[Federal Register Volume 65, Number 139 (Wednesday, July 19, 2000)]
[Notices]
[Pages 44820-44829]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18216]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Dairy Farmers of America, et al.; 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 
Pennsylvania in United States of America v. Dairy Farmers of America, 
et al., Civil Action No. 00-1663. On March 31, 2000, the United States 
filed a Complaint alleging that the proposed acquisition by Dairy 
Farmers of America, Inc. (``DFA'') of substantially all the assets of 
SODIAAL North America Corporation (``SODIAAL''), would violate section 
7 of the Clayton Act, 15 U.S.C. 18. The proposed Final Judgment, filed 
on May 18, 2000, allows DFA to complete the proposed acquisition of 
SODIAAL but prohibits it from entering into any federation with Land O' 
Lakes, Inc. with respect to the marketing, promotion, sale, or 
distribution of branded butter. Copies of the Complaint, proposed Final 
Judgment and Competitive Impact Statement are available for inspection 
at the Department of Justice in Washington, DC in Room 200, 325 Seventh 
Street, NW, and at the Office of the Clerk of the United States 
District Court for the Eastern District of Pennsylvania.
    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 J. Robert Kramer

[[Page 44821]]

II, Chief, Litigation II Section, Antitrust Division. Department of 
Justice, 1401 H St. NW, Suite 3000, Washington, DC 20530 (telephone: 
(202) 307-0924).

Constance K. Robinson,
Director of Operations and Merger Enforcement.

United States District Court, Eastern District of Pennsylvania

Civil Action No. 00-1663
United States of America, Plaintiff, vs. Dairy Farmers of America, 
et al., Defendants.

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 Pennsylvania.
    (2) The parties stipulate that a Final Judgment in the form hereto 
attached may be filed and entered by the Court, upon the motion of any 
party or upon the Court's own motion, at any time after compliance with 
the requirements of the Antitrust Procedures and Penalties Act (15 
U.S.C. 16), and without further notice to any party or other 
proceedings, provided that 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 (a) act in accordance with, abide by and 
comply with the provisions of the proposed Final Judgment pending entry 
of the Final Judgment, (b) 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, and (c) continue to comply with those terms and 
provisions until superseded by an Order of this 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 waive any claim that the Capper-Volstead Act, 7 
U.S.C. 291, constitutes a defense to any breach or violation of this 
Stipulation and Order or to any violation of any provision of the Final 
Judgment once entered by the Court.
    (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, 
this Stipulation shall have no binding effect on Plaintiff whatsoever, 
and the making of this Stipulation shall be without prejudice to 
Plaintiff in this or any other proceeding. Regardless of whether 
Plaintiff withdraws its consent, Defendants shall continue to abide by 
this Stipulation and Order until such time as it is superceded by Order 
of the Court.
    (7) Defendants represent that the conduct ordered in the proposed 
Final Judgment can and will be performed, and that Defendants will 
raise no claim of hardship or difficulty as grounds for asking the 
Court to modify any of the 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 31, 2000, April 4, 2000, and 
April 17, 2000, from consummation of their proposed transaction and 
from bringing their operations under common ownership and control, this 
Stipulation and Order, and the incorporated terms of the proposed Final 
Judgment shall supersede any inconsistent provisions of those earlier 
orders.
    (9) Unless otherwise indicated, from the date of filing of this 
proposed Stipulation and Orders of the Court and until consummation of 
the transaction, Societe De Diffusion Internationale Agro-Alimentaire 
and SODIAAL North America Corporation shall:
    a. Preserve, maintain, and operate the SODIAAL North America 
Corporation butter assets as an independent competitor with management, 
production, sales and operations held entirely separate, distinct and 
apart from those of Diary Farmers of America (``DFA'');
    b. Take all steps reasonably necessary to ensure that the SODIAAL 
North America Corporation butter assets will be maintained and operated 
as an independent, ongoing, economically viable and active competitor 
in the markets alleged in the Complaint; that the management of SODIAAL 
North America Corporation will not be influenced by DFA, and that the 
books, records, competitively sensitive sales, marketing and pricing 
information, and decision-making associated with the SODIAAL North 
America Corporation butter assets will be kept separate and apart from 
the operations of DFA;
    c. Use all reasonable efforts to maintain the operations of the 
SODIAAL North America Corporation butter assets, and maintain at 
current or previously approved levels, whichever are higher, internal 
funding, promotional, advertising, sales, technical assistance 
marketing and merchandising support for the SODIAAL North America 
Corporation butter assets;
    d. Provide and maintain sufficient working capital to maintain the 
SODIAAL North America Corporation butter assets as an economically 
viable, ongoing business;
    e. Provide and maintain sufficient lines and sources of credit to 
maintain the SODIAAL North America Corporation butter assets as an 
economically viable, ongoing business;
    f. Take all steps reasonably necessary to ensure that the SODIAAL 
North America Corporation butter assets are fully maintained in 
operable condition at no lower than their current rated capacity 
levels, and to maintain and adhere to normal repair and maintenance 
schedules of the SODIAAL North America Corporation butter assets; and,
    g. Cause the management of the SODIAAL North America Corporation 
butter assets to 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 
SODIAAL North America Corporation butter assets.

[[Page 44822]]

Respectfully submitted,

Mark J. Botti
  

Michael H. Knight
U.S. Department of Justice, Antitrust Division, 1401 H Street, N.W., 
room 400, Washington, D.C. 20530, Telephone: (202) 514-9109, Facsimile: 
(202) 307-5802, Counsel for United States of America.

W. Todd Miller, Esq.
Baker & Miller, PLLC, Suite 1000, 915 15th Street, N.W., Washington, 
D.C. 2005-2302, Telephone: (202) 637-9499, Facsimile: (202) 637-9384, 
Counsel for United States of America, Inc.

Frederick A. Tecce, Esq.
McShea & Tecce Mellon Bank Ctr., 26th floor, Philadelphia, PA 19103, 
Telephone: (215) 599-0800, Counsel for Dairy Farmers of America, Inc.
Facsimile: (202) 307-5802

Burton Z. Alter, Esq.
  
Christopher Rooney, Esq.
Carmody & Torrance LLP 18th Floor, 195 Church Street, New Haven, CT 
06509-1950, Counsel for Societe De Diffusion, Internationale Agro-
Alimentaire and SODIAAL North America Corporation.
So ordered:
    This 19th day of May, 2000.

United States District Court Eastern district of Pennsylvania

Civil Action No. 00-1663
United States of America Plaintiff, vs. Dairy Farmers of America, et 
al., Defendants.

Final Judgment

    Whereas Plaintiff, the United States of America (hereinafter 
``United States''), having filed its Complaint on March 31, 2000, this 
Court having issued a temporary restraining order on the same date, and 
Plaintiff and Defendants, by their respective attorneys, having 
consented to the entry of this Final Judgment without trial or 
adjudication of any issue of fact or law, and without this Final 
Judgment constituting any evidence against or admission by any party 
regarding any issue of fact or law;
    And whereas, Defendant Societe de Diffusion Internationale Agro-
Alimentaire, while not agreeing that it does business in the United 
States generally, has agreed to be bound by the provisions of this 
Final Judgment;
    And whereas, Defendants SODIAAL North America Corporation and Dairy 
Farmers of America, Inc. have agreed to be bound by the provisions of 
this Final Judgment;
    Now, therefore, before the taking of any testimiony, and without 
trial or final adjudication of any issue of fact or law herein, and 
upon consent of the parties hereto, it is hereby ordered, adjudged, and 
decreed:

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. 18).

II. Definitions

As used in this Final Judgment:
    A. ``Butter LLC'' means the limited liability company formed 
pursuant to Section IV of this Final Judgment and includes each of its 
successors, divisions, subsidiaries, and affiliates, each other person 
directly or indirectly, wholly or in part, owned or controlled by its, 
and each partnership or joint venture to which any of them is a party, 
and all of their directors, officers, and employees, and each and any 
successor to its interest in the Keller's, Hotel Bar, or Breakstone's 
brands.
    B. ``Dairy Farmers of America, Inc.'' or ``DFA'', means Defendant 
Dairy Farmers of America, Inc., a Kansas corporation with its 
headquarters in Kansas City, Missouri, and includes each of its 
successors, divisions, parents, subsidiaries, and majority-owned 
affiliates, and each other person, directly or indirectly, majority-
owned by it, including, but not limited to, Mid-Am Capital LLC and 
Butter LLC, and each majority-owned partnership or joint venture to 
which any of them is a party, and all of their directors, officers, 
managers, agents and employees.
    C. ``DFA butter assets'' means (a) assets currently employed by DFA 
to produce and process butter at DFA's Winnsboro, Texas facility and 
(b) DFA's interest in the Breakstone's brand (the transfer of which is 
subject to the consent of Kraft Foods, Inc.), which shall include, but 
not be limited to, all customer lists, inventory, contracts, and 
promotional materials.
    D. ``Federation'' means:
    (1) An agency in common, federation, pooling arrangement, merger or 
other combination or collaboration, including, but not limited to, any 
agreement on price or output, involving DFA's and/or Land O'Lakes' 
Branded Butter operations; or
    (2) An agreement, directly or indirectly, between DFA and Land 
O'Lakes with regard to the price, quantity, sale or supply of cream, 
milk, or butter to Butter LLC pursuant to which DFA, Land O'Lakes, or 
both would charge Butter LLC more for cream, milk or butter than either 
one or both charge other customers. However, nothing in this paragraph 
shall prohibit price differentials that are reasonably based on 
differences in purchase volume, freight or shipping costs, federal 
regulation or product quality.
    E. ``Land O'Lakes'' means Land O'Lakes, Inc., each of its 
successors, divisions, parents, subsidiaries, and affiliates, each 
other person directly or indirectly, wholly or in part, owned or 
controlled by it, and each partnership or joint venture to which any of 
them is a party, and all of their directors, officers, managers, agents 
and employees.
    F. ``Societe de Diffusion Internationale Agro-Alimentaire'' means 
Defendant Societe de Diffusion Internationale Agro-Alimentaire, each of 
its successors, divisions, parents, subsidiaries, and affiliates, each 
other person directly or indirectly, wholly or in part, owned or 
controlled by it, and each partnership or joint venture to which any of 
them is a party, and all of their directors, officers, managers, 
agents, and employees.
    G. ``SODIAAL North America Corporation'' means Defendant SODIAAL 
North America Corporation and includes each of its successors, 
divisions, parents, subsidiaries, and affiliates, each other person 
directly or indirectly, wholly or in part, owned or controlled by it, 
and each partnership or joint venture to which any of them is a party, 
and all of their directors, officers, managers, agents and employees.
    H. ``SODIAAL North America Corporation butter assets'' means the 
real property, equipment, vehicles, inventories, accounts receivables, 
information and records, intellectual property, and other assets used 
to produce, process or market butter including, but not limited to, the 
Keller's and Hotel Bar brands, and which assets are to be acquired by 
DFA pursuant to the Transaction, defined in Paragraph II.I., herein.
    I. ``Transaction'' means the proposed acquisition of certain assets 
of SODIAAL North America Corporation by DFA, described in the December 
15, 1999, letter agreement between DFA and Societe De Diffusion 
Internationale Agro-Alimentaire, and includes all related agreements 
among Defendants.
    J. ``Agricultural Cooperative'' means an entity eligible for 
classification as an ``agricultural cooperative'' under the terms of 
the Capper Volstead Act, 7 U.S.C. 291, as ``[p]ersons engaged in the 
production of agricultural products such as farmers, planters, 
ranchmen, dairymen, nut or fruit growers,'' acting individually or 
``together in associations, corporate or otherwise,'' as such terms are 
used in the Capper-Volstead Act.

[[Page 44823]]

    K. ``Branded Butter'' means butter, as currently defined by the 
Food and Drug Administration at 7 CFR 58.305(a), sold in a retail 
grocery channel under a brand owned or licensed by the butter 
manufacturer.
    L. ``Majority-owned'' means either (a) holding more than 50 percent 
of the voting interests in a corporation, partnership, or limited 
liability company, or (b) having the right to designate more than 50 
percent of the board of directors or similar body.
    M. ``Competitively Sensitive Information'' means information that 
is not public and could be used by a competitor or supplier to make 
production, pricing, or marketing decisions including, but not limited 
to, information relating to costs, capacity, distribution, marketing, 
supply, market territories, customer relationships, the terms of 
dealing with any particular customer (including the identity of 
individual customers and the quantity sold to any particular customer), 
and current and future prices, including discounts, slotting 
allowances, bids, or price lists. ``Competitively Sensitive 
Information'' does not include information that must be disclosed to 
implement a supply arrangement in the ordinary course of business.

III. Applicability

    A. The provisions of this Final Judgment apply to:
    (1) Defendant Dairy Farmers of America, Inc., as defined above, so 
long as DFA or Butter LLC (i) controls, (ii) receives royalty or other 
licensing payments from, or (iii) has any right or obligation to direct 
the pricing, production, sales, promotion, or marketing of Branded 
Butter sold under, the Keller's or Hotel Bar brands;
    (2) Defendants Societe de Diffusion Internationale Agro-Alimentaire 
and SODIAAL North America Corporation, as defined above, so long as 
either of them (i) controls, (ii) receives royalty or other licensing 
payments from, or (iii) has any right or obligation to direct the 
pricing, production, sales, promotion, or marketing of Branded Butter 
sold under, the Keller's or Hotel Bar brands;
    (3) Butter LLC, as defined above, so long as DFA or Butter LLC (i) 
controls, (ii) receives royalty or other licensing payments from, or 
(iii) has any right or obligation to direct the pricing, production, 
sales, promotion, or marketing of Branded Butter sold under, the 
Keller's or Hotel Bar brands;
    (4) Any person under Paragraph III.B. of this Final Judgment; and
    (5) All other persons in active concert or participation with 
anyone named in Paragraphs III.A.(1), III.A.(2), III.A.(3), or 
III.A.(4) above, who receive actual notice of this Final Judgment by 
Personal service or otherwise.
    B. DFA and/or Butter LLC shall require as a condition of the sale 
or other disposition of either the Keller's or Hotel Bar brands (or 
both) to an Agricultural Cooperative or to an entity in which DFA has a 
non-majority ownership interest that such person or persons agree to be 
bound by the provisions of this Final Judgment. However, except as 
provided in Paragraph III.A.(2) or III.A.(5) above, this Final Judgment 
shall not apply to transferees of either the Keller's or Hotel Bar 
brands (or both) who are neither an Agricultural Cooperative nor an 
entity in which DFA has an ownership interest.

IV. Formation of Limited Liability Company and Contribution of Assets

    A. Within 30 days after the consummation of the Transaction, DFA 
shall cause to be formed ``Butter LLC,'' a limited liability company to 
be partially owned by persons other than DFA which will cause Butter 
LLC to be ineligible for classification as an Agricultural Cooperative. 
Butter LLC shall, within 15 days of its formation, stipulate in writing 
to be bound by this Final Judgment and subject to the jurisdiction of 
this Court and shall serve a copy of its stipulation on Plaintiff and 
file that stipulation with the Court within those 15 days.
    B. Within 30 days after the consummation of the Transaction, DFA 
and/or Societe de Diffusion Internationale Agro-Alimentaire shall 
contribute to Butter LLC (a) the DFA butter assets including, subject 
to the consent of Kraft Foods, Inc., DFA's interest in the Breakstone's 
brand; and (b) the SODIAAL North America Corporation butter assets. 
Prior to that contribution, DFA shall take no steps to reduce 
eliminate, or otherwise divest those assets.
    C. Without prior written approval of Plaintiff, Butter LLC shall 
not sell, transfer, divest, license, or in any way grant, direct or 
indirect, control over the pricing, production, sales, promotion, or 
marketing of any or all of Keller's, Hotel Bar, or Breakstone's brands 
to Land O'Lakes.
    D. Without prior written approval of Plaintiff, Butter LLC shall 
not obtain, receive, or in any way acquire, direct or indirect, control 
over the pricing, production, sales, promotion, or marketing of any or 
all Branded Butter from Land O'Lakes.
    E. Without 30 days prior notice to Plaintiff, Butter LLC shall not 
sell, transfer, or divest either the Keller's or Hotel Bar brands, or 
both, to any entity in which DFA has an ownership interest. This Final 
Judgment shall apply to any such entity pursuant to Paragraph III.B.
    F. Without 30 days prior notice to Plaintiff, Butter LLC shall not 
sell, transfer, or divest either the Keller's or Hotel Bar brands, or 
both, to any entity in which neither DFA nor Land O'Lakes has an 
ownership interest. Notice provided under this Paragraph shall include 
the production to the Plaintiff of copies of any and all supply 
contracts then existing or contemplated between Butter LLC and the 
transferee.

V. Injunctive Provisions

    A. DFA and Butter LLC are hereby enjoined, individually and/or 
collectively, from entering into a Federation with Land O'Lakes, 
provided, however that, except as set forth in Paragraphs IV.C. and 
IV.D., nothing contained herein shall prohibit either DFA or Butter LLC 
from entering into a supply arrangement with Land O'Lakes whereby one 
party processes and packages (but does not market, promote, sell, or 
distribute) Branded Butter on the other's behalf.
    B. DFA and Butter LLC are further enjoined, individually and/or 
collectively, from disclosing to Land O'Lakes, directly or indirectly, 
any Competitively Sensitive Information regarding Branded Butter.

VI. Compliance Program

    DFA and Butter LLC shall maintain a judgment compliance program 
that shall include:
    A. Distributing, within 60 days from the entry of this Final 
Judgment, a copy of the Final Judgment and Competitive Impact Statement 
to all directors, officers and Branded Butter sales and marketing 
personnel;
    B. Distributing, in a timely manner, a copy of this Final Judgment 
and Competitive Impact Statement to any person who succeeds to a 
position described in Paragraph VI.A;
    C. Distributing, within 60 days from the entry of this Final 
Judgment, a copy of this Final Judgment and Competitive Impact 
Statement to Land O'Lakes;
    D. Briefing, annually, in writing or orally, those persons 
designated in Paragraphs VI.A. and VI.B. on the meaning and 
requirements of this Final Judgment and the antitrust laws, including 
penalties for violation thereof;
    E. Obtaining from those persons designated in Paragraphs VI.A. and 
VI.B. annual written certifications that they (1) have read, 
understand, and agree to abide by this Final Judgment, (2) understand 
that their noncompliance

[[Page 44824]]

with this Final Judgment may result in conviction for criminal contempt 
of court and imprisonment and/or fine, and (3) have reported 
violations, if any, of this Final Judgment of which they are aware to 
counsel for the respective Defendant; and
    F. Designating a specific individual for each company who shall be 
responsible for maintaining for inspection by Plaintiff a record of 
recipients to whom this Final Judgment and Competitive Impact Statement 
have been distributed and from whom annual written certifications 
regarding this Final Judgment have been received.

VII. Certification and Notification

    A. Within 75 days after entry of this Final Judgment, DFA and 
Butter LLC each shall certify to Plaintiff that it has made the 
distribution of the Final Judgment and Competitive Impact Statement as 
required by Paragraph VI.A.
    B. For each year after the entry of this Final Judgment, on or 
before its anniversary date, DFA and Butter LLC each shall certify to 
Plaintiff its compliance with any provisions of Sections IV, V, and VI 
then applicable to it; and
    C. Butter LLC shall notify the Plaintiff at least 30 days prior to, 
as applicable, any proposed (1) dissolution, (2) sale or assignment of 
claims or assets resulting in a successor person, or (3) change in 
company structure that may affect compliance with this Final Judgment.
    D. All certifications, notices and communications required to be 
made to Plaintiff pursuant to this Final Judgment shall be in writing 
and shall be deemed to be delivered when (1) hand delivered; or (2) 
when deposited in the United States mail, postage prepaid, registered 
or certified U.S. mail, return receipt requested, and addressed, in 
each such case, to the address set forth in this Paragraph, or the 
address as changed pursuant to the requirements of this Paragraph.
    United States Department of Justice--Antitrust Division, Director 
of Operations and Merger Enforcement, 601 D Street, N.W., Room 10103, 
Washington, DC 20530.
With a copy to:
    United States Department of Justice--Antitrust Division, Chief, 
Litigation II Section, 1401 H Street, N.W., Washington, DC 20530.
    Plaintiff may change the address for notices to be sent to it by 
written notice delivered to the Defendants by one of the methods 
described above in this Paragraph.

VIII. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or determining whether the Final Judgment should be 
modified or vacated, and subject to any legally recognized privilege, 
from time to time duly authorized representatives of the United States 
Department of Justice, including consultants and other persons retained 
by the United States, shall, upon the written request of a duly 
authorized representative of the Assistant Attorney General in charge 
of the Antitrust Division, and on reasonable notice to any Defendant or 
Butter LLC, be permitted:
    (1) Assess during office hours to inspect and copy, or at 
Plaintiff's option, demand Defendants or Butter LLC to provide copies 
of, all books, ledgers, accounts, correspondence, memoranda, and other 
records and documents in the possession or under the control of 
Defendants or Butter LLC, who may have counsel present, relating to any 
matters contained in this Final Judgment; and
    (2) Subject to the reasonable convenience of Defendants or Butter 
LLC and without restraint or interference from them to interview, 
either informally or on the record, directors, officers, employees, and 
agents of Defendants or Butter LLC, who may have their individual 
counsel present, regarding any such matters.
    B. Upon the written request of the Assistant Attorney General in 
charge of the Antitrust Division, Defendants and Butter LLC shall 
submit such written reports, under oath if requested, relating to any 
of the matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any person other 
than an 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 
Defendants or Butter LLC to the United States, Defendants or Butter LLC 
represent and identify in writing the material in any such information 
or documents to which a claim of protection may be asserted under Rule 
26(c)(7) of the Federal Rules of Civil Procedure, and Defendants or 
Butter LLC mark each pertinent page of such material, ``Subject to 
claim of protection under Rule 26(c)(7) of the Federal Rules of Civil 
Procedure,'' then the United States shall give Defendants or Butter LLC 
ten (10) calendar days notice prior to divulging such material in any 
legal proceeding (other than a grand jury proceeding).

IX. Retention of Jurisdiction

    This Court retains jurisdiction for the purpose of enabling any 
party 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.

X. Termination of Final Judgment

    This Final Judgment will continue in force until terminated 
pursuant to an order of this Court.

XI. Public Interest Determination

    Entry of this Final Judgment is in the public interest.
    Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec. 16.

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA

    Civil Action No. 00-1663
UNITED STATES OF AMERICA, Plaintiff, v. DAIRY FARMERS OF AMERICA, et 
al. Defendants.

Certificate of Service

    I, Michael H. Knight, hereby certify that on May 17, 2000, I caused 
copies of the foregoing proposed Final Judgment and the United States' 
Explanation of Consent Decree

[[Page 44825]]

Procedures to be served by telecopier and by mail upon the following:

Todd Miller, Esq.,
Baker & Miller, PLLC, Counsel for Dairy Farmers of America, suite 1000, 
915 15th Street, NW., Washington, DC 20005-2302.

Burton Z. Alter, Esq.,
 

Christopher Rooney, Esq.
Carmody & Torrance LLP, Counsel for SODIAAL North America Corporation 
and for Societe de Diffusion Internationale Agro-Alimentaire, 18th 
Floor, 195 Church Street, New Haven, CT 06509-1950.

Michael H. Knight,
Attorney, U.S. Department of Justice, Antitrust Division, 1401 H 
Street, NW., Room 4000, Washington, DC 20530, Phone: 202-514-9109 Fax: 
202-514-9033.

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA

Civil Action No. 00-1663

UNITED STATES OF AMERICA, Plaintiff, vs. DIARY FARMERS OF AMERICA, 
et al., Defendants.

Competitive Impact Statement

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

1. Nature and Purpose of the Proceeding

    On March 31, 2000, the United States filed a civil antitrust suit 
alleging that the proposed acquisition by Dairy Farmers of America, 
Inc. (``DFA'') of SODIAAL North America Corporation (``SODIAAL'') would 
violate Section 7 of the Clayton Act, 15 U.S.C. 18. The Complaint 
alleges that the combination of DFA and SODIAAL would substantially 
lessen competition in the markets for the sale of branded whipped and 
branded stick butter in the Philadelphia and New York City metropolitan 
areas. The United States District Court for the Eastern District of 
Pennsylvania entered a Temporary Restraining Order on March 31, 2000, 
prohibiting the parties from consummating their proposed transaction 
and setting the government's Motion for Preliminary Injunction for 
hearing.
    According to the Compliant, the proposed acquisition would create a 
duopoly in the markets for branded stick and branded whipped butter in 
Philadelphia and New York metropolitan areas. Land O' Lakes is the 
chief competitor to the SODIAAL brands in these regions. Combined, DFA 
(including the SODIAAL brands) and Land O' Lakes would control more 
than 90 percent of the sales of branded stick and branded whipped 
butter in these markets.
    Moreover, because both DFA and Land O' Lakes are agricultural 
cooperatives they are entitled to federate their branded butter 
businesses under the Capper-Volstead Act, 7 U.S.C. 291, which exempts 
from antitrust scrutiny collective marketing by or on behalf of 
agricultural production cooperatives. SODIAAL, however, does not have 
the benefit of the Capper-Volstead exemption. Thus, DFA's acquisition 
of the SODIAAL assets would bring the important SODIAAL brands under 
the control of an exempt cooperative. As a result, prices for branded 
stick and branded whipped butter sold to retailers and consumers in the 
Philadelphia and New York metropolitan areas likely would increase.
    The prayer for relief in the Compliant seeks: (1) A judgment that 
the proposed acquisition would violate Section 7 of the Clayton Act and 
(2) temporary and permanent injunctive relief that would prevent DFA 
from acquiring control of, or otherwise combining its assets with 
SODIAAL.
    On May 18, 2000, the United States filed a proposed Stipulation and 
Order and proposed Final Judgment that would permit DFA to complete its 
acquisition of SODIAAL but prohibit it from federating with Land O' 
Lakes, Inc. with respect to the marketing and sale of branded butter.
    The proposed Final Judgment requires DFA to form ``Butter LLC,'' a 
limited liability company to be majority-owned by DFA and minority-
owned by persons other than DFA (i.e., former SODIAAL managers).\1\ DFA 
and/or SODIAAL must contribute to Butter LLC assets necessary to 
produce and market the brands of butter DFA and SODIAAL have sold in 
New York and Philadelphia. Butter LLC will not be an agricultural 
cooperative and thus will not be entitled to Capper-Volstead immunity.
---------------------------------------------------------------------------

    \1\ Butter LLC will do business under the name Keller's 
Creamery, L.L.C.
---------------------------------------------------------------------------

    The proposed Final Judgment also enjoins DFA and Butter LLC, 
individually and collectively, from entering into any federation with 
Land O' Lakes with respect to the marketing, promotion, sale, or 
distribution of branded butter. DFA and Butter LLC are further 
prohibited from disclosing to Land O'Lakes any competitively sensitive 
information regarding branded butter.
    The Stipulation and Order, which was entered by the Court on May 
19, 2000, permits the defendants to close their transaction but 
requires that they act in accordance with, abide by, and comply, with, 
the terms of the proposed Final Judgment pending its entry by the 
Court. The parties have agreed 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. Description of the Events Giving Rise to the Violations Alleged 
in the Complaint

A. The Defendants and the Proposed Transaction

    DFA is an agricultural cooperative based in Kansas City, Missouri. 
It owns and operates dairy processing plants throughout the United 
States, including butter-producing plants in Winnsboro, Texas, and 
Goshen, Indiana. DFA produces, processes, markets, advertises, and 
sells Breakstone's branded butter (under license from Kraft Food, Inc.) 
throughout the eastern United States, including the greater 
Philadelphia and New York metropolitan areas. The Breakstone's brand 
was founded in 1882. In 1998, the company recorded net sales of 
approximately $7.3 billion.
    SODIAAL, headquartered in Harleysville, Pennsylvania, is a 
privately held subsidiary of a French cooperative, Societe de Diffusion 
Internationale Agro-Alimentaire. It owns and operates one butter-
producing plant, Mayfair Creamery, in Somerset, Pennsylvania. SODIAAL 
produces, markets, advertises, and sells Keller's and Hotel Bar branded 
butter in the northeastern United States, including the greater 
Philadelphia and New York metropolitan areas. The Keller's brand was 
founded in 1906; the Hotel Bar brand was founded in 1885. In 1998, 
SODIAAL had net sales of approximately $238 million.
    On or about December 15, 1999, DFA entered into a letter agreement 
with Societe de Diffusion Internationale Agro-Alimentaire, to purchase, 
for about $36 million, substantially all of the assets of SODIAAL. This 
transaction, which would eliminate the sole remaining, significant, 
privately held (i.e., non-cooperative) branded butter producer in the 
Philadelphia and New York markets, precipitated the government's suit.

[[Page 44826]]

B. The Competitive Effects of the Transaction

1. The Relevant Product Markets for Branded Stick and Branded Whipped 
Butter
    Butter is sold to consumers at retail in a variety of forms (e.g., 
quarter-pound butter sticks, whipped butter, lightly salted butter, and 
unsalted butter) and package sizes (e.g., one-pound packages comprising 
four quarter-pound sticks, one-half pound packages comprising two 
quarter-pound sticks, and eight-ounce tubs of whipped butter). In the 
greater Philadelphia and New York metropolitan areas combined, 
approximately 84 percent of butter sold at retail is in stick form. An 
additional 14 percent is whipped and is typically sold in half-pound 
(eight-ounce) tubs.
    The unique characteristics of butter differentiate if from 
potential substitutes such as margarine. While spreads such as 
margarine compete in a limited way with butter, because of butter's 
unique qualities and characteristics, if the price of butter were 
increased by a small but significant amount, a sufficient number of 
purchasers would not switch to other products to make such a price 
increase unprofitable.
    Most butter is sold to consumers through retail outlets, such as 
grocery stores and mass merchandisers. Consumers purchase two distinct 
categories of butter--branded butter (such as Keller's, Hotel Bar, 
Breakstone's, and Land O' Lakes) and private label butter (i.e., butter 
marketed under a label owned or controlled by the retailer)--and two 
distinct forms of butter--stick and whipped.\2\
---------------------------------------------------------------------------

    \2\ A small percentage of butter sold at retail (approximately 
2% in Philadelphia and New York) is purchased in ``specialty'' forms 
such as shaped holiday molds.
---------------------------------------------------------------------------

    The sale of branded whipped butter through retail outlets is a 
relevant product market for antitrust purposes. Retail consumers of 
branded whipped butter consider it to be a distinct product from 
private label whipped butter, stick butter, and other products. With 
respect to private label whipped butter, consumers perceive branded 
whipped butter to possess different quality characteristics. These 
perceptions have been reinforced by years of promotions and brand 
advertising. In addition, branded whipped butter has different 
principal users and is manufactured and packaged differently from stick 
butter (branded and private label) and other products. Accordingly, a 
small but significant increase in the price of branded whipped butter 
will not cause a sufficient number of consumers of branded whipped 
butter to substitute other products (including private label whipped 
butter and stick butter) to dissuade a hypothetical monopolist from 
such a price increase.
    The sale of branded stick butter through retail outlets is also a 
relevant product market for antitrust purposes. Retail consumers of 
branded stick butter consider it to be a distinct product from private 
label stick butter, whipped butter, and other products. As with branded 
whipped butter, consumers perceive quality differences between branded 
stick butter and private label stick butter. In addition, branded stick 
butter has different principal users and is manufactured and packaged 
differently from whipped butter and other products. A small but 
significant increase in the price of branded stick butter will not 
cause a sufficient number of consumers of branded stick butter to 
substitute other products (including private label stick butter and 
whipped butter) to dissuade a hypothetical monopolist from such a price 
increase.
    Although branded products do not always comprise relevant markets, 
there is no principle of law or economics that implies that relevant 
markets cannot be limited to such products. Whether the market is 
properly limited to branded products is determined by an application of 
the general market delineation principles articulated in the Horizontal 
Merger Guidelines. In Section 1.0, the Guidelines state:

    A market is defined as a product or group of products and a 
geographic area in which a hypothetical profit-maximizing firm, not 
subject to price regulation, that was the only present and future 
producer or seller of those products in that area likely would 
impose at least a ``small but significant and nontransitory'' 
increase in price, assuming the terms of sale of all other products 
are held constant. A relevant market is a group of products and a 
geographic area that is no bigger than necessary to satisfy this 
test.

    Stated differently, relevant product markets are delineated by 
determining the likely buyer response to a ``small but significant and 
nontransitory'' price increase (typically in the range of 5-10%) 
imposed by a hypothetical monopolist. If, in response to a price 
increase, buyers would switch to products outside the candidate market 
in sufficient numbers so that the hypothetical monopolist would not 
find it profit maximizing to increase price at least a ``small but 
significant and nontransitory'' amount, the candidate market is drawn 
too small.
    A critical factor in applying the Merger Guidelines' market 
definition principles is ``elasticity of demand,'' which measures the 
responsiveness of the quantity demanded for a product to changes in its 
price. Elasticity of demand is generally defined as the ratio of the 
percentage change in quantity demanded of a product to the percentage 
change in price that induced the quantity change. A high elasticity of 
demand for a product or group of products implies that good substitutes 
exist (and thus that the product or group of products is not likely to 
comprise a relevant market for antitrust purposes), while a low 
elasticity implies that substitutes are poor (and thus that the product 
or products may comprise a relevant market).
    When the requisite data are available, the Merger Guidelines' 
market definition principles are applied empirically. Using data 
supplied by the parties to determine product margins, the United States 
can employ standard economic analysis to determine the ``critical 
elasticity of demand'' (i.e., the demand elasticity value below which a 
hypothetical monopolist would impose at least the requisite ``small but 
significant nontransitory price increase''), and compare it to the 
estimated elasticity of demand for candidate market. \3\ An essentially 
equivalent approach identifies a critical sales loss corresponding to a 
designated threshold for a significant price increase. The latter 
approach has been used by several courts. FTC v. Tenet Health Care 
Corp., 186 F.3d 1045, 1050-51, 1053-54 (8th Cir. 1999); California v. 
Sutter Health System, 84 F. Supp. 2d 1057, 1076-80 (N.D. Cal. 2000), 
aff'd mem. __F.3d__, 2000 WL531847 (9th Cir. 2000). The results of a 
critical elasticity analysis performed using data provided by the 
merging firms and Land O'Lakes during the course of the government's 
investigation of the proposed merger support the alleged relevant 
product markets for branded stick and branded whipped butter.
---------------------------------------------------------------------------

    \3\ For a more detailed discussion of the use of critical demand 
elasticities in delineating antitrust markets, see Gregory J. 
Werden, Demand Elasticities in Antitrust Analysis, 66 Antitrust L.J. 
363, 384-96 (1998).
---------------------------------------------------------------------------

2. The Relevant Geographic Markets of Philadelphia and New York 
Metropolitan Areas.
    Both DFA's and SODIAAL's brands of butter are sold and compete 
directly in the greater Philadelphia and New York metropolitan areas. 
DFA sells its Breakstone's brand in both the Philadelphia and New York 
metropolitan areas, while SODIAAL sells its Keller's brand primarily in 
the Philadelphia metropolitan area and its Hotel Bar brand primarily in 
the New

[[Page 44827]]

York metropolitan area. Due to local consumer preferences for specific 
brands, retailers and other consumers would not readily substitute 
brands of butter that had not been promoted and sold in the greater 
Philadelphia and New York metropolitan areas, and are likely to pay 
higher prices as a result of the proposed acquisition.
    Differing consumer preferences in different geographic areas cause 
DFA and SODIAAL to charge different net prices for the same product 
sold in different geographic areas. The variations in price do not 
simply reflect differences in costs, but rather reflect local 
differences in brand strength, competition, and competitive strategy. 
Price variations often take the form of advertising allowances, local 
promotions, and couponing campaigns. DFA and SODIAAL develop distinct 
marketing plans for the Philadelphia metropolitan area and for the New 
York metropolitan area.
    It would not be practical for retailers located in a higher-priced 
area to purchase branded stick or branded whipped butter from retailers 
in a lower-priced area. Such arbitrage, also known as ``diversion,'' is 
not practical for retailers because of the control producers maintain 
over the distribution and sale of their products. Producers, like the 
defendants, structure locally targeted price concessions to prevent 
arbitrage and often require proof of local advertising, coupon 
limitations, and other promotional restrictions.
    Accordingly, for the purposes of antitrust analysis, the greater 
Philadelphia and New York metropolitan areas each constitute a relevant 
geographic market.
3. The Effects of the Transaction on Competition in the Markets for 
Branded Stick and Branded Whipped Butter in Philadelphia and New York.
    According to the Complaint, the proposed acquisition will reduce 
competition substantially for the sale of branded stick and branded 
whipped butter in the Philadelphia and New York metropolitan areas.
    The Complaint alleges harm resulting from post-acquisition 
anticompetitive coordination between DFA and Land O' Lakes, Inc. DFA 
and SODIAAL are two of only three significant suppliers of branded 
butter in the greater Philadelphia and New York metropolitan areas. The 
third is Land O' Lakes, a cooperative with approximately $6 billion in 
annual sales, and the largest butter manufacturer in the United States. 
Post-transaction, more than 90 percent of the branded stick and branded 
whipped butter sold in the greater Philadelphia and New York 
metropolitan markets will be supplied by either DFA or Land O' Lakes. 
Economic analysis predicts that DFA and Land O' Lakes would find 
anticompetitive coordination to be profit-maximizing, particularly 
because both firms (unlike SODIAAL) are agricultural cooperatives 
between whom explicit collusion would be legal and could not be 
challenged under the antitrust laws. As a result, in the absence of 
relief, post-transaction prices would likely increase.
    The Complaint also alleges that entry into the sale of branded 
stick and branded whipped butter in the greater Philadelphia and New 
York metropolitan areas is difficult. Such entry requires substantial, 
sunk promotional, and advertising expenditures. Establishing a branded 
butter product takes years of effort and would not be timely, likely, 
or sufficient to deter any exercise of market power by branded butter 
suppliers in the relevant markets following the acquisition by DFA of 
SODIAAL.
    In order to prevent the consummation of the proposed acquisition, 
the Complaint had to be prepared on the basis of a preliminary 
analysis. That analysis suggested that the acquisition likely would 
also give rise to a unilateral anticompetitive effect resulting 
directly from the loss of competition between DFA and SODIAAL. 
Consequently, the Complaint also alleged this sort of anticompetitive 
effect. However, extensive post-Complaint analysis of the competitive 
interaction between DFA's Breakstone's brand and SODIAAL's Keller's and 
Hotel Bar brands has indicated that the proposed acquisition would not 
likely give rise to significant unilateral anticompetitive effects.

III. Explanation of the Proposed Final Judgment

    The relief described in the proposed Final Judgment is designed to 
eliminate the anticompetitive effects of the acquisition in the markets 
for the sale of branded butter in the Philadelphia and New York 
metropolitan areas.

A. The Formation of Butter LLC as a Non-Cooperative Entity

    The proposed Final Judgment requires DFA to form Butter LLC and 
ensures the transfer to Butter LLC of all assets necessary to 
manufacture and market the Breakstone's, Keller's, and Hotel Bar 
brands. Butter LLC will be owned in part by persons other than DFA 
(i.e., members of the premerger SODIAAL management team) and thus, 
unlike DFA, it will not qualify as an agricultural cooperative entitled 
to engage in collective marketing under the Capper-Volstead Act. In 
addition, both DFA and Butter LLC would be bound by the injunctive 
provisions of the Final Judgment described below.
    Neither DFA nor Butter LLC may dispose of either the Keller's or 
Hotel Bar brands (or both) to an ``Agricultural Cooperative'' (as 
defined in the proposed Final Judgment) unless the transferee agrees to 
be bound by the provisions of the Final Judgment. Similarly, 
disposition of these brands to any entity in which DFA holds a minority 
ownership interest, but which is not included within the definition of 
DFA in the Final Judgment, requires that the transferee agree to be 
bound by the Final Judgment. Disposition of the brands to any other 
entity (except Land O' Lakes) cannot be made without 30 days prior 
notice to the Department of Justice. Such notice shall include the 
provision of all supply contracts then existing or contemplated between 
the transferor and transferee. Finally, any transfer of control over 
the brands to Land O' Lakes would require the Department's prior 
written approval, as would receipt by Butter LLC (or DFA) of control 
over any Land O' Lakes brand.

B. The Injunctive Provisions

    The proposed Final Judgment also enjoins DFA and Butter LLC from 
entering into any Federation with Land O'Lakes with respect to branded 
butter. ``Federation'' is defined in the proposed Final Judgment as:

    (1) An agency in common, federation, pooling arrangement, merger 
or other combination or collaboration, including, but not limited 
to, any agreement on price or output, involving DFA's and/or Land 
O'Lakes' Branded Butter operations; or
    (2) An agreement, directly or indirectly, between DFA and Land 
O'Lakes with regard to the price, quantity, sale or supply of cream, 
milk, or butter to Butter LLC pursuant to which DFA, Land O'Lakes, 
or both would charge Butter LLC more for cream, milk or butter than 
either one or both charge other customers. However, nothing in this 
paragraph shall prohibit price differentials that are reasonably 
based on differences in purchase volume, freight or shipping costs, 
federal regulation or product quality.

    For purposes of illustration, the defendants have acknowledged that 
a federation between DFA and Land O'Lakes ``involving (their ) Branded 
Butter operations,'' prohibited by paragraph (1) above, would include 
an agreement on non-Branded Butter that has the purpose and effect of 
tying up substantial capacity otherwise available (and used) to produce 
Branded Butter. Similarly, an ``indirect'' agreement between DFA and 
Land O'Lakes of the

[[Page 44828]]

type prohibited by paragraph (2) above would exist if a non-majority-
owned affiliate of DFA forms an agreement with Land O'Lakes with regard 
to the price, quantity, sale, or supply of cream, milk, or butter to 
Butter LLC and the non-majority-owned affiliate forms a related 
agreement with DFA with regard to the price, quantity, sale or supply 
of cream, milk, or butter to Butter LLC.
    DFA and Butter LLC are also enjoined from disclosing to Land 
O'Lakes, directly or indirectly, competitively sensitive information 
regarding branded butter. ``Competitively Sensitive Information'' is 
defined as:

information that is not public and could be used by a competitor or 
supplier to make production, pricing, or marketing decisions 
including, but not limited to, information relating to costs, 
capacity, distribution, marketing, supply, market territories, 
customer relationships, the terms of dealing with any particular 
customer (including the identity of individual customers and the 
quantity sold to any particular customer), and current and future 
prices, including discounts, slotting allowances, bids, or price 
lists. ``Competitively Sensitive Information'' does not include 
information that must be disclosed to implement a supply arrangement 
in the ordinary course of business.

C. Compliance Provisions

    DFA and Butter LLC are required under the proposed Final Judgment 
to distribute copies of the proposed Final Judgment and this 
Competitive Impact Statement to: (1) All current and future directors, 
officers and Branded Butter sales and marketing personnel; and (2) Land 
O'Lakes, Inc. In addition, DFA and Butter LLC must brief, annually, 
those directors, officers, and employees receiving copies of the Final 
Judgment and Competitive Impact Statement, on the meaning and 
requirements of the Final Judgment and the antitrust laws, including 
penalties for violation thereof. DFA and Butter LLC must also obtain 
written certifications from these individuals that they: (1) Have read, 
understand, and agree to abide by the Final Judgment; (2) understand 
that noncompliance with the Final Judgment may result in a conviction 
for criminal contempt of court; and (3) have reported violations, if 
any, of the Final Judgment of which they are aware to counsel for the 
respective company. Finally, both DFA and Butter LLC must designate a 
specific individual for each company to be responsible for ensuring 
that the compliance provisions are satisfied.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
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 defendant.

V. Procedures Available for Modification of the Proposed Final 
Judgment

    The parties have stipulated that the proposed Final Judgment may be 
entered by the Court after compliance with the provisions of the APPA, 
provided that the United States has not withdrawn its consent. The APPA 
conditions entry of the decree upon the Court's determination that the 
proposed Final Judgment is in the public interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register. The United States will 
evaluate and respond to the comments. All comments will be given due 
consideration by the Department of Justice, which remains free to 
withdraw its consent to the proposed Final Judgment at any time prior 
to entry. The comments and the response of the United States will be 
filed with the Court and published in the Federal Register. Written 
comments should be submitted to: J. Robert Kramer II, Chief, Litigation 
II Section, Antitrust Division, United States Department of Justice, 
1401 H Street, NW, Suited 3000, Washington, D.C. 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 defendants DFA, 
SODIAAL and Societe de Diffusion International Agro-Alimentaire. The 
Untied States could have continued the litigation to seek preliminary 
and permanent injunctions against DFA's acquisition of SODIAAL. The 
United States is satisfied, however, that the requirements and 
prohibitions contained in the proposed Final Judgment will establish, 
preserved and ensure viable competitors in each of the relevant markets 
identified by the government. To this end, the United States expects 
that the proposed relief, once implemented by the Court, will likely 
prevent DFA's acquisition of SODIAAL from having significant adverse 
competitive effects.

VII. Standard or 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 sixty (60 days comment 
period, after which the court shall determine whether entry of the 
proposed Final Judgment ``is in the public interest.'' In making that 
determination, the court may consider--

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

    15 U.S.C. 16(e). As the Court of Appeals for the District of 
Columbia Circuit has held, the APPA 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 (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 United States v. Gillette 
Co., 406 F. Supp. 713, 715 (D.C. Mass. 1975). A ``public interest'' 
determined 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. 93-1463, 93rd Cong. 2d 
Sess. 8-9 reprinted in (1974) U.S. Code Cong. & Ad. News 6535, 6538.

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[[Page 44829]]

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 CCH 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. Bethtel 
Corp., 648 F.2d 660, 666 (9th Cir.), cert denied, 454 U.S. 1083 
(1981)); see also Microsoft, 56 F.3d 1448 (D.C. Cir. 1995). 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.\5\
---------------------------------------------------------------------------

    \5\ United States v. Bechtel, 648 F.2d at 666 (citations 
omitted) (emphasis added); see United States v. BNS, Inc. 858 F.2d 
at 463; United States v. National Broadcasting Co., 449 F. Supp. 
1127, 1143 (C.D. Cal. 1978); United States v. Gillette Co., 406 F. 
Supp. at 716. See also United v. American Cyanamid Co., 719 F.2d at 
565.

    The proposed Final Judgment, therefore, should not be reviewed 
under a standard of whether it is certain to eliminate every 
anticompetive 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. and Tel. Co., 552 F. Supp. 
131, 151 (D.D.C. 1982) (quoting United States v. Gillette Co., 
supra, 406 F. Supp. at 716) (citations omitted), aff'd sub nom. 
Maryland v. United States, 460 U.S. 1001 (1983); United States v. 
Alcan Aluminum, Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985).
---------------------------------------------------------------------------

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.
Dated: June 29, 2000.
      Respectfully submitted,
Mark J. Botti

Michael H. Knight
U.S. Department of Justice, Antitrust Division, Litigation II 
Section, 1401 H Street, NW, Suite 3000, Washington, DC 20530, (202) 
307-0827.

Certificate of Service

    I hereby certify under penalty of perjury that on this 29th day of 
June, 2000, I caused a true and correct copy of the foregoing 
Competitive Impact Statement to be served by telecopier and by mail to:
W. Todd Miller, Esq.
Baker & Miller, PLLC, Suite 1000, 915 15th Street, N.W., Washington, 
D.C. 20005-2302, Counsel for Dairy Farmers of America, Inc.

Burton Z. Alter, Esq.
Christopher Rooney, Esq.
Carmody & Torrance LLP, 18th Floor, 195 Church Street, New Haven, CT 
06509-1950, Counsel for Societe De Diffusion Internationale Agro-
Alimentaire and SODIAAL North America Corporation.

Michael H. Knight
Trial Attorney, U.S. Department of Justice, Antitrust Division, 1401 
H. Street, N.W., Suite 4000, Washington, D.C. 20530, Telephone: 202-
514-9109, Facsimile: 202-514-9033.
[FR Doc. 00-18216 Filed 7-18-00; 8:45 am]
BILLING CODE 4410-11-M