United States v. Ixtlera de Santa Catarina, S.A. de C.V. and MFC Corporation; Proposed Final Judgment and Competitive Impact Statement

DEPARTMENT OF JUSTICE

Antitrust Division

United States v. Ixtlera de Santa Catarina, S.A. de C.V. and MFC

Corporation; Proposed Final Judgment and Competitive Impact Statement

Notice is hereby given pursuant to the Antitrust Procedures and

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

Judgment, Stipulation and Competitive Impact Statement have been filed

with the United States District Court for the Eastern District of

Pennsylvania in the above-captioned case.

On September 26, 1996, the United States filed a civil antitrust

Complaint to prevent and restrain Ixtlera de Santa Catarina, S.A. de

C.V. (``Ixtlera'') and MFC Corporation from conspiring to fix prices

and allocate the sales volume of tampico fiber imported and sold in the

United States in violation of Section 1 of the Sherman Act (15 U.S.C.

Sec. 1). Tampico fiber is a vegetable fiber grown in Mexico and used as

a filler in industrial and consumer brushes.

The Complaint alleges that the defendants agreed with unnamed co-

conspirators to (1) fix the prices of tampico fiber imported into the

United States; (2) fix the resale prices charged in the United States

distributors; and (3) allocate tampico fiber sales among United States

distributors.

The proposed Final Judgment would prohibit the defendants from

entering into any agreement or understanding with any other processor

or distributor of tampico fiber to:

(1) Raise, fix, or maintain the price or other terms or conditions

for the sale or supply of tampico fiber;

(2) Allocate sales, territories or customers for tampico fiber;

(3) Eliminate or discourage new entry into the tampico fiber

market; and

(4) Eliminate or otherwise restrict the supply of tampico fiber to

any customer.

The proposed Final Judgment would also prohibit defendants form

communicating with any other processor, supplier or distributor

regarding future price information, information regarding sales volume,

the location or identity of customers, eliminating or discouraging new

entrants into the tampico fiber market, or eliminating or restricting

the supply of tampico fiber to any customer. In addition, the proposed

Final Judgment would prohibit the defendants from adhering to any

resale pricing policy and defendant Ixtlera from suggesting resale

prices and form terminating or threatening to terminate any distributor

for that distributor's pricing. Finally, the proposed Final Judgment

would also prohibit Ixtlera from merging with the Mexican tampico fiber

processor Fibras Saltillo, S.A. de C.V. without providing the Antitrust

Division with ninety (90) days notice to review the transaction.

Public comment is invited within the statutory sixty (60) day

period. Such comments will be published in the Federal Register and

filed with the Court. Comments should be addressed to Robert E.

Connolly, Chief, Middle Atlantic Office, U.S. Department of Justice,

Antitrust Division, The Curtis Center, 6th and Walnut Streets, Suite

650 West, Philadelphia, PA 19106 (telephone number 215-597-7405).

Rebecca P. Dick,

Deputy Director of Operations.

In the United States District Court for the Eastern District of

Pennsylvania

United States of America, Plaintiff, v. Ixtlera de Santa

Catarina, S.A. de C.V.; and MFC Corporation, Defendants. Civil

Action No. 95-6515, Judge Jay C. Waldman.

Stipulation

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

respective attorneys, that:

(1) The parties consent that a final judgment in the form hereto

attached may be filed and entered by the Court at any time after the

expiration of the sixty (60) day period for public comment provided by

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

without further notice to any party or other proceedings, either upon

the motion of any party or upon the Court's own motion, provided that

plaintiff has not withdrawn its consent as provided herein;

(2) The plaintiff may withdraw its consent hereto at any time

within said period of sixty (60) days by serving notice thereof upon

the other party hereto and filing said notice with the Court;

(3) In the event the plaintiff withdraws its consent hereto, this

application shall be of no effect whatever in this or any other

proceeding and the making of this stipulation shall not in any manner

prejudice any consenting party to any subsequent proceedings.

Dated: September 26, 1996.

For the Plaintiff:

Joel I. Klein,

Acting Assistant Attorney General.

Rebecca P. Dick,

Deputy Director of Operations.

Robert E. Connolly,

Chief, Middle Atlantic Office.

Respectfully submitted,

Edward S. Panek,

Michelle A. Pionkowski,

Roger L. Currier,

Joseph Muoio,

Attorneys, Antitrust Division, U.S. Department of Justice, Middle

Atlantic Office, The Curtis Center, Suite 650W, 7th and Walnut Streets,

Philadelphia, PA 19106, Tel.: (215) 597-7401.

For the Defendants:

Gordon B. Spivack,

Ixtlera de Santa Catarina, S.A. de C.V.

Roxann E. Henry,

MFC Corporation.

Final Judgment

Plaintiff, the United States of America, filed its complaint on

September 26, 1996. Plaintiff and defendants, by their respective

attorneys, have consented to the entry of this final judgment without

trial or adjudication of any issue of fact or law. This final judgment

shall not be evidence against or an admission by any party to any issue

of fact or law.

[[Page 52460]]

Defendants have agreed to be bound by the provisions of this final

judgment pending its approval by the Court.

Therefore, before the taking of any testimony and without trial or

adjudication of any such issue of fact or law herein, and upon consent

of the parties, it is hereby ordered, adjudged, and decreed as follows:

I

Jurisidiction

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. Sec. 1.

II

Definitions

As used in this final judgment:

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

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

B. ``Person'' means any individual, corporation, partnership,

company, sole proprietorship, firm or other legal entity.

C. ``Tampico fiber'' is a natural vegetable fiber produced by the

lechugilla plant and grown in the deserts of northern Mexico. It is

harvested by individual farmers, processed, finished and exported to

the United States and worldwide, where it is used as brush filling

material for industrial and consumer brushes. It is available in

natural white, bleached white, black, gray and a wide variety of

mixtures.

D. ``Resale price'' means any price, price floor, price ceiling,

price range, or any mark-up, formula or margin of profit relating to

tampico fiber sold by distributors.

III

Applicability

A. This final judgment applies to each of the defendants and to

their owners, officers, directors, agents, employees, subsidiaries,

successor and assigns, 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. Each defendant shall require, as a condition of any sale or

other disposition of all, or substantially all, of its stock or assets

used in the manufacture or sale of tampico fiber, that the acquiring

party or parties agree to be bound by the provisions of this final

judgment, and that such agreement be filed with the Court.

IV

Prohibited Conduct

As to tampico fiber imported into or sold in the United States:

A. Each defendant is enjoined and restrained from directly or

indirectly entering into, adhering to, maintaining, furthering,

enforcing or claiming any rights under any contract, agreement,

arrangement, understanding, plan, program, combination or conspiracy

with any other processor, supplier or distributor of tampico fiber to:

(1) Raise, fix, or maintain the prices or other terms or conditions

for the sale or supply of tampico fiber;

(2) Allocate sales volumes, territories or customers for tampico

fiber;

(3) Discourage or eliminate any new entrant into the tampico fiber

market; or

(4) Restrict or eliminate the supply of tampico fiber to any

customer;

B. Each defendant is enjoined and restrained from communication

with any processor, supplier or distributor (other than its own

processor, supplier or distributor) of tampico fiber regarding any

current or future price, price change, discount, or other term or

condition of sale charged or quoted or to be charged or quoted to any

customer or potential customer for tampico fiber, whether communicated

in the form of a specific price or in the form of information from

which such specific price may be computed;

C. Each defendant is enjoined and restrained from distributing to

any processor, supplier or distributor (other than its own processor,

supplier or distributor) of tampico fiber price lists or other pricing

material that is used, has been used, or will be used in computing

prices or terms or conditions of sale charged or to be charged for

tampico fiber;

D. Each defendant is enjoined and restrained from communicating

with any processor, supplier or distributor (other than its own

processor, supplier or distributor) of tampico fiber regarding

information pertaining to the volume of sales of tampico fiber or the

location or identity of customers;

E. Each defendant is enjoined and restrained from communicating

with any processor, supplier or distributor regarding discouraging or

eliminating any new entrant into the tampico fiber market or

restricting or eliminating the supply of tampico fiber to any customer;

F. Ixtlera is enjoined and restrained from directly or indirectly

entering into, adhering to, maintaining, furthering, enforcing or

claiming any right under any contract, agreement, understanding, plan

or program with any distributor to fix or maintain the prices at which

tampico fiber sold by Ixtlera may be resold or offered for sale by any

distributor;

G. Ixtlera is enjoined and restrained from directly or indirectly

adopting, promulgating, suggesting, announcing or establishing any

resale pricing policy for tampico fiber;

H. Ixtlera is enjoined and restrained from threatening any

distributor with termination or terminating any distributor on the

basis of that distributor's pricing; or discussing with any present or

potential distributor any decision regarding termination of any other

distributor for any reason directly or indirectly related to the other

distributor's resale pricing, provided, however, that nothing herein

shall prohibit Ixtlera from terminating a distributor for any reason

other than the distributor's resale pricing;

I. MFC is enjoined and restrained from directly or indirectly

entering into, adhering to, maintaining, furthering, enforcing or

claiming any right under any contract, agreement, understanding, plan

or program with any supplier to fix or maintain the prices at which

tampico fiber may be resold or offered for sale by MFC or any other

distributor;

J. Each defendant is enjoined and restrained from participating or

engaging directly or indirectly through any trade association,

organization or other group in any activity which is prohibited in IV

(A)-(I) above; and

K. Ixtlera is enjoined and retrained from merging with, acquiring

all or part of the assets or securities of, or selling all or part of

its assets or securities to the Mexican tampico fiber processor Fibras

Saltillo, S.A. de C.V., or its owners, officers, directors, agents,

employees, subsidiaries, successors and assigns without first providing

plaintiff with at least 90 days written notice prior to closing the

transaction for the purpose of investigation the proposed transaction.

Such notification shall include a complete description, English, of the

proposed transaction and the reasons therefor. Ixtlera agrees to

provide promptly all information, with English translations, reasonably

requested by plaintiff in connection with its investigation of the

proposed transaction, consents to the jurisdiction of the Court to

adjudicate the legality of the proposed or consummated transaction

under the antitrust laws of the United States and waives any objections

to venue. Nothing in this paragraph shall prohibit Miguel Schwarz,

Marx, principal of Ixtlera, from divesting to any person, without

[[Page 52461]]

notice, the 27.5 percent interest in Fibras Saltillo, S.A. de C.V.

which he currently holds.

V

Permitted Conduct

A. Other than Section IV(A) of this final judgment, nothing

contained in this final judgment shall prohibit a defendant from

negotiating or communicating with any processor, supplier or

distributor of tampico fiber or with any agent, broker or

representative of such processor, supplier or distributor solely in

connection with bona fide proposed or actual purchases of tampico fiber

from, or sale or tampico fiber to, that processor, supplier or

distributor.

B. Nothing contained in this final judgment shall prohibit

defendant MFC from unilaterally deciding to resell tampico fiber at

prices suggested by its supplier. However, any instance in which a

supplier suggests the prices at which MFC should resell tampico fiber

shall be reported in writing with a copy to MFC's Antitrust Compliance

Officer. This report shall state the date, time and place of the

communication, whether it was oral or written, the name and title of

the other person or persons involved in the communication, briefly

describe the pricing information provided, and if the communication was

written, have attached a copy of the document containing the reference

to the suggested resale prices. Such reports shall be retained in the

files of MFC, and copies thereof shall be delivered to the Antitrust

Division by the defendant on or about each anniversary date of this

final judgment.

C. Nothing contained in this final judgment shall prohibit Miguel

Schwarz Marx from obtaining information as to the prices Fibras

Saltillo charged A&L Mayer Associates, Inc. or any successor to A&L

Mayer Associates, Inc. that serves as a conduit between Fibras Saltillo

and its United States distributor for tampico fiber so long as the

pricing information is at least six months old and is used solely to

protect the value of Schwarz's investment in Fibras Saltillo under

Mexican law.

D. Nothing contained in this final judgment shall prevent (1) MFC

from being Ixtlera's exclusive distributor for tampico fiber in the

United States, (2) MFC and Ixtlera from conducing negotiations

regarding such an exclusive distributorship, or (3) Ixtlera from

deciding to appoint another company as its exclusive distributor in the

United States.

VI

Compliance Program

Each defendant shall establish within thirty (30) days of entry of

this final judgment and shall thereafter for so long as it or its

employees are engaged in the manufacture or sale of tampico fiber,

maintain a program to insure compliance with this final judgment, which

program shall include at a minimum the following:

A. Designating an Antitrust Compliance Officer responsible, on a

continuing basis, for achieving compliance with this final judgment and

promptly reporting to the Department of Justice any violation of the

final judgment;

B. Within sixty (60) days after the date of entry of this final

judgment, furnishing a copy thereof to each of its own, its

subsidiaries', and its affiliates' (1) officers, (2) directors, and (3)

employees or managing agents who are engaged in, or have responsibility

for or authority over, the pricing of tampico fiber; and advising and

informing each such person that his or her violation of this final

judgment could result in a conviction for contempt of court and

imprisonment, a fine, or both;

C. Within seventy five (75) days after the date of entry of this

final judgment, certifying to the plaintiff whether it has designated

an Antitrust Compliance officer and has distributed the final judgment

in accordance with Sections VI (A) and (B) above;

D. Within thirty (30) days after each such person becomes an

officer, director, employee or agent of the kind described in Section

VI (B), furnishing to him or her a copy of this final judgment together

with the advice specified in Section VI (B);

E. Annually distributing the final judgment to each person

described in Sections VI (B) and (D);

F. Annually briefing each person described in Sections VI (B) and

(D) as to the defendant's policy regarding compliance with the Sherman

Act and with this final judgment, including the advice that such

defendant will make legal advice available to such persons regarding

any compliance questions or problems;

G. Annually obtaining (and maintaining) from each person described

in Sections VI (B) and (D) a certification that he or she:

(1) Has read, understands, and agrees to abide by the terms of this

final judgment;

(2) Has been advised of and understands the company's policy with

respect to compliance with the Sherman Act and the final judgment;

(3) Has been advised and understands that his or her non-compliance

with the final judgment may result in conviction for criminal contempt

of court and imprisonment, a fine, or both; and

(4) Is not aware of any violation of the final judgment that has

not been reported to the Antitrust Compliance Officer; and

H. On or about each anniversary date of the entry of the final

judgment, submitting to the plaintiff an annual declaration as to the

fact and manner of its compliance with this final judgment, including

any reports responsive to Section V of this final judgment.

VII

Inspection and Compliance

For the purpose of determining or securing compliance with this

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 a 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, which 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

a 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 VII of the final judgment shall be divulged by any

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, or for the purpose of securing compliance with this

final judgment, or as otherwise required by law;

[[Page 52462]]

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

defendant to plaintiff, such 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 such 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 such defendant prior to divulging such

material in any legal proceeding (other than a grand jury proceeding)

to which such defendant is not a party; and

E. Nothing set forth in this final judgment shall prevent the

Antitrust Division from utilizing other investigative alternatives,

such as Civil Investigative Demand process provided by 15 U.S.C.

Secs. 1311-1314 or a federal grand jury, to determine if the defendant

has complied with this final judgment.

VIII

Retention of Jurisdiction

Jurisdiction is retained by this Court for the purpose of: (1)

enabling any of the parties to this final judgment to apply to this

Court at any time for such further orders or 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

violations hereof; and (2) adjudicating the legality of any merger or

acquisition of assets or securities described in Section IV (K) above.

IX

Ten Year Expiration

This final judgment will expire on the tenth anniversary of its

date of entry.

X

Public Interest

Entry of this final judgment is in the public interest.

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

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

United States District Judge

Competitive Impact Statement

Pursuant to Section 2 of the Antitrust Procedures and Penalties Act

(``APPA''), 15 U.S.C. Sec. 16(b), the United States files this

Competitive Impact Statement relating to the proposed final judgment as

to United States v. Ixtlera de Santa Catarina, S.A. de C.V. and MFC

Corporation, submitted for entry in this civil antitrust proceeding.

I

Nature and Purpose of the Proceedings

On September 26, 1996, the United States filed a civil antitrust

complaint alleging that under Section 4 of the Sherman Act, as amended,

15 U.S.C. Sec. 4, the above-named defendants combined and conspired

with others from at least as early as January 1990 to April 1995, to

lessen and eliminate competition in the sale of tampico fiber in the

United States, in violation of Section 1 of the Sherman Act, 15 U.S.C.

Sec. 1. A companion criminal information against Ixtlera de Santa

Catarina, S.A. de C.V. (``Ixtlera'') and MFC Corporation (``MFC'') was

filed on September 26, 1996. The civil complaint alleges that as part

of the conspiracy, the defendants and co-conspirators among other

things:

(a) Fixed the prices at which tampico fiber was imported into the

United States;

(b) Fixed the resale prices for tampico fiber charged by their

exclusive United States distributors; and

(c) Allocated sales between such distributors.

The complaint seeks a judgment by the Court declaring that the

defendants engaged in unlawful combinations and conspiracies in

restraint of trade in violation of the Sherman Act. It also seeks an

order by the Court to enjoin and restrain the defendants from any such

activities or other activities having a similar purpose or effect in

the future.

The United States and defendants have stipulated that the proposed

final judgment may be entered after compliance with the APPA, unless

the United States withdraws its consent.

The Court's entry of the proposed final judgment will terminate

this civil action against these defendants, except that the Court will

retain jurisdiction over the matter for possible further proceedings to

construe, modify or enforce the judgment, or to punish violations of

any of its provisions.

II

Description of the Practices Giving Rise to the Alleged Violations of

the Antitrust Laws

As defined in the complaint, tampico fiber is a natural vegetable

fiber produced by the lechuguilla plant and grown in the deserts of

northern Mexico. It is harvested by individual farmers, processed,

finished and exported worldwide, where it is used as brush filling

material for industrial and consumer brushes. It is available in

natural white, bleached white, black, gray and a wide variety of

mixtures.

The complaint further alleges that defendant MFC had United States

sales of tampico fiber of approximately $14,699,000 during the period

from January of 1990 through April of 1995. During this time, the

defendants sold and shipped substantial quantities of tampico fiber in

a continuous and uninterrupted flow of interstate commerce from the

processing facility of Ixtlera in Mexico through its exclusive United

States distributor, MFC, a company headquartered in Texas, to MFC's

customers throughout the United States, including those located in the

Eastern District of Pennsylvania. Similarly, the complaint alleges that

non-defendant co-conspirators sold and shipped additional substantial

quantities of tampico fiber in a continuous and uninterrupted flow of

interstate commerce from another processing facility in Mexico through

their exclusive United States distributor to customers throughout the

United States, including some located in the Eastern District of

Pennsylvania.

The complaint alleges that the defendants and co-conspirators

engaged in three forms of concerted action and states three causes of

action: (1) An agreement to fix import prices, (2) an agreement to fix

resale prices, and (3) an agreement to allocate sales. Essentially, the

complaint alleges that defendants and their co-conspirators fixed the

prices at which tampico fiber was sold to their two respective

exclusive United States distributors, agreed on the resale prices to be

charged by those two distributors and agreed to a percentage allocation

of sales volume between those distributors.

The defendants and their co-conspirators went far beyond suggesting

and adhering to suggested resale prices. Resale price sheets were

provided by Ixtlera and the co-conspirator processor to MFC and the co-

conspirator distributor. As a condition of becoming and remaining a

United States distributor of tampico fiber, the co-conspirator

distributor agreed by written contract with its supplier to sell at the

prices listed on the price sheet. From at least January 1990 on, both

MFC and the co-conspirator distributor had identical price sheets

supplied by Ixtlera and the co-conspirator processor, and the majority

of tampico fiber sales were made by those distributor at these list

prices or other agreed-upon prices. MFC made the sales with its two top

executives' knowledge of and participation in the collusive agreement

with their putative competitor.

The use of resale price maintenance by the defendants and co-

conspirators was designed to and had the effect of monitoring and

enforcing the horizontal

[[Page 52463]]

price-fixing and sales volume allocation agreements between the

defendants and co-conspirators. The defendants' conduct had the effect

of lessening or eliminating competition between the two United States

distributors of tampico fiber in order to maintain prices at

artificially high and non-competitive levels.

In furtherance of the conspiracy, the defendants and their co-

conspirators, among other things, periodically met, discussed and

agreed to new import and resale prices for tampico fiber, and met,

discussed and compared the annual sales volumes of their United States

distributors to ensure they were at or about the percentages the

defendants and co-conspirators had agreed upon for each.

III

Explanation of the Proposed Final Judgment

The United States and the defendants have stipulated that a final

judgment, in the form filed with the Court, may be entered by the Court

at any time after compliance with the APPA, 15 U.S.C. Sec. 16(b)-(h).

The proposed final judgment provides that the entry of the final

judgment does not constitute any evidence against or an admission by

any party with respect to any issue of fact or law. Under the

provisions of Section 2(e) of the APPA, entry of the proposed final

judgment is conditioned upon the Court finding that its entry will be

in the public interest.

The United States has filed a criminal information charging

Ixtlera, MFC and unnamed co-conspirators with a conspiracy to fix the

prices and allocate sales of tampico fiber imported into and sold in

the United States, in violation of the Sherman Act (15 U.S.C. Sec. 1).

The United States does not routinely file both civil and criminal

cases involving the same underlying conduct. It is appropriate to do so

in this case, however, because of the extent of the control of the

market by a small number of companies conspiring to eliminate price

competition in the sale of tampico fiber in the United States through a

comprehensive scheme of fixing the prices of imported tampico fiber,

allocating sales volumes between their exclusive distributors, and

agreeing upon the prices at which distributors would resell tampico

fiber within the United States.

The proposed final judgment contains three principal forms of

relief. First, the defendants are enjoined from repeating the conduct

they undertook in connection with the tampico fiber conspiracy and from

certain other conduct that could have similar anticompetitive effects.

Second, in light of their overwhelming shares of the tampico fiber

market in the United States and of evidence that they have previously

discussed consolidating operations, Ixtlera is prohibited from merging

with its co-conspirator processor, Fibras Saltillo, S.A. de C.V.,

without providing the Antitrust Division ninety (90) days notice. Such

a transaction, if consummated, would likely nullify the prophylactic

measures pertaining to horizontal conduct contained in both this

proposed final judgment and the final judgment entered by the Court

against Fibras Saltillo on August 20, 1996. Third, the proposed final

judgment places affirmative burdens on the defendants to pursue an

antitrust compliance program directed toward avoiding a repetition of

the tampico fiber conspiracy.

A. Prohibited Conduct

Section IV of the proposed final judgment broadly enjoins each

defendant from conspiring to fix prices, allocate sales, discourage or

eliminate new entrants, or otherwise restrict or eliminate the supply

of tampico fiber sold to any customer in the United States, (IV (A));

from communicating pricing, sales volume and customer information to

any processor, supplier or distributor of tampico fiber other than its

own (IV (B), (C) and (D)); from communicating regarding discouraging or

eliminating new entrants (IV (E)); from engaging in resale price

maintenance (IV (F)-(I)); and from joining any group whose aims or

activities are prohibited by Sections IV (A)-(I) of the proposed final

judgment (IV (J)). Finally, Ixtlera is enjoined from merging with,

acquiring the stock or assets of, or selling its stock or assets to

Fibras Saltillo, S.A. de C.V., a major processor of tampico fiber and a

co-conspirator, without providing the Antitrust Division ninety (90)

days notice.

Specifically, as regards tampico fiber sold in the United States,

Sections IV (A)-(E) of the proposed final judgment provide as follows:

Section IV (A) of the proposed final judgment enjoins each

defendant from agreeing with any other processor, supplier or

distributor of tampico fiber to (1) raise, fix, or maintain the prices

or other terms or conditions for the sale or supply of tampico fiber;

(2) allocate sales volumes, territories or customers for tampico fiber;

(3) discourage or eliminate any new entrant into the tampico fiber

market; or (4) restrict or eliminate the supply of tampico fiber to any

customer.

Section IV (B) of the proposed final judgment enjoins each

defendant from communicating with any processor, supplier or

distributor (other than its own processor, supplier or distributor) of

tampico fiber regarding any current or future price, price change,

discount, or other term or condition of sale charged or quoted or to be

charged or quoted to any customer or potential customer for tampico

fiber, whether communicated in the form of a specific price or in the

form of information from which such specific price may be computed.

Section IV (C) of the proposed final judgment enjoins each

defendant from distributing to any processor, supplier or distributor

(other than its own processor, supplier or distributor) of tampico

fiber price lists or other pricing material that is used, has been

used, or will be used in computing prices or terms or conditions of

sale charged or to be charged for tampico fiber.

Section IV (D) of the proposed final judgment enjoins each

defendant from communicating with any processor, supplier or

distributor (other than its own processor, supplier or distributor) of

tampico fiber regarding information pertaining to the volume of sales

of tampico fiber or the location or identity of customers.

Section IV (E) of the proposed final judgment enjoins each

defendant from communicating with any processor, supplier or

distributor regarding discouraging or eliminating any new entrant into

the tampico fiber market or restricting or eliminating the supply of

tampico fiber to any customer.

Section IV (F) of the proposed final judgment enjoins Ixtlera from

directly or indirectly entering into, adhering to, maintaining,

furthering, enforcing or claiming any right under any contract,

agreement, understanding, plan or program with any distributor to fix

or maintain the prices at which tampico fiber sold by Ixtlera may be

resold or offered for sale by any distributor.

Section IV (G) of the proposed final judgment enjoins Ixtlera from

directly or indirectly adopting, promulgating, suggesting, announcing

or establishing any resale pricing policy for tampico fiber.

Section IV (H) of the proposed final judgment enjoins Ixtlera from

threatening any distributor with termination or terminating any

distributor on the basis of that distributor's pricing; or discussing

with any present or potential distributor any decision regarding

termination of any other distributor for any reason directly or

indirectly related to the latter distributor's resale pricing,

provided, however, that nothing herein shall

[[Page 52464]]

prohibit Ixtlera from terminating a distributor for any reason other

than the distributor's resale pricing;

Section IV (I) of the proposed final judgment enjoins MFC from

directly or indirectly entering into, adhering to, maintaining,

furthering, enforcing or claiming any right under any contract,

agreement, understanding, plan or program with any supplier to fix or

maintain the prices at which tampico fiber may be resold or offered for

sale by MFC or any other distributor.

Section IV (J) of the proposed final judgment enjoins each

defendant from participating or engaging directly or indirectly through

any trade association, organization or other group in any activity

which is prohibited in IV (A)-(I).

Section IV (K) of the proposed final judgment enjoins Ixtlera from

merging with, acquiring all or part of the assets or securities of, or

selling all or part of its assets or securities to the Mexican tampico

fiber processor Fibras Saltillo, S.A. de C.V., or its owners, officers,

directors, agents, employees, subsidiaries, successors and assigns

without first providing plaintiff with at least ninety (90) days

written notice prior to closing the transaction. Such notification

shall include a complete description, in English, of the proposed

transaction and the reasons therefor. Ixtlera agrees to provide

promptly all information, with English translations, reasonably

requested by plaintiff in connection with its investigation of the

proposed transaction, consents to the jurisdiction of the Court to

adjudicate the legality of the proposed or consummated transaction

under the antitrust laws of the United States, and waives any

objections to venue. Nothing in this paragraph shall prohibit Miguel

Schwarz Marx, principal of Ixtlera, from divesting to any person,

without notice, the 27.5 percent interest in Fibras Saltillo, S.A. de

C.V. which he currently holds.

B. Permitted Conduct

Four exceptions to the broad prohibitions of Section IV of the

proposed final judgment are contained in Section V.

Section V (A) permits any necessary negotiations or communications

with any processor, supplier or distributor of tampico fiber or with

any agent, broker or representative of such processor, supplier or

distributor in connection with bona fide proposed or actual purchases

of tampico fiber from, or sale of tampico fiber to, that processor,

supplier or distributor.

Section V (B) makes it clear that nothing contained in the proposed

final judgment would prohibit MFC from unilaterally deciding to resell

tampico fiber at prices suggested by its supplier. However, any

instance of this must be reported and the reports must be retained in

MFC's files.

Section V (C) makes it clear that although Miguel Schwarz Marx, an

owner and officer of Ixtlera, is otherwise prohibited from discussing

with or obtaining information from Fibras Saltillo regarding Fibras

Saltillo's prices, volume, customers or marketing plans for tampico

fiber (IV (A)-(E)), as a 27.5 percent owner of Fibras Saltillo, he can

have limited access to historical pricing information of Fibras

Saltillo to A&L Mayer Associates, Inc. (Associates) or Associates

successor that serves as a conduit between Fibras Saltillo and its

United States distributor (currently Brush Fibers, Inc.), provided such

information is at least six months old and is used solely to protect

the value of Schwarz's investment in Fibras Saltillo under Mexican law.

Section V (D) makes it clear that nothing contained in the final

judgment would prevent (1) MFC from continuing to act as Ixtlera's

exclusive distributor for tampico fiber in the United States; (2) MFC

and Ixtlera from conducting negotiations regarding such an exclusive

distributorship; or (3) Ixtlera from deciding to appoint another

company as its exclusive distributor in the United States.

C. Defendants' Affirmative Obligations

Section VI requires that within thirty (30) days of entry of the

final judgment, the defendants adopt or pursue an affirmative

compliance program directed toward ensuring that their employees comply

with the antitrust laws. More specifically, the program must include

the designation of an Antitrust Compliance Officer responsible for

compliance with the final judgment and reporting any violations of its

terms. It further requires that each defendant furnish a copy of the

final judgment to each of its officers and directors and each of its

employees who is engaged in or has responsibility for or authority over

pricing of tampico fiber within sixty (60) days of the date of entry,

and to certify that it has distributed those copies and designated an

Antitrust Compliance Officer within seventy-five (75) days. Copies of

the final judgment also must be distributed to anyone who becomes such

an officer, director or employee within thirty (30) days of holding

that position and to all such individuals annually.

Furthermore, Section VI requires each defendant to brief each

officer, director and employee engaged in or having responsibility over

pricing of tampico fiber as to the defendant's policy regarding

compliance with the Sherman Act and with the final judgment, including

the advice that his or her violation of the final judgment could result

in a conviction for contempt of court and imprisonment, a fine or both

and that the defendant will make legal advice available to such persons

regarding compliance questions or problems. The defendants annually

must obtain (and maintain) certifications from each such person that

the aforementioned briefing, advice and a copy of the final judgment

were received and understood and that he or she is not aware of any

violation of the final judgment that has not been reported to the

Antitrust Compliance Officer. Finally, each defendant must submit to

the plaintiff an annual declaration as to the fact and manner of its

compliance with the final judgment.

Under Section VII of the final judgment, the Justice Department

will have access, upon reasonable notice, to the defendants' records

and personnel in order to determine defendants' compliance with the

judgment.

D. Scope of the Proposed Judgment

(1) Persons Bound by the Decree

The proposed judgment expressly provides in Section III that its

provisions apply to each of the defendants and each of their owners,

officers, directors, agents and employees, subsidiaries, successors and

assigns and to all other persons who receive actual notice of the terms

of judgment.

In addition, Section III of the judgment prohibits each of the

defendants from selling or transferring all or substantially all of its

stock or assets used in its tampico fiber business unless the acquiring

party files with the Court its consent to be bound by the provisions of

the judgment.

(2) Duration of the Judgment

Section IX provides that the judgment will expire on the tenth

anniversary of its entry.

E. Effect of the Proposed Judgment on Competition

The prohibition terms of Section IV of the final judgment are

designed to ensure that each defendant will act independently in

determining the prices, and terms and conditions at which it will sell

or offer to sell tampico fiber, and that there will be no

anticompetitive restraints (horizontal or vertical) in the tampico

fiber market. The affirmative obligations of Sections

[[Page 52465]]

VI and VII are designed to ensure that each corporate defendant's

employees are aware of their obligations under the decree in order to

avoid a repetition of the conspiracies in the tampico fiber industry

that led to this case and the companion criminal proceeding. Compliance

with the proposed judgment will deter price collusion, allocation of

sales, markets and customers, concerted activities in restricting new

entrants and customers, and resale price restraints by each of the

defendants with each other and with other tampico fiber processors and/

or distributors.

IV

Remedies Available to Potential Private Plaintiffs

After entry of the proposed final judgment, any potential private

plaintiff who might have been damaged by the alleged violation will

retain the same right to sue for monetary damages and any other legal

and equitable remedies which he or she may have had if the proposed

judgment had not been entered. The proposed judgment may not be used,

however, as prima facie evidence in private litigation, pursuant to

Section 5(a) of the Clayton Act, as amended, 15 U.S.C. Sec. 16(a).

V

Procedures Available for Modification of the Proposed Consent Judgment

The proposed final judgment is subject to a stipulation between the

government and the defendants which provides that the government may

withdraw its consent to the proposed judgment any time before the Court

has found that entry of the proposed judgment is in the public

interest. By its terms, the proposed judgment provides for the Court's

retention of jurisdiction of this action in order to permit any of the

parties to apply to the Court for such orders as may be necessary or

appropriate for the modification of the final judgment.

As provided by the APPA (15 U.S.C. Sec. 16), any person wishing to

comment upon the proposed judgment may, for a sixty-day (60) period

subsequent to the publishing of this document in the Federal Register,

submit written comments to the United States Department of Justice,

Antitrust Division, Attention: Robert E. Connolly, Chief, Middle

Atlantic Office, Suite 650 West, 7th and Walnut Streets, Philadelphia,

Pennsylvania 19106. Such comments and the government's response to them

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

government will evaluate all such comments to determine whether there

is any reason for it to withdraw its consent to the proposed judgment.

VI

Alternative to the Proposed Final Judgment

The alternative to the proposed final judgment considered by the

Antitrust Division was a full trial of the issues on the merits and on

relief. The Division considers the substantive language of the proposed

judgment to be of sufficient scope and effectiveness to make litigation

on the issues unnecessary, as the judgment provides appropriate and

fully effective relief against the violations alleged in the complaint.

VII

Determinative Materials and Documents

No materials or documents were considered determinative by the

United States in formulating the proposed Final Judgment. Therefore,

none are being filed pursuant to the APPA, 15 U.S.C. Sec. 16(b).

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

Joel I. Klein,

Acting Assistant Attorney General.

Rebecca P. Dick,

Deputy Director of Operations.

Robert E. Connolly,

Chief, Middle Atlantic Office.

Respectfully submitted,

Edward S. Panek,

Michelle A. Pionkowski,

Roger L. Currier,

Joseph Muoio,

Attorneys, Antitrust Division, U.S. Department of Justice, Middle

Atlantic Office, The Curtis Center, Suite 650W, 7th and Walnut Streets,

Philadelphia, PA 19106, Tel.: (215) 597-7401.

Certificate of Service

I, Edward S. Panek, an attorney with the United States Department

of Justice, Antitrust Division, hereby certify that on September 26,

1996, copies of the Complaint, Stipulation, Proposed Final Judgment and

Competitive Impact Statement were served, by mail, on counsel of record

as follows.

Counsel for Ixtlera de Santa Catarina, S.A. de C.V.:

Gordon B. Spivack, Esquire, Coudert Brothers, 1114 Avenue of the

Americas, New York, NY 10036-7703

Counsel for MFC Corporation:

Roxann E. Henry, Esquire, Howrey & Simon, 1299 Pennsylvania Avenue,

NW., Washington, DC 20004-2402

Edward S. Panek,

Attorney, Antitrust Division, U.S. Department of Justice, Middle

Atlantic Office, The Curtis Center, Suite 650W, 7th and Walnut Streets,

Philadelphia, PA 19106, Tel.: (215) 597-7401.

[FR Doc. 96-25336 Filed 10-4-96; 8:45 am]

BILLING CODE 4410-01-M