United States, State of Florida and State of Maryland, v. Browning Ferris Industries, Inc.; Public Comments and Response on Proposed Final Judgment

Federal RegisterMar 13, 1995

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DEPARTMENT OF JUSTICE

United States, State of Florida and State of Maryland, v.

Browning Ferris Industries, Inc.; Public Comments and Response on

Proposed Final Judgment

Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C.

16(c)-(h), the United States publishes below the comments received on

the proposed Final Judgment in United States, State of Florida and

State of Maryland v. Browning Ferris Industries, Inc., Civil Action No.

94-2588, filed in the United States District Court for the District of

Columbia, together with the United States' responses to those comments.

Copies of the comments and responses are available for inspection

and copying in room 3233 of the Antitrust Division, U.S. Department of

Justice, 10th Street and Pennsylvania Avenue, N.W., Washington, D.C.

and for inspection and copying at the Office of the Clerk of the United

States District Court for the District of Columbia, United States

Courthouse, 333 Constitution Avenue, N.W., Washington, D.C.

Constance K. Robinson,

Director of Operations.

Comments on the Proposed Final Judgment and the United States'

Responses to the Comments

United States of America, State of Florida, by and through its

Attorney General Robert A. Butterworth, and State of Maryland, by

and through its Attorney General J. Joseph Curran, Jr., Plaintiffs

vs. Browning-Ferris Industries, Inc., Defendant. Civil Action No.:

1:94CV02588.

Pursuant to the requirements of the Antitrust Procedures and

Penalties Act (``APPA''), 15 U.S.C. 16(b)-(h), the United States

hereby files the attached comments on the proposed Final Judgment in

the above-captioned civil antitrust proceeding, together with the

United States' responses to those comments.

This action was commenced on December 1, 1994, when the United

States, the State of Maryland (``Maryland'') and the State of

Florida (``Florida'') filed a Complaint that the acquisition by

Browning-Ferris Industries, Inc. (``BFI'') of the ordinary voting

shares of Attwoods plc (``Attwoods'') violated Section 7 of the

Clayton Act because the effects of the acquisition may be

substantially to lessen competition in interstate trade and commerce

for small containerized hauling services in the following relevant

markets: Baltimore, MD; Broward County, FL; Chester County, PA; Clay

County, FL; Duval County, FL; Polk County, FL; the Southern Eastern

Shore of Maryland; Sussex County, DE; and Western Maryland.

At the same time the United States, Maryland, and Florida filed

a proposed Final Judgment, a Stipulation signed by the parties

stipulating to entry of the Final Judgment, and a Hold Separate

Stipulation and Order. Shortly thereafter the United States filed a

Competitive Impact Statement. The proposed Final Judgment requires

BFI to divest certain Attwoods' assets in Chester County, PA; Clay

County, FL; Duval County, FL; the Southern Eastern Shore of

Maryland; Sussex County, DE; and Western Maryland. It also requires

BFI to offer new, less restrictive contracts to its small

containerized hauling customers in Broward County, FL; Polk County,

FL; and the greater Baltimore, MD metropolitan area. The Hold

Separate Stipulation and Order requires BFI to preserve, hold, and

continue to operate the assets that may be divested under the Final

Judgment as separate ongoing businesses. The Stipulation provides

that the proposed Final Judgment may be entered by the Court after

the completion of the procedures required by the APPA.

The APPA requires a sixty-day period for the submission of

public comments on the proposed Final Judgment, 15 U.S.C. 16(b). In

this case, the sixty-day comment period commenced on December 15,

1994 and terminated on February 13, 1995. During this period, the

United States received two comments on the proposed Final Judgment.

The United States considered the comments and sent written responses

to the commenting parties.\1\

\1\The Comments and Responses are attached as Exhibit A.

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Pursuant to 15 U.S.C. 16(e), the proposed Final Judgment can be

entered only after the Court determines that the Judgment is in the

public interest. The focus of this determination is whether the

relief provided by the proposal Final Judgment is adequate to remedy

the antitrust violation alleged in the Complaint.\2\

\2\United States v. Bechtel Corp., 1979-1 Trade Cases (CCH)

62,430 (N.D. Cal. 1979), aff'd, 648 F.2d 660, 665 (9th Cir. 1981),

cert. denied, 454 U.S. 1083 (1982).

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Both comments expressed concern about the contracts used by BFI

with its small containerized hauling customers. One of the comments

expressed concern that the contract currently in use by BFI in the

greater Baltimore metropolitan area is one-sided. The other comment

stated that the new contracts required to be used by BFI in Broward

County, FL under the proposed Final Judgment were being used by BFI

as marketing tools to the disadvantage of small haulers. That

comment suggested that BFI should be required to cancel all its

existing contracts immediately and implement the new contracts all

at one time. The comment went on to suggest that the combination of

BFI and Attwoods' municipal franchises would permit BFI to subsidize

cheaper prices in the small containerized hauling service market to

the detriment of other haulers.

The United States explained in its responses to these comments

that, in the greater Baltimore area, the concern about BFI's use of

restrictive customer contracts has been expressly rectified by the

proposed Final Judgment. BFI is required to use less restrictive

customer contracts that do not have the effects complained of in the

comment. The Department also explained that, in Broward County, FL,

BFI was being required to phase in the new contracts rapidly--within

one year. The proposed Final Judgment requires that the new

contracts be made available immediately to all new customers and all

customers signing new contracts. A one year period to convert all

other customers seemed reasonable in order to avoid unnecessary

confusion and the probable higher cost of immediately converting all

customers to the new contract. Finally, the Department explained

that using franchised business, in which municipal entities solicit

bids and award contracts to serve consumers within their boundaries,

to subsidize the small containerized hauling market would likely

occur only if bidding for franchises is not competitive. The

Department was not persuaded, given the number of actual and

potential bidders for municipal franchises in the Florida markets,

that the acquisition raised any concerns in the market for bidding

on municipal franchises.

After careful consideration of the comments, the United States

continues to believe that, for the reasons stated in the responses

to the comments and in the Competitive Impact Statement, the

proposed Final Judgment would be adequate to remedy the risks to

competition presented by the proposed acquisition and, therefore,

the proposed Final Judgment is in the public interest.

After the comments and responses have been published in the

Federal Register, pursuant to 15 U.S.C. 16(d) of the APPA, the

United States will move this Court for entry of the proposed Final

Judgment.

Dated: March 2, 1995.

Respectfully submitted,

Nancy H. McMillen,

Peter H. Goldberg,

Eva Almirantearena,

Attorneys, Antitrust Division, Department of Justice.

Eastern Trans-Waste of Maryland, Inc.

December 15, 1994.

Anthony V. Nanni,

Chief, Litigation I Section, Antitrust Division, U.S. Dept. of

Justice, 1401 H Street NW., Suite 4000, Washington, DC 20530

Re: BFI's Settlement

Dear Mr. Nanni: As I am sure you are well aware the matter of

EWI's takeover by BFI is of grave concern. I am an owner of a small

women-owned refuse business and I am writing this letter to voice my

awareness regarding various unethical procedures being practiced by

big business. Small business concerns are being gobbled up by big

business. This development should alert all interested in economic

fairplay, because these unfair and illegal practices can lead to

[[Page 13453]] monopoly control and higher prices for the consumer.

Two such deceitful practices that I would like to bring to your

attention are BFI's attempts to restrain trade with their one-sided

contracts and their new attempt to gain control by backing a small-

disadvantaged refuse company.

Specifically, Browning-Ferris regularly restrains trade by

having their customers sign one-sided refuse service agreements.

Once the customer gets into these deceptive agreements it seems

impossible to get out.

Exhibit A

December 6, 1994.

Basically, the contract states that in order to terminate

service you have to give them sixty day written notice (Certified

Mail) before end of contract date. However, if you do not give this

notice before the sixty day period the contract means the agreement

is automatically renewed for three years. Being that most customers

do not anticipate a formidable increase, the notification period

usually passes unnoticed.

So, consequently BFI waits for the sixty days to pass and then

proceeds to inform the customer the service price will increase. The

increase is usually substantially higher than the original contract

price and when the customer tries to seek a more competitive price

BFI threatens to sue for the remainder of the contract. Although

there is a contract, it is unfair and deceptive not allowing the

customer any recourse action once the price increase is established.

Under these circumstances the customer is able to void the contract

due to deceitful terms, but the majority of the customers are

ignorant to this fact. To illustrate this matter Fleet Maintenance,

a small business located in Clinton, Maryland, was engaged in a

contract with BFI and the price was considerably raised. Fleet

proceeded to search for a more competitive price, so they contacted

my company, Eastern Trans-Waste (ETW). ETW quoted a price that was

fifty percent lower than BFI's price. Consequently, Fleet informed

BFI that they would be cancelling service and if they didn't like it

they would have to sue them. However, BFI didn't attempt to sue,

instead they lowered the price of service, but only to drive out the

competitor. In the majority of similar cases customers are

intimidated by the contract and feel caught in a legal trap, which

results lead to accepting the higher price. This depicts how trade

is restrained by not allowing customers to shop for preferable

prices, which seriously demeans our beliefs that we life in a fair

and competitive society.

The other method that reflects the current situation would be

BFI's attempt to gain control by backing a small-disadvantaged

refuse business. Bethesda Naval Hospital recently put out to bid a

recycling job which was offered only to small disadvantaged

concerns. Due to this fact only one company submitted a bid.

Consequently the contract was awarded to Heritage Recyclers; at an

exorbitant price for the scope of the contract. Needless to say BFI

has furnished all the equipment on this job with their name on said

equipment and is performing the services.

As a result BFI has been gaining a larger market share by

utilizing a variety of unfair and unethical tactics. All of the

methods they employ undermine the long-term interests of small

business in the refuse field. Therefore, you must see how this

takeover of EWI is of crucial importance to the small business

owner.

Although I have been concentrating on BFI and their unethical

practices, I would like to point out that Waste Management also

participates in these same methods that undermine the long-term

interests of small business. Whereas, ETW is only one small business

voicing this complaint there are others who have had business taken

from them by big business and would be willing to reveal the

scandalous procedures that were utilized.

Knowing that you are a busy person I would like to thank you for

this opportunity to express my feelings on this matter and I look

forward to a response.

Sincerely,

Kimberly A. Robb,

President, Eastern Trans-Waste of Maryland, Inc.

Department of Justice, Antitrust Division

City Center Building, 1401 H Street, NW., Washington, DC 20530

March 1, 1995.

AVN: NHM

60-4953-0059

Kimberly A. Robb,

President, Eastern Trans-Waste of Maryland, Inc., 1402 Richie

Marlboro Road, Capitol Heights, Maryland 20743

Re: United States V. Browning-Ferris Industries, Inc.; Civ. Action

No.: 1:94CV02588 (D.D.C. Dec. 1, 1994)

Dear Ms. Robb: This letter responds to your letter dated

December 15, 1994 commenting on the proposed Final Judgment in the

above-referenced civil antitrust case, which challenges the

acquisition of the assets of Attwoods plc (``Attwoods'') by

Browning-Ferris Industries, Inc. (``BFI''). The Complaint alleges

that the acquisition, as originally structured, violated Section 7

of the Clayton Act, as amended, 15 U.S.C. Sec. 18, because its

effects may be substantially to lessen competition in small

containerized hauling services in the following relevant markets:

Baltimore, MD; Broward County, FL; Chester County, PA; Clay County,

FL; Duval County, FL; Polk County, FL; the Southern Eastern Shore of

Maryland; Sussex County, DE; and Western Maryland. Under the

proposed Final Judgment, BFI would be required to divest Attwoods'

assets in Chester County, PA; Clay County, FL; Duval County, FL; the

Southern Eastern Shore of Maryland; Sussex County, DE; and Western

Maryland. BFI would also be required to offer new, less restrictive

contracts to its small containerized hauling customers in Broward

County, FL; Polk County, FL; and the greater Baltimore, MD

metropolitan area.

You expressed concern that BFI regularly restrains trade by

having their customers sign one-sided refuse service agreements. You

note that once the customer signs one of these agreements ``it seems

impossible to get out.'' Letter at p. 1. You specifically mention a

provision requiring the customer to give BFI written notice 60 days

or more before the end of the contract and that if this date is

missed, the agreement is automatically renewed for three years. You

further state that, once the contract is renewed, BFI increases its

price to the customer and threatens to sue the customer if the

customer tries to seek a more competitive price.

The Department believes the proposed Final Judgment eliminates

the concerns expressed in your letter. Specifically, Parts VIII A

and B of the proposed Final Judgment require BFI to offer contracts

to small containerized hauling customers in your area\1\ that make

it considerably easier for a customer to benefit from price

competition for that customer's business. The initial term of the

new contract is only one year (instead of the three year current

term). The renewal term is only one year, instead of three. The

customer can give notice much later under the new contract (up to 30

days from the end of the contract term rather than prior to 60 days

from the end of the term), making it more likely the customer will

have time to terminate the contract should it receive an attractive

offer from a competitor. Furthermore, the liquidated damages

provision of BFI's contract has been substantially decreased from

six times the customer's average monthly charges. Under the proposed

Final Judgment, customers may terminate the contract during their

first 10 months as a BFI customer by paying only two times its prior

average monthly charges and, after 10 months, an amount equal to one

month's average charges. The Department believes these changes

reduce a substantial barrier to entry into small containerized

hauling service and will increase the likelihood that the customer

will not '`feel caught in a legal trap'' (letter at p. 2).

\1\The area in Maryland affected by this portion of the proposed

Final Judgment is Anne Arundel County, Baltimore City, Baltimore

County, Calvert County, Carroll County, Harford County, Howard

County, Montgomery County and Prince George's County.

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Your letter expresses a second concern. You appear to describe a

situation in which a small business set-aside bid was performed by

BFI, rather than the small business that was awarded the bid. The

acquisition that is the subject matter of this complaint and

proposed Final Judgment has no effect on the alleged conduct you

describe. This is not the type of matter that is subject to being

remedied as part of a proposed acquisition and does not appear to be

a matter within the jurisdiction of the Antitrust Division. The

Department does appreciate your interest in enforcing the antitrust

laws and any information relevant to that enforcement in the

appropriate forum is welcome.

We appreciate you bringing your concerns to our attention, and

hope that this information will help to alleviate them. Final

Judgment would adequately safeguard competition for small

containerized hauling service in the markets alleged in the

complaint. Pursuant to the Antitrust Procedures and Penalties Act, a

copy of your letter and this response will be published in the

Federal Register and filed with the Court.

[[Page 13454]] Sincerely yours,

Anthony V. Nanni,

Chief, Litigation I Section.

Coastal Carting Limited, Inc.

Garbage and Trash Removal, 2316 S.W. 56th Terrace, West Hollywood,

Florida 33021

February 8, 1995.

Anthony V. Nanni,

Chief, Litigation One Section, Anti-Trust Division, United States

Department of Justice, 1401 H Street, NW., Suite 4000, Washington,

DC 20530

Re: Browning-Ferris Industries, Acquisition of Attwoods PLC, Civil

action No.: 94-2588, United States of America, State of Florida, and

State of Maryland vs. Browning-Ferris Industries, Inc., United

States District Court for the District of Columbia

To Whom It May Concern: I am writing because I am very concerned

about the acquisition of Attwoods by Browning-Ferris Industries and

its effect upon my business.

Finally, BFI has utilized the Contract that as attached Exhibit

``B'' of the proposed Final Judgment as a marketing tool to

discredit the smaller haulers. BFI is out in the market place

telling the customer if he is not happy with the service provided by

BFI, they can terminate the contract with minimum cost to the

customer.

My suggestion is to terminate all the existing agreements

immediately and then have BFI compete with us with them using the

new Contract.

Finally, BFI will be able to subsidize their competitive

commercial work by the monies made on the ``combined'' franchises of

BFI and Attwoods allowing BFI to subsidize competitive prices,

thereby, keeping the small hauler from competing in the market place

where they can compete.

Once again, I am concerned about the effect this transaction

will have on the market place and my business. Please feel free to

contact me at your earliest convenience regarding these issues and I

hope you will strongly consider my concerns.

Very truly yours,

Frank D'Agostino,

President, Coastal Carting Ltd., Inc.

Department of Justice Antitrust Division

City Center Building, 1401 H Street, NW., Washington, DC 20530

March 1, 1995.

AVN: NHM

60-4953-0059

Frank D'Agostino,

President,

Coastal Carting Limited, Inc.,

2316 SW. 56th Terrace,

West Hollywood, Florida 33021

Re: United States v. Browning-Ferris Industries, Inc.; Civ. Action

No.: 1:94CV02588 (D.D.C. Dec. 1, 1994)

Dear Mr. D'Agostino: This letter responds to your letter dated

February 8, 1995 commenting on the proposed Final Judgment in the