.A. or V of the Final Judgment has been 
accomplished:
    A. Following consummation of Suiza Foods Corporation's acquisition 
of Broughton Foods Company and until the divestiture required by 
Section IV.A. or V of the Final Judgment has been accomplished, Suiza 
Foods Corporation shall preserve, maintain, and operate the Southern 
Belle Dairy as an independent competitor with management, production, 
sales and operations held entirely separate, distinct and apart from 
those of Suiza Foods Corporation. Suiza Foods Corporation shall not 
coordinate the production, marketing or sale of products from Southern 
Belle Dairy's business with the business that it will own as a result 
of the acquisition of Broughton Foods Company.
    B. Following consummation of Suiza Foods Corporation's acquisition 
of Broughton Foods Company and until the divestiture required by 
Section IV.A. or V of the Final Judgment has been accomplished, Suiza 
Foods Corporation shall take all steps reasonably necessary to ensure 
that the Southern Belle Dairy will be maintained and operated as an 
independent, ongoing, economically viable and active competitor in the 
production and sale of products; that the management of the Southern 
Belle Dairy will not be influenced by Suiza Foods Corporation, and that 
the books, records, competitively sensitive sales, marketing and 
pricing information, and decision-making associated with the Southern 
Belle Dairy will be kept separate and apart from the operations of 
Suiza Foods Corporation. Suiza Foods Corporation's influence over the 
Southern Belle Dairy shall be limited to that necessary to carry out 
its obligations under the Final Judgment. Suiza Foods Corporation may 
receive historical aggregate financial information (excluding capacity 
or pricing information) relating to the Southern Belle Dairy to the 
extent necessary to allow Suiza Foods

[[Page 26786]]

Corporation to prepare financial reports, tax returns, personnel 
reports, and other necessary or legally required reports including 
provision of due diligence information required to be made available 
pursuant to this Final Judgment.
    C. Following consummation of Suiza Foods Corporation's acquisition 
of Broughton Foods Company and until the divestiture required by 
Section IV.A. or V of the Final Judgment has been accomplished, Suiza 
Foods Corporation shall use all reasonable efforts to maintain the 
operations of the Southern Belle Dairy, and shall maintain at current 
or previously approved levels, whichever are higher, internal funding, 
promotional, advertising, sales, technical assistance, marketing and 
merchandising support for the Southern Belle Dairy.
    D. Following consummation of Suiza Foods Corporation's acquisition 
of Broughton Foods Company and until the divestiture required by 
Section IV.A. or V of the Final Judgment has been accomplished, Suiza 
Foods Corporation shall provide and maintain sufficient working capital 
to maintain the Southern Belle Dairy as an economically viable, ongoing 
business.
    E. Following consummation of Suiza Foods Corporation's acquisition 
of Broughton Foods Company and until the divestiture required by 
Section IV.A. or V of the Final Judgment has been accomplished, Suiza 
Foods Corporation shall provide and maintain sufficient lines and 
sources of credit to maintain the Southern Belle Dairy as an 
economically viable, ongoing business.
    F. Following consummation of Suiza Foods Corporation's acquisition 
of Broughton Foods Company and until the divestiture required by 
Section IV.A. or V of the Final Judgment has been accomplished, Suiza 
Foods Corporation shall take all steps reasonably necessary to ensure 
that the Southern Belle Dairy is fully maintained in operable condition 
at no lower than its current rated capacity levels, and shall maintain 
and adhere to normal repair and maintenance schedules for the Southern 
Belle Dairy.
    G. Suiza Foods Corporation 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 assets of the Southern Belle Dairy.
    H. The management of Southern Belle Dairy 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 Southern Belle Dairy.
    I. Except in the ordinary course of business or as is otherwise 
consistent with this Final Judgment, Suiza Foods Corporation shall not 
hire and shall not 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 filing of this proposed Final Judgment 
work at the Southern Belle Dairy, unless such individual has a written 
offer of employment from a third party for a like position.
    J. Until such time as the Southern Belle Dairy is divested, it 
shall be managed by Martin Shearer. Mr. Shearer shall have complete 
managerial responsibility for the Southern Belle Dairy, subject to the 
provisions of the Final Judgment. Following consummation of Suiza Foods 
Corporation's acquisition of Broughton Foods Company and until the 
divestiture required by Section IV.A. or V of the Final Judgment has 
been accomplished, and in the event that Mr. Shearer is unwilling or 
unable to perform these duties, Suiza Foods Corporation shall appoint, 
subject to plaintiffs approval, a replacement acceptable to plaintiff 
within ten (10) working days. Should Suiza Foods Corporation fail to 
appoint a replacement acceptable to plaintiff within ten (10) working 
days, plaintiff shall appoint a replacement.
    K. Suiza Foods Corporation shall take no action that would 
interfere with the ability of any trustee appointed pursuant to the 
Final Judgment to complete the divestiture pursuant to the Final 
Judgment to a suitable purchaser.
    L. Within twenty (20) calendar days of the filing of this Final 
Judgment, Suiza Foods Corporation shall deliver to the United States an 
affidavit which describes in detail all actions Suiza Foods Corporation 
has taken and all steps Suiza Foods Corporation has implemented on an 
on-going basis to preserve the Southern Belle Dairy pursuant to Section 
VIII of this Final Judgment. The affidavit also shall describe, but not 
be limited to, Suiza Foods Corporation's efforts to maintain and 
operate the Southern Belle Dairy as an active competitor, maintain the 
independent management, staffing, sales, marketing, and pricing of the 
Southern Belle Dairy and maintain the Southern Belle Dairy in operable 
condition at current capacity levels. Suiza Foods Corporation shall 
deliver to the United States an affidavit describing any changes to the 
efforts and actions outlined in Suiza Foods Corporation's earlier 
affidavit(s) filed pursuant to this Section within fifteen (15) 
calendar days after the change is implemented.

IX. 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 plaintiff, including 
consultants and other persons retained by the United States, shall, 
upon the written request of the Assistant Attorney General in charge of 
the Antitrust Division, and on reasonable notice to Suiza Foods 
Corporation or Broughton Foods Company made to their principal offices, 
be permitted:
    1. access during office hours to inspect and copy all books, 
ledgers, accounts, correspondence, memoranda, and other records and 
documents in the possession or under the control of defendants, which 
may have counsel present, relating to any matters contained in this 
Final Judgment; and
    2. subject to the reasonable convenience of defendants and without 
restraint or interference from them, to interview either informally or 
on the record, directors, officers, employees, and agents of 
defendants, which may have counsel present, regarding any such matters.
    B. Upon the written request of the Assistant Attorney General in 
charge of the Antitrust Division, made to defendants at their principal 
offices, defendants shall submit written reports, under oath if 
requested, with respect to any of the matters contained in this Final 
Judgment as may be requested.
    C. No information nor any documents obtained by the means provided 
in Sections VIII or IX shall be divulged by any representative of the 
plaintiffs 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 plaintiff 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 a 
defendant to the plaintiff, such defendant 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 defendant marks each pertinent page of 
such material, ``Subject to claim of protection under Rule 26(c)(7) of 
the Federal Rules of

[[Page 26787]]

Civil Procedure,'' then the plaintiff shall give ten (10) calendar 
days' notice to defendant prior to divulging such material in any legal 
proceeding (other than a grand jury proceeding) to which defendant is 
not a party.

X. 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, implementation, or modification of 
any of the provisions of this Final Judgment, for the enforcement of 
compliance herewith, and for the punishment of any violations hereof.

XI. Termination of Provisions

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

XII. Public Interest

    Entry of this Final Judgment is in the public interest.

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

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

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

Competitive Impact Statement

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

I. Nature and Purpose of the Proceeding

    Plaintiff filed a civil antitrust Complaint on March 18, 1999, in 
United States District Court for the Eastern District of Kentucky, 
London Division, alleging that the proposed acquisition of Broughton 
Foods Company (``Broughton'') by Suiza Foods Corporation (``Suiza '') 
would violate Section 7 of the Clayton Act, 15 U.S.C. 18. The Complaint 
alleges that Suiza and Broughton compete head-to-head to sell milk to 
school districts, and that in 55 of those school districts located in 
South Central Kentucky, the acquisition is likely to substantially 
lessen competition in the sale of school milk, and that therefore 
school districts and students would likely pay higher school milk 
prices or experience lower school milk quality and service.
    The prayer for relief seeks: (a) an adjudication that the proposed 
transaction described in the Complaint would violate Section 7 of the 
Clayton Act; (b) preliminary and permanent injunctive relief preventing 
the consummation of the transaction; (c) an award to the United States 
of the costs of this action; and (d) such other relief as is proper.
    After this suit was filed, a proposed settlement was reached that 
permits Suiza to complete its acquisition of Broughton, yet preserves 
competition in the South Central Kentucky school districts where the 
transaction raises significant competitive concerns. A Stipulation and 
proposed Final Judgment embodying the settlement have been filed with 
the Court.
    The proposed Final Judgment orders Suiza to divest the entire 
Southern Belle Dairy plant based in Pulaski County, Kentucky, and all 
related assets. Unless the plaintiff grants a time extension, Suiza 
must divest the Southern Belle Dairy and related assets within six (6) 
months after the filing of the Complaint in this action or within five 
(5) business days after notice of entry of the Final Judgment, 
whichever is later. If Suiza does not divest the Southern Belle Dairy 
and related assets within the divestiture period, the Court, upon 
plaintiff's application, is to appoint a trustee to sell the assets. 
The proposed Final Judgment also requires that, until the divestiture 
mandated by the Final Judgment has been accomplished, Suiza and 
Broughton shall take all steps necessary to maintain and operate the 
Southern Belle Dairy as an active competitor, such that the sale and 
marketing of its products shall be conducted separate from, and in 
competition with, all of Suiza's products, maintain sufficient 
management and staffing, and maintain the Southern Belle Dairy in 
operable condition at current capacity configurations.
    The plaintiff and the defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. The Alleged Violations

A. The Defendants
    Suiza, a large nationwide operator of milk processing plants, is a 
Delaware corporation headquartered in Dallas, Texas. Suiza had sales of 
approximately $1.8 billion in 1997. Using the Flav-O-Rich, PET and 
Trauth names, Suiza distributes its products to Kentucky grocery 
stores, convenience stores, schools, and institutions from its dairies 
located in London and Newport, Kentucky; and Bristol and Kingsport, 
Tennessee.
    Broughton is an Ohio corporation with its headquarters in Marietta, 
Ohio. Broughton had sales of approximately $87.2 million in 1997. In 
Kentucky, Broughton, using the Southern Belle and Broughton's names, 
distributes its products to grocery stores, convenience stores, 
independent distributors, schools, and institutions from its dairies in 
Somerset, Kentucky and Marietta, Ohio.
B. Description of the Events Giving Rise to the Alleged Violations
    On September 10, 1998, Suiza and Broughton entered into an 
agreement and plan of merger, pursuant to which Suiza intends to 
purchase all of the stock of Broughton for $109.7 million and assume 
Broughton liabilities of $13 million. The statutory waiting period 
during which the firms were prohibited from completing their proposed 
acquisition expired March 19, 1999, 15 U.S.C. 18a(e)(2). The Complaint 
was filed on March 18, 1999, together with a Motion For Preliminary 
injunction. On April 9, 1999, the defendants agreed to not complete 
their proposed acquisition pending trial and the Motion For Preliminary 
Injunction was withdrawn. On April 29, 1999, the Stipulation and 
Proposed Final Judgment to resolve the suit was filed with the Court in 
London, Kentucky.
C. Anticompetitive Consequences of the Proposed Transaction
    The Complaint alleges that the sale of school milk constitutes a 
relevant product market and a line of interstate commerce. Milk is a 
product that has special nutritional characteristics and no practical 
substitutes, and dairies sell milk to schools with special services, 
including storage coolers, daily or every-other-day delivery to each 
school, limited hours delivery, constant rotation of old milk and 
replacement of expired milk. Moreover, school districts must provide 
milk in order to receive substantial funds under federal school meal 
subsidy programs. The Complaint defines the sale of milk together with 
its delivery services as the product ``school milk.'' There are no 
other products that school districts would substitute for school milk 
in the event of a small but significant price increase. If the price of 
school milk rose by a small but significant amount, school districts 
would be forced to pay the increase.

[[Page 26788]]

    The Complaint alleges that the relevant geographic market in which 
to assess the competitive effects of the proposed acquisition is a 39-
county area of Kentucky (``South Central Kentucky''), and narrower 
markets contained therein, including each of the 55 listed school 
districts likely to be affected by the acquisition (``South Central 
Kentucky School Districts''). As a practical matter, South Central 
Kentucky School Districts would be unable to turn to additional school 
milk producers not currently bidding or not currently intending to bid 
for school milk contracts within South Central Kentucky School 
Districts to supply them with school milk if the price of school milk 
were to increase by a small but significant amount.
    The Complaint alleges that Suiza's proposed acquisition of 
Broughton would lessen competition substantially in the sale of school 
milk in each of the South Central Kentucky School Districts. In 32 of 
the listed school districts, only two competitors would likely remain 
after the acquisition. Because dairies bid on each school milk contract 
separately, where the acquisition would reduce the number of bidders on 
these contracts from three to two, the likelihood that the remaining 
bidders will bid less aggressively against each other on both price and 
service terms is significantly increased.
    In 23 of the listed school districts, the effect of the proposed 
acquisition would be to establish a monopoly. In these counties, the 
proposed acquisition would give the post-acquisition firm the power 
unilaterally to raise prices or to decrease the level or quality of 
service provided to these school districts.
    The Complaint also alleges that entry by other dairies or 
distributors would not be timely, likely or sufficient to deter any 
anticompetitive effect caused by the acquisition. Dairies or 
distributors would be unlikely to decide that it has become profitable 
to compete for this low margin, low volume, seasonal business as a 
result of a small but significant increase in school milk prices.
    The Complaint also alleges, in support of its allegations 
concerning relevant product market, likely competitive effects, and 
entry, the existence of an admitted school milk bid-rigging conspiracy 
between Southern Belle Dairy and Flav-O-Rich Dairy continuing from the 
late 1970s through 1989, in 23 of the 39 counties likely to be affected 
by the acquisition. Although the dairies involved in the conspiracy 
were later purchased by Broughton (Southern Belle) and Suiza (Flav-O-
Rich), the history of school milk bid rigging in South Central Kentucky 
indicates that school milk markets there are conducive to collusion. 
The proposed acquisition would likely increase the danger of tacit or 
overt collusion in those school districts where the acquisition would 
reduce the number of competing firms from three to two, and in 
districts with no remaining competition, the proposed acquisition would 
recreate the harmful effects of the criminal bid-rigging conspiracy.
    For all of these reasons, plaintiff concludes that the proposed 
transaction is likely to lessen competition substantially in the sale 
of school milk in South Central Kentucky, and result in increased 
prices and/or reduced quality and services, all in violation of Section 
7 of the Clayton Act.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment would preserve existing competition in 
the sale of school milk in South Central Kentucky. It requires the 
divestiture of all of the Southern Belle Dairy operation. This relief 
maintains the level of competition that existed premerger and ensures 
that the affected markets will suffer no reduction in competition as a 
result of the merger, and the South Central Kentucky School Districts 
will continue to have alternatives to Suiza/Flav-O-Rich in purchasing 
school milk.
    Unless plaintiff grants an extension of time, the divestiture must 
be completed within six (6) months after the filing of the Complaint in 
this matter or within five (5) business days after notice of entry of 
this Final Judgment by the Court, whichever is later. The proposed 
Final Judgment also requires that, until the divestiture mandated by 
the Final Judgment has been accomplished, Suiza and Broughton shall 
take all steps necessary to maintain and operate the Southern Belle 
Dairy as an active competitor, such that the sale and marketing of its 
products shall be conducted separate from, and in competition with, all 
of Suiza's products; maintain sufficient management and staffing, and 
maintain the Southern Belle Dairy in operable condition at current 
capacity configurations.
    The divestiture must be to a purchaser or purchasers acceptable to 
the plaintiff in its sole discretion. Unless plaintiff otherwise 
consents in writing, the divesture shall include all the assets of the 
Southern Belle Dairy being divested, and shall be accomplished in such 
a way as to satisfy plaintiff, in its sole discretion, that such assets 
can and will be used as a viable, ongoing business. In addition, the 
purchaser must intend in good faith to continue the operations of the 
Southern Belle Dairy business that were in place prior to the filing of 
the Complaint, unless any significant change in the operations planned 
by a purchaser is accepted by the plaintiff in its sole discretion. 
This provision is intended to ensure that the business to be divested 
remains competitive with Suiza in South Central Kentucky.
    If defendants fail to divest the Southern Belle Dairy within the 
time period specified in the Final Judgment, the Court, upon 
plaintiff's application, is to appoint a trustee nominated by plaintiff 
to effect the divestiture. If a trustee is appointed, the proposed 
Final Judgment provides that defendants will pay all costs and expenses 
of the trustee and any professionals and agents retained by the 
trustee. The compensation paid to the trustee and any persons retained 
by the trustee shall be both reasonable in light of the value of the 
Southern Belle Dairy, and based on a fee arrangement providing the 
trustee with an incentive based on the price and terms of the 
divestiture and the speed with which its is accomplished. After 
appointment, the trustee will file monthly reports with the plaintiff, 
defendants and the Court, setting forth the trustee's efforts to 
accomplish the divestiture ordered under the proposed Final Judgment. 
If the trustee has not accomplished the divestiture within six (6) 
months after its appointment, the trustee shall promptly file with the 
Court a report setting forth (1) the trustee's efforts to accomplish 
the required divestiture, (2) the reasons, in the trustee's judgment, 
why the required divestiture has not been accomplished and (3) the 
trustee's recommendations. At the same time the trustee will furnish 
such report to the plaintiff and defendants, who will each have the 
right to be heard and to make additional recommendations.
    The relief in the proposed Final Judgment is intended to remedy 
only the likely anticompetitive effects of Suiza's proposed acquisition 
of Broughton in South Central Kentucky. Nothing in this Final Judgment 
is intended to limit the plaintiff's ability to investigate or to bring 
actions, where appropriate, challenging other past or future activities 
of the defendants.

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

[[Page 26789]]

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

V. Procedures Available for Modification of the Proposed Final Judgment

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

VI. Alternatives to the Proposed Final Judgment

    Plaintiff considered, as an alternative to the proposed Final 
Judgment, a full trial on the merits of its Complaint against the 
defendants. Plaintiff is satisfied, however, that the divestiture 
contained in the proposed Final Judgment will preserve competition in 
the sale of school milk in South Central Kentucky as it was prior to 
the proposed acquisition, and that the proposed Final Judgment would 
achieve all the relief the government would have obtained through 
litigation, but merely avoids the time and expense of a trial.

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

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

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

Rather,

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

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

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

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

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

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

    The relief obtained in this case is strong and effective relief 
that should fully address the competitive harm posed by the proposed 
transaction.

[[Page 26790]]

VIII. Determination Documents

    There are not determinative materials or documents within the 
meaning of the APPA that were considered by the plaintiff in 
formulating the proposed Final Judgment.

    Dated April 28, 1999.

    Respectfully submitted,
James K. Foster,
Merger Task Force, U.S. Department of Justice, Antitrust Division, 1401 
H Street, NW; Suite 4000, Washington, DC 20530, (202) 307-0001.

Certificate of Service

    I, James K. Foster, hereby certify that, on April 28, 1999, I 
caused the foregoing document to be served on defendants Suiza Foods 
Corporation and Broughton Foods Company, by facsimile and first-class 
mail, postage prepaid, to:
Paul Denis, Esq.,
Arnold & Porter, 555 12th Street, NW, Washington DC 20004-1202, Counsel 
for Suiza Foods Corporation.

William Kolasky,
Wilmer, Cutler, & Pickering, 2445 M Street, NW, Washington, DC 20037, 
Counsel for Broughton Foods Company.

James K. Foster

[FR Doc. 99-12340 Filed 5-14-99; 8:45 am]
BILLING CODE 4410-11-M