United States v. Sabreliner Corporation; Proposed Final Judgment and Competitive Impact Statement

DEPARTMENT OF JUSTICE

Antitrust Division

United States v. Sabreliner Corporation; Proposed Final Judgment

and Competitive Impact Statement

Notice is hereby given pursuant to the Antitrust Procedures and

Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment and

Competitive Impact Statement have been filed with the United States

District Court for the District of Columbia in United States of America

v. Sabreliner Corporation.

The Complaint in this case alleges that the acquisition of Midcoast

Aviation, Inc. (``Midcoast'') by Sabreliner Corporation

(``Sabreliner'') may substantially lessen competition in the sale of

jet fuel to transient general aviation aircraft at Lambert-St. Louis

International airport (``Lambert'') in violation of Section 7 of the

Clayton Act.

Sabreliner and Midcoast are the only two fixed base operators

(``FBOs'') at Lambert Field. Fixed base operators provide terminaling

services, such as aircraft cleaning, de-icing and fueling to general

aviation aircraft. These services are typically included in the price

of jet fuel sold to the general aviation customer. This acquisition,

left unchallenged, would result in a monopoly in the provision of jet

fuel to transient general aviation customers at Lambert.

The proposed Final Judgment requires Sabreliner to divest either

its transient general aviation fueling facilities at Lambert, or, if

necessary to attract a purchaser, its entire FBO operation at Lambert.

If defendant does not complete the divestiture by the allotted time, a

trustee will be appointed to conduct the divestiture.

Public comment on the proposed Final Judgment is invited within the

statutory 60-day comment period. Such comments, and responses thereto,

will be published in the Federal Register and filed with the Court.

Comments should be directed to Roger W. Fones, Chief, Transportation,

Energy, and Agriculture Section, Antitrust Division, Room 9104,

Judiciary Center Building, 555 4th Street, NW., Washington, DC 20001

(202-307-6351).

Constance K. Robinson,

Director of Operations, Antitrust Division.

United States of America; Plaintiff; vs. Sabreliner Corporation,

a corporation; Defendant.

[Docket Number: 95-0241]

Stipulation

It is stipulated by and between the undersigned parties, by their

respective attorneys, as follows:

(1) The Court has jurisdiction over the subject matter of this

action and over each of the parties hereto, and venue of this action is

proper in the District for the District of Columbia.

(2) The parties consent that a Final Judgment in the form hereto

attached may be filed and entered by the Court, upon the motion of any

party or upon the Court's own motion, at any time after compliance with

the requirements of the Antitrust Procedures and Penalties Act (15

U.S.C. 16), and without further notice to any party or other

proceedings, provided that plaintiff has not withdrawn its consent,

which it may do at any time before the entry of the proposed final

Judgment by serving notice thereof on defendant and by filing that

notice with the Court.

(3) In the event plaintiff withdraws its consent or if the proposed

Final Judgment is not entered pursuant to this Stipulation, this

Stipulation shall be of no effect whatever, and the making of this

Stipulation shall be without prejudice to any party in this or any

other proceeding.

Dated: November 2, 1994.

[[Page 9400]] For Plaintiff United States of America:

Anne K. Bingaman,

Assistant Attorney General.

Steven C. Sunshine,

Deputy Asst. Attorney General.

Constance K. Robinson,

Director of Operations.

Roger W. Fones,

May Jean Moltenbrey,

Kelly Signs,

Stephen B. Donovan,

Attorneys.

For Defendant Sabreliner Corporation:

Winthrop, Stimson, Putnam & Roberts,

By: John Gillick,

A Member of the Firm.

Final Judgment

Whereas, plaintiff, United States of America, having filed its

Complaint herein on February 6, 1995, and plaintiff and defendant, by

their respective attorneys, having consented to the entry of this Final

Judgment without trial or adjudication of any issue of fact or law

herein and without this Final Judgment constituting any evidence

against or an admission by any party with respect to any such issue;

And whereas, defendant has agreed to be bound by the provisions of

this Final Judgment pending its approval by the Court;

And whereas, prompt and certain divestiture is the essence of this

agreement, and defendant has represented to plaintiff that the

divestiture required below can and will be made and that defendant will

later raise no claims of hardship or difficulty as grounds for asking

the Court to modify any of the divestiture provisions contained below;

Now, therefore, before the taking of any testimony and without

trial or adjudication of any issue of fact or law herein, and upon

consent of the parties hereto, it is hereby

Ordered, adjudged and decreed as follows:

I

Jurisdiction

This Court has jurisdiction over the subject matter of this action

and over each of the parties hereto. The Complaint states a claim upon

which relief may be granted against defendant under Section 7 of the

Clayton Act, as amended (15 U.S.C. 18).

II

Definitions

As used in this Final Judgment:

A. ``TWA'' means Trans World Airlines, Inc., each of its

predecessors, successors, divisions, subsidiaries, and affiliates, each

person directly or indirectly, wholly or in part, owned or controlled

by it, or which owns or controls it, and each partnership or venture to

which any of them is a party, and each officer, director, employee,

attorney, agent, or other person acting for or on behalf of any of

them.

B. ``Midcoast'' means Midcoast Aviation, Inc., each of its

predecessors, successors, divisions, subsidiaries, and affiliates, and

each person directly or indirectly, wholly or in part, owned or

controlled by it, or which owns or controls it, and each partnership or

venture to which any of them is a party, and each officer, director,

employee, attorney, agent, or other person acting for or on behalf of

any of them.

C. ``Sabreliner'' means defendant Sabreliner Corporation, each of

its predecessors, successors, divisions, subsidiaries, and affiliates,

each person directly or indirectly, wholly or in part, owned or

controlled by it, or which owns or controls it, and each partnership or

venture to which any of them is a party, and each officer, director,

employee, attorney, agent, or other person acting for or on behalf of

any of them.

D. ``Sabreliner's Transient Fuel Service Business'' means the

following assets, owned or controlled by Sabreliner, that are or have

been used at Lambert Field to provide fuel and other services to

general aviation customers:

1. 5,000 square feet of ramp space located west of Hangar 6;

2. Office space (with associated office equipment), which includes

pilot's lounge/flight planning room and access to lobby area,

restrooms, conference facilities and canteen;

3. Space on the north side of Hangar 6 sufficient to park any

fueling trucks required by the purchaser; and

4. Non-discriminatory access to the Fuel Delivery Cabinet on the

west end of Sabreliner's fuel farm, the right to draw from Sabreliner's

jet fuel tanks at least 2500 gallons of jet fuel per day, and the right

to purchase that jet fuel directly from the fuel supplier from whom

Sabreliner obtains its fuel.

E. ``Sabreliner's Cargo and General Aviation Business'' means the

following assets, owned or controlled by Sabreliner, that are or have

been used at Lambert Field to provide fuel and other services to

general aviation and based cargo customers:

1. Sabreliner's entire leasehold interest in its tank farm, and all

improvements and assets used in the business, including five fuel

tanks, truck loading cabinet, and associated equipment;

2. All rolling stock, including the fuel trucks, deicing vehicle,

ramp tugs, auxiliary power unit and courtesy van;

3. Office space (with associated office equipment), including

pilot's lounge/flight planning room and access to lobby area,

restrooms, conference facilities and canteen; and

4. The entire ramp area around the west of hangers 6 and 7,

comprising approximately eleven (11) acres, subject to access easements

of any subtenants in Hangers 6 and 7.

F. ``Person'' means any natural person, corporation, association,

firm, partnership, or other business or legal entity.

G. ``Lambert Field'' means Lambert St. Louis International Airport.

III

Applicability

A. The provisions of this Final Judgment shall apply to the

defendant, to defendant's successors and assigns, to defendant's

subsidiaries, affiliates, directors, officers, managers, agents, and

employees, and to all other persons in active concert or participation

with any of them who shall have received actual notice of this Final

Judgment by personal service or otherwise.

B. The provisions of Sections IV through VIII of this Final

Judgment shall be applicable only upon the consummation of the

acquisition of Midcoast by Sabreliner.

C. Defendant shall require, as a condition of the sale or other

disposition of all or substantially all of their assets or stock, or of

the assets required to be divested herein, that the acquiring party

agree to be bound by the provisions of this Final Judgment.

D. Nothing herein shall suggest that any portion of this Final

Judgment is or has been created for the benefit of any third party, and

nothing herein shall be construed to provide any rights to any third

party.

IV

Divestiture of Sabreliner's Transient Fuel Business

A. Defendant is hereby ordered and directed to divest, to an

eligible purchaser, all of its direct and indirect ownership and

control of Sabreliner's Transient Fuel Business or Sabreliner's Cargo

and General Aviation Business. Nothing contained herein shall preclude

Sabreliner from dealing with or contracting for services from the

divested entity in the ordinary course of business.

B. Divestiture of Sabreliner's leasehold interest in any of the

assets of Sabreliner's Transient Fuel Service [[Page 9401]] Business or

Sabreliner's Cargo and General Aviation Business may be by transfer of

the entire leasehold interest or by sublease. If divestiture of any or

all of the assets is by sublease, each such sublease shall be for the

entire term of Sabreliner's lease, including the same rights for

renewal Sabreliner has, and the sublease shall specify, for the entire

period of the sublease:

1. The price, or a formula for computing the price, for each and

every payment due from the purchaser to Sabreliner pursuant to the

sublease, including rent, and any uplift or other service charge for

the use of Sabreliner's fuel tanks; and

2. The terms and conditions under which Sabreliner may evict the

purchaser or exercise any other rights for breach of the sublease; and

3. That the airport authority must specifically approve any action

by Sabreliner to exercise any rights under the sublease against the

purchaser, unless such approval is arbitrarily and unreasonably

withheld in the event of a breach of the sublease by the purchaser, in

which case defendant must give a minimum of thirty (30) days notice to

plaintiff prior to exercising any rights against the purchaser.

C. If defendant has not accomplished the required divestiture prior

to May 1, 1995, plaintiff may, if its sole discretion, extend this time

period for an additional period of time not to exceed two months.

D. Defendant agrees to take all reasonable steps to accomplish

quickly said divestiture. In carrying out its obligation to divest the

Sabreliner's Transient Fuel Business, defendant may divest these

operations alone, or may divest along with these operations any other

assets of Sabreliner.

E. In accomplishing the divestiture ordered by this Final Judgment,

the defendant promptly shall make known in the United States and in

other major countries, by usual and customary means, the availability

of Sabreliner's Transient Fuel Business for sale as an ongoing

business. The defendant shall notify any person making an inquiry

regarding the possible purchase of this operation that the sale is

being made pursuant to this Final Judgment and provide such person with

a copy of the Final Judgment. The defendant shall also offer to furnish

to all bona fide prospective purchasers of Sabreliner's Transient Fuel

Business, subject to customary confidentiality assurances, all

pertinent information regarding Sabreliner's Cargo and General Aviation

Business, including Sabreliner's Transient Fuel Business except such

information subject to attorney-client privilege or attorney work

product privilege. Defendant shall make available such information to

the plaintiff at the same time that such information is made available

to any other person. Defendant shall permit prospective purchasers of

Sabreliner's Transient Fuel Business to have access to personnel at

Sabreliner's Cargo and General Aviation Business, including

Sabreliner's Transient Fuel Business, and to make such inspection of

physical facilities and any and all financial, operational, or other

documents and information as may be relevant to the sale required by

this Final Judgment.

F. Unless the plaintiff otherwise consents, divestiture under

Section IV.A., or by the trustee appointed pursuant to Section V, shall

be accomplished in such a way as to satisfy plaintiff, in its sole

discretion, that Sabreliner's Transient Fuel Business or Sabreliner's

Cargo and General Aviation Business can and will be operated by the

purchaser as a viable, ongoing business engaged in the provision of

fuel and other services to general aviation and cargo customers at

Lambert Field. Divestiture shall be made to a purchaser for whom it is

demonstrated to plaintiff's satisfaction that (1) the purchase is for

the purpose of competing effectively in the provision of fuel and other

services to general aviation customers at Lambert Field; (2) the

purchaser has the managerial, operational, and financial capability to

compete effectively in the provision of fuel and other services to

general aviation customers at Lambert Field; and (3) none of the terms

of any sublease between the purchaser and Sabreliner give Sabreliner

the ability artificially to raise the purchaser's costs, lower the

purchaser's efficiency, or otherwise interfere in the ability of the

purchaser to provide fuel and other services to general aviation

customers at Lambert Field. If the divestiture is of Sabreliner's

Transient Fuel Business, it must be demonstrated to plaintiff's

satisfaction that the purchaser can operate a transient fueling

business on a stand-alone basis with costs and efficiency comparable to

those achieved by Sabreliner's current integrated general aviation and

cargo business.

G. Except to the extent otherwise approved by plaintiff, any assets

divested pursuant to this Final Judgment shall be divested free and

clear of all mortgages, encumbrances and liens to Sabreliner or TWA.

V

Appointment of Trustee

A. If defendant has not accomplished the divestiture required by

Section IV of the Final Judgment by March 15, 1995, defendant shall

notify plaintiff of that fact. Within ten (10) days of that date, or

twenty (20) days prior to the expiration of any extension granted

pursuant to Section IV(B), whichever is later, plaintiff shall provide

defendant with written notice of the names and qualifications of not

more than two (2) nominees for the position of trustee for the required

divestiture. Defendant shall notify plaintiff within ten (10) days

thereafter whether either or both of such nominees are acceptable. If

either or both of such nominees are acceptable to defendant, plaintiff

shall notify the Court of the person upon whom the parties have agreed

and the Court shall appoint that person as the trustee. If neither of

such nominees is acceptable to defendant, they shall furnish to

plaintiff, within ten (10) days after plaintiff provides the names of

its nominees, written notice of the names and qualifications of not

more than two (2) nominees for the position of trustee for the required

divestiture. If either or both of such nominees are acceptable to

plaintiff, plaintiff shall notify the Court of the person upon whom the

parties have agreed and the Court shall appoint that person as the

trustee. If neither of such nominees is acceptable to plaintiff, it

shall furnish the Court the names and qualifications of its proposed

nominees and the names and qualifications of the nominees proposed by

defendant. The Court may hear the parties as to the qualifications of

the nominees and shall appoint one of the nominees as the trustee.

B. If defendant has not accomplished the divestiture required by

Section IV of this Final Judgment at the expiration of the time period

specified in Section IV(C),the appointment by the Court of the trustee

shall become effective. The trustee shall then take steps to effect

divestiture of Sabreliner's Transient Fuel Service Business. The

trustee shall have the right, in its sole discretion, to include in the

package of assets to be divested any or all of the assets of

Sabreliner's Cargo and General Aviation Business.

C. After the trustee's appointment has become effective, only the

trustee shall have the right to sell Sabreliner's Transient Fuel

Service Business and Sabreliner's General Aviation and Cargo Business.

The trustee shall have the power and authority to accomplish the

divestiture to a purchaser acceptable to plaintiff at such price and on

such terms [[Page 9402]] as are then obtainable upon a reasonable

effort by the trustee, subject to the provisions of Section VIII of

this Final Judgment, and shall have such other powers as this Court

shall deem appropriate. Defendant shall not object to a sale of

Sabreliner's Transient Fuel Service Business or any or all Sabreliner's

Cargo and General Aviation Business by the trustee on any grounds other

than the trustee's malfeasance. Any such objection by defendant must be

conveyed in writing to plaintiff and the trustee within fifteen (15)

days after the trustee has notified defendant of the proposed sale in

accordance with Section VIII of this Final Judgment.

D. The trustee shall serve at the cost and expense of defendant,

shall receive compensation based on a fee arrangement providing an

incentive based on the price and terms of the divestiture and the speed

with which it is accomplished, and shall serve on such other terms and

conditions as the Court may prescribe; provided, however, that the

trustee shall receive no compensation, nor incur any costs or expenses,

prior to the effective date of his or her appointment. The trustee

shall account for all monies derived from a sale of Sabreliner's Cargo

and General Aviation Business and all costs and expenses incurred in

connection therewith. After approval by the Court of the trustee's

accounting, including fees for its services, all remaining monies shall

be paid to defendant and the trust shall then be terminated.

E. Defendant shall take no action to interfere with or impede the

trustee's accomplishment of the divestiture of Sabreliner's Transient

Fuel Service Business or any or all of Sabreliner's Cargo and General

Aviation Business and shall use its best efforts to assist the trustee

in accomplishing the required divestiture. The trustee shall have full

and complete access to the personnel, books, records, and facilities of

Sabreliner's overall business, and defendant shall develop such

financial or other information relevant to Sabreliner's Cargo and

General Aviation Business.

F. After its appointment becomes effective, the trustee shall file

monthly reports with the parties and the Court setting forth the

trustee's efforts to accomplish divestiture of Sabreliner's Transient

Fuel Service Business or any or all of Sabreliner's Cargo and General

Aviation Business as contemplated under this Final Judgment; provided,

however, that to the extent such reports contain information that the

trustee deems confidential, such reports shall not be filed in the

public docket of the Court. Such reports shall include the name,

address, and telephone number of each person who, during the preceding

thirty (30) days, made an offer to acquire, expressed an interest in

acquiring, entered into negotiations to acquire, or was contacted or

made an inquiry about acquiring, any ownership interest in Sabreliner's

Cargo and General Aviation Business, and shall describe in detail each

contact with any such person during that period. The trustee shall

maintain full records of all efforts made to divest these operations.

G. Within six months after its appointment has become effective, if

the trustee has not accomplished the divestiture required by Section VI

of this Final Judgment, the trustee shall promptly file with the Court

a report setting forth (1) the trustee's efforts to accomplish the

required divestiture, (2) the reasons, in the trustee's judgment, why

the required divestiture has not been accomplished, and (3) the

trustee's recommendations; provided, however, that to the extent such

reports contain information that the trustee deems confidential, such

reports shall not be filed in the public docket of the Court. The

trustee shall at the same time furnish such report to the parties, who

shall each have the right to be heard and to make additional

recommendations consistent with the purpose of the trust. The Court

shall thereafter enter such orders as it shall deem appropriate in

order to carry out the purpose of the trust, which shall, if necessary,

include augmenting the assets to be divested, and extending the trust

and the term of the trustee's appointment.

VI

Notification

Immediately following entry of a binding contract, contingent upon

compliance with the terms of this Final Judgment, to effect any

proposed divestiture pursuant to Sections IV or V of this Final

Judgment, defendant or the trustee, whichever is then responsible for

effecting the divestiture, shall notify plaintiff of the proposed

divestiture. If the trustee is responsible, it shall similarly notify

defendant. The notice shall set forth the details of the proposed

transaction and list the name, address, and telephone number of each

person not previously identified who offered to, or expressed an

interest in or desire to, acquire any ownership interest in the

business that is the subject of the binding contract, together with

full details of same. Within fifteen (15) days of receipt by plaintiff

of such notice, plaintiff may request additional information concerning

the proposed divestiture and the proposed purchaser. Defendant and/or

the trustee shall furnish any additional information requested within

twenty (20) days of the receipt of the request, unless the parties

shall otherwise agree. Within thirty (30) days after receipt of the

notice or within twenty (20) days after plaintiff has been provided the

additional information requested (including any additional information

requested of persons other than defendant or the trustee), whichever is

later, plaintiff shall provide written notice to defendant and the

trustee, if there is one, stating whether or not it objects to the

proposed divestiture. If plaintiff provides written notice to defendant

and/or the trustee that it does not object, then the divestiture may be

consummated, subject only to defendant's limited right to object to the

sale under the provisions in Sections VI(C). Absent written notice that

the plaintiff does not object to the proposed purchaser, a divestiture

proposed under Section IV shall not be consummated. Upon objection by

plaintiff, a divestiture proposed under Section V shall not be

consummated. Upon objection by plaintiff, or by defendant under the

priviso in Sections VI(C), a divestiture proposed under Section V shall

not be consummated unless approved by the Court.

VII

Affidavits

Upon filing of this Final Judgment and every thirty (30) days

thereafter until the divestiture has been completed or authority to

effect divestiture passes to the trustee pursuant to Section V of this

Final Judgment, defendant shall deliver to plaintiff an affidavit as to

the fact and manner of compliance with Sections IV and V of this Final

Judgment. Each such affidavit shall include the name, address, and

telephone number of each person who, at any time after the period

covered by the last such report, 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 ownership interest in

Sabreliner's Transient Fuel Business or Sabreliner's Cargo and General

Aviation Business, and shall describe in detail each contact with any

such person during that period. Defendant shall maintain full records

of all efforts made to divest these operations.

VIII

Financing

With prior consent of the plaintiff, defendant may finance all or

any part of [[Page 9403]] any purchase made pursuant to Sections IV or

V of this Final Judgment.

IX

Preservation of Assets

Until the divestitures required by the Final Judgment have been

accomplished:

A. Defendant shall take all steps necessary to assure that

Sabreliner's Cargo and General Aviation Business will be maintained as

separate and independent economically viable, ongoing businesses with

Midcoast's assets required for the provision of Midcoast's transient

fuel services (including leaseholds, contracts, management, operations,

and books and records) separate, distinct and apart from those of

Sabreliner. The defendant shall use all reasonable efforts on behalf of

Sabreliners's Cargo and General Aviation Business to maintain and

increase sales of transient fuel and other services to general aviation

customers at Lambert Field, and otherwise maintain the business as a

viable and active competitor at Lambert Field.

B. The defendant shall not sell, lease, assign, transfer or

otherwise dispose of, or pledge as collateral for loans (except such

loans as are currently outstanding or replacements of substitutes

therefore), assets required to be divested pursuant to Sections IV or V

except that any component of such assets as is replaced in the ordinary

course of business with a newly purchased component may be sold or

otherwise disposed of, provided the newly purchased component is so

identified as a replacement component for one to be divested.

C. The defendant shall provide capital and provide and maintain

sufficient working capital to maintain Sabreliner's Cargo and General

Aviation Business, as viable, ongoing businesses consistent with the

requirements of Section IX(A).

D. The defendant shall preserve the assets required to be divested

pursuant to Section IV and V, except those replaced with newly acquired

assets in the ordinary course of business, in a state of repair equal

to their state of repair as of the date of this Final Judgment,

ordinary wear and tear excepted. Defendant shall preserve the

documents, books and records of Midcoast until the date of divestiture

of Sabreliner' Transient Fuel Business and shall preserve the

documents, books and records of Sabreliner's Cargo and General Aviation

Business until the date of divesture of that business.

E. Except in the ordinary course of business, or as is otherwise

consistent with the requirements of Section IX, the defendant shall

refrain from terminating or altering one or more current employment,

salary, or benefit agreements for one or more executive, managerial,

sales, marketing, engineering, or other technical personnel of

Sabreliner's Cargo and General Aviation Business, including its

Transient Fuel Business, and shall refrain from transferring any

employee so employed without the prior approval of plaintiff.

F. Defendant shall refrain from taking any action that would

jeopardize the sale of Sabreliner's Cargo and General Aviation

Business.

X

Compliance Inspection

For the purposes of determining or securing compliance with the

Final Judgment and subject to any legally recognized privilege, from

time to time:

A. Duly authorized representatives of the Department of Justice

shall, upon written request of the Attorney General or of the Assistant

Attorney General in charge of the Antitrust Division, and on reasonable

notice to defendant made to its principal office, be permitted:

1. Access during office hours of such defendant to inspect and copy

all books, ledgers, accounts, correspondence, memoranda, and other

records and documents in the possession or under the control of such

defendant, who may have counsel present, relating to any matters

contained in this Final Judgment; and

2. Subject to the reasonable convenience of such defendant and

without restraint or interference from it, to interview officers,

employees, and agents of such defendant, who may have counsel present,

regarding any such matters.

B. Upon the written request of the Attorney General or of the

Assistant Attorney General in charge of the Antitrust Division made to

defendant's principal office, such defendant shall submit such written

reports, under oath if requested, with respect to any of the matters

contained in this Final Judgment as may be requested.

C. No information or documents obtained by the means provided in

this Section X shall be divulged by a representative of the Department

of Justice to any person other than a duly authorized representative of

the Executive Branch of the United States, except in the course of

legal proceedings to which the United States is a party (including

grand jury proceedings), or for the purpose of securing compliance with

this Final Judgment, or as otherwise required by law.

D. If at the time information or documents are furnished by

defendant to plaintiff, defendant represents and identifies in writing

the material in any such information or documents to which a claim of

protection may be asserted under rule 26(c)(7) of the Federal Rules of

Civil Procedure, and defendant marks each pertinent page of such

material, ``Subject to claim of protection under Rule 26(c)(7) of the

Federal Rules of Civil Procedure,'' then ten (10) days notice shall be

given by plaintiff to defendant prior to divulging such material in any

legal proceeding (other than a grand jury proceeding).

XI

Retention of Jurisdiction

Jurisdiction is retained by this Court for the purpose of enabling

any of the parties to this Final Judgment to apply to this Court at any

time for such further orders and directions as may be necessary or

appropriate for the construction or carrying out of this Final

Judgment, for the modification of any of the provisions hereof, for the

enforcement of compliance herewith, and for the punishment of any

violations hereof.

XII

Termination

This Final Judgment will expire on the tenth anniversary of the

date of its entry.

XIII

Public Interest

Entry of this Final Judgment is in the public interest.

Dated:

----------------------------------------------------------------------

United States District Judge

Competitive Impact Statement

United States of America, Plaintiff, v. Sabreliner Corporation,

Defendant.

Case Number 1:95CV00241

Judge: Stanley Sporkin

Deck Type: Antitrust

Date Stamp: 02/06/95

Pursuant to Section 2(b) of the Antitrust Procedures and Penalties

Act (``APPA''), 15 U.S.C. (b)-(h), the United States of America files

this Competitive Impact Statement relating to the proposed Final

Judgment submitted for entry with the consent of Sabreliner Corporation

in this civil antitrust proceeding.

I

Nature and Purpose of the Proceeding

On February 6, 1995, the United States filed a Complaint alleging

that the [[Page 9404]] acquisition of Midcoast Aviation, Inc.

(hereinafter ``Midcoast'') by Sabreliner Corporation, (hereinafter

``Sabreliner'') was a violation of Section 7 of the Clayton Act (15

U.S.C. 18). The Complaint alleges that the effect of the merger may be

substantially to lessen competition for the sale of jet fuel by fixed

base operators (``FBOs'') to general aviation aircraft at St. Louis-

Lambert International Airport. Sabreliner and Midcoast are the only two

providers of jet fuel for transient general aviation customers at

Lambert Field.

On February 6, 1995, the United States and defendant also filed a

Stipulation by which they consented to the entry of a proposed Final

Judgment designed to eliminate the anticompetitive effects of the

merger. Under the proposed Final Judgment, as explained more fully

below, Sabreliner would be required to sell or assign, by May 1, 1995,

certain assets and leasehold interests. If it should fail to do so, a

trustee appointed by the Court would be empowered to divest these

assets.

The United States and Sabreliner have agreed that the proposed

Final Judgment may be entered after compliance with the APPA. Entry of

the proposed Final Judgment will terminate the action, except that the

Court will retain jurisdiction to construe, modify and enforce the

Final Judgment, and to punish violations of the Final Judgment.

II

Events Giving Rise to the Alleged Violation

On November 2, 1994, Sabreliner, Midcoast, and Trans World

Airlines, Inc. (the parent of Midcoast) entered into an agreement under

which Sabreliner would acquire all of the stock of Midcoast for

approximately $7.2 million.

Sabreliner, engaged primarily in the business of repairing and

overhauling jet aircraft, also operates a FBO service at Lambert Field

in St. Louis. Sabreliner's total revenues for fiscal 1994 were over

$100 million.

Midcoast has FBO facilities at Adams Field in Little Rock, AK, Bi-

State Parks in Cahokia, IL, and St. Louis-Lambert in St. Louis, MO.

From these facilities, Midcoast performs repairs, maintenance, and

overhauls in addition to other FBO services, including jet fueling.

Midcoast had revenues of $41 million in 1993.

FBOs provide aircraft terminaling services to general aviation

aircraft customers, typically charter operators or other private

operators that provide transportation for business executives. These

services principally involve aircraft fueling services and maintenance

services, such as aircraft cleaning and de-icing, and also the

provision of such facilities as lounges for passengers and flight

crews, ground transportation, and canteens. Last year, general aviation

customers purchased around $1 billion of jet fuel from FBOs nationwide.

General aviation customers flying into airports other than the

airport where they are based are called ``transients.'' If transient

general aviation customers need to purchase fuel away from home, they

must purchase fuel from an FBO.

Pilots of corporate and charter jets select the airports to which

they will fly based on where their passengers need to go, or where

their passengers need to be picked up. The pilots will then choose then

FBO at that airport offering the most favorable combination of fuel

prices and services. There are no alternative sources to which the

pilots would switch to obtain jet fuel if the FBOs raise prices.

Although Lambert Field is one of several airports in the St. Louis

area servicing general aviation aircraft, Lambert is the only airport

in St. Louis that provides commercial scheduled domestic and

international service. In addition, Lambert offers close proximity to

downtown St. Louis. Both of these features make Lambert attractive to

general aviation passengers.

Because of the large volume of commercial traffic served by

Lambert, however, the airport is frequently very congested. To avoid

this congestion, general aviation pilots prefer to use other airports

in the St. Louis area, which accommodate primarily general aviation

traffic. General aviation aircraft usually will fly into Lambert only

if it is necessary to satisfy a passenger's travel requirements. Those

pilots that select Lambert as their destination airport, therefore, are

not likely to change their flight plan to obtain lower fuel prices at

other airports.

The Complaint alleges that the sale of jet fuel to transient

general aviation customers is a relevant product market for antitrust

purposes. The Complaint further alleges that Lambert-St. Louis

International Airport is a relevant geographic market within the

meaning of Section 7 of the Clayton Act. The Complaint refers to the

relevant market as the ``Lambert transient general aviation jet fuel

market.''

Sabreliner and Midcoast have been the only two FBOs providing, and

capable of providing in the future, fueling services to general

aviation aircraft at Lambert Field. Based on jet fuel sales revenue,

Sabreliner has 15% of that market and Midcoast has 85%. Transient

general aviation customers have benefited from competition between

these two firms, receiving lower jet fuel prices and improved FBO

services. As a result of its acquisition of Midcoast, Sabreliner now

has a monopoly of the Lambert transient general aviation jet fuel

market, which, absent relief, will likely cause general aviation

customers to pay higher prices for jet fuel and received diminished

services.

The St. Louis Airport Authority has committed to expanding the

amount of space available at Lambert for scheduled commercial traffic

and is unlikely to allocate more space to accommodate another FBO in

the near future. Therefore, an increase in the price of jet fuel to

transient general aviation customers will not be defeated by a new

entrant.

III

Explanation of The Proposed Final Judgment

The United States brought this action because the effect of the

acquisition of Midcoast by Sabreliner may be substantially to lessen

competition, in violation of Section 7 of the Clayton Act, in the

Lambert transient general aviation jet fuel market. The risk to

competition posed by this acquisition, however, would be eliminated if

the assets and leases currently held by Sabreliner to operate its

Lambert transient general aviation fueling business were sold and

assigned to a purchaser that could operate them as an active,

independent and financially viable competitor. To this end, the

provisions of the proposed Final Judgment are designed to accomplish

the sale and assignment of certain assets and leaseholds to such a

purchaser and thereby prevent the anticompetitive effects of the

proposed acquisition.

Section IV of the proposed Final Judgment requires defendant

Sabreliner, by May 1, 1995, to divest either its Transient Fuel Service

Business as defined in Section II. D, or its Cargo and General Aviation

Business, as defined in Section II. E of the proposed Final Judgment.

Divestiture of one of the two groups of assets and leaseholds will cure

the potential anticompetitive consequences of Sabreliner's acquisition

of Midcoast.

The first group, Sabreliner's Transient General Aviation Business,

includes the assets and leases a prospective purchaser would need to

effectively operate a stand-alone transient general aviation fueling

business. Should a purchaser elect to acquire and operate

[[Page 9405]] these assets, the competition lost through Sabreliner's

acquisition of Midcoast would be restored. However, Sabreliner's

current revenue stream from its transient general aviation fueling

business may be too small to attract, or viably support, a satisfactory

purchaser. Accordingly, the second group, Cargo and General Aviation

Business, is a broader package that includes assets that Sabreliner

currently operates to provide fuel and other services to both cargo and

general aviation aircraft at Lambert Field.

Under the proposed Final Judgment, Sabreliner must take all

reasonable steps necessary to accomplish quickly the divestiture of one

of the two specified groups of assets, and shall cooperate with bona

fide prospective purchasers by supplying all information relevant to

the proposed sale. Should Sabreliner fail to complete its divestiture

by May 1, 1995, the Court will appoint, pursuant to Section V, a

trustee to accomplish the divestiture. The United States will have the

discretion to delay the appointment of the trustee for up to an

additional two months should it appear that the assets can be sold in

the extended time period.

Following the trustee's appointment, only the trustee will have the

right to sell the divestiture assets, and defendant Sabreliner will be

required to pay for all of the trustee's sale-related expenses. It will

be in the sole discretion of the trustee to sell either package of

assets, or any combination of those assets, necessary to accomplish a

timely divestiture of Sabreliner's Transient Fuel Service Business.

Section VI of the proposed Final Judgment would assure the United

States an opportunity to review any proposed sale, whether by

Sabreliner or by the trustee, before it occurs. Under this provision,

the United States is entitled to receive complete information regarding

any proposed sale or any prospective purchaser prior to consummation.

Upon objection by the United States to a sale of the divestiture assets

by the defendant Sabreliner, a proposed divestiture may not be

completed. Should the United States object to a sale of the divested

assets by the trustee, that sale shall not be consummated unless

approved by the Court.

Pursuant to Section V.G., should the trustee not accomplish the

divestiture within six months of appointment, the trustee and the

parties will make recommendations to the Court, which shall enter such

orders as it deems appropriate to carry out the purpose of the trust,

which may include extending the trust or the term of the trustee's

appointment.

Under Section IX of the proposed Final Judgment, defendant

Sabreliner must take certain steps to ensure that, until the required

divestiture has been completed, the divestiture assets--Sabreliner's

cargo and general aviation business--will be maintained as a separate,

ongoing, viable business and kept distinct from Midcoast's assets and

facilities at Lambert. Until such divestiture, Sabreliner must also

continue to maintain and operate the business as a viable, independent

competitor at Lambert Field, using all reasonable efforts to maintain

and increase transient fuel sales. Sabreliner must maintain the

business, so that it continues to be salable, including maintaining all

records, loans, and personnel necessary for its operation.

Section X requires the defendant to make available, upon request,

the business records and the personnel of its business. This provision

allows the United States to inspect and ensure that the defendant is

complying with the requirements of the proposed Final Judgment. Section

XII of the proposed Final Judgment provides that it will expire on the

tenth anniversary of its entry by the Court.

IV

Remedies Available to Potential Private Litigants

Section 4 of the Clayton Act (15 U.S.C. 15) provides that any

person who has been injured as a result of conduct prohibited by the

antitrust laws may bring suit in federal court to recover three times

the damages the person has suffered, as well as costs and reasonable

attorneys' fees. Entry of the proposed Final Judgment will neither

impair nor assist the bringing of any private antitrust damage action.

Under the provisions of Section 5(a) of the Clayton Act (15 U.S.C.

16(a)), the proposed Final Judgment has no prima facie effect in any

subsequent private lawsuit that may be brought against the defendant.

V

Procedure for Commenting on the Proposed Final Judgment

The United States and defendant 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. The United States will evaluate the comments,

determine whether it should withdraw its consent, and respond to

comments. The comments and the response of the United States will be

filed with the Court and published in the Federal Register.

Written comments should be submitted to: Roger W. Fones, Chief,

Transportation, Energy & Agriculture Section, Antitrust Division,

Judiciary Center Building, 555 4th Street, N.W., Room 9104, Washington,

DC 20001.

VI

Altneratives to the Proposed Final Judgment

The proposed Final Judgment requires that the divestiture assets be

sold to a purchaser with the capability and present intent of operating

them as part of a viable, ongoing business capable of providing

transient general aviation fueling services at Lambert Field. Thus,

compliance with the proposed Final Judgment and the completion of the

sale required by the Judgment should resolve the competitive concerns

raised by the acquisition.

Litigation is, of course, always an alternative to a consent decree

in a Section 7 case. The United States rejected this alternative

because the sale required under the proposed Final Judgment should

prevent the acquisition by Sabreliner of Midcoast from having a

significant anticompetitive effect in the relevant market alleged.

The United States is satisfied that the proposed Final Judgment

fully resolves the anticompetitive effects of the proposed merger

alleged in the Complaint. Although the proposed Final Judgment may not

be entered until the criteria established by the APPA (15 U.S.C.

16(b)(-(h)) have been satisfied, the public will benefit immediately

from the safeguards in the proposed Final Judgment because the

defendant has stipulated to comply with the terms of the Judgment

pending its entry by the Court.

VII

Determinative Materials and Documents

There are no materials or documents that the United States

considered to be determinative in formulating this proposed Final

Judgment. Accordingly, [[Page 9406]] none are being filed with this

Competitive Impact Statement.

Dated: February 6, 1995.

Respectfully submitted.

Roger W. Fones,

Chief.

Donna N. Kooperstein,

Assistant Chief.

Jonathan D. Lee,

Attorney.

Certificate of Service

I hereby certify that I am an attorney for the United States in

this action, and have caused a true and correct copy of the foregoing

Complaint, Stipulation, proposed Final Judgment, and Competitive Impact

Statement, to be served by first class mail and February 6, 1995 for

the defendant at the address below:

John Gillick,

Winthrop, Stimson, Putnam & Roberts.

For defendant Sabreliner Corporation.

Jonathan D. Lee,

Attorney in Charge.

[FR Doc. 95-3889 Filed 2-16-95; 8:45 am]

BILLING CODE 4410-01-M