[Federal Register Volume 84, Number 40 (Thursday, February 28, 2019)]
[Notices]
[Pages 6824-6833]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-03478]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Learfield Communications, LLC, IMG College, LLC,
and A-L Tier I LLC; Proposed Final Judgment and Competitive Impact
Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation, and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States of America v. Learfield Communications, LLC, IMG College, LLC,
and A-L Tier I LLC, Civil Action No. 1:19-cv-00389. On February 14,
2019, the United States filed a
[[Page 6825]]
Complaint alleging that that Learfield Communications, LLC's
(``Learfield'') and IMG College, LLC's (``IMG'') agreements not to
compete for multimedia rights contracts for universities' athletic
programs violate Section 1 of the Sherman Act, 15 U.S.C. 1. The
proposed Final Judgment, filed at the same time as the Complaint,
prohibits sharing of competitively sensitive information, agreeing not
to bid or agreeing to jointly bid, and entering into or extending
multimedia rights joint ventures (absent approval from the United
States), and it requires Defendants to implement an antitrust
compliance training program.
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.
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 Owen M. Kendler,
Chief, Media, Entertainment and Professional Services Section,
Antitrust Division, Department of Justice, 450 Fifth Street NW, Suite
4000, Washington, DC 20530 (telephone: 202-305-8376).
Patricia A. Brink,
Director of Civil Enforcement.
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
United States of America, Plaintiff, v. Learfield
Communications, LLC, IMG College, LLC, and A-L TIER I LLC,
Defendants.
Civil Action No.: 1:19-cv-00389
Judge: Emmet G. Sullivan
COMPLAINT
The United States of America brings this civil action to enjoin
anticompetitive conduct by IMG College (``IMG''), Learfield
Communications, LLC (``Learfield''), and A-L Tier I LLC, and to obtain
other equitable relief. The United States alleges as follows:
I. NATURE OF THE ACTION
1. Athletic programs of the nation's universities have limited
opportunities to generate revenue, and thus sponsorship revenue from
multimedia rights (``MMR'') plays an important role in many of their
budgets. Defendants IMG and Learfield, along with several smaller
companies, manage MMR for university athletic programs across the
country.
2. Agreements by and among Defendants not to compete, however, have
restrained competition in the MMR market, harming the universities that
rely on these firms for an important revenue source. These agreements
constitute contracts, combinations, or conspiracies in restraint of
trade or commerce in the United States in violation of Section 1 of the
Sherman Act, 15 U.S.C. Sec. 1, and should be enjoined.
II. JURISDICTION, VENUE, AND COMMERCE
3. The United States brings this action under Section 4 of the
Sherman Act, 15 U.S.C. Sec. 4, to obtain equitable relief and other
relief to prevent and restrain Defendants' violations of Section 1 of
the Sherman Act, 15 U.S.C. Sec. 1. This Court has subject matter
jurisdiction over this action under Section 4 of the Sherman Act, 15
U.S.C. Sec. 4.
4. This Court has personal jurisdiction over each Defendant. Both
IMG and Learfield transact business within the District of Columbia.
5. Defendants are engaged in interstate commerce and in activities
substantially affecting interstate commerce. IMG and Learfield manage
MMR for universities throughout the United States. They are engaged in
a regular, continuous, and substantial flow of interstate commerce, and
their MMR management and other services have had a substantial effect
on interstate commerce.
6. 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(c).
III. THE DEFENDANTS
7. Defendant IMG, until its 2018 merger with Learfield, was a
division of global entertainment firm WME Entertainment Parent LLC
(``WME''). IMG provided a variety of services to universities,
including trademark licensing, ticketing, and MMR management. In 2017,
IMG's U.S. revenue for MMR management was approximately $402 million.
8. Defendant Learfield, until its 2018 merger with IMG, was owned
by Philadelphia, Pennsylvania-based private equity firm Atairos Group
Inc. (``Atairos''), which is substantially owned by Comcast
Corporation. Learfield provided a similar set of services to
universities as IMG, including MMR management. In 2017, Learfield's
U.S. revenue for MMR management was approximately $406 million.
9. On December 31, 2018, Defendants announced that they completed a
merger under which Learfield and IMG had merged into a new company--A-L
Tier I LLC (d/b/a Learfield IMG College)--owned, in part, by WME and
Atairos.
IV. INDUSTRY BACKGROUND
10. Across the country, over a thousand colleges and universities
field men's and women's sports teams to compete in intercollegiate
athletics. The majority of these athletic programs are small, with only
a few sports and funded primarily by student fees. Many, however,
include over a dozen men's and women's teams each, requiring extensive
facilities, staffing, and funding.
11. Because of their size, major university athletic programs
require substantial budgets, with funding drawn primarily from a
handful of key sources, including television rights, ticket revenue,
donations, and MMR.
12. Multimedia rights consist of advertising and promotional rights
associated with school property and athletic activities. Although the
package of rights may vary slightly from deal to deal, MMR management
firms typically manage the school's print and digital athletic
advertising, signage in stadiums and arenas, game and event
sponsorships, promotions, and radio shows. While smaller schools may
choose to maintain MMR management in-house, nearly all major university
athletic programs use an MMR management firm to manage their MMR.
13. MMR management firms serve several important functions. First,
they oversee the general commercialization of a university's athletic
rights, including identifying advertising and promotional
opportunities, working with different constituencies to secure the most
advertising revenue without undermining the interests and values of the
university, and performing a variety of back office functions. Second,
they assist the university in bringing MMR opportunities to market,
such as providing facilities and infrastructure to produce radio shows
and funding the construction of new stadium videoboards. Finally, MMR
management firms develop and maintain relationships with advertisers.
V. COORDINATION IN THE MMR INDUSTRY
14. Defendants IMG and Learfield have agreed or otherwise
coordinated to limit competition between one another
[[Page 6826]]
and between themselves and smaller competitors.
15. At times, the coordination between IMG and Learfield has taken
the form of joint ventures at specific universities. Under the guise of
legitimate business arrangements, these joint ventures further
Defendants' interests over schools', denying colleges the benefits of
competition with little, if anything, in return.
16. In one such episode, IMG and Learfield provided MMR services
through a joint venture that had been created years before. When the
university's multimedia rights came up for bid, both IMG and Learfield
initially prepared to submit independent bids in competition with each
other. Before submissions were made to the school, however, executives
of IMG and Learfield agreed not to submit competing bids and instead
submitted a joint bid. Absent the competing independent offers
anticipated from both IMG and Learfield, the school accepted a joint
bid that offered less revenue to the school than at least one of
Defendants' planned independent bids.
17. With varying degrees of success, Defendants have also attempted
to wield the joint venture structure as a way to co-opt smaller
competitors. In one example, as part of a joint venture agreement
between IMG and a smaller MMR provider, IMG secured a commitment under
which the smaller provider would not bid on any of IMG's schools for
over a year. IMG recognized the joint venture's value in removing the
smaller provider as a competitor and projected millions in savings from
not having to compete. In another example, IMG proposed to another
bidder that they each withdraw their bids and submit a joint bid that
would be less favorable to the school. In this instance, however, IMG's
invitation did not succeed and the other firm ultimately won the bid.
18. Additionally, when IMG and Learfield have unwound established
joint ventures at certain universities, the two firms have crafted non-
compete agreements that continue to limit competition. As with the
joint ventures themselves, these non[dash]competes unreasonably denied
schools the benefits of competition. And when one of the two firms
wanted to compete, the other quickly moved to suppress the threatening
bid, enforcing the agreement. In one example, a then-IMG executive
asked Learfield for permission to bid on a Learfield school that was
coming up for bid on which Learfield had a non-compete commitment from
IMG. Learfield, however, did not consent and the school stayed with
Learfield.
19. Even in the absence of a so-called joint venture or non-compete
agreement, IMG and Learfield have sought ways to undermine competition.
In some cases, an understanding not to compete is employed with an
informal policing mechanism. In one such episode, Learfield bid for an
IMG school without first receiving permission from IMG. As a result, a
then-IMG executive reached out to a Learfield executive requesting that
Learfield withdraw its bid. Learfield agreed and withdrew its bid as
IMG had requested. The university, without Learfield's offer, signed an
agreement with IMG.
20. These efforts to suppress competition also extended to others
in the market. For example, Defendants have attempted to craft legal
settlements with smaller competitors in ways that limit competition. In
an employee dispute with one such competitor, Learfield secured a
settlement that precluded the company from bidding on a certain
university. And in another employee dispute, Learfield made a failed
attempt to agree not to compete with a competitor for one another's MMR
staff.
21. Defendants' agreements and attempted agreements not to compete,
and to co-opt smaller competitors, reflect a culture of disregard for
the antitrust laws and the competitive process. Accordingly, such
conduct should be enjoined.
VI. VIOLATIONS ALLEGED
22. The agreements by Defendants not to compete constitute
agreements that unreasonably restrain competition in the market for MMR
management in the United States in violation of Section 1 of the
Sherman Act, 15 U.S.C. Sec. 1.
23. Among other things, Defendants' conduct has and will continue
to:
(a) harm the competitive process by suppressing or eliminating
competition in MMR management;
(b) reduce the revenue received by universities; and
(c) cause the quality of MMR management to decrease.
24. These agreements are not reasonably necessary to accomplish any
allegedly procompetitive goals. Any procompetitive benefits are
outweighed by anticompetitive harm, and there are less restrictive
alternatives by which Defendants would be able reasonably to achieve
any procompetitive goals.
VII. REQUEST FOR RELIEF
25. The United States requests:
(a) that the aforesaid agreements not to compete against each other
be adjudged to unreasonably restrain trade and to be illegal under
Section 1 of the Sherman Act, 15 U.S.C. Sec. 1;
(b) that Defendants be permanently enjoined from engaging in,
enforcing, carrying out, or attempting to engage in, enforce, carry
out, or renew the agreements in which Defendants are alleged to have
engaged, or any other agreement having a similar purpose or effect, in
violation of Section 1 of the Sherman Act, 15. U.S.C. Sec. 1;
(c) that Defendants eliminate and cease enforcing all agreements
not to compete and be prohibited from otherwise acting to restrain
trade unreasonably;
(d) that Defendants be required to institute an antitrust
compliance program;
(e) that the United States be awarded costs of this action; and
(f) that the United States be awarded such other relief as the
Court may deem just and proper.
Respectfully submitted,
FOR PLAINTIFF UNITED STATES OF AMERICA:
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Makan Delrahim (D.C. Bar 457795),
Assistant Attorney General for Antitrust.
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Bernard A. Nigro Jr. (D.C. Bar 412357),
Deputy Assistant Attorney General for Antitrust.
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Patricia A. Bank,
Director of Civil Enforcement.
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Owen M. Kendler,
Chief, Media, Entertainment & Professional Services Section.
Lisa A. Scanlon,
Assistant Chief, Media, Entertainment & Professional Services
Section.
Dated: February 14, 2019
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Adam C. Speegle,
Jeffrey G. Vernon (D.C. Bar 1009690),
Trial Attorneys, United States Department of Justice, 450 Fifth
Street NW, Suite 4000, Washington, DC 20530, Telephone: (202) 616-
5932, Facsimile: (202) 514-7308, E-mail: [email protected]
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
United States of America, Plaintiff, v. Learfield
Communications, LLC, IMG College, LLC and A-L Tier I LLC,
Defendants.
Civil Action No.: 1:19-cv-00389
Judge: Emmet G. Sullivan
[PROPOSED] FINAL JUDGMENT
Whereas, Plaintiff, United States of America, filed its Complaint
on January ------, 2019, alleging that Defendants violated Section 1 of
the Sherman Act, 15 U.S.C. Sec. 1, the United States and Defendant, by
their respective attorneys,
[[Page 6827]]
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 United States and Defendants agree to be bound by
the provisions of this Final Judgment pending its approval by this
Court;
And Whereas, the Defendants agree to undertake certain actions and
to refrain from engaging in certain forms of communications and joint
activities with their competitors;
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 allegations in the Complaint arise under
Section 1 of the Sherman Act, as amended, 15 U.S.C. Sec. 1. See 28
U.S.C. Sec. 1331.
II. DEFINITIONS
As used in this Final Judgment:
A. ``Advertiser'' means an advertiser, sponsor, or corporate
hospitality client or an agent or representative acting on behalf of an
advertiser, sponsor, or corporate hospitality client.
B. ``Agreement'' means any agreement, understanding, pact,
contract, or arrangement, formal or informal, oral or written, between
two or more Persons.
C. ``Bid'' or ``Bidding'' means any offer or response to a Request
for Proposal, Request for Submission, Request for Information, or any
other request, either formal or informal, by a college, university, or
athletic conference (including facilities owned or affiliated with such
institutions) relating to a contract or other arrangement (including
extensions or renewals of any existing contract or other arrangement)
for the management, sale, commercialization, or other utilization of
Multimedia Rights owned by the college, university, or athletic
conference, or their owned or affiliated facilities.
D. ``Communicate,'' ``Communicating,'' and ``Communication(s)''
means to provide, send, discuss, circulate, exchange, request, or
solicit information, whether directly or indirectly, and regardless of
the means by which it is accomplished, including orally or by written
or recorded means of any kind, such as electronic communications, e-
mails, facsimiles, telephone communications, voicemails, text messages,
audio recordings, meetings, interviews, correspondence, exchange of
written or recorded information, face-to-face meetings, or social
media.
E. ``Competitively Sensitive Information'' means any non-public
information of Defendants or any Competitor regarding the purchase or
sale of Multimedia Rights, including without limitation non-public
information relating to negotiating positions, tactics, or strategy,
pricing or pricing strategies, Bids or Bidding Strategies, intentions
to Bid or not to Bid, decisions to Bid, whether a Bid was or was not
submitted, costs, revenues, profits, or margins.
F. ``Competitor'' means any Person (other than any Defendant)
engaged in , or considering engaging in, the business of servicing,
marketing, or commercializing Multimedia Rights or any Multimedia
Rights contract, agreement, or opportunity. For the avoidance of doubt,
colleges and universities are not ``Competitors.''
G. ``Defendants'' mean Learfield, IMG College, and A-L Tier I LLC.
H. ``IMG College'' means IMG College LLC headquartered in Winston-
Salem, North Carolina, its successors and assigns (including but not
limited to A-L Tier I LLC), and its subsidiaries, partnerships, joint
ventures, and their directors, officers, managers, agents, and
employees.
I. ``Joint Venture'' means any collaboration, formed by written or
oral agreement, created by and among any Defendant and Competitor
relating to the management, sale, commercialization, or other
utilization of Multimedia Rights or the Bidding for Multimedia Rights.
J. ``Learfield'' means Learfield Communications, LLC, a Delaware
limited liability company headquartered in Plano, Texas, its successors
and assigns (including but not limited to A-L Tier I LLC), and its
subsidiaries, partnerships, joint ventures, and their directors,
officers, managers, agents and employees.
K. ``Management'' means all directors, executives, and officers of
a Defendant, or any other employee with management or supervisory
responsibilities for a Defendant's Multimedia Rights business at or
above the level of general manager at a college or university.
L. ``Multimedia Rights'' means the sponsorship and advertising
rights of a college or university intercollegiate athletic program,
including but not limited to in-venue signage, television advertising,
radio advertising, print advertising, digital advertising, and social
media advertising.
M. ``Multi-Property Sales'' means the promotion, marketing, or
sales of Multimedia Rights in a package that includes more than one
college, university, athletic conference, or venue.
N. ``Person'' means any natural person, university, athletic
conference, corporation, company, partnership, joint venture, firm,
association, proprietorship, agency, board, authority, commission,
office, or other business or legal entity, whether private or
governmental.
III. APPLICABILITY
This Final Judgment applies to IMG College, Learfield, and A-L Tier
I LLC and other Persons in active concert or participation with them
who receive actual notice of this Final Judgment by personal service or
otherwise. This Final Judgment is fully enforceable, including by
penalty of contempt, against all of the foregoing.
IV. PROHIBITED CONDUCT
A. Defendants shall not, directly or indirectly:
1. Communicate with any Competitor concerning any Competitively
Sensitive Information relating to a Bid or Bidding;
2. Agree, combine, conspire, or collude with any Competitor to
participate in any joint Bid, collaborative Bid, cooperative Bid, or
shared Bid;
3. Agree with any Competitor that any Defendant or any Competitor
will not Bid for any Multimedia Rights contract, opportunity, or
arrangement; or
4. Communicate, offer, invite, propose, encourage, facilitate, or
suggest any joint Bid, collaborative Bid, cooperative Bid, or shared
Bid with any Competitor.
B. The prohibitions under Paragraph IV.A apply to Defendant's
Communicating or agreeing to Communicate through any third-party agent
or third-party consultant at Defendants' instruction, direction, or
request.
C. Without the prior written consent of the United States in its
sole discretion, the Defendants shall not enter into, renew, or extend
the term of any Joint Venture or conduct other business negotiations in
conjunction with or on behalf of any Competitor relating to the
management, sale, commercialization, or other utilization of Multimedia
Rights. The Defendants may apply for prior written consent of the
United States in its sole discretion for permission to conduct
specified categories of collaborations or
[[Page 6828]]
sublicensing arrangements that would not reduce the number of
Competitors Bidding.
V. CONDUCT NOT PROHIBITED
A. Nothing in Section IV shall prohibit Defendants from
Communicating with a college, university, athletic conference, venue,
or any other Person (other than a Competitor) seeking to contract for
the management, sale, commercialization, or other utilization of such
Person's own Multimedia Rights.
B. Nothing in Section IV shall prohibit Defendants from
Communicating with an actual or prospective Advertiser.
C. Nothing in Section IV shall prohibit Defendants from
Communicating or transacting with their employees, officers, directors,
or owners, including for the avoidance of doubt, WME Entertainment
Parent and its subsidiaries and Atairos.
D. Nothing in Section IV shall prohibit Defendants, after securing
advice of counsel and in consultation with the Antitrust Compliance
Officer appointed pursuant to Section VI infra, from Communicating with
a Competitor concerning the formation of a Joint Venture that would be
subject to the approval of the United States under Section IV(C) or a
merger or acquisition, including transactions subject to the Hart-
Scott-Rodino Antitrust Improvements Act of 1976.
E. Nothing in Section IV shall prohibit Defendants from
Communicating with a Competitor concerning Multi-Property Sales.
F. Nothing in Section IV shall prohibit Defendants from
Communicating with a Competitor if (i) the Competitor was engaged in a
Joint Venture with any Defendant as of July 1, 2018 and the
Communications relate solely to the operation of the Joint Venture in
which Competitor and the Defendant are engaged; or (ii) the Competitor
and Defendant are engaged in a Joint Venture approved by the United
States pursuant to Paragraph IV(C) including, in either case (i) or
(ii), waiving or terminating any provisions of the applicable Joint
Venture agreement. Defendants shall maintain copies of all written or
recorded Communications of the type referenced in this Paragraph V(F)
for five years or the duration of the Final Judgment, whichever is
shorter, following the date of the creation of such Communication, and
Defendants shall make such documents available to the United States
upon request.
G. Nothing in Section IV shall prohibit Defendant from engaging in
conduct in accordance with the doctrine established in Eastern Railroad
Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127
(1961), United Mine Workers v. Pennington, 381 U.S. 657 (1965), and
their progeny.
H. The preceding Paragraphs V(A) through (G) are for the avoidance
of doubt and do not create any implications as to the scope or
interpretation of Section IV.
VI. REQUIRED CONDUCT
A. Within ten days of entry of this Final Judgment, each Defendant
shall appoint an Antitrust Compliance Officer who is an internal
employee or Officer of the Defendant, and identify to the United States
the Antitrust Compliance Officer's name, business address, telephone
number, and email address. Within forty-five days of a vacancy in a
Defendant's Antitrust Compliance Officer position, such Defendant shall
appoint a replacement, and shall identify to the United States the
Antitrust Compliance Officer's name, business address, telephone
number, and email address. The Defendant's initial or replacement
appointment of an Antitrust Compliance Officer is subject to the
approval of the United States in its sole discretion. For the avoidance
of doubt, a single Person employed by one Defendant may serve as the
Antitrust Compliance Officer for all Defendants.
B. The Antitrust Compliance Officer shall have, or shall retain
outside counsel who has, the following minimum qualifications:
1. be an active member in good standing of the bar in any U.S.
jurisdiction; and
2. at least five years' experience in legal practice, including
experience with antitrust matters.
C. The Antitrust Compliance Officer shall, directly or through the
employees or counsel working at the Antitrust Compliance Officer's
direction:
1. within fourteen days of entry of the Final Judgment, furnish to
each Defendant's Management a copy of this Final Judgment, the
Competitive Impact Statement filed by the United States with the Court,
and a cover letter in a form attached as Exhibit 1;
2. within fourteen days of entry of the Final Judgment, in a manner
to be devised by each Defendant and approved by the United States,
provide each Defendant's Management reasonable notice of the meaning
and requirements of this Final Judgment;
3. annually brief each Defendant's Management on the meaning and
requirements of this Final Judgment and the U.S. antitrust laws;
4. brief any Person who succeeds a Person in any position
identified in Paragraph VI(C)(3), within sixty days of such succession;
5. obtain from each Person designated in Paragraph VI(C)(3) or
VI(C)(4), within thirty days of that Person's receipt of the Final
Judgment, a certification that the Person (i) has read and 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 Antitrust Compliance Officer; and (iii) understands that failure
to comply with this Final Judgment may result in an enforcement action
for civil or criminal contempt of court;
6. annually communicate to each Defendant's Management that they
may disclose to the Antitrust Compliance Officer, without reprisal for
such disclosure, information concerning any violation or potential
violation of this Final Judgment or the U.S. antitrust laws by the
Defendant; and
7. maintain for five years or until expiration of the Final
Judgment, whichever is shorter, a copy of all materials required to be
issued under Paragraph VI(C), and furnish them to the United States
within ten days if requested to do so, except documents protected under
the attorney-client privilege or the attorney work-product doctrine.
For all materials required to be furnished under Paragraph VI(C) which
a Defendant claims are protected under the attorney-client privilege or
the attorney work-product doctrine, Defendant shall furnish to the
United States a privilege log.
D. Each Defendant shall:
1. upon Management or the Antitrust Compliance Officer learning of
any violation or potential violation of any of the terms and conditions
contained in this Final Judgment, (i) promptly take appropriate action
to investigate, and in the event of a violation, terminate or modify
the activity so as to comply with this Final Judgment, (ii) maintain
all documents related to any violation or potential violation of this
Final Judgment for a period of five years or the duration of this Final
Judgment, whichever is shorter, and (iii) maintain, and furnish to the
United States at the United States' request, a log of (a) all such
documents and documents for which Defendant claims protection under the
attorney-client privilege or the attorney work product doctrine, and
(b) all potential and actual violations, even if no documentary
evidence regarding the violations exist;
2. within thirty days of Management or the Antitrust Compliance
Officer learning of any such violation or potential violation of any of
the terms and conditions contained in this Final
[[Page 6829]]
Judgment, file with the United States a statement describing in detail
any violation or potential violation of any of the terms and conditions
contained in this Final Judgment, 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;
3. establish a whistleblower protection policy, which provides that
any employee may disclose, without reprisal for such disclosure, to the
Antitrust Compliance Officer information concerning any violation or
potential violation by the Defendant of this Final Judgment or U.S.
antitrust laws;
4. have its CEO, General Counsel or Chief Legal Officer certify in
writing to the United States annually on the anniversary date of the
entry of this Final Judgment that Defendant has complied with the
provisions of this Final Judgment; and
5. maintain and produce to the United States upon request: (i) a
list identifying all employees having received the annual antitrust
briefing required under Paragraphs VI(C)(3) and VI(C)(4); and (ii)
copies of all materials distributed as part of the annual antitrust
briefing required under Paragraphs VI(C)(3) and V(C)(4). For all
materials requested to be produced under this Paragraph VI(D)(5) for
which a Defendant claims is protected under the attorney-client
privilege or the attorney work-product doctrine, Defendant shall
furnish to the United States a privilege log.
6. file with the United States six months, twelve months, and
twenty-four months after entry of this Final Judgment a report
describing in detail the steps it has taken to (a) comply with the
terms of this Final Judgement and (b) implement the provisions of
Section VI.
E. For the avoidance of doubt, the term ``potential violation'' as
used in Paragraph VI(D) does not include the discussion of future
conduct.
F. If a Defendant acquires a Person in the business of the
management, sale, commercialization, or other utilization of Multimedia
Rights after entry of this Final Judgment, this Section VI will not
apply to that acquired Person and the Management of that acquired
Person until 120 days after closing of the acquisition of that acquired
Person.
VII. COMPLIANCE INSPECTION
A. For the purposes of determining or securing compliance with this
Final Judgment or of any related orders, or of determining whether the
Final Judgment should be modified, and subject to any legally
recognized privilege, from time to time authorized representatives of
the United States Department of Justice, including consultants and
other Persons retained by the United States, shall, upon written
request of an authorized representative of the Assistant Attorney
General in charge of the Antitrust Division, and on reasonable notice
to Defendants, be permitted:
1. to access during Defendants' office hours to inspect and copy,
or at the option of the United States, to require Defendants to provide
electronic or hard copies of all books, ledgers, accounts, records,
data, and documents in the possession, custody, or control of
Defendants, relating to any matters that are the subject of this Final
Judgment, not protected by the attorney-client privilege or the
attorney work product doctrine; and
2. to interview, either informally or on the record, Defendants
officers, employees, or agents, who may have their individual counsel
present, regarding such matters. The interviews shall be subject to the
reasonable convenience of the interviewee and without restraint or
interference by Defendants; and
3. to obtain from Defendants written reports or responses to
written interrogatories, of information not protected by the attorney-
client privilege or attorney work product doctrine, under oath if
requested, relating to any matters that are the subject of this Final
Judgment as may be requested.
B. No information or documents obtained by the means provided in
this Section VII 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 for law
enforcement purposes, or as otherwise required by law.
C. If at the time information or documents are furnished by
Defendants to the United States, a 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 that 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 that Defendant ten calendar days' notice prior
to divulging such material in any legal proceeding (other than a grand
jury proceeding).
VIII. RETENTION OF JURISDICTION
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
IX. 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 civil 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 Defendants waive any argument that a
different standard of proof should apply.
B. The Final Judgment should be interpreted to give full effect to
the procompetitive purposes of the antitrust laws and to restore all
competition the United States alleged was harmed by the challenged
conduct. Defendants agree that they may be held in contempt of, and
that the Court may enforce, any provision of this Final Judgment that,
as interpreted by the Court in light of these procompetitive principles
and applying ordinary tools of interpretation, is stated specifically
and in reasonable detail, whether or not it is clear and unambiguous on
its face. In any such interpretation, the terms of this Final Judgment
should not be construed against either party as the drafter.
C. In any enforcement proceeding in which the Court finds that
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 Defendants, whether litigated or resolved prior to
litigation, Defendants agree to reimburse the United States for the
fees and expenses of its attorneys, as well as any other costs
including experts' fees, incurred in connection with that enforcement
effort,
[[Page 6830]]
including in the investigation of the potential violation.
X. EXPIRATION OF FINAL JUDGMENT
Unless this Court grants an extension, this Final Judgment shall
expire ten years from the date of its entry, except that after seven
years from the date of its entry, this Final Judgment may be terminated
upon notice by the United States to the Court and Defendants that the
continuation of the Final Judgment no longer is necessary or in the
public interest.
XI. 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 Defendants):
Chief
Media, Entertainment, and Professional Services Section
U.S. Department of Justice
Antitrust Division
450 Fifth Street, NW, Suite 4000
Washington, D.C. 20530
XII. PUBLIC INTEREST DETERMINATION
Entry of this Final Judgment is in the public interest. The parties
have complied with the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. Sec. 16, including making copies available to
the public of this Final Judgment, the Competitive Impact Statement,
and any comments thereon and the United States' responses to comments.
Based upon the record before the Court, which includes the Competitive
Impact Statement and any comments and response to comments filed with
the Court, entry of this Final Judgment is in the public interest.
IT IS SO ORDERED by the Court, this _ day of ___, 201_.
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: Prohibitions against Working with Competitors on MMR Bids
Dear [XX]:
I provide you this notice regarding a judgment recently entered by
a federal judge in Washington, DC prohibiting communicating and
otherwise working with competitors when bidding on colleges and
universities' multimedia rights contracts.
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 communicating with other multimedia
rights firms about bidding on RFPs or other responses to colleges and
universities seeking multimedia rights management services. The
judgment also prevents us from jointly bidding, or seeking to bid
jointly, for any multimedia rights contracts with other companies or
from forming multimedia rights joint ventures. There are limited
exceptions to these restrictions, which are listed in the judgment. The
company will provide briefing on legitimate and illegitimate actions.
You must consult with me if you have any questions on whether a
particular circumstance is subject to an exception under the judgment.
A copy of the judgment 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 work activities, please contact me as
soon as possible.
Please sign and return the attached Employee Certification to
[Defendant's Antitrust Compliance Officer] within thirty days of your
receipt of this letter. Thank you for your cooperation.
Sincerely,
[Defendant's Antitrust Compliance Officer]
Employee Certification
I, ____ [name], ___ [position] at ___ [station or location] do
hereby certify that I (i) have read and understand, and agree to abide
by, the terms of the Final Judgment; (ii) am not aware of any violation
of the Final Judgment that has not been reported to [Defendant]; and
(iii) understand that my failure to comply with this Final Judgment may
result in an enforcement action for civil or criminal contempt of
court.
-----------------------------------------------------------------------
Name:
Date:
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
United States of America, Plaintiff, v. Learfield
Communications, LLC, IMG College, LLC, and A-L Tier I LLC,
Defendants.
Civil Action No.: 1:19-cv-00389
Judge: Emmet G. Sullivan
COMPETITIVE IMPACT STATEMENT
Plaintiff United States of America (``United States''), pursuant to
Section 2(b) of the Antitrust Procedures and Penalties Act, 15 U.S.C.
Sec. 16(b)-(h) (``APPA'' or ``Tunney Act''), files this Competitive
Impact Statement relating to the proposed Final Judgment against
Defendants IMG College (``IMG''), Learfield Communications, LLC
(``Learfield''), and A-L Tier I LLC (collectively ``Defendants''),
submitted for entry in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
On February 14, 2019, the United States filed a civil antitrust
complaint alleging that Defendants agreed or otherwise coordinated to
limit competition between themselves and between themselves and smaller
competitors. The Complaint alleges those agreements and that
coordination unlawfully restrain trade in the multimedia rights
(``MMR'') management market under Section 1 of the Sherman Act, 15
U.S.C. Sec. 1. The Complaint seeks injunctive relief to enjoin the
Defendants from engaging in similar conduct in the future.
Along with the Complaint, the United States filed a proposed Final
Judgment. The proposed Final Judgment prohibits sharing of
competitively sensitive information, agreeing not to bid or agreeing to
jointly bid, and, absent approval from the United States, entering into
or extending MMR joint ventures. It also requires Defendants to
implement an antitrust compliance training program.
The United States and Defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA, unless
the United States withdraws its consent. Entry of the proposed Final
Judgment would terminate this action, except that 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. Industry Background
Millions of Americans enjoy college sports each year. Advertisers
often try to reach college sports fans by advertising during games,
promoting their products at college sports events, and sponsoring
various aspects of college sports events and venues. Multimedia rights
management companies transform
[[Page 6831]]
universities' multimedia rights into revenue. Multimedia rights firms
do this by selling advertising, promotional, and sponsorship
opportunities associated with the universities' sports programs to
companies and other groups trying to reach the universities' sports
fans. The multimedia rights can include space on videoboards and
scoreboards in football stadiums and basketball arenas, space on
printed game programs, commercial time during radio broadcasts of
games, commercial time during radio and television broadcasts of
coaches' shows, promotional contests during games, and various other
methods of reaching fans.
B. Coordination in the MMR Industry
The Complaint alleges that IMG and Learfield have agreed or
otherwise coordinated to limit competition between one another and
between themselves and smaller competitors. At times, the coordination
between IMG and Learfield has taken the form of joint ventures at
specific universities. Under the guise of legitimate business
arrangements, these joint ventures further Defendants' interests over
schools', denying colleges the benefits of competition with little, if
anything, in return. With varying degrees of success, IMG and Learfield
have also attempted to wield the joint venture structure as a way to
co-opt smaller competitors. Additionally, when IMG and Learfield have
unwound established joint ventures at certain universities, the two
firms have crafted non-compete agreements that continue to limit
competition.
The Complaint also alleges that, even in the absence of a so-called
joint venture or non[dash]compete agreement, IMG and Learfield have
sought ways to undermine competition, including employing an informal
policing mechanism to enforce an understanding not to compete. Efforts
to suppress competition have also extended to employee disputes and
legal settlements.
III. Explanation of the Proposed Final Judgment
The provisions of the proposed Final Judgment closely track the
relief sought in the Complaint and are intended to provide prompt,
certain, and effective remedies that will ensure that Defendants and
their employees and agents will not impede competition by agreeing not
to compete, entering into unapproved joint ventures, or sharing
competitively sensitive information with their competitors. The
requirements and prohibitions in the proposed Final Judgment will
terminate Defendants' illegal conduct, prevent recurrence of the same
or similar conduct, and ensure that Defendants establish an antitrust
compliance program. The proposed Final Judgment protects competition
and consumers by putting a stop to the anticompetitive conduct alleged
in the Complaint.
A. Prohibited Conduct
Section IV of the proposed Final Judgement prohibits Defendants
from, directly or indirectly, communicating competitively sensitive
information related to bidding with any MMR competitor.
Section IV also prohibits Defendants from agreeing with an MMR
competitor not to bid, or to bid jointly, on an MMR contract, including
invitations or suggestions to bid jointly Paragraph IV(C) outlines a
process under which Defendants may seek approval from the United States
to form an MMR joint venture, but otherwise prohibits entering into,
renewing, or extending the term of any current or future MMR joint
venture.
B. Conduct Not Prohibited
The proposed Final Judgment does not prohibit Defendants from
undertaking activities necessary to win MMR contracts on their own,
selling multimedia rights to advertisers, or creating packages for
advertisers to advertise across MMR properties. Paragraph V(A) makes
clear that the proposed Final Judgment does not prohibit Defendants
from communicating with colleges, universities, athletic conferences,
or venues seeking to enter into an MMR contract. Paragraph V(B)
confirms Defendants are permitted to communicate with actual or
prospective advertisers, and Paragraph V(E) allows Defendants to
communicate with a competitor for the purpose of putting together
multi-property advertiser packages. Paragraph V(G) confirms that the
proposed Final Judgment does not prohibit petitioning conduct protected
by the Noerr-Pennington doctrine.
Paragraphs V(D) and V(F) permit certain conduct related to joint
ventures. Specifically, Paragraph V(D) allows Defendants to have
initial discussions with a competitor about the formation of a joint
venture that would then be subject to approval by the United States.
Paragraph V(F) makes clear that Defendants may communicate with
competitors about the operation of a joint venture established on or
before July 1, 2018.
C. Antitrust Compliance Obligations
Under Section VI of the proposed Final Judgment, Defendants must
designate an Antitrust Compliance Officer who will be responsible for
implementing training and antitrust compliance programs and ensuring
compliance with the Final Judgment. Among other duties, the Antitrust
Compliance Officer will be required to distribute copies of the Final
Judgment and ensure that training on the Final Judgment and the
antitrust laws is provided to Defendants' management. Section VI also
requires Defendants to establish an antitrust whistleblower policy and
remedy and report violations of the Final Judgment. Under Paragraph
VI(D)(4), Defendants, through their CEO, General Counsel, or Chief
Legal Officer, must certify annual compliance with the Final Judgment.
This compliance program is necessary in light of Defendants'
anticompetitive conduct.
D. 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 IX(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. 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 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 IX(B) provides additional clarification regarding the
interpretation of the provisions of the proposed Final Judgment. The
proposed Final Judgment was drafted to restore competition the United
States alleged was harmed by Defendants' challenged conduct. Defendants
agree that they will abide by the proposed Final Judgment, and that
they may be held in contempt of this Court for failing to comply with
any provision of the proposed Final Judgment that is stated
specifically and in reasonable detail, whether or not it is clear and
unambiguous on its face, and as interpreted in light of this
procompetitive purpose.
Paragraph IX(C) further provides that, should the Court find in an
enforcement
[[Page 6832]]
proceeding that 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 a
proposed Final Judgment, Paragraph IX(C) provides that in any
successful effort by the United States to enforce a Final Judgment
against Defendants, whether litigated or resolved before litigation,
Defendants agree 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 X of the proposed Final Judgment provides that the
Final Judgment shall expire ten years from the date of its entry,
except that after seven years from the date of its entry, the Final
Judgment may be terminated upon notice by the United States to the
Court and 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. Sec. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
Sec. 16(a), the proposed Final Judgment has no prima facie effect in
any subsequent private lawsuit that may be brought against Defendants.
V. Procedures Available for Modification of the Proposed Final
Judgments
The United States and Defendants have stipulated that the Court may
enter the proposed Final Judgment after compliance with the provisions
of the APPA, provided that the United States has not withdrawn its
consent. The APPA conditions entry upon the Court's determination that
the proposed Final Judgment is in the public interest.
The APPA provides a period of at least sixty days preceding the
effective date of the proposed Final Judgment within which any person
may submit to the United States written comments regarding the proposed
Final Judgment. Any person who wishes to comment should do so within
sixty days of the date of publication of this Competitive Impact
Statement in the Federal Register, or the last date of publication in a
newspaper of the summary of this Competitive Impact Statement,
whichever is later. All comments received during this period will be
considered by the United States Department of Justice, which remains
free to withdraw its consent to the proposed Final Judgment at any time
before the Court's entry of judgment. The comments and the response of
the United States will be filed with the Court. In addition, comments
will be posted on the U.S. Department of Justice, Antitrust Division's
website and, under certain circumstances, published in the Federal
Register.
Written comments should be submitted to:
Owen M. Kendler
Chief, Media, Entertainment & Professional Services Section
Antitrust Division
United States Department of Justice
450 5th Street, N.W., Suite 4000
Washington, DC 20530
Under Section VIII, 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, seeking injunctive relief against Defendants' conduct
through a full trial on the merits. The United States is satisfied,
however, that the relief sought in the proposed Final Judgment will
terminate the anticompetitive conduct alleged in the Complaint and more
quickly restore the benefits of competition. Thus, the proposed Final
Judgment would achieve the relief the United States might have obtained
through litigation, but avoids the time, expense, and uncertainty of a
full trial on the merits.
VII. Standard of Review Under the APPA for the Proposed Final Judgments
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 60-day comment period, after which the court shall
determine whether entry of the proposed Final Judgment ``is in the
public interest.'' 15 U.S.C. Sec. 16(e)(1). In making that
determination, the court, in accordance with the statute as amended in
2004, is required to consider:
(A) the competitive impact of such judgment, including termination
of alleged violations, provisions for enforcement and modification,
duration of relief sought, anticipated effects of alternative
remedies actually considered, whether its terms are ambiguous, and
any other competitive considerations bearing upon the adequacy of
such judgment that the court deems necessary to a determination of
whether the consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and
individuals alleging specific injury from the violations set forth
in the complaint including consideration of the public benefit, if
any, to be derived from a determination of the issues at trial.
15 U.S.C. Sec. 16(e)(1)(A) & (B). In considering these statutory
factors, the court's inquiry is necessarily a limited one as the
government is entitled to ``broad discretion to settle with the
defendant within the reaches of the public interest.'' United States v.
Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally
United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007)
(assessing public interest standard under the Tunney Act); United
States v. U.S. 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
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'').
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 in the government's complaint, whether the decree is
sufficiently clear, whether its 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.,
[[Page 6833]]
152 F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS
84787, at *3. Instead:
[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).\1\
\1\ See also 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'').
---------------------------------------------------------------------------
In determining whether a proposed settlement is in the public
interest, a district court ``must accord deference to the government's
predictions about the efficacy of its remedies, and may not require
that the remedies perfectly match the alleged violations.'' SBC
Commc'ns, 489 F. Supp. 2d at 17; see also U.S. Airways, 38 F. Supp. 3d
at 74-75 (noting that a court should not reject the proposed remedies
because it believes others are preferable and that room must be made
for the government to grant concessions in the negotiation process for
settlements); 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 government's prediction as to the effect of
proposed remedies, its perception of the market structure, and its
views of the nature of the case''). The ultimate question is 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.' '' Microsoft, 56 F.3d at 1461 (quoting United States v.
Western Elec. Co., 900 F.2d 283, 309 (D.C. Cir. 1990)). To meet this
standard, the United States ``need only provide a factual basis for
concluding that the settlements are reasonably adequate remedies for
the alleged harms.'' SBC Commc'ns, 489 F. Supp. 2d at 17.
Moreover, the court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its complaint, and does not authorize the court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways,
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.
In its 2004 amendments,\2\ 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. Sec. 16(e)(2); see also U.S. 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). This language explicitly wrote into the statute
what Congress intended when it first enacted the Tunney Act in 1974. As
Senator Tunney explained: ``[t]he court is nowhere compelled to go to
trial or to engage in extended proceedings which might have the effect
of vitiating the benefits of prompt and less costly settlement through
the consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement
of Sen. Tunney). Rather, the procedure for the public interest
determination is left to the discretion of the court, with the
recognition that the court's ``scope of review remains sharply
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC
Commc'ns, 489 F. Supp. 2d at 11. A court can make its public interest
determination based on the competitive impact statement and response to
public comments alone. U.S. Airways, 38 F. Supp. 3d at 76. See also
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''); S. Rep. No. 93-298 93d
Cong., 1st Sess., at 6 (1973) (``Where the public interest can be
meaningfully evaluated simply on the basis of briefs and oral
arguments, that is the approach that should be utilized.'').
---------------------------------------------------------------------------
\2\ The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for a court to consider and amended the
list of factors to focus on competitive considerations and to
address potentially ambiguous judgment terms. Compare 15 U.S.C.
Sec. 16(e) (2004), with 15 U.S.C. Sec. 16(e)(1) (2006); see also
SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004
amendments ``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------
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: February 14, 2019
Respectfully submitted,
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Adam C. Speegle
Trial Attorney
U.S. Department of Justice
Antitrust Division
Media, Entertainment, and Professional Services Section
450 Fifth Street, N.W., Suite 4000
Washington, DC 20530
Phone: (202) 616-5932
Facsimile: (202) 514-7308
Email: [email protected].
[FR Doc. 2019-03478 Filed 2-27-19; 8:45 am]
BILLING CODE 4410-11-P