[Federal Register Volume 67, Number 163 (Thursday, August 22, 2002)]
[Notices]
[Pages 54463-54469]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-21351]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. National Association of Police Equipment 
Distributors, Inc.; Proposed Final Judgment and Competitive Impact 
Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Stipulation and Competitive Impact Statement have been filed with the 
United States District Court for the Southern District of Florida in 
United States of America v. National Association of Police Equipment 
Distributors, Inc. (``NAPED''), Civil Action No. 02-80703. On July 29, 
2002, the United States filed a Complaint to obtain equitable and other 
relief to prevent and restrain violations of Section I of the Sherman 
Act as amended, 15 U.S.C. 1. The United States brought this action to 
enjoin NAPED from engaging in an unlawful group boycott of 
manufacturers that participated or considered participating in the 
United States General Services Administration program under Section 
1122 of the National Defense Authorization Act of 1994 to make 
available police equipment products to state and local law enforcement 
agencies at GSA-negotiated prices. The proposed Final Judgment, filed 
at the same time as the Complaint, requires NAPED to eliminate the 
anticompetitive conduct identified in the Complaint.
    Copies of the Complaint, proposed Final Judgment and Competitive 
Impact Statement are available for inspection at the Department of 
Justice in Washington, DC in Room 200, 325 Seventh Street, NW., and at 
the Office of the Clerk of the United States District Court for the 
Southern District of Florida, West Palm Beach Florida.
    Public comment is invited within sixty (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 Marvin N. Price, Jr., Chief, Chicago Field Office, 
Antitrust Division, U.S. Department of Justice, 209 S. LaSalle Street, 
Suite 600, Chicago, IL 60604, (telephone: (312) 353-7530).

Dorothy B. Fountain,
Deputy Director of Operations.

Stipulation

    The undersigned parties, by their respective attorneys, stipulate 
as follows:
    1. A Final Judgment in the form attached hereto may be filed and 
entered by the Court, upon the motion of any party or upon the Court's 
own motion, at any time after compliance with the requirements of the 
Antitrust Procedures and Penalties Act, 15 U.S.C. 16, and without 
further notice to any party or other proceedings, provided that 
plaintiff has not withdrawn its consent, which it may do at any time 
before entry of the proposed Final Judgment by serving notice thereof 
on defendant and by filing that notice with the Court.
    2. Defendant shall abide by and comply with the provisions of the

[[Page 54464]]

proposed Final Judgment pending entry of the Final Judgment by the 
Court, or until expiration of time for all appeals of any Court rule 
declining entry of the proposed Final Judgment, and shall, from the 
date of the signing of this Stipulation, comply with all the terms and 
provisions of the proposed Final Judgment as though the same were in 
full force and effect as an order of the Court.
    3. 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.
    4. For purposes of this Stipulation and the accompanying Final 
Judgment only, defendant stipulates that: (i) The Complaint states a 
claim uopn which relief may be granted under Section 1 of the Sherman 
Act; (ii) the Court has jurisdiction over the subject matter of this 
action and over each of the parties hereto; and (iii) venue of this 
action is proper in this Court.
    5. In the event plaintiff withdraws its consent, as provided in 
paragraph (1) above, or in the event that the Court declines to enter 
the proposed Final Judgment 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.
    6. Defendant represents that the undertakings ordered in the 
proposed Final Judgment can and will be satisfied, and that defendant 
will not later raise claims of hardship or difficulty as grounds for 
asking the Court to modify any of the undertakings contained therein.

Dated: July 25, 2002.
For Plaintiff United States of America:
Charles A. James,
Assistant Attorney General.

Deborah P. Majoras,
Deputy Assistant Attorney General.

Dorothy B. Fountain,
Deputy Director of Operations.

Marvin N. Price. Jr.,
Chief, Chicago Field Office.

Frank J. Vondrak
Assistant Chief, Chicago Field Office.

For Defendant Naped, INC.
Paula Cozzi Goedert, Esq.,
IL Bar #00978515, Jenner & Block, One IBM Plaza, Chicago, IL 60611, 
(312) 222-9350, (312) 527-0484 (Fax), E-Mail: [email protected].
Rosemary Simota Thompson,
IL Bar #6204990, E-Mail: [email protected].

Donna Alberts Peel,
Attorney.

Diane Lotko-Baker,
Attorney.

Attorneys, U.S. Department of Justice, Antitrust Division, 209 S. 
LaSalle Street, Suite 600, Chicago, Illinois 60604, (312) 353-7530, 
(312) 353-4136 (Fax).

III. Applicability

    A. This Final Judgment applies to the defendant and to each of its 
officers, directors, agents and employees.
    B. Defendant shall require, as a condition of any merger, 
reorganization, or acquisition by any other organization, that the 
organization to which defendant is to be merged or reorganized, or by 
which it is to be acquired, agree to be bound by the provisions of this 
Final Judgment.
    C. Nothing in this Final Judgment creates any rights for, or gives 
standing to, any person not a party to this action.

IV. Prohibited Conduct

    Defendant is hereby enjoined from:
    A. Directly or indirectly entering into, adhering to, or enforcing 
any agreement with any distributor or dealer to hinder through any 
means any manufacturer's participation in the GSA Program;
    B. Directly or indirectly entering into, adhering to, or enforcing 
any agreement with any distributor or dealer to retaliate in any way 
against any manufacturer for participating or considering participating 
in or seeking information about the GSA Program;
    C. Urging, encouraging, advocating or suggesting that any 
distributor or dealer urge, encourage, advocate, or suggest to any 
manufacturer that it discard Section 1122 purchase orders or commit any 
other misrepresentation to circumvent the requirements of the GSA 
Program;
    D. Urging, encouraging, advocating or suggesting that any 
distributor or dealer refrain from conducting business with any 
manufacturer for participating in, considering participating in, or 
seeking information regarding the GSA Program;
    E. Urging, encouraging, advocating or suggesting that any 
distributor, dealer or manufacturer (1) refuse to do business with 
particular persons or types of persons, (2) reduce the amount of 
business they do with particular persons or types of persons, or (3) do 
business with particular persons or types of persons only on specified 
terms.

II. Definitions

    As used in this Final Judgment:
    A. ``Agreement'' means a contract, arrangement, or understanding, 
formal or informal, oral or written, between to or more persons.
    B. ``Dealer'' or ``Distributor'' means any person that distributes 
police equipment products manufactured by another person or who 
purchases or acquires such product for resale to any other person.
    C. ``GSA'' means General Services Administration of the United 
States Government.
    D. ``GSA Program'' means the General Services Administration's 
(``GSA'') program pursuant to Section 1122 of the National Defense 
Authorization Act of 1994, which permits state and local governments to 
purchase equipment products for drug interdiction under GSA schedules, 
and any other programs under which state and local governments are able 
to purchase police equipment products through a GSA schedule.
    E. ``Manufacturer'' means any person who makes a assembles police 
equipment including each of its divisions, parents, subsidiaries, and 
affiliates.
    F. ``NAPED'' or ``defendant'' means National Association of Police 
Equipment Distributors, Inc., including each of its committees, 
divisions, parents, subsidiaries, and affiliates, and any person action 
on behalf of any of them, as well as its successors and assigns.
    G. ``Organizations'' means any corporation, firm, company, sole 
proprietorship, partnership, joint venture, association, institute or 
other business, legal or government entity.
    H. ``Person'' means any natural person, corporation, company, 
partnership, joint venture firm, association, proprietorship, agency, 
board, authority, commission, office or other business or legal entity, 
whether private or governmental.
    I. ``Police Equipment'' means any product used primarily in law 
enforcement.
    J. ``Section 1122'' means Section 1122 of the National Defense 
Authorization Act of 1994, which permits state and local governments to 
purchase police equipment products for drug interdiction under GSA 
schedules.

Final Judgment

    Plaintiff, United States of America, filed its Complaint on July 
29, 2002. Plaintiff and defendant, National Association of Police 
Equipment Distributors, Inc. (``NAPED''), by their respective 
attorneys, have consented to the entry of this Final Judgment without 
trial or adjudication of any issue of fact or law. This Final Judgment 
shall not constitute any evidence against or an

[[Page 54465]]

admission by any party with respect to any issue of fact or law herein.
    Therefore, before the taking of any testimony and without trial or 
adjudication of any issue of fact or law herein, and upon consent of 
the parties, it is hereby ordered, adjudged, and decreed, as follows:

I. Jurisdiction and Venue

    This court has jurisdiction over the subject matter of this action 
and over the defendant. The Complaint states a claim upon which relief 
may be granted against the defendant under Section 1 of the Sherman 
Act, 15 U.S.C. 1. Venue is a proper in the District Court for the 
Southern District of Florida.

V. Limiting Conditions

    A. Nothing in this Final Judgment shall prohibit defendant from:
    1. Continuing to disseminate public statements regarding 
contemplated changes in the laws affecting the GSA Program, GSA 
policies, or procurement of police equipment by state and local 
governments;
    2. Engaging in collective actions to procure government action when 
such actions are protected under the Noerr-Pennington doctrine, as 
established by Eastern Railroad Presidents Conference v. Noerr Motor 
Freight, Inc., 365 U.S. 127 (1961), and United Mine Workers v. 
Pennington, 381 U.S. 657 (1965);
    3. Presenting the views, opinions or concerns of its members on 
topics to manufacturers, distributors or dealers, consumers, or other 
interested parties, provided that such activities do not violate any 
provision contained in Section IV above;
    B. Nothing in this Final Judgment shall prohibit any individual 
distributor or dealer, acting alone and not on behalf of or in common 
with defendant or any of defendant's officers, directors, agents, 
employees, successors, or assigns, from negotiating any terms of its 
business relationship with any manufacturer, including terms related to 
a manufacturer's policies.

VI. Notification Provisions

    Defendant is ordered and directed:
    A. To publish the Final Judgment and a written notice, in the form 
attached as Appendix A to this Final Judgment, in Law & Order magazine 
within 60 days of the entry of this Final Judgment;
    B. To send a written notice, in the form attached as Appendix A to 
this Final Judgment, to each distributor or dealer who is a current 
member of NAPED within 30 days of the entry of this Final Judgment; and
    C. To send a written notice, in the form attached as Appendix A to 
this Final Judgment, to each distributor or dealer who becomes a member 
of NAPED within 10 years of entry of this Final Judgment. Such notice 
shall be sent within 30 days after the distributor or dealer becomes a 
member of NAPED.

VII. Compliance Program

    A. Defendant is ordered to establish and maintain an antitrust 
compliance program which shall include designating, within 30 days of 
entry of this Final Judgment, an Antitrust Compliance Officer with 
responsibility for implementing the antitrust compliance program and 
achieving full compliance with this Final Judgment and the antitrust 
laws. The Antitrust Compliance Officer shall, on a continuing basis, be 
responsible for the following:
    1. Furnishing a copy of this Final Judgment within 30 days of entry 
of the Final Judgment to each of defendant's officers, directors, and 
employees, except for employees whose functions are purely clerical or 
manual and do not address issues related to the sale or purchase of 
police equipment;
    2. Furnishing within 30 days a copy of this Final Judgment to any 
person who succeeds to a position described in Section VII A.1;
    3. Arranging for an annual briefing to each person designated in 
Section VII A.1 or 2 on the meaning and requirements of this Final 
Judgment and the antitrust laws;
    4. Obtaining from each person designated in Section VII A.1 or 2 
certification that he or she: (1) Has read and, to the best of his or 
her ability, understands and agrees to abide by the terms of this Final 
Judgment; (2) is not aware of any violation of the Final Judgment that 
has not been reported to the Antitrust Compliance Officer; and (3) 
understands that any person's failure to comply with this Final 
Judgment may result in an enforcement action for civil or criminal 
contempt of court against NAPED and/or any person who violates this 
Final Judgment;
    5. Maintaining: (1) A record of certifications received pursuant to 
this Section; (2) a file of all documents related to any alleged 
violation of this Final Judgment and the antitrust laws; and (3) a 
record of all communications related to any such violation, which shall 
identify the date and place of the communications, the persons 
involved, the subject matter of the communication, and the results of 
any related investigation;
    6. Reviewing the final draft of each speech and policy statement 
made by any officer, director, or employee in order to ensure its 
adherence with this Final Judgment;
    7. Reviewing the purpose for the formation or creation of each 
committee and task force in order to ensure its adherence with this 
Final Judgment;
    8. Reviewing the content of each letter, memorandum, and report 
written by or on behalf of any director in his or her capacity as a 
NAPED director or on NAPED stationery in order to ensure its adherence 
with this Final Judgment.
    B. If defendant's Antitrust Compliance Officer learns of any 
violations of any of the terms and conditions contained in this Final 
Judgment, defendant shall immediately take appropriate action to 
terminate or modify the activity so as to comply with this Final 
Judgment.

VIII. Certification

    A. Within 60 days after the entry of this Final Judgment, defendant 
shall certify to the plaintiff that it has designated an Antitrust 
Compliance Officer and has distributed the Final Judgment in accordance 
with Section VII above.
    B. For 10 years after the entry of this Final Judgment, on or 
before its anniversary date, defendant shall file with plaintiff an 
annual statement as to the fact and manner of its compliance with the 
provisions of Sections VI and VII.

IX. Plaintiff's Access

    A. For the purpose of determining or securing compliance with this 
Final Judgment or determining whether this Final Judgment should be 
modified or terminated, and subject to any legally recognized 
privilege, authorized representatives of the Antitrust Division of the 
United States Department of Justice, shall upon written request of the 
Assistant Attorney General in charge of the Antitrust Division, and on 
reasonable notice to defendant, be permitted:
    1. Access during regular business hours to inspect and copy all 
records and documents in the possession, custody, or under the control 
of defendant, which may have counsel present, relating to any matters 
contained in this Final Judgment;
    2. To interview defendant's officers, directors, employees or 
agents, who may have their individual counsel present, regarding any 
such matters; and
    3. To obtain written reports from defendant, under oath if 
requested, relating to any matters contained in this Final Judgment.
    B. Defendant shall have the right to be represented by counsel in 
any process under this Section.

[[Page 54466]]

    C. No information or documents obtained by the means provided in 
this Section shall be divulged by the plaintiff to any person other 
than duly authorized representatives 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 
defendant to plaintiff, defendant represents and identifies, in 
writing, the material in any such information or documents to which a 
claim of protection may be asserted under Rule 26(c)(7) of the Federal 
Rules of Civil Procedure, and defendant marks each pertinent page of 
such material, ``subject to claim of protection under Rule 26(c)(7) of 
the Federal Rules of Civil Procedure,'' then 10 days notice shall be 
given by plaintiff to defendant prior to divulging such material in any 
legal proceeding (other than a grand jury proceeding) to which 
defendant is not a party.

X. Duration of the Final Judgment

    Except as otherwise provided hereinabove, this Final Judgment shall 
remain in effect until 10 years from the date of entry.

XI. Construction, Enforcement, Modification and Compliance

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

XII. Public Interest

    Entry of this Final Judgment is in the public interest.

Appendix A

    On July 29, 2002, the Antitrust Division of the United States 
Department of Justice filed a civil suit alleging that the National 
Association of Police Equipment Distributors (``NAPED'') had engaged 
in certain practices that violated Section 1 of the Sherman 
Antitrust Act. Without being subject to any monetary penalties, 
NAPED has agreed to the entry of a civil consent order to settle 
this matter. The consent order does not constitute evidence or 
admission by any party with respect to any issue of fact or law. The 
consent order applies to NAPED and all of its officers, directors, 
employees, and agents, but not to any distributor or dealer acting 
on its own.
    Under the consent order, NAPED may not enter into, adhere to, or 
enforce any agreement with any distributor or dealer to hinder 
through any means any manufacturers' participation in the GSA 
Program. The GSA Program includes the General Services 
Administration's (``GSA'') program pursuant to Section 1122 of the 
National Defense Authorization Act of 1994, which permits state and 
local governments to purchase police equipment products for drug 
interdiction under GSA schedules, and any other program under which 
state and local governments are able to purchase police equipment 
products through a GSA schedule.
    The consent order further provides that NAPED may not enter 
into, adhere to, or enforce any agreement with any distributor or 
dealer to retaliate in any way against any manufacturer for 
participating or considering participating in or seeking information 
about the GSA Program. NAPED is also prohibited from recommending 
that any distributor or dealer: (1) Suggest to any manufacturer that 
it discard Section 1122 purchase orders or commit any other 
misrepresentation to circumvent the requirements of the GSA Program; 
or (2) refrain from conducting business with any manufacturer for 
participating in, considering participating in, or seeking 
information regarding the GSA Program. Furthermore, NAPED is 
prohibited from recommending that any distributor, dealer or 
manufacturer refuse to do business or reduce the amount of business 
it does with particular people or organizations, or types of people 
or organizations. Finally, NAPED is prohibited from recommending 
that any distributor, dealer, or manufacturer do business with 
particular people or organizations, or types of people or 
organizations, only on specified terms. Failure to comply with the 
consent order may result in conviction for contempt of court.
    The consent order does not prohibit NAPED from continuing 
certain activities, including disseminating public statements 
regarding contemplated changes in the laws affecting the GSA 
Program, GSA policies, or procurement of police equipment by state 
and local governments; seeking to procure government action; and 
presenting members' views to distributors or dealers, manufacturers, 
consumers, or other interested parties in ways that do not otherwise 
violate the consent order.

Competitive Impact Statement

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

I. Nature and Purpose of the Proceeding

    On July 29, 2002, the United States filed a civil antitrust 
Complaint alleging that the defendant had violated Section 1 of the 
Sherman Act, 15 U.S.C. 1. The defendant, the National Association of 
Police Equipment Distributors, Inc. (``NAPED''), is a trade 
association. Its members are competing distributors and dealers of 
police equipment products such as body armor, batons, uniforms, and 
handcuffs. The Complaint alleges that, from 1998 to 1999, the defendant 
engaged in an unlawful group boycott of manufacturers who participated 
or considered participating in the United States General Services 
Administration program under Section 1122 of the National Defense 
Authorization Act of 1994 (``GSA Program'') to make police equipment 
products available to state and local law enforcement agencies at 
reduced prices.
    On July 29, 2002, the United States and the defendant filed a 
Stipulation in which they consented to the entry of a proposed Final 
Judgment that requires the defendant to eliminate the anticompetitive 
conduct identified in the Complaint. Specifically, the proposed Final 
Judgment provides that the defendant may not enter into, adhere to, or 
enforce any agreement with any distributor or dealer to hinder any 
manufacturer's participation in the GSA Program. The proposed Final 
Judgment also provides that the defendant may not enter into, adhere 
to, or enforce any agreement with any distributor or dealer to 
retaliate against any manufacturer for participating or considering 
participating in or seeking information about the GSA Program. 
Defendant is also prohibited from recommending that any distributor or 
dealer: (1) Suggest to any manufacturer that it discard Section 1122 
purchase orders or commit any other misrepresentation to circumvent the 
requirements of the GSA Program; or (2) refrain from conducting 
business with any manufacturer for participating in, considering 
participating in, or seeking information regarding the GSA Program. The 
defendant is prohibited from recommending that any distributor, dealer 
or manufacturer do business only with particular people or 
organizations, or types of people or organizations, or do business only 
on specified terms.
    The United States and the defendant have agreed that the proposed 
Final Judgment may be entered after compliance with the APPA, provided 
that the United States has not withdrawn its consent. Entry of the 
Final Judgment would terminate the action, except that the Court would 
retain jurisdiction to construe, modify, or enforce the Final 
Judgment's provisions and to punish violations thereof.

[[Page 54467]]

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

A. Background on the GSA Program and the Defendant

    GSA negotiates contracts with manufacturers of police equipment 
products that allow federal agencies to purchase such products at a 
discount. The GSA Program is authorized by Section 1122 of the National 
Defense Authorization Act of 1994, which permits state and local law 
enforcement entities to purchase products directly from manufacturers 
at prices negotiated by the GSA, as long as the equipment is used for 
drug interdiction.
    Although the GSA Program was enacted into law in 1994, it was 
initially a pilot program. At first, any manufacturer that sold to 
federal entities under the GSA schedule was required to honor Section 
1122 orders. In 1998, only a few states were fully operational 
participants and order volume was low. On January 1, 1999, the program 
was changed and manufacturers' participation in Section 1122 became 
voluntary. By 1999, over half of the states had committed to work on 
the GSA Program rollout, and order volume increased accordingly. 
Currently, most states are participants in the GSA Program.
    Prior to the GSA Program, state and local governments purchased 
most law enforcement equipment from distributors or dealers at prices 
reflecting their mark-ups. After the GSA Program, manufacturers selling 
police equipment at GSA-negotiated prices competed with distributors 
for sales of police equipment to state and local law enforcement 
agencies. Thus, state and local law enforcement agencies could choose 
to buy police equipment directly from the manufacturers under the GSA 
Program at negotiated prices, or from distributors who often provided 
them with certain services not provided by manufacturers.
    Defendant's members specialize in selling and servicing police 
equipment products to state and local law enforcement agencies and 
carry a small inventory. Generally, they do not have GSA contracts for 
federal sales. The typical NAPED member is a distributor or dealer who 
operates his or her own business, although a few large catalog houses 
are also members. The large catalog houses carry a significant 
inventory and sell by mail order. When state and local governments 
purchase directly from manufacturers under a discounted GSA schedule, 
distributors and dealers lose those sales.

B. Illegal Agreement To Boycott Manufacturers

    In the spring of 1998, the defendant, through its officers, 
directors, and members, engaged in conduct to prevent manufacturers' 
participation in the GSA Program and thereby limit competition in the 
sale of police equipment to state and local law enforcement agencies. 
This conduct spanned approximately eighteen months.
    During the summer of 1998, the defendant, through its members, 
contacted manufacturers under the guise of taking a survey of 
manufacturers' attitudes towards the GSA Program and pressured them to 
avoid their legal obligations to accept orders from state and local law 
enforcement and not to participate in the GSA program. The defendant 
monitored activities of manufacturers and encouraged its members to 
express their displeasure with 1122 sales and to discourage 
manufacturers' participation in the GSA program.
    In the spring of 1999, defendant's officers told at least three 
manufacturers that distributors would not do business with them if they 
participated in the GSA Program. These manufacturers believed that 
these officers were speaking directly or indirectly on behalf of NAPED 
and its members. Defendant's efforts caused at lease some manufacturers 
to eliminate their participation in the GSA Program.
    For example, one manufacturer, fearing that it would be 
``blackballed'' by defendant's members for participating in a GSA 
Program event to attract purchasers and vendors, withdrew its 
registration for the event from the GSA Web site. Another manufacturer, 
which attended the GSA Program event, was excluded from the mail order 
catalog of one of NAPED's members as a result of its participation. 
Also, during a meeting with executives of a large manufacturer, 
defendant's then-president stated that the trade association would not 
``support'' manufacturers that engaged in 1122 sales under the GSA 
Program. The executives understood this to mean that the members of 
NAPED would no longer do business with their company if it participated 
in the GSA Program.

C. Effects of the Agreement

    The purpose and effect of the boycott agreement between defendant 
and its members was to prevent participation by manufacturers in the 
GSA Program and thereby preventing them from competing with 
distributors or dealers for the sale of police equipment to state and 
local law enforcement agencies. As a result of the agreement, 
participation by manufacturers in the GSA Program was significantly 
less than it otherwise would have been. Thus, state and local law 
enforcement agencies were deprived of some of the benefits of free and 
open competition in the purchase of police equipment products.

III. Explanation of the Proposed Final Judgment

A. Prohibited Conduct

    The proposed Final Judgment prohibits the defendant from engaging 
in five (5) categories of prohibited conduct. These prohibitions are 
intended to deter the defendant from using the threat of a group 
boycott by its members to pressure manufacturers to decline 
participation in the GSA Program, or any other program under which 
state and local governments are able to purchase products through a GSA 
schedule. These provisions will also bar the defendant from urging its 
members to reduce or eliminate the amount of business they do with 
manufacturers engaged in the GSA Program.
    Section IV.A of the proposed Final Judgment contains a general 
prohibition against any agreement by the defendant with any distributor 
or dealer to hinder any manufacturer's participation in the GSA 
Program. Section IV.B contains a similar prohibition against any 
agreement by the defendant with any distributor or dealer to retaliate 
against any manufacturer for participating or considering participating 
in the GSA Program. Section IV.C prohibits the defendant from urging, 
encouraging, advocating, or suggesting that any distributor or dealer 
urge, encourage, advocate, or suggest to any manufacturer that it 
discard 1122 purchase orders or commit any other misrepresentation to 
circumvent the requirements of the GSA Program. Section IV.D prohibits 
the defendant from urging, encouraging, advocating, or suggesting that 
any distributor or dealer refrain from conducting business with any 
manufacturer for participating in or considering participating in the 
GSA Program. Finally, Section IV.E prohibits the defendant from urging 
distributors, dealers, or manufacturers to refuse to do business or 
reduce their business with particular types of persons, or do business 
with particular persons only on specified terms.

B. Limiting Conditions

    Section V of the proposed Final Judgment contains certain limiting 
provisions that clarify the scope of the prohibitions in Section IV. 
Section V

[[Page 54468]]

identifies specific activities that are unlikely to restrict 
competition and are not prohibited by the decree. Specifically, Section 
V.A provides that the defendant may: (1) Continue to disseminate public 
statements regarding contemplated changes in the laws affecting the GSA 
1122 Program, GSA policies, or procurement of police equipment by state 
and local branches of government; (2) engage in collective action to 
procure government action, such as lobbying activities, when those 
actions are immune from antitrust challenge under the Noerr-Pennington 
doctrine; and (3) present the views, opinions, or concerns of its 
members on topics to manufacturers, distributors or dealers, consumers, 
or other interested parties, provided that such activities do not 
violate any provision contained in Section IV. Section V.B clarifies 
that nothing in the proposed Final Judgment limits individual 
distributor or dealers' rights to act independently.

C. Additional Relief

    Section VI of the proposed Final Judgment requires the defendant to 
publish a notice describing the Final Judgment in Law and Order, an 
industry trade publication, within sixty (60) days after the proposed 
Final Judgment is entered. Section VI also requires that written notice 
be sent to all distributors or dealers who are current members of NAPED 
within thirty (30) days after the proposed Final Judgment is entered. A 
copy of the written notice also must be sent to each dealer or 
distributor who becomes a member of NAPED during the ten-year term of 
this Final Judgment.
    Section VII requires the defendant to set up an antitrust 
compliance program to ensure that its members are aware of and comply 
with the limitations in the proposed Final Judgment and the antitrust 
laws. Section VII requires the defendant to designate an Antitrust 
Compliance Officer and to furnish a copy of the Final Judgment, 
together with a written explanation of its terms, to each of its 
officers, directors, and non-clerical employees who address issues 
related to the purchase and sale of police equipment products. The 
Antitrust Compliance officer is also required to review: (1) The final 
draft of each speech and policy statement by each officer, director, or 
employee; (2) the purpose for the creation of each committee and task 
force; and (3) the content of each letter, memorandum, and report 
written by or on behalf of each director in his or her capacity as a 
NAPED director, in order to ensure adherence to the Final Judgment.
    Section VIII requires the defendant to certify the designation of 
an Antitrust Compliance Officer and the distribution of the Final 
Judgment as required by Section VII. It also requires the defendant to 
submit to the United States an annual statement regarding defendant's 
compliance with the Final Judgment.
    Section IX of the proposed Final Judgment provides that, upon 
request of the Department of Justice, the defendant shall submit 
written reports, under oath, with respect to any of the matters 
contained in the Final Judgment. Additionally, the Department of 
Justice is permitted to inspect and copy all books and records, and to 
interview defendant's officers, directors, employees, and agents.

D. Effect of the Final Judgment

    The parties have stipulated that the Court may enter the proposed 
Final Judgment at any time after compliance with the APPA. The proposed 
Final Judgment states that it shall not constitute any evidence against 
or an admission by either party with respect to any issue of fact or 
law. Section III of the proposed Final Judgment provides that it shall 
apply to the defendant and each of its officers, directors, agents, 
employees, successors, and assigns and to any organization to which it 
is to be merged or reorganized, or by which it is to be acquired.
    The Government believes that the proposed Final Judgment is fully 
adequate to prevent the continuation or recurrence of the violations of 
Section 1 of the Sherman Act alleged in the Complaint, and that 
disposition of this proceeding without further litigation is 
appropriate and in the public interest.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages suffered, as well as costs and reasonable attorneys' fees. 
Entry of the proposed Final Judgment will neither impair nor assist the 
bringing of such actions. Under the provisions of Section 5(a) of the 
Clayton Act, 15 U.S.C. 16(a), the Final Judgment has no prima facie 
effect in any subsequent lawsuits that may be brought against the 
defendant.

V. Procedures Available for Modification of the Proposed Final 
Judgment

    The United States and the defendant have stipulated that the 
proposed Final Judgment may be entered by the Court after compliance 
with the provisions of the APPA, provided that the United States has 
not withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest. The Department believes that entry of this 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 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 Final Judgment at any time prior to entry. The comments 
and the response of the United States will be filed with the Court and 
published in the Federal Register.
    Written comments should be submitted to: Marvin N. Price, Jr., 
Chief, Chicago Field Office, U.S. Department of Justice, Antitrust 
Division, 209 S. LaSalle St., Suite 600, Chicago, Illinois 60604.
    Under Section XI of the proposed Final Judgment, the Court will 
retain jurisdiction over this action, and the parties may apply to the 
Court for orders necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment. The proposed 
Final Judgment would expire ten (10) year from the date of its entry.

VI. Alternatives to the Proposed Final Judgment

    As an alternative to the proposed Final Judgment, the Department 
considered litigation on the merits. The Department rejected that 
alternative for two reasons. First, a trial would involve substantial 
cost to both the United States and to the defendant and is not 
warranted because the proposed Final Judgment provides all the relief 
the Government would likely obtain following a successful trial. 
Second, the Department is satisfied that the various compliance 
procedures to which the defendant has agreed will ensure that the 
anticompetitive practices alleged in the Complaint are unlikely to 
recur and, if they do recur, will be punishable by civil or criminal 
contempt, as appropriate.

[[Page 54469]]

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

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

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

15 U.S.C. 16(e).
    As the United States Court of Appeals for the District of Columbia 
Circuit has held, the APPA permits a court to consider, among other 
things, the relationship between the remedy secured and the specific 
allegations set forth in the government's complaint, whether the decree 
is sufficiently clear, whether enforcement mechanisms are sufficient, 
and whether the decree may positively harm third parties. See United 
States v. Microsoft Corp., 56 F.3d 1448, 1458-62 (D.C. Cir. 1995).
    In conducting this inquiry, ``the Court is nowhere compelled to go 
to trial or to engage in extended proceedings which might have the 
effect of vitiating the benefits of prompt and less costly settlement 
through the consent decree process.'' \1\ Rather,
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    \1\ 119 Cong. Rec. 24,598 (1973). See United States v. Gillette 
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest'' 
determination can be made properly on the basis of the Competitive 
Impact Statement and Response to Comments filed pursuant to the 
APPA. Although the APPA authorizes the use of additional procedures, 
15 U.S.C. 16(f), those procedures are discretionary. A court need 
not invoke any of them unless it believes that the comments have 
raised significant issues and that further proceedings would aid the 
court in resolving those issues. See H.R. Rep. No. 93-1463, 93rd 
Cong. 2d Sess. 8-9, reprinted in 1974 U.S.C.C.A.N. 6535, 6538.

absent a showing of corrupt failure of the government to discharge 
its duty, the Court, in making its public interest finding, should * 
* * carefully consider the explanations of the government in the 
competitive impact statement and its responses to comments in order 
to determine whether those explanations are reasonable under the 
circumstances.\2\
---------------------------------------------------------------------------

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

    Accordingly, with respect to the adequacy of the relief secured 
by the decree, a court may not ``engage in an unrestricted 
evaluation of what relief would best serve the public.'' United 
States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988), quoting 
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir.), cert. 
denied, 454 U.S. 1083 (1981); see also Microsoft; 56 F.3d at 1458. 
---------------------------------------------------------------------------
Precedent requires that:

the balancing of competing social and political interests affected 
by a proposed antitrust consent decree must be left, in the first 
instance, to the discretion of the Attorney General. The court's 
role in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to 
the decree. The court is required to determine not whether a 
particular decree is the one that will best serve society, but 
whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.\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 Boardcasting 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. Amerian 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, 
150 (D.D.C. 1982), (quoting United States v. Gillette, 406 F. Supp. 
at 716), aff'd sub nom. Maryland v. United States, 460 U.S. 1001 
(1983); see 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. 1978).
---------------------------------------------------------------------------

    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged 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 the case in the 
first place,'' it follows that court ``is only authorized to review the 
decree itself,'' and not to ``effectively redraft the complaint'' to 
inquire into other matters that the United States might have but did 
not pursue. Id.

VIII. Determinative Materials And Documents

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

Dated: July 25, 2002.
Respectfully submitted,
Rosemary Simota Thompson,
Trial Attorney, U.S. Department of Justice, Antitrust Division, 
Chicago Field Office, 209 S. La Salle St., Suite 600, Chicago, 
Illinois 60604, (312) 353-7530, (312) 353-1046 (Fax), 
[email protected] (E-mail).

[FR Doc. 02-21351 Filed 8-21-02; 8:45 am]
BILLING CODE 4410-11-M