[Federal Register Volume 83, Number 73 (Monday, April 16, 2018)]
[Notices]
[Pages 16382-16396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-07840]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Knorr-Bremse AG and Westinghouse Air Brake 
Technologies Corporation; Proposed Final Judgment and Competitive 
Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Stipulation and 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. Knorr-Bremse AG and Westinghouse Air Brake 
Technologies Corporation, Civil Action No. 1:18-cv-00747. On April 3, 
2018, the United States filed a Complaint alleging that Knorr-Bremse AG 
(``Knorr'') and Westinghouse Air Brake Technologies Corporation 
(``Wabtec'') entered into unlawful agreements not to poach employees in 
violation of Section 1 of the Sherman Act, 15 U.S.C. 1. The proposed 
Final Judgment, filed at the same time as the Complaint, requires Knorr 
and Wabtec to refrain from entering into, maintaining, or enforcing 
unlawful agreements not to compete for employees.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's website at http://www.justice.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.

[[Page 16383]]

    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 Antitrust Division's website, 
filed with the Court, and, under certain circumstances, published in 
the Federal Register. Comments should be directed to Maribeth Petrizzi, 
Chief, Defense, Industrials, and Aerospace 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. Knorr-Bremse AG, Moosacher Str. 80, 80809 
M[uuml]nchen, Germany, and Westinghouse Air Brake Technologies 
Corporation, 1001 Airbrake Avenue, Wilmerding, PA 15148, Defendants.

Civil Action No: 1:18-cv-00747
Judge: Colleen Kollar-Kotelly

COMPLAINT

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil antitrust 
action to obtain equitable relief against Defendants Knorr-Bremse AG 
and Westinghouse Air Brake Technologies Corporation. The United States 
alleges as follows:

I. INTRODUCTION

    1. This action challenges under Section 1 of the Sherman Act, 15 
U.S.C. Sec.  1, a series of unlawful agreement between three of world's 
largest rail equipment suppliers to restrain competition in the labor 
markets in which they compete for employees.
    2. Defendants Knorr-Bremse AG (``Knorr'') and Westinghouse Air 
Brake Technologies Corporation (``Wabtec'') are each other's top 
competitors for rail equipment used in freight and passenger rail 
applications. They also compete with each other to attract, hire, and 
retain various skilled employees, including rail industry project 
managers, engineers, sales executives, business unit heads, and 
corporate officers. Prior to its acquisition by Wabtec in November 
2016, Faiveley Transport S.A. (``Faiveley'') also competed with Knorr 
and Wabtec to attract, hire, and retain employees.
    3. The unlawful agreements between Knorr, Wabtec, and Faiveley 
included promises and commitments not to solicit, recruit, hire without 
prior approval, or otherwise compete for employees (collectively, ``no-
poach agreements''). The no-poach agreements were not reasonably 
necessary to any separate, legitimate business transaction or 
collaboration between the companies. They spanned several years and 
were monitored and enforced by high-level company executives, and had 
the effect of unlawfully allocating employees between the companies, 
resulting in harm to U.S. workers and consumers.
    4. Beginning no later than 2009, senior executives at Knorr and 
Wabtec, including executives at several of their U.S. subsidiaries, 
entered into no-poach agreements with one another. Beginning no later 
than 2011, senior executives at certain U.S. subsidiaries of Knorr and 
Faiveley entered into a no-poach agreement with one another. And 
beginning no later than January 2014, senior executives at the U.S. 
passenger rail businesses of Wabtec and Faiveley entered into a no-
poach agreement with one another.
    5. By entering into no-poach agreements, Knorr, Wabtec, and 
Faiveley substantially reduced competition for employees to the 
detriment of workers in this important U.S. industry. These no-poach 
agreements denied American rail industry workers access to better job 
opportunities, restricted their mobility, and deprived them of 
competitively significant information that they could have used to 
negotiate for better terms of employment. Moreover, these no-poach 
agreements disrupted the efficient allocation of labor that comes from 
Knorr, Wabtec, and Faiveley competing for rail industry employees.
    6. Defendants' no-poach agreements are per se unlawful restraints 
of trade that violate Section 1 of the Sherman Act, 15 U.S.C. Sec.  1. 
The United States seeks an order prohibiting such agreements and other 
relief.

II. JURISDICTION AND VENUE

    7. Defendants Knorr and Wabtec develop, manufacture, and sell rail 
equipment into the United States. In furtherance of each Defendant's 
U.S. business activities, Knorr and Wabtec recruit and hire skilled 
employees in the United States. Such activities, including the employee 
recruiting and hiring activities that are the subject of this 
Complaint, are in the flow of and substantially affect interstate 
commerce. The Court has subject matter jurisdiction under Section 4 of 
the Sherman Act, 15 U.S.C. Sec.  4, and under 28 U.S.C. Sec. Sec.  1331 
and 1337, to prevent and restrain Defendants from violating Section 1 
of the Sherman Act, 15 U.S.C. Sec.  1.
    8. Defendants have consented to venue and personal jurisdiction in 
this district. Venue is proper in this district under Section 12 of the 
Clayton Act, 15 U.S.C. Sec.  22, and 28 U.S.C. Sec.  1391.

III. DEFENDANTS

    9. Defendant Knorr is a privately-owned German company with its 
headquarters in Munich, Germany. Knorr is a global leader in the 
development, manufacture, and sale of rail and commercial vehicle 
equipment. In 2017, Knorr had annual revenues of approximately $7.7 
billion.
    10. Knorr holds several wholly-owned subsidiaries in the United 
States. Knorr Brake Company is a Delaware corporation with its 
headquarters in Westminster, Maryland. It manufactures train control, 
braking, and door equipment used on passenger rail vehicles. New York 
Air Brake Corporation is a Delaware corporation with its headquarters 
in Watertown, New York. It manufactures railway air brakes and other 
rail equipment used on freight trains. Knorr Brake Company and New York 
Air Brake Corporation are wholly-owned subsidiaries of Knorr.
    11. Defendant Wabtec is a Delaware corporation headquartered in 
Wilmerding, Pennsylvania. With over 100 subsidiaries, Wabtec is the 
world's largest provider of rail equipment and services with global 
sales of $3.9 billion in 2017. It is an industry leader in the freight 
and passenger rail segments of the rail industry. Wabtec Passenger 
Transit is a business unit of Wabtec that develops, manufactures, and 
sells rail equipment and services for passenger rail applications. It 
is based in Spartanburg, South Carolina.
    12. On November 30, 2016, Wabtec acquired Faiveley, which had been 
a French soci[eacute]t[eacute] anonyme based in Gennevilliers, France. 
Before the acquisition, Faiveley was the world's third-largest rail 
equipment supplier behind Wabtec and Knorr. Faiveley had employees in 
24 countries, including at six U.S. locations. It developed, 
manufactured, and sold passenger and freight rail equipment to 
customers in Europe, Asia, and North America, including the United 
States, with revenues of approximately [euro]1.2 billion in 2016. In 
the United States, Faiveley conducted business primarily through 
Faiveley Transport North America, a wholly-owned subsidiary of Faiveley 
and a New York corporation headquartered in Greenville, South Carolina. 
Certain Faiveley recruiting activities conducted prior to its 
acquisition by Wabtec are at issue in this Complaint.

[[Page 16384]]

IV. TRADE AND COMMERCE

    13. Knorr and Wabtec (which now includes Faiveley) are the world's 
largest rail equipment suppliers and each other's top rival in the 
development, manufacture, and sale of equipment used in freight and 
passenger rail applications.
    14. Defendants also compete with one another and with firms at 
other tiers of the rail industry supply chain to attract, hire, and 
retain skilled employees by offering attractive salaries, benefits, 
training, advancement opportunities, and other favorable terms of 
employment.
    15. There is high demand for and limited supply of skilled 
employees who have rail industry experience. As a result, firms in the 
rail industry can experience vacancies of critical roles for months 
while they try to recruit and hire an individual with the requisite 
skills, training, and experience for a job opening. Employees of other 
rail industry participants, including the employees of Defendants' 
customers, competitors, and suppliers, are key sources of potential 
talent to fill these openings.
    16. Firms in the rail industry employ a variety of recruiting 
techniques, including using internal and external recruiters to 
identify, solicit, recruit, and otherwise help hire potential 
employees. Rail companies also receive direct applications from 
individuals interested in potential employment opportunities. Directly 
soliciting employees from another rail industry participant is a 
particularly efficient and effective method of competing for qualified 
employees. Soliciting involves communicating directly--whether by 
phone, email, social and electronic networking, or in person--with 
another firm's employee who has not otherwise applied for a job 
opening. Such direct solicitation can be performed by individuals of 
the company seeking to fill the position or by outside recruiters 
retained to identify potential employees on the company's behalf. Firms 
in the rail industry rely on direct solicitation of employees of other 
rail companies because those individuals have the specialized skills 
necessary and may be unresponsive to other methods of recruiting. In 
addition, the rail industry is an insular one in which employees at 
different firms form long-term relationships and often look to their 
professional networks to fill a vacancy.
    17. In a competitive labor market, rail industry employers compete 
with one another to attract highly-skilled talent for their employment 
needs. This competition benefits employees because it increases the 
available job opportunities that employees learn about. It also 
improves an employee's ability to negotiate for a better salary and 
other terms of employment. Defendants' no-poach agreements, however, 
restrained competition for employees and disrupted the normal 
bargaining and price-setting mechanisms that apply in the labor market.

V. THE UNLAWFUL AGREEMENTS

    18. Over a period spanning several years, Wabtec, Knorr, and 
Faiveley entered into similar no-poach agreements with one another to 
eliminate competition between them for employees. These agreements were 
executed and enforced by senior company executives and reached several 
of the companies' U.S. subsidiaries. The no-poach agreements were not 
reasonably necessary to any separate, legitimate business transaction 
or collaboration between the companies.

I. Wabtec--Knorr Agreements

    19. Wabtec and Knorr entered into pervasive no-poach agreements 
that spanned multiple business units and jurisdictions. Senior 
executives at the companies' global headquarters and their respective 
U.S. passenger and freight rail businesses entered into no-poach 
agreements that involved promises and commitments not to solicit or 
hire one another's employees. These no-poach agreements primarily 
affected recruiting for project management, engineering, sales, and 
corporate officer roles and restricted each company from soliciting 
current employees from the other's company. At times, these agreements 
were operationalized as agreements not to hire current employees from 
one another without prior approval.
    20. Beginning no later than 2009, Wabtec's and Knorr Brake 
Company's most senior executives entered into an express no-poach 
agreement and then actively managed it with each other through direct 
communications. For example, in a letter dated January 28, 2009, a 
director of Knorr Brake Company wrote to a senior executive at Wabtec's 
headquarters, ``[Y]ou and I both agreed that our practice of not 
targeting each other's personnel is a prudent cause for both companies. 
As you so accurately put it, `we compete in the market.' '' Although 
the no-poach agreement was between Wabtec and Knorr's U.S. passenger 
rail subsidiary, it was well-known to senior executives at the parent 
companies, including top Knorr executives in Germany who were included 
in key communications about the no-poach agreement. In furtherance of 
their agreement, Wabtec and Knorr Brake Company informed their outside 
recruiters not to solicit employees from the other company.
    21. In some instances, Wabtec and Knorr Brake Company's no-poach 
agreement foreclosed the consideration of an unsolicited applicant 
employed by Wabtec or Knorr Brake Company without prior approval of the 
other firm. For example, in a 2010 internal communication, a senior 
executive at Knorr Brake Company stated that he would not even consider 
a Wabtec candidate who applied to Knorr Brake Company without the 
permission of his counterpart at Wabtec.
    22. Wabtec and Knorr's no-poach agreements also reached the 
companies' U.S. freight rail businesses. In July 2012, for example, a 
senior executive at New York Air Brake Corporation informed a human 
resources manager that he could not consider a Wabtec employee for a 
job opening due to the no-poach agreement between Wabtec and Knorr.
    23. Wabtec's and Knorr's senior executives actively policed 
potential breaches of their companies' no-poach agreements and directly 
communicated with one another to ensure adherence to the agreements. 
For example, in February 2016, a member of Knorr's executive board 
complained directly to an executive officer at Wabtec regarding an 
external recruiter who allegedly solicited a Knorr Brake Company 
employee for an opening at Wabtec. The Wabtec executive investigated 
the matter internally and reported back to Knorr that Wabtec's outside 
recruiter was responsible for the contact and that he had instructed 
the recruiter to terminate his activities with the candidate and 
refrain from soliciting Knorr employees going forward due to the 
existing no-poach agreement between the companies.

II. Knorr--Faiveley Agreement

    24. Beginning no later than 2011, senior executives at Knorr Brake 
Company and Faiveley Transport North America reached an express no-
poach agreement that involved promises and commitments to contact one 
another before pursuing an employee of the other company. In October 
2011, a senior executive at Knorr Brake Company explained in an email 
to a high-level executive at Knorr-Bremse AG that he had a discussion 
with an executive at Faiveley's U.S. subsidiary that ``resulted in an 
agreement between us that we do not poach each other's employees. We 
agreed to talk if there was one trying to get a job[.]'' Executives at 
Knorr Brake Company and Faiveley's

[[Page 16385]]

U.S. subsidiary actively managed the agreement with each other through 
direct communications.
    25. In or about 2012, a senior executive at Knorr Brake Company 
discussed the companies' no-poach agreement with an executive at 
Faiveley Transport North America. This discussion took place at a trade 
show in Berlin, Germany. Subsequently, the executives enforced the no-
poach agreement with each other through direct communications. This no-
poach agreement was known to other senior executives at the companies, 
who directly communicated with one another to ensure adherence to the 
agreement. For example, in October 2012, executives at Faiveley 
Transport North America stated in an internal communication that they 
were required to contact Knorr Brake Company before hiring a U.S. train 
brake engineer.
    26. The companies continued their no-poach agreement until at least 
2015. After Wabtec announced its proposed acquisition of Faiveley in 
July 2015, a high-level Knorr executive directed the company's 
recruiters in the United States and other jurisdictions to raid 
Faiveley for high-potential employees.

III. Wabtec--Faiveley Agreement

    27. Beginning no later than January 2014, senior executives at 
Wabtec Passenger Transit and Faiveley Transport North America entered 
into a no-poach agreement in which the companies agreed not to hire 
each other's employees without prior notification to and approval from 
the other company.
    28. Wabtec Passenger Transit and Faiveley Transport North America 
executives actively managed and enforced their agreement with each 
other through direct communications. For example, in January 2014, 
Wabtec Passenger Transit executives refused to engage in hiring 
discussions with a U.S.-based project manager at Faiveley Transport 
North America without first getting permission from Faiveley Transport 
North America executives. In an internal email to his colleagues, a 
Wabtec Passenger Transit executive explained that the candidate ``is a 
good guy, but I don't want to violate my own agreement with [Faiveley 
Transport North America].'' Only after receiving permission from 
Faiveley Transport North America did Wabtec Passenger Transit hire the 
project manager. One month later, a Wabtec Passenger Transit senior 
executive informed his staff that hiring Faiveley Transport North 
America's employees was ``off the table'' due to the agreement with 
Faiveley Transport North America not to engage in hiring discussions 
with each other's employees without the other's prior approval.
    29. In July 2015, Wabtec and Faiveley publicly announced their 
intent to merge. Wabtec closed its acquisition of Faiveley on November 
30, 2016. Presently, Faiveley is a wholly-owned subsidiary of Wabtec.

VI. VIOLATION ALLEGED

    30. Defendants are direct competitors in certain labor markets for 
skilled rail industry employees, including project managers, engineers, 
sales executives, and corporate officers. Defendants entered into 
anticompetitive no-poach agreements that reduced competition in the 
labor markets in which they compete and, in doing so, disrupted the 
typical bargaining and negotiation between employees and employers that 
ordinarily would take place in these labor markets.
    31. Defendants' no-poach agreements were facially anticompetitive 
because they eliminated a significant form of competition to attract 
skilled labor in the U.S. rail industry. These agreements denied 
employees access to better job opportunities, restricted their 
mobility, and deprived them of competitively significant information 
that they could have used to negotiate for better terms of employment.
    32. Accordingly, Defendants' no-poach agreements constitute 
unreasonable restraints of trade that are per se unlawful under Section 
1 of the Sherman Act, 15 U.S.C. Sec.  1.

VII. REQUEST FOR RELIEF

    33. The United States requests that this Court:
    (a) adjudge and decree that Defendants' no-poach agreements 
constitute per se illegal restraints of trade and interstate commerce 
in violation of Section 1 of the Sherman Act;
    (b) enjoin and restrain Defendants from enforcing or adhering to 
existing no-poach agreements that unreasonably restrict competition for 
employees;
    (c) permanently enjoin and restrain each Defendant from 
establishing a no-poach agreement except as prescribed by the Court;
    (d) award the United States such other relief as the Court may deem 
just and proper to redress and prevent recurrence of the alleged 
violations and to dissipate the anticompetitive effects of the illegal 
no-poach agreements entered into by Defendants; and
    (e) award the United States the costs of this action.

Dated: April 3, 2018
Respectfully submitted,
FOR PLAINTIFF UNITED STATES OF AMERICA

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MAKAN DELRAHIM
Assistant Attorney General for Antitrust
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MARIBETH PETRIZZI (D.C. Bar #435204)
Chief
Defense, Industrials, and Aerospace Section
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ANDREW C. FINCH
Principal Deputy Assistant Attorney General
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DAVID E. ALTSCHULER (D.C. Bar #983023)
Assistant Chief
Defense, Industrials, and Aerospace Section
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BERNARD A. NIGRO, JR.
(D.C. Bar #412357)
Deputy Assistant Attorney General
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DOHA MEKKI*
DAN MONAHAN
GABRIELLA MOSKOWITZ (D.C. Bar #1044309)
Trial Attorneys
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PATRICIA A. BRINK
Director of Civil Enforcement
United States Department of Justice Antitrust Division
Defense, Industrials, and Aerospace Section
450 Fifth Street NW, Suite 8700
Washington, D.C. 20530
Telephone: (202) 598-8023
Facsimile: (202) 514-9033
Email: [email protected]

*Lead Attorney to be Noticed

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,

Plaintiff,

v.

KNORR-BREMSE AG,

and

WESTINGHOUSE AIR BRAKE
TECHNOLOGIES CORPORATION,

Defendants.

Civil Action No: 1:18-cv-00747
Judge: Colleen Kollar-Kotelly

[PROPOSED] FINAL JUDGMENT

    WHEREAS, Plaintiff, United States of America, filed its Complaint 
on April 3, 2018, alleging that Defendants Knorr-Bremse AG and 
Westinghouse Air Brake Technologies Corporation violated Section 1 of 
the Sherman Act, 15 U.S.C. Sec.  1, the United States and the

[[Page 16386]]

Defendants, 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 WHEREAS, this Final Judgment does not constitute any evidence 
against or admission by any party regarding any issue of fact or law;
    AND WHEREAS, the Defendants agree to be bound by the provisions of 
this Final Judgment pending its approval by this Court;
    AND WHEREAS, the United States requires the Defendants to agree to 
undertake certain actions and refrain from certain conduct for the 
purpose of remedying the anticompetitive effects alleged in the 
Complaint;
    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 and each of the 
parties to this action. The Complaint states a claim upon which relief 
may be granted against the Defendants under Section 1 of the Sherman 
Act, as amended, 15 U.S.C. Sec.  1.

II. DEFINITIONS

    As used in this Final Judgment:
    A. ``Knorr'' and ``Defendant'' (when that term is applicable to 
Knorr) means Knorr-Bremse AG, a German corporation with its 
headquarters in Munich, Germany, its successors and assigns, and its 
subsidiaries, divisions, groups, affiliates, partnerships, and joint 
ventures, and their directors, officers, managers, agents, and 
employees.
    B. ``Wabtec'' and ``Defendant'' (when that term is applicable to 
Wabtec) means Westinghouse Air Brake Technologies Corporation, a 
Delaware corporation with its headquarters in Wilmerding, Pennsylvania, 
its successors and assigns, and its subsidiaries (including Faiveley 
Transport), divisions, groups, affiliates, partnerships, and joint 
ventures, and their directors, officers, managers, agents, and 
employees. Wabtec acquired Faiveley Transport S.A., a French 
soci[eacute]t[eacute] anonyme based in Gennevilliers, France, on 
November 30, 2016.
    C. ``Agreement'' means any agreement, understanding, pact, 
contract, or arrangement, formal or informal, oral or written, between 
two or more persons.
    D. ``HR Management'' means directors, officers, and human resource 
employees of the Defendant who supervise or have responsibility for 
recruiting, solicitation, or hiring efforts affecting the United 
States.
    E. ``No-Poach Agreement'' or ``No-Poach Provision'' means any 
Agreement, or part of an Agreement, among two or more employers that 
restrains any person from cold calling, soliciting, recruiting, hiring, 
or otherwise competing for (i) employees located in the United States 
being hired to work in the United States or outside the United States 
or (ii) any employee located outside the United States being hired to 
work in the United States.
    F. ``Person'' means any natural person, corporation, company, 
partnership, joint venture, firm, association, proprietorship, agency, 
board, authority, commission, office, or other business or legal 
entity, whether private or governmental.
    G. ``Management'' means all officers, directors, and board members 
of Knorr-Bremse AG or Westinghouse Air Brake Technologies Corporation, 
or anyone with management or supervisory responsibilities for Knorr's 
or Wabtec's U.S. business or operations.

III. APPLICABILITY

    This Final Judgment applies to Knorr and Wabtec, and to 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.

IV. PROHIBITED CONDUCT

    Each Defendant is enjoined from attempting to enter into, entering 
into, maintaining, or enforcing any No-Poach Agreement or No-Poach 
Provision.

V. CONDUCT NOT PROHIBITED

    A. Nothing in Section IV shall prohibit a Defendant from attempting 
to enter into, entering into, maintaining, or enforcing a reasonable 
Agreement not to solicit, recruit, or hire employees that is ancillary 
to a legitimate business collaboration.
    B. All Agreements not to solicit, recruit, or hire employees 
described in Paragraph V(A) that a Defendant enters into, renews, or 
affirmatively extends after the date of entry of this Final Judgment 
shall:
    1. be in writing and signed by all parties thereto;
    2. identify, with specificity, the Agreement to which it is 
ancillary;
    3. be narrowly tailored to affect only employees who are reasonably 
anticipated to be directly involved in the Agreement;
    4. identify with reasonable specificity the employees who are 
subject to the Agreement; and
    5. contain a specific termination date or event.
    C. Defendants shall not be required to modify or conform, but shall 
not enforce, any No-Poach Provision to the extent it violates this 
Final Judgment if the No-Poach Provision appears in a Defendant's 
agreement in effect as of the date of entry of this Final Judgment (or 
in effect as of the time a Defendant acquires a company that is a party 
to such an Agreement).
    D. Nothing in Section IV shall prohibit a Defendant from 
unilaterally deciding to adopt a policy not to consider applications 
from employees of another person, or to solicit, cold call, recruit, or 
hire employees of another person, provided that Defendants are 
prohibited from:
    1. requesting, encouraging, proposing, or suggesting that any 
person other than the Defendant and its agents adopt, enforce, or 
maintain such a policy; or
    2. notifying the other person that the Defendant has decided to 
adopt such a policy.

VI. REQUIRED CONDUCT

    A. Within ten (10) days of entry of this Final Judgment, each 
Defendant shall appoint an Antitrust Compliance Officer and identify to 
Plaintiff his or her name, business address, and telephone number.
    B. Each Antitrust Compliance Officer shall:
    1. within sixty (60) days of entry of the Final Judgment, furnish 
to all of the Defendant's Management and HR Management a copy of this 
Final Judgment, the Competitive Impact Statement, and a cover letter in 
a form attached as Exhibit 1;
    2. within sixty (60) days of entry of the Final Judgment, in a 
manner to be devised by each Defendant and approved by the United 
States, provide the Defendant's U.S. employees reasonable notice of the 
meaning and requirements of this Final Judgment;
    3. annually brief the Defendant's Management and HR Management on 
the meaning and requirements of this Final Judgment and the antitrust 
laws;
    4. within sixty (60) days of such succession, brief any person who 
succeeds a person in any position identified in Paragraph VI(B)(3);
    5. obtain from each person designated in Paragraph VI(B)(3) or 
VI(B)(4), within sixty (60) days of that person's receipt of the Final 
Judgment, a certification that he or she (i) has read and, to the best 
of his or her ability, understands and agrees to abide by the terms of 
this Final Judgment; (ii) is not aware of any violation of the Final 
Judgment that has not been reported to the Defendant; and (iii) 
understands that any person's failure to comply with this Final

[[Page 16387]]

Judgment may result in an enforcement action for civil or criminal 
contempt of court against the Defendant and/or any person who violates 
this Final Judgment;
    6. maintain (i) a copy of all Agreements covered by Paragraph V(A) 
and (ii) a record of certifications received pursuant to this Section;
    7. annually communicate to the Defendant's employees that they may 
disclose to the Antitrust Compliance Officer, without reprisal, 
information concerning any potential violation of this Final Judgment 
or the antitrust laws;
    8. within sixty (60) days of entry of the Final Judgment, furnish a 
copy of this Final Judgment, the Competitive Impact Statement, and a 
cover letter in a form attached as Exhibit 2 to all recruiting agencies 
or providers of temporary employees or contract workers retained by the 
Defendant for recruiting, soliciting, or hiring efforts affecting the 
Defendant's business activities in the United States at the time of 
entry of the Final Judgment or subsequently retained by the Defendant 
during the term of the Final Judgment; and
    9. furnish a copy of all materials required to be issued pursuant 
to Paragraph VI(B) to the United States within seventy-five (75) days 
of entry of the Final Judgment.
    C. Within thirty (30) days of entry of the Final Judgment, 
Defendants shall furnish notice of this action to the rail industry 
through (1) the placement of an advertisement, at the expense of Knorr 
and Wabtec equally, to be run in one monthly edition of an industry 
trade publication approved by the United States in a form approved by 
the United States prior to publication and containing the text of 
Exhibit 3, and (2) the creation of website pages linked to the 
corporate websites of Knorr and Wabtec, respectively, to be posted for 
no less than one (1) year after the date of entry of the Final 
Judgment, containing the text of Exhibit 3 and links to the Final 
Judgment, Competitive Impact Statement, and Complaint on the Antitrust 
Division's website.
    D. Each Defendant shall:
    1. upon Management or HR Management learning of any violation or 
potential violation of any of the terms and conditions contained in 
this Final Judgment, promptly take appropriate action to terminate or 
modify the activity so as to comply with this Final Judgment and 
maintain all documents related to any violation or potential violation 
of this Final Judgment;
    2. within sixty (60) days of Management or HR Management learning 
of any violation or potential violation of any of the terms and 
conditions contained in this Final Judgment, file with the United 
States a statement describing any violation or potential violation, 
which shall include a description of any communications constituting 
the violation or potential violation, including the date and place of 
the communication, the persons involved, and the subject matter of the 
communication; and
    3. have its CEO or CFO, and its General Counsel, certify to the 
United States annually on the anniversary date of the entry of this 
Final Judgment that the Defendant has complied with the provisions of 
this Final Judgment.

VII. DEFENDANTS' COOPERATION

    A. Each Defendant shall cooperate fully and truthfully with the 
United States in any investigation or litigation examining whether or 
alleging that the Defendant entered into a No-Poach Agreement with any 
other person in violation of Section 1 of the Sherman Act, as amended, 
15 U.S.C. Sec.  1. Each Defendant shall use its best efforts to ensure 
that all current and former officers, directors, employees, and agents 
also fully and promptly cooperate with the United States. The full, 
truthful, and continuing cooperation of each Defendant shall include, 
but not be limited to:
    1. providing sworn testimony to the United States regarding each 
No-Poach Agreement between the Defendant and any other person;
    2. producing, upon request of the United States, all documents and 
other materials, wherever located, not protected under the attorney-
client privilege or the attorney work-product doctrines, in the 
possession, custody, or control of that Defendant, that relate to any 
No-Poach Agreement between that Defendant and any other person;
    3. making available for interview any officers, directors, 
employees, and agents if so requested by the United States; and
    4. testifying at trial and other judicial proceedings fully, 
truthfully, and under oath, subject to the penalties of perjury (18 
U.S.C. Sec.  1621), making a false statement or declaration in court 
proceedings (18 U.S.C. Sec.  1623), contempt (18 U.S.C. Sec.  401-402), 
and obstruction of justice (18 U.S.C. Sec.  1503, et seq.) when called 
upon to do so by the United States;
    5. provided however, that the obligations of each Defendant to 
cooperate fully with the United States as described in this Section 
shall cease upon the conclusion of all the United States' 
investigations and the United States' litigation examining whether or 
alleging that the Defendant agreed to any No-Poach Agreement with any 
other person in violation of Section 1 of the Sherman Act, as amended, 
15 U.S.C. Sec.  1, including exhaustion of all appeals or expiration of 
time for all appeals of any Court ruling in each such matter.
    B. Subject to the full, truthful, and continuing cooperation of 
each Defendant, as defined in Paragraph VII(A), the United States 
agrees that it will not bring any further civil actions or criminal 
charges against that Defendant for any No-Poach Agreement with any 
other person that:
    1. was entered into and terminated on or before the date of the 
filing of the Complaint in this action;
    2. was disclosed to the United States before the date of the filing 
of the Complaint in this action; and
    3. does not in any way constitute or include an agreement to fix 
wages, compensation, or other benefits.
    C. The United States' agreement set forth in Paragraph VII(B) does 
not apply to any acts of perjury or subornation of perjury (18 U.S.C. 
Sec.  1621-22), making a false statement or declaration (18 U.S.C. 
Sec.  1001, 1623), contempt (18 U.S.C. Sec.  401-402), or obstruction 
of justice (18 U.S.C. Sec.  1503, et seq.) by the Defendant or its 
officers, directors, employees, and agents.

VIII. COMPLIANCE INSPECTION

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of determining whether the Final Judgment should be 
modified or vacated, and subject to any legally-recognized privilege, 
from time to time authorized representatives of the United States 
Department of Justice, including consultants and other persons retained 
by the United States, shall, upon the written request of an authorized 
representative of the Assistant Attorney General in charge of the 
Antitrust Division, and on reasonable notice to each Defendant be 
permitted:
    1. access during each Defendant's office hours to inspect and copy, 
or at the option of the United States, to require each Defendant to 
provide electronic or hard copies of, all books, ledgers, accounts, 
records, data, and documents in the possession, custody, or control of 
each Defendant, relating to any matters contained in this Final 
Judgment; and
    2. to interview, either informally or on the record, each 
Defendant's officers, employees, or agents, who may have counsel, 
including their individual counsel, present, regarding such matters. 
The interviews shall be subject to the reasonable convenience of the

[[Page 16388]]

interviewee and without restraint or interference by any Defendant.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, each 
Defendant shall submit written reports or responses to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (including grand jury proceedings), or for the 
purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    D. If at the time information or documents are furnished by a 
Defendant to the United States, the Defendant represents and identifies 
in writing the material in any such information or documents to which a 
claim of protection may be asserted under Rule 26(c)(1)(G) of the 
Federal Rules of Civil Procedure, and the Defendant marks each 
pertinent page of such material, ``Subject to claim of protection under 
Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the 
United States shall give the Defendant ten (10) calendar days' notice 
prior to divulging such material in any legal proceeding (other than a 
grand jury proceeding).

IX. 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.

X. ENFORCEMENT OF FINAL JUDGMENT

    A. The United States retains and reserves all rights to enforce the 
provisions of this Final Judgment, including its right to seek an order 
of contempt from this Court. Defendants agree that in any civil 
contempt action, any motion to show cause, or any similar action 
brought by the United States regarding an alleged violation of this 
Final Judgment, the United States may establish a violation of the 
decree and the appropriateness of any remedy therefor by a 
preponderance of the evidence, and they waive any argument that a 
different standard of proof should apply.
    B. In any enforcement proceeding in which the Court finds that the 
Defendants have violated this Final Judgment, the United States may 
apply to the Court for a one-time extension of this Final Judgment, 
together with such other relief as may be appropriate. In connection 
with any successful effort by the United States to enforce this Final 
Judgment against a Defendant, whether litigated or resolved prior to 
litigation, that Defendant agrees to reimburse the United States for 
any attorneys' fees, experts' fees, and costs incurred in connection 
with that enforcement effort, including the investigation of the 
potential violation.

XI. EXPIRATION OF FINAL JUDGMENT

    Unless this Court grants an extension, this Final Judgment shall 
expire seven (7) years from the date of its entry, except that after 
five (5) years from the date of its entry, this Final Judgment may be 
terminated upon notice by the United States to the Court and the 
Defendants that the continuation of the Final Judgment no longer is 
necessary or in the public interest.

XII. NOTICE

    For purposes of this Final Judgment, any notice or other 
communication required to be provided to the United States shall be 
sent to the person at the address set forth below (or such other 
addresses as the United States may specify in writing to the 
Defendants):

Chief
Defense, Industrials, and Aerospace Section
U.S. Department of Justice
Antitrust Division
450 Fifth Street, NW, Suite 8700
Washington, D.C. 20530

XIII. PUBLIC INTEREST DETERMINATION

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the Procedures of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 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
-----------------------------------------------------------------------
United States District Judge

EXHIBIT 1

[Company Letterhead]

[Name and Address of Antitrust Compliance Officer]

    Re: Agreements Not to Solicit Employees from Other Companies

Dear [XX]:

    I am providing you this notice regarding a judgment recently 
entered by a federal judge in Washington, D.C. affecting our employee 
recruiting, soliciting, and hiring practices. The judgment applies to 
our company and all of its employees, including you, so it is important 
that you understand the obligations it imposes on us. [CEO Name] has 
asked me to let each of you know that [s/he] expects you to take these 
obligations seriously and abide by them.
    The judgment prohibits us from agreeing with any other employer not 
to solicit, cold call, or recruit each other's employees. This includes 
seeking permission or approval before considering or approaching an 
employee of the employer about a potential opportunity or requiring the 
other employer to seek permission or approval from us before 
considering or approaching one of our employees. There are limited 
exceptions to this restriction. You must consult me before determining 
whether a particular employer is subject to an exception under the 
judgment.
    A copy of the court order is attached. Please read it carefully and 
familiarize yourself with its terms. The judgment, rather than the 
above description, is controlling. If you have any questions about the 
judgment or how it affects your recruiting and hiring activities, 
please contact me as soon as possible.
    Thank you for your cooperation.

Sincerely,

[Defendant's Antitrust Compliance Officer]

EXHIBIT 2

[Company Letterhead]

[Name and Address of Antitrust Compliance Officer]

    Re: Agreements Not to Solicit Employees from Other Companies

Dear [XX]:

    I am providing you this notice regarding a judgment recently 
entered by a federal judge in Washington, D.C. affecting [Defendant's] 
employee recruiting, soliciting, and hiring

[[Page 16389]]

practices. The judgment applies to [Defendant] and all of its 
employees, so it is important that you understand the obligations it 
imposes on your recruiting activities for [Defendant]. [CEO Name] has 
asked me to let you know that [s/he] expects you to take these 
obligations seriously and abide by them, irrespective of any contrary 
instructions you may receive from any other employee or officer of 
[Defendant].
    The judgment prohibits [Defendant] from agreeing with another 
employer not to solicit, cold call, or recruit each other's employees. 
This includes seeking permission or approval before considering or 
approaching an employee of the other employer about a potential 
opportunity or requiring the other employer to seek permission or 
approval from [Defendant] before considering or approaching one of 
[Defendant's] employees. There are limited exceptions to this 
restriction. You must consult me before determining whether a 
particular employer is subject to an exception under the judgment. If 
any employee of [Defendant] has asked or asks you to refrain from 
recruiting, cold calling, soliciting, or otherwise approaching an 
employee from a particular company, you must notify me immediately 
before doing so.
    A copy of the court order is attached. Please read it carefully and 
familiarize yourself with its terms. The judgment, rather than the 
above description, is controlling. If you have any questions about the 
judgment or how it affects your recruiting and hiring activities for 
[Defendant], please contact me as soon as possible.
    Thank you for your cooperation.

Sincerely,

[Defendant's Antitrust Compliance Officer]

EXHIBIT 3

    Please take notice that Knorr-Bremse AG (Knorr) and Westinghouse 
Air Brake Technologies Corporation (Wabtec) have entered into a 
settlement with the United States Department of Justice relating to 
their respective employee recruiting, solicitation, and hiring 
practices.
    On April 3, 2018, the United States filed a federal civil antitrust 
Complaint alleging that Knorr and Wabtec entered into agreements that 
restrained cold calling, soliciting, recruiting, hiring, or otherwise 
competing for employees (collectively, ``no-poach agreements'') in 
violation of Section 1 of the Sherman Act, 15 U.S.C. Sec.  1. At the 
same time, the United States filed a proposed settlement that prohibits 
each of Knorr and Wabtec from entering into, maintaining, or enforcing 
no-poach agreements with another employer subject to limited 
exceptions. This prohibition includes seeking permission or approval 
before considering, approaching, or hiring an employee or requiring the 
other employer to seek permission or approval from Knorr and Wabtec 
before considering or approaching one of their employees.
    As part of its settlement with the United States, Knorr and Wabtec 
confirmed that each company has unilaterally withdrawn from and will 
not enforce any prohibited no-poach agreements it may have had with any 
other employer relating to employees located or being hired to work in 
the United States.
    The Final Judgment, which was recently entered by a federal 
district court, is effective for seven years. Copies of the Complaint, 
Final Judgment, and Competitive Impact Statement are available at:

[Link to Complaint]

[Link to Final Judgment]

[Link to Competitive Impact Statement]

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,

Plaintiff,

v.

KNORR-BREMSE AG

and

WESTINGHOUSE AIR BRAKE
TECHNOLOGIES CORPORATION,

Defendants.

Civil Action No: 1:18-cv-00747
Judge: Colleen Kollar-Kotelly

COMPETITIVE IMPACT STATEMENT

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

I. NATURE AND PURPOSE OF THE PROCEEDING

    On April 3, 2018, the United States filed a civil antitrust 
Complaint alleging that Defendants Knorr-Bremse AG (``Knorr'') and 
Westinghouse Air Brake Technologies Corporation (``Wabtec'') entered 
into unlawful agreements not to poach each other's employees in 
violation of Section 1 of the Sherman Act, 15 U.S.C. Sec.  1. 
Specifically, the Complaint alleges that Knorr and Wabtec entered into 
a series of agreements not to solicit, recruit, hire without prior 
approval, or otherwise compete for employees (collectively, ``No-Poach 
Agreements''). In addition, the Complaint alleges that Knorr and Wabtec 
separately entered into No-Poach Agreements with Faiveley Transport 
North America, a U.S. subsidiary of Faiveley Transport S.A. 
(``Faiveley''), before Faiveley was acquired by Wabtec in November 
2016. The No-Poach Agreements were not reasonably necessary to any 
separate, legitimate business transaction or collaboration between the 
companies. According to the Complaint, the Defendants' No-Poach 
Agreements unlawfully allocated employees between the companies and are 
per se unlawful restraints of trade that violate Section 1 of the 
Sherman Act, 15 U.S.C. Sec.  1.
    At the same time the Complaint was filed, the United States also 
filed a Stipulation and Order and proposed Final Judgment, which would 
remedy the violation by enjoining the Defendants from entering into, 
maintaining, or enforcing any No-Poach Agreements, subject to limited 
exceptions. The proposed Final Judgment also requires the Defendants to 
take specific compliance measures and to cooperate in any investigation 
or litigation examining whether or alleging that the Defendant entered 
into a No-Poach Agreement with any other person in violation of Section 
1 of the Sherman Act, 15 U.S.C. Sec.  1.
    The United States and the Defendants have stipulated that the 
proposed Final Judgment may be entered after compliance with the APPA. 
Entry of the proposed Final Judgment would terminate this action, 
except that the Court would retain jurisdiction to construe, modify, or 
enforce the provisions of the proposed Final Judgment and to punish 
violations thereof.

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

A. The Defendants

    Knorr is a privately-owned German company with its headquarters in 
Munich, Germany. It is a global leader in the development, manufacture, 
and sale of rail and commercial vehicle equipment. In 2017, Knorr had 
annual revenues of approximately $7.7 billion. Knorr holds several 
wholly-owned rail subsidiaries in the United States. Knorr Brake 
Company is a Delaware corporation with its headquarters in Westminster, 
Maryland. It manufactures train control, braking, and door

[[Page 16390]]

equipment used on passenger rail vehicles. New York Air Brake 
Corporation is a Delaware corporation with its headquarters in 
Watertown, New York. It manufactures railway air brakes and other rail 
equipment used on freight trains. Knorr Brake Company and New York Air 
Brake Corporation are wholly-owned subsidiaries of Knorr.
    Wabtec is a Delaware corporation headquartered in Wilmerding, 
Pennsylvania. With over 100 subsidiaries, Wabtec is the world's largest 
provider of rail equipment and services with global sales of $3.9 
billion in 2017. Wabtec Passenger Transit is a business unit of Wabtec 
that develops, manufactures, and sells rail equipment and services for 
passenger rail applications. It is based in Spartanburg, South 
Carolina.
    On November 30, 2016, Wabtec acquired Faiveley, which had been a 
French soci[eacute]t[eacute] anonyme based in Gennevilliers, France. 
Before the acquisition, Faiveley was the world's third-largest rail 
equipment supplier behind Wabtec and Knorr. Faiveley had employees in 
24 countries, including at six U.S. locations. It developed, 
manufactured and sold passenger and freight rail equipment to customers 
in Europe, Asia, and North America, including the United States, with 
revenues of approximately [euro]1.2 billion in 2016. In the United 
States, Faiveley conducted business primarily through Faiveley 
Transport North America, a wholly-owned subsidiary of Faiveley and a 
New York corporation headquartered in Greenville, South Carolina.

B. Defendants Enter into and Maintain No-Poach Agreements

    The Complaint alleges that Knorr and Wabtec (which now includes 
Faiveley) are the world's largest rail equipment suppliers and each 
other's top rival for the development, manufacture, and sale of 
equipment used in freight and passenger rail applications. Knorr and 
Wabtec also compete with one another and with firms at other tiers of 
the rail industry supply chain to attract, hire, and retain skilled 
employees by offering attractive salaries, benefits, training, 
advancement opportunities, and other favorable terms of employment.
    The Complaint further alleges that there is high demand for and 
limited supply of skilled employees who have rail industry experience. 
As a result, firms in the rail industry can experience vacancies of 
critical roles for months while they try to recruit and hire an 
individual with the requisite skills, training, and experience for a 
job opening. Employees of other rail industry participants, including 
the employees of Knorr's and Wabtec's customers, competitors, and 
suppliers, are key sources of potential talent to fill these openings.
    According to the Complaint, firms in the rail industry employ a 
variety of recruiting techniques, including using internal and external 
recruiters to identify, solicit, recruit, and otherwise help hire 
potential employees. Rail companies also receive direct applications 
from individuals interested in potential employment opportunities. 
Directly soliciting employees from another rail industry participant is 
a particularly efficient and effective method of competing for 
qualified employees. Soliciting involves communicating directly--
whether by phone, e-mail, social and electronic networking, or in 
person--with another firm's employee who has not otherwise applied for 
a job opening. Firms in the rail industry rely on direct solicitation 
of employees of other rail companies because those individuals have the 
specialized skills necessary for the vacant position and may be 
unresponsive to other methods of recruiting. The Complaint alleges that 
the rail industry is an insular one where employees at different firms 
form long-term relationships and often look to their professional 
networks to fill a vacancy.
    According to the Complaint, in a competitive labor market, rail 
industry employers compete with one another to attract highly-skilled 
talent for their employment needs. This competition benefits employees 
because it increases the available job opportunities that employees 
learn about and improves employees' ability to negotiate for better 
salaries and other terms of employment. The Complaint alleges that, 
over a period spanning several years, Wabtec, Knorr, and Faiveley 
entered into similar No-Poach Agreements with one another to eliminate 
competition between them for employees. These agreements were executed 
and enforced by senior company executives and reached several of the 
companies' U.S. subsidiaries and business units. The Complaint alleges 
that Knorr's and Wabtec's No-Poach Agreements restrained competition 
for employees and disrupted the normal bargaining and price-setting 
mechanisms that apply in the labor market. The Complaint further 
alleges that the No-Poach Agreements were not reasonably necessary to 
any separate, legitimate business transaction or collaboration between 
the companies.

1. Wabtec-Knorr Agreements

    According to the Complaint, Wabtec and Knorr entered into pervasive 
No-Poach Agreements that spanned multiple business units and 
jurisdictions. Senior executives at the companies' global headquarters 
as well as their respective U.S. passenger and freight rail businesses 
entered into No-Poach Agreements that involved promises and commitments 
not to solicit or hire one another's employees. As alleged in the 
Complaint, the No-Poach Agreements primarily affected recruiting for 
project management, engineering, sales, and corporate officer roles and 
restricted each company from soliciting current employees from the 
other company. The Complaint further alleges that, at times, these 
agreements were operationalized as agreements not to hire current 
employees from one another without prior approval.
    According to the Complaint, beginning no later than 2009, Wabtec's 
and Knorr Brake Company's most senior executives entered into an 
express No-Poach Agreement and then actively managed it with each other 
through direct communications. The Complaint alleges that in a letter 
dated January 28, 2009, a director of Knorr Brake Company wrote to a 
senior executive at Wabtec's headquarters, ``[Y]ou and I both agreed 
that our practice of not targeting each other's personnel is a prudent 
cause for both companies. As you so accurately put it, `we compete in 
the market.' '' As alleged in the Complaint, that agreement was well-
known to senior executives at the parent companies, including top Knorr 
executives in Germany who were included in key communications about the 
No-Poach Agreement. The Complaint further alleges that in furtherance 
of their agreement, Wabtec and Knorr Brake Company informed their 
outside recruiters not to solicit employees from the other company. In 
some instances, Wabtec and Knorr Brake Company's No-Poach Agreement 
foreclosed the consideration of an unsolicited applicant employed by 
the other company without prior approval of the other firm. Knorr and 
Wabtec's No-Poach Agreements also extended to the companies' U.S. 
freight rail businesses.
    According to the Complaint, Knorr's and Wabtec's senior executives 
actively policed potential breaches of their companies' No-Poach 
Agreements and directly communicated with one another to ensure 
adherence to the agreements.

[[Page 16391]]

2. Knorr-Faiveley Agreement

    As alleged in the Complaint, beginning no later than 2011, senior 
executives at Knorr Brake Company and Faiveley Transport North America 
reached an express No-Poach Agreement that involved promises and 
commitments to contact one another before pursuing an employee of the 
other company. The Complaint alleges that in October 2011, a senior 
executive at Knorr Brake Company explained in an email to a high-level 
executive at Knorr-Bremse AG that he had a discussion with an executive 
at Faiveley's U.S. subsidiary that ``resulted in an agreement between 
us that we do not poach each other's employees. We agreed to talk if 
there was one trying to get a job[.]'' Executives at Knorr Brake 
Company and Faiveley's U.S. subsidiary actively managed the No-Poach 
Agreement with each other through direct communications. The Complaint 
specifically alleges that in or about 2012, a senior executive at Knorr 
Brake Company discussed the companies' No-Poach Agreement with an 
executive at Faiveley Transport North America. This discussion took 
place at a trade show in Berlin, Germany. Subsequently, the executives 
enforced the No-Poach Agreement with each other through direct 
communications. This No-Poach Agreement was known to other senior 
executives at the companies, who directly communicated with one another 
to ensure adherence to the agreement.
    As alleged in the Complaint, the companies continued their No-Poach 
Agreement until at least 2015. After Wabtec announced its proposed 
acquisition of Faiveley in July 2015, a high-level Knorr executive 
directed the company's recruiters in the United States and other 
jurisdictions to raid Faiveley for high-potential employees.

3. Wabtec-Faiveley Agreement

    The Complaint alleges that beginning no later than January 2014, 
senior executives at Wabtec Passenger Transit and Faiveley Transport 
North America entered into a No-Poach Agreement in which the companies 
agreed not to hire each other's employees without prior notification to 
and approval from the other company. According to the Complaint, Wabtec 
Passenger Transit and Faiveley Transport North America executives 
actively managed and enforced their agreement with each other through 
direct communications. The Complaint specifically alleges that in an 
internal email to his colleagues, a Wabtec Passenger Transit executive 
explained that a candidate ``is a good guy, but I don't want to violate 
my own agreement with [Faiveley Transport North America].''
    The Complaint alleges that in July 2015, Wabtec and Faiveley 
publicly announced their intent to merge. Wabtec closed its acquisition 
of Faiveley on November 30, 2016. Presently, Faiveley is a wholly-owned 
subsidiary of Wabtec.

C. Defendants' No-Poach Agreements Were Per Se Unlawful Market 
Allocation Agreements under Section 1 of the Sherman Act

    No-Poach Agreements that are not reasonably necessary to any 
separate, legitimate business transaction or collaboration are properly 
considered per se unlawful market allocation agreements under Section 1 
of the Sherman Act. Section 1 outlaws any ``contract, combination . . 
., or conspiracy, in restraint of trade or commerce.'' 15 U.S.C. 1. 
Courts have long interpreted this language to prohibit only 
``unreasonable'' restraints of trade. Bus. Elecs. Corp. v. Sharp Elecs. 
Corp., 485 U.S. 717, 723 (1988). Most restraints are analyzed under the 
rule of reason, which requires the plaintiff to present evidence of a 
restraint's anticompetitive effects and permits the defendant to 
present procompetitive justifications. Ultimately, the fact-finder 
weighs all the circumstances to determine whether the restraint is one 
that suppresses competition or promotes it. See Bd. of Trade of City of 
Chi. v. United States, 246 U.S. 231, 238 (1918).
    ``The rule of reason does not govern all restraints,'' however. 
Leegin Creative Leather Prod., Inc. v. PSKS, Inc., 551 U.S. 877, 886 
(2007). Rather, ``some types of restraints on trade have such 
predictable and pernicious anticompetitive effect, and such limited 
potential for procompetitive benefit, that they are deemed unlawful per 
se,'' State Oil Co. v. Khan, 522 U.S. 3, 3 (1997), and thus ``illegal 
without elaborate inquiry as to the precise harm they have caused or 
the business excuse for their use,'' Northern Pac. Ry. v. United 
States, 356 U.S. 1, 545 (1958). It is well established that naked 
restraints of competition among horizontal competitors, such as price-
fixing or market allocation agreements, are per se unlawful. See United 
States v. Socony-Vacuum Oil Co., 310 U.S. 150, 218 (1940); Palmer v. 
BRG of Georgia, Inc., 498 U.S. 46, 48-50 (1990) (per curiam).\1\
---------------------------------------------------------------------------

    \1\ Under the ancillary restraints doctrine, an agreement 
ordinarily condemned as per se unlawful is ``exempt from the per se 
rule'' if it is ancillary to a separate, legitimate procompetitive 
venture between the competitors and reasonably necessary to achieve 
the procompetitive benefits of that venture. Rothery Storage & Van 
Co. v. Atlas Van Lines, Inc., 792 F.2d 210, 224 (DC Cir. 1986) (a 
customer allocation agreement is ancillary only if it is 
``subordinate and collateral to a separate, legitimate transaction'' 
and reasonably necessary to make that separate transaction ``more 
effective [or efficient] in accomplishing its purpose''); see Texaco 
Inc. v. Dagher, 547 U.S. 1, 7-8 (2006).
---------------------------------------------------------------------------

    Market allocation agreements cannot be distinguished from one 
another based solely on whether they involve input or output 
markets.\2\ Nor are labor markets treated differently than other input 
markets under antitrust law. ``[A]n agreement among employers that they 
will not compete against each other for the services of a particular 
employee or prospective employee is, in fact, a service division 
agreement, analogous to a product division agreement.'' United States 
v. eBay, Inc., 968 F. Supp. 2d 1030, 1039 (N.D. Cal. 2013) (citation 
omitted); see also IIA Phillip E. Areeda et al., Antitrust Law, ] 352c 
at 288-89 (4th ed. 2014) (``Antitrust law addresses employer 
conspiracies controlling employment terms precisely because they tamper 
with the employment market and thereby impair the opportunities of 
those who sell their services there. Just as antitrust law seeks to 
preserve the free market opportunities of buyers and sellers of goods, 
so also it seeks to do the same for buyers and sellers of employment 
services.'').
---------------------------------------------------------------------------

    \2\ In similar circumstances, the Sixth Circuit has held that an 
agreement among competitors not to solicit one another's customers 
was a per se violation of the antitrust laws. See U.S. v. 
Cooperative Theaters of Ohio, Inc., 845 F.2d 1367 (6th Cir. 1988) 
(finding that two movie theater booking agents agreed to refrain 
from actively soliciting each other's customers). In particular, the 
Sixth Circuit found the defendants' ``no-solicitation agreement'' 
was ``undeniably a type of customer allocation scheme which courts 
have often condemned in the past as a per se violation of the 
Sherman Act.'' Id. at 1373.
---------------------------------------------------------------------------

    Consistent with these precedents, the United States has repeatedly 
challenged No-Poach Agreements that are not reasonably necessary to any 
separate, legitimate business transaction or collaboration as per se 
unlawful restraints of trade. For example, in September 2010, the 
United States charged six of the largest U.S. high technology 
companies--Adobe Systems, Inc., Apple Inc., Google Inc., Intel Corp., 
Intuit Inc., and Pixar--with per se violations of Section 1 for 
entering into bilateral agreements to prohibit each company from ``cold 
calling'' the other company's employees. Complaint, United States v. 
Adobe Sys., Inc., No. 10-cv-1629 (D.D.C. Oct. 1, 2010).\3\ In

[[Page 16392]]

December 2010, the United States charged Lucasfilm Ltd. with a per se 
violation of Section 1 for entering an agreement with Pixar to prohibit 
cold calling of each other's employees and setting forth anti-
counteroffer rules that restrained bidding for employees. Complaint, 
United States v. Lucasfilm Ltd., No. 10-cv-2220 (D.D.C. Dec. 28, 
2010).\4\ And in November 2012, the United States charged eBay with a 
per se violation of Section 1 for entering an agreement with Intuit, 
pursuant to which eBay and Intuit agreed not to recruit each other's 
employees and eBay agreed not to hire Intuit employees, including those 
that approached eBay for a job. See Complaint, United States v. eBay, 
Inc., No. 12-cv-5869 (N.D. Cal. Nov. 16, 2012).\5\ In each case, the 
defendants ultimately agreed to consent decrees terminating their 
unlawful agreements.\6\
---------------------------------------------------------------------------

    \3\ The complaint is available at https://www.justice.gov/atr/case/us-v-adobe-systems-inc-et-al.
    \4\ The complaint is available at https://www.justice.gov/atr/case/us-v-lucasfilm-ltd.
    \5\ The complaint is available at https://www.justice.gov/atr/case/us-v-ebay-inc.
    \6\ The Division's settlement in eBay followed the district 
court's denial of eBay's motion to dismiss. See United States v. 
eBay, Inc., 968 F. Supp. 2d 1030 (N.D. Cal. 2013).
---------------------------------------------------------------------------

    Beginning in October 2016, the department has made clear that it 
intends to bring criminal, felony charges against culpable companies 
and individuals who enter into naked No-Poach Agreements.\7\ No-Poach 
Agreements eliminate competition in the same irredeemable way as a 
customer- or market-allocation agreement, and the department has long 
prosecuted such agreements as hardcore cartel conduct. The Division has 
reiterated this prosecutorial intent in subsequent public statements 
and indicated that it may proceed criminally where the underlying No-
Poach Agreements began or continued after October 2016.\8\ As a matter 
of prosecutorial discretion, the Division will pursue No-Poach 
Agreements entered into and terminated before that date through civil 
actions for equitable relief.
---------------------------------------------------------------------------

    \7\ See, e.g., Andrew C. Finch, Acting Asst. Att'y Gen., 
Antitrust Div., U.S. Dep't of Justice, ``Antitrust Enforcement and 
the Rule of Law,'' Remarks at Global Antitrust Enforcement Symposium 
(Sept. 12, 2017), available at https://www.justice.gov/opa/speech/file/996151/download (``The Guidelines cautioned that naked 
agreements among employers not to recruit certain employees, or not 
to compete on employee compensation, are per se illegal and may 
thereafter be prosecuted criminally.''); Renata B. Hesse, Acting 
Asst. Att'y Gen. for Antitrust, U.S. Dep't of Justice, ``The Measure 
of Success: Criminal Antitrust Enforcement during the Obama 
Administration,'' Remarks at 26th Annual Golden State Antitrust, UCL 
and Privacy Law Institute (Nov. 3, 2016), available at https://www.justice.gov/opa/speech/acting-assistant-attorney-general-renata-hesse-antitrust-division-delivers-remarks-26th (``Naked wage-fixing 
or no-poach agreements eliminate competition in the same 
irredeemable way as per se unlawful price-fixing and customer-
allocation agreements do. So we will approach them the same way, 
using our professional judgment, and considering all the factors 
that ordinarily weigh on our discretion as criminal prosecutors.''); 
Press Release, U.S. Dep't of Justice, Justice Department and Federal 
Trade Commission Release Guidance for Human Resource Professionals 
on How Antitrust Law Applies to Employee Hiring and Compensation 
(Oct. 20, 2016), available at https://www.justice.gov/opa/pr/justice-department-and-federal-trade-commission-release-guidance-human-resource-professionals (``Going forward, the Justice 
Department intends to criminally investigate naked no-poaching or 
wage-fixing agreements that are unrelated or unnecessary to a larger 
legitimate collaboration between the employers.'').
    \8\ See Andrew C. Finch, Principal Deputy Asst. Att'y Gen., 
Antitrust Div., U.S. Dep't of Justice, ``Trump Antitrust Policy 
After One Year,'' Remarks at the Heritage Foundation (Jan. 23, 
2018), available at https://www.justice.gov/opa/speech/file/1028906/download (``In October 2016, the Division issued guidance reminding 
the business community that no-poach agreements can be prosecuted as 
criminal violations. For agreements that began after the date of 
that announcement, or that began before but continued after that 
announcement, the Division expects to pursue criminal charges.'').
---------------------------------------------------------------------------

    As described in the Complaint, Knorr's and Wabtec's No-Poach 
Agreements were naked restraints on competition for employees and were 
not reasonably necessary to any separate, legitimate business 
transaction or collaboration between the firms. The No-Poach Agreements 
suppressed and eliminated competition to the detriment of employees by 
depriving workers of competitively important information that they 
could have leveraged to bargain for better job opportunities and terms 
of employment. In doing so, the No-Poach Agreements eliminated 
significant competition between the firms to attract employees in the 
rail industry. Accordingly, they are per se unlawful horizontal market 
allocation agreements under Section 1 of the Sherman Act. The United 
States has pursued the agreements at issue in the Complaint by civil 
action rather than as a criminal prosecution because the United States 
uncovered and began investigating the agreements, and the Defendants 
terminated them, before the United States had announced its intent to 
proceed criminally against such agreements.

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

    The proposed Final Judgment sets forth (1) conduct in which the 
Defendants may not engage; (2) conduct in which the Defendants may 
engage without violating the proposed Final Judgment; (3) certain 
actions the Defendants are required to take to ensure compliance with 
the terms of the proposed Final Judgment; (4) the Defendants' 
obligations to cooperate with the United States in its investigations 
of No-Poach Agreements; and (5) oversight procedures the United States 
may use to ensure compliance with the proposed Final Judgment.

A. Prohibited Conduct

    Section IV of the proposed Final Judgment prohibits the Defendants 
from attempting to enter into, entering into, maintaining, or enforcing 
any No-Poach Agreement or No-Poach Provision. Paragraph II(E) of the 
proposed Final Judgment defines ``No-Poach Agreement'' or ``No-Poach 
Provision'' as ``any Agreement, or part of an Agreement, among two or 
more employers that restrains any person from cold calling, soliciting, 
recruiting, hiring, or otherwise competing for (i) employees located in 
the United States being hired to work in the United States or outside 
the United States or (ii) any employee located outside the United 
States being hired to work in the United States.'' \9\ Taken together, 
these provisions will terminate any existing No-Poach Agreements to 
which either Defendant is currently a party and prohibit each Defendant 
from entering into any No-Poach Agreements in the future.
---------------------------------------------------------------------------

    \9\ Paragraph II(C) defines ``Agreement'' to mean ``any 
agreement, understanding, pact, contract, or arrangement, formal or 
information, oral or written, between two or more persons.''
---------------------------------------------------------------------------

B. Conduct Not Prohibited

    Paragraph V(A) of the proposed Final Judgment provides that nothing 
in Section IV shall prohibit a Defendant from attempting to enter into, 
entering into, maintaining, or enforcing a reasonable agreement not to 
solicit, recruit, or hire employees that is ancillary to a legitimate 
business collaboration. Paragraph V(B) requires that all Agreements 
that satisfy Paragraph V(A) that are entered into, renewed, or 
affirmatively extended after the proposed Final Judgment's entry: (1) 
be in writing and signed by all parties thereto; (2) identify, with 
specificity, the collaboration to which the Agreement is ancillary; (3) 
be narrowly tailored to affect only employees who are anticipated to be 
directly involved in the Agreement; (4) identify with reasonable 
specificity the employees who are subject to the Agreement; and (5) 
contain a specific termination date or event. The purpose of Paragraph 
V(B) is to ensure that Agreements entered into pursuant to Paragraph 
V(A) are narrowly tailored and can be properly monitored by the United 
States.
    Defendants may have existing Agreements that contain No-Poach

[[Page 16393]]

Provisions that may not comply with the terms of the proposed Final 
Judgment. To avoid the unnecessary burden of identifying and 
renegotiating these existing contracts, Paragraph V(C) of the proposed 
Final Judgment provides that Defendants are not required to modify or 
conform existing No-Poach Provisions that violate the proposed Final 
Judgment but shall not enforce them.
    Finally, Paragraph V(D) of the proposed Final Judgment provides 
that a Defendant is not prohibited from unilaterally adopting or 
maintaining a policy not to consider applications from employees of 
another person, or not to solicit, cold call, recruit or hire employees 
of another person, provided that the Defendant does not (1) request, 
encourage, propose, or suggest that another person adopt, enforce, or 
maintain such a policy; or (2) notify the other person that the 
Defendant has adopted such a policy.

C. Required Conduct

    Section VI of the proposed Final Judgment sets forth various 
mandatory procedures to ensure the Defendants are in compliance with 
the proposed Final Judgment. Paragraph VI(A) requires each Defendant to 
appoint an Antitrust Compliance Officer within ten (10) days of entry 
of the Final Judgment. Paragraph VI(B) then sets forth the steps that 
the Antitrust Compliance Officer must take in order to ensure the 
Defendant's compliance with the Final Judgment and make the Defendant's 
employees and recruiting agencies aware of its terms.
    Specifically, Paragraph VI(B)(1) of the proposed Final Judgment 
requires that within sixty days of entry of the Final Judgment, the 
Antitrust Compliance Officer must furnish copies of the Competitive 
Impact Statement, the Final Judgment, and a cover letter explaining the 
obligations of the Final Judgment to the Defendant's Management and HR 
Management.\10\ Paragraphs VI(B)(3), (B)(5), and (B)(6) further require 
that the Antitrust Compliance Officer annually brief the Defendant's 
Management and HR Management on the meaning and requirements of the 
Final Judgment and the antitrust laws, obtain from each of them a 
certification that he or she has read and agreed to abide by the terms 
of the Final Judgment, and maintain a record of all certifications 
received.
---------------------------------------------------------------------------

    \10\ Paragraph II(D) of the Proposed Final Judgment defines ``HR 
Management'' as ``the directors, officers, and human resource 
employees of the Defendant who supervise or have responsibility for 
recruiting, solicitation, or hiring efforts affecting the United 
States.'' Paragraph II(G) defines ``Management'' as ``all officers, 
directors, and board members of Knorr-Bremse AG or Westinghouse Air 
Brake Technologies Corporation, or anyone with management or 
supervisory responsibilities for Knorr's or Wabtec's U.S. business 
or operations.''
---------------------------------------------------------------------------

    In addition, Paragraph VI(B)(2) of the proposed Final Judgment 
obligates each Defendant to provide all of its U.S. employees 
reasonable notice of the meaning and requirements of the Final Judgment 
in a manner to be approved by the United States. Paragraph VI(B)(7) 
further requires the Antitrust Compliance Officer to annually 
communicate to the Defendant's employees that they may disclose to the 
Antitrust Compliance Officer, without reprisal, information concerning 
any potential violation of the Final Judgment or the antitrust laws.
    To ensure that each Defendant's outside recruiters are aware of the 
proposed Final Judgment, Paragraph VI(B)(8) requires the Antitrust 
Compliance Officer, within sixty days of entry of the Final Judgment, 
to furnish copies of the Competitive Impact Statement, the Final 
Judgment, and a cover letter explaining the obligations of the Final 
Judgment to all recruiting agencies, or providers of temporary 
employees or contract workers, retained by the Defendant for 
recruiting, soliciting, or hiring efforts affecting the Defendant's 
business activities in the United States at the time of entry of the 
Final Judgment and during the term of the Final Judgment.
    Pursuant to Paragraph VI(B)(9) of the proposed Final Judgment, the 
Antitrust Compliance Officer must furnish a copy of all materials 
required by Paragraph VI(B) of the proposed Final Judgment to the 
United States within seventy-five (75) days of entry of the Final 
Judgment.
    Paragraph VI(C) of the proposed Final Judgment requires the 
Defendants to furnish notice of this action to the rail industry 
through the placement of an advertisement in an industry trade 
publication to be approved by the United States and the creation of 
website pages linked to the corporate websites of each Defendant for no 
less than one year.
    Finally, Paragraph VI(D)(3) requires that the Chief Executive 
Officer or Chief Financial Officer, and General Counsel of each 
Defendant separately certify annually to the United States that the 
Defendant has complied with the provisions of the Final Judgment. 
Additionally, if Management or HR Management learns of any violation or 
potential violation of the terms of the Final Judgment, Paragraph 
VI(D)(1) and (D)(2) of the proposed Final Judgment obligate each 
Defendant to promptly take action to terminate the violation, maintain 
all documents relating to the violation, and, within sixty days, file 
with the United States a statement describing the violation.

D. Cooperation

    Section VII of the proposed Final Judgment requires each Defendant 
to cooperate with the United States in any investigation or litigation 
examining whether or alleging that the Defendant entered into a No-
Poach Agreement with any other person. Paragraph VII(A) requires each 
Defendant, upon request of the United States, to provide sworn 
testimony, produce documents and materials, make employees available 
for interview, and testify in judicial proceedings about such No-Poach 
Agreements.
    Paragraph VII(B) provides that, subject to each Defendant's 
truthful and continuing cooperation as defined in Paragraph VII(A), the 
United States will not bring further civil actions or criminal charges 
against that Defendant for any No-Poach Agreement with another person 
if the agreement: (1) was entered into and terminated before the date 
of the filing of the Complaint; (2) was disclosed to the United States 
before the filing of the Complaint; and (3) does not in any way 
constitute or include an agreement to fix wages, compensation, or other 
benefits. The purpose of Paragraph VII(B) is to incentivize each 
Defendant to provide the United States with all of the information it 
knows about potential No-Poach Agreements it may have entered into with 
additional counterparties.

E. Compliance

    To facilitate monitoring of the Defendants' compliance with the 
proposed Final Judgment, Paragraph VIII(A) permits the United States, 
upon reasonable notice and a written request: (1) access during each 
Defendant's office hours to inspect and copy, or at the option of the 
United States, to require each Defendant to provide electronic or hard 
copies of, all books, ledgers, accounts, records, data, and documents 
in the possession, custody, or control of each Defendant, relating to 
any matters contained in the proposed Final Judgment; and (2) to 
interview, either informally or on the record, each Defendant's 
officers, employees, or agents.
    Additionally, Paragraph VIII(B), upon written request of the United 
States, requires each Defendant to submit written reports or responses 
to interrogatories relating to any of the matters contained in the 
proposed Final Judgment.

[[Page 16394]]

F. Enforcement and Expiration of the Final Judgment

    The proposed Final Judgment contains provisions designed to promote 
compliance and make the enforcement of Division consent decrees as 
effective as possible. Paragraph X(A) provides that the United States 
retains and reserves all rights to enforce the provisions of the 
proposed Final Judgment, including its rights to seek an order of 
contempt from the Court. Under the terms of this paragraph, the 
Defendants have agreed that in any civil contempt action, any motion to 
show cause, or any similar action brought by the United States 
regarding an alleged violation of the Final Judgment, the United States 
may establish the violation and the appropriateness of any remedy by a 
preponderance of the evidence and that the Defendants have waived any 
argument that a different standard of proof should apply. This 
provision aligns the standard for compliance obligations with the 
standard of proof that applies to the underlying offense that the 
compliance commitments address.
    Paragraph X(B) of the proposed Final Judgment further provides that 
should the Court find in an enforcement proceeding that the Defendants 
have violated the Final Judgment, the United States may apply to the 
Court for a one-time extension of the Final Judgment, together with 
such other relief as may be appropriate. In addition, in order to 
compensate American taxpayers for any costs associated with the 
investigation and enforcement of violations of the proposed Final 
Judgment, Paragraph X(B) provides that in any successful effort by the 
United States to enforce this Final Judgment against a Defendant, 
whether litigated or resolved prior to litigation, that Defendant 
agrees to reimburse the United States for any attorneys' fees, experts' 
fees, or costs incurred in connection with any enforcement effort, 
including the investigation of the potential violation.
    Finally, Section XI of the proposed Final Judgment provides that 
the Final Judgment shall expire seven years from the date of its entry, 
except that after five years from the date of its entry, the Final 
Judgment may be terminated upon notice by the United States to the 
Court and the Defendants that the continuation of the Final Judgment is 
no longer necessary or in the public interest.

IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
16(a), the proposed Final Judgment has no prima facie effect in any 
subsequent private lawsuit that may be brought against the Defendants.

V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT

    The United States and the 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, 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 
website and, under certain circumstances, published in the Federal 
Register.
    Written comments should be submitted to:

Maribeth Petrizzi
Chief, Defense, Industrials, and Aerospace 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 the Defendants. The 
United States is satisfied, however, that the relief proposed in the 
Final Judgment will prevent the recurrence of the violations alleged in 
the Complaint and restore competition between the Defendants and other 
firms for employees. Thus, the proposed Final Judgment would achieve 
all or substantially all of the relief the United States would have 
obtained through litigation, but avoids the time, expense, and 
uncertainty of a full trial on the merits of the Complaint.

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

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a sixty-day comment period, after which the Court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. 16(e)(1). In making that determination, 
the Court, in accordance with the statute as amended in 2004, is 
required to consider:
    (A) the competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration of relief sought, anticipated effects of alternative remedies 
actually considered, whether its terms are ambiguous, and any other 
competitive considerations bearing upon the adequacy of such judgment 
that the court deems necessary to a determination of whether the 
consent judgment is in the public interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and individuals 
alleging specific injury from the violations set forth in the complaint 
including consideration of the public benefit, if any, to be derived 
from a determination of the issues at trial.

15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors, 
the Court's inquiry is necessarily a limited one as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448, 1461 (DC Cir. 1995); see generally United States v. SBC 
Commc'ns, Inc., 489 F. Supp. 2d 1

[[Page 16395]]

(D.D.C. 2007) (assessing public interest standard under the Tunney 
Act); United States v. US Airways Group, Inc., 38 F. Supp. 3d 69, 75 
(D.D.C. 2014) (explaining that the ``court's inquiry is limited'' in 
Tunney Act settlements); 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'').\11\
---------------------------------------------------------------------------

    \11\ 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.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\12\ 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 US Airways, 38 F. Supp. 3d at 75 (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).
---------------------------------------------------------------------------

    \12\ 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 US 
Airways, 38 F. Supp. 3d at 76 (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 US Airways, 
38 F. Supp. 3d at 75 (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 US Airways, 38 F. Supp. 3d at 
76 (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.

[[Page 16396]]

Supp. 2d at 11.\13\ A court can make its public interest determination 
based on the competitive impact statement and response to public 
comments alone. US Airways, 38 F. Supp. 3d at 76.
---------------------------------------------------------------------------

    \13\ 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: April 3, 2018

Respectfully submitted,

DOHA MEKKI
United States Department of Justice
Antitrust Division
Defense, Industrials, and Aerospace Section
450 Fifth Street NW, Suite 8700
Washington, DC 20530
Telephone: (202) 598-8023
Facsimile: (202) 514-9033
Email: [email protected]

[FR Doc. 2018-07840 Filed 4-13-18; 8:45 am]
 BILLING CODE 4410-11-P