[Federal Register Volume 66, Number 167 (Tuesday, August 28, 2001)]
[Notices]
[Pages 45326-45339]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-21645]


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DEPARTMENT OF JUSTICE


United States v. Premdor Inc., Premdor U.S. Holdings, Inc., 
International Paper Company, and Masonite Corporation; Proposed Final 
Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Secs. 16(b)-(h), that a proposed Final 
Judgment, Hold Separate Stipulation and Order, and Competitive Impact 
Statement were filed with the U.S. District Court for the District of 
Columbia in United States v. Premdor Inc., Premdor U.S. Holdings, Inc., 
International Paper Company, and Masonite Corporation, Civ. Action No. 
1:01CV01696. On August 3, 2001, the United States filed a Complaint 
alleging that Premdor Inc.'s acquisition of Masonite Corporation and 
related assets 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 defendants to divest Masonite Corporation's doorskin 
manufacturing facility located in Towanda, Pennsylvania.Copies of the 
Complaint, proposed Final Judgment, Hold Separate Stipulation and 
Order, and Competitive Impact Statement are available for inspection at 
the U.S. Department of Justice, Antitrust Division, 325 Seventh Street, 
NW., Room 215, Washington, DC 20530 (telephone: 202-514-2481), and at 
the Clerk's Office 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, U.S. Department of Justice, 1401 H Street, NW., Suite 3000, 
Washington, DC 20530 (telephone: 202-307-0924).

Mary Jean Moltenbrey,
Director of Civil NonMerger Enforcement.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

United States of America, Plaintiff, v. Premdor Inc., 1600 Britannia 
Road East, Mississauga, Ontario, Canada L4W 1J2; Premdor U.S. Holdings 
Inc., One North Dale Mabry Highway, Suite 950, Tampa, Florida 33609; 
International Paper Company, 400 Atlantic Street, Stamford, Connecticut 
06921; and Masonite Corporation, 1 South Wacker Drive, Chicago, 
Illinois 60606; Defendants.

[Civil No.: 01 1696]

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. ``Acquirer'' or ``Acquirers'' means the entity or entities to 
whom the Towanda Facility is divested.
    B. ``Premdor'' means defendant Premdor Inc., a Canadian corporation 
with its headquarters in Mississauga, Ontario, Canada, its successors 
and assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships and joint ventures, and their directors, officers, 
managers, agents, and employees.
    C. ``Premdor U.S.'' means defendant Premdor U.S. Holdings, Inc., a 
Florida corporation and a wholly owned subsidiary of Premdor with its 
headquarters in Tampa, Florida, its successors and assigns, and its 
subsidiaries, divisions, groups, affiliates, partnerships and joint 
ventures, and their directors, officers, managers, agents, and 
employees.
    D. ``IP'' means defendant International Paper Company, a New York 
corporation with its headquarters in Stamford, Connecticut, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates,

[[Page 45327]]

partnerships and joint ventures, and their directors, officers, 
managers, agents, and employees.
    E. ``Masonite'' means defendant Masonite Corporation, a Delaware 
corporation and a wholly owned subsidiary of IP with its headquarters 
in Chicago, Illinois, its successors and assigns, and its subsidiaries, 
divisions, groups, affiliates, partnerships and joint ventures, and 
their directors, officers, managers, agents, and employees.
    F. ``Doorskin'' means the facing components used in the manufacture 
of an interior flush door; two doorskins are required for each door--
one for the front facing and one for the rear facing of the door.
    G. ``Molded Doorskin'' means a hardboard doorskin made from a 
fibrous mat that has been molded under extreme pressure and at a high 
temperature into a raised panel design.
    H. ``Proprietary Premdor Product'' means any product manufactured 
by Masonite in which Premodor has an ownership interest and which 
Masonite has agreed in writing not to sell to anyone other than 
Premdor.
    I. ``Towanda Facility'' means Masonite's Molded Doorskin production 
facility located in Towanda, Pennsylvania including:
    (1) All tangible assets that comprise the Towanda Facility, 
including research and development activities, all manufacturing 
equipment, tooling and fixed assets, personal property, inventory, 
materials, supplies, components, parts, designs and other tangible 
property or assets used at the Towanda Facility (provided, however, 
that all manufacturing equipment, tooling and fixed assets, personal 
property, inventory, materials, supplies, components, parts, designs 
and other tangible property or assets used exclusively in the 
production of any Proprietary Premdor Product are excluded from the 
provisions of this subparagraph); all licenses, permits and 
authorizations issued by any governmental organization relating to the 
Towanda Facility; all contracts, teaming arrangements, agreements 
(including supply agreements), leases, commitments, certifications, and 
understandings relating to the Towanda Facility (provided, however, 
that any contracts, teaming arrangements, agreements (including supply 
agreements), leases, commitments, certifications, and understandings 
between Masonite and/or IP and Premdor and/or Premdor U.S. are excluded 
from this subparagraph); all lists, contracts, accounts, and credit 
records of customers (provided, however, that any contracts, accounts, 
and credit records relating exclusively to Premdor and/or Premdor U.S. 
are excluded from this subparagraph); all repair, performance, and 
Towanda Facility records and all other records relating to the Towanda 
Facility; and
    (2) Any and all intangible assets used in the development, 
production, servicing and sale of Molded Doorskins at the Towanda 
Facility, including, but not limited to: (a) Subject to the right of 
Premdor and Premdor U.S., for 180 days from the date of the 
consummation of the divestiture pursuant to Section IV or VI of the 
proposed Final Judgment, to use up any Premdor co-branded packaging or 
promotional material, exclusive use of the CraftMaster, Canterbury, 
Carmelle, Carolina, Carrera, Caspian, Castille, Classique, Clermont, 
Colonist, Harvest, Canyon, Corinth, Coventry, Cremona, Hakuju, 
Maletero, Mesa, Morning Sun, Natural Trugrain Harvest, and Trugrain 
Natural brand names and all other intellectual property rights used in 
connection with the production of Molded Doorskins at the Towanda 
Facility, including all blueprints and engineering drawings needed for 
the manufacture of dies used in the Molded Doorskin presses at the 
Towanda facility; (b) all information, documents and computer records, 
relating to the production, sales, marketing or distribution of any 
products sold under any of the brand names identified in section 
I(2)(a), including all files relating to purchasers (other than Premdor 
and Premdor U.S.) of Molded Doorskins or doors manufactured with Molded 
Doorskins; (c) with respect to all other intellectual property rights 
currently used or currently planned to be used in connection with the 
production of Molded Doorskins at both the Towanda Facility and other 
nondivested Molded Doorskin production facilities, a transferable 
license; (d) all existing licenses and sublicenses relating exclusively 
to the Towanda Facility; (e) a transferable sublicense, exclusive in 
the Acquirer(s) of the Towanda Facility, to all other existing license 
and sublicenses relating to the Towanda Facility; and (f) all research 
or market evaluations relating exclusively to the Towanda Facility or 
to customers and copies of all other research market evaluations or 
information relating to plans for, improvements or updates to, or 
product line extensions of Masonite's Molded Doorskin business in 
existence as of the date the Towanda Facility is divested. Intellectual 
property rights comprise, but are not limited to, patents, licenses and 
sublicenses, technical information, copyrights, trademarks, trade 
names, service marks, service names, computer software and related 
documentation, know-how, trade secrets, drawings, blueprints, designs, 
design protocols, specifications for parts and devices, safety 
procedures for the handling of materials and substances, quality 
assurance and control procedures, design tools and simulation 
capability, all manuals and technical information provided to 
employees, customers, supplies, agents, or licensees, and all research 
data concerning historic and current research and development efforts 
relating to Masonite's Molded Doorskin business including, but not 
limited to, designs of experiments and the results of successful and 
unsuccessful designs and experiments. Intellectual property rights do 
not include rights to the ``Masonite'' brand name or to any Proprietary 
Premdor Product.
    (3) The Towanda Facility does not include IP corporate documents, 
intellectual property owned by IP or other materials regularly 
maintained at IP headquarters that were not part of the Purchase 
Agreement.
    J. ``The North American Molded Products Business'' means Masonite's 
Molded Doorskin business, including:
    (1) Production facilities located in Towanda, Pennsylvania and 
Laurel Mississippi, and all tangible assets that comprise the Towanda 
Facility and the Laurel Facility, including research and development 
activities, all manufacturing equipment, tooling and fixed assets, 
personal property, inventory, materials, supplies, and components, 
parts, design and other tangible property or assets used at the Towanda 
Facility and the Laurel Facility (provided, however, that all 
manufacturing equipment, tooling and fixed assets, personal property, 
and inventory, materials, supplies, components, parts, designs and 
other tangible property or assets used exclusively in the production of 
any Property Premdor Product are excluded from the provisions of this 
subparagraph); all licenses, permits and authorizations issued by any 
governmental organization relating to the Towanda Facility and the 
Laurel Facility; all contracts, teaming arrangements, agreements 
(including supply agreements), leases, commitments, certifications, and 
understandings relating to the Towanda Facility and the Laurel Facility 
(provided, however, that any contracts, terming arrangements, 
agreements (including supply agreements), leases, commitments, 
certifications, and understandings between Masonite and/or IP and 
Premdor and/or Premdor U.S.

[[Page 45328]]

are excluded from this subparagraph); all lists, contracts, accounts, 
and credit records of customers (provided, however, that any contracts, 
accounts, and credit records relating exclusively to Premdor and/or 
Premdor U.S. are excluded from this subparagraph); all repair, 
performance, and Towanda Facility and Laurel Facility records and all 
other records relating to the Towanda Facility and the Laurel Facility.
    (2) Any and all intangible assets used in the development, 
production, servicing and sale of Molded Doorskins at the Towanda 
Facility and the Laurel Facility, including, but not limited to: (a) 
Subject to the right of Premdor and Premdor U.S., for 180 days from the 
date of the consummation of the divestiture pursuant to Section IV or 
VI of the proposed Final Judgment, to use up any Premdor co-branded 
packaging or promotional material, and CraftMaster, Canterbury, 
Carmelle, Carolina, Carrera, Caspian, Castille, Clermont, Colonist, 
Harvest, Canyon, Corinth, Coventry, Cremona, Hakuju, Maletero, Mesa, 
Morning Sun, Natural, Trugrain Harvest, and Trugrain Natural brand 
names and all other intellectual property rights used in connection 
with the production of Molded Doorskin at the Towanda Facility and the 
Laurel Facility; (b) all existing licenses and sublicenses relating 
exclusively to the Towanda Facility and the Laurel Facility; and (c) 
all research, market evaluations or information relating to plans for; 
improvements or updates to, or product line extensions of Masonite's 
Molded Doorskin business. Intellectual property rights comprise, but 
are not limited to, patents, licenses and sublicenses, technical 
information, copyrights, trademarks, trade names, service marks, 
service names, computer software and related documentation, know-how, 
trade secrets, drawings, blueprints, designs, design protocols, 
specifications for parts and devices, safety procedures for the 
handling of materials and substances, quality assurance and control 
procedures, design tools and simulation capability, and manuals and 
technical information provided to employees, customers, suppliers, 
agents, or licenses, and all research data concerning historic and 
current research and development efforts relating to Masonite's Molded 
Doorskin business including, but not limited to, designs of experiments 
and the results of successful and unsuccessful designs and experiments. 
Intellectual property rights to not include rights to any Property 
Premdor Product; and,
    (3) The Illinois Corporate Offices, the Research Center and the 
Sales and Marketing Offices of Masonite, including all information 
maintained at these locations, all written and electronic records and 
files of these locations, and all tangible and intangible property and 
assets located at them, with the exception of such information, 
records, files and property that do not concern the production, sale, 
marketing, or distribution of Molded Doorskin or doors manufactured 
with Molded Doorskins in North America.
    (4) The North American Molded Products Business does not include IP 
corporate documents, intellectual property owned by IP or other 
materials regularly maintained at IP headquarters that were not part of 
the Purchase Agreement.
    K. ``Purchase Agreement'' means the Purchase Agreement by and among 
IP, Premdor and Premdor U.S. dated as of September 30, 2000 and 
includes all associated schedules and any subsequent modifications to 
revisions of that agreement.

II. Objectives

    The proposed Final Judgment filed in this case is meant to ensure 
defendants' promote divestiture of the Towanda Facility for the purpose 
of establishing a viable competitor in the Molded Doorskin business in 
order to remedy the effects that the United States alleges would 
otherwise result from Premdor's acquisition of the Masonite business 
IP. This Hold Separate Stipulation and Order ensures, prior to such 
divestitures, that the Towanda facility and the North American Molded 
Products Business remain independent, economically viable, and ongoing 
business concerns that will remain independent and uninfluenced by 
Premdor's acquisition of the Masonite business of IP, 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 in proper 
in the United States District Court for the District of Columbia.

IV. Compliance With and Entry of Final Judgment

    A. Each defendant, upon signing his Hold Separate Stipulation and 
Order, thereby stipulates that a Final Judgment in the form attached 
hereto as Exhibit A may be filed with and entered by the Court, upon 
the motion of any party or upon the Court's own motion, at any time 
after compliance with the requirements of the Antitrust Procedures and 
Penalties Act (15 U.S.C. Sec. 16), and without further notice to any 
party or other proceedings, provided that the 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. Each defendant, upon signing his Hold Separate Stipulation and 
Order, thereby stipulates that it shall abide by and comply with the 
applicable 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 applicable 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. Each defendant, upon signing this Hold Separate Stipulation and 
Order, thereby stipulates that it shall not consummate the transaction 
sought to be enjoined by the Complaint herein before the Court has 
signed this Hold Separate Stipulation and Order, and before each 
defendant has signed this Stipulation.
    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 divestitures 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.

[[Page 45329]]

V. Hold Separate Provisions

    Until the divestiture required by the proposed Final Judgment has 
been accomplished, and subject to the provisions of Section VI of this 
Order:
    A. Defendants shall preserve, maintain, and operate the North 
American Molded Products Business as an independent, ongoing, 
economically viable competitive business, with management, research, 
design, development, production, promotions, marketing, sales and 
operations of such assets held entirely separate, distinct and apart 
from those of the defendants' other operations. Defendants Premdor and 
Premdor U.S. shall not coordinate the production, marketing, or terms 
of sale of any products with those produced by or sold by the North 
American Molded Products Business, except to the extent necessary to 
sell Molded Doorskins to Premdor or Premdor U.S. Within twenty (20) 
days after the entry of the 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. Defendants shall take all steps necessary to ensure that (1) the 
North American Molded Products Business will be maintained and operated 
as an independent, ongoing, economically viable and active competitor 
in the Molded Doorskin industry; (2) the management of the North 
American Molded Products Business facility will not be influenced by 
defendants; and (3) the books, records, competitively sensitive sales, 
marketing and pricing information, and decision-making concerning 
research, development, marketing, production, distribution or sales of 
products by or under any of the North American Molded Products Business 
will be kept separate and apart from the other operations of 
defendants.
    C. Defendants shall use all reasonable efforts to maintain the 
research, development, sales and revenues of the products produced by 
or sold by the North American Molded Products Business, and shall 
maintain at 2001 levels all promotional, advertising, sales, technical 
assistance, marketing and merchandising support for the Towanda 
Facility.
    D. Defendants shall provide sufficient working capital and lines 
and sources of credit to continue to maintain the North American Molded 
Products Business as economically viable and competitive, ongoing 
business, consistent with the requirements of Section V(A) and (B).
    E. Defendants shall take all steps necessary to ensure that the 
Towanda Facility is fully maintained in operable condition at no less 
than its current capacity and sales, and shall maintain and adhere to 
normal repair and maintenance schedules for the Towanda Facility.
    F. Defendants shall not, except as stated in the Purchase Agreement 
or 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 asset of the North 
American Molded Products Business, subject to the provisions of Section 
VI of this Order. Except as stated in the Purchase Agreement, 
defendants shall not remove originals or make copies of any of the 
information, records, files or property of the North American Molded 
Products Business, other than the regular course of business, and 
defendants shall not permit review or disclosure of such information, 
records, files or property to defendants Premdor or Premdor U.S., 
provided, however, that Premdor and Premdor U.S. may have access to 
such information, records, files or property to the extent necessary to 
comply with the provisions of the Final Judgment and this Order, to 
obtain and maintain financing to consummate the transactions stated in 
the Purchase Agreement, and to make any disclosure mandated under the 
securities laws of the United States or Canada. Premdor and Premdor 
U.S. shall provide the monitoring trustee, if any, appointed under the 
proposed Final Judgment timely notice identifying: (1) Which, if any, 
Premdor or Premdor U.S. employees have been given access to any of the 
information, records, files or property of the North American Molded 
Products Business; (2) the information, records, files or property of 
the North American Molded Products Business to which such employees 
have been given access; and (3) the reason for such access. In no event 
shall employees of Premodor and Premdor U.S. with direct responsibility 
for sales and marketing have access to any of the information, records, 
files or property of the North American Molded Products 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 North American Molded 
Products Business.
    H. Defendants shall take no action that would jeopardize, delay or 
implede the sale of the Towanda Facility.
    I. Defendants' employees with primary responsibility for the 
research, design, development, promotion, distribution, sale, and 
operation of the North American Molded Products Business shall not be 
transferred or reassigned to other ares within the company except for 
transfer bids initiated by employees pursuant to defendants' regular, 
established job posting policy. Defendants shall provide the United 
States with ten (10) calendar days notice of such transfer.
    J. Prior to consummation of their transaction, defendants shall 
appoint Peter Heist to oversee and to be responsible for defendants' 
compliance with this section. Peter Heist shall have complete 
managerial responsibility for the North American Molded Products 
Business, subject to the provisions of the proposed Final Judgment. In 
the event such person is unable to perform his duties, defendants shall 
appoint, subject to the approval of the Untied States, a replacement 
within ten (10) working days. Should a replacement acceptable to the 
Untied States not be appointed 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 proposed Final 
Judgment to monitor each defendant's compliance with the terms of the 
proposed Final Judgment and this Hold Separate Stipulation and Order 
applicable to it, or to complete the divestitures pursuant to the 
proposed Final Judgment to an Acquirer or Acquirers acceptable to the 
United States.
    L. This Hold Separate Stipulation and Order shall remain in effect 
until consummation of the divestitures required by the proposed Final 
Judgment or until further order of the Court.

VI. Partition Plan

    A. Defendants may present to the Department of Justice a plan 
within twenty-eight (28) days of this Order to partition from the 
Masonite business the Towanda Facility and any other assets of the 
North American Molded Products Business that are necessary to create a 
viable Molded Doorskin business. In the event the Department of Justice 
rejects the partition plan or in the event that the defendants do not 
submit a partition plan, defendants are ordered and directed to hold 
separate the North American Molded Products Business until the 
divestiture of the Towanda Facility is complete. Acceptance of the 
partition plan is in the sole discretion of the Department of Justice. 
If the

[[Page 45330]]

Department of Justice approves the partition plan submitted by 
defendants, Premdor U.S. can take control of the North American Molded 
Products Business with the exception of the Towanda Facility.
    B. Premdor and Pemdor U.S. shall ensure to the satisfaction of the 
Department of Justice that the operations of the Towanda Facility shall 
not be disrupted.

Respectfully submitted,

    For Plaintiff United States of America
J. Brady Dugar, Esq.,
Virginia Bar No.: 31685, United States Department of Justice, 
Antitrust Division, Litigation II Section, 1401 H Street, N.W., 
Suite 300, Washington, D.C. 20530, (202) 616-5125.

    For Defendants Premdor, Inc., and Premdor U.S. Holding Inc.

Keith D. Shugarman, Esq.,
D.C. Bar No.: 416534, Goodwin Procter LLP, 1717 Pennsylvania Avenue, 
N.W., Washington, D.C. 20006, (202) 974-1020.

    International Paper Company and Masonite Corporation
James R. Loftis III, Esq.
D.C. Bar No.: 25627
Danielle K. Moskowitz, Esq.,
D.C. Bar No.: 452132, Gibson, Dunn & Crutcher LLP, 1050 Connecticut 
Avenue, N.W., Washington, D.C. 20036-5307, (202) 955-8500

Order

    It Is So Ordered by the Court, this __________ day of __________, 
2001.
----------------------------------------------------------------------
United States District Judge

Final Judgment

    Whereas, plaintiff, United States of America, filed its Complaint 
on August 3, 2001, plaintiff and defendants, Premdor Inc. 
(``Premdor''), Premdor U.S. Holdings, Inc. (``Premdor U.S.''), 
International Paper Company (``IP''), and Masonite Corporation 
(``Masonite''), by their respective attorneys, have 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 issued of fact 
or law;
    And Whereas, defendants agree 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 certain rights or assets by the defendants to 
assure that competition is not substantially lessened;
    And Whereas, plaintiff requires defendants to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the complaint;
    And Whereas, defendants Premdor and Premdor U.S. have represented 
to the United States that the divestitures required below can and will 
be made, and defendants IP and Masonite have represented that as of the 
time of signing the stipulation to the entry of this Final Judgment, 
the divestiture required below can and will be made, and each defendant 
agrees that it will later 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 any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is Ordered, Adjudged and Decreed:

I. Jurisdiction

    This Court has jurisdiction over the subject matter of and each of 
the parties to 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. ``Acquirer'' or ``Acquirers'' means the entity or entities to 
whom the Towanda Facility is divested.
    B. ``Premdor'' means defendant Premdor Inc., a Canadian corporation 
with its headquarters in Mississauga, Ontario, Canada, its successors 
and assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships and joint ventures, and their directors, officers, 
managers, agents, and employees.
    C. ``Premdor U.S.'' means defendant Premdor U.S. Holdings, Inc., a 
Florida corporation and a wholly owned subsidiary of Premdor with its 
headquarters in Tampa, Florida, its successors and assigns, and its 
subsidiaries, divisions, groups, affiliates, partnerships and joint 
ventures, and their directors, officers, managers, agents, and 
employees.
    D. ``IP'' means defendant International Paper Company, a New York 
corporation with its headquarters in Stamford, Connecticut, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships and joint ventures, and their directors, 
officers, managers, agents, and employees.
    E. ``Masonite'' means defendant Masonite Corporation, a Delaware 
corporation and a wholly owned subsidiary of IP with its headquarters 
in Chicago, Illinois, its successors and assigns, and its subsidiaries, 
divisions, groups, affiliates, partnerships and joint ventures, and 
their directors, officers, managers, agents, and employees.
    F. ``Doorskin'' means the facing components used in the manufacture 
of an interior flush door; two doorskins are required for each door--
one for the front facing and one for the rear facing of the door.
    G. ``Molded Doorskin'' means a hardboard doorskin made from a 
fibrous mat that has been molded under extreme pressure and at a high 
temperature into a raised panel design.
    H. ``Proprietary Premdor Product'' means any product manufactured 
by Masonite in which Premdor has an ownership interest and which 
Masonite has agreed in writing not to sell to anyone other than 
Premdor.
    I. ``Towanda Facility'' means Masonite's Molded Doorskin production 
facility located in Towanda, Pennsylvania including:
    (l) All tangible assets that comprise the Towanda Facility, 
including research and development activities, all manufacturing 
equipment, tooling and fixed assets, personal property, inventory, 
materials, supplies, components, parts, designs and other tangible 
property or assets used at the Towanda Facility (provided, however, 
that all manufacturing equipment, tooling and fixed assets, personal 
property, inventory, materials, supplies, components, parts, designs 
and other tangible property or assets used exclusively in the 
production of any Proprietary Premdor Product are excluded from the 
provisions of this subparagraph); all licenses, permits and 
authorizations issued by any governmental organization relating to the 
Towanda Facility; all contracts, teaming arrangements, agreements 
(including supply agreements), leases, commitments, certifications, and 
understandings relating to the Towanda Facility (provided, however, 
that any contracts, teaming arrangements, agreements (including supply 
agreements), leases, commitments, certifications, and understandings 
between Masonite and/or IP and Premdor and/or Premdor U.S. are excluded 
from this subparagraph); all lists, contracts, accounts, and credit 
records of customers (provided, however, that any contracts, accounts, 
and credit records relating exclusively to Premdor and/or Premdor U.S. 
are excluded from this subparagraph); all repair, performance, and 
Towanda Facility records and all other records relating to the Towanda 
Facility; and
    (2) Any and all intangible assets used in the development, 
production, servicing and sale of Molded Doorskins at the Towanda 
Facility, including, but

[[Page 45331]]

not limited to: (a) Subject to the right of Premdor and Premdor U.S. 
for 180 days from the date of the consummation of the divestiture 
pursuant to Section IV or VI of this Final Judgment, to use up any 
Premdor co-branded packaging or promotional material, exclusive use of 
the CraftMaster, Canterbury, Carmelle, Carolina, Carrera, Caspian, 
Castille, Classique, Clermont, Colonist, Harvest, Canyon, Corinth, 
Coventry, Cremona, Hakuju, Maletero, Mesa, Morning Sun, Natural, 
Trugrain Harvest, and Trugrain Natural brand names and all other 
intellectual property rights used in connection with the production of 
Molded Doorskins at the Towanda Facility, including all blueprints and 
engineering drawings needed for the manufacture of dies used in the 
Molded Doorskin presses at the Towanda Facility; (b) all information, 
documents and computer records, relating to the production, sales, 
marketing or distribution of any products sold under any of the brand 
names identified in section I(2)(a), including all files relating to 
purchasers (other than Premdor and Premdor U.S.) of Molded Doorskins or 
doors manufactured with Molded Doorskins; (c) with respect to all other 
intellectual property rights currently used or currently planned to be 
used in connection with the production of Molded Doorskins at both the 
Towanda Facility and other nondivested Molded Doorskin production 
facilities, a transferable license; (d) all existing licenses and 
sublicenses relating exclusively to the Towanda Facility; (e) a 
transferable sublicense, exclusive in the Acquirer(s) of the Towanda 
Facility, to all other existing licenses and sublicenses relating to 
the Towanda Facility; and (f) all research or market evaluations 
relating exclusively to the Towanda Facility or to customers and copies 
of all other research, market evaluations or information relating to 
plans for, improvements or updates to, or product line extensions of 
Masonite's Molded Doorskin business in existence as of the date the 
Towanda Facility is divested Intellectual property rights comprise, but 
are not limited to, patents, licenses and sublicenses, technical 
information, copyrights, trademarks, trade names, service marks, 
service names, computer software and related documentation, know-how, 
trade secrets, drawings, blueprints, designs, design protocols, 
specifications for parts and devices, safety procedures for the 
handling of materials and substances, quality assurance and control 
procedures, design tools and simulation capability, all manuals and 
technical information provided to employees, customers, suppliers, 
agents, or licensees, and all research data concerning historic and 
current research and development efforts relating to Masonite's Molded 
Doorskin business including, but not limited to, designs of experiments 
and the results of successful and unsuccessful designs and experiments. 
Intellectual property rights do not include rights to the ``Masonite'' 
brand name or to any Proprietary Premdor Product.
    (3) The Towanda Facility does not include IP corporate documents, 
intellectual property owned by IP or other materials regularly 
maintained at IP headquarters that were not part of the Purchase 
Agreement.
    J. ``The North American Molded Products Business'' means Masonite's 
Molded Doorskin business, including:
    (1) Production facilities located in Towanda. Pennsylvania and 
Laurel Mississippi, and all tangible assets that comprise the Towanda 
Facility and the Laurel Facility, including research and development 
activities, all manufacturing equipment, tooling and fixed assets, 
personal property, inventory, materials, supplies, components, parts, 
designs and other tangible property or assets used at the Towanda 
Facility and the Laurel Facility (provided, however, that all 
manufacturing equipment, tooling and fixed assets, personal property, 
inventory, materials, supplies, components, parts, designs and other 
tangible property or assets used exclusively in the production of any 
Proprietary Premdor Product are excluded from the provisions of this 
subparagraph); all licenses, permits and authorizations issued by any 
governmental organization relating to the Towanda Facility and the 
Laurel Facility; all contracts, teaming arrangements, agreements 
(including supply agreements), leases, commitments, certifications, and 
understandings relating to the Towanda Facility and the Laurel Facility 
(provided, however, that any contracts, teaming arrangements, 
agreements (including supply agreements), leases, commitments, 
certifications, and understandings between Masonite and/or IP and 
Premdor and/or Premdor U.S. are excluded from this subparagraph); all 
lists, contracts, accounts, and credit records of customers (provided, 
however, that any contracts, accounts, and credit records relating 
exclusively to Premdor and/or Premdor U.S. are excluded from this 
subparagraph); all repair, performance, and Towanda Facility and Laurel 
Facility records and all other records relating to the Towanda Facility 
and the Laurel Facility;
    (2) Any and all intangible assets used in the development, 
production, servicing and sale of Molded Doorskins at the Towanda 
Facility and the Laurel Facility, including, but not limited to: (a) 
Subject to the right of Premdor and Premdor U.S., for 180 days from the 
date of the consummation of the divestiture pursuant to Section IV or 
VI of this Final Judgment, to use up any Premdor co-branded packaging 
or promotional material, the CraftMaster, Canterbury, Carmelle, 
Carolina, Carrera, Caspian, Castille, Classique, Clermont, Colonist, 
Harvest, Canyon, Corinth, Coventry, Cremona, Hakuju, Maletero, Mesa, 
Morning Sun, Natural, Trugrain Harvest, and Trugrain Natural brand 
names and all other intellectual property rights used in connection 
with the production of Molded Doorskins at the Towanda Facility and the 
Laurel Facility; (b) all existing licenses and sublicenses relating 
exclusively to the Towanda Facility and the Laurel Facility; and (c) 
all research, market evaluations or information relating to plans for, 
improvements or updates to, or product line extensions of Masonite's 
Molded Doorskin business. Intellectual property rights comprise, but 
are not limited to, patents, licenses and sublicenses, technical 
information, copyrights, trademarks, trade names, service marks, 
service names, computer software and related documentation, know-how, 
trade secrets, drawings, blueprints, designs, design protocols, 
specifications for parts and devices, safety procedures for the 
handling of materials and substances, quality assurance and control 
procedures, design tools and simulation capability, all manuals and 
technical information provided to employees, customers, suppliers, 
agents, or licensees, and all research data concerning historic and 
current research and development efforts relating to Masonite's Molded 
Doorskin business including, but not limited to, designs of experiments 
and the results of successful and unsuccessful designs and experiments. 
Intellectual property rights do not include rights to any Proprietary 
Premdor Product; and,
    (3) The Illinois Corporate Offices, the Research Center and the 
Sales and Marketing Offices of Masonite, including all information 
maintained at these locations, all written and electronic records and 
files of these locations, and all tangible and intangible property and 
assets located at them, with the exception of such information, 
records, files and property that do not concern the production, sale,

[[Page 45332]]

marketing, or distribution of Molded Doorskins or doors manufactured 
with Molded Doorskins in North America.
    (4) The North American Molded Products Business does not include IP 
corporate documents, intellectual property owned by IP or other 
materials regularly maintained at IP headquarters that were not part of 
the Purchase Agreement.
    K. ``Purchase Agreement'' means the Purchase Agreement by and among 
IP, Premdor and Premdor U.S. dated as of September 30, 2000 and 
includes all associated schedules and any subsequent modifications to 
or revisions of that agreement.

III. Applicability

    A. This Final Judgment applies to Premdor, Premdor U.S., IP, and 
Masonite, as defined above, and to 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 of other 
disposition of all or substantially all of their assets or of lesser 
business units that include the Towanda Facility, that the purchaser 
agrees to be bound by the provisions of this Final Judgment, provided, 
however, that defendants need not obtain such an agreement from the 
Acquirer(s).

IV. Divestiture

    A. Defendants are ordered and directed within (a) the earlier of 
(1) one hundred-fifty (150) calendar days after the filing of the 
Compliant in this matter, of (2) one hundred-twenty (120) calendar days 
after the closing of the transaction in the Purchase Agreement, or, if 
later, (b) five (5) calendar days after the entry of the Final 
Judgment, to:
    (1) Divest the Towanda Facility in manner consistent with this 
Final Judgment as a viable, ongoing business to Acquirers acceptable to 
the United States in its sole discretion;
    (2) At the option of the Acquirer(s) enter an agreement to supply, 
for a maximum period of 12 months from the date of the consummation of 
a divestiture pursuant to Section IV or Section VI of this Final 
Judgment, at a price not greater than the cost of production, any 
reasonably necessary number of the dies used by Masonite to produce the 
full range of Molded Doorskins designs and sizes that Masonite has the 
ability to produce as of the date of the consummation of a divestiture 
pursuant to Section IV or Section VI of this Final Judgment.
    (3) At the option of the Acquirer(s), enter into and agreement to 
supply, for as maximum period of 12 months from the date of the 
consummation of a divestiture pursuant to Section IV or Section VI of 
this Final Judgment, reasonable levels of transitional and 
manufacturing start-up support that will enable the Acquirer(s) to 
produce Molded Doorskins.
    B. The United States, in its sole discretion, may extend the time 
period for the divestiture two additional periods of time, not to 
exceed thirty (3) calendar days each, and shall notify the Court in 
such circumstances. Defendants agree to use their best efforts to 
divest the Towanda Facility as expeditiously as possible.
    C. In accomplishing the divestiture ordered by this Final Judgment, 
defendants promptly shall make known, by usual and customary means, the 
availability of the Towanda Facility. Defendants shall inform any 
person making inquiry regarding a possible purchase of the Towanda 
Facility 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 Acquirers, subject to 
customary confidentiality assurances, all information and documents 
relating to the Towanda Facility customarily provided in a due 
diligence process except: (1) such information or documents subject to 
the attorney-client or work-product privileges, and (2) such 
information or documents consisting solely of information relating to 
purchases by Premdor and Premdor U.S. 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 Acquirer(s) and the United States 
information relating to any IP or Masonite personnel involved in the 
research, design, production, operation, development, marketing, and 
sale of Molded Doorskins to enable the Acquirer(s) to make offers of 
employment. Defendants will not interfere with any negotiations by the 
Acquirer(s) to make offers of employment. Defendants will not interfere 
with any negotiations by the Acquirer(s) to employ any person whose 
primary responsibility is the research, design, production, operation, 
development, marketing or sale of Molded Doorskins. Defendants are 
prohibited from soliciting or making any offers or counteroffers of 
employment to any employee of the North American Molded Products 
Business except with respect to: (1) personnel at or with 
responsibility for the Laurel Facility; (2) personnel at the West 
Chicago research and development facility.
    E. Defendants, or if the transaction contemplated in the Purchase 
Agreement has closed, defendant Premdor shall permit prospective 
Acquirers of the Towanda Facility to have reasonable access to 
personnel and to make inspections of the physical facilities of the 
Towanda Facility; access to any and all environmental, zoning, and 
other permit documents and information; and access to any and all 
financial, operations, or other documents and information customarily 
provided as part of a due diligence process (except such information or 
documents subject to the attorney-client or work-product privileges or 
consisting solely of information relating to purchases by Premdor and/
or Premdor U.S.).
    F. Defendants shall warrant to the Acquirer(s) of the Towanda 
Facility that each asset will be operational on the date of sale.
    G. Defendants warrant that they have the authority to convey all 
intellectual property described in Section II.I under the definition of 
Towanda Facility free and clear of any encumbrances, contractual 
commitments or obligations to third parties.
    H. Defendants shall not take any action that will impede in any way 
the permitting, operation, or divestiture of the Towanda Facility.
    I. Defendants shall not take any action that will impede or exclude 
their customers from buying Molded Doorskins produced by the 
Acquirer(s) of the Towanda Facility for two years from the date of the 
consummation of the divestiture pursuant to Section IV or VI of this 
Final Judgment.
    J. Defendants shall not take any action that will impede or exclude 
their customers from selling doors manufactured with Molded Doorskins 
produced by the Acquirer(s) of the Towanda Facility for two years from 
the date of the consummation of the divestiture pursuant to Section IV 
or VI of this Final Judgment.
    K. Defendants shall warrant to the Acquirer(s) of the Towanda 
Facility that there are no material defects in the environmental, 
zoning or other permits pertaining to the operation of each assets, and 
that following the sale of the Towanda Facility, defendants will not 
undertake, directly or indirectly, any challenges to the environmental, 
zoning or other permits relating to the operation of the Towanda 
Facility.
    L. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section IV, or by trustee appointed pursuant to 
Section VI, of

[[Page 45333]]

this Final Judgment, shall include the entire Towanda Facility, and 
shall be accomplished in such a way as to satisfy the United States, in 
its sole discretion, that the Towanda Facility can and will be used by 
the Acquirer(s) as part of a viable, ongoing Molded Doorskin business. 
The divestiture, whether pursuant to Section IV or Section VI of this 
Final Judgment.
    (1) Shall be made to an Acquirer (or Acquirers) that, in the United 
Stat's sole judgment, has the intent and capability (including the 
necessary managerial, operational, technical and financial capability) 
of competing effectively in the manufacture and sale of Molded 
Doorskins; and
    (2) Shall be accomplished so as to satisfy the United States, in 
its sole discretion, than none of the terms of any agreement between an 
Acquirer (or Acquirers) and any of the defendants gives any of the 
defendants the ability unreasonably to raise the Acquirer's costs, to 
lower the Acquirer's efficiency, or otherwise to interfere in the 
ability of the Acquirer(s) to compete effectively.

V. Appointment of Monitoring Trustee

    A. Immediately upon the filing of this Final Judgment, the United 
States may, in its sole discretion, appoint a monitoring trustee, 
subject to approval by the Court.
    B. The trustee shall have the power and authority to monitor 
defendants' compliance with the terms of this Final Judgment and the 
Hold Separate Stipulation and Order entered by this Court and shall 
have such powers as this Court deems appropriate. Subject to Section 
V(C) of this Final Judgment, the monitoring trustee may hire at the 
cost and expense of defendant Premdor any consultants, accountants, 
attorneys, or other persons, who shall be solely accountable to the 
monitoring trustee, reasonably necessary in the monitoring trustee's 
judgment.
    C. Defendants shall not object to actions taken by the monitoring 
trustee in fulfillment of the monitoring trustee's responsibilities 
under any Order of this Court on any ground other than the monitoring 
trustee's malfeasance. Any such objections by defendants must be 
conveyed in writing to the United States and the monitoring trustee 
within ten (10) calendar days after the action taken by the monitoring 
trustee giving rise to the defendants' objection.
    D. The monitoring trustee shall serve at the cost and expense of 
defendant Premdor, on such terms and conditions as the plaintiff 
approves. The compensation of the monitoring trustee and any 
consultants, accountants, attorneys, and other persons retained by the 
monitoring trustee shall be on reasonable and customary terms 
commensurate with the individuals experience and responsibilities.
    E. The monitoring trustee shall have no responsibility or 
obligation for the operation of defendants' businesses.
    F. Defendants shall use their best efforts to assist the monitoring 
trustee in monitoring defendants' compliance with their individual 
obligations under this Final Judgment and under the Hold Separate 
Stipulation and Order. The monitoring trustee and any consultants, 
accountants, attorneys, and other persons retained by the monitoring 
trustee shall have full and complete access to the personnel, books, 
records, and facilities of the North American Molded Products Business, 
subject to reasonable protection for trade secret or other confidential 
research, development, or commercial information or any applicable 
privileges. Defendants shall take no action to interfere with or to 
impede the monitoring trustee's accomplishment of its responsibilities.
    G. After its appointment, the monitoring trustee shall file monthly 
reports with the United States and the Court setting forth the 
defendants' efforts to comply with their individual obligations under 
this Final Judgment and under the Hold Separate Stipulation and Order. 
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.
    H. The monitoring trustee shall serve until the divestiture of the 
Towanda Facility is finalized pursuant to either Section IV or Section 
VI of this Final Judgment.

VI. Appointment of a Trustee To Effect the Divestiture

    A. If the Towanda Facility has not been divested within the time 
period specified in Section IV(A), defendants shall notify the United 
States of that fact in writing. If a monitoring trustee has been 
appointed under Section V of this Final Judgment, the monitoring 
trustee shall immediately assume the sole power and authority to effect 
the divestiture of the Towanda Facility. If a monitoring trustee has 
not been appointed, upon application of the United States, the Court 
shall appoint a trustee selected by the United States and approved by 
the Court to effect the divestiture of the Towanda Facility.
    B. Upon the appointment of a trustee and expiration of the time 
specified in Section IV(A) of this Final Judgment, only the trustee 
shall have the right to sell the Towanda Facility. The trustee shall 
have the power and authority to accomplish the divestiture to an 
Acquirer or Acquirers acceptable to the United States at such price and 
on such terms as are then obtainable upon reasonable efforts by the 
trustee, subject to the provisions of Sections IV, VI, and VII of this 
Final Judgment, and shall have such other powers as this Court deems 
appropriate. Subject to Section VI(C) of this Final Judgment, the 
trustee may hire at the cost and expense of defendant Premdor, any 
investment bankers, attorneys, or other agents, who shall be solely 
accountable to the trustee, reasonably necessary in the trustee's 
judgment to assist in the divestiture.
    C. Defendants shall not object to a sale 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 VII.
    D. The trustee shall serve at the cost and expense of defendant 
Premdor, on such terms and conditions as the plaintiff approves, and 
shall account for all monies derived from the sale of the assets sold 
by the trustee and all costs and expenses so incurred. Upon receipt of 
such monies, the trustee shall place the monies in an interest bearing 
account. 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, including accrued 
interest, shall be paid to defendants and the trust shall then be 
terminated. The compensation of the trustee and any professionals and 
agents retained by the trustee shall be reasonable and based on a fee 
arrangement providing the trustee with an incentive based on the price 
and terms of the divestiture and the speed with which it is 
accomplished, but timeliness is paramount.
    E. Defendants shall use their best efforts to assist the trustee in 
accomplishing the required divestiture. The trustee and any 
consultants, account's, attorneys, and other persons retained by the 
trustee shall have full and complete access to the personnel, books, 
records, and facilities of the business to be divested, and defendants 
shall develop financial and other information relevant to such business 
as the trustee may reasonably request, subject to reasonable protection 
for trade secret or other confidential research, development, or 
commercial information or any applicable privileges. Provided, however, 
that the trustee shall not make available to

[[Page 45334]]

prospective Acquirers any such information or documents consisting 
solely of information relating to purchases by Premdor and Premdor U.S. 
Defendants shall take no action to interfere with or to impede the 
trustee's accomplishment of its responsibilities.
    F. After its appointment, the trustee shall file monthly reports 
with the United States and the Court setting forth the trustee's 
efforts to accomplish the divestiture ordered under this Final 
Judgment. To the extent such reports contain information that the 
trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. Such reports shall include the name, 
address, and telephone number of each person who, during the preceding 
month, made an offer to acquire, expressed an interest in acquiring, 
entered into negotiations to acquire, or was contacted or made an 
inquiry about acquiring, any interest in the Towanda Facility, and 
shall describe in detail each contact with any such person. The trustee 
shall maintain fully records of all efforts made to divest the Towanda 
Facility.
    G. If the trustee has not accomplished such divestiture within six 
months after its becomes responsible for selling the Towanda Facility, 
the trustee shall promptly file with the Court a report setting forth 
(1) the trustee's efforts to accomplish the required divestiture, (2) 
the reasons, in the trustee's judgment, why the required divestiture 
has not been accomplished, and (3) the trustee's recommendations. 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 plaintiff who shall have the right to make additional 
recommendations consistent with the purpose of the trust. The Court 
thereafter shall enter such orders as it shall deem appropriate to 
carry out the purpose of the Final Judgment, which may, if necessary, 
include extending the trust and the term of the trustee's appointment 
by a period requested by the United States.

VII. Notice of Proposed Divestiture

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, defendants or the trustee, whichever is then 
responsible for effecting the divestiture required herein, shall notify 
the United States of any proposed divestiture required by Section IV or 
VI of this Final Judgment. 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 or 
expressed an interest in or desire to acquire any ownership interest in 
the Towanda Facility, together with full details of the same.
    B. Within fifteen (15) calendar days of receipt by the United 
States of such notice, the United States may request from defendants, 
the proposal Acquirer(s), any other third party, or the trustee if 
applicable additional information concerning the proposed divestiture, 
the proposed Acquirer(s), and any other potential Acquirer. Defendants 
and the trustee shall furnish any additional information requested 
within fifteen (15) calendar days of the receipt of the request, unless 
the parties shall otherwise agree.
    C. 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 defendants, the 
proposed Acquirer(s), any third party and the trustee, 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 that 
it does not object, the divestiture may be consummated, subject only to 
defendants limited right to object to the sale under Section VI(C) of 
this Final Judgment. Absent written notice that the United States does 
not object to the proposed Acquirer(s) or upon objection by the United 
States, a divestiture proposed under Section IV or Section VI shall not 
be consummated. Upon objection by defendants under Section VI(C), a 
divestiture proposed under Section VI shall not be consummated unless 
approved by the Court.

VIII. Financing

    Defendants shall not finance all or any part of any purchase made 
pursuant to Section IV or VI of this Final Judgment.

IX. Hold Separate

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

X. Affidavits

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestiture has been completed under Section IV or VI, defendants, 
or if the transaction contemplated in the Purchase Agreement has 
closed, defendant Premdor shall deliver to the United States an 
affidavit as to the fact and manner of its compliance with Section IV 
or VI of this Final Judgment. Each such affidavit shall include the 
name, address, and telephone number of each person who, during the 
preceding thirty days, 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 Towanda Facility, 
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 defendants have taken to solicit buyers for the Towanda 
Facility, and to provide required information to prospective Acquirers, 
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 limitation 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 that describes in reasonable detail all actions defendants 
have taken and all steps defendants have implemented on an ongoing 
basis to comply with Section IX of this Final Judgment. Defendants 
shall deliver to the United States an affidavit describing any changes 
to the efforts and actions outlined in defendants' earlier affidavits 
filed pursuant to this section within fifteen (15) calendar days after 
the change is implemented.
    C. Defendants shall individually keep all records of each of their 
individual efforts made to preserve and divest the Towanda Facility 
until one year after such divestiture has been completed.

XI. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of 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 written request of a duly authorized 
representative of the Assistant Attorney General in charge of the 
Antitrust Division, and on

[[Page 45335]]

reasonable notice to defendants, be permitted.
    (1) Access during defendants' office hours to inspect and copy, or 
at plaintiff's option, to require defendants provide copies of, all 
books, ledgers, accounts, records and documents in the possession, 
custody, or control of defendants, relating to any matters contained in 
this Final Judgment, and
    (2) To interview, either informally or on the record, defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews shall be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by defendants.
    B. Upon the written request of a duly authorized representative of 
the Assistant Attorney General in charge of the Antitrust Division, 
defendants shall submit 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 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, 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 the United States shall give 
defendants ten (10) calendar days notice prior to divulging such 
material in any legal proceeding (other than a grand jury proceeding).

XII. No Reacquisition

    Defendants may not reacquire any part of the Towanda Facility 
during the term of this Final Judgment.

XIII. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XIV. Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire ten years from the date of its entry.

XV. Public Interest Determination

    Entry of this Final Judgment is in the public interest.
    Dated:________, 2001
    Court approval subject to procedures of the Antitrust Procedures 
and Penalties Act, 15 U.S.C. 16
----------------------------------------------------------------------
United States District Judge

Competitive Impacts 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.

1. Nature and Purpose of This Proceeding

    On August 3, 2001, the United States filed a Compliant alleging 
that the proposed acquisition of the Masonite business of International 
Paper Company (``IP'') by Premdor Inc. (``Premdor'') would 
substantially lessen competition in violation of section 7 of the 
Clayton Act, as amended, 15 U.S.C. 18. The Compliant alleges that 
Premdor and IP, through its subsidiary Masonite Corporation 
(``Masonite''), are two of the three largest firms involved in the 
production of interior molded doors. As alleged in the Complaint, the 
transaction will substantially lessen competition in the development, 
manufacture and sale of interior molded doorskins and interior molded 
doors in the United States, thereby harming consumers. Accordingly, 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 Premdor to acquire the 
Masonite business, provided that Premdor divests its Towanda, 
Pennsylvania doorskin manufacturing facility, along with intellectual 
property, research capabilities and other assets needed to be a viable 
doorskin manufacturer. The settlement consists of proposed Final 
Judgment and a Hold Separate Stipulation and Order.
    The proposed Final Judgment orders defendants to divest the Towanda 
facility to an acquirer approved by the United States. Defendants must 
complete the divestiture with 150 calendar days after the filing of the 
Complaint in this matter, or within 120 calendar days after the closing 
of Premdor's acquisition of the Masonite business, whichever is 
earlier. 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 Towanda facility.
    The Hold Separate Stipulation and Order and the proposed Final 
Judgment require defendants to preserve, maintain and continue to 
operate the North American operations of the Masonite business as an 
independent, ongoing, economically viable competitive business, with 
the management, sales and operations held separate from Premdor's other 
operations. The Hold Separate Stipulation and Order allows the 
defendants to submit to the United States a plan for partitioning the 
Towanda facility from the remainder of Masonite's North American 
operations. If the defendants submit a partition plan that is 
acceptable to the United States, then, after the transaction closes, 
Premdor can take control of all of Masonite's North American operations 
other than the Towanda facility and any other partitioned assets. The 
partitioned assets must continue to be held separate until they are 
divested to a suitable acquirer.
    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 
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. Premdor
    Premdor is a Canadian corporation with its corporate headquarters 
and principal place of business in Mississauga, Ontario, Canada. 
Premdor produces interior and exterior doors. Its line of wood doors 
includes molded, louvered and custom-made commercial and architectural 
doors. Premdor is the largest manufacturer and merchandises of interior 
molded doors in the world. It manufactures, merchandises and sells

[[Page 45336]]

interior molded doors to distributors, wholesalers, home centers and 
building-supply dealers across Canada, the United States, Mexico, 
Europe, Asia and the Middle East. Sale of interior molded doors in the 
United States accounted for about 23 percent of Premdor's total 2000 
sales of approximately $1.29 billion. Premdor also holds a 48.5 percent 
equity stake in Firbramold, S.A. (``Fibramold''), a Chilean 
manufacturer of interior molded doorskins. Fibramold is a Chilean 
closed corporation owned by Premdor, Forestal Terranova S.A., and 
Citifor (Chile) Holdings Limitada. Premdor is Fibramold's only 
significant interior molded doorskin customer in the United States.
2. Premdor U.S. Holdings, Inc. (``Premdor U.S.'')
    Premdor U.S. a wholly owned subsidiary of Premdor, is a Florida 
corporation with its corporate headquarters and principal place of 
business in Tampa, Florida. Premdor U.S. owns Premdor's U.S. facilities 
involved in the manufacture and sale of doors.
3. IP
    IP is a New York corporation with its corporate headquarters and 
principal place of business in Stamford, Connecticut. Its businesses 
include printing paper, packaging, distribution, chemical and petroleum 
products and building materials. IP operates in nearly fifty countries 
and exports its products to more than 130 nations. In 2000, IP reported 
net sales of approximately $28.2 billion.
4. Masonite
    Masonite, a wholly owned subsidiary of IP, is a Delaware 
corporation with its corporate headquarters and principal place of 
business in Chicago, Illinois. Masonite is one of the world's largest 
manufacturers of fiberboard, which is processed into a variety of 
products, including molded doorskins. Masonite manufacturers interior 
molded doorskins in the United States at plants in Laurel, Mississippi 
and Towanda, Pennsylvania. Masonite sells interior molded doorskins to 
all of the non-vertically door manufacturers in the United States. In 
2000, Masonite reported total sales of approximately $465 million, 
approximately half of which was generated through sales of interior 
molded doorskins.
B. The Proposed Acquisition
    On or about September 30, 2000, IP, Premdor and Premdor U.S. 
entered into a purchase agreement whereby Premdor, through Premdor 
U.S., agreed to purchase IP's Masonite business. Premdor U.S. agreed to 
purchase 100 percent of the shares of Masonite, International Paper 
Masonite Holding Company Ltd. and Pintu Acquisition Company, Inc., as 
well as certain other assets and intellectual property rights. The 
purchase price for the transaction is approximately $500 million, 
subject to post-closing adjustments.
C. The Competitive Effects of the Acquisition
1. The Interior Molded Doorskin and Interior Molded Door Markets
    As alleged in the Complaint, a doorskin is the component which 
makes up the front and back of the flush door; two doorskins are 
required for each flush door. These are several varieties of 
doorskins--a molded doorskin is formed from a fibrous mat that is 
molded into a raised panel design in a press under extreme pressure and 
at high temperatures. Molded doorskins are designed to provide the 
appearance of solid wood doors at a much lower price. A molded doorskin 
is the largest input cost of a molded door, comprising up to 70 percent 
of the cost of manufacturing a molded door. The Complaint alleges that 
the sale of interior molded doorskin in the United States for use in 
manufacturing interior molded doors is a relevant product market within 
the meaning of section 7 of the Clayton Act.
    The Complaint also alleges that the sale of interior molded doors 
in the United States is a relevant product market within the meaning of 
section 7 of the Clayton Act. Interior molded doors are a type of flush 
door used primarily in residential construction and remodeling for 
closets, rooms, and hallways. Other types of flush doors include those 
made with hardboard and veneered doorskin. Both hardboard and veneered 
doorskins are flat, unlike a molded doorskin which has a raised panel 
design. The Complaint alleges that hardboard and veneered doors are not 
substitutes for molded doors, as they are used in different 
applications than molded doors. Moreover, changes in price of molded 
doors have, in the past, had no impact on the demand for hardboard or 
veneered doors.
2. Anticompetitive Consequences of the Acquisition
    The markets for interior molded doorskin (the ``upstream market'') 
and for interior molded doors (the ``downstream market'') are closely 
connected--interior molded doorskins are the primary input in the 
manufacture of interior molded doors. There are only two major 
competitors in each market, one of which is a vertically integrated 
firm, not to party to this action (hereinafter the ``non-party firm''), 
that therefore competes in both markets. Masonite presently is the 
largest competitor in the interior molded doorskin market and is not 
vertically integrated into the interior molded door market. Premdor is 
one of two players in the interior molded doors market and is a small, 
but significant, participant in the interior molded doorskin market. 
The proposed transaction, therefore, would combine two competitors in 
the interior molded doorskin market and result in the combined Premdor/
Masonite firm being vertically integrated into both the interior molded 
doorskin and interior molded door markets. In 2000, Masonite and the 
non-party firm manufactured the vast majority of all doorskins used to 
manufacture interior molded doors in the United States. Masonite sell 
its doorskins to non-vertically integrated door manufacturers, and 
Premdor is Masonite's largest purchaser of interior molded doorskins. 
Premdor also participates in the interior molded doorskin market 
through its joint venture, Fibramold. The non-party firm uses the vast 
majority of its interior molded doorskin production in the production 
of its own molded doors; the rest of its interior molded doorskin 
production is sold to non-vertically integrated door manufacturers. 
There are also a number of small doorskin manufacturers that sell 
interior molded doorskins in the United States, however, none of these 
sells even one percent of the interior molded doorskins sold in the 
United States.
    Premdor is the world's largest producer of interior molded doors. 
In 2000, Premdor sold over 40 percent of all interior molded doors sold 
in the United States. Premdor's principal competitor in the downstream 
interior molded door market is the non-party firm. The approximately 
nine smaller, non-vertically integrated door manufacturers each sells 
five percent or less of the interior molded doors sold in the United 
States. The non-integrated door manufacturers in the United States 
purchase almost all of their interior molded doorskin from either 
Masonite or the non-party firm.
    But for several impediments to coordination that result from the 
current structure of the upstream and downstream markets, the markets 
for interior molded doorskins and interior molded doors sold to U.S. 
consumers would be more conducive to anticompetitive coordination of 
output and price by the market participants.

[[Page 45337]]

Despite the high concentration and homogeneous products of these 
markets--characteristics that tend to make coordination possible--the 
evidence developed in the investigation of the proposed transaction 
revealed at least four significant factors in the current structure of 
these markets that make coordination less likely. Based upon the 
evidence specific to this case, including documents obtained from the 
defendants, each of these factors would be lessened or eliminated if 
the proposed transaction were consummated.
    The most significant impediment to coordination is Premdor's 
potential expansion in the interior molded doorskin market. Due to the 
substantial volume of interior molded doorskins that it uses, Premdor 
could become a more significant producer by expanding further into the 
production of doorskins. If Masonite and the non-party firm were to 
coordinate, their increased doorskin prices would harm Premdor, giving 
it an incentive to expand significantly its output of doorskins, which 
would disrupt the coordination between Masonite and the non-party firm.
    As the Compliant alleges, In 1998, Premdor purchased a 48.5 percent 
equity interest in Fibramold. Following that investment, Premdor began 
using some of its internally produced molded doorskins in the 
manufacture of interior molded doors sold in the United States. 
Recognizing Premdor's potential to expand significantly its 
participation in the U.S. market for doorskin production, Masonite 
began negotiating lower interior molded doorskin prices for Premdor. In 
March 1999, Premdor, Masonite and LP signed a strategic Alliance 
agreement in which Masonite agreed to lower the price of interior 
molded doorskins sold to Premdor in exchange for Premdor's agreement, 
inter alia, to certain volume commitments. The Strategic Alliance, 
which has stated term of five years, gives Premdor an incentive in the 
form of lower prices to refrain from further vertical integration--if 
either party decides to further vertically integrate, the other party 
may terminate the agreement on ninety days notice.
    After Masonite began lowering its interior molded doorskin prices 
to Premdor pursuant to the Strategic Alliance, Masonite also began 
lowering its prices to the other interior molded door manufacturers. 
Under the current market structure, Masonite has an incentive to keep 
the other door manufacturers competitive with Premdor to maintain a 
broader customer base. If Premdor were to acquire Masonite, the price-
constraining effect of Premdor's potential expansion in the interior 
molded doorskin market would be eliminated.
    In addition, Masonite acts as a significant competitive constraint 
in the interior molded door market. Premdor and the non-party firm have 
an incentive to attempt to coordinate pricing by reducing output. 
Coordination would reduce the output of interior molded doors, and lead 
to higher door prices. However, such an output reduction would also 
reduce the output of interior molded doorskins sold in the United 
States, harming Masonite. Thus, Masonite would have an incentive to 
disrupt such coordination through increased sales to the other non-
vertically integrated door manufacturers. After the proposed 
transaction, a vertically integrated Premdor/Masonite combination will 
not have the same incentive to defeat coordination in the interior 
molded door market by increasing sales to the non-integrated door 
manufacturers since the combined company would be competing against 
those door manufacturers, and would benefit from an increase in the 
prices of interior molded doors.
    The non-party firm acts as a significant competitive constraint in 
both the upstream and downstream markets. Documentary evidence obtained 
from the defendants suggests that the non-party firm, as a fully 
vertically integrated manufacturer, has certain cost advantages over 
Masonite and Premdor that it has used to lower prices to build market 
share. This differing cost structure among the dominant firms is an 
impediment to coordination. The evidence from the defendants suggests 
that post-acquisition, the cost structures of the two vertically 
integrated firms would be more closely aligned, decreasing the 
opportunity for the non-party firm to increase its market share 
profitably through lower prices, and thus increasing the non-party 
firm's incentive to coordinate with the combined Premdor/Masonite. In 
fact, Masonite recognized that the non-party firm's incentive to gain 
market share by lowering price would diminish if it faced a strong, 
integrated competitor.
    Finally, the asymmetries of information available to the firms 
about the upstream and downstream markets impede coordination. Masonite 
specializes in interior molded doorskin production, whereas its most 
significant competitor, the non-party firm, competes in both the 
interior molded doorskin and interior molded door markets. The 
differences in vertical integration between the two firms create 
information asymmetries that would make it difficult for the firms to 
monitor and punish deviations from attempted coordination on the terms 
of sale of interior molded doorskins. For example, since the non-party 
firm uses internally most of the doorskins it produces, Masonite lacks 
an ability to observe a market price for the non-party firm's doorskins 
and the number of doorskins that it produces. Similarly, since Masonite 
does not sell in the downstream market, it lacks information about the 
non-party firm's production and pricing in the interior molded door 
market. Moreover, despite the Strategic Alliance between Premdor and 
Masonite, there are significant gaps in the information each party has 
about the market in which the other party participates. The proposed 
acquisition would eliminate much of the information uncertainty by 
adding Premdor's downstream market information to Masonite's upstream 
market information, enhancing the combined firm's ability to detect 
deviations by the on-party firm on any coordinated price increase
    It is unlikely that the non-vertically integrated molded door 
manufacturers would be able to expand their output to defeat any 
anticompetitive coordination between the two vertically integrated 
firms post-acquisition. Each of these manufacturers is dependent on 
Masonite or the non-party firm for the majority of its molded 
doorskins. Since molded doorskins represent up to 70 percent of the 
cost of producing a molded door, post-acquisition the two vertically 
integrated firms could weaken their downstream rivals by raising their 
molded doorskin prices.
    Entry into the U.S. interior molded doorskin market is unlikely to 
be timely, likely or sufficient to prevent the exercise of market power 
that the two dominant, vertically-integrated firms would be able to 
collectively exercise following the merger. While several foreign 
interior molded doorskin producers have limited sales in North America, 
they collectively lack the capacity, quality and reliability to disrupt 
a coordinated effort to restrict output of interior molded doorskins, 
and ultimately, doors.
    Finally, any merger-specific efficiencies that may be generated by 
the transaction are outweighed by the likely anticompetitive effects. 
While vertical integration may allow the combined Premdor/Masonite to 
lower the cost of producing interior molded doors, Premdor and Masonite 
can obtain the benefits of vertical integration without also enhancing 
the likelihood of coordination in the relevant markets by

[[Page 45338]]

allowing Premdor to acquire a portion of Masonite. The proposed Final 
Judgment allows Premdor to acquire Masonite's interior molded doorskin 
production facilities in Laurel, Mississippi and Carrick-on-Shannon 
Ireland, giving Premdor sufficient capacity to supply all of its 
current requirements. However, the proposed Final Judgment also 
requires the divestiture of Masonite's Towanda Facility, which will 
create an independent manufacturer of interior molded doorskins that 
will impede the combined Premdor/Masonite's ability to coordinate with 
the non-party firm.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment requires Premdor to divest the Towanda 
Facility to a purchaser, approved by the United States, that can 
compete effectively in the interior molded doorskin market, and thereby 
remedy the anticompetitive effects alleged in the Complaint 
Specifically, the proposed Final Judgment requires Premdor to divest 
the assets related to the production of molded doorskins at the Towanda 
Facility: including the Towanda plant; the exclusive right world-wide 
to the ``CraftMaster'' name; the exclusive right world-wide to the 
molded doorskin design names (i.e. Colonist, Classique, etc.); a 
license to all of the research and development, and other intellectual 
property related to the manufacture and sale of molded doorskins; the 
Towanda customer list; and the right to hire Masonite's sales, 
marketing and distribution employees, as well as the employees of the 
Towanda Facility and certain other employees. This will allow the 
purchaser of the Towanda Facility to manufacture and sell all of the 
designs and sizes of interior molded doorskins that Masonite currently 
sells in the United States. The proposed Final Judgment also gives the 
acquirer of the Towanda Facility the option to enter into transitional 
agreements for up to twelve months for the supply of dies needed to 
manufacture interior molded doorskins, as well as for services required 
to run the Towanda Facility.
    Defendants must use their best efforts to divest the Towanda 
Facility as expeditiously as possible. The proposed Final Judgment 
provides that the Towanda Facility be divested in such a way as to 
satisfy the United States, in its sole discretion, that the acquirer 
can and will use the assets as part of a viable, ongoing business.
    The proposed Final Judgment allows for the appointment of a trustee 
to monitor defendants' compliance with the terms of the proposed Final 
Judgment and the Hold Separate Stipulation and Order. If the defendants 
are unable to divest the Towanda Facility in the time allowed, the 
Final Judgment also allows for the appointment of a trustee to effect 
the divestiture. If a trustee is appointed, the proposed Final Judgment 
provides that defendants must cooperate fully with the trustee and 
defendant Premdor must pay all of the trustee's costs and expenses. Any 
trustee appointed to effect the divestiture will have his or her 
compensation 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 any trustee 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.

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 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, N.W., 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 
Towanda Facility, and other relief contained in the proposed Final 
Judgment will establish, preserve and ensure a viable competitor in the 
relevant markets identified by the United States. Thus, the United 
States is convinced that the proposed Final Judgment, once implemented 
by the Court, will prevent Premdor's acquisition of the Masonite 
business of IP 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.


[[Page 45339]]


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 decree 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 (DC Cir. 
1995).
    In conducting this inquiry, ``the Court is nowhere compelled to go 
to trail or to engage in extended proceedings which might have the 
effect of vitiating the benefits of prompt and less costly settlement 
through the consent decree process.'' \1\ Rather,
---------------------------------------------------------------------------

    \1\ 119 Cong. Rec. 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-American 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 ``engate in an unrestricted evaluation of 
what relief would best serve the public.'' United States v. BNS, Inc., 
858 F.2d 456, 462-63 (9th Cir. 1988), quoting United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083 
---------------------------------------------------------------------------
(1981); see also Microsoft, 56 F.3d at 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 Cyanamid 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, 622 (W.D. Ky. 1985); 
United States v. Carrols Dev. Corp., 454 F. Supp. 1215, 1222 
(N.D.N.Y. 1979).
---------------------------------------------------------------------------

    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 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.

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: August 3, 2001, Washington, DC.

    Respectfully submitted,

J. Brady Dugan, Joseph M. Miller, Joan Farragher, Karen Y. Douglas, 
Paul E. O'Brien, Michael Bodosky,
Attorneys, U.S. Department of Justice, Antitrust Division, 
Litigation II Section, 1401 H Street, NW., Suite 3000, Washington, 
D.C. 20530; 202-616-5125.

[FR Doc. 01-21645 Filed 8-27-01; 8:45 am]
BILLING CODE 4410-11-M