[Federal Register Volume 75, Number 115 (Wednesday, June 16, 2010)]
[Notices]
[Pages 34156-34169]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-14563]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Amcor, Ltd., 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 Final Judgment, 
Hold Separate Stipulation and Order and Competitive Impact Statement 
have been filed with the United States District Court for the District 
of Columbia in United States of America v. Amcor Ltd., et al., Civil 
Action No. 1:10-cv-00973. On June 10, 2010, the United States filed a 
complaint alleging that the proposed acquisition by Amcor of the Alcan 
Packaging Medical Flexibles business of Rio Tinto would violate Section 
7 of the Clayton Act, 15 U.S.C. 18. The proposed Final Judgment, filed 
at the same time as the Complaint, requires Amcor to divest Alcan 
Packaging's Marshall, North Carolina plant, which produces vented bags 
for medical use, as well as certain tangible and intangible assets 
associated with the plant.
    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 District of Columbia. Copies of these materials may be obtained 
from the Antitrust Division upon request and payment of the 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, 
Department of Justice, 450 Fifth Street, NW., Suite 8700, Washington, 
DC 20530, (telephone: 202-307-0924).

J. Robert Kramer II,
Director of Operations.

United States District Court for the District of Columbia

    United States of America, Department of Justice, Antitrust 
Division, 450 Fifth Street, NW., Suite 8700, Washington, DC 20530, 
Plaintiff, v. Amcor LTD., 109 Burwood Road, Hawthorn VIC 3122, 
Australia, and Rio Tinto PLC, 2 Eastbourne Terrace, London, W2 6LG, 
United Kingdom, and Alcan Corporation, 8770 West Bryn Mawr Avenue, 
Chicago, IL 60631, Defendants.

Case No.: 1:10-cv-00973.
Description: Antitrust.
Judge: Kollar-Kotelly, Colleen.
Date Stamp: 6/10/2010.

Complaint

    The United States of America (``United States''), acting under the 
direction of the Attorney General, brings this civil antitrust action 
against defendants Amcor Ltd. (``Amcor''), Rio Tinto plc (``Rio 
Tinto''), and Alcan Corporation to enjoin Amcor's proposed acquisition 
from Rio Tinto of the Alcan Packaging Medical Flexibles business 
(``Alcan Packaging'') and to obtain other equitable relief. The United 
States complains and alleges as follows:

I. Nature of This Action

    1. Defendants Amcor Ltd. and Rio Tinto plc entered into an asset 
purchase agreement dated December 21, 2009, pursuant to which Amcor 
agreed to acquire the Alcan Packaging Medical Flexibles business from 
Rio Tinto for $65 million.
    2. Amcor and Alcan Packaging are two of the three leading suppliers 
of vented bags for medical use in the United States.
    3. The proposed acquisition would eliminate competition between 
Amcor and Alcan Packaging. For significant customers, Amcor and Alcan 
Packaging are the two best sources of vented bags for medical use. 
Elimination of the competition between Amcor and Alcan Packaging likely 
will result in Amcor's ability to raise prices to these customers. In 
addition, by eliminating Alcan Packaging, the transaction increases the 
likelihood of coordinated interaction between Amcor and the other 
leading supplier of vented bags for medical use. As a result, the 
proposed acquisition likely would substantially lessen competition in 
the development, production, and sale of vented bags for medical use in 
the United States, in violation of Section 7 of the Clayton Act, 15 
U.S.C. 18.

[[Page 34157]]

II. The Defendants

    4. Amcor is organized under Australian law and is headquartered in 
Melbourne, Australia. Amcor is a global packaging manufacturer that had 
total sales of AUD $9.53 billion for the fiscal year ending in June 
2009. That same year, Amcor had approximately $170 million in U.S. 
sales of flexible packaging for medical use.
    5. Rio Tinto is organized under the laws of and headquartered in 
the United Kingdom. Its 2009 sales totaled approximately $44 billion. 
Rio Tinto acquired Alcan Corporation in 2007.
    6. Alcan Corporation is a wholly owned subsidiary of Rio Tinto. 
Alcan Corporation is a Texas corporation headquartered in Chicago, 
Illinois. Alcan Packaging develops, produces, and sells flexible 
packaging for medical use in the United States. In 2008, Alcan 
Packaging sold approximately $115 million of flexible packaging for 
medical use.

III. Jurisdiction and Venue

    7. The United States brings this action under Section 15 of the 
Clayton Act, 15 U.S.C. 25, to prevent and restrain defendants from 
violating Section 7 of the Clayton Act, 15 U.S.C. 18.
    8. Defendants themselves, or through wholly owned subsidiaries, 
produce and sell vented bags for medical use in the flow of interstate 
commerce. Defendants' activities in the development, production, and 
sale of vented bags for medical use substantially affect interstate 
commerce. This Court has subject-matter jurisdiction over this action 
pursuant to Section 15 of the Clayton Act, 15 U.S.C. 25, and 28 U.S.C. 
1331, 1337(a) and 1345.
    9. Defendants 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). Venue is also proper in the District of Columbia for 
defendants Amcor and Rio Tinto under 28 U.S.C. 1391(d).

IV. Trade and Commerce

A. Background

1. Overview of Flexible Packaging for Medical Use
    10. Flexible packaging is any package the shape of which can be 
readily changed. Flexible packaging is distinguishable from rigid 
packaging such as trays, bottles, vials, and other hard plastic or 
glass containers. Flexible packaging for medical use includes bags, 
pouches, tubing, forming films, rollstock, and lidding, made in 
different styles and using different materials. Packaged products 
include items ranging from scalpels, intravenous tubes, and syringes to 
large surgery trays and kits.
    11. Generally, flexible packaging is produced by a ``converter,'' 
which makes the flexible packaging according to a common production 
blueprint. The basic production steps can be described as: (1) The 
processing of resins into plastic film, either by ``casting'' or 
``blowing'' (which is the extrusion of resin pellets through a die); 
(2) the conversion of the film by laminating multiple sheets together, 
applying coatings, and/or printing on the sheets; and (3) the finishing 
of the product by slitting and placing it on large rolls, or forming it 
into bags, pouches or other constructions.
    12. If a converter performs all three of the process steps in-
house, it is considered to be vertically integrated. Many converters 
purchase film that is blown or cast by another company and simply 
convert and finish the film, however. Also, many large medical device 
manufacturers have the capability to form the packaging product 
themselves and, instead of purchasing ``converted products'' (e.g., 
bags or pouches), purchase ``rollstock,'' which is film supplied as a 
roll.
    13. The seeming simplicity of the production process is misleading. 
A single piece of film--the starting point for the conversion process--
itself may contain as many as eleven or more separate layers that have 
been formed together during the extrusion process. The combination of 
layers in the film, with each layer extruded from a specific type of 
resin, provides the finished structure with the particular 
characteristics needed to properly contain the product for which that 
flexible package is intended. Furthermore, manufacturing a converted 
product from these films is difficult because the manufacturer must 
balance the package's ability to maintain its seal with its ability to 
open easily.
    14. Producers of flexible packaging sell their packaging to medical 
device manufacturers that package their products for wholesale 
distribution or sale to end-users in the medical industry. End-users 
include hospitals, doctors' offices, and laboratories.
    15. Sterilizable flexible packaging for medical use (``medical 
flexibles'') is different from other types of flexible packaging for 
several reasons. First, medical flexibles must be able to withstand the 
sterilization process because the medical device is sterilized after it 
has been placed in the package. The most common sterilization process 
is the forcing of ethylene-oxide gas into and out of the package (known 
as ``EtO sterilization''), which requires a ``vented'' or 
``breathable'' package that incorporates some porous material. This 
porous material must act as a vent for the EtO gas to enter and exit 
but also must maintain the sterile barrier. The most widely used 
venting material is Tyvek, a durable, effective, Dupont-patented 
plastic material.
    16. Second, medical flexibles must conform to strict quality and 
qualification requirements. Before a medical device manufacturer 
purchases any medical flexible product, it first must ``qualify'' the 
particular product. The product qualification process is meant to guard 
against the risk of the package's failure. A failure of the package 
could expose the medical device to microbes, bacteria, or particulates, 
which could cause a patient's injury, sickness, or even death. The 
risks associated with packaging failure dictate a rigorous product 
qualification process, whereby the customer performs numerous tests, 
including quality testing, sterilization testing, seal strength 
testing, aging simulations, and shipping and handling simulations.
    17. Sterilization testing during qualification is especially 
rigorous. The EtO sterilization process is an aggressive process that 
forces gas into and out of the flexible packaging through the venting 
material. During this process, the gas may not be able to escape 
quickly enough through the venting material, bursting the seams of the 
packaging. In addition, EtO sterilization can weaken the plastic films 
of the packaging, weaken seals, cause discoloration of the package, and 
cause other types of harm to the package. Producing medical flexible 
packaging that can withstand this process is difficult, and even 
products from large, established suppliers may fail customers' 
sterilization tests.
2. Vented Bags for Medical Use
    18. Vented bags for medical use are formed by sealing two pieces of 
film rollstock together on three sides, leaving the fourth side open 
for filling and sealing. There are two different styles of EtO-
sterilizable vented bags for medical use: (1) ``Header bags,'' which 
are sealed on one end by a long, thin venting strip running the length 
of the bag, and (2) ``patch bags'' or ``breather bags,'' which have one 
or more circular venting patches on the sides of the bag instead of a 
strip over the end. Both styles of vented bag perform the same 
functions for the same end uses, and are generally

[[Page 34158]]

considered to be interchangeable. As with medical flexibles generally, 
Tyvek is the leading venting material for vented bags for medical use.
    19. Each manufacturer produces vented bags for medical use with a 
range of features and characteristics. These include, among others: 
Size, ease of opening, film composition, film gauge, seal strength, 
venting style, and venting design. Customers decide which vented bag 
for medical use to purchase by weighing the relative importance of 
these features.
    20. Despite their generic name, vented bags for medical use are 
specialized, hard-to-make products. Because Tyvek is expensive, vented 
bags for medical use incorporate as little Tyvek into their design as 
possible. Minimizing the use of Tyvek, however, makes it more likely 
that, during sterilization, the EtO gas may not escape quickly enough 
through the venting material, bursting the seams of the packaging and 
breaking the sterile barrier. Designing and producing vented bags for 
medical use that strike the proper balance between using as little 
Tyvek as possible and providing sufficient venting for the EtO gas to 
escape is difficult and requires specialized knowledge and processes.

B. Relevant Market

    21. The development, production, and sale of vented bags for 
medical use to U.S. customers is a line of commerce and a relevant 
market within the meaning of Section 7 of the Clayton Act.
    22. Vented bags for medical use have specific end-uses, for which 
other types of medical flexibles cannot be used. Vented bags for 
medical use typically are used to accommodate larger and heavier items, 
such as surgical gowns and surgical kits and trays. Other types of 
flexible packaging, such as vented pouches for medical use, cannot 
handle these larger, heavier items because they are designed 
differently. Therefore, the relevant product is vented bags for medical 
use.
    23. U.S. customers have unique qualification requirements that 
allow producers to price discriminate against them without regard to 
prices of foreign producers. Based on the locations of customers for 
vented bags for medical use, the relevant geographic market is the 
United States.
    24. A small but significant increase in the price of vented bags 
for medical use to U.S. customers would not cause those customers to 
turn to other types of flexible packaging or to engage in arbitrage by 
purchasing through customers located outside of the United States, or 
otherwise to reduce purchases of vented bags for medical use, in 
volumes sufficient to make such a price increase unprofitable.

C. Market Participants

    25. Amcor, Alcan Packaging, and one other competitor are the only 
significant competitors in the U.S. market for vented bags for medical 
use. Smaller suppliers are not significant competitors in the U.S. 
market for vented bags for medical use because their products generally 
serve niche applications, such as low-volume products, non-standard 
sizes, and small customers, and are not price competitive. Foreign 
suppliers are not significant competitors in the U.S. market for vented 
bags for medical use because currently they do not sell into the United 
States, and they would not do so in the event of a small but 
significant increase in price because of the qualification barriers 
they would face. Thus, there are no other providers of vented bags for 
medical use to which a medical device manufacturer could turn if faced 
with a small but significant increase in the price of vented bags for 
medical use.

V. Likely Anticompetitive Effects of the Proposed Acquisition

A. How Competition Occurs in the U.S. Market for Vented Bags for 
Medical Use

    26. Producers of vented bags for medical use must work closely with 
medical device manufacturers to ensure that their packaging material 
meets their customers' qualifications, that they meet the promised lead 
times, and that they continuously find ways to cut the customers' 
costs. Producers also must engage in research and development to 
deliver better packaging products in order to compete effectively.
    27. Prices for vented bags for medical uses are customer-specific 
and based on, among other things, an individual customer's unique 
requirements and specifications. The price charged to one customer 
likely will be different from the price charged to another customer. 
Additionally, arbitrage is unlikely because customer-specific printing, 
branding, and labeling on vented bags for medical use prevents sales 
among customers.
    28. Price competition in the market for vented bags for medical use 
occurs in two ways. First, customers may issue a request for proposal, 
through which they invite potential suppliers to bid on supplying 
packaging that meets the customers' specifications. Customers evaluate 
the competing bids on the basis of, among other things, compliance with 
their specifications, price, delivery times, and the services provided 
by each producer. Second, price competition may also occur less 
formally if a customer seeks or receives an offer from an alternative 
supplier and the incumbent is given a chance to respond.
    29. Because of the risk-averse nature of medical device 
manufacturers, the time-consuming and difficult qualification process, 
and the high quality requirements, switching suppliers can involve 
significant time and expense. Consequently, competition tends to take 
the form of competition for a stream of new business, which the winner 
expects to keep for some years.

B. Likely Anticompetitive Effects in the U.S. Market for Vented Bags 
for Medical Use

    30. The proposed acquisition of Alcan Packaging by Amcor likely 
would substantially lessen competition in the U.S. market for vented 
bags for medical use. Amcor, Alcan Packaging, and one other company are 
the three primary competitors in the U.S. market for vented bags for 
medical use. Currently, Amcor and Alcan Packaging account for 27 
percent and 33 percent, respectively, of U.S. sales in the market for 
vented bags for medical use. If the transaction is not enjoined, three 
firms collectively would account for approximately 95 percent of sales 
of vented bags for medical use in the United States. Using a measure 
called the Herfindahl-Hirschman Index (``HHI'') (explained in Appendix 
A), the HHI would increase by more than 1,790 points, resulting in a 
post-acquisition HHI of more than 4,830 points.
    31. Due to Amcor and Alcan Packaging's collective overall expertise 
in meeting the needs of customers and other technical and commercial 
factors for vented bags for medical use, including, among other things, 
price, quality, ability to pass the customer's rigorous qualification 
procedures, delivery times, service, and technical support, Amcor and 
Alcan Packaging frequently are perceived by each other, by other 
bidders, and by customers as two of the three most significant 
competitors in the market.
    32. Amcor's and Alcan Packaging's bidding behavior often has been 
constrained by the possibility of losing business to the other. For 
significant customers of vented bags for medical use, Amcor and Alcan 
Packaging are their two best substitutes. By eliminating Alcan 
Packaging, Amcor likely would gain the incentive and ability to 
profitably increase its bid prices, reduce quality, offer fewer and 
less attractive supply-chain options, reduce technical support, and 
reduce innovation below what it would have been absent the acquisition.

[[Page 34159]]

    33. Customers have benefited from competition between Amcor and 
Alcan Packaging through lower prices, higher quality, better supply-
chain options (including delivery times and volume-purchase 
requirements), technical support, and numerous innovations. The 
combination of Amcor and Alcan Packaging would eliminate this 
competition and future benefits to customers, and likely would result 
in harmful unilateral price effects.
    34. In addition, by reducing the number of significant competitors 
in the U.S. market for vented bags for medical use from three to two, 
Amcor and the one other competitor would gain the incentive and likely 
ability to raise prices through coordinated interaction. The fringe 
competitors would be unable to render the coordination unprofitable by 
repositioning or expansion. Coordination would be more likely because, 
for example, the merger would make customer allocation easier. Each 
competitor could be reasonably certain as to the identity of the 
other's customers, making cheating easier to detect and discipline and, 
because each competitor is at or near capacity, the ability of each 
profitably to expand sales and steal business from the other would be 
limited.
    35. Customers have benefited from competition between Amcor, Alcan 
Packaging, and the other significant competitor through lower prices, 
higher quality, better supply-chain options (including delivery times 
and volume-purchase requirements), technical support, and numerous 
innovations. The combination of Amcor and Alcan Packaging would 
eliminate this competition and future benefits to customers, and likely 
would result in harmful coordinated price effects.
    36. The proposed acquisition, therefore, likely would substantially 
lessen competition in the United States for the development, 
production, and sale of vented bags for medical use, which likely would 
lead to higher prices, lower quality, less favorable supply-chain 
options, reduced technical support, and less innovation, in violation 
of Section 7 of the Clayton Act.

C. Entry or Expansion Is Unlikely To Prevent Anticompetitive Harm

    37. In order to compete effectively in the U.S. market for vented 
bags for medical use, a competitor must be vertically integrated. Other 
converters produce vented bags for medical use similar to those 
produced by Amcor and Alcan Packaging. Unlike Amcor, Alcan Packaging, 
and the other leading competitor, however, those companies are not 
vertically integrated (i.e., they do not make their own films) and do 
not benefit from similar economies of scale or scope, and they 
therefore operate at a cost disadvantage.
    38. Amcor and Alcan Packaging, as a consequence of the efficiencies 
they possess due to vertical integration, are able to offer vented bags 
for medical use to customers at lower prices and higher volumes than 
are the non-vertically integrated competitors. In order to compete 
effectively with Amcor and Alcan Packaging, other converters must begin 
producing their own films and expand production to capture similar 
scale and scope benefits. Expanding to compete with the vertically 
integrated converters would require a significant capital investment 
and would take years, as the expanding company still would have to 
qualify each of its products at each new customer. These suppliers 
likely would not be able to expand to meet customers' required 
specifications or quality requirements cost-effectively within a 
commercially reasonable amount of time, and therefore would be deterred 
from attempting to expand.
    39. Likewise, de novo entry into the market for vented bags for 
medical use would not be timely, likely, or sufficient to deter 
anticompetitive post-merger pricing. A new supplier would need to 
construct production lines capable of producing vented bags for medical 
use that meet the rigorous standards set forth by major buyers of such 
films. Construction of manufacturing facilities would require a 
significant capital investment and the entrant would have to be 
committed to research and development. In addition, the technical know-
how necessary to design and successfully manufacture packaging that is 
able to pass customers' qualification tests is difficult to obtain and 
is learned through a time-consuming trial-and-error process.
    40. Even after a new entrant has developed the capability to supply 
vented bags for medical use, the entrant's product must be qualified by 
potential customers, demonstrating that its products can meet rigorous 
quality and performance standards. For example, because the qualifying 
process for vented bags for medical use typically requires a simulated 
aging test, where sample products are packaged in the vented bag, 
sterilized, and then stored in an accelerated aging room for extended 
periods of time, the process can take many months. Further, initial 
attempts to qualify are not guaranteed to be successful, and even 
current market participants have had to repeat the process multiple 
times. In such cases, the qualification process can take several years 
with no guarantee of success. Moreover, because customer specifications 
are unique, qualification with one customer does not guarantee 
qualification with another.
    41. Even if a new entrant were to develop the capability to supply 
vented bags for medical use and can pass qualification tests, the new 
entrant still would face the same barriers to expansion as those faced 
by converters currently producing vented bags for medical use. In 
addition, in the medical industry, where the costs of packaging failure 
are high, medical device manufacturers are reluctant to work with 
suppliers that have not established reputations for quality, the 
establishment of which occurs gradually over many years.
    42. As a result of these barriers, expansion by non-vertically 
integrated vented bag converters or entry by new firms into the market 
for the development, production, and sale of vented bags for medical 
use would not be timely, likely, or sufficient to prevent a likely 
exercise of market power by Amcor after the acquisition.

VI. The Proposed Acquisition Violates Section 7 of the Clayton Act

    43. Amcor's proposed acquisition of the Alcan Packaging business 
likely would substantially lessen competition in the development, 
production, and sale of vented bags for medical use in the United 
States, in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
    44. Unless enjoined, the proposed acquisition likely would have the 
following anticompetitive effects, among others:
    (a) Actual and potential competition between Amcor and Alcan 
Packaging in the market for the development, production, and sale of 
vented bags for medical use in the United States would be eliminated;
    (b) Competition in the market for the development, production, and 
sale of vented bags for medical use in the United States likely would 
be substantially lessened; and
    (c) For vented bags for medical use in the United States, prices 
likely would increase, quality likely would decrease, supply-chain 
options likely would be less favorable, technical support likely would 
be reduced, and innovation likely would decline.

VII. Requested Relief

    45. The United States requests that this Court:
    (a) Adjudge and decree Amcor's proposed acquisition of the Alcan

[[Page 34160]]

Packaging business to violate Section 7 of the Clayton Act, 15 U.S.C. 
18;
    (b) Enjoin defendants and all persons acting on their behalf from 
consummating the proposed acquisition of the Alcan Packaging business 
by Amcor, or from entering into or carrying out any other agreement, 
plan, or understanding, the effect of which would be to combine Amcor 
with the Alcan Packaging business;
    (c) Award the United States its costs for this action; and
    (d) Award the United States such other and further relief as the 
Court deems just and proper.

FOR PLAINTIFF UNITED STATES OF AMERICA:
/s/--------------------------------------------------------------------

William F. Cavanaugh, Jr.,
Acting Assistant Attorney General.

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

Maribeth Petrizzi,
Chief, Litigation II Section,
D.C. Bar  435204.
/s/--------------------------------------------------------------------

J. Robert Kramer II,
Director of Operations

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

Dorothy B. Fountain,
Assistant Chief, Litigation II Section,
D.C. Bar  439469.

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

Dando B. Cellini,
Brian E. Rafkin,
Janet A. Nash,
Ferdose al-Taie,
(D.C. Bar  467730),
Stephen A. Harris,
Attorneys,
United States Department of Justice,
Antitrust Division,
450 Fifth Street, N.W., Suite 8700,
Washington, DC 20530,
(202) 307-0829.

Dated: June 10, 2010

Appendix A

Definition of HHI

    The term ``HHI'' means the Herfindahl-Hirschman Index, a commonly 
accepted measure of market concentration. The HHI is calculated by 
squaring the market share of each firm competing in the market and then 
summing the resulting numbers. For example, for a market consisting of 
four firms with shares of 30, 30, 20, and 20%, the HHI is 2,600 (30\2\ 
+ 30\2\ + 20\2\ + 20\2\ = 2,600). The HHI takes into account the 
relative size distribution of the firms in a market. It approaches zero 
when a market is occupied by a large number of firms of relatively 
equal size and reaches its maximum of 10,000 points when a market is 
controlled by a single firm. The HHI increases both as the number of 
firms in the market decreases and as the disparity in size between 
those firms increases.
    Markets in which the HHI is between 1,000 and 1,800 points are 
considered to be moderately concentrated, and markets in which the HHI 
is in excess of 1,800 points are considered to be highly concentrated. 
See Horizontal Merger Guidelines ] 1.51 (revised Apr. 8, 1997). 
Transactions that increase the HHI by more than 100 points in highly 
concentrated markets presumptively raise antitrust concerns under the 
Horizontal Merger Guidelines issued by the Department of Justice and 
the Federal Trade Commission. See id.

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Amcor Ltd., and Rio 
Tinto PLC, and Alcan Corporation, Defendants.

Case No.:
Description: Antitrust.
Judge:
Date Stamp:

Proposed Final Judgment

    Whereas, Plaintiff United States of America filed its Complaint on 
June 10, 2010, the United States and defendants Amcor Ltd., Rio Tinto 
plc, and Alcan Corporation, 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 fact or law;
    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 certain rights or assets by defendants 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 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 defendants under Section 7 of the Clayton 
Act, as amended (15 U.S.C. 18).

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' means the entity to whom Amcor shall divest the 
Divestiture Assets.
    B. ``DuPont Tyvek Authorized Converter'' means the owner of a 
license issued by DuPont that permits its owner to purchase directly 
from DuPont any medical-grade type of DuPont's patented Tyvek material, 
and to use, promote, and resell Tyvek or products incorporating Tyvek.
    C. ``Amcor'' means defendant Amcor Ltd., organized under the laws 
of Australia and headquartered in Melbourne, Australia, its successors 
and assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships and joint ventures, and their directors, officers, 
managers, agents, and employees.
    D. ``Rio Tinto'' means defendant Rio Tinto plc, organized under the 
laws of and headquartered in the United Kingdom, its successors and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships and joint ventures, and their directors, officers, 
managers, agents, and employees.
    E. ``Alcan Packaging'' means defendant Alcan Corporation, a Texas 
corporation that is a wholly owned subsidiary of Rio Tinto 
headquartered in Chicago, Illinois, its successors and assigns, and its 
subsidiaries, divisions, groups, affiliates, partnerships and joint 
ventures, and their directors, officers, managers, agents, and 
employees.
    F. ``Divestiture Assets'' means:
    (1) Alcan Packaging's facility located at 100 Kenpack Lane, 
Marshall, North Carolina 28753 (``Marshall Facility'');
    (2) All tangible assets that comprise the Marshall Facility, 
including, research and development activities; all manufacturing 
equipment, tooling and fixed assets, personal property, inventory, 
office furniture, materials, supplies, and other tangible property and 
all assets used exclusively in connection with the Marshall Facility; 
all licenses, permits and authorizations issued by any governmental 
organization relating to the Marshall Facility; all contracts, teaming 
arrangements, agreements, leases, commitments, certifications, and 
understandings, relating to the Marshall Facility, including supply 
agreements;

[[Page 34161]]

all customer lists, contracts, accounts, and credit records; all repair 
and performance records and all other records relating to the Marshall 
Facility; and
    (3) The following intangible assets:
    (a) All intangible assets used exclusively or primarily in the 
design, development, production, marketing, servicing, distribution, 
and/or sale of any product produced at the Marshall Facility, 
including, but not limited to, all patents, licenses and sub-licenses, 
intellectual property, copyrights, trade names or trademarks, 
including, but not limited to, ``Kwikbreathe,'' ``Kwiktear,'' 
``Ultimate Header Film,'' ``Ultimate Header Bag,'' ``Ultimate 
Tyvek[reg] Header Bag,'' ``Ultimate Kwiktear Bag,'' ``KWAdvent,'' 
``Direct Seal,'' or any derivation thereof, service marks, service 
names, technical information, designs, trade dress, and trade secrets; 
computer software, databases, and related documentation; know-how, 
including, but not limited to, recipes, formulas, and machine settings; 
information relating to plans for, improvements to, or line extensions 
of, any product produced at the Marshall Facility; drawings, 
blueprints, designs, design protocols, specifications for materials, 
and specifications for parts and devices; marketing and sales data; 
quality assurance and control procedures; design tools and simulation 
capability; contractual rights; manuals and technical information 
provided by Alcan Packaging to its own employees, customers, suppliers, 
agents, or licensees; safety procedures for the handling of materials 
and substances; research information and data concerning historic and 
current research and development efforts, including, but not limited 
to, designs and experiments and the results of successful and 
unsuccessful designs and experiments; and
    (b) With respect to any intangible assets that are not included in 
paragraph II(F)(3)(a), above, and that prior to the filing of the 
Complaint in this matter were used in connection with the design, 
development, production, marketing, servicing, distribution, and/or 
sale both of products produced at the Marshall Facility and products 
produced at any other Alcan Packaging facility, a non-exclusive, non-
transferable license for such intangible assets to be used for the 
design, development, production, marketing, servicing, distribution, 
and/or sale of any product produced at the Marshall Facility, and only 
products produced at the Marshall Facility, for the period of time that 
defendants have rights to such assets; provided, however, that any such 
license is transferable to any future purchaser of all or any relevant 
portion of the Marshall Facility.

III. Applicability

    A. This Final Judgment applies to Amcor, Rio Tinto, and Alcan 
Packaging, as defined above, and all other persons in active concert or 
participation with any of them who receive actual notice of this Final 
Judgment by personal service or otherwise.
    B. If, prior to complying with Section IV or 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. Amcor is 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 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. The United States, in its sole 
discretion, 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. Amcor agrees to use its best efforts to divest 
the Divestiture Assets as expeditiously as possible.
    B. In accomplishing the divestiture ordered by this Final Judgment, 
Amcor promptly shall make known, by usual and customary means, the 
availability of the Divestiture Assets. Amcor shall inform any person 
making 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. Amcor 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. Amcor shall make available such 
information to the United States at the same time that such information 
is made available to any other person.
    C. Amcor shall provide the Acquirer and the United States 
information relating to the personnel involved in the production, 
operation, development and sale of any product by the Marshall Facility 
to enable the Acquirer to make offers of employment. Defendants will 
not interfere with any negotiations by the Acquirer to employ any 
defendant employee whose primary responsibility is the operation of the 
Marshall Facility, and the development, production, and sale of vented 
bags for medical use.
    D. Amcor shall permit prospective Acquirers of the Divestiture 
Assets to have reasonable access to personnel and to make inspections 
of the Marshall Facility; 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. Amcor 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, use, 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 each asset, 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 Marshall Facility.
    H. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section IV, or by trustee appointed pursuant to 
Section V, of this Final Judgment, shall include the entire Divestiture 
Assets, and shall be accomplished in such a way as to satisfy the 
United States, in its sole discretion, that the Divestiture Assets can 
and will be used by the Acquirer as part of a viable, ongoing business 
in the development, production, and sale of vented bags for medical 
use. The divestitures, whether pursuant to Section IV or Section V of 
this Final Judgment:
    (1) Shall be made to an Acquirer with a readily available supply of 
Tyvek, such as a DuPont Tyvek Authorized Converter or one that has, or 
will have on the date of divestiture, a supply agreement with a DuPont 
Tyvek Authorized Converter;
    (2) Shall be made to an Acquirer that, in the United States's sole 
judgment, has the intent and capability (including the necessary 
managerial, operational, technical and financial capability) of 
competing effectively in the

[[Page 34162]]

development, production, and sale of vented bags for medical use; and
    (3) Shall be accomplished so as to satisfy the United States, in 
its sole discretion, that none of the terms of any agreement between 
the Acquirer and defendants give 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 Amcor has not divested the Divestiture Assets within the time 
period specified in Section IV(A), Amcor 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 divestiture 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 
divestiture to an Acquirer acceptable to the United States 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(D) of this Final Judgment, the 
trustee may hire at the cost and expense of Amcor 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 divestiture.
    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 Amcor, 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 Amcor 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 divestiture 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 divestiture. 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 research, development, or 
commercial information. Defendants shall take no action to interfere 
with or to impede the trustee's accomplishment of the divestiture.
    F. After its appointment, the trustee shall file monthly reports 
with the United States and the Court setting forth the trustee's 
efforts to accomplish the divestiture 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 divestiture ordered 
under this Final Judgment within six (6) months after the trustee's 
appointment, the trustee shall promptly file with the Court a report 
setting forth: (1) The trustee's efforts to accomplish the required 
divestiture; (2) the reasons, in the trustee's judgment, why the 
required divestiture has 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 Divestiture

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, Amcor shall notify the United States of any 
proposed divestiture required by Section IV of this Final Judgment. 
Within two (2) business days following execution of a definitive 
divestiture agreement, the trustee shall notify the United States and 
defendants of any proposed divestiture required by Section V of this 
Final Judgment. The notice shall set forth the details of the proposed 
divestiture 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 by the United 
States of such notice, the United States may request from defendants, 
the proposed Acquirer, any other third party, or the trustee, if 
applicable, additional information concerning the proposed divestiture, 
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 divestiture. If the United States provides written notice that 
it does not object, the divestiture may be consummated, subject only to 
defendants' limited right to object to the sale under Section 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 Section V(C), a 
divestiture proposed under Section V shall not be consummated unless 
approved by the Court.

[[Page 34163]]

VII. Financing

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

VIII. Hold Separate

    Until the divestiture required by this Final Judgment has 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 action that would jeopardize the divestiture 
ordered by this Court.

IX. 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 divestiture has been completed under Section IV or V, Amcor shall 
deliver to the United States 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 Amcor 
has 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 to information provided by Amcor, including limitations 
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, Amcor 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 VIII of this Final Judgment. Amcor shall deliver to the 
United States 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 
divestiture has been completed.

X. 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, 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).

XI. Notification

    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''), 
Amcor, without providing advance notification to the Antitrust 
Division, shall not directly or indirectly acquire any assets of or any 
interest--including any financial, security, loan, equity, or 
management interest--in any entity in the business of developing, 
producing or selling vented bags for medical use in the United States 
during the term of this Final Judgment.
    Such notification shall be provided to the Antitrust Division 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 vented bags for medical use. 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 
Antitrust Division make a written request for additional information, 
defendants 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.

XII. No Reacquisition

    Amcor may not reacquire any part of the Divestiture Assets during 
the term of this Final Judgment.

[[Page 34164]]

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

    United States of America, Plaintiff, v. Amcor LTD., and Rio 
Tinto PLC, and Alcan Corporation, Defendants.

Case No.: 1:10-cv-00973.
Description: Antitrust.
Judge: Kollar-Kotelly, Colleen.
Date Stamp: 6/10/2010.

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

    Defendants Amcor Ltd. and Rio Tinto plc entered into an asset 
purchase agreement dated December 21, 2009, pursuant to which Amcor 
agreed to acquire the Alcan Packaging Medical Flexibles business from 
Rio Tinto for $65 million.
    The United States filed a civil antitrust Complaint against Amcor, 
Rio Tinto, and Alcan Corporation on June 10, 2010, seeking to enjoin 
Amcor's acquisition of the Alcan Packaging Medical Flexibles business. 
The Complaint alleged that the acquisition likely would substantially 
lessen competition in violation of Section 7 of the Clayton Act, 15 
U.S.C. 18, in the United States for the development, production, and 
sale of vented bags for medical use. That loss of competition likely 
would result in higher prices, decreased quality, less favorable 
supply-chain options, reduced technical support, and lesser innovation 
in the U.S. market for vented bags for medical use.
    At the same time the Complaint was filed, the United States filed a 
Hold Separate Stipulation and Order (``Hold Separate'') and proposed 
Final Judgment, which are designed to eliminate the anticompetitive 
effects of Amcor's acquisition of the Alcan Packaging Medical Flexibles 
business. Under the proposed Final Judgment, which is explained more 
fully below, defendants are required to divest Alcan Packaging's 
facility that produces all of its vented bags for medical use, all of 
the tangible assets necessary to operate the facility, and all of the 
intangible assets (i.e., intellectual property and know-how) related to 
the facility.
    The United States and 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 Final Judgment and to punish violations thereof.

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

A. The Defendants and the Industry

1. The Defendants
    Amcor is organized under Australian law and is headquartered in 
Melbourne, Australia. Amcor is a global packaging manufacturer that had 
total sales of AUD $9.53 billion for the fiscal year ending in June 
2009. That same year, Amcor had approximately $170 million in U.S. 
sales of flexible packaging for medical use.
    Rio Tinto is organized under the laws of and headquartered in the 
United Kingdom. Its 2009 sales totaled approximately $44 billion. Rio 
Tinto acquired Alcan Corporation in 2007. Alcan Corporation is a wholly 
owned subsidiary of Rio Tinto. Alcan Corporation is a Texas corporation 
headquartered in Chicago, Illinois. Alcan Packaging develops, produces, 
and sells flexible packaging for medical use in the United States. In 
2008, Alcan Packaging sold approximately $115 million of flexible 
packaging for medical use.
2. Overview of Flexible Packaging for Medical Use
    Flexible packaging is any package the shape of which can be readily 
changed. Flexible packaging is distinguishable from rigid packaging 
such as trays, bottles, vials, and other hard plastic or glass 
containers. Flexible packaging for medical use includes bags, pouches, 
tubing, forming films, rollstock, and lidding, made in different styles 
and using different materials. Packaged products include items ranging 
from scalpels, intravenous tubes, and syringes to large surgery trays 
and kits.
    Generally, flexible packaging is produced by a ``converter,'' which 
makes the flexible packaging according to a common production 
blueprint. The basic production steps can be described as: (1) The 
processing of resins into plastic film, either by ``casting'' or 
``blowing'' (which is the extrusion of resin pellets through a die); 
(2) the conversion of the film by laminating multiple sheets together, 
applying coatings, and/or printing on the sheets; and (3) the finishing 
of the product by slitting and placing it on large rolls, or forming it 
into bags, pouches or other constructions.
    If a converter performs all three of the process steps in-house, it 
is considered to be vertically integrated. Many converters purchase 
film that is blown or cast by another company and simply convert and 
finish the film, however. Also, many large medical device manufacturers 
have the capability to form the packaging product themselves and, 
instead of purchasing ``converted products'' (e.g., bags or pouches), 
purchase ``rollstock,'' which is film supplied as a roll.
    The seeming simplicity of the production process is misleading. A 
single piece of film--the starting point for the conversion process--
itself may contain as many as eleven or more separate layers that have 
been formed together during the extrusion process. The combination of 
layers in the film, with each layer extruded from a specific type of 
resin, provides the finished structure with the particular 
characteristics needed to properly contain the product for which that 
flexible package is intended. Furthermore, manufacturing a converted 
product from these films is difficult because the manufacturer must 
balance

[[Page 34165]]

the package's ability to maintain its seal with its ability to open 
easily.
    Producers of flexible packaging sell their packaging to medical 
device manufacturers that package their products for wholesale 
distribution or sale to end-users in the medical industry. End-users 
include hospitals, doctors' offices, and laboratories.
    Sterilizable flexible packaging for medical use (``medical 
flexibles'') is different from other types of flexible packaging for 
several reasons. First, medical flexibles must be able to withstand the 
sterilization process because the medical device is sterilized after it 
has been placed in the package. The most common sterilization process 
is the forcing of ethylene-oxide gas into and out of the package (known 
as ``EtO sterilization''), which requires a ``vented'' or 
``breathable'' package that incorporates some porous material. This 
porous material must act as a vent for the EtO gas to enter and exit 
but also must maintain the sterile barrier. The most widely used 
venting material is Tyvek, a durable, effective, DuPont-patented 
plastic material.
    Second, medical flexibles must conform to strict quality and 
qualification requirements. Before a medical device manufacturer 
purchases any medical flexible product, it first must ``qualify'' the 
particular product. The product qualification process is meant to guard 
against the risk of the package's failure. A failure of the package 
could expose the medical device to microbes, bacteria, or particulates, 
which could cause a patient's injury, sickness, or even death. The 
risks associated with packaging failure dictate a rigorous product 
qualification process, whereby the customer performs numerous tests, 
including quality testing, sterilization testing, seal strength 
testing, aging simulations, and shipping and handling simulations.
    Sterilization testing during qualification is especially rigorous. 
The EtO sterilization process is an aggressive process that forces gas 
into and out of the flexible packaging through the venting material. 
During this process, the gas may not be able to escape quickly enough 
through the venting material, bursting the seams of the packaging. In 
addition, EtO sterilization can weaken the plastic films of the 
packaging, weaken seals, cause discoloration of the package, and cause 
other types of harm to the package. Producing medical flexible 
packaging that can withstand this process is difficult, and even 
products from large, established suppliers may fail customers' 
sterilization tests.
3. Vented Bags for Medical Use
    Vented bags for medical use are formed by sealing two pieces of 
film rollstock together on three sides, leaving the fourth side open 
for filling and sealing. There are two different styles of EtO-
sterilizable vented bags for medical use: (1) ``Header bags,'' which 
are sealed on one end by a long, thin venting strip running the length 
of the bag, and (2) ``patch bags'' or ``breather bags,'' which have one 
or more circular venting patches on the sides of the bag instead of a 
strip over the end. Both styles of vented bag perform the same 
functions for the same end uses, and are generally considered to be 
interchangeable. As with medical flexibles generally, Tyvek is the 
leading venting material for vented bags for medical use.
    Each manufacturer produces vented bags for medical use with a range 
of features and characteristics. These include, among others: size, 
ease of opening, film composition, film gauge, seal strength, venting 
style, and venting design. Customers decide which vented bag for 
medical use to purchase by weighing the relative importance of these 
features.
    Despite their generic name, vented bags for medical use are 
specialized, hard-to-make products. Because Tyvek is expensive, vented 
bags for medical use incorporate as little Tyvek into their design as 
possible. Minimizing the use of Tyvek, however, makes it more likely 
that, during sterilization, the EtO gas may not escape quickly enough 
through the venting material, bursting the seams of the packaging and 
breaking the sterile barrier. Designing and producing vented bags for 
medical use that strike the proper balance between using as little 
Tyvek as possible and providing sufficient venting for the EtO gas to 
escape is difficult and requires specialized knowledge and processes.

B. Relevant Market

    The development, production, and sale of vented bags for medical 
use to U.S. customers is a line of commerce and a relevant market 
within the meaning of Section 7 of the Clayton Act.
    Vented bags for medical use have specific end-uses, for which other 
types of medical flexibles cannot be used. Vented bags for medical use 
typically are used to accommodate larger and heavier items, such as 
surgical gowns and surgical kits and trays. Other types of flexible 
packaging, such as vented pouches for medical use, cannot handle these 
larger, heavier items because they are designed differently. Therefore, 
the relevant product is vented bags for medical use.
    U.S. customers have unique qualification requirements that allow 
producers to price discriminate against them without regard to prices 
of foreign producers. Based on the locations of customers for vented 
bags for medical use, the relevant geographic market is the United 
States.
    A small but significant increase in the price of vented bags for 
medical use to U.S. customers would not cause those customers to turn 
to other types of flexible packaging or to engage in arbitrage by 
purchasing through customers located outside of the United States, or 
otherwise to reduce purchases of vented bags for medical use, in 
volumes sufficient to make such a price increase unprofitable.

C. Market Participants

    Amcor, Alcan Packaging, and one other competitor are the only 
significant competitors in the U.S. market for vented bags for medical 
use. Smaller suppliers are not significant competitors in the U.S. 
market for vented bags for medical use because their products generally 
serve niche applications, such as low-volume products, non-standard 
sizes, and small customers, and are not price competitive. Foreign 
suppliers are not significant competitors in the U.S. market for vented 
bags for medical use because currently they do not sell into the United 
States, and they would not do so in the event of a small but 
significant increase in price because of the qualification barriers 
they would face. Thus, there are no other providers of vented bags for 
medical use to which a medical device manufacturer could turn if faced 
with a small but significant increase in the price of vented bags for 
medical use.

D. Competitive Effects

1. How Competition Occurs in the U.S. Market for Vented Bags for 
Medical Use
    Producers of vented bags for medical use must work closely with 
medical device manufacturers to ensure that their packaging material 
meets their customers' qualifications, that they meet the promised lead 
times, and that they continuously find ways to cut the customers' 
costs. Producers also must engage in research and development to 
deliver better packaging products in order to compete effectively.
    Prices for vented bags for medical uses are customer-specific and 
based on, among other things, an individual customer's unique 
requirements and specifications. The price charged to one customer 
likely will be different from the price charged to another customer. 
Additionally, arbitrage is unlikely

[[Page 34166]]

because customer-specific printing, branding, and labeling on vented 
bags for medical use prevents sales among customers.
    Price competition in the market for vented bags for medical use 
occurs in two ways. First, customers may issue a request for proposal, 
through which they invite potential suppliers to bid on supplying 
packaging that meets the customers' specifications. Customers evaluate 
the competing bids on the basis of, among other things, compliance with 
their specifications, price, delivery times, and the services provided 
by each producer. Second, price competition may also occur less 
formally if a customer seeks or receives an offer from an alternative 
supplier and the incumbent is given a chance to respond.
    Because of the risk-averse nature of medical device manufacturers, 
the time-consuming and difficult qualification process, and the high 
quality requirements, switching suppliers can involve significant time 
and expense. Consequently, competition tends to take the form of 
competition for a stream of new business, which the winner expects to 
keep for some years.
2. Likely Anticompetitive Effects in the U.S. Market for Vented Bags 
for Medical Use
    The proposed acquisition of Alcan Packaging by Amcor likely would 
substantially lessen competition in the U.S. market for vented bags for 
medical use. Amcor, Alcan Packaging, and one other company are the 
three primary competitors in the U.S. market for vented bags for 
medical use. Currently, Amcor and Alcan Packaging account for 27 
percent and 33 percent, respectively, of U.S. sales in the market for 
vented bags for medical use. If the transaction is not enjoined, three 
firms collectively would account for approximately 95 percent of sales 
of vented bags for medical use in the United States. Using a measure 
called the Herfindahl-Hirschman Index (``HHI''), the HHI would increase 
by more than 1,790 points, resulting in a post-acquisition HHI of more 
than 4,830 points.
    Due to Amcor and Alcan Packaging's collective overall expertise in 
meeting the needs of customers and other technical and commercial 
factors for vented bags for medical use, including, among other things, 
price, quality, ability to pass the customer's rigorous qualification 
procedures, delivery times, service, and technical support, Amcor and 
Alcan Packaging frequently are perceived by each other, by other 
bidders, and by customers as two of the three most significant 
competitors in the market.
    Amcor's and Alcan Packaging's bidding behavior often has been 
constrained by the possibility of losing business to the other. For 
significant customers of vented bags for medical use, Amcor and Alcan 
Packaging are their two best substitutes. By eliminating Alcan 
Packaging, Amcor likely would gain the incentive and ability to 
profitably increase its bid prices, reduce quality, offer fewer and 
less attractive supply-chain options, reduce technical support, and 
reduce innovation below what it would have been absent the acquisition.
    Customers have benefited from competition between Amcor and Alcan 
Packaging through lower prices, higher quality, better supply-chain 
options (including delivery times and volume-purchase requirements), 
technical support, and numerous innovations. The combination of Amcor 
and Alcan Packaging would eliminate this competition and future 
benefits to customers, and likely would result in harmful unilateral 
price effects.
    In addition, by reducing the number of significant competitors in 
the U.S. market for vented bags for medical use from three to two, 
Amcor and the one other competitor would gain the incentive and likely 
ability to raise prices through coordinated interaction. The fringe 
competitors would be unable to render the coordination unprofitable by 
repositioning or expansion. Coordination would be more likely because, 
for example, the merger would make customer allocation easier. Each 
competitor could be reasonably certain as to the identity of the 
other's customers, making cheating easier to detect and discipline and, 
because each competitor is at or near capacity, the ability of each 
profitably to expand sales and steal business from the other would be 
limited.
    Customers have benefited from competition between Amcor, Alcan 
Packaging, and the other significant competitor through lower prices, 
higher quality, better supply-chain options (including delivery times 
and volume-purchase requirements), technical support, and numerous 
innovations. The combination of Amcor and Alcan Packaging would 
eliminate this competition and future benefits to customers, and likely 
would result in harmful coordinated price effects.
    The proposed acquisition, therefore, likely would substantially 
lessen competition in the United States for the development, 
production, and sale of vented bags for medical use, which likely would 
lead to higher prices, lower quality, less favorable supply-chain 
options, reduced technical support, and less innovation, in violation 
of Section 7 of the Clayton Act.

E. Entry/Expansion

    In order to compete effectively in the U.S. market for vented bags 
for medical use, a competitor must be vertically integrated. Other 
converters produce vented bags for medical use similar to those 
produced by Amcor and Alcan Packaging. Unlike Amcor, Alcan Packaging, 
and the other leading competitor, however, those companies are not 
vertically integrated (i.e., they do not make their own films) and do 
not benefit from similar economies of scale or scope, and they 
therefore operate at a cost disadvantage.
    Amcor and Alcan Packaging, as a consequence of the efficiencies 
they possess due to vertical integration, are able to offer vented bags 
for medical use to customers at lower prices and higher volumes than 
are the non-vertically integrated competitors. In order to compete 
effectively with Amcor and Alcan Packaging, other converters must begin 
producing their own films and expand production to capture similar 
scale and scope benefits. Expanding to compete with the vertically 
integrated converters would require a significant capital investment 
and would take years, as the expanding company still would have to 
qualify each of its products at each new customer. These suppliers 
likely would not be able to expand to meet customers' required 
specifications or quality requirements cost-effectively within a 
commercially reasonable amount of time, and therefore would be deterred 
from attempting to expand.
    Likewise, de novo entry into the market for vented bags for medical 
use would not be timely, likely, or sufficient to deter anticompetitive 
post-merger pricing. A new supplier would need to construct production 
lines capable of producing vented bags for medical use that meet the 
rigorous standards set forth by major buyers of such films. 
Construction of manufacturing facilities would require a significant 
capital investment and the entrant would have to be committed to 
research and development. In addition, the technical know-how necessary 
to design and successfully manufacture packaging that is able to pass 
customers' qualification tests is difficult to obtain and is learned 
through a time-consuming trial-and-error process.
    Even after a new entrant has developed the capability to supply 
vented bags for medical use, the entrant's product must be qualified by 
potential customers, demonstrating that its products can meet rigorous 
quality

[[Page 34167]]

and performance standards. For example, because the qualifying process 
for vented bags for medical use typically requires a simulated aging 
test, where sample products are packaged in the vented bag, sterilized, 
and then stored in an accelerated aging room for extended periods of 
time, the process can take many months. Further, initial attempts to 
qualify are not guaranteed to be successful, and even current market 
participants have had to repeat the process multiple times. In such 
cases, the qualification process can take several years with no 
guarantee of success. Moreover, because customer specifications are 
unique, qualification with one customer does not guarantee 
qualification with another.
    Even if a new entrant were to develop the capability to supply 
vented bags for medical use and can pass qualification tests, the new 
entrant still would face the same barriers to expansion as those faced 
by converters currently producing vented bags for medical use. In 
addition, in the medical industry, where the costs of packaging failure 
are high, medical device manufacturers are reluctant to work with 
suppliers that have not established reputations for quality, the 
establishment of which occurs gradually over many years.
    As a result of these barriers, expansion by non-vertically 
integrated vented bag converters or entry by new firms into the market 
for the development, production, and sale of vented bags for medical 
use would not be timely, likely, or sufficient to prevent a likely 
exercise of market power by Amcor after the acquisition.

III. Explanation of the Proposed Final Judgment

    The divestiture required by the proposed Final Judgment will 
eliminate the anticompetitive effects that otherwise likely would 
result from Amcor's acquisition of the Alcan Packaging Medical 
Flexibles business. This divestiture will preserve competition in the 
U.S. market for vented bags for medical use by establishing a new, 
independent, and economically viable competitor.
    The proposed Final Judgment requires the divestiture of the entire 
business that currently produces Alcan Packaging's vented bags for 
medical use, which includes the one plant currently producing vented 
bags for medical use, as well as all of the tangible and intangible 
assets associated with the plant. The goal of the proposed Final 
Judgment is to provide the acquirer of the Divestiture Assets with 
everything needed to replace the competition that would otherwise be 
lost as a result of the transaction. In addition, because vertical 
integration is important to being able to compete effectively in the 
U.S. market for vented bags for medical use, the Divestiture Assets 
include sufficient film extrusion assets and capabilities to support 
current and future demand for vented bags for medical use.
    To that end, the Divestiture Assets include the entirety of Alcan 
Packaging's facility located at 100 Kenpack Lane, Marshall, North 
Carolina 28753 (``Marshall Facility''). The Marshall Facility produces 
all of Alcan Packaging's vented bags for medical use. The Marshall 
Facility is vertically integrated, meaning that it both produces its 
own films and converts those films into vented bags for medical use. In 
addition, the Marshall Facility has an established record as a high-
quality, efficient production facility with product offerings that have 
been qualified by its customers and sufficient capacity to meet current 
and future demand for its products.
    The Marshall Facility also produces forming films and plastic 
liners, which are not products of concern. Nevertheless, rather than 
removing these product lines from the integrated facility, the entire 
facility will be divested. Moreover, their inclusion will ensure that 
the Marshall Facility can be operated as a profitable, stand-alone 
entity.
    The proposed Final Judgment also requires divestiture of tangible 
and intangible assets associated with the production of vented bags for 
medical use. These assets will provide the acquirer with the physical 
tools (e.g., equipment, inventory, business records, etc.), and the 
bank of knowledge and rights (e.g., manufacturing know-how, contractual 
rights, etc.) needed to create an independent producer of vented bags 
for medical use equivalent to Alcan Packaging's current operations. The 
Divestiture Assets also include: (1) All intangible assets used 
exclusively or primarily by the Marshall Facility in the design, 
development, production, marketing, servicing, distribution or sale of 
any product produced at the Marshall Facility; and (2) with respect to 
any intangible assets not included in (1) above, and that prior to the 
filing of the Complaint in this matter were used in connection with the 
design, development, production, marketing, servicing, distribution, or 
sale of any product produced at the Marshall Facility, a non-exclusive, 
non-transferable license for such intangible assets to be used for the 
design, development, production, marketing, servicing, distribution, or 
sale of any product produced at the Marshall Facility. These assets are 
to be divested regardless of whether they are currently used at the 
Marshall Facility.
    Another necessary requirement to compete effectively in the U.S. 
market for vented bags for medical use is access to DuPont's patented 
Tyvek venting material in order to manufacture vented bags for medical 
use incorporating that material. Therefore, the proposed Final Judgment 
requires that the acquirer of the Divestiture Assets must have a 
readily available supply of Tyvek; thus, it must be able to purchase 
Tyvek directly from DuPont or have a Tyvek supply agreement with a 
company, other than Amcor, that is able to purchase Tyvek directly from 
DuPont.
    The proposed Final Judgment requires that Amcor must give advance 
notice of future acquisitions in the U.S. market for vented bags for 
medical use. This requirement is necessary because an acquisition of 
certain competitors in the U.S. market for vented bags for medical use 
would likely not be reportable under the requirements of the Hart-
Scott-Rodino Antitrust Improvements Act of 1976.
    The divestiture provisions of the proposed Final Judgment will 
eliminate the anticompetitive effects that likely would result if Amcor 
acquired the Alcan Packaging Medical Flexibles business because the 
acquirer will have the ability to develop, produce, and sell vented 
bags for medical use in the United States in competition with Amcor.

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 Defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and 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

[[Page 34168]]

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 continued the litigation and sought 
preliminary and permanent injunctions against Amcor's acquisition of 
the Alcan Packaging Medical Flexibles business. The United States is 
satisfied, however, that the divestiture of assets described in the 
proposed Final Judgment will preserve competition for the development, 
production, and sale of vented bags for medical use in the United 
States. Thus, the proposed Final Judgment would achieve all or 
substantially all of the relief the United States would have obtained 
through litigation, but avoids 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 proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. 16(e)(1). In making that determination, 
the court, in accordance with the statute as amended in 2004, 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.'').\1\
---------------------------------------------------------------------------

    \1\ 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.(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).
---------------------------------------------------------------------------

    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 
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).\2\ In 
determining whether a proposed settlement is in the public interest, 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' prediction as 
to the effect of proposed remedies, its perception of the market 
structure, and its views of the nature of the case).
---------------------------------------------------------------------------

    \2\ 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

[[Page 34169]]

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). 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, 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 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, 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 language wrote into the statute 
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\
---------------------------------------------------------------------------

    \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: June 10, 2010.

Respectfully submitted,

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Brian E. Rafkin, U.S. Department of Justice, Antitrust Division, 450 
Fifth Street, NW., Suite 8700, Washington, DC 20530, (202) 616-1583.

[FR Doc. 2010-14563 Filed 6-15-10; 8:45 am]
BILLING CODE 4410-11-P