Proposed Final Judgment and Competitive Impact Statement; United States v. City of Stilwell, OK, et al.

DEPARTMENT OF JUSTICE

Antitrust Division

Proposed Final Judgment and Competitive Impact Statement; United

States v. City of Stilwell, OK, et al.

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 been filed with the

United States District Court for the Eastern District of Oklahoma in

United States v. City of Stilwell, Oklahoma, et al., CIV 96-196B. The

proposed Final Judgment is subject to approval by the Court after the

expiration of the statutory sixty-day public comment period and

compliance with the Antitrust Procedures and Penalties Act, 15 U.S.C.

16(b)-(h).

On April 25, 1996, the United States filed a civil antitrust

complaint under Section 4 of the Sherman Act, as amended, 15 U.S.C. 4,

alleging that defendants City of Stilwell, Oklahoma and the Stilwell

Area Development Authority adopted and enforced a policy by which

defendants, the sole suppliers of public water and sewer services to

customers within Stilwell city limits, refused to provide water or

sewer services to those unless they agreed to purchase electric service

from the City's Utility Department. The complaint alleged that this

``all-or-none'' utility policy violated Sections 1 and 2 of the Sherman

Act, 15 U.S.C. 1 and 2, and sought a judgment by the Court declaring

the defendants' policy to be an unlawful restraint of trade. The

complaint also sought an order by the Court to enjoin the defendants

from requiring any consumer of electricity to purchase retail electric

service from the City as a condition of receiving water and sewer

service, or otherwise discriminating against any customer that

purchases or may purchase electric service elsewhere.

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 the

defendants, except that the Court will retain jurisdiction over the

matter for possible further proceedings to construe, modify, terminate

or enforce the judgment, or to punish violations of any of its

provisions.

The proposed Final Judgment contains three principal forms of

relief. First, the defendants are enjoined from requiring any consumer

of electricity to

[[Page 41293]]

purchase retail electric service from the defendants as a condition of

receiving water or sewer service from the defendants. Second,

defendants are required to include a disclaimer on any application for

water or sewer service or other written materials distributed by

defendants to prospective applicants for water and sewer that states

that defendants do not require any applicants to purchase electric

service from them as a condition of receiving water or sewer service.

Third, the proposed Final Judgment requires defendants to implement an

antitrust compliance program directed toward avoiding a repetition of

their anticompetitive behavior.

Public comment is invited within the sixty days of the publication

of this notice. All comments, and responses thereto, will be published

in the Federal Register and filed with the Court. Written comments

should be directed to Roger W. Fones, Chief, Transportation, Energy and

Agriculture Section, Antitrust Division, 325 Seventh Street, N.W.,

Suite 500, Washington, D.C. 20530 (telephone: (202) 307-6351). Copies

of the Complaint, Stipulation, proposed Final Judgment and Competitive

Impact Statement are available for inspection in Room 215 of the U.S.

Department of Justice, Antitrust Division, 325 Seventh Street, N.W.,

Washington, D.C. 20530 (telephone: (202) 514-2481) and at the office of

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

of Oklahoma, United States Courthouse, 5th and Okmulgee Streets,

Muskogee, Oklahoma 74401.

Copies of any of these materials may be obtained upon request and

payment of a copying fee.

Constance K. Robinson,

Acting Director of Civil Non-Merger Enforcement Antitrust Division.

United States of America, Plaintiff, v. City of Stilwell,

Oklahoma, et al., Defendants.

[Case No. CIV 96-196B]

Stipulation and Order

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

their respective attorneys, as follows:

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

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

proper in the United States District Court for the Eastern District of

Oklahoma.

2. The parties stipulated 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 Procedure and Penalties Act (15

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

proceedings, provided that plaintiff has not withdrawn its consent,

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

Judgment by serving notice thereof on defendants and by filing that

notice with the Court.

3. Each defendant shall abide by and comply with the provisions of

the proposed Final Judgment pending entry of the Final Judgment by the

Court and shall, from the date of the signing of this Stipulation by

the parties, comply with all the terms and provisions of the proposed

Final Judgment as though they were in full force and effect as an order

of the Court.

4. In the event that plaintiff withdraws its consent, as provided

in paragraph 2 above, then the parties are released from all further

obligations under this Stipulation, and the making of this Stipulation

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

proceeding.

Respectfully submitted,

For Plaintiff, United States of America:

John R. Read,

Michele B. Cano,

Michael D. Billiel,

Attorneys, Antitrust Division, U.S. Department of Justice, 325 Seventh

Street, N.W., Washington, D.C. 20004, (202) 307-0468.

For Defendants, City of Stilwell and Stilwell Area Development

Authority:

Lloyd E. Cole, Jr.,

Nason Morton,

Cole Law Office, 120 W. Division Street, Stilwell, OK 74960, (918) 696-

7331.

Order

It is so ordered, this ____ day of ____, 1998.

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

United States District Court Judge

United States of America, Plaintiff, v. City of Stilwell,

Oklahoma, et al. Defendants.

Final Judgment

[Case No. CIV 96-196-B]

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

25, 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 with respect to any

issue of fact or law. Therefore, without trial or adjudication of any

issue of fact or law herein, 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. Venue is proper in the

Eastern District of Oklahoma. The Complaint states a claim upon which

relief may be granted against the defendants under Sections 1 and 2 of

the Sherman Act, 15 U.S.C. Secs. 1 & 2.

II. Definitions

As used herein:

(A) the term ``defendants'' means the City of Stilwell, Oklahoma

(``City'') and the Stilwell Area Development Authority;

(B) the term ``document'' means all ``writing and recordings'' as

that phrase is defined in Rule 1001(1) of the Federal Rules of

Evidence;

(C) two or more products are ``unbundled'' when available

separately and priced such that the seller's charge for the combination

is no less than the sum of the individual product prices;

(D) the term ``person'' means any natural person, corporation,

firm, company, sole proprietorship, partnership, association,

institution, governmental unit, public trust, or other legal entity.

III. Applicability

(A) This Final Judgment applies to the defendants, jointly and

severally, and to their respective successors, assigns, and to all

other persons in active concert or participation with any of them who

shall have received actual notice of the Final Judgment by personal

service or otherwise.

(B) Nothing herein contained shall suggest that any portion of this

Final Judgment is or has been created for the benefit of any third

party and nothing herein shall be construed to provide any rights to

any third party.

IV. Prohibited and Mandated Conduct

(A) The defendants, and each of them, are enjoined and restrained

from requiring any consumer of electric energy to purchase retail

electric service from a defendant as a condition of receiving water or

sewer service from a defendant.

(B) Any application for water or sewer service or other written

materials distributed by a defendant to prospective applicants for

water or sewer service shall include, in a conspicuous manner, the

following disclaimer:

Although we provide electric service, as well as water and sewer

services, we do not require you to purchase electric service from us

as a condition of receiving water or sewer service and we will not

discriminate against

[[Page 41294]]

you if you do not purchase electric service from us.

(C) The defendants, and each of them, are enjoined and restrained

from denying, withholding, or delaying any service, license or permit,

or otherwise threatening, discriminating or retaliating against any

person that has not agreed to purchase or does not purchase electric

service from a defendant, unless defendants' reason for such conduct is

unrelated to such person's choice of retail electric provider.

V. Limiting Conditions

Nothing in this Final Judgment shall prohibit a defendant from:

(A) Exercising any valid right now or hereafter conferred by State

law to expropriate facilities used by any retail electric supplier to

furnish electric energy within the City's corporate boundaries;

(B) Commencing or prosecuting, in good faith, litigation to

ascertain or protect any right now or hereafter conferred by State law

to restrict the furnishing of electric energy within the City's

corporate boundaries to retail electric suppliers authorized by law to

do so; and

(C) Furnishing any premises with more than one utility service on

an unbundled basis.

VI. Compliance Program

(A) Defendants are ordered to maintain an antitrust compliance

program which shall include the following:

(1) Designating, within 30 days of entry of this Final Judgment, an

Antitrust Compliance Officer with responsibility for accomplishing the

antitrust compliance program and with the purpose of achieving

compliance with this Final Judgment. The Antitrust Compliance Officer

shall, on a continuing basis, supervise the review of the current and

proposed activities of defendants to ensure that they comply with this

Final Judgment.

(2) The Antitrust Compliance Officer shall be responsible for

accomplishing the following activities:

(a) providing copies of this Final Judgment to individuals

currently serving on the governing boards, and to non-clerical

employees of the Stilwell Utility Department and the Stilwell Area

Development Authority, and to each individual hereafter assuming any

such position, and obtaining a written certification from such

individuals that they received, read, understand to the best of their

ability, and agree to abide by this Final Judgment and that they have

been advised that noncompliance with the Final Judgment may result in

conviction for criminal contempt of court; and

(b) briefing annually the governing boards and the non-clerical

employees of the Stilwell Utility Department and the Stilwell Area

Development Authority on this Final Judgment and the antitrust laws.

VII. Certification

(A) Within 75 days after the entry of this Final Judgment, the

defendants shall certify to the plaintiff that they have complied with

Section IV above, designated an Antitrust Compliance Officer, and

distributed the Final Judgment in accordance with Section VI(A) above.

(B) For each year of the term of this Final Judgment, the

defendants shall file with the plaintiff, on or before the anniversary

date of entry of this Final Judgment, a statement as to the fact and

manner of their compliance with the provisions of Section IV and VI

above.

VIII. Plaintiff Access

(A) To determine or secure compliance with this Final Judgment and

for no other purpose, duly authorized representatives of the plaintiff

shall, upon written request 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, subject to any legally

recognized privilege:

(1) Access during such defendant's office hours to inspect and copy

all documents in the possession or under the control of the defendant,

who may have counsel present, relating to any matters contained in this

Final Judgment; and

(2) Subject to the reasonable convenience of such defendant and

without restraint or interference from it, to interview officers,

employees or agents of the defendant, who may have counsel present,

regarding such matters.

(B) Upon the written request 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, relating to any matters contained in this Final Judgment as

may be reasonably requested, subject to any legally recognized

privilege.

(C) No information or documents obtained by the means provided in

Section VIII shall be divulged by the 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 (including grand jury proceedings), or for the

purpose of securing compliance with this Final Judgment, or as

otherwise required by law.

(D) If at the time information or documents are furnished to

plaintiff, the 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 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 10 days notice shall be given

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

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

defendant is not a party.

IX. Further Elements of the Final Judgment

(A) This Final Judgment shall expire ten years from the date of

entry.

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

enabling any of the parties to this Final Judgment to apply to this

Court at any time for further orders and directions as may be necessary

or appropriate to carry out or construe this Final Judgment, to modify

or terminate any or all of its provisions, to enforce compliance, and

to punish violations of its provisions.

(C) Each party shall bear their respective costs and attorneys

fees.

(D) Entry of this Final Judgment is in the public interest.

Dated: ________.

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

United States District Judge

United States of America, Plaintiff, v. City of Stilwell,

Oklahoma, et al., Defendants.

[Case No. CIV 96-196 B]

Competitive Impact Statement

The United States, pursuant to Section 2(b) of the Antitrust

Procedures and Penalties Act (``APPA''), 15 U.S.C. Sec. 16(b)-(h),

files this Competitive Impact Statement relating to the proposed Final

Judgment submitted for entry in this civil antitrust proceeding.

I. Nature and Purpose of This Proceeding

On April 25, 1996, the United States filed a Complaint alleging

that the defendants City of Stilwell, Oklahoma (``City'') and Stilwell

Area Development Authority (``ADA'') (collectively ``Defendants'') had

violated the Sections 1 and 2 of the Sherman Act, 15 U.S.C. Secs. 1 and

2. The Complaint challenged a utility policy adopted and implemented by

Defendants, the sole suppliers of public water and sewer services to

[[Page 41295]]

customers within the Stilwell city limits, by which Defendants refused

to extend or connect water or sewer lines to customers unless the

customers also agreed to purchase electric service from the City's

Utility Department. The effect of this policy, commonly referred to as

the ``all-or-none utility policy,'' has been to restrict competition in

the provision of electric services in newly annexed areas of Stilwell.

On July 15, 1998, the United States and Defendants filed a

Stipulation and Order consenting to the entry of a proposed Final

Judgment designed to eliminate the all-or-none utility policy and

prevent Defendants from implementing any similar restriction in the

future. Under the proposed Final Judgment, Defendants would be enjoined

from requiring any consumer of electric energy to purchase retail

electric service from Defendants as a condition of receiving water or

sewer service from Defendants, and would be enjoined from taking

actions to impose any similar restrictions on City residents in the

future. The proposed Final Judgment also requires that any application

for water or sewer service or other written materials distributed by

Defendants to prospective applicants include a disclaimer stating that

customers are not required to purchase City electricity as a condition

of receiving water or sewer service.

The United States and Defendants have stipulated that the proposed

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

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

Court would retain jurisdiction to construe, modify, or enforce the

provisions of the proposed Final Judgment and to punish violations

thereof.

II. Description of the Events Giving Rise to the Alleged Violation

The City of Stilwell is a charter municipality, organized and

existing under the laws of the State of Oklahoma. Its Utility

Department was established by Section 106 of the City's Charter as a

business enterprise to provide electricity within and around the City's

corporate boundaries. The Utility Department is governed by a Utility

Board of five members appointed by the Mayor with the approval of the

City Council and is subject to the Council's oversight.

The Stilwell Area Development Authority (``ADA'') is a public

trust, organized and existing under Oklahoma law, to provide water and

sewer service for compensation within and around the City's corporate

boundaries. It is governed by a Board of Trustees whose membership is

identical to that of the City's Utility Board and which is likewise

subject to the Council's oversight.

Defendants provide water, sewer, and electric service in Stilwell.

Within the pre-1961 boundaries of Stilwell, the City's Utility

Department is the sole provider of electric service. But in areas of

Stilwell annexed since that time, the City competes with Ozarks Rural

Electric Cooperative (``Ozarks'') for sales to new electric service

customers. In both pre-1961 Stilwell and areas subsequently annexed,

Defendants have virtual monopoly on the sale of water and sewer

services.

Beginning as early as 1985, the Defendants adopted an all-or-none

utility policy, refusing water and sewer services to any customer who

did not agree to purchase electric service from the City. The purpose

of the policy was to prevent Ozarks from obtaining new electric

customers in the annexed areas. The Utility Department and ADA

formalized the all-or-none utility policy in 1994, and the Stilwell

City Council subsequently approved the policy.

To enforce its all-or-none policy, the Defendants denied water and

sewer connections, turned off already connected lines, and otherwise

discriminated against those customers in annexed areas who tried to

obtain electric service from Ozarks. Defendants' enforcement of the

policy deprived customers of their right to choose freely among

competing electric service providers on the basis of price and quality

of service and eliminated competition in the provision of electric

service in the annexed areas.

III. Explanation of the Proposed Final Judgment

The provisions of the proposed Final Judgment are designed to

eliminate Defendants' all-or-none utility policy and to prevent future

actions by Defendants to place similar restrictions on electric

consumers. The proposed Final Judgment would enjoin Defendants from

requiring any consumer of electricity to purchase the City's retail

electric service as a condition of receiving water or sewer service

from the City (Section IV(A)). In addition,the proposed Final Judgment

would require defendants to include the following disclaimer in a

conspicuous manner in any application for water or sewer service or in

any other written materials they distribute to prospective applicants

for water or sewer services:

Although we provide electric service, as well as water and sewer

services, we do not require you to purchase electric service from us

as a condition of receiving water or sewer service and we will not

discriminate against you if you do not purchase electric service

from us.

(Section IV(B)). Defendants would also be enjoined from threatening or

discriminating or retaliating against any person because that person

had not agreed to purchase or did not purchase electric service from

Defendants (Section IV(C)).

The proposed Final Judgment would further require Defendants to

establish and maintain an antitrust compliance program (Section VI) and

file an annual certificate of compliance with the United States

(Section VII). It would also provide that the United States may obtain

information from the Defendants concerning possible violations of the

Final Judgment (Section VIII).

The proposed Final Judgment would not prohibit Defendants from

exercising any right under State law to expropriate facilities used by

any retail electric supplier to furnish electricity within the City's

corporate boundaries, or from commencing or prosecuting, in good faith,

litigation to ascertain or protect any right they might have under

State law to restrict the furnishing of electricity within the City's

corporate boundaries to retail electric suppliers authorized by law to

do so (Section V(A) and (B)).

IV. Remedies Available to Potential Private Litigants

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

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

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

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

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

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

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

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

subsequent private lawsuit that may be brought against defendants.

V. Procedures Available for Modification of the Proposed Final

Judgment

The United States and Defendants have stipulated that the proposed

Final Judgment may be entered by the Court after compliance with the

provisions of the APPA, provided that the United States has not

withdrawn its consent. The APPA conditions entry upon the Court's

determination that the proposed Final Judgment is in the public

interest.

The APPA provides a period of at least sixty days preceding the

effective

[[Page 41296]]

date of the proposed Final Judgment within which any person may submit

to the United States written comments regarding the proposed Final

Judgment. Any person who wishes to comment should do so within sixty

days of the date of publication of this Competitive Impact Statement in

the Federal Register. The United States will evaluate and respond to

the comments. All comments will be given due consideration by the

Department of Justice, which remains free to withdraw its consent to

the proposed Judgment at any time prior to entry. The comments and the

responses of the United States will be filed with the Court and

published in the Federal Register. Written comments should be submitted

to: Roger W. Fones, Chief, Transportation, Energy & Agriculture

Section, Antitrust Division, United States Department of Justice, 325

Seventh Street, N.W., Suite 500, Washington, D.C. 20004.

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 the modification,

interpretation, or enforcement of the Final Judgment. The Proposed

Final Judgment would expire ten (10) years from the date of its entry.

VI. Alternatives to the Proposed Final Judgment

The United States considered, as an alternative to the proposed

Final Judgment, a full trial on the merits against Defendants. In the

view of the Department of Justice, such a trial would involve

substantial cost to the United States and is not warranted. The

proposed Final Judgment provides relief that fully remedies the alleged

violations of the Sherman Act set forth in the Complaint.

VII. Determinative Documents

There are no determinative materials or documents within the

meaning of the APPA that were considered by the United States in

formulating the proposed Final Judgment.

For Plaintiff United States of America:

Dated: July ______, 1998.

Respectfully submitted,

John R. Read,

Michele B. Cano,

Michael D. Billiel,

Trial Attorneys, U.S. Department of Justice, Antitrust Division, 325

Seventh Street, N.W., Suite 500, Washington, D.C. 20004, 202-307-0468,

202-616-2441 (Facsimile).

[FR Doc. 98-20578 Filed 7-31-98; 8:45 am]

BILLING CODE 4410-11-M