[Federal Register Volume 86, Number 245 (Monday, December 27, 2021)]
[Notices]
[Pages 73319-73342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-27959]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Antitrust Division


United States v. B.S.A. S.A., LAG Holding, Inc., and The Kraft 
Heinz Company; Complaint, 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 Complaint, a proposed Final 
Judgment, an Asset Preservation and Hold Separate Stipulation and 
Order, and a Competitive Impact Statement have been filed with the 
United States District Court for the District of Columbia in United 
States of America v. B.S.A. S.A., LAG Holding, Inc., and The

[[Page 73320]]

Kraft Heinz Company, Civil Action No. 1:21-cv-02976-RBW. On November 
10, 2021, the United States filed a Complaint alleging that B.S.A. 
S.A.'s proposed acquisition of The Kraft Heinz Company's natural cheese 
business 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 B.S.A. S.A. to divest The Kraft Heinz Company's Athenos 
business--including the worldwide rights to the Athenos brand, under 
which The Kraft Heinz Company sells feta cheese and other products--to 
Emmi Roth USA, Inc. or an alternative acquirer approved by the United 
States. The proposed Final Judgment also requires B.S.A. S.A. to divest 
The Kraft Heinz Company's Polly-O business--including the worldwide 
rights to the Polly-O brand, under which The Kraft Heinz Company sells 
ricotta and other cheeses--to BelGioioso Cheese Inc. or an alternative 
acquirer approved by the United States.
    Copies of the Complaint, proposed Final Judgment, Asset 
Preservation and Hold Separate Stipulation and Order, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's website at https://www.justice.gov/atr/case/us-v-lactalis-et-al and at the Office of the Clerk of the United States District 
Court for the District of Columbia. Copies of these materials may be 
obtained from the Antitrust Division upon request and payment of the 
copying fee set by Department of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, including the name of the submitter, and 
responses thereto, will be posted on the Antitrust Division's website, 
filed with the Court, and, under certain circumstances, published in 
the Federal Register. Comments should be submitted in English and 
directed to Eric D. Welsh, Chief, Healthcare and Consumer Products 
Section, Antitrust Division, Department of Justice, 450 Fifth Street 
NW, Suite 4100, 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, United States Department of Justice, 
Antitrust Division, 450 Fifth Street NW, Suite 4100, Washington, DC 
20530, Plaintiff, v. B.S.A. S.A., 33 Avenue du Maine, Paris, France 
75015, LAG Holding, Inc., 2376 South Park Avenue, Buffalo, NY 14220, 
and The Kraft Heinz Company, One PPG Plaza, Pittsburgh, PA 15222, 
Defendants.

Civil Action No.:

Complaint

    The United States of America brings this civil antitrust action to 
enjoin B.S.A. S.A. and its subsidiary, LAG Holding, Inc. (together 
``Lactalis''), from acquiring the natural cheese business of The Kraft 
Heinz Company (``Kraft Heinz'') in the United States. This combination 
would bring together the two largest suppliers of feta cheese in the 
United States and the two largest suppliers of ricotta cheese in the 
metropolitan and surrounding area of New York, New York, and in four 
metropolitan and surrounding areas in Florida. As a result, the 
proposed combination of Lactalis and Kraft Heinz would likely lead to 
higher prices, lower quality, and reduced choice for retail consumers 
of these cheeses, at a time when many Americans are struggling to meet 
rising food prices. The transaction should be enjoined to prevent 
American consumers from suffering these likely anticompetitive harms. 
The United States alleges as follows:

I. Nature of the Action

    1. Grocery and supermarket purchases account for a significant 
portion of the household budget for American families, and Americans' 
food bills are rising. According to the USDA's Economic Research 
Service, grocery prices have increased in 2021, and are expected to 
further increase in 2022, putting more pressure on American consumers 
who are struggling to make ends meet. Competition plays an important 
role in keeping down the prices for grocery items, such as cheese, that 
Americans purchase and use every day.
    2. B.S.A. S.A. is one of the world's largest dairy companies, 
manufacturing and selling cheese in the United States through its 
subsidiaries, LAG Holding, Inc. and Lactalis American Group, Inc. In 
the United States, Lactalis sells natural cheeses primarily under the 
Galbani and Pr[eacute]sident brand names. Kraft Heinz is one of the 
largest food products and beverage companies in the world. Kraft Heinz 
is also the largest supplier of natural cheeses to grocery stores and 
other retail outlets in the United States, selling natural cheeses 
primarily under the Kraft, Cracker Barrel, Athenos, and Polly-O brand 
names.
    3. On September 15, 2020, B.S.A. S.A. agreed to pay approximately 
$3.2 billion to acquire Kraft Heinz's (1) natural cheese business in 
the United States, which includes feta, ricotta, and many other types 
of cheeses, but excludes processed cheese and cream cheese, (2) grated 
cheese business in Canada, and (3) entire cheese business outside North 
America (the ``proposed transaction'').
    4. The proposed transaction would combine the two largest suppliers 
of feta cheese sold to retailers in the United States, and the two 
largest suppliers of ricotta cheese sold to retailers in five 
metropolitan and surrounding areas located in New York and Florida. If 
allowed to proceed, the merged firm's brands would control 
approximately 65% of all retail feta sales (brands and private label) 
nationwide, with its next closest branded competitor controlling 
approximately 6% of retail feta sales. For ricotta, the merged firm's 
brands would control approximately 70% of all retail sales (brands and 
private label) in the metropolitan and surrounding area of New York, 
New York, with its next closest branded competitor controlling 
approximately 7% of retail ricotta sales in that market. And in each of 
the four metropolitan and surrounding areas in Florida identified 
below, the merged firm's brands would control over 65% of all retail 
ricotta sales (brands and private label), with its next closest branded 
competitor in each of the markets controlling no more than 2% of retail 
ricotta sales.
    5. Defendants are particularly close competitors for the sale of 
feta (through Lactalis's Pr[eacute]sident brand and Kraft Heinz's 
Athenos brand) and ricotta (through Lactalis's Galbani brand and Kraft 
Heinz's Polly-O brand) to retailers. These strong brands allow Lactalis 
and Kraft Heinz to compete aggressively with each other in the sale of 
feta and ricotta cheese in the relevant markets, which has resulted in 
lower prices and innovative products, such as Lactalis's double cream 
ricotta cheese and Kraft Heinz's flip top container for Athenos 
crumbled feta cheese, that benefit consumers.
    6. The proposed transaction would eliminate this competition, 
likely leading to higher prices, reduced innovation, and fewer choices 
for these products for retailers in the relevant markets. For these 
reasons, the proposed transaction is likely to substantially lessen 
competition in the sale of feta and ricotta cheeses in the relevant 
markets, in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. 
The Court should, therefore, enjoin the proposed transaction.

II. Jurisdiction and Venue

    7. The United States brings this action pursuant to Section 15 of 
the Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain 
Defendants from violating Section 7 of the Clayton Act, as amended, 15 
U.S.C. 18.

[[Page 73321]]

    8. Defendants sell cheeses, including feta and ricotta, in the flow 
of interstate commerce, and their sale of these products substantially 
affects interstate commerce, including in this judicial district. This 
Court therefore 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.
    9. Defendants have each consented to personal jurisdiction and 
venue in this judicial district for purposes of this action. Venue is 
therefore proper in this district under 28 U.S.C. 1391(b) and (c).

III. The Defendants

    10. B.S.A. S.A. is a French company operating under the name 
Lactalis Group. B.S.A. S.A. is a corporation organized and existing 
under the laws of France, with its headquarters in Laval, France. It is 
one of the largest dairy companies in the world.
    11. LAG Holding, Inc. is a subsidiary of B.S.A. S.A. It is a 
Delaware corporation with its headquarters in Buffalo, New York. LAG 
Holding, Inc. and its subsidiary, Lactalis American Group, Inc., 
generated natural cheese sales of approximately $429 million at retail 
outlets in the United States in 2020.
    12. Kraft Heinz is a Delaware corporation co-headquartered in 
Pittsburgh, Pennsylvania, and Chicago, Illinois. Kraft Heinz is one of 
the largest food products and beverage companies in the world. Retail 
sales of its natural cheeses in the United States amounted to over $2.2 
billion in 2020.

IV. Relevant Markets

    13. A typical starting point for merger analysis is defining a 
relevant market, which has both a product and a geographic dimension. 
Courts define relevant markets to help determine the areas of 
competition most likely to be affected by a merger. As described below, 
both feta cheese sold to retailers across the United States and ricotta 
cheese sold to retailers in the metropolitan and surrounding area of 
New York, New York (the ``New York Metro Market'') and in four 
metropolitan and surrounding areas in Florida--Miami/Ft. Lauderdale, 
Tampa/St. Petersburg, Orlando, and Jacksonville (collectively, the 
``Florida Metro Markets'')--are relevant markets.

A. Relevant Product Markets

    14. Cheeses are sold to retailers as branded cheeses or private 
label cheeses. A branded cheese bears a brand name controlled by the 
cheese supplier (e.g., Kraft Heinz's Athenos and Polly-O brands and 
Lactalis's Pr[eacute]sident and Galbani brands). A branded cheese is 
usually carried by multiple retailers. A private label cheese is 
usually sold under a name owned by the retailer (e.g., Wal-Mart's Great 
Value private label), and is typically offered only in that retailer's 
stores.
    15. Grocery stores and other food retailers act as proxies for 
individual consumers and seek to offer the variety of products demanded 
by their customers. As a result, retailers strive to carry products and 
brands that their customers value, and may vary their offerings to meet 
local customer demand. For example, Polly-O was founded over 100 years 
ago in the New York City area, where it became quite popular. As 
residents of the New York City area visited or moved to Florida, they 
took their Polly-O brand loyalty with them. Thus, Polly-O ricotta 
cheese has greater competitive significance in grocery stores and other 
retailers in the New York Metro Market and the Florida Metro Markets 
than in other areas of the country.
1. Ricotta Cheese Sold to Retailers Is a Relevant Product Market
    16. Ricotta is a soft cheese that originated in Italy. It is 
primarily used as an ingredient in food dishes.
    17. There are no reasonable substitutes for ricotta cheese for most 
consumers. A hypothetical monopolist supplier of ricotta cheese to 
retailers likely would find it profitable to increase its prices by at 
least a small but significant non-transitory amount. Consumers are 
unlikely to sufficiently reduce their purchases of ricotta cheese or 
shift to a different cheese or other products to render such a price 
increase unprofitable. As a result, retailers, buying on behalf of the 
consumer, are also unlikely to sufficiently reduce purchases of ricotta 
cheese to render such a price increase unprofitable. Accordingly, 
ricotta cheese sold to retailers is a relevant product market and line 
of commerce within the meaning of Section 7 of the Clayton Act.
    18. Defining a market for ricotta cheese that is sold to retailers 
is consistent with industry recognition and practice. Suppliers of 
ricotta cheese to retailers typically (1) monitor the retail prices of 
competing ricotta cheeses and set their prices and promotional spending 
accordingly, (2) do not set the price they charge for ricotta cheese 
based on the prices of other cheeses or other consumer products, (3) 
track their sales to retailers separately from their sales to other 
distribution channels (i.e., foodservice and the ingredients or 
industrial channels), (4) have sales employees dedicated to serving 
retailers, and (5) sell ricotta cheese to retailers in packaging and 
package sizes that are different than that used for ricotta sold 
through other distribution channels. These factors further support that 
ricotta cheese sold to retailers is a relevant product market and line 
of commerce within the meaning of Section 7 of the Clayton Act.
2. Feta Cheese Sold to Retailers Is a Relevant Product Market
    19. Feta cheese originated in Greece. It is primarily used as an 
ingredient in food dishes.
    20. There are no reasonable substitutes for feta cheese for most 
consumers. A hypothetical monopolist supplier of feta cheese to 
retailers likely would find it profitable to increase its prices by at 
least a small but significant non-transitory amount. Consumers are 
unlikely to sufficiently reduce their purchases of feta cheese or shift 
to a different cheese or other products to render such a price increase 
unprofitable. As a result, retailers, buying on behalf of the consumer, 
are also unlikely to sufficiently reduce purchases of feta cheese to 
render such a price increase unprofitable. Accordingly, feta cheese 
sold to retailers is a relevant product market and line of commerce 
within the meaning of Section 7 of the Clayton Act.
    21. Defining a market for feta cheese that is sold to retailers is 
consistent with industry recognition and practice. Suppliers of feta 
cheese to retailers typically (1) monitor the retail prices of 
competing feta cheeses and set their prices and promotional spending 
accordingly, (2) do not set the price they charge for feta based on the 
prices of other cheeses or other consumer products, (3) track their 
sales to retailers separately from their sales to other distribution 
channels, (4) have sales employees dedicated to serving retailers, and 
(5) sell feta cheese to retailers in packaging and package sizes that 
are different than that used for feta sold through other distribution 
channels. These factors further support that feta cheese sold to 
retailers is a relevant product market and line of commerce within the 
meaning of Section 7 of the Clayton Act.

B. Relevant Geographic Markets

    22. The relevant geographic markets for analyzing the effects of 
the proposed transaction on competition for feta and ricotta cheeses 
sold to retailers are best defined by reference to the locations of the 
retailers that purchase feta and ricotta cheeses in order to then sell 
those products to consumers.

[[Page 73322]]

    23. This approach to defining the relevant geographic markets is 
appropriate because suppliers of feta and ricotta cheeses to retailers 
assess the competitive conditions in particular localities, including 
local demand for feta and ricotta cheeses, as well as local demand for 
the suppliers' own brands as compared to competing brands or to private 
label offerings. As a result, suppliers of feta and ricotta cheeses can 
charge different prices, or offer different levels of promotional 
funding, to retailers in different locations based on local competitive 
conditions. If targeted for a price increase or reduction in 
promotional funding, retailers in a given locality would be unlikely to 
be able to render such conduct unprofitable by purchasing feta or 
ricotta cheeses outside of the relevant geography and transporting it 
to their retail location.
    24. Where ricotta and feta cheese suppliers can successfully vary 
prices and promotional funding based on retailer customer location, the 
goal of geographic market definition is to identify the area 
encompassing the location of potentially targeted customers. The 
relevant geographic markets identified below encompass the locations of 
retailers that would likely be targeted by suppliers for price 
increases as a result of the proposed transaction.
1. The Relevant Geographic Markets for Ricotta Cheese Sold to Retailers 
Are the New York Metro Market and the Florida Metro Markets
    25. The relevant geographic markets for the sale of ricotta cheese 
to retailers that will be harmed by the proposed transaction are the 
New York Metro Market and the Florida Metro Markets. In each of these 
markets, Defendants compete vigorously with each other for sales of 
ricotta cheese to retailers that resell those products to consumers. 
Defendants' Polly-O and Galbani ricotta brands combined would account 
for approximately 70% of all ricotta cheese sales by retailers in the 
New York Metro Market and over 65% of all ricotta cheese sales by 
retailers in each of the Florida Metro Markets.
    26. A hypothetical monopolist supplier of ricotta cheese to 
retailers in the New York Metro Market and in each of the Florida Metro 
Markets likely would increase its price by at least a small but 
significant and non-transitory amount. Therefore, the New York Metro 
Market and each of the Florida Metro Markets are relevant geographic 
markets and sections of the country within the meaning of Section 7 of 
the Clayton Act.
2. The Relevant Geographic Markets for Feta Cheese Sold to Retailers 
Are Individual Metropolitan and Surrounding Areas, but Can Be Analyzed 
on a National Basis for Convenience
    27. The relevant geographic markets for the sale of feta cheese to 
retailers may be defined as narrowly as individual metropolitan and 
surrounding areas. A hypothetical monopolist supplier of feta cheese to 
retailers in any given metropolitan and surrounding area in the United 
States likely would find it profitable to increase its prices by at 
least a small but significant and non-transitory amount. Therefore, 
each metropolitan and surrounding area in the United States is a 
relevant geographic market and section of the country within the 
meaning of Section 7 of the Clayton Act.
    28. In circumstances where competitive conditions are similar, it 
is appropriate to aggregate local markets into a larger relevant market 
for analytical convenience. The competitive conditions across the 
country are similar for the sale of feta cheese to retailers who 
purchase the cheese for resale to consumers. Kraft Heinz's Athenos feta 
and Lactalis's Pr[eacute]sident feta are the two top-selling feta 
cheese brands in the United States, and combined, the two brands would 
account for approximately 65% of all feta cheese sales by retailers 
nationally. While some regional brands of feta cheese exist, none place 
a significant competitive constraint on Defendants in any particular 
metropolitan and surrounding area. Therefore, it is appropriate to 
analyze competition for the sale of feta cheese to retailers on a 
national basis.

V. The Proposed Transaction Is Likely to Substantially Lessen 
Competition for the Sale of Ricotta and Feta Cheeses to Retailers

    29. The proposed transaction would combine the two largest 
suppliers of ricotta cheese to retailers in the New York Metro Market 
and in each of the Florida Metro Markets, and the two largest suppliers 
of feta cheese to retailers nationally, resulting in a substantial 
increase in concentration in these markets.
    30. The Supreme Court has held that mergers that significantly 
increase concentration in already concentrated markets are 
presumptively anticompetitive and therefore presumptively unlawful. To 
measure market concentration, courts often use the Herfindahl-Hirschman 
Index (``HHI'') as described in the U.S. Department of Justice and 
Federal Trade Commission Horizontal Merger Guidelines. HHIs range from 
0 in markets with no concentration to 10,000 in markets where one firm 
has a 100% market share. According to the Horizontal Merger Guidelines, 
mergers that increase the HHI by more than 200 and result in an HHI 
above 2,500 in any relevant market or line of commerce are presumed to 
be anticompetitive and, therefore, unlawful.
    31. The proposed transaction would eliminate substantial head-to-
head competition between Defendants in both ricotta and feta cheese 
sales to retailers, leading to higher prices, lower quality, and less 
innovation for these products in the relevant markets.
    32. The significant increase in market concentration that the 
proposed transaction would produce in the relevant markets, combined 
with the loss of head-to-head competition between Defendants, is likely 
to substantially lessen competition in violation of Section 7 of the 
Clayton Act.

A. The Proposed Transaction Is Presumptively Unlawful and Is Likely to 
Substantially Lessen Head-to-Head Competition for the Sale of Ricotta 
Cheese to Retailers

    33. In the New York Metro Market, Defendants are the two largest 
suppliers of ricotta cheese to retailers, and their Polly-O and Galbani 
ricotta cheese brands combined would account for approximately 70% of 
all ricotta cheese sales by retailers in that market. In the New York 
Metro Market, the proposed transaction would increase the HHI by more 
than 2,400 points, resulting in a highly concentrated market with a 
post-acquisition HHI of more than 5,000 points. Thus, the proposed 
transaction is presumptively unlawful in the New York Metro Market.
    34. In each of the Florida Metro Markets, Defendants are also the 
two largest suppliers of ricotta cheese to retailers, and their Polly-O 
and Galbani ricotta cheese brands combined would account for over 65% 
of all ricotta cheese sales by retailers. In each of the Florida Metro 
Markets, the proposed transaction would increase the HHI by more than 
1,500 points, resulting in highly concentrated markets, each with a 
post-acquisition HHI of more than 4,400 points. Thus, the proposed 
transaction is presumptively unlawful in each of the Florida Metro 
Markets.
    35. Defendants are particularly close competitors for ricotta 
cheese sold to retailers in the New York Metro Market and the Florida 
Metro Markets. They compete aggressively with each other on

[[Page 73323]]

pricing and promotions for ricotta cheese and in offering new and 
innovative products and features, such as double cream ricotta and 
packaging design.
    36. The president of the Lactalis American Group Retail Division 
recognized this fact in February 2019, noting that, ``through 
aggressive pricing we managed to grow the Galbani share at the expense 
of [Kraft Heinz's] Poly-O [sic] from 2015 to 2018'' in the ricotta 
cheese category. Additionally, in January 2020, a Lactalis senior sales 
manager learned of an Easter price promotion on ricotta cheese that 
Polly-O was offering in the Northeast. Lactalis responded by improving 
its own Easter price promotion on ricotta cheese.

B. The Proposed Transaction Is Presumptively Unlawful and Is Likely to 
Substantially Lessen Head-to-Head Competition for the Sale of Feta 
Cheese to Retailers

    37. Defendants are the two largest suppliers of feta cheese to 
retailers in the United States, and their Athenos and Pr[eacute]sident 
feta cheese brands combined would account for approximately 65% of all 
feta cheese sales by retailers nationally. In a national market for 
feta cheese sold by retailers, the proposed transaction would increase 
the HHI by more than 2,100 points, resulting in a highly concentrated 
market with a post-acquisition HHI of more than 4,300 points. Thus, the 
proposed transaction is presumptively unlawful.
    38. Defendants are particularly close competitors for feta cheese 
sold to retailers in metropolitan and surrounding areas throughout the 
United States. Kraft Heinz's Athenos brand and Lactalis's 
Pr[eacute]sident brand are the two top-selling retail brands of feta 
cheese sold in the United States. A Lactalis executive referred to them 
as the ``two national leaders'' in feta cheese. They compete vigorously 
on prices, promotions, flavor, texture, variety (e.g., fat free, 
traditional), and quality.
    39. For example, in November 2020, a national sales manager at 
Kraft Heinz lamented that Kraft Heinz was ``in a really bad position'' 
at a supermarket chain because it ``lost the feta business in March 
when [we] were undercut by Lactalis.'' Similarly, a Lactalis marketing 
plan for feta cheese identified an objective of ``steal[ing] market 
share from [Kraft Heinz's] Athenos'' in 2021.

VI. Absence of Countervailing Factors

    40. New entry and expansion by competitors are unlikely to be 
timely and sufficient enough to offset the proposed transaction's 
likely anticompetitive effects. Barriers to entering these markets are 
high and include the substantial time and expense required to build a 
brand's reputation and overcome existing consumer preferences through 
promotional and advertising activity as well as the substantial sunk 
costs needed to secure the distribution and placement of a new 
entrant's products in retail outlets (e.g., paying slotting fees to 
obtain shelf space at supermarkets and other food retailers).
    41. The proposed transaction is unlikely to generate verifiable, 
merger-specific efficiencies sufficient to reverse or outweigh the 
anticompetitive effects that are likely to occur as a result of the 
proposed transaction.

VII. Violations Alleged

    42. The United States hereby incorporates the allegations of 
paragraphs 1 through 41 above as if set forth fully herein.
    43. The proposed transaction is likely to substantially lessen 
competition in interstate trade and commerce, in violation of Section 7 
of the Clayton Act, 15 U.S.C. 18.
    44. Unless enjoined, the proposed transaction would likely have the 
following anticompetitive effects, among others:
    a. Substantially lessening head-to-head competition between 
Defendants for the sale of feta cheese to retailers in the United 
States and ricotta cheese to retailers in the New York Metro Market and 
in each of the Florida Metro Markets;
    b. substantially lessening competition generally in the market for 
feta cheese sold to retailers in the United States and ricotta cheese 
sold to retailers in the New York Metro Market and in each of the 
Florida Metro Markets;
    c. causing prices to be higher than they would be otherwise for 
feta cheese sold to retailers in the United States and ricotta cheese 
sold to retailers in the New York Metro Market and in each of the 
Florida Metro Markets; and
    d. reducing choice and innovation for feta cheese sold to retailers 
in the United States and ricotta cheese sold to retailers in the New 
York Metro Market and in each of the Florida Metro Markets.

VIII. Request for Relief

    45. The United States requests that the Court:
    a. Adjudge and decree the proposed transaction to be unlawful and 
in violation of Section 7 of the Clayton Act, 15 U.S.C. 18;
    b. permanently enjoin and restrain Defendants and all persons 
acting on their behalf from carrying out the proposed transaction, or 
from entering into or carrying out any other contract, agreement, plan, 
or understanding, the effect of which would be to combine Defendants in 
the relevant markets alleged above;
    c. award the United States its costs for this action; and
    d. award the United States such other relief as the Court deems 
just and proper.

    Dated: November 10, 2021

    Respectfully submitted,

For Plaintiff United States of America
-----------------------------------------------------------------------
Richard A. Powers
Acting Assistant Attorney General, Antitrust Division.
-----------------------------------------------------------------------
Kathleen S. O'Neill
Senior Director of Investigations and Litigation, Antitrust 
Division.
-----------------------------------------------------------------------
Eric D. Welsh (DC Bar #998612)
Chief, Healthcare and Consumer Products Section, Antitrust Division.
-----------------------------------------------------------------------
Andrew J. Robinson (DC Bar #1008003)
Assistant Chief, Healthcare and Consumer Products Section, Antitrust 
Division.
-----------------------------------------------------------------------
Justin M. Dempsey* (DC Bar #425976)
Giancarlo R. Ambrogio (DC Bar #1736460)
Chris Hong
Garrett M. Liskey (DC Bar #1000937)
Natalie R. Melada
Attorneys for the United States, United States Department of 
Justice, Antitrust Division, Healthcare and Consumer Products 
Section, 450 Fifth Street NW, Suite 4100, Washington, DC 20530, 
Telephone: (202) 307-5815, Facsimile: (202) 307-5802, Email: 
[email protected].

*LEAD ATTORNEY TO BE NOTICED

United States District Court for the District of Columbia

    United States of America, Plaintiff, v.B.S.A. S.A., LAG Holding, 
Inc., and The Kraft Heinz Company, Defendants.

Proposed Final Judgment

    Whereas, Plaintiff, United States of America, filed its Complaint 
on November 10, 2021;
    And whereas, the United States and Defendants, B.S.A. S.A., LAG 
Holding, Inc., and The Kraft Heinz Company, 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 
relating to any issue of fact or law;
    And whereas, Defendants agree to make certain divestitures to 
remedy the loss of competition alleged in the Complaint;

[[Page 73324]]

    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 (15 U.S.C. 18).

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' or ``Acquirers'' means the entity or entities 
approved by the United States in its sole discretion to which 
Defendants divest any of the Divestiture Assets.
    B. ``Acquirer of the Athenos Divestiture Assets'' means Emmi Roth 
or another entity approved by the United States in its sole discretion 
to which Defendants divest the Athenos Divestiture Assets.
    C. ``Acquirer of the Polly-O Divestiture Assets'' means BelGioioso 
or another entity approved by the United States in its sole discretion 
to which Defendants divest the Polly-O Divestiture Assets.
    D. ``Athenos Brand Name'' means Athenos and any other name that 
uses, incorporates, or references the Athenos name.
    E. ``Athenos Divestiture Assets'' means all of Defendants' rights, 
titles, and interests in and to all property and assets, tangible and 
intangible, wherever located, relating to or used in connection with 
the Athenos Divestiture Business, including:
    1. The Athenos Brand Name, including (a) the right to the exclusive 
use of the Athenos Brand Name in all sales channels (including the 
retail, foodservice, and ingredients or industrial channels), and (b) 
all other intellectual property owned, licensed, or sublicensed, either 
as licensor or licensee, including (i) patents, patent applications, 
and inventions and discoveries that may be patentable, (ii) registered 
and unregistered copyrights and copyright applications, and (iii) 
registered and unregistered trademarks, trade dress, service marks, 
trade names, and trademark applications;
    2. all contracts, contractual rights, and customer relationships, 
and all other agreements, commitments, and understandings, including 
agreements with suppliers, manufacturers, co-packers, and retailers, 
teaming agreements, leases, and all outstanding offers or solicitations 
to enter into a similar arrangement;
    3. all licenses, permits, certifications, approvals, consents, 
registrations, waivers, and authorizations, including those issued or 
granted by any governmental organization, and all pending applications 
or renewals;
    4. all records and data, including (a) customer lists, accounts, 
sales, and credits 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) records and research data concerning historic and 
current research and development activities, including designs of 
experiments and the results of successful and unsuccessful designs and 
experiments, and (e) drawings, blueprints, and designs; and
    5. all other intangible property, including (a) commercial names 
and d/b/a names, (b) technical information, including recipes and 
formulas, (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), quality assurance 
and control procedures, (d) design tools and simulation capabilities, 
and (e) rights in internet websites and internet domain names.
    Provided, however, that the assets specified in Paragraphs II.E.1-5 
above do not include the Athenos Transitional Manufacturing Assets or 
the Athenos Transitional Services Contracts.
    F. ``Athenos Divestiture Business'' means the worldwide business of 
the sale of Athenos Products by Kraft Heinz.
    G. ``Athenos Personnel'' means all full-time, part-time, or 
contract employees of Kraft Heinz, wherever located, whose job 
responsibilities relate in any way to the Athenos Divestiture Assets, 
at any time between September 15, 2020, and the date on which the 
Athenos Divestiture Assets are divested. The United States, in its sole 
discretion, will resolve any disagreement relating to which employees 
are Athenos Personnel.
    H. ``Athenos Products'' means any product that Kraft Heinz sold, 
sells, or has plans to sell under the Athenos Brand Name anywhere in 
the world.
    I. ``Athenos Transitional Manufacturing Assets'' means:
    1. Production lines numbers 25 and 26, which are used by the 
Athenos Divestiture Business for crumbling and packaging feta and are 
located at Kraft Heinz's facility at 1007 Townline Road, Wausau, 
Wisconsin 54403;
    2. the feta packaging mold used to produce plastic feta lids and 
containers, which was purchased by Kraft Heinz in 2021 and is located 
at the facilities of RPC Bramlage-WIKO USA, Inc. in Morgantown, 
Pennsylvania; and
    3. the contracts and agreements between Kraft Heinz and each of the 
following: (a) Agropur, dated January 13, 2021; (b) J. Rettenmaier USA 
LP, dated January 1, 2021; (c) International Paper Company, dated 
January 1, 2016, and last amended December 31, 2020; (d) Berry Global, 
Inc., dated April 1, 2014, supplemented September 22, 2014, and last 
amended August 1, 2019; (e) Weber Packaging Solutions, Inc., dated 
January 1, 2020; and (f) Bramlage, Inc. d/b/a RPC Bramlage Morgantown 
(the ``RPC Agreement''), dated October 23, 2017.
    J. ``Athenos Transitional Services Contracts'' means the contracts 
and agreements between Kraft Heinz and each of the following: (a) 
Prairie Farms, dated November 3, 2020; (b) Great Lakes Cheese Company, 
Inc., dated January 1, 2021, and supplemented and amended on January 1, 
2021; (c) Marathon Cheese Corporation, dated April 10, 2021, and 
supplemented on April 10, 2021; (d) Cedar's Mediterranean Foods, Inc., 
dated November 1, 2020, and supplemented on February 1, 2021; and (e) 
Saputo Cheese USA, Inc., dated November 1, 2020.
    K. ``BelGioioso'' means BelGioioso Cheese, Inc., a Wisconsin 
corporation with its headquarters in Green Bay, Wisconsin, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships, and joint ventures, and their directors, 
officers, managers, agents, and employees.
    L. ``Divestiture Assets'' means the Athenos Divestiture Assets and 
the Polly-O Divestiture Assets.
    M. ``Emmi Roth'' means Emmi Roth USA, Inc., a Wisconsin corporation 
with its headquarters in Fitchburg, Wisconsin, its successors and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    N. ``Including'' means including, but not limited to.
    O. ``Kraft Heinz'' means Defendant The Kraft Heinz Company, a 
Delaware corporation with its co-headquarters in Pittsburgh, 
Pennsylvania and Chicago, Illinois, its successors and assigns, and its 
subsidiaries, divisions, groups, affiliates, partnerships, and joint

[[Page 73325]]

ventures, and their directors, officers, managers, agents, and 
employees.
    P. ``Lactalis'' means Defendant B.S.A. S.A., a French corporation 
with its headquarters in Laval, France, its successors and assigns, and 
its subsidiaries, divisions, groups, affiliates, partnerships, and 
joint ventures, and their directors, officers, managers, agents, and 
employees.
    Q. ``LAG Holding'' means Defendant LAG Holding, Inc., a wholly-
owned subsidiary of Lactalis and a Delaware corporation with its 
headquarters in Buffalo, New York, its successors and assigns, and its 
subsidiaries, including Lactalis American Group, Inc., divisions, 
groups, affiliates, partnerships, and joint ventures, and their 
directors, officers, managers, agents, and employees.
    R. ``Polly-O Brand Name'' means Polly-O and any other name that 
uses, incorporates, or references the Polly-O name.
    S. ``Polly-O Divestiture Assets'' means all of Defendants' rights, 
titles, and interests in and to all property and assets, tangible and 
intangible, wherever located, relating to or used in connection with 
the Polly-O Divestiture Business, including:
    1. The Polly-O Brand Name, including (a) the right to the exclusive 
use of the Polly-O Brand Name in all sales channels (including the 
retail, foodservice, and ingredients or industrial channels), and (b) 
all other intellectual property owned, licensed, or sublicensed, either 
as licensor or licensee, including (i) patents, patent applications, 
and inventions and discoveries that may be patentable, (ii) registered 
and unregistered copyrights and copyright applications, and (iii) 
registered and unregistered trademarks, trade dress, service marks, 
trade names, and trademark applications;
    2. the Shared Recipes License;
    3. all contracts, contractual rights, and customer relationships, 
and all other agreements, commitments, and understandings, including 
agreements with suppliers, manufacturers, co-packers, and retailers, 
teaming agreements, leases, and all outstanding offers or solicitations 
to enter into a similar arrangement;
    4. all licenses, permits, certifications, approvals, consents, 
registrations, waivers, and authorizations, including those issued or 
granted by any governmental organization, and all pending applications 
or renewals;
    5. all records and data, including (a) customer lists, accounts, 
sales, and credits 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) records and research data concerning historic and 
current research and development activities, including designs of 
experiments and the results of successful and unsuccessful designs and 
experiments, and (e) drawings, blueprints, and designs; and
    6. all other intangible property, including (a) commercial names 
and d/b/a names, (b) technical information, (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), quality assurance and control procedures, (d) design tools 
and simulation capabilities, and (e) rights in internet websites and 
internet domain names.
    Provided, however, that the assets specified in Paragraphs II.S.1-6 
above do not include any ownership of the intellectual property 
licensed through the Shared Recipes License or the Polly-O Excluded 
Contracts.
    T. ``Polly-O Divestiture Business'' means the worldwide business of 
the sale of Polly-O Products by Kraft Heinz.
    U. ``Polly-O Excluded Contracts'' means the contracts and 
agreements between Kraft Heinz and each of the following: (a) Foremost 
Farms USA Cooperative, dated October 8, 2020; (b) Marathon Cheese 
Corporation, dated April 10, 2021, and supplemented on April 10, 2021; 
(c) Saputo Cheese USA Inc., dated November 1, 2020; (d) Amcor Flexibles 
North America, Inc. (fka Bemis Company, Inc.), dated January 1, 2015, 
entered into initially between H.J. Heinz Supply Chain Europe B.V. and 
Bemis Company, Inc., and last amended November 1, 2020; (e) 
International Paper Company, dated January 1, 2016, and last amended 
December 31, 2020; (f) Berry Global, Inc., dated April 1, 2014, 
supplemented September 22, 2014, and last amended August 1, 2019; (g) 
Transcontinental US LLC, dated January 1, 2019; and (h) J. Rettenmaier 
USA LP, dated January 1, 2021.
    V. ``Polly-O Personnel'' means all full-time, part-time, or 
contract employees of Kraft Heinz, wherever located, whose job 
responsibilities relate in any way to the Polly-O Divestiture Assets, 
at any time between September 15, 2020, and the date on which the 
Polly-O Divestiture Assets are divested. The United States, in its sole 
discretion, will resolve any disagreement relating to which employees 
are Polly-O Personnel.
    W. ``Polly-O Products'' means any product that Kraft Heinz sold, 
sells, or has plans to sell under the Polly-O Brand Name anywhere in 
the world.
    X. ``Shared Recipes License'' means a perpetual, royalty-free, 
paid-up, irrevocable, worldwide, non-exclusive license to the formulas, 
recipes and related trade secrets, know-how, confidential business 
information and related data that, on or prior to the date of the 
signing of the Asset Preservation and Hold Separate Stipulation and 
Order by Defendants, were used by Kraft Heinz for the production of 
cheese sold under both (i) the Polly-O Brand Name and (ii) any name 
other than the Polly-O Brand Name.
    Y. ``Transaction'' means the definitive agreement that Lactalis and 
Kraft Heinz entered into on September 15, 2020, for the acquisition by 
Lactalis of, among other assets, Kraft Heinz's natural, grated, 
cultured, and specialty cheese businesses in the United States.

III. Applicability

    A. This Final Judgment applies to Lactalis, LAG Holding, and Kraft 
Heinz, 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, Section V, and Section 
VI of this Final Judgment, Defendants sell or otherwise dispose of all 
or substantially all of their assets or of business units that include 
any of 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 Acquirers.

IV. Divestiture of the Athenos Divestiture Assets

    A. Defendants are ordered and directed, within 30 calendar days 
after the Court's entry of the Asset Preservation and Hold Separate 
Stipulation and Order in this matter, to divest the Athenos Divestiture 
Assets in a manner consistent with this Final Judgment to Emmi Roth or 
another Acquirer acceptable to the United States, in its sole 
discretion. The United States, in its sole discretion, may agree to one 
or more extensions of this time period not to exceed 60 calendar days 
in total and will notify the Court of any extensions.
    B. Defendants must use best efforts to divest the Athenos 
Divestiture Assets as expeditiously as possible. Defendants must take 
no action that would jeopardize the completion of the divestiture 
ordered by the Court, including any action to impede the permitting, 
operation, or divestiture of the Athenos Divestiture Assets.

[[Page 73326]]

    C. Unless the United States otherwise consents in writing, 
divestiture pursuant to this Final Judgment must include the entire 
Athenos Divestiture Assets and must be accomplished in such a way as to 
satisfy the United States, in its sole discretion, that the Athenos 
Divestiture Assets can and will be used by Acquirer of the Athenos 
Divestiture Assets as part of a viable, ongoing business of selling 
feta cheese to retailers and that the divestiture to Acquirer of the 
Athenos Divestiture Assets will remedy the competitive harm in the 
market for selling feta cheese to retailers alleged in the Complaint.
    D. The divestiture of the Athenos Divestiture Assets must be made 
to an Acquirer that, in the United States' sole judgment, has the 
intent and capability, including the necessary managerial, operational, 
technical, and financial capability, to compete effectively in the sale 
of feta cheese to retailers.
    E. The divestiture of the Athenos Divestiture Assets must be 
accomplished in a manner that satisfies the United States, in its sole 
discretion, that none of the terms of any agreement between Acquirer of 
the Athenos Divestiture Assets and Defendants gives Defendants the 
ability unreasonably to raise costs for Acquirer of the Athenos 
Divestiture Assets, to lower the efficiency of Acquirer of the Athenos 
Divestiture Assets, or otherwise interfere in the ability of Acquirer 
of the Athenos Divestiture Assets to compete effectively in the sale of 
feta cheese to retailers.
    F. In the event Defendants are attempting to divest the Athenos 
Divestiture Assets to an Acquirer other than Emmi Roth, Defendants 
promptly must make known, by usual and customary means, the 
availability of the Athenos Divestiture Assets. Defendants must inform 
any person making an inquiry relating to a possible purchase of the 
Athenos Divestiture Assets that the Athenos 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 of the Athenos Divestiture 
Assets, subject to customary confidentiality assurances, all 
information and documents relating to the Athenos 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.
    G. Defendants must provide prospective Acquirers of the Athenos 
Divestiture Assets with (1) access to make inspections of the Athenos 
Divestiture Assets; (2) access to all environmental, zoning, and other 
permitting documents and information relating to the Athenos 
Divestiture Assets; and (3) access to all financial, operational, or 
other documents and information relating to the Athenos Divestiture 
Assets that would customarily be provided as part of a due diligence 
process. Defendants also must disclose all encumbrances on any part of 
the Athenos Divestiture Assets, including on intangible property.
    H. Defendants must cooperate with and assist Acquirer of the 
Athenos Divestiture Assets in identifying and, at the option of 
Acquirer of the Athenos Divestiture Assets, in hiring all Athenos 
Personnel, including:
    1. Within 10 business days following the filing of the Complaint in 
this matter, Defendants must identify all Athenos Personnel to Acquirer 
of the Athenos Divestiture Assets and the United States, including by 
providing organization charts covering all Athenos Personnel.
    2. Within 10 business days following receipt of a request by 
Acquirer of the Athenos Divestiture Assets or the United States, 
Defendants must provide to Acquirer of the Athenos Divestiture Assets 
and the United States additional information relating to Athenos 
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 of the Athenos Divestiture Assets and the 
United States information relating to current and accrued compensation 
and benefits of Athenos Personnel, including most recent bonuses paid, 
aggregate annual compensation, current target or guaranteed bonus, if 
any, any retention agreement or incentives, and any other payments due, 
compensation or benefits accrued, or promises made to the Athenos 
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 Acquirer of the Athenos Divestiture Assets, 
Defendants must promptly make Athenos Personnel available for private 
interviews with Acquirer of the Athenos Divestiture Assets during 
normal business hours at a mutually agreeable location.
    4. Defendants must not interfere with any effort by Acquirer of the 
Athenos Divestiture Assets to employ any Athenos Personnel. 
Interference includes offering to increase the compensation or improve 
the benefits of Athenos Personnel unless (a) the offer is part of a 
company-wide increase in compensation or improvement in benefits that 
was announced prior to September 15, 2020, or (b) the offer is approved 
by the United States in its sole discretion. Defendants' obligations 
under this Paragraph will expire six months after the date on which the 
Athenos Divestiture Assets are divested.
    5. For Athenos Personnel who elect employment with Acquirer of the 
Athenos Divestiture Assets either (a) before the date on which a 
transition services contract entered into pursuant to Paragraph IV.P is 
terminated or expires, or (b) within three months after the date on 
which such a contract is terminated or expires, Defendants must waive 
all non-compete and non-disclosure agreements; vest and pay to the 
Athenos Personnel (or to Acquirer of the Athenos Divestiture Assets for 
payment to the employee) on a prorated basis any bonuses, incentives, 
other salary, benefits, or other compensation fully or partially 
accrued at the time of the transfer of the employee to Acquirer of the 
Athenos Divestiture Assets; vest any unvested pension and other equity 
rights; and provide all other benefits that those Athenos Personnel 
otherwise would have been provided had the Athenos Personnel continued 
employment with Defendants, including any retention bonuses or 
payments. Defendants may maintain reasonable restrictions on disclosure 
by Athenos Personnel of Defendants' proprietary non-public information 
that is unrelated to the Athenos Divestiture Assets and not otherwise 
required to be disclosed by this Final Judgment.
    6. For a period of 12 months from the date on which the Athenos 
Divestiture Assets are divested, Defendants may not solicit to rehire 
Athenos Personnel who were hired by Acquirer of the Athenos Divestiture 
Assets either (a) before the date on which a transition services 
contract entered into pursuant to Paragraph IV.P is terminated or 
expires, or (b) within three months after the date on which such a 
contract is terminated

[[Page 73327]]

or expires, unless an individual is terminated or laid off by Acquirer 
of the Athenos Divestiture Assets or Acquirer of the Athenos 
Divestiture Assets agrees in writing that Defendants may solicit to re-
hire that individual. Nothing in this Paragraph prohibits Defendants 
from advertising employment openings using general solicitations or 
advertisements and re-hiring Athenos Personnel who apply for an 
employment opening through a general solicitation or advertisement.
    I. Defendants must warrant to Acquirer of the Athenos Divestiture 
Assets that (1) the Athenos Divestiture Assets will be operational and 
without material defect on the date of their transfer to Acquirer of 
the Athenos Divestiture Assets; (2) there are no material defects in 
the environmental, zoning, or other permits relating to the operation 
of the Athenos Divestiture Assets; and (3) Defendants have disclosed 
all encumbrances on any part of the Athenos Divestiture Assets, 
including on intangible property. Following the sale of the Athenos 
Divestiture Assets, Defendants must not undertake, directly or 
indirectly, challenges to the environmental, zoning, or other permits 
relating to the operation of the Athenos Divestiture Assets.
    J. Defendants must assign, subcontract, or otherwise transfer all 
contracts, agreements, and customer relationships (or portions of such 
contracts, agreements, and customer relationships) included in the 
Athenos Divestiture Assets, including all supply and sales contracts 
and co-packing and packaging supplier agreements, to Acquirer of the 
Athenos Divestiture Assets; provided, however, that 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 Acquirer of the Athenos 
Divestiture Assets and a contracting party.
    K. Defendants must, at the option of the Acquirer of the Athenos 
Divestiture Assets, and subject to the approval by the United States in 
its sole discretion, assign, subcontract, or otherwise transfer any of 
the Athenos Transitional Services Contracts to Acquirer of the Athenos 
Divestiture Assets upon request of the Acquirer of the Athenos 
Divestiture Assets either at the time of the divestiture of the Athenos 
Divestiture Assets or at any time prior to the expiration or 
termination of a transition services contract entered into pursuant to 
Paragraph IV.P; provided, however, that 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 Acquirer of the Athenos Divestiture 
Assets and a contracting party.
    L. Defendants must use best efforts to assist Acquirer of the 
Athenos Divestiture Assets to obtain all necessary licenses, 
registrations, and permits to operate the Athenos Divestiture Business. 
Until Acquirer of the Athenos Divestiture Assets obtains the necessary 
licenses, registrations, and permits, Defendants must provide Acquirer 
of the Athenos Divestiture Assets with the benefit of Defendants' 
licenses, registrations, and permits to the full extent permissible by 
law.
    M. At the option of Acquirer of the Athenos Divestiture Assets, and 
subject to approval by the United States in its sole discretion, on or 
before the date on which the Athenos Divestiture Assets are divested, 
Defendants must enter into a supply contract or contracts for the 
processing and packaging of Athenos Products sufficient to meet the 
needs of Acquirer of the Athenos Divestiture Assets, as determined by 
Acquirer of the Athenos Divestiture Assets, for a period of up to two 
years, on terms and conditions reasonably related to market conditions 
for the processing and packaging of Athenos Products. Any amendment to 
or modification of any provision of any such supply contract is 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 supply contract, for a total of up to an additional 12 months. If 
Acquirer of the Athenos Divestiture Assets seeks an extension of the 
term of any supply contract, Defendants must notify the United States 
in writing at least three months prior to the date the supply contract 
expires. Acquirer of the Athenos Divestiture Assets may terminate a 
supply contract, or any portion of a supply contract, without cost or 
penalty at any time upon commercially reasonable written notice. The 
employees of Defendants tasked with providing services pursuant to a 
supply contract must not share any competitively sensitive information 
of Acquirer of the Athenos Divestiture Assets with any other employee 
of Defendants.
    N. At the option of Acquirer of the Athenos Divestiture Assets, and 
subject to approval by the United States in its sole discretion, 
Defendants may, for the sole purpose of fulfilling any supply contract 
required by Paragraph IV.M of this Final Judgment, retain the Athenos 
Transitional Manufacturing Assets until the earlier of (1) 60 calendar 
days after Acquirer of the Athenos Divestiture Assets terminates the 
supply contract or contracts required by Paragraph IV.M of this Final 
Judgment or (2) 60 calendar days following the expiration of any supply 
contract or contracts required by Paragraph IV.M of this Final 
Judgment, after which Defendants must sell and transfer to Acquirer of 
the Athenos Divestiture Assets the Athenos Transitional Manufacturing 
Assets on terms and conditions reasonably related to market conditions 
for such manufacturing assets.
    O. Defendants must warrant to Acquirer of the Athenos Divestiture 
Assets that (1) the Athenos Transitional Manufacturing Assets will be 
operational and without material defect on the date of their transfer 
to Acquirer of the Athenos Divestiture Assets; (2) there are no 
material defects in the environmental, zoning, or other permits 
relating to the operation of the Athenos Transitional Manufacturing 
Assets; and (3) Defendants have disclosed all encumbrances on any part 
of the Athenos Transitional Manufacturing Assets, including on 
intangible property. Following the sale of the Athenos Transitional 
Manufacturing Assets, Defendants must not undertake, directly or 
indirectly, challenges to the environmental, zoning, or other permits 
relating to the operation of the Athenos Transitional Manufacturing 
Assets.
    P. At the option of Acquirer of the Athenos Divestiture Assets, and 
subject to approval by the United States in its sole discretion, on or 
before the date on which the Athenos Divestiture Assets are divested, 
Defendants must enter into a contract to provide transition services 
for back office, human resources, accounting, information technology 
services and support, facilitating repacking, warehousing, 
transportation, and by making personnel available to assist Acquirer of 
the Athenos Divestiture Assets for a period of up to six months on 
terms and conditions reasonably related to market conditions for the 
provision of the transition services. Any amendment to or modification 
of any provision of a contract to provide transition services is 
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, for a total of up 
to an additional six months. If Acquirer of the Athenos Divestiture 
Assets seeks an

[[Page 73328]]

extension of the term of any contract for transition services, 
Defendants must notify the United States in writing at least 30 days 
prior to the date the contract expires. Acquirer of the Athenos 
Divestiture Assets may terminate a contract for transition services, or 
any portion of a contract for transition services, without cost or 
penalty at any time upon commercially reasonable written notice. The 
employees of Defendants tasked with providing transition services must 
not share any competitively sensitive information of Acquirer of the 
Athenos Divestiture Assets with any other employee of Defendants.
    Q. If any term of an agreement between Defendants and Acquirer of 
the Athenos Divestiture Assets, including an agreement to effectuate 
the divestiture of the Athenos Divestiture Assets 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. Divestiture of the Polly-O Divestiture Assets

    A. Defendants are ordered and directed, within 30 calendar days 
after the Court's entry of the Asset Preservation and Hold Separate 
Stipulation and Order in this matter, to divest the Polly-O Divestiture 
Assets in a manner consistent with this Final Judgment to BelGioioso or 
another Acquirer acceptable to the United States, in its sole 
discretion. The United States, in its sole discretion, may agree to one 
or more extensions of this time period not to exceed 60 calendar days 
in total and will notify the Court of any extensions.
    B. Defendants must use best efforts to divest the Polly-O 
Divestiture Assets as expeditiously as possible. Defendants must take 
no action that would jeopardize the completion of the divestiture 
ordered by the Court, including any action to impede the permitting, 
operation, or divestiture of the Polly-O Divestiture Assets.
    C. Unless the United States otherwise consents in writing, 
divestiture pursuant to this Final Judgment must include the entire 
Polly-O Divestiture Assets and must be accomplished in such a way as to 
satisfy the United States, in its sole discretion, that the Polly-O 
Divestiture Assets can and will be used by Acquirer of the Polly-O 
Divestiture Assets as part of a viable, ongoing business of selling 
ricotta cheese to retailers, and that the divestiture to Acquirer of 
the Polly-O Divestiture Assets will remedy the competitive harm in the 
market for selling ricotta cheese to retailers alleged in the 
Complaint.
    D. The divestiture of the Polly-O Divestiture Assets must be made 
to an Acquirer that, in the United States' sole judgment, has the 
intent and capability, including the necessary managerial, operational, 
technical, and financial capability, to compete effectively in the sale 
of ricotta cheese to retailers.
    E. The divestiture of the Polly-O Divestiture Assets must be 
accomplished in a manner that satisfies the United States, in its sole 
discretion, that none of the terms of any agreement between Acquirer of 
the Polly-O Divestiture Assets and Defendants gives Defendants the 
ability unreasonably to raise costs for Acquirer of the Polly-O 
Divestiture Assets, to lower the efficiency of Acquirer of the Polly-O 
Divestiture Assets, or otherwise interfere in the ability of Acquirer 
of the Polly-O Divestiture Assets to compete effectively in the sale of 
ricotta cheese to retailers.
    F. In the event Defendants are attempting to divest the Polly-O 
Divestiture Assets to an Acquirer other than BelGioioso, Defendants 
promptly must make known, by usual and customary means, the 
availability of the Polly-O Divestiture Assets. Defendants must inform 
any person making an inquiry relating to a possible purchase of the 
Polly-O Divestiture Assets that the Polly-O 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 of the Polly-O Divestiture 
Assets, subject to customary confidentiality assurances, all 
information and documents relating to the Polly-O 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.
    G. Defendants must provide prospective Acquirers of the Polly-O 
Divestiture Assets with (1) access to make inspections of the Polly-O 
Divestiture Assets; (2) access to all environmental, zoning, and other 
permitting documents and information relating to the Polly-O 
Divestiture Assets; and (3) access to all financial, operational, or 
other documents and information relating to the Polly-O Divestiture 
Assets that would customarily be provided as part of a due diligence 
process. Defendants also must disclose all encumbrances on any part of 
the Polly-O Divestiture Assets, including on intangible property.
    H. Defendants must cooperate with and assist Acquirer of the Polly-
O Divestiture Assets in identifying and, at the option of Acquirer of 
the Polly-O Divestiture Assets, in hiring all Polly-O Personnel, 
including:
    1. Within 10 business days following the filing of the Complaint in 
this matter, Defendants must identify all Polly-O Personnel to Acquirer 
of the Polly-O Divestiture Assets and the United States, including by 
providing organization charts covering all Polly-O Personnel.
    2. Within 10 business days following receipt of a request by 
Acquirer of the Polly-O Divestiture Assets or the United States, 
Defendants must provide to Acquirer of the Polly-O Divestiture Assets 
and the United States additional information relating to Polly-O 
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 of the Polly-O Divestiture Assets and the 
United States information relating to current and accrued compensation 
and benefits of Polly-O Personnel, including most recent bonuses paid, 
aggregate annual compensation, current target or guaranteed bonus, if 
any, any retention agreement or incentives, and any other payments due, 
compensation or benefits accrued, or promises made to the Polly-O 
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 Acquirer of the Polly-O Divestiture Assets, 
Defendants must promptly make Polly-O Personnel available for private 
interviews with Acquirer of the Polly-O Divestiture Assets during 
normal business hours at a mutually agreeable location.
    4. Defendants must not interfere with any effort by Acquirer of the 
Polly-O Divestiture Assets to employ any Polly-O Personnel. 
Interference includes offering to increase the compensation or improve 
the benefits of Polly-O

[[Page 73329]]

Personnel unless (a) the offer is part of a company-wide increase in 
compensation or improvement in benefits that was announced prior to 
September 15, 2020, or (b) the offer is approved by the United States 
in its sole discretion. Defendants' obligations under this Paragraph 
will expire six months after the date on which the Polly-O Divestiture 
Assets are divested.
    5. For Polly-O Personnel who elect employment with Acquirer of the 
Polly-O Divestiture Assets either (a) before the date on which a 
transition services contract entered into pursuant to Paragraph V.N is 
terminated or expires, or (b) within three months after the date on 
which such a contract is terminated or expires, Defendants must waive 
all non-compete and non-disclosure agreements; vest and pay to the 
Polly-O Personnel (or to Acquirer of the Polly-O Divestiture Assets for 
payment to the employee) on a prorated basis any bonuses, incentives, 
other salary, benefits, or other compensation fully or partially 
accrued at the time of the transfer of the employee to Acquirer of the 
Polly-O Divestiture Assets; vest any unvested pension and other equity 
rights; and provide all other benefits that those Polly-O Personnel 
otherwise would have been provided had the Polly-O Personnel continued 
employment with Defendants, including any retention bonuses or 
payments. Defendants may maintain reasonable restrictions on disclosure 
by Polly-O Personnel of Defendants' proprietary non-public information 
that is unrelated to the Polly-O Divestiture Assets and not otherwise 
required to be disclosed by this Final Judgment.
    6. For a period of 12 months from the date on which the Polly-O 
Divestiture Assets are divested, Defendants may not solicit to rehire 
Polly-O Personnel who were hired by Acquirer of the Polly-O Divestiture 
Assets either (a) before the date on which a transition services 
contract entered into pursuant to Paragraph V.N is terminated or 
expires, or (b) within three months after the date on which such a 
contract is terminated or expires, unless an individual is terminated 
or laid off by Acquirer of the Polly-O Divestiture Assets or Acquirer 
of the Polly-O Divestiture Assets agrees in writing that Defendants may 
solicit to re-hire that individual. Nothing in this Paragraph prohibits 
Defendants from advertising employment openings using general 
solicitations or advertisements and re-hiring Polly-O Personnel who 
apply for an employment opening through a general solicitation or 
advertisement.
    I. Defendants must warrant to Acquirer of the Polly-O Divestiture 
Assets that (1) the Polly-O Divestiture Assets will be operational and 
without material defect on the date of their transfer to Acquirer of 
the Polly-O Divestiture Assets; (2) there are no material defects in 
the environmental, zoning, or other permits relating to the operation 
of the Polly-O Divestiture Assets; and (3) Defendants have disclosed 
all encumbrances on any part of the Polly-O Divestiture Assets, 
including on intangible property. Following the sale of the Polly-O 
Divestiture Assets, Defendants must not undertake, directly or 
indirectly, challenges to the environmental, zoning, or other permits 
relating to the operation of the Polly-O Divestiture Assets.
    J. Defendants must assign, subcontract, or otherwise transfer all 
contracts, agreements, and customer relationships (or portions of such 
contracts, agreements, and customer relationships) included in the 
Polly-O Divestiture Assets, including all supply and sales contracts 
and co-packing and packaging supply agreements, to Acquirer of the 
Polly-O Divestiture Assets; provided, however, that 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 Acquirer of the Polly-O 
Divestiture Assets and a contracting party.
    K. In the event Defendants are attempting to divest the Polly-O 
Divestiture Assets to an Acquirer other than BelGioioso, Defendants 
must, as the option of Acquirer of the Polly-O Divestiture Assets, and 
subject to the approval by the United States in its sole discretion, 
assign, subcontract, or otherwise transfer any of the Polly-O Excluded 
Contracts to Acquirer of the Polly-O Divestiture Assets; provided, 
however, that 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 Acquirer of the Polly-O Divestiture Assets and a 
contracting party.
    L. Defendants must use best efforts to assist Acquirer of the 
Polly-O Divestiture Assets to obtain all necessary licenses, 
registrations, and permits to operate the Polly-O Divestiture Business. 
Until Acquirer of the Polly-O Divestiture Assets obtains the necessary 
licenses, registrations, and permits, Defendants must provide Acquirer 
of the Polly-O Divestiture Assets with the benefit of Defendants' 
licenses, registrations, and permits to the full extent permissible by 
law.
    M. At the option of Acquirer of the Polly-O Divestiture Assets, and 
subject to approval by the United States in its sole discretion, on or 
before the date on which the Polly-O Divestiture Assets are divested, 
Defendants must enter into a supply contract or contracts for the 
production and packaging of Polly-O Products sufficient to meet the 
needs of Acquirer of the Polly-O Divestiture Assets, as determined by 
Acquirer of the Polly-O Divestiture Assets, for a period of up to 12 
months, on terms and conditions reasonably related to market conditions 
for the production and packaging of Polly-O Products. Any amendment to 
or modification of any provision of any such supply contract is 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 supply contract, for a total of up to an additional 12 months. If 
Acquirer of the Polly-O Divestiture Assets seeks an extension of the 
term of any supply contract, Defendants must notify the United States 
in writing at least three months prior to the date the supply contract 
expires. Acquirer of the Polly-O Divestiture Assets may terminate a 
supply contract, or any portion of a supply contract, without cost or 
penalty at any time upon commercially reasonable written notice. The 
employees of Defendants tasked with providing services pursuant to a 
supply contract must not share any competitively sensitive information 
of Acquirer of the Polly-O Divestiture Assets with any other employee 
of Defendants.
    N. At the option of Acquirer of the Polly-O Divestiture Assets, and 
subject to approval by the United States in its sole discretion, on or 
before the date on which the Polly-O Divestiture Assets are divested, 
Defendants must enter into a contract to provide transition services 
for back office, human resources, accounting, information technology 
services and support, facilitating repacking, warehousing, 
transportation, and by making personnel available to assist Acquirer of 
the Polly-O Divestiture Assets for a period of up to six months on 
terms and conditions reasonably related to market conditions for the 
provision of the transition services. Any amendment to or modification 
of any provision of a contract to provide transition services is 
subject to approval by the United States, in its sole discretion. The 
United States,

[[Page 73330]]

in its sole discretion, may approve one or more extensions of any 
contract for transition services, for a total of up to an additional 
six months. If Acquirer of the Polly-O Divestiture Assets seeks an 
extension of the term of any contract for transition services, 
Defendants must notify the United States in writing at least 30 days 
prior to the date the contract expires. Acquirer of the Polly-O 
Divestiture Assets may terminate a contract for transition services, or 
any portion of a contract for transition services, without cost or 
penalty at any time upon commercially reasonable written notice. The 
employees of Defendants tasked with providing transition services must 
not share any competitively sensitive information of Acquirer of the 
Polly-O Divestiture Assets with any other employee of Defendants.
    O. If any term of an agreement between Defendants and Acquirer of 
the Polly-O Divestiture Assets, including an agreement to effectuate 
the divestiture of the Polly-O Divestiture Assets 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.

VI. Appointment of Divestiture Trustee

    A. If Defendants have not divested all of the Divestiture Assets 
within the periods specified in Paragraphs IV.A and V.A, Defendants 
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 any of the 
Divestiture Assets that have not been sold during the time periods 
specified in Paragraphs IV.A and V.A.
    B. After the appointment of a divestiture trustee by the Court, 
only the divestiture trustee will have the right to sell those 
Divestiture Assets that the divestiture trustee has been appointed to 
sell. The divestiture trustee will have the power and authority to 
accomplish the divestiture(s) to an 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, VI, and VII of this Final 
Judgment, and will have other powers as the Court deems appropriate. 
The divestiture trustee must sell the relevant 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 VII.
    D. The divestiture trustee will serve at the cost and expense of 
Defendants pursuant to a written agreement, on terms and conditions, 
including confidentiality requirements and conflict of interest 
certifications, approved by the United States in its sole discretion.
    E. The divestiture trustee may hire at the cost and expense of 
Defendants any agents or consultants, including 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 
confidentiality requirements and conflict-of-interest certifications, 
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 Defendants 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 Defendants 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 date on 
which any divestiture overseen by the divestiture trustee is completed, 
the divestiture trustee must submit that accounting to the Court for 
approval. 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 Defendants and the trust will then be terminated.
    H. Defendants must use best efforts to assist the divestiture 
trustee to accomplish the required divestiture(s). 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 relevant 
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(s).
    I. The divestiture trustee must maintain complete records of all 
efforts made to sell any of the Divestiture Assets that have not been 
sold during the time periods specified in Paragraphs IV.A and V.A, 
including by filing monthly reports with the United States setting 
forth the divestiture trustee's efforts to accomplish the 
divestiture(s) 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 
that the divestiture trustee has been appointed to sell and must 
describe in detail each contact.
    J. If the divestiture trustee has not accomplished the 
divestiture(s) 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(s); (2) the reasons, in 
the divestiture trustee's judgment, why the required divestiture(s) has 
not been accomplished; and (3) the divestiture trustee's 
recommendations for completing the divestiture(s). 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 by a period requested by the United States.

[[Page 73331]]

    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.

VII. Notice of Proposed Divestiture

    A. Within two business days following execution of a definitive 
agreement to sell the Athenos Divestiture Assets to an Acquirer other 
than Emmi Roth or execution of a definitive agreement to sell the 
Polly-O Divestiture Assets to an Acquirer other than BelGioioso, 
Defendants 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 
Defendants. 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 relevant 
Divestiture Assets.
    B. Within 15 calendar days of receipt by the United States of a 
notice required by Paragraph VII.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 a notice required by 
Paragraph VII.A or within 20 calendar days after the United States has 
been provided the additional information requested pursuant to 
Paragraph VII.B, whichever is later, the United States will provide 
written notice to Defendants and any divestiture trustee that states 
whether the United States, in its sole discretion, objects to the 
proposed Acquirer or any other aspect of the proposed divestiture. 
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 VI.C of this Final Judgment. Upon objection by 
Defendants pursuant to Paragraph VI.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 
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 10 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, 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 10 
calendar days' notice before divulging the material in any legal 
proceeding (other than a grand jury proceeding).

VIII. Financing

    Defendants may not finance all or any part of any Acquirer's 
purchase of all or part of the Divestiture Assets.

IX. Asset Preservation and Hold Separate

    Defendants must take all steps necessary to comply with the Asset 
Preservation and Hold Separate Stipulation and Order entered by the 
Court.

X. 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 (a) on behalf 
of Kraft Heinz, the Global Chief Financial Officer, and the Global 
General Counsel, and (b) on behalf of Lactalis, the Chief Financial 
Officer of LAG Holding, and the Chief Legal Officer of LAG Holding, 
describing in reasonable detail the fact and manner of that Defendant's 
compliance with this Final Judgment. The United States, in its sole 
discretion, may approve different signatories for the affidavits.
    B. In the event Defendants are attempting to divest the Athenos 
Divestiture Assets to an Acquirer other than Emmi Roth or the Polly-O 
Divestiture Assets to an Acquirer other than BelGioioso, each affidavit 
required by Paragraph X.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 Athenos Divestiture Assets until one year after the Athenos 
Divestiture Assets are divested. Defendants must keep all records of 
any efforts made to divest the Polly-O Divestiture Assets until one 
year after the Polly-O Divestiture Assets are divested.
    D. Within 20 calendar days of the filing of the Complaint in this 
matter, each Defendant must deliver to the United States an affidavit 
signed by (a) on behalf of Kraft Heinz, the Global Chief Financial 
Officer, and the Global General Counsel, and (b) on behalf of Lactalis, 
the Chief Financial Officer of

[[Page 73332]]

LAG Holding, and the Chief Legal Officer of LAG Holding, that describes 
in reasonable detail all actions that Defendant has taken and all steps 
that Defendant has implemented on an ongoing basis to comply with 
Section IX 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 actions and steps described 
in affidavits provided pursuant to Paragraph X.D, the Defendant 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 IX until the later of one year after the Athenos 
Divestiture Assets are divested or one year after the Polly-O 
Divestiture Assets are divested.

XI. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment or of related orders such as the Asset Preservation and 
Hold Separate Stipulation and Order or 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 this 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 matters contained in this Final 
Judgment.
    C. No information or documents obtained pursuant to this Section 
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, 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).

XII. 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''), 
Lactalis 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 an entity involved in the sale 
of ricotta cheese to retailers in the United States during the term of 
this Final Judgment.
    B. Lactalis must provide the notification required by this Section 
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 the sale of ricotta cheese to retailers in 
the United States.
    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 transaction on behalf of each party, 
and all management or strategic plans discussing the proposed 
transaction. If, within the 30 calendar days following notification, 
representatives of the United States make a written request for 
additional information, Defendants 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 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 must be broadly 
construed, and any ambiguity or uncertainty relating to whether to file 
a notice under this Section must be resolved in favor of filing notice.

XIII. No Reacquisition

    Defendants may not reacquire any part of or any interest in the 
Divestiture Assets during the term of this Final Judgment without prior 
authorization of the United States.

XIV. 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.

XV. 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 relating to 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

[[Page 73333]]

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 an 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 this 
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.

XVI. 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 is no longer necessary or in the public interest.

XVII. 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 
response to comments filed with the Court, entry of this Final Judgment 
is in the public interest.
Date:------------------------------------------------------------------
[Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16]
-----------------------------------------------------------------------
United States District Judge

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. B.S.A. S.A., LAG 
Holding, Inc., and The Kraft Heinz Company, Defendants.

Civil Action No.: 1:21-cv-02976-RBW

Competitive Impact Statement

    In accordance with the Antitrust Procedures and Penalties Act, 15 
U.S.C. 16(b)-(h) (the ``APPA'' or ``Tunney Act''), the United States of 
America files this Competitive Impact Statement related to the proposed 
Final Judgment filed in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On September 15, 2020, B.S.A. S.A. (collectively with its 
subsidiaries LAG Holding, Inc., and Lactalis American Group, Inc., 
``Lactalis'') agreed to acquire the natural cheese business of The 
Kraft Heinz Company (``Kraft Heinz'') in the United States, along with 
its grated cheese business in Canada and its entire cheese business 
outside North America, for approximately $3.2 billion. The United 
States filed a civil antitrust Complaint on November 10, 2021, seeking 
to enjoin the transaction. See Dkt. No. 1. The Complaint alleges that 
the likely effect of this transaction would be to substantially lessen 
competition for the sale of feta cheese to retailers in the United 
States and ricotta cheese to retailers in the metropolitan and 
surrounding area of New York, New York and in four metropolitan and 
surrounding areas in Florida 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 
an Asset Preservation and Hold Separate Stipulation and Order 
(``Stipulation and Order'') and a proposed Final Judgment, which are 
designed to remedy the loss of competition alleged in the Complaint. 
See Dkt. Nos. 2-1 and 2-2.
    Under the proposed Final Judgment, explained more fully below, 
Defendants are required to divest Kraft Heinz's entire Athenos and 
Polly-O businesses, including the brand names, all products sold under 
those brand names, and other assets related to or used in these 
businesses to Emmi Roth USA, Inc. and BelGioioso Cheese, Inc., 
respectively, or to alternative acquirers acceptable to the United 
States, within 30 calendar days after entry of the Stipulation and 
Order. These divestitures will protect competition by enabling the 
acquirers of the Athenos and Polly-O businesses to step into the shoes 
of Kraft Heinz and compete with Lactalis in the feta and ricotta 
markets.
    Under the terms of the Stipulation and Order, Defendants must also 
take certain steps to operate, preserve, and maintain the full economic 
viability, marketability, and competitiveness of the Athenos 
Divestiture Assets and the Polly-O Divestiture Assets. In addition, 
Lactalis must hold entirely separate, distinct, and apart from its 
other operations, the management, sales, and operations of the Athenos 
Divestiture Assets and the Polly-O Divestiture Assets. The purpose of 
these terms in the Stipulation and Order is to ensure that competition 
is maintained while the divestitures are being accomplished. The Court 
signed the Stipulation and Order on November 13, 2021, and entered the 
Stipulation and Order on November 15, 2021. See Dkt. No. 3.
    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 by the Court will terminate this action, 
except that the Court will retain jurisdiction to construe, modify, or 
enforce the provisions of the proposed Final Judgment and to punish 
violations thereof.

II. Description of Events Giving Rise to the Alleged Violations

A. The Defendants and the Transaction

    B.S.A. S.A. is a French company operating under the name Lactalis 
Group, organized and existing under the laws of France, with its 
headquarters in Laval, France. It is one of the largest dairy companies 
in the world, selling cheese in the United States through its 
subsidiaries, LAG Holding, Inc. and Lactalis American Group, Inc. LAG 
Holding, Inc., a Delaware corporation with its headquarters in Buffalo, 
New

[[Page 73334]]

York, and Lactalis American Group, Inc. generated natural cheese sales 
of approximately $429 million at retail outlets in the United States in 
2020. In the United States, Lactalis sells natural cheeses primarily 
under the Galbani and Pr[eacute]sident brand names.
    Kraft Heinz is a Delaware corporation co-headquartered in 
Pittsburgh, Pennsylvania and Chicago, Illinois. Kraft Heinz is one of 
the largest food products and beverage companies in the world. It is 
the largest supplier of natural cheeses to grocery stores and other 
retail outlets in the United States, with retail sales of its natural 
cheeses totaling over $2.2 billion in 2020. Kraft Heinz sells natural 
cheeses primarily under the Kraft, Cracker Barrel, Athenos, and Polly-O 
brand names.
    Pursuant to a September 15, 2020 asset purchase agreement, Lactalis 
will acquire for approximately $3.2 billion Kraft Heinz's interests in 
its: (1) Natural cheese business in the United States, which includes 
feta, ricotta, and many other types of cheeses; (2) grated cheese 
business in Canada; and (3) entire cheese business outside North 
America (the ``Transaction''). Kraft Heinz is retaining a significant 
portion of its cheese business in the United States, consisting of its 
processed cheese and cream cheese businesses, marketed under the Kraft 
Singles, Velveeta, Cheez Whiz, and Philadelphia Cream Cheese brand 
names.

B. The Competitive Effects of the Transaction

    The Complaint alleges that the Transaction will result in 
anticompetitive effects in the markets for the sale of feta cheese to 
retailers in the United States and the sale of ricotta cheese to 
retailers in the metropolitan and surrounding area of New York, New 
York (the ``New York Metro Market'') and in four metropolitan and 
surrounding areas in Florida: Miami/Ft. Lauderdale, Tampa/St. 
Petersburg, Orlando, and Jacksonville (collectively, the ``Florida 
Metro Markets'').
    Cheeses are sold to retailers (such as grocery stores, 
supermarkets, mass merchandisers like Wal-Mart, and club stores like 
Sam's Club) as branded cheeses or private label cheeses. A branded 
cheese bears a brand name controlled by the cheese supplier (e.g., 
Kraft Heinz's Athenos and Polly-O brands) and is usually carried by 
multiple retailers. A private label cheese is usually sold under a name 
owned by the retailer (e.g., Wal-Mart's Great Value private label), and 
is typically offered only in that retailer's stores. Grocery stores and 
other food retailers act as proxies for individual customers and seek 
to offer a variety of products demanded by their customers. 
Accordingly, retailers strive to carry products and brands that their 
customers value, and may vary their offerings to meet local customer 
demand.
    The Transaction would combine the two largest suppliers of feta 
cheese sold to retailers in the United States and the two largest 
suppliers of ricotta cheese sold to retailers in the New York Metro 
Market and in each of the Florida Metro Markets. As alleged in the 
Complaint, eliminating the head-to-head competition between Lactalis 
and Kraft Heinz would likely lead to higher prices, lower quality, and 
less innovation for these products for retailers (and consumers) in the 
relevant markets.
1. Relevant Product Markets
    A typical starting point for merger analysis is defining a relevant 
market, which has both a product and a geographic dimension. Courts 
define relevant markets to help determine the areas of competition most 
likely to be affected by a merger.
a. Feta Cheese Sold to Retailers
    As alleged in the Complaint, feta cheese sold to retailers is a 
relevant antitrust product market in which to analyze the effects of 
the Transaction. Feta cheese originated in Greece, and is primarily 
used as an ingredient in food dishes. There are no reasonable 
substitutes for feta cheese for most consumers. A hypothetical 
monopolist supplier of feta cheese to retailers likely would find it 
profitable to increase its prices by at least a small but significant 
non-transitory amount (e.g., five percent). Consumers are unlikely to 
sufficiently reduce their purchases of feta cheese or shift to a 
different cheese or other products to render such a price increase 
unprofitable. Retailers, buying on behalf of consumers, are also 
unlikely to sufficiently reduce purchases of feta cheese to render such 
a price increase unprofitable. Accordingly, feta cheese sold to 
retailers is a relevant product market and line of commerce within the 
meaning of Section 7 of the Clayton Act, 15 U.S.C. 18.
    Defining a market for feta cheese that is sold to retailers is also 
consistent with industry recognition and practice. As the Complaint 
indicates, suppliers of feta cheese to retailers typically (1) monitor 
the retail prices of competing feta cheeses and set their prices and 
promotional spending accordingly, (2) do not set the price they charge 
for feta cheese based on the prices of other cheeses or other consumer 
products, (3) track their sales to retailers separately from their 
sales to other distribution channels (i.e., foodservice and the 
ingredients or industrial channels), (4) have sales employees dedicated 
to serving retailers, and (5) sell feta cheese to retailers in 
packaging and package sizes that are different than that used for feta 
cheese sold through other distribution channels. These factors further 
support that feta cheese sold to retailers is a relevant product market 
and line of commerce within the meaning of Section 7 of the Clayton 
Act, 15 U.S.C. 18.
b. Ricotta Cheese Sold to Retailers
    As alleged in the Complaint, ricotta cheese sold to retailers is a 
relevant antitrust product market in which to analyze the effects of 
the Transaction. Ricotta is a soft cheese that originated in Italy, and 
is primarily used as an ingredient in food dishes. There are no 
reasonable substitutes for ricotta cheese for most consumers. A 
hypothetical monopolist supplier of ricotta cheese to retailers likely 
would find it profitable to increase its prices by at least a small but 
significant non-transitory amount (e.g., five percent). Similar to feta 
cheese, consumers and retailers are unlikely to sufficiently reduce 
their purchases of ricotta cheese or shift to a different cheese or 
other products to render such a price increase unprofitable. In 
addition, defining a market for ricotta cheese that is sold to 
retailers is consistent with industry recognition and practice for the 
same reasons described above for feta cheese. Accordingly, ricotta 
cheese sold to retailers is a relevant product market and line of 
commerce within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 
18.
2. Relevant Geographic Markets
    The relevant geographic markets for analyzing the effects of the 
Transaction on competition for feta and ricotta cheeses sold to 
retailers are best defined by reference to the locations of the 
retailers that purchase feta and ricotta cheeses in order to then sell 
those products to consumers. This approach to defining the relevant 
geographic markets is appropriate because suppliers of feta and ricotta 
cheeses to retailers assess the competitive conditions in particular 
localities, including local demand for feta and ricotta cheeses, as 
well as local demand for the suppliers' own brands as compared to 
competing brands and to private label offerings. As a result, suppliers 
of feta and ricotta cheeses can charge different prices, or offer 
different

[[Page 73335]]

levels of promotional funding, to retailers in different locations 
based on local competitive conditions. If targeted for a price increase 
or reduction in promotional funding, retailers in a given locality 
would likely not be able to render such conduct unprofitable by 
purchasing feta or ricotta cheeses outside of the relevant geography 
and transporting it to their retail locations.
    As the Complaint alleges, where feta and ricotta cheese suppliers 
can successfully vary prices and promotional funding based on retailer 
customer location, the goal of geographic market definition is to 
identify the area encompassing the location of potentially targeted 
customers. The relevant geographic markets described below encompass 
the locations of retailers that would likely be targeted by suppliers 
for price increases as a result of the Transaction.
a. The Relevant Geographic Markets for Feta Cheese Sold to Retailers
    The relevant geographic market for the sale of feta cheese to 
retailers may be defined as narrowly as individual metropolitan and 
surrounding areas. A hypothetical monopolist supplier of feta cheese to 
retailers in any given metropolitan and surrounding area in the United 
States likely would find it profitable to increase its prices by at 
least a small but significant and non-transitory amount (e.g., five 
percent). Therefore, each metropolitan and surrounding area in the 
United States is a relevant geographic market and section of the 
country within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 
18.
    As the Complaint alleges, in circumstances where competitive 
conditions are similar, it is appropriate to aggregate local markets 
into a larger relevant market for analytical convenience. The 
competitive conditions across the country are similar for the sale of 
feta cheese to retailers. Kraft Heinz's Athenos feta and Lactalis's 
Pr[eacute]sident feta are the two top-selling feta cheese brands in the 
United States. While some regional brands of feta cheese exist, none 
place a significant competitive constraint on Defendants in any 
particular metropolitan and surrounding area. Therefore, it is 
appropriate to analyze competition for the sale of feta cheese to 
retailers on a national basis.
b. The Relevant Geographic Markets for Ricotta Cheese Sold to Retailers
    The relevant geographic markets for the sale of ricotta cheese to 
retailers are the New York Metro Market and each of the Florida Metro 
Markets. In each of these markets, Defendants compete vigorously with 
each other for sales of ricotta cheese to retailers. A hypothetical 
monopolist supplier of ricotta cheese to retailers in the New York 
Metro Market and in each of the Florida Metro Markets likely would 
increase its price by at least a small but significant and non-
transitory amount (e.g., five percent). Therefore, the New York Metro 
Market and each of the Florida Metro Markets are relevant geographic 
markets and sections of the country within the meaning of Section 7 of 
the Clayton Act, 15 U.S.C. 18.
3. The Transaction Would Result in Large Combined Market Shares and 
Likely Substantially Lessen Head-To-Head Competition Between Two 
Particularly Close Competitors
    The Transaction would combine Lactalis and Kraft Heinz, the two 
largest suppliers of feta cheese to retailers nationally, and the two 
largest suppliers of ricotta cheese to retailers in the New York Metro 
Market and in each of the Florida Metro Markets, resulting in a 
substantial increase in concentration in these markets.
    The Supreme Court has held that mergers that significantly increase 
concentration in already concentrated markets are presumptively 
anticompetitive and therefore presumptively unlawful. To measure market 
concentration, courts often use the Herfindahl-Hirschman Index 
(``HHI'') as described in the U.S. Department of Justice and Federal 
Trade Commission Horizontal Merger Guidelines. HHIs range from 0 in 
markets with no concentration to 10,000 in markets where one firm has a 
100% market share. According to the Horizontal Merger Guidelines, 
mergers that increase the HHI by more than 200 and result in an HHI 
above 2,500 in any market are presumed to be anticompetitive and, 
therefore, unlawful.
    The Complaint alleges that the Transaction is presumptively 
unlawful for the sale of feta cheese to retailers nationally. 
Defendants are the two largest suppliers of feta cheese to retailers in 
the United States, and their Athenos and Pr[eacute]sident feta cheese 
brands combined would account for approximately 65% of all feta cheese 
sales by retailers nationally. In a national market for feta cheese 
sold by retailers, the Transaction would increase the HHI by more than 
2,100 points, resulting in a highly concentrated market with a post-
acquisition HHI of more than 4,300 points. Thus, the Transaction is 
presumptively unlawful for the sale of feta cheese to retailers 
nationally.
    As alleged in the Complaint, the Transaction is also presumptively 
unlawful for the sale of ricotta cheese to retailers in the New York 
Metro Market and in each of the Florida Metro Markets. In each of these 
markets, the Defendants are the two largest suppliers of ricotta cheese 
to retailers. In the New York Metro Market, their Polly-O and Galbani 
ricotta cheese brands combined would account for approximately 70% of 
all ricotta cheese sales by retailers, and the Transaction would 
increase the HHI by more than 2,400 points, resulting in a highly 
concentrated market with a post-acquisition HHI of more than 5,000 
points. In each of the Florida Metro Markets, the Defendants' Polly-O 
and Galbani ricotta cheese brands combined would account for over 65% 
of all ricotta cheese sales by retailers, and the Transaction would 
increase the HHI by more than 1,500 points, resulting in highly 
concentrated markets, each with a post-acquisition HHI of more than 
4,400 points. Thus, the Transaction is presumptively unlawful in the 
New York Metro Market and in each of the Florida Metro Markets.
    The Complaint further alleges that Lactalis and Kraft Heinz are 
particularly close competitors for feta cheese sold to retailers 
nationally, and for ricotta cheese sold to retailers in the New York 
Metro Market and in each of the Florida Metro Markets. The Defendants 
are the only two major brands for feta and ricotta cheese in the 
relevant geographic markets and compete aggressively with each other on 
pricing and promotions. The Defendants also compete to offer new and 
innovative products and features, such as Kraft Heinz's flip top 
container for Athenos crumbled feta cheese and Lactalis's double cream 
ricotta cheese. Accordingly, the proposed combination of Lactalis and 
Kraft Heinz would likely lead to higher prices, lower quality, and less 
innovation for feta cheese sold to retailers nationally and for ricotta 
cheese sold to retailers in the New York Metro Market and in each of 
the Florida Metro Markets.
4. Difficulty of Entry or Expansion
    As alleged in the Complaint, new entry and expansion by competitors 
will likely neither be timely nor sufficient in scope to prevent the 
likely anticompetitive effects of the Transaction. Barriers to entry 
and expansion are high and include the substantial time and expense 
required to build a brand's reputation and overcome existing consumer 
preferences through

[[Page 73336]]

promotional and advertising activity as well as the substantial sunk 
costs needed to secure the distribution and placement of a new 
entrant's products in retail outlets (e.g., paying slotting fees to 
obtain shelf space at supermarkets and other food retailers).
    The Complaint also alleges that the likely anticompetitive effects 
of the Transaction are not likely to be reversed or outweighed by any 
efficiencies that the Transaction may achieve.

III. Explanation of the Proposed Final Judgment

    To remedy the likely anticompetitive effects of the Transaction, 
the United States required the Defendants to divest Kraft Heinz's 
competing feta cheese business (the Athenos Divestiture Business), and 
its competing ricotta cheese business (the Polly-O Divestiture 
Business) to acquirers who will step into the shoes of Kraft Heinz and 
preserve the competition with Lactalis in the relevant geographic 
markets. Thus, the relief required by the proposed Final Judgment will 
remedy the loss of competition alleged in the Complaint by establishing 
independent and economically viable competitors in the markets for the 
sale of feta cheese nationally and for the sale of ricotta cheese in 
the New York Metro Market and in each of the Florida Metro Markets.

A. Athenos Divestiture Provisions

    Paragraph IV.A of the proposed Final Judgment requires Defendants, 
within 30 days after the entry of the Stipulation and Order by the 
Court, to divest the Athenos Divestiture Assets to Emmi Roth USA, Inc. 
(``Emmi Roth'') or an alternative acquirer acceptable to the United 
States, in its sole discretion. Emmi Roth is an established cheese 
producer based in Fitchburg, Wisconsin. With the divestiture of Kraft 
Heinz's Athenos business, Emmi Roth, or an alternative qualified 
acquirer, will be able to enter or expand feta cheese sales to grocery 
stores and other retailers across the United States. The United States, 
in its sole discretion, may agree to one or more extensions of the time 
period to complete the divestiture of the Athenos Divestiture Assets, 
not to exceed 60 calendar days in total, and will notify the Court of 
any extensions. Paragraph IV.C of the proposed Final Judgment requires 
that the divestiture must include the entire Athenos Divestiture Assets 
and that the assets must be divested in such a way as to satisfy the 
United States, in its sole discretion, that the assets can and will be 
operated by the acquirer as a viable, ongoing business that can compete 
effectively in the sale of feta cheese to retailers. Defendants must 
take all reasonable steps necessary to accomplish the divestitures 
quickly and must cooperate with any acquirer.
    The Athenos Divestiture Assets are defined in Paragraph II.E of the 
proposed Final Judgment as all rights, titles, and interests in and to 
all tangible and intangible property and assets relating to or used in 
connection with the Athenos Divestiture Business.\1\ These assets 
include: (1) The Athenos Brand Name,\2\ including the exclusive right 
to the name in all sales channels (including the retail, foodservice, 
and ingredients or industrial channels), and all other intellectual 
property owned, licensed, or sublicensed, including patents, patent 
applications, and inventions or discoveries that may be patentable, 
registered and unregistered copyrights and copyright applications, and 
registered and unregistered trademarks, trade dress, service marks, 
trade names, and trademark applications; (2) all contracts, contractual 
rights, and customer relationships, and all other agreements, 
commitments, and understandings, including agreements with suppliers, 
manufacturers, co-packers, and retailers, teaming agreements, leases, 
and all outstanding offers or solicitations to enter into a similar 
arrangement; (3) all licenses, permits, certifications, approvals, 
consents, registrations, waivers, and authorizations, and all pending 
applications or renewals; (4) all records and data, including customer 
lists, accounts, sales, and credit records; production, repair, 
maintenance, and performance records; manuals and technical information 
Defendants provide to their own employees, customers, suppliers, 
agents, or licensees; records and research data concerning historic and 
current research and development activities; and drawings, blueprints, 
and designs; and (5) all other intangible property, including 
commercial names and d/b/a names, technical information such as recipes 
and formulas, computer software and related documentation, know-how, 
trade secrets, design protocols, specifications for materials, parts, 
and devices, procedures for safety, quality assurance, and control, 
design tools and simulation capabilities, and rights in internet 
websites and domain names.
---------------------------------------------------------------------------

    \1\ The Athenos Divestiture Business is defined in Paragraph 
II.F of the proposed Final Judgment as ``the worldwide business of 
the sale of Athenos Products by Kraft Heinz.'' Athenos Products is 
defined in Paragraph II.H of the proposed Final Judgment as ``any 
product that Kraft Heinz sold, sells, or has plans to sell under the 
Athenos Brand Name anywhere in the world.''
    \2\ The Athenos Brand Name is defined in Paragraph II.D of the 
proposed Final Judgment as ``Athenos and any other name that uses, 
incorporates, or references the Athenos name.''
---------------------------------------------------------------------------

    Importantly, the Athenos Divestiture Assets include all rights to 
the Athenos Brand Name, which is currently used to sell feta, 
gorgonzola, blue cheese, hummus, and pita chips. By requiring the full 
divestiture of the Athenos Brand Name, which will allow the acquirer to 
use the Athenos Brand Name for more than just feta, the proposed Final 
Judgment will enable the acquirer to more effectively compete in the 
sale of feta cheese by (1) avoiding the potential consumer confusion 
and potential harm to the Athenos Brand Name that could result from 
having both the acquirer and Lactalis marketing and selling Athenos-
branded products, and (2) by giving the acquirer control over the sale 
of all Athenos Products in all three channels of distribution--retail, 
foodservice, and ingredients or industrial.\3\ In this case, it is 
appropriate to require a divestiture that is broader than the harm 
alleged in the Complaint in order to preserve competition. See, e.g., 
Merger Remedies Manual, Antitrust Division, September 2020, at 9 
(explaining that the Division ``may seek to include a full line of 
products in the divestiture package, even when the antitrust concern 
relates to only a subset of those products''). The divestiture of the 
entire Athenos Brand Name (and the entire Athenos Divestiture Business) 
will allow the divestiture buyer the opportunity to use the divested 
brand in the same way that Kraft Heinz uses it to compete today.
---------------------------------------------------------------------------

    \3\ The retail channel is comprised of grocery stores, 
supermarkets, mass merchandisers like Wal-Mart, and club stores like 
Sam's Club; the foodservice channel is for distributors that sell to 
restaurants, cafeterias, hospitals, and other businesses that 
prepare and serve food; and the ingredients/industrial channel is 
for companies that primarily prepare and package the frozen 
entr[eacute]es that are sold in grocery stores and supermarkets.
---------------------------------------------------------------------------

    In addition to the Athenos Divestiture Assets, at a later date, the 
acquirer will acquire additional physical assets and contracts relating 
to Athenos feta cheese. These additional assets are referred to as 
Athenos Transitional Manufacturing Assets in Paragraph II.I of the 
proposed Final Judgment and defined as: (1) Production lines numbers 25 
and 26 that are used by the Athenos Divestiture Business for crumbling 
and packaging feta cheese and are located at Kraft Heinz's facility in 
Wausau, Wisconsin; (2) the feta cheese packaging mold used to produce 
plastic feta lids and containers that was purchased by Kraft Heinz in 
2021 and is located at the facilities of packaging supplier RPC 
Bramlage-WIKO USA, Inc. in

[[Page 73337]]

Morgantown, Pennsylvania; and (3) contracts and agreements between 
Kraft Heinz and Agropur, J. Rettenmaier USA LP, International Paper 
Company, Berry Global, Inc., Weber Packaging Solutions, Inc., and 
Bramlage, Inc.
    Because the Athenos Transitional Manufacturing Assets will be used 
by Defendants to fulfill their obligations under the supply contract 
permitted by Paragraph IV.M of the proposed Final Judgment, Lactalis is 
permitted, pursuant to Paragraph IV.N of the proposed Final Judgment, 
to retain these Athenos Transitional Manufacturing Assets until the 
supply agreement expires or is terminated. At that point, Defendants 
are required to sell and transfer to the acquirer of the Athenos 
Divestiture Assets the Athenos Transitional Manufacturing Assets within 
60 days. This is preferable because Lactalis will be responsible for 
the maintenance and upkeep of the Athenos Transitional Manufacturing 
Assets for the duration of any supply contract, and pursuant to 
Paragraph IV.O of the proposed Final Judgment, Lactalis is required to 
warrant that the Athenos Transitional Manufacturing Assets are 
operational and without material defect at the time of such transfer to 
the acquirer.
    Similarly, Paragraph IV.K of the proposed Final Judgment provides 
the acquirer of the Athenos Divestiture Assets with the option to have 
a series of third-party contracts relating to the production of Athenos 
Products assigned to it at any time prior to the conclusion of any 
transition services agreement entered into between the acquirer and 
Defendants pursuant to Paragraph IV.P of the proposed Final Judgment. 
These third-party contracts are referred to as the Athenos Transitional 
Service Contracts in the proposed Final Judgment and are defined in 
Paragraph II.J as contracts between Kraft Heinz and Prairie Farms, 
Great Lake Cheese Company, Inc., Marathon Cheese Corporation, Cedar's 
Mediterranean Foods, Inc., and Saputo Cheese USA, Inc. An acquirer, 
such as Emmi Roth, that is already a cheese producer with an existing 
series of suppliers and contracts may prefer not to have some or even 
any of the Athenos Transitional Services Contracts assigned to it 
pursuant to Paragraph IV.K of the proposed Final Judgment, but, for a 
different acquirer, this option will ensure continuity in supply while 
also allowing that acquirer to evaluate its needs.
    The proposed Final Judgment also contains provisions intended to 
facilitate the acquirer's efforts to hire employees whose job 
responsibilities relate to the Athenos Divestiture Assets, enabling the 
acquirer to successfully operate the Athenos business. Paragraph IV.H 
of the proposed Final Judgment requires Defendants to provide the 
acquirer and the United States with organization charts and information 
relating to these employees and to make them available for interviews 
with the acquirer. It also prohibits Defendants from interfering with 
any negotiations by the acquirer to hire these employees. In addition, 
for employees who elect employment with the acquirer, Defendants must 
waive all non-compete and non-disclosure agreements; vest and pay on a 
prorated basis any bonuses, incentives, other salary, benefits, or 
other compensation fully or partially accrued at the time of transfer; 
vest any unvested pension and other equity rights; and provide all 
other benefits that the employees would generally be provided had those 
employees continued employment with Defendants, including any retention 
bonuses or payments. Finally, the timeline for when these employees may 
be hired by the acquirer has been set to ensure that employees 
providing any transition services pursuant to a transition services 
agreement entered into pursuant to Paragraph IV.P of the proposed Final 
Judgment are not interrupted.
    Paragraph IV.H of the proposed Final Judgment further provides that 
Defendants may not directly solicit to rehire any Athenos-related 
employees who were hired by the acquirer, unless an employee is 
terminated or laid off by the acquirer or the acquirer agrees in 
writing that Defendants may solicit to rehire that individual. This 
non-solicitation period runs for 12 months from the date of the 
divestiture. This provision serves two purposes. First, it promotes a 
period of stability that will aid the acquirer in assuming control of 
the Athenos business. Second, many food retailers conduct periodic 
category reviews in which they evaluate their brand offerings and shelf 
space allocations, and a one-year non-solicitation period will permit 
the acquirer to complete at least one such category review at most food 
retailers. It is important to note, however, that this non-solicitation 
provision does not prohibit Defendants from advertising employment 
openings using general solicitations or advertisements and rehiring 
anyone who applies for an opening through a general solicitation or 
advertisement.
    The proposed Final Judgment contains several provisions to 
facilitate the transition of the Athenos Divestiture Business to the 
acquirer. First, Paragraph IV.J of the proposed Final Judgment will 
facilitate the transfer to the acquirer of customer and other 
contractual relationships that are included within the Athenos 
Divestiture Assets. Defendants must transfer all contracts, agreements, 
and customer relationships (or portions of such contracts, agreements, 
and customer relationships), including all supply and sales contracts 
and co-packing and packaging supplier agreements, to the acquirer and 
must use best efforts to assign, subcontract, or otherwise transfer 
contracts or agreements that require the consent of another party 
before assignment, subcontracting, or otherwise transferring. 
Defendants must not interfere with any negotiations between the 
acquirer of the Athenos Divestiture Assets and a contracting party. 
These protections also apply to any of the Athenos Transitional 
Services Contracts that the acquirer can elect to have assigned under 
Paragraph IV.K of the proposed Final Judgment.
    Second, Paragraph IV.M of the proposed Final Judgment requires 
Defendants, at the acquirer's option, to enter into a supply contract 
or contracts for the processing and packaging of Athenos Products 
sufficient to meet the acquirer's needs for a period of up to two years 
on terms and conditions reasonably related to market conditions for the 
processing and packaging of Athenos Products. A two-year term is 
appropriate here to permit the acquirer to move the physical equipment 
included in the Athenos Transitional Manufacturing Assets to a facility 
that will allow for the most efficient operation of the Athenos 
Divestiture Business. Supply contracts of this nature are common in 
this industry; indeed, Kraft Heinz today outsources much of its cheese 
production to other cheese manufacturers, including its feta cheese 
production. Companies operating in this industry have experience 
negotiating and managing these types of supply contracts, and such 
arrangements are used by other natural cheese brands. In addition, 
Paragraph IV.M of the proposed Final Judgment prohibits employees of 
the Defendants tasked with providing services pursuant to any supply 
contract from sharing any competitively sensitive information of the 
acquirer with any other employee of Defendants.
    The acquirer may terminate any supply contract described in 
Paragraph IV.M of the proposed Final Judgment, or any portion of any 
such supply contract, without cost or penalty at any time upon 
commercially reasonable written notice. The United States, in its sole 
discretion, may approve one or more

[[Page 73338]]

extensions of any supply contract for up to an additional 12 months, 
and if the acquirer requests such an extension, Defendants must notify 
the United States in writing at least three months prior to the date 
the supply contract expires. Any amendments to or modifications of any 
provisions of a supply contract are subject to approval by the United 
States, in its sole discretion.
    Finally, Paragraph IV.P of the proposed Final Judgment requires 
Defendants, at the acquirer's option and subject to approval by the 
United States in its sole discretion, to enter into a transition 
services agreement for a period of up to six months. Among other 
things, this transition services agreement will ensure that the 
acquirer has sufficient access to Athenos-related enterprise data and 
personnel that are knowledgeable about this data, so as to avoid 
disruption to the Athenos Divestiture Business while Defendants work to 
transfer this data to the acquirer and the acquirer interviews and 
makes offers of employment to Athenos personnel. The acquirer may 
terminate the transition services agreement, or any portion of it, 
without cost or penalty at any time upon commercially reasonable 
written notice. The United States, in its sole discretion, may approve 
one or more extensions of any transition services agreement for a total 
of up to an additional six months, and if the acquirer requests such an 
extension, Defendants must notify the United States in writing at least 
30 days prior to the date the transition services agreement expires. 
Any amendments to or modifications of any provisions of a transition 
services agreement are also subject to approval by the United States, 
in its sole discretion. The employees of Defendants tasked with 
providing transition services must not share any competitively 
sensitive information of the acquirer of the Athenos Divestiture Assets 
with any other employee of Defendants.

B. Polly-O Divestiture Provisions

    Paragraph V.A of the proposed Final Judgment requires Defendants, 
within 30 days after the entry of the Stipulation and Order by the 
Court, to divest the Polly-O Divestiture Assets to BelGioioso Cheese, 
Inc. (``BelGioioso'') or an alternative acquirer acceptable to the 
United States, in its sole discretion. BelGioioso is an established 
cheese producer based in Green Bay, Wisconsin. With the divestiture of 
Kraft Heinz's Polly-O business, BelGioioso, or an alternative qualified 
acquirer, will be able to enter or expand ricotta cheese sales to 
grocery stores and other retailers in New York and Florida. The United 
States, in its sole discretion, may agree to one or more extensions of 
the time period to complete the divestiture of the Polly-O Divestiture 
Assets, not to exceed 60 calendar days in total, and will notify the 
Court of any extensions. Paragraph V.C of the proposed Final Judgment 
requires that the Polly-O Divestiture Assets must be divested in such a 
way as to satisfy the United States, in its sole discretion, that the 
assets can and will be operated by the acquirer as a viable, ongoing 
business that can compete effectively in the sale of ricotta cheese to 
retailers. Defendants must take all reasonable steps necessary to 
accomplish the divestitures quickly and must cooperate with any 
acquirer.
    The Polly-O Divestiture Assets are defined in Paragraph II.S of the 
proposed Final Judgment as all rights, titles, and interests in and to 
all intangible and tangible property and assets, relating to or used in 
connection with the Polly-O Divestiture Business.\4\ These assets 
include: (1) The Polly-O Brand Name,\5\ including the exclusive right 
to the name in all sales channels (including the retail, foodservice, 
and ingredients or industrial channels), and all other intellectual 
property owned, licensed, or sublicensed, including patents, patent 
applications, and inventions or discoveries that may be patentable, 
registered and unregistered copyrights and copyright applications, and 
registered and unregistered trademarks, trade dress, service marks, 
trade names, and trademark applications; (2) the Shared Recipes 
License, which is defined in Paragraph II.X of the proposed Final 
Judgment as a perpetual, royalty-free, paid-up, irrevocable, worldwide, 
non-exclusive license to the formulas, recipes and related trade 
secrets, know-how, confidential business information and related data 
that were used by Kraft Heinz for the production of cheese sold under 
both the Polly-O Brand Name and any other Kraft Heinz brand name; (3) 
all contracts, contractual rights, and customer relationships, and all 
other agreements, commitments, and understandings, including agreements 
with suppliers, manufacturers, co-packers, and retailers, teaming 
agreements, leases, and all outstanding offers or solicitations to 
enter into a similar arrangement; (4) all licenses, permits, 
certifications, approvals, consents, registrations, waivers, and 
authorizations, and all pending applications or renewals; (5) all 
records and data, including customer lists, accounts, sales, and credit 
records; production, repair, maintenance, and performance records; 
manuals and technical information Defendants provide to their own 
employees, customers, suppliers, agents, or licensees; records and 
research data concerning historic and current research and development 
activities; and drawings, blueprints, and designs; and (6) all other 
intangible property, including commercial names and d/b/a names, 
technical information, computer software and related documentation, 
know-how, trade secrets, design protocols, specifications for 
materials, parts, and devices, procedures for safety, quality 
assurance, and control, design tools and simulation capabilities, and 
rights in internet websites and domain names.
---------------------------------------------------------------------------

    \4\ The Polly-O Divestiture Business is defined in Paragraph 
II.T of the proposed Final Judgment as ``the worldwide business of 
the sale of Polly-O Products by Kraft Heinz.'' Polly-O Products is 
defined in Paragraph II.W of the proposed Final Judgment as ``any 
product that Kraft Heinz sold, sells, or has plans to sell under the 
Polly-O Brand Name anywhere in the world.''
    \5\ The Polly-O Brand Name is defined in Paragraph II.R of the 
proposed Final Judgment as ``Polly-O and any other name that uses, 
incorporates, or references the Polly-O name.''
---------------------------------------------------------------------------

    Similar to the Athenos Divestiture Assets, the proposed Final 
Judgment requires Defendants to divest all rights to the Polly-O Brand 
Name, which is currently used to sell ricotta, chunk mozzarella, 
shredded mozzarella, string mozzarella,\6\ twist mozzarella-cheddar, 
fresh mozzarella, asiago, parmesan, romano, and Italian cheese blends. 
By requiring the full divestiture of the Polly-O Brand Name, the 
proposed Final Judgment will enable the acquirer to more effectively 
compete in the sale of ricotta cheese by (1) avoiding the potential 
consumer confusion and potential harm to the brand that could result 
from having both the acquirer and Lactalis marketing and selling Polly-
O branded cheeses, and (2) by giving the acquirer control over the sale 
of all Polly-O Products in all three channels of distribution--retail, 
foodservice and ingredients or industrial. For the same reasons 
described with respect to the Athenos divestiture provisions, requiring 
Defendants to divest the full Polly-O Brand Name will preserve 
competition. Most notably, with respect to the Polly-O Brand Name, it 
will permit the acquirer to offer both ricotta and chunk mozzarella 
cheese under the same brand name, which is important for competing in 
the market for the sale

[[Page 73339]]

of ricotta cheese to retailers because both cheeses are often promoted 
in tandem.
---------------------------------------------------------------------------

    \6\ Both Defendants also sell mozzarella string cheese in many 
local areas, particularly in the eastern United States. However, 
since the proposed Final Judgment requires divesting the entire 
Polly-O business--including mozzarella string cheese--it fully 
remedies any potential competitive harm to purchasers of mozzarella 
string cheese.
---------------------------------------------------------------------------

    Under the Shared Recipes License defined in Paragraph II.X of the 
proposed Final Judgment, the acquirer will also receive a perpetual, 
royalty free, paid-up, irrevocable, worldwide, non-exclusive license to 
the formulas, recipes and related trade secrets, know-how, confidential 
business information and related data that were used by Kraft Heinz for 
the production of cheese sold under both the Polly-O Brand Name and any 
other Kraft Heinz brand name. The Shared Recipes License will enable 
the acquirer to produce and sell Polly-O cheeses that share recipes 
with any other Kraft Heinz product.
    Paragraph V.H of the proposed Final Judgment also contains 
provisions intended to facilitate the acquirer's efforts to hire 
employees whose job responsibilities relate in any way to the Polly-O 
Divestiture Assets. These provisions are the same as those applicable 
to employees whose job responsibilities relate in any way to the 
Athenos Divestiture Assets, as described above. Specifically, Paragraph 
V.H of the proposed Final Judgment requires Defendants to provide the 
acquirer and the United States with organization charts and information 
relating to these employees and to make them available for interviews 
with the acquirer. It also prohibits Defendants from interfering with 
any negotiations by the acquirer to hire these employees. In addition, 
for employees who elect employment with the acquirer, Defendants must 
waive all non-compete and non-disclosure agreements; vest and pay on a 
prorated basis any bonuses, incentives, other salary, benefits, or 
other compensation fully or partially accrued at the time of transfer; 
vest any unvested pension and other equity rights; and provide all 
other benefits that the employees would generally be provided had those 
employees continued employment with Defendants, including any retention 
bonuses or payments. Finally, the timeline for when these employees may 
be hired by the acquirer has been set to ensure that employees 
providing any transition services pursuant to a transition services 
agreement entered into pursuant to Paragraph V.N of the proposed Final 
Judgment are not interrupted.
    Paragraph V.H of the proposed Final Judgment further provides that 
Defendants may not directly solicit to rehire any Polly-O-related 
employees who were hired by the acquirer, unless an employee is 
terminated or laid off by the acquirer or the acquirer agrees in 
writing that Defendants may solicit to rehire that individual. This 
non-solicitation period runs for 12 months from the date of the 
divestiture. This provision serves two purposes. First, it promotes a 
period of stability that will aid the acquirer in assuming control of 
the Athenos business. Second, many food retailers conduct periodic 
category reviews in which they evaluate their brand offerings and shelf 
space allocations, so a one-year non-solicitation period permits the 
acquirer to complete at least one such category review at most food 
retailers. It is important to note, however, that this non-solicitation 
provision does not prohibit Defendants from advertising employment 
openings using general solicitations or advertisements and rehiring 
anyone who applies for an opening through a general solicitation or 
advertisement.
    Paragraph II.U of the proposed Final Judgment defines Polly-O 
Excluded Contracts. These are contracts that BelGioioso has informed 
Defendants that it does not want included as part of the Polly-O 
Divestiture Assets. The Polly-O Excluded Contracts are contracts and 
agreements between Kraft Heinz and Foremost Farms USA Cooperative, 
Marathon Cheese Corporation, Saputo Cheese USA Inc., Amcor Flexibles 
North America, Inc., International Paper Company, Berry Global, Inc, 
Transcontinental US LLC, and J. Rettenmaier USA LP. As an established 
producer of cheese that has an existing series of suppliers and 
contracts, BelGioioso reviewed these contracts and determined that it 
did not need them in order to effectively operate the Polly-O 
Divestiture Business. To avoid saddling BelGioioso with unnecessary or 
potentially duplicative contracts, those contracts are excluded from 
the Polly-O Divestiture Assets. However, if Defendants divest the 
Polly-O Divestiture Assets to an acquirer other than BelGioioso, and 
that alternative acquirer determines it needs these Polly-O Excluded 
Contracts, Paragraph V.K of the proposed Final Judgment requires 
Defendants to assign, subcontract, or otherwise transfer any of the 
Polly-O Excluded Contracts to any such acquirer of the Polly-O 
Divestiture Assets.
    As with the Athenos Divestiture Business, the proposed Final 
Judgment contains several provisions to facilitate the transition of 
the Polly-O Divestiture Business to the acquirer. First, Paragraph V.J 
of the proposed Final Judgment will facilitate the transfer to the 
acquirer of customer and other contractual relationships that are 
included within the Polly-O Divestiture Assets. As with the Athenos 
divestiture provisions above, Defendants must transfer all such 
contracts, agreements, and customer relationships (or portions of such 
contracts, agreements, and customer relationships), including all 
supply and sales contracts and co-packing and packaging supplier 
agreements, to the acquirer and must use best efforts to assign, 
subcontract, or otherwise transfer contracts or agreements that require 
the consent of another party before assignment, subcontracting, or 
otherwise transferring. Defendants must not interfere with any 
negotiations between the acquirer and a contracting party. These 
protections also apply to any of the Polly-O Excluded Contracts that an 
acquirer other than BelGioioso elects to have assigned under Paragraph 
V.K of the proposed Final Judgment.
    Second, Paragraph V.M of the proposed Final Judgment requires 
Defendants, at the acquirer's option, to enter into a supply contract 
or contracts for the production and packaging of Polly-O Products 
sufficient to meet the acquirer's needs for a period of up to 12 months 
on terms and conditions reasonably related to market conditions for the 
production and packaging of Polly-O Products. As with the Athenos 
divestiture provisions above, supply contracts of this nature are 
common in this industry; indeed, Kraft Heinz today outsources much of 
its cheese production to other cheese manufacturers, including its 
ricotta cheese production. Companies operating in this industry have 
experience negotiating and managing these types of supply contracts, 
and such arrangements are used by other natural cheese brands. In 
addition, Paragraph V.M of the proposed Final Judgment prohibits 
employees of Defendants tasked with providing services pursuant to any 
supply contract from sharing any competitively sensitive information of 
the acquirer with any other employee of Defendants.
    The acquirer may terminate any supply contract described in 
Paragraph V.M of the proposed Final Judgment, or any portion of any 
such supply contract, without cost or penalty at any time upon 
commercially reasonable written notice. The United States, in its sole 
discretion, may approve one or more extensions of any supply contract 
for up to an additional 12 months, and if the acquirer requests such an 
extension, Defendants must notify the United States in writing at least 
three months prior to the date the supply contract expires. Any 
amendments to or modifications of any provisions of a supply contract 
are subject to approval

[[Page 73340]]

by the United States, in its sole discretion.
    Finally, Paragraph V.N of the proposed Final Judgment requires 
Defendants, at the acquirer's option and subject to approval by the 
United States in its sole discretion, to enter into a transition 
services agreement for a period of up to six months. Among other 
things, this transition services agreement will ensure that the 
acquirer has sufficient access to Polly-O-related enterprise data and 
personnel that are knowledgeable about this data, so as to avoid 
disruption to the Polly-O Divestiture Business while Defendants work to 
transfer this data to the acquirer and the acquirer interviews and 
makes offers of employment to Athenos personnel. The acquirer may 
terminate the transition services agreement, or any portion of it, 
without cost or penalty at any time upon commercially reasonable 
written notice. The United States, in its sole discretion, may approve 
one or more extensions of any transition services agreement for a total 
of up to an additional six months, and if the acquirer requests such an 
extension, Defendants must notify the United States in writing at least 
30 days prior to the date the transition services agreement expires. 
Any amendments to or modifications of any provisions of a transition 
services agreement are also subject to approval by the United States, 
in its sole discretion. The employees of Defendants tasked with 
providing transition services must not share any competitively 
sensitive information of the acquirer of the Polly-O Divestiture Assets 
with any other employee of Defendants.

C. Divestiture Trustee Provisions

    If Defendants do not accomplish the divestitures within the time 
periods prescribed in Paragraphs IV.A and V.A of the proposed Final 
Judgment, Section VI of the proposed Final Judgment provides that the 
Court will appoint a divestiture trustee selected by the United States 
to effect any remaining divestitures. If a divestiture trustee is 
appointed, the proposed Final Judgment provides that Defendants must 
pay all costs and expenses of the trustee. The divestiture trustee's 
commission must 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 must provide monthly reports 
to the United States setting forth his or her efforts to accomplish the 
remaining divestitures. If the remaining divestitures have not been 
accomplished within six months of the divestiture trustee's 
appointment, the United States may make recommendations to the Court, 
which will enter such orders as appropriate, in order to carry out the 
purpose of the Final Judgment, including by extending the trust or the 
term of the divestiture trustee's appointment.

D. Ricotta Notification Requirement Provisions

    Section XII of the proposed Final Judgment requires Lactalis to 
notify the United States at least 30 days in advance of acquiring, 
directly or indirectly, in a transaction that would not otherwise be 
reportable under the Hart-Scott-Rodino Antitrust Improvements Act of 
1976, as amended, 15 U.S.C. 18a (the ``HSR Act''), any assets or any 
interest in any entity involved in the sale of ricotta cheese to 
retailers in the United States. Pursuant to the proposed Final 
Judgment, Lactalis must notify the United States of such acquisitions 
as it would for a required HSR Act filing, as specified in the Appendix 
to Part 803 of Title 16 of the Code of Federal Regulations, except that 
the information requested in Items 5 through 8 of the instructions must 
be provided only about the sale of ricotta cheese to retailers in the 
United States. The proposed Final Judgment further provides for waiting 
periods and opportunities for the United States to obtain additional 
information analogous to the provisions of the HSR Act before such 
acquisitions can be consummated.
    The reason for this requirement for ricotta cheese is that there is 
evidence of strong regional variation in brand strength in ricotta 
cheese. Accordingly, Lactalis could purchase a regional brand of 
ricotta that is very important to competition in that particular 
region, but that purchase might be small enough on a national level not 
to require a filing under the HSR Act. Given Lactalis's strong presence 
in the sale of ricotta cheese nationwide, it is important for the 
United States to receive notice of regional transactions which could 
have the potential to substantially reduce competition in this 
industry. Requiring notification from Lactalis before acquisition of an 
entity involved in the sale of ricotta cheese to retailers will permit 
the United States to assess the competitive effects of that acquisition 
before it is consummated and, if necessary, seek to enjoin the 
transaction.

E. Compliance and Enforcement Provisions

    The proposed Final Judgment also contains provisions designed to 
promote compliance with and make enforcement of the Final Judgment as 
effective as possible. Paragraph XV.A provides that the United States 
retains and reserves all rights to enforce the Final Judgment, 
including the right 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 
with the Final Judgment with the standard of proof that applies to the 
underlying offense that the Final Judgment addresses.
    Paragraph XV.B provides additional clarification regarding the 
interpretation of the provisions of the proposed Final Judgment. The 
proposed Final Judgment is intended to remedy the loss of competition 
the United States alleges would otherwise result from the Transaction. 
Defendants agree that they will abide by the proposed Final Judgment 
and that they may be held in contempt of the 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 XV.C provides that if the Court finds in an enforcement 
proceeding that a Defendant has violated the Final Judgment, the United 
States may apply to the Court for an 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 Final Judgment, Paragraph 
XV.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, the Defendant must reimburse the United 
States for attorneys' fees, experts' fees, and other costs incurred in 
connection with that effort to enforce this Final Judgment, including 
the investigation of the potential violation.
    Paragraph XV.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

[[Page 73341]]

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.

F. Term of the Final Judgment

    Section XVI of the proposed Final Judgment provides that the Final 
Judgment will expire 10 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 divestitures have been completed and that the continuation of 
this Final Judgment is no longer necessary or in the public interest.

IV. Remedies Available to Potential Private Plaintiffs

    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, the comments and the United 
States' responses will be published in the Federal Register unless the 
Court agrees that the United States instead may publish them on the 
U.S. Department of Justice, Antitrust Division's internet website.
    Written comments should be submitted in English to: Eric D. Welsh, 
Chief, Healthcare and Consumer Products Section, Antitrust Division, 
United States Department of Justice, 450 Fifth Street NW, Suite 4100, 
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 Lactalis's proposed acquisition of Kraft 
Heinz's natural cheese business in the United States. The United States 
is satisfied, however, that the relief required by the proposed Final 
Judgment will remedy the anticompetitive effects alleged in the 
Complaint, preserving competition for the sale of feta cheese sold to 
retailers in the United States and ricotta cheese sold to retailers in 
the New York Metro Market and in each of the Florida Metro Markets. 
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.

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

    Under the Clayton Act and APPA, proposed Final Judgments, or 
``consent decrees,'' in antitrust cases brought by the United States 
are 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 
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 
proposed Final 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 mechanisms 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 ``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;

[[Page 73342]]

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 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 also 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); see also United States v. Deutsche 
Telekom AG, No. 19-2232 (TJK), 2020 WL 1873555, at *7 (D.D.C. Apr. 14, 
2020). More demanding requirements would ``have enormous practical 
consequences for the government's ability to negotiate future 
settlements,'' contrary to congressional intent. Microsoft, 56 F.3d 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 (``[T]he 
`public interest' is not to be measured by comparing the violations 
alleged in the complaint against those the court believes could have, 
or even should have, been alleged.''). Because the ``court's authority 
to review the decree depends entirely on the government's exercising 
its prosecutorial discretion by bringing a case in the first place,'' 
it follows that ``the court is only authorized to review the decree 
itself,'' and not to ``effectively redraft the complaint'' to inquire 
into other matters that the United States did not pursue. Microsoft, 56 
F.3d at 1459-60.
    In its 2004 amendments to the APPA, Congress made clear its intent 
to preserve the practical benefits of using 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: December 20, 2021

    Respectfully submitted,

For Plaintiff United States of America:
-----------------------------------------------------------------------
Justin M. Dempsey (D.C. Bar #425976),
Trial Attorney, United States Department of Justice, Antitrust 
Division, Healthcare and Consumer Products Section, 450 Fifth Street 
NW, Suite 4100, Washington, DC 20530, Telephone: (202) 307-5815, 
Email: [email protected].

[FR Doc. 2021-27959 Filed 12-23-21; 8:45 am]
BILLING CODE 4410-11-P