[Federal Register Volume 79, Number 245 (Monday, December 22, 2014)]
[Notices]
[Pages 76371-76385]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29862]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Continental AG and Veyance Technologies, 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, 
Hold Separate Stipulation and Order, and Competitive Impact Statement 
have been filed with the United States District Court for the District 
of Columbia in United States of America v.  Continental AG, and Veyance 
Technologies, Inc., Civil No. 1:14-cv-02087. On December 11, 2014, the 
United States filed a Complaint alleging that Continental's proposed 
acquisition of Veyance would violate Section 7 of the Clayton Act, 15 
U.S.C. 18. The proposed Final Judgment, filed the same time as the 
Complaint, requires Continental to divest Veyance's North American 
commercial vehicle air springs business, including manufacturing and 
assembly facilities in San Luis Potosi, Mexico; research, development, 
engineering, and administrative assets in Fairlawn, Ohio; and certain 
tangible and intangible assets.
    Copies of the Complaint, proposed Final Judgment and Competitive 
Impact Statement are available for inspection at the Department of 
Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth 
Street NW., Suite 1010, Washington, DC 20530 (telephone: 202-514-2481), 
on the Department of Justice's Web site at http://www.usdoj.gov/atr, 
and at the Office of the Clerk of the United States District Court for 
the District of Columbia. Copies of these materials may be obtained 
from the Antitrust Division upon request and payment of 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 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 Maribeth Petrizzi, Chief, Litigation II Section, 
Antitrust Division, Department of Justice, 450 Fifth Street NW., Suite 
8700, Washington, DC 20530 (telephone: 202-307-0924).

Patricia A. Brink,
Director of Civil Enforcement.

United States District Court for the District of Columbia

    United States of America, U.S. Department of Justice, Antitrust 
Division, 450 Fifth Street, NW, Suite 8700, Washington, DC 20530, 
Plaintiff, v. Continental AG, Vanrenwalder Strasse 9, D-30165, 
Hanover, Germany, and Veyance Technologies, Inc., 703 S. Cleveland 
Massillon Road, Fairlawn, Ohio 44333, Defendants.
Case: 1:14-cv--2087
Filed: 12/11/2014
Judge: Hon. Reggie B. Walton

COMPLAINT

    The United States of America (``United States''), acting under the 
direction of the Attorney General of the United States, brings this 
civil antitrust action to enjoin the proposed acquisition by Defendant 
Continental AG (``Continental'') of Defendant Veyance Technologies, 
Inc. (``Veyance''). The United States alleges as follows:

I. INTRODUCTION

    1. Pursuant to an Agreement and Plan of Merger dated February 10, 
2014, Continental has agreed to purchase Veyance from Carlyle Partners 
IV, L.P. for $1.8 billion. The merger would combine two of the three 
leading suppliers of air springs used in commercial vehicles in North 
America.
    2. Continental has competed aggressively with Veyance for sales in 
North America, which has resulted in lower prices for commercial 
vehicle air springs. Elimination of the competition between Continental 
and Veyance likely would result in higher prices and decreased quality 
of service for customers, and would increase the likelihood that the 
two remaining suppliers would substantially reduce competition through 
successful coordination. As a result, the proposed acquisition likely 
would substantially lessen competition in the development, manufacture, 
and sale of commercial vehicle air springs in North America in 
violation of Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.

II. THE PARTIES TO THE PROPOSED TRANSACTION

    3. Defendant Continental AG, a corporation organized under the laws 
of the Federal Republic of Germany, is based in Hanover, Germany. 
Continental is a leading German automotive manufacturing company, 
specializing in tires, brake systems, and components, and it is one of 
the world's largest producers of rubber products. Its annual sales for 
2013 were approximately $40 billion. ContiTech North America, Inc., of 
Montvale, New Jersey, is a part of ContiTech AG, a division of 
Continental. ContiTech North America produces and sells parts, 
components and systems, including commercial vehicle air springs, for 
the automotive engineering industry in North America.
    4. Defendant Veyance Technologies, Inc. is incorporated in Delaware 
with its headquarters in Fairlawn, Ohio. Veyance manufactures 
engineered rubber products for heavy-duty industrial, automotive and 
military applications. Veyance produces and sells automotive and 
commercial vehicle parts, including commercial vehicle air springs, in 
North America. In 2013, Veyance had $2.1 billion in sales.

III. JURISDICTION AND VENUE

    5. The United States brings this action pursuant to Section 15 of 
the Clayton Act, 15 U.S.C. Sec.  25, as amended, to prevent and 
restrain Defendants from violating Section 7 of the Clayton Act, 15 
U.S.C. Sec.  18.
    6. The Court has subject matter jurisdiction over this action 
pursuant to Section 15 of the Clayton Act, 15 U.S.C. Sec.  25, and 28 
U.S.C. Sec. Sec.  1331, 1337(a), and 1345. Defendants produce and sell 
commercial vehicle air springs in a regular, continuous, and 
substantial flow of interstate commerce. Defendants' activities in the 
development, manufacture, and sale of commercial vehicle air springs 
have had a substantial effect upon interstate commerce.
    7. Defendants have consented to venue and personal jurisdiction in 
this District.
    8. Venue is proper in this Court under Section 12 of the Clayton 
Act, 15 U.S.C. Sec.  22, and 28 U.S.C. Sec.  1391(b) and (c).

[[Page 76372]]

IV. THE RELEVANT MARKET

A. Product Description

    9. Air springs are load-carrying rubber components constructed of a 
hollow rubber bellow sealed to metal plates attached at the top and 
bottom. Through the use of air compression, air springs dampen road 
shock and vibration. Air springs keep commercial vehicles--such as 
trucks, trailers and buses--at the same distance from the road 
irrespective of the weight being carried and also can be used as 
actuators to raise and lower objects. For example, air springs are used 
in buses to automatically maintain the same vehicle level and ride 
comfort, no matter how many passengers get on or off.
    10. As commercial vehicle components, air springs are used in 
multiple locations in a vehicle: under the driver's seat, between the 
cab and underlying frame, and in suspensions between axle and frame for 
truck and trailer. Air springs in suspension systems of trucks, 
trailers and buses help commercial vehicles save fuel, reduce tire 
wear, and provide greater reliability. Air springs between the floor of 
the cabin and the seat provide for driver comfort and reduce driver 
fatigue. Air springs in the commercial vehicle cabin suspension system, 
between the frame and the cabin, regulate cabin movement.
    11. The three types of air springs are (1) rolling lobe, which are 
used for truck, bus and trailer axles; (2) convoluted, or bellows, 
which serve the same function as rolling lobe but also are used as 
actuators to lift axles; and (3) sleeves, which are smaller springs 
generally used in cabs and seats for driver comfort. The vast majority 
of air springs for commercial vehicle applications sold in North 
America are rolling lobe air springs purchased by original equipment 
manufacturers (``OEMs'') for truck, trailer and bus suspension systems.
    12. Commercial vehicle OEMs in North America determine the type of 
air spring to be used in a particular platform. They can source the air 
springs directly from the air spring manufacturer or purchase a 
completed, fully integrated suspension system that includes air springs 
from a suspension system OEM. Suspension system OEMs source commercial 
vehicle air springs directly from the air spring manufacturer.
    13. All air springs used by commercial vehicle OEMs must be of high 
quality and durability. Commercial vehicle OEMs require that commercial 
vehicle air springs meet rigid qualifications to ensure performance, 
quality, and engineering design fit. The qualification process includes 
not only qualification of the specific air spring to be used, via 
laboratory and road tests, but also inspection of the particular 
production facility where the air spring is to be produced. The 
rigorous process of qualifying an air spring for commercial vehicle 
OEMs can take more than two years. Once the air spring is qualified, 
commercial vehicle OEMs work closely with the air spring manufacturer 
to ensure that the air spring is integrated into the overall design of 
the platform.
    14. Air springs also are sold in the aftermarket, or the market for 
replacement air springs for commercial vehicles. Commercial vehicle air 
springs for the aftermarket are purchased by the end user to replace, 
after time and wear, the air springs originally installed in commercial 
vehicles. Commercial vehicle air springs for the aftermarket do not 
have to meet the rigid qualifications that commercial vehicle OEMs 
require, as replacement commercial vehicle air springs are not designed 
for a specific commercial vehicle platform.

B. Relevant Product Markets

    15. Rolling lobe, convoluted and sleeve commercial vehicle air 
springs perform distinct functions and, in general, cannot be 
substituted for each other. For instance, an air spring used in a 
trailer suspension is not the same as an air spring used for a truck 
seat. Accordingly, the three types of commercial vehicle air springs 
are not interchangeable or substitutable for one another, and demand 
for each is separate. In the event of a small but significant increase 
in price for a given type of commercial vehicle air spring, customers 
would not stop using that air spring in sufficient numbers so as to 
defeat the price increase. Thus, the development, manufacture, and sale 
of each type of commercial vehicle air spring is a separate line of 
commerce and a relevant product market within the meaning of Section 7 
of the Clayton Act.
    16. Although narrower product markets of rolling lobe, convoluted 
and sleeve air springs for commercial vehicles exist, the competitive 
dynamic for each type is nearly identical. The same firms manufacture 
and sell each of these products and each type of commercial vehicle air 
spring is sold in similar competitive conditions. Therefore, the 
products may be aggregated for analytical convenience into a single 
relevant product market for the purpose of assigning market shares and 
evaluating the competitive impact of the acquisition.

(1) Commercial Vehicle Air Springs for Original Equipment Manufacturers

    17. Commercial vehicle OEMs require each air spring to meet rigid 
qualification standards to ensure performance, quality, and engineering 
design fit. Commercial vehicle air springs sold into the aftermarket 
for replacement purposes are not of sufficient quality or reliability 
to be used by commercial vehicle OEMs. Accordingly, commercial vehicle 
air springs for OEMs are not interchangeable with or substitutable for 
commercial vehicle air springs for the aftermarket, and demand for each 
is separate.
    18. A small but significant increase in the price of commercial 
vehicle air springs for OEMs would not cause a sufficient number of 
OEMs to substitute commercial vehicle air springs manufactured for the 
aftermarket so as to make such a price increase unprofitable. Thus, the 
development, manufacture, and sale of commercial vehicle air springs 
for OEMs is a line of commerce and a relevant product market within the 
meaning of Section 7 of the Clayton Act.

(2) Commercial Vehicle Air Springs for the Aftermarket

    19. Commercial vehicle air springs for the aftermarket are sold for 
replacement purposes. The targeted customer is the commercial vehicle 
owner. Because commercial vehicle air springs for the aftermarket are 
not designed for a specific commercial vehicle platform, they do not 
have to meet the rigid qualifications that commercial vehicle OEMs 
require. Commercial vehicle air springs for the aftermarket are of 
lower quality and lesser durability than commercial vehicle air springs 
made for OEMs. Accordingly, commercial vehicle air springs for the 
aftermarket are not interchangeable or substitutable for commercial 
vehicle air springs sold to OEMs. Demand for commercial vehicle air 
springs used by OEMs is separate from demand for commercial vehicle air 
springs for the aftermarket.
    20. A small but significant increase in the price of commercial 
vehicle air springs for the aftermarket would not cause customers to 
substitute commercial vehicle air springs for OEMs in sufficient 
numbers so as to make such a price increase unprofitable. Thus, the 
development, manufacture, and sale of commercial vehicle air springs 
for the aftermarket is a line of commerce and a relevant product market 
within the meaning of Section 7 of the Clayton Act.

[[Page 76373]]

C. Relevant Geographic Market

(1) Commercial Vehicle Air Springs for OEMs

    21. Commercial vehicle air springs are bulky but relatively 
lightweight. Despite the light weight, the cost of transporting 
commercial vehicle air springs is high compared to the value of the 
product, because the manufacturers essentially have to pay to ship air. 
Therefore, while shipping commercial vehicle air springs from overseas 
is feasible, it adds significant cost--approximately 10 to 15 percent--
to the price of the product. Import taxes also add additional costs to 
commercial vehicle air springs that are shipped from outside North 
America.
    22. In addition, commercial vehicle OEMs require that the air 
springs production facility be qualified. The qualification process 
includes inspection of the production facility by the customer. Having 
to inspect and qualify a facility outside of North America adds both 
time and expense to the process.
    23. Further, commercial vehicle OEMs require timely delivery of air 
springs, as they are an essential input into the final vehicle 
platform. Procuring commercial vehicle air springs from overseas adds 
significant lead time to delivery, increases the risk of shipment 
delays, and makes more difficult the rapid correction of quality 
shortcomings in delivered product. Thus, for commercial vehicle OEMs, 
purchasing air springs from outside North America involves the 
assumption of an unacceptable level of risk.
    24. Therefore, to successfully sell commercial vehicle air springs 
for OEM use in North America, an air spring manufacturer must have an 
air spring production facility in North America.
    25. OEM customers for commercial vehicle air springs in North 
America would be unwilling to switch to commercial vehicle air springs 
manufactured outside of North America to defeat a small but significant 
price increase. Accordingly, North America is a relevant geographic 
market for the development, manufacture, and sale of commercial vehicle 
air springs for OEMs within the meaning of Section 7 of the Clayton 
Act.

(2) Commercial Vehicle Air Springs for the Aftermarket

    26. For commercial vehicle air springs sold in the aftermarket, 
purchases are based on price, brand or reputation, and availability. As 
with commercial vehicle air springs for OEMs, the cost of shipping 
commercial vehicle air springs for the aftermarket, individually or in 
small quantities, from outside North America would make them more 
expensive than those sold in North America. Further, the additional 
lead time to ship commercial vehicle air springs for individual demand 
makes direct purchase from overseas unattractive to potential 
purchasers, who want their vehicles repaired in a timely manner. 
Therefore, a customer typically would not directly purchase commercial 
vehicle air springs for the aftermarket from outside of North America.
    27. Customers would be unwilling to switch to commercial vehicle 
air springs manufactured outside of North America to defeat a small but 
significant price increase. Accordingly, North America is a relevant 
geographic market for the development, manufacture, and sale of 
commercial vehicle air springs for the aftermarket within the meaning 
of Section 7 of the Clayton Act.

D. Anticompetitive Effects

(1) Commercial Vehicle Air Springs for OEMs

    28. In North America, the market for the development, manufacture, 
and sale of commercial vehicle air springs for OEMs is highly 
concentrated and would become substantially more concentrated as a 
result of the proposed transaction. Continental and Veyance each have 
approximately 30 percent of the North American market for commercial 
vehicle air springs sold for OEMs. The only other competitor has 
approximately 40 percent of the North American market, so the 
acquisition would result in two firms holding 100 percent of the 
market.
    29. As articulated in the Horizontal Merger Guidelines issued by 
the Department of Justice and the Federal Trade Commission, the 
Herfindahl-Hirschman Index (``HHI''), discussed in Appendix A, is a 
measure of market concentration. Market concentration is often one 
useful indicator of the level of competitive vigor in a market and the 
likely competitive effects of a merger. The more concentrated a market, 
and the more a transaction would increase concentration in a market, 
the more likely it is that a transaction would result in a meaningful 
reduction in competition, harming consumers. Markets in which the HHI 
is between 1,500 and 2,500 points are considered to be moderately 
concentrated and markets in which the HHI is in excess of 2,500 points 
are considered to be highly concentrated. Transactions that increase 
the HHI by more than 200 points in highly concentrated markets are 
presumed likely to enhance market power.
    30. In the North American market for the development, manufacture, 
and sale of commercial vehicle air springs for OEMs, the pre-merger HHI 
is 3,388; the post-merger HHI is 5,224, with an increase in the HHI of 
1,836. Consistent with the Horizontal Merger Guidelines, this market is 
highly concentrated and would become substantially more concentrated as 
a result of the proposed acquisition.
    31. A combined Continental and Veyance would have the ability to 
increase prices of commercial vehicle air springs sold to OEMs and to 
reduce the quality of service for these customers by limiting 
availability or delivery options.
    32. In addition, Continental's elimination of Veyance as a strong, 
independent competitor in the development, manufacture, and sale of 
commercial vehicle air springs for OEMs likely would facilitate 
anticompetitive coordination between the remaining two suppliers. The 
two suppliers would be able to estimate each other's output, capacity, 
reserves, and costs, making coordinated interaction easier.
    33. The transaction would substantially lessen competition in the 
development, manufacture, and sale of commercial vehicle air springs 
for OEMs in North America and lead to higher prices and decreased 
quality of service in violation of Section 7 of the Clayton Act.

(2) Commercial Vehicle Air Springs for the Aftermarket

    34. In North America, the market for the development, manufacture, 
and sale of commercial vehicle air springs sold in the aftermarket is 
highly concentrated and would become substantially more concentrated as 
a result of the proposed transaction. Veyance has approximately 33 
percent of the market, Continental has approximately 17 percent of the 
market, and one other competitor has approximately 45 percent. Were the 
acquisition to proceed, two firms each would have close to a 50 percent 
share of the market.
    35. For the North American market for the development, manufacture, 
and sale of commercial vehicle air springs sold in the aftermarket, the 
premerger HHI is 3,403, the post-acquisition HHI is 4,525, and the 
acquisition would produce an increase of 1,122 in the HHI. Consistent 
with the Horizontal Merger Guidelines, this market is highly 
concentrated and would become substantially more concentrated as a 
result of the proposed acquisition.
    36. The proposed transaction likely would substantially lessen 
competition

[[Page 76374]]

in the North American market for the development, manufacture, and sale 
of commercial vehicle air springs for the aftermarket and lead to 
higher prices and decreased quality of service in violation of Section 
7 of the Clayton Act.

E. Difficulty of Entry

(1) Commercial Vehicle Air Springs for OEMs

    37. Timely and sufficient entry by additional competitors into the 
market for the development, manufacture, and sale of commercial vehicle 
air springs for OEMs is unlikely, given the substantial time and cost 
required to establish a qualified production facility and to establish 
a recognized brand and reputation in North America.
    38. Choosing an appropriate factory location, ordering the 
necessary equipment and setting up the factory for production of 
commercial vehicle air springs likely would take two or more years and 
would require a substantial investment. Once a location is chosen and 
the factory is producing, the OEM qualification process can take two or 
more additional years. Qualification requires a number of steps, and 
both the factory and the particular air springs to be used by the 
commercial vehicle OEM must be qualified.
    39. Because of the cost and difficulty of establishing a production 
facility in North America and gaining requisite OEM qualification, 
entry into the North American market for the development, manufacture, 
and sale of commercial vehicle air springs for OEMs would not be 
timely, likely or sufficient to mitigate the anticompetitive effects of 
Continental's proposed acquisition of Veyance.

(2) Commercial Vehicle Air Springs for the Aftermarket

    40. The impact of the acquisition in the North American market for 
the development, manufacture, and sale of commercial vehicle air 
springs for the aftermarket would not be remedied quickly by the 
response of foreign suppliers. These suppliers lack a recognized brand 
and reputation in North America, and most lack the broad product 
portfolio, to supply commercial vehicle air springs that would be 
accepted by most OEMs. Foreign firms are not present in the North 
American market for the development, manufacture, and sale of 
commercial vehicle air springs for OEMs, so they do not have 
established reputations that would contribute to their acceptance in 
the aftermarket. Therefore, entry would not be timely, likely, or 
sufficient to mitigate the anticompetitive effects of Continental's 
proposed acquisition of Veyance.

V. VIOLATIONS ALLEGED

    41. Continental's proposed acquisition of Veyance likely would 
substantially lessen competition in North America for (1) the 
development, manufacture, and sale of commercial vehicle air springs 
for OEMs, and (2) the development, manufacture, and sale of commercial 
vehicle air springs for the aftermarket, in violation of Section 7 of 
the Clayton Act, 15 U.S.C. 18.
    42. Unless enjoined, the proposed acquisition likely would have the 
following anticompetitive effects, among others:
    (a) actual and potential competition between Veyance and 
Continental in the relevant markets would be eliminated;
    (b) competition generally in the relevant markets would be 
substantially lessened; and
    (c) for the relevant products, prices would increase and the 
quality of service would decrease.

VI. REQUESTED RELIEF

    43. The United States requests that the Court:
    (a) adjudge and decree that Continental's proposed acquisition of 
Veyance is unlawful and in violation of Section 7 of the Clayton Act, 
15 U.S.C. 18;
    (b) preliminarily and permanently enjoin and restrain defendants 
and all persons acting on their behalf from consummating the proposed 
acquisition of Veyance by Continental, or from entering into or 
carrying out any other contract, agreement, plan, or understanding, the 
effect of which would be to combine Continental with Veyance;
    (c) award the United States the costs for this action; and
    (d) grant the United States such other and further relief as the 
Court deems just and proper.

Respectfully submitted,

DATED: December 11, 2014

FOR PLAINTIFF UNITED STATES OF AMERICA:

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

William J. Baer

Assistant Attorney General

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

David I. Gelfand

Deputy Assistant Attorney General

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

Patricia A. Brink

Director of Civil Enforcement

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

Maribeth Petrizzi (DC Bar #435204)

Chief, Litigation II Section

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

Dorothy B. Fountain (DC Bar #439469)

Assistant Chief, Litigation II Section

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

Suzanne Morris (DC Bar #450208)
 Dando Cellini
Tara Shinnick (DC Bar #501462)
Angela Ting (DC Bar #449576)
Soyoung Choe
James Tucker

United States Department of Justice, Antitrust Division, Litigation 
II Section, 450 Fifth Street NW., Suite 8700, Washington, DC 20530, 
(202) 307-0924, (202) 514-9033 (fax), [email protected].

APPENDIX A

    The U.S. Dep't of Justice and Federal Trade Commission, Horizontal 
Merger Guidelines Sec.  5.3 (2010), available at http://www.justice.gov/atr/public/guidelines/hmg-2010.html, provide the method 
for calculating the HHI. The HHI is calculated by squaring the market 
share of each firm competing in the market and then summing the 
resulting numbers. For example, for a market consisting of four firms 
with shares of 30, 30, 20, and 20 percent, the HHI is 2,600 (30\2\ + 
30\2\ + 20\2\ + 20\2\ = 2,600). The HHI takes into account the relative 
size distribution of the firms in a market. It approaches zero when a 
market is occupied by a large number of firms of relatively equal size 
and reaches its maximum of 10,000 points when a market is controlled by 
a single firm. The HHI increases both as the number of firms in the 
market decreases and as the disparity in size between those firms 
increases.

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Continental AG and 
Veyance Technologies, Inc. Defendants.

Case No.: 1:14-cv-02087

Judge: Hon. Reggie B. Walton

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.

NATURE AND PURPOSE OF THE PROCEEDING

    Pursuant to an Agreement and Plan of Merger dated February 10, 
2014, Continental AG (``Continental'') has agreed to purchase Veyance 
Technologies, Inc. (``Veyance'') from

[[Page 76375]]

Carlyle Partners IV, L.P. for $1.8 billion. The merger would combine 
two of the three leading suppliers of air springs used in commercial 
vehicles in North America.
    The United States filed a civil antitrust Complaint on December 11, 
2014, seeking to enjoin the proposed acquisition. The Complaint alleges 
that the acquisition likely would substantially lessen competition in 
North America in the development, manufacture and sale of commercial 
vehicle air springs, in violation of Section 7 of the Clayton Act, 15 
U.S.C. 18. That loss of competition likely would result in higher 
prices and decreased quality of service for customers in the North 
American market for commercial vehicle air springs.
    At the same time the Complaint was filed, the United States filed a 
Hold Separate Stipulation and Order and a proposed Final Judgment, 
which are designed to eliminate the anticompetitive effects of the 
acquisition. Under the proposed Final Judgment, which is explained more 
fully below, the defendants are required to divest the Veyance North 
America Air Springs Business, which includes Veyance's manufacturing 
and assembly facilities in San Luis Potosi, Mexico, research and 
development, engineering and testing operations, and administration 
assets in Fairlawn, Ohio, and all of the tangible and intangible assets 
primarily used in or for the business. Under the terms of the Hold 
Separate Stipulation and Order, defendants will take certain steps to 
ensure that the Veyance North America Air Springs Business is operated 
as a competitively independent, economically viable, and ongoing 
business concern; that it will remain independent and uninfluenced by 
the consummation of the acquisition; and that competition is maintained 
during the pendency of the ordered divestiture.
    The United States and defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. DESCRIPTION OF THE EVENTS GIVING RISE TO THE ALLEGED VIOLATION

A. The Defendants

    Defendant Continental AG, a corporation organized under the laws of 
the Federal Republic of Germany, is based in Hanover, Germany. 
Continental is a leading German automotive manufacturing company, 
specializing in tires, brake systems, and components, and it is one of 
the world's largest producers of rubber products. Its annual sales for 
2013 were approximately $40 billion. ContiTech North America, Inc., of 
Montvale, New Jersey, is a part of ContiTech AG, a division of 
Continental. ContiTech North America produces and sells parts, 
components and systems, including commercial vehicle air springs, for 
the automotive engineering industry in North America.
    Defendant Veyance Technologies, Inc. is incorporated in Delaware 
with its headquarters in Fairlawn, Ohio. Veyance manufactures 
engineered rubber products for heavy-duty industrial, automotive and 
military applications. Veyance produces and sells automotive and 
commercial vehicle parts, including commercial vehicle air springs, in 
North America. In 2013, Veyance had $2.1 billion in sales.

B. The Markets

1. Commercial Vehicle Air Springs

    Air springs are load-carrying rubber components constructed of a 
hollow rubber bellow sealed to metal plates attached at the top and 
bottom. Through the use of air compression, air springs dampen road 
shock and vibration. Air springs keep commercial vehicles-such as 
trucks, trailers and buses-at the same distance from the road 
irrespective of the weight being carried and also can be used as 
actuators to raise and lower objects. As commercial vehicle components, 
air springs are used in multiple locations in a vehicle: under the 
driver's seat, between the cab and underlying frame, and in suspensions 
between axle and frame for truck and trailer. Air springs in suspension 
systems of trucks, trailers and buses help commercial vehicles save 
fuel, reduce tire wear, and provide greater reliability. Air springs 
between the floor of the cabin and the seat provide for driver comfort 
and reduce driver fatigue. Air springs in the commercial vehicle cabin 
suspension system, between the frame and the cabin, regulate cabin 
movement.
    The three types of air springs are (1) rolling lobe, which are used 
for truck, bus and trailer axles; (2) convoluted, or bellows, which 
serve the same function as rolling lobe, but also are used as actuators 
to lift axles; and (3) sleeves, which are smaller springs generally 
used in cabs and seats for driver comfort. The vast majority of air 
springs for commercial vehicle applications sold in North America are 
rolling lobe air springs purchased by original equipment manufacturers 
(``OEMs'') for truck, trailer and bus suspension systems.
    Commercial vehicle OEMs in North America determine the type of air 
spring to be used in a particular platform. They can source the air 
springs directly from the air spring manufacturer or purchase a 
completed, fully integrated suspension system that includes air springs 
from a suspension system OEM. Suspension system OEMs source commercial 
vehicle air springs directly from the air spring manufacturer. All air 
springs used by commercial vehicle OEMs must be of high quality and 
durability. Commercial vehicle OEMs require that commercial vehicle air 
springs meet rigid qualifications to ensure performance, quality, and 
engineering design fit. The qualification process includes not only 
qualification of the specific air spring to be used, via laboratory and 
road tests, but also inspection of the particular production facility 
where the air spring is to be produced. The rigorous process of 
qualifying an air spring for commercial vehicle OEMs can take more than 
two years. Once the air spring is qualified, commercial vehicle OEMs 
work closely with the air spring manufacturer to ensure that the air 
spring is integrated into the overall design of the platform.
    Air springs also are sold in the aftermarket, or the market for 
replacement air springs for commercial vehicles. Commercial vehicle air 
springs for the aftermarket are purchased by the end user to replace, 
after time and wear, the air springs originally installed in commercial 
vehicles. Commercial vehicle air springs for the aftermarket do not 
have to meet the rigid qualifications that commercial vehicle OEMs 
require, as replacement commercial vehicle air springs are not designed 
for a specific commercial vehicle platform.

2. The North American Market for Commercial Vehicle Air Springs for 
Original Equipment Manufacturers

    Rolling lobe, convoluted and sleeve commercial vehicle air springs 
perform distinct functions and, in general, cannot be substituted for 
each other. For instance, an air spring used in a trailer suspension is 
not the same as an air spring used for a truck seat. Accordingly, the 
three types of commercial vehicle air springs are not

[[Page 76376]]

interchangeable or substitutable for one another, and demand for each 
is separate. In the event of a small but significant increase in price 
for a given type of commercial vehicle air spring, customers would not 
stop using that air spring in sufficient numbers to defeat the price 
increase. Thus, the development, manufacture, and sale of each type of 
commercial vehicle air spring is a separate line of commerce and a 
relevant product market within the meaning of Section 7 of the Clayton 
Act.
    Although narrower product markets of rolling lobe, convoluted and 
sleeve air springs for commercial vehicles exist, the competitive 
dynamic for each type is nearly identical. The same firms manufacture 
and sell each of these products and each type of commercial vehicle air 
spring is sold in similar competitive conditions. Therefore, the 
products may be aggregated for analytical convenience into a single 
relevant product market for the purpose of assigning market shares and 
evaluating the competitive impact of the acquisition.
    Commercial vehicle OEMs require each air spring to meet rigid 
qualification standards to ensure performance, quality and engineering 
design fit. Commercial vehicle air springs sold into the aftermarket 
for replacement purposes are not of sufficient quality or reliability 
to be used by commercial vehicle OEMs. Accordingly, commercial vehicle 
air springs for OEMs are not interchangeable with or substitutable for 
aftermarket commercial vehicle air springs, and demand for each is 
separate.
    A small but significant increase in the price of commercial vehicle 
air springs for commercial vehicle OEMs would not cause a sufficient 
number of OEMs to substitute commercial vehicle air springs 
manufactured for the aftermarket so as to make such a price increase 
unprofitable. Thus, the development, manufacture, and sale of 
commercial vehicle air springs for OEMs is a line of commerce and a 
relevant product market within the meaning of Section 7 of the Clayton 
Act.
    Commercial vehicle air springs are bulky but relatively 
lightweight. Despite the light weight, the cost of transporting 
commercial vehicle air springs is high compared to the value of the 
product, because the manufacturers essentially have to pay to ship air. 
Therefore, while shipping commercial vehicle air springs from overseas 
is feasible, it adds significant cost--approximately 10 to 15 percent--
to the price of the product. Import taxes also add additional costs to 
commercial vehicle air springs that are shipped from outside North 
America.
    In addition, commercial vehicle OEMs require that the air springs 
production facility be qualified. The qualification process includes 
inspection of the production facility by the customer. Having to 
inspect and qualify a facility outside of North America adds both time 
and expense to the process.
    Further, commercial vehicle OEMs require timely delivery of air 
springs, as they are an essential input into the final vehicle 
platform. Procuring commercial vehicle air springs from overseas adds 
significant lead time to delivery, increases the risk of shipment 
delays, and makes more difficult the rapid correction of quality 
shortcomings in delivered product. Thus, for commercial vehicle OEMs, 
purchasing air springs from outside North America involves the 
assumption of an unacceptable level of risk.
    Therefore, to successfully sell commercial vehicle air springs for 
OEM use in North America, an air spring manufacturer must have an air 
spring production facility in North America. OEM customers for 
commercial vehicle air springs in North America would be unwilling to 
switch to commercial vehicle air springs manufactured outside of North 
America to defeat a small but significant price increase. Accordingly, 
North America is a relevant geographic market for the development, 
manufacture, and sale of commercial vehicle air springs for OEMs within 
the meaning of Section 7 of the Clayton Act.

3. The North American Market for Commercial Vehicle Air Springs for the 
Aftermarket

    Commercial vehicle air springs for the aftermarket are sold for 
replacement purposes. The targeted customer is the commercial vehicle 
owner. Because commercial vehicle air springs for the aftermarket are 
not designed for a specific commercial vehicle platform, they do not 
have to meet the rigid qualifications that commercial vehicle OEMs 
require. Commercial vehicle air springs for the aftermarket are of 
lower quality and lesser durability than commercial vehicle air springs 
made for OEMs. Accordingly, commercial vehicle air springs for the 
aftermarket are not interchangeable or substitutable for commercial 
vehicle air springs sold to OEMs. Demand for commercial vehicle air 
springs used by OEMs is separate from demand for commercial vehicle air 
springs for the aftermarket.
    A small but significant increase in the price of commercial vehicle 
air springs for the aftermarket would not cause customers to substitute 
commercial vehicle air springs for OEMs in sufficient numbers so as to 
make such a price increase unprofitable. Thus, the development, 
manufacture, and sale of commercial vehicle air springs for the 
aftermarket is a line of commerce and a relevant product market within 
the meaning of Section 7 of the Clayton Act.
    For commercial vehicle air springs sold in the aftermarket, 
purchases are based on price, brand or reputation, and availability. As 
with commercial vehicle air springs for OEMs, the cost of shipping 
commercial vehicle air springs for the aftermarket, individually or in 
small quantities, from outside North America would make them more 
expensive than those sold in North America. Further, the additional 
lead time to ship commercial vehicle air springs for individual demand 
makes direct purchase from overseas unattractive to potential 
purchasers, who want their vehicles repaired in a timely manner. 
Therefore, a customer typically would not directly purchase commercial 
vehicle air springs for the aftermarket from outside of North America.
    Customers would be unwilling to switch to commercial vehicle air 
springs manufactured outside of North America to defeat a small but 
significant price increase. Accordingly, North America is a relevant 
geographic market for the development, manufacture, and sale of 
commercial vehicle air springs for the aftermarket within the meaning 
of Section 7 of the Clayton Act.

4. Anticompetitive Effects

a. Commercial Vehicle Air Springs for OEMs

    In North America, the market for the development, manufacture, and 
sale of commercial vehicle air springs for OEMs is highly concentrated 
and would become substantially more concentrated as a result of the 
proposed transaction. Continental and Veyance each have approximately 
30 percent of the North American market for commercial vehicle air 
springs sold for OEMs. The only other competitor has approximately 40 
percent of the North American market, so the acquisition would result 
in two firms holding 100 percent of the market.
    As articulated in the Horizontal Merger Guidelines issued by the 
Department of Justice and the Federal Trade Commission, and discussed 
in Appendix A of the Complaint, the Herfindahl-Hirschman Index 
(``HHI'') is a measure of market concentration. Market concentration is 
often one useful

[[Page 76377]]

indicator of the level of competitive vigor in a market and the likely 
competitive effects of a merger. The more concentrated a market, and 
the more a transaction would increase concentration in a market, the 
more likely it is that a transaction would result in a meaningful 
reduction in competition, harming consumers. Markets in which the HHI 
is between 1,500 and 2,500 points are considered to be moderately 
concentrated and markets in which the HHI is in excess of 2,500 points 
are considered to be highly concentrated. Transactions that increase 
the HHI by more than 200 points in highly concentrated markets are 
presumed likely to enhance market power.
    In the North American market for the development, manufacture, and 
sale of commercial vehicle air springs for OEMs, the pre-merger HHI is 
3,388; the post-merger HHI is 5,224, with an increase in the HHI of 
1,836. Consistent with the Horizontal Merger Guidelines, this market is 
highly concentrated and would become substantially more concentrated as 
a result of the proposed acquisition.
    A combined Continental and Veyance would have the ability to 
increase prices of commercial vehicle air springs sold to OEMs and to 
reduce the quality of service for these customers by limiting 
availability or delivery options. In addition, Continental's 
elimination of Veyance as a strong, independent competitor in the 
development, manufacture, and sale of commercial vehicle air springs 
for OEMs likely would facilitate anticompetitive coordination between 
the remaining two suppliers. The two suppliers would be able to 
estimate each other's output, capacity, reserves, and costs, making 
coordinated interaction easier. The transaction would substantially 
lessen competition in the development, manufacture, and sale of 
commercial vehicle air springs for OEMs in North America and lead to 
higher prices and decreased quality of service in violation of Section 
7 of the Clayton Act.

b. Commercial Vehicle Air Springs for the Aftermarket

    In North America, the market for the development, manufacture, and 
sale of commercial vehicle air springs sold in the aftermarket is 
highly concentrated and would become substantially more concentrated as 
a result of the proposed transaction. Veyance has approximately 33 
percent of the market, Continental has approximately 17 percent of the 
market, and one other competitor has approximately 45 percent. Were the 
acquisition to proceed, the two firms each would have close to a 50 
percent share of the market.
    For the North American market for the development, manufacture, and 
sale of commercial vehicle air springs sold in the aftermarket, the 
premerger HHI is 3,403, the post-acquisition HHI is 4,525, and the 
acquisition would produce an increase of 1,122 in the HHI. Consistent 
with the Horizontal Merger Guidelines, this market is highly 
concentrated and would become substantially more concentrated as a 
result of the proposed acquisition. The proposed transaction likely 
would substantially lessen competition in the North American market for 
the development, manufacture, and sale of commercial vehicle air 
springs for the aftermarket and lead to higher prices and decreased 
quality of service in violation of Section 7 of the Clayton Act.

5. Difficulty of Entry

a. Commercial Vehicle Air Springs for OEMs

    Choosing an appropriate factory location, ordering the necessary 
equipment and setting up the factory for production of commercial 
vehicle air springs likely would take two or more years and would 
require a substantial investment. Once a location is chosen and the 
factory is producing, the OEM qualification process can take two or 
more additional years. Qualification requires a number of steps, and 
both the factory and the particular air springs to be used by the 
commercial vehicle OEM must be qualified.
    Because of the cost and difficulty of establishing a production 
facility in North America and gaining requisite OEM qualification, 
entry into the North American market for the development, manufacture, 
and sale of commercial vehicle air springs for OEMs would not be 
timely, likely or sufficient to mitigate the anticompetitive effects of 
Continental's proposed acquisition of Veyance.

b. Commercial Vehicle Air Springs for the Aftermarket

    The impact of the acquisition in the North American market for the 
development, manufacture, and sale of commercial vehicle air springs 
for the aftermarket would not be remedied quickly by the response of 
foreign suppliers. These suppliers lack a recognized brand and 
reputation in North America, and most lack the broad product portfolio, 
to supply commercial vehicle air springs that would be accepted by most 
OEMs. Foreign firms are not present in the North American market for 
the development, manufacture, and sale of commercial vehicle air 
springs for OEMs, so they do not have established reputations that 
would contribute to their acceptance in the aftermarket. Therefore, 
entry would not be timely, likely, or sufficient to mitigate the 
anticompetitive effects of Continental's proposed acquisition of 
Veyance.

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

    The divestiture required by the proposed Final Judgment will 
eliminate the anticompetitive effects of the acquisition in the North 
American market for commercial vehicle air springs by establishing a 
new, independent, and economically viable competitor. Paragraph IV.A of 
the proposed Final Judgment requires defendants, within ninety (90) 
days after the filing of the Complaint, or five days after notice of 
the entry of the Final Judgment by the Court, whichever is later, to 
divest the Veyance North America Air Springs Business. The assets must 
be divested in such a way as to satisfy the United States in its sole 
discretion that the Veyance North America Air Springs Business can and 
will be operated by the purchaser as a viable, ongoing business that 
can compete effectively in the development, manufacture, and sale of 
commercial vehicle air springs. Defendants must take all reasonable 
steps necessary to accomplish the divestiture quickly and shall 
cooperate with prospective purchasers.
    The Divestiture Assets include the Veyance North America Air 
Springs Business, including its manufacturing facility and its assembly 
facility, both located in San Luis Potosi, Mexico, and its research and 
development, engineering and testing operations, and administration 
assets located in Fairlawn, Ohio (``Fairlawn Facility''). The Veyance 
North America Air Springs Business produces commercial vehicle air 
springs sold to customers in North America. It is an established, high-
quality manufacturer with product offerings that have been qualified by 
its customers and sufficient capacity to meet current and future demand 
for its product.
    The proposed Final Judgment requires the divestiture of all 
tangible and intangible assets primarily used in or for the Veyance 
North America Air Springs Business. These assets will provide the 
Acquirer not only with physical assets, but also with intellectual 
property and rights, specifically including all U.S. patents and other 
intellectual property used by the Veyance North America Air Springs 
Business in the development,

[[Page 76378]]

manufacture and sale of air springs, and a non-exclusive, perpetual, 
worldwide, royalty-free license for all non-U.S. patents and pending 
patent applications for use in the design, development, manufacture, 
marketing, servicing and/or sale of air springs produced for customers 
located outside of North America.
    Paragraph IV.C of the proposed Final Judgment prohibits defendants 
from interfering with the Acquirer's ability to hire defendants' 
employees whose primary responsibility is the development, manufacture 
and sale of air springs. The proposed Final Judgment explicitly 
includes in this provision four categories of employees critical to the 
Veyance North America Air Springs Business: (1) Head of Air Springs 
Business, (2) Head of Sales and Marketing, (3) a Chief Chemist for Air 
Springs, and (4) aftermarket sales personnel. The proposed Final 
Judgment proscribes defendants' interference with negotiations by the 
Acquirer to hire these employees.
    The Veyance North America Air Springs Business currently sources 
critical inputs--compounds and calendered materials--from a Veyance 
facility that is not being divested. The Acquirer initially may require 
a ready supply of such inputs for the manufacture of air springs. 
Therefore, Paragraph IV.G of the proposed Final Judgment provides that, 
at the option of the Acquirer, Continental shall enter into a supply 
contract for compounds and calendered materials sufficient to meet all 
or part of the Acquirer's needs for a period of up to one (1) year. The 
United States, in its sole discretion, may approve an extension of the 
term for a period totaling not more than one (1) additional year. The 
Acquirer also may require a transition services agreement for back 
office and technical support to ensure the continuity of the operations 
of the Veyance North America Air Springs Business. The proposed Final 
Judgment, in Paragraph IV.H, provides the Acquirer with the option for 
a transition services agreement for six (6) months, with a possible 
extension of the term for another six (6) months.
    The research and development, engineering and testing operations, 
and administration assets included in the Divestiture Assets are housed 
on the first and third floors of the Fairlawn Facility, which is also 
Veyance's world headquarters. The proposed Final Judgment, in Paragraph 
IV.J, provides that, at the option of the Acquirer, defendants shall 
enter into a sublease for the first and third floors of the Fairlawn 
Facility for a period of six (6) months. The United States, in its sole 
discretion, may approve one or more extensions for a total of up to an 
additional six (6) months. Should the Acquirer exercise its option to 
sublease space in the Fairlawn Facility, the proposed Final Judgment, 
in Paragraph IV.K, requires defendants to create physical barriers that 
segregate the air spring operations from the portions of the Fairlawn 
Facility that will remain occupied by defendants.
    Veyance has a lab and testing equipment located on the second floor 
of the Fairlawn Facility that supports various Veyance businesses, 
including its air springs business. In Paragraph IV.L, the proposed 
Final Judgment provides that, at the option of the Acquirer, defendants 
will provide the Acquirer with complete and sole access to the 
laboratory and all the equipment located on the second floor of the 
Fairlawn Facility for a continuous pre-scheduled, 48-hour period each 
week. To maintain the confidentiality of the Acquirer's operations, 
Paragraph IV.M of the proposed Final Judgment, requires defendants to 
program the equipment on the second floor of the Fairlawn Facility to 
ensure that no results related to air springs testing are stored on the 
equipment and that such results instead will be routed only to a server 
designated by the Acquirer.
    Veyance utilizes for its various businesses, including its air 
springs business, three warehouses located, respectively, in San Luis 
Potosi, Mexico; Moberly, Missouri; and Mississauga, Ontario, Canada. 
Paragraph IV.N of the proposed Final Judgment provides that, at the 
option of the Acquirer, defendants shall enter into a sublease with the 
Acquirer for space at any or all of the warehouses. Should the Acquirer 
exercise this option, the proposed Final Judgment, in Paragraph IV.O, 
requires defendants to create physical barriers segregating the air 
springs areas at each of the warehouses from the portions of each 
warehouse that will remain occupied by defendants.
    By providing for the possibility of a supply contract for compounds 
and calendered materials, a transition services agreement, and the 
physical segregation of the Fairlawn Facility and the warehouses, the 
proposed Final Judgment contemplates an ongoing relationship between 
defendants and the Acquirer for a period of time. Should the United 
States conclude that it would benefit from the assistance of a 
Monitoring Trustee to oversee the negotiation of the agreements and the 
segregation of the shared facilities, Section X of the proposed Final 
Judgment provides for the appointment of a Monitoring Trustee with the 
power and authority to investigate and report on the parties' 
compliance with the terms of the Final Judgment and the Hold Separate 
Stipulation and Order during the pendency of the divestiture, including 
the terms of the supply agreement, the transition services agreement, 
and the physical segregation of the shared facilities. The Monitoring 
Trustee would not have any responsibility or obligation for the 
operation of the parties' businesses. The Monitoring Trustee would 
serve at defendants' expense, on such terms and conditions as the 
United States approves, and defendants must assist the trustee in 
fulfilling its obligations. The Monitoring Trustee would file monthly 
reports and would serve until the divestiture of the Divestiture Assets 
is finalized pursuant to either Section IV or Section V of the proposed 
Final Judgment and the expiration of any transition services agreement 
between defendants and the Acquirer.
    In the event that defendants do not accomplish the divestiture 
within the prescribed period, Section V of the proposed Final Judgment 
provides that the Court will appoint a trustee selected by the United 
States to effect the divestiture. If a trustee is appointed, the 
proposed Final Judgment provides that Defendants will pay all costs and 
expenses of the trustee. The trustee's commission will be structured so 
as to provide an incentive for the trustee based on the price obtained 
and the speed with which the divestiture is accomplished. After his or 
her appointment becomes effective, the trustee will file monthly 
reports with the Court and the United States setting forth his or her 
efforts to accomplish the divestiture. At the end of six (6) months, if 
the divestiture has not been accomplished, the trustee and the United 
States will make recommendations to the Court, which shall enter such 
orders as appropriate, in order to carry out the purpose of the trust, 
including extending the trust or the term of the trustee's appointment.
    The divestiture provisions of the proposed Final Judgment will 
eliminate the anticompetitive effects that likely would result if 
Continental acquired Veyance because the Acquirer will have the ability 
to develop, manufacture and sell commercial vehicle air springs to 
customers in North America in competition with Continental.

IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS

    Section 4 of the Clayton Act, 15 U.S.C. Sec.  15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws

[[Page 76379]]

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

V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT

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

VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT

    The United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits against Defendants. The 
United States could have continued the litigation and sought 
preliminary and permanent injunctions against Continental's acquisition 
of Veyance. The United States is satisfied, however, that the 
divestiture of assets described in the proposed Final Judgment will 
preserve competition for the development, manufacture and sale of 
commercial vehicle air springs in North America. Thus, the proposed 
Final Judgment would achieve all or substantially all of the relief the 
United States would have obtained through litigation, but avoids the 
time, expense, and uncertainty of a full trial on the merits of the 
Complaint.

VII. STANDARD OF REVIEW UNDER THE APPA FOR THE PROPOSED FINAL JUDGMENT

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a sixty-day comment period, after which the court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. Sec.  16(e)(1). In making that 
determination, the court, in accordance with the statute as amended in 
2004, is required to consider:
    (A) the competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration of relief sought, anticipated effects of alternative remedies 
actually considered, whether its terms are ambiguous, and any other 
competitive considerations bearing upon the adequacy of such judgment 
that the court deems necessary to a determination of whether the 
consent judgment is in the public interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and individuals 
alleging specific injury from the violations set forth in the complaint 
including consideration of the public benefit, if any, to be derived 
from a determination of the issues at trial.
    15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory 
factors, the court's inquiry is necessarily a limited one as the 
government is entitled to ``broad discretion to settle with the 
defendant within the reaches of the public interest.'' United States v. 
Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally 
United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) 
(assessing public interest standard under the Tunney Act); United 
States v. U.S. Airways Group, Inc., No. 13-cv-1236 (CKK), 2014-1 Trade 
Cas. (CCH) ] 78, 748, 2014 U.S. Dist. LEXIS 57801, at *7 (D.D.C. Apr. 
25, 2014) (noting the court has broad discretion of the adequacy of the 
relief at issue); United States v. InBev N.V./S.A., No. 08-1965 (JR), 
2009-2 Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, at *3, 
(D.D.C. Aug. 11, 2009) (noting that the court's review of a consent 
judgment is limited and only inquires ``into whether the government's 
determination that the proposed remedies will cure the antitrust 
violations alleged in the complaint was reasonable, and whether the 
mechanism to enforce the final judgment are clear and 
manageable.'').\1\
---------------------------------------------------------------------------

    \1\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for 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).
---------------------------------------------------------------------------

    As the United States Court of Appeals for the District of Columbia 
Circuit has held, under the APPA a court considers, among other things, 
the relationship between the remedy secured and the specific 
allegations set forth in the government's complaint, whether the decree 
is sufficiently clear, whether enforcement mechanisms are sufficient, 
and whether the decree may positively harm third parties. See 
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the 
relief secured by the decree, a court may not ``engage in an 
unrestricted evaluation of what relief would best serve the public.'' 
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (quoting 
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.


[[Page 76380]]


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 U.S. Airways, 2014 U.S. Dist. LEXIS 57801, at 
*16 (noting that a court should not reject the proposed remedies 
because it believes others are preferable); 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 U.S. 
Airways, 2014 U.S. Dist. LEXIS 57801, at *8 (noting that room must be 
made for the government to grant concessions in the negotiation process 
for settlements (citing Microsoft, 56 F.3d at 1461); 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 U.S. Airways, 
2014 U.S. Dist. LEXIS 57801, at *9 (noting that the court must simply 
determine whether there is a factual foundation for the government's 
decisions such that its conclusions regarding the proposed settlements 
are reasonable; InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``the 
`public interest' is not to be measured by comparing the violations 
alleged in the complaint against those the court believes could have, 
or even should have, been alleged''). Because the ``court's authority 
to review the decree depends entirely on the government's exercising 
its prosecutorial discretion by bringing a case in the first place,'' 
it follows that ``the court is only authorized to review the decree 
itself,'' and not to ``effectively redraft the complaint'' to inquire 
into other matters that the United States did not pursue. Microsoft, 56 
F.3d at 1459-60. As this Court confirmed in SBC Communications, courts 
``cannot look beyond the complaint in making the public interest 
determination unless the complaint is drafted so narrowly as to make a 
mockery of judicial power.'' 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); see also U.S. Airways, 2014 U.S. Dist. 
LEXIS 57801, at *9 (indicating that a court is not required to hold an 
evidentiary hearing or to permit intervenors as part of its review 
under the Tunney Act). The language wrote into the statute what 
Congress intended when it enacted the Tunney Act in 1974, as Senator 
Tunney explained: ``[t]he court is nowhere compelled to go to trial or 
to engage in extended proceedings which might have the effect of 
vitiating the benefits of prompt and less costly settlement through the 
consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of 
Sen. 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\ A court can make its public 
interest determination based on the competitive impact statement and 
response to public comments alone. U.S. Airways, 2014 U.S. Dist. LEXIS 
57801, at *9.
---------------------------------------------------------------------------

    \3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1 
Trade Cas. (CCH) ] 61,508, at 71,980, *22 (W.D. Mo. 1977) (``Absent 
a showing of corrupt failure of the government to discharge its 
duty, the Court, in making its public interest finding, should . . . 
carefully consider the explanations of the government in the 
competitive impact statement and its responses to comments in order 
to determine whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, at 6 (1973) (``Where the 
public interest can be meaningfully evaluated simply on the basis of 
briefs and oral arguments, that is the approach that should be 
utilized.'').
---------------------------------------------------------------------------

VIII. DETERMINATIVE DOCUMENTS

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

Dated: December 11, 2014

Respectfully submitted,

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

Suzanne Morris

U.S. Department of Justice, Antitrust Division, Litigation II 
Section, Liberty Square Building, 450 Fifth Street NW., Suite 8700, 
Washington, DC 20530, Tel.: (202) 307-1188 Email: 
[email protected]

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Continental AG and 
Veyance Technologies, Inc. Defendants.
CASE NO.: 1:14-cv-02087
JUDGE: Hon. Reggie B. Walton

PROPOSED FINAL JUDGMENT

    WHEREAS, Plaintiff, United States of America, filed its Complaint 
on December 11, 2014, the United States and defendants, Continental AG 
(``Continental'') and Veyance Technologies, Inc. (``Veyance''), by 
their respective attorneys, have consented to the entry of this Final 
Judgment without trial or adjudication of any issue of fact or law, and 
without this Final Judgment constituting any evidence against or 
admission by any party regarding any issue of fact or law;
    AND WHEREAS, defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;

[[Page 76381]]

    AND WHEREAS, the essence of this Final Judgment is the prompt and 
certain divestiture of certain rights or assets by the defendants to 
assure that competition is not substantially lessened;
    AND WHEREAS, the United States requires defendants to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    AND WHEREAS, defendants have represented to the United States that 
the divestitures required below can and will be made and that 
defendants will later raise no claim of hardship or difficulty as 
grounds for asking the Court to modify any of the divestiture 
provisions contained below;
    NOW THEREFORE, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is ORDERED, ADJUDGED AND DECREED:

I. Jurisdiction

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

II. Definitions

    As used in this Final Judgment:
    A. ``Continental'' means defendant Continental AG, a German 
corporation with its headquarters in Hanover, Germany, its successors, 
assigns, subsidiaries, divisions, groups, affiliates, partnerships and 
joint ventures, and their directors, officers, managers, agents, and 
employees.
    B. ``Veyance'' means defendant Veyance Technologies, Inc., a 
Delaware corporation with its headquarters in Fairlawn, Ohio, its 
successors, assigns, subsidiaries, divisions, groups, affiliates, 
partnerships and joint ventures, and their directors, officers, 
managers, agents, and employees.
    C. ``Acquirer'' means the entity to which defendants divest the 
Divestiture Assets.
    D. ``Air Springs'' means rolling lobe, bellow, sleeve and other air 
springs used as original equipment or replacement parts in commercial 
vehicle, passenger car, and industrial applications.
    E. ``Veyance North America Air Springs Business'' means Veyance's 
North American operations for the development, manufacture and sale of 
Air Springs and includes Veyance's subsidiary, Veyance Productos 
Industriales, S. de R.L. de C.V., a Mexican corporation with its 
principal place of business in San Luis Potosi, Mexico.
    F. ``Divestiture Assets'' means the Veyance North America Air 
Springs Business, including, but not limited to:
    1. The manufacturing facility located at Eje Central Sahop No 215, 
Manzana 53, Zona Industrial 1A. Seccion Land A, San Luis Potosi, SLP, 
CP 78395;
    2. The assembly facility located at Eje 128 No.140 interior C y D, 
Zona industrial del Potosi, SLP, CP 78395;
    3. The Air Springs research and development, engineering and 
testing operations, and administration assets used for the Veyance 
North America Air Springs Business located at 703 South Cleveland 
Massillon Road, Fairlawn, Ohio 44333 (``Fairlawn Facility'');
    4.a. All tangible assets used primarily in or for the Veyance North 
America Air Springs Business, including, but not limited to, all real 
property and improvements, manufacturing equipment, product inventory, 
tooling and fixed assets, personal property, input inventory, office 
furniture, materials, supplies, and other tangible property and assets;
    b. All tangible assets used primarily in or for the research and 
development, product and material design, and testing of any Air Spring 
product for the Veyance North America Air Springs Business, including, 
but not limited to, equipment, records, materials, supplies, and other 
property (except for the testing machines located on the second floor 
of the Fairlawn Facility); and
    c. All records and documents relating to the Veyance North America 
Air Springs Business, including, but not limited to, all licenses, 
permits and authorizations issued by any governmental organization; all 
contracts, teaming arrangements, agreements, leases, commitments, 
certifications, and understandings, including supply agreements; all 
customer lists, contracts, purchase orders, accounts, and credit 
records; and all repair and performance records and all other records 
relating to the Veyance North America Air Springs Business.
    5.a. All intangible assets used by the Veyance North America Air 
Springs Business in the development, manufacture, and sale of Air 
Springs, including, but not limited to, all U.S. patents, licenses and 
sublicenses, intellectual property, copyrights, trademarks, trade 
names, service marks, service names, technical information, computer 
software and related documentation, know-how (including, but not 
limited to, recipes, formulas, and machine settings), trade secrets, 
drawings, blueprints, designs, design protocols, specifications for 
materials, specifications for parts and devices, safety procedures for 
the handling of materials and substances, quality assurance and control 
procedures, all research data concerning historic and current research 
and development relating to the Veyance North America Air Springs 
Business, quality assurance and control procedures, design tools and 
simulation capability, all manuals and technical information defendants 
provide to their own employees, customers, suppliers, agents or 
licensees, and all research data concerning historic and current 
research and development efforts relating to the Veyance North America 
Air Springs Business (including, but not limited to, product testing, 
designs of experiments, and the results of successful and unsuccessful 
designs and experiments);
    b. The trade names ``SUPER-CUSHION'' and ``SPRINGRIDE'', or any 
derivation thereof; and
    c. A non-exclusive, perpetual, worldwide, royalty-free license for 
all non-U.S. patents and pending patent applications for use in the 
design, development, manufacture, marketing, servicing, and/or sale of 
Air Springs produced for locations outside of North America, which 
shall be transferable only to any future purchaser of all or 
substantially all of the Veyance North America Air Springs Business. 
Any improvements or modifications to these intangible assets developed 
by the Acquirer of the Veyance North America Air Springs Business shall 
be owned solely by that Acquirer.
    G. ``Warehouses'' means the Air Springs storage and handling assets 
used for the Veyance North America Air Springs Business located at:
    1. Circuito Exportacion 412, Parque Industrial Tres Naciones, San 
Luis Potosi, SLP, CP 78395;
    2. 1957 Route DD, Moberly, Missouri 65270; and
    3. 237 Brunel Road, Mississauga, Ontario L4Z 1T5, Canada.

III. Applicability

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

[[Page 76382]]

Acquirer of the assets divested pursuant to this Final Judgment.

IV. Divestitures

    A. Defendants are ordered and directed, within ninety (90) calendar 
days after the filing of the Complaint in this matter, or five (5) 
calendar days after notice of the entry of this Final Judgment by the 
Court, whichever is later, to divest the Divestiture Assets in a manner 
consistent with this Final Judgment to an Acquirer acceptable to the 
United States, in its sole discretion. The United States, in its sole 
discretion, may agree to one or more extensions of this time period not 
to exceed sixty (60) calendar days in total, and shall notify the Court 
in such circumstances. Defendants agree to use their best efforts to 
divest the Divestiture Assets as expeditiously as possible.
    B. In accomplishing the divestiture ordered by this Final Judgment, 
defendants promptly shall make known, by usual and customary means, the 
availability of the Divestiture Assets. Defendants shall inform any 
person making an inquiry regarding a possible purchase of the 
Divestiture Assets that they are being divested pursuant to this Final 
Judgment and provide that person with a copy of this Final Judgment. 
Defendants shall offer to furnish to all prospective Acquirers, subject 
to customary confidentiality assurances, all information and documents 
relating to the Divestiture Assets customarily provided in a due 
diligence process except such information or documents subject to the 
attorney-client privileges or work-product doctrine. Defendants shall 
make available such information to the United States at the same time 
that such information is made available to any other person.
    C. Defendants shall provide the Acquirer and the United States 
information relating to the personnel involved in the development, 
manufacture and sale of Air Springs to enable the Acquirer to make 
offers of employment. Defendants shall not interfere with any 
negotiations by the Acquirer to employ any defendant employee whose 
primary responsibility is the development, manufacture and sale of Air 
Springs, and shall not interfere with negotiations by the Acquirer to 
employ the following personnel (1) Head of Air Springs Business, (2) 
Head of Sales and Marketing, (3) a Chief Chemist for Air Springs, and 
(4) aftermarket sales personnel.
    D. Defendants shall permit prospective Acquirers of the Divestiture 
Assets to have reasonable access to personnel and to make inspections 
of the physical facilities of the Divestiture Assets; access to any and 
all environmental, zoning, and other permit documents and information; 
and access to any and all financial, operational, or other documents 
and information customarily provided as part of a due diligence 
process.
    E. Defendants shall warrant to the Acquirer that each asset will be 
operational on the date of sale.
    F. Defendants shall not take any action that will impede in any way 
the permitting, operation, or divestiture of the Divestiture Assets.
    G. At the option of the Acquirer, Continental shall enter into a 
supply contract for compounds and calendered materials (rubberized 
fabric used in the production of Air Springs) sufficient to meet all or 
part of the Acquirer's needs for a period of up to one (1) year. The 
terms and conditions of any contractual arrangement meant to satisfy 
this provision must be reasonably related to market conditions for 
compounds and calendered fabrics. The United States, in its sole 
discretion, may approve one or more extensions of the term of this 
supply contract for a period totaling not more than one (1) additional 
year. If the Acquirer seeks an extension of the term of this supply 
contract, it shall so notify the United States in writing at least 
three (3) months prior to the date the supply contract expires. If the 
United States approves such an extension, it shall so notify the 
Acquirer in writing at least two (2) months prior to the date the 
supply contract expires.
    H. At the option of the Acquirer, Continental shall enter into a 
transition services agreement with the Acquirer for back office and 
technical support sufficient to meet all or part of the Acquirer's 
needs for a period of up to six (6) months. The United States, in its 
sole discretion, may approve one or more extensions of this agreement 
for a total of up to an additional six (6) months. The terms and 
conditions of any contractual arrangement intended to satisfy this 
provision must be reasonably related to the market value of the 
expertise of the personnel providing any needed assistance.
    I. Defendants shall warrant to the Acquirer that there are no 
material defects in the environmental, zoning or other permits 
pertaining to the operation of each asset, and that following the sale 
of the Divestiture Assets, defendants will not undertake, directly or 
indirectly, any challenge to the environmental, zoning, or other 
permits relating to the operation of the Divestiture Assets.
    J. At the option of the Acquirer, defendants shall enter into a 
sublease for the first and third floors of the Fairlawn Facility for a 
period of six (6) months. The United States, in its sole discretion, 
may approve one or more extensions of this sublease for a total of up 
to an additional six (6) months.
    K. Defendants shall create physical barriers that segregate the Air 
Springs operations at the Fairlawn Facility from the portions of the 
Fairlawn Facility that will remain occupied by defendants. Defendants' 
areas and operations at the Fairlawn Facility shall be secured 
separately from those of the Acquirer so that the Acquirer's areas and 
operations cannot be accessed by defendants and defendants' areas and 
operations cannot be accessed by the Acquirer, other than for facility 
repair, support, and maintenance pursuant to a lease or other lease 
agreement.
    L. At the option of the Acquirer, defendants will provide the 
Acquirer with complete and sole access to the laboratory and all the 
equipment located on the second floor of the Fairlawn Facility for a 
continuous pre-scheduled, 48-hour period each week.
    M. Defendants will program the equipment located on the second 
floor of the Fairlawn Facility to ensure that no results related to Air 
Springs testing are stored on the equipment and that such results 
instead will be routed only to a server designated by the Acquirer.
    N. At the option of the Acquirer, defendants shall enter into a 
sublease with the Acquirer for space at any or all of the Warehouses.
    O. Defendants shall create physical barriers that segregate the Air 
Springs areas at each of the Warehouses from the portions of each 
Warehouse that will remain occupied by defendants. Defendants' areas 
and operations at the Warehouses shall be secured with access locks 
separate from those of the Acquirer so that the Acquirer's areas and 
operations cannot be accessed by defendants and defendants' areas and 
operations cannot be accessed by the Acquirer.
    P. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section IV, or by a Divestiture Trustee 
appointed pursuant to Section V, of this Final Judgment, shall include 
the entire Divestiture Assets, and shall be accomplished in such a way 
as to satisfy the United States, in its sole discretion, that the 
Divestiture Assets can and will be used by the Acquirer(s) as part of a 
viable, ongoing business in the development, manufacture and sale of 
commercial vehicle Air Springs to customers in North America. The 
divestitures, whether pursuant to Section IV or Section V of this Final 
Judgment,

[[Page 76383]]

    (1) shall be made to an Acquirer that, in the United States' sole 
judgment, has the intent and capability (including the necessary 
managerial, operational, technical and financial capability) of 
competing effectively in the development, manufacture, and sale of 
commercial vehicle Air Springs to customers in North America; and
    (2) shall be accomplished so as to satisfy the United States, in 
its sole discretion, that none of the terms of any agreement between an 
Acquirer and defendants give defendants the ability unreasonably to 
raise the Acquirer's costs, to lower the Acquirer's efficiency, or 
otherwise to interfere in the ability of the Acquirer to compete 
effectively.

V. Appointment of Divestiture Trustee

    A. If defendants have not divested the Divestiture Assets within 
the time period specified in Section IV(A), defendants shall notify the 
United States of that fact in writing. Upon application of the United 
States, the Court shall appoint a Divestiture Trustee selected by the 
United States and approved by the Court to effect the divestiture of 
the Divestiture Assets.
    B. After the appointment of a Divestiture Trustee becomes 
effective, only the Divestiture Trustee shall have the right to sell 
the Divestiture Assets. The Divestiture Trustee shall have the power 
and authority to accomplish the divestiture to an Acquirer acceptable 
to the United States at such price and on such terms as are then 
obtainable upon reasonable effort by the Divestiture Trustee, subject 
to the provisions of Sections IV, V, and VI of this Final Judgment, and 
shall have such other powers as this Court deems appropriate. Subject 
to Section V(D) of this Final Judgment, the Divestiture Trustee may 
hire at the cost and expense of defendants any investment bankers, 
attorneys, or other agents, who shall be solely accountable to the 
Divestiture Trustee, reasonably necessary in the Divestiture Trustee's 
judgment to assist in the divestiture. Any such investment bankers, 
attorneys, or other agents shall serve on such terms and conditions as 
the United States approves including confidentiality requirements and 
conflict of interest certifications.
    C. Defendants shall not object to a sale by the Divestiture Trustee 
on any ground other than the Divestiture Trustee's malfeasance. Any 
such objections by defendants must be conveyed in writing to the United 
States and the Divestiture Trustee within ten (10) calendar days after 
the Divestiture Trustee has provided the notice required under Section 
VI.
    D. The Divestiture Trustee shall serve at the cost and expense of 
defendants pursuant to a written agreement, on such terms and 
conditions as the United States approves including confidentiality 
requirements and conflict of interest certifications. The Divestiture 
Trustee shall account for all monies derived from the sale of the 
assets sold by the Divestiture Trustee and all costs and expenses so 
incurred. After approval by the Court of the Divestiture Trustee's 
accounting, including fees for its services yet unpaid and those of any 
professionals and agents retained by the Divestiture Trustee, all 
remaining money shall be paid to defendants and the trust shall then be 
terminated. The compensation of the Divestiture Trustee and any 
professionals and agents retained by the Divestiture Trustee shall be 
reasonable in light of the value of the Divestiture Assets and based on 
a fee arrangement providing the Divestiture Trustee with an incentive 
based on the price and terms of the divestiture and the speed with 
which it is accomplished, but timeliness is paramount. If the 
Divestiture Trustee and defendants are unable to reach agreement on the 
Divestiture Trustee's or any agents' or consultants' compensation or 
other terms and conditions of engagement within 14 calendar days of 
appointment of the Divestiture Trustee, the United States may, in its 
sole discretion, take appropriate action, including making a 
recommendation to the Court. The Divestiture Trustee shall, within 
three (3) business days of hiring any other professionals or agents, 
provide written notice of such hiring and the rate of compensation to 
defendants and the United States.
    E. Defendants shall use their best efforts to assist the 
Divestiture Trustee in accomplishing the required divestiture. The 
Divestiture Trustee and any consultants, accountants, attorneys, and 
other agents retained by the Divestiture Trustee shall have full and 
complete access to the personnel, books, records, and facilities of the 
business to be divested, and defendants shall develop financial and 
other information relevant to such business as the Divestiture Trustee 
may reasonably request, subject to reasonable protection for trade 
secret or other confidential research, development, or commercial 
information or any applicable privileges. Defendants shall take no 
action to interfere with or to impede the Divestiture Trustee's 
accomplishment of the divestiture.
    F. After its appointment, the Divestiture Trustee shall file 
monthly reports with the United States and, as appropriate, the Court 
setting forth the Divestiture Trustee's efforts to accomplish the 
divestiture ordered under this Final Judgment. To the extent such 
reports contain information that the Divestiture Trustee deems 
confidential, such reports shall not be filed in the public docket of 
the Court. Such reports shall include the name, address, and telephone 
number of each person who, during the preceding month, made an offer to 
acquire, expressed an interest in acquiring, entered into negotiations 
to acquire, or was contacted or made an inquiry about acquiring, any 
interest in the Divestiture Assets, and shall describe in detail each 
contact with any such person. The Divestiture Trustee shall maintain 
full records of all efforts made to divest the Divestiture Assets.
    G. If the Divestiture Trustee has not accomplished the divestiture 
ordered under this Final Judgment within six months after its 
appointment, the Divestiture Trustee shall promptly file with the Court 
a report setting forth (1) the Divestiture Trustee's efforts to 
accomplish the required divestiture, (2) the reasons, in the 
Divestiture Trustee's judgment, why the required divestiture has not 
been accomplished, and (3) the Divestiture Trustee's recommendations. 
To the extent such reports contains information that the Divestiture 
Trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. The Divestiture Trustee shall at the same 
time furnish such report to the United States which shall have the 
right to make additional recommendations consistent with the purpose of 
the trust. The Court thereafter shall enter such orders as it shall 
deem appropriate to carry out the purpose of the Final Judgment, which 
may, if necessary, include extending the trust and the term of the 
Divestiture Trustee's appointment by a period requested by the United 
States.
    H. If the United States determines that the Divestiture Trustee has 
ceased to act or failed to act diligently or in a reasonably cost-
effective manner, it may recommend the Court appoint a substitute 
Divestiture Trustee.

VI. Notice of Proposed Divestiture

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, defendants or the Divestiture Trustee, whichever 
is then responsible for effecting the divestiture required herein, 
shall notify the United States of any proposed divestiture required by 
Section IV or V of this Final Judgment. If the Divestiture Trustee is 
responsible, it shall similarly notify defendants. The notice shall set 
forth

[[Page 76384]]

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

VII. Financing

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

VIII. Hold Separate

    Until the divestiture required by this Final Judgment has been 
accomplished, defendants shall take all steps necessary to comply with 
the Hold Separate Stipulation and Order entered by this Court. 
Defendants shall take no action that would jeopardize the divestiture 
ordered by this Court.

IX. Affidavits

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

X. Appointment of Monitoring Trustee

    A. Upon application of the United States, the Court shall appoint a 
Monitoring Trustee selected by the United States and approved by the 
Court.
    B. The Monitoring Trustee shall have the power and authority to 
monitor defendants' compliance with the terms of this Final Judgment 
and the Hold Separate Stipulation and Order entered by this Court, and 
shall have such other powers as this Court deems appropriate. The 
Monitoring Trustee shall be required to investigate and report on the 
Defendants' compliance with this Final Judgment and the Hold Separate 
Stipulation and Order and the defendants' progress toward effectuating 
the purposes of this Final Judgment, including but not limited to the 
terms of a supply contract for compounds and calendered materials, a 
transition services agreement, and the physical segregation of the 
Fairlawn Facility and the Warehouses.
    C. Subject to Section X(E) of this Final Judgment, the Monitoring 
Trustee may hire at the cost and expense of defendants any consultants, 
accountants, attorneys, or other agents, who shall be solely 
accountable to the Monitoring Trustee, reasonably necessary in the 
Monitoring Trustee's judgment. Any such consultants, accountants, 
attorneys, or other agents shall serve on such terms and conditions as 
the United States approves including confidentiality requirements and 
conflict of interest certifications.
    D. Defendants shall not object to actions taken by the Monitoring 
Trustee in fulfillment of the Monitoring Trustee's responsibilities 
under any Order of this Court on any ground other than the Monitoring 
Trustee's malfeasance. Any such objections by defendants must be 
conveyed in writing to the United States and the Monitoring Trustee 
within ten (10) calendar days after the action taken by the Monitoring 
Trustee giving rise to the defendants' objection.
    E. The Monitoring Trustee shall serve at the cost and expense of 
defendants pursuant to a written agreement with defendants and on such 
terms and conditions as the United States approves including 
confidentiality requirements and conflict of interest certifications. 
The compensation of the Monitoring Trustee and any consultants, 
accountants, attorneys, and other agents retained by the Monitoring 
Trustee shall be on reasonable and customary terms commensurate with 
the individuals' experience and responsibilities. If the Monitoring 
Trustee and defendants are unable to reach agreement on the Monitoring 
Trustee's or any agents' or consultants' compensation or other terms 
and conditions of engagement within 14 calendar days of appointment of 
the Monitoring Trustee, the United States may, in its sole discretion, 
take appropriate action, including making a recommendation to the 
Court. The Monitoring Trustee shall, within three (3) business days of 
hiring any

[[Page 76385]]

consultants, accountants, attorneys, or other agents, provide written 
notice of such hiring and the rate of compensation to defendants and 
the United States.
    F. The Monitoring Trustee shall have no responsibility or 
obligation for the operation of defendants' businesses.
    G. Defendants shall use their best efforts to assist the Monitoring 
Trustee in monitoring defendants' compliance with their individual 
obligations under this Final Judgment and under the Hold Separate 
Stipulation and Order. The Monitoring Trustee and any consultants, 
accountants, attorneys, and other agents retained by the Monitoring 
Trustee shall have full and complete access to the personnel, books, 
records, and facilities relating to compliance with this Final 
Judgment, subject to reasonable protection for trade secret or other 
confidential research, development, or commercial information or any 
applicable privileges. Defendants shall take no action to interfere 
with or to impede the Monitoring Trustee's accomplishment of its 
responsibilities.
    H. After its appointment, the Monitoring Trustee shall file reports 
monthly, or more frequently as needed, with the United States, and, as 
appropriate, the Court setting forth defendants' efforts to comply with 
its obligations under this Final Judgment and under the Hold Separate 
Stipulation and Order. To the extent such reports contain information 
that the Monitoring Trustee deems confidential, such reports shall not 
be filed in the public docket of the Court.
    I. The Monitoring Trustee shall serve until the divestiture of all 
the Divestiture Assets is finalized pursuant to either Section IV or 
Section V of this Final Judgment and the expiration of any continuing 
transition services agreement.
    J. If the United States determines that the Monitoring Trustee has 
ceased to act or failed to act diligently or in a reasonably cost-
effective manner, it may recommend the Court appoint a substitute 
Monitoring Trustee.

XI. Compliance Inspection

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

XII. No Reacquisition

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

XIII. Retention of Jurisdiction

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

XIV. Expiration of Final Judgment

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

XV. Public Interest Determination

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

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

Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16
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United States District Judge

[FR Doc. 2014-29862 Filed 12-19-14; 8:45 am]
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