United States v. Cargill, Incorporated and Continental Grain Company; Proposed Final Judgment and Competitive Impact Statement

DEPARTMENT OF JUSTICE

Antitrust Division

United States v. Cargill, Incorporated and Continental Grain

Company; Proposed Final Judgment and Competitive Impact Statement

Notice is hereby given pursuant to the Antitrust Procedures and

Penalties Act, 15 U.S.C. Section 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 District of

Columbia in United States of America v. Cargill, Inc. and Continental

Grain Company, Civil Action No. 99-1875. The Complaint in this case

alleged that the proposed acquisition of Continental Grain Company's

(Continental) worldwide commodity marketing business by Cargill, Inc.

(Cargill) would substantially lessen competition for grain purchasing

services to farmers and other suppliers in many areas in the United

States, and would increase the concentration of authorized delivery

capacity for settlement of Chicago Board of Trade corn and soybean

futures contracts, in violation of Section 7 of the Clayton Act, 15

U.S.C. Sec. 18. The Complaint further alleged that the Covenant Not To

Compete in the Purchase Agreement between the two companies is an

unreasonable agreement in restraint of trade in violation of Section 1

of the Sherman Act, 15 U.S.C. Sec. 1.

The proposed Final Judgment requires Cargill to divest all of its

property rights in its port elevator in Seattle, Washington and its

river elevators in East Dubuque and Morris, Illinois. The proposed

Final Judgment further requires Continental to divest all of its

property rights in its river elevators at Lockport, Illinois and

Caruthersville, Missouri, its rail elevators at Salina, Kansas and

Troy, Ohio; and its port elevators at Beaumont, Texas, Stockton,

California, and Chicago, Illinois. Cargill is also required to enter

into a ``throughput agreement'' to make one-third of the loading

capacity at its Havana, Illinois river elevator available to an

independent grain company. Cargill is prohibited from acquiring any

interest in the facilities being divested by Continental, or in the

river elevator at Birds Point, Missouri in which Continental previously

held a minority interest. The proposed Final Judgment also makes

Cargill subject to various restrictions if it seeks to enter into an

throughput agreement with the acquirer of the Seattle port facility.

[[Page 44047]]

Public comment is invited within the statutory 60-day comment

period. Such comments, and responses thereto, which will be published

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

directed to: Roger Fones; Chief, Transportation, Energy, and

Agriculture Section, Antitrust Division; U.S. Department of Justice,

325 Seventh Street, NW; Room 500; Washington, DC 20530 (telephone:

(202) 307-6351).

Constance K. Robinson,

Director of Operations.

Stipulation and Order

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

their respective attorneys, as follows:

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

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

proper in the United States District Court for the District of

Columbia.

2. The parties stipulate 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. Sec. 16), and without further notice to any party or other

proceedings, provided that the plaintiff has not withdrawn its consent,

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

Judgment by serving notice thereof on defendants and by filing that

notice with the Court.

3. Defendants shall abide by and comply with the provisions of the

proposed Final Judgment pending entry of the Final Judgment by the

Court, or until expiration of the time for all appeals of any Court

ruling declining entry of the proposed Final Judgment, and shall, from

the date of the signing of this Stipulation by the parties, comply with

all the terms and provisions of the proposed Final Judgment as though

the same were in full force and effect as an order of the Court.

4. This Stipulation shall apply with equal force and effect to any

amended proposed Final Judgment agreed upon in writing by the parties

and submitted to the Court.

5. Defendants shall prepare and deliver reports in the form

required by the provisions of Section VI.B of the proposed Final

Judgment commencing no later than twenty (20) calendar days after the

filing of this Stipulation, and every thirty (30) calendar days

thereafter pending entry of the Final Judgment.

6. In the event that the plaintiff withdraws its consent, as

provided in paragraph 2 above, or if the proposed Final Judgment is not

entered pursuant to this Stipulation, or the time has expired for all

appeals of any Court ruling declining entry of the proposed Final

Judgment, and the Court has not otherwise ordered continuing compliance

with the terms and provisions of the proposed Final Judgment, this

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

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

other proceeding.

7. Defendants represent that the divestitures ordered in the

proposed Final Judgment can and will be made, and that defendants will

raise no claim of hardship or difficulty as grounds for asking the

Court to modify any of the divestiture provisions contained therein.

Respectfully submitted,

For Plaintiff United States of America

Robert L. McGeorge,

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

Street, N.W., Suite 500, Washington, D.C. 20530, Telephone: (202) 307-

6361, Facsimile (202) 307-2784.

For Defendant Cargill, Incorporated

Marc G. Schildkraut

Howrey & Simon, 1299 Pennsylvania Avenue, N.W., Washington, DC 20004,

Telephone: (202) 383-7448, Facsimile: (202) 383-6610.

For Defendant Continental Grain Company

Paul T. Denis,

Swidler, Berlin Shereff Friedman, LLP, 3000 K Street, N.W.; Suite 300,

Washington, DC 20007-5116, Telephone: (202) 424-7810, Facsimile: (202)

424-7645.

Jack Quinn,

Arnold & Porter, 555 Twelfth Street, N.W., Washington, DC 20004,

Telephone: (202) 942-5000, Facsimile: (202) 942-5999.

Dated: July 8, 1999.

Order

It is so ordered, this ______ day of ____________, 1999.

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

United States District Court Judge

Final Judgment

Whereas plaintiff, the United States of America (hereinafter

``United States''), having filed its Complaint herein, and defendants

Cargill, Incorporated (``Cargill'') and Continental Grain Company

(``Continental''), by their respective attorneys, having consented to

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

issue of fact or law herein, and without this Final Judgment

constituting any evidence against or an admission by any party with

respect to any issue of law of fact herein;

And whereas, the defendants have agreed to be bound by the

provisions of this Final Judgment pending its approval by the Court;

And whereas, prompt and certain divestiture of certain assets to

third parties is the essence of this agreement;

And whereas, the United States requires defendants to maker certain

divestitures for the purpose of remedying the loss of competition

alleged in the Complaint;

And whereas, defendants have represented to the United States that

the divestitures required below can and will be made as provided in

this Final Judgment and that defendants will later raise no claims of

hardship or difficulty as grounds for asking the Court to modify any of

the divestiture provisions contained below;

Now, Therefore, before the taking of any testimony, and without

trial or adjudication of any issue of fact or law herein, and upon

consent of the parties hereto, 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 hereto. The Complaint states a claim upon

which relief may be granted against the defendants under Section 7 of

the Clayton Act, as amended (15 U.S.C. Sec. 18).

II. Definitions

As used in this Final Judgment:

A. ``Acquirer'' means the person or persons to whom defendants

shall transfer the Assets (as defined in subsection B).

B. ``Assets'' means all property rights held by Cargill or

Continental in the river, rail and port elevators defined in

subsections C, F, H, J, L, M, Q, R, T and V.

C. ``Beaumont port elevator'' means the port elevator operated by

Continental at or near Beaumont, Texas, and all Related Assets.

D. ``Capacity'' when used in connection with a grain elevator may

be based on the maximum number of bushels that can be stored in the

facility at any one time (storage capacity), or the maximum number of

bushels that can be moved through the facility over the course of a

designated unit of time (throughput capacity). When one grain company

obtains the right to a certain percentage of the capacity of the

storage or loading capacity at another grain company's elevator

pursuant to a throughput agreement or other

[[Page 44048]]

commercial arrangement, it obtains the right to the stipulated portion

of total storage or throughput capacity at the facility, and not

necessarily the exclusive right to use a specific area in that

facility.

E. ``Cargill'' means defendant Cargill, Incorporated, and includes

its successors and assigns, their subsidiaries, divisions, groups,

partnerships and joint ventures, affiliates, directors, officers,

managers, agents and employees.

F. ``Caruthersville river elevator'' means the river elevator

operated by Continental at or near Caruthersville, Missouri, and all

Related Assets.

G. ``Continental'' means defendant Continental Grain Company and

includes its successors and assigns, their subsidiaries, divisions,

groups, partnerships and joint ventures, affiliates, directors,

officers, managers, agents and employees.

H. ``Chicago port elevator'' means the river elevator operated by

Continental (also known as ``Chicago B'') at or near Chicago, Illinois,

and all Related Assets.

I. ``Divest'' means to sell or transfer a defendant's rights in

property that it owns, or to assign or sublease a defendant's rights in

property that it leases or rents.

J. ``East Dubuque river elevator'' means the river elevator

operated by Cargill at or near East Dubuque, Illinois, and all Related

Assets.

K. ``Grain'' means corn, wheat and other grains, and soybeans and

other oilseeds, in their unprocessed, commodity form.

L. ``Lockport river elevator'' means the river elevator operated by

Continental at or near Lockport, Illinois, and all Related Assets.

M. ``Morris river elevator'' means the river elevator operated by

Cargill at or near Morris, Illinois, and all Related Assets.

N. ``Person'' means any natural person, corporation, association,

firm or other business or legal entity.

O. ``Property rights'' means all legal rights possessed by

defendants relating primarily to the use, control or operation of a

specific river, rail or port elevator, including but not limited to:

fee simple ownership rights, easements and all other real property

rights for land, improvements and fixtures owned by that defendant;

leasehold and rental rights for facilities that are leased or rented to

that defendant, including all renewal or option rights; personal

property ownership rights for equipment and other personal property

owned by that defendant and used in the operation of those facilities;

stockholder interests; and contract rights.

P. ``Related Assets'' means all real, personal and contract rights

associated primarily with the operation of a particular river, rail or

port elevator, including but not limited to: all bins, silos and other

grain storage facilities; all improvements and equipment used for

handling, receiving, unloading, weighing, sampling, grading, elevating,

storing, drying, conditioning and loading grain; all of the real

property on which the facility is located; all inventory, accounts

receivable, pertinent correspondence, files, customer lists and

information and advertising materials relating to the facility; and all

assignable contract rights specific to a facility with suppliers,

customers and transportation firms for that specific facility.

Q. ``Salina rail elevator'' means the elevator with outbound rail

capability (also known as ``Salina East'') operated by Continental at

or near Salina, Kansas, and all Related Assets.

R. ``Seattle port elevator'' means the port elevator operated by

Cargill at or near Seattle, Washington (commonly referred to as ``Pier

86''), and all Related Assets.

S. ``Standard Throughput Agreement'' means an agreement that allows

one grain company to move its grain through an elevator operated by

another person, with unloading, storage, loading and ancillary services

provided by the operator pursuant to terms, conditions and rates that

are common in the grain industry.

T. ``Stockton port elevator'' means the port elevator operated by

Continental at or near Stockton, California, and all Related Assets.

U. ``Tacoma port elevator'' means the port elevator operated by

Continental at or near Tacoma, Washington.

V. ``Troy rail elevator'' means the elevator with outbound rail

capability operated by Continental at or near Troy, Ohio, and all

Related Assets.

III. Applicability

A. The provisions of this Final Judgment apply to the defendants,

their successors and assigns, their subsidiaries, affiliates,

directors, officers, managers, agents, and employees, and all other

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

have received actual notice of this Final Judgment by personal service

or otherwise.

B. The pertinent defendant shall require, as a condition of the

divestiture of the Assets, that the Acquirer agree to be bound by the

provisions of this Final Judgment.

IV. Divestiture of Assets

A. Cargill is hereby ordered and directed, within five (5) months

from the date this Final Judgment is filed with the Court, or five (5)

calendar days after notice of the entry of this Final Judgment by the

Court, whichever is later, to divest all of its property rights in the

East Dubuque river elevator and Morris river elevator to an Acquirer

acceptable to the United States in its sole discretion. It is hereby

ordered and directed, within six (6) months from the date this Final

Judgment is filed with the Court, or five (5) calendar days after

notice of the entry of this Final Judgment by the Court, whichever is

later, to divest all of its property rights in the Seattle port

elevator to an Acquirer acceptable to the United States in its sole

discretion. The United States, in its sole discretion, may agree to an

extension of the time period, and shall notify the Court in such

circumstances.

B. Notwithstanding Section IV.A, the Acquirer of the Seattle port

elevator may enter into a Standard Throughput Agreement with Cargill,

or any joint venture involving the Tacoma elevator to which Cargill is

a party (the ``Cargill Joint Venture''), provided that: (1) the

Acquirer has no interest in Cargill or the Cargill Joint Venture; (2)

the throughput agreement gives Cargill or the Cargill Joint Venture no

more rights concerning the operations of the facility than are commonly

granted to sublessees in Standard Throughput Agreements; (3) and

Cargill or the Cargill Joint Venture obtains continuing rights to move

no more than 8.5 million bushels of grain and oilseeds combined in any

given month through the Seattle port elevator.

C. Notwithstanding Section IV.A and IV.B, Cargill need not divest

the Seattle port elevator if it does not buy, lease or otherwise

acquire an interest in Continental's port elevator at or near Tacoma,

Washington.

D. Continental is hereby ordered and directed, within five (5)

months from the date this Final Judgment is filed with the Court, or

five (5) calendar days after notice of the entry of this Final Judgment

by the Court, whichever is later, to divest all of its property rights

in the Lockport river elevator, Caruthersville river elevator, Salina

rail elevator, Troy rail elevator, Beaumont port elevator, Stockton

port elevator and Chicago port elevator to an Acquirer acceptable to

the United States in its sole discretion. The United States, in its

sole discretion, may agree to an extension of the time period, and

shall notify the Court in such circumstances.

E. Unless the United States consents in writing, the divestiture

pursuant to

[[Page 44049]]

Section IV or by trustee appointed pursuant to Section V of this Final

Judgment, shall include the entire Assets defined above (as qualified

by Section IV.B and IV.C). Divestiture shall be accomplished in such a

way as to satisfy the United States, in its sole discretion, that the

Assets can and will be operated by the Acquirer as a viable, ongoing

business. Divestiture of the Assets, whether pursuant to Section IV or

Section V of this Final Judgment, shall be made to an Acquirer for whom

it is demonstrated to the sole satisfaction of the United States that:

(1) the purchase is for the purpose of using the Asset to compete

effectively in the grain business, (2) the Acquirer has the managerial,

operational, and financial capability to use the Asset to compete

effectively in the grain business; and (3) none of the terms of any

agreement between the Acquirer and defendant(s) give defendant(s) the

ability unreasonably to raise the Acquirer's costs, to lower the

Acquirer's efficiency, or otherwise to interfere in the ability or

incentive of the Acquirer to compete effectively. Moreover, the United

States must be satisfied, in its sole discretion, that any Standard

Throughput Agreement that may be negotiated between Cargill or the

Cargill Joint Venture and the Acquirer of the Seattle port elevator:

(1) would leave the Acquirer with sufficient capacity for it to be a

viable and effective competitor for the purchase of corn and soybeans

in the Pacific Northwest draw area; and (2) would not adversely affect

the Acquirer's ability or incentives to compete vigorously for the

origination of corn and soybeans in the Pacific Northwest draw area, by

raising the Acquirer's costs, lowering its efficiency, or otherwise

interfering in the ability or incentive of the Acquirer to compete

effectively.

F. In accomplishing the divestiture ordered by this Final Judgment,

defendants shall make known, by usual and customary means, the

availability of the Assets. Defendants shall provide any person making

inquiry regarding a possible purchase a copy of the Final Judgment. The

pertinent defendant shall also offer to furnish to any prospective

purchaser, subject to customary confidentiality assurances, all

information regarding the Assets customarily provided in a due

diligence process, except such information subject to attorney client

privilege or attorney work product privilege. The pertinent defendant

shall make available such information to the United States at the same

time that such information is made available to any other person. The

pertinent defendant shall permit prospective purchasers of the Assets

to have reasonable access to personnel and to make such inspection of

physical facilities and any and all financial, operational, or other

documents and information customarily provided as part of a due

diligence process.

G. Defendants shall not interfere with any negotiations by the

Acquirer to employ any employee whose primary responsibility involves

the use of the Assets.

H. Defendants shall take all reasonable steps to accomplish the

prompt divestitures contemplated by this Final Judgment. Defendants

shall not take any action other than in the ordinary course of business

that will impede in any way the operation of the Assets.

I. Cargill shall not purchase, lease or acquire any interest in the

Lockport river elevator, Caruthersville river elevator, Salina rail

elevator, Troy rail elevator, Beaumont port elevator, Stockton port

elevator or Chicago port elevator, or any interest in the river

elevator at or near Birds Point, Missouri (in which Continental

formerly owned a minority interest, and had a right of first refusal to

purchase grain). If another firm acquires the Tacoma port elevator

pursuant to a right of first refusal (and Cargill therefore retains the

Seattle port elevator), Cargill shall not subsequently purchase or

lease the Tacoma port elevator. If another firm acquires the Tacoma

port elevator pursuant to a right of first refusal, Cargill shall not

subsequently acquire any other interest in that facility (including a

joint venture interest) without the written consent of the United

States.

J. Cargill shall enter into a throughput agreement that makes one-

third (\1/3\) of the daily loading capacity at its river elevator

located at or near Havana, Illinois, or one barge-load per day,

whichever is greater, to an independent grain company acceptable to the

United States in its sole discretion (the ``Havana Throughput

Agreement''). Daily loading capacity shall be the capacity registered

with the CBOT. The independent grain company that obtains the

throughput right from Cargill (the ``third party'') must be qualified

under CBOT rules and regulations to make delivery of at least one

barge-load of corn and soybeans per day for the settlement of CBOT corn

and soybean futures contracts, and must agree to register that capacity

at the Havana facility with the CBOT.

The Havana Throughput Agreement shall allow the third party to use

its share of the loading capacity at the Havana facility to transload

grain from trucks onto barges for commercial purposes unrelated to

futures contract deliveries, as well as to make deliveries under CBOT

futures contracts. Cargill shall not be obligated by this Final

Judgment to provide storage services to the third party in excess of

the storage services required to accommodate the transloading of grain

shipments from trucks to barges. Cargill's load-out fees, and its fees

for any storage services that Cargill elects to provide for storage in

excess of twenty-four hours from the time of truck unload to barge

loading, may not exceed the load-out fees and daily storage rates

published in applicable CBOT tariffs.

As part of the Havana Throughput Agreement, any dispute or

disagreement between Cargill and the third party arising from or

relating to the throughput agreement or the third party's use of

Cargill's loading capacity at Havana shall be submitted, governed, and

resolved in accordance with the arbitration rules of the CBOT to the

extent such dispute or disagreement falls within the jurisdiction of

the CBOT Arbitration Committees. To the extent such dispute or

disagreement does not fall within CBOT jurisdiction, such dispute or

disagreement shall be submitted, governed and resolved in accordance

with the arbitration rules of the National Grain and Feed Association,

or other arbitration body that is mutually agreed upon by Cargill and

the third party. Cargill shall abide by the decisions of such

arbitrators.

Cargill shall enter into the Havana Throughput Agreement within

five (5) months from the date this Final Judgment is filed with the

Court, or five (5) calendar days after notice of the entry of this

Final Judgment by the Court, whichever is later. The United States, in

its sole discretion, may agree to an extension of the time period, and

shall notify the Court in such circumstances. If Cargill has not

entered into a Havana Throughput Agreement within this time period, a

trustee shall be appointed to satisfy this requirement pursuant to the

same conditions as are set forth in Section V.

V. Appointment of Trustee

A. In the event that Cargill has not divested the East Dubuque

river elevator, Morris river elevator or Seattle port elevator, or

entered in the Havana Throughput Agreement, to the extent required by

Section IV of the Final Judgment within the time period specified

therein, or that Continental has not divested the Lockport river

elevator, Caruthersville river elevator, Salina rail elevator, Troy

rail elevator, Beaumont port elevator, Stockton port elevator or

Chicago port elevator, to the

[[Page 44050]]

extend required by Section IV of the Final Judgment, within the time

period specified, it shall notify the United States of that fact in

writing. In that event, and upon application of the United States, the

Court shall appoint a trustee selected by the United States to effect

the divestiture of the Assets. Until such time as a trustee is

appointed, defendants shall continue their efforts to effect the

divestiture as specified in Section IV.

B. After the appointment of a trustee becomes effective, only the

trustee shall have the right to divest the Assets. The trustee shall

have the power and authority to accomplish the divestiture at the best

price then obtainable upon a reasonable effort by the trustee, subject

to the provisions of Sections IV, V and VIII of this Final Judgment,

and shall have such other powers as the Court shall deem appropriate.

Subject to Section V.C. of this Final Judgment, the trustee shall have

the power and authority to hire at the cost and expense of defendants

any investment bankers, attorneys, or other agents reasonably necessary

in the judgment of the trustee to assist in the divestiture, and such

professionals and agents shall be solely accountable to the trustee.

The trustee shall have the power and authority to accomplish the

divestiture at the earliest possible time to a purchaser acceptable to

the United States in its sole discretion, and shall have such other

powers as this Court shall deem appropriate. Defendants shall not

object to a sale by the trustee on any grounds other than the trustee's

malfeasance. Any such objections by defendants must be conveyed in

writing to the United States and the trustee within ten (10) calendar

days after the trustee has provided the notice required under Section

VI of this Final Judgment.

C. The trustee shall serve at the cost and expense of the pertinent

defendant, on such terms and conditions as the Court may prescribe, and

shall account for all monies derived from the sale of the Assets sold

by the trustee and all costs and expenses so incurred. After approval

by the Court of the trustee's accounting, including fees for its

services and those of any professionals and agents retained by the

trustee, all remaining money shall be paid to the pertinent defendant

and the trust shall then be terminated. The compensation of such

trustee and that of any professionals and agents retained by the

trustee shall be reasonable and based on a fee arrangement providing

the trustee with an incentive based on the price and terms of the

divestiture and the speed with which it is accomplished.

D. The pertinent defendant shall use its best efforts to assist the

trustee in accomplishing the required divestiture, including their best

efforts to effect all regulatory approvals and its best efforts to

obtain any necessary consent of any persons from whom they lease the

Assets. The trustee and any consultants, accountants, attorneys, and

other persons retained by the trustee shall have full and complete

access to the personnel, books, records, and facilities of, and

relating to, the Assets, and the pertinent defendant shall develop

financial or other information relevant to such Assets customarily

provided in a due diligence process as the trustee may reasonably

request, subject to reasonable protection for trade secret or other

confidential research, development, or commercial information.

Defendants shall take no action to interfere with or to impede the

trustee's accomplishment of the divestiture. The pertinent defendant

shall permit any prospective Acquirer of the Assets to have reasonable

access to personnel and to make such inspection of physical facilities

and any and all financial, operational, or other documents and other

information as may be relevant to the divestitures required by this

Final Judgment.

E. After its appointment, the trustee shall file monthly reports

with the parties and the Court setting forth the trustee's efforts to

accomplish the divestiture ordered under this Final Judgment; provided,

however, that to the extent such reports contain information that the

trustee deems confidential, such reports shall not be filed in the

public docket of the Court. Such reports shall include the name,

address, and telephone number of each person who, during the preceding

month, made an offer to acquire, expressed an interest in acquiring,

entered into negotiations to acquire, or was contacted or made an

inquiry about acquiring, any interest in the Assets, and shall describe

in detail each contact with any such person during that period. The

trustee shall maintain full records of all efforts made to divest the

Assets. If the trustee has not accomplished such divestiture within six

(6) months after its appointment, the trustee shall thereupon promptly

file with the Court a report setting forth (1) the trustee's efforts to

accomplish the required divestiture, (2) the reasons, in the trustee's

judgment, why the required divestiture has not been accomplished, and

(3) the trustee's recommendations; provided, however, that to the

extent such reports contain information that the trustee deems

confidential, such reports shall not be filed in the public docket of

the Court. The trustee shall at the same time furnish such report to

the parties, who shall each have the right to be heard and to make

additional recommendations consistent with the purpose of the trust.

The Court shall thereafter enter such orders as it shall deem

appropriate in order to carry out the purpose of the Final Judgment,

which may, if necessary, include extending the trust and the term of

the trustee's appointment by a period requested by the United States.

VI. Notification

A. Within two (2) business days following execution of a definitive

agreement with respect to any of the Assets, the pertinent defendant or

the trustee, whichever is then responsible for effecting the

divestiture required herein, shall notify the United States of any

proposed divestiture required by Section IV or V of this Final

Judgment. If the trustee is responsible, it shall similarly notify the

pertinent defendant. The notice shall set forth the details of the

proposed transaction and list the name, address, and telephone number

of each person not previously identified who offered to, or expressed

an interest in or desire to, acquire any ownership interest in the

Assets, together with full details of the same. Within fifteen (15)

calendar days after receipt of the notice, the United States may

request from the pertinent defendant, the proposed purchaser, or any

third party additional information concerning the proposed divestiture,

the proposed purchaser, and any other potential purchaser. The

pertinent defendant or the trustee shall furnish the additional

information within fifteen (15) calendar days of the receipt of the

request. Within thirty (30) calendar days after receipt of the notice

or within twenty (20) calendar days after receipt of the additional

information by the United States, whichever is later, the United States

shall notify in writing the pertinent defendant and the trustee, if

there is one, whether or not it objects to the proposed divestiture. If

the United States notifies in writing the pertinent defendant and the

trustee, if there is one, that it does not object, then the divestiture

may be consummated, subject only to the pertinent defendant's limited

right to object to the sale under Section V.B. Absent written notice

that the United States does not object to the proposed purchaser or

upon objection by the United States, a divestiture proposed under

Section IV or V may not be consummated. Upon objection by a defendant

under Section V.B., the proposed divestiture under Section V

[[Page 44051]]

shall not be accomplished unless approved by the Court.

B. Twenty (20) calendar days from the date of the filing of this

Final Judgment, and every thirty (30) calendar days thereafter until

the divestiture has been completed under Section IV or V, each

defendant shall deliver to the United States a written affidavit as to

the fact and manner of compliance with Section IV or V of this Final

Judgment. Each such affidavit shall include, for each person who during

the preceding thirty (30) calendar days made an offer, expressed an

interest or desire to acquire, entered into negotiations to acquire, or

made an inquiry about acquiring any ownership interest in all or any

portion of the Assets, the name, address, and telephone number of that

person and a detailed description of each contact with that person

during that period. Each such affidavit shall also include a

description of the efforts that the pertinent defendant has taken to

solicit an Acquirer for the relevant Assets and to provide required

information to prospective Acquirers including the limitations, if any,

on such information. Assuming that the information set forth in the

affidavit is true and complete, any objection by the United States to

the information provided by the defendants, including limitations of

information, shall be made within fourteen (14) calendar days of

receipt of such affidavit. Until one year after each defendant has

completed such divestitures, that defendant shall maintain full records

of all efforts made to divest all or any portion of the Assets.

VII. Financing

Defendants shall not finance all or any part of any purchase of the

Assets made pursuant to Section IV or V of this Final Judgment. With

respect to Assets leased by a defendant, however, the pertinent will

not violate this condition if: (1) The lessor holds the pertinent

defendant responsible for lease payments under an assignment or

sublease of the defendant's leasehold interests; or (2) the pertinent

defendant makes up any shortfall between its lease payment obligations

and the lease payments negotiated by the person to whom it assigns or

subleases its leasehold interests.

VIII. Hold Separate and Preservation of Assets Requirements

Unless otherwise indicated, from the date of filing of this

proposed Final Judgment with the Court and until the divestitures

required by Sections IV.A, IV.D and/or V of the Final Judgment, and the

execution of the Havana Throughput Agreement required by Section IV.J,

have been accomplished:

A. Subject to force majeure, defendants shall: (1) Take all steps

necessary to assure that the Assets and Cargill's Havana river elevator

are maintained as separate, distinct and salable assets; and extend all

reasonable efforts to maintain these facilities in a condition that

makes them usable as grain elevators; (2) not sell, assign, transfer,

or otherwise dispose of theses facilities, or pledge them as collateral

for loans, except in accordance with the Final Judgment; (3) take all

steps necessary to preserve these facilities in a state of repair equal

to their current state of repair, ordinary wear and tear excepted; (4)

take all steps necessary to preserve the documents, books, customers

lists and records relating to these facilities; (5) refrain from taking

any actions that would jeopardize the sales of these facilities; and

(6) continue to operate these facilities as grain elevators.

Notwithstanding the foregoing: (a) if Continental's lease of the Salina

rail elevator expired on or before April 30, 1999 and was not renewed,

that facility shall not be subject to this section of the Final

Judgment, and (b) if Cargill's lease of the East Dubuque river elevator

expires prior to divestiture, Cargill shall not thereafter be subject

to the provisions of this section if it has offered to extend the lease

at rates and conditions substantially similar to the rates and

conditions in its current lease, and the lessor has rejected that

offer.

B. Except in the ordinary course of business or as is otherwise

consistent with this Final Judgment, defendants shall not hire and

shall not transfer or terminate, or alter, to the detriment of any

employee, any current employment or salary agreements for any employees

who on June 24, 1999 worked at any of the Assets, unless such

individual has a written offer of employment from a third party for a

like or better position.

C. Until such time as the Assets are divested: William F. Winnie

shall manage the Beaumont port elevator, Caruthersville river elevator,

Chicago port elevator, Lockport river elevator, Stockton port elevator

and Troy rail elevator; Peter Reed shall manage the East Dubuque river

elevator; Sharon Spies shall manage the Morris river elevator; and

Donald Vogt shall manage the Seattle port elevator. These individuals

shall have complete managerial responsibility for the Assets, subject

to the provisions of the Final Judgment. In the event that these

individuals are unwilling or unable to perform these duties, defendants

shall appoint, subject to the United States' approval, a replacement

acceptable to the United States within ten (10) working days. Should

defendants fail to appoint a replacement acceptable to the United

States within ten (10) working days, the United States may appoint a

replacement.

D. Defendants shall take no action that would interfere with the

ability of any trustee appointed pursuant to the Final Judgment to

complete the divestiture pursuant to the Final Judgment to a suitable

Acquirer.

E. Continental shall operate the Lockport river elevator,

Caruthersville river elevator, Troy rail elevator, Beaumont port

elevator, Stockton port elevator and Chicago port elevator

independently from and in competition with Cargill. Defendants shall

not implement any non-compete agreements until all of the Assets have

been divested. The term of any such non-compete agreement shall not be

more than three (3) years.

IX. Compliance Inspection

For the purpose of determining or securing compliance with this

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

time to time:

A. Duly authorized representatives of the United States, including

consultants and other persons retained by the United States, shall,

upon the written request of the Assistant Attorney General in charge of

the Antitrust Division, and on reasonable notice to defendants made to

their principal offices, be permitted:

1. access during office hours to inspect and copy all books,

ledgers, accounts, correspondence, memoranda, and other records and

documents in the possession or under the control of defendants, which

may have counsel present, relating to any matter contained in this

Final Judgment; and

2. subject to the reasonable convenience of defendants and without

restraint or interference from them, to interview either informally or

on the record, directors, officers, employees, and agents of

defendants, which may have counsel present, regarding any such matters.

B. Upon the written request of the Assistant Attorney General in

charge of the Antitrust Division, made to defendants at their principal

offices, defendants shall submit written reports, under oath if

requested, with respect to any of the matters contained in this Final

Judgment as may be requested.

C. No information nor any documents obtained by the means provided

in Sections VIII or IX shall be divulged by any representative of the

United States to any person other than a duly

[[Page 44052]]

authorized representative of the Executive Branch of the United States,

except in the course of legal proceedings to which the United States is

a party (including grand jury proceedings), or for the purpose of

securing compliance with this Final Judgment, or as otherwise required

by law.

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

defendant to the United States, such defendant represents and

identifies in writing the material in any such information or documents

for which a claim of protection may be asserted under Rule 26(c)(7) of

the Federal Rules of Civil Procedure, and 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 the

United States shall give ten (10) calendar days' notice to defendant

prior to divulging such material in any legal proceeding (other than a

grand jury proceeding) to which defendant is not a party.

X. 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 for the construction, implementation, or modification of

any of the provisions of this Final Judgment, for the enforcement of

compliance herewith, and for the punishment of any violations hereof.

XI. Termination of Provisions

Unless this Court grants an extension, this Final Judgment will

expire on the tenth anniversary of the date of its entry.

XII. Public Interest

Entry of this Final Judgment is in the public interest.

Dated: July ____, 1999.

Court approval subject to procedures of Antitrust Procedures and

Penalties Act, 15 U.S.C. Sec. 16.

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

United States District Judge

Competitive Impact Statement

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

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

files this Competitive Impact Statement relating to the proposed Final

Judgment submitted for entry in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

On July 8, 1999, the United States filed a civil antitrust

Complaint alleging that the proposed acquisition by Cargill,

Incorporated (``Cargill'') of the Commodity Marketing Group of

Continental Grain Company (``Continental'') would violate Section 7 of

the Clayton Act, 15 U.S.C. Sec. 18. The Complaint alleges that Cargill

is the second largest grain trader in North America, and that, until

recently, Continental was the third largest grain trader in North

America. The Complaint alleges that if the acquisition is permitted to

proceed, it will substantially lessen competition for grain purchasing

services to farmers and other suppliers in a number of areas in the

United States in violation of Section 7 of the Clayton Act, 15 U.S.C.

Sec. 18. The Complaint further alleges that unless the acquisition is

enjoined, many American farmers and other suppliers likely will receive

lower prices for their grain and oilseed crops, including corn,

soybeans, and wheat (collectively referred to as ``grain''). The

request for relief in the Complaint seeks: (1) Preliminary and

permanent injunctive relief preventing the consummation of the

transaction; and (2) such other relief as is proper.

When the Complaint was filed, the United States also filed a

proposed consent decree (``Final Judgment'') that would permit Cargill

to complete its acquisition of Continental's commodity marketing

business, but requires divestitures and other relief that would

preserve competition for grain purchasing services to farmers and other

suppliers in a number of areas in the United States.\1\ The proposed

Final Judgment orders defendant Cargill to divest all of its property

rights in the river elevators located in East Dubuque, Illinois and

Morris, Illinois within five (5) months after the filing of the

proposed Final Judgment or within five (5) calendar days after notice

of entry of the Final Judgment, whichever is later. The proposed Final

Judgment also orders defendant Cargill to divest all of its property

rights in the Seattle port elevator within six (6) months after the

filing of the proposed Final Judgment or within five (5) calendar days

after notice of entry of the Final Judgment, whichever is later. The

proposed Final Judgment orders defendant Continental to divest all of

its property rights in the river elevators located at Lockport,

Illinois and Caruthersville, Missouri, the rail elevators located at

Salina, Kansas and Troy, Ohio, and the port elevators located at

Beaumont, Texas, Stockton, California, and Chicago, Illinois within

five (5) months after the filing of the proposed Final Judgment or

within five (5) calendar days after notice of entry of the Final

Judgment, whichever is later. The proposed Final Judgment also requires

defendant Cargill to enter into a ``throughput agreement''--an

agreement providing for one grain trader to lease elevator capacity

from another--to make one-third of the loading capacity at its Havana,

Illinois river elevator available to an independent grain company,

within five (5) months after the filing of the proposed Final Judgment

or within five (5) calendar days after notice of entry of the Final

Judgment, whichever is later.

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\1\ Cargill and Continental entered into a Stipulation (filed

contemporaneously with the Final Judgment) in which they agreed to

be bound by the proposed final Judgment pending final determination

by the Court.

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In addition, the proposed Final Judgment prohibits defendant

Cargill from acquiring any interest in the facilities to be divested by

Continental, or the river elevator at Birds Point, Missouri, in which

Continental until recently had held a minority interest. The proposed

Final Judgment also makes defendant Cargill subject to various

restrictions in the event it seeks to enter into a throughput agreement

with the acquirer of the Seattle port facility.

If the defendants should fail to accomplish the divestitures or to

enter into a Havana throughput agreement within the prescribed time

periods, a trustee appointed by the Court would be empowered to divest

these assets or otherwise satisfy the Havana throughput requirement.

The plaintiff and defendants have stipulated that the proposed

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

the proposed Final Judgment would terminate this action, except that

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

provisions of the proposed Final Judgment and to punish violations

thereof.

II. Events Giving Rise to the Alleged Violations

A. The Defendants and the Proposed Transaction

Cargill is a Delaware corporation with its principal place of

business in Minnetonka, Minnesota. It is the second largest grain

trader in North America. Continental is a Delaware corporation with its

principal place of business in New York City, New York. It was, as

recently as 1997, North America's third largest grain trader. The

defendants are also the first and third largest U.S. grain exporters,

collectively exporting approximately 40 percent of all U.S.

agricultural commodities. Both Cargill and Continental purchase grain

and

[[Page 44053]]

other crops from farmers, brokers, and elevator operators throughout

the United States.

On October 9, 1998, Cargill and Continental entered into an

agreement entitled ``Purchase Agreement'' under which Cargill agreed to

purchase Continental's Commodity Marketing Group.

B. The Grain Purchasing Market

Grain traders such as Cargill and Continental operate extensive

grain distribution networks, which facilitate the movement of grain

from farms to domestic consumers of these commodities and to foreign

markets. Country elevators are often the first stage of the grain

distribution system, with producers hauling wheat, corn, and soybeans

by truck from their farms for sale to the country elevators. Here, the

grain is off-loaded, sampled, graded, and put into storage. Sometimes

other services are offered by the country elevators, such as grain

drying and conditioning services. The grain is then transported by

truck, rail, or barge to larger distribution facilities, such as river,

rail, or port elevators, which may or may not be affiliated with the

country elevators, or to feedlots or processors.

River elevators or rail terminals may receive grain directly from

the farm or from country elevators. From the river elevator, grain

typically moves outbound by barge to port elevators. From the rail

terminal, grain typically moves outbound by rail to port elevators or

to domestic feedlots or processors.

The final stage in the grain distribution system for grain intended

for export is a port elevator, where it is transferred to ocean vessels

for shipment to foreign buyers. Grain normally comes to port elevators

from river elevators (via barge) and rail terminals, although some port

elevators receive grain directly from farmers and country elevators

located within a relatively short distance from the port elevator.

Because the transportation of grain is relatively costly and time-

consuming, farmers generally sell their grain within a limited

geographic area surrounding their farms, usually to a country

elevator--although farmers located near river, rail, or port elevators

sometimes bypass the country elevator and ship their grain directly to

those facilities. Grain traders purchase grain at these country, rail,

river, and port elevators from farmers and from other suppliers, such

as brokers and independent elevator operators who have purchased grain

from the farmers.

the Complaint alleges that the purchasing of wheat, corn, and

soybeans each constitutes a relevant product market and a line of

commerce within the meaning of the Clayton Act.

The draw area for a country, river, rail, or port elevator is the

geographic area from which the facility receives grain. The draw area

of one grain company's country, river, rail or port elevator will

overlap the draw area of a competitor's elevator if their facilities

are relatively close to each other--and the cost of shipping grain from

the producer to both elevators is comparable. Cargill and Continental

operate a number of facilities with overlapping draw areas, and

therefore compete with one another in a number of markets for the

purchase of wheat, corn, and soybeans from the same producers or other

suppliers.

Many farmers and other suppliers located within overlapping

Cargill/Continental draw areas depend solely on competition among

Cargill, Continental, and perhaps a small number of other nearby grain

companies to obtain a competitive price for their products. The areas

in which these suppliers are located are referred to as ``captive draw

areas'' in the Complaint. The Complaint alleges that these captive draw

areas are relevant geographic markets and separate sections of the

country within the meaning of the Clayton Act.

The following are the overlapping and captive draw areas for

competing Cargill and Continental facilities:

The Pacific Northwest. Cargill's port elevator in Seattle

competes with Continental's port elevator in Tacoma for the purchase of

corn and soybeans. The overlapping draw area for these facilities

includes portions of North Dakota, South Dakota, Minnesota, Nebraska,

and Iowa. Captive suppliers are located primarily in eastern North

Dakota, eastern South Dakota, and western Minnesota.

Central California. Cargill's port elevator in Sacramento

competes with Continental's port elevator in Stockton for the purchase

of wheat and corn. The overlapping draw area for these facilities is

located in the Sacramento/Stockton area, where all suppliers are

captive

Texas Gulf. Cargill's port elevator in Houston competes

with Continental's port elevator in Beaumont for the purchase of

soybeans and wheat. The overlapping draw area for these facilities

includes portions of Texas, Louisiana, Oklahoma, Kansas, New Mexico,

Colorado, Nebraska, Missouri, Iowa, and Illinois. Captive suppliers are

located primarily in eastern Texas and western Louisiana.

Rail and River Elevators. Cargill and Continental compete

for the purchase of grain from captive suppliers located near their

rail elevators in Salina, Kansas and Troy, Ohio, and their river

elevators in the vicinity of Morris, Illinois, Lockport, Illinois,

Dubuque, Iowa/East Dubuque, Illinois, and New Madrid/Caruthersville,

Missouri.

According to the Complaint, if Cargill were allowed to acquire the

Continental facilities that purchase grain in these captive draw areas,

it would be in a position unilaterally, or in coordinated interaction

with the few remaining competitors, to depress prices paid to farmers

and other suppliers, because transportation costs would preclude them

from selling to other grain traders or purchasers in sufficient

quantities to prevent an anticompetitive price decrease.

The Complaint also alleges that producers of corn, soybeans, and

wheat would not switch to an alternative crop in sufficient numbers to

prevent a small but significant decrease in price because of the length

of growing seasons and of the suitability of those crops to certain

climates and regions. Nor are processors or fedlots that purchase grain

to manufacture food products or fatten livestock likely to constrain

pricing decisions by grain trading companies because their purchasing

decisions are based on factors other than small but significant changes

in crop prices. Therefore, significant changes in concentration among

grain trading companies can have an anticompetitive impact upon prices

received by farmers and other suppliers.

C. The Chicago Board of Trade Futures Markets

In addition, Cargill and Continental compete to purchase corn and

soybeans from grain sellers seeking to deliver these crops to river

elevators on the Illinois River that, beginning in year 2000, will be

authorized as delivery points for the settlement of Chicago Board of

Trade (CBOT) corn and soybean futures contracts. The provision of

authorized delivery points for corn and soybean futures contracts is a

relevant product market within the meaning of the Clayton Act. These

delivery points are regulated by the Commodities Futures Trading

Commission. The authorized delivery points, running the entire length

of the Illinois River for soybeans, and from Chicago to Peoria,

Illinois for corn, each constitutes a relevant geographic market within

the meaning of the Clayton Act; and undue concentration in these

markets would increase the possibilities

[[Page 44054]]

of anticompetitive manipulations of the futures markets.

D. Harm to Competition as a Consequence of the Acquisition

The Complaint alleges that Cargill's acquisition of Continental's

Commodity Marketing Group will substantially lessen competition for the

purchase of corn, soybeans, and wheat in each of the relevant

geographic markets by enabling Cargill unilaterally to depress the

prices paid to farmers and other suppliers. The Complaint further

alleges that the proposed transaction will also make it more likely

that the few remaining grain trading companies that purchase corn,

soybeans, and wheat in these markets will engage in anticompetitive

coordination to depress grain prices. Moreover, it is not likely that

Cargill's exercise of market power in any of these relevant geographic

markets would be thwarted by significantly increased purchases of corn,

soybeans, or wheat by processors, feedlots, or other buyers, by new

entry, by farmers and other suppliers transporting their products to

more distant markets, or by any other countervailing force.

In addition, the Complaint alleges that by consolidating the

Cargill and Continental river elevators on the Illinois River, this

transaction would give two firms approximately 80% of the authorized

delivery capacity for settlement of CBOT corn and soybeans futures

contracts. This concentration would increase the likelihood of price

manipulation of futures contracts by those firms, resulting in higher

risks for buyers and sellers of futures contracts.

Finally, the Complaint alleges that the defendants' Purchase

Agreement includes a Covenant Not to Compete that is longer than is

reasonably necessary for Cargill to have a fair opportunity to gain the

loyalty of Continental's suppliers and customers, and has the effect of

unlawfully dividing markets between the two companies in violation of

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

III. Explanation of the Proposed Final Judgment

The provisions of the proposed Final Judgment are designed to

preserve existing competition for grain purchasing services to farmers

and other suppliers in numerous areas in the United States, and to

prevent anticompetitive manipulation of CBOT corn and soybean futures

markets. To preserve existing competition for grain purchasing

services, it requires divestitures of Cargill or Continental river

elevators at Morris, Illinois, Lockport, Illinois, East Dubuque,

Illinois, and Caruthersville, Missouri; rail terminals at Troy, Ohio

and Salina, Kansas; and port elevators at Beaumont, Texas, Stockton,

California, and Seattle, Washington. This relief is intended to

maintain the level of competition that existed preacquisition, and

ensures that farmers and other suppliers in the affected markets will

continue to have effective alternatives to Cargill when selling their

crops. to prevent manipulations of CBOT corn and soybean futures

markets, the proposed Final Judgment requires divestitures of Cargill

or Continental elevators along the Illinois River at Morris, Lockport

and Chicago, Illinois, as well as providing one-third of Cargill's

capacity at Havana, Illinois to a new entrant pursuant to a throughput

agreement.\2\

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\2\ The divestitures of the Morris and Lockport river elevators

provide relief for both the grain purchasing markets and the CBOT

futures markets.

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A. East Dubuque and Morris River Elevators, and Seattle Port Elevator

Provisions

Section IV.A of the proposed Final Judgment provides that, within

five (5) months from the filing of the proposed Final Judgment with the

Court, or five (5) calendar days after notice of the entry of the Final

Judgment by the Court, whichever is later, defendant Cargill must

divest all of its property rights in the East Dubuque, Illinois river

elevator and the Morris, Illinois river elevator to an acquirer

acceptable to the United States. Section IV.A of the proposed Final

Judgment also provides that, within six (6) months from the filing of

the proposed Final Judgment with the Court, or five (5) calendar days

after notice of the entry of the Final Judgment by the Court, whichever

is later, defendant Cargill must divest all of its property rights in

the Seattle port elevator to an acquirer acceptable to the United

States.

Section IV.B of the proposed Final Judgment imposes conditions on

Cargill and the acquirer of the Seattle port elevator, should the

acquirer decide to enter into a throughput agreement with Cargill or

any joint venture involving the Tacoma elevator to which Cargill is a

party (``Cargill Joint Venture''). Throughput agreements, which are

common in the grain industry, allow one firm to move its grain through

another firm's elevator for a fee. Under the terms of the Final

Judgment: (a) Cargill may not obtain continuing rights to move more

than 8.5 million bushels of grain per month through the Seattle port

elevator (which ensures that the acquirer of that facility will have

continuing rights to a substantial majority of the facility's

throughput capacity); (b) the throughput agreement gives Cargill no

more rights concerning the operations of the Seattle facility than are

commonly granted to sublessees in standard throughput agreements (which

insures that the acquirer will retain overall operational control of

the facility); and (c) that, in any event, the throughput agreement

will not interfere with the ability or incentive of the acquirer to

compete for the purchase of corn and soybeans.

Section IV.C of the proposed Final Judgment provides that Cargill

need not divest the Seattle port elevator if it does not buy, lease, or

otherwise acquire an interest in Continental's port elevator at or near

Tacoma, Washington.

B. Lockport River Elevator, Caruthersville River Elevator, Salina Rail

Elevator, Troy Rail Elevator, Beaumont Port Elevator, Stockton Port

Elevator, and Chicago Port Elevator Provisions

Section IV.D of the proposed Final Judgment provides that, within

five (5) months from the filing of the proposed Final Judgment with the

Court, or five (5) calendar days after notice of the entry of the Final

Judgment by the Court, whichever is later, defendant Continental must

divest all of its property rights in the river elevators located at

Lockport, Illinois and Caruthersville, Missouri; the rail terminals

located at Salina, Kansas and Troy, Ohio; and the port elevators

located at Beaumont, Texas, Chicago, Illinois, and Stockton,

California, to an acquirer acceptable to the United States. These

facilities were originally part of the defendants' Purchase Agreement.

This divestiture requirement will ensure that these facilities are sold

to purchasers who will operate these assets as grain elevators; and it

is intended to preserve the market structure that existed in those

geographic areas prior to the acquisition.

C. General Divestiture Provisions

Sections IV.E through IV.H of the proposed Final Judgment apply to

all the divestitures ordered in Sections IV.A and IV.D (as qualified by

Sections IV.B and IV.C). Section IV.E provides that unless the United

States consents in writing, the divestitures shall include the entire

assets defined in Sections IV.A and IV.D. The divestitures must be

accomplished in such a way to satisfy the United States, in its sole

discretion, that the assets can and will be operated by the acquirer as

a viable, ongoing entity capable of competing in the grain business. In

addition, any Standard Throughput Agreement that may be

[[Page 44055]]

negotiated between Cargill or the Cargill Joint Venture and the

purchaser of the Seattle port elevator must be acceptable to the United

States, in its sole discretion.

Under Section IV.F of the proposed Final Judgment, defendants shall

make known, by usual and customary means, the availability of the

assets and provide any prospective purchasers with a copy of the Final

Judgment. The pertinent defendant is required to offer to furnish any

prospective purchaser, subject to customary confidentiality assurances,

all information regarding the assets customarily provided in a due

diligence process, except such information subject to attorney-client

privilege or attorney work-product privilege. The pertinent defendant

must also permit prospective purchasers to have reasonable access to

personnel and to make inspection of physical facilities and financial,

operational, or other documents and information customarily provided as

part of a due diligence process.

Section IV.G prohibits defendants from interfering with any

negotiations by the purchaser to hire any employee whose primary

responsibility involves the use of the assets. Under Section IV.H,

defendants must take all reasonable steps necessary to accomplish the

prompt divestitures contemplated by the proposed Final Judgment, and

may not impede the operation of the assets.

Section IV.I of the proposed Final Judgment prohibits Cargill from

purchasing, leasing, or acquiring any interest in any of the assests

required to be divested by defendant Continental pursuant to Section

IV.D, or any interest in the river elevator at or near Bird's Point,

Missouri (in which Continental formerly owned a minority interest and

had a right of first refusal to purchase grain). Section IV.I also

prohibits Cargill from subsequently purchasing or leasing the Tacoma

port elevator should another firm acquire that facility, or from

acquiring any other interest in that facility (including a joint

venture interest) without the written consent of the United States.

Section IV.I does not explicitly prohibit Cargill from reacquiring the

assets that it will divest, because that prohibition is inherent in the

requirement that Cargill divest these assets for the ten-year term of

the Final Judgment.

Pursuant to Section IV.J of the proposed Final Judgment, defendant

Cargill must enter into a throughput agreement that makes one-third

(\1/3\) of the daily loading capacity at its river elevator located at

or near Havana, Illinois, or one barge-load per day, whichever is

greater, to an independent grain company acceptable to the United

States in its sole discretion (the ``Havana Throughput Agreement'').\3\

Unless the United States agrees to an extension, Cargill must enter

into the Havana Throughput Agreement within five (5) months from the

date the Final Judgment is filed with the Court, or five (5) calendar

days after notice of the entry of the Final Judgment by the Court,

whichever is later.

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\3\ The divestitures of the facilities at Morris, Lockport, and

Chicago were sufficient to resolve concerns about consolidation of

authorized delivery points for CBOT corn futures markets, which

extend from Chicago to Pekin. To resolve concerns about

concentration of authorized delivery points for CBOT soybean futures

markets, which extend the entire length of the Illinois River, it

was necessary to provide delivery capacity for a new entrant on the

southern portion of the Illinois River.

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D. Trustee Provisions

If the defendants fail to complete any of the divestitures or to

enter into the Havana Throughput Agreement within the required time

periods, the Court will appoint a trustee, pursuant to Section V of the

proposed Final Judgment, to accomplish the divestitures. Once

appointed, only the trustee will have the right to sell the divestiture

assets or enter into the Havana Throughput Agreement, and the pertinent

defendant will pay all costs and expenses of the trustee and any

professionals and agents retained by the trustee. The compensation paid

to the trustee and any such professionals or agents shall be reasonable

and based on a fee arrangement providing the trustee with an incentive

based on the price and terms of the divestiture and the speed with

which it is accomplished. The proposed Final Judgment also requires the

pertinent defendant to use its best efforts to assist the trustee in

accomplishing the required divestitures.

Pursuant to Section V.E, the trustee must file monthly reports with

the parties and the Court, setting forth the trustee's efforts to

accomplish the divestitures ordered under the proposed Final Judgment.

If the trustee does not accomplish the divestitures within six (6)

months after its appointment, the trustee shall promptly file with the

Court a report setting forth (1) the trustee's efforts to accomplish

the required divestitures, (2) the reasons, in the trustee's judgment,

why the required divestitures have not been accomplished, and (3) the

trustee's recommendations. At the same time, the trustee will furnish

such report to the United States and defendants, who will each have the

right to be heard and to make additional recommendations. The Court

shall thereafter enter such orders as appropriate in order to carry out

the purpose of the Final Judgment, including extending the term of the

trustee's appointment.

E. Notification Provisions

Section VI of the proposed Final Judgment assures the United States

an opportunity to review any proposed sale, whether by the pertinent

defendant or the trustee, before it occurs. Under this provision, the

United States is entitled to receive complete information regarding any

proposed sale or any prospective purchaser prior to consummation. Upon

objection by the United States to a sale of any of the divestiture

assets by the pertinent defendant or the trustee, any proposed

divestiture may not be completed. Should a defendant object to a

divestiture by the trustee pursuant to Section V.B., that sale shall

not be consummated unless approved by the Court.

Section VII of the proposed Final Judgment prohibits defendants

from financing all or any part of any purchase of the assets made

pursuant to Sections IV or V of the Final Judgment. However, the

pertinent defendant will not violate this condition with respect to

assets leased by a defendant if: (1) The lessor holds the pertinent

defendant responsible for lease payments under an assignment or

sublease of the defendant's leasehold interests; or (2) the pertinent

defendant makes up any shortfall between its lease payment obligations

and the lease payments negotiated by the person to whom it assigns or

subleases its leasehold interests.

F. Hold Separate Provisions

Under Section VIII of the proposed Final Judgment, defendants must

take certain steps to ensure that, until the required divestitures and

the execution of the Havana Throughput Agreement have been

accomplished, all the previously defined assets and Cargill's Havana

river elevator will be maintained as separate, distinct and saleable

assets, and maintained as usable grain elevators. Until such

divestitures, the defendants shall continue to operate these facilities

as grain elevators. The defendants must maintain all these facilities

so that they continue to be saleable, including maintaining all

records, loans, and personnel necessary for their operation. Defendant

Continental must operate the Lockport river elevator, Caruthersville

river elevator, Troy rail elevator, Beaumont port elevator, Stockton

port elevator, and Chicago port elevator independently from and in

competition with Cargill.

[[Page 44056]]

G. Non-Compete Provisions

The Cargill/Continental Purchase Agreement contains a five-year

non-compete provision. Under the proposed Final Judgment, defendants

are prohibited from implementing any non-compete agreements until all

of the assets have been divested. Furthermore, the term of any such

non-compete agreement may not be more than three (3) years.

H. Compliance Inspection, Retention of Jurisdiction and Termination

Provisions

Section IX requires defendants to make available, upon request, the

business records and the personnel of its businesses. This provision

allows the United States to inspect defendants' facilities and ensure

that they are complying with the requirements of the proposed Final

Judgment. Section X provides for jurisdiction to be maintained by the

Court. Section XI of the proposed Final Judgment provides that it will

expire on the tenth anniversary of its entry by the Court.

IV. Remedies Available to Potential Private Litigants

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

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

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

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

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

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

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

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

any subsequent private lawsuit that may be brought against defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

The United States and defendants have stipulated that the proposed

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

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

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

determination that the proposed Final Judgment is in the public

interest.

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

effective date of the proposed Final Judgment within which any person

may submit to the United States written comments regarding the proposed

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

sixty days of the date of publication of this Competitive Impact

Statement in the Federal Register. The United States will evaluate and

respond to the comments. All comments will be given due consideration

by the Department of Justice, which remains free to withdraw its

consent to the proposed Final Judgment at any time prior to its entry.

The comments and the response of the United States will be filed with

the Court and published in the Federal Register. Written comments

should be submitted to: Roger W. Fones, Chief, Transportation, Energy &

Agriculture Section, Antitrust Division, United States Department of

Justice, 325 Seventh Street, N.W., Suite 500, Washington, DC 20530.

The proposed Final Judgment provides that the Court retains

jurisdiction over this action, and the parties may apply to the Court

for any order necessary or appropriate for the modification,

interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

the United States considered, as an alternative to the proposed

Final Judgment, a full trial on the merits against Cargill and

Continental. The United States is satisfied, however, that the

divestitures and other relief contained in the proposed Final Judgment

should preserve competition in grain purchasing services as it was

prior to the proposed acquisition, and that the proposed Final Judgment

would achieve all of the relief that the government would have obtained

through litigation, but merely avoids the time and expense of a trial.

VII. Standard of Review Under the APPA for Proposed Final Judgment

The APPA requires that proposed consent judgments in antitrust

cases brought by the United States be subject to a sixty-day comment

period, after which the Court shall determine whether entry of the

proposed Final Judgment ``is in the public interest.'' In making that

determination, the Court may consider:

(1) The competitive impact of such judgment, including

termination of alleged violations, provisions for enforcement and

modification, duration or relief sought, anticipated effects of

alternative remedies actually considered, and any other

consideration bearing upon the adequacy of such judgment;

(2) The impact of entry of such judgment upon the public

generally and individuals alleging specific injury from the

violations set forth in the complaint including consideration of the

public benefit, if any, to be derived from a determination of the

issues at trail.

15 U.S.C. Sec. 16(e). As the Court of Appeals for the District of

Columbia Circuit held, the APPA permits the Court to consider, among

other things, the relationship between the remedy secured and the

specific allegations set forth in the government's complaint, whether

the decree is sufficiently clear, whether enforcement mechanisms are

sufficient, and whether the decree may positively harm third parties.

See United States v. Microsoft, 56 F.3d 1448 (D.C. Cir. 1995).

In conducting this inquiry, ``the Court is nowhere compelled to go

to trial or to engage in extended proceedings which might have the

effect of vitiating the benefits of prompt and less costly settlement

through the consent decree process. \4\ Rather,

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\4\ 119 Cong. Rec. 24598 (1973); see also United States v.

Gillette Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public

interest'' determination can be made properly on the basis of the

Competitive Impact Statement and Response to Comments filed pursuant

to the APPA. Although the APPA authorizes the use of additional

procedures, 15 U.S.C. Sec. 16(f), those procedures are

discretionary. A court need not invoke any of them unless it

believes that the comments have raised significant issues and that

further proceedings would aid the court in resolving those issues.

See H.R. 93-1463, 93rd Cong. 2d Sess. 8-9, reprinted in (1974)

U.S.C.C.A.N. 6535, 6538.

absent a showing of corrupt failure of the government to discharge

its duty, the Court, in making its public interest finding, should *

* * carefully consider the explanations of the government in the

competitive impact statement and its responses to comments in order

to determine whether those explanations are reasonable under the

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circumstances.

United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas.

para.61,508, at 71,980 (W.D. Mo. 1977).

Accordingly, with respect to the adequacy of the relief secured by

the decree, a court may not ``engage in an unrestricted evaluation of

what relief would best serve the public.'' United States v. BNS, Inc.,

858 F.2d 456, 462 (9th Cir. 1988), quoting United States v. Bechtel

Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083

(1981). Precedent requires that

[t]he balancing of competing social and political interests affected

by a proposed antitrust consent decree must be left, in the first

instance, to the discretion of the Attorney General. The court's

role in protecting the public interest is one of insuring that the

government has not breached its duty to the public in consenting to

the decree. The court is required to determine not whether a

particular decree is the one that will best serve society, but

whether the settlement is ``within the reaches of the public

interest.'' More elaborate requirements might undermine the

[[Page 44057]]

effectiveness of antitrust enforcement by consent decree.\5\

\5\ United States v. Bechtel, 648 F.2d at 666 (internal

citations omitted) (emphasis added); see United States v. BNS Inc.,

858 F.2d at 463; United States v. National Broadcasting Co., 449 F.

Supp. 1127, 1143 (C.D. Cal. 1978); Gillette, 406 F. Supp. at 716.

See also United States v. American Cyanamid Co., 719 F. 2d 558, 565

(2d Cir. 1983).

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The proposed Final Judgment, therefore, should not be reviewed

under a standard of whether it is certain to eliminate every

anticompetitive effect of a particular practice or whether it mandates

certainty of free competition in the future. Court approval of a final

judgment requires a standard more flexible and less strict than the

standard required for a finding of liability. ``[A] proposed decree

must be approved even if it falls short of the remedy the court would

impose on its own, as long as it falls within the range of

acceptability or is `within the reaches of public interest.' ''.\6\

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\6\ United States v. American Tel. & Tel. Co., 552 F. Supp. 131,

150 (D.D.C. 1982) (citations omitted), aff'd sub nom. Maryland v.

United States, 460 U.S. 1001 (1983), quoting Gillette, 406 F. Supp.

at 716; United States v. Alcan Aluminum, Ltd., 605 F. Supp. 619, 622

(W.D. Ky. 1985).

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Moreover, the Court's role under the Tunney Act is limited to

reviewing the remedy in relationship to the violations that the United

States has alleged in its complaint, and the Act does not authorize the

Court to ``construct [its] own hypothetical case and then evaluate the

decree against that case.'' Microsoft, 56 F.3d at 1459. Since ``[t]he

court's authority to review the decree depends entirely on the

government's exercising its prosecutorial discretion by bringing a case

in the first place,'' it follows that the court ``is only authorized to

review the decree itself,'' and not to ``effectively redraft the

complaint'' to inquire into other matters that the United States might

have but did not pursue. Id.

VIII. Determinative Documents

There are no determinative materials or documents within the

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

formulating the proposed Final Judgment.

For Plaintiff United States of America

Dated: July 23, 1999.

Respectfully submitted,

Robert L. McGeorge, D.C. Bar No. 91900,

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

Seventh Street, N.W.; Suite 500, Washington, DC 20530, Telephone: (202)

307-6361 or (202) 307-6351, Facsimile: (202) 307-2784.

[FR Doc. 99-20806 Filed 8-11-99; 8:45 am]

BILLING CODE 4410-11-M