[Federal Register Volume 86, Number 108 (Tuesday, June 8, 2021)]
[Notices]
[Pages 30479-30494]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-11916]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Zen-Noh Grain Corporation, et al.; 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. Zen-Noh Grain Corporation, et al., Civil Action
No. 1:21-cv-1482-RJL. On June 1, 2021, the United States filed a
Complaint alleging that Zen-Noh Grain Corporation's proposed
acquisition of 35 operating and 13 idled U.S. grain origination
elevators from Bunge North America, Inc. would violate Section 7 of the
Clayton Act, 15 U.S.C. 18. The proposed Final Judgment, filed at the
same time as the Complaint, requires Zen-Noh Grain Corporation to
divest nine grain elevators located in five states along the
Mississippi River and its tributaries.
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
[[Page 30480]]
Federal Register. Comments should be submitted in English and directed
to Robert Lepore, Chief, Transportation, Energy, and Agriculture
Section, Antitrust Division, Department of Justice, 450 Fifth Street
NW, Suite 8000, Washington, DC 20530 (email address:
[email protected]).
Suzanne Morris,
Chief, Premerger and Division Statistics, Antitrust Division.
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 8000, Washington, DC 20530,
Plaintiff, v. Zen-Noh Grain Corp., 1127 Highway 190, East Service
Road, Covington, LA 70433 and Bunge North America, Inc., 1391
Timberland Manor Parkway, Chesterfield, MO 63017, Defendants.
Civil Action No.: 1:21-cv-1482-RJL
Judge Richard J. Leon
Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, brings this civil antitrust
action to prevent Zen-Noh Grain Corp. from acquiring assets of Bunge
North America, Inc. The United States alleges as follows:
I. Introduction
1. American farmers produce the crops that feed our nation and the
world. The United States' primary crops are corn and soybeans
(collectively referred to here as ``grain''). American farmers produced
14.2 billion bushels of corn and 4.14 billion bushels of soybeans in
2020, and roughly one-quarter of these grains were exported. In the
United States, grain may flow from the farm directly to end users like
ethanol plants and feed mills, or farmers can sell their grain to local
grain elevators, where it is stored and aggregated, and later
transported by train or barge to more distant domestic end users or to
port elevators for export. To earn a fair return on their hard work and
investments, farmers rely on vigorous competition between the companies
that purchase their grain for direct use or further resale.
2. Zen-Noh Grain Corp. (``ZGC'') seeks to acquire 35 operating and
13 idled U.S. grain elevators from Bunge North America, Inc.
(``Bunge''). These elevators are located in nine states, mainly along
the Mississippi River and its tributaries. ZGC and Bunge are both grain
traders and exporters, each purchasing millions of tons of corn and
soybeans annually from farmers located across the United States'
agricultural regions, and through their networks distributing the grain
to customers throughout the United States and the rest of the world.
3. Today, ZGC, along with its affiliate CGB Enterprises, Inc.
(``CGB''), a 50-50 joint venture between ZGC and Itochu Corporation,
competes against Bunge to purchase corn and soybeans at numerous U.S.
grain elevators and at their port elevators. In particular, in some
areas along the Mississippi and Ohio Rivers where the Defendants
operate competing river elevators, farmers have few--if any--
alternative purchasers for their grain. The acquisition will eliminate
competition between ZGC and Bunge in those locations; as a result, many
U.S. farmers are likely to receive lower prices and poorer quality
service when seeking to sell their grain.
4. In nine geographic areas, a Bunge elevator and a nearby ZGC or
CGB elevator represent two of only a small number of alternatives where
area farmers can sell their grain. In those nine areas, ZGC and Bunge
currently compete aggressively to win farmers' business by offering
better prices and more attractive amenities such faster grain drop-off
services and better grain grading. Faster drop-off services mean
farmers can get back to their fields more quickly and make better use
of their trucks and employees, ultimately saving time and money. If one
elevator is grading grain more harshly or inconsistently, which may
lead to a lower price paid to a farmer for the grain, the farmer has
the option of selling to a competing elevator which may grade
differently.
5. If the proposed transaction proceeds in its current form,
farmers located in these areas are likely to receive lower prices and
lower quality services, and have fewer choices for the sale of their
crops. The proposed transaction therefore is likely to lessen
competition substantially in violation of Section 7 of the Clayton Act,
15 U.S.C. 18, and the Court should enjoin this unlawful transaction.
II. Jurisdiction and Venue
6. The United States brings this action pursuant to Section 15 of
the Clayton Act, 15 U.S.C. 25, to prevent and restrain Defendants from
violating Section 7 of the Clayton Act, 15 U.S.C. 18.
7. Defendants are engaged in, and their activities substantially
affect, interstate commerce. ZGC and Bunge both purchase, store, and
sell grain throughout the United States. The Court has subject matter
jurisdiction over this action pursuant to Section 15 of the Clayton
Act, 15 U.S.C. 25, and 28 U.S.C. 1331, 1337(a), and 1345.
8. ZGC and Bunge have each consented to personal jurisdiction and
venue in this jurisdiction for purposes of this action. Venue is proper
under 15 U.S.C. 22, and 28 U.S.C. 1391(b) and (c).
III. Defendants and the Proposed Transaction
9. This case arises from ZGC's proposed acquisition of certain
grain elevator assets from Bunge for approximately $300 million
pursuant to an Asset Purchase Agreement entered on April 21, 2020.
10. ZGC, headquartered in Covington, Louisiana, is a subsidiary of
the National Federation of Agricultural Cooperative Associations of
Japan. ZGC owns and operates a state-of-the-art export elevator located
on the Mississippi River near Convent, Louisiana, from which it trades
and exports corn, soybeans, sorghum, wheat, and grain by-products.
Recently expanded in 2018 to handle up to 17 million tons of grain
annually, ZGC's Convent elevator is the largest port elevator on the
Mississippi. ZGC does not own any inland grain elevators and relies
upon its affiliate, CGB, to supply the majority of the massive
quantities of corn and soybeans ZGC exports annually from Convent.
Post-acquisition, ZGC intends to lease the Bunge elevators to CGB to
operate through CGB's wholly owned subsidiary, Consolidated Grain and
Barge Co.
11. CGB is a 50-50 joint venture between ZGC and Itochu
Corporation, a global trading company. CGB operates more than 100
elevators, many of which are located along the Mississippi, Ohio,
Arkansas, and Illinois Rivers. CGB is the fifth-largest grain company
in the United States by storage capacity. CGB's grain merchandizers are
in daily contact with thousands of farmers, actively seeking to
purchase grain from them. Currently, CGB sells approximately 60% of the
grain it purchases to ZGC.
12. Bunge, headquartered in Chesterfield, Missouri, is the North
American subsidiary of Bunge Limited. Bunge is a large agribusiness and
food ingredient company that owns and operates grain elevators, oilseed
processing plants, and edible oil refineries, as well as grain export
terminals. Bunge is the eighth-largest grain company in the United
States by storage capacity. Post-acquisition, Bunge will continue
purchase grain in the United States via its export elevator on the
Mississippi River in Destrehan, Louisiana and its export terminal in
Longview, Washington (a joint venture
[[Page 30481]]
with Itochu Corporation). In addition to the export terminals, Bunge
will retain ownership interests in eight elevators in Illinois and
Indiana.
IV. The Relevant Markets
13. The livelihood of farmers depends on their ability to sell the
corn and soybeans they grow to purchasers who offer them the best
price, net of transportation and other selling costs that farmers
incur. Ethanol plants and feed and crush mills purchase grain and
process it into usable products such as soymeal or fuel. Rail and river
elevators also purchase grain and store it until it is sold and
transported to end users, in either domestic or export markets.
14. For convenience, some farmers may sell their grain to smaller,
``country'' elevators, located in closer proximity to the farmer than
end users or rail and river elevators. Such elevators serve as grain
collection and buying points in rural communities, and may provide
other services like grain storage, drying, and conditioning services.
Upon aggregating sufficient quantities of grain, or when market prices
are most attractive, country elevators ultimately resell the grain to
end users or to the larger rail or river elevators that can transport
the grain to end users or export elevators.
15. More than 45% of the grain exported from the U.S. is shipped
out from port elevator export terminals located at the mouth of the
Mississippi River near the Gulf of Mexico. The vast majority of this
grain is sourced from river elevators located along the Mississippi and
its tributaries. These river elevators, found as far north as
Minnesota, purchase grain from surrounding farms, and load it onto
barges for transport to the port elevators.
A. Relevant Product Markets
16. ZGC (mainly through CGB) and Bunge own grain elevators,
primarily located at rail terminals and along navigable rivers. They
compete with other grain purchasers, including ethanol processors, feed
mills, and crush processors, to purchase corn and soybeans from U.S.
farmers, brokers and country elevators. Corn and soybeans are each
distinct products without reasonable substitutes, differing from other
agricultural commodities and one another in their physical
characteristics, means of production, uses, and pricing. Because of the
length of growing seasons, and the suitability of corn and soybeans to
certain climates and regions, farmers of these crops would not switch
to production of other agricultural commodities in sufficient numbers
to render unprofitable a small but significant decrease in price by a
hypothetical monopsonist of that crop. The purchase of corn and the
purchase of soybeans for end use or for sale to the export market each
constitute a relevant product market and line of commerce under Section
7 of the Clayton Act, 15 U.S.C. 18.
B. Relevant Geographic Market
17. Farmers typically haul grain by truck to nearby elevators or
end users. Transportation costs increase significantly with every mile
the farmers must transport the grain to reach a purchaser, reducing the
farmers' profits. Transporting grain also consumes farmers' time. For
these reasons, a small change in price would not likely cause farmers
to significantly expand the distance they are willing to drive to sell
their grain. The distance a farmer is willing to drive is determined in
large part by the second-closest potential purchaser, which is the best
competitive threat to the purchaser closest to the farmer.
18. Rail or river elevators and other grain purchasing facilities,
such as grain crush plants and ethanol plants, typically purchase grain
from within the facility's draw area. ``Draw area'' is an industry term
that describes the locations of farms from which the facility expects
to acquire most of its grain. Each elevator or end user has a unique
draw area due to characteristics such as surrounding road conditions,
crop output, local topography, and proximity of competing purchasers.
The draw area of a grain purchasing facility is determined by
transportation time and costs and so is usually very localized.
19. The draw area of one grain facility frequently will overlap
with that of another, resulting in competition between the facilities
to purchase grain from farmers. Some farming areas of the country may
be located such that they fall within the overlapping draw areas of
only a few competing grain purchasing facilities. In particular, in the
following areas where the Defendants' river elevators have overlapping
draw areas, there are only a small number of grain purchasers competing
to purchase farmers' corn and soybeans:
(a) The overlapping draw areas of elevators in the vicinity of
McGregor, Iowa;
(b) The overlapping draw areas of elevators in the vicinity of
Albany/Fulton, Illinois;
(c) The overlapping draw areas of elevators in the vicinity of
Shawneetown, Illinois;
(d) The overlapping draw areas of elevators in the vicinity of
Caruthersville, Missouri;
(e) The overlapping draw areas of elevators in the vicinity of
Huffman, Arkansas;
(f) The overlapping draw areas of elevators in the vicinity of
Osceola, Arkansas;
(g) The overlapping draws areas of elevators in the vicinity of
Helena, Arkansas;
(h) The overlapping draw areas of elevators in the vicinity of Lake
Providence, Louisiana; and
(i) The overlapping draw areas of elevators in the vicinity of
Lettsworth, Louisiana.
20. These geographic areas satisfy the hypothetical monopsonist
test (a ``monopsonist'' is a buyer that controls the purchases in a
given market), the buyer-side counterpart to the hypothetical
monopolist test. A hypothetical monopsonist of the purchase of corn or
soybeans in each of these areas would impose at least a small but
significant and non-transitory decrease in the price paid to farmers.
Such a price decrease for these products would not be defeated by
farmers selling to purchasers outside their local area due to the added
costs of transportation. As farmers in these areas have already
determined the best use of their farmland, a price decrease would also
not be defeated by farmers' switching to growing alternative crops.
Farmers currently growing corn or soybeans are unlikely convert to
production of other agricultural commodities in sufficient numbers to
prevent a small but significant decrease in price. Nor could area
farmers thwart a post-transaction price decrease by selling instead to
local country elevators. Country elevators simply resell grain to river
and rail elevators or to other end users; if Defendants lower prices
post-transaction, country elevators would be forced to lower their own
price to farmers to maintain profitability. Consequently, country
elevators cannot mitigate a price decrease resulting from this
transaction. Therefore, each of the overlapping draw areas above
constitute a relevant geographic market within the meaning of Section 7
of the Clayton Act, 15 U.S.C. 18, for the purposes of analyzing this
transaction.
V. ZGC's Acquisition of Certain Grain Elevators From Bunge is Likely To
Result in Anticompetitive Effects
21. In each of the nine relevant geographic markets, ZGC (and its
affiliate CGB) and Bunge are two of a very small number of grain
purchasers competing to buy corn and soybeans; in
[[Page 30482]]
two of these markets, CGB and Bunge are the only elevators available to
area farmers. Famers located within these geographic areas depend on
this competition to obtain a competitive price for their grain. ZGC's
acquisition of Bunge's elevators will substantially lessen competition
for the purchase of corn and soybeans in these markets, enabling it to
unilaterally depress prices paid to farmers for their crops.
22. Because there are few alternative grain purchasers within these
geographic areas, purchases of grain are highly concentrated, with the
Defendants accounting for a majority of corn and/or soybean purchases
in a given year. For example, in 2019, the Defendants purchased upwards
of 95% of the total corn and soybean output of farmers in Pemiscot
County, Missouri; Pemiscot County falls within the draw area of Bunge's
Caruthersville, Missouri river elevator, and the draw areas of CGB's
Caruthersville and Cottonwood, Missouri river elevators.
23. By eliminating head-to-head competition between ZGC (and its
affiliate CGB) and Bunge for grain purchases in these geographic
markets, the proposed acquisition would result in lower prices paid to
farmers, lower quality of services offered to farmers at the grain
origination elevators, and reduced choice of outlets for farmers to
sell their grain. The proposed transaction would substantially lessen
competition and harm the many farmers selling their crops to river
elevators along the Mississippi River and its tributaries.
V. Absence of Countervailing Factors
24. New entry and expansion by competitors likely will not be
timely and sufficient in scope to prevent the acquisition's likely
anticompetitive effects. New elevators are unlikely to be constructed
in these geographic markets because of the high cost of construction
and the difficulty of finding appropriate locations to build such a
facility along the Mississippi or its tributaries. Even assuming such a
location could be found and regulatory and permitting requirements
could be fulfilled, constructing a river elevator would take
approximately two years to complete.
25. The proposed acquisition is unlikely to generate verifiable,
merger-specific efficiencies sufficient to reverse or outweigh the
anticompetitive effects likely to occur.
VII. Violation Alleged
26. The United States hereby incorporates the allegations of
paragraphs 1 through 26 above as if set forth fully herein.
27. ZGC's proposed acquisition of the Bunge elevators is likely to
substantially lessen competition in the relevant markets, in violation
of Section 7 of the Clayton Act, 15 U.S.C. 18.
28. Unless enjoined, the proposed acquisition would likely have the
following anticompetitive effects, among others:
(a) Eliminate present and future competition between ZGC (and
affiliate CGB) and Bunge in the each of the relevant geographic markets
for the purchase of corn and the purchase of soybeans;
(b) cause prices paid to farmers for corn and soybeans to be lower
than they would be otherwise; and
(c) reduce quality, service, and choice for American farmers.
VIII. Request for Relief
29. The United States requests that the Court:
(a) Adjudge ZGC's acquisition of Bunge's elevators to violate
Section 7 of the Clayton Act, 15 U.S.C. 18;
(b) permanently enjoin Defendants from consummating ZGC's proposed
acquisition of Bunge's elevators or from entering into or carrying out
any other agreement, understanding, or plan by which the assets or
businesses of ZGC and Bunge would be combined;
(c) award the United States its costs of this action; and
(d) grant the United States such other relief the Court deems just
and proper.
Dated: June 1, 2021.
Respectfully submitted,
FOR PLAINTIFF UNITED STATES:
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Richard A. Powers
Acting Assistant Attorney General for Antitrust
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Kathleen S. O'Neill
Senior Director of Investigations & Litigation
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Robert A. Lepore
Chief, Transportation, Energy & Agriculture Section
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Katherine A. Celeste
Assistant Chief, Transportation, Energy & Agriculture Section
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Jill Ptacek *
Michele B. Cano
Jessica Butler-Arkow (D.C. #43022)
Attorneys for the United States
U.S. Department of Justice, Antitrust Division, 450 Fifth Street NW,
Suite 8000, Washington, DC 20530, Tel: (202) 307-6607, Fax: (202)
616-2441, Email: [email protected]
* Lead attorney to be noticed
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
United States of America, Plaintiff, v. Zen-Noh Grain Corp., and
Bunge North America, Inc., Defendants.
Civil Action No.: 1:21-cv-1482-RJL
Judge Richard J. Leon
Proposed Final Judgment
Whereas, Plaintiff, United States of America, filed its Complaint
on ___, 2021;
And whereas, the United States and Defendants, Zen-Noh Grain Corp.
and Bunge North America, Inc., by their respective attorneys, have
consented to entry of this Final Judgment without the taking of
testimony, without trial or adjudication of any issue of fact or law,
and without this Final Judgment constituting any evidence against or
admission by any party regarding any issue of fact or law;
And whereas, Defendants agree to make certain divestitures to
remedy the loss of competition alleged in the Complaint;
And whereas, Defendants represent that the divestitures and other
relief required by this Final Judgment can and will be made and that
Defendants will not later raise a claim of hardship or difficulty as
grounds for asking the Court to modify any provision of this Final
Judgment;
Now therefore, it is ordered, adjudged, and decreed:
I. Jurisdiction
The Court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states a claim upon which
relief may be granted against Defendants under Section 7 of the Clayton
Act, as amended (15 U.S.C. 18).
II. Definitions
As used in this Final Judgment:
A. ``Acquirer'' or ``Acquirers'' means Viserion or another entity
or entities to which Defendants divest the Divestiture Assets.
B. ``ZGC'' means Zen-Noh Grain Corp., a Louisiana corporation
headquartered in Covington, Louisiana, its successors and assigns, and
its subsidiaries, divisions, groups, affiliates (including CGB),
partnerships, and joint ventures, and their directors, officers,
managers, agents, and employees.
C. ``Bunge'' means Bunge North America, Inc., a New York
corporation headquartered in Chesterfield, Missouri, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships, and joint ventures, and their directors, officers,
managers, agents, and employees.
[[Page 30483]]
D. ``Bunge Elevators'' means the elevators located on the
properties owned or leased by Bunge listed among the Divested
Elevators.
E. ``CGB'' means CGB Enterprises Inc., a Louisiana corporation
headquartered in Covington, LA, its successors and assigns, and its
subsidiaries, divisions, groups, affiliates, partnerships, and joint
ventures, and their directors, officers, managers, agents, and
employees.
F. ``CGB Elevator'' means the elevator located on the property
owned or leased by CGB listed among the Divested Elevators.
G. ``Viserion'' means Viserion Grain, LLC and Viserion
International Holdco, LLC, Delaware limited liability companies
headquartered in Colorado, their successors and assigns, their
subsidiaries, divisions, groups, affiliates, partnerships, and joint
ventures and their directors, officers, managers, agents, and
employees.
H. ``Divested Elevators'' means the following elevators:
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Geographic area Elevator(s) to be divested
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McGregor, IA........................................ The Bunge Elevator located at 311 E B St., McGregor, IA
52157.
Albany, IL.......................................... The Bunge Elevator located at 1002 N Main St., Albany, IL
61230 OR the CGB Elevator located at 561 Broderick Drive,
Savanna, IL 61074.
Shawneetown, IL..................................... The Bunge Elevator located at 218 Market St., Shawneetown,
IL 62984.
Caruthersville, MO.................................. The Bunge Elevator located at 100 Ward Ave.,
Caruthersville, MO 63830.
Huffman, AR......................................... The Bunge Elevator located at 7058 E County Rd. 54, Hwy.
37, Blytheville, AR 72315.
Osceola, MO......................................... The Bunge Elevators located at 2220 E State Hwy. 198 and
Mississippi River, Osceola, AR 72370 and at Mississippi
County 661 S, Monroe Township, AR 72370.
Helena, AR.......................................... The Bunge Elevator located at 103 Hanks Ln., Helena, AR
72342.
Lake Providence, LA................................. The Bunge Elevator located at 337 Port Rd., Lake
Providence, LA 71254.
Lettsworth, LA...................................... The Bunge Elevator located at 17783 Hwy. 418, Lettsworth,
LA 70753.
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I. ``Divestiture Assets'' means all of Defendants' rights, titles,
and interests in and to:
1. The Divested Elevators;
2. all contracts, contractual rights, and relationships, including
customer and supplier relationships, and all other agreements,
commitments, and understandings, including, supply agreements, teaming
agreements, and leases, and all outstanding offers or solicitations to
enter into a similar arrangement that relate exclusively to the
Divested Elevators; and
3. all other property and assets, tangible and intangible, wherever
located, relating to or used in connection with each Divested Elevator,
including:
a. All real property and real property rights, fee simple
interests; buildings, facilities, and other structures, including bins,
silos, other grain storage facilities, and dock facilities; easements;
leasehold and rental rights, including all renewal or option rights;
prepaid rent and security deposits; and fixtures, improvements, and
assignable improvement warranties;
b. all tangible personal property; equipment, machinery, and tools,
such as those used for handling, receiving, unloading, weighing,
sampling, grading, elevating, storing, drying, conditioning, loading,
and buying and selling grain; vehicles and furniture; supplies,
replacement parts, and spare parts; and inventory;
c. all licenses, permits, certifications, approvals, consents,
registrations, waivers, and authorizations issued or granted by any
governmental organization, and all pending applications or renewals;
d. all records and data, including (a) customer and supplier lists,
accounts, sales, and credit records, (b) production, repair,
maintenance, and performance records, (c) manuals and technical
information Defendants provide to their own employees, customers,
suppliers, agents, or licensees, (d) accounting and operating records
and ledgers; (e) sales and marketing records, including local marketing
plans and sales and advertising materials, (f) records and research
data concerning historic and current research and development
activities, and (g) drawings, blueprints, and designs; and
e. all other intangible property, including, (a) technical
information, (b) design tools and simulation capabilities, (c) computer
software and related documentation, know-how, trade secrets, design
protocols, specifications for materials, specifications for parts,
specifications for devices, safety procedures (e.g., for the handling
of materials and substances), and quality assurance and control
procedures, provided, however, that any intellectual property
associated with the brand names Bunge, CGB, Zen-Noh, and ZGC is not
included in the Divestiture Assets.
J. ``Divestiture Date'' means the date[s] on which the Divestiture
Assets are divested to Acquirer[s] pursuant to this Final Judgment.
K. ``Including'' means including, but not limited to.
L. ``Relevant Personnel'' means: (1) All full-time, part-time, or
contract employees employed at the Divested Elevators at any time
between August 21, 2020, and the Divestiture Date; (2) all elevator
managers, grain merchandisers, and elevator superintendents employed by
Bunge or CGB whose job responsibilities are shared between or among
Divested Elevators and any non-divested elevators, at any time between
August 21, 2020, and the Divestiture Date; and (3) all regional
managers employed by Bunge one organizational level above the elevator
manager level, wherever located, whose job responsibilities support the
grain purchasing business of any of the Bunge Elevators, at any time
between August 21, 2020, and the Divestiture Date. The United States,
in its sole discretion, will resolve any disagreement regarding which
employees are Relevant Personnel.
M. ``Transaction'' means ZGC's proposed acquisition of 35 operating
and 13 idled grain elevators from Bunge.
III. Applicability
A. This Final Judgment applies to Defendants ZGC and Bunge, as
defined above, and all other persons in active concert or participation
with any Defendant who receive actual notice of this Final Judgment.
B. If, prior to complying with Section IV and Section V of this
Final Judgment, Defendants sell or otherwise dispose of all or
substantially all of their assets or of business units that include the
Divestiture Assets, Defendants must require any purchaser to be bound
by the provisions of this Final Judgment. Defendants need not obtain
such an agreement from an Acquirer.
IV. Divestitures
A. Defendant ZGC is ordered and directed within 30 calendar days
after entry of the Asset Preservation Stipulation and Order to divest
the Divestiture Assets in a manner
[[Page 30484]]
consistent with this Final Judgment to Viserion or to another Acquirer
or Acquirers acceptable to the United States, in its sole discretion.
The United States, in its sole discretion, may agree to one or more
extensions of this time period not to exceed 90 calendar days in total
and will notify the Court of any extensions.
B. Defendant ZGC must use its best efforts to divest the
Divestiture Assets as expeditiously as possible, and Defendants may not
take any action to impede the permitting, licensing, operation, or
divestiture of the Divestiture Assets. Defendants must take no action
that would jeopardize the divestiture ordered by the Court.
C. Unless the United States otherwise consents in writing,
divestiture pursuant to this Final Judgment must include the entire
Divestiture Assets and must be accomplished in such a way as to satisfy
the United States, in its sole discretion, that the Divestiture Assets
can and will be used by Acquirer as part of a viable, ongoing business
of grain purchasing, and that the divestiture to Acquirer or Acquirers
will remedy the competitive harm alleged in the Complaint.
D. The divestiture must be made to an Acquirer or Acquirers that,
in the United States' sole judgment, has or have the intent and
capability (including the necessary managerial, operational, technical,
and financial capability) to compete effectively in grain purchasing.
E. The divestiture must be accomplished in a manner that satisfies
the United States, in its sole discretion, that none of the terms of
any agreement between an Acquirer and Defendant ZGC give Defendants the
ability unreasonably to raise an Acquirer's costs, to lower an
Acquirer's efficiency, or otherwise to interfere in the ability of an
Acquirer to compete effectively in grain purchasing.
F. Divestiture of the Divestiture Assets may be made to one or more
Acquirers, in one or more transactions, provided that it is
demonstrated to the sole satisfaction of the United States that the
criteria required by Paragraphs IV(C), IV(D), and IV(E) will still be
met.
G. In the event Defendant ZGC is attempting to divest the
Divestiture Assets to an Acquirer other than Viserion, Defendant ZGC
promptly must make known, by usual and customary means, the
availability of the Divestiture Assets. Defendant ZGC must inform any
person making an inquiry regarding a possible purchase of the
Divestiture Assets that the Divestiture Assets are being divested in
accordance with this Final Judgment and must provide that person with a
copy of this Final Judgment. Defendants must offer to furnish to all
prospective Acquirers, subject to customary confidentiality assurances,
all information and documents relating to the Divestiture Assets that
are customarily provided in a due-diligence process; provided, however,
that Defendants need not provide information or documents subject to
the attorney-client privilege or work-product doctrine. Defendants must
make all information and documents available to the United States at
the same time that the information and documents are made available to
any other person.
H. Defendants must provide prospective Acquirers with (1) access to
make inspections of the Divestiture Assets; (2) access to all
environmental, zoning, and other permitting documents and information
regarding the Divestiture Assets; and (3) access to all financial,
operational, or other documents and information relating to the
Divestiture Assets that customarily would be provided as part of a due-
diligence process. Defendants also must disclose all encumbrances on
any part of the Divestiture Assets, including on intangible property.
I. Defendants must cooperate with and assist an Acquirer in
identifying and, at the option of Acquirer, hiring all Relevant
Personnel, including:
1. Within 10 business days following the filing of the Complaint in
this matter, or, if the Divestiture Assets are divested to an Acquirer
or Acquirers other than Viserion, within 10 business days of notice
from the United States pursuant to Paragraph VI.C. that it does not
object to a proposed Acquirer, Defendants must identify all Relevant
Personnel to Acquirer and the United States, including by providing
organization charts covering all Relevant Personnel.
2. Within 10 business days following receipt of a request by an
Acquirer or the United States, Defendants must provide to Acquirer and
the United States additional information related to Relevant Personnel,
including name, job title, reporting relationships, past experience,
responsibilities, training and educational histories, relevant
certifications, and job performance evaluations. Defendants must also
provide to Acquirer and the United States current and accrued
compensation and benefits, including most recent bonuses paid,
aggregate annual compensation, current target or guaranteed bonus, any
retention agreement or incentives, and any other payments due,
compensation or benefited accrued, or promises made to the Relevant
Personnel. If Defendants are barred by any applicable law from
providing any of this information, Defendants must provide, within 10
business days following receipt of the request, the requested
information to the full extent permitted by law and also must provide a
written explanation of Defendants' inability to provide the remaining
information, including specifically identifying the provisions of the
applicable laws.
3. At the request of an Acquirer, Defendants must promptly make
Relevant Personnel available for private interviews with Acquirer
during normal business hours at a mutually agreeable location.
4. Defendants must not interfere with any effort by an Acquirer to
employ any Relevant Personnel. Interference includes, but is not
limited to, offering to increase the compensation or improve the
benefits of Relevant Personnel unless: (a) The offer is part of a
company-wide increase in compensation or improvement in benefits that
was announced prior to April 21, 2020, or (b) the offer is approved by
the United States in its sole discretion. Defendants' obligations under
this Paragraph will expire 6 months after the Divestiture Date.
5. For Relevant Personnel who elect employment with an Acquirer
within 6 months of the Divestiture Date, Defendants must waive all non-
compete and non-disclosure agreements, vest all unvested pension and
other equity rights (or to the extent such accelerated vesting is not
permitted, provide the equivalent benefits), provide any pay pro-rata,
provide all other compensation and benefits that their Relevant
Personnel have fully or partially accrued, and provide pro-rata all
other benefits that those Relevant Personnel otherwise would have been
provided had the Relevant Personnel continued employment with
Defendants, including any vested retention bonuses or payments.
Defendants may maintain reasonable restrictions on disclosure by
Relevant Personnel of Defendants' proprietary non-public information
that is unrelated to the Divestiture Assets and not otherwise required
to be disclosed by this Final Judgment.
6. For a period of 12 months from the Divestiture Date, Defendants
may not solicit to rehire the following categories of Relevant
Personnel hired by an Acquirer from Defendants within 6 months of the
Divestiture Date: Regional and general managers, elevator managers,
grain merchandisers, elevator superintendents, and bookkeepers.
Defendants may solicit to rehire these categories of Relevant Personnel
if (a) an
[[Page 30485]]
individual is terminated or laid off by Acquirer, or (b) Acquirer
agrees in writing that Defendants may solicit to rehire that
individual. Nothing in this Paragraph IV.H.6. prohibits Defendants from
advertising employment openings using general solicitations or
advertisements and rehiring Relevant Personnel who apply for an
employment opening through a general solicitation or advertisement.
J. Defendant ZGC must warrant to Acquirer or Acquirers that (1) the
Divestiture Assets will be operational and without material defects on
the date of their transfer to Acquirer; (2) there are no material
defects in the environmental, zoning, or other permits relating to the
operation of the Divestiture Assets; and (3) Defendant ZGC has
disclosed all encumbrances on any part of the Divestiture Assets,
including on intangible property. Following the sale of the Divestiture
Assets, Defendants must not undertake, directly or indirectly,
challenges to the environmental, zoning, or other permits relating to
the operation of the Divestiture Assets.
K. For any contract or agreement that requires the consent of
another party to assign, subcontract, or otherwise transfer, Defendants
must use best efforts to accomplish the assignment, subcontracting, or
transfer. Defendants must not interfere with any negotiations between
an Acquirer and a contracting party.
L. Defendants must make best efforts to assist Acquirer or
Acquirers to obtain all necessary licenses, registrations,
certifications, and permits to operate the Divestiture Assets,
including those issued by governmental entities. Until an Acquirer
obtains the necessary licenses, registrations, certifications, and
permits, Defendants must provide Acquirer with the benefit of
Defendants' licenses, registrations, certifications, and permits to the
full extent permissible by law.
M. At the option of Acquirer or Acquirers, and subject to approval
by the United States in its sole discretion, on or before the
Divestiture Date, Defendants must enter into contracts to provide
transition services for back office, human resources, and information
technology, for a period of up to six months after the divestiture
occurs on terms and conditions reasonably related to market conditions
for the provision of the transition services. Any amendments to or
modifications of any provision of any contract between either or both
Defendants, and Acquirer or Acquirers, to provide transition services
are subject to approval by the United States, in its sole discretion.
The United States, in its sole discretion, may approve one or more
extensions of any contract for transition services between Defendants
and Viserion, for a total of up to an additional six months. In the
event the Divestiture Assets are divested to an Acquirer or Acquirers
other than Viserion, the United States, in its sole discretion, may
approve an extension of any contract for transition services for up to
12 months after the divestiture is completed. If an Acquirer seeks an
extension of the term of any contract for transition services, the
relevant Defendant must notify the United States in writing at least
two months prior to the date the contract expires. An Acquirer may
terminate a contract for transition services, or any portion of a
contract for transition services, without cost or penalty at any time
upon 30 days' written notice. The employee(s) of Defendants tasked with
providing transition services must not share any competitively
sensitive information of an Acquirer with any other employee of
Defendants.
N. If any term of an agreement between Defendants and Acquirer or
Acquirers, including an agreement to effectuate the divestiture
required by this Final Judgment, varies from a term of this Final
Judgment, to the extent that Defendants cannot fully comply with both,
this Final Judgment determines Defendants' obligations.
V. Appointment of Divestiture Trustee
A. If Defendant ZGC has not divested the Divestiture Assets within
the period specified in Paragraph IV.A., Defendant ZGC must immediately
notify the United States of that fact in writing. Upon application of
the United States, which Defendants may not oppose, the Court will
appoint a divestiture trustee selected by the United States and
approved by the Court to effect the divestiture of the Divestiture
Assets.
B. After the appointment of a divestiture trustee by the Court,
only the divestiture trustee will have the right to sell the
Divestiture Assets. The divestiture trustee will have the power and
authority to accomplish the divestiture to an Acquirer or Acquirer(s)
acceptable to the United States, in its sole discretion, at a price and
on terms obtainable through reasonable effort by the divestiture
trustee, subject to the provisions of Sections IV, V, and VI of this
Final Judgment, and will have other powers as the Court deems
appropriate. The divestiture trustee will have sole discretion to
select the Divested Elevator to be divested in each geographic area
listed in Paragraph II.H. The divestiture trustee must sell the
Divestiture Assets as quickly as possible.
C. Defendants may not object to a sale by the divestiture trustee
on any ground other than malfeasance by the divestiture trustee.
Objections by Defendants must be conveyed in writing to the United
States and the divestiture trustee within 10 calendar days after the
divestiture trustee has provided the notice of proposed divestiture
required by Section VI.
D. The divestiture trustee will serve at the cost and expense of
Defendant ZGC pursuant to a written agreement, on terms and conditions,
including confidentiality requirements and conflict of interest
certifications, that are approved by the United States in its sole
discretion.
E. The divestiture trustee may hire at the cost and expense of
Defendant ZGC any agents or consultants, including, but not limited to,
investment bankers, attorneys, and accountants, that are reasonably
necessary in the divestiture trustee's judgment to assist with the
divestiture trustee's duties. These agents or consultants will be
accountable solely to the divestiture trustee and will serve on terms
and conditions, including terms and conditions governing
confidentiality requirements and conflict-of-interest certifications,
that are approved by the United States in its sole discretion.
F. The compensation of the divestiture trustee and agents or
consultants hired by the divestiture trustee must be reasonable in
light of the value of the Divestiture Assets and based on a fee
arrangement that provides the divestiture trustee with incentives based
on the price and terms of the divestiture and the speed with which it
is accomplished. If the divestiture trustee and Defendant ZGC are
unable to reach agreement on the divestiture trustee's compensation or
other terms and conditions of engagement within 14 calendar days of the
appointment of the divestiture trustee by the Court, the United States,
in its sole discretion, may take appropriate action, including by
making a recommendation to the Court. Within three business days of
hiring an agent or consultant, the divestiture trustee must provide
written notice of the hiring and rate of compensation to Defendant ZGC
and the United States.
G. The divestiture trustee must account for all monies derived from
the sale of the Divestiture Assets sold by the divestiture trustee and
all costs and expenses incurred. Within 30 calendar days of the
Divestiture Date, the divestiture trustee must submit that accounting
to the Court for approval.
[[Page 30486]]
After approval by the Court of the divestiture trustee's accounting,
including fees for unpaid services and those of agents or consultants
hired by the divestiture trustee, all remaining money must be paid to
Defendant ZGC and the trust will then be terminated.
H. Defendants must use their best efforts to assist the divestiture
trustee to accomplish the required divestiture. Subject to reasonable
protection for trade secrets, other confidential research, development,
or commercial information, or any applicable privileges, Defendants
must provide the divestiture trustee and agents or consultants retained
by the divestiture trustee with full and complete access to all
personnel, books, records, and facilities of the Divestiture Assets.
Defendants also must provide or develop financial and other information
relevant to the Divestiture Assets that the divestiture trustee may
reasonably request. Defendants must not take any action to interfere
with or to impede the divestiture trustee's accomplishment of the
divestiture.
I. The divestiture trustee must maintain complete records of all
efforts made to sell the Divestiture Assets, including by filing
monthly reports with the United States setting forth the divestiture
trustee's efforts to accomplish the divestiture ordered by this Final
Judgment. The reports must include the name, address, and telephone
number of each person who, during the preceding month, made an offer to
acquire, expressed an interest in acquiring, entered into negotiations
to acquire, or was contacted or made an inquiry about acquiring any
interest in the Divestiture Assets and must describe in detail each
contact with any such person.
J. If the divestiture trustee has not accomplished the divestiture
ordered by this Final Judgment within six months of appointment, the
divestiture trustee must promptly provide the United States with a
report setting forth: (1) The divestiture trustee's efforts to
accomplish the required divestiture; (2) the reasons, in the
divestiture trustee's judgment, why the required divestitures have not
been accomplished; and (3) the divestiture trustee's recommendations
for completing the divestitures. Following receipt of that report, the
United States may make additional recommendations to the Court. The
Court thereafter may enter such orders as it deems appropriate to carry
out the purpose of this Final Judgment, which may include extending the
trust and the term of the divestiture trustee's appointment.
K. The divestiture trustee will serve until divestiture of all
Divestiture Assets is completed or for a term otherwise ordered by the
Court.
L. If the United States determines that the divestiture trustee is
not acting diligently or in a reasonably cost-effective manner, the
United States may recommend that the Court appoint a substitute
divestiture trustee.
VI. Notice of Proposed Divestiture
A. Within two business days following execution of a definitive
agreement to divest the Divestiture Assets to an Acquirer or Acquirers
other than Viserion, Defendant ZGC or the divestiture trustee,
whichever is then responsible for effecting the divestiture, must
notify the United States of the proposed divestiture. If the
divestiture trustee is responsible for completing the divestiture, the
divestiture trustee also must notify Defendant ZGC. The notice must set
forth the details of the proposed divestiture and list the name,
address, and telephone number of each person not previously identified
who offered or expressed an interest in or desire to acquire any
ownership interest in the Divestiture Assets.
B. Within 15 calendar days of receipt by the United States of
receipt of the notice required by Paragraph IV.A., the United States
may request from Defendants, the proposed Acquirer, other third
parties, or the divestiture trustee additional information concerning
the proposed divestiture, the proposed Acquirer, and other prospective
Acquirers. Defendants and the divestiture trustee must furnish the
additional information requested within 15 calendar days of the receipt
of the request unless the United States provides written agreement to a
different period.
C. Within 45 calendar days after receipt of the notice required by
Paragraph VI.A. or within 20 calendar days after the United States has
been provided the additional information requested pursuant to
Paragraph VI.B., whichever is later, the United States will provide
written notice to Defendant ZGC and any divestiture trustee that states
whether or not the United States, in its sole discretion, objects to an
Acquirer or Acquirers or any other aspect of the proposed divestitures.
Without written notice that the United States does not object, a
divestiture may not be consummated. If the United States provides
written notice that it does not object, the divestiture may be
consummated, subject only to Defendants' limited right to object to the
sale under Paragraph V.C. of this Final Judgment. Upon objection by
Defendants pursuant to Paragraph V.C., a divestiture by the divestiture
trustee may not be consummated unless approved by the Court.
D. No information or documents obtained pursuant to this Section VI
may 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, for the purpose of
evaluating a proposed Acquirer or securing compliance with this Final
Judgment, or as otherwise required by law.
E. In the event of a request by a third party for disclosure of
information under the Freedom of Information Act, 5 U.S.C. 552, the
United States Department of Justice's Antitrust Division will act in
accordance with that statute, and the Department of Justice regulations
at 28 CFR part 16, including the provision on confidential commercial
information, at 28 CFR 16.7. Persons submitting information to the
Antitrust Division should designate the confidential commercial
information portions of all applicable documents and information under
28 CFR 16.7. Designations of confidentiality expire ten years after
submission, ``unless the submitter requests and provides justification
for a longer designation period.'' See 28 CFR 16.7(b).
F. If at the time that a person furnishes information or documents
to the United States pursuant to this Section VI, that person
represents and identifies in writing information or documents for which
a claim of protection may be asserted under Rule 26(c)(1)(G) of the
Federal Rules of Civil Procedure, and 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,'' the United States must give
that person ten calendar days' notice before divulging the material in
any legal proceeding (other than a grand-jury proceeding).
VII. Financing
Defendants may not finance all or any part of Acquirer's purchase
of all or part of the Divestiture Assets.
VIII. Asset Preservation and Hold Separate Obligations
Defendants must take all steps necessary to comply with the Asset
Preservation and Hold Separate Stipulation and Order entered by the
Court.
[[Page 30487]]
IX. Affidavits
A. Within 20 calendar days of the filing of the Complaint in this
matter, and every 30 calendar days thereafter until the divestitures
required by this Final Judgment have been completed, each Defendant
must deliver to the United States an affidavit, signed by each
Defendant's Chief Financial Officer and General Counsel, describing in
reasonable detail the fact and manner of Defendants' compliance with
this Final Judgment. The United States, in its sole discretion, may
approve different signatories for the affidavits. Defendant Bunge's
obligations under this Paragraph IX.A shall cease 30 calendar days
after the closing of the Transaction.
B. Each affidavit required by Paragraph IX.A. must include: (1) The
name, address, and telephone number of each person who, during the
preceding 30 calendar days, made an offer to acquire, expressed an
interest in acquiring, entered into negotiations to acquire, or was
contacted or made an inquiry about acquiring, an interest in the
Divestiture Assets and describe in detail each contact with such
persons during that period; (2) a description of the efforts Defendants
have taken to solicit buyers for and complete the sale of the
Divestiture Assets and to provide required information to prospective
Acquirers; and (3) a description of any limitations placed by
Defendants on information provided to prospective Acquirers. Objection
by the United States to information provided by Defendants to
prospective Acquirers must be made within 14 calendar days of receipt
of the affidavit, except that the United States may object at any time
if the information set forth in the affidavit is not true or complete.
C. Defendants must keep all records of any efforts made to divest
the Divestiture Assets until one year after the Divestiture Date.
D. Within 20 calendar days of the filing of the Complaint in this
matter, each Defendant must also deliver to the United States an
affidavit signed by each Defendant's Chief Financial Officer and
General Counsel, describing in reasonable detail all actions Defendants
have taken and all steps Defendants have implemented on an ongoing
basis to comply with Section VIII of this Final Judgment. The United
States, in its sole discretion, may approve different signatories for
the affidavits.
E. If a Defendant makes any changes to the actions and steps
outlined in any earlier affidavits provided pursuant to Paragraph
IX.D., Defendants must, within 15 calendar days after any change is
implemented, deliver to the United States an affidavit describing those
changes.
F. Defendants must keep all records of any efforts made to comply
with Section VIII until one year after the Divestiture Date.
X. Compliance Inspection
A. For the purpose of determining or securing compliance with this
Final Judgment, or related orders such as the Hold Separate Stipulation
and Order, or for the purpose of determining whether this Final
Judgment should be modified or vacated, upon written request of an
authorized representative of the Assistant Attorney General for the
Antitrust Division, and reasonable notice to Defendants, Defendants
must permit, from time to time and subject to legally recognized
privileges, authorized representatives, including agents retained by
the United States:
1. To have access during Defendants' office hours to inspect and
copy, or at the option of the United States, to require Defendants to
provide electronic copies of all books, ledgers, accounts, records,
data, and documents in the possession, custody, or control of
Defendants relating to any matters contained in this Final Judgment;
and
2. to interview, either informally or on the record, Defendants'
officers, employees, or agents, who may have their individual counsel
present, relating to any matters contained in the Final Judgment. The
interviews must be subject to the reasonable convenience of the
interviewee and without restraint or interference by Defendants.
B. Upon the written request of an authorized representative of the
Assistant Attorney General for the Antitrust Division, Defendants must
submit written reports or respond to written interrogatories, under
oath if requested, relating to any of the matters contained in this
Final Judgment.
C. No information or documents obtained pursuant to this Section XI
may 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, for the purpose of securing
compliance with this Final Judgment, or as otherwise required by law.
D. In the event of a request by a third party for disclosure of
information under the Freedom of Information Act, 5 U.S.C. 552, the
Antitrust Division will act in accordance with that statute, and the
Department of Justice regulations at 28 CFR part 16, including the
provision on confidential commercial information, at 28 CFR 16.7.
Defendants submitting information to the Antitrust Division should
designate the confidential commercial information portions of all
applicable documents and information under 28 CFR 16.7. Designations of
confidentiality expire 10 years after submission, ``unless the
submitter requests and provides justification for a longer designation
period.'' See 28 CFR 16.7(b).
E. If at the time that Defendants furnish information or documents
to the United States pursuant to this Section X, Defendants represent
and identify in writing information or documents for which a claim of
protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules
of Civil Procedure, and Defendants mark each pertinent page of such
material, ``Subject to claim of protection under Rule 26(c)(1)(G) of
the Federal Rules of Civil Procedure,'' the United States must give
Defendants 10 calendar days' notice before divulging the material in
any legal proceeding (other than a grand jury proceeding).
XI. Notification
A. Unless a transaction is otherwise subject to the reporting and
waiting period requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''),
Defendant ZGC, may not, without first providing at least 30 calendar
days advance notification to the United States, directly or indirectly
acquire any assets of or any interest, including a financial, security,
loan, equity, or management interest, in grain purchasing facilities,
including grain elevators and crush mills, located within a 100-mile
radius any Divested Elevator during the term of this Final Judgment;
provided, however, that the obligations in this Section XI do not apply
to Defendant ZGC's acquisition of grain purchasing facilities that were
leased by Defendant ZGC as of January 1, 2021.
B. Defendant ZGC must provide the notification required by this
Section XI in the same format as, and in accordance with the
instructions relating to, the Notification and Report Form set forth in
the Appendix to Part 803 of Title 16 of the Code of Federal Regulations
as amended, except that the information requested in Items 5 through 8
of the instructions must be provided only about grain purchasing
facilities located within a 100-mile radius of any Divested Elevator.
C. Notification must be provided at least 30 calendar days before
acquiring any assets or interest, and must include, beyond the
information required by the instructions, the names of the principal
representatives who negotiated the
[[Page 30488]]
transaction on behalf of each party, and all management or strategic
plans relating to the proposed transaction. If, within the 30 calendar
days following notification, representatives of the United States make
a written request for additional information, Defendant ZGC may not
consummate the proposed transaction until 30 calendar days after
submitting all requested information.
D. Early termination of the waiting periods set forth in this
Section XI may be requested and, where appropriate, granted in the same
manner as is applicable under the requirements and provisions of the
HSR Act and rules promulgated thereunder. This Section XI must be
broadly construed, and any ambiguity or uncertainty regarding whether
to file a notice under this Section XI must be resolved in favor of
filing notice.
XII. Limitations on Reacquisition
Defendant ZGC may not reacquire any part of or any interest in the
Divestiture Assets during the term of this Final Judgment without prior
authorization by the United States.
XIII. Retention of Jurisdiction
The Court retains jurisdiction to enable any party to this Final
Judgment to apply to the Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
XIV. Enforcement of Final Judgment
A. The United States retains and reserves all rights to enforce the
provisions of this Final Judgment, including the right to seek an order
of contempt from the Court. Defendants agree that in a civil contempt
action, a motion to show cause, or a similar action brought by the
United States regarding an alleged violation of this Final Judgment,
the United States may establish a violation of this Final Judgment and
the appropriateness of a remedy therefor by a preponderance of the
evidence, and Defendants waive any argument that a different standard
of proof should apply.
B. This Final Judgment should be interpreted to give full effect to
the procompetitive purposes of the antitrust laws and to restore the
competition the United States alleges 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 an 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 other relief that may be appropriate. In connection with
a successful effort by the United States to enforce this Final Judgment
against a Defendant, whether litigated or resolved before litigation,
that Defendant agrees to reimburse the United States for the fees and
expenses of its attorneys, as well as all other costs including
experts' fees, incurred in connection with that effort to enforce the
Final Judgment, including in the investigation of the potential
violation.
D. For a period of four years following the expiration of this
Final Judgment, if the United States has evidence that a Defendant
violated this Final Judgment before it expired, the United States may
file an action against that Defendant in this Court requesting that the
Court order: (1) Defendant to comply with the terms of this Final
Judgment for an additional term of at least four years following the
filing of the enforcement action; (2) all appropriate contempt
remedies; (3) additional relief needed to ensure the Defendant complies
with the terms of this Final Judgment; and (4) fees or expenses as
called for by this Section XIV.
XV. Expiration of Final Judgment
Unless the Court grants an extension, this Final Judgment will
expire 10 years from the date of its entry, except that after five
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
divestitures have been completed and continuation of this Final
Judgment no longer is necessary or in the public interest.
XVI. 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. 16, including by making available to the
public copies of this Final Judgment and the Competitive Impact
Statement, public comments thereon, and any response to comments by the
United States. Based upon the record before the Court, which includes
the Competitive Impact Statement and, if applicable, any comments and
responses 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. 16]
-----------------------------------------------------------------------
United States District Judge
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Zen-Noh Grain Corp., and
Bunge North America, Inc., Defendants.
Civil Action No.: 1:21-cv-1482-RJL
Judge Richard J. Leon
Competitive Impact Statement
The United States of America, under Section 2(b) of the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16(b)-(h) (the ``APPA'' or
``Tunney Act''), 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 21, 2020, Zen-Noh Grain Corp. (``ZGC'') agreed to acquire
35 operating and 13 idled U.S. grain elevators from Bunge North
America, Inc. (``Bunge'') for approximately $300 million (``the
Transaction''). The United States filed a civil antitrust Complaint on
June 1, 2021, seeking to enjoin the proposed Transaction. The Complaint
alleges that the likely effect of the Transaction would be to
substantially lessen competition for purchases of corn and soybeans in
nine geographic areas of the United States in violation of Section 7 of
the Clayton Act, 15 U.S.C. 18.
At the same time the Complaint was filed, the United States filed a
proposed Final Judgment and an Asset Preservation and Hold Separate
Stipulation and Order (``Stipulation''), which are designed to address
the anticompetitive effects of the Transaction. The proposed Final
Judgment, explained more fully below, requires the Defendants to divest
certain grain elevators and related assets of Bunge or ZGC affiliate
CGB Enterprises, Inc. (``the Divestiture Assets'') to Viserion Grain
LLC and Viserion International Holdco LLC (``Viserion''), or to another
acquirer or acquirers acceptable to the United States, within 30
calendar days after entry of the Stipulation.
Under the terms of the Stipulation, the Defendants will take
certain steps to ensure that the Divestiture Assets remain independent;
that all of the
[[Page 30489]]
Divestiture Assets remain economically viable, competitive, and
saleable; that Defendants will preserve and maintain the Divestiture
Assets; and that the level of competition that existed between
Defendants prior to the Transaction is maintained during the pendency
of the required divestiture.
The United States and Defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA. Entry of
the proposed Final Judgment will terminate this action, except that the
Court will retain jurisdiction to construe, modify, or enforce the
provisions of the Final Judgment and to punish violations thereof.
II. Description of Events Giving Rise to the Alleged Violation
(A) The Defendants and the Proposed Transaction
Defendant ZGC, headquartered in Covington, Louisiana, is a
subsidiary of the National Federation of Agricultural Cooperative
Associations of Japan. ZGC owns and operates a state-of-the-art export
elevator located on the Mississippi River near Convent, Louisiana, from
which it trades and exports corn, soybeans, sorghum, wheat, and grain
by-products. Export elevators receive grain, largely via barge or rail,
that has been purchased from farmers by inland elevators. Export
elevators store the aggregated grain until it can be loaded onto ocean
going ships. ZGC does not own any inland grain elevators and relies
upon its affiliate, CGB Enterprises Inc. (``CGB''), to supply the
majority of the corn, soybeans and other agricultural commodities ZGC
exports annually from Convent. Post-acquisition, ZGC intends to lease
the elevators that it proposes to acquire from Bunge to CGB to operate
through CGB's wholly owned subsidiary, Consolidated Grain and Barge Co.
CGB is a 50-50 joint venture between ZGC and Itochu Corporation, a
global trading company. CGB operates more than 100 elevators in the
United States, many of which are located along the Mississippi, Ohio,
Arkansas, and Illinois Rivers. CGB is the fifth-largest grain company
in the United States by storage capacity. CGB's grain merchandisers are
in daily contact with thousands of farmers, actively seeking to
purchase grain from them. Currently, CGB sells approximately 60% of the
grain it purchases to ZGC.
Defendant Bunge is the North American subsidiary of Bunge Limited.
Bunge is a large agribusiness and food ingredient company that owns and
operates grain elevators, oilseed processing plants, and edible oil
refineries, as well as grain export terminals. Bunge is the eighth-
largest grain company in the United States by storage capacity. Post-
acquisition, Bunge will continue to purchase grain in the United States
via its export elevator on the Mississippi River in Destrehan,
Louisiana and its export terminal in Longview, Washington (a joint
venture with Itochu Corporation). In addition to the export terminals,
Bunge will retain ownership interests in eight grain elevators in
Illinois and Indiana.
The 35 operating elevators ZGC proposes to acquire from Bunge are
located in nine states--Arkansas, Iowa, Illinois, Indiana, Kentucky,
Louisiana, Missouri, Mississippi and Tennessee--primarily along the
Mississippi River and its tributaries, and predominantly handle corn
and soybeans.
(B) Relevant Markets and the Competitive Effects of the Transaction
American consumers benefit from the productivity and efficiency of
American farmers, who annually produce far more volume than needed to
meet domestic demand. Corn and soybeans (collectively referred to here
as ``grain'') are the primary crops grown in the United States.
American farmers produced 14.2 billion bushels of corn and 4.14 billion
bushels of soybeans in 2020, and roughly one-quarter of these grains
were exported. In the United States, grain may flow from the farm
directly to end users like ethanol plants and feed mills, or farmers
may sell their grain to nearby rail or river grain elevators, where it
is stored, aggregated, and later transported by train or barge to more
distant domestic end users or to port elevators for export.
More than 45% of the grain exported from the United States is
shipped out from port elevator export terminals located at the mouth of
the Mississippi River near the Gulf of Mexico. The vast majority of
this grain is sourced from river elevators located along the
Mississippi and its tributaries. These river elevators, found as far
north as Minnesota, purchase grain from surrounding farms and load it
onto barges for transport to port elevators. Nearly all of the
elevators ZGC seeks to acquire from Bunge are river elevators located
on the Mississippi or its tributaries.
The livelihood of farmers depends on their ability to sell the corn
and soybeans they grow to purchasers who offer them the best price, net
of transportation and other selling costs that farmers incur. Ethanol
plants and feed and crush mills purchase grain and process it into
usable products such as soymeal or fuel. Rail and river elevators also
purchase grain and store it until it is sold and transported to end
users, in either domestic or export markets.
For convenience, some farmers may sell their grain to smaller,
``country'' elevators, located in closer proximity to the farmer than
end users or rail and river elevators. Such elevators serve as grain
collection and buying points in rural communities, and may provide
other services like grain storage, drying, and conditioning services.
Upon aggregating sufficient quantities of grain, or when market prices
are most attractive, country elevators ultimately resell the grain to
end users or to the larger rail or river elevators that can transport
the grain to end users or export elevators.
Today, ZGC and its affiliate CGB compete against Bunge to purchase
corn and soybeans from farmers. In particular, in nine geographic areas
a Bunge river elevator and a nearby ZGC or CGB elevator represent two
of only a handful of grain purchasing alternatives for area farmers. In
those nine geographic areas, ZGC and Bunge currently compete
aggressively to win farmers' business by offering better prices and
more attractive amenities such as faster grain drop-off services and
better grain grading. Faster drop-off services mean farmers can get
back to their fields more quickly and make better use of their trucks
and employees, ultimately saving time and money. If one elevator is
grading grain more harshly or inconsistently, which may lead to a lower
price paid, the farmer has the option of selling to a competing
elevator which may grade differently. The Transaction will eliminate
competition between ZGC and Bunge in those locations. As result, many
U.S. farmers are likely to receive lower prices and poorer quality
service when seeking to sell their grain.
1. Relevant Product Markets
ZGC (mainly through CGB) and Bunge own grain elevators, primarily
located at rail terminals and along navigable rivers. They compete with
other grain purchasers, including ethanol processors, feed mills, and
crush processors, to purchase corn and soybeans from U.S. farmers,
brokers, and country elevators. Corn and soybeans are each distinct
products without reasonable substitutes, differing from other
agricultural commodities and one another in their physical
characteristics, means of production, uses, and pricing. Because of the
length of growing seasons, and the suitability of corn and soybeans to
certain climates
[[Page 30490]]
and regions, farmers of these crops would not switch to production of
other agricultural commodities in sufficient numbers to render
unprofitable a small but significant decrease in price by a
hypothetical monopsonist of that crop. The purchase of corn and the
purchase of soybeans for end use or for sale to the export market each
constitute a relevant product market and line of commerce under Section
7 of the Clayton Act, 15 U.S.C. 18.
2. Relevant Geographic Markets
Farmers typically haul grain by truck to nearby elevators or end
users. Transportation costs increase significantly with every mile the
farmers must transport the grain to reach a purchaser, reducing the
farmers' profits. Transporting grain also consumes farmers' time. For
these reasons, a small change in price would not likely cause farmers
to significantly expand the distance they are willing to drive to sell
their grain. The distance a farmer is willing to drive is determined in
large part by the second-closest potential purchaser, which is the best
competitive threat to the purchaser closest to the farmer.
Rail or river elevators and other grain purchasing facilities, such
as grain crush plants and ethanol plants, typically purchase grain from
within the facility's draw area. ``Draw area'' is an industry term that
describes the locations of farms from which the facility expects to
acquire most of its grain. Each elevator or end user has a unique draw
area due to characteristics such as surrounding road conditions, crop
output, local topography, and proximity of competing purchasers. The
draw area of a grain purchasing facility is determined by
transportation time and costs and so is usually very localized.
The draw area of one grain facility frequently will overlap with
that of another, resulting in competition between the facilities to
purchase grain from farmers. Some farming areas of the country may be
located such that they fall within the overlapping draw areas of only a
few competing grain purchasing facilities. In particular, in the
following areas where the Defendants' river elevators have overlapping
draw areas, there are only a small number of grain purchasers competing
to purchase farmers' corn and soybeans:
(a) The overlapping draw areas of elevators in the vicinity of
McGregor, Iowa;
(b) The overlapping draw areas of elevators in the vicinity of
Albany/Fulton, Illinois;
(c) The overlapping draw areas of elevators in the vicinity of
Shawneetown, Illinois;
(d) The overlapping draw areas of elevators in the vicinity of
Caruthersville, Missouri;
(e) The overlapping draw areas of elevators in the vicinity of
Huffman, Arkansas;
(f) The overlapping draw areas of elevators in the vicinity of
Osceola, Arkansas;
(g) The overlapping draws areas of elevators in the vicinity of
Helena, Arkansas;
(h) The overlapping draw areas of elevators in the vicinity of Lake
Providence, Louisiana; and
(i) The overlapping draw areas of elevators in the vicinity of
Lettsworth, Louisiana.
These geographic areas satisfy the hypothetical monopsonist test (a
``monopsonist'' is a buyer that controls the purchases in a given
market), the buyer-side counterpart to the hypothetical monopolist
test. A hypothetical monopsonist of the purchase of corn or soybeans in
each of these areas would impose at least a small but significant and
non-transitory decrease in the price paid to farmers. Such a price
decrease for these products would not be defeated by farmers selling to
purchasers outside their local area due to the added costs of
transportation. As farmers in these areas have already determined the
best use of their farmland, a price decrease would also not be defeated
by farmers' switching to growing alternative crops. Farmers currently
growing corn or soybeans are unlikely convert to production of other
agricultural commodities in sufficient numbers to prevent a small but
significant decrease in price. Nor could area farmers thwart a post-
transaction price decrease by selling instead to local country
elevators. Country elevators simply resell grain to river and rail
elevators or to other end users; if Defendants lower prices post-
transaction, country elevators would be forced to lower their own price
to farmers to maintain profitability. Consequently, country elevators
cannot mitigate a price decrease resulting from the Transaction.
Therefore, each of the overlapping draw areas above constitute a
relevant geographic market within the meaning of Section 7 of the
Clayton Act, 15 U.S.C. 18, for the purposes of analyzing this
transaction.
3. Competitive Effects
In the each of the nine relevant geographic markets, ZGC (and its
affiliate CGB) and Bunge are two of a very small number of grain
purchasers competing to buy corn and soybeans; in two of these markets,
CGB and Bunge are the only elevators available to area farmers. Famers
located within these geographic areas depend on this competition to
obtain a competitive price for their grain. ZGC's acquisition of
Bunge's elevators will substantially lessen competition for the
purchase of corn and soybeans in these markets, enabling it to
unilaterally depress prices paid to farmers for their crops.
Because there are few alternative grain purchasers within these
geographic areas, purchases of grain are highly concentrated, with the
Defendants accounting for a majority of corn and/or soybean purchases
in a given year. For example, in 2019, the Defendants purchased upwards
of 95% of the total corn and soybean output of farmers in Pemiscot
County, Missouri; Pemiscot County falls within the draw area of Bunge's
Caruthersville, Missouri river elevator, and the draw areas of CGB's
Caruthersville and Cottonwood, Missouri river elevators.
By eliminating head-to-head competition between ZGC (and its
affiliate CGB) and Bunge for grain purchases in these geographic
markets, the Transaction would result in lower prices paid to farmers,
lower quality of services offered to farmers at the grain origination
elevators, and reduced choice of outlets for farmers to sell their
grain. The Transaction would substantially lessen competition and harm
the many farmers selling their crops to river elevators along the
Mississippi River and its tributaries.
4. Entry
New entry and expansion by competitors likely will not be timely
and sufficient in scope to prevent the likely anticompetitive effects
of Defendant ZGC's acquisition of Bunge's elevators. Competitors are
unlikely to construct new elevators in these geographic markets because
of the high cost of construction and the difficulty of finding
appropriate locations to build along the Mississippi or its
tributaries. Even assuming such a location could be found and
regulatory and permitting requirements could be fulfilled, constructing
a river elevator would take approximately two years to complete.
III. Explanation of the Proposed Final Judgment
The divestiture required by the proposed Final Judgment will remedy
the loss of competition alleged in the Complaint by establishing an
independent and economically viable competitor for the purchase of corn
and soybeans in certain geographic markets
[[Page 30491]]
along the Mississippi and Ohio Rivers. The proposed Final Judgment
requires the Defendants to divest nine elevators \1\ in nine geographic
markets within 30 days after the entry of the Stipulation by the Court
to Viserion or another acquirer or acquirers approved by the United
States. In each of those nine geographic markets, a Bunge elevator
competes head to head with one or more ZGC or CGB elevators.
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\1\ In Osceola, Arkansas, Bunge has two elevator locations,
``Riverside,'' which as the name implies, abuts the Mississippi, and
``Landside,'' a former soy crush plant located a bit inland from the
river. Bunge currently operates the two locations as one combined
entity, with Landside being used primarily for overflow storage in
support of Riverside; similarly, the proposed Final Judgment and
Stipulation view the two Bunge Osceola locations as one asset for
purposes of remedying the likely harm from the proposed Transaction.
---------------------------------------------------------------------------
The Divestiture Assets include the real property and real property
rights, fee simple interests; buildings, facilities, and other
structures, including bins, silos, other grain storage facilities, and
dock facilities associated with the nine grain elevators. The
Divestiture Assets also encompass all existing grain inventories at the
elevators, and all contracts (including grain contracts), contractual
rights, and relationships, including customer and supplier
relationships, and all other agreements, commitments, and
understandings, including, supply agreements, teaming agreements, and
leases, and all outstanding offers or solicitations to enter into a
similar arrangement that relate exclusively to the elevators that will
be divested.
The Divestiture Assets must be divested in such a way as to satisfy
the United States in its sole discretion that the Divestiture Assets
can and will be operated by the purchaser as a viable, ongoing business
that can compete effectively in the market for the purchase of corn and
the market for the purchase of soybeans. Defendants must take all
reasonable steps necessary to accomplish the divestiture quickly and
must cooperate with any acquirer.
If Defendants do not accomplish the divestiture within the period
prescribed in the proposed Final Judgment, the proposed Final Judgment
provides that the Court will appoint a divestiture trustee selected by
the United States to execute the divestiture. If a divestiture trustee
is appointed, the proposed Final Judgment provides that Defendant ZGC
will pay all costs and expenses of the trustee. The divestiture
trustee's commission will be structured so as to provide an incentive
for the trustee based on the price obtained and the speed with which
the divestiture is accomplished. After the divestiture trustee's
appointment becomes effective, the trustee will provide periodic
reports to the United States setting forth his or her efforts to
accomplish the divestiture. If the divestiture has not been
accomplished at the end of six months, the divestiture trustee and the
United States will make recommendations to the Court, which will enter
such orders as appropriate, in order to carry out the purpose of the
trust, including by extending the trust or the term of the divestiture
trustee's appointment.
Under Paragraph IV.I. of the proposed Final Judgment, Defendants
must cooperate with and assist the acquirer in identifying and, at the
option of acquirer, hiring (1) all full time, part time, or contract
employees employed at the divested elevators at any time between August
21, 2020, and the divestiture date; (2) all elevator managers, grain
merchandisers, and elevator superintendents employed by Bunge or CGB
whose job responsibilities are shared between or among divested
elevators and any non-divested elevators, at any time between August
21, 2020, and the divestiture date; and (3) all regional managers
employed by Bunge one organizational level above the elevator manager
level, wherever located, whose job duties support the grain purchasing
business of any of the Bunge elevators, at any time between August 21,
2020, and the divestiture date. Defendants must provide Viserion, or
any other acquirer or acquirers, with information on these employees
and are prohibited from interfering with the efforts of Viserion, or
any other acquirer or acquirers, to hire them.
The proposed Final Judgment includes a non-solicit provision
(Paragraph IV.I.6.) prohibiting the Defendants from attempting to
rehire relevant personnel that have agreed to work for the acquirer,
subject to certain narrow exceptions, such as if an individual is laid
off by the acquirer. The non-solicit provision is limited in duration
to 12 months, which is a length of time intended to encompass the first
harvest season for which the acquirer will be operating the divested
elevators. It is also limited in scope to apply only to certain
relevant personnel--regional/general managers, elevator managers,
merchandisers, bookkeepers, and site superintendents--the employees
most intimately involved with farmer outreach and elevator operation.
The categories of employees protected by the non-solicit provision are
integral to maintaining customer relations while ownership of the
assets is transitioning; elevator managers and the grain merchandisers,
in particular, are needed to develop and keep strong customer
relationships to get grain into the elevators. Defendants are not
restricted, however, from advertising employment openings using general
solicitations or advertisements and rehiring relevant personnel who
apply for an employment opening through a general solicitation or
advertisement.
Under Paragraph IV.M. of the proposed Final Judgment, at the option
of the acquirer or acquirers, and subject to approval by the United
States in its sole discretion, Defendants must enter into one or more
contracts to provide the acquirer or acquirers with transition services
for back office, human resources, or information technology, for a
period of up to six months after the divestiture occurs, on terms and
conditions reasonably related to market conditions for the provision of
the transition services. The transition services covered by the
proposed Final Judgment are those that might reasonably be necessary to
ensure that an acquirer or acquirers can readily and promptly use the
assets to compete in the relevant markets.
For the term of the proposed Final Judgment, Paragraph XI.A.
requires Defendant ZGC to provide at least 30 calendar days advance
notification to the United States of its intent to directly or
indirectly acquire any assets of, or any interest in, grain purchasing
facilities located within a 100-mile radius any divested elevator. The
notification requirement of Paragraph XI.A. applies to transactions
that are not subject to the reporting and waiting period requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, 15 U.S.C. 18a (the ``HSR Act'').\2\ Notification of such non-
reportable transactions is necessary because acquisition of a single
elevator from another grain purchasing company is not uncommon in the
grain industry, and such an acquisition, or even an acquisition of a
small suite of elevators, likely would not meet the notification
thresholds of the HSR Act, but nevertheless could have a substantial
anticompetitive effect.
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\2\ Paragraph XI.M. exempts from this reporting requirement
Defendant ZGC's acquisition of grain purchasing facilities that were
leased by Defendant ZGC as of January 1, 2021. The United States has
already accounted for ZGC's control over those assets in its
competitive analysis of the Transaction and structuring of the
divestiture.
---------------------------------------------------------------------------
The proposed Final Judgment also contains provisions designed to
promote compliance and make the enforcement of the Final Judgment as
effective as possible. Paragraph XIV.A. provides that the United States
retains and reserves all rights to enforce the provisions of the
proposed Final Judgment, including its
[[Page 30492]]
rights to seek an order of contempt from the Court. Under the terms of
this paragraph, 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 XIV.B. provides additional clarification regarding the
interpretation of the provisions of the proposed Final Judgment. The
proposed Final Judgment was drafted to restore competition that would
otherwise be harmed by the transaction. 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, as interpreted in light of this procompetitive purpose.
Paragraph XIV.C. of the proposed Final Judgment provides that if
the Court finds in an enforcement 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, to compensate American
taxpayers for any costs associated with investigating and enforcing
violations of the proposed Final Judgment, Paragraph XIV.C. provides
that in any successful effort by the United States to enforce the Final
Judgment against a Defendant, whether litigated or resolved before
litigation, that Defendants will reimburse the United States for
attorneys' fees, experts' fees, and other costs incurred in connection
with any enforcement effort, including the investigation of the
potential violation.
Paragraph XIV.D. states that the United States may file an action
against a Defendant for violating the Final Judgment for up to four
years after the Final Judgment has expired or been terminated. This
provision is meant to address circumstances such as when evidence that
a violation of the Final Judgment occurred during the term of the Final
Judgment is not discovered until after the Final Judgment has expired
or been terminated or when there is not sufficient time for the United
States to complete an investigation of an alleged violation until after
the Final Judgment has expired or been terminated. This provision,
therefore, makes clear that, for four years after the Final Judgment
has expired or been terminated, the United States may still challenge a
violation that occurred during the term of the Final Judgment.
Finally, Section XV of the proposed Final Judgment provides that
the Final Judgment will expire ten 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 Defendants that the divestiture has been completed and 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 neither impairs
nor assists 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 Defendants.
V. Procedures Available for Modification of the Proposed Final Judgment
The United States and Defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least 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 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 U.S.
Department of Justice, which remains free to withdraw its consent to
the proposed Final Judgment at any time before the Court's entry of the
Final 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:
Robert Lepore, Chief, Transportation, Energy and Agriculture
Section, Antitrust Division, U.S. Department of Justice, 450 Fifth
Street NW, Suite 8000, 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
As an alternative to the proposed Final Judgment, the United States
considered a full trial on the merits against Defendants. The United
States could have continued the litigation and sought preliminary and
permanent injunctions against ZGC's acquisition of grain elevators from
Bunge. The United States is satisfied, however, that the divestiture of
assets described in the proposed Final Judgment will remedy the
anticompetitive effects alleged in the Complaint, preserving
competition for the purchase of corn and soybeans in the nine relevant
geographic markets along the Mississippi and Ohio Rivers. Thus, the
proposed Final Judgment achieves 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 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. 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
[[Page 30493]]
modification, duration of relief sought, anticipated effects of
alternative remedies actually considered, whether its terms are
ambiguous, and any other competitive considerations bearing upon the
adequacy of such judgment that the court deems necessary to a
determination of whether the consent judgment is in the public
interest; and
(B) the impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and
individuals alleging specific injury from the violations set forth
in the complaint including consideration of the public benefit, if
any, to be derived from a determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors,
the Court's inquiry is necessarily a limited one as the government is
entitled to ``broad discretion to settle with the defendant within the
reaches of the public interest.'' United States v. Microsoft Corp., 56
F.3d 1448, 1461 (D.C. Cir. 1995); United States v. U.S. Airways Grp.,
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 a 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 U.S. 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 proposed Final Judgment is
sufficiently clear, whether its enforcement mechanisms are sufficient,
and whether it may positively harm third parties. See Microsoft, 56
F.3d at 1458-62. With respect to the adequacy of the relief secured by
the proposed Final Judgment, a court may ``not to make de novo
determination of facts and issues.'' United States v. W. Elec. Co., 993
F.2d 1572, 1577 (D.C. Cir. 1993) (quotation marks omitted); see also
Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F.
Supp. 2d 37, 40 (D.D.C. 2001); United States v. Enova Corp., 107 F.
Supp. 2d 10, 16 (D.D.C. 2000); 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.'' W.
Elec. Co., 993 F.2d at 1577 (quotation marks omitted). ``The court
should bear in mind the flexibility of the public interest inquiry: The
court's function is not to determine whether the resulting array of
rights and liabilities is one that will best serve society, but only to
confirm that the resulting settlement is within the reaches of the
public interest.'' Microsoft, 56 F.3d at 1460 (quotation marks
omitted). More demanding requirements would ``have enormous practical
consequences for the government's ability to negotiate future
settlements,'' contrary to congressional intent. Id. at 1456. ``The
Tunney Act was not intended to create a disincentive to the use of the
consent decree.'' Id.
The United States' predictions about the efficacy of the remedy are
to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at
1461 (recognizing courts should give ``due respect to the Justice
Department's . . . view of the nature of its case''); United States v.
Iron Mountain, Inc., 217 F. Supp. 3d 146, 152-53 (D.D.C. 2016) (``In
evaluating objections to settlement agreements under the Tunney Act, a
court must be mindful that [t]he government need not prove that the
settlements will perfectly remedy the alleged antitrust harms[;] it
need only provide a factual basis for concluding that the settlements
are reasonably adequate remedies for the alleged harms.'') (internal
citations omitted); United States v. Republic Servs., Inc., 723 F.
Supp. 2d 157, 160 (D.D.C. 2010) (noting ``the deferential review to
which the government's proposed remedy is accorded''); United States v.
Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (``A
district court must accord due respect to the government's prediction
as to the effect of proposed remedies, its perception of the market
structure, and its view of the nature of the case''). The ultimate
question is whether ``the remedies [obtained by the Final Judgment 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 W. Elec. Co., 900 F.2d at 309).
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 to the APPA, Congress made clear its intent
to preserve the practical benefits of using consent judgments proposed
by the United States in antitrust enforcement, Public Law. 108-237
Sec. 221, and added the unambiguous instruction that ``[n]othing in
this section shall be construed to require the court to conduct an
evidentiary hearing or to require the court to permit anyone to
intervene.'' 15 U.S.C. 16(e)(2); see also U.S. Airways, 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). ``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 (citing Enova
Corp., 107 F. Supp. 2d at 17).
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: June 1, 2021.
Respectfully submitted,
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Jill Ptacek,
U.S. Department of Justice Antitrust Division, Transportation,
Energy and Agriculture Section, 450 Fifth Street NW, Suite 8000,
[[Page 30494]]
Washington, DC 20530, 202-307-6607, [email protected].
[FR Doc. 2021-11916 Filed 6-7-21; 8:45 am]
BILLING CODE 4410-11-P