[Federal Register Volume 76, Number 93 (Friday, May 13, 2011)]
[Notices]
[Pages 28080-28093]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-11865]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Unilever N.V., 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 and
Competitive Impact Statement have been filed with the United States
District Court for the District of Columbia, in United States v.
Unilever N.V., Unilever PLC, Conopco, Inc. and Alberto-Culver Co.,
Civil Action No. 1:11-cv-00858-ABJ. On May 6, 2011, the United States
filed a Complaint alleging that the proposed acquisition by Unilever of
Alberto-Culver Co. 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 Unilever and Alberto-Culver to divest the Alberto
VO5 and Rave brands and related assets.
Copies of the Complaint, proposed Final Judgment, and Competitive
Impact Statement are available for inspection at the Department of
Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth
Street, NW., Suite 1010, Washington, DC 20530 (telephone: 202- 514-
2481), on the Department of Justice's Web site at http://
[[Page 28081]]
www.usdoj.gov/atr, and at the Office of the Clerk of the United States
District Court for the District of Columbia. Copies of these materials
may be obtained from the Antitrust Division upon request and payment of
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 Joshua H. Soven, Chief, Litigation I Section, Antitrust Division,
U.S. Department of Justice, 450 Fifth Street, NW., Suite 4100,
Washington, DC 20530 (telephone: 202-307-0827).
Patricia A. Brink,
Director of Civil Enforcement.
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA, United States Department of Justice,
Antitrust Division, Litigation I Section, 450 Fifth Street, NW.,
Suite 4100, Washington, DC 20530, Plaintiff, v. UNILEVER N.V., Weena
455, PO Box 760, 3000 DK Rotterdam, The Netherlands, UNILEVER PLC,
Unilever House, 100 Victoria Embankment, London EC4Y 0DY United
Kingdom, CONOPCO, INC., 800 Sylvan Avenue, Englewood Cliffs, New
Jersey 07632, and ALBERTO-CULVER CO., 2525 Armitage Avenue, Melrose
Park, Illinois 60160, Defendants.
CASE NO.: 1:11-cv-00858
JUDGE: Jackson, Amy Berman
DATE FILED: 5/6/2011
DESCRIPTION: Antitrust
COMPLAINT
The United States of America, acting under the direction of the
Attorney General of the United States, brings this civil action to
enjoin the proposed acquisition of Alberto-Culver Co. (``Alberto
Culver'') by Unilever N.V., Unilever PLC, and Conopco, Inc.
(collectively, ``Unilever'') and to obtain other equitable relief. The
acquisition would likely substantially lessen competition in the United
States in markets for value shampoo, value conditioner, and hairspray
sold in retail stores in violation of Section 7 of the Clayton Act, 15
U.S.C. Sec. 18, and result in higher prices for consumers in these
markets. The United States alleges as follows:
I. NATURE OF THE ACTION
1. Unilever and Alberto Culver are both large consumer products
companies that sell shampoo, conditioner, hairspray, and many other
products. On September 27, 2010, Unilever agreed to acquire Alberto
Culver for approximately $3.7 billion.
2. Value shampoo and value conditioner (collectively, ``value
shampoo and conditioner'') are the lowest priced shampoos and
conditioners sold in stores and almost always sell for less than $2.00
per bottle. Unilever sells value shampoo and conditioner under the
Suave Naturals brand; Alberto Culver sells value shampoo and
conditioner under the Alberto VO5 brand.
3. The proposed acquisition would eliminate substantial head-to-
head competition between Unilever's Suave Naturals and Alberto Culver's
Alberto VO5 brands and give Unilever a near monopoly of the sale of
value shampoo and conditioner in the United States with shares of
approximately 90 percent in these two markets.
4. The proposed acquisition would also eliminate substantial head-
to-head competition between Unilever and Alberto Culver in the United
States for hairspray sold in retail stores. Unilever sells hairspray
mainly under the Suave, Suave Professional, Rave, and Dove brands.
Alberto Culver sells hairspray primarily under the TRESemm[eacute],
Nexxus, and Alberto VO5 brands. The proposed acquisition would make
Unilever the largest seller of hairspray in the United States by
increasing its market share from approximately 24 percent to over 45
percent.
5. Because the acquisition likely substantially lessens competition
in the United States for the sale of value shampoo, value conditioner,
and hairspray sold in retail stores, it violates Section 7 of the
Clayton Act.
II. JURISDICTION, VENUE, AND INTERSTATE COMMERCE
6. The United States brings this action pursuant to Section 15 of
the Clayton Act, as amended, 15 U.S.C. Sec. 25, to prevent and
restrain Defendants from violating Section 7 of the Clayton Act, 15
U.S.C. Sec. 18. The Court has subject-matter jurisdiction over this
action pursuant to Section 15 of the Clayton Act, 15 U.S.C. Sec. 25,
and 28 U.S.C. Sec. Sec. 1331, 1337(a), and 1345.
7. Defendants Unilever and Alberto Culver manufacture, market, and
sell consumer products, including shampoo, conditioner, and hairspray,
in the flow of interstate commerce, and their production and sale of
these products substantially affect interstate commerce. Defendants
Unilever and Alberto Culver transact business and are found in the
District of Columbia, through, among other things, selling consumer
products to customers in this District. Venue is proper for Alberto
Culver and Conopco, Inc. in this District under 15 U.S.C. Sec. 22.
Venue is proper in the District of Columbia for Unilever N.V., a Dutch
corporation, and Unilever PLC, an English corporation, under 28 U.S.C.
Sec. 1391(d).
8. Defendants have consented to personal jurisdiction and venue in
this judicial district.
III. THE DEFENDANTS
9. Unilever N.V. and Unilever PLC are corporations respectively
organized under the laws of the Netherlands and England, with
headquarters in Rotterdam and London. They wholly own Conopco, Inc., a
New York corporation and U.S. subsidiary of Unilever N.V. and Unilever
PLC. In addition to hair care products, Unilever owns more than 400
brands of consumer products such as Hellmann's, Lipton, Surf, Dove,
Suave, and Vaseline. Unilever had $62 billion in sales in 2010.
10. Unilever's Suave Naturals brand is the most popular U.S. brand
of value shampoo and conditioner, accounting for approximately 50
percent of value shampoo and conditioner sales. Unilever's hairspray
brands (primarily Suave, Suave Professionals, Rave, and Dove) account
for approximately 24 percent of U.S. hairspray sales.
11. Alberto Culver, a Delaware corporation headquartered in Melrose
Park, Illinois, is a consumer products company that owns brands such as
TRESemm[eacute], Alberto VO5, Noxzema, Nexxus, St. Ives., Static Guard,
and Mrs. Dash. Alberto Culver had $1.6 billion in sales for the fiscal
year ending September 30, 2010.
12. Alberto Culver's Alberto VO5 brand is the second most popular
U.S. brand of value shampoo and conditioner, accounting for
approximately 39 percent of value shampoo and conditioner sales.
Alberto Culver's hairspray brands (primarily TRESemm[eacute], Nexxus,
and Alberto VO5) account for approximately 22 percent of U.S. hairspray
sales.
IV. RELEVANT MARKETS
A. Relevant Product Markets
1) Value Shampoo and Conditioner
13. Shampoo is a hair care product used to clean hair. Conditioner
is a hair care product used to moisturize and enhance the appearance of
hair.
14. Value shampoos and conditioners are the lowest priced shampoos
and conditioners sold in retail stores, with current retail prices of
approximately $1 per bottle for smaller sizes (e.g., 15-18 oz.) and
almost always less than $1.65 per bottle for larger family sizes (e.g.,
22.5-30 oz.). The parties' business documents and the hair care
industry
[[Page 28082]]
consistently refer to products in this price range as belonging to a
``value,'' ``opening-price-point,'' or ``dollar'' category. Industry
participants, including manufacturers and retailers, widely recognize
that shampoo and conditioner products within the value category compete
more closely with each other than they do with higher priced shampoos
or conditioners.
15. Several factors considered together, including product
ingredients, attributes, industry recognition, and price, indicate that
value shampoo and conditioner are not reasonably interchangeable with
more expensive shampoo and conditioner.
16. Value shampoo and conditioner generally contain only
inexpensive ingredients, such as basic soap and scent. More expensive
shampoos and conditioners contain additional, more expensive
ingredients, which are intended to provide specialized benefits not
provided by value shampoo and conditioner such as smoothing,
strengthening, repairing, adding volume, and benefits for different
hair types (e.g., curly, fine, frizzy, or color-treated hair).
17. Reflecting this difference in input costs and perceived
consumer benefits, a significant price gap exists between value shampoo
and conditioner and the next-lowest-priced shampoos and conditioners.
For 15-18 oz. bottles, the price differential is generally 100 percent
or more; value shampoo and conditioner are priced around $1 and the
next-lowest-priced shampoos and conditioners are priced between $2.15
and $2.80. For larger bottles, the price differential is also
significant. For example, one large retailer's average price for a 30
oz. value brand bottle of shampoo is $1.67 while the next-lowest-priced
shampoo of that same size is, on average, $2.98.
18. Total annual U.S. retail sales of value shampoo are
approximately $177 million. Total annual U.S. retail sales of value
conditioner are approximately $106 million.
19. Consumers purchase value shampoo and conditioner almost
exclusively through retail food, drug, dollar, and mass merchandise
stores (collectively, ``retail stores''). Sales of value shampoo and
conditioner through hairdressing salons are de minimis.
20. Purchasers of value shampoo and conditioner are unlikely to
reduce their purchases of value shampoo and conditioner in response to
a small but significant and non-transitory price increase to an extent
that would make such a price increase unprofitable.
21. Value shampoo and value conditioner are each a relevant product
market and a line of commerce within the meaning of Section 7 of the
Clayton Act.
2) Hairspray Sold in Retail Stores
22. Hairspray is a product used to set or maintain a hair style
after the hair has been dried and styled.
23. Mousses, gels, and other styling aids are not reasonably
interchangeable with hairspray because consumers typically use those
products in wet or damp hair to give hair form, shape, and style, not
to set or maintain a hair style after the hair has been dried and
styled.
24. The vast majority of consumers purchase hairspray in retail
stores. Some consumers purchase hairspray through hairdressing salons.
Several factors considered together indicate that hairspray sold in
salons is not reasonably interchangeable with hairspray sold in retail
stores, including (i) purchasing hairspray in salons is less convenient
for many consumers who purchase hairspray in retail stores, (ii) many
more brands are available in retail stores than are available in
salons, (iii) the hair care industry views sales of hairspray in retail
stores as separate from sales in salons and uses different marketing
strategies in those different sales channels, and (iv) the average
price of hairspray sold in salons is at least three times more than the
average price of hairspray sold in retail stores.
25. Total annual U.S. retail sales of hairspray sold in retail
stores are approximately $809 million.
26. Purchasers of hairspray sold in retail stores are unlikely to
reduce their purchases of hairspray sold in retail stores in response
to a small but significant and non-transitory price increase to an
extent that would make such a price increase unprofitable.
27. Hairspray sold in retail stores is a relevant product market
and a line of commerce within the meaning of Section 7 of the Clayton
Act.
B. Relevant Geographic Markets
28. The relevant geographic markets, within the meaning of Section
7 of the Clayton Act, for the value shampoo, value conditioner, and
hairspray product markets are no larger than the United States. Because
of transportation costs, differences in brand presence and recognition,
and U.S. regulations, a small but significant non-transitory price
increase in each of these relevant product markets would not cause
purchasers to switch to products sold outside of the United States to
an extent that would make such a price increase unprofitable.
V. LIKELY ANTICOMPETITIVE EFFECTS
A. Value Shampoo and Conditioner
29. The markets for value shampoo and conditioner are highly
concentrated. By unit volume, Unilever's share in each market is
approximately 50 percent, and Alberto Culver's share is approximately
39 percent in each market. One other company accounts for almost all of
the remaining sales in each market (approximately 10 percent).
30. If the proposed acquisition is consummated, the value shampoo
and conditioner markets would become substantially more concentrated.
The combined firm would control approximately 90 percent of the sales
of value shampoo and conditioner.
31. Using a standard concentration measure called the Herfindahl-
Herschman Index (or ``HHI,'' defined and explained in Appendix A), the
proposed acquisition would produce an HHI increase of approximately
3913 and a post-acquisition HHI of approximately 8602 for value
shampoo, and an HHI increase of approximately 3902 and a post-
acquisition HHI of approximately 8066 for value conditioner.
32. The proposed acquisition would reduce the number of significant
competitors from three to two in the value shampoo and conditioner
markets and would eliminate significant head-to-head competition
between Unilever and Alberto Culver. Currently, Unilever and Alberto
Culver compete in the United States on price, and through product
innovation and various forms of promotions.
33. The significant increase in market concentration that the
proposed acquisition would produce in the United States, combined with
the loss of head-to-head competition, is likely to substantially lessen
competition in violation of Section 7 of the Clayton Act, resulting in
higher prices for consumers of value shampoo and conditioner.
B. Hairspray Sold in Retail Stores
34. The market for hairspray sold through retail stores in the
United States is moderately concentrated. By unit volume, Unilever's
market share is approximately 24 percent, and Alberto Culver's is
approximately 22 percent. The three next largest competitors have
shares of approximately 20 percent, nine percent, and eight percent.
35. If the proposed acquisition is consummated, the hairspray
market would become substantially more concentrated, resulting in a
highly concentrated market. The combined
[[Page 28083]]
firm would control approximately 46 percent of hairspray sold through
retail stores. Post-merger, Unilever and the company with the next
largest share would account for approximately 66 percent of the market.
36. The proposed acquisition would produce an HHI increase of
approximately 1034 and a post-acquisition HHI of approximately 2654 for
hairspray.
37. The proposed transaction would combine the two largest
hairspray companies and would eliminate significant head-to-head
competition between Unilever and Alberto Culver. Currently, Unilever
and Alberto Culver compete in the United States on price and through
product innovation, couponing and other promotions.
38. The significant increase in market concentration that the
proposed acquisition would produce, combined with the loss of head-to-
head competition, is likely to substantially lessen competition in
violation of Section 7 of the Clayton Act, resulting in higher prices
for consumers of hairspray sold through retail stores.
VI. ABSENCE OF COUNTERVAILING FACTORS
A. Entry
39. Responses from competitors and new entry likely will not
prevent the proposed acquisition's likely anticompetitive effects.
Barriers to entering these markets include: (i) the substantial time
and expense required to build a brand reputation to overcome existing
consumer preferences; (ii) the substantial sunk costs for promotional
and advertising activity needed to secure the distribution and
placement of a new entrant's product in retail outlets; and (iii) the
difficulty of securing shelf-space in retail outlets.
40. Because of these entry barriers even sophisticated well-funded
entrants have not been able to enter the value shampoo and conditioner
markets. For example, one major U.S. manufacturer repositioned an
existing brand into the value shampoo and conditioner markets in 2003,
but discontinued it in 2004 because of low sales. Similarly, a major
U.S. retailer introduced a private label value shampoo and conditioner
in 2009, but also discontinued the product because of low sales.
41. Entry has been similarly difficult for hairspray sold in retail
stores. In the last two years, no hairspray company has increased its
unit sales by three percentage points or more.
B. Efficiencies
42. The proposed acquisition will not generate verifiable, merger-
specific efficiencies sufficient to reverse the likely competitive harm
of the acquisition.
VII. VIOLATION ALLEGED
43. The United States hereby incorporates paragraphs 1 through 42.
44. Unilever's proposed acquisition of Alberto Culver would likely
substantially lessen competition in interstate trade and commerce, in
violation of Section 7 of the Clayton Act, 15 U.S.C. Sec. 18, and
would likely have the following effects, among others:
a) actual and potential competition in the United States between
Alberto Culver and Unilever for sales of value shampoo, value
conditioner, and hairspray sold in retail stores would be eliminated;
b) competition generally in the United States for value shampoo,
value conditioner, and hairspray sold in retail stores would be
substantially lessened.
VIII. REQUEST FOR RELIEF
The United States requests:
a) That the Court adjudge the proposed acquisition to violate
Section 7 of the Clayton Act, 15 U.S.C. Sec. 18;
b) That the Court permanently enjoin and restrain the Defendants
from carrying out the proposed acquisition or from entering into or
carrying out any other agreement, understanding, or plan by which
Alberto Culver would be acquired by, acquire, or merge with Unilever;
c) That the Court award the United States the costs of this action;
and
d) That the Court award such other relief to the United States as
the Court may deem just and proper.
Dated: May 6, 2011
Respectfully submitted,
FOR PLAINTIFF UNITED STATES OF AMERICA
/s/ Christine A. Varney
Christine A. Varney,
Assistant Attorney General (DC Bar No. 411654).
/s/ Joseph F. Wayland
Joseph F. Wayland,
Deputy Assistant Attorney General.
/s/ Patricia A. Brink
Patricia A. Brink,
Director of Civil Enforcement.
/s/ Joshua H. Soven
Joshua H. Soven,
Chief, Litigation I Section, (DC Bar No. 436633).
/s/ Peter J. Mucchetti
Peter J. Mucchetti,
Assistant Chief, Litigation I Section, (DC Bar No. 463202).
/s/ John P. Lohrer
John P. Lohrer (DC Bar No. 438939)
Andrea V. Arias
Barry L. Creech (DC Bar No. 421070)
Robert E. Draba (DC Bar No. 496815)
Amy R. Fitzpatrick (DC Bar No. 458680)
Tiffany Joseph (DC Bar No. 481878)
Richard D. Mosier (DC Bar No. 492489)
Julie A. Tenney
Trial Attorneys, United States Department of Justice, Antitrust
Division, Litigation I Section, 450 Fifth Street, N.W. Suite 4100,
Washington, DC 20530, Telephone: (202) 616-5125, Facsimile: (202)
307-5802, E-mail: [email protected].
APPENDIX A
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 percent, 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 1,500 and 2,500 points are
considered to be moderately concentrated, and markets in which the HHI
is in excess of 2,500 points are considered to be highly concentrated.
See U.S. Department of Justice & FTC, Horizontal Merger Guidelines
Sec. 5.3 (2010). Transactions that increase the HHI by more than 200
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.
THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA, Plaintiff, v. UNILEVER N.V., UNILEVER
PLC, CONOPCO, INC., and ALBERTO-CULVER COMPANY, Defendants.
CASE NO.: 1:11-cv-00858
JUDGE: Jackson, Amy Berman
DATE FILED: 5/6/2011
DESCRIPTION: Antitrust
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. Sec. 16(b)-(h), files this Competitive
Impact Statement relating to the proposed Final Judgment
[[Page 28084]]
submitted for entry in this civil antitrust proceeding.
I. NATURE AND PURPOSE OF THE PROCEEDING
The United States filed a civil antitrust Complaint on May 6, 2011,
seeking to enjoin the proposed acquisition of Alberto-Culver Company
(``Alberto Culver'') by Unilever N.V., Unilever PLC, and Conopco, Inc.
(collectively ``Unilever''), alleging that it likely would
substantially lessen competition in three product markets--value
shampoo, value conditioner, and hairspray sold in retail stores--in
violation of Section 7 of the Clayton Act, 15 U.S.C. Sec. 18. The loss
of competition from the acquisition likely would result in higher
prices for value shampoo, value conditioner, and hairspray sold in
retail stores in the United States.
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 that would result from Unilever's acquisition of Alberto
Culver. Under the proposed Final Judgment, which is explained more
fully below, Unilever is required to divest the Alberto VO5 and Rave
brands and related assets to one or more acquirers approved by the
United States. Pursuant to the Hold Separate, Unilever and Alberto
Culver must take certain steps to ensure that the assets being divested
continue to be operated in a competitively and economically viable
manner and that competition for the products being divested is
maintained during the pendency of the divestiture.
The United States and the defendants have stipulated that the
proposed Final Judgment may be entered after compliance with the APPA.
Entry of the proposed Final Judgment would terminate this action,
except that the Court would retain jurisdiction to construe, modify, or
enforce the provisions of the Final Judgment and to punish violations
thereof.
II. EVENTS GIVING RISE TO THE ALLEGED VIOLATION
A. The Defendants and the Acquisition
On September 27, 2010, Unilever N.V., Unilever PLC, and Conopco,
Inc. agreed to acquire Alberto Culver for approximately $3.7 billion.
Unilever N.V. and Unilever PLC are corporations respectively organized
under the laws of the Netherlands and England, with headquarters in
Rotterdam and London. They wholly own Conopco, Inc., a New York
corporation and U.S. subsidiary of Unilever N.V. and Unilever PLC.
Unilever sells consumer products in more than 100 countries under
brands such as Hellmann's, Lipton, Surf, Dove, Suave, and Vaseline.
Unilever has approximately 163,000 employees and had sales of $62
billion in 2010.
Alberto Culver, a Delaware corporation headquartered in Melrose
Park, Illinois, sells consumer products in more than 100 countries
under brands such as TRESemm[eacute], Alberto VO5, Noxzema, Nexxus, St.
Ives, Static Guard, and Mrs. Dash. Alberto Culver has approximately
2,500 employees and had sales of $1.6 billion for the fiscal year
ending September 30, 2010.
Unilever's Suave Naturals brand is the most popular U.S. brand of
value shampoo and conditioner, accounting for approximately 50 percent
of value shampoo and conditioner sales. Unilever's hairspray brands
(primarily Suave, Suave Professionals, Rave, and Dove) account for
approximately 24 percent of hairspray sold in retail stores in the
United States.
Alberto Culver's Alberto VO5 brand is the second most popular U.S.
brand of value shampoo and conditioner, accounting for approximately 39
percent of value shampoo and conditioner sales. Alberto Culver's
hairspray brands (primarily TRESemm[eacute], Nexxus, and Alberto VO5)
account for approximately 22 percent of hairspray sold in retail stores
in the United States.
B. The Relevant Markets
1. Value Shampoo and Value Conditioner Are Relevant Product Markets
Shampoo is a hair care product used to clean hair. Conditioner is a
hair care product used to moisturize and enhance the appearance of
hair.
Value shampoos and conditioners are the lowest priced shampoos and
conditioners sold in retail stores, with current retail prices of
approximately $1 per bottle for smaller sizes (e.g., 15-18 oz.) and
almost always less than $1.65 per bottle for larger family sizes (e.g.,
22.5-30 oz.). The parties' business documents and the hair care
industry consistently refer to products in this price range as
belonging to a ``value,'' ``opening-price-point,'' or ``dollar''
category. Industry participants, including manufacturers and retailers,
widely recognize that shampoo and conditioner products within the value
category compete substantially more closely with each other than they
do with higher priced shampoos or conditioners. Total annual U.S.
retail sales of value shampoo are approximately $177 million. Total
annual U.S. retail sales of value conditioner are approximately $106
million.
Several factors considered together, including product ingredients,
attributes, industry recognition, and price, indicate that value
shampoo and conditioner are not reasonably interchangeable with more
expensive shampoo and conditioner. Value shampoo and conditioner
generally contain only inexpensive ingredients, such as basic soap and
scent. More expensive shampoos and conditioners contain additional,
more expensive ingredients, which are intended to provide specialized
benefits not provided by value shampoo and conditioner such as
smoothing, strengthening, repairing, adding volume, and benefits for
different hair types (e.g., curly, fine, frizzy, or color-treated
hair).
Reflecting this difference in input costs and perceived consumer
benefits, a significant price gap exists between value shampoo and
conditioner and the next-lowest-priced shampoos and conditioners. For
15-18 oz. bottles, the price differential is generally 100 percent or
more; value shampoo and conditioner are priced around $1 and the next-
lowest-priced shampoos and conditioners are priced between $2.15 and
$2.80. For larger bottles, the price differential is also significant.
For example, one large retailer's average price for a 30 oz. value
brand bottle of shampoo is $1.67 while the next-lowest-priced shampoo
of that same size is, on average, $2.98.
Consumers purchase value shampoo and conditioner almost exclusively
through retail food, drug, dollar, and mass merchandise stores
(collectively, ``retail stores''). Sales of value shampoo and
conditioner through salons is de minimis. Purchasers of value shampoo
and conditioner are unlikely to reduce their purchases of value shampoo
and conditioner in response to a small but significant and non-
transitory price increase to an extent that would make such a price
increase unprofitable. Value shampoo and value conditioner are,
therefore, each a relevant product market and a line of commerce within
the meaning of Section 7 of the Clayton Act.
2. Hairspray Sold In Retail Stores Is a Relevant Product Market
Hairspray is a product used to set or maintain a hair style after
the hair has been dried and styled. Mousses, gels, and other styling
aids are not reasonably interchangeable with hairspray because
consumers typically use those products
[[Page 28085]]
in wet or damp hair to give hair form, shape, and style, not to set or
maintain a hair style after the hair has been dried and styled. Total
annual U.S. retail sales of hairspray sold in retail stores are
approximately $809 million.
The vast majority of consumers purchase hairspray in retail stores.
Some consumers purchase hairspray through hairdressing salons. Several
factors considered together indicate that hairspray sold in salons is
not reasonably interchangeable with hairspray sold in retail stores,
including (i) purchasing hairspray in salons is less convenient for
many consumers who purchase hairspray in retail stores, (ii) many more
brands are available in retail stores than are available in salons,
(iii) the hair care industry views sales of hairspray in retail stores
as separate from sales in salons and uses different marketing
strategies in those different sales channels, and (iv) the average
price of hairspray sold in salons is at least three times more than the
average price of hairspray sold in retail stores.
Purchasers of hairspray sold in retail stores are unlikely to
reduce their purchases of hairspray sold in retail stores in response
to a small but significant and non-transitory price increase to an
extent that would make such a price increase unprofitable. Hairspray
sold in retail stores is, therefore, a relevant product market and a
line of commerce within the meaning of Section 7 of the Clayton Act.
3. The Geographic Markets Are the United States
The Complaint alleges that the United States constitutes a relevant
geographic market within the meaning of Section 7 of the Clayton Act
for each of the three product markets. Defendants sell value shampoo,
value conditioner, and hairspray through retail stores throughout the
United States. For several reasons, a small but significant non-
transitory price increase in each of these relevant product markets
would not cause purchasers to switch to products sold outside of the
United States to an extent that would make such a price increase
unprofitable. First, brands preferred in the United States differ from
brands preferred in foreign countries. Second, shipping relevant
products from foreign countries to the United States would increase
transportation costs to manufacturers and retailers. Finally, products
sold outside the United States may not comply with U.S. regulations or
have labeling suitable for the United States such that the product
could be sold to consumers in the United States.
C. The Acquisition's Likely Anticompetitive Effects
1. Value Shampoo and Value Conditioner
The complaint alleges that the proposed acquisition would
substantially lessen competition in the sale of value shampoo and
conditioner in the United States, resulting in higher prices for
consumers in these markets. Currently, Unilever and Alberto Culver
compete in these markets on price and through product innovation and
various forms of promotions. The combination would eliminate that
significant head-to-head competition and reduce the number of
significant competitors in the value shampoo and conditioner markets
from three to two. In each market, Unilever's current share (by unit
volume) is approximately 50 percent, and Alberto Culver's share is
approximately 39 percent. One other competitor accounts for almost all
of the remaining sales in each market (approximately 10 percent).
The markets for value shampoo and conditioner are already highly
concentrated, and the acquisition would increase concentration
significantly, resulting in Unilever controlling approximately 90
percent of both markets. Using a standard concentration measure called
the Herfindahl-Herschman Index (``HHI''), the proposed acquisition
would produce an HHI increase of approximately 3913 and a post-
acquisition HHI of approximately 8602 for value shampoo, and an HHI
increase of approximately 3902 and a post-acquisition HHI of
approximately 8066 for value conditioner.
The acquisition would enable the combined firm to profit by
unilaterally raising the prices of its products above the pre-merger
price level. The parties' documents and diversion of sales caused by
past price changes indicate that a significant fraction of customers
purchasing Unilever's and Alberto Culver's value shampoos and
conditioners view the other merging firm's value shampoo and
conditioner as their next best choice. Consequently, a significant
fraction of the sales lost due to price increases on Unilever's
products would be diverted to products of Alberto Culver, and vice
versa. See U.S. Dept. of Justice & FTC, Horizontal Merger Guidelines
Sec. 6.1 (2010). The pre-merger margins on the parties' value shampoo
and conditioner products are sufficiently high that the amount of
recaptured lost sales would make the price increases profitable even
though such price increases would not have been profitable prior to the
merger. See id. Consequently, the proposed acquisition would likely
cause the combined firm to raise the prices that it charges for value
shampoo and conditioner.
2. Hairspray
The complaint alleges that the proposed acquisition would
substantially lessen competition in the sale of hairspray sold in
retail stores in the United States, resulting in higher prices for
consumers in this market. Currently, Unilever and Alberto Culver
compete in this market on price and through couponing, product
innovation, and various forms of promotions. The combination would
eliminate that significant head-to-head competition. Unilever's current
share (by unit volume) of this market is approximately 24 percent, and
Alberto Culver's is approximately 22 percent. The three next largest
competitors have shares of approximately 20 percent, nine percent, and
eight percent.
If the proposed acquisition is consummated, the market for
hairspray sold in retail stores would become substantially more
concentrated, resulting in a highly concentrated market. Using the HHI
concentration measure, the proposed acquisition would produce an HHI
increase of approximately 1034 and a post-acquisition HHI of
approximately 2654 for hairspray sold in retail stores.
The acquisition would enable the combined firm to profit by
unilaterally raising hairspray prices above the pre-merger price level.
The parties' documents and diversion of sales caused by past price
changes indicate that a significant fraction of customers purchasing
Unilever's and Alberto Culver's brands of hairspray view the other
merging firm's brands of hairspray as their next best choice.
Consequently, a significant fraction of the sales lost due to price
increases on Unilever's products would be diverted to products of
Alberto Culver, and vice versa. See U.S. Dept. of Justice & FTC,
Horizontal Merger Guidelines Sec. 6.1 (2010).
The significant fraction of customers that view Unilever's and
Alberto Culver's hairspray brands as their next-best choice does not
approach a majority. ``However, unless pre-merger margins between price
and incremental cost are low, that significant fraction need not
approach a majority * * *. A merger may produce significant unilateral
effects for a given product even though many more sales are diverted to
products sold by non-merging firms than to products previously sold by
the merger partner.'' Id. The pre-merger margins on the parties'
hairspray products are
[[Page 28086]]
sufficiently high that the amount of recaptured lost sales would make
the price increase profitable even though such price increases would
not have been profitable prior to the merger.
3. Entry
The Complaint alleges that responses from competitors and new entry
likely will not prevent the proposed acquisition's likely
anticompetitive effects. Barriers to entering these markets include:
(i) the substantial time and expense required to build a brand
reputation to overcome existing consumer preferences; (ii) the
substantial sunk costs for promotional and advertising activity needed
to secure the distribution and placement of a new entrant's product in
retail outlets; and (iii) the difficulty of securing shelf-space in
retail outlets.
Because of these entry barriers even sophisticated, well-funded
entrants have not been able to enter the value shampoo and conditioner
markets. For example, one major U.S. manufacturer repositioned an
existing brand into the value shampoo and conditioner markets in 2003,
but discontinued it in 2004 because of low sales. Similarly, a major
U.S. retailer introduced a private label value shampoo and conditioner
in 2009, but also discontinued the product because of low sales.
Entry has been similarly difficult for hairspray sold in retail
stores. In the last two years, no hairspray company has increased its
unit sales by three percentage points or more.
Therefore, entry by new firms or the threat of entry by new firms
would not defeat the substantial lessening of competition in the
manufacture and sale of value shampoo, value conditioner, or hairspray
in the United States that likely would result from Unilever's
acquisition of Alberto Culver.
III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT
The proposed Final Judgment requires significant divestitures that
will preserve competition in the markets for value shampoo, value
conditioner, and hairspray sold in retail stores. Within 90 calendar
days after filing of the proposed Final Judgment or five calendar days
after entry of a Final Judgment by the Court, whichever is later, the
Defendants are required to divest the Alberto VO5 and Rave brands and
associated assets to an acquirer or acquirers that has or have the
intent and capability (including the necessary managerial, operational,
technical, and financial capability) to compete effectively in the
business of value shampoo, value conditioner, and/or hairspray
products.
The Alberto VO5 brand consists of value shampoo, value conditioner,
hairspray, and other hair styling products. The Rave brand consists of
hairspray and mousse products. The divestiture of the Alberto VO5 brand
and associated assets is limited to the United States because a U.S.-
only divestiture of Alberto VO5 is sufficient to address the
competitive harm that the acquisition would produce in the United
States. Alberto Culver has substantial sales of Alberto VO5 products in
other countries. Sales of Rave outside of the United States are de
minimis. Accordingly, the proposed Final Judgment requires divestiture
of the worldwide rights to Rave because it is the most efficient way to
divest the brand.
The divestiture of Alberto VO5, which accounts for 39 percent of
the value shampoo and conditioner markets, will preserve the pre-merger
competition in the value shampoo and conditioner markets by maintaining
Alberto VO5 as a competitor to Suave Naturals. In particular, the
United States' analysis of the proposed merger indicated that the
merged company was likely to raise prices on Suave Naturals and Alberto
VO5 because lost sales on one would be diverted to the other.
Divestiture of the Alberto VO5 brand eliminates the merged firm's
ability to raise prices on Alberto VO5 and preserves a competitor to
Suave Naturals.
The divestitures of Rave and Alberto VO5, which together account
for 8 percent of hairspray sold in retail stores, will reduce the
merged firm's post-merger market share from approximately 46 percent to
approximately 38 percent. These divestitures are sufficient to prevent
an increase in the merged firm's incentives and ability to raise
hairspray prices because the divestitures will significantly increase
the amount of sales that would be diverted to products of non-merging
firms.
In particular, the United States' analysis of the proposed merger
indicated that the merged company was especially likely to raise prices
on Suave, Suave Professionals, and Rave hairspray products because lost
sales would be diverted to former Alberto Culver products (e.g.,
TRESemm[eacute] and Alberto VO5 hairspray). Divestiture of the Rave
brand eliminates the merged firm's ability to raise prices on Rave
hairspray products. Additionally, the United States' analysis indicated
that Rave is a close substitute to Suave and Suave Professionals.
Because Rave is a close substitute to Suave and Suave Professionals,
Rave's divestiture will create a competitor that will significantly
decrease the merged firm's incentive to raise prices on Suave and Suave
Professionals products.
In addition to divestiture of the Alberto VO5 and Rave brands, the
proposed Final Judgment requires divestiture of other related
intangible assets and certain related tangible assets. The other
intangible assets include the rights to trade dress, trade secrets, and
other intellectual property used in the research, development,
production, marketing, servicing, distribution, or sale of the Alberto
VO5 and Rave brands. The tangible assets include equipment used
primarily to manufacture the divested brands, and records, contracts,
permits, customer information, inventory, molds, packaging, artwork,
and other assets related to the divested brands. The proposed Final
Judgment does not require divestiture of any manufacturing plants or
real property because many contract manufacturers have the available
capacity, plants, and ability to manufacture the Alberto VO5 and Rave
products. Requiring the Defendants to divest one or more manufacturing
facilities is unnecessary where independent capacity is readily
available or can be quickly built.
The proposed Final Judgment provides that, at the purchaser's
option, the Defendants must divest any equipment primarily used by the
parties to manufacture the Alberto VO5 and Rave products. Potential
buyers of the divested assets may not want to purchase this equipment
because they will use contract manufacturers to make the divested
products or because they already own equipment that is capable of
efficiently making the divested products. The equipment is also widely
available from others. However, due primarily to lead times of up to
nine months for ordering and receiving new equipment, establishing a
new manufacturing line can take up to a year. The option to purchase
this equipment may, therefore, allow some potential purchasers to be
ready to produce the divested products sooner than if this equipment
were not available.
Defendants must use their best efforts to divest the assets as
expeditiously as possible. The proposed Final Judgment provides that
the assets must be divested in such a way as to satisfy the United
States, in its sole discretion, that an acquirer can and will use the
assets as part of a viable, ongoing business engaged in the sale of
value shampoo, value conditioner, and/or hairspray in retail stores in
the United States.
[[Page 28087]]
If Defendants do not accomplish the ordered divestitures within the
prescribed time period, then Section V of the proposed Final Judgment
provides that the Court will appoint a trustee, selected by the United
States, to complete the divestitures. If a trustee is appointed, the
proposed Final Judgment provides that Defendants must cooperate fully
with the trustee and pay all of the trustee's costs and expenses. The
trustee's compensation will be structured to provide an incentive for
the trustee based on the price and terms of the divestitures and the
speed with which they are accomplished. After the trustee's appointment
becomes effective, the trustee will file monthly reports with the
United States and the Court setting forth the trustee's efforts to
accomplish the required divestitures. At the end of six months, if the
divestitures have not been accomplished, the trustee and the United
States will make recommendations to the Court, which shall enter such
orders as appropriate to carry out the purpose of the Final Judgment,
including extending the trust or the term of the trustee's appointment.
IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS
Section 4 of the Clayton Act, 15 U.S.C. Sec. 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.
Sec. 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, Unilever, and Alberto Culver have stipulated
that the proposed Final Judgment may be entered by the Court after
compliance with the provisions of the APPA, provided that the United
States has not withdrawn its consent. The APPA conditions entry upon
the Court's determination that the proposed Final Judgment is in the
public interest.
The APPA provides a period of at least sixty days preceding the
effective date of the proposed Final Judgment within which any person
may submit to the United States written comments regarding the proposed
Final Judgment. Any person who wishes to comment should do so within
sixty 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
before 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:
Joshua H. Soven
Chief, Litigation I Section
Antitrust Division
United States Department of Justice
450 Fifth Street, NW, Suite 4100
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 a judicial
order enjoining Unilever's acquisition of Alberto-Culver. The United
States is satisfied, however, that divestiture of the assets described
in the proposed Final Judgment will preserve competition for the sale
of value shampoo, value conditioner, and hairspray 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. Sec. 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. Sec. 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 mechanisms 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.
Sec. 16(e) (2004), with 15 U.S.C. Sec. 16(e)(1) (2006); see also
SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004
amendments ``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------
As the United States Court of Appeals for the District of Columbia
Circuit has held, a court considers under the APPA, among other things,
the relationship between the remedy secured and the specific
allegations set forth in the United States' complaint, whether the
decree is sufficiently clear, whether enforcement mechanisms are
sufficient, and whether the decree may positively harm third parties.
See Microsoft, 56
[[Page 28088]]
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; InBev, 2009 U.S. Dist. LEXIS 84787, at *3; United States v.
Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001). 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 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 the United States District Court for the District of Columbia
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 using 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. Sec. 16(e)(2). This language effectuates 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 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: May 6, 2011
Respectfully submitted,
/s/Amy R. Fitzpatrick--------------------------------------------------
Amy R. Fitzpatrick (DC Bar No. 458680)
Attorney for the United States, United States Department of Justice,
Antitrust Division, Litigation I Section, 450 Fifth Street, N.W.,
Suite 4100, Washington, DC 20530, Telephone: (202) 532-4558,
Facsimile: (202) 307-5802, E-mail: [email protected].
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA, Plaintiff, v. UNILEVER N.V., UNILEVER
PLC, CONOPCO, INC., and ALBERTO-CULVER CO., Defendants.
CASE NO.: 1:11-cv-00858
JUDGE: Jackson, Amy Berman
DATE FILED: 5/6/2011
DESCRIPTION: Antitrust
[PROPOSED] FINAL JUDGMENT
WHEREAS, Plaintiff, United States of America, filed its Complaint
on May 6, 2011, and the United States of America and defendants
Unilever, N.V., Unilever PLC, Conopco, Inc., (collectively,
``Unilever'') and Alberto-Culver Company (``Alberto Culver'')
(collectively, ``Defendants''), by their respective attorneys, have
consented to the entry of this Final Judgment without
[[Page 28089]]
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 claims upon which
relief may be granted against Defendants under Section 7 of the Clayton
Act, as amended (15 U.S.C. Sec. 18).
II. Definitions
As used in this Final Judgment:
(A) ``Acquirer'' means the person, persons, entity or entities to
whom Defendants divest all or some of the Divestiture Assets.
(B) ``Alberto Culver'' means Defendant Alberto-Culver Co., a
Delaware corporation with its headquarters in Melrose Park, Illinois,
its successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, and their directors,
officers, managers, agents, and employees.
(C) ``Alberto VO5 Brand Name'' means Alberto VO5 and any other name
that uses, incorporates, or references the Alberto VO5 name in the
United States, including but not limited to Alberto VO5 Extra Body
Shampoo and Conditioner, Alberto VO5 Normal Shampoo and Conditioner,
Alberto VO5 Repair and Protect Shampoo and Conditioner, Alberto VO5 2-
in-1 Shampoo and Conditioner, Alberto VO5 Split Ends Shampoo and
Conditioner, Alberto VO5 Moisture Milks Shampoo and Conditioner,
Alberto VO5 Herbal Escapes Shampoo and Conditioner, Alberto VO5 Tea
Therapy Shampoo and Conditioner, Alberto VO5 Silky Experiences Shampoo
and Conditioner, Alberto VO5 Perfect Hold Aerosol Hairspray, Alberto
VO5 Perfect Hold Non-Aerosol Hairspray, Alberto VO5 Perfect Hold
Styling Mousse, Alberto VO5 Perfect Hold Styling Gel, Alberto VO5 Hair
Spray Regular, Alberto VO5 Hair Spray Super, Alberto VO5 Hair Spray
Brush Out, Alberto VO5 Hair Spray Extra Body, Alberto VO5 Hair Spray
Unscented, Alberto VO5 Conditioning Hairdressing, Alberto VO5 Sheer
Hairdressing Conditioning Cream, Alberto VO5 Hot Oil Shower Works
Conditioning Treatment, Alberto VO5 Hot Oil Moisturizing Conditioning
Treatment, Alberto VO5 Detangle and Shine Leave-in Conditioner, Alberto
VO5 Total Hair Recovery Conditioning Treatment, and any extensions of
any one or more of such products.
(D) ``Alberto VO5 Business'' means Alberto Culver's business
engaged in the research, development, licensing (as licensor or as
licensee), production, marketing, servicing or sale of any Alberto VO5
Product, including:
(i) All tangible assets used primarily in the research,
development, marketing, or sale of any Alberto VO5 Product including
but not limited to licenses, permits or authorizations issued by any
governmental organization; contracts, teaming arrangements, agreements,
leases commitments, certifications and understandings, including
agreements with suppliers, distributors, wholesalers, retailers,
marketers, or advertisers; customer lists; accounts, credit record, and
related customer information; product inventory; packaging and artwork
relating to such packaging; molds and silk screens; and all performance
records and all other records. Provided, however, that Unilever may
retain the portions of such tangible assets that relate to products
other than any Alberto VO5 Product where such asset reasonably can be
divided;
(ii) At the option of the Acquirer, all tangible assets used
primarily in the manufacturing of any Alberto VO5 Product, including
manufacturing equipment, materials and supplies. Provided, however,
that Defendants have no obligation to divest any real property as part
of the Alberto VO5 Business;
(iii) All legal rights to the Alberto VO5 Brand Name for use in the
United States;
(iv) All intellectual property used primarily in the research,
development, production, marketing, servicing, distribution or sale of
any Alberto VO5 Product, including but not limited to all legal rights
associated with the products, including patents, licenses, and
sublicenses, copyrights, Licensed Marks, Trade Dress, and other
intellectual property, for use in the United States; and a non-
exclusive, transferable, royalty-free right to all other intellectual
property used in the research, development, production, marketing,
servicing distribution or sale of any Alberto VO5 Product for the
purpose of the research, development, production, marketing, servicing,
distribution or sale in the United States of any Alberto VO5 Product.
Provided, however that with respect to any intellectual property
divested pursuant to this subsection (iv) that Defendants have used in
products not being divested, the Acquirer shall provide to Defendants a
worldwide, non-exclusive, transferable, royalty-free right to use such
intellectual property in the research, development, production,
marketing, servicing, distribution or sale of any product not being
divested; and
(v) All intangible assets, other than intangible assets set forth
in subsection (iv) above, used in the research, development,
production, marketing, servicing, distribution or sale of any Alberto
VO5 Product in the United States for use in the United States,
including all trade secrets; all technical information, computer
software and related documentation, know-how, and Formulas, including
information relating to plans for, improvement to, or line extensions
of, the products under the Alberto VO5 Brand Name; all research,
packaging, sales marketing, advertising and distribution know-how and
documentation, including plan-o-grams, marketing and sales data,
packaging designs, quality assurance and control procedures; all
manuals and technical information Alberto Culver provides to its own
employees, customers, suppliers, agents or licensees; and all research
data concerning historic and current research and development efforts,
including, but not limited to, designs of experiments, and the results
of successful and unsuccessful designs and experiments. Provided, that
with respect to any intangible assets that, prior to the merger, were
being used in the research, development, production, marketing,
servicing, distribution or sale of any Alberto VO5 Product and any
product not being divested, Defendants may utilize and retain the
portions of such
[[Page 28090]]
intangible assets that relate solely to products other than any Alberto
VO5 Product where such assets reasonably can be divided, and may
utilize and retain copies of such intangible assets that relate to both
any Alberto VO5 Product and any other product not being divested.
(E) ``Albert VO5 Product'' means any product that Alberto Culver
sold, sells, or has plans to sell under the Alberto VO5 Brand Name in
the United States.
(F) ``Defendants'' mean Unilever and Alberto Culver.
(G) ``Divestiture Assets'' mean the Alberto VO5 Business and the
Rave Business.
(H) ``Formulas'' mean all Defendants' formulas, processes, and
specifications used by the Defendants in connection with the production
and packaging associated with the goods manufactured, distributed,
marketed, and sold under a brand name, including, without limitation,
Defendants' ingredients, manufacturing processes, equipment and
material specifications, trade and manufacturing secrets, know-how, and
scientific and technical information.
(I) ``Licensed Marks'' mean all trademarks, service marks, or trade
names belonging or licensed to Defendants (whether registered or
unregistered, or whether the subject of a pending application)
associated with the goods manufactured, distributed, marketed, and sold
under a brand name.
(J) ``Rave Brand Name'' means Rave and any other name that uses,
incorporates, or references the Rave name, including but not limited to
Rave 4x Mega Scented Aerosol Hairspray, Rave 4x Mega Scented Non-
Aerosol Hairspray, Rave 4x Mega Unscented Aerosol Hairspray, Rave 4x
Mega Unscented Non-Aerosol Hairspray, Rave 2x Low Control Bodifying
Mousse, Rave 2x Extra Bodifying Mousse, and any extensions of any one
or more of such products.
(K) ``Rave Business'' means Unilever's business engaged in the
research, development, licensing (as licensor or as licensee),
production, marketing, servicing or sale of any Rave Product,
including:
(i) All tangible assets used primarily in the research,
development, marketing, or sale of any Rave Product including but not
limited to licenses, permits or authorizations issued by any
governmental organization; contracts, teaming arrangements, agreements,
leases commitments, certifications and understandings, including
agreements with suppliers, distributors, wholesalers, retailers,
marketers, or advertisers; customer lists; accounts, credit record, and
related customer information; product inventory; packaging and artwork
relating to such packaging; molds and silk screens; and all performance
records and all other records. Provided, however, that Unilever may
retain the portions of such tangible assets that relate to products
other than any Rave Product where such asset reasonably can be divided;
(ii) At the option of the Acquirer, all tangible assets used
primarily in the manufacturing of any Rave Product, including
manufacturing equipment, materials and supplies. Provided, however,
that Defendants have no obligation to divest any real property as part
of the Rave Business;
(iii) All legal rights to the Rave Brand Name. Provided, however,
that Defendants shall not be required to give the Acquirer rights to
use the terms ``Unilever'' or ``Suave,'' or any derivative of the terms
``Unilever'' or ``Suave;''
(iv) All intellectual property used primarily in the research,
development, production, marketing, servicing, distribution or sale of
any Rave Product, including but not limited to all legal rights
associated with the products, including patents, licenses, and
sublicenses, copyrights, Licensed Marks, Trade Dress, and other
intellectual property; and a non-exclusive, transferable, royalty-free
right to all other intellectual property used in the research,
development, production, marketing, servicing distribution or sale of
any Rave Product for the purpose of the research, development,
production, marketing, servicing, distribution or sale of any Rave
Product. Provided, however that with respect to any intellectual
property divested pursuant to this subsection (iv) that Defendants have
used in products not being divested, the Acquirer shall provide to
Defendants a worldwide, non-exclusive, transferable, royalty-free right
to use such intellectual property in the research, development,
production, marketing, servicing, distribution or sale of any product
not being divested; and
(v) All intangible assets, other than intangible assets set forth
in subsection (iv) above, used in the research, development,
production, marketing, servicing, distribution or sale of any Rave
Product, including all trade secrets; all technical information,
computer software and related documentation, know-how, and Formulas,
including information relating to plans for, improvement to, or line
extensions of, the products under the Rave Brand Name; all research,
packaging, sales marketing, advertising and distribution know-how and
documentation, including plan-o-grams, marketing and sales data,
packaging designs, quality assurance and control procedures; all
manuals and technical information Unilever provides to its own
employees, customers, suppliers, agents or licensees; and all research
data concerning historic and current research and development efforts,
including, but not limited to, designs of experiments, and the results
of successful and unsuccessful designs and experiments. Provided, that
with respect to any intangible assets that, prior to the merger, were
being used in the research, development, production, marketing,
servicing, distribution or sale of any Rave Product and any product not
being divested, Defendants may utilize and retain the portions of such
intangible assets that relate solely to products other than any Rave
Product where such assets reasonably can be divided, and may utilize
and retain copies of such intangible assets that relate to both any
Rave Product and any other product not being divested.
(L) ``Rave Product'' means any product that Unilever sold, sells,
or has plans to sell under the Rave Brand Name anywhere in the world.
(M) ``Trade Dress'' means the print, style, color, labels, and
other elements of trade dress currently used by Defendants and/or their
subsidiaries, divisions, groups, affiliates, partnerships, and joint
ventures in association with the goods manufactured, distributed,
marketed, and sold under a brand name.
(N) ``Unilever'' means defendants Unilever, N.V. and Unilever PLC,
corporations respectively organized under the laws of the Netherlands
and England, with headquarters in Rotterdam and London, and their
successors and assigns, their subsidiaries, divisions, groups,
affiliates, partnerships, and joint ventures, and their respective
directors, officers, managers, agents, and employees. Unilever includes
Conopco, Inc., a New York corporation, a wholly owned subsidiary of
Unilever N.V. and Unilever PLC.
III. Applicability
(A) This Final Judgment applies to all Defendants, as defined
above, and all other persons in active concert or participation with
the Defendants 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, license, or otherwise disposes of all or
substantially all of their assets or of lesser business units that
include the Divestiture Assets,
[[Page 28091]]
Defendants shall require the purchaser(s) to be bound by the provisions
of this Final Judgment. Defendants need not obtain such an agreement
from the Acquirer(s) of the assets divested pursuant to this Final
Judgment.
IV. Divestitures
(A) Defendants are ordered and directed, within ninety (90)
calendar days after the filing of the Proposed Final Judgment or five
(5) calendar days after 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 or Acquirers
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. Defendants agree to use
their best efforts to divest the Divestiture Assets as expeditiously as
possible.
(B) In accomplishing the divestiture ordered by this Final
Judgment, Defendants promptly shall make known, by usual and customary
means, the availability of the Divestiture Assets. Defendants shall
inform any person who inquires about a possible purchase of the
Divestiture Assets that they are being divested pursuant to this Final
Judgment and provide that person with a copy of this Final Judgment.
Defendants shall offer to furnish to all prospective Acquirers, subject
to customary confidentiality assurances, all information and documents
relating to the Divestiture Assets customarily provided in a due
diligence process except such information or documents subject to the
attorney-client privilege or work-product doctrine. Defendants shall
make available such information to the United States at the same time
that such information is made available to any other person.
(C) Defendants shall provide the Acquirer(s) and the United States
with information relating to the personnel involved in the design,
product development, management, operations, or sales activities
relating to the Divestiture Assets to enable the Acquirer(s) to make
offers of employment. Defendants will not interfere with any
negotiations by the Acquirer(s) to employ or contract with any
Defendants' employee whose primary responsibility relates to the
Divestiture Assets. Interference with respect to this paragraph
includes, but is not limited to, offering to increase an employee's
salary or benefits other than as a part of a company-wide increase in
salary or benefits. In addition, for each employee who elects
employment by the Acquirer or Acquirers, Defendants shall vest all
unvested pension and other equity rights of that employee and provide
all benefits to which the employee would have been entitled if
terminated without cause.
(D) Defendants shall waive all noncompete agreements for any
current or former employee employed in the design, development,
production, marketing, servicing, distribution, and/or sale of any of
the Divestiture Assets who the Acquirer(s) employs with relation to the
Divestiture Assets.
(E) Defendants shall permit prospective Acquirers of the
Divestiture Assets to (1) have reasonable access to personnel; (2) make
reasonable inspections of the physical facilities; (3) access to any
and all environmental, zoning, and other permit documents and
information; and (4) access to any and all financial, operational, or
other documents and information customarily provided as part of a due
diligence process.
(F) Defendants shall warrant to the Acquirer(s) that the
Divestiture Assets will be operational on the date of sale.
(G) Defendants shall not take any action that will impede in any
way the permitting, operation, or divestiture of the Divestiture
Assets.
(H) In connection with the divestiture of the Divestiture Assets
pursuant to Section IV, or by trustee appointed pursuant to Section V
of this Final Judgment, at the option of the Acquirer(s), the
Defendants shall enter into transitional supply and services
agreements, up to six (6) months in length, for the supply of Alberto
VO5 and/or Rave Products and the provision of services required to
transfer the Alberto VO5 and/or Rave Businesses to the Acquirer(s). At
the request of the Acquirer, the United States, in its sole discretion,
may agree to one or more extensions of this time period, not to exceed
twelve (12) months in total. The terms and conditions of such
agreements must be acceptable to the United States in its sole
discretion. Upon the expiration or termination of such agreements, the
Defendants shall not enter into or have any supply or service
agreements with the Acquirer(s) relating to the sale of the Alberto VO5
and/or Rave Products for a period of three (3) years thereafter.
(I) 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 will
achieve the purposes of this Final Judgment and that the Divestiture
Assets can and will be used by the Acquirer(s) as part of viable,
ongoing business engaged in the sale of shampoo, conditioner, and/or
hairspray. Divestiture of the Divestiture Assets may be made to one or
more Acquirers, provided that in each instance it is demonstrated to
the sole satisfaction of the United States that the Divestiture Assets
will remain viable and the divestiture of such assets will remedy the
competitive harm alleged in the Complaint. The divestitures, whether
pursuant to Section IV or Section V of this Final Judgment:
(i) shall be made to an Acquirer or Acquirers that, in the United
States' sole judgment, has or have the intent and capability (including
the necessary managerial, operational, technical, and financial
capability) of competing effectively in the sale of shampoo,
conditioner and/or hairspray; and
(ii) shall be accomplished so as to satisfy the United States, in
its sole discretion, that none of the terms of any agreement between an
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 Defendants have not divested the Divestiture Assets within
the time period specified in Section IV(A), Defendants shall notify the
United States of that fact in writing. Upon application of the United
States, the Court shall appoint a trustee selected by the United States
and approved by the Court to effect the 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 Defendants 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
[[Page 28092]]
than the trustee's malfeasance. Any such objections by Defendants must
be conveyed in writing to the United States and the trustee within ten
(10) calendar days after the trustee has provided the notice required
under Section VI.
(D) The trustee shall serve at the cost and expense of Defendants,
on such terms and conditions as the United States approves, and shall
account for all monies derived from the sale of the assets sold by the
trustee and all costs and expenses so incurred. After approval by the
Court of the trustee's accounting, including fees for its services and
those of any professionals and agents retained by the trustee, all
remaining money shall be paid to Defendants and the trust shall then be
terminated. The compensation of the trustee and any professionals and
agents retained by the trustee shall be reasonable in light of the
value of the Divestiture Assets and based on a fee arrangement
providing the trustee with an incentive based on the price and terms of
the 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 Divestiture Assets, and Defendants shall
develop financial and other information relevant to the Divestiture
Assets as the trustee may reasonably request, subject to reasonable
protection for trade secrets 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 its 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 the report contains information that the trustee deems
confidential, the report 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, Defendants or the trustee, whichever
is then responsible for effecting the divestiture required herein,
shall notify the United States of any proposed divestiture required by
Section IV or V of this Final Judgment. If the trustee is responsible,
it shall similarly notify Defendants. The notice shall set forth the
details of the proposed 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(s), any other third party, or the trustee, if
applicable, additional information concerning the proposed divestiture,
the proposed Acquirer(s), and any other potential Acquirer. Defendants
and the trustee shall furnish to the United States 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(s), 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(s) 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.
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, Defendants
shall deliver to the United States an affidavit as to the fact and
manner of their compliance with Section IV or V of this Final Judgment.
Each such affidavit shall include the name, address, and telephone
number of each person who, during the preceding thirty (30) calendar
days, made an offer to acquire, expressed an interest in acquiring,
entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring, any interest in the Divestiture Assets, and
shall describe in detail each contact with any such person during that
period. Each such affidavit shall also include a description of the
efforts Defendants have taken to solicit buyers for the Divestiture
Assets and to provide required information to prospective Acquirers,
including the limitations, if any, on such information. Provided that
the information set forth in the affidavit is true and complete, any
objection by
[[Page 28093]]
the United States to information provided by Defendants, including any
limitation on information, shall be made within fourteen (14) calendar
days of receipt of such affidavit.
(B) Within twenty (20) calendar days of the filing of the Complaint
in this matter, Defendants shall deliver to the United States an
affidavit that describes in reasonable detail all actions Defendants
have taken and all steps Defendants have implemented on an ongoing
basis to comply with Section VIII of this Final Judgment. Defendants
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 (1) 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, 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:
(i) 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
(ii) 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,
including, but not limited to, any transitional supply and/or services
agreements entered into between the Acquirer(s) and the Defendants
pursuant to Section IV(H) of this Final Judgment.
(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. No Reacquisition
Defendants shall not reacquire any part of the Divestiture Assets
during the term of this Final Judgment.
XII. 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.
XIII. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire ten (10) years from the date of its entry.
XIV. Public Interest Determination
The parties have complied with the requirements of the Antitrust
Procedures and Penalties Act, 15 U.S.C. Sec. 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 those comments. Based upon the record before the Court,
which includes the Competitive Impact Statement and any comments and
responses 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. Sec. 16.
-----------------------------------------------------------------------
United States District Judge
[FR Doc. 2011-11865 Filed 5-12-11; 8:45 am]
BILLING CODE 4410-11-P