[Federal Register Volume 64, Number 155 (Thursday, August 12, 1999)]
[Notices]
[Pages 44046-44057]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20806]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Cargill, Incorporated and Continental Grain 
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 District of 
Columbia in United States of America v. Cargill, Inc. and Continental 
Grain Company, Civil Action No. 99-1875. The Complaint in this case 
alleged that the proposed acquisition of Continental Grain Company's 
(Continental) worldwide commodity marketing business by Cargill, Inc. 
(Cargill) would substantially lessen competition for grain purchasing 
services to farmers and other suppliers in many areas in the United 
States, and would increase the concentration of authorized delivery 
capacity for settlement of Chicago Board of Trade corn and soybean 
futures contracts, in violation of Section 7 of the Clayton Act, 15 
U.S.C. Sec. 18. The Complaint further alleged that the Covenant Not To 
Compete in the Purchase Agreement between the two companies is an 
unreasonable agreement in restraint of trade in violation of Section 1 
of the Sherman Act, 15 U.S.C. Sec. 1.
    The proposed Final Judgment requires Cargill to divest all of its 
property rights in its port elevator in Seattle, Washington and its 
river elevators in East Dubuque and Morris, Illinois. The proposed 
Final Judgment further requires Continental to divest all of its 
property rights in its river elevators at Lockport, Illinois and 
Caruthersville, Missouri, its rail elevators at Salina, Kansas and 
Troy, Ohio; and its port elevators at Beaumont, Texas, Stockton, 
California, and Chicago, Illinois. Cargill is also required to enter 
into a ``throughput agreement'' to make one-third of the loading 
capacity at its Havana, Illinois river elevator available to an 
independent grain company. Cargill is prohibited from acquiring any 
interest in the facilities being divested by Continental, or in the 
river elevator at Birds Point, Missouri in which Continental previously 
held a minority interest. The proposed Final Judgment also makes 
Cargill subject to various restrictions if it seeks to enter into an 
throughput agreement with the acquirer of the Seattle port facility.

[[Page 44047]]

    Public comment is invited within the statutory 60-day comment 
period. Such comments, and responses thereto, which will be published 
in the Federal Register and filed with the Court. Comments, should be 
directed to: Roger Fones; Chief, Transportation, Energy, and 
Agriculture Section, Antitrust Division; U.S. Department of Justice, 
325 Seventh Street, NW; Room 500; Washington, DC 20530 (telephone: 
(202) 307-6351).
Constance K. Robinson,
Director of Operations.

Stipulation and Order

    It is hereby 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 for 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 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 defendants 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 by the 
Court, 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 signing of this Stipulation by the parties, comply with 
all the terms and provisions of the proposed Final Judgment as though 
the same were in full force and effect as an order of the Court.
    4. 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 Section VI.B 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 that 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 divestitures 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.

        Respectfully submitted,

For Plaintiff United States of America

Robert L. McGeorge,
Attorney, U.S. Department of Justice, Antitrust Division, 325 Seventh 
Street, N.W., Suite 500, Washington, D.C. 20530, Telephone: (202) 307-
6361, Facsimile (202) 307-2784.

For Defendant Cargill, Incorporated

Marc G. Schildkraut
Howrey & Simon, 1299 Pennsylvania Avenue, N.W., Washington, DC 20004, 
Telephone: (202) 383-7448, Facsimile: (202) 383-6610.

For Defendant Continental Grain Company

Paul T. Denis,
Swidler, Berlin Shereff Friedman, LLP, 3000 K Street, N.W.; Suite 300, 
Washington, DC 20007-5116, Telephone: (202) 424-7810, Facsimile: (202) 
424-7645.

Jack Quinn,
Arnold & Porter, 555 Twelfth Street, N.W., Washington, DC 20004, 
Telephone: (202) 942-5000, Facsimile: (202) 942-5999.

    Dated: July 8, 1999.

Order

    It is so ordered, this ______ day of ____________, 1999.

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

Final Judgment

    Whereas plaintiff, the United States of America (hereinafter 
``United States''), having filed its Complaint herein, and defendants 
Cargill, Incorporated (``Cargill'') and Continental Grain Company 
(``Continental''), 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 of 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 
third parties is the essence of this agreement;
    And whereas, the United States requires defendants to maker certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    And whereas, defendants have represented to the United States that 
the divestitures 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 defendants under Section 7 of 
the Clayton Act, as amended (15 U.S.C. Sec. 18).

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' means the person or persons to whom defendants 
shall transfer the Assets (as defined in subsection B).
    B. ``Assets'' means all property rights held by Cargill or 
Continental in the river, rail and port elevators defined in 
subsections C, F, H, J, L, M, Q, R, T and V.
    C. ``Beaumont port elevator'' means the port elevator operated by 
Continental at or near Beaumont, Texas, and all Related Assets.
    D. ``Capacity'' when used in connection with a grain elevator may 
be based on the maximum number of bushels that can be stored in the 
facility at any one time (storage capacity), or the maximum number of 
bushels that can be moved through the facility over the course of a 
designated unit of time (throughput capacity). When one grain company 
obtains the right to a certain percentage of the capacity of the 
storage or loading capacity at another grain company's elevator 
pursuant to a throughput agreement or other

[[Page 44048]]

commercial arrangement, it obtains the right to the stipulated portion 
of total storage or throughput capacity at the facility, and not 
necessarily the exclusive right to use a specific area in that 
facility.
    E. ``Cargill'' means defendant Cargill, Incorporated, and includes 
its successors and assigns, their subsidiaries, divisions, groups, 
partnerships and joint ventures, affiliates, directors, officers, 
managers, agents and employees.
    F. ``Caruthersville river elevator'' means the river elevator 
operated by Continental at or near Caruthersville, Missouri, and all 
Related Assets.
    G. ``Continental'' means defendant Continental Grain Company and 
includes its successors and assigns, their subsidiaries, divisions, 
groups, partnerships and joint ventures, affiliates, directors, 
officers, managers, agents and employees.
    H. ``Chicago port elevator'' means the river elevator operated by 
Continental (also known as ``Chicago B'') at or near Chicago, Illinois, 
and all Related Assets.
    I. ``Divest'' means to sell or transfer a defendant's rights in 
property that it owns, or to assign or sublease a defendant's rights in 
property that it leases or rents.
    J. ``East Dubuque river elevator'' means the river elevator 
operated by Cargill at or near East Dubuque, Illinois, and all Related 
Assets.
    K. ``Grain'' means corn, wheat and other grains, and soybeans and 
other oilseeds, in their unprocessed, commodity form.
    L. ``Lockport river elevator'' means the river elevator operated by 
Continental at or near Lockport, Illinois, and all Related Assets.
    M. ``Morris river elevator'' means the river elevator operated by 
Cargill at or near Morris, Illinois, and all Related Assets.
    N. ``Person'' means any natural person, corporation, association, 
firm or other business or legal entity.
    O. ``Property rights'' means all legal rights possessed by 
defendants relating primarily to the use, control or operation of a 
specific river, rail or port elevator, including but not limited to: 
fee simple ownership rights, easements and all other real property 
rights for land, improvements and fixtures owned by that defendant; 
leasehold and rental rights for facilities that are leased or rented to 
that defendant, including all renewal or option rights; personal 
property ownership rights for equipment and other personal property 
owned by that defendant and used in the operation of those facilities; 
stockholder interests; and contract rights.
    P. ``Related Assets'' means all real, personal and contract rights 
associated primarily with the operation of a particular river, rail or 
port elevator, including but not limited to: all bins, silos and other 
grain storage facilities; all improvements and equipment used for 
handling, receiving, unloading, weighing, sampling, grading, elevating, 
storing, drying, conditioning and loading grain; all of the real 
property on which the facility is located; all inventory, accounts 
receivable, pertinent correspondence, files, customer lists and 
information and advertising materials relating to the facility; and all 
assignable contract rights specific to a facility with suppliers, 
customers and transportation firms for that specific facility.
    Q. ``Salina rail elevator'' means the elevator with outbound rail 
capability (also known as ``Salina East'') operated by Continental at 
or near Salina, Kansas, and all Related Assets.
    R. ``Seattle port elevator'' means the port elevator operated by 
Cargill at or near Seattle, Washington (commonly referred to as ``Pier 
86''), and all Related Assets.
    S. ``Standard Throughput Agreement'' means an agreement that allows 
one grain company to move its grain through an elevator operated by 
another person, with unloading, storage, loading and ancillary services 
provided by the operator pursuant to terms, conditions and rates that 
are common in the grain industry.
    T. ``Stockton port elevator'' means the port elevator operated by 
Continental at or near Stockton, California, and all Related Assets.
    U. ``Tacoma port elevator'' means the port elevator operated by 
Continental at or near Tacoma, Washington.
    V. ``Troy rail elevator'' means the elevator with outbound rail 
capability operated by Continental at or near Troy, Ohio, and all 
Related Assets.

III. 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.
    B. The pertinent defendant shall require, as a condition of the 
divestiture of the Assets, that the Acquirer agree to be bound by the 
provisions of this Final Judgment.

IV. Divestiture of Assets

    A. Cargill is hereby ordered and directed, within five (5) 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 all of its property rights in the 
East Dubuque river elevator and Morris river elevator to an Acquirer 
acceptable to the United States in its sole discretion. It 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 all of its property rights in the Seattle port 
elevator 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 the time period, and shall notify the Court in such 
circumstances.
    B. Notwithstanding Section IV.A, the Acquirer of the Seattle port 
elevator may enter into a Standard Throughput Agreement with Cargill, 
or any joint venture involving the Tacoma elevator to which Cargill is 
a party (the ``Cargill Joint Venture''), provided that: (1) the 
Acquirer has no interest in Cargill or the Cargill Joint Venture; (2) 
the throughput agreement gives Cargill or the Cargill Joint Venture no 
more rights concerning the operations of the facility than are commonly 
granted to sublessees in Standard Throughput Agreements; (3) and 
Cargill or the Cargill Joint Venture obtains continuing rights to move 
no more than 8.5 million bushels of grain and oilseeds combined in any 
given month through the Seattle port elevator.
    C. Notwithstanding Section IV.A and IV.B, Cargill need not divest 
the Seattle port elevator if it does not buy, lease or otherwise 
acquire an interest in Continental's port elevator at or near Tacoma, 
Washington.
    D. Continental is hereby ordered and directed, within five (5) 
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 all of its property rights 
in the Lockport river elevator, Caruthersville river elevator, Salina 
rail elevator, Troy rail elevator, Beaumont port elevator, Stockton 
port elevator and Chicago port elevator 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 the time period, and 
shall notify the Court in such circumstances.
    E. Unless the United States consents in writing, the divestiture 
pursuant to

[[Page 44049]]

Section IV or by trustee appointed pursuant to Section V of this Final 
Judgment, shall include the entire Assets defined above (as qualified 
by Section IV.B and IV.C). Divestiture shall be accomplished in such a 
way as to satisfy the United States, in its sole discretion, that the 
Assets can and will be operated by the Acquirer as a viable, ongoing 
business. Divestiture of the Assets, whether pursuant to Section IV or 
Section V of this Final Judgment, shall be made to an Acquirer for whom 
it is demonstrated to the sole satisfaction of the United States that: 
(1) the purchase is for the purpose of using the Asset to compete 
effectively in the grain business, (2) the Acquirer has the managerial, 
operational, and financial capability to use the Asset to compete 
effectively in the grain business; and (3) none of the terms of any 
agreement between the Acquirer and defendant(s) give defendant(s) the 
ability unreasonably to raise the Acquirer's costs, to lower the 
Acquirer's efficiency, or otherwise to interfere in the ability or 
incentive of the Acquirer to compete effectively. Moreover, the United 
States must be satisfied, in its sole discretion, that any Standard 
Throughput Agreement that may be negotiated between Cargill or the 
Cargill Joint Venture and the Acquirer of the Seattle port elevator: 
(1) would leave the Acquirer with sufficient capacity for it to be a 
viable and effective competitor for the purchase of corn and soybeans 
in the Pacific Northwest draw area; and (2) would not adversely affect 
the Acquirer's ability or incentives to compete vigorously for the 
origination of corn and soybeans in the Pacific Northwest draw area, by 
raising the Acquirer's costs, lowering its efficiency, or otherwise 
interfering in the ability or incentive of the Acquirer to compete 
effectively.
    F. In accomplishing the divestiture ordered by this Final Judgment, 
defendants shall make known, by usual and customary means, the 
availability of the Assets. Defendants shall provide any person making 
inquiry regarding a possible purchase a copy of the Final Judgment. The 
pertinent defendant shall also offer to furnish to any prospective 
purchaser, subject to customary confidentiality assurances, all 
information regarding the Assets customarily provided in a due 
diligence process, except such information subject to attorney client 
privilege or attorney work product privilege. The pertinent defendant 
shall make available such information to the United States at the same 
time that such information is made available to any other person. The 
pertinent defendant shall permit prospective purchasers 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 information customarily provided as part of a due 
diligence process.
    G. Defendants shall not interfere with any negotiations by the 
Acquirer to employ any employee whose primary responsibility involves 
the use of the Assets.
    H. Defendants shall take all reasonable steps to accomplish the 
prompt divestitures contemplated by this Final Judgment. Defendants 
shall not take any action other than in the ordinary course of business 
that will impede in any way the operation of the Assets.
    I. Cargill shall not purchase, lease or acquire any interest in the 
Lockport river elevator, Caruthersville river elevator, Salina rail 
elevator, Troy rail elevator, Beaumont port elevator, Stockton port 
elevator or Chicago port elevator, or any interest in the river 
elevator at or near Birds Point, Missouri (in which Continental 
formerly owned a minority interest, and had a right of first refusal to 
purchase grain). If another firm acquires the Tacoma port elevator 
pursuant to a right of first refusal (and Cargill therefore retains the 
Seattle port elevator), Cargill shall not subsequently purchase or 
lease the Tacoma port elevator. If another firm acquires the Tacoma 
port elevator pursuant to a right of first refusal, Cargill shall not 
subsequently acquire any other interest in that facility (including a 
joint venture interest) without the written consent of the United 
States.
    J. Cargill shall enter into a throughput agreement that makes one-
third (\1/3\) of the daily loading capacity at its river elevator 
located at or near Havana, Illinois, or one barge-load per day, 
whichever is greater, to an independent grain company acceptable to the 
United States in its sole discretion (the ``Havana Throughput 
Agreement''). Daily loading capacity shall be the capacity registered 
with the CBOT. The independent grain company that obtains the 
throughput right from Cargill (the ``third party'') must be qualified 
under CBOT rules and regulations to make delivery of at least one 
barge-load of corn and soybeans per day for the settlement of CBOT corn 
and soybean futures contracts, and must agree to register that capacity 
at the Havana facility with the CBOT.
    The Havana Throughput Agreement shall allow the third party to use 
its share of the loading capacity at the Havana facility to transload 
grain from trucks onto barges for commercial purposes unrelated to 
futures contract deliveries, as well as to make deliveries under CBOT 
futures contracts. Cargill shall not be obligated by this Final 
Judgment to provide storage services to the third party in excess of 
the storage services required to accommodate the transloading of grain 
shipments from trucks to barges. Cargill's load-out fees, and its fees 
for any storage services that Cargill elects to provide for storage in 
excess of twenty-four hours from the time of truck unload to barge 
loading, may not exceed the load-out fees and daily storage rates 
published in applicable CBOT tariffs.
    As part of the Havana Throughput Agreement, any dispute or 
disagreement between Cargill and the third party arising from or 
relating to the throughput agreement or the third party's use of 
Cargill's loading capacity at Havana shall be submitted, governed, and 
resolved in accordance with the arbitration rules of the CBOT to the 
extent such dispute or disagreement falls within the jurisdiction of 
the CBOT Arbitration Committees. To the extent such dispute or 
disagreement does not fall within CBOT jurisdiction, such dispute or 
disagreement shall be submitted, governed and resolved in accordance 
with the arbitration rules of the National Grain and Feed Association, 
or other arbitration body that is mutually agreed upon by Cargill and 
the third party. Cargill shall abide by the decisions of such 
arbitrators.
    Cargill shall enter into the Havana Throughput Agreement within 
five (5) 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. The United States, in 
its sole discretion, may agree to an extension of the time period, and 
shall notify the Court in such circumstances. If Cargill has not 
entered into a Havana Throughput Agreement within this time period, a 
trustee shall be appointed to satisfy this requirement pursuant to the 
same conditions as are set forth in Section V.

V. Appointment of Trustee

    A. In the event that Cargill has not divested the East Dubuque 
river elevator, Morris river elevator or Seattle port elevator, or 
entered in the Havana Throughput Agreement, to the extent required by 
Section IV of the Final Judgment within the time period specified 
therein, or that Continental has not divested the Lockport river 
elevator, Caruthersville river elevator, Salina rail elevator, Troy 
rail elevator, Beaumont port elevator, Stockton port elevator or 
Chicago port elevator, to the

[[Page 44050]]

extend required by Section IV of the Final Judgment, within the time 
period specified, it shall notify the United States of that fact in 
writing. In that event, and upon application of the United States, the 
Court shall appoint a trustee selected by the United States to effect 
the divestiture of the Assets. Until such time as a trustee is 
appointed, defendants shall continue their efforts to effect the 
divestiture as specified in Section IV.
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to divest the Assets. 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 in its sole discretion, 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 United States and the trustee within ten (10) calendar 
days after the trustee has provided the notice required under Section 
VI of this Final Judgment.
    C. The trustee shall serve at the cost and expense of the pertinent 
defendant, 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 the pertinent defendant 
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 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. The pertinent defendant shall use its best efforts to assist the 
trustee in accomplishing the required divestiture, including their best 
efforts to effect all regulatory approvals and its best efforts to 
obtain any necessary consent of any persons from whom they lease the 
Assets. 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 Assets, and the pertinent defendant 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. The pertinent defendant 
shall permit any prospective Acquirer of the Assets to have reasonable 
access to personnel and to make such inspection of physical facilities 
and any and all financial, operational, or other documents and other 
information as may be relevant to the divestitures required by this 
Final Judgment.
    E. After its appointment, the trustee shall file monthly reports 
with the parties and the Court setting forth the trustee's efforts to 
accomplish the divestiture 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 the Assets, 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 
Assets. 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 with respect to any of the Assets, the pertinent defendant or 
the trustee, whichever is then responsible for effecting the 
divestiture required herein, shall notify the United States of any 
proposed divestiture required by Section IV or V of this Final 
Judgment. If the trustee is responsible, it shall similarly notify the 
pertinent defendant. 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 
Assets, together with full details of the same. Within fifteen (15) 
calendar days after receipt of the notice, the United States may 
request from the pertinent defendant, the proposed purchaser, or any 
third party additional information concerning the proposed divestiture, 
the proposed purchaser, and any other potential purchaser. The 
pertinent defendant 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 the pertinent defendant and the trustee, if 
there is one, whether or not it objects to the proposed divestiture. If 
the United States notifies in writing the pertinent defendant and the 
trustee, if there is one, that it does not object, then the divestiture 
may be consummated, subject only to the pertinent defendant'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 a defendant 
under Section V.B., the proposed divestiture under Section V

[[Page 44051]]

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, each 
defendant shall deliver to the United States 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 Assets, 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 the pertinent defendant has taken to 
solicit an Acquirer for the relevant Assets and to provide required 
information to prospective Acquirers including the limitations, if any, 
on such information. Assuming that the information set forth in the 
affidavit is true and complete, any objection by the United States to 
the information provided by the defendants, including limitations of 
information, shall be made within fourteen (14) calendar days of 
receipt of such affidavit. Until one year after each defendant has 
completed such divestitures, that defendant shall maintain full records 
of all efforts made to divest all or any portion of the Assets.

VII. Financing

    Defendants shall not finance all or any part of any purchase of the 
Assets made pursuant to Section IV or V of this Final Judgment. With 
respect to Assets leased by a defendant, however, the pertinent will 
not violate this condition if: (1) The lessor holds the pertinent 
defendant responsible for lease payments under an assignment or 
sublease of the defendant's leasehold interests; or (2) the pertinent 
defendant makes up any shortfall between its lease payment obligations 
and the lease payments negotiated by the person to whom it assigns or 
subleases its leasehold interests.

VIII. Hold Separate and Preservation of Assets Requirements

    Unless otherwise indicated, from the date of filing of this 
proposed Final Judgment with the Court and until the divestitures 
required by Sections IV.A, IV.D and/or V of the Final Judgment, and the 
execution of the Havana Throughput Agreement required by Section IV.J, 
have been accomplished:
    A. Subject to force majeure, defendants shall: (1) Take all steps 
necessary to assure that the Assets and Cargill's Havana river elevator 
are maintained as separate, distinct and salable assets; and extend all 
reasonable efforts to maintain these facilities in a condition that 
makes them usable as grain elevators; (2) not sell, assign, transfer, 
or otherwise dispose of theses facilities, or pledge them as collateral 
for loans, except in accordance with the Final Judgment; (3) take all 
steps necessary to preserve these facilities in a state of repair equal 
to their current state of repair, ordinary wear and tear excepted; (4) 
take all steps necessary to preserve the documents, books, customers 
lists and records relating to these facilities; (5) refrain from taking 
any actions that would jeopardize the sales of these facilities; and 
(6) continue to operate these facilities as grain elevators. 
Notwithstanding the foregoing: (a) if Continental's lease of the Salina 
rail elevator expired on or before April 30, 1999 and was not renewed, 
that facility shall not be subject to this section of the Final 
Judgment, and (b) if Cargill's lease of the East Dubuque river elevator 
expires prior to divestiture, Cargill shall not thereafter be subject 
to the provisions of this section if it has offered to extend the lease 
at rates and conditions substantially similar to the rates and 
conditions in its current lease, and the lessor has rejected that 
offer.
    B. Except in the ordinary course of business or as is otherwise 
consistent with this Final Judgment, defendants 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 June 24, 1999 worked at any of the Assets, unless such 
individual has a written offer of employment from a third party for a 
like or better position.
    C. Until such time as the Assets are divested: William F. Winnie 
shall manage the Beaumont port elevator, Caruthersville river elevator, 
Chicago port elevator, Lockport river elevator, Stockton port elevator 
and Troy rail elevator; Peter Reed shall manage the East Dubuque river 
elevator; Sharon Spies shall manage the Morris river elevator; and 
Donald Vogt shall manage the Seattle port elevator. These individuals 
shall have complete managerial responsibility for the Assets, subject 
to the provisions of the Final Judgment. In the event that these 
individuals are unwilling or unable to perform these duties, defendants 
shall appoint, subject to the United States' approval, a replacement 
acceptable to the United States within ten (10) working days. Should 
defendants fail to appoint a replacement acceptable to the United 
States within ten (10) working days, the United States may appoint a 
replacement.
    D. Defendants 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 
Acquirer.
    E. Continental shall operate the Lockport river elevator, 
Caruthersville river elevator, Troy rail elevator, Beaumont port 
elevator, Stockton port elevator and Chicago port elevator 
independently from and in competition with Cargill. Defendants shall 
not implement any non-compete agreements until all of the Assets have 
been divested. The term of any such non-compete agreement shall not be 
more than three (3) years.

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 United States, 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 defendants 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 matter 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 
United States to any person other than a duly

[[Page 44052]]

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 a 
defendant to the United States, 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 Civil Procedure,'' then the 
United States 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: July ____, 1999.

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

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

Competitive Impact Statement

    The United States, pursuant to Section 2(b) of the Antitrust 
Procedures and Penalties Act (``APPA''), 15 U.S.C. Sec. 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 July 8, 1999, the United States filed a civil antitrust 
Complaint alleging that the proposed acquisition by Cargill, 
Incorporated (``Cargill'') of the Commodity Marketing Group of 
Continental Grain Company (``Continental'') would violate Section 7 of 
the Clayton Act, 15 U.S.C. Sec. 18. The Complaint alleges that Cargill 
is the second largest grain trader in North America, and that, until 
recently, Continental was the third largest grain trader in North 
America. The Complaint alleges that if the acquisition is permitted to 
proceed, it will substantially lessen competition for grain purchasing 
services to farmers and other suppliers in a number of areas in the 
United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 
Sec. 18. The Complaint further alleges that unless the acquisition is 
enjoined, many American farmers and other suppliers likely will receive 
lower prices for their grain and oilseed crops, including corn, 
soybeans, and wheat (collectively referred to as ``grain''). The 
request for relief in the Complaint seeks: (1) Preliminary and 
permanent injunctive relief preventing the consummation of the 
transaction; and (2) such other relief as is proper.
    When the Complaint was filed, the United States also filed a 
proposed consent decree (``Final Judgment'') that would permit Cargill 
to complete its acquisition of Continental's commodity marketing 
business, but requires divestitures and other relief that would 
preserve competition for grain purchasing services to farmers and other 
suppliers in a number of areas in the United States.\1\ The proposed 
Final Judgment orders defendant Cargill to divest all of its property 
rights in the river elevators located in East Dubuque, Illinois and 
Morris, Illinois within five (5) months after the filing of the 
proposed Final Judgment or within five (5) calendar days after notice 
of entry of the Final Judgment, whichever is later. The proposed Final 
Judgment also orders defendant Cargill to divest all of its property 
rights in the Seattle port elevator within six (6) months after the 
filing of the proposed Final Judgment or within five (5) calendar days 
after notice of entry of the Final Judgment, whichever is later. The 
proposed Final Judgment orders defendant Continental to divest all of 
its property rights in the river elevators located at Lockport, 
Illinois and Caruthersville, Missouri, the rail elevators located at 
Salina, Kansas and Troy, Ohio, and the port elevators located at 
Beaumont, Texas, Stockton, California, and Chicago, Illinois within 
five (5) months after the filing of the proposed Final Judgment or 
within five (5) calendar days after notice of entry of the Final 
Judgment, whichever is later. The proposed Final Judgment also requires 
defendant Cargill to enter into a ``throughput agreement''--an 
agreement providing for one grain trader to lease elevator capacity 
from another--to make one-third of the loading capacity at its Havana, 
Illinois river elevator available to an independent grain company, 
within five (5) months after the filing of the proposed Final Judgment 
or within five (5) calendar days after notice of entry of the Final 
Judgment, whichever is later.
---------------------------------------------------------------------------

    \1\ Cargill and Continental entered into a Stipulation (filed 
contemporaneously with the Final Judgment) in which they agreed to 
be bound by the proposed final Judgment pending final determination 
by the Court.
---------------------------------------------------------------------------

    In addition, the proposed Final Judgment prohibits defendant 
Cargill from acquiring any interest in the facilities to be divested by 
Continental, or the river elevator at Birds Point, Missouri, in which 
Continental until recently had held a minority interest. The proposed 
Final Judgment also makes defendant Cargill subject to various 
restrictions in the event it seeks to enter into a throughput agreement 
with the acquirer of the Seattle port facility.
    If the defendants should fail to accomplish the divestitures or to 
enter into a Havana throughput agreement within the prescribed time 
periods, a trustee appointed by the Court would be empowered to divest 
these assets or otherwise satisfy the Havana throughput requirement.
    The plaintiff and 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. Events Giving Rise to the Alleged Violations

A. The Defendants and the Proposed Transaction
    Cargill is a Delaware corporation with its principal place of 
business in Minnetonka, Minnesota. It is the second largest grain 
trader in North America. Continental is a Delaware corporation with its 
principal place of business in New York City, New York. It was, as 
recently as 1997, North America's third largest grain trader. The 
defendants are also the first and third largest U.S. grain exporters, 
collectively exporting approximately 40 percent of all U.S. 
agricultural commodities. Both Cargill and Continental purchase grain 
and

[[Page 44053]]

other crops from farmers, brokers, and elevator operators throughout 
the United States.
    On October 9, 1998, Cargill and Continental entered into an 
agreement entitled ``Purchase Agreement'' under which Cargill agreed to 
purchase Continental's Commodity Marketing Group.
B. The Grain Purchasing Market
    Grain traders such as Cargill and Continental operate extensive 
grain distribution networks, which facilitate the movement of grain 
from farms to domestic consumers of these commodities and to foreign 
markets. Country elevators are often the first stage of the grain 
distribution system, with producers hauling wheat, corn, and soybeans 
by truck from their farms for sale to the country elevators. Here, the 
grain is off-loaded, sampled, graded, and put into storage. Sometimes 
other services are offered by the country elevators, such as grain 
drying and conditioning services. The grain is then transported by 
truck, rail, or barge to larger distribution facilities, such as river, 
rail, or port elevators, which may or may not be affiliated with the 
country elevators, or to feedlots or processors.
    River elevators or rail terminals may receive grain directly from 
the farm or from country elevators. From the river elevator, grain 
typically moves outbound by barge to port elevators. From the rail 
terminal, grain typically moves outbound by rail to port elevators or 
to domestic feedlots or processors.
    The final stage in the grain distribution system for grain intended 
for export is a port elevator, where it is transferred to ocean vessels 
for shipment to foreign buyers. Grain normally comes to port elevators 
from river elevators (via barge) and rail terminals, although some port 
elevators receive grain directly from farmers and country elevators 
located within a relatively short distance from the port elevator.
    Because the transportation of grain is relatively costly and time-
consuming, farmers generally sell their grain within a limited 
geographic area surrounding their farms, usually to a country 
elevator--although farmers located near river, rail, or port elevators 
sometimes bypass the country elevator and ship their grain directly to 
those facilities. Grain traders purchase grain at these country, rail, 
river, and port elevators from farmers and from other suppliers, such 
as brokers and independent elevator operators who have purchased grain 
from the farmers.
    the Complaint alleges that the purchasing of wheat, corn, and 
soybeans each constitutes a relevant product market and a line of 
commerce within the meaning of the Clayton Act.
    The draw area for a country, river, rail, or port elevator is the 
geographic area from which the facility receives grain. The draw area 
of one grain company's country, river, rail or port elevator will 
overlap the draw area of a competitor's elevator if their facilities 
are relatively close to each other--and the cost of shipping grain from 
the producer to both elevators is comparable. Cargill and Continental 
operate a number of facilities with overlapping draw areas, and 
therefore compete with one another in a number of markets for the 
purchase of wheat, corn, and soybeans from the same producers or other 
suppliers.
    Many farmers and other suppliers located within overlapping 
Cargill/Continental draw areas depend solely on competition among 
Cargill, Continental, and perhaps a small number of other nearby grain 
companies to obtain a competitive price for their products. The areas 
in which these suppliers are located are referred to as ``captive draw 
areas'' in the Complaint. The Complaint alleges that these captive draw 
areas are relevant geographic markets and separate sections of the 
country within the meaning of the Clayton Act.
    The following are the overlapping and captive draw areas for 
competing Cargill and Continental facilities:
     The Pacific Northwest. Cargill's port elevator in Seattle 
competes with Continental's port elevator in Tacoma for the purchase of 
corn and soybeans. The overlapping draw area for these facilities 
includes portions of North Dakota, South Dakota, Minnesota, Nebraska, 
and Iowa. Captive suppliers are located primarily in eastern North 
Dakota, eastern South Dakota, and western Minnesota.
     Central California. Cargill's port elevator in Sacramento 
competes with Continental's port elevator in Stockton for the purchase 
of wheat and corn. The overlapping draw area for these facilities is 
located in the Sacramento/Stockton area, where all suppliers are 
captive
     Texas Gulf. Cargill's port elevator in Houston competes 
with Continental's port elevator in Beaumont for the purchase of 
soybeans and wheat. The overlapping draw area for these facilities 
includes portions of Texas, Louisiana, Oklahoma, Kansas, New Mexico, 
Colorado, Nebraska, Missouri, Iowa, and Illinois. Captive suppliers are 
located primarily in eastern Texas and western Louisiana.
     Rail and River Elevators. Cargill and Continental compete 
for the purchase of grain from captive suppliers located near their 
rail elevators in Salina, Kansas and Troy, Ohio, and their river 
elevators in the vicinity of Morris, Illinois, Lockport, Illinois, 
Dubuque, Iowa/East Dubuque, Illinois, and New Madrid/Caruthersville, 
Missouri.
    According to the Complaint, if Cargill were allowed to acquire the 
Continental facilities that purchase grain in these captive draw areas, 
it would be in a position unilaterally, or in coordinated interaction 
with the few remaining competitors, to depress prices paid to farmers 
and other suppliers, because transportation costs would preclude them 
from selling to other grain traders or purchasers in sufficient 
quantities to prevent an anticompetitive price decrease.
    The Complaint also alleges that producers of corn, soybeans, and 
wheat would not switch to an alternative crop in sufficient numbers to 
prevent a small but significant decrease in price because of the length 
of growing seasons and of the suitability of those crops to certain 
climates and regions. Nor are processors or fedlots that purchase grain 
to manufacture food products or fatten livestock likely to constrain 
pricing decisions by grain trading companies because their purchasing 
decisions are based on factors other than small but significant changes 
in crop prices. Therefore, significant changes in concentration among 
grain trading companies can have an anticompetitive impact upon prices 
received by farmers and other suppliers.
C. The Chicago Board of Trade Futures Markets
    In addition, Cargill and Continental compete to purchase corn and 
soybeans from grain sellers seeking to deliver these crops to river 
elevators on the Illinois River that, beginning in year 2000, will be 
authorized as delivery points for the settlement of Chicago Board of 
Trade (CBOT) corn and soybean futures contracts. The provision of 
authorized delivery points for corn and soybean futures contracts is a 
relevant product market within the meaning of the Clayton Act. These 
delivery points are regulated by the Commodities Futures Trading 
Commission. The authorized delivery points, running the entire length 
of the Illinois River for soybeans, and from Chicago to Peoria, 
Illinois for corn, each constitutes a relevant geographic market within 
the meaning of the Clayton Act; and undue concentration in these 
markets would increase the possibilities

[[Page 44054]]

of anticompetitive manipulations of the futures markets.
D. Harm to Competition as a Consequence of the Acquisition
    The Complaint alleges that Cargill's acquisition of Continental's 
Commodity Marketing Group will substantially lessen competition for the 
purchase of corn, soybeans, and wheat in each of the relevant 
geographic markets by enabling Cargill unilaterally to depress the 
prices paid to farmers and other suppliers. The Complaint further 
alleges that the proposed transaction will also make it more likely 
that the few remaining grain trading companies that purchase corn, 
soybeans, and wheat in these markets will engage in anticompetitive 
coordination to depress grain prices. Moreover, it is not likely that 
Cargill's exercise of market power in any of these relevant geographic 
markets would be thwarted by significantly increased purchases of corn, 
soybeans, or wheat by processors, feedlots, or other buyers, by new 
entry, by farmers and other suppliers transporting their products to 
more distant markets, or by any other countervailing force.
    In addition, the Complaint alleges that by consolidating the 
Cargill and Continental river elevators on the Illinois River, this 
transaction would give two firms approximately 80% of the authorized 
delivery capacity for settlement of CBOT corn and soybeans futures 
contracts. This concentration would increase the likelihood of price 
manipulation of futures contracts by those firms, resulting in higher 
risks for buyers and sellers of futures contracts.
    Finally, the Complaint alleges that the defendants' Purchase 
Agreement includes a Covenant Not to Compete that is longer than is 
reasonably necessary for Cargill to have a fair opportunity to gain the 
loyalty of Continental's suppliers and customers, and has the effect of 
unlawfully dividing markets between the two companies in violation of 
Section 1 of the Sherman Act, 15 U.S.C. Sec. 1.

III. Explanation of the Proposed Final Judgment

    The provisions of the proposed Final Judgment are designed to 
preserve existing competition for grain purchasing services to farmers 
and other suppliers in numerous areas in the United States, and to 
prevent anticompetitive manipulation of CBOT corn and soybean futures 
markets. To preserve existing competition for grain purchasing 
services, it requires divestitures of Cargill or Continental river 
elevators at Morris, Illinois, Lockport, Illinois, East Dubuque, 
Illinois, and Caruthersville, Missouri; rail terminals at Troy, Ohio 
and Salina, Kansas; and port elevators at Beaumont, Texas, Stockton, 
California, and Seattle, Washington. This relief is intended to 
maintain the level of competition that existed preacquisition, and 
ensures that farmers and other suppliers in the affected markets will 
continue to have effective alternatives to Cargill when selling their 
crops. to prevent manipulations of CBOT corn and soybean futures 
markets, the proposed Final Judgment requires divestitures of Cargill 
or Continental elevators along the Illinois River at Morris, Lockport 
and Chicago, Illinois, as well as providing one-third of Cargill's 
capacity at Havana, Illinois to a new entrant pursuant to a throughput 
agreement.\2\
---------------------------------------------------------------------------

    \2\ The divestitures of the Morris and Lockport river elevators 
provide relief for both the grain purchasing markets and the CBOT 
futures markets.
---------------------------------------------------------------------------

A. East Dubuque and Morris River Elevators, and Seattle Port Elevator 
Provisions
    Section IV.A of the proposed Final Judgment provides that, within 
five (5) months from the filing of the proposed Final Judgment with the 
Court, or five (5) calendar days after notice of the entry of the Final 
Judgment by the Court, whichever is later, defendant Cargill must 
divest all of its property rights in the East Dubuque, Illinois river 
elevator and the Morris, Illinois river elevator to an acquirer 
acceptable to the United States. Section IV.A of the proposed Final 
Judgment also provides that, within six (6) months from the filing of 
the proposed Final Judgment with the Court, or five (5) calendar days 
after notice of the entry of the Final Judgment by the Court, whichever 
is later, defendant Cargill must divest all of its property rights in 
the Seattle port elevator to an acquirer acceptable to the United 
States.
    Section IV.B of the proposed Final Judgment imposes conditions on 
Cargill and the acquirer of the Seattle port elevator, should the 
acquirer decide to enter into a throughput agreement with Cargill or 
any joint venture involving the Tacoma elevator to which Cargill is a 
party (``Cargill Joint Venture''). Throughput agreements, which are 
common in the grain industry, allow one firm to move its grain through 
another firm's elevator for a fee. Under the terms of the Final 
Judgment: (a) Cargill may not obtain continuing rights to move more 
than 8.5 million bushels of grain per month through the Seattle port 
elevator (which ensures that the acquirer of that facility will have 
continuing rights to a substantial majority of the facility's 
throughput capacity); (b) the throughput agreement gives Cargill no 
more rights concerning the operations of the Seattle facility than are 
commonly granted to sublessees in standard throughput agreements (which 
insures that the acquirer will retain overall operational control of 
the facility); and (c) that, in any event, the throughput agreement 
will not interfere with the ability or incentive of the acquirer to 
compete for the purchase of corn and soybeans.
    Section IV.C of the proposed Final Judgment provides that Cargill 
need not divest the Seattle port elevator if it does not buy, lease, or 
otherwise acquire an interest in Continental's port elevator at or near 
Tacoma, Washington.
B. Lockport River Elevator, Caruthersville River Elevator, Salina Rail 
Elevator, Troy Rail Elevator, Beaumont Port Elevator, Stockton Port 
Elevator, and Chicago Port Elevator Provisions
    Section IV.D of the proposed Final Judgment provides that, within 
five (5) months from the filing of the proposed Final Judgment with the 
Court, or five (5) calendar days after notice of the entry of the Final 
Judgment by the Court, whichever is later, defendant Continental must 
divest all of its property rights in the river elevators located at 
Lockport, Illinois and Caruthersville, Missouri; the rail terminals 
located at Salina, Kansas and Troy, Ohio; and the port elevators 
located at Beaumont, Texas, Chicago, Illinois, and Stockton, 
California, to an acquirer acceptable to the United States. These 
facilities were originally part of the defendants' Purchase Agreement. 
This divestiture requirement will ensure that these facilities are sold 
to purchasers who will operate these assets as grain elevators; and it 
is intended to preserve the market structure that existed in those 
geographic areas prior to the acquisition.
C. General Divestiture Provisions
    Sections IV.E through IV.H of the proposed Final Judgment apply to 
all the divestitures ordered in Sections IV.A and IV.D (as qualified by 
Sections IV.B and IV.C). Section IV.E provides that unless the United 
States consents in writing, the divestitures shall include the entire 
assets defined in Sections IV.A and IV.D. The divestitures must be 
accomplished in such a way to satisfy the United States, in its sole 
discretion, that the assets can and will be operated by the acquirer as 
a viable, ongoing entity capable of competing in the grain business. In 
addition, any Standard Throughput Agreement that may be

[[Page 44055]]

negotiated between Cargill or the Cargill Joint Venture and the 
purchaser of the Seattle port elevator must be acceptable to the United 
States, in its sole discretion.
    Under Section IV.F of the proposed Final Judgment, defendants shall 
make known, by usual and customary means, the availability of the 
assets and provide any prospective purchasers with a copy of the Final 
Judgment. The pertinent defendant is required to offer to furnish any 
prospective purchaser, subject to customary confidentiality assurances, 
all information regarding the assets customarily provided in a due 
diligence process, except such information subject to attorney-client 
privilege or attorney work-product privilege. The pertinent defendant 
must also permit prospective purchasers to have reasonable access to 
personnel and to make inspection of physical facilities and financial, 
operational, or other documents and information customarily provided as 
part of a due diligence process.
    Section IV.G prohibits defendants from interfering with any 
negotiations by the purchaser to hire any employee whose primary 
responsibility involves the use of the assets. Under Section IV.H, 
defendants must take all reasonable steps necessary to accomplish the 
prompt divestitures contemplated by the proposed Final Judgment, and 
may not impede the operation of the assets.
    Section IV.I of the proposed Final Judgment prohibits Cargill from 
purchasing, leasing, or acquiring any interest in any of the assests 
required to be divested by defendant Continental pursuant to Section 
IV.D, or any interest in the river elevator at or near Bird's Point, 
Missouri (in which Continental formerly owned a minority interest and 
had a right of first refusal to purchase grain). Section IV.I also 
prohibits Cargill from subsequently purchasing or leasing the Tacoma 
port elevator should another firm acquire that facility, or from 
acquiring any other interest in that facility (including a joint 
venture interest) without the written consent of the United States. 
Section IV.I does not explicitly prohibit Cargill from reacquiring the 
assets that it will divest, because that prohibition is inherent in the 
requirement that Cargill divest these assets for the ten-year term of 
the Final Judgment.
    Pursuant to Section IV.J of the proposed Final Judgment, defendant 
Cargill must enter into a throughput agreement that makes one-third 
(\1/3\) of the daily loading capacity at its river elevator located at 
or near Havana, Illinois, or one barge-load per day, whichever is 
greater, to an independent grain company acceptable to the United 
States in its sole discretion (the ``Havana Throughput Agreement'').\3\ 
Unless the United States agrees to an extension, Cargill must enter 
into the Havana Throughput Agreement within five (5) months from the 
date the Final Judgment is filed with the Court, or five (5) calendar 
days after notice of the entry of the Final Judgment by the Court, 
whichever is later.
---------------------------------------------------------------------------

    \3\ The divestitures of the facilities at Morris, Lockport, and 
Chicago were sufficient to resolve concerns about consolidation of 
authorized delivery points for CBOT corn futures markets, which 
extend from Chicago to Pekin. To resolve concerns about 
concentration of authorized delivery points for CBOT soybean futures 
markets, which extend the entire length of the Illinois River, it 
was necessary to provide delivery capacity for a new entrant on the 
southern portion of the Illinois River.
---------------------------------------------------------------------------

D. Trustee Provisions
    If the defendants fail to complete any of the divestitures or to 
enter into the Havana Throughput Agreement within the required time 
periods, the Court will appoint a trustee, pursuant to Section V of the 
proposed Final Judgment, to accomplish the divestitures. Once 
appointed, only the trustee will have the right to sell the divestiture 
assets or enter into the Havana Throughput Agreement, and the pertinent 
defendant 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 such professionals or agents shall be reasonable 
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. The proposed Final Judgment also requires the 
pertinent defendant to use its best efforts to assist the trustee in 
accomplishing the required divestitures.
    Pursuant to Section V.E, the trustee must file monthly reports with 
the parties and the Court, setting forth the trustee's efforts to 
accomplish the divestitures ordered under the proposed Final Judgment. 
If the trustee does not accomplish the divestitures within six (6) 
months after its appointment, the trustee shall promptly file with the 
Court a report setting forth (1) the trustee's efforts to accomplish 
the required divestitures, (2) the reasons, in the trustee's judgment, 
why the required divestitures have not been accomplished, and (3) the 
trustee's recommendations. At the same time, the trustee will furnish 
such report to the United States and defendants, who will each have the 
right to be heard and to make additional recommendations. The Court 
shall thereafter enter such orders as appropriate in order to carry out 
the purpose of the Final Judgment, including extending the term of the 
trustee's appointment.
E. Notification Provisions
    Section VI of the proposed Final Judgment assures the United States 
an opportunity to review any proposed sale, whether by the pertinent 
defendant or 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 pertinent defendant or the trustee, any proposed 
divestiture may not be completed. Should a defendant object to a 
divestiture by the trustee pursuant to Section V.B., that sale shall 
not be consummated unless approved by the Court.
    Section VII of the proposed Final Judgment prohibits defendants 
from financing all or any part of any purchase of the assets made 
pursuant to Sections IV or V of the Final Judgment. However, the 
pertinent defendant will not violate this condition with respect to 
assets leased by a defendant if: (1) The lessor holds the pertinent 
defendant responsible for lease payments under an assignment or 
sublease of the defendant's leasehold interests; or (2) the pertinent 
defendant makes up any shortfall between its lease payment obligations 
and the lease payments negotiated by the person to whom it assigns or 
subleases its leasehold interests.
F. Hold Separate Provisions
    Under Section VIII of the proposed Final Judgment, defendants must 
take certain steps to ensure that, until the required divestitures and 
the execution of the Havana Throughput Agreement have been 
accomplished, all the previously defined assets and Cargill's Havana 
river elevator will be maintained as separate, distinct and saleable 
assets, and maintained as usable grain elevators. Until such 
divestitures, the defendants shall continue to operate these facilities 
as grain elevators. The defendants must maintain all these facilities 
so that they continue to be saleable, including maintaining all 
records, loans, and personnel necessary for their operation. Defendant 
Continental must operate the Lockport river elevator, Caruthersville 
river elevator, Troy rail elevator, Beaumont port elevator, Stockton 
port elevator, and Chicago port elevator independently from and in 
competition with Cargill.

[[Page 44056]]

G. Non-Compete Provisions
    The Cargill/Continental Purchase Agreement contains a five-year 
non-compete provision. Under the proposed Final Judgment, defendants 
are prohibited from implementing any non-compete agreements until all 
of the assets have been divested. Furthermore, the term of any such 
non-compete agreement may not be more than three (3) years.
H. Compliance Inspection, Retention of Jurisdiction and Termination 
Provisions
    Section IX requires defendants to make available, upon request, the 
business records and the personnel of its businesses. This provision 
allows the United States to inspect defendants' facilities and ensure 
that they are complying with the requirements of the proposed Final 
Judgment. Section X provides for jurisdiction to be maintained by the 
Court. Section XI 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. Sec. 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 
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. 
Sec. 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 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 for a period of at least sixty 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 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 its 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, United States Department of 
Justice, 325 Seventh Street, N.W., Suite 500, Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    the United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits against Cargill and 
Continental. The United States is satisfied, however, that the 
divestitures and other relief contained in the proposed Final Judgment 
should preserve competition in grain purchasing services as it was 
prior to the proposed acquisition, and that the proposed Final Judgment 
would achieve all of the relief that 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-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 
consideration 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. Sec. 16(e). As the Court of Appeals for the District of 
Columbia Circuit held, the APPA permits the 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 (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. \4\ Rather,
---------------------------------------------------------------------------

    \4\ 119 Cong. Rec. 24598 (1973); see also 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. 93-1463, 93rd Cong. 2d Sess. 8-9, reprinted in (1974) 
U.S.C.C.A.N. 6535, 6538.

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). Precedent requires that

[t]he 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

[[Page 44057]]

effectiveness of antitrust enforcement by consent decree.\5\

    \5\ United States v. Bechtel, 648 F.2d at 666 (internal 
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); Gillette, 406 F. Supp. at 716. 
See also United States v. American Cyanamid Co., 719 F. 2d 558, 565 
(2d Cir. 1983).
---------------------------------------------------------------------------

    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.' ''.\6\
---------------------------------------------------------------------------

    \6\ United States v. American Tel. & Tel. Co., 552 F. Supp. 131, 
150 (D.D.C. 1982) (citations omitted), aff'd sub nom. Maryland v. 
United States, 460 U.S. 1001 (1983), quoting Gillette, 406 F. Supp. 
at 716; United States v. Alcan Aluminum, Ltd., 605 F. Supp. 619, 622 
(W.D. Ky. 1985).
---------------------------------------------------------------------------

    Moreover, the Court's role under the Tunney Act is limited to 
reviewing the remedy in relationship to the violations that the United 
States has alleged in its complaint, and the Act does not authorize the 
Court to ``construct [its] own hypothetical case and then evaluate the 
decree against that case.'' Microsoft, 56 F.3d at 1459. Since ``[t]he 
court's authority to review the decree depends entirely on the 
government's exercising its prosecutorial discretion by bringing a case 
in the first place,'' it follows that the court ``is only authorized to 
review the decree itself,'' and not to ``effectively redraft the 
complaint'' to inquire into other matters that the United States might 
have but did not pursue. Id.

VIII. Determinative Documents

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

For Plaintiff United States of America

    Dated: July 23, 1999.
        Respectfully submitted,
Robert L. McGeorge, D.C. Bar No. 91900,
Trial Attorney, U.S. Department of Justice, Antitrust Division, 325 
Seventh Street, N.W.; Suite 500, Washington, DC 20530, Telephone: (202) 
307-6361 or (202) 307-6351, Facsimile: (202) 307-2784.
[FR Doc. 99-20806 Filed 8-11-99; 8:45 am]
BILLING CODE 4410-11-M