United States, et al. v. Waste Management, Inc., et al.; Proposed Final Judgment and Competitive Impact Statement
Federal RegisterFeb 26, 1999
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DEPARTMENT OF JUSTICE
Antitrust Division
[Civ. No. 98 CV 7168 (FB)]
United States, et al. v. Waste Management, Inc., et al.; Proposed
Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. Secs. 16(b)-(h), that a proposed Final
Judgment, Hold Separate Stipulation and Order, and Competitive Impact
Statement have been filed with the Untied States District Court for the
Eastern District of New York, Brooklyn, NY, in United States and States
of New York and Florida and Commonwealth of Pennsylvania v. Waste
Management, Inc., Ocho Acquisition Corp., and Eastern Environmental
Services, Inc., Civ. No. 98 CV 7168 (FB).
On November 17, 1998, the United States, New York Pennsylvania and
Florida filed a Complaint, which alleged that Waste Management's
proposed acquisition of Eastern would violate Section 7 of the Clayton
Act, 15 U.S.C. 18, by substantially lessening competition in waste
collection and/or disposal in nine markets around the country,
including New York, NY (disposal of commercial and residential
municipal solid waste); Pittsburgh and Bethlehem/Allentown, PA
(disposal of municipal solid waste); Carlisle/Chambersburg, PA area
(collection of commercial waste and disposal of municipal solid waste);
and Miami/Ft. Lauderdale, and suburban Tampa, FL (collection of
commercial waste). the proposed Final Judgment, filed on December 31,
1998, requires Waste Management and Eastern to divest commercial waste
collection and/or municipal solid waste disposal operations in each of
the geographic areas alleged in the Amended Complaint.
Public comment is invited within the statutory 60-day comment
period. Such comments and responses thereto will be published in the
Federal Register and filed with the Court. Comments should be directed
to J. Robert Kramer II, Chief, Litigation II Section, Antitrust
Division, U.S. Department of Justice, 1401 H Street, NW, Suite 3000,
Washington, D.C. 20530 [telephone: (202) 307-0924].
Constance K. Robinson,
Director of Operations & Merger Enforcement.
Hold Separate Stipulation and Order
It is hereby stipulated and agreed by and between the undersigned
parties, subject to approval and entry by the Court, that:
I
Definitions
As used in this Hold Separate Stipulation and Order:
A. ``Waste Management'' means defendant Waste Management, Inc., a
Delaware corporation with its headquarters in Houston, Texas, and
includes its successors and assigns, and its subsidiaries (including
Ocho Acquisition Corp.), divisions, groups, affiliates, directors,
officers, managers, agents, and employees.
B. ``Eastern'' means defendant Eastern Environmental Services,
Inc., a Delaware corporation with its headquarters in Mt. Laurel, New
Jersey, and includes its successors and assigns, and its subsidiaries,
divisions, groups, affiliates, directors, officers, managers, agents,
and employees.
C. ``Rights to Eastern's RFP Proposal'' means (1) all right, title
and interest in the proposal submitted by Eastern to the New York City
Department of Sanitation in response to the New York City Request for
Proposals to Receive Solid Waste at a Marine Transfer Station,
Procurement Identification No. 82797RR0014, dated June 16, 1997, and
any amendments, revisions, or modifications thereto; (2) any intangible
assets relating to that proposal, including any engineering, technical,
or construction designs, plans or specifications, permit or land use
applications, and any options, commitments or agreements of any type
for the design, construction, permitting, lease or sale of any land,
building or equipment, or to receive, transport store or dispose of
waste; (3) at purchaser's option, such technical assistance on that
proposal as the purchaser reasonably may require from Eastern for a
period of one hundred fifty days (150) after the purchase of the Rights
to Eastern's RFP Proposal; and (4) at purchaser's option, airspace
disposal rights for up to a twenty-year time period at Eastern's
Waverly, VA landfill, pursuant to which defendants will sell rights to
dispose of up to 4,000 tons of average daily waste pursuant to any
contract award under the New York City RFP, on the terms and conditions
specified in the Waste Disposal Agreement, dated December 29, 1998,
between Atlantic Waste Disposal, Inc. and Republic Services, Inc.
D. ``Relevant Disposal Assets'' means, with respect to each
landfill or transfer station listed and described herein: (1) All
tangible assets, including all fee and leasehold and renewal rights in
the listed landfill or transfer station; the garage and related
facilities; offices; and landfill or transfer station-related assets
including capital equipment, trucks and other vehicles, scales, power
supply equipment, interests, permits, and supplies; and (2) all
intangible assets of the listed landfill or transfer station, including
customer lists, contracts, and accounts, or options to purchase any
adjoining property.
Relevant Disposal Assets, as used herein, includes each of the
following properties:
1. Landfills
a. Allegheny County, Pennsylvania--Eastern's Kelly Run Sanitation
Landfill, located at State Route 51 South, Elizabeth, Pennsylvania
15037, and known as the Kelly Run Landfill (and includes the waste
disposal agreement between Chambers Development Company, Inc. and
William H. Martin, Inc. and Eastern Environmental Services, Inc. and
Kelly Run Sanitation, Inc., dated 1997);
b. Bethlehem/Allentown, Pennsylvania--Eastern's Eastern Waste of
Bethlehem Landfill, located at 2335 Applebutter Road, Bethlehem,
Pennsylvania 18015, and known as the Bethlehem Landfill; and
c. Chambersburg-Carlisle, Pennsylvania--Eastern's R&A Bender
Landfill located at 3747 White Church Road, Chambersburg, Pennsylvania
[[Page 9528]]
17201, and known as the Bender Landfill.
2. Transfer Stations
New York, New York--a. Eastern's PJ's Transfer Station located at
222 Morgan Avenue, Brooklyn, New York 11237 (also known as the Morgan
Avenue Transfer Station);
b. Eastern's Atlantic Waste Transfer Station located at 110-120
50th Street, Brooklyn, New York 11232, also known as the Atlantic
Transfer Station; and
c. Waste Management's Vacarro Transfer Station, located at 577
Court Street, Brooklyn, NY 11231 (also known as the Court Street
Transfer Station); and Waste Management's Gesuale Transfer Station,
located at 38-50 Review Avenue, Queens, NY 11101 (also known as the
Review Avenue Transfer Station), only one of which must be sold
pursuant to the terms of the proposed Final Judgment.
E. ``Relevant Hauling Assets'' means with respect to each
commercial route or other hauling asset described herein: (1) All
tangible assets, including capital equipment, trucks and other
vehicles, containers, interests, permits, and supplies [except real
property and improvements to real property (i.e., buildings)]; and (2)
all intangible assets, including hauling-related customer lists,
contracts, and accounts.
Relevant Hauling Assets, as used herein, includes each of the
following assets:
1. Scranton, Pennsylvania--Waste Management's front-end loader
truck (``FEL'') commercial routes servicing Luzerne and Lackawanna
County, Pennsylvania;
2. Franklin/Adams/Cumberland Counties, Pennsylvania--Eastern's FEL
commercial routes servicing Franklin, Adams and Cumberland Counties,
Pennsylvania;
3. Broward County, Florida--Eastern's FEL commercial routes
servicing Broward County, Florida;
4. Dade County, Florida--Eastern's FEL commercial routes servicing
portions of Dade County, Florida;
5. Hillsborough County, Florida--Eastern's Kimmins Recycling
Corporation FEL commercial routes servicing the unincorporated (and
grandfathered incorporated) areas of Hillsborough County, Florida solid
waste service area, more specifically defined in RFP#C-277-96,
Hillsborough County Board of County Commissioners documents 96-2393, as
modified by 97-1913.
F. ``Hauling'' means the collection of waste from commercial
customers and the transporting of the collected waste to disposal
sites. Hauling, as used herein, does not include collection of roll-off
containers.
G. ``Waste'' means municipal solid waste.
H. ``Disposal'' means the business of disposing of waste into
approved disposal sites.
I. ``Relevant Area'' means the county in which the Relevant Hauling
Assets or Relevant Disposal Assets are located, or with respect to the
Rights to Eastern's RFP Proposal, New York, New York.
J. ``Relevant State'' means the state in which the Relevant
Disposal Assets or Relevant Hauling Assets are located.
II
Objectives
The Final Judgment filed in this case is meant to ensure
defendants' prompt divestitures of the Relevant Disposal Assets,
Relevant Hauling Assets, and the Rights to Eastern's RFP Proposal for
the purpose of establishing viable competitors in the waste disposal
business or the commercial waste hauling business, or both, in the
Relevant Areas to remedy the effects that plaintiffs allege would
otherwise result from Waste Management's acquisition of Eastern. This
Hold Separate Stipulation and Order ensures, prior to such
divestitures, that the Relevant Disposal Assets and the Relevant
Hauling Assets are independent and, with the exception of assets listed
in Sections I(D)(2)(a) and (c), economically viable and ongoing
business concerns; that the Rights to Eastern's RFP Proposal remain
independent and uninfluenced by Waste Management; and that competition
is maintained during the pendency of the ordered divestitures.
III
Jurisdiction and Venue
The Court has jurisdiction over the subject matter of this action
and over each of the parties hereto, and venue of this action is proper
in the United States District Court for the Eastern District of New
York.
IV
Compliance With and Entry of Final Judgment
A. The parties stipulate that a Final Judgment in the form attached
hereto as Exhibit A may be filed with 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 United States 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.
B. Defendants shall abide by and comply with the provisions of the
proposed Final Judgment, pending the Judgment's entry by the Court, or
until expiration of 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.
C. Defendants shall not consummate the transaction sought to be
enjoined by the Complaint herein before the Court has signed this Hold
Separate Stipulation and Order.
D. 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.
E. In the event (1) the United States has withdrawn its consent, as
provided in Section IV(A) above, or (2) the proposed Final Judgment is
not entered pursuant to this Stipulation, 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 continued compliance
with the terms and provisions of the proposed Final Judgment, then the
parties are released from all further obligations under this
Stipulation, and the making of this Stipulation shall be without
prejudice to any party in this or any other proceeding.
F. Defendants represent that the divestitures ordered in the
proposed Final Judgment can and will be made, and that defendants will
later raise no claim of hardship or difficulty as grounds for asking
the Court to modify any of the divestiture provisions contained
therein.
V
Hold Separate Provisions
Until the divestitures required by the Final Judgment have been
accomplished:
A. Defendants shall preserve, maintain, and with the exception of
assets listed in Sections I (C) and (D)(2)(a) and (c), operate the
Relevant Disposal Assets, the Relevant Hauling Assets, and the Rights
to Eastern's RFP Proposal as independent competitive businesses, with
management, sales and
[[Page 9529]]
operations of such assets held entirely separate, distinct and apart
from those of defendants' other operations. Defendants shall not
coordinate the marketing of, or negotiation or sales by, any Relevant
Disposal Assets, Relevant Hauling Assets, or Rights to Eastern's RFP
Proposal with defendants' other operations. Within twenty (20) days
after the filing of the Hold Separate Stipulation and Order, or thirty
(30) days after the entry of this Order, whichever is later, defendants
will inform plaintiffs of the steps defendants have taken to comply
with this Hold Separate Stipulation and Order.
B. Defendants shall take all steps necessary to ensure that (1) the
Relevant Disposal Assets and Relevant Hauling Assets will be maintained
and, with the exception of assets listed in Sections I (D)(2)(a) and
(c), operated as independent, ongoing, economically viable and active
competitors in the waste disposal business or waste hauling business,
or both in the Relevant Area; (2) management of the Relevant Disposal
Assets, Relevant Hauling Assets, or the Rights to Eastern's RFP
Proposal will not be influenced by Waste Management; and (3) the books,
records, competitively sensitive sales, marketing and pricing
information, and decision-making concerning the Relevant Disposal
Assets, Relevant Hauling Assets, and Rights to Eastern's RFP Proposal
will be kept separate and apart from defendants' other operations.
Waste Management's influence over the Relevant Disposal Assets,
Relevant Hauling Assets, and the Rights to Eastern's RFP Proposal shall
be limited to that necessary to carry out Waste Management's
obligations under this Hold Separate Stipulation and Order and the
Final Judgment.
C. Defendants shall use all reasonable efforts to maintain and
increase the sales and revenues of the Relevant Disposal Assets [with
the exception of assets listed in Sections I (D)(2)(a) and (c)] and the
Relevant Hauling Assets, and shall maintain at 1998 or at previously
approved levels, whichever are higher, all promotional, advertising,
sales, technical assistance, marketing and merchandising support for
the Relevant Disposal Assets and Relevant Hauling Assets.
D. Defendants shall provide sufficient working capital to maintain
the Relevant Disposal Assets [with the exception of assets listed in
Sections I(D)(2)(a) and (c)] and the Relevant Hauling Assets as
economically viable and competitive ongoing businesses.
E. Defendants shall take all steps necessary to ensure that the
Relevant Disposal Assets [with the exception of assets listed in
Sections I(D)(2)(a) and (c)] and the Relevant Hauling Assets are fully
maintained in operable condition at no lower than their current
capacity or sales, and shall maintain and adhere to normal repair and
maintenance schedules for the Relevant Disposal Assets and Relevant
Hauling Assets.
F. Defendants shall not, except as part of a divestiture approved
by plaintiffs in accordance with the terms of the proposed Final
Judgment, remove, sell, lease, assign, transfer, pledge or otherwise
dispose of any of the Relevant Disposal Assets, Relevant Hauling
Assets, or the Rights to Eastern's RFP Proposal.
G. Defendants shall maintain, in accordance with sound accounting
principles, separate, accurate and complete financial ledgers, books
and records that report on a periodic basis, such as the last business
day of every month, consistent with past practices, the assets,
liabilities, expenses, revenues and income of the Relevant Disposal
Assets and Relevant Hauling Assets.
H. Except in the ordinary course of business or as is otherwise
consistent with this Hold Separate Stipulation and Order, defendants
shall not hire, transfer, terminate, or otherwise alter the salary
agreements for any Waste Management or Eastern employee who, on the
date of defendants' signing of this Hold Separate Stipulation and
Order, either: (1) Works at a Relevant Disposal Asset or Relevant
Hauling Asset, or (2) is a member of management referenced in Section
V(I) of this Hold Separate Stipulation and Order.
I. Until such time as the Relevant Disposal Assets and Relevant
Hauling Assets are divested pursuant to the terms of the Final
Judgment, the Relevant Disposal Assets and Relevant Hauling Assets of
Waste Management and Eastern shall be managed by Donald Chappel. Mr.
Chappel shall have complete managerial responsibility for the Relevant
Disposal Assets and Relevant Hauling Asset of Waste Management and
Eastern, subject to the provisions of this Order and the Final
Judgment. In the event that Donald Chappel is unable to perform his
duties, defendants shall appoint, subject to the approval of the United
States, after consultation with the Relevant States, a replacement
within ten (10) working days. Should defendants fail to appoint a
replacement acceptable to the United States, after consultation with
the Relevant States, within ten (10) working days, the United States
shall appoint a replacement.
J. Until such time as the Rights to Eastern's RFP Proposal are
divested pursuant to the terms of the Final Judgment, the Rights to
Eastern's RFP Proposal shall be managed by Donald Chappel, who shall
have complete managerial responsibility for the Rights to Eastern's RFP
Proposal, subject to the provisions of this Hold Separate Stipulation
and Order, the Final Judgment, any such other written agreement between
the defendants and both the United States and the State of New York. In
the event that Donald Chappel is unable to perform his duties, the
United States and the State of New York jointly shall appoint a
replacement.
K. Defendants shall take no action that would interfere with the
ability of any trustee appointed pursuant to the Final Judgment to
complete the divestitures pursuant to the Final Judgment to purchasers
acceptable to the United States, after consultation with the Relevant
State, or in the case of the Rights to Eastern's RFP Proposal and the
Gesuale or Vaccaro transfer stations, acceptable to both the United
States and the State of New York.
L. This Hold Separate Stipulation and Order shall remain in effect
until consummation of the divestitures contemplated by the Final
Judgment or until further order of the Court.
Dated: December 30, 1998.
[[Page 9530]]
For Plaintiff United States of America:
Anthony E. Harris, Esquire (AH 5876)
U.S. Department of Justice, Antitrust Division, Litigation II Section,
Suite 3000, Washington, D.C. 20005, (202) 307-6583.
For Plaintiff State of New York
Dennis C. Vacco,
Attorney General.
Stephen D. Houck,
Assistant Attorney General in Charge.
Richard E. Grimm (RG 6891)
Assistant attorney General, Antitrust Bureau, Office of the Attorney
Bureau, Office of the Attorney General, 120 Broadway, Suite 26-01, New
York, NY 10271, (212) 416-8271.
For Defendants Waste Management, Inc. and Ocho Acquisition Corp.
Steven C. Sunshine, Esquire,
Shearman & Sterling, 801 Pennsylvania Avenue, NW, Washington, DC 20004-
2604, (202) 508-8000.
James R. Weiss, Esquire,
Preston Gates Ellis & Rouvelas Meeds LLP, 1735 New York Avenue, NW,
Washington, DC 20006-8425, (202) 662-8425.
For Defendant Eastern Environmental Services, Inc.
Neal R. Stoll, Esquire,
Skadden, Arps, Slate, Meagher, & Flom, 919 Third Avenue, New York, NY
10022-3897, (212) 735-3000.
Of Counsel:
Kay Taylor,
Assistant Attorney General.
For Plaintiff Commonwealth of Pennsylvania
D. Michael Fisher,
Attorney General.
James A. Donahue, III,
Chief Deputy Attorney General.
Benjamin L. Cox (BC 2146),
Deputy Attorney General, 14th Floor, Strawberry Square, Harrisburg, PA
17120, (717) 787-4530.
For Plaintiff State of Florida
Robert A. Butterworth,
Attorney General.
Lizabeth A. Leeds,
Douglas L. Kilby,
Assistant Attorneys General, Antitrust Section, PL-01, The Capitol,
Tallahassee, FL 32399-1050, (850) 414-3856.
Order
It is so ordered by the Court, this ______ day of ______.
----------------------------------------------------------------------
United States District Judge
Final Judgment
Whereas, plaintiffs, the United States of America, the State of New
York, the Commonwealth of Pennsylvania, and the State of Florida, and
defendants Eastern Environmental Services, Inc. (``Eastern''), Waste
Management, Inc. (``Waste Management''), and Ocho Acquisition
Corporation (``Ocho''), 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 or fact herein; and that this Final
Judgment shall settle all claims made by plaintiffs in their Amended
Complaint filed on December 2, 1998;
And whereas, defendants have agreed to be bound by the provisions
of this Final Judgment pending its approval by the Court;
And whereas, the essence of this Final Judgment is, in the event of
the acquisition of Eastern by Waste Management, the prompt and certain
divestiture of the identified assets to assure that competition is not
substantially lessened;
And whereas, plaintiffs require defendants to make certain
divestitures for the purpose of establishing a viable competitor in the
disposal business, the commercial waste hauling business, or both in
the specified areas;
And whereas, defendants have represented to plaintiffs that the
divestures ordered herein can and will be made and that defendants will
later raise no claims of hardship or difficulty as grounds for asking
the Court to modify any of the divesture provisions contained below;
And whereas, the United States, the states of New York and Florida,
and the Commonwealth of Pennsylvania currently believe that entry of
this Final Judgment is in the public interest;
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 each of the parties hereto and
over the subject matter of this action. The Complaint states a claim
upon which relief may be granted against defendants, as hereinafter
defined, under Section 7 of the Clayton Act, as amended (15 U.S.C.
Sec. 18).
II
Definitions
As used in this Final Judgment:
A. ``Waste Management'' means defendant Waste Management, Inc., a
Delaware corporation with its headquarters in Houston, Texas and
includes its successors and assigns, and its subsidiaries, divisions,
groups, affiliates, directors, officers, managers, agents, and
employees.
B. ``Eastern'' means defendant Eastern Environmental Services,
Inc., a Delaware corporation with its headquarters in Mt. Laurel, New
Jersey, and includes its successors and assigns, and its subsidiaries,
divisions, groups, affiliates, directors, officers, managers, agents,
and employees.
C. ``Rights to Eastern's RFP Proposal'' means (1) all right, title
and interest in the proposal submitted by Eastern to the New York City
Department of Sanitation in response to the New York City Request for
Proposals to Receive Solid Waste at a Marine Transfer Station.
Procurement Identification No. 82797RR0014, dated June 16, 1997, and
any amendments, revisions, or modifications thereto (hereinafter, the
``New York City RFP''); (2) any intangible assets relating to that
proposal, including any engineering, technical, or construction
designs, plans or specifications, permit or land use applications, and
any options, commitments or agreements of any type for the design,
construction, permitting, lease or sale of any land, building or
equipment, or to receive, transport, store or dispose of waste; (3) at
purchaser's option, such technical assistance on that proposal as the
purchaser reasonably may require from Eastern for a period of one
hundred fifty days (150) after the purchase of the Rights to Eastern's
RFP Proposal; and (4) at purchaser's option, airspace disposal rights
for up to a twenty-year time at Eastern's Waverly, VA landfill,
pursuant to which defendants will sell rights to dispose of up to 4,000
tons of average daily waste pursuant to any contract award under the
New York City RFP, on the terms and conditions specified in the Waste
Disposal Agreement, dated December 29, 1998, between Atlantic Waste
Disposal, Inc. and Republic Services, Inc.
D. ``Relevant Disposal Assets'' means, with respect to each
landfill or transfer station listed and described herein: (1) all
tangible assets, including all fee and leasehold and renewal rights in
the listed landfill or transfer station; the garage and related
facilities; offices; and landfill- or transfer station-related assets
including capital equipment, trucks and other vehicles, scales, power
supply equipment, interests, permits, and supplies; and (2) all
intangible assets of the listed landfill or transfer station, including
customer lists, contracts, and accounts, or options to purchase any
adjoining property.
[[Page 9531]]
Relevant Disposal Assets, as used herein, includes each of the
following properties:
1. Landfills
a. Allegheny County, Pennsylvania--Eastern's Kelly Run Sanitation
Landfill, located at State Route 51 South, Elizabeth, Pennsylvania
15037, and known as the Kelly Run Landfill (and includes the waste
disposal agreement between Chambers Development Company, Inc. and
William H. Martin, Inc. and Eastern Environmental Services, Inc. and
Kelly Run Sanitation, Inc., dated 1997);
b. Bethlehem/Allentown, Pennsylvania--Eastern's Eastern Waste of
Bethlehem Landfill, located at 2335 Applebutter Road, Bethlehem,
Pennsylvania 18015, and known as the Bethlehem Landfill; and
c. Chambersburg-Carlisle, Pennsylvania--Eastern's R&A Bender
Landfill located at 3747 White Church Road, Chambersburg, Pennsylvania
17201 (also known as the Bender Landfill).
2. Transfer Stations
New York, New York--a. Eastern's PJ's Transfer Station located at
222 Morgan Avenue, Brooklyn, New York 11237 (also known as the Morgan
Avenue Transfer Station);
b. Eastern's Atlantic Waste Transfer Station located at 110-120
50th Street, Brooklyn, New York 11232 (also known as the Atlantic
Transfer Station); and
c. Waste Management's Vacarro Transfer Station, located at 577
Court Street, Brooklyn, NY 11231 (also known as the Court Street
Transfer Station); and Waste Management's Gesuale Transfer Station,
located at 38-50 Review Avenue, Queens, NY 11101 (also known as Review
Avenue Transfer Station), only one of which must be sold pursuant to
the terms of Sections IV or V of this Final Judgment.
E. ``Relevant Hauling Assets'' means with respect to each
commercial route or other hauling asset described herein: (1) all
tangible assets, including capital equipment, trucks and other
vehicles, containers, interests, permits, and supplies [except real
property and improvements to real property (i.e., buildings)]; and (2)
all intangible assets, including hauling-related customer lists,
contracts, and accounts.
Relevant Hauling Assets, as used herein, includes each of the
following assets:
1. Scranton, Pennsylvania--Waste Management's front-ent loader
truck (``FEL'') commercial routes servicing Luzerne and Lackawanna
County, Pennsylvania;
2. Franklin/Adams/Cumberland Counties, Pennsylvania--Eastern's FEL
commercial routes servicing Franklin, Adams and Cumberland Counties,
Pennsylvania;
3. Broward County, Florida--Eastern's FEL commercial routes
servicing Broward County, Florida;
4. Dade County, Florida--Eastern's FEL commercial routes servicing
portions of Dad County, Florida;
5. Hillsborough County, Florida--Eastern's Kimmins Recycling
Corporation FEL commercial routes servicing the unincorporated (and
grandfathered incorporated) areas of Hillsborough County, Florida solid
waste service area, more specifically defined in RFP#C-277-96,
Hillsborough County Board of County Commissioners documents 96-2393, as
modified by 97-1913.
F. ``Hauling'' means the collection of waste from commercial
customers and the transporting of the collected waste to disposal
sites. Hauling, as used herein, does not include collection of roll-off
containers.
G. ``Waste'' means municipal solid waste.
H. ``Disposal'' means the business of disposing of waste into
approved disposal sites.
I. ``Relevant Area'' means the country in which the Relevant
Hauling Assets or Relevant Disposal Assets are located, or with respect
to the Rights to Eastern's RFP Proposal, New York, New York.
J. ``Relevant State'' means the state in which the Relevant
Disposal Assets or Relevant Hauling Assets are located.
III
Applicability
A. The provisions of this Final Judgment apply to defendants, their
successors and assigns, subsidiaries, 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. Waste Management shall require, as a condition of the sale or
other disposition of all or substantially all of its assets, or of a
lesser business unit that includes defendants' hauling or disposal
business in any Relevant Area, that the acquiring party agree to be
bound by the provisions of this Final Judgment.
IV
Divestitures
A. In the event that Waste Management acquires Eastern, defendants
are hereby ordered and directed in accordance with the terms of this
Final Judgment, within one hundred and twenty (120) calendar days after
the filing of the Hold Separate Stipulation and Order in this case, or
five (5) days after notice of the entry of this Final Judgment by the
Court, whichever is later, to:
(1) Sell the Relevant Disposal Assets (excluding the Gesuale and
Vaccaro transfer stations defined in Section II(D)(2)(c) hereof) and
the Relevant Hauling Assets as viable, ongoing businesses to a
purchaser or purchasers acceptable to the United States in its sole
discretion, after consultation with the Relevant State; and
(2) Offer to sell both the Gesuale Transfer Station and the Vacarro
Transfer Station, defined in Section II(D)(2)(c) hereof, and at Waste
Management's sole election, sell either one of these two transfer
stations to a purchaser or purchasers acceptable to both United States
and the State of New York, in their sole discretion, but subject to the
standard set forth in Section IV(J) of the Final Judgment.
B. In the event that Waste Management acquires Eastern, defendants
are hereby ordered and directed in accordance with the terms of this
Final Judgment, to sell by January 18, 1999, the Rights to Eastern's
RFP Proposal to Republic Services, Inc. or any other purchaser
acceptable to both the United States and the State of New York, in
their sole discretion.
C. Defendants shall use their best efforts to accomplish the
divestitures as expeditiously and timely as possible. The United
States, in its sole discretion, after consultation with the Relevant
State--or with respect to the Rights to Eastern's RFP Proposal, both
the United States and the State of New York jointly, in their sole
discretion--may extend the time period for any divestiture an
additional period of time not to exceed sixty (60) calendar days.
D. In accomplishing the divestitures ordered by this Final
Judgment, Waste Management promptly shall make known, by usual and
customary means, the availability of the Relevant Disposal Assets and
the Relevant Hauling Assets. Waste Management shall inform any person
making an inquiry regarding a possible purchase that the sale is being
made pursuant to this Final Judgment and provide such person with a
copy of this Final Judgment. Waste Management shall also offer to
furnish to all bona fide prospective purchasers, subject to customary
confidentiality assurances, all information regarding the Relevant
Disposal Assets, the Relevant Hauling Assets, and the Rights to
Eastern's RFP Proposal customarily provided in a due
[[Page 9532]]
diligence process except such information subject to attorney-client
privilege or attorney work-product privilege. Waste Management shall
make available such information to the plaintiffs at the same time that
such information is made available to any other person.
E. Defendants shall not interfere with any negotiations by any
purchaser to employ any Waste Management (or former Eastern) employee
(with the exception of Louis D. Paolino, Jr. or Robert M. Kramer) who
works at, or whose principal responsibility concerns, any disposal or
hauling business that is part of the Relevant Disposal Assets, the
Relevant Hauling Assets, or the Rights to Eastern's RFP Proposal.
F. Waste Management shall permit prospective purchasers of the
Relevant Disposal Assets, Relevant Hauling Assets, or Rights to
Eastern's RFP Proposal to have access to personnel and to make such
inspection of such assets; access to any and all environmental, zoning,
and other permit documents and information; and access to any and all
financial, operational, or other documents and information customarily
provided as part of a due diligence process.
G. With the exception of the assets listed in Sections II (D)(2)(a)
and (c), Waste Management shall warrant to any and all purchasers of
the Relevant Disposal Assets or Relevant Hauling Assets that each asset
will be operational on the date of sale.
H. Waste Management shall not take any action, direct or indirect,
that will impede in any way the permitting or operation of the Relevant
Disposal Assets or Relevant Hauling Assets, or take any action, direct
or indirect, that will impede in any way the permitting of any facility
to be built or used pursuant to an award by New York City relating to
the Rights to Eastern's RFP Proposal.
I. Waste Management shall warrant to the purchaser of the Relevant
Disposal Assets or Relevant Hauling Assets that with the exception of
the assets listed in Sections II(D)(2)(a) and (c), there are no
material defects in the environmental, zoning, or other permits
pertaining to the operation of each asset, and that with respect to all
Relevant Disposal Assets or Relevant Hauling assets, Waste Management
will not undertake, directly or indirectly, following the divestiture
of each asset, any challenges to the environmental, zoning, or other
permits pertaining to the operation of the asset.
J. Unless the United States, after consultation with the Relevant
State, otherwise consents in writing, the divestitures pursuant to
Section IV, whether by defendants or by trustee appointed pursuant to
Section V of this Final Judgment, shall include all Relevant Disposal
Assets, Relevant Hauling Assets, and Rights to Eastern's RFP Proposal
and be accomplished by selling or otherwise conveying each asset to a
purchaser in such a way as to satisfy the United States, in its sole
discretion, after consultation with the Relevant State--or with respect
to the Rights to Eastern's RFP Proposal or Vacarro or Gesuale transfer
stations [Section II(D)(2)(c)], in such a way as to satisfy both the
United States and the State of New York--that the Relevant Disposal
Assets or the Relevant Hauling Assets can and will be used by the
purchaser as part of a viable, ongoing business or businesses engaged
in waste disposal or hauling, or with respect to the Rights to
Eastern's RFP Proposal, in such a way as to satisfy both the United
States and the State of New York, in their sole discretion, that the
purchaser will use its best efforts to compete for a contract award
under the New York City RFP. The divestiture, whether pursuant to
Section IV or Section V of this Final Judgment, shall be made to a
purchaser or purchasers for whom it is demonstrated to the United
States sole satisfaction, after consultation with the Relevant State--
or with respect to the Rights to Eastern's RFP Proposal or Vacarro or
Gesuale transfer stations [Section II(D)(2)(c)], for whom it is
demonstrated to both the United States and the State of New York's sole
satisfaction--that the purchaser: (1) has the capability and intent of
competing effectively in the waste disposal or hauling business in the
Relevant Area; (2) has or soon will have the managerial, operational,
and financial capability to compete effectively in the waste disposal
or hauling business in the Relevant Area; and (3) is not hindered by
the terms of any agreement between the purchaser and Waste Management
which gives Waste Management the ability unreasonably to raise the
purchaser's costs, lower the purchaser's efficiency, or otherwise
interfere in the ability of the purchaser to compete effectively in the
Relevant Area.
K. Defendants shall not institute any action to challenge the sale
or assignment of the Rights to Eastern's RFP Proposal pursuant to the
terms of this Final Judgment, and defendants shall not challenge, on
the basis of such sale or assignment, the New York City Department of
Sanitation's consideration of such proposal, as sold or assigned, or
the New York City Department of Sanitation's award to a purchaser or
assignee of such proposal under the New York City RFP. If any legal
action is commenced against such sale or assignment, defendants shall
support in that action the sale or assignment of the Rights to
Eastern's RFP Proposal.
L. The United States and the State of New York shall file a joint
motion with Waste Management to modify the pending Final Judgment in
United States v. USA Waste Service, Inc., Civ. No. 98 CV 1616 (N.D.
Ohio, filed June 16, 1998), to remove from the Judgment the contingent
divestiture of Waste Managment's Brooklyn Transfer Station, located at
485 Scott Avenue, Brooklyn, NY 12222 (also known as the Scott Avenue
Transfer Station).
V
Appointment of Trustee
A. In the event that Waste Management has not sold the Relevant
Disposal Assets, the Relevant Hauling Assets, or the Rights to
Eastern's RFP Proposal within the time period specified in Section IV
of this Final Judgment, the Court shall appoint, on application of the
United States, a trustee selected by the United States (or with respect
to the Rights to Eastern's RFP Proposal and Gesuale or Vacarro transfer
station, a trustee selected by both the United States and the State of
New York jointly), to effect the divestiture of each such asset not
sold; provided, however, that if Waste Management has a definitive
agreement to sell either Vacarro or Gesuale transfer station to a
purchaser approved by both the United States and the State of New York
under the Final Judgment, but the sale of the transfer station cannot
be consummated because of Waste Management's or the purchaser's
inability to obtain regulatory approval for a change of control of or
approval to operate the transfer station, then, as long as such
inability persists, a trustee shall not be appointed with respect to
the sale of either Vacarro or Gesuale transfer station; and provided
further that if the inability to obtain such regulatory approval
persists for one year or more after the signing of a definitive
agreement to sell the transfer station and approval of the proposed
purchaser by both the United States and the State of New York, Waste
Mangement may request that the United States and the State of New York
select--or both the United States and the State of New York may on
their own jointly select--a trustee to effect the sale of Gesuale
Transfer Station, and at the time such request or joint selection is
made any
[[Page 9533]]
obligation to sell Vacarro Transfer Station shall terminate.
B. After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell the Relevant Disposal Assets,
Relevant Hauling Assets, or Rights to Eastern's RFP Proposal described
in Sections II (C), (D) and (E) of this Final Judgment. The trustee
shall have the power and authority to accomplish any and all
divestitures at the best price then obtainable upon a reasonable effort
by the trustee, subject to the provisions of Sections IV and VII of
this Final Judgment, and shall have such other powers as the Court
shall deem appropriate. With respect to the Rights to Eastern's RFP
Proposal, the trustee shall have the power to offer to sell the
airspace disposal rights option on the terms specified in the Waste
Disposal Agreement, dated December 29, 1998, between Atlantic Waste
Disposal, Inc. and Republic Services, Inc. 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 Waste Managment any investment bankers,
attorneys, or other agents reasonably necesary in the judgment of the
trustee to assist in the divestitures, and such professionals and
agents shall be accountable solely to the trustee. The trustee shall
have the power and authority to accmplish the divestitures at the
earliest possible time to a purchaser or purchasers acceptable to the
United States, upon consultation with the Relevant State [except that
the sale of the Rigths to Eastern's RFP Proposal or the sale of Vaccaro
or Gesuale transfer station shall be made to a purchaser or purchasers
acceptable to both the United States and the State of New York], and
shall have such other powers as this Court shall deem appropriate.
Waste Management shall not object to a sale by the trustee on any
grounds other than the trustee's malfeasance. Any such objections by
Waste Management must be conveyed in writing to the relevant plaintiffs
and the trustee within ten (10) calender 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 Waste
Management, on such terms, and conditions as the Court may prescribe,
and shall account for all monies derived from the sale of each asset
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 Waste Management and the
trust shall then be terminated. The compensation of such trustee and of
any professionals and agents retained by the trustee shall be
reassonable in light of the value of the divested business 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. Waste Management shall use its best effort to assist the trustee
in accomplishing the required divestitures, including best efforts to
effect all necessary regulatory approvals. 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 the businesses to be divested, and Waste
Mangement shall develop financial or other information relevant to the
businesses to be divested customarily provided in a due diligence
process as the trustee may reasonably request, subject to customary
confidentiality assurances. Waste Management shall permit bona fide
prospective acquirers of each Relevant Disposal Asset, Relevant Hauling
Asset, or the Rights to Eastern's RFP Proposal 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 divestitures 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 business to be divested,
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 businesses to be divested.
F. If the trustee has not accomplished such divestitures within six
(6) months after its appointment, the trustee thereupon shall file
promptly with the Court a report a setting forth (1) the trustee's
efforts to accomplish their required divestitures, (2) the reasons, in
the trustee's judgment, why the required divestitures have 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 that 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 enter thereafter such orders as it shall deem
appropriate in orders to carry out the purpose of the trust which may,
if necessary, include extending the trust and the term of the trustee's
appointment by a period requested by the United States, or with respect
to the Rights to Eastern's RFP Proposal and Vacarro or transfer station
Gesuale, requested by both the United States and the State of New York.
VI
Notification
Within two (2) business days following execution of a definitive
agreement, contingent upon compliance with the terms of this Final
Judgment, to effect, in whole or in part, and proposed divestiture
pursuant to Sections IV or V of this Final Judgment, Waste Management
or the trustee, whichever is then responsible for effecting the
divestiture, shall notify plaintiffs of the proposed divestiture. If
the trustee is responsible, it shall similarly notify Waste Management.
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 a
desire to, acquire any ownership interest in the business to be
divested that is the subject of the binding contract, together with
full details of same. Within fifteen (15) calendar days of receipt by
plaintiffs of such notice, the United States, in its sole discretion,
after consultation with the Relevant State--or with respect to the
Rights to Eastern's RFP Proposal or the sale of Vacarro or Gesuale
transfer station [Section II(d)(2)(c)], both the United States and the
State of New York jointly, in their sole discretion--may request from
Waste Management, the proposed purchaser, or any other third party
additional information concerning the proposed divestiture and the
proposed purchaser. Waste Management and the trustee shall furnish any
additional information requested from them within fifteen (15) calendar
days of the receipt of the request, unless the parties shall
[[Page 9534]]
otherwise agree. Within thirty (30) calendar days after receipt of the
notice or within twenty (20) calendar days after plaintiffs have been
provided the additional information requested form Waste Management,
the proposed purchaser, and any third party, whichever is later, the
United States, after consultation with the Relevant State--or with
respect to the Rights to Eastern's RFP Proposal or the sale of Vaccaro
or Gesuale transfer station, both the United States and the State of
New York jointly--shall provide written notice to Waste Management and
the trustee, if there is one, stating whether or not it objects to the
proposed divestiture. If the United States (or with respect to the
Rights to Eastern's RFP Proposal and Vacarro or Gesuale transfer
station, both the United States and the State of New York jointly)
provide written notice to Waste Management and the trustee that it does
not object, then the divestiture may be consummated, subject only to
Waste Management's limited right to object to the sale under Section
V(B) of this Final Judgment. Upon objection by the United States (or
with respect to the Rights to Eastern's RFP Proposal and Vacarro or
Gesuale transfer station, both the United States and the State of New
York), and divestiture proposed under Section IV or Section V shall not
be consummated. Upon objection by Waste Management under the provision
in Section V(B), a divestiture proposed under Section V shall not be
consummated unless approved by the Court.
VII
Affidavits
A. Within twenty (20) calendar days of the filing of the Hold
Separate Stipulation and Order in this matter and every thirty (30)
calendar days thereafter until the divestiture has been completed
whether pursuant to Section IV or Section V of this Final Judgment,
Waste Management shall deliver to plaintiffs an affidavit as to the
fact and manner of compliance with Sections IV or V of this Final
Judgment. Each such affidavit shall include, inter alia, the name,
address, and telephone number of each person who, at any time after the
period covered by the last such report, 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 businesses to be divested, and shall describe in detail
each contact with any such person during that period. Each such
affidavit shall also include a description of the efforts that Waste
Management has taken to solicit a buyer for any and all Relevant
Disposal Assets, Relevant Hauling Assets, or Rights to Eastern's RFP
Proposal and to provide required information to prospective purchasers,
including the limitations, if any, on such information. Assuming the
information set forth in the affidavit is true and complete, any
objection by the United States, after consultation with the Relevant
State--or with respect to the Rights to Eastern's RFP Proposal, and
Vacarro or Gesuale transfer station, any objection by both the United
States and the State of New York--to information provided by Waste
Management, including limitations on information, shall be made within
fourteen (14) days of receipt of such affidavit.
B. Within twenty (20) calendar days of the filing of the Hold
Separate Stipulation and Order in this matter, Waste Management shall
deliver to plaintiffs an affidavit which describes in detail all
actions Waste Management has taken and all steps Waste Management has
implemented on an on-going basis to preserve the Relevant Disposal
Assets, Relevant Hauling Assets, and Rights to Eastern's RFP Proposal
pursuant to Section VIII of this Final Judgment and the Hold Separate
Stipulation and Order entered by the Court. The affidavit also shall
describe, but not be limited to, Waste Management's efforts to maintain
and operate each Relevant Disposal Asset and Relevant Hauling Asset as
an active competitor, maintain the management, staffing, sales,
marketing and pricing of each asset, and maintain each asset in
operable condition at current capacity configurations. Waste Management
shall deliver to plaintiffs an affidavit describing any changes to the
efforts and actions outlined in Waste Management's earlier affidavit(s)
filed pursuant to this Section within fifteen (15) calendar days after
the change is implemented.
C. Until one year after such divestiture has been completed, Waste
Management shall preserve all records of all efforts made to preserve
the Relevant Disposal Assets, Relevant Hauling Assets, and Rights to
Eastern's RFP Proposal and to effect the ordered divestitures.
VIII
Hold Separate Order
Until the divestitures required by the Final Judgment have been
accomplished, Waste Management shall take all steps necessary to comply
with the Hold Separate Stipulation and Order entered by this Court.
Defendants shall take no action that would jeopardize the sale of the
Relevant Disposal Assets, Relevant Hauling Assets, or the Rights to
Eastern's RFP Proposal.
IX
Financing
Waste Management is ordered and directed not to finance all or any
part of any acquisition by any person made pursuant to Sections IV or V
of this Final Judgment.
X
Compliance Inspection
For purposes of determining or securing compliance with the Final
Judgment and subject to any legally recognized privilege, from time to
time:
A. Duly authorized representatives of the United States Department
of Justice, upon written request of the Attorney General or of the
Assistant Attorney General in charge of the Antitrust Division, or upon
written request of duly authorized representatives of the Attorney
General's Office of any Relevant State, and on reasonable notice to
Waste Management made to its principal offices, shall be permitted:
(1) Access during office hours of Waste Management to inspect and
copy all books, ledgers, accounts, correspondence, memoranda, and other
records and documents in the possession or under the control of Waste
Management, who may have counsel present, relating to the matters
contained in this Final Judgment and the Hold Separate Stipulation and
Order; and
(2) Subject to the reasonable convenience of Waste Management and
without restraint or interference from it, to interview, either
informally or on the record, its officers, employees, and agents, who
may have counsel present, regarding any such matters.
B. Upon the written request of the Attorney General or of the
Assistant Attorney General in charge of the Antitrust Division, or upon
the written request of the Attorney General's Office of any Relevant
State, Waste Management shall submit such written reports, under oath
if requested, with respect to any matter contained in the Final
Judgment and the Hold Separate Stipulation and Order.
C. No information or documents obtained by the means provided in
Sections VII or X of this Final Judgment shall be divulged by a
representative of the plaintiffs to any person other than a duly
authorized representative of the Executive Board of the United States,
or the Attorney General's Office of any Relevant State, except in the
course of legal proceedings to which the United
[[Page 9535]]
States or any Relevant State 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 Waste
Management to plaintiffs, Waste Management represents and identifies in
writing the material in any such information or documents to which a
claim of protection may be asserted under Rule 26(c)(7) of the Federal
Rules of Civil Procedure, and Waste Management marks each pertinent
page of such material, ``Subject to claim of protection under Rule
26(c)(7) of the Federal Rule of Civil Procedure,'' then ten (10)
calendar days notice shall be given by plaintiffs to Waste Management
prior to divulging such material in any legal proceeding (other than a
grand jury proceeding) to which Waste Management is not a party.
XI
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 or carrying out of this Final
Judgment, for the modification of any of the provisions hereof, for the
enforcement of compliance herewith, and for the punishment of any
violations hereof.
XII. Termination
Unless this Court grants an extension, this Final Judgment will
expire upon the tenth anniversary of the date of its entry.
XIII. Public Interest
Entry of this Final Judgment is in the public interest.
Dated: ________.
----------------------------------------------------------------------
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 November 17, 1998, the United States, and the states of New York
and Florida, and the Commonwealth of Pennsylvania (``the governments'')
filed a civil antitrust suit alleging that the proposed acquisition by
Waste Management, Inc. of Eastern Environmental Services, Inc.
(``Eastern'') would violate Section 7 of the Clayton Act, 15 U.S.C.
Sec. 18. The Amended Complaint, filed on December 2, 1998, alleges that
in nine markets in the eastern United States, Waste Management and
Eastern are two of the most significant competitors in commercial waste
collection, or disposal of municipal solid waste (``MSW'') (i.e.,
operation of landfills, transfer stations and incinerators), or both
services.
The Amended Compliant alleges that a combination of Waste
Management and Eastern would substantially lessen competition for the
massive $6 billion contract to dispose of residential waste collected
by the New City Department of Sanitation following the closure of the
city's Fresh Kills Landfill in late 2001. The Amended Complaint alleges
that the combination would also substantially reduce competition in
disposal of municipal solid waste in four other highly concentrated
markets--Pittsburgh (Allegheny County), Allentown/Bethlehem, and
Chambersburg/Carlisle, Pennsylvania, and New York, New York (commercial
waste)--and that it would substantially lessen competition in
commercial waste collection services in four highly concentrated,
relevant geographic markets: Scranton and Carlisle/Chamberburg,
Pennsylvania; and the Miami/Ft. Lauderdale and suburban Tampa
(Hillsborough County), Florida areas.
According to the Amended Complaint, the loss of competition would
likely result in consumers paying higher prices and receiving fewer or
lesser quality services for the collection and disposal of waste. The
prayer for relief in the Amended Complaint seeks: (1) a judgment that
the proposed acquisition would violate Section 7 of the Clayton Act and
(2) a permanent injunction that would prevent Waste Management from
acquiring control of or otherwise combining its assets with Eastern.
On December 31, 1998, the governments filed a proposed settlement
that would permit Waste Management to complete its acquisition of
Eastern, but require the defendants to divest certain waste collection
and disposal assets in such a way as to preserve competition in the
affected markets. This settlement consists of Hold Separate Stipulation
and Oder, a proposed Final Judgment, and correspondence that outlines a
methodology for selecting which commercial waste collection routes
should be divested in the Miami area and sets forth the standard by
which the governments determined whether routes that serve a given
geographic area should be divested under the Judgment (Appendix B).\1\
---------------------------------------------------------------------------
\1\ Defendants are required to divest front end loader (FEL)
commercial waste collection routes that serve certain geographic
areas specified in the Judgment. Because some FEL commercial routes
may serve more than one area, the governments agreed that in
determining whether a defendant's routes that serve a given area are
subject to divestiture under the Judgment the following standard
would apply: if a defendant's FEL route obtained 10% or more of its
commercial revenues from a geographic area set forth in the Judgment
[Secs. II(E)(1)-(5)] in the route's most recent year of operation,
defendants must divest that FEL commercial route. Applying this
principle in the Franklin/Adams/Cumberland area are Pennsylvania,
for instance, would require defendants to divest any Eastern FEL
commercial route from which 10 percent or more of its revenues
derive from customers located in the Franklin, Adams or Cumberland
County, PA area. Under this standard, route which serves an area but
has a de minimis amount of revenue would be excluded.
Defendants have specifically noted the total number of FEL
commercial routes they believe must be divested under the Judgment.
At this time, the governments, however, have not verified
defendants' representations.
---------------------------------------------------------------------------
The proposed Final Judgment orders Waste Management and Eastern to
divest commercial waste collection routes in each of the relevant areas
in which the Complaint alleges the merger would substantially reduce
competition in commercial waste collection services. In addition, the
Judgment orders Waste Management and Eastern to divest landfills,
transfer stations, or disposal rights in such facilities in each of the
relevant markets in which the merger would substantially reduce
competition in disposal of municipal solid waste. (A summary of the
commercial waste collection and waste disposal assets that defendants
must divest pursuant to the Judgment appears below in Appendix A.)
Waste Management and Eastern must complete their divestitures of the
rights to Eastern's RFP proposal by January 18, 1999, \2\ and complete
their divestitures of the other waste collection and disposal assets
within 120 days after December 31, 1998, or five days after entry of
the Final Judgment, whichever is later.
---------------------------------------------------------------------------
\2\ The rights to Eastern's RFP proposal were divested to
Republic Services, Inc. in a transaction that closed on January 18,
1999.
---------------------------------------------------------------------------
The Hold Separate Stipulation and Order (``Hold Separate Order'')
and the proposed Final Judgment ensure that until the divestitures
mandated by the Judgment are accomplished, the currently operating
waste collection and disposal assets that are to be divested will be
maintained and operated as saleable, economically viable, ongoing
concerns, with competitively sensitive
[[Page 9536]]
business information and decision-making divorced from that of the
combined company. Subject to the United States' approval. Waste
Management will appoint a person to manage the operations to be
divested and ensure defendants' compliance with the requirements of the
proposed Judgment and Hold Separate Order.
The parties have stipulated that the proposed Final Judgment may be
entered after compliance with the APPA. Entry of the proposed Judgment
would terminate this action, except that the Count would retain
jurisdiction to construe, modify or enforce the provisions of the
proposed Judgment and to punish violations thereof.
II. Description of the Events Giving Rise to the Violations Alleged in
the Complaint
A. The Defendants and the Proposed Transaction
Waste Management is the largest waste collection and disposal firm
in the United States. Based in Houston, Texas, it provides waste
collection and disposal services throughout the country. In 1998, Waste
Management's total operating revenues exceeded $12 billion.
Eastern, based in Mt. Laurel, New Jersey, is a large regional waste
collection and disposal firm, with operations concentrated in New York,
New Jersey, Pennsylvania, Delaware and Florida, often in direct
competition with Waste Management. In 1997, Eastern reported total
operating revenues of over $90 million.
In August 1998, Waste Management announced an agreement to acquire
Eastern in a stock transaction worth nearly $1.2 billion. This
transaction, which would combine two major competitors and
substantially increase concentration in a number of already highly
concentrated, difficult-to-enter waste disposal and collection markets,
precipitated the governments' suit.
B. The Competitive Effects of the Transaction
Waste collection firms, or ``haulers,'' contract to collect
municipal solid waste (``MSW'') from residential and commercial
customers; they transport the waste to private and public disposal
facilities (e.g., transfer stations, incinerators and landfills),
which, for a fee, process and legally dispose of waste. Waste
Management and Eastern compete in operating waste collection routes and
waste disposal facilities.
1. The Effects of the Transaction on Competition in the Markets for
Commercial Waste Collection
Commercial waste collection is the collection of MSW from
commercial businesses such as office and apartment buildings and retail
establishments (e.g., stores and restaurants) for shipment to, and
disposal at, an approved disposal facility. Because of the type and
volume of waste generated by commercial accounts and the frequency of
service required, haulers organize commercial accounts into special
routes, and use specialized equipment to store, collect and transport
waste from these accounts to approved disposal sites. This equipment--
one to ten cubic yard containers for waste storage, and front-end
loader vehicles for collection and transportation--is uniquely well
suited to commercial waste collection service. Providers of other types
of waste collection services (e.g., residential and roll-off services)
are not good substitutes for commercial waste collection firms. In
their waste collection efforts, other firms use different waste storage
equipment (e.g., garbage cans or semi-stationary roll-off containers)
and different vehicles (e.g., rear- or side-load trucks), which, for a
variety of reasons, cannot be conveniently or efficiently used to
store, collect or transport waste generated by most commercial
accounts, and hence, are infrequently used on commercial waste
collection routes. For purposes of antitrust analysis, commercial waste
collection constitutes a line of commerce, or relevant service, for
analyzing the effects of the merger.
The Amended Complaint alleges that provision of commercial waste
collection services takes place in compact, highly localized geographic
markets. It is expensive to ship waste long distances in either
collection or disposal operations. To minimize transportation costs and
maximize the scale, density, and efficiency of their waste collection
operations, commercial waste collection firms concentrate their
customers and collection routes in small areas. Firms with operations
concentrated in a distant area cannot easily compete against firms
whose routes and customers are locally based. Sheer distance may
significantly limit a distant firm's ability to provide commercial
waste collection service as frequently or conveniently as that offered
by local firms with nearby routes. Also, local commercial waste
collection firms have significant cost advantages over other firms, and
can profitably increase their charges to local commercial customers
without losing significant sales to firms outside the area.
Applying that analysis, the Amended Complaint alleges that four
areas--Scranton and the Chambersburg/Carlisle area (Franklin/Adams/
Cumberland counties), Pennsylvania, and Miami/Ft. Lauderdale and
suburban Tampa (Hillsborough County), Florida areas--constitute
sections of the country, or relevant geographic markets, for the
purpose of assessing the competitive effects of a combination of Waste
Management and Eastern in the provision of commercial waste collection
services. In each of these markets, Waste Management and Eastern are
two of the largest competitors, and the combined firm would command
from 50 to 75 percent or more of total market revenues. These five
commercial waste collection markets generate from $7 million to well
over $150 million in annual revenues.
Significant new entry into these markets would be difficult, time
consuming, and is unlikely to occur soon. Many customers of commercial
waste collection firms have entered into ``evergreen'' contracts, tying
them to a market incumbent for indefinitely long periods of time. In
competing for uncommitted customers, market incumbents can price
discriminate, i.e., selectively (and temporarily) charge unbeatably low
prices to customers targeted by entrants, a tactic that would strongly
discourage a would-be competitor from competing for such accounts,
which, if won, may be very unprofitable to serve. The existence of long
term contracts and price discrimination substantially increases any
would-be new entrant's costs and time necessary for it to build its
customer base and obtain efficient scale and route density to become an
effective competitor in the market.
The Amended Complaint alleges that a combination of Waste
Management and Eastern would likely lead to an increase in prices
charged to consumers of commercial waste collection services. The
acquisition would diminish competition by enabling the few remaining
competitors to engage more easily, frequently, and effectively in
coordinated pricing interaction that harms consumers. This is
especially troublesome in markets where entry has not proved an
effective deterrent to the exercise of market power.
2. The Effect of the Transaction on Competition for the Disposal of New
York City's Residential Waste After the Closing of Fresh Kills Landfill
A combination of Waste Management and Eastern would have some of
its
[[Page 9537]]
most immediate, far-reaching and severe effects on competition for the
New York City Department of Sanitation's 20-30 year, multi-billion
dollar contracts for disposal of the city's residential waste following
the state-mandated December 2001 closing of Fresh Kills Landfill, the
only landfill that handles the disposal of the city's residential
waste. In a lengthy competitive process known as the ``RFP,'' between
June 1997 and October 1998, the New York City Department of Sanitation
solicited and evaluated proposals from a number of vendors for the
disposal of the city's waste, and it recently concluded that Waste
Management and Eastern are two of only three firms that remain in
contention for contracts under this major procurement.
The RFP, once the contracts are awarded and the proposals
implemented, would create a new infrastructure for processing and
disposal of New York City's residential waste. The winning contractors
would purchase and operate a fleet of barges that would collect up to
9,000 tons of residential waste each day from city-owned transfer
stations, and deliver it to one or more new, privately-owned and
operated enclosed marine barge unloading facilities (``EBUFs''). The
EBUFs would process the residential waste and ship it by rail, truck or
ocean-going barge primarily to massive distant landfills for final
disposal far from New York.
New York City currently anticipates paying private contractors more
than $200 million annually, over a 20-30 year time period, to
construct, operate and manage the waste processing and disposal
facilities outlined in its RFP. With total estimated payments of well
over $6 billion over the length of the contracts, the RFP would be the
single largest municipal procurement in the history of New York City.
A combination of Waste Management and Eastern would significantly
reduce from three to two the city's competitive options for the
disposal of its residential waste, and likely result in an increase (or
a refusal to negotiate further reductions) in the finalists' charges
for disposal of the city's residential waste. As it stands now, Eastern
is a competitive alternative for a third or more of any final RFP
award. With the elimination of Eastern, the market incumbents, Waste
Management and Browning-Ferris Industries, Inc., would no longer
compete as aggressively since they would no longer have to worry about
losing business to Eastern.
3. The Effects of the Transaction on Competition in Other Markets for
Disposal of Municipal Solid Waste
A number of federal, state and local safety, environmental, zoning
and permit laws and regulations dictate critical aspects of storage,
handling, transportation, processing and disposal of MSW. MSW can only
be sent for disposal to a transfer station, sanitary landfill, or
incinerator permitted to accept MSW. Anyone who attempts to dispose of
MSW in a facility that has not been approved for disposal of such waste
risks severe civil and criminal penalties. Firms that compete in the
disposal of MSW can profitably increase their charges to haulers for
disposal of MSW without losing significant sales to other firms. For
these reasons, there are no good substitutes for disposal of MSW.
Disposal of MSW tends to occur in highly localized markets.\3\
Disposal costs are a significant component of waste collection
services, often comprising 40 percent or more of overall operating
costs. It is expensive to transport waste significant distances for
disposal. Consequently, waste collection firms strongly prefer to send
waste to local disposal sites. Sending a vehicle to dump waste at a
remote landfill increases both the actual and opportunity costs of a
hauler's collection service. Natural and man-made obstacles (e.g.,
mountains and traffic congestion), sheer distance and relative
isolation from population centers (and collection operations) all
substantially limit the ability of a remote disposal site to compete
for MSW from closer, more accessible sites. Thus, waste collection
firms will pay a premium to dispose of waste at more convenient and
accessible sites. Operators of such disposal facilities can--and do--
price discriminate, i.e., charge higher prices to customers who have
fewer local options for waste disposal.
---------------------------------------------------------------------------
\1\ Though disposal of municipal solid waste is primarily a
local activity, in some densely populated urban areas there are few,
if any, local landfills or incinerators available for final disposal
of waste. In these areas, transfer stations are the principal
disposal option. A transfer station collects, processes and
temporarily stores waste for later bulk shipment by truck, rail or
barge to a more distant disposal site, typically a sanitary
landfill, for final disposal. In such markets, local transfer
stations compete for municipal solid waste for processing and
temporary storage, and sanitary landfills may compete in a broader
regional market for permanent disposal of area waste. The Complaint
in this case alleges that in one relevant area--New York, NY--
transfer stations are the principal method for disposal of MSW.
---------------------------------------------------------------------------
For these reasons, the Complaint alleges that, for purposes of
antitrust analysis, five areas--New York City, NY; Pittsburgh
(Allegheny County), Allentown/Bethlehem, and Carlisle/Chambersburg,
PA--are relevant geographic markets for disposal of municipal solid
waste. In each of these markets, Waste Management and Eastern are two
of only a few significant competitors. Their combination would command
from over 50 to well over 90 percent of disposal capacity for municipal
solid waste, in markets that generate annual disposal revenues of from
$10 million to over $100 million annually.
Entry into the disposal of municipal solid waste is difficult.
Government permitting laws and regulations make obtaining a permit to
construct or expand a disposal site an expensive and time-consuming
task. Significant new entry into these markets is unlikely to occur in
any reasonable period of time, and is not likely to prevent exercise of
market power after the acquisition.
In each listed market, Waste Management's acquisition of Eastern
would remove a significant competitor in disposal of municipal solid
waste. With the elimination of Eastern, market incumbents will no
longer compete as aggressively since they will not have to worry about
losing business to Eastern. The resulting substantial increase in
concentration, loss of competition, and absence of reasonable prospect
of significant new entry or expansion by market incumbents likely
ensure that consumers will pay substantially higher prices for disposal
of MSW, collection of commercial waste, or both, following the
acquisition.
III. Explanation of the Proposed Final Judgment
The relief described in the proposed Final Judgment will eliminate
the anticompetitive effects of the acquisition in commercial waste
collection and in disposal of MSW from the relevant markets by
establishing new, independent and economically viable competitors in
each affected market.
A. The Proposed Divestitures
First, the proposed Final Judgment requires Waste Management and
Eastern to sell by January 18th the rights to Eastern's RFP Proposal to
Republic Services, Inc. or any other purchaser acceptable to both the
United States and the State of New York.\4\ That divestiture must be
made promptly so as to not delay the New York Department of
Sanitation's plans to quickly conduct
[[Page 9538]]
and complete its final negotiations for contracts to dispose of the
city's residential waste before the city must close its only landfill
in 2001.\5\
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\4\ As noted above, defendants sold the rights to Eastern's RFP
proposal to Republic Services, Inc. on January 18, 1999.
\5\ On December 30, 1998, the governments agreed that Donald
Chappel be substituted for Robert Donna as interim trustee for the
rights to Eastern's RFP proposal and defendants agreed to restrict
Waste Management's access to highly confidential information
contained in the rights to Eastern's RFP proposal prior to the
proposal's divestiture by Waste Management or by a trustee appointed
pursuant to the terms of the Judgment.
---------------------------------------------------------------------------
The proposed Final Judgment also requires Waste Management and
Eastern, within 120 days after the December 31, 1998 filing of the Hold
Separate Stipulation and Order, or five days after notice of the entry
of this Final Judgment by the Court, whichever is later, to sell
certain commercial waste collection assets (``Relevant Hauling
Assets'') and disposal assets (``Relevant Disposal Assets'') as viable,
ongoing businesses to a purchaser or purchasers acceptable to the
United States, in its sole discretion, after consultation with the
relevant state, or in the case of certain New York City transfer
stations, to a purchaser or purchasers acceptable to both the United
States and the State of New York.\6\ The collection assets to be
divested include front-end loader commercial waste collection routes,
trucks and customer lists. The disposal assets to be divested include
landfills, transfer stations, disposal rights in such facilities, and
certain other assets (e.g., leasehold and renewal rights in the
particular landfill or transfer station, garages and offices, trucks
and vehicles, scales, permits, and intangible assets such as landfill
or transfer station-related customer lists and contracts).
---------------------------------------------------------------------------
\6\ The governments interpret Section VI of the proposed Final
Judgment as meaning that any request for information involving the
rights to Eastern's RFP proposal or Vacarro or Gesuale transfer
stations must be a joint request from New York and the Antitrust
Division. Since a request continues until such time as it is
answered, it can effectively be withdrawn by either New York or the
Antitrust Division withdrawing the request--under the decree, such
action would mean that there was no ongoing ``joint'' request for
additional information.
---------------------------------------------------------------------------
Finally, the proposed Judgment [Sec. IV(L)] provides that the
United States and the State of New York will join a Waste Management
motion to modify the pending consent decree in United States v. USA
Waste Services, Inc., No. 98 CV 1616 (N.D. Ohio, filed July 16, 1998),
to eliminate this proposed Judgment would substitute an immediate
divestiture or either Waste Management's Gesuale or Vacarro transfer
station [Secs. II(D)(2)(c) and IV(A)(2)]. A day after the filing of the
proposed decree in that case, counsel for defendants informed the
United States, New York and the other governments that defendants had
mistakenly agreed to a contingent divestiture of the Brooklyn Transfer
Station, when they had actually meant to agree to a contingent
divestiture of the Gesuale Transfer Station, located at 38-50 Review
Avenue, Queens NY. In addition, defendants contended that they needed
to retain the Scott Transfer Station in order to provide disposal
services under a New York residential waste contract, which they
expected to receive, and that in any event, there was no assurance
under the proposed Judgment that after defendants receive the
residential waste contract, the Scott Avenue Transfer Station, if
divested, would have any capacity remaining for disposal of commercial
waste.
The United States and the State of New York agreed to join a motion
to revise the proposed decree in the Ohio case, substituting a
divestiture of either Vacarro or Gesuale, only if Waste Management
agreed to divest both New York City transfer stations it would gain by
acquiring Eastern--divestitures which defendants have agreed to make
[see Judgment, Secs. II(D)(2)(a) and (b) and IV(A)(1)].
B. Trustee Provisions
If Waste Management and Eastern cannot accomplish the divestitures
within the prescribed time, the Final Judgment provides that, upon
application of the United States (or in the case of certain New York
City transfer stations, application by both the United States and the
State of New York), the Court will appoint a trustee to complete the
divestiture of each relevant disposal asset or relevant hauling asset
not sold. The proposed Final Judgment generally provides that the
assets must be divested in such a way as to satisfy the United States,
in its sole discretion, after consultation with the relevant state,
that the assets can and will be used by the purchaser as part of a
viable, ongoing business or businesses engaged in waste collection or
disposal that can compete effectively in the relevant area. Defendants
must take all reasonable steps necessary to accomplish the
divestitures, and shall cooperate with bona fide prospective purchasers
and, if one is appointed, with the trustee.
If a trustee is appointed, the proposed Final Judgment provides
that defendants will pay all costs and expenses of the trustee. The
trustee's commission will be structured so as to provide an incentive
for the trustee based on the price obtained and the speed with which
the divestitures are accomplished. After his or her appointment becomes
effective, the trustee will file monthly reports with the parties and
the Court, setting forth the trustee's efforts to accomplish the
divestitures. At the end of six months, if the divestitures have not
been accomplished, the trustee and the parties will make
recommendations to the Court which shall enter such orders as
appropriate in order to carry out the purpose of the trust, including
extending the trust or the term of the trustee's appointment.
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
attorney's 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 defendant.
V. Procedures Available for Modification of the Proposed Final Judgment
The parties 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 of the decree upon the Court's determination that the
proposed Final Judgment is in the public interest.
The APPA provides a period of at least 60 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 (60) days of the date of publication of this Competitive Impact
Statement in the Federal Register. The United States will evaluate and
respond to the comments. All comments will be given due consideration
by the Department of Justice, which remains free to withdraw its
consent to the proposed Judgment at any time prior to entry. The
comments and the response of the United States will be filed with the
Court and published in the Federal Register. Written comments should be
submitted to: J. Robert Kramer II, Chief, Litigation II Section,
Antitrust Division, United States Department of Justice, 1401 H
[[Page 9539]]
Street, NW., Suite 3000, 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 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 defendants Waste
Management and Eastern. The United States could have continued the
litigation to seek preliminary and permanent injunctions against Waste
Management's acquisition of Eastern. The United States is satisfied,
however, that defendants' divestiture of the assets described in the
Judgment will establish, preserve and ensure viable competitors in each
of the relevant markets identified by the governments. To this end, the
United States is convinced that the proposed relief, once implemented
by the Court, will prevent Waste Management's acquisition of Eastern
from having adverse competitive effects.
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
considerations 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 trial.
15 U.S.C. 16(e) (emphasis added). As the Court of Appeals for the
District of Columbia Circuit recently held, the APPA permits a 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.`` \7\ Rather, 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 circumstances.
\7\ 119 Cong. Rec. 24598 (1973). See 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. Code Cong. & Ad. News
6535, 6538.
---------------------------------------------------------------------------
United States v. Mid-America Dairymen, Inc., 1977-1 CCH 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); see also Microsoft, 56 F.3d 1448 (D.C. Cir. 1995). Precedent
requires that the 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 effectiveness of antitrust
enforcement by consent decree.\8\
\8\ United States v. Bechtel, 648 F.2d at 666 (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); United States v. Gillette Co. 406 F.
Supp. at 716. See also United States v. American Cyanamid Co., 719
F.2d at 565.
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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.' (citations
omitted).'' \9\
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\9\ United States v. American Tel. and Tel. Co., 552 F.Supp.
131, 150 (D.D.C. 1982), aff'd sub nom. Maryland v. United States,
460 U.S. 1001 (1983() quoting United States v. Gillette Co., supra,
406 F.Supp. at 716; United States v. Alcan Aluminum, Ltd., 605 F.
Supp. 619, 622 (W.D. Ky 1985)
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VIII. Determinative Documents
There are no determinative materials or documents with the meaning
of the APPA that were considered by the United States in formulating
the proposed Final Judgment.
Dated: February 1, 1999.
Filed: February 2, 1999.
Respectfully submitted,
Anthony E. Harris (AH 5876),
U.S. Department of Justice, Antitrust Division, Litigation II Section
1401 H Street, NW, Suite 3000, Washington, DC 20530, (202) 307-6583.
Appendix A--Summary of Waste Disposal and Collection Assets That
Must Be Divested Under the Proposed Final Judgment
I. The Rights to Eastern's RFP Proposal
The proposed Final Judgment (Secs. II(C), IV and V) requires
Waste Management and Eastern to divest to Republic Services, Inc.
(or any other purchaser acceptable to the United States and the
State of New York) the rights to Eastern's proposal to accept
residential waste at a marine transfer terminal from the New York
City Department of Sanitation. The rights to Eastern's RFP proposal
include not only the rights to Eastern's original proposal, but also
any amendments, revisions, or modifications to that proposal and any
intangible assets relating to the proposal (e.g., any engineering,
technical, or construction designs, plans or specifications, permit
or land use applications, and any options, commitments or agreements
of any type for the design, construction, permitting, lease or sale
of any land, building or equipment, or to receive, transport, store
or dispose of waste).
The purchaser of the Rights to Eastern's RFP Proposal, in
addition, may obtain such technical assistance on that proposal as
the purchaser reasonably may require from Eastern for a period of
one hundred fifty days (150) after the purchase of the rights; and
at purchaser's option, airspace disposal rights for up to a twenty-
year time period at Eastern's Waverly, VA landfill, pursuant to
which defendants will sell rights to dispose
[[Page 9540]]
of up to 4,000 tons of average daily waste pursuant to any contract
award under the New York City RFP. The optional airspace agreement
must be entered into on the terms and conditions specified in the
Waste Disposal Agreement, dated December 29, 1998, between Atlantic
Waste Disposal, Inc. and Republic Services, Inc.
II. Waste Disposal Assets
The proposed Final Judgment (Secs. II (D) and (E), and (E), IV
and V) requires Waste Management and Eastern to divest certain
``relevant disposal assets.'' In general, this means, with respect
to each landfill or transfer station, all tangible assets, including
all fee and leasehold and renewal rights in the listed landfill or
transfer station; the garage and related facilities; offices; and
landfill- or transfer station-related assets including capital
equipment, trucks and other vehicles, scales, power supply
equipment, interests, permits, and supplies; and all intangible
assets of the listed landfill or transfer station, including
customer lists, contracts, and accounts, or options to purchase any
adjoining property. The list of disposal facilities that must be
divested includes properties in the following locations, under the
listed terms and conditions:
A. Landfills
1. Allegheny County, Pennsylvania
Eastern's Kelly Run Sanitation Landfill, located at State Route
51 South, Elizabeth, Pennsylvania 15037, and known as the Kelly Run
Landfill (and includes the waste disposal agreement between Chambers
Development Company, Inc. and William H. Martin, Inc. and Eastern
Environmental Services, Inc. and Kelly Run Sanitation, Inc., dated
1997);
2. Bethlehem/Allentown, Pennsylvania
Eastern's Eastern Waste of Bethlehem Landfill, located at 2335
Applebutter Road, Bethlehem, Pennsylvania 18015, and known as the
Bethlehem Landfill; and
3. Chambersburg-Carlisle, Pennsylvania
Eastern's R&A Bender Landfill located at 3747 White Church Road,
Chambersburg, Pennsylvania 17201 (also known as the Bender
Landfill).
B. Transfer Stations
New York, New York
1. Eastern's PJ's Transfer Station located at 222 Morgan Avenue,
Brooklyn, New York 11237 (also known as the Morgan Avenue Transfer
Station);
2. Eastern's Atlantic Waste Transfer Station located at 110-120
50th Street, Brooklyn, New York 11232 (also known as the Atlantic
Transfer Station); and
3. Waste Management's Vacarro Transfer Station, located at 577
Court Street, Brooklyn, NY 11231 (also known as the Court Street
Transfer Station); and Waste Management's Gesuale Transfer Station,
located at 38-50 Review Avenue, Queens, NY 11101 (also known as the
Review Avenue Transfer Station), only one of which must be sold
pursuant to the terms of Sections IV or V of this Final Judgment.
III. Commercial Waste Collection Assets
The Final Judgment also orders Waste Management and Eastern to
divest certain commercial waste collection assets. Those assets
primarily include routes, capital equipment trucks and other
vehicles, containers, interests, permits, supplies, customer lists,
contracts, and accounts used to service customers along the routes
in the following locations:
A. Scranton, Pennsylvania
Waste Management's front-end loader truck (``FEL'') commercial
routes servicing Luzerne and Lackawanna County, Pennsylvania;
B. Franklin/Adams/Cumberland Counties, Pennsylvania
Eastern's FEL commercial routes serving Franklin, Adams and
Cumberland Counties, Pennsylvania;
C. Broward County, Florida
Eastern's FEL commercial routes servicing Broward County,
Florida;
D. Dade County, Florida
Eastern's FEL commercial route servicing portions of Dade
County, Florida; and
E. Hillsborough County, Florida
Eastern's Kimmins Recycling Corporation FEL commercial routes
servicing the unincorporated (and grandfathered incorporated) areas
of Hillsborough County, Florida solid waste service area, more
specifically defined in RFP#-277-96, Hillsborough County Board of
County Commissioners documents 96-2393, as modified by 97-1913.
Appendix B--Correspondence Between Counsel for Waste Management,
Inc. and Eastern Environmental Services, Inc. and Counsel for the
United States (Methodology for Determining Which FEL Commercial
Routes Must Be Divested Under the Judgment)
Shearman & Sterling
801 Pennsylvania Avenue, NW., Washington, DC 20004-2604
December 30, 1998.
By Hand
Anthony E. Harris, Esq.,
Litigation II Section, U.S. Department of Justice, Antitrust
Division, 1401 H Street, NW., Washington, DC 20530
United States, et al. v. Waste Management, Inc. et al.
Dear Tony: I write regarding the Proposed Final Judgment in the
above-referenced actions.
Section II(E) of the Proposed Final Judgment defines ``Relevant
Hauling Assets'' and does so by reference to counties ``serviced''
by a designated defendant's front-end loader commercial routes. The
United States and each of the Relevant States, as defined in the
Proposed Final Judgment and Hold Separate Order, have agreed that a
front-end loader commercial route of a designated company is engaged
in ``servicing'' a particular county if, in the most recent year of
the route's operation, 10% or more of its revenues were generated by
customers in that county.
Section II(E)(4) of the Proposed Final Judgment, titled ``Dade
County, Florida,'' reads ``Eastern's FEL commercial routes servicing
portions of Dade County, Florida.'' The United States, the State of
Florida, and Defendants have further agreed that this provision
means the following:
(a) one of Eastern's three largest front-end loader commercial
routes servicing Dade County, Florida (calculated on the basis of
monthly revenues); and
(b) four additional Eastern front-end loader commercial routes
servicing Dade County, Florida to be selected by Waste Management in
its sole discretion.
Eastern Environmental Services, Inc. has represented that it
presently has 10 commercial FEL routes serving Dade County and that
Eastern's three largest routes in Dade County are Routes 5, 6, and
11.
I have listed below for each area described in the Proposed
Final Judgment the number of front-end loader commercial routes
operated by the company whose routes will be divested and that have
generated at least 10% of their revenues in the most recent year of
operation from customers in the counties set forth in the definition
of Section II(e). It is the Defendants' understanding that these
routes are all those that need to be divested pursuant to the terms
of the Proposed Final Judgment.
Scranton, Pennsylvania
Waste Management's three commercial FEL routes servicing Luzerne
and Lackawana Counties.
Franklin/Adams/Cumberland Counties, Pennsylvania
Eastern's two commercial FEL routes servicing Franklin County,
two commercial FEL routes servicing Adams County, and one commercial
FEL route serving Cumberland County.
Broward County, Florida
Eastern's two commercial FEL routes servicing Broward County.
Dade County, Florida
Five of Eastern's ten commercial FEL routes servicing Dade
County as described above in this letter.
Hillsborough County, Florida
Eastern's five commercial FEL routes servicing the
unincorporated and grandfathered incorporated area of Hillsborough
County.
Defendants understand that the United States and each of the
relevant states have not, at this stage, verified the Defendants'
representations as to which particular routes or the total number of
routes that must be divested pursuant to the terms of the Proposed
Final Judgment.
[[Page 9541]]
Very truly yours,
Steven C. Sunshine,
Counsel for Waste Management, Inc.
Neal R. Stoll,
Counsel for Eastern Environmental Services, Inc.
Agreed and Acknowledged:
Anthony E. Harris,
U.S. Department of Justice.
cc: Douglas L. Kilby, Esq., State of Florida
James A. Donahue, III, Esq., Commonwealth of Pennsylvania
Richard F. Grimm, Esq., State of New York
Certificate of Service
I certify that on February 1, 1999, I caused a copy of the
foregoing Competitive Impact Statement to be served on the parties
in this case by mailing the pleading first-class, postage prepaid,
to a duly authorized legal representative of each of the parties as
follows:
Jonathan L. Greenblatt, Esquire
Steven C. Sunshine, Esquire
Michael Strub, Jr., Esquire,
Shearman & Sterling, 801 Pennsylvania Avenue, NW, Washington, DC 20004-
2604.
James R. Weiss, Esquire,
Preston Gates Ellis & Rouvelas Meeds LLP, 1735 New York Avenue, NW,
Washington, DC 20006-8425.
Counsel for Defendants Waste Management, Inc. and Ocho Acquisition
Corp.
Neal R. Stoll, Esquire,
Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, NY
10022-3897.
Counsel for Defendant Eastern Environmental Services, Inc.
Richard E. Grimm
Kay Taylor,
Assistant Attorneys General, Antitrust Bureau, Office of the Attorney
General, State of New York, 120 Broadway, Suite 26-01, New York, NY
10271.
Counsel for Plaintiff State of New York
James A. Donahue, III,
Chief Deputy Attorney General
Benjamin L. Cox,
Deputy Attorney General, 14th Floor, Strawberry Square, Harrisburg, PA
17120.
Counsel for Plaintiff Commonwealth of Pennsylvania
Lizabeth A. Leeds
Douglas L. Kilby,
Assistant Attorneys General, Antitrust Section, PL-01, The Capitol,
Tallahassee, FL 32399-1050.
Counsel for Plaintiff State of Florida
Anthony E. Harris, Esq.,
U.S. Department of Justice, Antitrust Division, 1401 H Street, NW,
Suite 3000, Washington, DC 20530, (202) 307-6583.
[FR Doc. 99-3925 Filed 2-25-99; 8:45 am]
BILLING CODE 4410-11-M
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