[Federal Register Volume 79, Number 93 (Wednesday, May 14, 2014)]
[Notices]
[Pages 27639-27650]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-11056]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Ebay Inc.; 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, 
Stipulation and Competitive Impact Statement have been filed with the 
United States District Court for the Northern District of California in 
United States of America v. eBay Inc., Civil Action No. 12-5869. On 
November 16, 2012, the United States filed a Complaint alleging that 
eBay Inc. entered into an agreement with Intuit, Inc., that restrained 
the recruiting and hiring of high technology workers, in violation of 
Section 1 of the Sherman Act, 15 U.S.C. 1. The proposed Final Judgment 
prevents eBay from maintaining or entering into similar agreements.
    Copies of the Complaint, as amended, Stipulation, proposed Final 
Judgment and Competitive Impact Statement are available for inspection 
at the Department of Justice, Antitrust Division, Antitrust Documents 
Group, 450 Fifth Street NW., Suite 1010, Washington, DC 20530 
(telephone: 202-514-2481), on the Department of Justice's Web site at 
http://www.usdoj.gov/atr, and at the Office of the Clerk of the United 
States District Court for the Northern District of California. 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, including the name of the submitter, and 
responses thereto, will be posted on the U.S. Department of Justice, 
Antitrust Division's internet Web site, filed with the Court and, under 
certain circumstances, published in the Federal Register. Comments 
should be directed to James J. Tierney, Chief, Networks and Technology 
Enforcement Section, Antitrust Division, Department of Justice, 
Washington, DC 20530, (telephone: 202-307-6640).

Patricia Brink,
Director of Civil Enforcement.

N. Scott Sacks, Attorney (D.C. Bar No. 913087)
Jessica N. Butler-Arkow, Attorney (D.C. Bar No. 430022)
Adam T. Severt, Attorney (Member, Maryland Bar, Numbers not assigned)
Ryan Struve, Attorney (D.C. Bar No. 495406)
Anna T. Pletcher, Attorney (California State Bar No. 239730)
United States Department of Justice, Antitrust Division, 450 Fifth 
Street NW., Suite 7100, Washington, DC 20530, Telephone: 202-307-6200, 
Facsimile: 202-616-8544, Email: [email protected]

[Additional counsel listed on signature page]

Attorneys for Plaintiff United States of America

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA 
SAN JOSE DIVISION

UNITED STATES OF AMERICA, Plaintiff, v. EBAY, INC., Defendant.

Case No. 12-CV-05869 EJD

Amended Complaint

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil antitrust 
action to obtain equitable relief against Defendant eBay, Inc. 
(``eBay''), alleging as follows:

Nature of the Action

    1. This action challenges under Section 1 of the Sherman Act a no-
solicitation and no-hiring agreement between eBay and Intuit, Inc. 
(``Intuit''), pursuant to which eBay and Intuit agreed not to recruit 
each other's employees and eBay agreed not to hire Intuit employees, 
even those that approached eBay for a job. This agreement harmed 
employees by lowering the salaries and benefits they might otherwise 
have commanded, and deprived these employees of better job 
opportunities at the other company. Meg Whitman, then the CEO of eBay, 
and Scott Cook, Founder and Chairman of the Executive Committee at 
Intuit, were intimately involved in forming, monitoring, and enforcing 
this anticompetitive agreement.
    2. Senior executives at eBay and Intuit entered into an evolving 
``handshake'' agreement to restrict their ability to recruit and hire 
employees of the other company. The agreement, which was entered into 
no later than 2006, prohibited either company from soliciting one 
another's employees for employment opportunities, and, for over a year, 
prevented at least eBay from hiring any employees from Intuit at all. 
The agreement was enforced at the highest levels of each company.
    3. The agreement reduced eBay's and Intuit's incentives and ability 
to compete for employees and restricted employees' mobility. This 
agreement thus harmed employees by lowering the salaries and benefits 
they otherwise would have commanded, and deprived these employees of 
better job opportunities at the other company.
    4. This agreement between eBay and Intuit is a naked restraint of 
trade that is per se unlawful under Section 1 of the Sherman Act, 15 
U.S.C. 1. The United States seeks an order prohibiting any such 
agreement and other relief.

Jurisdiction and Venue

    5. eBay hires specialized computer engineers, scientists, and other 
employees throughout the United

[[Page 27640]]

States, and sells products and services throughout the United States. 
Such activities, including the recruitment and hiring activities at 
issue in this Complaint, are in the flow of and substantially affect 
interstate commerce. The Court has subject matter jurisdiction under 
Section 4 of the Sherman Act, 15 U.S.C. 4, and under 28 U.S.C. 1331 and 
1337 to prevent and restrain the Defendant from violating Section 1 of 
the Sherman Act, 15 U.S.C. 1.
    6. Venue is proper in this judicial district under Section 12 of 
the Clayton Act, 15 U.S.C. 22, and under 28 U.S.C. 1391(b)(2), (c). 
eBay transacts or has transacted business in this district and has its 
principal place of business here. A substantial part of the events that 
gave rise to this action occurred here.

Intradistrict Assignment

    7. Venue is proper in the San Jose Division because this action 
arose primarily in Santa Clara County. Civil L.R. 3-2(c), (e). A 
substantial part of the events that gave rise to the claim occurred in 
Santa Clara County, and eBay has its principal place of business in 
Santa Clara County. Judge Koh in the San Jose Division is currently 
presiding over a case that is similar in certain respects. In addition, 
the Attorney General of the State of California is filing a Complaint 
that is related to the United States' Complaint, pursuant to the 
requirements of Local Rule 3-12(a).

Defendant

    8. eBay is a Delaware corporation with its principal place of 
business in San Jose, California.

Co-Conspirators

    9. Various other corporations and persons not made defendants in 
this Complaint, including Intuit and senior executives at Intuit and 
eBay, participated as co-conspirators in the violation alleged and 
performed acts and made statements in furtherance of the violation 
alleged. Intuit is not named as a defendant in this action because 
Intuit is subject to a court order in United States v. Adobe Systems, 
No. 10-01629 (D.D.C. judgment entered Mar. 17, 2011), barring it from 
entering into or enforcing any agreement that improperly limits 
competition for employee services.

Trade and Commerce

    10. Firms in the same or similar industries often compete to hire 
and retain talented employees. This is particularly true in technology 
industries in which particular expertise and highly specialized skills 
sought by one firm can often be found at another firm. Solicitation of 
skilled employees at other companies is an effective method of 
competing for needed employees. For example, Beth Axelrod, eBay's 
Senior Vice President for Human Resources at the time the agreement 
with Intuit was in effect, co-authored a book, ``The War for Talent,'' 
which emphasizes the importance of ``cold-calling'' as a recruitment 
tool: ``The recruiting game is changing for yet another reason: It's no 
longer sufficient to target your efforts to people looking for a job; 
you have to reach people who aren't looking.''
    11. eBay's agreement with Intuit eliminated this competition. The 
agreement harmed employees by reducing the salaries, benefits, and 
employment opportunities they might otherwise have earned if 
competition had not been eliminated. The agreement also misallocated 
labor between eBay and Intuit--companies that drove innovation based in 
no small measure on the talent of their employees. In a well-
functioning labor market, employers compete to attract the most 
valuable talent for their needs. Competition among employers for 
skilled employees may benefit employees' salaries and benefits, and 
facilitates employee mobility. The no-solicitation and no-hiring 
agreement between Intuit and eBay distorted this competitive process 
and likely resulted in some of eBay's and Intuit's employees remaining 
in jobs that did not fully utilize their unique skills. Ms. Axelrod and 
her co-authors described how the ``structural forces fueling the war 
for talent'' have resulted in power ``shift[ing] from the corporation 
to the individual,'' giving ``talented individuals . . . the 
negotiating leverage to ratchet up their expectation for their 
careers.''
    12. Instead of working harder to acquire this critical and scarce 
talent, eBay and Intuit called a truce in the ``war for talent'' to 
protect their own interests at the expense of their employees. eBay 
initially sought a limited no-solicitation agreement aimed at high-
level executives. eBay ultimately agreed to an expansive no-
solicitation and no-hire agreement in large part to placate Intuit's 
Mr. Cook, who was serving as a member of eBay's Board of Directors and 
who, at the same time, was making several complaints on behalf of 
Intuit about eBay's hiring practices. eBay elevated the interests of 
Mr. Cook above the welfare of its own employees. Similarly, Mr. Cook 
was willing to sacrifice the welfare of Intuit's employees in order to 
advance his own personal interests in serving on eBay's Board.
    13. Neither eBay nor Intuit publicly announced their no hire/no 
solicit agreement or ensured that all potentially affected employees 
were aware of the agreement. Disclosure of the agreement could have 
created substantial legal problems for eBay and Intuit under California 
law and significant embarrassment for the executives and other 
individuals who entered into, and monitored compliance with, the 
agreement on behalf of the two firms. Many eBay and Intuit employees 
reside in California, a state with a strong public policy prohibiting 
firms from restricting employee movement by, among other things, 
barring employers from enforcing ``no compete'' agreements. California 
law provides that ``every contract by which anyone is restrained from 
engaging in a lawful profession, trade, or business of any kind is to 
that extent void.'' California Business & Professions Code Sec.  16600.

The Unlawful Agreement

    14. Beginning no later than 2006, and lasting at least until 2009, 
Intuit and eBay maintained an illegal agreement that restricted their 
ability to actively recruit employees from each other, and for some 
part of that time, further restricted eBay from hiring any employees 
from Intuit. As alleged in more detail below, this agreement was 
entered into and enforced at the most senior levels of these two 
companies.
    15. In November 2005, eBay's Chief Operating Officer, Maynard Webb, 
wrote to Scott Cook, Intuit's Founder and Chairman of its Executive 
Committee, to ``get [Mr. Cook's] advice on a specific hiring situation 
and then see if we could establish some guidelines on an ongoing 
basis.'' Mr. Webb asked Mr. Cook for ``permission to proceed'' with 
hiring an Intuit employee who had contacted eBay regarding a job, and 
then proposed a ``structure'' to Mr. Cook for future situations, 
whereby eBay would ``not actively recruit from Intuit.'' Under Mr. 
Webb's proposal, for Intuit candidates ``below Senior Director level'' 
who contacted eBay regarding employment, eBay would be permitted to 
hire them and would give Intuit ``notice'' only after a candidate 
accepted a job offer. For Intuit candidates ``at Senior Director level 
or above,'' eBay would not make an offer unless Intuit was notified in 
advance. Mr. Cook rejected this proposal insofar as it allowed hiring 
of any employees without prior notice to Intuit, saying that ``we don't 
recruit from board companies, period'' and ``[w]e're passionate on 
this.'' In other words, because Mr. Cook served on eBay's board, Intuit 
employees should be

[[Page 27641]]

denied any chance to work for eBay. Mr. Cook committed that Intuit 
would not make an offer to anyone from eBay without first notifying 
eBay, and said ``[w]e would ask the same.''
    16. A month later, in December 2005, Meg Whitman, the CEO of eBay 
at the time, and Mr. Cook discussed the competition for two employees 
with an eye toward eliminating that competition altogether. As Ms. 
Whitman told Ms. Axelrod, Mr. Cook was ``slightly miffed by our recent 
hire of two Intuit executives.''
    17. No later than August 2006, the initial agreement between eBay 
and Intuit restricting the hiring of each other's employees was put 
into effect. In August 2006, when eBay considered hiring an Intuit 
employee for an opening at its PayPal subsidiary, Ms. Axelrod said that 
while she was ``happy to have a word with Meg [Whitman] about it,'' Ms. 
Axelrod was ``quite confident she will say hands off because Scott 
[Cook] insists on a no poach policy with Intuit.'' When the PayPal 
executive asked Ms. Axelrod to confer with Ms. Whitman, Ms. Axelrod 
reported back that ``I confirmed with Meg [Whitman] that we cannot 
proceed without notifying Scott Cook first.'' eBay does not appear to 
have pursued the potential candidate beyond this point as everyone 
agreed ``that it's to[o] awkward to call Scott [Cook] when we don't 
even know if the candidate has interest,'' demonstrating that the non-
solicitation agreement had a distinct chilling effect on recruitment 
and hiring between the two companies.
    18. On or about April 2007, eBay's commitment metastasized into a 
no-hire agreement. The impetus was a complaint from Mr. Cook to Ms. 
Whitman that he was ``quite unhappy'' about a potential offer that eBay 
was going to make to an Intuit employee who had approached eBay. Ms. 
Axelrod spoke with Ms. Whitman regarding Mr. Cook's concerns, and 
instructed David Knight, then eBay's Vice President, Internal 
Communications, to hold off on making the offer. Mr. Knight urged Ms. 
Axelrod to find a way to make the offer happen, as the decision put the 
applicant ``in a tough position and us in a bad place with California 
law'' and left eBay ``another 6 months away from getting another 
candidate'' for the position. A week later, Mr. Knight wrote to Ms. 
Axelrod and Ms. Whitman pleading with them to at least ``negotiate'' 
any shift from a ``no poaching'' agreement to a ``no hiring'' agreement 
after this particular applicant was hired, as eBay ``desperately 
need[ed] this position filled.''
    19. While Ms. Axelrod ultimately authorized Mr. Knight to extend an 
offer to this Intuit employee, eBay did expand the agreement to 
prohibit eBay from hiring any employee from Intuit, regardless of how 
that employee applied for the job. A few months later, for example, an 
eBay human resources manager alerted Ms. Axelrod to a potential 
``situation'' and wanted to know if eBay ``continue[d] to be sensitive 
to Scott [Cook]'s request'' or if there was ``any flexibility on hiring 
from Intuit.'' The Intuit candidate was ``getting a lot of responses 
from managers directly'' before the human resource manager's team was 
involved as his ``education is fantastic.'' Ms. Axelrod confirmed, 
however, that even when an Intuit employee was ``dying'' to work for 
eBay and had proactively reached out to eBay, hiring managers had ``no 
flexibility'' and must keep their ``hands off'' the potential 
applicant.
    20. Two eBay staffers sought to clarify the situation with Ms. 
Axelrod shortly thereafter. Ms. Axelrod said: ``We have an explicit 
hands of[f] that we cannot violate with any Intuit employee. There is 
no flexibility on this.'' The staff asked for further amplification: 
``This applies even if the Intuit employee has reached out and 
specifically asked? If so then I assume that person could NEVER be 
hired by ebay unless they quit Intuit first.'' Ms. Axelrod confirmed 
this was ``correct.'' Ms. Axelrod similarly explained the impact of the 
agreement to Ms. Whitman: ``I keep getting inquiries from our folks to 
recruit from Intuit and I am firmly holding the line. No exceptions 
even if the candidate proactively contacts us.'' In another email 
exchange, Ms. Axelrod explained that she was responding to all 
inquiries regarding hiring from Intuit by ``firmly holding the line and 
saying absolutely not (including to myself since their comp[ensation] 
and ben[efits] person is supposed to be excellent!).''
    21. Mr. Cook was a driving force behind eBay's no-hire agreement 
with Intuit. In one 2007 email, an eBay recruiter confirmed that the 
message to Intuit candidates should be that eBay was ``not allowed to 
hire from Intuit per Scott Cook regardless of whether the candidate 
applies directly or if we reach out.'' eBay recruiting personnel 
understood that ``Meg [Whitman] and Scott Cook entered into the 
agreement (handshake style, not written) that eBay would not hire from 
Intuit, period.'' Mr. Cook and Intuit, on the other hand, agreed that 
Intuit would not recruit from eBay. Mr. Cook explained to one applicant 
who had decided to work for eBay but expressed a future interest in 
joining Intuit, that ``Intuit is precluded from recruiting you'' unless 
eBay has decided it does not need the employee or where the employee 
informs his management and then proactively contacts Intuit.
    22. eBay insisted that Intuit refrain from recruiting its employees 
in exchange for the limitation on eBay's ability to recruit and hire 
Intuit employees. On August 27, 2007, Ms. Axelrod wrote Ms. Whitman to 
complain that while eBay was sticking to its agreement not to hire 
Intuit employees, ``it is hard to do this when Intuit recruits our 
folks.'' Ms. Axelrod forwarded Ms. Whitman a recruiting flyer that 
Intuit had sent to an eBay employee. Ms. Whitman forwarded Ms. 
Axelrod's email to Mr. Cook the same day asking him to ``remind your 
folks not to send this stuff to eBay people.'' Mr. Cook responded 
quickly: ``@!%$[caret]&!!! Meg my apologies. I'll 
find out how this slip up occurred again. . . .''
    23. Throughout the course of the agreement, eBay repeatedly 
declined opportunities to hire or interview Intuit employees, even when 
eBay had open positions for ``quite some time,'' when the potential 
employee ``look[ed] great,'' or when ``the only guy who was good was 
from [I]ntuit.'' eBay employees were instructed not to pursue potential 
hires that came from Intuit and to discard their resumes. When a 
candidate applied for a position and told eBay that she had left 
Intuit, Ms. Axelrod went so far as to write Mr. Cook to confirm that 
the applicant had, in fact, left the company.
    24. The companies acknowledged that throughout the agreement, they 
``passed'' on ``talented'' applicants, consistent with their 
anticompetitive agreement. The repeated requests from lower level 
employees at both companies to be allowed to recruit employees from the 
other firm demonstrates that the agreement denied employees the 
opportunity to compete for better job opportunities.
    25. The agreement between eBay and Intuit remained in effect for at 
least some period of time after a United States Department of Justice 
investigation of agreements between technology companies that 
restricted hiring practices became public. One eBay employee asked 
another in June 2009 if she had been ``able to connect with Beth 
[Axelrod] re our policies around hiring from Intuit with respect to'' a 
former employee at eBay's PayPal division who ``wishes to return'' and 
noted press reports of the Department of Justice investigation. The 
employee responded: ``It's a no go . . . too

[[Page 27642]]

complicated. We should move to plan b.'' (Ellipses in original.)

Violation Alleged (Violation of Section 1 of the Sherman Act)

    26. The United States hereby incorporates paragraphs 1 through 25.
    27. eBay and Intuit are direct competitors for employees, including 
specialized computer engineers and scientists, covered by the agreement 
at issue here. eBay and Intuit entered into a naked no-solicitation and 
no-hire agreement, thereby reducing their ability and incentive to 
compete for employees. This agreement suppressed competition between 
eBay and Intuit, thereby limiting affected employees' ability to secure 
better compensation, benefits, and working conditions.
    28. eBay's agreement with Intuit is per se unlawful under Section 1 
of the Sherman Act, 15 U.S.C. 1. No elaborate industry analysis is 
required to demonstrate the anticompetitive character of this 
agreement.
    29. The no-solicitation and no-hire agreement between eBay and 
Intuit is also an unreasonable restraint of trade that is unlawful 
under Section 1 of the Sherman Act, 15 U.S.C. 1, under an abbreviated 
or ``quick look'' rule of reason analysis. The principal tendency of 
the agreement between eBay and Intuit is to restrain competition, as 
the nature of the restraint is obvious and the agreement has no 
legitimate pro-competitive justification. Even an observer with a 
rudimentary understanding of economics could therefore conclude the 
agreement would have an anticompetitive effect on employees and harm 
the competitive process.

Requested Relief

    The United States requests that:
    (A) The Court adjudge and decree that the Defendant's agreement 
with Intuit not to compete constitutes an illegal restraint of 
interstate trade and commerce in violation of Section 1 of the Sherman 
Act;
    (B) the Defendant be enjoined and restrained from enforcing or 
adhering to any existing agreement that unreasonably restricts 
competition for employees between it and anyone else;
    (C) the Defendant be permanently enjoined and restrained from 
establishing any similar agreement unreasonably restricting competition 
for employees except as prescribed by the Court;
    (D) the United States be awarded such other relief as the Court may 
deem just and proper to redress and prevent recurrence of the alleged 
violation and to dissipate the anticompetitive effects of the illegal 
agreement entered into by eBay and Intuit; and
    (E) the United States be awarded the costs of this action.

Dated: April 19, 2013.

For Plaintiff United States Of America.
William J. Baer,
Assistant Attorney General for Antitrust.

Terrell Mcsweeny,
Chief Counsel for Competition Policy and Intergovernmental 
Relations.

Patricia A. Brink,
Director of Civil Enforcement.

Mark W. Ryan,
Director of Litigation.

James J. Tierney,
Chief, Networks & Technology Enforcement Section.

Brian J. Stretch, (CSBN 163973), Acting United States Attorney.
ALEX G. TSE (CSBN 152348),
Chief, Civil Division,
Office of the United States Attorney,
Northern District of California,
150 Almaden Blvd., Suite 900,
San Jose, CA 95113,
Telephone: 408-535-5061.
Facsimile: 408-535-5066.
[email protected].
--/s/------
N. Scott Sacks
--/s/------
Jessica N. Butler-Arkow
--/s/------
Adam T. Severt
--/s/------
Ryan Struve
--/s/------
Anna T. Pletcher

Attorneys for the United States Networks & Technology Enforcement 
Section, 450 Fifth Street NW., Suite 7100, >Washington, DC 20530, 
Telephone: (202) 307-6200, Facsimile: (202) 616-8544, 
[email protected].

EXHIBIT A

N. Scott Sacks, Attorney (DC Bar No. 913087)
Jessica N. Butler-Arkow, Attorney (DC Bar No. 430022)
Danielle Hauck, Attorney (Member, New York Bar, numbers not assigned)
Anna T. Pletcher, Attorney (California Bar No. 239730)
Adam T. Severt, Attorney (Member, Maryland Bar, numbers not assigned)
Ryan Struve, Attorney (DC Bar No. 495406)
Shane Wagman, Attorney (California Bar No. 283503)
United States Department of Justice, Antitrust Division, 450 Fifth 
Street NW., Suite 7100, Washington, DC 20530, Telephone: (202) 307-
6200, Facsimile: (202) 616-8544, Email: [email protected]

Attorneys for Plaintiff United States of America

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA 
SAN JOSE DIVISION

UNITED STATES OF AMERICA, Plaintiff, v. EBAY, INC., Defendant.

Case No. 12-CV-05869-EJD-PSG

COMPETITIVE IMPACT STATEMENT

Competitive Impact Statement

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

I. Nature and Purpose of the Proceeding

    The United States brought this lawsuit against Defendant eBay Inc. 
(``eBay'') on November 16, 2012, to remedy a violation of Section 1 of 
the Sherman Act, 15 U.S.C. 1.\1\ Section 1 of the Sherman Act outlaws 
``[e]very contract, combination in the form of trust or otherwise, or 
conspiracy, in restraint of trade or commerce among the several 
States.'' 15 U.S.C. 1. The Sherman Act is designed to ensure ``free and 
unfettered competition as the rule of trade. It rests on the premise 
that the unrestrained interaction of competitive forces will yield the 
best allocation of our economic resources, the lowest prices, the 
highest quality and the greatest material progress. . . .'' National 
Collegiate Athletic Assn v. Board of Regents of Univ. of Okla., 468 
U.S. 85, 104 n.27 (1984) (quoting Northern Pac. Ry. v. United States, 
356 U.S. 1, 4-5 (1958)).
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    \1\ The United States filed an Amended Complaint on June 4, 
2013. Am. Compl., United States v. eBay Inc., No.12-cv-05869-EJD 
(N.D. Cal. filed June 4, 2013), ECF No. 36. All references to the 
Complaint refer to the Amended Complaint.
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    The Complaint alleges that eBay entered an agreement with Intuit, 
Inc. (``Intuit''), pursuant to which each firm agreed to restrict 
certain employee recruiting and hiring practices. The two firms agreed 
not to recruit each other's employees, and eBay agreed not to hire 
Intuit employees. The effect of this agreement was to reduce 
competition for highly-skilled technical and other employees, diminish 
potential employment opportunities for those same employees, and 
interfere with the competitive and efficient functioning of the price-
setting mechanism in the labor market that would otherwise have 
prevailed. The Complaint alleged the agreement is a naked restraint of 
trade and violates Section 1 of the Sherman Act, 15 U.S.C. 1.

[[Page 27643]]

    eBay filed a Motion to Dismiss (``Motion'') pursuant to Federal 
Rule of Civil Procedure 12(b)(6) (failure to state a claim upon which 
relief can be granted), arguing that the Complaint failed to allege (1) 
an actionable agreement between two separate and independent firms 
because the agreement was essentially the product of the relationship 
between eBay and one of its outside directors, Scott Cook, in his 
capacity as an eBay director and (2) harm to competition under a ``rule 
of reason'' analysis. Def.'s Mot. to Dismiss the Compl. Pursuant to 
FRCP 12(b)(6), & Mem. Of P. & A. In Support Thereof, United States v. 
eBay Inc., ---- F. Supp. 2d ----, 2013 WL 5423734 (N.D. Cal. Sept. 27, 
2013) (No.12-cv-05869-EJD), ECF No. 15.
    In Opposition to the Motion, the United States maintained that the 
Complaint alleged facts to demonstrate that the agreement was between 
eBay and Intuit as two separate and independent firms (i.e, that Cook 
was acting in his capacity as Chairman of the Executive Committee of 
Intuit, Inc.), and that the alleged ``naked'' horizontal market 
allocation agreement was ``per se'' unlawful or, alternatively, 
unlawful under a ``quick-look'' rule of reason analysis, and thus a 
full rule of reason analysis was unnecessary. Opp'n of the United 
States to Def.'s Mot. to Dismiss Pursuant to FRCP Rule 12(b)(6), United 
States v. eBay Inc., ---- F. Supp. 2d ----, 2013 WL 5423734 (N.D. Cal. 
Sept. 27, 2013) (No.12-cv-05869-EJD), ECF No. 24. After eBay's Reply 
brief and a hearing, the Court denied the motion to dismiss on 
September 27, 2013. United States v. eBay Inc., ---- F. Supp. 2d ----, 
2013 WL 5423734 (N.D. Cal. Sept. 27, 2013).
    The Court found that the United States had alleged an actionable 
agreement between two separate firms, eBay and Intuit. Id. at *4. The 
Court, after noting that horizontal market allocation agreements 
typically constitute per se violations of Section 1, also found that 
the United States had adequately alleged a per se horizontal market 
allocation agreement. In doing so, the Court rejected eBay's contention 
that the fact that the alleged agreement involved a labor market should 
prevent the court from finding a ``classic'' horizontal market 
agreement that would warrant per se treatment. Id. at *5-6. The Court 
noted that eBay's argument that the alleged restraint was not naked as 
alleged by the United States but was ancillary to a legitimate business 
purpose could only be resolved after discovery. Id. at *6.
    The United States today filed a Stipulation and proposed Final 
Judgment which would remedy the violation by enjoining eBay from 
enforcing any such agreements currently in effect, and prohibit eBay 
from entering similar agreements in the future. The United States and 
eBay have stipulated that the proposed Final Judgment may be entered 
after compliance with the APPA, unless the United States withdraws its 
consent. Entry of the proposed Final Judgment would terminate this 
action, except that this Court would retain jurisdiction to construe, 
modify, and enforce the proposed Final Judgment and to punish 
violations thereof.

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

    eBay and Intuit compete to hire specialized computer engineers, 
scientists, and other categories of employees. According to eBay's 
Senior Vice President for Human Resources, and co-author of The War for 
Talent, soliciting the employees of other firms in similar industries 
is an important arena of competition. (Compl. ]] 5, 10, 11.)
    Beginning no later than 2006, and lasting at least until 2009, 
Intuit and eBay maintained an illegal agreement that restricted their 
ability to actively recruit employees from each other, and for some 
part of that time, further restricted eBay from hiring any employees 
from Intuit. The agreement covered all employees of both firms and was 
not limited by geography, job function, product group, or time period.
    As the Complaint alleges, senior executives and directors at eBay 
and Intuit reached this express agreement through direct and explicit 
communications. The executives actively managed and enforced the 
agreement through direct communications. For example, in November 2005, 
eBay Chief Operating Officer Maynard Webb asked Cook, Intuit's Founder 
and Chairman of its Board Executive Committee and an outside director 
of eBay, to enter into a no-solicitation agreement under which eBay 
would not actively recruit from Intuit; eBay would notify Intuit in 
advance before offering a position at the Senior Director level or 
above to an Intuit employee; and eBay would notify Intuit after making 
an offer below that level. Intuit rejected the proposal because it 
allowed eBay to hire Intuit employees without prior notice to Intuit. 
Cook wrote that Intuit did not recruit from board companies (i.e., the 
companies from which its outside directors came), ``period'' and 
``[w]e're passionate on this.'' (Compl. ] 15.) Cook committed that 
Intuit would not make an offer to anyone from eBay without first 
notifying eBay. (Compl. ] 15.)
    In December 2005, eBay Chief Executive Officer Meg Whitman and Cook 
again discussed their firms' competition for employees with an eye 
toward ending that competition entirely. (Compl. ] 16.) Ultimately, an 
agreement not to solicit each other's employees was put into effect. 
When eBay considered hiring an Intuit employee for an opening at 
Paypal, executives internally expected that Whitman ``will say hands 
off because Scott [Cook] insists on a no poach policy with Intuit.'' 
Whitman confirmed that eBay could not proceed without notifying Intuit. 
(Compl. ] 17.)
    In April 2007, eBay and Intuit expanded their agreement to bar eBay 
from hiring any Intuit employees. Cook had complained to eBay about a 
potential offer to an Intuit employee who had approached eBay. Even 
when Intuit employees were well-suited for its positions, eBay 
refrained from hiring them due to its agreement with Intuit. (Compl. ]] 
19-20.) As eBay's Senior Vice President for Human Resources Beth 
Axelrod explained to recruiting staff, ``We have an explicit hands 
of[f] that we cannot violate with any Intuit employee. There is no 
flexibility on this.'' (Compl. ] 20.) When asked if the agreement meant 
that a ``person could NEVER be hired by eBay unless they quit Intuit 
first,'' Axelrod confirmed that this was the case. (Compl. ] 20.) In 
another email exchange, Axelrod explained that she was responding to 
all inquiries regarding hiring from Intuit by ``firmly holding the line 
and saying absolutely not (including to myself since their 
comp[ensation] and ben[efits] person is supposed to be excellent!).'' 
(Compl. ] 20.) eBay recruiting personnel understood that ``Meg 
[Whitman] and Scott Cook entered into the agreement (handshake style, 
not written) that eBay would not hire from Intuit, period.'' (Compl. ] 
21.)
    eBay insisted that Intuit refrain from recruiting its employees in 
exchange for a limitation on eBay's ability to recruit and hire Intuit 
employees. Both eBay and Intuit personnel policed adherence to the 
agreement. In 2007, Whitman complained to Cook that Intuit had 
solicited eBay's employees even though eBay was sticking to its 
agreement not to hire Intuit employees. Cook apologized, 
``@!%$[caret]&!!! Meg my apologies. I'll find out how 
this slip up occurred again . . . .'' (Compl. ] 22.)
    Throughout the course of the agreement, eBay repeatedly declined 
opportunities to hire or interview Intuit employees, even when eBay had 
open

[[Page 27644]]

positions for ``quite some time,'' when the potential employee 
``look[ed] great,'' or when ``the only guy who was good was from 
[I]ntuit.'' (Compl. ] 23.) Both Intuit and eBay acknowledged that 
throughout the agreement, they ``passed'' on ``talented'' applicants, 
consistent with their anticompetitive agreement. The repeated requests 
from lower level employees at both companies to be allowed to recruit 
employees from the other firm demonstrates that there were 
opportunities for employees to move between the two firms and that 
employees were denied those opportunities. (Compl. ] 24.)
    The agreement harmed employees by depriving them of opportunities 
for better jobs with higher salaries and greater benefits at the other 
firm. (Compl. ]] 1, 3, 11.) The agreement also distorted the 
competitive process in the labor markets in which eBay and Intuit 
compete. (Compl. ] 11.)

III. The Agreement Was a Naked Restraint and Not Ancillary To Achieving 
Legitimate Business Purposes

A. The Agreement Was a Naked Restraint of Trade That Is Per Se Unlawful 
Under Section 1 of the Sherman Act, 15 U.S.C. 1

    The law has long recognized that ``certain agreements or practices 
which because of their pernicious effect on competition and lack of any 
redeeming virtue are conclusively presumed to be unreasonable and 
therefore illegal without elaborate inquiry as to the precise harm they 
have caused or the business excuse for their use.'' Northern Pac. Ry., 
356 U.S. at 545; accord, Catalano, Inc. v. Target Sales, Inc., 446 U.S. 
643, 646 n.9 (1980). Such naked restraints of competition among 
horizontal competitors (i.e., agreements that have a pernicious effect 
on competition with no redeeming virtue), such as price-fixing or 
market allocation agreements, are deemed per se unlawful.
    eBay's agreement with Intuit is a per se unlawful horizontal market 
allocation agreement under Section 1 of the Sherman Act. See eBay, 
Inc., 2013 WL 5423734 at *5-*7 (in denying Defendant's Motion to 
Dismiss, the Court recognized that a horizontal market allocation 
typically constitutes a per se violation of Section 1 and that the 
facts alleged in the United States' Complaint taken as true ``suffice 
to state a horizontal market allocation agreement''). The two firms' 
concerted behavior both reduced their ability to compete for employees 
and disrupted the normal competitive mechanisms that allocate employees 
in labor markets. The market allocation agreement is facially 
anticompetitive because it clearly eliminated significant competition 
between the firms to attract technical and other employees. Overall, 
the agreement diminished competition to the detriment of the affected 
employees who likely were deprived of competitively important 
information and access to better job opportunities, as well as 
distorting competition in the labor market.
    In analogous circumstances, the Sixth Circuit has held that an 
agreement among competitors not to solicit one another's customers was 
a per se violation of the antitrust laws. U.S. v. Cooperative Theaters 
of Ohio, Inc., 845 F.2d 1367 (6th Cir. 1988). In that case, two movie 
theater booking agents agreed to refrain from actively soliciting each 
other's customers. Despite the defendants' arguments that they 
``remained free to accept unsolicited business from their competitors' 
customers,'' id. (emphasis in original), the Sixth Circuit found their 
no-solicitation agreement'' was ``undeniably a type of customer 
allocation scheme which courts have often condemned in the past as a 
per se violation of the Sherman Act.'' Id. at 1373.

B. The Per Se Rule Against Naked Restraints of Trade Applies With Equal 
Force in Labor Markets

    Market allocation agreements cannot be distinguished from one 
another based solely on whether they involve input or output markets, 
as anticompetitive agreements in both input and output markets create 
allocative inefficiencies.\2\ Nor are labor markets treated differently 
than other input markets under the antitrust laws.
---------------------------------------------------------------------------

    \2\ In 1991, the Antitrust Division brought an action against 
conspirators who competed to procure billboard leases and who had 
agreed to refrain from bidding on each other's former leases for a 
year after the space was lost or abandoned by the other conspirator. 
United States v. Brown, 936 F.2d 1042 (9th Cir. 1991) (affirming 
jury verdict convicting defendants of conspiring to restrain trade 
in violation of 15 U.S.C. 1). The agreement was limited to an input 
market (the procurement of billboard leases) and did not extend to 
downstream sales (in which the parties also competed). In affirming 
defendants' convictions, the appellate court held that the agreement 
was per se unlawful, finding that the agreement restricted each 
company's ability to compete for the other's billboard sites and 
clearly allocated markets between the two billboard companies. A 
market allocation agreement between two companies at the same market 
level is a classic per se antitrust violation. Id. at 1045.
---------------------------------------------------------------------------

    Accordingly, in denying eBay's Motion to Dismiss, the Court held in 
this case that the fact that the alleged market allocation occurs in an 
input market, i.e., the employment market, did not, as a matter of law, 
prevent the Court from finding that the agreement as alleged amounts to 
a ``classic'' horizontal market division, and that antitrust law does 
not treat employment markets differently from other markets in this 
respect. See eBay, Inc., 2013 WL 5423734 at *5.
    The United States has previously challenged restraints on 
employment as per se illegal.\3\ In fact, the restraint challenged here 
is broader than the no cold call restraints challenged in United States 
v. Adobe Systems, Inc. and the prohibition on counteroffers challenged 
in United States v. Lucasfilm Ltd., because the conduct challenged here 
also prohibited eBay from hiring Intuit employees. The prohibition of 
hiring in its entirety renders the eBay-Intuit agreement, taken as a 
whole, more pernicious than previously-challenged agreements to refrain 
from cold-calling or counter-offering, and is also per se unlawful. See 
National Soc'y of Prof. Engineers v. United States, 435 U.S. 679, 695 
(1978); Harkins Amusement Enter., Inc. v. Gen. Cinema Corp., 850 F.2d 
477, 487 (9th Cir. 1988).
---------------------------------------------------------------------------

    \3\ In September 2010, the United States filed suit charging six 
high technology companies with a per se violation of Section 1 for 
entering bilateral agreements to prohibit each company from cold 
calling the other company's employees. United States v. Adobe Sys., 
Inc., et al.; Proposed Final Judgment and Competitive Impact 
Statement, 75 FR 60820, 60820-01 (Oct. 1, 2010); Final Judgment, 
United States v. Adobe Sys., Inc., et al., 10-cv-1629 (D.D.C. Mar. 
17, 2011), ECF No. 17. In December 2010, the United States filed 
suit charging Lucasfilm Ltd. with a per se violation of Section 1 
for entering an agreement with Pixar to prohibit cold calling of 
each other's employees and setting forth anti-counteroffer rules 
that restrained bidding for employees. United States v. Lucasfilm 
Ltd.; Proposed Final Judgment and Competitive Impact Statement, 75 
FR 81651-01 (Dec. 28, 2010); Order, United States v. Lucasfilm Ltd., 
10-cv-2220 (D.D.C. June 3, 2011), ECF No. 7.
---------------------------------------------------------------------------

C. The Unlawful Agreements Were Not Ancillary to a Legitimate 
Procompetitive Venture

    An agreement that would normally be condemned as a per se unlawful 
restraint on competition may nonetheless be lawful if it is ancillary 
to a legitimate procompetitive venture and reasonably necessary to 
achieve the procompetitive benefits of the collaboration. Ancillary 
restraints therefore are not per se unlawful, but rather are evaluated 
under the rule of reason, which balances a restraint's procompetitive 
benefits against its anticompetitive effects.\4\ To be

[[Page 27645]]

considered ``ancillary'' under established antitrust law, however, the 
restraint must be a necessary or intrinsic part of the procompetitive 
collaboration.\5\ Restraints that are broader than reasonably necessary 
to achieve the efficiencies from a business collaboration are not 
ancillary and are properly treated as per se unlawful.
---------------------------------------------------------------------------

    \4\ See generally Department of Justice, Antitrust Division, and 
Federal Trade Commission, Antitrust Guidelines for Collaborations 
Among Competitors Sec.  1.2 (2000) (``Collaboration Guidelines''). 
See also Major League Baseball v. Salvino, 542 F.3d 290, 339 (2d 
Cir. 2008) (Sotomayor, J., concurring) (``a per se or quick look 
approach may apply . . . where a particular restraint is not 
reasonably necessary to achieve any of the efficiency-enhancing 
benefits of a joint venture and serves only as a naked restraint 
against competition.''); Dagher v. Saudi Refining, Inc., 369 F.3d 
1108, 1121 (9th Cir. 2004) (describing ancillary restraints as 
``reasonably necessary to further the legitimate aims of the joint 
venture''); rev'd on other grounds sub nom. Texaco v. Dagher, 547 
U.S. 1, 8 (2006); Rothery Storage & Van Co. v. Atlas Van Lines, 
Inc., 792 F.2d 210, 227 (D.C. Cir. 1986) (``[T]he restraints it 
imposes are reasonably necessary to the business it is authorized to 
conduct''); In re Polygram Holdings., Inc., 2003 WL 21770765 (F.T.C. 
2003) (stating that parties must prove that the restraint was 
``reasonably necessary'' to permit them to achieve particular 
alleged efficiency), aff'd, Polygram Holdings, Inc. v. F.T.C., 416 
F.3d 29 (D.C. Cir. 2005).
    \5\ See Rothery Storage & Van Co., 792 F.2d at 227 (national 
moving network in which the participants shared physical resources, 
scheduling, training, and advertising resources, could forbid 
contractors from free riding by using its equipment, uniforms, and 
trucks for business they were conducting on their own); Salvino, 542 
F.3d at 337 (Sotomayor, J., concurring) (Major League Baseball 
teams' formal joint venture to exclusively license, and share 
profits for, team trademarks, resulted in ``decreased transaction 
costs, lower enforcement and monitoring costs, and the ability to 
one-stop shop. . . .'' and such benefits ``could not exist without 
the . . . agreements.''); Addamax v. Open Software Found., 152 F.3d 
48 (1st Cir. 1998) (computer manufacturers' nonprofit joint research 
and development venture agreement on price to be paid for security 
software that was used by the joint venture was ancillary to effort 
to develop a new operating system). See also Collaboration 
Guidelines at Sec.  3.2 (``[I]f the participants could achieve an 
equivalent or comparable efficiency-enhancing integration through 
practical, significantly less restrictive means, then . . . the 
agreement is not reasonably necessary.'').
---------------------------------------------------------------------------

    The Division saw no evidence of a relevant legitimate collaborative 
project involving eBay and Intuit, nor was the recruiting agreement 
into which they entered, under established antitrust law, properly 
ancillary to any such collaboration if it existed. The agreement 
extended to all employees at the firms, regardless of any employee's 
relationship to any collaboration. The agreement was not limited by 
geography, job function, product group, or time period. Accordingly, 
the agreement was not reasonably necessary for any collaboration 
between the two firms and hence, not a legitimate ancillary restraint.

IV. Explanation of the Proposed Final Judgment

    The proposed Final Judgment sets forth (1) conduct in which eBay 
may not engage; (2) conduct in which eBay may engage without violating 
the proposed Final Judgment; (3) certain actions eBay is required to 
take to ensure compliance with the terms of the proposed Final 
Judgment; and (4) oversight procedures the United States may use to 
ensure compliance with the proposed Final Judgment. Section VI of the 
proposed Final Judgment provides that these provisions will expire five 
years after entry of the proposed Final Judgment.

A. Prohibited Conduct

    The proposed Final Judgment is essentially the same as that entered 
in United States v. Adobe Sys., Inc., et al.; Proposed Final Judgment 
and Competitive Impact Statement, 75 FR 60820, 60820-01 (Oct. 1, 2010). 
Section IV of the proposed Final Judgment preserves competition for 
employees by prohibiting eBay, and all other persons in active concert 
or participation with eBay with notice of the Final Judgment, from 
agreeing, or attempting to agree, with another person to refrain from 
cold calling, soliciting, recruiting, hiring or otherwise competing for 
employees of the other person. It also prohibits eBay from requesting 
or pressuring another person to refrain from cold calling, soliciting, 
recruiting, hiring or otherwise competing for employees of the other 
person. These provisions prohibit agreements not to make counteroffers 
and agreements to notify each other when making an offer to each 
other's employee.

B. Conduct Not Prohibited

    The Final Judgment does not prohibit all agreements related to 
employee solicitation and recruitment. Section V makes clear that the 
proposed Final Judgment does not prohibit ``no direct solicitation 
provisions'' \6\ that are reasonably necessary for, and thus ancillary 
to, legitimate procompetitive collaborations.\7\ Such restraints remain 
subject to scrutiny under the rule of reason.
---------------------------------------------------------------------------

    \6\ Section II.C. of the proposed Final Judgment defines ``no 
direct solicitation provision'' as ``any agreement, or part of an 
agreement, among two or more persons that restrains any person from 
hiring, cold calling, soliciting, recruiting, or otherwise competing 
for employees of another person.''
    \7\ The Complaint alleges a violation of the Sherman Antitrust 
Act, 15 U.S.C. 1. The scope of the Final Judgment is limited to 
violations of the federal antitrust laws. It prohibits certain 
conduct and specifies other conduct that the Judgment would not 
prohibit. The Judgment does not address whether any conduct it does 
not prohibit would be prohibited by other federal or state laws, 
including California Business & Professions Code Sec.  16600 
(prohibiting firms from restraining employee movement).
---------------------------------------------------------------------------

    Section V.A.1 does not prohibit no direct solicitation provisions 
contained in existing and future employment or severance agreements 
with eBay's employees. Narrowly tailored no direct solicitation 
provisions are often included in severance agreements and rarely 
present competition concerns. Sections V.A.2-5 also make clear that the 
proposed Final Judgment does not prohibit no direct solicitation 
provisions reasonably necessary for:

    1. Mergers or acquisitions (consummated or unconsummated), 
investments, or divestitures, including due diligence related 
thereto;
    2. contracts with consultants or recipients of consulting 
services, auditors, outsourcing vendors, recruiting agencies or 
providers of temporary employees or contract workers;
    3. the settlement or compromise of legal disputes; and
    4. contracts with resellers or OEMs; contracts with certain 
providers or recipients of services; or the function of a legitimate 
collaboration agreement, such as joint development, technology 
integration, joint ventures, joint projects (including teaming 
agreements), and the shared use of facilities.

    Section V of the proposed Final Judgment contains additional 
requirements applicable to no direct solicitation provisions contained 
in these types of contracts and collaboration agreements. The proposed 
Final Judgment recognizes that eBay may sometimes enter written or 
unwritten contracts and collaboration agreements and sets forth 
requirements that recognize the different nature of written and 
unwritten contracts.
    Thus, for written contracts, Section V.B of the proposed Final 
Judgment requires eBay to: (1) Identify, with specificity, the 
agreement to which the no direct solicitation provision is ancillary; 
(2) narrowly tailor the no direct solicitation provision to affect only 
employees who are anticipated to be directly involved in the 
arrangement; (3) identify with reasonable specificity the employees who 
are subject to the no direct solicitation provision; (4) include a 
specific termination date or event; and (5) sign the agreement, 
including any modifications to the agreement.
    If the no direct solicitation provision relates to an oral 
agreement, Section V.C of the proposed Final Judgment requires eBay to 
maintain documents sufficient to show the terms of the no direct 
solicitation provision, including: (1) The specific agreement to which 
the no direct solicitation provision is ancillary; (2) an 
identification, with reasonable specificity, of the employees who are 
subject to the no direct solicitation provision; and (3) the no direct

[[Page 27646]]

solicitation provision's specific termination date or event.\8\
---------------------------------------------------------------------------

    \8\ For example, eBay might document these requirements through 
electronic mail or in memoranda that it will retain.
---------------------------------------------------------------------------

    The purpose of Sections V.B. and V.C. is to ensure that no direct 
solicitation provisions related to eBay's contracts with resellers, 
OEMs, and providers of services, and collaborations with other 
companies, are reasonably necessary to the contract or collaboration. 
In addition, the requirements set forth in Sections V.B and V.C of the 
proposed Final Judgment provide the United States with the ability to 
monitor eBay's compliance with the proposed Final Judgment.
    eBay has a number of routine consulting and services agreements 
that contain no direct solicitation provisions that may not comply with 
the terms of the proposed Final Judgment. To avoid the unnecessary 
burden of identifying these existing contracts and re-negotiating any 
no direct solicitation provisions, Section V.D of the proposed Final 
Judgment provides that eBay shall not be required to modify or conform 
existing no direct solicitation provisions included in consulting or 
services agreements to the extent such provisions violate this Final 
Judgment. The Final Judgment further prohibits eBay from enforcing any 
such existing no direct solicitation provision that would violate the 
proposed Final Judgment.
    Finally, Section V.E of the proposed Final Judgment provides that 
eBay is not prohibited from unilaterally adopting or maintaining a 
policy not to consider applications from employees of another person, 
or not to solicit, cold call, recruit or hire employees of another 
person, provided that eBay does not request or pressure another person 
to adopt, enforce, or maintain such a policy.

C. Required Conduct

    Section VI of the proposed Final Judgment sets forth various 
mandatory procedures to ensure eBay's compliance with the proposed 
Final Judgment, including providing officers, directors, human resource 
managers, and senior managers who supervise employee recruiting with 
copies of the proposed Final Judgment and annual briefings about its 
terms. Section VI.A.5 requires eBay to provide its employees with 
reasonably accessible notice of the existence of all agreements covered 
by Section V.A.5 and entered into by the company.
    Under Section VI, eBay must file annually with the United States a 
statement identifying any agreement covered by Section V.A.5., and 
describing any violation or potential violation of the Final Judgment 
known to any officer, director, human resources manager, or senior 
manager who supervises employee recruiting, solicitation, or hiring 
efforts. If one of these persons learns of a violation or potential 
violation of the Judgment, eBay must take steps to terminate or modify 
the activity to comply with the Judgment and maintain all documents 
related to the activity.

D. Compliance

    To facilitate monitoring of eBay's compliance with the proposed 
Final Judgment, Section VII grants the United States access, upon 
reasonable notice, to eBay's records and documents relating to matters 
contained in the proposed Final Judgment. eBay must also make its 
employees available for interviews or depositions about such matters. 
Moreover, upon request, eBay must answer interrogatories and prepare 
written reports relating to matters contained in the proposed Final 
Judgment.

V. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
16(a), the proposed Final Judgment has no prima facie effect in any 
subsequent private lawsuit that may be brought against eBay.
    On the same date and in the same court this case was filed by the 
United States, the State of California filed a related case based on 
the same factual allegations, The People of the State of California v. 
eBay, Inc., No. 12-cv-5874-EJD (N.D. Cal. filed November 16, 2012). On 
the same date that the United States filed its proposed final judgment 
in this case, the State of California filed a proposed parens patriae 
settlement which would provide up to $2.675 million in restitution 
directly to individuals and to compensate for harm to the state's 
economy.

VI. Procedures Applicable for Approval or Modification of the Proposed 
Final Judgment

    The United States and eBay have stipulated that the proposed Final 
Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register, or the last date of 
publication in a newspaper of the summary of this Competitive Impact 
Statement, whichever is later. All comments received during this period 
will be considered by the United States, which remains free to withdraw 
its consent to the proposed Final Judgment at any time prior to the 
Court's entry of judgment. The comments and the response of the United 
States will be filed with the Court and published in the Federal 
Register.
    Written comments should be submitted to: James J. Tierney, Chief, 
Networks & Technology Enforcement Section, Antitrust Division, United 
States Department of Justice, 450 Fifth Street NW., Suite 7100, 
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.

VII. 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 eBay. The United 
States is satisfied, however, that the relief contained in the proposed 
Final Judgment will quickly establish, preserve, and ensure that 
employees can benefit from competition between eBay and others. 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.

[[Page 27647]]

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

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a sixty-day comment period, after which the Court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. 16(e)(1). In making that determination, 
the Court, in accordance with the statute as amended in 2004, is 
required to consider:

    (A) The competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration of relief sought, anticipated effects of 
alternative remedies actually considered, whether its terms are 
ambiguous, and any other competitive considerations bearing upon the 
adequacy of such judgment that the court deems necessary to a 
determination of whether the consent judgment is in the public 
interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and 
individuals alleging specific injury from the violations set forth 
in the complaint including consideration of the public benefit, if 
any, to be derived from a determination of the issues at trial.

15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors, 
the Court's inquiry is necessarily a limited one as the 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 (D.C. Cir. 1995); see generally United States v. SBC 
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public 
interest standard under the Tunney Act); United States v. InBev N.V./
S.A., 2009-2 Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, 
No. 08-1965 (JR), at *3 (D.D.C. Aug. 11, 2009) (noting that the court's 
review of a consent judgment is limited and only inquires ``into 
whether the government's determination that the proposed remedies will 
cure the antitrust violations alleged in the complaint was reasonable, 
and whether the mechanism to enforce the final judgment are clear and 
manageable'').\9\

    \9\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for a 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. 
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns, 
489 F. Supp. 2d at 11 (concluding that the 2004 amendments 
``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------

    Under the APPA a court considers, 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).\10\ 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).
---------------------------------------------------------------------------

    \10\ 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.' '').
---------------------------------------------------------------------------

    In addition, ``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. American 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 (``[T]he `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. 
Courts ``cannot look beyond the complaint in making the public interest 
determination unless the complaint is drafted so narrowly as to make a 
mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
    In its 2004 amendments, Congress made clear its intent to preserve 
the practical benefits of utilizing consent decrees in antitrust 
enforcement, adding the unambiguous instruction that ``[n]othing in 
this section shall be construed to require the court to conduct an 
evidentiary hearing or to require the court to permit anyone to 
intervene.'' 15 U.S.C. 16(e)(2). 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

[[Page 27648]]

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.\11\
---------------------------------------------------------------------------

    \11\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade Cas. (CCH) ] 
61,508, at 71,980 (W.D. Mo. 1977) (``Absent a showing of corrupt 
failure of the government to discharge its duty, the Court, in 
making its public interest finding, should . . . carefully consider 
the explanations of the government in the competitive impact 
statement and its responses to comments in order to determine 
whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, 93d Cong., 1st Sess., at 6 
(1973) (``Where the public interest can be meaningfully evaluated 
simply on the basis of briefs and oral arguments, that is the 
approach that should be utilized.'').
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IX. Determinative Documents

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

Dated: May 1, 2014.

For Plaintiff United States of America.

N. Scott Sacks,
Jessica N. Butler-Arkow,
Danielle Hauck,
Anna T. Pletcher,
Adam T. Severt,
Ryan Struve,
Shane Wagman,
Attorneys.

United States Department of Justice, Antitrust Division, 450 5th 
Street NW., Suite 7100, Washington, DC 20530, Telephone: (202) 307-
6200, Facsimile: (202) 616-8544, Email: [email protected].

EXHIBIT A

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA 
SAN JOSE DIVISION

UNITED STATES OF AMERICA, Plaintiff,
v.
EBAY INC., Defendant.

Case No. 12-CV-05869-EJD-PSG

[PROPOSED] FINAL JUDGMENT

[Proposed] Final Judgment

    WHEREAS, the United States of America filed its Complaint on 
November 16, 2012, alleging that the Defendant participated in an 
agreement in violation of Section One of the Sherman Act, and the 
United States and the Defendant, by their attorneys, have consented to 
the entry of this Final Judgment without trial or further adjudication 
of any issue of fact or law;
    AND WHEREAS, this Final Judgment does not constitute any admission 
by the Defendant that the law has been violated or of any issue of fact 
or law;
    AND WHEREAS, the Defendant agrees to be bound by the provisions of 
this Final Judgment pending its approval by this Court;
    NOW THEREFORE, before any testimony is taken, without trial or 
further adjudication of any issue of fact or law, and upon consent of 
the Defendant, it is ORDERED, ADJUDGED, AND DECREED:

I. Jurisdiction

    This Court has jurisdiction over the subject matter and the parties 
to this action. The Complaint states a claim upon which relief may be 
granted against the Defendant under Section One of the Sherman Act, as 
amended, 15 U.S.C. 1.

II. Definitions

    As used in this Final Judgment:
    A. ``eBay'' means eBay Inc., its (i) successors and assigns, (ii) 
controlled subsidiaries, divisions, groups, affiliates, partnerships, 
and joint ventures, and (iii) directors, officers, managers, agents 
acting within the scope of their agency, and employees.
    B. ``Agreement'' means any contract, arrangement, or understanding, 
formal or informal, oral or written, between two or more persons.
    C. ``No direct solicitation provision'' means any agreement, or 
part of an agreement, among two or more persons that restrains any 
person from cold calling, soliciting, recruiting, hiring, or otherwise 
competing for employees of another person.
    D. ``Person'' means any natural person, corporation, company, 
partnership, joint venture, firm, association, proprietorship, agency, 
board, authority, commission, office, or other business or legal 
entity, whether private or governmental.
    E. ``Senior manager'' means any company officer or employee above 
the level of vice president.

III. Applicability

    This Final Judgment applies to eBay, as defined in Section II, and 
to all other persons in active concert or participation with eBay who 
receive actual notice of this Final Judgment by personal service or 
otherwise.

IV. Prohibited Conduct

    The Defendant is enjoined from attempting to enter into, entering 
into, maintaining or enforcing any agreement with any other person to 
in any way refrain from, requesting that any person in any way refrain 
from, or pressuring any person in any way to refrain from hiring, 
soliciting, cold calling, recruiting, or otherwise competing for 
employees of the other person.

V. Conduct Not Prohibited

    A. Nothing in Section IV shall prohibit the Defendant and any other 
person from attempting to enter into, entering into, maintaining or 
enforcing a no direct solicitation provision, provided the no direct 
solicitation provision is:
    1. Contained within existing and future employment or severance 
agreements with the Defendant's employees;
    2. reasonably necessary for mergers or acquisitions, consummated or 
unconsummated, investments, or divestitures, including due diligence 
related thereto;
    3. reasonably necessary for contracts with consultants or 
recipients of consulting services, auditors, outsourcing vendors, 
recruiting agencies or providers of temporary employees or contract 
workers;
    4. reasonably necessary for the settlement or compromise of legal 
disputes; or
    5. reasonably necessary for (i) contracts with resellers or OEMs; 
(ii) contracts with providers or recipients of services other than 
those enumerated in paragraphs V.A.1-4 above; or (iii) the function of 
a legitimate collaboration agreement, such as joint development, 
technology integration, joint ventures, joint projects (including 
teaming agreements), and the shared use of facilities.
    B. All no direct solicitation provisions that relate to written 
agreements described in Section V.A.5.i, ii, or iii that the Defendant 
enters into, renews, or affirmatively extends after the date of entry 
of this Final Judgment shall:
    1. Identify, with specificity, the agreement to which it is 
ancillary;
    2. be narrowly tailored to affect only employees who are 
anticipated to be directly involved in the agreement;
    3. identify with reasonable specificity the employees who are 
subject to the agreement;
    4. contain a specific termination date or event; and
    5. be signed by all parties to the agreement, including any 
modifications to the agreement.
    C. For all no direct solicitation provisions that relate to 
unwritten agreements described in Section V.A.5.i, ii, or iii, that the 
Defendant enters into,

[[Page 27649]]

renews, or affirmatively extends after the date of entry of this Final 
Judgment, the Defendant shall maintain documents sufficient to show:
    1. The specific agreement to which the no direct solicitation 
provision is ancillary;
    2. the employees, identified with reasonable specificity, who are 
subject to the no direct solicitation provision; and
    3. the provision's specific termination date or event.
    D. The Defendant shall not be required to modify or conform, but 
shall not enforce, any no direct solicitation provision to the extent 
it violates this Final Judgment if the no direct solicitation provision 
appears in the Defendant's consulting or services agreements in effect 
as of the date of this Final Judgment (or in effect as of the time the 
Defendant acquires a company that is a party to such an agreement).
    E. Nothing in Section IV shall prohibit the Defendant from 
unilaterally deciding to adopt a policy not to consider applications 
from employees of another person, or to solicit, cold call, recruit or 
hire employees of another person, provided that the Defendant is 
prohibited from requesting that any other person adopt, enforce, or 
maintain such a policy, and is prohibited from pressuring any other 
person to adopt, enforce, or maintain such a policy.

VI. Required Conduct

    A. The Defendant shall:
    1. Furnish a copy of this Final Judgment and related Competitive 
Impact Statement within sixty (60) days of entry of the Final Judgment 
to its officers, directors, human resources managers, and senior 
managers who supervise employee recruiting, solicitation, or hiring 
efforts;
    2. furnish a copy of this Final Judgment and related Competitive 
Impact Statement to any person who succeeds to a position described in 
Section VI.A.1 within thirty (30) days of that succession;
    3. annually brief each person designated in Sections VI.A.1 and 
VI.A.2 on the meaning and requirements of this Final Judgment and the 
antitrust laws;
    4. obtain from each person designated in Sections VI.A.1 and 
VI.A.2, within sixty (60) days of that person's receipt of the Final 
Judgment, a certification that he or she (i) has read and, to the best 
of his or her ability, understands and agrees to abide by the terms of 
this Final Judgment; (ii) is not aware of any violation of the Final 
Judgment that has not been reported to the Defendant; and (iii) 
understands that any person's failure to comply with this Final 
Judgment may result in an enforcement action for civil or criminal 
contempt of court against the Defendant and/or any person who violates 
this Final Judgment;
    5. provide employees reasonably accessible notice of the existence 
of all agreements covered by Section V.A.5 and entered into by the 
company; and
    6. maintain (i) a copy of all agreements covered by Section V.A.5; 
and (ii) a record of certifications received pursuant to this Section.
    B. For five (5) years after the entry of this Final Judgment, on or 
before its anniversary date, the Defendant shall file with the United 
States an annual statement identifying and providing copies of any 
agreement and any modifications thereto described in Section V.A.5, as 
well as describing any violation or potential violation of this Final 
Judgment known to any officer, director, human resources manager, or 
senior manager who supervises employee recruiting, solicitation, or 
hiring efforts. Descriptions of violations or potential violations of 
this Final Judgment shall include, to the extent practicable, a 
description of any communications constituting the violation or 
potential violation, including the date and place of the communication, 
the persons involved, and the subject matter of the communication.
    C. If any officer, director, human resources manager, or senior 
manager who supervises employee recruiting, solicitation, or hiring 
efforts of the Defendant learns of any violation or potential violation 
of any of the terms and conditions contained in this Final Judgment, 
the Defendant shall promptly take appropriate action to terminate or 
modify the activity so as to comply with this Final Judgment and 
maintain all documents related to any violation or potential violation 
of this Final Judgment.

VII. 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, from time to time authorized representatives of 
the United States Department of Justice, including consultants and 
other persons retained by the United States, shall, upon the written 
request of an authorized representative of the Assistant Attorney 
General in charge of the Antitrust Division, and on reasonable notice 
to the Defendant, subject to any legally recognized privilege, be 
permitted:
    1. Access during the Defendant's regular office hours to inspect 
and copy, or at the option of the United States, to require the 
Defendant to provide electronic or hard copies of, all books, ledgers, 
accounts, records, data, and documents in the possession, custody, or 
control of the Defendant, relating to any matters contained in this 
Final Judgment; and
    2. to interview, either informally or on the record, the 
Defendant's officers, employees, or agents, who may have their counsel, 
including any individual counsel, present, regarding such matters. The 
interviews shall be subject to the reasonable convenience of the 
interviewee and without restraint or interference by the Defendant.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, the 
Defendant shall submit written reports or responses to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (including grand jury proceedings), or for the 
purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    D. If at the time information or documents are furnished by the 
Defendant to the United States, the Defendant represents and identifies 
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 the Defendant marks 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 the Defendant ten (10) calendar days notice 
prior to divulging such material in any legal proceeding (other than a 
grand jury proceeding).

VIII. 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.

[[Page 27650]]

IX. Expiration of Final Judgment

    Unless this court grants an extension, this Final Judgment shall 
expire five (5) years from the date of its approval by the Court.

X. Notice

    For purposes of this Final Judgment, any notice or other 
communication shall be given to the persons at the addresses set forth 
below (or such other addresses as they may specify in writing to EBay): 
Chief, Networks & Technology Enforcement Section, U.S. Department of 
Justice, Antitrust Division, 450 Fifth Street NW., Suite 7100, 
Washington, DC 20530.

XI. Public Interest Determination

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

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

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United States District Judge

[FR Doc. 2014-11056 Filed 5-13-14; 8:45 am]
BILLING CODE P