United States v. American National Can Co. & KMK Maschinen AG; Proposed Final Judgment and Competitive Impact Statement

DEPARTMENT OF JUSTICE

Antitrust Division

United States v. American National Can Co. & KMK Maschinen AG;

Proposed Final Judgment and Competitive Impact Statement

Notice is hereby given pursuant to the Antitrust Procedures and

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

Stipulation, and Competitive Impact Statement have

[[Page 34863]]

been filed with the United States District Court for the District of

Columbia in United States v. American National Can Co. and KMK

Maschinen AG, Civil No. 96-01458.

The Complaint alleges that the defendants violated section 1 of the

Sherman Act by entering a series of agreements, the purpose and effect

of which was to eliminate competition between them in the North

American markets for laminated tubes and laminated tube-making

equipment and technology. The Complaint further alleges that pursuant

to those agreements, KMK Maschinen AG (``KMK'') sold its U.S. tube-

making affiliate to American National Can Co. (``ANC'') and agreed to

sell its laminated tube-making equipment and to license its related

technology exclusively to ANC, and ANC agreed to buy all its laminated

tube-making equipment for use in North America from KMK and not to

acquire or use anyone else's equipment or technology there while at the

same time discontinuing its own manufacture of such equipment.

The proposed Final Judgment would end the extant exclusive,

laminated tube-making equipment and technology arrangement between the

defendants, and would bar them from collecting any payment from each

other under that agreement. It also would enjoin defendants from

entering agreements that restrict certain rights of any party relating

to laminated tubes or laminated tube-making equipment or technology,

where the parties compete directly against each other in the same

segment of the laminated tube market (tubes, equipment, or technology)

to which the restraint applies.

Laminated tubes are collapsible tubular containers of multiple,

laminated plastic layers used to package virtually all toothpaste and

many pharmaceutical products.

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 Mary Jean Moltenbrey, Chief, Civil Task

Force, U.S. Department of Justice, Antitrust Division, 325 7th Street,

NW., Suite 300, Washington, DC 20530 (202/616-5935).

Rebecca P. Dick,

Deputy Director of Operations.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

In the matter of; UNITED STATES OF AMERICA, Plaintiff, v.

AMERICAN NATIONAL CAN CO., and KMK MASCHINEN AG, Defendant; Civil

Action No. 96-01458, Filed June 25, 1996, Judge Thomas Pennfield

Jackson.

Stipulation

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

respective attorneys, that:

1. The Court has jurisdiction over the subject matter of this

action and over each of the parties hereto for purposes of this action,

and venue of this action is proper in 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. Sec. 16(b)-(h)), 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. Each defendant agrees to be bound by the provisions of the

proposed Final Judgment pending its approval by the Court; and

4. 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 whatsoever, and the making of this

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

other proceeding.

Dated: June 24, 1996.

For Plaintiff:

Anne K. Bingaman,

Assistant Attorney General.

Joel I. Klein,

Deputy Assistant Attorney General.

Rebecca P. Dick,

Deputy Director of Operations.

Mary Jean Moltenbrey,

Chief, Civil Task Force.

Robert J. Zastrow,

Assistant Chief, Civil Task Force.

Thomas H. Liddle.

Scott A. Scheele,

DC Bar No. 429061, Attorneys, Antitrust Division, U.S. Department of

Justice, Suite 300, Liberty Place Building, 325 7th Street, N.W.,

Washington, DC 20530.

For Defendant American National Can Co.:

McDermott, Will & Emery

David Marx, Jr.,

A Member of the Firm.

For Defendant KMK Maschinen Ag:

Wilmer, Cutler & Pickering

Rajiv P. Santwan,

Chief Executive, KMK Maschinen AG.

C. Loring Jetton, Jr.,

A Member of the Firm, D.C. Bar No. 83766.

Final Judgment

Plaintiff, United States of America, filed its Complaint on June

25, 1996; plaintiff and defendants, by their respective attorneys, have

consented to entry of this Final Judgment without trial or adjudication

of any issue of fact or law, and defendants have agreed to be bound by

the provisions of this Final Judgment pending its approval by the

Court. This Final Judgment shall not be evidence against or an

admission by any party with respect to any issue of fact or law herein.

Now, therefore, before the taking of any testimony and upon consent

of the parties, it is hereby Ordered, Adjudged, and Decreed as follows:

I

Jurisdiction

This Court has jurisdiction of the subject matter of this action

and of each of the parties consenting hereto. The Complaint states a

claim upon which relief may be granted against defendants under Section

1 of the Sherman Act, 15 U.S.C. 1.

II

Definitions

As used in this Final Judgment:

A. ``Agreement'' means any contract, arrangement, or understanding,

whether oral or written, or any term or provision thereof, together

with any modification or amendment thereto;

B. ``Laminated tube'' means a collapsible, squeeze-to-use tubular

package with a sideseam that consists of a body of multiple laminated

plastic layers separated by a layer of either plastic or aluminum foil

that serves as a barrier to moisture, light, gases, or other agents; a

tube head attached to the body; and may include a cap;

C. ``Laminated tube-making equipment'' means machinery, apparatus,

or devices for making and/or assembling laminated tubes, including

forming a tube head, sealing or otherwise connecting it to a laminated

tube body, or capping the laminated tube;

D. ``Laminated tube-making technology'' means any form of

intellectual property relating to (i) the design, development,

construction, or operation of laminated tube-making equipment or any

component, feature, or use thereof; (ii) the fabrication of laminated

tubes or any component

[[Page 34864]]

thereof; or (iii) the material used in making laminated tubes; but only

to the extent such component, feature, use, or material relates to

laminated tubes and not to other types of packaging;

E. ``North America'' means the United States of America, Canada,

and the United Mexican States.

III

Applicability

This Final Judgment applies to each defendant; to each of its

officers, directors, agents, employees, successors, assigns,

subsidiaries, divisions, and any other organizational unit controlled

by either defendant; 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.

IV

Injunctive Relief

Each defendant is enjoined and prohibited from:

A. Maintaining, enforcing, carrying out, or claiming any right or

operating under the 1987 License and Technical Assistance Agreement

(LTAA) between American National Can Co. and KMK Karl Maegerle Lizenz

AG;

B. Collecting or attempting to collect any royalties, fees, or

other payments under the LTAA for (i) the manufacture, sale, or use in

North America of laminated tubes or laminated tube-making equipment or

(ii) the license, sale, or use in North America of laminated tube-

making technology;

C. Entering into, maintaining, enforcing, carrying out, or claiming

any right under any agreement with any person who

(1) Owns or has the right to use, license, and transfer laminated

tube-making technology that restricts the right of any party to the

agreement to use, license, or transfer in North America laminated tube-

making technology that it owns or has the right to use at the time of

the agreement,

(2) Manufactures or sells laminated tube-making equipment that

restricts the right of any party to the agreement to manufacture or

sell such equipment in North America using or incorporating only

laminated tube-making technology that it owns or has the right to use

at the time of the agreement, or

(3) Manufactures or sells laminated tubes in North America that

restricts the right of any party to the agreement to manufacture or

sell, but not use, laminated tubes in North America.

The prohibitions of this Section IV.C shall not apply to either

defendant's acquisition of substantially all of any person's assets or

voting securities relating to laminated tube-making equipment or

technology, provided that (1) the defendant gives the Antitrust

Division of the United States Department of Justice written notice of

the proposed acquisition at least 30 days prior to its consummation,

and (2) if within that 30-day period the Antitrust Division requests

additional information and/or documentary material relevant to the

proposed acquisition, the defendant extends the consummation thereof

for at least an additional 20 days after the date on which the

Antitrust Division receives all the information and documentary

material requested from the defendant.

V

Notification

Within 60 days of entry, each defendant shall provide a copy of

this Final Judgment by mail or personal service to its officers,

directors, and managerial employees responsible for defendant's

laminated tubes and/or laminated tube-making equipment or technology

businesses, and to its current laminated tube-making technology

licenses in North America. Thereafter, each defendant shall distribute

a copy of this Final Judgment to any new such officer, director, or

managerial employee within 60 days of a person's assumption of duties

as an officer, director, or manager of that defendant.

VI

Compliance Information

A. To determine or secure compliance with this Final Judgment, from

time to time, duly authorized representatives of plaintiff, upon

written request of the Assistant Attorney General in charge of the

Antitrust Division, or reasonable notice to a defendant at its

principal office and subject to any lawful privilege, shall be

permitted:

1. Access during normal office hours to inspect and copy all books,

ledgers, accounts, correspondence, memoranda, and other records and

documents in the defendant's possession, custody, and control relating

to any matters contained in this Final Judgment; and

2. To interview the defendant's officers, employees, or agents

regarding such matters, who may have counsel present, subject to the

defendant's reasonable convenience but without its restraint or

interference.

B. Upon written request of the Assistant Attorney General in charge

of the Antitrust Division to a defendant's principal office, and

subject to any lawful privilege, the defendant shall submit such

written reports, under oath if requested, relating to any matters

contained in this Final Judgment, as may be requested.

C. No information or documents obtained pursuant to this section

shall be divulged by plaintiff 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, 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 a

defendant to plaintiff, the defendant represents and identifies in

writing the material in any such information or documents for which a

claim of protection may be asserted under Rule 26(c)(7) of the Federal

Rules of Civil Procedure, and the 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 plaintiff shall give 10

days' notice to the defendant before divulging such material in any

legal proceeding (other than a grand jury proceeding) to which the

defendant is not a party.

VII

Retention of Jurisdiction

Jurisdiction is retained by this Court for the purpose of enabling

any party to this Final Judgment to apply to this Court at any time for

further orders or directions as may be necessary or appropriate to

implement or construe this Final Judgment, to modify or terminate any

provision thereof, to enforce compliance therewith, and to punish

violations thereof.

VIII

Term

This Final Judgment shall expire ten years from the date of its

entry.

IX

Public Interest

Entry of this Final Judgment is in the public interest.

Dated:-----------------------------------------------------------------

Court approval subject to the Antitrust Procedures and Penalties

Act, 15 U.S.C. 16.

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

United States District Judge

Certificate of Service

I hereby certify that copies of the foregoing Complaint,

Stipulation (to which is attached a copy of a proposed Final Judgment),

and Competitive Impact Statement were served this 25th day of June

1996, by first class mail, postage prepaid, upon:

[[Page 34865]]

David Marx, Jr., Esq., McDermott, Will & Emory, 31st Floor, 227 West

Monroe Street, Chicago, IL 60606-5096

Counsel for Defendant, American National Can Co.

C. Loring Jetton, Jr., Esq., Wilmer, Cutler & Pickering, 2445 M Street,

N.W., Washington, D.C. 20037-1420

Counsel for Defendant KMK Maschinen AG.

Thomas H. Liddle,

Attorney, Antitrust Division, U.S. Department of Justice, 325 7th

Street, N.W., Washington, D.C. 20530.

Competitive Impact Statement

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

Act (15 U.S.C. 16(b), the United States of America hereby files this

Competitive Impact Statement relating to the proposed Final Judgment

submitted for entry in this civil antitrust action against American

National Can Co. (``ANC'') and KMK Maschinen AG (``KMK'').

I

Nature and Purpose of the Proceeding

The government filed this civil antitrust suit on June 25, 1996,

alleging that defendants violated Section 1 of the Sherman Act by

engaging in a combination and conspiracy that unreasonably restrains

interstate trade and commerce in the manufacture of laminated tubes and

laminated tube-making equipment, and in the license and transfer of

related laminated tube-making technology. The Complaint alleges that

this combination and conspiracy consisted of a series of continuing

agreements between defendants, the purpose and effect of which was to

eliminate competition between them in the North American markets for

laminated tubes and laminated tube-making equipment and technology.

Specifically, KMK agreed to sell its laminated tube-making equipment

and license its related technology exclusively to ANC, and ANC

purchased KMK's U.S. laminated tube-making facility. These agreements

harmed competition in several ways:

(a) They eliminated KMK as a competitor in the laminated tubes

market, thereby reducing competition among tube manufacturers in the

United States;

(b) They precluded KMK from selling laminated tube-making equipment

or from licensing laminated tube-making technology to persons other

than ANC for 15 years, and gave ANC effective control over KMK's

existing laminated tube-making equipment in North America, thereby

reducing competition among equipment manufacturers in the United

States; and

(c) They gave ANC effective control over KMK's laminated tube-

making technology in North America, thereby reducing competition

generally in the United States laminated tube, laminated tube-making

equipment, and related technology markets.

The complaint seeks: (1) A declaration that these agreements

violate section 1 of the Sherman Act; and (2) an injunction preventing

defendants from enforcing, maintaining, or renewing any such agreement

or entering into or engaging in any other agreement having a similar

purpose or effect.

The United States and the defendants have stipulated that the Court

may enter the proposed Final Judgment at any time after compliance with

the Antitrust Procedures and Penalties Act, 15 U.S.C. 16 (b)-(h). Under

the provisions of section 2(e) of the Antitrust Procedures and

Penalties Act, 15 U.S.C. 16(e), the proposed Final Judgment may not be

entered unless the Court finds that its entry is in the public

interest.

II

The Practices and Events Giving Rise to the Alleged Sherman Act

Violations

A. The Markets Involved

1. Laminated Tubes

Laminated tubes are collapsible tubular containers of multiple,

laminated plastic layers used to package virtually all toothpaste and

many pharmaceutical products sold in the United States. These tubes

preserve the product within a flexible tube without permitting air or

moisture to enter the tube. Other packaging materials either cost more

than or lack the barrier characteristics of laminated tubes. Thus,

there are no viable economic substitutes for laminated tubes. Annual

retail sales of such tubes in North America are about $110 million, or

1.1 billion tubes, of which approximately 800 million are sold to

toothpaste manufacturers; approximately 300 million are sold to

pharmaceutical manufacturers and others.

The market for laminated tubes is highly concentrated. Three

companies manufacture over 95% of such tubes sold in the United States.

ANC is the largest competitor with total sales comprising over 60% of

the United States toothpaste tube market. There are only two other

competitors in the United States that have 5% or more of the laminated

tubes market. It is not economically feasible to ship laminated tubes

into North America.

Successful new entry into, or expansion within, the laminated tube

market is difficult. To be successful, a new entrant must acquire

expensive laminated tube-making equipment and essential, related

patented and unpatented laminated tube-making technology. The up-front

investment in plant, machinery, research, technology, and sales is

substantial relative to the profit opportunity available in a commodity

market like this one.

2. Laminated Tube-Making Equipment

Laminated tube-making equipment consists of machinery used to

manufacture laminated tubes. This equipment cannot efficiently be used

for any other purpose, nor can other machines easily or efficiently be

converted or adapted to make laminated tubes. Thus, there are no viable

economic substitutes for this equipment.

The market for laminated tube-making equipment is highly

concentrated. Besides KMK, only two companies worldwide currently

manufacture such equipment.

KMK is, therefore, one of only a very few firms in the world that

can provide laminated tube-making equipment for sale in the United

States. KMK has sold such equipment worldwide, and its equipment enjoys

a good reputation in the industry. KMK has numerous patents in

countries around the world, including the United States.

Successful new entry into, or expansion within, the market for

laminated tube-making equipment is difficult. To be successful, a new

entrant must acquire or develop essential patented and unpatented

laminated tube-making technology. Such technology is expensive to

acquire or develop relative to the sales opportunity for the equipment.

3. Laminated Tube-Making Technology

The use of both patented and unpatented tube-making technology is

essential to the profitable manufacture of laminated tubes and

laminated tube-making equipment. There are only a few competing forms

of such technology today, and KMK, ANC, and an affiliate of ANC's

parent hold the rights to three of the four leading types of the

technology worldwide.

Development of new competitive technology would require substantial

investment with highly uncertain returns. New entry into the laminated

tube-making technology market cannot reasonably be expected in the

foreseeable future.

[[Page 34866]]

B. Illegal Agreements

In 1987, before entering into the agreements discussed below, both

ANC and KMK were vertically integrated companies that owned rights to

laminated tube-making technology, manufactured laminated tube-making

equipment for use in the United States, and manufactured and sold

laminated tubes in the United States.

In late 1987, KMK and ANC entered into several agreements, the

purpose and effect of which was to eliminate competition between them

in the North American laminated tube and tube-making equipment markets.

Pursuant to one of these agreements ANC purchased Swisspack

Corporation, KMK's U.S. affiliate, for just under $15 million, although

the laminated tube-making equipment covered by the transaction was

valued at less than $5 million. As a result of its selling Swisspack to

ANC, KMK exited the North American laminated tube market.

On the same day ANC acquired Swisspack, ANC and KMK entered into a

License and Technology Assistance Agreement (``LTAA''). Pursuant to

that agreement, KMK gave ANC an exclusive license to use KMK's

laminated tube-making technology, and an exclusive right to but its

tube-making equipment, in North America (``exclusivity provision''). In

exchange, ANC agreed to license any laminated tube-making technology

and buy all laminated tube-making equipment for use in North America

only from KMK, and not to acquire or use any third party's laminated

tube-making equipment or technology there. At or about the time of

these agreements, ANC discontinued the manufacture of laminated tube-

making equipment. By precluding KMK from selling laminated tube-making

equipment or licensing laminated tube-making technology to others in

North America, these agreements reduced competition in the North

American laminated tube, laminated tube-making equipment, and laminated

tube-making technology markets.

Several yeas after entering into these agreements, ANC was acquired

by Pechiney SA, a French company, one of whose existing subsidiaries,

Cotuplas SA, manufactures laminated tube-making equipment. Since being

acquired by Pechiney SA, ANC has obtained substantially all its

laminated tube-making equipment from the Pechiney SA subsidiary. Until

very recently, however, ANC has enforced the exclusivity provisions of

the LTAA against KMK, preventing KMK, its equipment, and its technology

from competing with ANC in North America. KMK brought these agreements

to the attention of the United States and cooperated in its

investigation; after learning that the United States had commenced its

investigation into these agreements, ANC agreed with KMK not to

interfere with KMK's right to sell its laminated tube-making equipment

or to license its tube-making technology in North America.

III

Explanation of the Proposed Final Judgment and Its Anticipated Effect

on Competition

A. Terms

The proposed Final Judgment provides for injunctive relief that is

intended to eliminate any residual anticompetitive effects of the

restrictive agreements and other conduct challenged by the Complaint,

and to prevent defendants from entering into similar agreements that

would have the same effect. Section IV.A of the Final Judgment would

terminate the defendants' 1987 LTAA and its exclusivity provisions,

thus freeing KMK to sell or license its own laminated tube-making

equipment and technology to anyone in North America. Section IV.B would

bar defendants from collecting any payment from each other pursuant to

the LTAA for the manufacture, sale, license, or use in North America of

laminated tube-making equipment or technology.

Section IV.C of the Judgment would enjoin each defendant from

entering certain agreements that restrict the right of any party (i) to

use, license, or transfer in North America laminated plastic tube-

making technology that the party owns or has the right to use at the

time of the agreement, or (ii) to manufacture or sell laminated plastic

tubes or tube-making equipment in North America, where such agreements

likely would lessen competition among the parties. Such agreements

would be barred if (i) at the time of the agreement both parties

compete directly against each other in any of the three vertically

related laminated plastic tube markets--i.e., technology, equipment, or

tubes, and (ii) the restraint involved applies to that common market.

For example, Section IV.C would prohibit either defendant from

entering into an agreement with a tube-making equipment manufacturer

that restricted any party from manufacturing or selling tube-making

equipment in North America because both parties to such an agreement

would be competitors in the tube-making equipment market. Section IV.C

would not bar agreements that are essentially vertical in nature. For

example, KMK and a company that does not manufacture tube-making

equipment could enter into an agreement with KMK granting that company

an exclusive right to use KMK's equipment in North America.

Finally, Section IV.C would require that defendants give the

Department of Justice notice of, and provide certain discovery rights

concerning, any acquisition of a laminated plastic tube competitor that

included an agreement not to compete. This notification will enable the

Department to investigate and prevent any anticompetitive acquisition,

including any transaction that does not require notification under the

Hart-Scott-Rodino Act, before it takes place, and thus would prevent

these parties from engaging in anticompetitive non-reportable transfers

such as their 1987 transaction.

B. Effect on Competition

The proposed Final Judgment will ensure that KMK will be able to

compete in all three North American laminated plastic tube markets. KMK

will be able to sell laminated plastic tubes, sell or lease tube-making

equipment, and license or transfer laminate tube technology. Existing

tube manufacturers will benefit from increased competition in the sale

of laminate tube-making equipment and technology. New entrants into the

North American laminated tube market now will have access to the

requisite equipment and technology, which may lead to greater

competition in the manufacture and sale of laminated tubes.

To preserve incentives to enter for those firms who may be

reluctant to make the requisite investment without exclusive rights to

technology or equipment, the injunction against exclusive licenses or

otherwise restrictive agreements would apply only to those with persons

already competing in the same level of the laminated tube market

(technology, equipment, or tubes) as the defendant.

Similarly, to preserve important incentives to innovate, especially

where a defendant is likely to be the primary source of the investment,

the injunction would not bar that defendant from acquiring exclusive

rights in laminated tube-making technology or equipment that is

developed or marketed jointly with customers or suppliers, provided

they are not also competitors in the same market level as that

defendant.

The injunctive provisions also would exempt restrictions on sale to

third parties of equipment made for a particular customer incorporating

that customer's own technology.

[[Page 34867]]

Finally, prior notice to the Department of any acquisition by a

defendant of a laminated tube competitor imposing non-compete

obligations would ensure that the Department has an opportunity to get

discovery and challenge any such arrangement deemed anticompetitive.

IV

Remedies Available to 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 suffered, as well as costs and reasonable attorney's fees.

Entry of the proposed Final Judgment will neither impair nor assist the

bringing of such actions. Under the provisions of section 5(a) of the

Clayton Act, 15 U.S.C. 16(a), the Judgment has no prima facie effect in

any subsequent lawsuits that may be brought against the defendants in

the matter.

V

Procedures Available for Modification of the Proposed Judgment

As provided by the Antitrust Procedures and Penalties Act, any

person believing that the proposed Final Judgment should be modified

may submit written comments to Mary Jean Moltenbrey, Chief, Civil Task

Force, U.S. Department of Justice, Antitrust Division, 325 7th Street,

NW., Suite 300, Washington, DC 20530, within the 60-day period provided

by the Act. These comments, and the Department's responses, will be

filed with the Court and published in the Federal Register. All

comments will be given due consideration by the Department of Justice,

which remains free, pursuant to a stipulation signed by the United

States and defendants, to withdraw its consent to the proposed Judgment

at any time prior to entry. Section VII of 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 modification, interpretation, or enforcement of the Final Judgment.

VI

Determinative Materials/Documents

No materials or documents of the type described in section 2(b) of

the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b), were

considered by the United States in formulating the proposed Final

Judgment. However, a letter, dated June 21, 1996, from plaintiff's

counsel to counsel for defendant KMK, acknowledging KMK's right under

current law to seek relief from the compliance provisions of Section VI

in the event it believes a conflict has arisen between any request for

information or documents under those provisions and foreign law, was

considered determinative by KMK in agreeing to the proposed Judgment

and is attached hereto as Exhibit A.

VII

Alternative to the Proposed Final Judgment

The alternative to the proposed Final Judgment is a full trial on

the merits. While the Department is confident it would succeed in such

a trial, this case involves difficult issues of law and fact, as well

as obvious risks and costs to the United States, and success is not

certain. The Final Judgment to which the parties have agreed provides

virtually all the relief the Government sought in its complaint, and

that relief will fully and effectively open the markets involved to

competition.

Dated: June 25, 1996.

Respectfully submitted,

Thomas H. Liddle,

Scott A. Scheele,

DC Bar No. 429061, Attorneys, U.S. Department of Justice, Antitrust

Division, 325 7th Street, NW, Washington, DC 20530.

U.S. Department of Justice

Antitrust Division

Liberty Place Building, Washington, DC 20530

June 21, 1996.

MJM:RJZ

60-3083-0001

C. Loring Jetton, Jr., Esq.,

Wilmer, Cutler & Pickering, 2445 M Street, N.W., Washington, D.C.

20037-1420, Fax (202) 663-6463.

Re: KMK Maschinen AG/Laminated Tubes

Dear Mr. Jetton: During our negotiations of a consent decree in

this case, you suggested the possibility that a conflict could arise

between the compliance provisions in Section VI of the proposed

decree, which authorize the Assistant Attorney General to inspect

documents or conduct interviews and to request written reports, and

laws or orders of foreign governments, which appear to prohibit

compliance with such provisions. Of course, we would attempt to work

with KMK to avoid any such conflict in exercising our rights under

Section VI. In the event that we could not reach agreement with you,

however, KMK would be free to seek relief from the decree court from

its obligations to comply with any Section VI request. Under the

principles set forth in Societe Internationale v. Rogers, 357 U.S.

197 (1958) and its progeny, KMK would have the burden of showing

that (1) compliance with the request is prohibited by foreign law,

(2) KMK was not in any way responsible for creating the conflict

between the judgment and foreign law, and (3) KMK has exercised its

best efforts to obtain any waiver or permission from the foreign

government and other relevant person(s) that would enable it to

comply with the request.

Sincerely yours,

Robert J. Zastrow,

Assistant Chief, Civil Task Force.

[FR Doc. 96-16889 Filed 7-2-96; 8:45 am]

BILLING CODE 4410-01-M