[Federal Register Volume 67, Number 227 (Monday, November 25, 2002)]
[Notices]
[Pages 70620-70623]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29779]


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DEPARTMENT OF JUSTICE

Antitrust Division


Responses to Public Comments on Proposed Final Judgment in United 
States v. The Manitowoc Co., Inc., et al.

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
Sec.  16(b)-(h), the United States hereby publishes the two public 
comments on the proposed Final Judgment in United Statesv. The 
Manitowoc Co., Inc., Grove Investors, Inc., and National Crane Corp., 
Civil No. 1:02 CV 01509 (RL), filed in the United States District Court 
for the District of Columbia, together with the government's responses 
to the comments.
    On July 31, 2002, the United States filed a Complaint that alleged 
that The Manitowoc Company Inc.'s proposed acquisition of Grove 
Investors, Inc. (and its subsidiary, National Crane Corp.) would 
violate Section 7 of the Clayton Act, 15 U.S.C. 18, by substantially 
lessening competition in production and sale of medium- and heavy-lift 
boom trucks in North America. The proposed Final Judgment, requires the 
defendants to divest either Manitowoc's

[[Page 70621]]

or Grove's boom truck business to a purchaser acceptable to the United 
States.
    Public comment was invited within the statutory 60-day comment 
period. The public comments and the United State's responses thereto 
are hereby published in the Federal Register, and shortly thereafter 
these documents will be attached to a Certificate of Compliance with 
Provisions of the Antitrust Procedures and Penalties Act and filed with 
the Court, together with a motion urging the Court to enter the 
proposed Judgment. Copies of the Complaint, Hold Separate Stipulation 
and Order, proposed Final Judgment, and the Competitive Impact 
Statement are currently available for inspection in Room 200 of the 
Antitrust Division, Department of Justice, 325 7th Street, NW., 
Washington, DC 20530 (telephone: 202-514-2481) and at the Clerk's 
Office, United States District Court for the District of Columbia, 333 
Constitution Avenue, NW., Washington, DC 20001. (The United State's 
Certificate of Compliance with Provisions of the Antitrust Procedures 
and Penalties Act will be made available at the same locations shortly 
after they are filed with the Court.) Copies of any of these materials 
may be obtained upon request and payment of a copying fee.

Constance K. Robinson,
Director of Operations, Antitrust Division.

U.S. Department of Justice, Antitrust Division

November 11, 2002.
Mr. Richard M. Beine,
President, Busey Truck Equipment, Inc., 1840 S. Farmington Road, 
Jackson, M0 63755.
Re: Comment on Proposed Final Judgment in United States v. The 
Manitowoc Co., Inc., Grove Investors, Inc., and National Crane 
Corp., No. 1:02CV01509 (D.C.C., filed July 31, 2002).

    Dear Mr. Beine: This letter responds to your September 25th 
letter, commenting on the proposed Final Judgment submitted for 
entry in the above case. The government's Complaint in the case 
charged that a combination of Manitowoc and Grove would 
substantially reduce competition in production and sale of medium- 
and heavy-lift boom truck in North America. The proposed Judgment 
would resolve these competitive concerns by requiring defendants 
promptly to divest either Manitowoc's Grove's boom truck business.
    In your comment, you observed that defendant Manitowoc has 
consistently failed to provide support for its line of unloader and 
tailgator products. In February 2002, long before the government 
filed its proposed Judgment in this case, you offered to purchase 
this line of products from Manitowoc. Manitowoc, however, has failed 
to respond to your offer.
    The gravamen of Busey Truck's complaint is Manitowoc's apparent 
unwillingness to sell its unloader and tailgator product lines. 
However, we can find no competitive justification for requiring a 
divestiture of Manitowoc's unloader and tailgator product lines. 
Unloaders and tailagors are small material handling vehicles similar 
to forklifts that are primarily used for loading and unloading 
delivery trucks and in warehouse stocking operatings. The United 
States is unaware of any evidence that suggests a combination of 
Manitowoc and Grove would adversely affect competition in the 
production and sale of unloader and tailgator products. Unloaders 
and tailgators are, at best, minor complements to, not competitive 
alternatives for, medium- and heavy-lift boom trucks. Divestitures 
of unloader and tailgator product lines unloader and tailgator 
product lines is not required either to cure an alleged violation or 
to ensure the viability of the divested boom truck assets. The 
Judgment, as currently written, fully addressed the competitive 
issues raised by Manitowoc's acquisition of Grove's boom truck 
business.
    Thank you for bringing your concern to our attention; we hope 
this information will help alleviate them. Pursuant to the Antitrust 
Procedures and Penalties Act, 15 U.S.C. Sec.  16(d), a copy of your 
comment and this response will be published in the Federal Register 
and filed with the Court.

 Sincerely yours,

J. Robert Kramer II,
Chief, Litigation II Section.

Busey Truck Equip., Inc.

J. Robert Kramer II,
Chief, Litigation II Section, Antitrust Division, US Department of 
Justice, 1401 H Street NW Suite 3000, Washington DC 20530.
September 25, 2002.
Re: The Manitowoc Co., Inc.

    Dear Sir: In February 2002, we had our attorney prepare a letter 
of intent to the Manitowoc Co to express our interest in purchasing 
the Trolley Boom Line (Unloaders, tailgators) of products. They have 
never responded to our letter of intent. May 1, 2002 FEMCO a 
subsidiary of the Manitowoc Co informed us they would be taking over 
management of this line of products.
    Our primary interest in acquiring the Trolley Boom Line 
(unloaders, tailgators) of products is because Manitowoc has 
continuously failed to provide the product support needed for this 
product as it is such a small part of their conglomeration. Sir, 
these trolley booms are our business' lifeblood.
    When we tried to purchase this line in February we had the 
support of all of the dealers that already sell this line. They 
believe we can continue on the great USTC name of these trolley 
booms.
    We are still interested in the purchase of the Trolley Boom Line 
of products. We have the expertise and experience needed to support 
this product line. However we have no interest in the purchasing of 
the Boom Truck Line ran out of Georgetown TX.
    We trust these comments are relevant to your inquiry of the 
Manitowoc Co Inc. Please contact us if you need any other 
information.

 Thank you,

Richard M. Beine,
President,
[email protected].

U.S. Department of Justice, Antitrust Division

November 11, 2002.
Mr. S.M. Oliva,
President, Citizens for Voluntary Trade, 2000 F Street, NW, Suite 
315, Washington, DC 20006.
Re: Comment on Proposed Final Judgment in United States v. The 
Manitowoc Co., Inc., Grove Investors, Inc., and National Crane 
Corp., No. 1:02CV01509 (D.D.C., filed July 31, 2002).

    Dear Mr. Oliva: This letter responds to the comment on the 
proposed Final Judgment (``Judgment''), which you submitted on 
behalf of Citizens for Voluntary Trade (``CVT''), a nonprofit 
association that purportedly provides supporters of capitalism and 
individual rights an opportunity to participate in public policy 
discussions related to antitrust and government regulation of 
business. The Complaint in this case charged that a combination of 
Manitowoc and Grove would substantially reduce competition in 
medium- and heavy-lift boom trucks. The proposed Judgment would 
resolve the serious competitive concerns by requiring defendants to 
divest either Manitowoc's or Grove's boom truck business.
    In its comment, CVT asserted that the Court should not require 
defendants to divest either Manitowoc's or Grove's boom truck 
business until after the United States demonstrates that defendants' 
combination actually will result in higher prices charged to 
purchasers of medium- and heavy-lift boom trucks. Even then, CVT 
contends, the Court should not order a divestiture since consumers 
can simply decide not to purchase boom trucks. In essence, CVT's 
argument is that the antitrust laws are an unnecessary (and perhaps 
unconstitutional) government infringement on defendants' contracting 
freedom, and in that context, the boom truck business divestiture 
ordered by the proposed Judgment is an unauthorized government 
``taking'' of defendants' private property.
    In determining whether to enter the proposed Judgment, the Court 
must decide whether entry of the Judgment would be in the ``public 
interest.'' To make that determination the Court, inter alia, must 
carefully review the relationship between the relief that has been 
ordered in the proposed Judgment and the allegations of the 
government's Complaint. Applying that standard in this case, the 
Court's entry of the proposed Judgment surely would be ``within the 
reaches'' of the public interest (United States v. Bechtel Corp., 
Inc., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083 
(1981)), for it would alleviate the serious competitive concerns 
regarding the proposal to combine two of the nation's three major 
boom truck producers by requiring defendants promptly to divest one 
of their boom truck businesses. To require the government to prove 
the allegations of its Complaint before the Court rules on the 
appropriateness of the parties' agreed-upon

[[Page 70622]]

relief would effectively turn every government antitrust case into a 
full-blown trial on the merits of the parties' claims, and thereby 
seriously undermine the effectiveness of antitrust enforcement by 
use of consent decrees. And in any event, the government is not 
required to demonstrate, as CVT asserts, an actual post-merger price 
increase in order to establish that an acquisition will prove 
anticompetitive. ``Section 7 is, after all, concerned with 
probabilities, not certainties.'' F.T.C. v. H.J. Heinz Co., 246 F.3d 
708, 719 (D.C. Cir. 2001) (emphasis original, citations omitted).
    As to CVT's suggestion that the antitrust laws constitute an 
unconstitutional infringement upon freedom to contract, the Supreme 
Court has consistently held, in a line of cases stretching as far 
back as Standard Oil, that is it not the antitrust laws that impair 
individual freedom to contract, but private agreements or acts that 
unduly diminish competition and tend to raise prices to consumers. 
By purging our nation's economy of such private restraints on 
competition, the antitrust laws protect and enhance, not undermine, 
individual freedoms, and these laws do not otherwise contravene the 
Constitution. See also United States v. Standard Oil Co., 221 U.S. 
1, 52-70, esp. 58, 68-70 (1911). See also United States v. E.I. 
duPont de Nemours & Co., 366 U.S. 316, 327 (1961) (``If the Court 
concludes that other measures will not be effective to redress a 
violation, and that complete divestiture is a necessary element of a 
effective relief, the Government cannot be denied the latter remedy 
because economic hardship, however severe, may result. * * * This 
proposition is not novel; it is deeply rooted in antitrust law and 
has never been successfully challenged.'')
    Thank you for bringing your concerns to our attention; we hope 
this information will help alleviate them. Pursuant to the Antitrust 
Procedures and Penalties Act, 15 U.S.C. 16(d), a copy of your 
comment and this response will be published in the Federal Register 
and filed with the Court.

 Sincerely yours,

J. Robert Kramer II,
Chief, Litigation II Section.

United States of America, Plaintiff, v. The Manitowoc Company, Inc., 
Grove Investors, Inc., and National Crane Corp., Defendants; Comments 
of Citizens for Voluntary Trade to the Proposed Final Judgment

[Case No. 02CV0159]
Judge: Royce Lamberth

    Pursuant to 15 U.S.C. 16(b)-(h) and the Federal Register notice 
filed by the United States on August 22, 2002, Citizens for 
Voluntary Trade respectfully submits the following comments to the 
proposed final judgment filed by the parties on July 31, 2002.

Introductory Statement

    Citizens for Voluntary Trade (``CVT'') is a District of Columbia 
nonprofit association organized in 2002. CVT's mission is to provide 
supporters of capitalism and individual rights with opportunities to 
participate in public policy discussions related to antitrust and 
government regulation of business. CVT performs this function, in 
part, by filing comments in antitrust cases brought by the 
Department of Justice, the Federal Trade Commission, and other 
federal and state regulatory agencies.
    Neither CVT nor its members have a financial interest in the 
outcome of this case. CVT has no pre-existing relationship with the 
defendants, and has not received any financial support from the 
defendants or any outside corporation in connection with this case.

Comments

    The government employs a simple premise in this case: Combining 
the first and third largest boom truck crane manufacturers will harm 
consumers by increasing prices and reducing innovation. As with most 
pre-merger prosecutions, the government can produce no evidence to 
prove their allegations; instead, the public is forced to accept 
speculation as to what might happen in the future. Relieved of any 
burden to present facts, the government can easily demonstrate the 
possibility of consumer harm, and thus justify its preemptive acts 
against the defendant companies.
    CVT believes, however, that ignoring facts is dangerous. It's 
one thing to draw inferences from limited facts; it's quite another 
to predict outcomes without any factual basis. The latter is a 
function best left to gypsies and psychics. The Department of 
Justice's track record shows they are poor predictors of events that 
may never take place. Traditionally, governments limit themselves to 
prosecuting defendants after the alleged crime has taken place. With 
the exception of antitrust, there is no other area of law where the 
government grants itself the power to act before any crime (or 
victim) is established.
    The government claims, in rebuttal, that the defendants 
committed a crime just by agreeing to merge. This, they say, is 
evidence of anticompetitive actions that violate the Clayton Act.\1\ 
But if this is a crime, then where's the victim? The government says 
consumers are the victim, because the merger will ``increase the 
likelihood'' of price increases.\2\ This begs two questions. First, 
will the merger actually increase prices, or does it just raise the 
mathematical probability of such an act? And second, assuming prices 
are raised post-merger, does this constitute an actual harm to 
consumers? We believe the answer to both questions is no.
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    \1\ Complaint at 3.
    \2\ Id. at 2.
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    The government relies on market concentration to judge the 
``likelihood'' of price increases. They claim that the defendants, 
left to merge without government interference, would control 60% of 
the relevant market. Furthermore, the merged defendants and the 
remaining principal competitor would control 90% of the market.\3\ 
The government concludes the reduction of large competitors from 
three to two raises the ``likelihood'' of price increases. That's 
hardly a given. While the combined Manitowoc-National Crane company 
would have a 60% market share, the number-two firm would still have 
30%. While it is likely that Manitowoc could increase prices due to 
its higher market share, it's just as likely the remaining 
competitor could lower their own prices in an effort to attract new 
customers. This could, conceivably, increase the competitor's market 
share and reduce Manitowoc's dominance. In any case, both scenarios 
are ``likely,'' and the government offers no conclusive evidence to 
favor its own scenario has a greater probability of prevailing. 
Since the government won't allow the merger to occur, we'll never 
know.
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    \3\ Id. at 7.
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    Even if a price increase did occur post-merger, it would not, by 
itself, constitute a harm to consumers. Certainly it wouldn't injure 
any legal rights of consumers. Nothing in federal law or the United 
States Constitution guarantee individuals the right to affordable 
medium- and heavy-lift boom trucks. The survival of the human race 
does not depend on the continued availability of such trucks. Nor 
does a price increase for such trucks deny any general 
constitutional right enjoyed by consumers, such as the right to free 
speech or due process of law. Indeed, ``consumers'' are not a group 
recognized by the Constitution; that document only addresses the 
rights of individuals. To the extent the Constitution recognizes 
groups at all, it is in the context of general citizenship 
(separating U.S. citizens from ``Indians not taxed,'' for example 
\4\ or to remedy historical wrongs against a particular group, as 
was the case with the Reconstruction amendments.\5\ In all other 
contexts, the Constitution frowns upon arbitrary classification of 
citizens.\6\
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    \4\ U.S. Const. art. I, Sec.  2, cl. 3.
    \5\ U.S. Const. amends. XIII, XIV, & XV.
    \6\ See, e.g., U.S. Const. art. IV, Sec.  2, cl. 1.
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    Consumers are not a historically oppressed class. Quite the 
contrary, American consumers enjoy an unprecedented level of power 
to dictate economic outcomes. Unlike the traditionally centrally 
planned economies of Europe, the American marketplace is principally 
governed by consumer demand. If customers don't want a product, they 
don't buy it, and the product's producer will fail to make a profit. 
Producers are typically in the business of satisfying customer 
demands. At the same time, however, it is understood that the 
producers own their businesses. A firm can produce as much or as 
little of their product as they choose, and may charge whatever 
price they want; the customer has the right to reject the producer's 
price. But in a market economy, the consumer cannot demand a 
producer turn over his goods to them. Capitalism requires the 
voluntary trade of goods and services; that is, trade according to 
mutually agreeable terms.
    The government wants none of that. Instead, under the facade of 
``antitrust'' laws, the Department of Justice seeks to award 
consumers the ability to demand goods and services free of the 
constraints of voluntary trade. If producers want to raise the 
prices they ask of consumers, the government smears that behavior as 
``anticompetitive.'' Antitrust theory itself holds that just above 
any price increase initiated by producers is presumptively bad. This 
despite the fact that increased prices lead to increased profits, 
which in turn allow producers to increase

[[Page 70623]]

their capacity, develop new and improved products, and focus on 
improving overall customer service. No firm could provide superior 
products to customers at a sustained loss.
    The government understands this, though they're loathe to admit 
it. In paragraph 17 of the complaint in this case, the Department of 
Justice describes some of the reasons for the dominance of just 
three firms in the boom truck market: ``superior production capacity 
and capability, strong dealer networks, broad product lines and 
strong reputation for safety and reliability.'' The government 
notes, correctly, that it would be difficult for any new competitor 
to quickly enter the market because they would need to ``establish a 
strong reputation'' in order to effectively compete with the 
dominant firms. \7\ But this is not a weakness of the market, but a 
strength. Every factor the government lists above is the result of 
honest, ethical activity. Manitowoc's superior production capacity 
is not the result of coercion. National Crane's strong reputation is 
not derived from violent acts against competitors. This, 
essentially, is the difference between ``market power'' derived from 
free trade, and ``political power'' derived from the use of force. 
The government's case fails to make this crucial distinction.
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    \7\ Complaint at 7.
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    The remedy in the proposed final judgment replaces market power 
with political power. The defendants are forced to divest one of 
their crane businesses to a yet-to-be-determined third party. The 
government says this will protect competition. It does no such 
thing. ``Competition'' only exists in a capitalist economy; a forced 
divestiture is hardly capitalist, since it's neither voluntary nor 
based on respect for property rights. In a capitalist system, the 
marketplace decides economic outcomes. In the Department of 
Justice's system, however, economic outcomes are decided by 
government mandates. Such is the case here. The government dislikes 
the potential post-merger structure of the boom truck market, so 
they brought this case to rearrange things to their liking. If the 
government did not have a monopoly on the use of political force, it 
would not be able to obtain this result.
    And far from ``protecting'' consumers, the government's remedy 
here denies consumers the fundamental right to act for themselves. 
The government assumes consumers won't pay any price increase that 
may result from the merger. But there's no proof of this hypothesis 
in the record. Consumers often pay higher prices if they feel the 
product is worth it, or it they believe that the product will 
improve in the future. Consumers are certainly a far better judge of 
these things than attorneys at the Department of Justice. The final 
judgment's remedy wrecks all that, however. By employing its 
political power, the government has stripped consumers of their 
economic power.
    Finally, there is an obvious contradiction in the government 
recognizing the factors behind Manitowoc's dominance on the one 
hand, but ignoring these same factors in fashioning the final 
judgment's remedy. The government says a new firm is unlikely to 
enter the market because of the need to ``establish a strong 
reputation,'' among other things. So how does creating a new 
competitor by force accomplish this? Does the government believe 
that a reputation can be established simply by handing a corporation 
assets and customers they didn't actually earn? If that's the case, 
why doesn't the Department of Justice simply allocate resources and 
market shares in all sectors of American industry? They obviously 
consider their judgment superior to consumers.

Conclusion

    The government claims to serve the ``public interest'' in 
presenting this proposed final judgment. But it's unclear what those 
interests are. It's certainly not legal interests, since no 
constitutional or statutory right of consumers was violated by the 
defendants. And it's not economic interests, since a capitalist 
economy is built on voluntary actions free of government 
interference. ``Free competition enforced by law is a grotesque 
contradiction in terms,'' \8\ not to mention a highly unstable way 
to govern an economy. The companies prosecuted in this case did 
compete and are competing. The government just doesn't like the 
outcome of that competition, so they've come to court seeking to 
overrule the judgment of consumers and producers. The result of the 
government's actions is to introduce fear and uncertainty into a 
market that previously functioned well. It's hard to see how that 
serves any identifiable ``public interest.''
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    \8\ Ayn Rand, Antitrust: The Rule of Unreason, in The Voice of 
Reason 255 (Leonard Peikoff, ed., 1990).
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    Since it is unlikely the Department of Justice will see the 
error of its ways, CVT respectfully asks the Court to consider our 
comments and take appropriate action. We believe the only just 
action here is to reject entry of the proposed final judgment, and 
to dismiss the government's complaint with prejudice.

Dated: October 18, 2002.

 Respectfully Submitted,

Citizens for Voluntary Trade

S.M. Oliva,
President, 2000 F Street, N.W., Suite 315, Washington, DC 20006; 
Telephone: (202) 223-0071; Facsimile: (760) 418-9010; E-mail: 
[email protected].

[FR Doc. 02-29779 Filed 11-22-02; 8:45 am]
BILLING CODE 4410-11-M