Public Comment and Response on Proposed Final Judgment; United States and State of Texas v. Allied Waste Industries, Inc.

DEPARTMENT OF JUSTICE

Antitrust Division

[Civil Action No. 497-CF 564 E]

Public Comment and Response on Proposed Final Judgment; United

States and State of Texas v. Allied Waste Industries, Inc.

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

16 (b)-(h), the United States of America hereby publishes below the

comment received on the proposed Final Judgment in United States and

State of Texas v. Allied Waste Industries, Inc., Civil Action No. 497-

CV 564 E, filed in the United States District Court for the Northern

District of Texas, together with the United States' response to the

comment.

Copies of the comment and response are available for inspection in

Room 215 of the U.S. Department of Justice, Antitrust Division, 325 7th

Street, N.W., Washington, DC 20530, telephone: (202) 514-2481, and at

the office of the Clerk of the United States District Court for the

Northern District of Texas, Room 310, 501 W. 10th Street, Fort Worth,

TX 76102. Copies of any of these materials may be obtained upon request

and payment of a copying fee.

Constance K. Robinson,

Director of Operations, Antitrust Division.

Independent Environmental Services, Inc.,

October 10, 1997.

J. Robert Kramer II

Chief, Litigation II Section

Antitrust Division

United States Department of Justice

1401 H Street, N.W., Suite 3000

Washington, DC 20530

Dear Mr. Kramer: This letter addresses our company's concerns

regarding the merger or takeover of USA Waste Services, Inc., Fort

Worth by Allied Waste Industries, Inc., Fort Worth. Our company,

Independent Environmental Services, Inc. (IESI), is an independent

hauler located and doing business in Tarrant County. To my

knowledge, we are the only independent hauler in the municipal

residential business in Tarrant County and one of a very few

competing in the commercial and industrial business in Tarrant

County. As I am sure you are aware, Allied Waste Industries controls

all of the assets that were owned by USA Waste Services, Triple A

Waste Services, Consolidated Waste Services, Laidlaw Waste

Industries, Sanifill, and Tarrant County Waste. This combination has

reduced competition in our market and has resulted in higher

landfill disposal fees to independent competitors like IESI. As you

are no doubt aware, the large public solid waste companies often

seek to control their markets and eliminate competition by charging

excessive disposal rates to independent operators like IESI.

IESI received a letter from Laidlaw advising us of the

opportunity to purchase air space at their newly acquired Crow

Landfill as well as additional space at their existing Turkey Creek

Landfill. We submitted a proposal to buy air space at the Crow

Landfill. My concern is that I also received a letter and phone call

from Allied/Laidlaw, which raises our cost of disposal 23% for

residential and compacted industrial waste. I have also been advised

that my front load commercial disposal rates have been increased

63.4%.

When David Bickel from the US Justice Department interviewed me,

I expressed a concern that only Waste Management and Sanifill/USA

Waste owned landfills that were strategically and economically

located for disposal in Tarrant County. It is also interesting to

point out that, prior to the Allied acquisition, Sanifill was not a

competitor in the hauling business and was very competitive and

accommodating and desirous of our disposal business. These recent

price increases by Allied/Laidlaw represent a strategic plan to

leverage this capacity and utilize it against us, particularly,

since our disposal alternatives are extremely limited.

Allied/Laidlaw has seen fit to measure our front loader trucks

differently than the truck manufacturer and the 2 previous landfill

owners. I cannot help but think the term ``anti-competitive,

monopolistic, unfair practices, price gouging, and driving the

little guy out of business'' all aptly describe the action taken by

Allied/Laidlaw. It is also rumored that BFI would be purchasing the

air space at Crow. The rumor is supported by the fact that Allied/

Laidlaw needs disposal capacity in another market where BFI can

accommodate their needs. From an accounting perspective, you can

imagine the ``pencil whipping'' that can take place in that type of

an arrangement. A deal could easily be structured or better yet, two

deals easily structured in which anyone reviewing the merits would

have no idea of the actual accommodations that have taken place. It

also further enhances my belief of the desire by the Laidlaw

management to drive us out of business.

I'm sure that your decision to approve (subject to conditions)

the Allied acquisition did not contemplate the current activities

demonstrated by Allied/Laidlaw. If your final judgment is not yet

final, we would like to discuss our concerns so that our company may

continue to survive.

Your immediate concern to this problem is appreciated.

[[Page 67897]]

Respectfully yours,

Charles ``Mickey'' Flood,

President and CEO.

U.S. Department of Justice,

Antitrust Division, 1401 H Street, City Center Building, Washington,

DC 20530,

December 8, 1997.

Mr. Charles ``Mickey'' Flood

President and CEO

Independent Environmental Services, Inc.

3330 North Beach Street

Haltom City, TX 76111

Re: United States, et al., v. Allied Waste Industries, Inc., C.A.

No. 497-CV 564 E (N.D. TX)

Dear Mr. Flood: This letter responds to your letter dated

October 10, 1997 commenting on the proposed Final Judgment in the

above-captioned civil antitrust case challenging the acquisition by

Allied Waste Industries, Inc. (``Allied'') of the Crow Landfill in

Tarrant County, Texas owned by USA Waste Services, Inc. The

Complaint alleges that the acquisition violates Section 7 of the

Clayton Act, as amended, 15 U.S.C. 18, because it is substantially

likely to lessen competition for the disposal of municipal solid

waste (``MSW'') generated in Tarrant County. Under the proposed

Final Judgment Allied is required to divest 880,000 cubic yards of

disposal space at the Crow Landfill to a purchaser(s) who would have

the right to use this airspace for five years or the life of the

Crow Landfill, whichever is longer. Allied is also required to

divest 560,000 cubic yards of disposal space at the Turkey Creek

Landfill to a purchaser(s) who would have the right to use the

airspace for a ten-year period.

In your letter you expressed concern that since acquiring the

Crow Landfill Allied has increased disposal rates and changed the

way trucks are measured that dispose of waste. You indicated in a

telephone conversation with the staff that when USA Waste owned the

Crow Landfill that the front-load hopper on the truck was not

measured for waste being deposited. Your letter indicates that your

disposal rates increased by 23% and the change in the method of

measuring trucks has resulted in a total 63.4% increase to IESI.

Additionally, your letter states that before the acquisition, USA

Waste was not a competitor in the hauling business and therefore the

Crow Landfill was desirous of IESI's disposal business. As Allied is

also in the hauling business, you believe the acquisition represents

a plan to raise prices for disposal which will place IESI at a

disadvantage in competing with Allied for hauling business since

there are few disposal alternatives to IESI. Your letter indicates

that large waste companies seek to control markets by charging

``excessive'' disposal rates to independent haulers, and you believe

BFI, a large waste company, will be sold the airspace in return for

assets by Allied in another location.

We have looked into the concerns expressed in your letter. We

can report that Allied has increased the rates at the Crow Landfill

(now called Mill Valley) and claims that the increase is necessary

because of capital costs for the upkeep and maintenance of the

landfill. We understand the rates at the Crow Landfill are now $6

for compacted MSW and $4.70 for loose MSW. Our investigation has

revealed that these prices are set at levels which are generally

comparable to prices charged at other landfills in the Tarrant

County area. With regard to the measuring of trucks, it is our

understanding that the other landfill operated by Allied specified

in the Complaint, Turkey Creek, and the landfills in the Tarrant

County area not owned by Allied all measure trucks in the same

fashion as now used by Allied at Mill Valley.

Although the price increases instituted by Allied do not appear

out of line with prevailing prices in the Tarrant County area, the

increase reinforces the belief of the United States that a Final

Judgment requiring Allied to sell airspace at the Crow Landfill (now

Mill Valley) and the Turkey Creek Landfill is necessary to protect

competition both in landfills and hauling in the Tarrant County

area. Divestiture will allow one or more purchasers to obtain

airspace rights that they can use to compete directly for local

solid waste contracts or to resell to other local haulers. As you

know, Allied has started the process of obtaining bids for airspace

rights. As we understand the bidding process so far, the prices

being offered for the airspace are at levels which could allow the

winning bidder(s) to resell space at prices below those being

currently charged by Allied. Your company has an opportunity to bid

on that airspace and we understand it has done so.

Your letter also expresses a concern that BFI, a large national

waste company, is bidding for and may win the airspace rights.

Should BFI be a bidder in the process or become the winning bidder,

this development would not necessarily constitute an anticompetitive

effect of the merger. The antitrust laws are not designed to promote

the interests of any one competitor but to protect competition as a

whole. We will, however, examine any proposed sale to ensure that it

complies with the terms of the Final Judgment.

The Antitrust Division appreciates you bringing your concerns to

our attention and hopes this response will alleviate them. 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. Thank you for your interest in the enforcement

of the antitrust laws.

Sincerely yours,

J. Robert Kramer II,

Chief, Litigation II Section.

[FR Doc. 97-33810 Filed 12-29-97; 8:45 am]

BILLING CODE 4410-11-M