[Federal Register Volume 77, Number 23 (Friday, February 3, 2012)]
[Notices]
[Pages 5574-5576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-2332]
[[Page 5574]]
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Grupo Bimbo, S.A.B. de C.V., et al.; Public
Comment and Response on Proposed Final Judgment
Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C.
16(b)-(h), the United States hereby publishes below the comment
received on the proposed Final Judgment in United States v. Grupo
Bimbo, S.A.B. de C. V., et al., Civil Action No. 1:11-cv-01857, which
was filed in the United States District Court for the District of
Columbia on January 23, 2012, together with the response of the United
States to the comment.
Copies of the comment and the response are available for inspection
at the U.S. Department of Justice, Antitrust Division, Antitrust
Documents Group, 450 Fifth Street NW., Suite 1010, Washington, DC 20530
(telephone: (202) 514-2481); on the Department of Justice's Web site at
http://www.usdoj.gov/atr; and at the Office of the Clerk of the United
States District Court for the District of Columbia. Copies of any of
these materials may be obtained upon request and payment of a copying
fee.
Patricia A. Brink,
Director of Civil Enforcement.
United States District Court for the District Of Columbia
United States of America, Plaintiff, v. Grupo Bimbo, S.A.B. de
C.V., et al. Defendants.
CASE NO.: 1:11-cv-01857 (EGS) FILED: January 23, 2012
Response of Plaintiff United States to Public Comment on the Proposed
Final Judgment
Pursuant to the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. Sec. 16(b)-(h) (``APPA'' or ``Tunney Act''),
plaintiff, the United States of America (``United States'') hereby
files the public comment concerning the proposed Final Judgment in this
case and the United States' response to that comment. After careful
consideration of the comment submitted, the United States continues to
believe that the proposed Final Judgment will provide an effective and
appropriate remedy for the antitrust violations alleged in the
Complaint. The United States will move the Court for entry of the
proposed Final Judgment after the public comment and this response have
been published in the Federal Register, pursuant to 15 U.S.C. Sec.
16(d).
I. Procedural History
On October 21, 2011, the United States filed a civil antitrust
lawsuit against Defendants Grupo Bimbo S.A.B. de C.V., BBU, Inc., and
Sara Lee Corporation to enjoin Grupo Bimbo and BBU's proposed
acquisition of Sara Lee's North American Fresh Bakery business. The
Complaint alleged that the acquisition would substantially lessen
competition in the market for sliced bread in eight geographic markets
in the United States 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.
Simultaneously with the filing of the Complaint, the United States
filed a proposed Final Judgment and Stipulation signed by the United
States, Grupo Bimbo, BBU, and Sara Lee consenting to entry of the
proposed Final Judgment after compliance with the requirements of the
APPA, 15 U.S.C. Sec. 16. The United States filed an Amended
Stipulation signed by the United States, Grupo Bimbo, BBU, and Sara Lee
on November 17, 2011.\1\ Pursuant to the requirements of the APPA, the
United States (1) filed its Competitive Impact Statement (``CIS'') with
the Court on October 21, 2011; (2) published the proposed Final
Judgment and CIS in the Federal Register on October 31, 2011 (see 76
Fed. Reg. 67209); and (3) had summaries of the terms of the proposed
Final Judgment and CIS, together with directions for the submission of
written comments relating to the proposed Final Judgment, published in
The Washington Post on October 28, 2011, and for six days beginning on
October 31, 2011, and ending on November 5, 2011. The Defendants filed
the statement required by 15 U.S.C. Sec. 16(g) on October 31, 2011.
The sixty-day public comment period ended on January 4, 2012. One
comment was received, as described below and attached hereto.
---------------------------------------------------------------------------
\1\ On November 17, 2011, the United States filed a Notice of
Amended Hold Separate Stipulation and Order to correct an
inadvertent clerical error relating to the definition of ``Central
Pennsylvania Area'' in the Hold Separate Stipulation and Order
originally filed on October 21, 2011. The Court entered the Amended
Hold Separate Stipulation and Order on November 30, 2011.
---------------------------------------------------------------------------
II. The Investigation and Proposed Resolution
On November 9, 2010, Grupo Bimbo and BBU (collectively ``BBU'')
agreed to acquire the North American Fresh Bakery business of Sara Lee.
The United States Department of Justice (the ``Department'') conducted
an extensive, detailed investigation into the competitive effects of
the proposed transaction. As part of this investigation, the Department
obtained and considered more than 30,000 documents. The Department
deposed officials of BBU and Sara Lee and interviewed retail store
customers, sliced bread manufacturers, and other individuals with
knowledge of the sliced bread industry.
After conducting a detailed analysis of the acquisition, the
Department concluded that the combination of BBU and Sara Lee likely
would substantially lessen competition for the sale of sliced bread in
the metropolitan and surrounding areas of San Francisco, San Diego,
Sacramento, and Los Angeles, California; Harrisburg/Scranton,
Pennsylvania; Kansas City, Kansas; Omaha, Nebraska; and Oklahoma City,
Oklahoma.
As more fully explained in the CIS, the Amended Stipulation and
proposed Final Judgment in this case are designed to preserve
competition in the sale of sliced bread in the eight geographic areas
set forth in the Complaint by requiring BBU to divest the following
assets (``Divestiture Assets''). In Los Angeles, San Diego, San
Francisco, and Sacramento, California, BBU is required to divest the
Sara Lee family of brands of sliced bread (which includes Sara Lee,
Sara Lee Classic, Sara Lee Soft & Smooth, Sara Lee Hearty & Delicious,
and Sara Lee Delightful) and the EarthGrains brand of sliced bread. In
Harrisburg/Scranton, Pennsylvania, BBU is required to divest the Holsum
and Milano brands of sliced bread. In Kansas City, Kansas, BBU is
required to divest the EarthGrains and Mrs Baird's brands of sliced
bread. In Omaha, Nebraska, BBU is required to divest the EarthGrains
and Healthy Choice brands of sliced bread. In Oklahoma City, Oklahoma,
BBU is required to divest the EarthGrains brand of sliced bread. See
Sections II.E, H, and K of the Proposed Final Judgment.
In addition to a perpetual, royalty-free, assignable, transferable,
exclusive license to use the particular brands of sliced bread, the
proposed Final Judgment requires with respect to each relevant
geographic market the divestiture of related tangible assets, including
records, customer information, and other assets related to the divested
brands. Id. at II.D, G, and J. It also requires the divestiture of
related intangible assets, including the rights to trade dress,
trademarks, trade secrets, and other intellectual property used in the
research, development,
[[Page 5575]]
production, marketing, servicing, distribution, or sale of the brands
being divested. Id. The proposed Final Judgment additionally requires
the divestiture of brand-related plants and plant-related assets, but
it also provides that BBU need not divest those assets in the event
that (1) the acquirer does not want those assets, and (2) the United
States determines in its sole discretion that a divestiture of some or
all of such assets is not reasonably necessary to enable the acquirer
to replace the competition that otherwise would have been lost pursuant
to BBU's acquisition of Sara Lee's fresh bakery business. Id.
In the Department's judgment, the divestiture of the Divestiture
Assets, along with the other requirements contained in the Amended
Stipulation and proposed Final Judgment, are sufficient to remedy the
anticompetitive effects identified in the Complaint.
III. Standard of Judicial Review
The Tunney Act 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 United
States 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 (DC Cir. 1995). See also United States v. SBC
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public
interest standard under the Tunney Act); United States v. InBev N.V./
S.A., 2009-2 Trade Cas. (CCH)
76,736, 2009 U.S. Dist. LEXIS 84787, No. 08-1965 (JR), at *3,
(D.D.C. Aug. 11, 2009) (noting that the court's review of a consent
judgment is limited and only inquires ``into whether the government's
determination that the proposed remedies will cure the antitrust
violations alleged in the complaint was reasonable, and whether the
mechanism to enforce the final judgment are clear and manageable.'').
As the United States Court of Appeals for the District of Columbia
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 F.3d at 1458-62. With respect to the adequacy of the
relief secured by the decree, a court may not ``engage in an
unrestricted evaluation of what relief would best serve the public.''
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (citing
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152
F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787,
at *3. Courts have held that:
[t]he balancing of competing social and political interests
affected by a proposed antitrust consent decree must be left, in the
first instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to the
decree. The court is required to determine not whether a particular
decree is the one that will best serve society, but whether the
settlement is ``within the reaches of the public interest.'' More
elaborate requirements might undermine the effectiveness of antitrust
enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\
In determining whether a proposed settlement is in the public interest,
a district court ``must accord deference to the government's
predictions about the efficacy of its remedies, and may not require
that the remedies perfectly match the alleged violations.'' SBC
Commc'ns, 489 F. Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461
(noting the need for courts to be ``deferential to the government's
predictions as to the effect of the proposed remedies''); United States
v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003)
(noting that the court should grant due respect to the United States'
``prediction as to the effect of proposed remedies, its perception of
the market structure, and its views of the nature of the case'').
---------------------------------------------------------------------------
\2\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); United States v. Gillette Co.,
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the
court is constrained to ``look at the overall picture not
hypercritically, nor with a microscope, but with an artist's
reducing glass''); see generally Microsoft, 56 F.3d at 1461
(discussing whether ``the remedies [obtained in the decree are] so
inconsonant with the allegations charged as to fall outside of the
'reaches of the public interest'').
---------------------------------------------------------------------------
Courts have greater flexibility in approving proposed consent
decrees than in crafting their own decrees 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. Akan 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.'' United States
v. Abitibi-Consolidated, Inc., 584 F. Supp. 2d 162, 165 (D.D.C. 2008)
(citing 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,''
[[Page 5576]]
and not to ``effectively redraft the complaint'' to inquire into other
matters that the United States did not pursue. Microsoft, 56 F.3d at
1459-60. As this court recently confirmed in SBC Communications, courts
cannot look beyond the complaint in making the public interest
determination unless the complaint is drafted so narrowly as to make a
mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
In its 2004 amendments,\3\ Congress made clear its intent to
preserve the practical benefits of utilizing consent decrees in
antitrust enforcement, stating 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 clause reflects 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\ The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for the court 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).
---------------------------------------------------------------------------
IV. Summary of Public Comment and the United States' Response
During the 60-day comment period, the United States received one
public comment, from Donald Steinhauer, a current BBU, and former Sara
Lee, employee in Central California.\4\
---------------------------------------------------------------------------
\4\ Pursuant to a specific request, the Department has redacted
Mr. Steinhauer's mailing address from his comment.
---------------------------------------------------------------------------
A. Summary of Comment
Mr. Steinhauer argues that requiring the divestiture of the Sara
Lee and EarthGrains brands of sliced bread in Central California will
result in job losses, and that concern for lost jobs should outweigh
any concerns the Department has about the anticompetitive effects of
BBU's acquisition of Sara Lee's fresh bakery business.
B. The United States' Response
This action was brought in order to prevent a potential violation
of Section 7 of the Clayton Act, which protects consumers from the
economic consequences of anticompetitive mergers and acquisitions. The
Clayton Act seeks to prevent the higher prices, lower quality, or
reduced innovation that may result from such transactions.
The Tunney Act, as amended in 2004, requires the Court to evaluate
the effect of the proposed Final Judgment ``upon competition'' as
alleged in the Complaint. The purpose of this Tunney Act proceeding is
to determine whether the proposed divestiture of the brands of sliced
bread and related assets resolves the violation identified in the
Complaint in a manner that is within the reaches of the public
interest. In his comment, Mr. Steinhauer does not criticize the
efficacy of the relief contained in the proposed Final Judgment to
remedy the competitive harm alleged in the Complaint. Accordingly, Mr.
Steinhauer's letter does not provide an appropriate rationale for
rejecting the proposed Final Judgment.
V. Conclusion
After careful consideration of the public comment, the United
States concludes that entry of the proposed Final Judgment will provide
an effective and appropriate remedy for the antitrust violations
alleged in the Complaint and is therefore in the public interest.
Accordingly, after the comment and this Response are published, the
United States will move this Court to enter the proposed Final
Judgment.
Dated: January 23, 2012.
Respectfully submitted,
United States of America
/s/Michelle R. Seltzer
Michelle R. Seltzer (DC Bar #475482), Attorney.
Litigation I Section
Antitrust Division
U.S. Department of Justice, 450 Fifth Street NW., Suite 4100,
Washington, DC 20530.
Telephone: (202) 353-3865
Facsimile: (202) 307-5802
Email: [email protected].
Certificate of Service
I, Michelle R. Seltzer, hereby certify that on January 23, 2012, I
electronically filed the Response of Plaintiff United States to Public
Comment on the Proposed Final Judgment and the attached Public Comment
with the Clerk of the Court using the CM/ECF system, which will send a
notice of electronic filing to the following counsel:
For Defendants Grupo Bimbo S.A.B. de C.V. and BBU Inc.:
Jaime M. Crowe, Esq., White & Case LLP, Washington, DC 20005.
Telephone: (202) 626-3640
Facsimile: (202) 639-9355
Email: [email protected].
For Defendant Sara Lee Corporation:
Marimichael O'Halloran Skubel, Esq., Kirkland & Ellis LLP 655
Fifteenth Street, NW Washington, DC 20005-5793.
Telephone: (202) 879-5034
Facsimile: (202) 879-5200
Email: [email protected].
/s/Michelle R. Seltzer
Michelle R. Seltzer (DC Bar #475482), Attorney.
Litigation I Section
Antitrust Division
U.S. Department of Justice, 450 Fifth Street NW., Suite 4100,
Washington, DC 20530.
Telephone: (202) 353-3865
Facsimile: (202) 307-5802
Email: [email protected].
November 16, 2011
To Whom It May Concern:
On your ruling over the Grupo Bimbo buyout of Sara Lee, I was
stunned at this ruling that requires Bimbo to divest the Sara Lee and
Earthgrains products in our area, Central California Do you realize the
job loss that will occur from this ruling over what you call ``higher
prices'' that people will pay for bread in the stores? If the consumer
feels that specific bread is too high they will buy another brand and
would still have other choices.
Knowing that this letter by no means will change the outcome of
this ruling, I thought that jobs were the focal point of a lot
decisions that are being made in this administration. I hope for my
family's well-being that I won't be one that loses out after being
employed with Sara Lee for 20+ years. In respect for what the
Department of Justice does to stop immorality in American businesses
and individuals, in this case, job loss that will occur outweighs the
concerns that you have about Bimbo monopolizing. I hope in the coming
months I could write you another letter apologizing to you about this
letter.
Respectfully, Donald Steinhauer.
Redacted.
[FR Doc. 2012-2332 Filed 2-2-12; 8:45 am]
BILLING CODE 4410-11-M