United States v. Norsk Hydro USA Inc., et al.

DEPARTMENT OF JUSTICE

Antitrust Division

United States v. Norsk Hydro USA Inc., et al.

Notice is hereby given pursuant to the Antitrust Procedures and

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

Judgment, Stipulation and Competitive Impact Statement have been filed

with the United States District Court for the Middle District of

Florida in United States v. Norsk Hydro USA Inc., and Farmland

Industries, Inc., Case No. 98-361-CIV-T-24C. The Compliant in this case

alleges that Horsk Hydro USA, Inc., entered into a secret agreement

with Seminole Fertilizer Corp., which had the effect of eliminating

Seminole as a viable bidder on an ammonia storage facility in Tampa,

Florida, in violation of Section 1 of the Sherman Act, 15 U.S.C. 1. The

Complaint also alleges that Farmland Industries, Inc., participated in

the efforts to reach the agreement and would have benefitted from

Hydro's purchase of the facility. The proposed Final Judgment enjoins

Hydro and Farmland from submitting any jointly determined bid for the

acquisition of any ammonia asset located in the United States that is

being sold by or under the auspices of a court or agency of the United

States, unless they (1) disclose to the seller of the asset and the

person administering the sale of the asset that a joint bid is being

submitted, and (2) do not, without disclosing to the seller in advance

of the sale, violate any of the terms or conditions for bidding imposed

by the seller of the asset or violate any of the terms or conditions

for bidding imposed by the person administering the sale of the asset.

Each defendant is required to establish and maintain an antitrust

compliance program which includes annually briefing its officers and

directors engaged in the ammonia business on the meaning and

requirements of the Final Judgment and the antitrust laws.

Public comment on the proposed Final Judgment is invited during the

next 60 days. Such comments and responses thereto will be published in

the Federal Register and filed with the Court. Comments should be

directed to Nezida S. Davis, Acting Chief, Atlanta Field Office,

Antitrust Division, Department of Justice, Suite 1176, Richard B.

Russell Federal Building, 75 Spring Street, SW, Atlanta, Georgia 30303

(telephone: 404-331-7100).

Rebecca P. Dick,

Director of Civil Non-Merger Enforcement.

Stipulation by the United States and Defendant Norsk Hydro USA,

Inc.

It is stipulated by and between the undersigned parties that:

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

action and over each of the parties thereto, and venue of this action

is proper in the Middle District of Florida, Tampa Division;

2. The parties consent that a Final Judgment in the form hereto

attached may be filed and entered by the Court, upon the motion of any

party or upon the Court's own motion, at any time after compliance with

the requirements

[[Page 10940]]

of the Antitrust Procedures and Penalties Act (15 U.S.C. 16), provided

that Plaintiff has not withdrawn its consent, which it may do at any

time before the entry of the proposed Final Judgment by serving notice

thereof on Defendant Norsk Hydro USA Inc. and by filing that notice

with the Court;

3. In the event Plaintiff withdraws its consent or if the proposed

Final Judgment is not entered pursuant to this Stipulation, this

Stipulation shall be of no effect whatsoever, and the making of this

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

other proceeding; and

4. This Stipulation and the Final Judgment to which it related are

for settlement purposes only and do not constitute an admission by

Defendant Norsk Hydro USA Inc. in this or any other proceeding that

Section 1 of the Sherman Act, 15 U.S.C. 1, or any other provision of

law, has been violated.

This 6th day of February, 1998.

David Mark, Jr.

Attorney for Defendant, Norsk Hydro USA Inc., McDermott, Will & Emery,

227 West Monroe Street, Chicago, IL 60606, (312) 372-2000.

Karen Sampson Jones.

Belinda A. Barnett.

Attorneys for Plaintiff, U.S. Department of Justice, Antitrust

Division, 75 Spring Street, S.W. Suite 1176, Atlanta, Georgia 30303,

(404) 331-7100.

Stipulation by the United States and Defendant Farmland Industries,

Inc.

It is stipulated by and between the undersigned parties that:

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

action and over each of the parties thereto, and venue of this action

is proper in the Middle District of Florida, Tampa Division;

2. The parties consent that a Final Judgment in the form hereto

attached may be filed and entered by the Court, upon the motion of any

party or upon the Court's own motion, at any time after compliance with

the requirements of the Antitrust Procedures and Penalties Act (15

U.S.C. 16), provided that Plaintiff has not withdrawn its consent,

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

Judgment by serving notice thereof on Defendant Farmland Industries,

Inc. and by filing that notice with the Court;

3. In the event Plaintiff withdraws its consent or if the proposed

Final Judgment is not entered pursuant to this Stipulation, this

Stipulation shall be of no effect whatsoever, and the making of this

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

other proceeding; and

4. This Stipulation and the Final Judgment to which it relates are

for settlement purposes only and do not constitute an admission by

Defendant Farmland Industries, Inc. in this or any other proceeding

that Section 1 of the Sherman Act, 15 U.S.C. 1, or any other provision

of law, has been violated.

This 18th day of February, 1998.

David Everson,

Attorney for Defendant, Farmland Industries, Inc., Stinson, Mag &

Fizzell, P.C., 1201 Walnut Street, Suite 2700, Kansas City, Missouri

64106, (816) 842-8600.

Karen Sampson Jones.

Belinda A. Barnett.

Attorneys for Plaintiff, U.S. Department of Justice, Antitrust

Division, 75 Spring Street, S.W., Suite 1176, Atlanta, Georgia 30303,

(404) 331-7100.

Final Judgment

Whereas plaintiff, United States of America, having filed its

Complaint in this action of ____________________ and plaintiff and

defendants, by their respective attorneys, having consented to the

entry of this Final Judgment without trial or adjudication of any issue

of fact or law; and without this Final Judgment constituting any

evidence against, or any admission by, any party with respect to any

such issue of fact or law.

And Whereas defendants have agreed to be bound by the provisions of

this Final Judgment pending its approval by the Court.

Now, Therefore, before any testimony is taken, and without trial or

adjudication of any issue of fact or law, and upon the consent of the

parties,

It Is Hereby Ordered, Adjudged and Decreed as follows:

I. Jurisdiction

This Court has jurisdiction over the subject matter of this action

and over each of the parties consenting to this Final Judgment. The

Complaint states a claim upon which relief may be granted against each

defendant under Section 1 of the Sherman Act (15 U.S.C. 1).

II. Definitions

As used in this Final Judgment:

A. Hydro means defendant Norsk Hydro USA Inc. and its parents,

subsidiaries, successors and assigns, directors, officers, managers,

agents, and employees engaged in the ammonia business, and any other

person acting for, on behalf of, or under the control of them with

respect to the ammonia business.

B. Farmland means defendant Farmland Industries, Inc. and its

parents, subsidiaries, successors and assigns, directors, officers,

managers, agents, and employees engaged in the ammonia business, and

any other person acting for, on behalf of, or under the control of them

with respect to the ammonia business.

C. Ammonia asset means any asset used principally in the

manufacture, processing, production, storage, distribution, or sale of

ammonia and whose purchase price exceeds $750,000.

D. Ammonia business means the manufacturing, processing,

production, storage, distribution, or sale of ammonia.

E. Jointly determined bid or ``joint bid'' means any combining,

pooling, or supplementing of resources, money, or property in

connection with an actual or proposed offer for property which is to be

sold through a bid process.

F. Person means any individual, association, cooperative,

partnership, corporation, or other business or legal entity.

III. Applicability

This Final Judgment shall apply to defendants Hydro and Farmland,

including each of their directors, officers, managers, agents,

employees, parents, subsidiaries, and successors and assigns engaged

now or in the future in the ammonia business, and to all other persons

in active concert or participation with each defendant in the ammonia

business who shall have received actual notice of this Final Judgment

by personal service or otherwise.

IV. Prohibited Conduct

Defendants are enjoined and restrained from submitting any jointly

determined bid for the acquisition of any ammonia asset located in the

United States that is being sold by or under the auspices of a court or

agency of the United States.

V. Limiting Conditions

A. Nothing in Section IV shall prohibit defendants from submitting

any jointly determined bid for the acquisition of any ammonia asset

located in the United States that is being sold by or under the

auspices of a court or agency of the United States so long as, before

or at the time of submitting any such jointly determined bid, the

defendants:

1. Disclose to the seller of the asset and the person administering

the sale of the asset that a jointly determined bid is being submitted

and with whom the joint bid is being submitted; and

2. Do not, without disclosing to the seller in advance of the sale,

violate any of the terms or conditions for bidding imposed by the

seller of the asset or

[[Page 10941]]

violate any of the terms or conditions for bidding imposed by the

person administering the sale of the asset.

B. Section IV shall not apply to any purchases by defendants,

either jointly or separately, that are for the benefit of, on behalf

of, or in the name of, Farmland Hydro L.P. Section IV shall apply to

any jointly determined bid submitted by either defendant and any third

person or to any jointly determined bid submitted by defendants that is

not made for the benefit of, on behalf of, or in the name of Farmland

Hydro L.P.

VI. Compliance

A. Defendants are ordered to establish and maintain an antitrust

compliance program which shall include designating, within thirty (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 the

defendants to ensure compliance with this Final Judgment. The Antitrust

Compliance Officer shall be responsible for accomplishing the following

activities:

1. Distributing, within ninety (90) days of entry of this Final

Judgment, a copy of this Final Judgment to all officers and directors,

and any person who otherwise manages defendants with respect to the

ammonia business;

2. Distributing in a timely manner a copy of this Final Judgment to

any person who succeeds to a position described in Section VI(A)(1);

3. Briefing annually defendants' officers and directors engaged in

the ammonia business on the meaning and requirements of this Final

Judgment and the antitrust laws;

4. Obtaining annually from each officer or employee designated in

Section VI(A) (1) and (2) a written certification that he or she: (a)

Has read, understands, and agrees to abide by the terms of this Final

Judgment; (b) understands that failure to comply with this Final

Judgment may result in conviction for criminal contempt of court; and

(c) is not aware of any violation of the Final Judgment that has not

been reported to the Antitrust Compliance Officer;

5. Maintaining a record of recipients from whom the certification

required by Section VI(A)(4) has been obtained; and

6. Prior to the submission of any jointly determined bid,

distributing a copy of this Final Judgment to any person with whom

defendants submit a jointly determined bid for the acquisition of any

ammonia asset that is being sold by or under the auspices of a court or

agency of the United States.

B. Defendants are also ordered to file with this Court and serve

upon plaintiff, within ninety (90) days after the date of entry of this

Final Judgment, affidavits as to the fact and manner of compliance with

this Final Judgment.

C. If defendants' Antitrust Compliance Officer learns of any

violations of the Final Judgment defendants shall forthwith take

appropriate action to terminate or modify the activity so as to assure

compliance with this Final Judgment.

VII. Plaintiff Access

A. For the purpose of determining or securing compliance with this

Final Judgment, and subject to any legally recognized privilege, duly

authorized representatives of the plaintiff shall, upon written request

by the Assistant Attorney General in charge of the Antitrust Division,

and on reasonable notice to defendants, be permitted:

1. Access during defendants' office hours to inspect and copy all

records and documents in its possession or control relating to any

matters contained in this Final Judgment; and

2. Subject to the reasonable convenience of defendants and without

restraint or interference from defendants, to interview defendants'

officers, employees, or agents engaged in the ammonia business, who may

have counsel present, regarding such matters.

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

of the Antitrust Division, each defendant shall submit such written

reports, under oath if requested, relating to any of the matters

contained in this Final Judgment as may be requested, subject to any

legally recognized privilege.

C. No information or documents obtained by the means provided in

this Section VII 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, or for the purpose of securing compliance

with this Final Judgment, or as otherwise required by law.

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

defendants to plaintiff, defendants represent and identify 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 defendants mark each pertinent page of such

material, ``Subject to claim of protection under Rule 26(c)(7) of the

Federal Rules of Civil Procedure,'' then 20 days' notice shall be given

by plaintiff to defendants prior to divulging such material in any

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

defendant is not a party.

VIII. Retention of Jurisdiction

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 such further orders and directions as may be necessary or

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

terminate any of its provisions, to enforce compliance herewith, and to

punish any violations of its provisions. Nothing in this provision

shall give standing to any person not a party to this Final Judgment to

seek any relief related to it.

IX. Term

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:-----------------------------------------------------------------

Court approval subject to the Antitrust Procedures and Penalties

Act, 15 U.S.C. 16.

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

United States District Judge

Competitive Impact Statement

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

Act, 15 U.S.C. Sec. 16(b)-(h), the United States submits this

Competitive Impact Statement relating to the proposed Final Judgment

submitted for entry with the consent of Norsk Hydro USA Inc.

(``Hydro'') and Farmland Industries, Inc. (``Farmland'') in this civil

antitrust proceeding.

I. Nature and Purpose of the Proceeding

On February 19, 1998, the United States filed a civil antitrust

complaint alleging that defendants and others conspired unreasonably to

restrain competition in violation of Section 1 of the Sherman Act, 15

U.S.C. 1. The Complaint alleges that defendants Hydro and Farmland met

with representatives of Seminole Fertilizer Corporation (``Seminole'')

\1\ on March 5,

[[Page 10942]]

1992, and discussed sharing pipeline capacity and the cost of bidding

on an ammonia tank and pipeline interest, hereinafter referred to as

the Tampa Facility, then being auctioned pursuant to bankruptcy

proceedings. At the conclusion of the meeting, defendants and Seminole

reached a tentative agreement, which was later reduced to writing. The

Complaint also alleges that on March 9 and March 10, 1992, Defendant

Hydro and Seminole discussed the terms of the agreement by telephone on

several occasions and that they executed the written agreement two

hours before the scheduled auction of the Tampa Facility on March 12,

1992. The agreement provided that Seminole would give bid support of up

to $2.5 million to Defendant Hydro, if necessary, to defeat a competing

bid. In exchange, Defendant Hydro agreed to give Seminole increased

pipeline capacity if defendant Hydro was the successful bidder.

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

\1\ Seminole, a wholly owned subsidiary of Tosco Corporation,

sold all of its assets in May 1993. Before its assets were sold,

defendant maintained its corporate offices in Stamford, Connecticut,

and was a manufacturer and distributor of phosphatic fertilizer. It

operated production and storage facilities in central Florida, near

Tampa. The staff filed a complaint, a proposed Final Judgment, and

related papers against Seminole on June 18, 1997. The Final Judgment

was entered by the Honorable Elizabeth A. Kovachevich and filed on

September 19, 1997.

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

This agreement had the effect of eliminating Seminole, Defendant

Hydro's chief rival, as a viable competing bidder for the Tampa

Facility, because it required Seminole to assist Hydro in bidding up

the price in the face of any bid, including a bid by Seminole alone--

against Hydro. Almost immediately after signing the agreement, Seminole

stated that it was no longer going to attend the auction of the Tampa

Facility. At the auction on the afternoon of March 12, there were no

bids for the Tampa Facility other than the one previously submitted by

Defendant Hydro, a bid which the bankruptcy trustee had hoped to top.

Defendants' intentions were to have the Tampa Facility become an

asset of their joint venture, Farmland Hydro L.P. (``FHLP''), if

Defendant Hydro was the successful bidder. Defendant Farmland

participated in the negotiations leading to the March 12 agreement,

assented to Defendant Hydro's execution of the agreement on its behalf

as a partner in FHLP, and directly benefited from the agreement because

of its partnership with Defendant Hydro.

On February 19, 1998, the United States and defendants filed a

Stipulation by which they consented to the entry of a proposed Final

Judgment following compliance with the Antitrust Procedures and

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

will be discussed in detail in Section IV.A., would order defendants to

refrain from submitting any jointly determined bid for the acquisition

of any ammonia asset (as defined in the Final Judgment) located in the

United States that is being sold by or under the auspices of a court or

agency of the United States, unless defendants disclose to the seller

of the asset and the person administering the sale of the asset that a

jointly determined bid is being submitted and with whom the joint bid

is being submitted. The Final Judgment also prohibits defendants from

violating any of the terms or conditions for bidding imposed by the

seller of the asset or from violating any of the terms or conditions

for bidding imposed by the person administering the sale of the asset,

without disclosing such to the seller in advance of the sale. By its

terms, the Final Judgment does not apply to any purchases by

defendants, either jointly or separately, that are for the benefit of,

on behalf of, or in the name of FHLP. The judgment does, however, apply

to any jointly determined bid submitted by either defendant and any

third person or to any jointly determined bid submitted by defendants

that is not made for the benefit of, on behalf of, on in the name of

FHLP.

II. Defendants

Defendant Hydro is a subsidiary of Norsk Hydro a.s (``Norsk AS''),

a Norwegian corporation, which is majority owned by the Norwegian

government. Hydro is headquartered in New York City, New York, and is a

holding company for various subsidiaries. One of the indirect

subsidiaries of Hydro, Hydro Agri Ammonia, Inc. (``Hydro Agri''), is a

wholesale distributor of ammonia headquartered in Tampa, Florida. At

the time of the alleged violation, Norsk AS controlled approximately

twenty-five percent of the world trade ammonia.

Defendant Farmland is a cooperative headquartered in Kansas City,

Missouri, which provides products and services to its members, who are

primarily farmers and ranchers. Through FHLP, which Farmland formed

with an affiliate of Hydro in November 1991, Farmland is also engaged

in manufacturing and distributing phosphatic fertilizers.

III. The Tampa Facility and Events Leading up to the Alleged

Violation

A. The Tampa Facility

The Tampa Facility, which consists of an ammonia terminal located

in the Port of Tampa, Florida, and a one-half interest in a pipeline

system connected to the ammonia terminal,\2\ is used for storing,

handling, and delivering anhydrous ammonia, one of the raw materials

used in the manufacture of phosphatic fertilizers. Located on

approximately 17\1/2\ acres of land leased from the Tampa Port

Authority, the Tampa Facility has a single tank with a 35,000 metric

ton storage capacity. It services five nearby phosphatic fertilizer

plants,\3\ where the ammonia is combined with phosphoric acid to create

diammonium phosphate. The Tampa Facility is able to service by truck or

rail other phosphatic fertilizer plants not connected to it. During the

early 1990's the Tampa Facility was owned by the Royster Company

(``Royster''), now known as Mulberry Phosphates, Inc. (``MPI'').

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

\2\ Seminole owned the other one-half interest in the pipeline,

along with a separate ammonia terminal (consisting of two ammonia

tanks) that also was connected to the pipeline.

\3\ If Seminole had been successful in acquiring the Tampa

Facility, it would have been the exclusive supplier to those five

plants.

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

B. The Bankruptcy of Royster and the Failed Auction

Royster was a manufacturer of phosphatic fertilizers and related

products for the domestic and export markets. Its principal facilities

included a plant for the production of diammonium phosphate, located in

Mulberry, Florida, and the Tampa Facility. Royster filed for bankruptcy

protection on April 8, 1991, after months of experiencing financial

hardships. Under the reorganization plan submitted to the Bankruptcy

Court, Royster proposed to liquidate certain assets, including its

Tampa Facility. Shortly after news of the potential sale of the Tampa

Facility went public, Defendant Hydro and Seminole separately expressed

interest in acquiring it. After extensive negotiations with Royster

officials, Defendant Hydro agreed to purchase the property for $15.5

million and executed an asset purchase agreement for the property on

September 25, 1991. The agreement guaranteed Royster the right to

purchase a continuing supply of ammonia from the terminal for its

Mulberry plant and contained a through-put provision that permitted it

to put the ammonia through the pipeline from the terminal to the plant.

In November of that same year, the Bankruptcy Court ordered that the

Tampa Facility be sold by auction and that bids be taken against

Hydro's offer of $15.5 million. The auction was scheduled for March 12,

1992. It was not until the auction was announced that a third company,

CF Industries

[[Page 10943]]

(``CF'')\4\, publicly expressed any interest in acquiring the Tampa

Facility.

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

\4\ CF is a cooperative which has been a major participant in

the fertilizer business since the mid-1960's and has operated world-

scale phosphatic fertilizer plants in Florida since 1969.

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

On December 18, 1991, the Bankruptcy Court issued an order

approving bidding procedures in connection with the proposed sale of

the Tampa Facility. Any third party offer had to: (1) Be substantially

similar to the one contained in the Hydro Asset Purchase Agreement; (2)

be at least $1 million more than Defendant Hydro's offer of $15.5

million; (3) include an offer to enter into a through-put agreement

with Royster; and (4) include a confidentiality agreement with Royster

and Defendant Hydro regarding disclosure of the terms of the Royster/

Hydro Through-put Agreement. In addition, the Order required that the

third party deposit $1 million in escrow no later than the time at

which it submitted an offer. The money deposited was to remain in

escrow pending the earlier of (a) the closing of the sale to the third

party if its offer was approved by the Bankruptcy Court or (b) the

entry of an order approving the sale of the Tampa Facility to either

Hydro or another third party bidder. After depositing the $1 million,

the third party was entitled to receive documents setting forth the

results of the inspection of the Tampa Facility's tank, the cost of

repair, the terms of the Royster/Hydro Through-put agreement, and the

terms of any through-put agreements submitted by any other third

parties.

In February 1992, CF deposited $1 million in escrow. Seminole made

its escrow deposit on March 9, 1992, three days before the auction. At

the time of the auction, there were four bidders who were qualified to

bid: Defendant Hydro, CF, Seminole, and Superfos Investments Limited

(``Superfos'').\5\ CF informed Royster shortly before the auction that

it would not be bidding, because of environmental concerns it had

recently identified. Only Defendant Hydro appeared at the auction site

on the afternoon of March 12 to bid on the Tampa Facility. There having

been no new bids tendered, Defendant Hydro's standing offer of $15.5

million was accepted, pending approval by the Bankruptcy Court. In a

meeting later that afternoon to finalize the details of the sale before

a March 13 court hearing, Royster representatives discovered that

Defendant Hydro and Seminole had executed a joint bidding agreement

approximately two hours before the auction was scheduled to begin.

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

\5\ Since Superfos was a major creditor of Royster, the

Bankruptcy Court exempted Superfos from the $1 million escrow

requirement and gave it permission to submit a credit bid. Thus,

Superfos could deduct from its bid offer the amount it was owed by

Royster.

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

At the hearing the following day, Royster representatives advised

the Bankruptcy Court of the agreement between Seminole and Defendant

Hydro. The Bankruptcy Court deferred ratification of the sale and

ordered discovery to be taken. A few days later, the Bankruptcy Court

received two anonymous communications regarding the bidding agreement.

One communication was a letter alleging that Seminole had agreed to

backstop Defendant Hydro's bid and that Seminole's bid supplement was

leaked to CF, causing the latter to withdraw. The other communication

was one of Seminole's internal memoranda written by Steve Yurman,

Seminole's president, describing the terms of the March 12 agreement.

After reviewing the information obtained during discovery in light of

the anonymous correspondence, the Bankruptcy Court, at a hearing on

March 20, refused to ratify the sale of the Tampa Facility to Defendant

Hydro and ordered that a second auction be held. At the second auction,

on June 17, 1992, CF and Defendant Hydro submitted bids, and CF won the

Tampa Facility with a final bid of $21.6 million. (By the time of the

second auction, CF had been able to resolve its environmental

concerns.)

C. Evidence of Collusion

On February 26, 1992, representatives of Seminole and Defendant

Hydro and Farmland met at the Rihga Royal Hotel in New York to discuss

a ``joint venture'' proposal by Seminole. The proposal involved

Defendant Hydro buying the Tampa Facility and keeping the interest in

the pipeline, but possibly selling the tank to CF. The meeting

concluded with no agreements being reached.

The same parties met again on March 5, 1992, at the same hotel.

They primarily discussed sharing pipeline capacity and the cost of

bidding on the terminal. Specifically, Seminole and Defendants Hydro

and Farmland proposed that Defendant Hydro and Seminole enter into an

agreement whereby Seminole would supplement Defendant Hydro's bid and

consent to Royster's transfer of its pipeline interest to Defendant

Hydro in return for Defendant Hydro giving Seminole extra pipeline

capacity.\6\ A tentative agreement was reached and Defendant Hydro

indicated that it would have its attorneys reduce the agreement to

writing and send Seminole a draft to review. Defendant Hydro sent the

first written draft to Seminole on March 6, and on March 9 and March 10

representatives of Defendant Hydro and Seminole discussed, via

telephone on several occasions, the terms of the draft agreement.

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

\6\ As owner of the other one-half interest in the Tampa

Facility's pipeline lease, Seminole already had the right to use

450,000 tons of the pipeline's 900,000 ton capacity.

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

On the morning of March 12, officials of Tosco, Seminole and

Defendants Hydro and Farmland, along with their attorneys, met in

Tampa, Florida, at the law offices of MacFarlane Ferguson, Defendant

Hydro's local counsel, to resume negotiating the details of the

proposed agreement. After hours of negotiations, the parties agreed, in

part, that (a) Seminole would supplement Defendant Hydro's bid up to

$2.5 million, if necessary to win the auction, and consent to Royster's

assignment of its one-half interest in the pipeline lease to Defendant

Hydro and (b) Defendant Hydro, in return, would give Seminole the right

to use an extra 40,000 tons of the pipeline's capacity. Almost

immediately after signing the agreement, Seminole stated that it was no

longer attending the auction.

One of Seminole's representatives appeared at the auction moments

before it started and advised Royster that it was withdrawing from the

bidding. Later that evening, representatives of Defendant Hydro and

Seminole talked by telephone and agreed to instruct their counsel to

confer with one another to prepare for the court hearing the next day.

In this case, there was virtually no evidence of covert activity,

which indicated that the subjects of the investigation were not aware

of, or did not appreciate, the illegal nature of their actions. This

lack of covertness and the lack of criminal intent it indicates are the

main reasons this case is being filed civilly rather than criminally.

See Antiturst Division Manual, Section III.E., at III-12 (October 18,

1987) (Second Edition).

IV. Explanation of Proposed Final Judgment

A. Prohibited Conduct and Limiting Conditions

Section IV enjoins defendants from submitting any jointly

determined bid for the acquisition of any ammonia asset located in the

United States that is being sold by or under the auspices of a court or

agency of the United States. Under Section V however, defendants are

permitted to submit jointly determined bids if two conditions are met,

i.e.,

[[Page 10944]]

defendants must (1) disclose to the seller of the asset and the person

administering the sale of the asset that a jointly determined bid is

being submitted and with whom the joint bid is being submitted, and (2)

not, without disclosing to the seller in advance of the sale, violate

any of the terms or conditions for bidding imposed by the seller of the

asset or violate any of the terms or conditions for bidding imposed by

the person administering the sale of the asset.

Similarly, Section V(B) allows jointly determined bids by

defendants, submitted either jointly or separately, that are for the

benefit of, on behalf of, or in the name of FHLP. This latter provision

still does not exempt jointly determined bids that are submitted by

either defendant and any third person or any jointly determined bids

submitted by defendants that are not made for the benefit of, on behalf

of, or in the name of FHLP.

B. Compliance Program and Certification

Under Section VI of the Final Judgment defendants are required,

within thirty days of entry of the Final Judgment, to establish and

maintain an antitrust compliance program which shall include

designating an Antitrust Compliance Officer with responsibility for

accomplishing the compliance program. The Antitrust Compliance Officer

is required to, on a continuing basis, supervise the review of the

current and proposed activities of the defendant to ensure that it is

in compliance with the program. The Antitrust Compliance Officer is

also required to (1) distribute a copy of the Final Judgment to all

officers and directors, and any person who otherwise manages defendant

with respect to the ammonia business, (2) distribute in a timely manner

a copy of the Final Judgment to any person who succeeds to a position

described in Section (VI)(A)(1) of the Final Judgment, (3) brief

annually defendant's officers and directors engaged in the ammonia

business on the meaning and requirements of the Final Judgment and the

antitrust laws, and (4) obtain annually from each officer or employee

designated in Section (VI)(A) (1) and (2) of the Final Judgment a

written certification that he or she: (a) Has read, understands, and

agrees to abide by the terms of the Final Judgment; (b) understands

that failure to comply with the Final Judgment may result in conviction

for criminal contempt of court; and (c) is not aware of any violation

of the Final Judgment that has not been reported to the Antitrust

Compliance Officer.

Moreover, prior to the submission of any jointly determined bid,

defendants must distribute a copy of the Final Judgment to any person

with whom defendants submit a jointly determined bid for the

acquisition of any ammonia asset that is being sold by or under the

auspices of a court or agency of the United States. Defendants are also

required to file with the Court and serve upon plaintiff, within ninety

(90) days after the date of the Final Judgment, affidavits as to the

fact and manner of their compliance with this Final Judgment.

Defendants are also required to take appropriate action to terminate or

modify any activities uncovered that violate any provision of the Final

Judgment.

V. 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 actions under

the Clayton Act. 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 private lawsuit that may be brought against the

defendants.

VI. Procedures Available for Modification of the Proposed Final

Judgment

As provided by the Antitrust Procedures and Penalties Act, any

person believing that the proposed Final Judgment should be modified

may submit written comments to Nezida S. Davis, Acting Chief, Atlanta

Field Office, U.S. Department of Justice, Antitrust Division, 75 Spring

Street, S.W., Suite 1176, Atlanta, Georgia, 30303, within the 60-day

period provided by the Act. These comments, and the Department's

responses, will be filed with the Court and published in the Federal

Register. All comments will be given due consideration by the

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

the proposed Final Judgment at any time prior to entry.

VII. Alternative to the Proposed Final Judgment

The Department considered, as an alternative to the proposed Final

Judgment, litigation seeking comparable equitable relief. In the view

of the Department of Justice, a trial would involve substantial cost to

the United States and is not warranted because the Proposed Judgment

provides relief that will remedy the violations of the Sherman Act

alleged.

VIII. Determinative Materials and Documents

No materials and documents described in Section 2(b) of the

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

formulating the proposed Final Judgment.

Dated: February 18, 1998.

Respectfully submitted,

Karen Sampson Jones,

Belinda A. Barnett,

Attorneys for Plaintiff, U.S. Department of Justice, Antitrust

Division, 75 Spring Street, S.W., Suite 1176, Atlanta, Georgia 30303,

(404) 331-7100.

[FR Doc. 98-5704 Filed 3-4-98; 8:45 am]

BILLING CODE 4410-11-M