[Federal Register Volume 70, Number 27 (Thursday, February 10, 2005)]
[Notices]
[Pages 7120-7127]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-2495]


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DEPARTMENT OF JUSTICE

Antitrust Division


Proposed Final Judgment and Competitive Impact Statement; United 
States v. Eastern Mushroom Marketing Cooperative, Inc.

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a Complaint, proposed Final 
Judgment, Stipulation, and Competitive Impact Statement have been filed 
with the United States District Court for the Eastern District of 
Pennsylvania in United States v. Eastern Mushroom Marketing 
Cooperative, Inc., Civil Case No. 04 CV 5829. The proposed Final 
Judgment is subject to approval by the Court after compliance with the 
Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h), including 
expiration of the statutory 60-day public comment period.
    On December 16, 2004, The United States filed a Complaint alleging 
that the Eastern Mushroom Marketing Cooperative, Inc., in order to 
support its price increases, acquired certain mushroom farms, then 
filed deed restrictions on the properties as part of an agreement among 
the cooperative members to restrict, forestall, and exclude competition 
from nonmember farmers in an unreasonable restraint of trade in 
violation of Section 1 of the Sherman Act. The Eastern Mushroom 
Marketing Cooperative, whose members grow, sell, and ship mushrooms to 
retail and food service outlets, is the largest mushroom cooperative in 
the United States. During the 2001-2002 growing season, the cooperative 
had approximately 19 members with control of more than 500 million 
pounds of mushrooms valued in excess of $425 million. The cooperative 
controlled over 60 percent of all agaricus mushrooms grown in the 
United States during the 2001-2002 growing season and approximately 90 
percent of all agaricus mushrooms grown in the eastern United States 
during the same growing season.
    To restore competition, the proposed Final Judgment filed with the 
Complaint will require the cooperative to remove the deed restrictions 
already filed and will enjoin and restrain the cooperative from 
creating, filing, or enforcing any mushroom deed restrictions with 
respect to any real property in which the cooperative has an ownership 
or leasehold interest of any kind. A Competitive Impact Statement, 
filed by the United States, describes the Complaint, the proposed Final 
Judgment, and the remedies available to

[[Page 7121]]

private litigants. 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 215, 325 Seventh 
Street, NW. 20530 (telephone: 202-514-2692) and at the Office of the 
Clerk of the United States District Court for the Eastern District of 
Pennsylvania, 601 Market Street, Room 2609, Philadelphia, Pennsylvania 
19106-1797.
    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 Roger Fones, Chief, Transportation, Energy, and Agriculture Section, 
Antitrust Division, U.S. Department of Justice, 325 7th Street, NW., 
Suite 500, Washington, DC 20530 (Telephone (202) 307-6351).

Dorothy B. Fountain,
Deputy Director of Operations, Antitrust Division.

United States District Court for the Eastern District of Pennsylvania

United States of America, Plaintiff, v. Eastern Mushroom Marketing 
Cooperative, Inc., Defendant; Competitive Impact Statement

    Civil Case No.: 2:04-CV-5829.
    Judge: Thomas N. O'Neill, Jr.
    Date Stamp: 12/16/2004.
    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 December 16, 2004, the United States filed a civil antitrust 
Complaint alleging that the Eastern Mushroom Marketing Cooperative, 
Inc. (``EMMC'') had violated section 1 of the Sherman Act, 15 U.S.C. 1. 
The EMMC is made up of entities that grow, buy, package, and ship 
mushrooms to retail and food service outlets across the United States. 
EMMC began operations in January 2001 and presently has 15 members. 
EMMC sets the minimum prices at which its members sell their mushrooms 
to customers in various geographic regions throughout the United States 
and publishes those prices regularly.
    The Complaint alleges that, in order to support its price 
increases, the EMMC collectively purchased or entered lease options on 
mushroom farms and thereafter shut them down, adding deed restrictions 
that permanently removed significant production capacity from the 
market. With the Complaint, the United States and the EMMC filed an 
agreed-upon proposed Final Judgment that requires the EMMC to eliminate 
the deed restrictions from all the properties it shut down.
    Under the proposed Final Judgment, the EMMC is required to file 
nullifying documents in each jurisdiction where it has filed any 
``Mushroom Deed Restrictions,'' as defined in the Final Judgment and 
discussed below in section III(A). The EMMC is also prohibited from 
creating, filing, or enforcing any Mushroom Deed Restrictions with 
respect to any real property in which the cooperative has an ownership 
or leasehold interest of any kind.
    The United States and the EMMC 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.

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

A. Description of the Defendant and its Activities

    The EMMC is organized pursuant to the Capper-Volstead Act, 7 U.S.C. 
291 et seq., which gives its members a limited immunity under the 
antitrust laws to act together voluntarily in ``collectively 
processing, preparing for market, handling, and marketing'' their 
products, and allows them to ``make the necessary contracts and 
agreements to effect such purposes.'' The Capper-Volstead Act does not 
give farmers the right to engage in exclusionary practices, monopolize 
trade, or suppress competition with the cooperative. The Supreme Court 
has stated that the legislative history of the Act shows a 
congressional intent:

* * * to make it possible for farmer-producers to organize together, 
set association policy, fix prices at which their cooperative will 
sell their produce * * *. It does not suggest a congressional desire 
to vest cooperatives with unrestricted power to restrain trade or to 
achieve monopoly by preying on independent producers * * * or 
dealers intent on carrying on their own businesses in their own 
legitimate way.\1\

    \1\ Maryland and Va. Milk Producers Assn. v. United States, 362 
U.S. 458, 466-467 (1960).

The EMMC, headquartered in Kennett Square, Pennsylvania, began 
operations in January 2001 and now is the largest mushroom cooperative 
in the United States. With control over combined production of more 
than 500 million pounds of mushrooms, the EMMC accounted for over 60 
percent of agaricus mushroom sales during 2001-2002. EMMC also sets the 
minimum prices at which its members can sell their mushrooms to 
customers in various geographic regions and publishes those prices 
regularly.

B. Effects of the Cooperative's Activities

    One of the first acts of EMMC members after forming the cooperative 
was to agree to increase prices in each of the geographic regions where 
its members sell mushrooms. The agreed-upon price increases averaged 
about 8 percent nationwide.
    Less than four months after instituting the price increases, the 
EMMC began acquiring mushroom farms through a ``Supply Control'' 
campaign. Through membership dues and a so-called ``Supply Control 
Assessment,'' the EMMC collected approximately six million dollars from 
its members between 2001 and 2003. Approximately four million dollars 
of that money was used in its plan to control the supply of mushrooms 
grown by nonmembers of the cooperative. Between May 2001 and March 
2002, the EMMC acquired one mushroom farm in Dublin, Georgia, and three 
in Pennsylvania. All four farms had mushroom-growing equipment and 
together had the capacity to grow approximately 29 million pounds of 
fresh mushrooms annually in competition with EMMC members' farms. The 
EMMC sold these properties, all at a loss, almost immediately after 
purchasing them. The net loss for the four properties combined was more 
than $1.2 million. The EMMC placed the deed restrictions prohibiting 
the conduct of any business related to mushroom growing on all the 
properties at the time of each resale. For example, one of the deed 
restrictions reads:

    This property shall never be used for the cultivation, growing, 
marketing, sale or distribution of fresh mushrooms, canned and/or 
processed mushrooms or related endeavors.

    In addition to the farm purchases and sales, the EMMC entered into 
lease option agreements during 2002 for two more mushroom farms, one in 
Ohio and the other in Pennsylvania, at a total cost of another $1.2 
million. The EMMC never actually entered into leases for these 
properties, but the agreements gave it the right to file deed 
restrictions

[[Page 7122]]

prohibiting the production of mushrooms on the properties for ten 
years, and the EMMC exercised that right.
    The purpose of these real estate transactions was to prevent 
nonmember mushroom farmers from competing with EMMC and its members.
    As a result of the deed restrictions filed by the EMMC upon the 
resale or lease of these mushroom growing properties in the eastern 
United States, the EMMC was able to boast to its members that it had 
``[a]nnually taken over 50 million pounds out of production from 
facilities which could have easily been purchased and remained in 
production.'' EMMC's actions artificially reduced the acreage and 
facilities available to produce mushrooms for American consumers, and 
consumers were deprived of the benefits of competition.

III. Explanation of the Proposed Final Judgment

A. Prohibited Conduct

    Pursuant to the Final Judgment, EMMC will be enjoined and 
restrained from creating, filing, or enforcing any Mushroom Deed 
Restrictions with respect to any real property in which the cooperative 
has an ownership or leasehold interest of any kind. As defined in the 
proposed Final Judgment, Mushroom Deed Restrictions means any 
restriction or limitation contained in any document filed in the land 
records of any jurisdiction that, with respect to any real property, 
limits the (1) commercial growing or cultivation of any types, 
varieties or species of mushrooms, mushroom spawn or other fungi; (2) 
packaging, processing, freezing, storing, handling, selling, or 
marketing of any types, varieties or species of mushrooms, mushrooms 
spawn or other fungi; (3) production of Phase I, Phase II or Phase III 
mushroom compost for on-site or off-site use; or (4) any other activity 
related to the production, processing or sale of mushrooms, mushroom 
spawn or other fungi, whether such production, processing or sales 
shall occur on or off such real property.

B. Effect of the Final Judgment

    The EMMC is required, within thirty (30) calendar days after the 
filing of the Complaint in this matter or five (5) days after notice of 
the entry of the Final Judgment by the Court, whichever is later, to 
file Nullifying Documents in each jurisdiction where the Defendant has 
filed any Mushroom Deed Restrictions. Nullifying Documents are defined 
in the proposed Final Judgment as documents that are necessary to 
nullify the legal effect of any Mushroom Deed Restrictions filed by the 
EMMC previously on (1) the properties the Defendant purchased in the 
name of the EMMC and thereafter resold; or (2) properties in which the 
EMMC purchased a leasehold interest. The Final Judgment requires the 
Defendant to use its best efforts to file the required Nullifying 
Documents as expeditiously as possible. Accordingly, the restrictions 
on competition caused by the deed restrictions will be eliminated.

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 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 Modifications 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 APPA provides a period of at least sixty 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 60 
days of the date of publication of this Competitive Impact Statement in 
the Federal Register. All comments received during this period will be 
considered by the Department of Justice, which remains free to withdraw 
its consent to the proposed Final Judgment at any time prior to the 
Court's entry of judgment. 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: Roger W. Fones, Chief, 
Transportation, Energy & Agriculture Section, Antitrust Division, 
United States Department of Justice, 325 7th Street, NW.; Suite 500, 
Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    The United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits against the Defendant. The 
United States could have entered into litigation and sought an 
injunction forcing the Defendant to void the deed restrictions. The 
United States is satisfied, however, that the Defendant's agreement to 
void the restrictions described in the proposed Final Judgment will 
preserve competition for the growth of agaricus mushrooms in the United 
States.

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.'' 15 U.S.C. 
16(e)(1). In making that determination, the Court shall consider:

    (A) 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, whether its terms are 
ambiguous, and any other competitive considerations bearing upon the 
adequacy of such judgment that the court deems necessary to a 
determination of whether the consent judgment is in the public 
interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, 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)(1)(A) and (B). 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.

[[Page 7123]]

Microsoft Corp., 56 F.3d 1448, 1458-62 (D.C. Cir. 1995).
    ``Nothing in this section shall be construed to require the court 
to conduct an evidentiary hearing or to require the court to permit 
anyone to intervene.'' 15 U.S.C. 16(e)(2). Thus, in conducting this 
inquiry, ``[t]he 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.'' 119 Cong. Rec. 24,598 (1973) (statement of Senator 
Tunney).\2\ Rather:
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    \2\ See United States v. Gillette Co., 406 F. Supp. 713, 716 (D. 
Mass. 1975) (recognizing it was not the court's duty to settle; 
rather, the court must only answer ``whether the settlement achieved 
[was] within the reaches of the public interest''). A ``public 
interest'' determination can be made properly on the basis of the 
Competitive Impact Statement and Response to Comments filed by the 
Department of Justice 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 (1974), 
reprinted in 1974 U.S.C.C.A.N. 6535, 6538.

[a]bsent 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 
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circumstances.

United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. (CCH) ] 
61,508, at 71,980 (W.D. Mo. 1977).

    Accordingly, with respect to the adequacy of the relief secured by 
the decree, a court may not ``engage in an unrestricted evaluation of 
what relief would best serve the public.'' United States v. BNS, Inc., 
858 F.2d 456, 462 (9th Cir. 1988) (citing United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d 
at 1460-62. Courts have held 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 ensuring 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.

Bechtel, 648 F.2d at 666 (emphasis added) (citation omitted).\3\

    \3\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); Gillette, 406 F. Supp. at 716 
(noting that, in this way, the court is constrained to ``look at the 
overall picture not hypercritically, nor with a microscope, but with 
an artist's reducing glass''). See generally Microsoft, 56 F.3d at 
1461 (discussing whether ``the remedies [obtained in the decree are] 
so inconsonant with the allegations charged as to fall outside of 
the `reaches of the public interest' '').
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    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.' '' United 
States v. AT&T, 552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) 
(quoting Gillette, 406 F. Supp. at 716), aff'd sub nom. Maryland v. 
United States, 460 U.S. 1001 (1983); see also United States v. Alcan 
Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving the 
consent decree even though the court would have imposed a greater 
remedy).
    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; the APPA 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. Because 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 did not pursue. Id. 
at 1459-60.

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: December 16, 2004.

 Respectfully submitted,

C. Alexander Hewes, Tracey D. Chambers, David McDowell,
Trial Attorneys, U.S. Department of Justice, Antitrust Division, 
Transportation, Energy & Agriculture Section.
325 7th Street, NW., Suite 500, Washington, DC 20530, Telephone: 
(202) 305-8519.

Laura Heiser, Anne Spiegelman,
Trial Attorneys, Antitrust Division, Philadelphia Field Office.

United States District Court for the Eastern District of Pennsylvania

United States of America, Plaintiff, v. Eastern Mushroom Marketing 
Cooperative, Inc., Defendant; Final Judgment

    Civil Case No.: 2:04-CV-5829.
    Judge: Thomas N. O'Neill, Jr.
    Date Stamp: 12/16/2004.
    Whereas, Plaintiff, United States of America, filed its Complaint 
on December 16, 2004, the Plaintiff and the Defendant, by their 
respective attorneys, have consented to the entry of this Final 
Judgment without trail or adjudication of any issue of fact or law, and 
without this Final Judgment constituting any evidence against or 
admission by any party regarding any issue of fact or law;
    And Whereas, the Defendant agrees 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 nullification of certain deed restrictions that limit mushroom 
production;
    And Whereas, Plaintiff requires the Defendant to nullify the deed 
restrictions for the purpose of remedying the loss of competition 
alleged in the Complaint;
    And Whereas, the Defendant has represented to the United States 
that it will file expeditiously the documents necessary to nullify the 
legal effect of the deed restrictions in each jurisdiction where the 
Defendant has filed any such deed restrictions previously and that the 
Defendant will later raise no claim of hardship or difficulty as 
grounds for asking the Court to modify any of the requirements set 
forth 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 the Defendant under section 1 of the 
Sherman Act, as amended (15 U.S.C. 1).

II. Definitions

    As used in this Final Judgment:
    A ``EMMC'' means the Eastern Mushroom Marketing Cooperative, Inc.,

[[Page 7124]]

the Defendant in this case, a Pennsylvania corporation with its 
headquarters in Kennett Square, Pennsylvania, its successors and 
assigns, and its subsidiaries, affiliates, members, divisions, groups, 
partnerships and joint ventures, and their directors, officers, 
managers, agents, and employees.
    B. ``Mushroom Deed Restrictions'' means any restriction or 
limitation contained in any document filed in the land records of any 
jurisdiction that, with respect to any real property, limits the (1) 
commercial growing or cultivation of any types, varieties or species of 
mushrooms, mushroom spawn or other fungi; (2) packaging, processing, 
freezing, storing, handling, selling, or marketing of any types, 
varieties or species of mushrooms, mushroom spawn or other fungi; (3) 
production of Phase I, Phase II or Phase III mushroom compost for on-
site or off-site, use; or (4) any other activity related to the 
production, processing or sale of mushrooms, mushroom spawn or other 
fungi, whether such production, processing or sales shall occur on or 
off such real property.
    C. ``Nullifying Documents'' means such documents as are necessary 
to nullify the legal effect of any Mushroom Deed Restrictions filed by 
the EMMC previously on (1) the properties the Defendant purchased in 
the name of the EMMC and thereafter resold; or (2) properties in which 
the EMMC purchased a leasehold interest.

III. Applicability

    This Final Judgment applies to the EMMC, as defined above, and all 
other persons in active concert or participation with the EMMC who 
receive actual notice of this Final Judgment by personal service or 
otherwise.

IV. Nullification of Mushroom Deed Restrictions

    A. The Defendant is ordered and directed, within thirty (30) 
calendar days after the filing of the Complaint in this matter, or five 
(5) days after notice of the entry of this Final Judgment by the Court, 
whichever is later, to file Nullifying Documents in each jurisdiction 
where the Defendant has filed any Mushroom Deed Restrictions. The 
Defendant shall use its best efforts to file the required Nullifying 
Documents as expeditiously as possible.

V. Prohibited Activity

    The Defendant is enjoined and restrained from creating, filing, or 
enforcing any Mushroom Deed Restrictions with respect to any real 
property in which the Defendant has an ownership or leasehold interest 
of any kind.

VI. Affidavit and Copies

    A. Within ten (10) calendar days of the filing of all Nullifying 
Documents required by this Final Judgment, the Defendant shall provide 
to the United States and the Court, an Affidavit providing affirmative 
notice that all the required Nullifying Documents have been filed in 
all required jurisdictions in full compliance with the terms of this 
Final Judgment.
    B. Within ten (10) calendar days after any Nullifying Documents 
have been filed in each jurisdiction, the Defendant shall provide to 
the United States a copy of all Nullifying Documents filed in such 
jurisdiction.

VII. Compliance Inspection

    A. For 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 reasonable notice to the Defendant, be 
permitted:
    1. Access during the defendant's office hours to inspect and copy, 
or at the United States' option, to require the Defendant to provide 
copies of all books, ledgers, accounts, records, and documents in the 
possession, custody, or control of the Defendant, relating to any 
matters contained in this Final Judgment; and
    2. To interview, either informally or on the record, the 
Defendant's 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 the Defendant.
    B. Upon written request of a duly authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, the 
Defendant shall submit written reports or interrogatory responses, 
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 the 
Defendant to the United States, the Defendant represents and identifies 
in writing the material in any such information nor documents to which 
a claim of protection may be asserted under Rule 26(c)(7) of the 
Federal Rules of Civil Procedure, and the 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 the 
United States shall give the Defendant ten (10 calendar days notice 
prior to divulging such material in any legal proceeding (other than a 
grand jury proceeding).

VIII. 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.

IX. Public Interest Determination

    Entry of this Final Judgment is in the public interest.
    This Final Judgment shall expire ten years from the date of its 
entry.

 Dated:----------------------------------------------------------------

Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16.
-----------------------------------------------------------------------
United States District Judge.

United States District Court for the Eastern District of Pennsylvania

United States of America, Department of Justice, Antitrust Division, 
325 7th Street, NW., Washington, DC 20530, Plaintiff, v. Eastern 
Mushroom Marketing Cooperative, Inc., 649 West South Street, Kennett 
Square, Pennsylvania 19348, Defendant; Complaint

    Civil Case No.: 2:04-CV-5829.
    Judge: Thomas N. O'Neill, Jr.
    Date Stamp: 12/16/2004.
    The United States of America, acting under the direction of the 
Attorney General, brings this antitrust action against Eastern Mushroom 
Marketing Cooperative, Inc. (``EMMC''), the

[[Page 7125]]

nation's largest mushroom cooperative, to enjoin it and its members 
from purchasing or leasing mushroom farms and shutting them down.

I. Summary of Claims

    1. Each year, American consumers spend over $800 million on 
mushrooms. EMMC members accounted for over 60 percent of those sales 
during the 2001-2002 growing season.
    2. The EMMC is organized pursuant to the Capper-Volstead Act 
(``Capper-Volstead''), 7 U.S.C. 29] et seq. Under Capper-Volstead, 
farmers have a limited immunity from the antitrust laws to act together 
voluntarily in ``collectively processing, preparing for market, 
handling, and marketing'' their products, and ``may make the necessary 
contracts and agreements to effect such purposes.'' Capper-Volstead 
provides no immunity, however, for cooperative members to conspire to 
prevent independent, nonmember farmers from competing with the 
cooperative or its members.
    3. Between May 2001 and August 2002, the EMMC conducted a ``Supply 
Control'' campaign to prevent nonmember farmers from buying or leasing 
certain of the very few available mushroom farms. The purpose of this 
campaign was to prevent nonmember farmers from competing with EMMC and 
its members.
    4. Staring in May 2001, the EMMC bought four mushroom farms in the 
eastern United States with annual combined growing capacity of 
approximately 29 million pounds. The EMMC then resold the four 
properties at a combined total loss of over $1.2 million and placed 
permanent deed restrictions on the properties at the time of each 
resale. The deed restrictions all prohibited the conduct of any 
business related to the growing of mushrooms. For example, one deed 
restriction reads:

This property shall never be used for the cultivation, growing, 
marketing, sale or distribution of fresh mushrooms, canned and/or 
processed mushrooms or related endeavors.

No mushrooms have been grown on these properties since they were resold 
by the EMMC.
    5. In February and August 2002, the EMMC purchased lease options, 
at a cost of over one million dollars, on two additional mushroom farms 
with a combined annual growing capacity of approximately 14 million 
pounds. The lease options allowed the EMMC to file deed restrictions on 
the two properties prohibiting the use of the properties for any 
business related to growing mushrooms for a period of ten years. The 
EMMC never entered into leases on these farms, but did file the deed 
restrictions. No mushrooms have been grown on these properties since 
the deed restrictions were filed by the EMMC.
    6. The EMMC touted the success of the Supply Control campaign to 
its membership, claiming it had ``[a]nnually taken over 50 million 
pounds out of production from facilities which could have easily been 
purchased and remained in production.''
    7. The agreement among the EMMC members to restrict, forestall, and 
exclude competition from nonmember farmers is an unreasonable restraint 
of trade in violation of section 1 of the Sherman Act. As a result of 
the EMMC's violations, the acreage and facilities available to produce 
mushrooms for American consumers was artificially reduced, and 
consumers were deprived of the benefits of competition.

II. Jurisdiction and Venue

    8. This Complaint is filed and this action is instituted under 
section 15 of the Clayton Act, 15 U.S.C. 25, in order to prevent and 
restrain the defendant from violating section 1 of the Sherman Act, 15 
U.S.C. 1.
    9. The Defendant is an agricultural cooperative whose members are 
engaged in the production and sale of fresh market mushrooms in 
interstate commerce. The Defendant's members' activities in the 
production and sale of mushrooms substantially affect interstate 
commerce. The Court has subject matter jurisdiction over this action 
pursuant to 28 U.S.C. 1331, 1337(a) and 1345.
    10. The Defendant has consented to personal jurisdiction and venue 
in this judicial district.

III. The Defendant

    11. The EMMC began operations in January 2001, and is the largest 
mushroom cooperative in the United States. The EMMC is incorporated in 
the Commonwealth of Pennsylvania and is headquarters in Kennett Square, 
Pennsylvania. The members of the EMMC grow, sell, and ship mushrooms to 
retail and food service outlets across the United States. During the 
2001-2002 growing season, the EMMC had approximately 19 members with 
control of more than 500 million pounds of mushrooms valued in excess 
of $425 million.

IV. Trade and Commerce

    12. Agaricus mushrooms are the common table variety, accounting for 
the vast majority of mushrooms grown and sold in the United States. In 
2002, domestic sales of all mushrooms were over $800 million.
    13. Mushrooms are grown on farms, usually in one-story windowless 
cinder block buildings called ``doubles.'' Doubles are kept cool and 
dark at an optimum ground temperature of 64 degrees year round. 
Mushrooms are grown in stacks of beds, usually six beds to a stack and 
24 beds to a double. The growing process takes approximately eight 
weeks to harvest from the introduction of mushroom seed, or ``spawn'' 
into the growing medium, usually compost. Once harvested, mushrooms are 
usually kept in refrigerated storage on the farms until packaged and 
shipped in refrigerated trucks to customers.
    14. Agaricus mushrooms of better quality are sold to fresh market 
retailers such as grocery store chains and food distributors. Lesser 
quality agaricus mushrooms are often sold to canneries. The majority of 
the agaricus mushrooms grown by EMMC members are sold to the fresh 
market.
    15. According to the U.S. Department of Agriculture, approximately 
66 percent of the domestic agaricus mushrooms grown in the United 
States are grown in the eastern United States, with 55 percent grown in 
Pennsylvania. Fresh market mushroom prices historically have been 
lowest in the east, and some fresh mushrooms grown in the eastern 
United States are shipped west.

V. Anticompetitive Effects

    16. In January 2001, shortly after its formation, the EMMC and its 
members agreed to set increased minimum prices at which they would sell 
fresh mushrooms in six different geographic regions, covering the 
entire continental United States. The minimum prices they agreed to 
were higher, on average, than the prices prevailing in those regions 
prior to the EMMC's formation. The price increases averaged about 8 
percent nationwide.
    17. The EMMC controlled over 60 percent of all agaricus mushrooms 
grown in the United States during the 2001-2002 growing season and 
approximately 90 percent of all agaricus mushrooms grown in the eastern 
United States during the same growing season.
    18. Within three months of instituting its price increases, the 
EMMC launched a campaign to control the mushroom supply by acquiring 
and subsequently dismantling non-EEMC mushroom growing operations in 
the eastern United States. The campaign was planned to include the 
purchase of mushroom farms in other regions of the country as well. The 
EMMC's objective

[[Page 7126]]

was to reduce overall mushroom supply as a means to support its price 
increases of early 2001.
    19. Through membership dues and a ``Supply Control Assessment'' the 
EMMC collected approximately six million dollars from its members 
during 2001-2002. EMMC then spent approximately three million dollars 
to purchase four mushroom farms and to acquire lease options on two 
additional mushroom farms in the eastern United States for the purpose 
of shutting them down and reducing the mushroom production capacity 
available for nonmembers to grow mushrooms in competition with the 
EMMC.
    20. In May 2001, the EMMC purchased a farm in Dublin, Georgia at a 
bankruptcy auction. The Dublin farm had an annual mushroom production 
capacity of approximately eight million pounds. At the auction, the 
EMMC outbid a nonmember mushroom grower based in Colorado that was 
attempting to enter mushroom farming in the eastern United States in 
competition with EMMC. Three months later, the EMMC entered into a land 
exchange with a land developer not connected to the mushroom industry, 
in which the EMMC exchanged the Dublin farm for another mushroom farm 
consisting of two parcels in Evansville, Pennsylvania, plus cash. As 
part of the exchange, the EMMC placed a permanent deed restriction on 
the Dublin farm prohibiting the conduct of any business related to the 
growing of mushrooms. The EMMC lost approximately $525,000 on the 
Dublin farm purchase and exchange transactions.
    21. Within three months of the Dublin farm/Evansville land 
exchange, the EMMC sold the largest parcel of the Evansville, 
Pennsylvania farm to a third party, with a permanent deed restriction 
prohibiting the conduct of any business related to the growing of 
mushrooms. Less than a year later, the EMMC sold the second parcel with 
the same permanent deed restriction. The two parcels making up the 
Evansville, Pennsylvania farm, with an annual mushroom growing capacity 
of 15 million pounds, were sold at a collective loss of $137,000.
    22. In January 2002, the EMMC purchased Gallo's Mushroom Farm 
(``Gallo's''), in Berks County, Pennsylvania. Gallos' had an annual 
mushroom growing capacity of two million pounds. Less than four months 
later, the EMMC sold Gallos' at a loss of $77,500 with a permanent deed 
restriction prohibiting the conduct of any business related to the 
growing of mushrooms.
    23. In February 2002, the EMMC agreed to pay one million dollars to 
the owners of Ohio Valley Mushroom Farms for, among other things, a 
non-complete agreement, a right of first refusal to lease the mushroom 
growing operations, a right of first refusal to purchase the 
properties, and the right to record a deed restriction prohibiting the 
conduct of any business related to mushroom growing on the property for 
ten years. The EMMC did not lease or purchase the property, but filed 
the deed restriction on the Ohio Valley Farm, which had recently been 
operated as a mushroom growing concern with annual capacity of nine 
million pounds.
    24. In March, 2002, the EMMC purchased the La Conca D'Oro mushroom 
farm in Berks County, Pennsylvania. The La Conca D'Oro farm had an 
annual production capacity of approximately five million pounds. The 
EMMC sold the farm and the mushroom-growing equipment on the farm 
approximately three months later at a loss of $500,000. Like the other 
EMMC-acquired properties, this land was sold with a deed restriction 
prohibiting anyone from conducting any business related to the growing 
of mushrooms on the property.
    25. In August 2002, the EMMC purchased a ten-year lease option on 
the Amadio Farm in Berks County, Pennsylvania for $230,000. The Amadio 
Farm had an annual mushroom production capacity of approximately five 
million pounds. The owner of the property agreed with the EMMC to the 
filing of a deed restriction on the property prohibiting anyone other 
than the EMMC from conducting any business related to the growing of 
mushrooms for ten years. EMMC never entered into a lease on the 
property.
    26. As a result of the deed restrictions placed by the EMMC on 
these six mushroom farms in the eastern United States, the EMMC removed 
more than 42 million pounds of annual growing capacity from that 
region, or approximately 8 percent of the total capacity in the eastern 
United States.
    27. The EMMC purpose in entering into the purchase and lease 
transactions was to reduce or eliminate the agaricus mushroom growing 
capacity available to potential independent competitors in the eastern 
United States, thereby improving the ability of its members to maintain 
the price increases to which they had agreed.
    28. Depending on the size and location, building a new mushroom 
growing and production facility costs millions of dollars and generally 
requires zoning approval. Building a new facility takes much longer to 
generate any revenue than purchasing or leasing an existing growing 
operation. By eliminating the existing available productive capacity, 
the EMMC effectively forestalled competitive entry by at least 18 
months.

VI. Capper-Volstead

    29. The EMMC was formed pursuant to the Capper-Volstead Act. 
Congress enacted the Capper-Volstead Act to improve the bargaining 
power of individual farmers when dealing with the corporate purchasers 
of their products by allowing farmers to act collectively without 
violating the antitrust laws. Under the Capper-Volstead Act, farmers, 
in a cooperative may collectively market their crops, including jointly 
setting prices, but they may not engage in exclusionary practices, 
monopolize trade or suppress competition with the cooperative.

VII. Violations Alleged

    30. Fresh agaricus mushrooms is a relevant product market within 
the meaning of Section 1 of the Sherman Act, 15 U.S.C. 1. The eastern 
United States is a relevant geographic market within the meaning of 
section 1 of the Sherman Act.
    31. The Supply Control campaign adopted and implemented by the EMMC 
constitutes a conspiracy in unreasonable restraint of trade to prevent, 
forestall and restrict competition from independent mushroom producers 
of section 1 of the Sherman Act, 15 U.S.C. 1.
    32. To form and effectuate this conspiracy, EMMC and its members 
did the following things, among others:
    a. Collectively funded the Supply Control campaign:
    b. Sold four properties with permanent deed restrictions forbidding 
the conduct of any business related to the production of mushrooms;
    c. Entered agreements with nonmembers to place deed restrictions on 
two properties for which the cooperative purchased lease options; and
    d. Filed deed restrictions on the two lease-optioned properties 
prohibiting the conduct of any business related to the production of 
mushrooms for ten years.
    33. The Supply Control campaign is not a joint activity protected 
by the exemption from the antitrust laws created by the Capper Volstead 
Act, 7 U.S.C. 291, et seq.
    34. Unless the deed restrictions are voided and similar 
transactions are restrained in the future, the EMMC's violations likely 
will have the following effects, among others:

[[Page 7127]]

    a. Competition generally in fresh market agaricus mushrooms in the 
eastern United States will be restrained.
    b. Actual and potential competition between the cooperative's 
members and other mushroom farmers will be prevented, forestalled and 
restricted;
    c. Acreage and facilities available to produce mushrooms in the 
eastern United States will be artificially reduced; and
    d. Consumers will be deprived of the benefits of competition.

VIII. Requested Relief

    Wherefore, Plaintiff requests:
    1. That the deed restrictions the EMMC placed on the six properties 
identified above be adjudged and decreed to be unlawful and in 
violation of section 1 of the Sherman Act, 15 U.S.C. 1.
    2. That the Defendant and all persons acting on its behalf be 
permanently enjoined and restrained from enforcing the deed 
restrictions on the above-mentioned properties and from entering into 
or carrying out any contract, agreement, understanding, or plan, the 
effect of which would be to limit, forestall or prohibit the conduct of 
any business related to the growing of mushrooms on any property in the 
United States;
    3. That the Defendant be ordered to file appropriate documents in 
the land records of each jurisdiction in Georgia, Pennsylvania and Ohio 
where the EMMC previously filed deed restrictions, to nullify the 
recorded deed restrictions that had the effect of prohibiting the 
conduct of business related to the cultivation, growing, production or 
marketing of mushrooms; and
    4. That Plaintiff have such other relief as the Court may deem just 
and proper.

 Respectfully submitted,
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R. Hewitt Pate,
Assistant Attorney General.
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J. Bruce McDonald,
Deputy Assistant Attorney General.
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Dorothy B. Fountain,
Deputy Director of Operations and Civil Enforcement.
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Roger W. Fones,
Chief, Transportation , Energy & Agriculture Section.
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Donna N. Kooperstein,
Assistant Chief, Transportation, Energy & Agriculture Section.
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C. Alexander Hewes.
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Tracey D. Chambers.
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J. David McDowell,
Trial Attorneys, United States Department of Justice Antitrust 
Division, Transportation, Energy & Agriculture Section.
325 7th Street, NW., Suite 500, Washington, DC 20530, Telephone: 
(202) 305-8519, Facsimile: (202) 307-2784.
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Laura Heiser.
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Anne Spiegelman,
Trial Attorneys, Antitrust Division, Philadelphia Field Office.

    December 16, 2004.

United States District Court for the Eastern District of Pennsylvania

United States of America, Plaintiff, v. Eastern Mushroom Marketing 
Cooperative, Inc., Defendant; Stipulation

    Civil Case No.: 2:04-CV-5829.
    Judge Thomas N. O'Neill, Jr.
    Date Stamp: 12/16/2004.
    It is stipulated by and between the undersigned parties by their 
respective attorneys that:
    1. The Court has jurisdiction over the subject matter of this 
action and over each of the parties hereto, and venue of this action is 
proper in the Eastern District of Pennsylvania.
    2. The parties consent that a Final Judgment in the form hereto 
attached may be filed and entered by the Court, upon the motion of any 
party or upon the Court's own motion, at any time after compliance with 
the requirements of the Antitrust Procedures and Penalties Act (15 
U.S.C. 16), and without further notice to any party or other 
proceedings, provided that the United States has not withdrawn its 
consent.
    3. The defendant shall abide by and comply with the provisions of 
the proposed Final Judgment pending entry of the Final Judgment, and 
shall, from the date of the filing of this Stipulation, comply with all 
the terms and provisions thereof as though the same were in full force 
and effect as an order of the Court.
    4. In the event the proposed Final Judgment is not entered pursuant 
to this Stipulation, this Stipulation shall be of no effect whatever, 
and the making of this Stipulation shall be without prejudice to any 
party in this or any other proceeding.

    Dated: December 16, 2004.

Eastern Mushroom Marketing Cooperative

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William A. DeStefano, Saul Ewing, LLP,
Centre Square West, 1500 Market Street, 38th Floor, Philadelphia, PA 
19102-2186, (215) 972-8578.

Counsel for the Eastern Mushroom Marketing Cooperative.

United States of America

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Laura Heiser,
Trial Attorney, United States Department of Justice, Antitrust 
Division, Philadelphia Office,
The Curtis Center, Suite 650 W., 170 S. Independence Mall West, 
Philadelphia, PA 19106-2424, (215) 597-7405.

Counsel for the United States.

[FR Doc. 05-2495 Filed 2-9-05; 8:45 am]
BILLING CODE 4410-11-M