United States v. Rochester Gas & Electric Corp.; Proposed Final Judgment and Competitive Impact Statement

DEPARTMENT OF JUSTICE

Antitrust Division

United States v. Rochester Gas & Electric Corp.; Proposed Final

Judgment and Competitive Impact Statement

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 Western District of New York in

United States v. Rochester Gas & Electric Corporation, 97-CV-6294T. The

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

expiration of the statutory 60-day public comment period and compliance

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

On June 24, 1997, the United States filed a civil antitrust

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

alleging that defendant Rochester Gas and Electric (``RG&E'') entered

into a contract with the University of Rochester (``University'' or

``UR''), in which RG&E promised UR a number of benefits, including

electricity at reduced rates, in exchange for the University's promise

not to compete against RG&E in the sale of electricity to consumers.

The complaint alleges that this agreement violated Section 1 of the

Sherman Act, 15 U.S.C. 1, and seeks a judgment by the Court declaring

the defendant's agreement to be an unlawful restraint of trade. The

complaint also seeks an order by the Court to enjoin the defendant from

other activities in the future having a similar purpose or effect.

The United States and defendant have stipulated that the proposed

consent 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 RG&E,

except that the Court will retain jurisdiction over the matter for

possible further proceedings to construe, modify or enforce the

judgment, or to punish violations of any of its provisions.

The proposed consent judgment contains three principal forms of

relief. First, RG&E is enjoined from enforcing an anticompetitive

agreement with the University. Second, RG&E is enjoined from entering

into future agreements with the University or any other competitor or

potential competitor that could have similar anticompetitive effects.

Third, the proposed final judgment places affirmative obligations on

RG&E to pursue an antitrust compliance program directed toward avoiding

a repetition of its anticompetitive behavior.

Public comment is invited within sixty days of the publication of

this notice. Such 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, NW., Suite

500, Washington, DC 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, NW.,

Washington, DC 20430 (telephone: (202) 514-2481) and at the office of

the Clerk of the United States District Court Western District of New

York 272 U.S. Courthouse, 100 State Street, Rockester, New York 14614-

1368.

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

payment of a copying fee.

Rebecca P. Dick,

Director of Civil Non-Merger Enforcement, Antitrust Division.

Stipulation

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

respective attorneys, that:

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 Western District of New York.

2. The parties consent that a Consent 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(b)-(h)), 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 Consent

Judgment by serving notice thereof on defendant and by filing that

notice with the Court.

3. Plaintiff is instructed to file and publish its competitive

impact statement pursuant to 15 U.S.C. 16(b) within 30 days of the

filing of this stipulation.

4. The parties shall abide by and comply with the provisions of the

proposed Consent Judgment pending entry of the Consent Judgment, and

from the date of the filing of this Stipulation, shall comply with all

the terms and provisions of the Consent Judgment as though they were in

full force and effect as an order of the Court.

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

Consent Judgment is not entered pursuant to this Stipulation, this

Stipulation and the Consent Judgment shall be of no effect whatever and

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

proceeding.

Dated: February 20, 1998

[[Page 15433]]

For Plaintiff Untied States of America

Joel I. Klein,

Acting Assistant Attorney General.

A. Douglas Melamed,

Deputy Assistant Attorney General.

Rebecca P. Dick,

Deputy Director of Operations.

Roger W. Fones,

Transportation, Energy & Agriculture Section.

Lade Alice Eaton, Nina Hale, Rebekah J. French, Janet R. Urban,

Attorneys, Department of Justice, Antitrust Division--Suite 500, 325

Seventh Street, N.W., Washington, D.C. 20004, (202) 307-6351.

Donna Kooperstein,

Assistant Chief, Transportation, Energy, & Agriculture Section.

For Defendant Rochester Gas and Electric Corporation

David M. Schraver,

NIXON, Hargrave, Devans & Doylellp, Clinton Square, P.O. Box 1051,

Rochester, New York 14603, (716) 263-1341.

Order

It is so ordered, this 20th day of February, 1998.

Michael A. Telesca,

United States District Judge.

Consent Judgment

Plaintiff, United States of America, filed it Complaint on June 24,

1997. Plaintiff and defendant, by their respective attorneys, have

consent to the entry of this Consent Judgment without trial or find

adjudication of any issue of fact or law. This Consent Judgment shall

not be evidence against or an admission by any party with respect to

any issue of fact of law. Defendant has denied any wrongdoing or

violation of law. Therefore, before the taking of any testimony and

without trial or find adjudication of any issue of fact of 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.

II. Background

Plaintiff's claims in this action are based primarily upon allege

conduct related to a provision contained in the Individual Service

Agreement between The University of Rochester and Rochester Gas and

Electric Corporation, dated March 31, 1994, which provision reads:

6.3 Study of Alternatives: The University may, during the term

of this Agreement, study alternatives to the acquisition of energy

from RG&E as the University deems appropriate; provided, however,

that the University shall not solicit or join with other customer of

RG&E to participate in any plan designed to provide them with

electric power and/or thermal energy from any source other than

RG&E.

III. Definitions

As used herein, the term.

(A) ``Agreement'' means any contract, arrangement, or

understanding, formal or informal, oral or written, between two or more

persons;

(B) ``Defendant'' or ``RG&E'' means Rochester Gas and Electric

Corporation, its domestic and foreign parents, predecessors,

divisions, subsidiaries, affiliates, and partnerships, and all

directors, officers, employees, agents and representatives of the

foregoing; the terms ``subsidiary'' and ``affiliate'' refer to any

person in which the defendant holds (50 percent or more) ownership

or control;

(C) ``Document'' means all ``writings and recordings'' as that

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

(D) ``Including'' means including but not limited to;

(E) ``Joint venture'' means a unified or integrated method of doing

business in which the parties share substantially in the profits,

losses and risks of the interprise;

(F) ``Person'' means any natural person, corporation, firm,

company, sole proprietorship, partnership, association, institution,

governmental unit, or other legal entity;

(G) ``Retail marketing agreement'' means any agreement pursuant to

which RG&E acts as a retailer of electricity at an unregulated price or

of other related products of services on behalf of a national or

regional providers of such electricity, products or services, so long

as the agreement does not result in the provider or RG&E being the only

provider or retailer of electricity at an unregulated price or such

other products or services in Monroe Country;

(H) ``The University'' means the University of Rochester in

Rochester, NY.

(I) ``Unregulated price'' means a price of the sale of electricity

other than (1) a price which is the result of a regulatory proceeding,

order or acceptance of tariff filings, setting or approving specific

uniform rates applicable to a class of classes of customers; or (2) a

price set by negotiation between a supplier and a customer at a minimum

floor price dictated by statute, regulation or order.

IV. Applicability

This Consent Judgment applies to the defendant and to each of its

successors and assigns, and to all other persons in active concert or

participation with any of them who shall have received actual notice of

the Consent Judgment by personal service or otherwise.

V. Injunction

RG&E, by this Consent Judgment, shall be enjoined from:

(A) enforcing any clause in any contract with The University of

Rochester containing the language quoted in Section II, above, or from

including any provision containing that language, without the reference

to the University, in an any other flexible rate contract (entered into

pursuant to RG&E's Service Classification No. 10 or any replacement to

Service Classification No. 10) for its retail electric services;

(B) enforcing or attempting to enforce Paragraph 10 of the

Memorandum of Understanding, dated October 27, 1993, between RG&E and

the University;

(C) entering into or enforcing a covenant or agreement not to

compete in the retail sale of electricity with any competitor or

potential competitor in the retail sale of electricity; provided,

however, that such an agreement not to compete that is reasonably

ancillary to the following types of agreements shall not be interpreted

as a violation of this Consent Judgment:

(1) employment contracts;

(2) personal service contracts;

(3) agreements regarding the sale or purchase of a business;

(4) joint ventures or partnerships;

(5) retail marketing agreements;

(6) consulting agreements; and

(7) portfolio management contracts.

VI. Exception

Nothing in this Consent Judgment shall prohibit RG&E from engaging

in any conduct which is exempt from or immune under the antitrust laws.

VII. Term

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

initial filing, unless earlier terminated pursuant to this Section.

(B) This Consent Judgment shall terminate upon demonstration by

RG&E that less than 50% of the non-residential retail sales of

electricity made at unregulated prices in Monroe County, New York, were

made by RG&E. The percentage threshold in this Paragraph must be: (1)

Satisfied in terms of kilowatt-hours of electricity sold; and (2)

measured as an average over a consecutive six month period.

(C) The procedure for making the determination described in

Paragraph B, above is as follows:

(1) Defendant RG&E shall notify the United States in writing when

it

[[Page 15434]]

believes the threshold stated in Paragraph B has been satisfied over

the requisite period, and shall submit to the United States all

supporting data and information.

(2) The United States shall object to the defendant in writing

within 60 days of receiving the notice and supporting data and

information if the United States condluces that RG&E has not

demonstrated that the condition has been satisfied.

(3) If the United States does not object within 60 days, this

Consent Judgment shall terminate without further act of either party or

of this Court.

(4) If the United States does object, the termination will not

become effective except by order of this Court.

VIII. Compliance Program

(A) The defendant is ordered to maintain an antitrust compliance

program which shall include designating, within 30 days of entry of

this Consent Judgment, an Antitrust Compliance Officer with

responsibility for implementing the antitrust compliance program and

achieving compliance with this Consent Judgment. The Antitrust

Compliance Officer shall, on a continuing basis, supervise the review

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

they comply with this Consent Judgment.

(B) The Antitrust Compliance Officer shall:

(1) Distribute, within 60 days of the entry of this Consent

Judgment, a copy of this Consent Judgment to all officers and employees

with responsibility for making electric power and planning acquisition

of electric power and generating capacity;

(2) Distribute in a timely manner a copy of this Consent Judgment

to any officer or employee who succeeds to a position described in

Section VIII(B)(1);

(3) Brief annually in writing or orally those persons designated in

Section VIII(B)(1) on the meaning and requirements of this Consent

Judgment and the antitrust laws and advise them that the defendant's

legal advisers are available to confer with them regarding compliance

with the Consent Judgment and the antitrust laws;

(4) Obtain from each officer or employee designated in Section

VIII(B)(1) a written certification that he or she: (a) has read,

understands, and agrees to abide by the terms of this Consent Judgment;

and (b) has been advised and understands that his or her failure to

comply with this Consent Judgment may constitute contempt of court; and

(5) Maintain a record of recipients to whom the Consent Judgment

has been distributed and from whom the certification in Section

VIII(B)(4) has been obtained.

(C) At any time, if the defendant's Antitrust Compliance Officer

learns of any past or future violations of Section V of this Consent

Judgment, the defendant shall, within 45 days after such knowledge is

obtained or sooner if feasible, take appropriate action to terminate or

modify the activity so as to comply with this Consent Judgment.

IX. Certification

Within 75 days after the entry of this Consent Judgment, the

defendant shall certify to the plaintiff whether it has designated an

Antitrust Compliance Officer and has distributed the Consent Judgment

in accordance with Section VIII above.

X. Plaintiff Access

(A) To determine or secure compliance with this Consent 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 the

defendant in accordance with Section XI(C) below, be permitted, subject

to any legally recognized privilege:

(1) Reasonable access during the defendant's normal business hours

to inspect and copy all non-privileged documents in the possession or

under the control of the defendant, who may have counsel present,

relating to actions enjoined under Section V, termination under Section

VII, and the compliance program under Section VIII of this Consent

Judgment; and

(2) Subject to the reasonable convenience of the 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 the defendant's principal

office, the defendant shall submit such written reports, under oath if

requested, relating to any matters described in Section X(A)(1) as may

be reasonably requested, subject to any legally recognized privilege.

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

Section X 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

Consent Judgment, or as otherwise required by law.

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

defendant to the 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 (relating to trade secret or other

confidential research, development or commercial information), 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 the plaintiff to

the defendant prior to disclosing such material in any legal proceeding

(other than a grand jury proceeding).

XI. Further Elements of the Consent Judgment

(A) Whenever notice must be provided to a party pursuant to the

terms of this Consent Judgment, such notice shall be made by first

class mail, return receipt requested, addressed to the following:

To RG&F; Michael T. Tomanino, Esq., Senior Vice President and General

Counsel, Rochester Gas and Electric Corporation, 89 East Avenue,

Rochester, New York 14649.

To the United States: Joel I. Klein, Assistant Attorney General,

Antitrust Division, United States Department of Justice, 10th Street

and Pennsylvania Avenue, N.W., Washington, D.C., Washington, D.C.

20530.

or to such other person whom the parties may designate from time to

time.

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

enabling any of the parties to this Consent 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 Consent Judgment, to

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

to punish violations of its provisions.

(C) Entry of this Consent Judgment is in the public interest.

Dated: ____________________, 1998.

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

Hon. Michael A. Telesca,

United States District Judge.

Competitive Impact Statement

Pursuant to Section 2 of the Antitrust Procedures and Penalties Act

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

Impact Statement

[[Page 15435]]

relating to the proposed consent judgment in United States v. Rochester

Gas and Electric Corporation, submitted for entry in this civil

antitrust proceeding.

I. Nature and Purpose of the Proceedings

On June 24, 1997, the United States filed a civil antitrust

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

alleging that defendant Rochester Gas and Electric (``RG&E'') entered

into a contract with the University of Rochester (``University'' or

``UR''), in which RG&E promised UR a number of benefits, including

electricity at reduced rates, in exchange for the University's promise

not to compete against RG&E in the sale of electricity to consumers.

The complaint alleges that this agreement violated Section 1 of the

Sherman Act, 15 U.S.C. 1, and seeks a judgment by the Court declaring

the defendant's agreement to be an unlawful restraint of trade. The

complaint also seeks an order by the Court to enjoin the defendant from

other activities in the future having a similar purpose or effect.

The United States and defendant have stipulated that the proposed

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

the United States withdraws its consent. The Court's entry of the

proposed judgment will terminate this civil action against RG&E, except

that the Court will retain jurisdiction over the matter for possible

further proceedings to construe, modify or enforce the judgment, or to

punish violations of any of its provisions.

II. Description of the Practices Giving Rise to the Alleged

violations of the Antitrust Laws

By the early 1990's regulated electricity rates in New York state

had become so high that industrial customers were beginning to look for

alternatives to high-priced power, either by relocating to other states

or by generating their own electricity.\1\ In 1993, the New York Public

Service Commission (``PSC'') adopted new regulations that permitted

utilities to negotiate individual prices with certain customers

(``flexible rate contracts'') rather than charge a uniform tariff. The

PSC intended to afford utilities the flexibility to compete with their

largest customers' other supply options.

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

\1\ Re Competitive Opportunities Available to Customers of

Electric and Gas Service, 93-M-0229, Order Instituting Proceeding

(March 19, 1993) (``March 19 Order'').

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

In the meantime, the University of Rochester, a major customer of

RG&E, learned that by building a modern, efficient plant to replace the

decades-old steam plant used to heat and cool its buildings, it could

produce the steam it needed and also produce--or cogenerate--

electricity as a byproduct at a negligible cost. The University formed

a study group to analyze and evaluate the cogeneration option, and

concluded that a 23 Megawatt (MW) plant would be the optimal size for

the University's steam and electricity needs. Such a plant would

generate up to one-third more electricity that the University needed,

but under New York law, the University could sell the excess

electricity to other retail customers in competion with RG&E. PSL

section 2(13). In addition, such a plant would be cost effective even

if the University continued to buy its electric power form RG&E and

sold all the power produced by the congeneration plant to others. Thus,

the University was a potential competitor from RG&E in the retail

electricity market. On July 20, 1993, the University's Board of

Trustees authorized construction of a 23 MW plant and allocated $1.3

million to begin the project.

The cogeneration project came to a halt in October 1993, when RG&E

induced the University to enter into a Memorandum of Understanding

(``MOU''). In part, the MOU resembles an ordinary--and legal--

requirements contract between buyer and seller: RG&E agreed to supply

the University with electricity at discounted rates, and the University

agreed to purchase of all of its power needs from RG&E for seven years.

But the MOU did not stop there--RG&E obtained the University's

commitment not to compete for RG&E customers. The bar on competition is

unrelated to the electric requirements contract and prohibits the

University for seven years for even studying any ``alternative sources

of electric power and gas supply'' unless the ``studies and the

activities associated with them shall be confined to the service of the

University's own needs.'' This provision was intended to and did

prevent the University from meeting its steam requirements--which were

wholly separate from its demand for electricity--in a manner that would

bring it into competition with RG&E.

RG&E and the University formalized the agreement set forth in the

MOU by entering a flexible rate contract (the ``Individual Service

Agreement'' or ``ISA'') about six months later. Like the MOU, the ISA

includes provisions that are not necessary for the respective

commitments by the University and RG&E to buy and sell electricity for

the University's needs but rather simply prevent UR from competing with

RG&E.

The University may not solicit RG&E customers or seek to

supply them with electricity;

The University may not join in any plan intended to supply

electricity to RG&E customers;

The University may not participate in any plan to provide

any RG&E customers with thermal energy; and

The University may not work with a developer to provide

steam to UR and sell electricity to RG&E customers.\2\

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\2\ These restrictions are set forth in Section 6.3 of the ISA,

which reads as follows:

``Study of Alternatives: The University may, during the term of

this Agreement, study alternatives to the acquisition of energy from

RG&E as the University deems appropriate; provided, however, that

the University shall not solicit or join with other customers of

RG&E to participate in any plan designed to provide them with

electric power and/or thermal energy from any source other than

RG&E.''

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As a result of the agreement not to compete, the University

abandoned its plans to build the cogeneration plant and enter the

retail electric market, depriving RG&E's customers of a competitive

alternative. By in effect ``paying'' the University--a potential

competitor--not to build the new cogeneration plant, RG&E was free to

demand higher prices from the customers the University's plant

otherwise could have served.

III. Explanation of the Proposed Consent Judgment

The United States and the defendants have stipulated that a consent

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

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

proposed judgment provides that the entry of the judgment does not

constitute any evidence against or an admission by any party with

respect to any issue of fact or law. Under the provisions of Section

2(e) of the APPA, entry of the proposed judgment is conditioned upon

the Court finding that its entry will be in the public interest.

The proposed judgment contains three principal forms of relief.

First, RG&E is enjoined from enforcing its anticompetitive agreement

with the University. Second, RG&E is enjoined from entering into future

agreements with the University or any other competitor or potential

competitor that could have similar anticompetive effects. Third, the

proposed judgment places affirmative obligations on RG&E to pursue an

antitrust compliance program directed toward avoiding a repetition of

its anticompetitive behavior.

[[Page 15436]]

A. Prohibited Conduct

Section V(A) of the proposed judgment prohibits RG&E from enforcing

the non-compete language in the ISA and enjoins RG&E from including

that language in any flexible rate contract with any other customer.

Section V(B) prevents RG&E from enforcing Paragraph 10 of its

Memorandum of Understanding with the University, which confines the

University's study of alternative energy sources to the service of the

University's own needs. Section V(C) broadly enjoins RG&E from entering

into or enforcing any agreement not to compete in the retail sale of

electricity with any competitor or potential competitor, except where

the agreement not to compete is reasonably necessary to achieve the

legitimate purposes of certain, specified, common contractual

arrangements.

B. Defendant's Affirmative Obligations

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

judgment, the defendant adopt an affirmative compliance program

directed toward ensuring that its employees comply with the antitrust

laws. The program must include the designation of an Antitrust

Compliance Officer responsible for compliance with the judgment and

reporting any violations of its terms. Section VIII further requires

that each defendant furnish a copy of the judgment, within sixty (60)

days of the date of its entry, to all officers and employees with

responsibility for marketing electric power and planning acquisition of

electric power and generating capacity. Section IX requires RG&E to

certify within seventy-five (75) days that it has distributed those

copies and designated an Antitrust Compliance Officer. Copies of the

judgment also must be distributed to anyone who succeeds to a position

described above.

Furthermore, Section VIII requires RG&E to brief all officers and

employees with responsibility for marketing electric power and planning

acquisition of electric power and generating capacity as to the

defendant's policy regarding compliance with the Sherman Act and with

the judgment, including the advice that his or her violation of the

judgment could constitute contempt of court.

Under Section X of the proposed judgment, the Justice Department

will have access, upon reasonable notice, to each defendant's records

and personnel in order to determine compliance with the judgment.

C. Scope of the Proposed Consent Judgment

(1) Persons Bound

The proposed judgment expressly provides in Section IV that its

provisions apply to RG&E, to each of its successors and assigns, and to

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

who receive actual notice of the terms of the judgment.

(2) Duration

Section VII provides that the judgment will expire on the tenth

anniversary of its entry. The judgment may be terminated earlier in the

event of a substantial restructuring of the retail electricity industry

in RG&E's service area. The decree terminates if RG&E demonstrates that

there has been substantial entry by others into retail sales of

electricity made at unregulated prices in Monroe County, New York.

Section VII establishes the procedure for making this determination.

(3) Exception

The exception set forth in Section VI of the proposed judgment

states that the judgment does not alter RG&E's right to engage in

conduct that is exempt from or immune under the antitrust laws. The

conduct alleged in the compliant, however, is not immune from the

antitrust laws,\3\ and the proposed judgment prohibits similar

anticompetitive conduct by RG&E in the future.

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\3\ See United States v. Rochester Gas & Elec. Corp., No. 97-CV-

6294T (W.D.N.Y. Feb. 17, 1998) (order denying defendant's summary

judgment motion seeking state action immunity).

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D. Effect of the Proposed Judgment on Competition

The prohibitions in Section V are designed to ensure that the

defendant will compete for retail electric customers and will not limit

competition by agreement with competitors or potential competitors who

may be able to serve RG&E customers. The eliminating of the prohibited

language has had an immediate procompetitive effect. The University has

issued a request for proposals to build a cogeneration plant.

The general prohibition of Section V (C) ensures that RG&E will not

make future agreements in the future with UR or any other firm to pre-

empt new competition before it can even occur. Because future

competition will likely come from new market entrants who do not

currently compete, the proposed consent judgment explicitly enjoins

agreements with potential competitors, some of whom like the University

may be current customers of RG&E.

Section V(C)'s prohibition on RG&E entering into any agreement not

to compete contains some enumerated exceptions. The exceptions include,

for example, employment contracts and contracts to sell a business,

which often include agreements not to compete for a limited time period

that are ancillary to a lawful purpose. Agreements not to compete in

the specific types of contracts specified in Section V(C) are not

prohibited by the proposed judgment, but remain subject to the

antitrust laws.

RG&E continues to be a virtual monopolist for retail sales of

electricity in its service area and a broad prohibition on non-compete

clauses with potential competitors is particularly important so long as

RG&E maintains its current market dominance. If, however, the retail

electric market in RG&E's service territory became subject to effective

competition, the prohibition of Section V(C) would no longer be

necessary to protect consumers of electricity. In a competitive market,

an arrangement between RG&E and one of its numerous competitors would

not be likely to restrict output or raise price. Moreover, without

market power, RG&E will have less incentive or ability to enter into

anticompetitive agreements. For these reasons, Section VI provides that

the judgment will terminate once RG&E has less than 50% of the retail

sales subject to competitive pricing in its present service area

(Monroe County). It is RG&E's burden to establish that this threshold

of effective retail electric competition has been satisfied. If the

threshold is met, it will mean that barriers to entry into this

formerly regulated monopoly market have been removed, and that actual

entry has occurred on a significant scale. Unless this substantial

restructuring of the industry occurs, the judgment remains in effect.

IV. Remedies Available to Potential Private Plaintiffs

After entry of the proposed judgment, any potential plaintiff who

might have been damaged by the alleged violation will retain the same

right to sue for monetary damages and any other legal and equitable

remedies which that person may have had if the proposed judgment had

not been entered. The proposed judgment may not be used, however, as

prima facie evidence in litigation, pursuant to Section 5(a) of the

Clayton Act, as amended, 15 U.S.C. 16(a).

[[Page 15437]]

V. Procedures Available for Modification of the Proposed Judgment

The proposed judgment is subject to a stipulation between the

government and the defendant which provides that the government may

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

has found that entry of the judgment is in the public interest. By it's

terms, the proposed judgment provides for the Court's retention of

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

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

for the modification of the judgment, including the demonstration of

retail market conditions outlined in Section VI of the decree.

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

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

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

submit written comments to the United States Department of Justice,

Antitrust Division, Attention: Roger W. Fones, 325 Seventh Street,

N.W., Washington, D.C. 20530. Such comments and the government's

response to them will be filed with the Court and published in the

Federal Register. The government will evaluate all such comments to

determine whether there is any reason for withdrawal of its content to

the proposed judgment.

VI. Alternative to the Proposed Judgment

The alternative to the proposed judgment considered by the

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

relief. The Division considered the substantive language of the

proposed judgment to be of sufficient scope and effectiveness to make

litigation on the issues unnecessary, as the judgment provides all of

the relief sought against the violations alleged in the compliant.

VII. Determinative Materials and Documents

No materials or documents were considered determination by the

United States in formulating the proposed judgment. Therefore, none are

being filed pursuant to the APPA, 15 U.S.C. 16(b).

Department of Justice Antitrust Division

By:--------------------------------------------------------------------

Jade Alice Eaton,

Transportation, Energy, and Agriculture Section, 325 Seventh Street,

N.W., Suite 500, Washington, D.C. 20530, (202) 307-6316.

[FR Doc. 98-8398 Filed 3-30-98; 8:45 am]

BILLING CODE 4410-11-M