[Federal Register Volume 74, Number 114 (Tuesday, June 16, 2009)]
[Notices]
[Pages 28527-28549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-13549]


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DEPARTMENT OF JUSTICE

Antitrust Division


Public Comments and Response on Proposed Final Judgment

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b)-(h), the United States hereby publishes below the comments 
received on the proposed Final Judgment in United States et al. v. 
Republic Services, Inc. and Allied Waste Industries, Inc., No. 1:08-CV-
02076-RWR, which were filed in the United States District Court for the 
District of Columbia on May 14, 2009, together with the response of the 
United States to the comments.
    Copies of the comments and the response are available for 
inspection at the Department of Justice Antitrust Division, 325 Seventh 
Street, NW., Room 200, Washington, DC 20530, (telephone (202) 514-
2481), and at the Office of the Clerk of the United States District 
Court for the District of Columbia, 333 Constitution Avenue, NW., 
Washington, DC 20001. Copies of any of these materials may be obtained 
upon request and payment of a copying fee.

Patricia Brink,
Deputy Director of Operations, Antitrust Division.

United States District Court for the District of Columbia

    United States of America, State of California, Commonwealth of 
Kentucky, State of Michigan, State of North Carolina, State of Ohio, 
Commonwealth of Pennsylvania, and State of Texas, Plaintiffs, v. 
Republic Services, Inc., and Allied Waste Industries, Inc., 
Defendants.

Civil Action No.: 1:08-cv-02076
Judge: Hon. Richard W. Roberts
Description: Antitrust
Date Stamp: May 14, 2009

Response of the United States to Public Comments on the Proposed Final 
Judgment

    Pursuant to the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h) (``APPA'' or ``Tunney Act''), the 
United States hereby responds to five public comments received 
regarding the proposed Final Judgment in this case. After careful 
consideration of the five comments, the United States continues to 
believe that the proposed Final Judgment will provide an effective and 
appropriate remedy for the antitrust violations alleged in the 
Complaint. The United States will move the Court for entry of the 
proposed Final Judgment after the public comments and this Response 
have been published in the Federal Register, pursuant to 15 U.S.C. 
16(d).

I. Procedural History

    On December 3, 2008, the United States and the State of California, 
Commonwealth of Kentucky, State of Michigan, State of North Carolina, 
State of Ohio, Commonwealth of Pennsylvania, and State of Texas (the 
``States'') filed the Complaint in this ma tter, alleging that 
defendant Republic Services, Inc.'s (``Republic'') acquisition of 
defendant Allied Waste Industries, Inc. (``Allied''), if permitted to 
proceed, would combine two of only a few significant providers of small 
container commercial waste collection or municipal solid waste 
(``MSW'') disposal services in several markets in violation of Section 
7 of the Clayton Act, 15 U.S.C. 18. Simultaneously, the United States 
filed a proposed Final Judgment and a Hold Separate Stipulation and 
Order signed by the United States, the States and the defendants 
consenting to the entry of the proposed Final Judgment after compliance 
with the requirements of the APPA.
    Pursuant to those requirements, a Competitive Impact Statement 
(``CIS'') also was filed in this Court on December 3, 2008; the 
proposed Final Judgment and CIS were published in the Federal Register 
on December 16, 2008, see 73 FR 76,383 (2008); and a summary of the 
terms of the proposed Final Judgment and CIS, together with directions 
for the submission of written comments relating to the proposed Final 
Judgment, was published for seven days in The Washington Post on 
December 31, 2008 through January 6, 2009. The defendants filed the 
statement required by 15 U.S.C. 16(g) on April 24, 2009. The 60-day 
public comment period ended on March 9, 2009; five comments were 
received, as described below and attached hereto.

II. The Investigation and Proposed Resolution

    After Republic and Allied announced their plans to merge, the 
United States Department of Justice (the ``United States'') conducted 
an extensi ve investigation into the competitive effects of the 
proposed transaction. As part of this investigation, the United States 
obtained documents and information from the merging parties and others 
and conducted more than 600 interviews with customers, competitors, and 
other individuals knowledgeable about the industry. The investigative 
staff carefully analyzed the information provided and thoroughly 
considered all of the issues presented. The United States considered 
the potential competitive effects of the transaction on small container 
commercial waste collection or MSW disposal services in a number of 
geographic areas, obtaining information about these services and these 
areas from market participants. The United States concluded that the 
combination of Republic and Allied likely would lessen competition in 
small container commercial waste collection or MSW disposal services in 
15 separate geographic markets.

[[Page 28528]]

    Small container commercial waste collection service is the 
collection of MSW from commercial businesses such as office and 
apartment buildings and retail establishments (e.g., stores and 
restaurants) for shipment to, and disposal at, an approved disposal 
facility. Because of the type and volume of waste generated by 
commercial accounts and the frequency of service required, haulers 
organize commercial accounts into routes, and generally use specialized 
equipment to store, collect, and transport MSW from these accounts to 
approved MSW disposal sites. This equipment (e.g., one- to ten-cubic-
yard containers for MSW storage, and front-end load vehicles commonly 
used for collection and transportation of MSW) is un iquely well suited 
to providing small container commercial waste collection service. 
Providers of other types of waste collection services (e.g., 
residential, hazardous waste, and roll-off services) are not good 
substitutes for small container commercial waste collection firms. In 
these types of waste collection efforts, firms use different waste 
storage equipment (e.g., garbage cans or semi-stationary roll-off 
containers) and different vehicles (e.g., rear-load, side-load, or 
roll-off trucks), which, for a variety of reasons, cannot be used 
conveniently or efficiently to store, collect, or transport MSW 
generated by commercial accounts and, hence, rarely are used on small 
container commercial waste collection routes. In the event of a small 
but significant increase in price for small container commercial waste 
collection services, customers would not switch to any other 
alternative.
    A number of Federal, State, and local safety, environmental, 
zoning, and permit laws and regulations dictate critical aspects of 
storage, handling, transportation, processing and disposal of MSW. In 
order to be disposed of lawfully, MSW must be disposed in a landfill or 
incinerator permitted to accept MSW. Anyone who attempts to dispose of 
MSW in an unlawful manner risks severe civil and criminal penalties. In 
some areas, landfills are scarce because of significant population 
density and the limited availability of suitable land. Accordingly, 
most MSW generated in these areas is burned in an incinerator or taken 
to transfer stations where it is compacted and transported on tractor 
trailer trucks to a more distant, permanent MSW disposal site. A 
transfer station is an intermediate disposal site for processing and 
temporary storage of MSW before transfer in bulk to more distant 
landfills or incinerators for final disposal.
    Because of the strict laws and regulations that govern MSW 
disposal, there are no good substitutes for MSW disposal in landfills, 
incinerators, or at transfer stations located near the source of the 
waste. Firms that do not offer MSW disposal cannot gain significant 
sales from MSW haulers by offering lower prices. MSW disposal generally 
occurs in localized markets. Because of transportation costs and travel 
time to more distant MSW disposal facilities, a substantial percentage 
of the MSW generated in an area is disposed of at nearby landfills or 
transfer stations. In the event that a local disposal facility imposed 
a small but significant increase in the price of disposal of MSW, 
haulers of MSW generated in that area could not profitably turn to more 
distant disposal sites.
    After its investigation, the United States concluded that the 
proposed transaction would lessen competition in the provision of non-
franchised small container commercial waste collection or MSW disposal 
services in 15 areas: Los Angeles, California; San Francisco, 
California; Denver, Colorado; Atlanta, Georgia; northwestern Indiana; 
Lexington, Kentucky; Flint, Michigan; Cape Girardeau, Missouri; 
Charlotte, North Carolina; Cleveland, Ohio; Philadelphia, Pennsylvania; 
Greenville-Spartanburg, South Carolina; Fort Worth, Texas; Houston, 
Texas; and Lubbock, Texas. In each of these areas, Republic and Allied 
are two of only a few significant firms providing small container 
commercial waste collection or MSW disposal services.
    As explained more fully in the Complaint and the CIS, this loss of 
competition would result in consumers paying higher prices and 
receiving fewer services for the collection and disposal of MSW. 
Complaint ] 23 et seq.; CIS ] II(B). As alleged in the Complaint, the 
proposed acquisition of Allied by Republic would remove a significant 
competitor in small container commercial waste collection and MSW 
disposal services in already highly concentrated and difficult-to-enter 
markets. Complaint ] 25. In each of these markets, the resulting 
substantial increase in concentration, loss of competition, and absence 
of any reasonable prospect of significant new entry or expansion by 
market incumbents likely would result in higher prices for small 
container commercial waste collection or MSW disposal services. Id.
    The proposed Final Judgment is designed to preserve competition in 
each of the 15 affected geographic markets. It requires Republic and 
Allied to divest a total of 87 commercial waste hauling routes, nine 
landfills and 10 transfer stations, together with ancillary assets and, 
in three cases, access to landfill disposal capacity. The divestiture 
provisions of the proposed Final Judgment will eliminate the 
anticompetitive effects of the acquisition in small container 
commercial waste collection and MSW disposal services in each of these 
areas. The divestiture of these assets to an independent, economically 
viable competitor will ensure that users of these services in each 
market will continue to receive the benefits of competition that 
otherwise would be lost.

III. Summary of Public Comments and the Response of the United States

    During the 60-day public comment period, the United States received 
comments from: (1) The Center for a Competitive Waste Industry 
(``CCWI''); (2) Ms. June Guidotti; (3) the Pennsylvania Independent 
Waste Haulers Association (``PIWHA''); (4) Metro Disposal; and (5) the 
Cuyahoga County Solid Waste District. The comments are attached in the 
accompanying Appendix and are summarized below. After reviewing the 
five comments, the United States continues to believe that the proposed 
Final Judgment is in the public interest.

A. Public Comment From the CCWI

1. Summary of the CCWI's Comment
    The CCWI, through its attorney David Balto, asserts that ``[t]he 
DOJ must strengthen the [proposed Final Judgment] to remedy the 
significant competitive problems posed by this merger.'' CCWI Comment, 
at 1. The CCWI comment may be summarized in eight points.
    First, the CCWI argues that ``[t]here should be divestitures of 
assets in both the [small container commercial waste collection] and 
[municipal solid waste] disposal markets in local affected geographic 
areas not named in the [proposed Final Judgment].'' CCWI Comment, at 
14.
    Second, the CCWI argues that ``[b]ecause [the] markets consist of 
oligopolies' [sic] with lock holds on local landfills, which create 
bottlenecks that impede new entry, divested assets should be sold to 
independent haulers with the right to contract for airspace in the 
merger companies' landfills.'' Id. In effect, the CCWI requests that 
the proposed Final Judgment be modified to preclude the sale of assets 
to the top five municipal solid waste companies.
    Third, instead of the divestiture of landfills to qualified 
purchasers, the

[[Page 28529]]

CCWI seeks a modification to the proposed Final Judgment that would 
give independent haulers nondiscriminatory access to landfills. CCWI 
Comment, at 11-12.
    Fourth, the CCWI advocates for additional airspace disposal rights 
to be included in the proposed Final Judgment. CCWI Comment, at 9.
    Fifth, the CCWI asserts that the proposed Final Judgment should be 
``modified to immediately impose the use of a monitor trustee to ensure 
compliance with the order,'' citing to a prior case for support. CCWI 
Comment, at 6-7.
    Sixth, the CCWI advocates for the inclusion of certain behavioral 
remedies in the proposed Final Judgment, stating that ``[u]se of the 
merged companies' evergreen contracts ought to be discontinued, 
especially in their term lengths, renewal provisions, liquidated 
damages, and escalator clauses.'' CCWI Comment, at 14. The CCWI cites 
to a prior consent decree that contained such behavioral relief. Id. at 
7.
    Seventh, the CCWI proposes that ``the goal of encouraging new 
entrants in the commercial waste hauling industry will be better served 
by requiring the divested assets in each individual market to be 
offered for sale individually rather than in a package,'' such as the 
requirements in the proposed Final Judgment relating to the sale of 
Divestiture Assets in Atlanta, Georgia; Cleveland, Ohio; Philadelphia, 
Pennsylvania; and Fort Worth, Texas. CCWI Comment, at 10.
    Lastly, the CCWI asserts that the proposed Final Judgment departs 
from past enforcement actions by allowing Republic to acquire an asset, 
the Newnan Transfer Station, that Allied previously was required to 
divest as a condition of the Allied/BFI merger in 1999.\(1)\ CCWI 
Comment, at 6.
2. Response of the United States to CCWI's Comment
a. The Final Judgment Need Not Remedy Competitive Concerns Not 
Addressed in the Complaint
    The CCWI's comment that the United States should have alleged harm 
to competition in small container commercial waste collection and MSW 
disposal services in other areas is outside the scope of this Tunney 
Act proceeding. As explained by this Court, in a Tunney Act proceeding, 
the district court should not second-guess the prosecutorial decisions 
of the United States regarding the nature of the claims brought in the 
first instance; ``rather, the court is to compare the complaint filed 
by the United States with the proposed consent decree and determine 
whether the proposed decree clearly and effectively addresses the 
anticompetitive harms initially identified.'' United States v. Thomson 
Corp., 949 F. Supp. 907, 913 (D.D.C. 1996); accord United States v. 
Microsoft Corp., 56 F.3d 1448, 1459 (D.C. Cir. 1995) (in APPA 
proceeding, ``district court is not empowered to review the actions or 
behavior of the Department of Justice; the court is only authorized to 
review the decree itself ''); United States v. BNS Inc., 858 F.2d 456, 
462-63 (9th Cir. 1988) (``the APPA does not authorize a district court 
to base its public interest determination on antitrust concerns in 
markets other than those alleged in the government's complaint''). This 
Court has held that ``a district court is not permitted to `reach 
beyond the complaint to evaluate claims that the government did not 
make and to inquire as to why they were not made.' '' United States v. 
SBC Commc'ns, Inc., 489 F. Supp. 2d 1, 14 (D.D.C. 2007) (quoting 
Microsoft, 56 F.3d at 1459).
    The CCWI's suggestion that the 2004 Amendments to the Tunney Act 
require a more extensive review of the United States's exercise of its 
prosecutorial judgment conflicts with this Court's holding in SBC 
Communications. In SBC Communications, this Court held that ``a close 
reading of the law demonstrates that the 2004 amendments effected 
minimal changes, and that this Court's scope of review remains sharply 
proscribed by precedent and the nature of [APPA] proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11. This Court explained that because 
``review [under the 2004 amendments] is focused on the `judgment,' it 
again appears that the Court cannot go beyond the scope of the 
complaint.'' Id.
    In short, the Tunney Act, as amended in 2004, requires the Court to 
evaluate the effect of the ``judgment upon competition'' as alleged in 
the Complaint. In this case, therefore, the remedy in the proposed 
Final Judgment must correspond to the harm to competition in small 
container commercial waste collection and MSW disposal services in the 
15 geographic markets identified in the Complaint. See 15 U.S.C. 
16(e)(1)(b). Because the United States did not allege that Republic's 
acquisition of Allied would cause competitive harm in additional 
markets, it is not appropriate for the Court to determine whether the 
acquisition will have anticompetitive effects in other regions of the 
country.
b. There Is No Evidence That Selling Assets to an Appropriate Large 
National Firm Would Be Less Competitive Than a Sale to a Smaller Firm
    The United States has carefully considered the CCWI's concern that 
divested assets should be sold only to regional haulers, but 
respectfully disagrees. The United States does not have any evidence 
that would lead it to conclude categorically that the divestiture of 
assets to a large national waste firm would be less competitive than a 
sale to a small regional firm. In fact, larger firms might enjoy some 
competitive advantages, such as better access to capital and more 
extensive experience, that might make them more formidable competitors 
than regional haulers.
    The proposed Final Judgment does not require Republic to accept a 
particular offer, only that any Acquirer of the divested assets meet 
the conditions set out in Paragraph IV(I)(1) and (2). These provisions 
require the divested assets to be sold to a purchaser who ``has the 
intent and capability (including the necessary managerial, operational, 
technical, and financial capability) of competing effectively in the 
disposal or hauling business.'' The divestitures in the proposed Final 
Judgment thus are designed to preserve competition in the marketplace.
c. Divestiture of an Entire Landfill Is Essential to Restoring 
Competition to Pre-Merger Levels
    The CCWI states that ``the [proposed Final Judgment] should be 
modified to confer upon independent haulers * * * the legal right to 
acquire 15-year contracts for space in Republic/Allied landfills in all 
markets that are highly concentrated under the Merger Guidelines, or at 
least the 15 markets that are the subject of the [proposed Final 
Judgment].'' CCWI Comment, at 9. Essentially, the CCWI argues against 
the sale of complete landfill assets to a prospective purchaser, 
preferring instead to carve landfills into separate, discrete portions 
to be made available to independent waste haulers. The United States 
has considered this issue and has determined that such relief is 
contrary to the public interest. As stated in the U.S. Department of 
Justice Antitrust Division's Policy Guide to Merger Remedies, the 
United States believes it is important that a divestiture include all 
assets necessary for a purchaser to be an effective, stand-alone long-
term competitor. See U.S. Dep't of Justice, Antitrust Division Policy 
Guide to Merger Remedies, Sec.  III(B) (2004) (``Remedies Guide''). 
Under the CCWI

[[Page 28530]]

proposal, the proposed relief would interfere with a landfill owner's 
ability to manage and operate the assets successfully. In particular, a 
landfill owner typically attempts to capture as much volume pursuant to 
long-term contracts under the requisite permits. The profitability of a 
landfill depends upon a variety of factors, including the volume 
disposed at the site on a daily basis. Under the CCWI's proposal, the 
landfill owner no longer would have control over critical operational 
elements of the landfill, such as determining the price charged for 
disposal services, establishing the duration of contracts, and managing 
expected daily volumes at the facility. The CCWI proposal would create 
uncertainty as to whether the landfill assets would be fully utilized, 
as independent haulers might not remain in business over the life of a 
divested landfill. Predicting which small container commercial waste 
collection service provider would use what capacity over the life of 
the landfill would be nearly impossible. Thus, this proposed remedy 
could jeopardize the competitive significance of the landfill assets.
    The proposed remedy proffered by the CCWI also would require the 
United States to oversee and enforce contracts between the defendants 
and non-vertically integrated MSW haulers for an undetermined period of 
time. As stated in the Remedies Guide, structural remedies, such as 
those in the proposed Final Judgment, are preferred in merger cases 
because they are relatively clean and certain, and generally avoid 
managing or regulating the merged firm's post-merger business conduct. 
Remedies Guide Sec.  III(A). For the reasons identified above, the 
CCWI's proposal would be more difficult, cumbersome, and costly to 
administer. The United States believes that the remedies in the 
proposed Final Judgment will address the alleged competitive harm more 
effectively and preserve competition in each of the affected areas.
d. No Additional Airspace Disposal Rights Are Necessary
    The CCWI argues for the inclusion of additional landfill disposal 
rights or ``airspace rights'' in the Final Judgment.\(2)\ Simply 
because the proposed Final Judgment includes additional airspace rights 
in Houston, Texas, Northwest Indiana, and Philadelphia, Pennsylvania, 
the CCWI argues that such relief is warranted in other areas. The 
United States conducted a case-by-case analysis of the specific facts 
in each market. In eight areas in which the United States determined 
the acquisition would result in competitive harm in the market for MSW 
disposal Charlotte, North Carolina; Greenville-Spartanburg, South 
Carolina; Fort Worth, Texas; Denver, Colorado; San Francisco, 
California; Los Angeles, California; Cleveland, Ohio; and Flint, 
Michigan the proposed Final Judgment requires the divestiture of an 
entire landfill. In two other areas Atlanta, Georgia and Cape 
Girardeau, Missouri transfer stations are the preferred option for MSW 
disposal because the distance to landfills makes them an unattractive 
option for the direct haul of MSW. In as much as MSW disposal 
competitors permanently utilize transfer stations, the divestiture of 
transfer stations in these areas is sufficient to remedy the 
competitive harm in MSW disposal.\(3)\ In the Philadelphia, 
Pennsylvania, Northwest Indiana, and Houston, Texas areas, the proposed 
Final Judgment requires the defendants to sell airspace rights at the 
buyer's option. These airspace rights generally were intended as an 
option during a transitional period to assist an Acquirer who might not 
yet have a plan for final MSW disposal. If the proposed buyer already 
has an ultimate disposal option(s) in a market, it is not required to 
purchase these airspace rights.
    In the Philadelphia area, the proposed Final Judgment requires the 
divestiture of the Girard Point Transfer Station and the Philadelphia 
Recycling and Transfer Station, as well as, at the option of the 
Acquirer, airspace rights at Republic's Modern Landfill for a period of 
18 months. Proposed Final Judgment ] II(H)(1)(j). These airspace rights 
are designed to assist an Acquirer that may not have an ultimate 
disposal option for a transitional period.
    In the Northwest Indiana area, the proposed Final Judgment requires 
the divestiture of Allied's Valparaiso Transfer Station, various small 
container commercial waste collection assets, and, at the option of the 
Acquirer, airspace rights at Allied's Newton County Development 
Corporation Landfill (``Newton County Landfill'') for a two-year 
period. Proposed Final Judgment ] II(H)(1)(i). Pre-merger, both Allied 
and Republic owned a transfer station in this area. The proposed Final 
Judgment requires the sale of Allied's Valparaiso Transfer Station, 
which will preserve pre-merger competition. With regard to landfill 
options, pre-merger, both Republic and Allied operate landfills in the 
area--Republic's Forest Lawn Landfill and Allied's Newton County 
Landfill. Because Republic's Forest Lawn Landfill is expected to be 
open for only two more years, the proposed Final Judgment requires the 
sale of airspace capacity at Allied's Newton County Landfill for the 
expected remaining life of the Forest Lawn Landfill at the Acquirer's 
option. Therefore, the remedy preserves competition that otherwise 
would be lost as a result of the merger.
    In the Houston, Texas area, the proposed Final Judgment requires 
the divestiture of Republic's Hardy Road Transfer Station, Republic's 
Seabreeze Environmental Landfill, 32 Republic small container 
commercial waste collection routes, and, at the option of the Acquirer, 
airspace rights at Allied's Blue Ridge Landfill for a ten-year period. 
Proposed Final Judgment ]] II(H)(2)(f) & II(I)(6). The United States 
sought airspace rights at Allied's Blue Ridge Landfill, because the 
landfill may be a more convenient and cost-efficient disposal option 
for the divested hauling routes in the southern and western areas of 
Houston and Harris County. The Houston divestiture package in the 
proposed Final Judgment is comparable to the remedy in United States v. 
USA Waste Service,\(4)\ in which the Modified Final Judgment required 
divestiture of Waste Management, Inc.'s (``WMI'') Hardy Road Transfer 
Station, USA Waste's Brazoria County Landfill, 31 WMI small container 
commercial waste collection routes, and, at the option of the Acquirer, 
airspace rights at WMI's Atascocita or Security landfills for a period 
of ten years. Republic used its prior purchase of the group of assets 
to compete effectively and grow its business in the Houston, Texas 
area. Therefore, the remedy is sufficient to preserve competition in 
this area.
e. A Monitoring Trustee Is Unnecessary
    The CCWI emphasizes the need for a monitoring trustee in this case. 
A monitoring trustee would be responsible for reviewing a defendant's 
compliance with its decree obligations to sell the assets as a viable 
enterprise to an acceptable purchaser and to abide by injunctive 
provisions to hold separate certain assets from a defendant's other 
business operations. The CCWI cites to United States v. Computer 
Associates Int'l \(5)\ as support for its contention that additional 
oversight is needed to ensure compliance with the proposed Final 
Judgment.
    The United States has considered the CCWI's position and 
respectfully disagrees. In Computer Associates, a trustee was appointed 
at the outset to sell the divested assets because the United States had 
reason to believe that the parties would not effectuate the 
divestitures in a timely manner. Here, the United States had no reason 
to

[[Page 28531]]

believe that the defendants would not comply promptly with the 
divestiture requirements of the proposed Final Judgment, and the 
defendants have done so. The CCWI 's conclusion that a monitoring 
trustee is necessary in this matter rests on an assumption that the 
United States's own monitoring efforts will not suffice, and it is 
counter to the position stated in the Remedies Guide on the use of 
monitoring trustees in merger-related actions.
    Remedies Guide Sec.  IV(I)(3). According to Section IV(I)(3) of the 
Remedies Guide, ``[i]n a typical merger case, a monitoring trustee's 
efforts would simply duplicate, and could potentially conflict with, 
the Division's own decree enforcement efforts * * * [and] should be 
reserved for relatively rare situations where a monitoring trustee with 
technical expertise unavailable to the Division could perform a 
valuable role.'' Id. In this particular case, the Division has 
sufficient knowledge of the industry to ensure compliance with the 
proposed Final Judgment.
    f. Restriction of Evergreen Contracts Is Unnecessary
    The CCWI states that the United States ``fails to limit the ability 
of the merged firm to use evergreen contracts.'' CCWI Comment, at 7. In 
seeking the discontinuance of such contracts, the CCWI cites to a 
single prior enforcement action in which the United States employed 
such a remedy.\(6)\ CCWI Comment, at 7. Simply because that prior 
consent decree contained such a remedy, the CCWI believes similar 
provisions are necessary in this case.
    As stated above, see supra Part III.2.c, the structural remedy of a 
divestiture is preferable to a behavioral remedy in merger cases 
because of the speed, certainty, cost, and efficacy associated with 
such a remedy. Unlike a structural remedy, a behavioral remedy of 
contract relief is less certain and is required only when warranted by 
the facts of the case. The United States has extensive experience 
reviewing mergers in the waste industry, and it reviews each 
transaction and each implicated geographic area on a case-by-case 
basis. The United States has considered this issue and has concluded 
that the modification of contracts is not necessary to preserve 
effective competition in the markets identified in the Complaint.
    The United States conducted a thorough market-by-market 
investigation, which included hundreds of hours of interviews with 
customers and competitors of the merging parties. The United States 
heard no specific concern that would warrant the type of relief 
suggested by the CCWI. The United States determined that the proposed 
remedy, i.e., the divestiture of all or most small container commercial 
waste collection routes of one of the merging parties in each affected 
market, is sufficient to provide effective competition in small 
container commercial waste collection services in each market and is 
consistent with prior Antitrust Division practice.
    The proposed Final Judgment would require the divestiture of either 
Republic's or Allied's entire small container commercial waste 
collection business in six of the nine geographic areas in which it has 
alleged competitive harm to competition in the provision of small 
container commercial waste collection services: Cape Girardeau, 
Missouri; Charlotte, North Carolina; Fort Worth, Texas; Greenville-
Spartanburg, South Carolina; Lexington, Kentucky; and Lubbock, Texas. 
The sale of the entire small container commercial waste collection 
business preserves the pre-merger market structure in each of these 
markets. Accordingly, no additional contract relief is necessary.
    In the remaining three areas in which the United States has alleged 
competitive harm to competition in the provision of small container 
commercial waste collections services Houston, Texas, Atlanta, Georgia, 
and Northwest Indiana the proposed Final Judgment would require the 
divestiture of most of either Allied's or Republic's small container 
commercial waste collection business. In the Houston, Texas area, the 
small container commercial waste collection routes and related assets 
that would be divested pursuant to the proposed Final Judgment, 
Proposed Final Judgment ] II(I)(6), represent a set of assets 
comparable to those divested in USA Waste.\(7)\ In USA Waste, the 
defendants divested 31 routes; by comparison in this case, the proposed 
Final Judgment includes 32 routes. Republic, as the purchaser of the 
Houston assets in USA Waste, was able to use these assets as a platform 
for entry into the area and to grow and become an effective, fully 
integrated, and viable competitor in the area. No contract relief was 
required to remedy any market in USA Waste, including Houston, Texas. 
In the present case, the divestiture of the small container commercial 
waste collection assets, coupled with the related sale of disposal 
assets, once again will enable a qualified acquirer to provide 
effective competition in the Houston, Texas area, much as Republic was 
able to do. Therefore, contract relief is not necessary here.
    In the Atlanta, Georgia area, the proposed Final Judgment would 
require the divestiture of all of Allied's routes in the northern and 
eastern areas of Atlanta, where Allied and Republic most directly 
overlapped and competed most intensely. Proposed Final Judgment ] 
II(I)(1). Numerous factors affect waste transport and disposal in the 
area, such as local requirements that require MSW to be disposed at 
designated disposal facilities, congestion, traffic patterns, and local 
ordinances. In light of these factors, haulers typically do not travel 
outside the northern and eastern portions of the area. The remedy here 
was designed to preserve the small container commercial waste 
collection competition that existed pre-merger. The United States has 
approved Advanced Disposal Services, Inc., which already has a presence 
in the area, as the Acquirer of these assets. With a footprint in the 
area, Advanced Disposal not only will replace competition lost as a 
result of the merger, but will become a more efficient competitor. 
Therefore, contract relief is not necessary here.
    In the Northwest Indiana area, the proposed Final Judgment would 
require the divestiture of most of Allied's small container commercial 
waste collection business in Porter, LaPorte, and Lake Counties. 
Proposed Final Judgment ] II(I)(9). In these areas, Republic and Allied 
competed most directly to provide customers with small container 
commercial waste collection services. The proposed Final Judgment 
addresses the harm alleged in the Complaint by requiring the 
divestiture of those routes necessary to create an effective 
competitor. To the extent the CCWI argues that additional routes or 
contract relief, might be necessary to create an effective remedy in 
MSW disposal, the United States concluded that this is not necessary 
because there are numerous hauling competitors in the area to support 
the divested Valparaiso Transfer Station. Therefore, the proposed 
remedy is sufficient to restore competition to pre-merger levels.
g. The Individual Sale of All the Divestiture Assets Is Not Necessary
    The CCWI suggests that the proposed Final Judgment be modified to 
require that the Divestiture Assets in each market be offered for sale 
separately and that no Divestiture Assets be sold together as a bundle. 
The CCWI cites to the requirements in the proposed Final Judgment that 
the assets in Atlanta, Georgia, Cleveland, Ohio, Philadelphia, 
Pennsylvania, and Fort Worth, Texas be sold separately from the 
Divestiture Assets in the other areas. Proposed Final Judgment ] IV(A).

[[Page 28532]]

    The United States has considered the CCWI's position and 
respectfully disagrees. Based on its extensive experience in overseeing 
divestitures of assets in antitrust cases, the United States has 
concluded that it is most efficient to allow the defendants to manage 
the process of selling divestiture assets, which may include the 
bundling of assets. In particular, a sale of bundled divestiture assets 
typically results in a quicker divestiture and a more efficient 
utilization of the divestiture assets by the acquirer. As always, the 
United States retains the authority to review a proposed acquirer of 
divestiture assets to determine whether the respective acquirer will 
fully utilize a package of divestiture assets.
    In this case, based on a fact-specific investigation of potential 
buyers in each area, the United States concluded that competition would 
benefit from the separate sale of the Divestiture Assets in the 
Atlanta, Georgia, Cleveland, Ohio, Philadelphia, Pennsylvania, and Fort 
Worth, Texas areas.\(8)\ Specifically, the separate sale of the 
Divestiture Assets in each of these four markets may permit a local or 
regional waste firm to acquire them and combine such assets with their 
own existing assets already serving these markets. The decision of the 
United States to require the sale of the Divestiture Assets in certain 
markets separately was also based on the recognition that approval of a 
single purchaser of all of the Divestiture Assets in the 15 relevant 
markets would be unlikely given the potential competitive overlap in 
some of these markets by some likely purchasers. For the reasons above, 
the CCWI's proposal is both unnecessary and contrary to the purposes of 
antitrust relief. If implemented, the proposal could substantially 
lengthen the divestiture process.
h. Republic's Acquisition of the Newnan Transfer Station Would Not 
Substantially Diminish Competition for the Provision of MSW Disposal 
Services in the Atlanta, Georgia Area
    The CCWI states that the proposed Final Judgment ``permits Allied 
to reacquire assets it was required to divest as a condition of 
previous final judgments,'' which ``represents a departure from 
previous agreements preventing such reacquisitions.'' CCWI Comment, at 
6. The CCWI cites to Republic acquiring the Newnan Transfer Station, a 
disposal asset that was required to be divested in 1999 pursuant to the 
terms of a Final Judgment entered in Allied/BFI.
    In 1999, in connection with the acquisition by Allied of Browning 
Ferris, Industries, Allied was required to divest the Newnan Transfer 
Station located in Newnan, Georgia, which at the time was serving the 
Atlanta, Georgia area. As part of the Final Judgment entered in Allied/
BFI, Republic acquired the Newnan Transfer Station from Allied and owns 
it today. Paragraph VIII(A) of the Allied/BFI Modified Final Judgment 
prohibits for a ten-year period Allied's reacquisition of divested 
assets without the prior written consent of the United States. Although 
Republic's acquisition of Allied will recombine the Newnan Transfer 
Station with Allied's other disposal assets in the Atlanta area, the 
United States has consented to this recombination because it concluded 
that the Newnan Transfer Station no longer participates meaningfully in 
the Atlanta market for MSW disposal services, and no competitive issues 
exist in the rural areas southwest of Atlanta served by the Newnan 
Transfer Station. Specifically, the United States found that, although 
Allied used the Newnan Transfer Station to serve the Atlanta MSW 
disposal market as of 1999 and that facility competed directly with 
transfer stations in the Atlanta area that Allied was acquiring in the 
Allied/BFI merger the focus of the Newnan Transfer Station has changed 
under Republic's ownership, and other transfer stations in the Atlanta 
area now accept the MSW that previously was disposed at the Newnan 
Transfer Station. Waste flow reports show that the Newnan Transfer 
Station disposes of waste generated in rural areas southwest of Atlanta 
and competes much less directly with other disposal facilities in the 
Atlanta area. Accordingly, the United States concluded that the 
proposed acquisition of Allied by Republic, whereby Allied's MSW 
disposal assets would be recombined with the Newnan Transfer Station, 
would not substantially diminish competition for the provision of MSW 
disposal services in the Atlanta, Georgia area. Instead, the 
divestiture of Republic's Central Gwinnett Transfer Station and 
Allied's BFI Smyrna Transfer Station will be an effective remedy for 
the anticompetitive effects of the proposed acquisition on MSW disposal 
services in this market.

B. Public Comment From June Guidotti

1. Summary of Ms. Guidotti's Comment
    Ms. June Guidotti owns property adjacent to Republic's Potrero 
Hills Landfill. Guidotti Comment, at 1. As a neighbor to the Potrero 
Hills Landfill, Ms. Guidotti, through her counsel William Reustle, 
asserts that the Potrero Hills Landfill ``should be put back to its 
original status as a marsh environment.'' Id. Ms. Guidotti further 
contends that ``Republic Services should be required to forever clean 
up and be accountable for the damage they have caused to untold plants 
and marine life.'' Id. Also, she requests that ``Republic Services 
(Allied Services) bear the costs to make the land useable once again, 
and to restore it to its prior pristine condition.'' Id.
2. Response of the United States to Ms. Guidotti's Comment
    In this antitrust suit, the allegations in the Complaint are based 
on current market conditions. In the current market, Potrero Hills is 
being used as a landfill. Given its current use as a landfill, the 
proposed divestiture will remedy the competitive harm that would have 
resulted from the merger. Whether the landfill continues to operate is 
within the purview of the State of California and local authorities; 
nothing in the proposed Final Judgment affects their authority or 
precludes the responsible State and local authorities from 
discontinuing the operation of a landfill on the site. The decision 
whether to permit the continuing use of the site for waste disposal 
should be left to the appropriate regulatory entities.

C. Public Comment From the Pennsylvania Independent Waste Haulers 
Association

1. Summary of the PIWHA's Comment
    The PIWHA submitted a comment through counsel, Anthony Mazillo and 
Leonard Dimare. In the comment, the PIWHA opined that the proposed 
Final Judgment should be revised to: (1) Require the ``divestiture of 
the Quickway transfer station * * * and the T.R.C. transfer station * * 
*, or at least one of them, instead of the Girard Point transfer 
station * * * and the Philadelphia Recycling and Transfer Station;'' 
PIWHA Comment, at 1, (2) require the sale of the ``divested facilities 
* * * to small, independent acquirers, if possible, and should permit 
the sale of each facility * * * to separate acquirers''; id., (3) 
``permit seller financing''; id., (4) require ``the two facilities in 
the Philadelphia area * * * to be sold separately to two different 
acquirers;'' id. at 3, and (5) ``require the defendants to offer three 
(3) year disposal contracts to all waste haulers.'' Id. at 1.

[[Page 28533]]

2. Response of the United States to the PIWHA's Comment
a. The Divestitures in the Proposed Final Judgment Will Preserve 
Competition
    The proposed Final Judgment requires the defendants to divest the 
Girard Point Transfer Station and the Philadelphia Recycling and 
Transfer Station. Proposed Final Judgment ] II(H)(2)(h)(i)-(ii). The 
Final Judgment also requires that the Acquirer of the transfer stations 
be offered the option of an 18-month disposal agreement at Republic's 
Modern Landfill in York, Pennsylvania for the final disposal of waste 
received at the transfer stations. Proposed Final Judgment ] 
II(H)(1)(j). The PIWHA's comment asserts that this proposed remedy is 
insufficient for several reasons. First, PIWHA states that, although 
PIWHA does not have access to the defendants' financial data, 
``marginal profitability of the Girard Point and [Philadelphia 
Recycling and Transfer Station] facilities has been the distinct 
impression of various PIWHA members.'' PIWHA Comment, at 2. Also, the 
PIWHA asserts that the Girard Point Transfer Station and the 
Philadelphia Recycling and Transfer Station are ``substantially further 
geographically from haulers servicing Bucks and Montgomery counties 
than Quickway and TRC, and, accordingly, are more costly for those 
haulers to use.'' Id.
    With regard to the financial viability of the Philadelphia assets, 
the bidding process for these assets has generated interest from 
several proposed purchasers; this demonstrated interest is persuasive 
evidence of the substantial value of the two transfer stations as 
ongoing business concerns.
    With regard to the PIWHA's contention that the United States should 
have selected different MSW disposal assets, the United States 
respectfully disagrees. The relief proposed by the PIWHA goes beyond 
the scope of the allegations in the Complaint and, as discussed in Part 
III.A.2(a) above, should not be considered by the Court. The United 
States alleged in the Complaint that the merger would have the effect 
of reducing competition in the market for MSW disposal services in the 
Philadelphia, Pennsylvania area--which identifies specifically in 
Philadelphia County--and not in the areas identified by the PIWHA. 
Complaint ] 22. Both the Girard Point Transfer Station and the 
Philadelphia Recycling and Transfer Station are located in Philadelphia 
County and are accessible to MSW haulers in Philadelphia County. Based 
on current market conditions, the ordered divestitures of Republic's 
Girard Point Transfer Station and Allied's Philadelphia Recycling and 
Transfer Station will alleviate the competitive concerns alleged in the 
Complaint by introducing a new MSW disposal services competitor into 
the Philadelphia, Pennsylvania area described in the Complaint.
b. The Divestiture Will Be Sold to a Viable and Competitive Firm
    As stated in Part III.A.2(b) above, Paragraphs IV(I)(1) and (2) of 
the proposed Final Judgment require the divested assets to be sold to a 
purchaser that ``has the intent and capability (including the necessary 
managerial, operational, technical, and financial capability) of 
competing effectively in the disposal and hauling business.'' When 
presented with a proposed acquirer of the Divestiture Assets, the 
United States will evaluate the proposed acquirer to determine whether 
it meets these requirements. Thus, the proposed Final Judgment already 
addresses this aspect of the PIWHA's comment.
c. Requiring the Separate Sale of the Philadelphia Assets Will Not 
Resolve Harm Alleged in Complaint
    With regard to separating the Divestiture Assets in the 
Philadelphia area, the United States does not believe that this 
proposal is appropriate. The goal of the divestiture of the Girard 
Point Transfer Station and Philadelphia Recycling and Transfer Station 
facilities to one acquirer is to find a purchaser that possesses both 
the means and the incentive to maintain the level of premerger 
competition in the area. In this area, transfer stations are the 
primary disposal option for haulers of MSW in this market because 
roadways in much of the area are highly congested and MSW landfills 
generally are too far from collection routes for the direct haul of MSW 
to landfills to be economical. Because transfer stations are the 
primary disposal options for haulers in this area, an acquisition of 
both transfer stations is necessary for a new competitor to compete for 
large municipal contracts in the area. Such contracts require a firm to 
handle large volumes of waste. The proposed remedy will enable a 
purchaser to maintain the premerger level of competition between 
Republic and Allied.
d. Seller Financing is Strongly Disfavored
    The PIWHA advocates the need for seller financing of the 
Divestiture Assets. PIWHA Comment, at 3-4. Seller financing essentially 
is a loan provided by the seller of an asset to the buyer, to cover 
part or all of the sale price. The PIWHA argues that small independent 
purchasers will not have access to the capital needed to bid on the 
assets. Id. at 3. In its view, the benefits of seller financing 
outweigh the ``potential problems'' associated with it. Id.
    The United States strongly disfavors seller financing of the 
divestitures for several reasons. Remedies Guide Sec.  IV(G). First, 
the seller may retain partial control over the assets, which could 
weaken the purchaser's competitiveness. Second, the seller's incentive 
to compete may be impeded because of the seller's concern that vigorous 
competition may jeopardize the purchaser's ability to repay the debt. 
Third, the seller may have some legal claim on the Divestiture Assets 
in the event the purchaser goes into bankruptcy. Fourth, the seller may 
use the ongoing relationship as a conduit for the exchange of 
competitively sensitive information. Lastly, a purchaser's inability to 
obtain financing from banks or other lending institutions may raise 
questions about the purchaser's viability. The United States believes 
that it is unnecessary to accept the risks associated with seller 
financing when a satisfactory divestiture is likely to occur without 
them.
e. Requiring the Defendants to Offer Three-Year Disposal Contracts Is 
Unnecessary
    In its comment, the PIWHA requests that ``the defendants be 
required to offer three year disposal contracts to all haulers, not 
just the larger ones as is currently the case.'' PIWHA Comment, at 4. 
The PIWHA believes that ``large, vertically integrated waste industry 
firms are generally unwilling to offer smaller haulers disposal 
contracts for a term exceeding one year.'' Id. Thus, PIHWA asserts that 
a three-year disposal contract requirement will benefit the independent 
haulers and, ultimately, competition generally in the Philadelphia, 
Pennsylvania area. Id.
    The United States does not believe that additional injunctive 
relief is necessary to eliminate the competitive effects from the 
merger in the Philadelphia area. The proposed Final Judgment should be 
no more restrictive than necessary to keep the Divestiture Assets 
competitive. Remedies Guide Sec.  II. The United States has no evidence 
that the defendants' merger would raise competitive issues warranting 
the imposition of the additional relief proposed by the PIWHA. Because 
the Divestiture Assets will remain competitive without such injunctive 
relief, the remedy in the proposed Final

[[Page 28534]]

Judgment is sufficient to resolve the harm alleged in the Complaint.

D. Public Comment From Metro Disposal

1. Summary of Metro Disposal's Comment
    Metro Disposal operates small container commercial waste collection 
and MSW disposal services principally in the Cleveland, Ohio area. In 
its comment, Metro Disposal asserts that the proposed Final Judgment 
should be revised to include the sale of 15 small container commercial 
waste collection routes in Cuyahoga County along with the sale of the 
Harvard Road Transfer Station and an unspecified number of additional 
routes in the town of Mansfield to the purchaser of the Oakland Marsh 
Landfill. Metro Disposal Comment, at 2. Metro Disposal further asserts 
that the Divestiture Assets will not be attractive ``[w]ithout having 
some guarantee of volumes into the Harvard transfer [station].'' Id.
2. Response of the United States to Metro Disposal's Comment
    The United States conducted a thorough investigation into small 
container commercial waste collection and MSW disposal services in the 
Cleveland, Ohio area. During the investigation, the United States 
conducted many interviews of market participants to determine the 
competitive impact of the proposed merger. Based on the investigation 
and current market conditions, the ordered divestitures of Allied's 
Superior Oakland Marsh Landfill and Republic's Harvard Road Transfer 
Station will alleviate the competitive concerns alleged in the 
Complaint by introducing a new MSW disposal services competitor to the 
market. A new competitor should provide a significant competitive 
alternative to the defendants' MSW disposal services in the Cleveland 
market. Metro Disposal's proposal to revise the proposed Final Judgment 
to require the sale of small container commercial waste collection 
routes in effect would require a remedy in a market in which no 
competitive harm has been alleged, and therefore would exceed the scope 
of the Complaint. The United States has no evidence that the merger 
would have anticompetitive effects in the market for small container 
commercial waste collection services in the Cleveland area. Numerous 
competitors for the provision of small container commercial waste 
collection services will remain in the Cleveland area following the 
merger. Because the merger will not cause competitive harm in this 
market, the additional remedy proposed by Metro Disposal is 
unnecessary.
    With regard to Metro Disposal's concern that additional MSW volumes 
are necessary for the continued viability of the Harvard Road Transfer 
Station and Superior Oakland Marsh Landfill, the United States 
respectfully disagrees. In its investigation, the United States found 
that the Harvard Road Transfer Station is centrally located in the City 
of Cleveland and is accessible to MSW haulers in Cuyahoga County. In 
addition, the Superior Oakland Marsh landfill will provide the Acquirer 
with an option for the final disposal of MSW. In the Cleveland, Ohio 
area, there are several independent haulers who are seeking additional 
disposal options. Accordingly, in addition to internalizing its own MSW 
in the transfer station and landfill, the Acquirer of the Divestiture 
Assets will be able to compete for third-party volumes to supply these 
disposal facilities. Thus, the ordered divestitures of Allied's 
Superior Oakland Marsh Landfill and Republic's Harvard Road Transfer 
Station will alleviate the competitive concerns alleged in the 
Complaint by introducing a new MSW disposal services competitor into 
the Cleveland, Ohio area, thereby maintaining the pre-merger level of 
competition.

E. Public Comment From the Cuyahoga Solid Waste District

1. Summary of the Cuyahoga Solid Waste District's Comment
    Like Metro Disposal, the Cuyahoga Solid Waste District urges that 
``sufficient small container commercial collection routes in the 
Cleveland, Ohio market area be added to the Relevant Hauling Assets'' 
to make ``the sale of the Harvard Road Transfer Station and the Oakland 
Marsh Landfill a financially viable transaction necessary to attract a 
qualified buyer.'' Cuyahoga Comment, at 2. The Cuyahoga Solid Waste 
District also asserts that the proposed Final Judgment should prohibit 
Republic from acquiring transfer station assets in Cuyahoga County, 
including the Broadview Heights Recycling Center. Id.
2. Response of the United States to the Cuyahoga Solid Waste District's 
Comment
    As explained in Part III.D.2. above, the United States has seen no 
evidence of anticompetitive harm in the Cleveland, Ohio market for 
small container commercial waste collection services, and the Complaint 
contains no allegation of such harm; accordingly, the relief proposed 
by the Cuyahoga Solid Waste District goes beyond the scope of the 
Complaint and should not be considered by the Court. Moreover, 
independent haulers generate sufficient volumes of MSW to support the 
types of volumes needed to supply the Harvard Road Transfer Station and 
Oakland Marsh Landfill. With regard to the Cuyahoga Solid Waste 
District's suggestion that Republic be barred from acquiring transfer 
station assets in Cuyahoga County, the United States already has 
addressed this concern in Section VII of the proposed Final Judgment:

    [D]efendants, without providing advance notification to United 
States and the Relevant State, shall not directly or indirectly 
acquire, any (1) interest in any business engaged in a relevant 
service in a relevant area, (2) assets (other than in the ordinary 
course of business) used in a relevant service in a relevant area, 
(3) capital stock, or (4) voting securities of any person that, at 
any time during the twelve (12) months immediately preceding such 
acquisition, was engaged in MSW disposal or small container 
commercial waste collection in any relevant area, where that 
person's annual revenues in the relevant area from MSW disposal and/
or small container commercial waste collection service were in 
excess of $500,000 annually. For clarity, this provision also 
applies to an acquisition of disposal facilities that serve a 
relevant area but are located outside the relevant area, whether or 
not they are physically located in the relevant area.

    Section VII of the proposed Final Judgment requires the defendants 
to notify the United States and the Relevant State if they plan to 
acquire any additional assets in the area, including Broadview Heights 
Recycling Center. Such notification would provide the United States and 
the Relevant State the opportunity to investigate, review, and 
ultimately determine whether the defendants' potential acquisition of 
additional small container commercial waste collection or MSW disposal 
assets in the Cleveland, Ohio area would present the potential for 
anticompetitive harm. The Cuyahoga Solid Waste District's concern thus 
is addressed in the proposed Final Judgment.

IV. Standard of Judicial Review

    Upon the publication of the Comments and this Response, the United 
States will have fully complied with the Tunney Act and will move for 
entry of the proposed Final Judgment as being ``in the public 
interest.'' 15 U.S.C. 16(e)(1), as amended.
    The Tunney Act states that, in making that determination, the Court 
shall consider:
    A. The competitive impact of such judgment, including termination 
of alleged violations, provisions for

[[Page 28535]]

enforcement and modification, duration of 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)-(B); see generally United States v. AT&T 
Inc., 541 F. Supp. 2d 2, 6 n.3 (D.D.C. 2008) (listing factors that the 
Court must consider when making the public-interest determination); 
United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1, 11 (D.D.C. 
2007) (concluding that the 2004 amendments to the Tunney Act ``effected 
minimal changes'' to scope of review under Tunney Act, leaving review 
``sharply proscribed by precedent and the nature of Tunney Act 
proceedings'').\(9)\
    As the United States Court of Appeals for the District of Columbia 
Circuit has held, under the APPA, a court considers, 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). 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 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.

    Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted); 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''); United States v. Gillette Co., 406 F. Supp. 713, 716 (D. 
Mass. 1975) (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' '').
    The government is entitled to broad discretion to settle with 
defendants within the reaches of the public interest. AT&T Inc., 541 F. 
Supp. 2d at 6. In making its public-interest determination, a district 
court ``must accord deference to the government's predictions about the 
efficacy of its remedies, and may not require that the remedies 
perfectly match the alleged violations.'' SBC Commc'ns, 489 F. Supp. 2d 
at 17; see also Microsoft, 56 F.3d at 1461 (noting the need for courts 
to be ``deferential to the government's predictions as to the effect of 
the proposed remedies''); United States v. Archer-Daniels-Midland Co., 
272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the court should grant 
due respect to the United States's prediction as to the effect of 
proposed remedies, its perception of the market structure, and its 
views of the nature of the case).
    Court approval of a consent decree requires a standard more 
flexible and less strict than that appropriate to court adoption of a 
litigated decree following 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. Am. Tel. & Tel. Co., 552 F. Supp. 131, 151 (D.D.C. 1982) 
(citations omitted) (quoting United States v. Gillette Co., 406 F. 
Supp. 713, 716 (D. Mass. 1975)), 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). To 
meet this standard, the United States ``need only provide a factual 
basis for concluding that the settlements are reasonably adequate 
remedies for the alleged harms.'' SBC Commc'ns, 489 F. Supp. 2d at 17.
    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, rather than 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. As this Court recently confirmed in SBC Communications, courts 
``cannot look beyond the complaint in making the public interest 
determination unless the complaint is drafted so narrowly as to make a 
mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
    In its 2004 amendments to the Tunney Act, Congress made clear its 
intent to preserve the practical benefits of utilizing consent decrees 
in antitrust enforcement, adding the unambiguous instruction that 
``[n]othing 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). The amendments codified what 
Congress intended when it passed the Tunney Act in 1974, as Senator 
Tunney then explained: ``[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). Rather, the procedure for the public-interest 
determination is left to the discretion of the court, with the 
recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11.\(10)\

V. Conclusion

    After careful consideration of the public comments, the United 
States concludes that entry of the proposed Final Judgment will provide 
an effective and appropriate remedy for the antitrust violations 
alleged in the Complaint and is therefore in the public interest. 
Accordingly, after the comments and this Response are published in the 
Federal Register pursuant to 15 U.S.C. 16(b) and (d), the United States 
will

[[Page 28536]]

move this Court to enter the proposed Final Judgment.

Dated: May 14, 2009.

 Respectfully submitted,
-----------------------------------------------------------------------
Stephen A. Harris (NJ Bar No. 020201999),

U.S. Department of Justice, Antitrust Division, 1401 H Street, NW., 
Suite 3000, Washington, DC 20530. Telephone: (202) 514-4901. Facsimile: 
(202) 307-6283.

Attorney for Plaintiff the United States.

Certificate of Service

    I, Stephen A. Harris, hereby certify that on May 14, 2009, I caused 
a copy of the foregoing Response of the United States to Public 
Comments on the Proposed Final Judgment and the attached Appendix to be 
served by electronic filing on Republic Services, Inc. and Allied Waste 
Industries, Inc., and plaintiffs the State of California, Commonwealth 
of Kentucky, State of Michigan, State of North Carolina, State of Ohio, 
Commonwealth of Pennsylvania, and the State of Texas by mailing the 
document electronically to the duly authorized legal representatives as 
follows:
Edward B. Schwartz, Kenneth G. Starling, DLA Piper LLP, 800 Eighth 
Street, NW., Washington, DC 20004. Tel.: (202) 799-4516. Fax: (202) 
700-5518. E-mail: [email protected]. Counsel for Defendant 
Republic Services, Inc.
Richard J. Favretto, John Roberti, Mayer Brown LLP, 1909 K Street, NW., 
Washington, DC 20006-1101. Tel.: (202) 263-3428. Fax: (202) 762-4228. 
E-mail: [email protected]. Counsel for Defendant Allied Waste 
Industries, Inc.
Nicole S. Gordon, Deputy Attorney General, 455 Golden Gate Avenue, San 
Francisco, CA 94102. Tel.: (415) 703-5702. Fax: (415) 703-5480. E-mail: 
[email protected]. Counsel for Plaintiff State of California.
C. Terrell Miller, Assistant Attorney General, Consumer Protection 
Division, 1024 Capital Center Drive, Frankfort, KY 40601. Tel.: (502) 
696-5389. Fax: (502) 573-8317. E-mail: [email protected]. 
Counsel for Plaintiff Commonwealth of Kentucky.
M. Elizabeth Lippitt, Assistant Attorney General, Consumer Protection 
Division, Antitrust Section, Attorneys for the State of Michigan, G. 
Mennen Williams Building, 6th Floor, 525 W. Ottawa Street, Lansing, 
Michigan 48913. Tel.: (517) 335-0855. Fax: 517-335-1935. E-mail: 
[email protected]. Counsel for Plaintiff State of Michigan.
K. D. Sturgis, Assistant Attorney General, North Carolina Department of 
Justice, 9001 Mail Service Center, Raleigh, NC 27699-9001. Tel.: (919) 
716.6000. Fax: 919-716-6050. E-mail: [email protected]. Counsel for 
Plaintiff State of North Carolina.
Jennifer L. Pratt, Chief, Antitrust Section, Office of the Ohio 
Attorney General, 150 East Gay St., 23rd Floor, Columbus, Ohio 43215. 
Tel: (614) 466-4328. Fax: (614) 995-0266. E-mail: 
[email protected]. Counsel for Plaintiff State of Ohio.
James A. Donahue, III, Chief Deputy Attorney General, Antitrust 
Section, 14th Floor, Strawberry Square, Harrisburg, PA 17120. 
Telephone: (717) 787-4530. Facsimile: (717) 705-7110. E-mail: 
[email protected]. Counsel for Plaintiff Commonwealth of 
Pennsylvania.
Kim Van Winkle, Texas Bar No. 24003104, Antitrust Division, Office of 
the Attorney General, P.O. Box 12548, Austin, TX 78711-2548. Tel.: 
(512) 463-1266. Fax: (512) 320-0975. E-mail: 
[email protected]. Counsel for Plaintiff State of Texas.

-----------------------------------------------------------------------
Stephen A. Harris (NJ Bar No. 020201999),
United States Department of Justice, Antitrust, Division, Litigation 
II Section, 1401 H Street, NW., Suite 3000, Washington, DC 20530. 
Tel.: (202) 514-4901. Fax: (202) 307-6583. E-mail: 
[email protected].

Footnotes

    1. See United States v. Allied Waste Industries & Browning-Ferris 
Industries (D.D.C. 1999) (No. 1:99 CV 01962) [hereinafter Allied/BFI].
    2. The CCWI asserts that ``Despite the consistency of prevailing 
market conditions cited in the [proposed Final Judgment], the remedies 
vary widely from market to market.'' CCWI Comment, at 8. In particular, 
the CCWI states that ``the [proposed Final Judgment] provides for the 
divestiture of airspace disposal rights * * * in several local markets, 
but requires that such rights remain with the acquirer for varying 
durations and upon varying terms.'' Id. at 9. In the proposed Final 
Judgment, the United States carefully crafted a remedy based on the 
particular facts presented in each of the affected areas. The United 
States's goal is to restore competition lost as a result of the merger, 
not to enhance premerger competition by requiring additional remedies 
not warranted by the facts. The CCWI's desire for an identical remedy 
in each of the affected areas would be counter to this goal. Based on a 
market-by-market analysis of each of the affected areas, the proposed 
remedy will restore competition lost as a result of the merger in each 
area.
    3. In two other areas Lubbock, Texas and Lexington, Kentucky it was 
determined that there was no harm to MSW disposal. Rather, the proposed 
Final Judgment requires the sale of Allied and Republic's small 
container commercial waste collection businesses as well as associated 
hauling facilities, respectively. Because there was no competitive harm 
to the market for MSW disposal, no disposal remedy is necessary.
    4. See United States, et al. v. USA Waste Services, Inc., et al., 
(N.D. Ohio 1999) (Civil No. 1:98CV1616) (hereinafter USA Waste).
    5. (D.D.C. 1999) (Case No. 1:99 CV 01318).
    6. The CCWI cites to United States v. Allied Waste Industries, 
Inc., (D.D.C. 2000) (No. 1:00 CV 01469), in support of its assertion 
that contract relief should be required in this case. In a more recent 
case, however, United States v. Waste Management, Inc., et al. (D.D.C. 
2003) (No. 1:03 CV 01409), the United States sought contract relief in 
some markets, but not others, as warranted by the specific facts of the 
case.
    7. See USA Waste, at ] II(D)(7).
    8. In addition, after the filing of the proposed Final Judgment, 
the defendants agreed to separately market and sell the Divestiture 
Assets in the San Francisco, California area, pursuant to an agreement 
with the Attorney General for the State of California.
    9. The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for courts to consider and amended the list 
of factors to focus on competitive considerations and to address 
potentially ambiguous judgment terms. Compare 15 U.S.C. 16(e) (2004) 
with 15 U.S.C. 16(e)(1) (2006).
    10. a> See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the court 
to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); United 
States v. Mid-Am. Dairymen, Inc., 1977-1 Trade Cas. (CCH) ] 61,508, at 
71,980 (W.D. Mo. 1977) (``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

[[Page 28537]]

comments in order to determine whether those explanations are 
reasonable under the circumstances.''); S. Rep. No. 93-298, 93d Cong., 
1st Sess., at 6 (1973) (``Where the public interest can be meaningfully 
evaluated simply on the basis of briefs and oral arguments, that is the 
approach that should be utilized.'').
March 6, 2009

Maribeth Petrizzi,
Chief, Litigation II Section, Antitrust Division, U.S. Department of 
Justice, 1401 H Street NW., Suite 3000, Washington, DC 20530.

Re: Comments of the Center for a Competitive Waste Industry, on the 
Proposed Judgment in U.S. v. Republic Services, Inc. and Allied Waste 
Industries, Inc., Case No. 1:08-cv-02076 (D.D.C. 2008)

    Dear Ms. Petrizzi: The proposed final judgment (``PFJ'') in this 
case will not fully remedy the competitive problems identified in the 
complaint but rather will permit a three-firm oligopoly to consolidate 
into an even more concentrated two-firm oligopoly based upon a remedy 
that is fatally discredited by the very parties involved. The proposal 
to create a duopoly in an industry with a history of persistent 
anticompetitive conduct is something that warrants the utmost scrutiny. 
In 1998 and 1999 the Department of Justice permitted two mega-mergers 
by ordering the divestiture of overlapping assets primarily to Republic 
Services, at that time ranked fifth. Now, in this proceeding, that same 
Republic Services, which was then supposed to restore competition, is 
applying to consolidate an already highly consolidated industry into a 
duopoly, with a few divested assets to the current fifth ranked 
oligopoly member, in this case Waste Connections.
    The PFJ is both inconsistent with past DOJ waste enforcement 
actions and internally inconsistent. A more lax approach is not 
warranted; indeed, the failure to abide with past divestitures calls 
for a more strict approach now. The DOJ must strengthen the PFJ to 
remedy the significant competitive problems posed by this merger. As we 
recommend, the merged firm should be required to sell to independent 
haulers some of the airspace in their landfills where the two firms' 
markets overlap. Unlocking control over landfills is most often the key 
element in effective relief, because the extreme difficulty in 
permitting new sites creates near impenetrable barriers to entry for 
disposal. Moreover, consistent with past DOJ practice, undisputedly 
anticompetitive evergreen contracts should be curtailed and enforcement 
monitors should be established to insure compliance--especially when, 
as here, the merged firms have a past history of violating prior 
orders.
    On December 3, 2008 the Antitrust Division of the Department of 
Justice filed a complaint and proposed final judgment (``PFJ'') with 
this Court regarding the acquisition of Allied Waste Industries, Inc. 
(``Allied'') by Republic Services, Inc (``Republic''). Although this 
acquisition creates a dominant waste hauling and disposal company 
nationally, the DOJ restricted its remedy to a very limited set of 
geographic markets in which competitive concerns arise in the small 
container commercial waste collection (``SCCWC'') and municipal solid 
waste (``MSW'') disposal markets. Moreover, the proposed remedies in 
these limited markets are inadequate to remedy competitive harm and are 
overall inconsistent as compared to other previous enforcement actions 
in the waste hauling and disposal industry.
    The Center for a Competitive Waste Industry files these comments 
pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. Sec.  
16(b-e) (known as the ``Tunney Act'') because the DOJ's complaint and 
PFJ are seriously inadequate to remedy the competitive concerns arising 
from this transaction. This merger results in a duopoly that threatens 
competition in the SCCWC markets in 10 local markets (Atlanta, Georgia; 
Cape Girardeau, Missouri; Charlotte, North Carolina; Fort Worth, 
Houston, and Lubbock, Texas; Greenville and Spartanburg, South 
Carolina; Lexington, Kentucky and Northwest Indiana), with combined 
market shares of just the merging firms of up to 75%.
    This merger also results in Republic dominating the municipal solid 
waste disposal markets (``MSW markets''), according to the proposed 
order, just in 13 local markets (Atlanta, Georgia; Charlotte, North 
Carolina; Cleveland, Ohio; Denver, Colorado; Flint, Michigan; Fort 
Worth and Houston, Texas; Greenville and Spartanburg, South Carolina; 
Los Angeles and San Francisco, California; Northwest Indiana; and 
Philadelphia, Pennsylvania), with combined market shares of just the 
merging firms of up to 80%.
    In these designated markets, the PFJ attempts to remedy the 
anticompetitive effects of the merger but takes no action in other 
markets that have an equal or greater level of concentration. Even if 
the identified local markets are the only markets of competitive 
concern the PFJ is inadequate in several respects:
     The PFJ is inconsistent with past waste merger enforcement 
actions;
     The relief in the PFJ is internally inconsistent;
     The PFJ limits itself to divestiture of landfill and 
transfer station assets, which independent haulers usually cannot 
afford, and does not include mechanisms for non-discriminatory access 
to such assets;
     The PFJ fails to restrict the sales of divested assets to 
the other oligopolists in the waste industry; and
     The PFJ fails to require the modification of evergreen 
contracts that severely limit customer choice and provide formidable 
barriers to entry for potential competitors, despite this requirement 
in previous enforcement actions.
    To alleviate these problems we suggest the following modifications 
to the PFJ:
     The PFJ should prohibit evergreen contracts and provide 
for modification of terms of length, renewal provisions, liquidated 
damages, and escalator clauses;
     The PFJ should prohibit divestiture to other oligopolists;
     The PFJ should provide independent haulers access to 
landfills in all markets on a non-discriminatory basis; and
     The DOJ should appoint a trustee to monitor compliance 
with the final judgment.

I. The Interests of the Parties

    These comments are submitted on behalf of the Center for a 
Competitive Waste Industry (``The Center''), a non-profit research and 
advocacy organization dedicated to the protection of a competitive 
waste industry. The Center advances efforts to restore and maintain 
competition in the solid waste industry of especial interest for public 
works directors, independent haulers, businesses using solid waste 
services, and recyclers. These stakeholders and ultimately consumers 
will be harmed from this merger even if the PFJ is implemented in its 
current form. The merger will result in a dominant waste hauling and 
disposal company with the unilateral ability to reduce competition in 
the waste industry and extend its market power into the recycling 
industry, thereby raising prices for consumers while simultaneously 
reducing services to these consumers.

II. Procedural Background

    In June 2008, Republic announced its proposed purchase of Allied 
for $4.5 billion. In July, the DOJ issued a ``second request'' under 
the Federal Hart-Scott-Rodino Antitrust

[[Page 28538]]

Improvements Act of 1976, seeking more information. The States of 
California, Kentucky, Michigan, North Carolina, Ohio, Pennsylvania and 
Texas conducted simultaneous investigations.
    On December 3, 2008, the DOJ and the several States mentioned above 
filed an enforcement action to enjoin the merger of Republic and 
Allied. The DOJ action claimed that the merger would pose significant 
competitive problems in the SCCWC market in 9 geographic areas and the 
MSW market in 13 geographic areas because the merged firm would 
substantially lessen competition by reducing the number of significant 
competitors and permitting a single firm to control a substantial 
market share in each geographic area in each product market. The DOJ 
alleged this would result in higher prices, fewer choices, and a 
reduction in the quality of waste services provided in these areas. The 
PFJ attempts to address these issues by requiring just the divestiture 
of SCCWC assets (including hauling routes, trucks, containers and 
customer lists) in 9 markets, and MSW disposal assets (including 
landfills, transfer stations, airspace disposal rights, and storage) in 
13 markets.

III. The Tunney Act Standards

    The Tunney Act requires that ``[b]efore entering any consent 
judgment proposed by the United States * * *, the court shall determine 
that the entry of such judgment is in the public interest.'', 16 U.S.C. 
Sec.  15(e)(1). In applying this ``public interest'' standard, the 
burden is on the government to ``provide a factual basis for concluding 
that the settlements are reasonably adequate remedies for the alleged 
harms.'' United States v. SBC, 489 F.Supp. 2d 1, 16, (D.D.C. 2007), 
citing United States v. Microsoft Corp., 56 F.3d 1448, 1460-61 (D.C. 
Cir. 1995).
    The 2004 Congressional amendments to this Act specifically 
overruled District of Columbia Circuit Court of Appeals and District 
Court precedent that was deemed overly deferential to Antitrust 
Division consent decrees.\1\ In response to those decisions, Congress 
reemphasized its intention that courts reviewing consent decrees ``make 
an independent, objective, and active determination without deference 
to the DOJ.'' \2\ Courts are to provide an ``independent safeguard'' 
against ``inadequate settlements''.\3\ Specifically, the Act was 
amended to compel reviewing courts to consider both ``ambiguity'' in 
the terms of the proposed remedy, as well as the ``impact'' of the 
proposed settlements on ``competitors in the relevant market or 
markets.'' \4\ Moreover, Congress adopted these 2004 amendments to 
highlight the expectation that an independent judiciary would oversee 
proposed settlements to ensure that those settlements met the needs of 
consumers.
---------------------------------------------------------------------------

    \1\ In this matter, the DOJ may claim that the court's review 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 go beyond the scope of the complaint. See 
Fed. Reg. Vol. 73, No. 47, at 12774 (March 10, 2008). We believe 
that view is inconsistent with the legislative history of the 2004 
Amendments to the Tunney Act. Congress amended the Tunney Act in 
2004 to overrule District of Columbia Circuit Court of Appeals and 
District Court precedent that was overly deferential to Antitrust 
Division consent decrees. The amendments to the Tunney Act compel 
the reviewing court to consider, inter alia, the ``impact'' of the 
entry of judgment on ``competition in the relevant market.'' See 
Pub. L. 108-327, Sec.  221(b)(2) rewriting 15 U.S.C. Sec.  16(e).
    No suggestion is made in the statute or legislative history that 
the courts should defer to either the Government's identification of 
injury or the Government's proposed remedy to that injury. On the 
contrary, as one of the authors of the legislation noted, the 
reviewing court is to achieve an ``independent, objective, and 
active determination without deference to the DOJ.'' See 150 Cong. 
Rec., S 3617 (April 2, 2004) (Statement of Sen. Kohl).
    For criticism of the overly deferential standard see Darren Bush 
and John J. Flynn, The Misuse and Abuse of the Tunney Act: The 
Adverse Consequences of the ``Microsoft Fallacies'', 34 Loy. U. Chi. 
L.J. 749 (2002-2003).
    \2\ See 150 Cong. Rec., S 3617 (April 2, 2004) (Statement of 
Sen. Kohl).
    \3\ Id.
    \4\ Id.
---------------------------------------------------------------------------

    We submit the DOJ has an extra burden to justify the limited relief 
in this case. First, parties in these markets have failed to abide with 
past DOJ merger decrees and the DOJ has brought enforcement actions to 
compel compliance with decrees. Second, the PFJ is inconsistent with 
past enforcement actions. Third, the PFJ is internally inconsistent 
requiring certain types of remedies in some markets and not others. 
Fourth, it relies at its center upon an asset divestiture remedy that 
has demonstrably failed to provide offsetting relief from the 
anticompetitive effects of major consolidation. Finally, the PFJ does 
not address several markets that will be adversely affected by the 
merger.
    As to the PFJ, we submit it is inadequate because it fails to 
provide for airspace disposal rights, access to landfills, 
nondiscriminatory access and modification of evergreen contracts 
divestiture.

IV. The PFJ Needs a Monitor Trustee to Ensure Compliance

    Waste firms' failure to abide with past merger divestitures raises 
significant concerns about the adequacy of the remedy in this case. Two 
examples are illuminating.
    In 1999, Allied merged with Browning Ferris Industries (``BFI''). 
The merger was cleared after the requirement of divestiture of several 
landfills, incinerators, airspace disposal rights, transfer stations, 
and commercial hauling routes. In August 2004, the DOJ brought a 
contempt order against Allied for prematurely terminating landfill 
disposal rights in a divested asset as part of the Allied/BFI merger. 
The DOJ secured a fine of $10,000 per day for every day in violation of 
the untimely termination and required a comprehensive compliance 
program for Allied's relevant management-level employees.\5\
---------------------------------------------------------------------------

    \5\ See DOJ Press Release (Aug. 2, 2004), available at http://www.usdoj.gov/opa/pr/2004/August/04_crt_529.htm.
---------------------------------------------------------------------------

    In 2000, Allied attempted a merger with Republic that resulted in a 
number of divestitures in hauling routes and contract revisions 
limiting contracting periods and requiring renewal notices in a number 
of affected markets. In November 2004, the DOJ brought a contempt 
action against Republic for failing to comply with certain contract 
revision requirements. This resulted in the payment of a $1.5 million 
fine to the Department of the Treasury.\6\
---------------------------------------------------------------------------

    \6\ See DOJ Press Release (Nov. 30, 2004), available at http://www.usdoj.gov/atr/public/press_releases/2004/206569.htm.
---------------------------------------------------------------------------

    We believe that these violations raise serious concerns about 
Republic's likely compliance with the provisions of the PFJ and 
highlight the need to strengthen the PFJ provisions. One of the 
approaches the DOJ has taken in cases where a firm that has violated 
past orders proposes to resolve a merger through a divestiture is to 
appoint a monitor trustee to ensure that the parties fully comply with 
the PFJ.\7\ We suggest that the PFJ be modified to immediately impose 
the use of a monitor trustee to ensure compliance with the order.
---------------------------------------------------------------------------

    \7\ Proposed Final Judgment, US v. Computer Associates 
International, Inc. and Platinum Technology International, Inc., 
Case No. 99CV01318 (D.D.C., May 25, 1999).
---------------------------------------------------------------------------

V. The DOJ Has Arbitrarily Departed From Its Past Antitrust Enforcement 
Policies in Waste Mergers and Should Restrict Evergreen Contracts and 
Liquidated Damage Provisions Consistent With Past Actions

    Even though the waste markets have become more concentrated and 
there is evidence that past orders have not been complied with the 
DOJ's PFJ is actually weaker than orders in past waste mergers. In past 
enforcement actions the

[[Page 28539]]

DOJ has relied on various forms of behavioral relief in addition to 
divestiture of assets in order to ensure that mergers between MSW 
companies do not harm competition.\8\ If DOJ has changed its 
enforcement policy on waste services mergers it bears an obligation to 
disclose the reasons for those changes, so that the court can determine 
whether entry of the PFJ is in the public interest.
---------------------------------------------------------------------------

    \8\ See e.g., Final Judgment, United States v. Allied Waste 
Industries, Inc. and Republic Services (D.C. Dist. 2000) at XII.
---------------------------------------------------------------------------

    For example, the 2000 Allied/Republic merger Final Judgment 
required modification of commercial waste hauling contracts to limit 
contract durations and the availability of liquidated damages by the 
merging firms. As described below, initial contracts were limited to 
two years, with renewal contracts limited to one.\9\ Although included 
as a key component of the 2000 Allied/Republic decree, contract 
revision requirements are noticeably absent from the PFJ in this case.
---------------------------------------------------------------------------

    \9\ Notably, Republic's alleged failure to adhere to the 
contract revision requirements of the FJ resulted in Republic making 
a $1.5 million payment to settle a civil contempt claim. See 
``Republic Services Inc. Agrees to Pay $1.5 Million Civil Penalty,'' 
Dept. of Justice Press Release, Nov. 30, 2004.
---------------------------------------------------------------------------

    Second, the PFJ permits Allied to reacquire assets it was required 
to divest as a condition of previous final judgments (``FJs''). The 
Allied/BFI merger in 1999 resulted in Allied being ordered to divest 
the Newnan Transfer Station, which was purchased by Republic.\10\ As a 
result of the Allied/Republic merger, the transfer station will once 
again be owned by Allied, in contravention of the FJ. The DOJ has 
consented to the reacquisition because the ``focus of the Newnan 
Transfer Station changed under Republic ownership,'' other transfer 
stations accept waste that previously went to Newnan, and because the 
transfer station ``competes much less directly with other disposal 
facilities in the Atlanta area.'' \11\ Regardless of the impact of the 
shift in ownership on the status of the previously divested asset, 
permitting Allied to reacquire assets previously divested represents a 
departure from previous agreements preventing such reacquisitions.
---------------------------------------------------------------------------

    \10\ Modified Final Judgment, United States v. Allied Waste 
Industries, Inc. and Browning-Ferris Industries, Inc., Case No. 
1:99CV01962 (D.D.C. 1999).
    \11\ Id.
---------------------------------------------------------------------------

    Third, the PFJ fails to limit the ability of the merged firm to use 
evergreen contracts. In past enforcement actions, the DOJ has 
repeatedly acknowledged the significance of evergreen contracts and the 
impact of such contracts on competitiveness in local waste hauling 
markets. For example, in the 2000 Republic/Allied merger the DOJ 
articulated the important reasons for restricting evergreen contracts:

    [T]he common use of long-term self-renewing ``evergreen'' contracts 
by existing commercial waste collection firms can leave too few 
customers available to the entrant in a sufficiently confined 
geographic area to create an efficient route. These contracts often run 
for several years and frequently have high liquidated damage terms 
which make it costly to a customer who wishes to change its collection 
service without giving proper notice. When giving proper notice, the 
customer must often inform the firm in writing 60 days before the 
contract renews. This time period allows the incumbent firm an 
opportunity to react to a prospective entrant's solicitation to that 
customer. The incumbent firm can inquire why the customer wishes to 
change its service, and if a prospective entrant has offered a lower 
price, the incumbent can lower its price to retain the customer. This 
can result in price discrimination; i.e., an incumbent firm can 
selectively (and temporarily) charge unbeatably low prices to some 
customers targeted by entrants, a tactic that would strongly inhibit a 
would-be entrant from competing for such accounts, which, if won, may 
be unprofitable to serve, and would limit its ability to build an 
efficient route. Because of these factors, a new entrant may find it 
difficult to compete by offering its services at pre-entry price levels 
comparable to the incumbent.\12\
---------------------------------------------------------------------------

    \12\ Competitive Impact Statement, United States v. Allied Waste 
Industries, Inc. and Republic Services, Inc., Case No. 1:00-cv-01469 
(D.C. Dist. 2000).

    The DOJ also recognizes similar concerns in the present case. 
Particularly in the commercial waste hauling industry, ``the 
incumbent's ability to engage in price discrimination and enter into 
long-term contracts with collection customers is effective in 
preventing new entrants from winning a large enough base of customers 
to achieve efficient routes in sufficient time to constrain the post-
acquisition firm from significantly raising prices.'' \13\ Moreover, 
``incumbent firms frequently use three to five year contracts, which 
may automatically renew or contain large liquidated damage provisions 
for contract termination.'' \14\
---------------------------------------------------------------------------

    \13\ Complaint, United States v. Allied Waste Industries, Inc. 
and Republic Services, Inc., Case No. 1:08 CV02076 (D.C. Dist. 2008) 
at 20.
    \14\ Id.
---------------------------------------------------------------------------

    However, despite this clear acknowledgement of the serious 
competitive problems posed by long-term commercial waste-hauling 
contracts, the PFJ does not provide a remedy. The PFJ fails to require 
the modification of evergreen contracts that severely limit customer 
choice and provide formidable barriers to entry for potential 
competitors. As a result, the success of other remedies, like asset 
divestitures, is jeopardized, especially in markets in which commercial 
waste hauling routes are not being divested. In the absence of a 
reliable customer base and without the opportunity to entice 
competitors' customers to switch firms, new competitors will be unable 
to build efficient routes capable of generating a profit. These new 
``competitors'' will be quickly precluded from providing any meaningful 
competition.
    In previous waste hauling merger cases, the final judgments have 
included provisions limiting both the length of contracts by merging 
firms for commercial waste collection services and the circumstances 
under which the contracts renew. For example, in the 2000 Allied/
Republic merger, the FJ required that commercial waste hauling 
contracts be revised to adhere to strict limits.\15\ New contracts were 
limited to two years, and renewal contracts could not exceed one year. 
The FJ also attempted to decrease the effectiveness of automatic 
renewal provisions by forbidding contracts from requiring customers to 
provide written notice of termination more than 30 days before the end 
of the contract term. Liquidated damage provisions were also limited to 
no more than three times the customer's average monthly charge during 
the first year, and two times the average monthly charge for subsequent 
years. In order to provide relief for existing customers, Allied and 
Republic had to offer the revised contract terms to customers who 
previously agreed to ``evergreen'' contracts.
---------------------------------------------------------------------------

    \15\ Final Judgment, United States v. Allied Waste Industries, 
Inc. and Republic Services, Inc., Case No. 1:08 CV2076 (D.C. Dist. 
2008) at XII.
---------------------------------------------------------------------------

    In this case we recommend adding the requirement of modifying the 
merging firms' current contracts consistent with the Allied/Republic 
matter. The customer should be permitted to cancel the contract without 
penalty after one year in the case of non-compacting container service, 
and after two years for compacting container service; automatic renewal 
provisions should be prohibited except if the customer's express 
written agreement is secured; liquidated damages should not exceed 
charges for the last three months in cases where

[[Page 28540]]

they would apply; escalator charges should be barred unless the 
specific basis of the calculation is based upon an independent third 
party's index, clearly stated in the contract, and shown in the bill as 
a separate line; and any escalator must also operate reciprocally when 
the index declines as when it increases.

VI. The Remedies in the PFJ Are Internally Inconsistent and the PFJ 
Should Be Modified To Require Divestiture of Airspace Rights and 
Restrictions on the Sales of the Assets in all Markets

    The PFJ identifies similar threats to competition due to increased 
concentration in 15 markets. In each affected market recognized in the 
PFJ, initially high concentration levels are exacerbated by further 
consolidation by Allied/Republic. In the majority of markets, the 
resulting Allied/Republic market presence will be at least 50 percent, 
with no more than three significant competitors. However, the PFJ does 
not respond to similar market concentration problems with similar 
remedies. Despite the consistency of prevailing market conditions cited 
in the PFJ, the remedies vary widely from market to market.
    For example, the PFJ provides for the divestiture of airspace 
disposal rights, or landfill space, in several local markets, but 
requires that such rights remain with the acquirer for varying 
durations and upon varying terms. Airspace disposal rights are to be 
divested only in Houston, Texas, Northwest Indiana, and Philadelphia, 
Pennsylvania, and not in any of the other markets addressed in the PFJ. 
Although the PFJ allows for a 10-year contract in Houston, the Indiana 
and Philadelphia contracts extend for only two years and 18 months, 
respectively. Neither the Competitive Impact Statement nor the PFJ 
offer an explanation as to why a lengthy contract is appropriate in one 
market, but contracts of only minimal duration are acceptable in the 
others. Moreover, no explanations are offered as to why airspace 
disposal rights are an unnecessary remedy in other markets. Although 
the lengthy contract required in Houston may provide disposal rights of 
a sufficient duration to support a purchaser's needs, given that no 
landfills are to be divested in either Indiana or Philadelphia, minor 
provisions granting short-term airspace disposal rights contracts to 
purchasers are likely to be insufficient to address their disposal 
needs in any meaningful way.
    Airpace rights are crucial to the success of the PFJ in restoring 
competition. We believe the PFJ should be modified to confer upon 
independent haulers, namely those without their own landfill assets, 
the legal right to acquire 15-year contracts for space in Republic/
Allied landfills in all markets that are highly concentrated under the 
Merger Guidelines, or at least the 15 markets that are the subject of 
the PFJ. These independent haulers should be given the right to secure 
access non-discriminatorily at the same price that the companies' 
corporate headquarters have internally billed their divisions, and up 
to 150% of the volumes the independent hauler has averaged for the past 
five years. To insure non-discriminatory treatment, Attachment A sets 
forth proposed terms.
    In the alternative, in the event airspace remedies are not afforded 
in all overlapping markets that the DOJ Merger Guidelines predict will 
result in the acquisition of market power, at the very least those 
markets identified by the PFJ as possessing those impacts should be 
provided with an airspace remedy. If not, in the alternative, the three 
markets that the PFJ does provide some airspace rights should be 
enhanced to include the essential type of protections set forth in 
Attachment A. For without specific and enforceable protections against 
discriminatory conduct, such as subjecting the trucks of the 
independent haulers with these contracts to long waits at the landfill, 
the right will be eviscerated in practice. Ironically, this is exactly 
what was done to Republic when it purchased similar rights to the 1998-
99 merger spinoffs in Florida without anti-discriminatory protections.
    Similarly, the PFJ restricts the sales of the divested assets so 
that all the assets are offered for sale individually. However, this 
restriction is imposed in only four markets: Atlanta, Georgia; 
Cleveland, Ohio; Philadelphia, Pennsylvania and Fort Worth, Texas. The 
DOJ explains that the restrictions in those markets operate to increase 
the pool of potential bidders.\16\ In order to encourage bidding from 
local and regional firms who may not be interested in or capable of 
purchasing a large group of divestiture assets, the DOJ requires that 
certain divestiture assets in certain markets be offered for separate 
purchase. However, the DOJ fails to indicate why assets in the four 
markets selected for individual sale are uniquely well-suited to be 
packaged independently. The choice to restrict the sale of assets in 
certain markets with the idea of encouraging purchase by local or 
regional firms is particularly significant given the extreme levels of 
concentration in all of the markets addressed in the PFJ. We believe 
that the goal of encouraging new entrants in the commercial waste 
hauling industry will be better served by requiring the divested assets 
in each individual market to be offered for sale individually rather 
than in a package.
---------------------------------------------------------------------------

    \16\ Competitive Impact Statement at 25.
---------------------------------------------------------------------------

VII. The PFJ Should be Modified to Prevent Divestiture to Other Members 
of the Waste Oligopoly and Provide for Nondiscriminatory Access

    We believe that the merger ought not to have been approved in the 
first instance. If it is approved nonetheless, we ask that eligible 
buyers be restricted, just as the PFJ attempts to do in four markets 
(Atlanta, Cleveland, Philadelphia and Fort Worth), but does so with 
such imprecision as to be marginally useful even there.
    The waste hauling industry currently functions as an oligopoly, 
with only two or sometimes three national or regional companies 
vertically integrated into landfill competing in a given local market: 
Waste Management, Allied, Republic, BFI, and Waste Connections. This 
extreme level of concentration has allowed the top companies to 
continually and inexorably increase their control of crucial waste 
hauling assets. For example, the three largest waste hauling companies 
controlled 68 percent of landfill space in 2004, up from 35 percent in 
1994.\17\ The consolidation of the waste hauling industry has not 
escaped public notice, as an article in the Wall Street Journal 
recently noted:
---------------------------------------------------------------------------

    \17\ Raymond James, Landfill Pricing Power, Waste Business 
Journal, Landfill Data Bases (2003).
---------------------------------------------------------------------------

    ``The country's three largest garbage haulers have been steadily 
raising prices despite the slowing economy. And with a major buyout 
among them looming, prices are likely to continue their climb.
    ``The increases are a break from the recent past, and follow a 
strategy shift in the wake of the industry's 1990s consolidation. They 
also followed some blunt, public suggestions about pricing by the 
companies' top executives * * *
    ``Another big merger among the waste giants could spur ever higher 
contract prices, say industry observers. The big three trash companies 
already control about two-thirds of the landfill business.'' \18\
---------------------------------------------------------------------------

    \18\ Ilan Brat, Garbage Haulers Hoist Prices: Truce Allows Waste 
Management, Allied and Republic to Push Higher, Wall Street Journal 
(Sept 18, 2008).
---------------------------------------------------------------------------

    While alluding to the dramatic consolidation of waste hauling 
companies during the 1990s,\19\ the

[[Page 28541]]

article also highlights the current levels of consolidation and the 
role of Allied and Republic in the waste hauling oligopoly. The merger 
between Allied and Republic will reduce the big three waste hauling 
companies to two, drawing the wave of consolidations begun in the 1990s 
to a near close. As the Wall Street Journal article notes, the current 
conditions in the waste hauling industry have already allowed the three 
largest firms to raise prices. In the absence of sufficient safeguards 
to protect and promote competition in local markets, the ability of the 
new big to firms to control prices may continue to increase 
dramatically.
---------------------------------------------------------------------------

    \19\ The increase in consolidation of waste hauling firms was 
aided by a sharp decrease in the number of functioning landfills 
from 7900 in 1989 to 2142 in 2001. See Ralph E. Townsend and Francis 
Ackerman, An Analysis of Competition in Collection and Disposal of 
Solid Waste in Maine, 19, Dec. 31, 2002, available at http://www.maine.gov/ag/dynld/documents/Solid_Waste_Report.pdf.
---------------------------------------------------------------------------

    In past enforcement actions, the DOJ has agreed that sales should 
be barred to the other top three firms in this market.\20\ But even 
selling assets to the fourth largest competitor in a market, will 
effectively allow the fourth player to become number three immediately 
after a merger of two of the top firms, as the current case 
demonstrates.\21\ Most divested assets in this industry are too 
expensive to be acquired by independent haulers and smaller sized firms 
who do not have the capital or the resources to purchase the assets as 
a package.
---------------------------------------------------------------------------

    \20\ Hold Separate Stipulation, U.S. v. USA Waste, Case No. 
98CV1616 (N.D. Ohio, July 23, 1998); Hold Separate Stipulation, U.S. 
v. Allied Waste, Case No. 99CV07962 (D.D.C. July 20, 1999); Hold 
Separate Stipulation, USA v. Waste Management, Case No. 98CV7168 
(E.D.N.Y. February 2, 1999).
    In Waste Management's 1999 acquisition of Eastern Environmental 
Services, Allied attempted to purchase a number of Waste Management 
divestiture assets, but J. Robert Kramer, chief of the Justice 
Department's Litigation II section, rejected these sales to another 
an oligopoly member, ``[s]uch a sale, we concluded, would raise 
serious competitive concerns in waste collection or disposal or both 
in virtually all the markets for which the judgment has ordered 
relief.'' Bob Brown, DOJ Letter Squashed Allied Deal, Waste News.com 
(May 31, 1999).
    \21\ On February 9, 2009, Waste Connections, the fourth largest 
waste company nationally, announced an agreement with Republic to 
purchase $110 million in divestiture assets across seven markets 
required by DOJ as a part of the Republic and Allied merger 
requirements. This is particularly troubling given that if this 
merger is to be approved, Waste Connections will become the third 
largest waste company nationally and a large member of the waste 
oligopoly effectively having the ability to maintain anticompetitive 
market concentration and behavior.
---------------------------------------------------------------------------

    Moreover, the PFJ limits itself to divestiture of assets and does 
not include mechanisms for non-discriminatory access to landfill 
disposal and airspace rights. Non-discriminatory access would require, 
for example, a landfill owner to sell disposal rights to an independent 
hauler at the same rate it charges its local subsidiary, or providing 
equal access to landfills without ability to incumbent firms to 
discriminate. The PFJ makes provisions for the divestiture of landfills 
and landfill rights, transfer stations, commercial hauling routes, and 
limited airspace disposal rights in the affected markets. As the PFJ 
notes, a new entrant to commercial waste collection ``cannot provide a 
significant competitive constraint on the prices charged by market 
incumbents until it achieves minimum efficient scale and operating 
efficiencies comparable to existing firms.'' \22\
---------------------------------------------------------------------------

    \22\ Proposed Final Judgment at paragraph 48.
---------------------------------------------------------------------------

    These divestitures will not be effective without providing 
nondiscriminatory access to landfills. Given the current and widespread 
oligopoly in commercial waste hauling, firms in a position to purchase 
divested assets will likely either be existing members of the oligopoly 
or small local or regional firms in need of further assistance in order 
to be competitive. Non-discriminatory access is necessary to allow 
independent and smaller waste firms to compete in an increasingly 
concentrated market of oligopolies. In highly concentrated markets, 
oligopolists have the ability to control prices requiring smaller firms 
to pay higher prices to even attempt to compete, which are eventually 
passed on to the consumer. This is evidenced by the ``eye-popping spot 
market price hikes'' averaged at 89% immediately after the DOJ approved 
the USA-Waste/Waste Management merger in 1999.\23\ In any instance, 
divestiture of assets alone is unlikely to fully restore competition 
without additional mechanisms to ensure their enforcement.
---------------------------------------------------------------------------

    \23\ Bob Brown, WMI Raises Tip Fees, Waste News (Mar 1, 1999).
---------------------------------------------------------------------------

    We recommend that the PFJ be modified to limit the sales of assets 
to the the top five municipal solid waste companies, namely, Waste 
Management, Republic Services, Veolea Environmental Services, Waste 
Connections and BFI Canada in order to reduce the risk of divestitures 
becoming little more than a game of musical chairs among other 
oligopoly members instead of a measure with any chance of restoring 
competition. In the event that independent haulers without their own 
disposal facilities are unable to afford certain divested assets, they 
can be sold the hauling assets and given the right to long-term 
contracts for airspace in the merged companies' landfills at the same 
price that the local subsidiary is billed by its parent. This will 
dissuade anticompetitive concentration in localized markets and permit 
more access and new entry allowing for competitive pricing of disposal 
and hauling services, and ultimately improve price and service to the 
consumer. Finally, we recommend that independent haulers be given 
nondiscriminatory access to landfills.

VIII. The PFJ Fails To Address Concentration in the Majority of 
Affected Markets

    The PFJ includes remedies for many markets, but fails to include 
the vast majority of affected markets. The PFJ requires a combination 
of landfills and landfill disposal rights to be divested in 11 markets, 
but fails to require divestiture in other markets that have an equal or 
greater level of concentration. For example, the complaint identified 
Fort Worth, Texas and Cleveland, Ohio, with premerger HHIs of 2267 and 
1928 respectively, as requiring remedial measures. Although the DOJ 
Merger Guidelines generally consider a market with an HHI greater than 
1800 to be highly concentrated, in this case the DOJ ignores several 
markets with an HHI for waste disposal in tons per day in excess of 
4800. The PFJ also fails to secure relief in dozens of markets with 
HHIs in excess of 2500, which are likely to suffer adverse effects from 
the further consolidation of commercial waste hauling services.\24\
---------------------------------------------------------------------------

    \24\ Examples of markets exhibiting extreme levels of 
concentration that are likely to be negatively impacted by the 
Allied/Republic merger include: Lafayette, Elkhart, and Terra Haute, 
Indiana: Mansfield, Ohio; and Saginaw, Grand Rapids, and Kalamazoo, 
Michigan.
---------------------------------------------------------------------------

    In an independent analysis of the impact of this merger, the Center 
for a Competitive Waste Industry identified at least 78 separate 
highly-concentrated geographic markets in which this merger will cause 
significant and sustained competitive harm and substantial increases to 
Republic's market power.\25\ Additionally, it found at least 46 of 
these markets will become so concentrated that they result in post-
merger HHIs of more than 2500.
---------------------------------------------------------------------------

    \25\ The Center for a Competitive Waste Industry, Projected 
Impacts on Competition from the Merger of Republic Services and 
Allied Waste (Nov. 14, 2008).
---------------------------------------------------------------------------

    Moreover, the PFJ includes remedies in markets in California, 
Colorado, Georgia, Indiana, Kentucky, Michigan, Missouri, North 
Carolina, South Carolina, Ohio, Pennsylvania, and Texas, but Illinois 
is noticeably absent from the list. The DOJ does not seek divestitures 
in any market in Illinois, despite the State having six markets 
exhibiting extreme levels of

[[Page 28542]]

concentration, and four with post merger HHI's greater than 4000.\26\
---------------------------------------------------------------------------

    \26\ See Attachment B for a table of the pre and post-merger 
landfill HHI concentration by state in the specific metropolitan 
areas where high levels were found based upon tons per day disposed 
of in the market in 2007, and also the remaining life that year.
---------------------------------------------------------------------------

IX. Proposed Remedies

    The PFJ falls short of adequately remedying the anticompetitive 
problems at issues here.
     First and foremost, if this merger--which creates a 
duopoly with overwhelming market power--is to be allowed, the landfill 
asset divestiture must be eschewed in overlapping markets, and replaced 
with the right of independent haulers to fairly contract for air space 
in the merging firms' landfills. The DOJ recognized this alternative, 
but only did so in three markets and in such a crabbed fashion that 
their effective enforcement would be dysfunctional. Properly structured 
for fair application, the air space remedy should be offered to 
independent haulers in every highly concentrated market.
     Second, due to the already highly concentrated market, and 
based on past evidence of intentional consolidation, where asset 
divestitures are nonetheless utilized, the largest five vertically 
integrated waste firms, which are least inclined to pursue a 
competitive model, should be ineligible to buy those assets.
     Third, evergreen contracts, as they once had been, should 
be sharply curtailed to minimize their indisputably anticompetitive 
effects in those markets.
     Finally, because of the failure of past divestitures in 
this industry, and the history of non-compliance of consent decrees by 
the merging parties, a monitor, paid by the Department and States with 
fees levied on the applicant should be established to enforce the terms 
of the final order and serve for a term of not less 10 years.
    Overall, we believe the remedies should be strengthened in the 
following fashion:
     There should be divestiture of assets in both the SCCWC 
and MSW disposal markets in local affected geographic areas not named 
in the PFJ.
     Because these markets consist of oligopolies' with lock 
holds on local landfills, which create bottlenecks that impede new 
entry, divested assets should be sold to independent haulers with the 
right to contract for airspace in the merger companies' landfills.
     Use of the merged companies' evergreen contracts ought to 
be discontinued, especially in their term lengths, renewal provisions, 
liquidated damages, and escalator clauses.
     There should be the appointment of a monitor trustee to 
ensure compliance with the final judgment.

VIII. Conclusion

    After investigation lasting over half a year of a merger posing an 
unprecedented level of concentration in numerous local markets in the 
United States, the DOJ chose modest divestitures and limited airspace 
contracting in a small number of affected geographic regions. In doing 
so it ignored the very fact of this merger, in which yesterday's white 
knight now stands before the DOJ as today's ultimate consolidator, 
proves that, in this industry, asset divestitures do not work in almost 
all cases.
    This PFJ will not fully restore competition and is inconsistent 
with past DOJ waste enforcement actions. But more important, the PFJ 
fails to address the significant loss of competition due to the 
inability of independent haulers to compete with the highly 
concentrated waste firms in these local markets and the oppressive 
evergreen contracts with the merging companies' customers. The DOJ 
action permits a merger that poses a significant threat of causing 
substantial harm to consumers.
    Thus, we believe the PFJ should be rejected. If the court however 
accepts the PFJ, we strongly urge it to treat the PFJ as an interim 
remedy and expressly leave open the possibility of supplementing the 
PFJ with additional remedies to address these competitive concerns.
 Respectfully Submitted,

/s/--------------------------------------------------------------------

David A. Balto,
Attorney at Law, 1350 I Street, NW., Suite 850, Washington, DC 20005

Peter Anderson,
RECYCLEWORLDS CONSULTING, 313 Price Place, Suite 14, Madison, WI 53705

Attachment A

Long Term Air Space Contract

    1. Eligible Buyers. Any municipal solid waste or construction and 
demolition debris service provider, whether publicly or privately 
owned, which serves the local market in the year in which the HSR 
notification was filed, and does not in that year have its own landfill 
assets, is eligible to purchase airspace as provided here.
    2. Maximum Volume. Eligible buyers may contract for a maximum 
volume of airspace at any landfill owned by the merged company and 
previously used by it to serve the market, in amount up to 150% of the 
tons the buyer collected from its customers, in the year in which it 
disposed of the greatest quantity during the prior five years, 
multiplied by 15 years. The eligible buyer may dispose of up to one-
tenth of the maximum volume of waste in any year during the length of 
the contract, but is not required to dispose of any minimum quantity. 
Volume shall be converted into weight based upon the density of waste 
in the landfill in the year the HSR notification is filed.
    3. Price. The price for disposal in that airspace under the 
contract may not exceed that which had been internally booked by the 
parent firm that owned the landfill prior to the merger and charged to 
its district unit, adjusted annually for inflation by the producer 
price index.
    4. Length of Contract. The contract shall be for not less than 15 
years.
    5. Purchase Period. Each State Attorney General in the States with 
local markets affected by this provision shall timely notify eligible 
buyers about the opportunity for them to purchase airspace rights. 
Eligible buyers have 6 months from entry of the settlement or court 
order to request in writing from the merged company, with copies to the 
DOJ and State Attorney General, for a contract for airspace as provided 
here. If the eligible buyer has a contract for airspace at a landfill 
that is closed prior to the end of the 15-year period, the merged 
company shall permit the buyer to contractually substitute airspace at 
another of the merged company's landfills in the market of its 
choosing.
    6. Non-Discrimination. (a) Inspections. If the seller of landfill 
airspace conducts inspections of incoming loads to its landfills at 
which airspace has been contracted for the purpose of rejecting certain 
loads, it must do so on a non-discriminatory basis as between its 
trucks with and those with airspace contracts. The seller must also 
maintain publicly available documentation to show that loads selected 
for inspection, and the type and severity of violations used to justify 
rejecting loads, are done on a non-discriminatory basis, including an 
accurate video record of all inspections and a tabulation of the number 
of truck loads dumping at the landfill by waste firm and the number of 
loads rejected, along with the reasons why. (b) Queues. Gate queues 
shall be non-discriminatory. If an airspace buyer claims that its 
trucks are kept on a longer queue than the seller's, the seller will 
visually record the queue and make tapes publicly available. (c) 
Arbitration. The buyer may take claims of discriminatory treatment to 
arbitration.

[[Page 28543]]

If the seller loses the arbitration, he or she must pay the costs of 
arbitration, including the buyer's legal fees. A record of all 
complaints and arbitrations will be filed with the State Attorney 
General.
    7. Succession or Sale. Landfill airspace contracts shall transfer 
to successor companies. Holders of landfill airspace contracts may sell 
their contract to another firm, if that other firm does not own 
landfill assets.
    8. Dispute Resolution. If either the merged company or eligible 
buyer has any other dispute with the other that is not finally resolved 
under ]6, DOJ will delegate the arbitration resolution process to the 
applicable State Attorney General, who may either, after hearing from 
both sides, issue a final decision, or submit the issue on behalf of 
the parties for final resolution to arbitration.
BILLING CODE P
[GRAPHIC] [TIFF OMITTED] TN16JN09.001


[[Page 28544]]


[GRAPHIC] [TIFF OMITTED] TN16JN09.002

BILLING CODE C
January 16, 2009
Via regular and certified mail
Ms. Maribeth Petrizzi, Chief, Litigation II Section, Antitrust 
Division, United States Department of Justice, 1401 H Street, NW, Suite 
3000, Washington, D.C. 20530
Re: Comments on Proposed Final Judgment in United States * * * 
Commonwealth of Pennsylvania, et al. v. Republic Services, Inc., and 
Allied Waste Industries, Inc., Case: 1:08-cv-02076 (D. D.C. December 3, 
2008)
    Dear Ms. Petrizzi: We represent the Pennsylvania Independent Waste 
Haulers Association (``PIWHA'') and on its behalf submit the following 
comments regarding the Proposed Final Judgment (``PFJ'') in response to 
the Competitive Impact Statement filed by the United States Department 
of Justice on December 3, 2008, in the above referenced matter.
    PIWHA is a trade association of over one hundred members 
established sixteen years ago for the purpose of promoting the survival 
of smaller, independent business owners in the increasingly 
concentrated waste industry. We respectfully request that our comments 
be assessed in the context of this purpose.

Summary of Comments

    As to the Philadelphia area, the PFJ should require the divestiture 
of the Quickway transfer station (``Quickway'') and the T.R.C. transfer 
station (``TRC''), or at least one of them, instead of the Girard Point 
transfer station (Girard Point'') and the Philadelphia Recycling and 
Transfer Station (``58th Street''). The PFJ should require that the 
divested facilities be sold to small, independent acquirers, if 
possible, and should permit the sale of each facility to be made to 
separate acquirers. The PFJ should permit seller financing and the 
Government should encourage such financing for smaller acquirers, 
provided that they are creditworthy. The PFJ should require the 
defendants to offer three (3) year disposal contracts to all waste 
haulers, not just to larger haulers as is the case now.

Comments

A. Hauling services consumers would be better served if the PFJ were to 
require different transfer stations to be divested in the Philadelphia 
area.

    The PFJ requires divestiture of the following transfer stations: 
(1) Republic owned Girard Point; and (2) Allied owned 58th Street. The 
PFJ should, instead, require divestiture of Quickway

[[Page 28545]]

and TRC, or at least one of the latter, for two reasons.
    First, both Girard Point and 58th Street, PIWHA contends, are 
substantially less financially viable than Quickway and TRC. Financial 
viability, of course, should be a significant factor in assessing the 
likelihood of the long term successful operation of a divested 
facility. Certainly PIWHA does not have access to the defendants' 
financial data, but marginal profitability of the Girard Point and 58th 
Street facilities has been the distinct impression of various PIWHA 
members who are fully familiar with the eastern Pennsylvania waste 
hauling/disposal market.
    The accuracy of this impression is corroborated by PIWHA's 
learning, as it reported to the Government while the investigation of 
the merger was in progress, that the defendants would be willing to 
divest Girard Point and 58th Street in order to receive Government 
approval of their then proposed merger. It is further corroborated by 
the fact, as PIWHA understands it, that these two facilities were/have 
been unsuccessfully offered for sale for a number of years. The 
inability of the defendants to sell the facilities no doubt was due to 
the limited size (and, accordingly, limited profitability) of the two 
facilities and the impossibility/impracticality of physical expansion.
    Secondly, there is a significant issue with regard to the location 
of the facilities. The 58th Street and the Girard Point facilities are 
substantially further geographically from haulers servicing Bucks and 
Montgomery counties than Quickway and TRC and, accordingly, are more 
costly for those haulers to use. Please see Appendices A and B attached 
hereto. Further, the 58th Street and the Girard Point facilities are 
significantly more difficult in terms of ingress and egress, which 
results in additional increased cost for use of these facilities.
    In this connection, it is PIWHA's position that the Government 
should take into account the anticompetitive effects the increased 
concentration of ownership of disposal facilities in Philadelphia 
County will have upon consumers of hauling services in areas close to 
Philadelphia but located in the contiguous northern counties of Bucks 
and Montgomery and revise its divestiture order accordingly. In PIWHA's 
opinion this would require the divestiture of Quickway and T.R.C., or 
at least one of them.
    With the intense development of Bucks and Montgomery counties over 
the last several decades and the migration of population from 
Philadelphia to those counties, it would seem extremely likely that a 
massive number of ``suburban'' hauling services consumers could be 
adversely affected by the increased concentration of disposal 
facilities located in the more northern part of Philadelphia County 
(Quickway and TRC). Quickway and TRC are the facilities which haulers 
in Bucks and Montgomery counties are far more likely to utilize. 
Assuming divesture as required by the PFJ, the increased prices haulers 
are likely to pay for use of Quickway and TRC will, in all likelihood, 
be directly passed on to the hauling service consumers in Bucks and 
Montgomery counties.
    The relative number of suburban hauling services consumers who 
could be adversely impacted is magnified by the fact that residential 
consumers in the suburbs largely use private haulers, unlike in 
Philadelphia, where the municipal government collects residential 
waste.

B. The PFJ should require that the divested disposal facilities be sold 
to small, independent acquirers, if possible, and not sold to large, 
national or regional waste industry firms

    PIWHA contends that wherever reasonable from the perspective of 
serving the public interest, efforts should be undertaken by the 
Government to encourage deconcentration in the waste industry, which 
has for years experienced rapidly accelerating market concentration. In 
this regard, the PFJ should require that the defendants' disposal 
assets which are to be divested be sold, if possible, to smaller, 
independent, non-publicly traded firms, with demonstrated ability to 
operate the acquired facilities successfully over the long term.

C. The PFJ should be revised to allow sale of the two Philadelphia 
disposal facilities to be made to separate acquirers, without obtaining 
prior Governmental written consent, as the PFJ currently requires

    Should the Government concur in PIWHA's position that preference 
should be given to small independent acquirers, achievement of that 
goal would clearly be facilitated by allowing, perhaps requiring, the 
two facilities in the Philadelphia area which are to be divested to be 
sold separately to two different acquirers.
    The possibility of the sale of the two divested Philadelphia County 
disposal facilities to separate acquirers would, of course, necessitate 
revision of the PFJ provision at Section II. H. 1. j. (p. 8-9) which 
requires use of the defendants' landfill in York, Pennsylvania be made 
available ``[a]t the option of the Acquirer [singular] * * * at rates 
to be negotiated.'' In any event, PIWHA contends that the grant of this 
option is meaningless in view of the location of the landfill (a three 
hour, one way drive from Philadelphia) and access being dependent upon 
the parties agreeing upon price.

D. The PFJ should be revised to permit seller financing of the purchase 
of divested facilities in this case and the Government should encourage 
seller financing for small, independent creditworthy acquirers

    PIWHA is aware of the inclination of the Government to disfavor 
seller financing of the purchase of divested assets, as stated in the 
Antitrust Division Policy Guide to Merger Remedies (``Guide'') (October 
2004) Section IV. G. (p. 35-36). The current severe contraction of the 
availability of credit the country is experiencing, however, warrants 
the Government's re-evaluating its stated position on the issue of 
seller financing, particularly if the sale of the divestment assets to 
small, independent acquirers is a desirable goal, as PIWHA strongly 
believes it is. The defendants are multi-billion dollar companies and 
no doubt can well afford to extend financing to buyers of their 
facilities. All of the ``potential problems'' identified in the Guide 
regarding seller financing would appear to be capable of being 
effectively addressed. We discuss each of these ``potential problems'' 
enumerated in the Guide immediately below.
    The problem of the seller retaining ``some partial control over the 
[divested] assets'' could be resolved by the seller's security interest 
(mortgage instrument) being so crafted as to deny the seller authority 
to exercise control over the buyer and that the seller's sole right 
would be limited to receiving installment payments. In the event of 
default and foreclosure, the Consent Decree could preclude the seller 
from regaining ownership and require that the facility be sold to a 
third party.
    The Guide's concern regarding impeding the seller's ``incentive to 
compete'' with the divested facility because of the seller's fear of 
jeopardizing the purchaser's ability to repay, would seem unfounded. It 
would seem unlikely that the seller in the present matter would forego 
profit opportunities to assure full repayment of a relatively small 
debt when it retains the ability to resell the facility in the event of 
default by the buyer. As to the potential concern of the buyer's 
possible disinclination to compete vigorously because it ``may cause 
the seller to exercise various rights under the loan,'' this cause for 
concern evaporates if the

[[Page 28546]]

seller's sole remedy is foreclosure and sale if the buyer defaults in 
repaying the loan.
    The Guide's expressed concern regarding the seller's having ``some 
legal claim on the divestiture assets in the event the purchaser goes 
bankrupt'' would also be effectively addressed by the Consent Decree's 
limiting the seller's remedy for the buyer's default to sale of the 
divested asset to a third party. It is difficult to imagine that a 
bankruptcy court would ignore this judicial mandate.
    As to the concern that the ``ongoing relationship'' between the 
seller and buyer could be used as ``a conduit for exchanging 
competitively sensitive information,'': again, the cause for this 
concern does not exist if the only relationship between the parties is 
the duty of the buyer to make installment payments to the seller in 
satisfaction of the loan.
    As to concerns which the buyer's need for seller financing might 
raise regarding the buyer's financial viability, we again submit that 
in the present financial credit market environment this should not be 
considered a poor reflection upon a prospective buyer of divested 
facilities.
    In summary as to the issue of seller financing, it is PIWHA's 
position that, in the language of the Guide, ``none of the possible 
concerns discussed * * * exist'' and that current conditions in the 
financial markets warrant allowing seller financing.

E. The PFJ should address the issue of the availability to small 
haulers of three year disposal contracts and require the defendants to 
offer such contracts to all waste haulers

    During the course of the Government's investigation of the proposed 
merger of the defendants, PIWHA urged that the defendants be required 
to offer three year disposal contracts to all haulers, not just the 
larger ones as is currently the case. The PFJ is silent as to this 
issue. It is PIWHA's experience that large, vertically integrated waste 
industry firms are generally unwilling to offer smaller haulers 
disposal contracts for a term exceeding one year. This practice 
prevents smaller haulers from submitting bids on longer term hauling 
contracts required by local governments, school districts and other 
large organizations. During these bidding processes, the bidders must 
certify that it has a three year disposal contract at an authorized 
facility. To require the offering of longer term disposal contracts to 
smaller haulers as well as larger haulers would certainly stimulate 
competition for the business of large customers who insist upon longer 
term hauling contracts.
    PIWHA is aware of the Government's hesitancy to seek ``conduct 
relief'' in Clayton Act Section 7 cases for the reasons stated in its 
2004 Merger Remedies Guide, but PIWHA believes, to use the terminology 
of the Guide at Section III. E. (p. 17) that the ``limited conduct 
relief'' it proposes here will ``be useful in [the present case] to 
help perfect structural relief.'' The Government has, in fact, required 
limited conduct relief in a Section 7 case against these very same 
defendants, United States v. Allied Waste Industries Inc., and Republic 
Services Inc. (D.D.C., June 21, 2000) in which the defendants had 
entered into an asset exchange agreement. The limited conduct relief 
provided for by the Consent Decree in that case was the revision of 
onerous hauling services customer contracts in markets where structural 
relief was ordered.
    Certainly, should the offering of three year contracts be required, 
the defendants should be permitted to offer different prices for 
different volumes of waste disposal. If the volume/price offerings of 
the defendants were required to be made publicly available, volume/
price offerings not made in good faith would be easily identified by 
those haulers who were prejudiced and reported to the Government for 
appropriate action to assure compliance with the Consent Decree.

 Respectfully submitted,

PENNSYLVANIA INDEPENDENT WASTE HAULERS ASSOCIATION
/s/--------------------------------------------------------------------

Leonard E. Dimare
/s/--------------------------------------------------------------------

Anthony J. Mazullo, Jr.

February 3, 2009
Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, 
U.S. Department of Justice, 1401 H Street, Suite 3000, Washington, D.C. 
20530

RE: United States of America, et al v. Republic Services, Inc. and 
Allied Waste Industries, Inc.

    Dear Ms. Petrizzi: On behalf of the Cuyhaoga County Solid Waste 
Management District of Cuyahoga County, Ohio and the Board of County 
Commissioners of Cuyahoga County, Ohio, I am submitting comments 
regarding the draft Proposed Final Judgment attached to the Hold 
Separate Stipulation and Order dated December 3, 2008 in the above 
referenced case.
    The Cuyahoga County Solid Waste Management District was established 
by the Board of County Commissioners of Cuyahoga County, Ohio on August 
29, 1988 pursuant to the requirements imposed by the State of Ohio in 
Chapter 3734 of the Ohio Revised Code. The Cuyahoga County Solid Waste 
Management District contains the City of Cleveland and 58 suburban 
municipalities, villages and townships, with a population totaling 
1,393,978. The statutory purpose of the District is the preparation, 
adoption, submission and implementation of a solid waste management 
plan of the District and the subsequent safe and sanitary management of 
all solid waste generated with the District. The Plan must provide 
adequate solid waste disposal capacity for at least 15 years and 
present a system to reduce, reuse and recycle at least 25% of the waste 
generated in the District.
    The Board of Commissioners of the Cuyahoga County Solid Waste 
Management District concurs and supports the civil antitrust complaint 
filed by the United States and States and Commonwealths party to the 
complaint. The Board of Commissioners also concurs and supports the 
remedy stated in the Hold Separate Stipulation and Order filed with the 
Court on December 3, 2008. The Board of Commissioners, however, does 
not concur or support the Cleveland, Ohio market remedy Exhibit A, 
Section I, Relevant Hauling Assets beginning on page 10.
    The remedy proposed within Appendix A fails to provide for 
divestiture of any small container commercial waste collection routes 
in the Cleveland, Ohio market area. Waste collected on such routes 
produce the volume of waste needed to make the sale of the Harvard Road 
Transfer Station and the Oakland Marsh Landfill a financially viable 
transaction necessary to attract a qualified buyer. The sale of the 
landfill and transfer assets without the sale of collection routes is 
akin to taking delivery of a new automobile of which the gasoline tank 
is bone dry. It is unreasonable to expect a potential buyer from 
outside the market area to incur the expense of maintaining the 
transfer and disposal assets while developing revenue volumes from 
scratch. To achieve a truly competitive remedy in the Cleveland, Ohio 
market requires the sale of commercial routes along with the transfer 
station and landfill assets. Thus the Board of Commissioners urges that 
sufficient small container commercial collection routes in the 
Cleveland, Ohio market area be added to the Relevant Hauling Assets 
listed in Section I.
    Additionally, the defendants should be prohibited from acquiring 
additional

[[Page 28547]]

transfer station assets within Cuyahoga County for a multi-year period. 
We understand that the Broadview Heights Recycling Center (aka Transfer 
Station) owned by Norton Environmental and which is located along 
Interstate 77 approximately five miles due south of the Harvard Road 
Transfer Station is for sale. If the defendants were allowed to 
purchase the Broadview Heights Transfer Station following the sale of 
the Harvard Road Transfer Station, without the sale of any commercial 
routes, the defendants would simply re-route its commercial waste to 
the Broadview Heights facility negating any attempt by the Court to 
insure competition within the Cleveland, Ohio market.
    The Board of Commissioners of the Cuyahoga County Solid Waste 
Management District appreciates your consideration of the above 
comments in the protection of the public interest.
 Sincerely,

/s/--------------------------------------------------------------------
Patrick J. Holland,
Executive Director
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[FR Doc. E9-13549 Filed 6-15-09; 8:45 am]
BILLING CODE C