[Federal Register Volume 75, Number 20 (Monday, February 1, 2010)]
[Notices]
[Pages 5120-5132]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-1959]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States, et al. v. Stericycle, Inc., et al.; Proposed Final 
Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed

[[Page 5121]]

Final Judgment and Competitive Impact Statement have been filed with 
the United States District Court for the District of Columbia in United 
States, et al. v. Stericycle, Inc., et al., Civil Action No. 1:09-cv-
02268. On November 30, 2009, the United States and the States of 
Missouri and Nebraska filed a Complaint alleging that the proposed 
acquisition by Stericycle, Inc. of MedServe, Inc. would violate Section 
7 of the Clayton Act, 15 U.S.C. 18. The proposed Final Judgment, filed 
the same time as the Complaint, requires Stericycle to divest all 
MedServe assets used in the provision of infectious waste collection 
and treatment services for Large Quantity Generator (``LQG'') customers 
in the states of Kansas, Missouri, Nebraska, and Oklahoma. These assets 
include an autoclave in Newton, Kansas; transfer stations in Kansas 
City, Kansas; Oklahoma City, Oklahoma; Omaha, Nebraska; and Booneville, 
Missouri; LQG customer contracts associated with these facilities; and 
certain tangible and intangible assets. Copies of the Complaint, 
proposed Final Judgment, and Competitive Impact Statement are available 
for inspection at the Department of Justice, Antitrust Division, 
Antitrust Documents Group, 450 Fifth Street, NW., Suite 1010, 
Washington, DC 20530 (telephone: 202-514-2481), on the Department of 
Justice's Web site at http://www.usdoj.gov/atr, and at the Office of 
the Clerk of the United States District Court for the District of 
Columbia. Copies of these materials may be obtained from the Antitrust 
Division upon request and payment of a copying fee set by Department of 
Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, 
U.S. Department of Justice, 450 Fifth Street, NW., Suite 8700, 
Washington, DC 20530 (telephone: 202-307-0924).

J. Robert Kramer II,
Director of Operations and Civil Enforcement.

United States District Court for the District of Columbia

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UNITED STATES OF AMERICA, Department of     CASE NO.: 1:09-cv-02268; JUDGE: John D. Bates; DECK TYPE: Antitrust;
 Justice, Antitrust Division, 450 5th        DATE STAMP: November 30, 2009.
 Street, NW., Suite 8700, Washington, DC
 20530; STATE OF MISSOURI, Office of the
 Attorney General, P.O. Box 899, Jefferson
 City, Missouri 65102; and STATE OF
 NEBRASKA, Office of the Attorney General,
 2115 State Capitol Building, Lincoln,
 Nebraska 68509-8920, Plaintiffs, v.
 STERICYCLE, INC., 28161 North Keith
 Drive, Lake Forest, Illinois 60045; ATMW
 ACQUISITION CORP., 28161 North Keith
 Drive, Lake Forest, Illinois 60045;
 MEDSERVE, INC., 6575 West Loop South,
 Suite 145, Bellaire, Texas, 77401; and
 AVISTA CAPITAL PARTNERS, L.P., 6575 West
 Loop South, Suite 145, Bellaire, Texas
 77401, Defendants.
----------------------------------------------------------------------------------------------------------------

Complaint

    Plaintiff, the United States of America (``United States''), acting 
under the direction of the Attorney General of the United States, and 
plaintiffs, the State of Missouri and the State of Nebraska, acting 
under the direction of their respective Attorneys General, bring this 
civil antitrust action against defendants, Stericycle, Inc. and ATMW 
Acquisition Corp. and MedServe, Inc. and Avista Capital Partners, L.P. 
to enjoin Stericycle's proposed acquisition of MedServe and to obtain 
other equitable relief. Plaintiffs complain and allege as follows:

I. Nature of the Action

    1. Pursuant to an agreement and plan of merger dated May 9, 2009, 
Stericycle intends to acquire all of the voting shares of MedServe in a 
transaction valued at $185 million. Defendants Stericycle and MedServe 
currently compete in the provision of infectious waste collection and 
treatment services for large quantity generator (``LQG'') customers. 
The resulting combination would create a monopoly in the provision of 
infectious waste collection and treatment services for LQG customers in 
the states of Missouri, Nebraska, Oklahoma, and Kansas.
    2. The United States, the State of Missouri, and the State of 
Nebraska bring this action to prevent the proposed acquisition because 
it would substantially lessen competition in the provision of 
infectious waste collection and treatment services for LQG customers in 
the states of Kansas, Missouri, Nebraska, and Oklahoma, in violation of 
Section 7 of the Clayton Act, 15 U.S.C. 18.

II. Jurisdiction and Venue

    3. The United States brings this action under Section 15 of the 
Clayton Act, as amended, 15 U.S.C. 4 and 25, to prevent and restrain 
defendants from violating Section 7 of the Clayton Act, 15 U.S.C. 18. 
The State of Missouri and the State of Nebraska bring this action under 
Section 16 of the Clayton Act, 15 U.S.C. 26, to prevent and restrain 
defendants from violating Section 7 of the Clayton Act, 15 U.S.C. 18. 
The State of Missouri and the State of Nebraska, by and through their 
respective Attorneys General, or other authorized officials, bring this 
action in their sovereign capacities and as parens patriae on behalf of 
the citizens, general welfare, and economy of each of their states.
    4. Defendants collect and treat infectious waste generated by LQG 
customers in the flow of interstate commerce. Defendants' activities in 
collecting and treating infectious waste substantially affect 
interstate commerce. The Court has jurisdiction over this action and 
over the parties pursuant to 15 U.S.C. 22, and 28 U.S.C. 1331 and 1337.
    5. Defendants transact business, and have consented to venue and 
personal jurisdiction, in the District of Columbia. Venue is therefore 
proper in this District under Section 12 of the Clayton Act, 15 U.S.C. 
22 and 28 U.S.C. 1391(c).

III. The Defendants

    6. Defendant Stericycle, Inc. is a Delaware corporation with its 
principal place of business in Lake Forest, Illinois. Stericycle, a 
multi-national company, is the largest provider of infectious waste 
collection and treatment services in the United States, with operations 
in nearly all of the contiguous 48 states, including 46 treatment 
facilities and 80 transfer and collection sites. In 2008, Stericycle 
reported total worldwide sales of approximately $1.1 billion, of which 
approximately 78 percent were generated in the United States. ATMW 
Acquisition Corp. is a corporation formed by Stericycle to facilitate 
its acquisition of MedServe. Stericycle and ATMW hereinafter are 
collectively referred to as Stericycle.
    7. Defendant MedServe is a Delaware corporation with its principal 
place of business in Bellaire, Texas. MedServe is the second-largest 
provider of infectious waste collection and treatment services in the 
United States, with operations in

[[Page 5122]]

25 states that include eight treatment facilities and 18 transfer and 
collection sites. In 2008, MedServe had total revenues of about $35.6 
million. Avista Capital Partners, L.P. is an entity formed by MedServe 
to facilitate the acquisition of MedServe by Stericycle. MedServe and 
Avista hereinafter are collectively referred to as MedServe.

IV. Trade and Commerce

A. The Relevant Service Market

    8. Regulated medical waste is waste generated in the diagnosis, 
treatment, or immunization of human beings or animals. There are 
generally three types of regulated medical waste: (1) Infectious waste; 
(2) pathological waste; and (3) trace chemotherapy waste. Infectious 
waste is waste that has come into contact with bodily fluids and 
``sharps'' waste, such as syringes and scalpels. Pathological waste is 
anatomical parts, and trace chemotherapy waste is small amounts of 
chemical compounds used to treat cancer patients and the equipment used 
to administer the compounds. Infectious waste comprises approximately 
90 percent of the regulated medical waste generated in the United 
States.
    9. State and Federal governments heavily regulate the collection 
and treatment of regulated medical waste. They prescribe how each type 
of regulated medical waste must be stored, collected, and treated. 
Providers of infectious waste collection and treatment services are 
required to be licensed by various state and Federal regulatory 
agencies before they can offer such services.
    10. Regulated medical waste must be stored separately from other 
types of waste, and each type of regulated medical waste must be stored 
separately from the other types in specially marked and sealed 
containers. Collection and transport of regulated medical waste to 
treatment facilities must be performed by state-approved companies.
    11. State-approved treatment facilities must be used to render 
regulated medical waste non-infectious. Failure to use state-approved 
treatment facilities subjects both the generator of the infectious 
waste and the infectious waste collection and treatment service 
provider to criminal prosecution, fines, damage actions, and 
potentially high clean-up costs.
    12. Autoclaves are the most prevalent treatment technology for 
infectious waste. An autoclave uses steam sterilization combined with 
pressure to render infectious waste non-infectious. Because autoclaving 
is a reliable and long-proven technology, it has become the preferred 
choice for treating infectious waste.
    13. The infectious waste collection and treatment services industry 
categorizes customers according to the amount of infectious waste they 
generate. LQG customers typically are hospitals, large laboratories, 
and other large medical facilities that generate large amounts of 
infectious waste. LQG customers often need collection to occur on a 
daily basis, or at least several times a week, and must receive 
continuous supplies of containers with sizeable storage capacity from 
their service providers.
    14. LQG customers require their service providers to perform both 
infectious waste collection and treatment. They also require their 
providers to meet strict standards to ensure they have sufficient 
technical capability, knowledge, and financial resources. For example, 
an LQG customer typically requires an infectious waste collection and 
treatment service provider to have: (a) An adequate infrastructure to 
serve the customer's needs, including trucks, storage containers, 
transfer stations, electronic equipment capable of monitoring and 
tracking each type of waste, and personnel with a variety of expertise 
to support the infrastructure; (b) an established reputation for 
providing reliable and timely collection and treatment for LQG 
customers; (c) its own infectious waste treatment facility to minimize 
the number of companies that handle the waste, thereby reducing the 
possibility that the waste is mishandled; and (d) substantial liability 
insurance that meets all Federal and state regulatory requirements 
governing infectious waste.
    15. Collection and treatment providers bid for each LQG customer's 
business separately, and an infectious waste collection and treatment 
service provider can identify the specific competitive conditions that 
apply to each LQG customer, including which potential competitors can 
serve that LQG customer. Infectious waste collection and treatment 
service providers for LQG customers can and do price discriminate based 
on an LQG customer's requirements and the number of other competitors 
available to provide such services.
    16. A small but significant increase in the price of infectious 
waste collection and treatment services for LQG customers would not 
cause LQG customers to move sufficient volumes of infectious waste to 
another type of collection and treatment service so as to make such a 
price increase unprofitable.
    17. Accordingly, the provision of infectious waste collection and 
treatment services for LQG customers is a line of commerce and a 
relevant price discrimination service market within the meaning of 
Section 7 of the Clayton Act.

B. The Relevant Geographic Market

    18. The geographic market for the provision of infectious waste 
collection and treatment services for LQG customers is largely defined 
by transportation costs. Infectious waste collection and treatment 
companies rely on trucks to transport waste from customer sites to 
their treatment facilities. Transfer stations enable service providers 
to transfer their waste into tractor-trailers and more cost-effectively 
to transport their waste to treatment facilities. Typically, the 
greater the distance between an LQG customer's operations and the 
service provider's treatment or transfer facility, the less price 
competitive the provider is.
    19. For LQG customers served by MedServe in Kansas, Missouri, 
Nebraska, and Oklahoma, the only competitive alternative is Stericycle. 
In these states, no other infectious waste collection and treatment 
service provider has a facility located within approximately 300 miles 
of Stericycle's or MedServe's facilities.
    20. In the states of Kansas, Missouri, Nebraska, and Oklahoma, LQG 
customers would not switch to a more distant infectious waste 
collection and treatment service provider in sufficient numbers so as 
to make a small but significant increase in price unprofitable.
    21. Accordingly, the states of Kansas, Missouri, Nebraska, and 
Oklahoma are a relevant geographic market within the meaning of Section 
7 of the Clayton Act.

C. Anticompetitive Effects of the Acquisition

    22. In the states of Kansas, Missouri, Nebraska, and Oklahoma, the 
market for the provision of infectious waste collection and treatment 
services for LQG customers is highly concentrated. Following the 
acquisition, Stericycle would become the monopoly provider of 
infectious waste collection and treatment services for LQG customers in 
these states.
    23. Vigorous price competition between Stericycle and MedServe in 
the provision of infectious waste collection and treatment services has 
benefited LQG customers in Kansas, Missouri, Nebraska, and Oklahoma. 
Stericycle and MedServe are each other's only rivals, directly 
competing on price and quality

[[Page 5123]]

of service in the provision of infectious waste collection and 
treatment services for LQG customers.
    24. Therefore, the proposed acquisition will eliminate the 
competition between Stericycle and MedServe; reduce the number of 
providers of infectious waste collection and treatment services for LQG 
customers from two to one; and enable Stericycle to establish a 
monopoly in the provision of such services, leading to higher prices 
and lower quality of service for LQG customers in Kansas, Missouri, 
Nebraska, and Oklahoma, in violation of Section 7 of the Clayton Act.

D. Entry Into Collection and Treatment of Infectious Waste Generated by 
LQG Customers

    25. Successful entry into the provision of collection and treatment 
services for infectious waste for LQG customers in Kansas, Missouri, 
Nebraska, and Oklahoma would be difficult, time-consuming, and costly. 
A prospective provider of infectious waste collection and treatment 
services for LQG customers faces substantial financial and permitting 
requirements to build a facility and the infrastructure needed to serve 
LQG customers. It also must have an established reputation for handling 
the large amounts of infectious waste produced by LQG customers.
    26. A provider of infectious waste collection and treatment 
services for LQG customers in Kansas, Missouri, Nebraska, and Oklahoma 
must establish a treatment facility that contains a treatment 
technology, such as an autoclave, with sufficient capacity for treating 
large volumes of infectious waste. In addition to the capital costs of 
the treatment unit, local zoning and state permits are required.
    27. A provider of infectious waste collection and treatment 
services for LQG customers also must have an infrastructure of trucks, 
transfer stations, and electronic equipment capable of collecting, 
transporting, treating and disposing, and monitoring and tracking the 
infectious waste.
    28. A provider of infectious waste collection and treatment 
services for LQG customers must develop a reputation and record of 
reliably collecting and treating large volumes of infectious waste in 
compliance with state and Federal regulations.
    29. A provider of infectious waste collection and treatment 
services for LQG customers must have the financial capability to 
indemnify LQG customers for any environmental fines or accidents 
resulting from the collection, transportation, and treatment of the 
infectious waste.
    30. Obtaining the necessary permits and building an autoclave 
facility, establishing the infrastructure to serve LQG customers, and 
developing a reputation and record of service and compliance would 
require in excess of two years.
    31. Entry into the provision of infectious waste collection and 
treatment services for LQG customers in Kansas, Missouri, Nebraska, and 
Oklahoma would not be timely, likely, or sufficient to counter 
anticompetitive price increases or diminished quality of service that 
Stericycle could impose after the proposed acquisition.

V. Violation Alleged

    32. The United States incorporates the allegations of paragraphs 1 
through 31 above.
    33. Stericycle's proposed acquisition of all of MedServe's voting 
securities and infectious waste collection and treatment assets in the 
states of Kansas, Missouri, Nebraska, and Oklahoma will substantially 
lessen competition and tend to create a monopoly in interstate trade 
and commerce in violation of Section 7 of the Clayton Act, 15 U.S.C. 
18.
    34. Unless restrained, the transaction will have the following 
anticompetitive effects, among others:
    a. Actual and potential competition between Stericycle and MedServe 
in the provision of infectious waste collection and treatment services 
for LQG customers in the states of Kansas, Missouri, Nebraska, and 
Oklahoma will be eliminated;
    b. Competition generally in the provision of infectious waste 
collection and treatment services for LQG customers in the states of 
Kansas, Missouri, Nebraska, and Oklahoma will be substantially 
lessened; and
    c. Prices for infectious waste collection and treatment services 
for LQG customers in the states of Kansas, Missouri, Nebraska, and 
Oklahoma will likely increase, and service likely will be reduced.

VI. Requested Relief

    35. Plaintiffs request:
    a. That Stericycle's proposed acquisition of MedServe be adjudged 
and decreed to be unlawful and in violation of Section 7 of the Clayton 
Act, 15 U.S.C. 18;
    b. That defendants and all persons acting on their behalf be 
permanently enjoined and restrained from consummating the proposed 
acquisition of MedServe by Stericycle, or from entering into or 
carrying out any contract, agreement, plan, or understanding, the 
effect of which would be to merge the voting securities or assets of 
the defendants;
    c. That plaintiffs receive such other and further relief as the 
case requires and the Court deems just and proper; and
    d. That plaintiffs recover the costs of this action.

    Dated: November 30, 2009.

    Respectfully submitted,
For Plaintiff United States of America.

/s/--------------------------------------------------------------------
Christine A. Varney,
Assistant Attorney General, D.C. Bar # 435204.

/s/--------------------------------------------------------------------
Maribeth Petrizzi,
Chief, Litigation II Section.

/s/--------------------------------------------------------------------
Molly S. Boast,
Deputy Assistant Attorney General.

/s/--------------------------------------------------------------------
Dorothy B. Fountain,
Assistant Chief, Litigation II Section, D.C. Bar # 439469.

/s/--------------------------------------------------------------------
J. Robert Kramer II,
Director of Operations.

/s/--------------------------------------------------------------------
Frederick H. Parmenter
Stephen A. Harris
Carolyn Davis
Leslie D. Peritz
Jay D. Owen,
Attorneys. U.S. Department of Justice, Antitrust Division, 
Litigation II Section, Suite 8700, 450 Fifth Street, NW., 
Washington, DC 20530. Tel: (202) 307-0924, Fax: (202) 307-6583, E-
mail: [email protected].

For Plaintiff State of Missouri.

Chris Koster,
Attorney General.

By:
/s/--------------------------------------------------------------------
Anne E. Schneider,
Assistant Attorney General, State of Missouri, P.O. Box 899, 
Jefferson City, MO 65102, Tel: (573) 751-8455, Fax: (573) 751-2041, 
E-mail: [email protected].

For Plaintiff State of Nebraska.

Jon Bruning,
Attorney General.

By:
/s/--------------------------------------------------------------------
Leslie C. Levy,
Assistant Attorney General, 2115 State Capitol Building, Lincoln, NE 
68509-8920, Tel.: (402) 471-2811, Fax: (402) 471-4725, E-mail: 
[email protected].

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

[[Page 5124]]



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UNITED STATES OF AMERICA, STATE    CASE NO.: 1:09-cv-02268, JUDGE: John
 OF MISSOURI, and STATE OF          D. Bates, DECK TYPE: Antitrust, DATE
 NEBRASKA, Plaintiffs, v.           STAMP: November 30, 2009.
 STERICYCLE, INC., ATMW
 ACQUISITION CORP., MEDSERVE,
 INC., and AVISTA CAPITAL
 PARTNERS, L.P., Defendants.
------------------------------------------------------------------------

Proposed Final Judgement

    Whereas, plaintiffs, the United States of America, the State of 
Missouri, and the State of Nebraska, filed their Complaint on November 
30, 2009; plaintiffs and defendants, Stericycle, Inc. and ATMW 
Acquisition Corp., and MedServe, Inc. and Avista Capital Partners, 
L.P., by their respective attorneys, have consented to the entry of 
this Final Judgment without trial or adjudication of any issue of fact 
or law; and without this Final Judgment constituting any evidence 
against or admission by any party regarding any issue of law or fact;
    And Whereas, defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    And Whereas, the essence of this Final Judgment is the prompt and 
certain divestiture of the Divestiture Assets to assure that 
competition is not substantially lessened;
    And Whereas, the United States requires defendants to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    And Whereas, defendants have represented to the United States that 
the divestitures required below can and will be made, and that 
defendants will later raise no claim of hardship or difficulty as 
grounds for asking the Court to modify any of the divestiture 
provisions contained below;
    Now, Therefore, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is hereby Ordered, Adjudged, and Decreed:

I. Jurisdiction

    This Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states a claim upon which 
relief may be granted against the defendants under Section 7 of the 
Clayton Act, 15 U.S.C. 18, as amended.

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' means the entity to which defendants shall divest 
the Divestiture Assets.
    B. ``Stericycle'' means defendant Stericycle, Inc., a Delaware 
corporation with its principal place of business in Lake Forest, 
Illinois, and ATMW Acquisition Corp. (a corporation formed to 
facilitate the acquisition), and their successors, assigns, 
subsidiaries, divisions, groups, affiliates, partnerships, and joint 
ventures, and all of their directors, officers, managers, agents, and 
employees.
    C. ``MedServe'' means defendant MedServe, Inc., a Delaware 
corporation with its principal place of business in Bellaire, Texas, 
and Avista Capital Partners, L.P. formed to facilitate the acquisition, 
and their successors, assigns, subsidiaries, divisions, groups, 
affiliates, partnerships, and joint ventures, and all of their 
directors, officers, managers, agents, and employees.
    D. ``Infectious Waste'' means regulated medical waste that is 
generated in the diagnosis, treatment, or immunization of human beings 
or animals and that has come into contact with bodily fluids, and 
``sharps'' waste, such as syringes and scalpels.
    E. ``Treatment'' means the sterilization of infectious waste at a 
state-approved treatment facility, including the use of transfer 
stations to facilitate the shipment of infectious waste to other 
treatment sites.
    F. ``Large Quantity Generator Customer'' or ``LQG Customer'' means 
any customer that spends $1000 or more per month on infectious waste 
collection and treatment services.
    G. ``Divestiture Assets'' means:
    1. The following facilities:
    a. MedServe's Newton, Kansas autoclave facility, located at 1021 
South Spencer Avenue, Newton, Kansas 67114;
    b. MedServe's Kansas City, Kansas transfer station, located at 200 
Funston Road, Suite B, Kansas City, Kansas 66115;
    c. MedServe's Oklahoma City, Oklahoma transfer station, located at 
8800 SW 8th Street, Oklahoma City, Oklahoma 73128;
    d. MedServe's Omaha, Nebraska transfer station, located at 13824-C 
Plaza, Omaha, Nebraska 68144; and
    e. MedServe's Booneville, Missouri transfer station, located at 680 
Al Bersted Drive, Booneville, Missouri 65233;
    2. All tangible assets at the MedServe facilities listed in 
Paragraph II(G)(1), including all research and development activities, 
equipment, and fixed assets, real property (leased or owned), 
equipment, personal property, inventory (containers), office furniture, 
materials, supplies, on- or off-site warehouses or storage facilities; 
all licenses, permits, and authorizations issued by any governmental 
organization relating to the facilities; all lists of MedServe LQG 
customers; all MedServe LQG customer contracts, accounts, and credit 
records; all other records; and all trucks and other vehicles assigned 
to the facilities as of May 9, 2009; and
    3. All intangible assets associated with the MedServe facilities 
listed in Paragraph II(G)(1), including, but not limited to, all 
contractual rights, patents, licenses and sublicenses, intellectual 
property, technical information, computer software (including waste 
monitoring software and management information systems) and related 
documentation, know-how, trade secrets, drawings, blueprints, designs, 
design protocols, specifications for materials, specifications for 
parts and devices, safety procedures for the handling of materials and 
substances, quality assurance and control procedures, design tools and 
simulation capability, all manuals and technical information provided 
to employees, customers, suppliers, agents or licensees.

III. Applicability

    A. This Final Judgment applies to Stericycle and MedServe, as 
defined above, and all other persons in active concert or participation 
with either of them, who receive actual notice of this Final Judgment 
by personal service or otherwise.
    B. If, prior to complying with Sections IV and V of this Final 
Judgment, defendants sell or otherwise dispose of all or substantially 
all of their assets or of lesser business units that include the 
Divestiture Assets, they shall require the purchaser to be bound by the 
provisions of this Final Judgment. Defendants need not obtain such an 
agreement from the Acquirer of the assets divested pursuant to this 
Final Judgment.

IV. Divestitures

    A. Defendants are ordered and directed, within ninety (90) calendar 
days after the filing of the Complaint in this matter, or five (5) 
calendar days after notice of the entry of this Final Judgment by the 
Court, whichever is

[[Page 5125]]

later, to divest the Divestiture Assets in a manner consistent with 
this Final Judgment to an Acquirer acceptable to the United States in 
its sole discretion, after consultation with the State of Missouri and 
the State of Nebraska. The United States, in its sole discretion, after 
consultation with the State of Missouri and the State of Nebraska, may 
agree to one or more extensions of this time period not to exceed sixty 
(60) calendar days in total, and shall notify the Court in such 
circumstances. Defendants agree to use their best efforts to divest the 
Divestiture Assets as expeditiously as possible.
    B. In accomplishing the divestitures ordered by this Final 
Judgment, defendants promptly shall make known, by usual and customary 
means, the availability of the Divestiture Assets. Defendants shall 
inform any person making an inquiry regarding a possible purchase of 
the Divestiture Assets that they are being divested pursuant to this 
Final Judgment and provide that person with a copy of this Final 
Judgment. Defendants shall offer to furnish to all prospective 
Acquirers, subject to customary confidentiality assurances, all 
information and documents relating to the Divestiture Assets 
customarily provided in a due diligence process except such information 
or documents subject to the attorney-client privilege or work-product 
doctrine. Defendants shall make available such information to the 
United States at the same time that such information is made available 
to any other person.
    C. Defendants shall provide the Acquirer and the United States 
information relating to the personnel involved in the operation and 
management of the Divestiture Assets to enable the Acquirer to make 
offers of employment. Defendants shall not interfere with any 
negotiations by the Acquirer to employ or contract with any defendant 
employee whose primary responsibility is the operation or management of 
the Divestiture Assets.
    D. Defendants shall permit prospective Acquirers of the Divestiture 
Assets to have reasonable access to personnel and to make inspections 
of the physical facilities of the Divestiture Assets; access to any and 
all environmental, zoning, and other permit documents and information; 
and access to any and all financial, operational or other documents and 
information customarily provided as part of a due diligence process.
    E. Defendants shall warrant to the Acquirer that each asset will be 
operational on the date of sale.
    F. Defendants shall not take any action that will impede in any way 
the permitting, operation or divestiture of the Divestiture Assets.
    G. Defendants shall warrant to the Acquirer that there are no 
material defects in the environmental, zoning or other permits 
pertaining to the operation of the Divestiture Assets, and that 
following the sale of the Divestiture Assets, defendants will not 
undertake, directly or indirectly, any challenges to the environmental, 
zoning, or other permits relating to the operation of the Divestiture 
Assets.
    H. Unless the United States, after consultation with the State of 
Missouri and the State of Nebraska, otherwise consents in writing, the 
divestitures pursuant to Section IV, or by trustee appointed pursuant 
to Section V, of this Final Judgment, shall be made to a single 
Acquirer and shall include all the Divestiture Assets, and shall be 
accomplished in such a way as to satisfy the United States, in its sole 
discretion, after consultation with the State of Missouri and the State 
of Nebraska, that the divestitures will achieve the purposes of this 
Final Judgment and that the Divestiture Assets can and will be used by 
the Acquirer as part of a viable, ongoing business providing infectious 
waste collection and treatment services for LQG customers located in 
Kansas, Missouri, Nebraska, and Oklahoma. The divestitures, whether 
pursuant to Section IV or Section V of this Final Judgment:
    1. Shall be made to the Acquirer that, in the United States's sole 
judgment, after consultation with the State of Missouri and the State 
of Nebraska, has the intent and capability (including the necessary 
managerial, operational, technical and financial capability) of 
competing effectively in the business of providing infectious waste 
collection and treatment services for LQG customers; and
    2. Shall be accomplished so as to satisfy the United States, in its 
sole discretion, after consultation with the State of Missouri and the 
State of Nebraska, that none of the terms of any agreement between the 
Acquirer and defendants gives defendants the ability unreasonably to 
raise the Acquirer's costs, to lower the Acquirer's efficiency, or 
otherwise to interfere in the ability of the Acquirer to compete 
effectively.

V. Appointment of Trustee

    A. If defendants have not divested the Divestiture Assets within 
the time period specified in Section IV, defendants shall notify the 
United States of that fact in writing. Upon application of the United 
States, the Court shall appoint a trustee selected by the United States 
and approved by the Court to effect the sale of the Divestiture Assets.
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the Divestiture Assets. The 
trustee shall have the power and authority to accomplish the 
divestitures to an Acquirer acceptable to the United States, after 
consultation with the State of Missouri and the State of Nebraska, at 
such price and on such terms as are then obtainable upon reasonable 
effort by the trustee, subject to the provisions of Sections IV, V and 
VI of this Final Judgment, and shall have such other powers as this 
Court deems appropriate. Subject to Section V, Paragraph D, of this 
Final Judgment, the trustee may hire at the defendants' cost and 
expense any investment bankers, attorneys, or other agents, who shall 
be solely accountable to the trustee, reasonably necessary in the 
trustee's judgment to assist in the divestitures.
    C. Defendants shall not object to a sale by the trustee on any 
ground other than the trustee's malfeasance. Any such objections by 
defendants must be conveyed in writing to the United States and the 
trustee within ten (10) calendar days after the trustee has provided 
the notice required under Section VI.
    D. The trustee shall serve at the cost and expense of defendants, 
on such terms and conditions as the United States approves, and shall 
account for all monies derived from the sale of the assets sold by the 
trustee and all costs and expenses so incurred. After approval by the 
Court of the trustee's accounting, including fees for its services and 
those of any professionals and agents retained by the trustee, all 
remaining money shall be paid to defendants and the trust shall then be 
terminated. The compensation of the trustee and any professionals and 
agents retained by the trustee shall be reasonable in light of the 
value of the Divestiture Assets and based on a fee arrangement 
providing the trustee with an incentive based on the price and terms of 
the divestitures and the speed with which it is accomplished, but 
timeliness is paramount.
    E. Defendants shall use their best efforts to assist the trustee in 
accomplishing the required divestitures. The trustee and any 
consultants, accountants, attorneys, and other persons retained by the 
trustee shall have full and complete access to the personnel, books, 
records, and facilities of the business to be divested, and defendants 
shall develop financial and other information relevant to such business 
as the trustee may reasonably request, subject to reasonable protection 
for trade secret or other confidential

[[Page 5126]]

research, development, or commercial information. Defendants shall take 
no action to interfere with or to impede the trustee's accomplishment 
of the divestitures.
    F. After its appointment, the trustee shall file monthly reports 
with the United States, the State of Missouri, the State of Nebraska, 
and the Court setting forth the trustee's efforts to accomplish the 
divestitures ordered under this Final Judgment. To the extent such 
reports contain information that the trustee deems confidential, such 
reports shall not be filed in the public docket of the Court. Such 
reports shall include the name, address, and telephone number of each 
person who, during the preceding month, made an offer to acquire, 
expressed an interest in acquiring, entered into negotiations to 
acquire, or was contacted or made an inquiry about acquiring, any 
interest in the Divestiture Assets, and shall describe in detail each 
contact with any such person. The trustee shall maintain full records 
of all efforts made to divest the Divestiture Assets.
    G. If the trustee has not accomplished the divestitures ordered 
under this Final Judgment within six (6) months after its appointment, 
the trustee shall promptly file with the Court a report setting forth: 
(1) The trustee's efforts to accomplish the required divestitures; (2) 
the reasons, in the trustee's judgment, why the required divestitures 
have not been accomplished; and (3) the trustee's recommendations. To 
the extent such reports contain information that the trustee deems 
confidential, such reports shall not be filed in the public docket of 
the Court. The trustee shall at the same time furnish such report to 
the United States, which shall have the right to make additional 
recommendations consistent with the purpose of the trust. The Court 
thereafter shall enter such orders as it shall deem appropriate to 
carry out the purpose of the Final Judgment, which may, if necessary, 
include extending the trust and the term of the trustee's appointment 
by a period requested by the United States.

VI. Notice of Proposed Divestitures

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, defendants or the trustee, whichever is then 
responsible for effecting the divestitures required herein, shall 
notify the United States, the State of Missouri, and the State of 
Nebraska of any proposed divestiture required by Section IV or V of 
this Final Judgment. If the trustee is responsible, it shall similarly 
notify defendants. The notice shall set forth the details of the 
proposed divestitures and list the name, address, and telephone number 
of each person not previously identified who offered or expressed an 
interest in or desire to acquire any ownership interest in the 
Divestiture Assets, together with full details of the same.
    B. Within fifteen (15) calendar days of receipt of such notice by 
the United States, the State of Missouri, and the State of Nebraska, 
the United States may request from defendants, the proposed Acquirer, 
any other third party, or the trustee, if applicable, additional 
information concerning the proposed divestitures, the proposed Acquirer 
and any other potential Acquirer. Defendants and the trustee shall 
furnish any additional information requested within fifteen (15) 
calendar days of the receipt of the request, unless the parties shall 
otherwise agree.
    C. Within thirty (30) calendar days after receipt of the notice or 
within twenty (20) calendar days after the United States has been 
provided the additional information requested from defendants, the 
proposed Acquirer, any third party, and the trustee, whichever is 
later, the United States shall provide written notice to defendants and 
the trustee, if there is one, stating whether or not it objects to the 
proposed divestitures. If the United States, after consultation with 
the State of Missouri and the State of Nebraska, provides written 
notice that it does not object, the divestitures may be consummated, 
subject only to defendants' limited right to object to the sale under 
paragraph V(C) of this Final Judgment. Absent written notice that the 
United States does not object to the proposed Acquirer or upon 
objection by the United States, a divestiture proposed under Section IV 
or Section V shall not be consummated. Upon objection by defendants 
under paragraph V(C), a divestiture proposed under Section V shall not 
be consummated unless approved by the Court.

VII. Notice of Future Acquisitions

    A. Unless such transaction is otherwise subject to the reporting 
and waiting period requirements of the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''), 
Stericycle, without providing advance notification to the United 
States, the State of Missouri, and the State of Nebraska, shall not 
directly or indirectly acquire, any (1) interest in any business 
located in Kansas, Missouri, Nebraska, and Oklahoma that is engaged in 
the collection and treatment of infectious waste; (2) other than in the 
ordinary course of business, assets located in Kansas, Missouri, 
Nebraska, and Oklahoma that are used in the collection and treatment of 
infectious waste; or (3) capital stock or voting securities of any 
person that, at any time during the twelve (12) months immediately 
preceding such acquisition, was engaged in the collection and treatment 
of infectious waste in Kansas, Missouri, Nebraska, or Oklahoma, where 
that person's annual revenues in these states from the collection and 
treatment of infectious waste were in excess of $500,000.
    B. Such notification shall be provided to the United States, the 
State of Missouri, and the State of Nebraska in the same format as, and 
per the instructions relating to the Notification and Report Form set 
forth in the Appendix to Part 803 of Title 16 of the Code of Federal 
Regulations as amended, except that the information requested in Items 
5 through 9 of the instructions must be provided only about the 
collection and treatment of infectious waste. Notification shall be 
provided at least thirty (30) calendar days prior to acquiring any such 
interest, and shall include, beyond what may be required by the 
applicable instructions, the names of the principal representatives of 
the parties to the agreement who negotiated the agreement, and any 
management or strategic plans discussing the proposed transaction. If 
within the 30-day period after notification, representatives of the 
United States make a written request for additional information, 
Stericycle shall not consummate the proposed transaction or agreement 
until thirty (30) calendar days after submitting all such additional 
information. Early termination of the waiting periods in this paragraph 
may be requested and, where appropriate, granted in the same manner as 
is applicable under the requirements and provisions of the HSR Act and 
rules promulgated thereunder. This Section shall be broadly construed 
and any ambiguity or uncertainty regarding the filing of notice under 
this Section shall be resolved in favor of filing notice.

VIII. Financing

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

IX. Hold Separate

    Until the divestitures required by this Final Judgment have been 
accomplished, defendants shall take all steps necessary to comply with 
the Hold Separate Stipulation and Order entered by this Court. 
Defendants shall take no

[[Page 5127]]

action that would jeopardize the divestitures ordered by this Court.

X. Affidavits

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestitures have been completed under Section IV or V, defendants 
shall deliver to the United States, the State of Missouri, and the 
State of Nebraska an affidavit as to the fact and manner of its 
compliance with Section IV or V of this Final Judgment. Each such 
affidavit shall include the name, address, and telephone number of each 
person who, during the preceding thirty (30) calendar days, made an 
offer to acquire, expressed an interest in acquiring, entered into 
negotiations to acquire, or was contacted or made an inquiry about 
acquiring, any interest in the Divestiture Assets, and shall describe 
in detail each contact with any such person during that period. Each 
such affidavit shall also include a description of the efforts 
defendants have taken to solicit buyers for the Divestiture Assets, and 
to provide required information to prospective Acquirers, including the 
limitations, if any, on such information. Assuming the information set 
forth in the affidavit is true and complete, any objection by the 
United States, after consultation with the State of Missouri and the 
State of Nebraska, to information provided by defendants, including 
limitation on information, shall be made within fourteen (14) calendar 
days of receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, defendants shall deliver to the United States an 
affidavit that describes in reasonable detail all actions defendants 
have taken and all steps defendants have implemented on an ongoing 
basis to comply with Section IX of this Final Judgment. Defendants 
shall deliver to the United States, the State of Missouri, and the 
State of Nebraska, an affidavit describing any changes to the efforts 
and actions outlined in defendants' earlier affidavits filed pursuant 
to this section within fifteen (15) calendar days after the change is 
implemented.
    C. Defendants shall keep all records of all efforts made to 
preserve and divest the Divestiture Assets until one year after such 
divestitures have been completed.

XI. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of determining whether the Final Judgment should be 
modified or vacated, and subject to any legally recognized privilege, 
from time to time authorized representatives of the United States 
Department of Justice Antitrust Division (``DOJ''), including 
consultants and other persons retained by the United States, shall, 
upon written request of an authorized representative of the Assistant 
Attorney General in charge of the Antitrust Division, and on reasonable 
notice to defendants, be permitted:
    1. access during defendants' office hours to inspect and copy, or 
at the option of the United States, to require defendants to provide 
hard copy or electronic copies of, all books, ledgers, accounts, 
records, data, and documents in the possession, custody, or control of 
defendants, relating to any matters contained in this Final Judgment; 
and
    2. to interview, either informally or on the record, defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews shall be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by defendants.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
defendants shall submit written reports or responses to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (including grand jury proceedings), or for the 
purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    D. If at the time information or documents are furnished by 
defendants to the United States, defendants represent and identify in 
writing the material in any such information or documents to which a 
claim of protection may be asserted under Rule 26(c)(1)(G) of the 
Federal Rules of Civil Procedure, and defendants mark each pertinent 
page of such material, ``Subject to claim of protection under Rule 
26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the United 
States shall give defendants ten (10) calendar days notice prior to 
divulging such material in any legal proceeding (other than a grand 
jury proceeding).

XII. No Reacquisition

    During the term of this Final Judgment, defendants may not 
reacquire any part of the Divestiture Assets, nor may any defendant 
participate in any other transaction that would result in a 
combination, merger, or other joining together of any part of the 
Divestiture Assets with assets of the divesting company.

XIII. Retention of Jurisdiction

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

XIV. Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire ten (10) years from the date of its entry.

XV. Public Interest Determination

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16, including making copies available to the 
public of this Final Judgment, the Competitive Impact Statement, and 
any comments thereon and the United States's responses to comments. 
Based upon the record before the Court, which includes the Competitive 
Impact Statement and any comments and response to comments filed with 
the Court, entry of this Final Judgment is in the public interest.

Date:------------------------------------------------------------------

Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16

-----------------------------------------------------------------------
United States District Judge

United States District Court for the District of Columbia

[[Page 5128]]



------------------------------------------------------------------------
 
------------------------------------------------------------------------
                  UNITED STATES    CASE NO.: 1:09-cv-02268, JUDGE: Hon.
                   OF AMERICA,      John D. Bates, DECK TYPE: Antitrust,
                   STATE OF         DATE STAMP.
                   MISSOURI, and
                   STATE OF
                   NEBRASKA,
                   Plaintiffs, v.
                   STERICYCLE,
                   INC., ATMW
                   ACQUISITION
                   CORP.,
                   MEDSERVE,
                   INC., and
                   AVISTA CAPITAL
                   PARTNERS L.P.,
                   Defendants.
------------------------------------------------------------------------

Competitive Impact Statement

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

I. Nature and Purpose of the Proceeding

    Defendant Stericycle, Inc., through ATMW Acquisition Corp., and 
defendant MedServe, Inc., through Avista Capital Partners, L.P., 
entered into a stock purchase agreement dated May 9, 2009, pursuant to 
which Stericycle would acquire all of the voting shares of MedServe, 
valued at $185 million. The United States, and the State of Missouri 
and the State of Nebraska (``States''), filed a civil antitrust 
Complaint on November 30, 2009, seeking to enjoin the proposed 
acquisition. The Complaint alleged that the likely effect of the 
acquisition would be to substantially lessen competition in the 
provision of infectious waste collection and treatment services for 
large quantity generator (``LQG'') customers in the states of Kansas, 
Missouri, Nebraska, and Oklahoma, in violation of Section 7 of the 
Clayton Act, 15 U.S.C. 18. This loss of competition would result in 
higher prices and reduced service for these customers of infectious 
waste collection and treatment services.
    With the filing of the Complaint in this case, the United States 
and the States also filed a Hold Separate Stipulation and Order and 
proposed Final Judgment, which are designed to eliminate the 
anticompetitive effects of the acquisition. Under the proposed Final 
Judgment, explained more fully below, Stericycle and MedServe are 
required within ninety (90) days after the filing of the Complaint, or 
five (5) days after notice of the entry of the Final Judgment by the 
Court, whichever is later, to divest, as a viable business, all of the 
MedServe infectious waste collection and treatment assets in Kansas, 
Missouri, Nebraska, and Oklahoma. Under the terms of the Hold Separate 
Stipulation and Order, Stericycle and MedServe are required to take 
certain steps to ensure that the assets to be divested will be 
preserved and held separate from their other assets and businesses.
    The United States, the States, and the defendants have stipulated 
that the proposed Final Judgment may be entered after compliance with 
the APPA. Entry of the proposed Final Judgment would terminate this 
action, except that the Court would retain jurisdiction to construe, 
modify, or enforce the provisions of the proposed Final Judgment and to 
punish violations thereof.

II. Description of the Events Giving Rise to the Alleged Violation

A. The Defendants and the Proposed Transaction

    Stericycle is a Delaware corporation with its principal place of 
business in Lake Forest, Illinois. Stericycle, a multi-national 
company, is the largest provider of infectious waste collection and 
treatment services in the United States, with operations in nearly all 
of the contiguous 48 states, including 46 treatment facilities and 80 
transfer and collection sites. In 2008, Stericycle reported total 
worldwide sales of approximately $1.1 billion, of which approximately 
78 percent were generated in the United States. ATMW Acquisition Corp. 
is a corporation formed by Stericycle to facilitate its acquisition of 
MedServe.
    MedServe is a Delaware corporation with its principal place of 
business in Bellaire, Texas. MedServe is the second-largest provider of 
infectious waste collection and treatment services in the United 
States, with operations in 25 states that include eight treatment 
facilities and 18 transfer and collection sites. In 2008, MedServe had 
total revenues of about $35 million. Avista Capital Partners, L.P. is 
an entity formed by MedServe to facilitate the acquisition of MedServe 
by Stericycle.
    The proposed transaction, as agreed to by defendants on May 9, 
2009, would substantially lessen competition in the provision of 
infectious waste collection and treatment services for LQG customers in 
the states of Missouri, Nebraska, Oklahoma, and Kansas. This 
acquisition is the subject of the Complaint and proposed Final Judgment 
filed by the United States and the States on November 30, 2009.

B. The Competitive Effects of the Transaction

1. Relevant Service Market: Infectious Waste Collection and Treatment 
Services for LQG Customers
    Regulated medical waste is waste generated in the diagnosis, 
treatment, or immunization of human beings or animals. There are three 
types of regulated medical waste: (1) Infectious waste; (2) 
pathological waste; and (3) trace chemotherapy waste. Infectious waste 
is waste that comes into contact with bodily fluids and ``sharps'' 
waste, such as syringes and scalpels. Pathological waste is anatomical 
parts, and trace chemotherapy waste is small amounts of chemical 
compounds used to treat cancer patients and the equipment used to 
administer the compounds. Infectious waste comprises approximately 90 
percent of all regulated medical waste generated in the United States.
    State and Federal governments heavily regulate the collection and 
treatment of regulated medical waste. They prescribe how each type of 
regulated medical waste must be stored, collected, and treated. 
Providers of infectious waste collection and treatment services are 
required to be licensed by the various state and Federal regulatory 
agencies before they can offer such services. Regulated medical waste 
must be stored separately from other types of waste, and each type of 
regulated medical waste must be stored separately from the other types 
in specially marked and sealed containers. Collection and transport to 
treatment facilities must be performed by a state-approved company.
    State-approved treatment facilities must be used to render 
regulated medical waste non-infectious. Failure to use state-approved 
treatment facilities subjects both the generator of the infectious 
waste and the infectious waste collection and treatment service 
provider to criminal prosecution, fines, damage actions, and 
potentially high clean-up costs.
    Autoclaves are the most prevalent treatment technology for 
infectious waste. An autoclave uses steam sterilization combined with 
pressure to render infectious waste non-infectious. Because autoclaving 
is a reliable and long-proven technology for treating infectious waste, 
it has become the

[[Page 5129]]

preferred choice for treating infectious waste.
    The infectious waste collection and treatment services industry 
categorizes customers according to the amount of infectious waste that 
they generate. LQG customers typically are hospitals, large 
laboratories, and other large medical facilities that generate large 
amounts of infectious waste. LQG customers often need collection to 
occur on a daily basis, or at least several times a week, and must 
receive continuous supplies of containers with sizeable storage 
capacity from their service providers.
    LQG customers require that their service providers perform both 
infectious waste collection and treatment. They also require their 
providers to meet strict standards to ensure they have sufficient 
technical capability, knowledge, and financial resources. For example, 
LQG customers typically require an infectious waste collection and 
treatment service provider to have: (a) An adequate infrastructure to 
serve the customer's needs, including trucks, storage containers, 
transfer stations, electronic equipment capable of monitoring and 
tracking each type of waste, and personnel with a variety of expertise 
to support the infrastructure; (b) an established reputation for 
providing reliable and timely collection and treatment for LQG 
customers; (c) its own infectious waste treatment facility to minimize 
the number of companies that handle the waste, thereby reducing the 
possibility that the waste is mishandled; and (d) substantial liability 
insurance that meets all Federal and State regulatory requirements 
governing infectious waste.
    Collection and treatment service providers bid for each LQG 
customer's business separately, and an infectious waste collection and 
treatment service provider can identify the specific competitive 
conditions that apply to each LQG customer, including which potential 
competitors can serve that LQG customer. Infectious waste collection 
and treatment service providers for LQG customers can and do price 
discriminate based on an LQG customer's requirements and the number of 
competitors available to provide such services.
    A small but significant increase in the price of infectious waste 
collection and treatment services for LQG customers would not cause LQG 
customers to move sufficient volumes of infectious waste to another 
type of collection and treatment service so as to make such a price 
increase unprofitable. Accordingly, the provision of infectious waste 
collection and treatment services for LQG customers is a line of 
commerce and a relevant price discrimination service market within the 
meaning of Section 7 of the Clayton Act.
2. Relevant Geographic Market
    The geographic market for the provision of infectious waste 
collection and treatment services for LQG customers is largely defined 
by transportation costs. Infectious waste collection and treatment 
service companies rely on trucks to transport waste from customer sites 
to their treatment facilities. Transfer stations enable service 
providers to transfer their waste into tractor-trailers and more cost-
effectively transport their waste to treatment facilities. Typically, 
the greater the distance between an LQG customer's operations and the 
service provider's treatment or transfer facility, the less price 
competitive the provider is.
    For LQG customers served by MedServe in Kansas, Missouri, Nebraska, 
and Oklahoma, the only competitive alternative is Stericycle. In these 
states, no other infectious waste collection and treatment service 
provider has a facility located within approximately 300 miles of 
Stericycle's or MedServe's facilities.
    In the states of Kansas, Missouri, Nebraska, and Oklahoma, LQG 
customers would not switch to a more distant infectious waste 
collection and treatment service provider in sufficient numbers so as 
to make a small but significant increase in price unprofitable. 
Accordingly, the states of Kansas, Missouri, Nebraska, and Oklahoma are 
a relevant geographic market within the meaning of Section 7 of the 
Clayton Act.
3. Anticompetitive Effects of the Acquisition
    In the states of Kansas, Missouri, Nebraska, and Oklahoma, the 
market for the provision of infectious waste collection and treatment 
services for LQG customers is highly concentrated. Following the 
acquisition, Stericycle would become the monopoly provider of 
infectious waste collection and treatment services for LQG customers in 
these states.
    Vigorous price competition between Stericycle and MedServe in the 
provision of infectious waste collection and treatment services has 
benefited LQG customers in Kansas, Missouri, Nebraska, and Oklahoma. 
Stericycle and MedServe are each other's only rival, directly competing 
on price and quality of service in the provision of infectious waste 
collection and treatment services for LQG customers.
    Therefore, the proposed acquisition will eliminate the competition 
between Stericycle and MedServe; reduce the number of providers of 
infectious waste collection and treatment services for LQG customers 
from two to one; and enable Stericycle to establish a monopoly in the 
provision of such services, leading to higher prices and lower quality 
of service for LQG customers in Kansas, Missouri, Nebraska, and 
Oklahoma, in violation of Section 7 of the Clayton Act.
    Successful entry into the provision of infectious waste collection 
and treatment services for LQG customers in Kansas, Missouri, Nebraska, 
and Oklahoma would be difficult, time-consuming, and costly. A 
prospective provider of infectious waste collection and treatment 
services for LQG customers faces substantial financial and permitting 
requirements to build a facility and the infrastructure needed to serve 
LQG customers. It also must have an established reputation for handling 
large amounts of infectious waste produced by LQG customers. A provider 
of infectious waste collection and treatment services for LQG customers 
in Kansas, Missouri, Nebraska, and Oklahoma must establish a treatment 
facility that contains a treatment technology, such as an autoclave, 
with sufficient capacity for treating large volumes of infectious 
waste. In addition to the capital costs of the treatment unit, local 
zoning and state permits are required.
    A provider of infectious waste collection and treatment services 
for LQG customers also must have an infrastructure of trucks, transfer 
stations, and electronic equipment capable of collecting, transporting, 
treating and disposing, and monitoring and tracking the infectious 
waste. A provider of infectious waste collection and treatment services 
for LQG customers also must develop a reputation and record of reliably 
collecting and treating large volumes of infectious waste in compliance 
with state and Federal regulations. In addition, a provider of 
infectious waste collection and treatment services for LQG customers 
must have the financial capability to indemnify LQG customers for any 
environmental fines or accidents resulting from the collection, 
transportation, and treatment of the infectious waste.
    Obtaining the necessary permits and building an autoclave facility, 
establishing the infrastructure to serve LQG customers, and developing 
a reputation and record of service and compliance would require in 
excess of two years. Entry into the provision of

[[Page 5130]]

infectious waste collection and treatment services for LQG customers in 
Kansas, Missouri, Nebraska, and Oklahoma would not be timely, likely, 
or sufficient to counter anticompetitive price increases or diminished 
quality of service that Stericycle could impose after the proposed 
acquisition.

III. Explanation of the Proposed Final Judgment

    The terms of the proposed Final Judgment will eliminate the 
anticompetitive effects of the acquisition alleged in the Complaint. 
Section IV of the proposed Final Judgment requires defendants, within 
ninety (90) days after the filing of the Complaint, or five (5) days 
after notice of the entry of the Final Judgment by the Court, whichever 
is later, to divest the assets currently used by MedServe in the 
provision of infectious waste collection and treatment services to LQG 
customers in Kansas, Missouri, Nebraska, and Oklahoma to an acquirer 
acceptable to the United States, in its sole discretion. The assets to 
be divested, along with associated tangible and intangible assets, are 
MedServe's Newton, Kansas autoclave facility and MedServe's transfer 
stations in Kansas City, Kansas; Oklahoma City, Oklahoma; Omaha, 
Nebraska; and Booneville, Missouri. These assets comprise all of the 
assets used by MedServe in the provision of infectious waste collection 
and treatment services for LQG customers in Kansas, Missouri, Nebraska, 
and Oklahoma. The divestiture of these assets according to the terms of 
the proposed Final Judgment will establish a new, independent, and 
economically viable competitor, thereby preserving competition in the 
provision of infectious waste collection and treatment services for LQG 
customers in Kansas, Missouri, Nebraska, and Oklahoma.
    In the event that defendants do not accomplish the divestiture 
within the time prescribed in the proposed Final Judgment, the proposed 
Final Judgment provides that the Court will appoint a trustee selected 
by the United States to effect the divestitures. If a trustee is 
appointed, the proposed Final Judgment provides that defendants will 
pay all costs and expenses of the trustee. The trustee's commission 
will be structured so as to provide an incentive for the trustee based 
on the price obtained and the speed with which the divestitures are 
accomplished. After his or her appointment becomes effective, the 
trustee will file monthly reports with the Court, United States, and 
the States as appropriate, setting forth his or her efforts to 
accomplish the divestitures. At the end of six months, if the 
divestitures have not been accomplished, the trustee, the United 
States, and the States, will make recommendations to the Court, which 
shall enter such orders as appropriate in order to carry out the 
purpose of the trust, including extending the trust or the term of the 
trustee's appointment.
    Section VII of the proposed Final Judgment requires that defendants 
provide advance notification of certain future proposed acquisitions 
not otherwise subject to the Hart-Scott-Rodino Antitrust Improvements 
Act of 1976, 15 U.S.C. 18a. That provision requires 30 days' advance 
written notice to the United States and the States before defendants 
acquire, directly or indirectly, (1) any interest in any business 
located in Kansas, Missouri, Nebraska, and Oklahoma that is engaged in 
the collection and treatment of infectious waste; (2) other than in the 
ordinary course of business, any assets located in Kansas, Missouri, 
Nebraska, and Oklahoma that are used in the collection and treatment of 
infectious waste; or (3) capital stock or voting securities of any 
person that, at any time during the twelve (12) months immediately 
preceding such acquisition, was engaged in the collection and treatment 
of infectious waste in Kansas, Missouri, Nebraska, and Oklahoma, where 
that person's annual revenues in these states from the collection and 
treatment of infectious waste were in excess of $500,000. With this 
provision, the United States and the States will have knowledge in 
advance of acquisitions that may impact competition in the provision of 
infectious waste collection and treatment services for LQG customers in 
Kansas, Missouri, Nebraska, and Oklahoma.

IV. Remedies Available to Potential Private Litigants

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

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States, the States, and the defendants have stipulated 
that the proposed Final Judgment may be entered by the Court after 
compliance with the provisions of the APPA, provided that the United 
States has not withdrawn its consent. The APPA conditions entry upon 
the Court's determination that the proposed Final Judgment is in the 
public interest. The APPA provides a period of at least sixty (60) days 
preceding the effective date of the proposed Final Judgment within 
which any person may submit to the United States written comments 
regarding the proposed Final Judgment. Any person who wishes to comment 
should do so within sixty (60) days of the date of publication of this 
Competitive Impact Statement in the Federal Register, or the last date 
of publication in a newspaper of the summary of this Competitive Impact 
Statement, whichever is later. All comments received during this period 
will be considered by the United States Department of Justice, which 
remains free to withdraw its consent to the proposed Final Judgment at 
any time prior to the Court's entry of judgment. The comments and the 
response of the United States will be filed with the Court and 
published in the Federal Register.
    Written comments should be submitted to: Maribeth Petrizzi, Chief, 
Litigation II Section, Antitrust Division, United States Department of 
Justice, 450 Fifth Street, NW., Suite 8700, Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    The United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits against defendants. The 
United States could have commenced litigation and sought a judicial 
order enjoining the acquisition of MedServe by Stericycle. The United 
States is satisfied that the divestiture and other relief described in 
the proposed Final Judgment will preserve competition in the provision 
of infectious waste collection and treatment services for LQG customers 
in Kansas, Missouri, Nebraska, and Oklahoma. The relief contained in 
the

[[Page 5131]]

proposed Final Judgment would achieve all or substantially all of the 
relief that the United States would have obtained through litigation, 
while avoiding the time, expense, and uncertainty of a full trial on 
the merits of the Complaint.

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

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a sixty-day comment period, after which the court shall 
determine whether entry of the Final Judgment ``is in the public 
interest.'' 15 U.S.C. 16(e)(1). In making that determination, in 
accordance with the statute, the court is required to consider:

    (A) The competitive impact of such judgment, including 
termination of alleged violations, provisions for 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). In considering these statutory factors, 
the court's inquiry is necessarily a limited one as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448, 1461 (D.C. Cir. 1995); see generally United States v. SBC 
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public 
interest standard under the Tunney Act); United States v. InBev N.V./
S.A. 2009-2 Trade Cas. (CCH) ]76,736, 2009 U.S. Dist. LEXIS 84787, No. 
08-1965 (JR), at *3 (D.D.C. Aug. 11, 2009) (noting that the court's 
review of a consent judgment is limited and only inquires ``into 
whether the government's determination that the proposed remedies will 
cure the antitrust violations alleged in the complaint was reasonable, 
and whether the mechanism to enforce the final judgment are clear and 
manageable.'').
    As the United States Court of Appeals for the District of Columbia 
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 Microsoft, 56 
F.3d at 1458-62. 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; United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 
(D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, at *3. 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).\1\ 
In determining whether a proposed settlement is in the public interest, 
the 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' prediction as to the effect of 
proposed remedies, its perception of the market structure, and its 
views of the nature of the case).
---------------------------------------------------------------------------

    \1\ 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' '').
---------------------------------------------------------------------------

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[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). Therefore, 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, and does not authorize the court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also InBev, 2009 
U.S. Dist. LEXIS 84787, at *20 (``the `public interest' is not to be 
measured by comparing the violations alleged in the complaint against 
those the court believes could have, or even should have, been 
alleged''). 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. Microsoft, 56 F.3d at 1459-60. 
As this Court 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.'' 489 F. Supp. 2d at 15.
    In its 2004 amendments to the Tunney Act,\2\ Congress made clear 
its

[[Page 5132]]

intent to preserve the practical benefits of utilizing consent decrees 
in antitrust enforcement, stating: ``[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 language wrote into the statute is what Congress intended when it 
enacted the Tunney Act in 1974, as Senator Tunney 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.\3\
---------------------------------------------------------------------------

    \2\ The 2004 amendments substituted the word ``shall'' for 
``may'' when directing the courts to consider the enumerated factors 
and amended the list of factors to focus on competitive 
considerations and address potentially ambiguous judgment terms. 
Compare 15 U.S.C. 16(e) (2004), with 15 U.S.C. 16(e)(1)(2006); see 
also SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004 
amendments ``effected minimal changes'' to Tunney Act review.).
    \3\ 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 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.'').
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VIII. Determinative Documents

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

    Dated: January ---- , 2010.

    Respectfully submitted,

Frederick H. Parmenter,
U.S. Department of Justice, Antitrust Division, Lit II Section, 450 
Fifth Street, NW., Suite 8700, Washington, DC 20530, 202-307-0620.

Certificate of Service

    I, Frederick H. Parmenter, hereby certify that on January ---- , 
2010, caused a copy of the foregoing Competitive Impact Statement to be 
served upon defendants Stericycle, Inc., ATMW Acquisition Corp., 
MedServe, Inc., and Avista Capital Partners, L.P., and plaintiffs the 
State of Missouri and State of Nebraska by mailing the document 
electronically to the duly authorized legal representatives as follows:

Counsel for Defendants Stericycle, Inc., and ATMW Acquisition Corp.

    David A. Clanton, D.C. Bar  376880, Baker & McKenzie LLP, 
815 Connecticut Avenue, NW., Washington, DC 20006-4078, Tel: (202) 452-
7014, Fax: (202) 416-6929, E-mail: [email protected].

Counsel for Defendants MedServe, Inc. and Avista Capital Partners, L.P.

    Sean F.X. Boland, D.C. Bar  249318, Howrey LLP, 1299 
Pennsylvania Avenue, NW., Washington, DC 20004-2402, Tel: (202) 383-
7122, Fax: (202) 318-8649, E-mail: [email protected].

Counsel for Plaintiff State of Missouri

    Anne E. Schneider, Assistant Attorney General, State of Missouri, 
P.O. Box 899, Jefferson City, MO 65102, Tel: (573) 751-8455, Fax: (573) 
751-2041, E-mail: 
[email protected]mailto:[email protected].

Counsel for Plaintiff State of Nebraska

    Leslie C. Levy, Assistant Attorney General, Nebraska Attorney 
General's Office, 2115 State Capital Building, Lincoln, NE 68509, Tel.: 
(402) 471-2683, Fax: (402) 471-4725, E-mail: [email protected].
    Frederick H. Parmenter, United States Department of Justice, 
Antitrust Division, Litigation II Section, 450 Fifth Street, NW., Suite 
8700, Washington, DC 20530, Tel.: (202) 307-0620, Fax: (202) 307-6583, 
E-mail: [email protected].

[FR Doc. 2010-1959 Filed 1-29-10; 8:45 am]
BILLING CODE 4410-11-P