[Federal Register Volume 66, Number 25 (Tuesday, February 6, 2001)]
[Notices]
[Pages 9096-9107]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-3066]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States of America v. Georgia-Pacific Corporation and Fort 
James Corporation; 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, Hold Separate Stipulation and Order, and Competitive 
Impact Statement have been filed with the United States District Court 
for the District of Columbia in United States of America v. Georgia-
Pacific Corporation and Fort James Corporation, Civil No. 1:00CV02824. 
On November 21, 2000, the United States filed a Complaint alleging that 
the proposed acquisition by Georgia-Pacific Corporation of Fort James 
Corporation would violate Section 7 of the Clayton Act, 15 U.S.C. 18. 
The proposed Final Judgment, filed the same time as the Complaint, 
requires Georgia-Pacific Corporation to divest four tissue-making mills 
located in Menasha, Wisconsin; Flagstaff, Arizona; Alsip, Illinois; and 
Gary, Indiana; five tissue converting facilities located in Neenah, 
Wisconsin; Bellemont, Arizona; Brattleboro, Vermont; Greenwich, New 
York; and LaGrange, Georgia; along with certain other tangible and 
intangible assets. Copies of the Complaint, proposed Final Judgment, 
Hold Separate Stipulation and order, and Competitive Impact Statement 
are available for inspection at the Department of Justice in

[[Page 9097]]

Washington, DC in Room 200, 325 Seventh Street, NW., and at the Office 
of the Clerk of the United States District Court for the District of 
Columbia, Washington, DC.
    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 II, Chief, Litigation II Section, Antitrust 
Division, United States Department of Justice, 1401 H Street, NW., 
Suite 3000, Washington, DC 20530. (Telephone: (202) 307-0924).

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

Hold Separate Stipulation and Order

    It is hereby stipulated and agreed by and between the undersigned 
parties, subject to approval and entry by the Court, that:

I. Definitions

    As used in this Hold Separate Stipulation and Order:
    A. ``Purchaser'' or ``Purchasers'' means the entity or entities to 
whom defendants divest the Georgia-Pacific AFH Tissue Business.
    B. ``AFH Tissue Product(s)'' means paper napkins, paper towels, and 
bathroom tissue sold into the away-from-home distribution channel, and 
all tissue product dispenser systems sold or leased into the away-from-
home distribution channel or to away-from-home tissue customers, except 
for the proprietary tissue product dispenser systems and components 
sold or leased under the Cormatic and Ultimatic lines and all tangible 
and intangible assets necessary for the production, marketing and sale 
of the Cormatic and Ultimatic tissue product dispenser systems and 
components.
    C. ``Fort James'' means defendant Fort James Corporation, a 
Virginia corporation with its headquarters in Deerfield, Illinois, and 
includes its successors and assigns, and its subsidiaries, divisions, 
groups, affiliates, partnerships, and joint ventures, and their 
directors, officers, managers, agents, and employees.
    D. ``Georgia-Pacific'' means defendant Georgia-Pacific Corporation, 
a Georgia corporation with its headquarters in Atlanta, Georgia, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships and joint ventures, and their directors, 
officers, managers, agents, and employees.
    E. ``Georgia-Pacific Tissue LLC'' or ``GPT'' means Georgia-Pacific 
Tissue LLC, a limited liability company incorporated in Delaware with 
its headquarters in Atlanta, Georgia, and includes its subsidiaries, 
divisions, groups, affiliates, partnerships, and joint ventures, and 
their directors, officers, managers, agents, and employees.
    F. ``Georgia-Pacific AFH Tissue Business'' means the business of 
developing, manufacturing, marketing, and selling AFH Tissue Products 
as conducted by GPT, including, but not limited to:
    (1) All tangible assets used in the research, development, 
production, marketing, servicing or sale of any AFH Tissue Product that 
Georgia-Pacific Tissue LLC produced, sold, sells, has plans to sell, or 
leases, including, but not limited to: research and development 
activities; all manufacturing equipment, tooling, and fixed assets for 
the tissue paper making mills located in Menasha, Wisconsin, Flagstaff, 
Arizona, Alsip, Illinois, and Gary, Indiana, and the tissue converting 
facilities located in Neenah, Wisconsin, Bellemont, Arizona, 
Brattleboro, Vermont, Greenwich, New York, and LaGrange, Georgia (but 
excluding Crossett, Arkansas, Palatka, Florida, and Toluca, Mexico and 
other Mexican property tangible and intangible); personal property, 
inventory, office furniture, materials, supplies, and other tangible 
property used to manufacture or sell AFH Tissue Products; all licenses, 
permits and authorizations issued by any governmental or standard 
setting organization relating to the manufacture or sale of any AFH 
Tissue Product; all contracts, agreements, leases, commitments, 
certifications, and understandings used in the manufacture or sale of 
any AFH Tissue Product, including supply agreements; all customer 
lists, contracts, accounts, and credit records; and all mill operations 
reports and other records relevant to AFH Tissue Products and the 
Georgia-Pacific AFH Tissue Business; and
    (2) all intangible assets used in the research, development, 
production, marketing, servicing or sale of any AFH Tissue Product that 
Georgia-Pacific Tissue LLC produced, sold, sells, or has plans to sell, 
or leases, including, but not limited to: all legal rights, including 
intellectual property rights, associated with AFH Tissue Products, 
including trademarks, trade names, service names, service marks, 
designs, trade dress, patents, copyrights and all licenses and 
sublicenses to such intellectual property; all legal rights to use the 
brand names controlled by GPT, including, but not limited to ``Park 
Avenue'', ``Main Street'', ``Second Nature'', and ``Coronet'', and any 
derivations thereof; all trade secrets; all technical information, 
computer software and related documentation, and know-how, including, 
but not limited to, recipes and formulas, and information relating to 
plans for, improvements to, or line extensions of, the products; all 
research, packaging, sales, marketing, advertising and distribution 
know-how and documentation, including marketing and sales data, 
packaging designs, quality assurance and control procedures; all 
manuals and technical information Georgia-Pacific Tissue LLC provided 
to its own employees, customers, suppliers, agents or licensees; all 
specifications for materials, and safety procedures for the handling of 
materials and substances; all research information and data concerning 
historic and current research and development efforts, including, but 
not limited to, designs of experiments and the results of successful 
and unsuccessful designs and experiments, and all employment contracts 
and relationships, as existing on July 17, 2000.

II. Objectives

    The Final Judgment filed in this case is meant to ensure 
defendants' prompt divestiture of the Georgia-Pacific AFH Tissue 
Business for the purpose of assuring the establishment of one or more 
viable competitors in the away-from-home tissue industry capable of 
competing effectively in supplying away-from-home tissue products to 
national accounts and to remedy the anticompetitive effects that the 
United States alleges would otherwise result from Georgia-Pacific's 
acquisition of Fort James Corporation. This Hold Separate Stipulation 
and Order ensures, prior to such divestitures, that the Georgia-Pacific 
AFH Tissue Business operates as a competitively independent, 
economically viable, and ongoing business concern that will remain 
independent and uninfluenced by the consummation of Georgia-Pacific's 
acquisition of Fort James Corporation, and that competition is 
maintained during the pendency of the ordered divestitures.

III. Jurisdiction and Venue

    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.

IV. Compliance With and Entry of Final Judgment

    A. The parties stipulate that a Final Judgment in the form attached 
hereto as Exhibit A may be filed with and entered

[[Page 9098]]

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 
United States 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.
    B. Defendants shall abide by and comply with the provisions of the 
proposed Final Judgment, pending the Judgment's entry by the Court, or 
until expiration of time for all appeals of any Court ruling declining 
entry of the proposed Final Judgment, and shall, from the date of the 
signing of this Stipulation 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.
    C. Defendants shall not consummate the transaction sought to be 
enjoined by the Complaint herein before the Court has signed this Hold 
Separate Stipulation and Order.
    D. 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.
    E. In the event (1) the United States has withdrawn its consent, as 
provided in Section IV(A) above, or (2) the proposed Final Judgment is 
not entered pursuant to this Stipulation, the time has expired for all 
appeals of any Court ruling declining entry of the proposed Final 
Judgment, and the Court has not otherwise ordered continued compliance 
with the terms and provisions of the proposed Final Judgment, then the 
parties are released from all further obligations under this 
Stipulation, and the making of this Stipulation shall be without 
prejudice to any party in this or any other proceeding.
    F. Defendants represent that the divestiture ordered in the 
proposed Final Judgment can and will be made, and that defendants will 
later raise no claim of mistake, hardship or difficulty of compliance 
as grounds for asking the Court to modify any of the provisions 
contained therein.

V. Hold Separate Provisions

    Until the divestitures required by the Final Judgment have been 
accomplished:
    A. Defendants shall preserve, maintain, and continue to operate the 
Georgia-Pacific AFH Tissue Business as an independent, ongoing, 
economically viable competitive business, with management, sales and 
operations of such assets held entirely separate, distinct and apart 
from those of Georgia-Pacific's other operations. Except as provided in 
this paragraph, Georgia-Pacific shall not coordinate its production, 
marketing or terms of sale of any products produced by or sold by or 
through the Georgia-Pacific AFH Tissue Business with the sale of any 
other products. In no event shall Georgia-Pacific coordinate or 
integrate the production, marketing, or terms of sale of any products, 
or the operation of the facilities, acquired as a result of the 
transaction with Fort James with the products, or facilities used to 
manufacture the products, produced by or sold through the Georgia-
Pacific AFH Tissue Business. Notwithstanding the foregoing provisions, 
Georgia-Pacific is not prohibited from continuing its historical, 
regular course of business, system-wide allocation of the manufacture 
of stock parent rolls and converted tissue products among Georgia-
Pacific mills and machines, provided that Georgia-Pacific continues to 
support and maintain the Georgia-Pacific AFH Tissue Business as an 
independent, ongoing, economically viable and active competitor in the 
AFH Tissue Business as required by this Hold Separate Stipulation and 
Order (including efforts to maintain and increase the sales and 
revenues of the Georgia-Pacific AFH Tissue Business required under 
Section V.C.). Within twenty (20) days after the entry of this Hold 
Separate Stipulation and Order, defendants will inform the United 
States of the steps defendants have taken to comply with this Hold 
Separate Stipulation and Order.
    B. Georgia-Pacific shall take all steps necessary to ensure that 
(1) the Georgia-Pacific AFH Tissue Business will be maintained and 
operated as an independent, ongoing, economically viable and active 
competitor in the away-from-home tissue industry; (2) management of the 
Georgia-Pacific AFH Tissue Business will not be influenced by Georgia-
Pacific or Fort James; and (3) the books, records, competitively 
sensitive sales, marketing and pricing information, and decision-making 
concerning production, distribution or sales of products by or under 
any of the Georgia-Pacific AFH Tissue Business will be kept separate 
and apart from Georgia-Pacific's other operations.
    C. Defendants shall use all reasonable efforts to maintain and 
increase the sales and revenues of the products produced by or sold 
under the Georgia-Pacific AFH Tissue Business, and shall maintain at 
2000 levels or previously approved levels for 2001, whichever are 
higher, all promotional, advertising, sales, technical assistance, 
marketing and merchandising support for the Georgia-Pacific AFH Tissue 
Business.
    D. Georgia-Pacific shall provide sufficient working capital and 
lines and sources of credit to continue to maintain the Georgia-Pacific 
AFH Tissue Business as an economically viable and competitive, ongoing 
business, consistent with the requirements of Sections V(A) and V(B).
    E. Georgia-Pacific shall take all steps necessary to ensure that 
all the assets of the Georgia-Pacific AFH Tissue Business are fully 
maintained in operable condition at no less than current capacity and 
sales, and shall maintain and adhere to normal repair and maintenance 
schedules for those assets.
    F. Defendants shall not, except as part of a divestiture approved 
by the United States in accordance with the terms of the proposed Final 
Judgment, remove, sell, lease, assign, transfer, pledge or otherwise 
dispose of any of the Georgia-Pacific AFH Tissue Business.
    G. Defendants shall maintain, in accordance with sound accounting 
principles, separate, 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 and income of the Georgia-Pacific AFH 
Tissue Business.
    H. Defendants shall take no action that would jeopardize, delay, or 
impede the sale of the Georgia-Pacific AFH Tissue Business.
    I. Georgia-Pacific's employees with primary responsibility for the 
Georgia-Pacific AFH Tissue Business shall not be transferred or 
reassigned to other areas within the company except for transfer bids 
initiated by employees pursuant to defendants' regular, established job 
posting policy. Defendant shall provide the United States with ten (10) 
calendar days notice of such transfer.
    J. Prior to consummation of their transaction, defendants shall 
appoint Lee M. Bingham to oversee the Georgia-Pacific AFH Tissue 
Business and to be responsible for defendants' compliance with this 
section. This person shall have complete managerial responsibility for 
the Georgia-Pacific AFH Tissue Business, subject to the provisions of 
this Final Judgment. In the event such person is unable to perform his 
duties, defendants shall appoint, subject to the approval of the United 
States, a replacement within ten (10) working

[[Page 9099]]

days. Should defendants fail to appoint a replacement acceptable to the 
United States within this time period, the United States shall appoint 
a replacement.
    K. Defendants shall take no action that would interfere with the 
ability of any trustee appointed pursuant to the Final Judgment to 
monitor and complete the divestiture pursuant to the Final Judgment to 
a purchaser or purchasers acceptable to the United States.
    L. This Hold Separate Stipulation and Order shall remain in effect 
until consummation of the divestiture required by the proposed Final 
Judgment or until further order of the Court.

Dated: November 21, 2000.

    For Plaintiff, United States of America.

Justin M. Dempsey,
U.S. Department of Justice, Antitrust Division, Litigation II 
Section, 1401 H Street, NW., Suite 3000, Washington, DC 20530, (202) 
307-5815.

      Respectfully submitted,

    For Defendant, Georgia-Pacific Corporation.

Wayne Dale Collins,
Shearman & Sterling, Lexington Avenue, New York, NY 10022, (212) 
848-4127.

    For Defendant, Fort James Corporation.

Ilene Knable Gotts,
Wachtell, Lipton, Rosen & Katz, 51 W. 52nd Street, New York, NY 
10019, (212) 403-1247.

Order

    It is so Ordered by the Court, this 21st day of November, 2000.

Richard W. Roberts,
United States District Judge.

Final Judgment

    Whereas, plaintiff, the United States of America (``United 
States''), filed its Complaint on November 21, 2000, and defendants 
Georgia-Pacific Corporation (``Georgia-Pacific'') and Fort James 
Corporation (``Fort James''), 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 any admission by any 
party with respect to any issue of law or fact herein;
    And Whereas, defendants have agreed to be bound by the provisions 
of this Final Judgment pending its approval by the Court;
    And Whereas, the essence of this Final Judgment is the prompt and 
certain divestiture of the business and assets identified below to 
assure that competition is not substantially lessened;
    And Whereas, the United States requires defendants to make the 
divestitures ordered herein 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 ordered herein can and will be made promptly and that 
defendants later will raise no claim of hardship or difficulty as 
grounds for asking the Court to modify any of the divestiture 
provisions contained below;
    Now, Therefore, before taking 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 each of the parties hereto and 
over the subject matter of this action. The Complaint states a claim 
upon which relief may be granted against defendants under section 7 of 
the Clayton Act, as amended (15 U.S.C. 18).

II. Definitions

    As used in this Final Judgment:
    A. ``Georgia-Pacific'' or ``G-P'' means defendant Georgia-Pacific 
Corporation, a Georgia corporation with its headquarters in Atlanta, 
Georgia, and includes its successors and assigns, and its subsidiaries, 
divisions, groups, affiliates, partnerships, and joint ventures, and 
their directors, officers, managers, agents, and employees.
    B. ``Georgia-Pacific Tissue LLC'' or ``GPT'' means Georgia-Pacific 
Tissue LLC, a limited liability company incorporated in Delaware with 
its headquarters in Atlanta, Georgia, and includes its successors and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    C. ``Fort James'' means defendant Fort James Corporation, a 
Virginia corporation with its headquarters in Deerfield, Illinois, and 
includes its successors and assigns, and its subsidiaries, divisions, 
groups, affiliates, partnerships, and joint ventures, and their 
directors, officers, managers, agents, and employees.
    D. ``AFH Tissue Products(s)'' means paper napkins, paper towels, 
and bathroom tissue sold into the away-from-home distribution channel, 
and all tissue product dispenser systems sold or leased into the away-
from-home distribution channel or to away-from-home tissue customers, 
except for the proprietary tissue product dispenser systems and 
components sold or leased under the Cormatic and Ultimatic lines and 
all tangible and intangible assets necessary for the production, 
marketing and sale of the Cormatic and Ultimatic tissue product 
dispenser systems and components.
    E. ``Georgia-Pacific AFH Tissue Business'' means the business of 
developing, manufacturing, marketing, and selling AFH Tissue Products 
as conducted by GPT, including, but not limited to:
    (1) All tangible assets used in the research, development, 
production, marketing, servicing or sale of any AFH Tissue Product that 
Georgia-Pacific Tissue LLC produced, sold, sells, has plans to sell, or 
leases, including, but not limited to: research and development 
activities; all manufacturing equipment, tooling, and fixed assets for 
the tissue paper making mills located in Menasha, Wisconsin, Flagstaff, 
Arizona, Alsip, Illinois, and Gary, Indiana, and the tissue converting 
facilities located in Neenah, Wisconsin, Bellemont, Arizona, 
Brattleboro, Vermont, Greenwich, New York, and LaGrange, Georgia (but 
excluding Crossett. Arkansas, Palatka, Florida, and Toluca, Mexico and 
other Mexican property tangible and intangible); personal property, 
inventory, office furniture, materials, supplies, and other tangible 
property used to manufacture or sell AFH Tissue Products; all licenses, 
permits and authorizations issued by any governmental or standards 
setting organization relating to the manufacturing or sale of any AFH 
Tissue Product; all contracts, agreements, leases, commitments, 
certifications, and understandings used in the manufacture or sale of 
any AFH Tissue Product, including supply agreement(s), except for (i) 
existing supply agreements for parent rolls with Georgia-Pacific (to be 
replaced by the new supply agreements under section IV.A(2)), and (ii) 
existing supply agreements for finished AFH tissue products transferred 
from the Crossett, Arkansas and Palatka, Florida tissue mills to GPT; 
all customer lists, contracts, accounts, and credit records; and all 
mill operations reports and other records relevant to AFH Tissue 
Products and the Georgia-Pacific AFH Tissue Business; and
    (2) all intangible assets used in the research, development, 
production, marketing, servicing or sale of any AFH Tissue Product that 
Georgia-Pacific Tissue LLC produced, sold, sells, or has plans to sell, 
or leases, including, but not limited to: all legal rights, including 
intellectual property rights, associated with AFH Tissue Products, 
including trademarks, trade names, service names, service marks, 
designs, trade dress, patents, copyrights and all licenses and

[[Page 9100]]

sublicenses to such intellectual property; all legal rights to the 
brand names controlled by GPT, including, but not limited to ``Park 
Avenue'', ``Maine Street'', ``Second Nature'', and ``Coronet'', and any 
derivations thereof; all trade secrets; all technical information, 
computer software and related documentation, and know-how, including, 
but not limited to, recipes and formulas, and information relating to 
plans for, improvements to, or line extensions of, the products; all 
research, packaging, sales, marketing, advertising and distribution 
know-how and documentation, including marketing and sales data, 
packaging designs, quality assurance and control procedures; all 
manuals and technical information Georgia-Pacific Tissue LLC provided 
to its own employees, customers, suppliers, agents or licensees; all 
specifications for materials, and safety procedures for the handling of 
materials and substances; all research information and data concerning 
historic and current research and development efforts, including, but 
not limited to, designs of experiments and the results of successful 
and unsuccessful designs and experiments, and all employment contracts 
and relationships, as existing on July 17, 2000.

III. Applicability

    A. This Final Judgment applies to Georgia-Pacific, Georgia-Pacific 
Tissue LLC, and Fort James, as defined above, and all other persons in 
active concert or participation with any of them who receive actual 
notice of this Final Judgment by personal service or otherwise.
    B. Defendants shall require, as a condition of the sale or other 
disposition of all or substantially all G-P's or Fort James's assets, 
or of lesser business units that include the Georgia-Pacific AFH Tissue 
Business, that the purchaser of G-P's or Fort James's assets agrees to 
be bound by the provisions of this Final Judgment, provided, however, 
that defendants need not obtain such an agreement from the purchaser of 
the Georgia-Pacific AFH Tissue Business.

IV. Divestitures

    A. Defendants are ordered and directed, within one hundred twenty 
(120) calendar days after the filing of the Complaint in this matter, 
or five (5) days after notice of the entry of this Final Judgment by 
this Court, whichever is later, to
    (1) divest the Georgia-Pacific AFH Tissue Business in a manner 
consistent with this Final Judgment as a viable ongoing business to one 
or more purchasers acceptable to the United States in its sole 
discretion, provided that at least one of these purchasers, in the sole 
judgment of the United States, becomes, as a result of the acquisition 
and any preexisting AFH business, capable of competing effectively in 
supplying AFH Tissue Products to national accounts; and,
    (2) at the option of the purchaser or purchasers of the Georgia-
Pacific AFH Tissue Business, enter into an agreement to supply tissue 
parent rolls of a quality and character substantially similar to those 
currently provided to Georgia-Pacific Tissue LLC pursuant to its supply 
contract with G-P, such agreement to (a) obligate G-P to provide up to 
120,000 tons of parent roll tissue in the aggregate, (b) continue for 
at least 3 years if requested by the purchaser and to be renewed 
thereafter annually upon the request of the purchaser, with the 
concurrence of the United States in its sole discretion, for two 
periods of one-year each, to extend the total term of the agreement up 
to five (5) years, (c) permit the purchaser to terminate the agreement, 
or to reduce the total tonnage required, upon reasonable prior notice 
to G-P, and (d) specify commercially reasonable price and other terms 
for parent rolls that are reasonably designed to permit the purchaser 
or purchasers to compete in the sale of commercial tissue products 
generally and, in particular, to national accounts.
    B. Defendants agree to use their best efforts to divest the 
Georgia-Pacific AFH Tissue Business as expeditiously as possible. The 
United States, in its sole discretion, may extend the time period for 
the divestiture two additional periods of time, not to exceed thirty 
(30) calendar days each, and shall notify this Court in such 
circumstances.
    C. In accomplishing the divestiture ordered by this Final Judgment, 
defendants promptly shall make known, by usual and customary means, the 
availability of the Georgia-Pacific AFH Tissue Business. Defendants 
shall inform any person making inquiry regarding a possible purchase of 
the Georgia-Pacific AFH Tissue Business that it is being divested 
pursuant to this Final Judgment and provide that person with a copy of 
this Final Judgment. Defendants shall offer to furnish to all 
prospective purchasers, subject to customary confidentiality 
assurances, all information and documents relating to the Georgia-
Pacific AFH Tissue Business customarily provided in a due diligence 
process, except such information or documents subject to the attorney-
client or attorney work-product privileges. Defendants shall make 
available such information to the United States at the same time that 
such information is made available to any other person.
    D. Defendants shall provide the purchaser and the United States 
information relating to any Georgia-Pacific personnel primarily 
involved in the research, production, operation, development, marketing 
and sale of AFH Tissue Products by the Georgia-Pacific AFH Tissue 
Business to enable the purchaser to make offers of employment. 
Defendants will not interfere with any negotiations by the purchaser to 
employ any Georgia-Pacific employee whose primary responsibility is the 
research, production, operation, development, marketing or sale of AFH 
Tissue Product(s) by the Georgia-Pacific AFH Tissue Business.
    E. Defendants shall permit prospective purchasers of the Georgia-
Pacific AFH Tissue Business to have reasonable access to personnel and 
to make inspections of the physical facilities to be divested; access 
to any and all environmental, zoning, and other permit documents and 
information; and access to any and all financial, sales, marketing, 
operational, or other documents and information customarily provided as 
part of a due diligence process.
    F. Defendants shall warrant to the purchaser of the Georgia-Pacific 
AFH Tissue Business that each asset of the Georgia-Pacific AFH Tissue 
Business will be operational on the date of sale.
    G. Defendants shall not take any action that will impede in any way 
the permitting, operation, or divestiture of the Georgia-Pacific AFH 
Tissue Business.
    H. Defendants shall warrant to the purchaser(s) of the Georgia-
Pacific AFH Tissue Business that there are no material defects in the 
environmental, zoning or other permits pertaining to the operation of 
any of the assets of the Georgia-Pacific AFH Tissue Business, and that 
following the sale of the Georgia-Pacific AFH Tissue Business, 
defendants will not undertake, directly or indirectly, any challenges 
to the environmental, zoning, or other permits relating to the 
operation of the Georgia-Pacific AFH Tissue Business.
    I. Unless the United States consents in writing, the divestiture 
pursuant to Section IV of this Final Judgment, whether by defendants or 
by a trustee appointed pursuant to Section VI of this Final Judgment, 
shall include the entire Georgia-Pacific AFH Tissue Business as defined 
in Section II. Prior to divestiture, the Georgia-Pacific AFH Tissue 
Business shall be operated pursuant to the Hold Separate

[[Page 9101]]

Stipulation and Order entered by this Court. The divestiture of the 
Georgia-Pacific AFH Tissue Business shall be accomplished by selling or 
otherwise conveying the Georgia-Pacific AFH Tissue Business to a 
purchaser(s) in such a way as to satisfy the United States, in its sole 
discretion, that the business to be divested can and will be used by 
the purchaser(s) as part of a viable ongoing AFH tissue business, and 
that at least one of these purchasers, in the sole judgment of the 
United States, becomes, as a result of the acquisition and any 
preexisting AFH business, capable of competing effectively in supplying 
AFH Tissue Products to national accounts. The divestiture of the 
Georgia-Pacific AFH Tissue Business, whether pursuant to Section IV or 
Section VI of this Final Judgment, shall be made to a purchaser(s) in a 
manner so as to satisfy the United States, in its sole discretion, that 
it: (1) Has the capability and intent of competing effectively in the 
development, production and sale of AFH Tissue Products; (2) has the 
managerial, operational, technical and financial capability to compete 
effectively in the development, production and sale of AFH Tissue 
Products; and (3) is not hindered by the terms of any agreement between 
the purchaser and defendants that gives either defendant the ability 
unreasonably to raise the purchaser's costs, to lower the purchaser's 
efficiency, or otherwise to interfere with the ability of the purchaser 
to compete effectively.

V. Notice of Proposed Divestitures

    A. Within two (2) business days following execution of a definitive 
agreement, contingent upon compliance with the terms of this Final 
Judgment, to effect, in whole or in part, any proposed divestiture 
pursuant to Sections IV or VI of this Final Judgment, defendants or the 
trustee, whichever is then responsible for effecting the divestiture, 
shall notify the United States of the proposed divestiture. If the 
trustee is responsible, it shall similarly notify defendants. The 
notice shall set forth the details of the proposed divestiture and list 
the name, address, and telephone number of each person not previously 
identified who offered to, or expressed an interest in or a desire to, 
acquire any ownership interest in the Georgia-Pacific AFH Tissue 
Business, together with full details of same. Within fifteen (15) 
calendar days of receipt by the United States of such divestiture 
notice, the United States may request from defendants, the proposed 
purchaser, or any other third party, or the trustee if applicable, 
additional information concerning the proposed divestiture, the 
proposed purchaser, and any other potential purchaser. Defendants and 
the trustee shall furnish any additional information requested from 
them within fifteen (15) calendar days of the receipt of the request, 
unless the parties shall otherwise agree. Within thirty (30) calendar 
days after receipt of the notice, or within twenty (20) calendar days 
after the United States has been provided the additional information 
requested from the defendants, the proposed purchaser, and any third 
party, whichever is later, the United States shall provide written 
notice to defendants and the trustee, if there is one, stating whether 
or not it objects to the proposed divestiture. If the United States 
provides written notice to defendants (and the trustee if applicable) 
that it does not object, then the divestiture may be consummated, 
subject only to defendants' limited right to object to the sale under 
Section VI(B) of this Final Judgment. Absent written notice that the 
United States does not object to the proposed purchaser or upon 
objection by the United States, a divestiture proposed under Section IV 
or Section VI may not be consummated. Upon objection by defendants 
under the provision in Section VI(B), a divestiture proposed under 
Section VI shall not be consummated unless approved by the Court.
    B. In the event that the required divestitures are made to more 
than one purchaser, all purchasers must be identified simultaneously by 
the defendants, or by the applicable trustee, in order that the 
proposed divestiture may be reviewed jointly by the United States.

VI. Appointment of Trustee

    A. Immediately upon the filing of this Final Judgment, the United 
States may, in its sole discretion, nominate a trustee, which the Court 
shall appoint, if such trustee is approved by the Court. If a trustee 
is appointed, that person shall monitor the divestiture by defendants 
of the Georgia-Pacific AFH Tissue Business. This procedure will enable 
the trustee to be familiar with all applicable divestiture issues in 
the event the trustee becomes responsible, pursuant to this Final 
Judgment, for completing the divestiture required by this Final 
Judgment.
    B. In the event that defendants have not completed the divestiture 
required by this Final Judgment within the time specified in Section IV 
of this Final Judgment, defendants shall notify the United States of 
that fact in writing. If a trustee has already been appointed under 
Section VI(A) of this Final Judgment, the trustee shall immediately 
assume the sole power and authority to effect the divestiture of the 
Georgia-Pacific AFH Tissue Business. If a trustee has not been 
appointed, the Court shall, on application of the United States, 
appoint a trustee selected by the United States and approved by the 
Court to effect the divestiture of the Georgia-Pacific AFH Tissue 
Business. Upon the appointment of a trustee and expiration of the time 
specified in Section IV of this Final Judgment, then only the trustee 
shall have the power and authority to accomplish the divestiture of the 
Georgia-Pacific AFH Tissue Business. 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 at such price and 
on such terms as are then obtainable for the Georgia-Pacific AFH Tissue 
Business, upon a reasonable effort by the trustee, subject to the 
provisions of Section IV, V, and VI of this Final Judgment, and shall 
have such other powers as the Court shall deem appropriate. Subject to 
Section VI(C) of this Final Judgment, the trustee shall have the power 
and authority to hire, after the time period described in Section IV(A) 
and at the cost and expense of the 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 accountable solely to the trustee. Defendants shall not object 
to a divestiture by the trustee on any ground 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 V 
of this Final Judgment.
    C. The trustee shall serve at the cost and expense of defendants, 
on such terms and conditions as approved by the United States. The 
trustee shall account for all monies derived from the sale of the 
Georgia-Pacific AFH Tissue Business, 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 
defendants and the trust shall then be terminated. The compensation of 
the trustee and of any professionals and agents retained by the trustee 
shall be reasonable in light of the value of the Georgia-Pacific AFH 
Tissue Business and based on a fee arrangement providing the trustee 
with an incentive

[[Page 9102]]

based on the price and terms of the divestiture and the speed with 
which it is accomplished, but timeliness is paramount.
    D. If a trustee is appointed under Section VI(A) of this Final 
Judgment, defendants shall use their best efforts to assist the trustee 
in monitoring defendants' attempts to divest the Georgia-Pacific AFH 
Tissue Business pursuant to this Final Judgment. Defendants shall also 
use their best efforts to assist the trustee in accomplishing the 
required divestiture pursuant to this Section, including their best 
efforts to effect all necessary consents and regulatory approvals. The 
trustee and any consultants, accountants, attorneys, and other persons 
retained by the trustee shall have full and complete access to the 
personnel, books, records, and facilities of the Georgia-Pacific AFH 
Tissue Business, and defendants shall develop financial or other 
information relevant to such business as the trustee may reasonably 
request, subject to reasonable protection for trade secrets 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.
    E. After its appointment, the trustee shall file monthly reports 
with the United States and the Court setting forth either the 
defendants' or the trustee's efforts, whichever is applicable, 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. After the time period described in Section 
IV(A), 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 business to be divested, 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 Georgia-Pacific 
AFH Tissue Business.
    F. If the trustee has not accomplished the divestiture of the 
Georgia-Pacific AFH Tissue Business within six (6) months after it 
became responsible for selling the Georgia-Pacific AFH Tissue Business, 
the trustee thereupon shall file promptly 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. 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 Final Judgment. The Court shall enter thereafter such orders as it 
shall deem appropriate in order to carry out the purpose of this Final 
Judgment which may, if necessary, include extending this Final Judgment 
and the term of the trustee's appointment by a period requested by the 
United States.

VII. Affidavits

    A. Within twenty (20) calendar days of the filing of the Compliant 
in this matter and every thirty (30) calendar days thereafter until the 
divestiture has been completed, whether pursuant to Section IV or 
Section VI of this Final Judgment, defendants shall deliver to the 
United States an affidavit as to the fact and manner of their 
compliance with Sections IV or VI of this Final Judgment. Each such 
affidavit shall include, inter alia, the name, address, and telephone 
number of each person who, at any time after the period covered by the 
last such report, made an offer to acquire, expressed an interest in 
acquiring, entered into negotiations to acquire, or was contacted or 
made an inquiry about acquiring, any interest in the Georgia-Pacific 
AFH Tissue Business, and shall describe in detail each contact with any 
such person during that period. Each such affidavit shall also include 
a description of the efforts that defendants have taken to solicit 
potential purchasers for the business to be divested and to provide 
required information to potential purchasers, including the 
limitations, if any, on such information. Assuming the information set 
forth in the affidavit is true and complete, any objection by the 
United States to information provided by defendants, including 
limitations on information, shall be made within fourteen (14) days of 
receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, defendants shall deliver to the United States an 
affidavit which describes in detail all actions defendants have taken 
and all steps defendants have implemented on an ongoing basis to 
preserve the Georgia-Pacific AFH Tissue Business pursuant to Section 
VIII of this Final Judgment and the Hold Separate Stipulation and Order 
entered by the Court. The affidavit also shall describe, but not be 
limited to, defendants' efforts to maintain and operate the Georgia-
Pacific AFH Tissue Business as an active competitor, maintain its 
management, staffing, research and development activities, sales, 
marketing and pricing, and maintain the business in operable condition 
at current capacity configurations. Defendants shall delivery to the 
United States an affidavit describing any changes to the efforts and 
actions outlined in defendants' earlier affidavit(s) filed pursuant to 
this Section within fifteen (15) calendar days after the change is 
implemented.
    C. Until one year after the divestiture has been completed, 
defendants shall preserve all records of all efforts made to preserve 
the business to be divested and to effect the ordered divestiture.

VIII. Hold Separate Order

    Until the divestiture required by this Final Judgment has been 
accomplished, defendants shall take all steps necessary to comply with 
the Hold Separate Stipulation and Order entered by this Court. 
Defendants shall take no action that would jeopardize the divestiture 
ordered by this Court.

IX. Financing

    Defendants are ordered and directed not to finance all or any part 
of any purchase made pursuant to Sections IV or VI of this Final 
Judgment.

X. No Reacquisition

    Defendants may not reacquire any part of the Georgia-Pacific AFH 
Tissue Business divested during the term of this Final Judgment.

XI. Compliance Inspection

    For the purposes of determining or securing compliance with this 
Final Judgment or of determining whether this Final Judgment should be 
modified or vacated, and subject to any legally recognized privilege, 
from time to time.
    A. Duly authorized representatives of the United States Department 
of Justice, including consultants and other persons retained by the 
United States, upon written request of a duly authorized representative 
of the Assistant Attorney General in charge of the Antitrust Division, 
and on reasonable notice to defendants made to their principal offices, 
shall be permitted:
    1. Access during office hours of defendants to inspect and copy, or 
at plaintiff's option, to require defendants to provide copies of, all 
books, ledgers, accounts, correspondence, memoranda,

[[Page 9103]]

and other records and documents in the custody or possession or under 
the control of defendants relating to the matters contained in this 
Final Judgment and the Hold Separate Stipulation and Order; and
    2. Subject to the reasonable convenience of defendants and without 
restraint or interference from them, to interview, either informally or 
on the record, their officers, employees, and agents, who may have 
counsel present, regarding any such matters.
    B. Upon the written request of a duly authorized representative of 
the Assistant Attorney General in charge of the Antitrust Division, 
made to defendants' principal offices, defendants shall submit such 
written reports, under oath if requested, with respect to any matter 
contained in this Final Judgment or the Hold Separate Stipulation and 
Order.
    C. No information or documents obtained by the means provided in 
this Section of this Final Judgment shall be divulged by a 
representative of 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 to the United States, defendants 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 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 ten (10) calendar day's 
notice shall be given to defendants by the United States prior to 
divulging such material in any legal proceeding (other than a grand 
jury proceeding) to which defendants are not a party.

XII. Retention of Jurisdiction

    Jurisdiction is retained by this Court for the purpose of enabling 
any of the parties to this Final Judgment to apply to this Court at any 
time for such further orders and directions as may be necessary or 
appropriate for the construction or carrying out of this Final 
Judgment, for the modification of any of the provisions hereof, for the 
enforcement of compliance herewith, and for the punishment of any 
violations hereof.

XIII. Termination

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

XIV. Public Interest

    Entry of this Final Judgment is in the public interest.

Date: __, 2000.
    Court approval subject to procedures of the Antitrust Procedures 
and Penalties Act. 15 U.S.C. 16

United States District Judge.

Certificate of Service

    I hereby certify under penalty of perjury that on this 21th day of 
November, 2000, I caused copies of the Complaint, Final Judgment, Hold 
Separate Stipulation and Order, and United States' Explanation of 
Consent Decree Procedures to be served upon the following:

Wayne Dale Collins, Esq., Shearman & Sterling, 801 Pennsylvania 
Avenue, NW., Washington, D.C. 20004-2604, Counsel for Georgia-
Pacific Corporation
Ilene K. Gotts, Esq., Wachtell, Lipton, Rosen & Katz, 51 West 52nd 
Street, New York, New York 10019-6150, Counsel for Fort James 
Corporation

Justin M. Dempsey, Trial Attorney,
U.S. Department of Justice, Antitrust Division, 1401 H Street, NW., 
Suite 4000, Washington, DC 20530, Telephone: 202-307-5815, 
Facsimile: 202-307-6283.

Competitive Impact Statement

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

I. Nature and Purpose of This Proceeding

    On November 21, 2000, the United States filed a Complaint alleging 
that the acquisition of Fort James Corporation (``Fort James'') by 
Georgia-Pacific Corporation (``Georgia-Pacific'') would substantially 
lessen competition in violation of Section 7 of the Clayton Act, as 
amended, 15 U.S.C. 18. The Complaint alleges that the Defendants 
(Georgia-Pacific and Fort James) are the two largest producers of away-
from-home (``AFH'') tissue products in the United States. The proposed 
acquisition would result in Georgia-Pacific accounting for 
approximately 66 percent of the dollar sales of AFH tissue products 
sold in the United States, and would also result in Georgia-Pacific 
controlling approximately 36 percent of North American tissue parent 
roll productive capacity. As alleged in the Complaint, the transaction 
will substantially lessen competition in the production and sale of AFH 
tissue products in the United States, thereby harming consumers. 
Accordingly, the prayer for relief in the Complaint seeks among other 
things: (1) A judgment that the proposed acquisition would violate 
Section 7 of the Clayton Act; and (2) permanent injunctive relief that 
would prevent Defendants from carrying out the acquisition or otherwise 
combining their businesses or assets.
    At the same time the Complaint was filed, the United States also 
filed a proposed settlement that would permit Georgia-Pacific to 
acquire Fort James, provided that Georgia-Pacific divest its AFH Tissue 
Business (as defined in the proposed Final Judgment) in order to 
preserve competition. The settlement consists of a proposed Final 
Judgment and a Hold Separate Stipulation and order.
    The proposed Final Judgment orders Defendants to divest the 
Georgia-Pacific AFH Tissue Business to an acquirer or acquirers 
approved by the United States. Defendants must complete the divestiture 
within one hundred twenty (120) calendar days after the filing of the 
Compliant, or five days after notice of the entry of the Final 
Judgment, whichever is later. The United States may nominate a trustee 
to monitor the divestiture process at any point. If Defendants do not 
complete the divestiture within the prescribed time, then, under the 
terms of the proposed Final Judgment, this Court will appoint a trustee 
to sell the Georgia-Pacific AFH Tissue Business, if a monitoring 
trustee has not already been appointed. If a monitoring trustee has 
been appointed, that person shall monitor the divestiture by the 
Defendants and complete the divestiture if Defendants have not 
completed the divestiture within the prescribed time.
    The Hold Separate Stipulation and Order, which this Court entered 
on November 21, 2000, and the proposed Final Judgment require 
Defendants to preserve, maintain and continue to operate the Georgia-
Pacific AFH Tissue Business as an independent, ongoing, economically 
viable competitive business, with the management, sales and operations 
held separate from Georgia-Pacific's other operations.
    The United States 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 
this Court would retain jurisdiction to construe, modify or enforce the

[[Page 9104]]

provisions of the proposed Final Judgment and to punish violations 
thereof.

II. Description of the Events Giving Rise to the Alleged Violation 
of the Antitrust Laws

A. The Defendants

1. Georgia-Pacific Corporation
    Georgia-Pacific, a Georgia corporation with its principal place of 
business in Atlanta, Georgia, is the second largest forest products 
company in the United States, and also the second largest manufacturer 
of AFH tissue products in the United States. In 1999, Georgia-Pacific 
reported sales of approximately $18 billion, with $1.4 billion of sales 
in tissue products in the United States, $674 million of which was 
derived from sales of AFH tissue products in the United States.
2. Fort James Corporation
    Fort James, a Virginia corporation with its principal place of 
business in Deerfield, Illinois, is the largest tissue manufacturer and 
the largest AFH tissue products manufacturer in the United States. In 
1999, Fort James reported sales of approximately $7 billion, with $3.1 
billion of sales in tissue products in the United States, $1.3 billion 
of which was derived from sales of AFH tissue products in the United 
States.

B. The Proposed Acquisition

    On or about July 16, 2000, Georgia-Pacific entered into an 
agreement with Fort James to purchase Fort James for cash and Georgia-
Pacific stock with an aggregate value of approximately $11 billion. The 
proposed combination of Georgia-Pacific and Fort James precipitated the 
United States's antitrust suit.

C. The Competitive Effects of the Acquisition in AFH Tissue

1. The AFH Tissue Market
    AFH tissue products are tissue products consumer primarily in 
commercial and other away-from-home establishments, such as office 
buildings, factories, restaurants, hospitals, schools, hotels and 
airports. The Complaint alleges that three separate categories of AFH 
tissue are relevant products (or lines of commerce) within the meaning 
of Section 7 of the Clayton Act: AFH bathroom tissue, AFH paper 
napkins, and AFH paper towels. There are no reasonably interchangeable 
substitutes for any of these relevant products to which a significant 
number of consumers would switch in response to a small but significant 
increase in price.
    AFH tissue products differ from retail tissue products (those sold 
in grocery stories, club stores and other retail outlets) in numerous 
important respects, including significant physical differences, 
distinct distribution channels, branding, industry recognition, 
purchaser perception, and significant price differences. Because of 
these differences, a small but significant increase in the price of AFH 
tissue products would not cause a significant number of purchasers to 
switch to retail tissue products. Additionally, AFH tissue products are 
often produced using distinct production equipment and processes, and a 
significant number of tissue product manufacturers produce only AFH or 
retail tissue products, but not both.
    A significant amount of AFH tissue products are sold to national 
accounts, such as quick serve restaurants. Many national account 
customers require national suppliers of AFH tissue products to ensure 
consistent product quality and timely delivery. In addition, is it 
usually more efficient and less costly for national accounts and 
distributors servicing national accounts to deal with a single tissue 
supplier with the ability to supply all the customers' locations, 
rather than with several suppliers servicing only limited regions. 
Therefore, for many AFH tissue purchasers, the only reasonably 
acceptable suppliers for AFH tissue products are the few AFH tissue 
manufacturers capable of servicing national accounts.
    The production of AFH tissue products is a two-stage process. 
First, ``parent rolls'' of tissue are produced on very large, expensive 
and complex machines (``tissue machines''), which are suitable only for 
making tissue paper. A tissue machine combines water and certain types 
and grades of pulp at the ``wet end'' of the machine and processes 
these materials into various types, grades and ``basis weights'' of 
tissue paper, which correspond to the particular physical properties 
required by the finished tissue product being produced. As tissue paper 
comes off the ``dry end'' of the machine, it is wound into a ``parent 
roll'' which can weigh several tons and measure eight to ten feet in 
diameter and up to 25 feet in length. Tissue parent rolls are 
subsequently converted by specialized machines into finished tissue 
products.
    This manufacturing process permits supply substitution by a 
significant number of AFH tissue manufacturers among the three AFH 
tissue products. Thus, while each AFH tissue product is a separate line 
of commerce and a relevant market for purposes of the Clayton Act, the 
ability of a significant number of suppliers to efficiently switch 
their production among AFH tissue products means that in each market 
the competitive effects will be similar. Thus, the Complaint alleges 
that AFH bathroom tissue, AFH paper napkins, and AFH paper towels can 
be usefully aggregated into what is referred to here as the ``AFH 
tissue market.''
    The Complaint alleges that the relevant geographic market within 
the meaning of Section 7 of the Clayton Act is no larger than the 
United States, Mexico and Canada (``North America''), and may be 
smaller. AFH tissue products are light and bulky, and consequently, a 
relatively small amount of product will fill a truck, making shipping 
long distances uneconomical. Accordingly, the amount of AFH tissue 
products imported into the United States is negligible, and a small but 
significant increase in the price of any AFH tissue product would not 
cause a sufficient number of purchasers to switch to finished products 
manufactured outside the United States to make the price increase 
unprofitable. Parent rolls of tissue paper (those not yet converted 
into a final tissue product) can be shipped economically longer 
distances than finished tissue products, making it profitable to ship 
parent rolls from part of Canada and parts of Mexico to converting 
facilities in parts of the United States for processing into finished 
goods.
2. Anticompetitive Consequences of the Acquisition
    The Complaint alleges that Georgia-Pacific's acquisition of Fort 
James would enable Georgia-Pacific to unilaterally exercise market 
power in the market for AFH tissue products by reducing the output of 
those products and the output of the AFH parent rolls used to produce 
AFH tissue, causing the price for AFH tissue products sold in the 
United States to increase following the merger.
    Georgia-Pacific has approximately 11 percent of North American 
capacity for the production of AFH tissue, and Fort James has 
approximately 25 percent. Hence, the acquisition would result in 
Georgia-Pacific accounting for approximately 36 percent of available 
North American AFH parent roll capacity. This increase in industry 
capacity controlled by Georgia-Pacific would give it sufficient 
capacity to profit from the increase in price caused by a unilateral 
reduction in output after this merger. While in other cases, this level 
of industry capacity might not allow for a profitable unilateral price 
increase resulting from an output

[[Page 9105]]

reduction, two factors in this case give rise to a significant 
anticompetitive effect. Demand for AFH tissue products is relatively 
inelastic, and manufacturers of AFH parent rolls converted into 
products for sale in the United States are already operating at or near 
capacity and are not able to expand parent roll output quickly. The 
evaluation of the profit-maximization calculation for the merged firm, 
the low elasticity of parent roll demand, the contribution margin of 
parent rolls and the fact that competitors are operating at or very 
near their capacity and cannot timely increase that capacity led to the 
conclusion that the amount of capacity controlled post-merger would 
give Georgia-Pacific the opportunity and incentive to reduce output 
unilaterally and thereby increase its prices and profits at the expense 
of purchasers.
    With respect to the sale of AFH tissue products. Georgia-Pacific 
and Fort James are the two largest producers of AFH tissue products in 
the United States. Georgia-Pacific has approximately a 23 percent 
market share of dollar sales and Fort James has approximately a 43 
percent market share of dollar sales, resulting in the combined from 
having approximately a 66 percent share of dollar sales in the United 
States following the merger. Moreover, only a few suppliers of AFH 
tissue products typically qualify as acceptable suppliers to national 
account customers, due to needs relating to volume, uniform quality and 
consistency, timely delivery on a national basis, and distributional 
efficiencies. The loss of Fort James as one of the few competitors 
capable of competing for national accounts business will likely result 
in higher prices to these customers.
    Entry is unlikely to be timely, likely or sufficient to prevent the 
exercise of market power that Georgia-Pacific would be able to engage 
in following the merger. Entry into AFH tissue products business would 
require a high sunk capital investment in equipment and facilities. AFH 
parent roll making machines are expensive and require extensive 
environmental permitting to install. Design and construction is also 
lengthy. The time required from initial planning for a new machine to 
final construction is more than two years. Furthermore, a successful 
new entrant would require converting lines to produce finished tissue 
products, a reliable distribution system and an extensive sales force. 
As a result of these factors, new entry into the AFH tissue products 
business, especially entry that would replace lost competition in sales 
to national accounts, is not likely to occur.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment requires that Georgia-Pacific divest 
its AFH Tissue Business to a purchaser or purchasers, approved by the 
United States, that can compete effectively in the AFH tissue business 
and thereby remedy the anticompetitive effects alleged in the 
Complaint. Specifically, the proposed Final Judgment requires Georgia-
Pacific to divest as an ongoing business virtually all of the tangible 
and intangible assets of Georgia-Pacific Tissue LLC (defined in the 
proposed Final Judgment), the Georgia-Pacific business unit responsible 
for its AFH tissue manufacturing, marketing and sales. The divestiture 
includes all customer lists and the sales and marketing force 
employment contracts and relationships of Georgia-Pacific Tissue LLC 
along with its current productive assets. The assets include four 
tissue making mills located in Menasha, Wisconsin; Flagstaff, Arizona; 
Alsip, Illinois; and Gary, Indiana; with total tissue machine capacity 
of approximately 368,000 tons per year. The assets to be divested also 
include five tissue converting facilities located in Neenah, Wisconsin; 
Bellemont, Arizona; Brattleboro, Vermont; Greenwich, New York; and 
LaGrange, Georgia; with total tissue converting capacity of 
approximately 560,000 tons per year.
    Georgia-Pacific is also required to offer, at the purchaser's 
option, a supply contract to provide the purchaser with up to 120,000 
tons per year of tissue parent rolls. The supply contract is limited to 
an initial term of three years, with two one-year extensions possible 
if the United States concurs. The supply contract is intended to bridge 
the gap between the converting capacity and the parent roll capacity 
being divested, and provides adequate time for the purchaser to plan 
for and build a new tissue mill, which can take as long as five years. 
The supply contract replaces a similar agreement between Georgia-
Pacific and Georgia-Pacific Tissue LLC, and is intended to ensure the 
continuation of the divested assets as an ongoing and viable business 
capable of competing effectively in the production and sale of AFH 
tissue products. Georgia-Pacific's compliance with the requirements of 
the Final Judgment will prevent an increase in market share in AFH 
tissue products as a result of its acquisition of Fort James, and 
preserve the competition that would have been lost as a result of the 
acquisition.
    Defendants must use their best efforts to divest the Georgia-
Pacific AFH Tissue Business as expeditiously as possible. The proposed 
Final Judgment provides that the Georgia-Pacific AFH Tissue Business be 
divested in such a way as to satisfy the United States, in its sole 
discretion, that the acquirer(s) can and will use the assets as part of 
a viable, ongoing business, and that if there are multiple 
divestitures, that at least one of the purchasers will become, as a 
result of the divestiture, capable of competing effectively in 
supplying AFH tissue products to national accounts.
    The United States may at any time nominate a trustee to monitor the 
divestiture. If Defendants do not accomplish the ordered divestiture 
within the prescribed time period, then the monitoring trustee will 
immediately assume the sole power and authority to accomplish the 
divestiture. If a monitoring trustee has not yet been appointed, the 
Court shall appoint a trustee upon application by the United States.
    If a trustee is appointed, the proposed Final Judgment provides 
that Defendants must cooperate fully with the trustee and pay all of 
the trustee's costs and expenses. The trustee's compensation will be 
structured to provide an incentive for the trustee based on the price 
and terms of the divestiture and the speed with which it is 
accomplished. After the trustee's appointment becomes effective, the 
trustee will file monthly reports with the United States and this Court 
setting forth either the Defendants' or the trustee's efforts, 
whichever is applicable, to accomplish the required divestiture. If at 
the end of six months after a trustee has become responsible for 
selling the Georgia-Pacific AFH Tissue Business, the divestiture has 
not been accomplished, then the trustee shall, and the United States 
and Defendants may, make recommendations to this Court, which shall 
enter such orders as appropriate to carry out the purpose of the Final 
Judgment.

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 district court to recover 
three times the damages the person has suffered, as well as the costs 
of bringing a lawsuit and reasonable attorneys' fees. Entry of the 
proposed Final Judgment will neither impair nor assist the bringing of 
any private antitrust damage action. Under the provisions of Section 
5(a) of the Clayton Act, 15 U.S.C. 16(a), the proposed Final

[[Page 9106]]

Judgment has no effect as prima facie evidence in any subsequent 
private lawsuit that may be brought against Defendants.

V. Procedures Available for Modification of the Proposed Final 
Judgment

    The parties have stipulated that the proposed Final Judgment may be 
entered by this 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 this 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 this 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., Suite 3000, Washington, DC 20530.
    The proposed Final Judgment provides that this Court retains 
jurisdiction over this action, and the parties may apply to this 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. The 
United States is satisfied, however, that the divestiture of the 
Georgia-Pacific AFH Tissue Business, and other relief contained in the 
proposed Final Judgment will establish, preserve and ensure a viable 
competitor in the relevant market identified by the United States. 
Thus, the United States is convinced that the proposed Final Judgment, 
once implemented by the Court, will prevent Georgia-Pacific's 
acquisition of Fort James from having adverse competitive effects.

VII. Standard of Review Under the APPA for Proposed Final Judgment

    The APPA requires that proposed consent judgments in antitrust 
cases brought by the United States be subject to a sixty (60) day 
comment period, after which the court shall determine whether entry of 
the proposed Final Judgment is ``in the public interest.'' In making 
that determination, the court may consider--

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

15 U.S.C. 16(e) (emphasis added). As the Court of Appeals for the 
District of Columbia 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 decreed is sufficiently clear, whether enforcement mechanisms are 
sufficient, and whether the decree may positively harm third parties. 
See United States v. Microsoft Corp., 56 F.3d 1448, 1458-62 (D.C. Cir. 
1995).
    In conducting this inquiry, ``the Court is nowhere compelled to go 
to trial or to engage in extended proceedings which might have the 
effect of vitiating the benefits of prompt and less costly settlement 
through the consent decree process.'' \1\ Rather,
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    \1\ 119 Cong. Rec. 24,598 (1973). See United States v. Gillette 
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest'' 
determination can be made properly on the basis of the Competitive 
Impact Statement and Response to Comments filed pursuant to the 
APPA. Although the APPA authorizes the use of additional procedures, 
those procedures are discretionary (15 U.S.C. 16(f)). A court need 
not invoke any of them unless it believes that the comments have 
raised significant issues and that further proceedings would aid the 
court in resolving those issues. See H.R. Rep. No. 93-1463, 93rd 
Cong. 2d Sess. 8-9 (1974), 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.\2\
---------------------------------------------------------------------------

    \2\ United States v. Mid-America Dairymen, Inc., 1977-1 Trade 
Cas. (CCH) para. 61,508, at 71,980 (W.D. Mo. 1977); See also United 
States v. Loew's Inc., 783 F. Supp. 211, 214 (S.D.N.Y. 1992), United 
States v. Columbia Artists Mgmt., Inc., 662 F.Supp. 865, 870 
(S.D.N.Y. 1987).

    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 Statesv. BNS, Inc., 
858 F.2d 456, 462-63 (9th Cir. 1988), quoting United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir.), cer. denied, 454 U.S. 1083 (1981); 
cert. denied, 454 U.S. 1083 (1981); see also Microsoft, 56 F.3d at 
---------------------------------------------------------------------------
1458. 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 
effectiveness of antitrust enforcement by consent decree.\3\
---------------------------------------------------------------------------

    \3\ United States v. Bechtel. Corp., 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 States v. American Cynamid Co., 719 
F.2d 558, 565 (2d Cir. 1983), cert denied, 465 U.S. 1101 (1984).

    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.` '' \4\

    \4\ United States v. American Tel. & Tel. Co., 552 F. Supp. 131, 
151 (D.D.C. 1982) (quoting Gillette, 406 F. Supp. at 716), aff'd sub 
nom. Maryland v. United States, 460 U.S. 1001 (1983); United States 
v. Alcan Aluminum, Ltd., 605 F. Supp. 619, 222 (W.D. Ky. 1985; 
United States v. Carrols Dev. Corp., 454 F. Supp. 1215, 1222 
(N.D.N.Y. 1978).
---------------------------------------------------------------------------

    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States 
alleges in its Complaint, and does not authorize the

[[Page 9107]]

court to ``construct [its] own hypothetical case and then evaluate the 
decree against that case.'' Microsoft, 56 F.3d at 1459. Since the 
``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.

Dated: January 25, 2001. Washington, D.C.

      Respectfully submitted,

Justin M. Dempsey
(DC Bar # 425976)
Joseph M. Miller
(DC Bar # 439965)
Mark J. Botti
(DC Bar # 416948)
Attorneys, U.S. Department of Justice, Antitrust Division, 
Litigation II Section, 1401 H Street, NW., Suite 3000, Washington, 
DC 20530, 202-307-0924.

Certificate of Service

    I hereby certify that I served a copy of the foregoing Competitive 
Impact Statement via First Class United States Mail and facsimile 
transmission, this 25th day of January 2001, on:

Counsel for Georgia-Pacific Corporation
Wayne Dale Collins, Esq.
Sherman & Sterling,
599 Lexington Avenue,
New York, NY 10022

Counsel for Fort James Corporation
Ilene K. Gotts, Esq.
Wachtell, Lipton, Rosen & Katz,
51 West 52nd Street,

New York, New York 10019-6150
Justin M. Dempsey, Attorney, U.S. Department of Justice, Antitrust 
Division, 1401 H Street, NW., Suite 3000, Washington, DC 20530, Direct 
line (202) 307-5815.

[FR Doc. 01-3066 Filed 2-5-01; 8:45 am]
BILLING CODE 4410-11-M