Proposed Termination of Judgment

DEPARTMENT OF JUSTICE

Antitrust Division

Proposed Termination of Judgment

Notice is hereby given that defendant, National Service Industries,

Inc. (``NSI''), the successor corporation to National Linen Services

Corporation (``NLS''), has filed with the United States District Court

for the Northern District of Georgia, Atlanta Division, a motion to

terminate the Judgment in United States v. National Linen Service

Corporation, Civil Action No. 5171, and that the Department of Justice

(``Department''), in a stipulation also filed with the Court, has

tentatively consented to termination of the Judgment but has reserved

the right to withdraw its consent pending receipt of public comments.

The Complaint in this case (filed April 25, 1955) alleged that NLS had

monopolized and attempted to monopolize the linen supply business in

the Southeastern United States, and had also entered into price fixing

agreements with competing linen suppliers.

On June 28, 1956, a Judgment was entered against NLS. In 1964, the

name of National Linen Service Corporation became National Service

Industries, Inc. The Judgment applies to two subdivisions of NSI's

textile rental division: National Linen Service and National Healthcare

Linen Service. The provisions of the Judgment that are still in effect

prohibit NSI from combining with any linen supply company or laundry to

fix prices to consumers, allocate territories or customers, or exclude

any person from engaging in the linen supply business. It further

enjoins NSI from charging unreasonably low prices for the purpose of

suppressing competition; offering to supply linens without charge or at

prices that discriminate between different customers in the same trade

area, where the effect may be to injure competition (except that NSI is

permitted to lower its prices or offer rebates to meet competition);

entering into any requirements contracts; making certain potentially

defamatory representations to customers about competitors of NSI;

threatening competitors or customers of competitors; coercing or

agreeing with suppliers not to sell to competitors of NSI; entering

into employment contracts with certain non-compete provisions; and from

acquiring an interest in certain competing firms.

The Department has filed with the Court a Memorandum setting forth

the reasons why the Government believes that termination of the

Judgment would serve the public interest. Copies of NSI's motion

papers, the Stipulation containing the Government's consent, the

Government's Memorandum and all further papers filed with the Court in

connection with this motion will be available for inspection at the

Legal Procedures Unit of the Antitrust Division, Room 215 North,

Liberty Place, Washington, DC 20530, and at the Office of the Clerk of

the United States District Court for the Northern District of Georgia,

Atlanta Division, 2211 Richard Russell Building, 75 Spring Street,

S.W., Atlanta, GA 30303-3361. Copies of any of these materials may be

obtained from the Antitrust Division upon request and payment of the

copying fee set by Department of Justice regulations.

Interested persons may submit comments regarding the proposed

termination of the decree to the Government. Such comments must be

received by the Division within sixty (60) days and will be filed with

the Court by the Government. Comments should be addressed to Mary Jean

Moltenbrey, Chief, Civil Task Force, Antitrust Division, Department of

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

Washington, DC 20530.

Rebecca P. Dick,

Director, Civil Non-Merger Enforcement.

Stipulation

It is stipulated by and between the undersigned parties by their

respective attorneys that:

1. Defendant, National Service Industries, Inc. (``NSI''), the

successor corporation to National Linen Services Corporation, will

publish at its expense a Notice, in the form attached as Attachment 1,

in (a) two consecutive issues of Textile Rental and (b) two consecutive

issues of Industrial Launderer; an Order, in the form attached as

Attachment 2, directing such publication, may be filed and entered by

the Court forthwith without further notice to any party or any other

proceedings.

2. The United States will publish in the Federal Register a notice

announcing NSI's motion and the Department's tentative consent to it,

summarizing the Complaint and Judgment, describing the procedures for

inspection and obtaining copies of relevant papers, and inviting the

submission of comments.

3. An Order in the form attached hereto as Attachment 3 terminating

the Judgment entered in this cause of action on June 28, 1956, as

amended, may be filed and entered by the Court, upon the request of any

party or by the Court sua sponte, at any time more than 70 days after

the last publication of the notices required by Paragraphs 1 and 2 of

this stipulation and without further notice to any party or any other

proceedings, provided that Plaintiff has not withdrawn its tentative

consent, which it may do at any time before the entry of an Order

terminating the Consent Decree by filing notice of withdrawal of its

consent with the Court and serving a copy of said notice upon the other

party.

4. In the event plaintiff withdraws its consent, or if the proposed

Order terminating the decree is not entered pursuant to this

stipulation, then this stipulation shall be of no effect whatsoever,

the making of this stipulation shall be without prejudice to any party

in this or any other proceeding, and the stipulation shall not

thereafter be used in this or any other action or for any other

purpose.

For the Plaintiff, United States of America.

Joel I. Klein,

Assistant Attorney General, Antitrust Division.

A. Douglas Melamed,

Principal Deputy Asst. Attorney General, Antitrust Division.

Rebecca P. Dick,

Director, Civil Non-Merger Enforcement, Antitrust Division.

Mary Jean Moltenbrey,

Chief, Civil Task Force, Antitrust Division.

Susan L. Edelheit,

Asst. Chief, Civil Task Force, Antitrust Division.

Theodore R. Bolema,

Attorney, Antitrust Division, U.S. Department of Justice, Liberty Place

Building, Suite 300, 325 7th Street, NW., Washington, DC 20530,

Telephone: (202) 616-5945.

For the Defendant National Service Industries, Inc.

Eric Queen,

Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New York,

NY 10004-1980, Telephone: (212) 859-8077.

Counsel for National Service Industries, Inc.

[[Page 43727]]

Notice of Proposed Termination of the Consent Decree Entered

Against National Linen Service on June 28, 1956

Please take notice that National Service Industries, Inc.

(``NSI''), the successor corporation to National Linen Service

Corporation, the named defendant in the Consent Decree entered by the

Court in the above-captioned matter on June 28, 1956, has asked this

Court to enter a judgment terminating the Consent Decree.

The United States has filed with the Court a memorandum setting

forth the reasons why it believes that termination of the Consent

Decree would serve the public interest. Copies of NSI's motion to

terminate, the stipulation containing the United States' tentative

consent, the United States' memorandum, and all further papers filed

with the court in connection with this motion will be available for

inspection at the Legal Procedures Unit of the Antitrust Division, Room

215 North, Liberty Place Building, Washington, DC 20530, and at the

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

Northern District of Georgia, Atlanta Division, 2211 Richard Russell

Building, 75 Spring Street, S.W., Atlanta, GA 30303-3361. Copies of any

of these materials may be obtained from the Antitrust Division upon

request and payment of the copying fee set by Department of Justice

regulations.

Interested persons may submit comments regarding the proposed

termination of the Consent Decree to the United States. Such comments

must be received by the Antitrust Division within sixty (60) days and

will be filed with the Court by the United States. Comments should be

addressed to Mary Jean Moltenbrey, Chief, Civil Task Force, Antitrust

Division, Department of Justice, 325 7th Street, NW, Suite 300,

Washington, D.C. 20530.

Order Establishing Notice and Public Comment Procedures for Motion

To Terminate Consent Decree

Defendant, National Service Industries, Inc. (``NSI''), the

successor corporation to National Linen Services Corporation, having

moved for an order terminating the Consent Decree entered by this court

in 1956 in this case; Plaintiff, the United States of America, having

tentatively consented to said motion; Plaintiff having proposed, and

Defendant have agreed, that notice of the motion and of Plaintiff's

tentative consent be published at the expense of Defendant, and that

all interested persons be given an opportunity to submit comments

concerning the proposed termination of the Consent Decree; and it

appearing to the Court desirable to invite such comments, and in

consideration of the stipulation of the parties dated__________, 199__,

it is:

Ordered, that the Defendant, NSI, publish at its own expense a

notice in the form attached hereto as Exhibit ``A'' in two consecutive

issues of Textile Rental and Industrial Launderer and file proof of

such publication with the Court; and it is:

Further Ordered, that copies of all comments received by Plaintiff

within sixty (60) days after the last publication of a notices required

by this Order shall be filed with this Court by Plaintiff promptly

after it receives such comments; and it is:

Further ordered, that this Court will not rule upon the motion of

NSI until at least the seventieth (70th) day after the last publication

of the notice of required by this Order.

Done, this______ day of__________, 199__.

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United States District Judge

Judgment Terminating Consent Decree

This cause having come on to be heard on the motion of National

Service Industries, Inc. (``NSI''), the successor corporation to

National Linen Service Corporation, for termination of the Judgment

entered in this case on June 28, 1956, and the United States of America

having represented to the Court that it has no objection to the motion

and notice of the motion having been published in the Federal Register,

Textile Rental and Industrial Launderer and all interested parties

having been given an opportunity to submit comments concerning the

proposed termination of the Consent Decree, and the Court having

considered all papers and comments filed in connection with this

motion, and the Court finding that is in the public interest to

terminate the Consent Decree, it is,

Ordered, Adjudged, and Decreed:

That said judgment is hereby terminated.

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

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

United States District Judge

Memorandum of the United States in Response to the Motion of

National Service Industries, Inc. for Judgment Terminating Consent

Decree

National Service Industries, Inc. (``NSI''), the successor

corporation to National Linen Service Corporation, has moved this Court

to terminate the Judgment, entered by this Court on June 28, 1956. In a

stipulation between NSI and the United States, (1) NIS agreed to

publish notice of its motion and invitation for comments thereon in

Textile Rental and Industrial Launderer, (2) the United States agreed

to publish notice in the Federal Register, and (3) the United States

tentatively consented to the entry of a judgment terminating the

Judgment at any time more than 70 days after the last publication of

such notice.

This memorandum summarizes the Complaint that initiated this action

and the resulting Judgment, explains the reason why the United States

has consented to termination of the Judgement, and discusses the legal

standards and precedents respecting termination or modification of

consent decrees. It also discusses the procedures proposed by the

United States, and agreed to by NSI, for giving public notice of the

pending motion, obtaining public comment on the motion, and assuring

the right of the United States to withdraw its consent after any

comments are received from nonparties.

I

The Complaint and the Judgment

On April 25, 1955, the United States filed in this Court a civil

complaint against National Linens Services, Inc. (``NLS''), the leading

supplier of linen services in the Southeastern United States, charging

NLS with monopolization and attempted monopolization of the linen

service business in several Southern states in violation of Section 2

of the Sherman Act, 15 U.S.C. 2, and also of price fixing in violation

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

Complaint alleged that the defendant bought out hundreds of

competitors, suppressed competition by providing service below its

costs in areas in which the defendant faced competition, gave customers

rebates and other inducements not to deal with competitors, threatened

to force competitors out of business, and entered into price fixing

agreements with several remaining competitors.

On June 28, 1956, the Judgment was entered against NLS. Several

provisions relating to notification of third parties of any divestiture

of certain subsidiaries by NSI have long since expired. The provisions

still in effect prohibit NSI from engaging in certain conduct in the

relevant geographic market. Specifically, the Judgment enjoins the

defendant from combining with any linen supply company or laundry to

fix prices to consumers, allocate territories or customers, or exclude

any person from engaging in the linen supply business. The Judgment

also enjoins the defendant from charging unreasonably

[[Page 43728]]

low prices for the purpose of suppressing competition, and from

offering to supply linens without charge or at prices that discriminate

between different customers in the same trade area, where the effect

may be to injure competition (except that NSI is permitted to lower its

prices or offer rebates to meet competition). The Judgment further

enjoins NSI from entering into any requirements contracts, from making

certain potentially defamatory representations to customers about

competitors of NSI, from threatening competitors or customers of

competitors, and from coercing or agreeing with suppliers not to sell

to competitors of NSI. Finally, the Judgment also enjoins NSI from

entering into employment contracts with certain non-compete provisions

and from acquiring an interest in certain competing firms.

In 1964, the name of National Linen Service Corporation became

National Service Industries, Inc. The Judgment applies to two

subdivisions of NSI's textile rental division: National Linen Service

and National Healthcare Linen Service.

II

Legal Standards Applicable to the Termination of an Antitrust Decree

With the Consent of the Government

This Court has jurisdiction to modify or terminate the Judgment

pursuant to Section XIX of the Judgment, Rule 60(b)(5) of the Federal

Rules of Civil Procedure, Fed. R. Civ. P.60(b)(5), and ``principles

inherent in the jurisdiction of the chancery.'' United States v. Swift

& Co., 286 U.S. 106, 114 (1932).

Where, as here, the United States tentatively has consented to a

proposed termination or modification of a judgment in a government

antitrust case, the issue before the Court is whether termination or

modification is in the public interest. See, e.g., United States v.

Western Elec. Co., 993 F.2d 1572, 1576 (D.C. Cir. 1993); United States

v. Western Elec. Co., 900 F.2d 283, 305 (D.C. Cir. 1990), cert. denied,

111 S. Ct. 283 (1990); United States v. Loew's, Inc., 783 F. Supp. 211

(S.D.N.Y. 1992); United States v. Columbia Artists Management, Inc.,

662 F. Supp. 865, 869-70 (S.D.N.Y. 1987), citing United States v. Swift

& Co., 1975-1 Trade Cas. (CCH) para. 60,201, at 65,702-03, 65,706 (N.D.

Ill. 1975); cf. United States v. American Cyanamid Co., 556 F. Supp.

361, 367 (S.D.N.Y. 1983), rev'd. on other grounds, 719 F.2d 558 (2d

Cir. 1983), cert. denied, 465 U.S. 1101 (1984). This is the same

standard that a District Court applies in reviewing an initial consent

judgment in a government antitrust case. See 15 U.S.C. 16(e); Western

Elec. Co., 900 F.2d at 295; United States v. AT&T, 552 F. Supp. 131,

147 n.67 (D.D.C. 1982), aff'd sub nom, Maryland v. United States, 406

U.S. 1001 (1983); United States v. Radio Corp. of Am., 46 F. Supp. 654,

656 (D. Del. 1942), appeal dismissed, 318 U.S. 796 (1943).

The Supreme Court has held that where the words ``public interest''

appear in federal statutes designed to regulate public sector behavior,

they ``take meaning from the purposes of the regulatory legislation.''

NAACP v. FPC, 425 U.S. 662, 669 (1976); see also System Fed'n No. 91 v.

Wright, 364 U.S. 642, 651 (1961). The purpose of the antitrust laws,

the ``regulatory legislation'' involved here, is, of course, to protect

competition. E.g., United States v. Penn-Olin Chem. Co., 378 U.S. 158,

170 (1964) (antitrust laws reflect ``a national policy enunciated by

the Congress to preserve and promote a free competitive economy.'')

Thus, the relevant question before the Court at this time is whether

termination of the Judgment would serve the public interest in ``free

and unfettered competition as the rule of trade.'' Northern Pac. Ry.

Co. v. United States, 356 U.S. 1, 4 (1958); see also Western Elec. Co.,

900 F.2d at 308; United States v. American Cyanamid, 719 F.2d 558, 565

(2d Cir. 1983), cert. denied, 405 U.S. 1101 (1984); United States v.

Loew's, Inc., 783 F. Supp. at 213.

It has long been recognized that the government has broad

discretion in settling antitrust litigation on terms that will best

serve the public interest in competition. See Sam Fox Pub'g Co. v.

United States, 366 U.S. 683, 689 (1961). The court's role in

determining whether the initial entry of a consent decree is in the

public interest, absent a showing of abuse of discretion or a failure

to discharge its duty on the party of the government, is to determine

whether the government's explanation is reasoned and not to substitute

its own opinion, United States v. Mid-America Dairymen, Inc., 1977-1

Trade Cas. (CCH) para. 61,508, at 71,980 (W.D. Mo. 1977); see also

United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981),

cert. denied, 454 U.S. 1083 (1981), quoting United States v. National

Broad. Co., 449 F. Supp. 1127, 1143 (C.D. Cal. 1978). The government

may reach any of a range of settlements that are consistent with the

public interest. See, e.g., Western Elec., 900 F.2d at 307-09; Bechtel,

648 F.2d at 665-66; United States v. Gillette Co., 406 F. Supp. 713,

716 (D. Mass. 1975). The court's role is to conduct a limited review to

``insur[e] that the government has not breached its duty to the public

in consenting to the decree,'' Bechtel, 648 F.2d at 666, through

malfeasance or by acting irrationally.

The standard is the same when the government consents to the

termination or modification of an antitrust judgment. Swift & Co.,

1975-1 Trade Cas. (CCH) para. 60,201, at 65,702-03. Where the

Department of Justice has offered a reasoned and reasonable explanation

of why the termination or modification vindicates the public interest

in free and unfettered competition, and there is no showing of abuse of

discretion or corruption affecting the government's recommendation, the

Court should accept the Department's conclusion concerning the

appropriateness of termination or modification.

III

Reasons Why the United States Tentatively Consents to Termination of a

Judgment

The nature of competition for linen services has changed

dramatically from what it was in 1956 and will undoubtedly continue to

change in the future. Many new linen suppliers and uniform companies

have entered the markets in which the defendant operates and not

compete successfully against NIS. The Judgment has accomplished its

remedial objective of permitting competition to develop in these

markets, so that the alleged predatory practices that gave rise to the

Complaint in 1955 are unlikely to be effective today. The remaining

injunctive provisions do not proscribe any conduct that is not already

proscribed by the Sherman Act and case law, and thus no longer serve

any useful purpose. Indeed, the remaining injunctions may deter

vigorous competition by NSI that could only benefit consumers. For all

of the foregoing reasons, the United States concludes that termination

of the Judgment is in the public interest.

IV

Proposed Procedures for Giving Public Notice of the Pending Motion and

Inviting Comment Thereon

The opinion in Swift & Co., 1975-1 Trade Cas. (CCH) para. 60,201,

at 65,703, articulates a court's responsibility to implement procedures

that will give nonparties notice of, and an opportunity to comment

upon, antitrust judgment modifications proposed by consent of the

parties:

Cognizant * * * of the public interest in competitive economic

activity, established

[[Page 43729]]

chancery powers and duties, and the occasional fallibility of the

Government, the court is, at the very least, obligated to ensure

that the public, and all interested parties, have received adequate

notice of the proposed modification. * * * (Footnote omitted.)

The Department of Justice believes that giving the public notice of

the filing of a motion to terminate the Judgment in a government

antitrust case, and an opportunity to comment upon that motion, is

generally necessary to ensure that both the Department and the Court

properly assess the public interest. Accordingly, over the years, the

Department has adopted and refined a policy of consenting to motions to

modify or terminate antitrust judgments only on condition that an

effort be undertaken to notify potentially interested persons of the

pendency of the motion. In the case at bar, the United States has

proposed, and NSI has agreed to, the following:

1. The Department will publish in the Federal Register a notice

announcing NSI's motion and the Department's tentative consent to it,

summarizing the Complaint and Judgment, describing the procedures for

inspecting and obtaining copies of relevant papers, and inviting the

submission of comments.

2. NSI will publish notice of its motion in two consecutive issues

of Textile Rental and two consecutive issues of Industrial Launderer.

These periodicals are trade journals likely to be read by persons

interested in the markets affected by the Judgment. The published

notices will provide for public comment during the following 60 days.

3. The Department of Justice will file with the Court copies of all

comments that it receives.

4. The parties will stipulate that the Court will not rule upon the

motion for at least 70 days after the last publication by defendant of

the notices described above (and thus for at least 10 days after the

close of the period for public comments), and the Department will

reserve the right to respond to comments or withdraw its consent to the

motion at any time until an order modifying or terminating the Judgment

is entered.

This procedure is designed to provide all potentially interested

persons with notice that a motion to terminate the Judgment is pending

and an adequate opportunity to comment thereon. NSI has agreed to

follow this procedure, including publication of appropriate notices.

The parties are therefore submitting to the Court a separate proposed

order establishing this procedural approach, asking that it be entered

forthwith.

V

Conclusion

For the foregoing reasons, the United States (1) asks the Court to

enter the order submitted herewith directing publication of notice of

NSI motion, and (2) tentatively consents to the termination of the

Judgment herein.

Dated:

Theodore R. Bolema,

Attorney, Antitrust Division, U.S. Department of Justice, Liberty Place

Building, Room 300, 325 7th Street, NW., Washington, DC 20530, (202)

616-5945.

Attorney for the Plaintiff, United States of America

[FR Doc. 98-21911 Filed 8-13-98; 8:45 am]

BILLING CODE 4410-11-M