atr annual report 1999 - pennsylvania state...

ANTITRUST DIVISION

UNITED STATES DEPARTMENT OF JUSTICE

ANNUAL REPORT

FY 1999

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Antitrust Division Annual Report

Contents

Foreword

The Criminal Enforcement Program

The Merger Enforcement Program

The Civil Non-Merger Enforcement Program

The Telecommunications Competition Program

International Antitrust Policies and Procedures

Appendix A: Selected Criminal Cases

Appendix B: Merger Challenges

Appendix C: Civil Non-Merger Cases

Appendix D: Antitrust Division Organization Directory

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Foreword March 20, 2000

By Assistant Attorney General Joel I. Klein

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This is the kind of antitrust enforcementpolicy to which this Administration iscommitted. It is both principled andpragmatic. There is no presumption that“big” is “bad,” but neither is there anassumption that the market will always“correct” anticompetitive problems.Instead, the Antitrust Division payscareful attention to facts, informed byeconomic analysis, in making itsenforcement decisions.

I am pleased to present this Report summarizing the recent major activi-

ties of the Antitrust Division of theDepartment of Justice. As the Reportdocuments, this has been an activeperiod for the Antitrust Division acrossthe full-range of its enforcement respon-sibilities: criminal prosecutions, mergerreview, and civil non-merger activities.Our accomplishments range fromprosecutions of international cartels thathave resulted in greater fines than everbefore to successful challenges tomultibillion dollar mergers, not tomention challenges to exclusionarybehavior in technologically criticalindustries.

Antitrust plays an important role inour economy. Competition is the corner-stone of this country’s economic founda-tion. We have long extolled the virtuesof the free market, which providesbusiness with the opportunity to inno-vate, produce, and distribute goods andservices without direct intervention bythe government. Competition, ratherthan government directives, determineswhich businesses will succeed, andconsumers are the ultimate—and appro-priate—beneficiaries of the competitiveprocess.

The antitrust laws ensure that thebenefits of the competitive process arenot interdicted by private anticompeti-tive conduct. The Supreme Court hasdescribed the Sherman Act as the

“magna carta” of the free enterprisesystem. The antitrust laws are thus usedto deter and punish anticompetitiveconduct and to obtain prospective reliefto prevent such conduct in the future.

At the same time, caution must betaken to assure that the antitrust lawsare not misused to protect competitorsfrom the vigor of the competitiveprocess. In a free market system, innova-tion and creativity should be rewarded,not penalized. There will inevitably bewinners and losers in this battle, butwhile the antitrust laws are intended toprevent conduct that impairs the com-petitive process, the antitrust agenciesare not in the business of picking whoshould win and who should lose. Thatresponsibility falls to consumers, whomake that determination through theirpurchasing decisions.

This is the kind of antitrust enforce-ment policy to which this Administra-tion is committed. It is both principled


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The increasing globalization of economic behavior presents important challenges toantitrust regimes that have traditionally been administered by individual sovereignnations.

and pragmatic. There is no presumptionthat “big” is “bad,” but neither is therean assumption that the market willalways “correct” anticompetitive prob-lems. Instead, the Antitrust Divisionpays careful attention to facts, informedby economic analysis, in making itsenforcement decisions.

Despite the diversity of our enforce-ment targets—ranging from hard-corecriminal violations to exclusionarypractices by dominant producers andservice providers—we have observedcertain important trends that cut crossthe full range of competitive activity:globalization of trade, rapid technologi-cal change, and deregulation. Each ofthese trends has important implicationsfor the future of antitrust enforcement.


Globalization of Trade

International trade is of increasingimportance to the economic well-beingof United States producers and consum-ers. U.S. firms frequently export toforeign countries, and American con-sumers purchase goods manufacturedabroad. Nearly 25 percent of our GDPis now related to export and importtrade. The increasing globalization ofeconomic behavior presents importantchallenges to antitrust regimes that havetraditionally been administered byindividual sovereign nations. The Anti-trust Division has taken account of theglobalization of trade in important ways.

First, the Antitrust Division isdevoting more of its resources to uncov-ering international cartel behavior thathas significant economic consequencesfor American consumers. Perhaps themost widely publicized example duringthe past year was the successful prosecu-tion of companies and individualsinvolved in vitamin production, whichculminated in fines of over $875 millionfor companies and in significant jailtime for individuals. More of our crimi-nal investigations involve foreign com-panies than ever before. To detect andprosecute international cartels, theAntitrust Division has developed pro-grams that encourage cooperation byforeign companies and their employees,including various forms of cooperationagreements with other governments.

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Another important focus of the Department’s antitrust enforcement efforts over the pastfew years has been our continuing effort to eliminate both private and public restrictionson competition in industries traditionally regulated as franchise monopolies.

So, too, the Antitrust Division hasrecognized the international dimensionof merger activity. An increasing numberof transactions have competitive implica-tions in more than one country, andtoday it is not uncommon for a transac-tion to be subject to multicountryreview. The Antitrust Division hasendeavored to develop good workingrelationships with other countries andthe European Union. We are workingclosely with governments around theworld to cooperate in merger review,both to minimize burdens on privateparties and to advance the cause ofproper antitrust analysis. To advance thisprocess, the Attorney General estab-lished the International CompetitionPolicy Advisory Committee, whichrecently issued its report reviewinginternational antitrust issues and makingrecommendations for consideration.

Technological Change

A number of our most importantindustries have been characterizedrecently by unprecedented levels oftechnological change. Such change hasimportant implications for antitrustenforcement. On the one hand, suchchange creates opportunities for compa-nies to develop new products andservices and find rapid customer accep-tance. It has been argued that the pros-pect for such change reduces the needfor antitrust enforcement because acompany that dominates an industrytoday may be replaced tomorrow by acompany that suddenly offers a superiorproduct or service. However, rapidtechnological change may actuallyincrease barriers to entry through net-

work externalities and first-moveradvantages, which pose risks that mar-kets will “tip” very quickly toward adominant supplier and thereby makeentry extremely difficult. The moreimportant that innovation becomes tosociety, the more important it is topreserve economic incentives to inno-vate. In such circumstances, timely andeffective antitrust enforcement may bethe key to preserving an environment inwhich companies—whether new or old,large or small—believe that there will beno artificial barriers to bringing newproducts and services to market.

It is undoubtedly true that rapidtechnological change requires carefulattention to facts. Our challenges to theLockheed Martin-Northrop Grummantransaction and Microsoft’s monopoly ofcomputer operating systems are notgarden-variety antitrust actions. Theyand other challenges filed by the Anti-trust Division were undertaken only


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The past decade has witnessed remarkable progress in moving these industries from aregime based largely on regulated monopoly to one that encourages competitionwherever possible, a trend portending an increasingly important role for antitrust.

after careful consideration of bothhistorical conduct and likely futureeffects. The fact that antitrust analysis ofissues arising in high-technology indus-tries may be difficult is no basis forabandoning the effort altogether. En-forcement decisions that are made today,especially in industries characterized byrapid technological change, will haveimportant ramifications for the nature ofthe American economy for many yearsto come.

Deregulation

In recent decades, legislative andregulatory changes in the United Stateshave reversed a generation of pervasivegovernment regulation and deregulatedsuch basic industries as telecommunica-tions, energy, financial services, andtransportation. Competition, withappropriate reliance upon antitrust laws,has again become the norm.

The Antitrust Division continues towork with various agencies to find waysto replace regulatory constraints withcompetitive incentives. We have beenvery active in promoting competitionpursuant to the Telecommunications Actof 1996, both to the Federal Communi-cations Commission and in the courts.The Antitrust Division is the primaryadvocate of competition within theexecutive branch and works regularlywith Congress, urging that the market-place—through purchase decisions madeby consumers—rather than governmentagencies determine the products andservices that businesses will provide.


The United States has again becomethe dominant economy of the world.The fact that this reemergence hascoincided with a substitution of compe-tition for regulation and a reinvigoratedantitrust enforcement policy is not acoincidence. Michael Porter noted in hislandmark work The Competitive Advan-tage of Nations (at pp. 662-63) thatdomestic firms spared from competingat home are unlikely to succeed abroad.He also found that the importance ofdomestic rivalry has “strong implicationsfor antitrust policy…. A strong antitrustpolicy, especially in the area of horizon-tal mergers, alliances, and collusivebehavior, is essential to the rate ofupgrading in an economy.” We couldnot agree more.

I hope you will find the attachedreport informative. This is the firstAnnual Report published by the Anti-trust Division in over three years. As aresult, the discussion of our enforcementprograms includes references to certainmatters begun before fiscal 1999 thatcarried over into that year, and theappendices contain information aboutcases filed subsequent to publication ofour last annual report.

Our recent accomplishments aretestimony to the hard-working men andwomen of the Antitrust Division andthe bipartisan support that antitrustenforcement has enjoyed. Both arecritical to the health and future of theAmerican economy.

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The Antitrust Division recently hasprosecuted international cartelsoperating in a broad spectrum ofcommerce, including vitamins, food andfeed additives, chemicals, graphiteelectrodes (used in steel making), andmarine construction and transportationservices.

The Criminal Enforcement Program

The Antitrust Division institutescriminal enforcement of Section

One of the Sherman Act, 15 U.S.C.Section 1, against hardcore cartel activ-ity such as price-fixing, bid-rigging, andmarket-allocation agreements. Suchconduct causes substantial harm topurchasers of goods and services.

The prosecution of such domesticcartel activity has been at the heart ofthe Department of Justice’s antitrustenforcement efforts ever since theenactment of the Sherman Act in 1890and continues unabated. In the lastseveral years, however, the AntitrustDivision has made the prosecution ofinternational cartels that victimizeAmerican businesses and consumers oneof its highest priorities. This strategyrecognizes that in many instances inter-national cartels pose an even greaterthreat to American businesses andconsumers than do domestic conspira-cies because they tend to be highlysophisticated and extremely broad intheir impact—in terms of geographicscope, the amount of commerce af-fected, and the number of businessesand consumers victimized by the con-spiracy.

The Antitrust Division recently hasprosecuted international cartels operat-ing in a broad spectrum of commerce,including vitamins, food and feed

additives, chemicals, graphite electrodes(used in steel making), and marineconstruction and transportation services.Since the beginning of FY 1997, theAntitrust Division has prosecutedinternational cartels affecting over $10billion in U.S. commerce. The cartelactivity in these cases cost U.S. busi-nesses and consumers many hundreds ofmillion of dollars annually.

The Antitrust Division’s strategy ofconcentrating its criminal resources oninternational cartels has led to unprec-edented success in terms of crackingthose cartels, securing the conviction ofthe major conspirators, and obtainingrecord-breaking fines.

Since the beginning of FY 1997, theAntitrust Division has obtained over$1.5 billion dollars in criminal fines,well over 90 percent of which wereimposed in connection with the prosecu-tion of international cartel activity. Toput this fine figure into perspective,consider that the highest amount of

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fines obtained by the Antitrust Divisionin any given year prior to FY 1997 wasroughly $42 million. In FY 1997, theAntitrust Division shattered that markwhen it collected $205 million in crimi-nal fines—nearly 500 percent higherthan during any previous year in theAntitrust Division’s history. InFY 1998, the Antitrust Division toppedthat number when it obtained over $265million in criminal fines. And then, inFY 1999, the Antitrust Division thrustthe new record still another 400 percenthigher when it secured over $1.1 billionin criminal fines. The amount of finesobtained since FY 1997 is many mul-tiples higher than the sum total of allcriminal fines imposed for violations ofthe Sherman Antitrust Act dating backto the Act’s inception in 1890.

The dramatic increase in finesreflects the fact that the major interna-tional cartels prosecuted over the pastfew years have been bigger, in terms ofthe volumes of affected commerce and

the amount of harm caused to Americanbusinesses and consumers, than anyconspiracies previously encountered bythe Antitrust Division.

For example, the internationalvitamin cartel, which affected over $5billion in U.S. commerce, was the mostharmful and elaborate conspiracy everuncovered by the Antitrust Division.The members of the vitamin cartelreached agreements on everything fromhow much product each company wouldproduce, to how much they wouldcharge, to which customers they wouldsell. The victims who purchased directlyfrom the cartel members includedcompanies with household names suchas General Mills, Kellogg, Coca-Cola,Tyson Foods, and Proctor & Gamble.However, these companies were just thefirst to feel the effects of this conspiracy.In the end, for nearly a decade, everyAmerican consumer—anyone who tooka vitamin, drank a glass of milk, or hada bowl of cereal—ended up paying more

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$100

$1,000

$900

$800

$700

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$500

$400

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$1,100

$1,200

Antitrust Division Criminal Fines

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Fine Amounts

1990: $23,575,000

1991: $20,379,000

1992: $23,705,000

1993: $42,296,000

1994: $40,236,000

1995: $41,653,000

1996: $26,817,000

1997: $205,178,000

1998: $266,924,000

1999: $1,105,654,316

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so that the conspirators could reaphundreds of millions of dollars in addi-tional revenues.

To date, the vitamin investigationhas resulted in convictions against

Swiss, German, Canadian, and Japanesefirms and over $875 million in criminalfines against the corporate defendants,including a $500 million fine imposedon F. Hoffmann-La Roche Ltd. (HLR)and a $225 million fine imposed on

Sherman Act Violations Yielding a Fine of $10 Million or More

Defendant (Fiscal Year) Product Fine Geographic Country

(million) Scope

F. Hoffman-La Roche Ltd. (1999) Vitamins $500 International Switzerland

BASF AG (1999) Vitamins $225 International Germany

SGL Carbon AG (1999) Graphite Electrodes $135 International Germany

UCAR International, Inc. (1998) Graphite Electrodes $110 International United States

Archer Daniels Midland Co. (1997) Lysine & Citric Acid $100 International United States

Takeda Chemical Industries, Ltd. Vitamins $72 International Japan

(1999)

Haarmann & Reimer Corp. (1997) Citric Acid $50 International German Parent

HeereMac v.o.f. (1998) Marine Construction $49 International Netherlands

Eisai Co., Ltd. (1999) Vitamins $40 International Japan

Hoechst AG (1999) Sorbates $36 International Germany

Showa Denko Carbon, Inc. (1998) Graphite Electrodes $32.5 International Japan

Daiichi Pharmaceutical Co., Ltd. Vitamins $25 International Japan

(1999)

Nippon Gohsei (1999) Sorbates $21 International Japan

Pfizer Inc. (1999) Maltol/Sodium $20 International United States

Erythorbate

Fujisawa Pharmaceuticals Co.

(1998) Sodium Gluconate $20 International Japan

Dockwise N.V. (1998) Marine Transportation $15 International Belgium

Dyno Nobel (1996) Explosives $15 Domestic Norwegian Parent

F. Hoffmann-LaRoche, Ltd. (1997) Citric Acid $14 International Switzerland

Eastman Chemical Co. (1998) Sorbates $11 International United States

Jungbunzlauer International (1997) Citric Acid $11 International Switzerland

Lonza AG (1998) Vitamins $10.5 International Switzerland

Akzo Nobel Chemicals, BV &

Glucona, BV (1997) Sodium Gluconate $9 International Netherlands

ICI Explosives (1996) Explosives $10 Domestic British Parent

Mrs. Baird’s Bakeries (1996) Bread $10 Domestic United States

Ajinomoto (1996) Lysine $10 International Japan

Kyowa Hakko Kogyo, Co., Ltd.

(1996) Lysine $10 International Japan

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BASF AG. The $500 million fineimposed against HLR is the largest fineever imposed in any Department ofJustice proceeding under any statute.The Antitrust Division also has thus farprosecuted seven American and foreignexecutives who participated in thevitamin cartel. All of these individuals,including the foreign defendants, areeither already serving time in federalprison or are awaiting sentencing andface potential jail sentences as well asheavy fines. For example, KunoSommer, the former director of World-wide Marketing for Vitamins at HLR,and Roland Brönnimann, the formerpresident of the Fine Chemical andVitamin Division at HLR, were recentlysent to prison and ordered to pay sub-stantial fines for their roles in the vita-min cartel. Messrs. Sommer andBrönnimann are the first Europeannationals to serve time in a U.S. prisonfor engaging in cartel activity. Theimposition of jail sentences againstforeign nationals residing outside thiscountry, together with the unprec-edented fines obtained in this matter,sends a powerful deterrent message that

the United States is committed tovigorous antitrust enforcement againstinternational cartel activity.

The increased effectiveness of theAntitrust Division’s anticartel effortsresult from more effective investigationas well as good trial work. The AntitrustDivision’s Amnesty Program has been amajor contributor to its investigativesuccess. In August 1993, the AntitrustDivision expanded its Amnesty Programto make it easier and more attractive forcompanies to come forward and cooper-ate with the Antitrust Division inexchange for a complete pass on pros-ecution. Today, that program is theAntitrust Division’s most effectivegenerator of large cases, and it is theDepartment of Justice’s most successfulleniency program. During the past year,the Antitrust Division has been receiv-ing amnesty applications at the rate ofapproximately two per month—a morethan twenty-fold increase compared tothe prior Amnesty Program. Moreover,in the past year alone, the AmnestyProgram has led to dozens of convic-tions and over $1 billion in criminalfines.

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The analysis of proposed mergers hasbecome increasingly difficult as theproducts and services of our economybecome more complex and the pace ofthe development of new productsincreases.

The Merger Enforcement Program

Section 7 of the Clayton Act (15U.S.C. Sec. 18) prohibits mergers

that may substantially lessen competi-tion. The Antitrust Division’s goal inenforcing Section 7 is to preserve forconsumers—individuals, businesses andgovernment—the price-reducing andquality-enhancing effects of competi-tion.

The Antitrust Division’s mergerenforcement program has been testedduring the past two years by recordnumbers of transactions filed under theHart-Scott-Rodino Act’s premergerreview provisions. In FY 1998 and1999, approximately 4,500 transactionswere filed each year—more than doublethe number filed just a few years earlier.During the past two years, 97 transac-tions have been abandoned or restruc-tured in response to the competitiveconcerns expressed by the AntitrustDivision, the highest level of mergerenforcement activity in its history.These transactions encompassed manyproducts and services that affect every-day life, including telephone, Internet,health insurance, airline, and bankingservices, local radio advertising, movietheaters, aluminum cans, trash haulingand disposal, voting machines, elec-tronic benefits transfer, and ourmilitary’s most sophisticated weapons.Many of these transactions have in-volved firms with billions of dollars inrevenues, operating in numerous prod-uct and service markets.

The analysis of proposed mergershas become increasingly difficult as theproducts and services of our economybecome more complex and the pace ofthe development of new productsincreases. In technologically complex orrapidly changing markets, the AntitrustDivision must determine not only theextent to which the merging firmscompete today but also the manner inwhich such rivalry is likely to be af-fected by foreseeable innovation fromthese firms and others in the same orrelated markets. This type of complex,fact-based analysis led to the Division’ssuit to block the $11.9 billion proposedmerger of Lockheed Martin andNorthrop Grumman, the largest mergerever challenged by the government, aswell as to the divestitures ordered inconnection with Raytheon’s acquisi-tions of the defense electronics busi-nesses of Texas Instruments andHughes Electronics. The Division’sgoal in each of these transactions wasto preserve for our armed services thecompetition necessary for developmentof innovative, cutting-edge weaponssystems.


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In United States v. Primestar, theDivision challenged an acquisition thatraised the risk that the cable industrywould be able to impede competitionfrom a new technology. Cable televisioncompanies, which for many years havedominated markets for the distributionof multichannel video programming,are beginning to face competition fromfirms using new technology to distrib-ute programming through high-pow-ered satellites. The Division sued toblock an effort by five of the nation’slargest cable companies, acting throughtheir joint venture Primestar, to acquireone of only three orbital slots availableto provide such high-power directbroadcast satellite service. The partiesabandoned the transaction before trial.


Hart-Scott-Rodino

1990

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1000

2000

3000

4000

5000

13881328-4%

1382+4%

1673+21%

2145+28%

2+2

*Chargeable filings. Data does not include transactions for whicsuch as those subject to approval by federal regulatory agencie

1991 1992 1993 1994 1Fisca

Much of the Antitrust Division’smerger enforcement work over the lastfew years has been concentrated inrecently deregulated or rapidly consoli-dating industries. For example, therelaxation of radio station ownershiprestrictions in the TelecommunicationsAct of 1996 has led to rapid consolida-tion in the radio industry. The Divisionhas investigated dozens of radio merg-ers and has challenged transactions thatwould have led to competitive con-cerns; all of those transactions wereeither restructured to resolve theDivision’s objections or abandoned.During FY 1999 alone, the Divisionanalyzed numerous bank merger trans-actions, including some of the largestin history, and required divestitures of

Premerger Filings*

(est.)

6172%

2870+10%

3425+19%

4938+14%

4332-3%

4482+30%

h notice must be given but no filing fees are required,s.

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1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

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Val

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Value of U.S. Merger Activity*

Calendar Year

Source: Securities Data Company

$186$137 $150

$239

$502

$357

$659

$959

$1,613

$1,790

local branches and assets in seventransactions, including the largestdivestiture in bank merger history. TheDivision also challenged a mergerbetween a gas and an electric company,as well as Northwest Airlines’ acquisi-tion of voting control of ContinentalAirlines.

In two cases last year, United Statesv. Aetna and United States v. Cargill, theDivision demonstrated that its concernsabout market power extend to circum-stances involving “monopsony power,”in which a transaction may create orenhance the power of buyers. In Aetna,the Division’s complaint alleged that, incertain geographic markets, the mergedfirm would obtain the ability to depress

artificially physicians’ reimbursementrates, leading to a reduction in quantityor degradation in quality of physicians’services. In Cargill, the Division’scomplaint alleged that, in certain geo-graphic markets, the acquisition ofContinental’s grain business by Cargillwould allow Cargill to depress artifi-cially the prices paid to farmers for grainand soybeans. Both cases were success-fully resolved by consent decree.

The majority of the Division’smerger cases are resolved by consentdecrees requiring divestitures that aredesigned to protect competition. Fullcompliance with consent decrees istherefore essential to merger enforce-ment. During the year, the Division


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filed criminal and civil contempt chargesagainst Smith International andSchlumberger, Ltd. for violation of aconsent decree. In December, the com-panies agreed to pay $13.1 million incivil fines; both were found in criminalcontempt and fined $750,000 each. TheDivision takes its consent decrees seri-ously and expects defendants to do so aswell.

Nevertheless, there will be circum-stances in which the Division concludesthat the anticompetitive effects of aparticular transaction cannot be cured bya consent decree and that the transactionshould be prohibited in its entirety. TheAntitrust Division’s willingness to


engage in litigation on merger issuesprovides important benefits to thepublic over and above the protection ofcompetition in the particular marketsaffected by the merger in question. Itsignals that the Division is unwilling toaccept an inadequate divestiture orother remedy, and it helps ensure thatmerger law reflects current learning. Inthe past two years, the Antitrust Divi-sion has filed or threatened to file 13lawsuits to prohibit proposed transac-tions in their entirety, and the Divisionwill continue to litigate merger chal-lenges whenever necessary to achieveappropriate relief or advance mergeranalysis in the courts.

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The Civil Non-Merger Enforcement Program

The Antitrust Division has filedcomplaints challenging a wide variety ofboth unilateral and multilateral conductin industries that are important toconsumers, such as personal computeroperating systems, credit cards, andairlines, to ensure that consumers arenot denied the full benefits ofcompetition.

The Antitrust Division’s civil non-merger enforcement program has

been addressing one of the most timelyquestions about antitrust enforcement:Are the antitrust laws adequate toprotect consumers from anticompetitiveharm that may arise during a period ofunprecedented technological change?During this period, the Antitrust Divi-sion has filed complaints challenging awide variety of both unilateral andmultilateral conduct in industries thatare important to consumers, such aspersonal computer operating systems,credit cards, and airlines, to ensure thatconsumers are not denied the full ben-efits of competition. The AntitrustDivision has simultaneously continuedits competitive advocacy efforts beforeCongress and federal administrativeagencies to urge reliance on competi-tion, rather than regulation, as themeans to maximize consumer welfare.

Recent years have seen unprec-edented technological change in manyindustries, particularly those involvinginformation technology. While somepeople have contended that the rapidpace of change obviates the need forantitrust enforcement on the groundthat new entrants can easily supplantdominant incumbents that try to exertmarket power, the Division believes thatsuch a generalization is mistaken. Undercertain circumstances, network externali-ties and first-mover advantages associ-ated with information technology

systems pose special risks that marketswill “tip” very quickly in favor of adominant incumbent. In such cases,timely and effective antitrust interven-tion may be even more important thanis normally the case if we are to ensurethat the eventual market winner prevailson the basis of competition on themerits.

Network effects, a phenomenon ofvarious computer and communicationssystems, arise when the value of aproduct or service to a user increaseswith the number of other users or asproducts compatible with the serviceincrease. Network effects arise directlywhere communication with other usersis important; for example, in telecom-munications or sharing of computerfiles. Network effects can also ariseindirectly where a product’s valuedepends heavily on complementaryproducts (such as application programscompatible with a computer’s operatingsystem), since a larger customer basetends to attract a greater variety of suchcomplements. Where network effects are


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substantial, the market success of acompetitor’s product will depend notonly on its inherent attributes (such asprice or ease of use) but also on itsability to interface seamlessly with thedominant firm’s products or withcomplementary products tailored forthose products. Installed-base compat-ibility advantages can give the dominantfirm a competitive edge also in relatedmarkets, as well as help defend its coremarket power against rivals whoseofferings are otherwise superior. Anti-trust concerns arise when a dominantfirm’s advantages derive from contrivedincompatibilities (that is, not fromgenuine efficiencies) or other exclusion-ary practices against rivals that restrictefficient access.
The most significant of the AntitrustDivision’s enforcement efforts of thistype has been its action against


Microsoft. In 1998, the Antitrust Divi-sion filed a complaint chargingMicrosoft with violating Sections 1 and2 of the Sherman Act in connectionwith its efforts to use exclusionarypractices to protect its monopoly inpersonal computer operating systemsand to extend its monopoly power intothe Internet browser market. Trial onthe liability issues was completed in1999, and the District Court issuedextensive findings of fact on November5, 1999.

Concerns about innovation in ser-vices important to consumers led theAntitrust Division to file suit in anothercase involving collaborative conduct bycompetitors. In October 1998, theAntitrust Division charged Visa andMasterCard, the two dominant general-purpose credit card networks, withfailing to compete against one another

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In 1998, the Antitrust Division filed a complaint charging Microsoft with violatingSections 1 and 2 of the Sherman Act in connection with its efforts to use exclusionarypractices to protect its monopoly in personal computer operating systems and to extendits monopoly power into the Internet browser market.

and adopting rules to prevent theirmember banks from dealing with othercard networks, all of which retardedinnovation. The case, which is scheduledto go to trial in June, will highlight theimportance that the antitrust laws attachto preserving competitive incentives andopportunities for exiting and potentialrivals.

During the year, the AntitrustDivision also filed suit charging Ameri-can Airlines with monopolizing routesemanating from its Dallas/Ft. Worth(DFW) hub in violation of Section 2 ofthe Sherman Act, through predatorypractices designed to drive low-costcarriers out of DFW routes. The com-plaint charges that American addeduneconomic flights and reduced fares inDFW routes served by low-cost carriersuntil the low-cost carriers were forcedout of the market; American viewedsuch conduct as an “investment” toprotect its ability to charge high fares onDFW routes. This is the first predationcase brought against an airline by theDivision since the industry was deregu-lated in 1979.

The Antitrust Division has alsocontinued its long-standing policy ofbeing an effective advocate for the causeof competition in various legislativeproceedings. The Antitrust Division

testifies regularly to Congress on variousproposals with competitive implications.In recent years, significant segments ofthe American economy, subjected toeconomic regulation for half a centuryor more, have been substantially deregu-lated by statute. Where public restraintshave been lifted, proper application ofthe antitrust laws ensures that thebenefits of competition will not beimpaired by private restraints.

Even in industries that have notbeen deregulated by statute, regulatoryagencies often retain substantial discre-tion to promote competitive behavior.The Antitrust Division works closelywith many federal agencies, includingthe Department of Transportation, theFederal Energy Regulatory Commission,the Securities and Exchange Commis-sion, and the Federal CommunicationsCommission, to urge that they rely intheir decision making on competitiveprinciples to the maximum extentconsistent with the other statutorygoals.

Thus, through antitrust enforcementactions, direct overtures to Congress forregulatory reform, and communicationswith federal regulatory agencies, theAntitrust Division remains thegovernment’s foremost proponent ofcompetition.


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The Telecommunications Competition Program

Thanks in significant part to theAntitrust Division’s activities, consumerstoday have more choices than everbefore in choosing among providers forlocal telecommunications services, forwireless services, for video services, forInternet services, and for internationaltelecommunications services.

The promotion of competition intelecommunications has been one of

the Antitrust Division’s most significantaccomplishments of the past threedecades and will be one of its greatestcontinuing challenges in years to come.

For most of the twentieth century,the telecommunications industry in theUnited States was a regulated monopoly.In the late 1960s, the Antitrust Divisionparticipated in FCC proceedings andsuccessfully advocated the introductionof competition into long-distance tele-phone service. In 1974, the JusticeDepartment filed a monopolization caseagainst AT&T, seeking structural reliefthat would permit the long-distancecompetition then authorized by the FCCto develop. That case was resolvedthrough the entry of a consent decree in1982, which involved a breakup ofAT&T. The breakup was highly contro-versial, but subsequent experienceproved its wisdom. Competition grewand flourished. By the mid-1990s, thelower prices and rapid innovationgenerated by competition and deregula-tion of long-distance telephone serviceand telecommunications equipmentmanufacturing in the United Statesprompted U.S. policy makers to seek toextend competition more broadlythroughout the domestic telecommuni-cations industry. This effort culminatedin the passage of the Telecommunica-tions Act of 1996, which eliminatedlegal restrictions on competition in local

telephone service and firmly establisheda fundamental national policy favoringcompetition and deregulation in alltelecommunications markets. The newcompetitive environment created by theTelecommunications Act presentedseveral competition advocacy challengesfor the Antitrust Division, which arereflected in its activities since 1996.

1. Opening Local Telecommunica-tions Markets. The TelecommunicationsAct of 1996 created opportunities toeliminate the most important remainingmonopoly in the telecommunicationsindustry—the monopoly of local tele-communications services controlled bythe Bell Operating Companies (BOCs)and other incumbent local exchangecarriers. The Antitrust Division hasworked to maximize those opportunitiesby successfully advocating principledand procompetitive interpretation andimplementation of the local marketopening provisions of the Act.

To that end, the Division filedextensive comments in the FCC’s LocalCompetition rulemaking advocating


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The globalization of the telecommunications industry has created new challenges forthe Antitrust Division. The Division’s mission in the global arena mirrors its domesticmission.

principles that the FCC adopted whenit promulgated its local competitionrules. The Division then worked closelywith the FCC in defending those rules(and the FCC’s rulemaking jurisdic-tion) in the Eighth Circuit and beforethe Supreme Court, which largelyupheld the FCC’s procompetitive rules.The Antitrust Division also assisted insuccessfully defending actions in whichthe constitutionality of the 1996 Act’stransitional restrictions on the BOCswere challenged. Assistant AttorneyGeneral Joel Klein successfully arguedin the U.S. Court of Appeals for theFifth Circuit that the restrictions on theBOCs do not constitute a “bill ofattainder” and are not otherwise uncon-stitutional.

The Antitrust Division has alsoassisted in monitoring and filing amicusbriefs in the numerous district courtand court of appeals cases under Sec-tion 252 of the TelecommunicationsAct, reviewing arbitrated interconnec-tion agreements between incumbentlocal exchange carriers (LECs) and newentrants. These efforts have helped toproduce a substantial body of precedentsupporting appropriate, procompetitiveinterpretations of the market-openingrequirements of Sections 251 and 252of the Act.

These litigation victories have beencritically important in establishing asolid legal foundation for the market-opening process contemplated by the1966 Telecommunications Act, butlitigation victories will not, by them-selves, create competition. Successful


competition will also require incumbentLECs and new entrants to implementthe technically complex arrangementsfor interconnection and access to theincumbents’ ubiquitous local networks.

The development of these arrange-ments has been the focus of a substan-tial portion of the Division’s efforts inconnection with its review of long-distance service applications by theBOCs under Section 271 of the Act. Inlate 1996, the Division solicited publicinput concerning the standard that itshould use in reviewing these applica-tions, and concluded that it wouldsupport Section 271 applications only ifthe applicant demonstrated that itslocal market was “fully and irreversiblyopen to competition.” The FCCadopted an interpretation of the criticalthreshold requirements of Section 271that followed the Division’s recommen-dations. The agency’s decision wasaffirmed by the D.C. Circuit Court ofAppeals. The Division has explained indetail—in its formal evaluations ofSection 271 applications, in speeches,and in its frequent discussions withinterested parties—how it will applythat standard in evaluating many spe-cific controversies that can be expectedto arise in connection with the market-opening process. The Division hasdevoted substantial resources to thecontinuous monitoring of the BOCs’market-opening efforts, through discus-sions with the BOCs, competing carri-ers, consumer groups, state commis-sions, and others. As a result of thisprocess, many of the requirements for asuccessful 271 application have been

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met by a number of BOCs, and theDivision is hopeful that successfulapplications, demonstrating fully andirreversibly open markets, will be filedin the near future.

These efforts have led to substantialentry by competitive local exchangecarriers (CLECs). Using exclusivelytheir own facilities or a combination oftheir own facilities with elements of theBOCs’ networks, these CLECs areproviding local telecommunicationsservices to an increasing number ofcustomers. CLECs had installed morethan 800 voice switches by the end of1999, compared to a total of 139 voiceswitches in 1996. CLECs tripled thesize of their local fiber transmissionnetworks from 1996 to 1999. As ofJune 1999, CLECs had obtained ap-proximately 685,000 unbundled loopsfrom incumbents (an increase of 180percent over the previous year) and hadcollocated in wire centers serving 60percent of all lines in the country (com-pared to 32 percent the previous year).CLECs have achieved local marketshares approximating 10 percent insome states, a remarkable achievementin markets that were virtually completemonopolies throughout most of thetwentieth century.

2. Promoting Competition in theGlobal Telecommunications Market.The telecommunications industry is acentral component of the emergingglobal economy. As firms in othermarkets have expanded the geographicscope of their operations, their need forglobal communications capabilities,both voice and data, have greatlyincreased. Improved technology andmore competitive telecommunicationsmarkets throughout the world have alsolowered the costs and prices of tele-

communications services, furtherstimulating demand for internationalcommunications.

The globalization of the telecom-munications industry has created newchallenges for the Antitrust Division.The Division’s mission in the globalarena mirrors its domestic mission.First, we have worked to support theopening of markets for internationaltelecommunications, a process that willalso entail the opening of markets inother countries. These internationalmarket-opening efforts will benefitAmerican consumers, who purchase alarge share of international telecommu-nications services. It will also benefitAmerican telecommunications firms,whose experience in competitive do-mestic markets has positioned them forsuccess in the international arena aswell. Second, we have worked closelywith telecommunications and competi-tion authorities in other countries,particularly with respect to mergerenforcement, to ensure the consistentapplication of sound policies that willprotect competition in internationalmarkets.

The transition to deregulated,competitive telecommunications mar-kets will continue to create new chal-lenges for the Antitrust Division in thecoming years. That transition is farfrom complete. In many criticallyimportant telecommunications markets,incumbent providers still maintainsubstantial market power. But theexperience in moving to competitiveequipment and long-distance marketsover the past two decades and morerecent experience in extending competi-tion to other markets under the Tele-communications Act has demonstratedthe great benefits of competitive mar-


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kets. Thanks in significant part to theAntitrust Division’s activities, consum-ers today have more choices than everbefore in choosing among providers forlocal telecommunications services,wireless services, video services,Internet services, and international

Antitrust Division Annual ReportAntitrust Division Annual Report

telecommunications services. Moreimportantly, the Division’s efforts havehelped to create a solid foundation forgreater competition in the future andthe lower prices, improved technology,and broader consumer choices that suchcompetition provides.

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International Antitrust Policy and Procedures

The Division now has more than 30ongoing grand juries—well over one-third of its criminal investigations—looking into international cartel activity.

As a result of the increasing global-ization of the world economy in

recent years, it is increasingly commonfor business conduct in one country tohave anticompetitive consequences inother countries. This trend has givenrise to new challenges for the AntitrustDivision. The most immediate challengeis to ensure continued, effective enforce-ment of the antitrust laws against un-lawful conduct, wherever it occurs, thatcauses injury in the United States. Asnoted previously, the Division hasactively pursued criminal enforcementagainst international cartels. The Divi-sion now has more than 30 ongoinggrand juries—well over one-third of itscriminal investigations—looking intointernational cartel activity.

The Division has also sought toencourage developments in competitionlaw throughout the world that willboth further the enforcement of sound,effective antitrust laws and reduce anycosts imposed on United States busi-nesses and consumers by reason of thenumber of, or possible inconsistenciesamong, different national competitionlaws. To those ends, the Division hastaken several steps to facilitate itsobtaining evidence (both documentsand witnesses) located abroad in con-nection with its cartel enforcementactivities. In April 1998, for example,the OECD ministers endorsed a Divi-sion-introduced Hard-Core CartelRecommendation that encourages the

29 OECD member countries to enactand enforce laws prohibiting hard-corecartels as well as to enter into mutualassistance agreements to permit thesharing of evidence with foreign anti-trust authorities to the extent permittedby national laws. In April 1999, theUnited States signed an agreement withAustralia, the first under the Interna-tional Antitrust Enforcement AssistanceAct of 1994, that will permit the twoantitrust enforcement agencies to shareconfidential information on both civiland criminal matters. In March 1999,the United States signed an antitrustcooperation agreement with Israel, andsimilar agreements were signed inOctober 1999 with Japan and Brazil.

As described in detail above, theDivision has been actively engaged ininternational merger and civil non-merger enforcement. In many cases thebusiness conduct involved is subject toreview by two or more countries’antitrust agencies. As a result, theDivision has had numerous occasionsto work with the Commission of theEuropean Communities on mergermatters and has had good experienceswith case-specific cooperation. Oneexample is the WorldCom/MCI merger


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During the past several years, the Division has also worked with other U.S. agenciesand in multinational fora to improve the overall environment for competitive markets andsound antitrust enforcement.

involving two U.S. telecommunicationsfirms, which resulted in the divestitureof MCI’s $1.75 billion in internetassets—the largest divestiture in U.S.merger history. In that case, the partiesprovided written waivers of confidenti-ality that permitted the two agencies’staffs to work closely together inmaking their independent analyses ofthe transaction. The Division and theEuropean Commission ultimatelyreached essentially the same conclu-sions, and before announcing its ap-proval of the transaction in July 1998,the Commission formally requested,pursuant to the 1991 U.S.-EU antitrustcooperation agreement, the Division’scooperation and assistance in evaluatingand implementing the divestitureproposal that had been proposed toboth the Division and the Commission.A similar procedure was successfullyfollowed by the Division, the EuropeanCommission, and the merging partiesin the Dresser/Halliburton merger,where the antitrust concerns wereresolved by a U.S. consent decreerequiring a significant divestiture.

Anticipating that they will be facedwith important transnational civilnonmerger matters, the United Statesand the European Union entered into anew positive comity agreement in June1998. This agreement builds on thepositive comity provisions of the firstsuch agreement, which was adopted in1991. Under the “positive comity”concept, the antitrust authority of onecountry preliminarily determines that


there are reasonable grounds for anantitrust investigation, typically in acase where a firm based in that countryappears to have been denied access tothe markets of another country byanticompetitive behavior in the latter.The requesting authority refers thematter, along with its preliminaryanalysis, to the authority whose homemarkets are most directly affected bythe suspect behavior. After consultingwith the foreign antitrust authority anddepending on that authority’s conclu-sions and actions, the requesting au-thority may accept the foreignauthority’s conclusions or seek differentresults under its own laws.

While no referrals have yet beenmade under the 1998 agreement, in1997 the Division made a formalreferral under the 1991 agreementregarding possible anticompetitiveconduct by certain European airlinesthat may be preventing U.S.-basedcomputer reservations systems fromcompeting effectively in certain Euro-pean countries. In 1999, the EuropeanCommission issued a statement ofobjections, which opens formal proceed-ings, against one of the airlines pursuantto this referral.

During the past several years, theDivision has also worked with otherU.S. agencies and in multinational forato improve the overall environment forcompetitive markets and sound anti-trust enforcement. During this period,for example, the Division has cochaired

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(with the Department of State) theStructural Issues Working Group of theU.S.-Japan Enhanced Initiative onDeregulation and Competition Policy;this group’s joint report includedcommitments by the government ofJapan to strengthen its antitrust en-forcement program. Similarly, theDivision worked with USTR and otherdomestic agencies on the successfulconclusion of the World Trade Organi-zation (WTO) negotiations on basictelecommunications issues, whichincluded agreement on a ReferencePaper on interconnection rules andother transitional competition-relatedsafeguards. Although the ReferencePaper does not directly affect antitrustenforcement, it does establish a mini-mum level of effective (non-antitrust)regulation for governments to employin liberalizing former monopolytelecom markets.

The Division also participates indiscussions in the increasing number ofinternational fora, including theOECD, NAFTA, the Asia PacificEconomic Cooperation, and the nego-tiations for the Free Trade Area of theAmericas (FTAA), in which antitrustand competition policy issues arediscussed. In addition, the Division hasparticipated (with other U.S. agencies)during the past three years in discus-sions of the WTO working group onthe relationship between trade andcompetition policy.

In 1997, Attorney General Renoand Assistant Attorney General forAntitrust Klein established an Interna-tional Competition Policy AdvisoryCommittee (ICPAC) to examine thechanging international environmentfrom an outside-the-Division perspec-tive. ICPAC devoted special attention to


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three key issues: (1) How can we builda consensus among governments forcooperation and effective prosecutionof at international cartels? (2) Howshould we deal with the proliferation ofpremerger notification requirementsand merger laws around the world, soas to achieve sound results for bothconsumers and merging firms? (3)How should we deal with the complexrelationships between trade and compe-


tition? ICPAC, which was cochaired byformer Assistant Attorney General JimRill and former U.S. InternationalTrade Commission Chairwoman PaulaStern, met several times and heldhearings in which antitrust officialsfrom around the world as well as awide range of U.S. witnesses partici-pated. ICPAC’s report was issued inFebruary 2000.

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Antitrust Division Selected Criminal Cases

April 1, 1996 through September 30, 1999

Vitamins

The vitamin cartel is themost pervasive and harmfulcriminal antitrust conspiracyever uncovered by the Divi-sion. The members of thevitamin cartel reached agree-ments on everything from howmuch product each companywould produce, to how muchthey would charge, to whichcustomers they would sell. Thevictims of this conspiracy werethe purchasers of the vitaminsmost commonly used as nutri-tional supplements or to enrich humanfood and animal feed. However, in thefinal analysis, the conspiratorial conductof the cartel members affected thepocketbook of virtually every Americanconsumer who took a daily vitaminsupplement or who had a bowl of cerealin the morning.

The vitamin investigation has thusfar resulted in convictions against Swiss,German, Canadian, and Japanese firmsand over $875 million in criminal finesagainst the corporate defendants, includ-ing a $500 million fine imposed onF. Hoffmann-La Roche Ltd. (HLR)and a $225 million fine imposed onBASF AG. The $500 million fineimposed against HLR is the largest fineever imposed in any Department ofJustice proceeding under any statute.

The Antitrust Division also has thusfar prosecuted seven U.S. and foreignexecutives who participated in thevitamin cartel. All of these individuals,including the foreign defendants, areeither already serving time in federalprison or are awaiting sentencing andface potential jail sentences as well asheavy fines. For example, KunoSommer, the former Director of World-wide Marketing for Vitamins at HLR,and Roland Brönnimann, the formerPresident of the Fine Chemical andVitamin Division at HLR, were recentlysent to prison and ordered to pay sub-stantial fines for their roles in the vita-min cartel. Messrs. Sommer andBrönnimann are the first Europeannationals to serve time in a U.S. prisonfor engaging in cartel activity.

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The vitamins cases brought thus farare as follows:

· United States v. Lonza, AG, (N.D.Tex. 1998) (Swiss firm; defendantagreed to $10.5 million fine in pleaagreement)

· United States v. John Kennedy, (N.D.Tex. 1999) (U.S. citizen; 12 monthsincarceration; $20,000 fine)

· United States v. Lindell Hilling,(N.D. Tex. 1999) (U.S. citizen;defendant agreed to incarceration forperiod of 12 months and $20,000fine in plea agreement)

· United States v. John L. “Pete” Fischer,(N.D. Tex. 1999) (U.S. citizen;defendant agreed to incarceration forperiod of 8 months and $20,000fine in plea agreement)

· United States v. Robert Samuelson,(N.D. Tex. 1999) (U.S. citizen;awaiting sentencing)

· United States v. Antonio Felix, (N.D.Tex. 1999) (Mexican citizen; await-ing sentencing)

· United States v. F. Hoffmann-LaRoche, Ltd., (N.D. Tex. 1999) (Swissfirm; $500 million fine)

· United States v. BASF AG, (N.D.Tex. 1999) (German firm; $225million fine)

· United States v. Dr. Kuno Sommer,(N.D. Tex. 1999) (Swiss citizen;4 months incarceration, $100,000fine)

· United States v. Dr. RolandBrönnimann, (N.D. Tex. 1999)

(Swiss citizen; defendant agreed to5 months incarceration and$150,000 fine in plea agreement)

· United States v. Daiichi Pharmaceuti-cal Co., Ltd., (N.D. Tex. 1999)(Japanese firm; defendant agreed to$25 million fine in plea agreement)

· United States v. Easai Co., Ltd.,(N.D. Tex. 1999) (Japanese firm;defendant agreed to $40 million finein plea agreement)

· United States v. Takeda ChemicalIndustries, Ltd., (N.D. Tex. 1999)(Japanese firm; defendant agreed to$72 million fine in plea agreement)

· United States v. Chinook Group Ltd.,(N.D. Tex. 1999) (Canadian firm;defendant agreed to $5 million finein plea agreement)

Graphite Electrodes

The Division cracked a conspiracy tofix the price and allocate market sharesworldwide for graphite electrodes usedin electric arc furnaces in steel mills tomelt scrap steel. As a result of thisconspiracy, steel makers, whose productsare integral to a variety of business andconsumer items, paid noncompetitiveand higher prices for graphite electrodesused in the manufacturing process. Totalsales of graphite electrodes in the UnitedStates during the term of the conspiracywere well over one billion dollars.

The graphite electrodes investigationwas sparked by cooperation receivedfrom an applicant to the Division’sCorporate Leniency Policy, which leddirectly to the execution of searchwarrants. The investigation uncoveredevidence that the members of the graph-

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ite electrodes cartel met in the UnitedStates, Far East, and Europe and agreedto fix prices and allocate volume on aregion-by-region basis around the globe.In addition, the conspirators agreed torestrict capacity for producing graphiteelectrodes, to restrict non-conspiratorcompanies’ access to graphite electrodemanufacturing technology, and, further,to exchange sales and customer informa-tion to monitor and enforce the con-spiracy.

An American, German, and twoJapanese companies have pled guilty andagreed to cooperate with the Division’songoing investigation. Two of thecompanies, UCAR International andSGL Carbon AG, were fined $110million and $135 million, respectively,for their participation in the conspiracy.In addition, two U.S. executives pledguilty and have agreed to pay fines ofmore than $1 million each and to serve

prison terms of 9 months and 17months, respectively, and a Germanexecutive was fined $10 million—thelargest criminal antitrust fine everimposed on an individual—for theirroles in the international conspiracy.

The graphite electrodes casesbrought thus far are as follows:

· United States v. UCAR International,Inc., (E.D. Pa. 1998) (U.S. firm;$110 million fine)

· United States v. Showa Denko Carbon,Inc., (E.D. Pa. 1998) (Japanese firm;$32.5 million fine)

· United States v. Tokai Carbon Com-pany, Ltd., (E.D. Pa. 1999) (Japa-nese firm; $6 million fine)

· United States v. SGL Carbon AG andRobert Koehler, (E.D. Pa. 1999)(German firm; $135 million. Ger-man citizen; $10 million fine)

· United States v. Robert J. Hart, (E.D.Pa. 1999) (U.S. citizen; defendantagreed to serve 9 months incarcera-tion and to pay a $1 million fine inplea agreement)

· United States v. Robert P. Krass, (E.D.Pa. 1999) (U.S. citizen; defendantagreed to serve 17 months incar-ceration and to pay a $1.25 millionfine in plea agreement)

Lysine

The lysine investigation broke up aninternational price-fixing and volume-allocation agreement among the world’smajor producers of lysine. Lysine, a feedadditive used by farmers in livestockfeeds, is a $600 million-a-year industry

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worldwide. The members of the lysinecartel reached agreements to carve upthe world market by allocating salesvolumes among themselves and agreeingon what prices would be charged tocustomers worldwide. As a result, priceswent up about 70 percent in the firstthree months of the conspiracy alone.

Beginning with the first round ofcharges in August 1996, the investiga-tion has resulted in the conviction offive companies, including two Japaneseand two Korean companies, and six oftheir executives; it has also yieldednearly $100 million in criminal fines,including a $70 million fine againstArcher Daniels Midland Company(ADM). (ADM was fined an additional$30 million for its participation in aseparate conspiracy in the citric acidmarket and paid a total fine of $100million.) The investigation culminatedwith the jury trial of three former high-ranking ADM executives for theirparticipation in the lysine cartel. InSeptember 1998, after a ten-week trial, aChicago jury returned guilty verdictsagainst all three executives. The ADMexecutives were subsequently sentenced

to serve lengthy prison sentences rang-ing from 24 to 30 months, and two ofthe executives were fined $350,000each.

ADM’s $100 million fine, imposedin October 1996, represented the firsttime that the Division utilized the

alternative fine provisionin order to obtain a finegreater than the ShermanAct statutory maximumof $10 million. Thealternative fine provision,found in 18 U.S.C.Section 3571(d), per-mits imposition of a fineequal to twice the gainto the cartel or twice theloss to the victims. As aresult, the landscape forcorporate antitrust fineshas changed dramatically.Whereas prior to ADM’ssentencing there were no

fines above the $10 million ShermanAct statutory cap, fines of $10 millionor more are now common, and fivedefendants have been fined $100 millionor more.

A list of all of the lysine cases fol-lows:

· United States v. Ajinomoto Co., Inc.,(N.D. Ill. 1996) (Japanese firm,defendant agreed to $10 million finein plea agreement)

· United States v. Kyowa Hakko KogyoCo. Ltd., (N.D. Ill. 1996) (Japanesefirm, $10 million fine)

· United States v. Sewon America, Inc.,(N.D. Ill. 1996) (U.S. subsidiary ofKorean company, $328,000 fine)

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· United States v. Kanji Mimoto, (N.D.Ill. 1996) (Japanese citizen, $75,000fine)

· United States v. Masaru Yamamoto,(N.D. Ill. 1996) (Japanese citizen,$50,000 fine)

· United States v. Jhom Su Kim, (N.D.Ill. 1996) (Korean citizen, $75,000fine)

· United States v. Archer DanielsMidland, Co., (N.D. Ill. 1996) (U.S.firm, $100 million fine: $70 mil-lion fine for lysine and $30 millionfine for citric acid)

· United States v. Cheil Jedang, Ltd.,(N.D. Ill. 1996) (Korean company,$1.25 million fine)

· United States v. Michael D. Andreas;Mark E. Whitacre; Terrance S. Wil-son; and Kazutoshi Yamada, (N.D.Ill. 1996) (Andreas, Whitacre andWilson, all U.S. citizens, convictedat trial; Andreas and Wilson eachsentenced to serve 24 months incar-ceration and to pay fines of$350,000; Whitacre sentenced toserve 30 months incarceration with10 months to be served concurrentlywith a prison sentence he wasalready serving for another offenseand 20 months to be served consecu-tively. Yamada, a Japanese citizen,did not appear at trial and remains afugitive.)

Citric Acid

The Division’s investigation andprosecution of an international cartelamong U.S. and European producers ofcitric acid put an end to one of the most

sophisticated and sweeping anticom-petitive schemes ever uncovered by theDivision. Citric acid, a flavor additiveand preservative in such products as softdrinks and processed foods, found innearly every home in the United States,as well as in detergents, pharmaceuticalsand cosmetic products, is a $1.2 billion-a-year industry worldwide. The con-spirators agreed to fix prices and allocatesales volumes in the citric acid marketworldwide. The conspirators also agreedon complex systems to monitor andenforce the agreements. For example,the conspirators devised a compensationsystem whereby the cartel membersreviewed the sales of each conspirator atthe end of the year, and any companythat sold more than its precisely allottedshare in one year was required in thefollowing year to purchase the excessfrom another conspirator that had notreached its volume allocation target inthat preceding year. As a result of theconspiracy, list prices for citric acid wereraised by more than 30 percent tocustomers in the United States duringthe conspiracy period, resulting in wellover $100 million in additional revenueto the members of the conspiracy.

Beginning with the first round ofcharges in October 1996, the citric acidinvestigation has resulted in convictionsagainst five corporations, includingU.S., German, Swiss, and Dutch firms,and four of their executives. In addition,over $100 million in criminal fines—including a $50 million fine imposed onHaarmann & Reimer Corporation, theU.S. subsidiary of the German pharma-ceutical giant Bayer AG—have beenobtained against the convicted defen-dants.

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A list of all of the citric acid casesfollows:

· United States v. Archer DanielsMidland Co., (N.D. Cal. 1996)(U.S. firm, $100 million fine: $70million fine for lysine and $30million fine for citric acid)

· United States v. Haarmann & ReimerCorp. and Hans Hartmann,(N.D. Cal. 1997) (U.S. subsidiaryof German company, $50 millionfine; German citizen, $150,000 fine)

· United States v. F. Hoffmann-LaRoche. Ltd. and Udo Haas, (N.D.Cal. 1997) (Swiss firm, $14 millionfine; Swiss citizen, $150,000 fine)

· United States v. Jungbunzlauer Inter-national AG Rainer Bichlbauer,(N.D. Cal. 1997) (Swiss firm, $11million fine; Swiss citizen,$150,000 fine)

· United States v. Cerestar BioproductsBV and Sylvio Kluzer, (N.D. Cal.1998) (Dutch firm, $400,000 fine;Italian citizen, $40,000 fine)

Sodium Gluconate

The Division’s investigation of aninternational conspiracy to suppress andeliminate competition in the worldwidesodium gluconate industry arose frominformation received from cooperatingdefendants in the lysine and citric acidinvestigations. Sodium gluconate is anindustrial cleaner with many applica-tions, such as food service and utensilcleaning, bottle washing, and paintremoval. The Division’s investigationunraveled a conspiracy to fix prices andallocate sales volumes worldwide amongthe world’s major producers of sodiumgluconate.

To date, the sodium gluconateinvestigation has led to criminal chargesagainst Dutch, French, and Japanesecompanies and their foreign executivesand has resulted in over $30 million incriminal fines. One of the industryleaders, Fujisawa Pharmaceutical Co.,Ltd., a Japanese corporation, agreed toplead guilty and pay a fine of $20million for its participation in theconspiracy.

A list of all of the sodium gluconatecases brought thus far follows:

· United States v. Akzo Nobel ChemicalsBV and Glucona BV, (N.D. Cal.1997) (Dutch firms, $10 millionfine)

· United States v. Cornelis R.Nederveen, (N.D. Cal. 1997) (Dutchcitizen, $100,000 fine)

· United States v. Marcel Van Eekhout,(N.D. Cal. 1997) (Dutch citizen,$100,000 fine)

· United States v. Fujisawa Pharmaceu-tical Co., Ltd. and Akira Nakao,(N.D. Cal. 1998) (Japanese firm,$20 million fine; Japanese citizen,$200,000 fine)

· United States v. Roquette Freres andBertrand Dufour, (N.D. Cal. 1997)(French firm, $2.5 million fine;French citizen, $50,000 fine)

Sorbates

The Division’s investigation andprosecution of a seventeen-year interna-tional conspiracy among U.S., German,and Japanese producers of sorbatesbegan as a matter transferred to theDivision by the FTC. Sorbates (sorbic

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acid and potassium sorbate) are chemi-cal preservatives used primarily toprevent mold in food products, such ascheese and baked goods. Sales are over$250 million a year worldwide. TheDivision’s investigation uncovered oneof the longest-running and durableinternational cartels ever prosecuted, aconspiracy which affected over $1billion in U.S. sales.

The sorbates conspirators agreedto fix sorbates prices and allocate themarket shares of sorbates sold world-wide, including the United States.Meetings among the producers wereheld in Japan and Europe throughoutthe seventeen-year conspiracy. Theproducers established several levels oftarget prices in the U.S. market basedon the size of the customers and agreedto announce price increases on differentdates to avoid detection of collusion.To date, three corporations and twoexecutives have pled guilty and haveagreed to pay fines totaling over$68 million.

The sorbates cases brought thus farare as follows:

· United States v. Eastman ChemicalCompany, (N.D. Cal. 1998) (U.S.firm, $11 million fine)

· United States v. Hoechst AG, (N.D.Cal. 1999) (German firm, $36million fine)

· United States v. Bernd Romahn,(N.D. Cal. 1999) (German citizen,$250,000 fine)

· United States v. Nippon Gohsei, (N.D.Cal. 1999) (Japanese firm, $21million fine)

· United States v. Hiromi Ito, (N.D.Cal. 1999) (Japanese citizen,$350,000 fine)

Marine Construction AndTransportation

In December 1997, the Divisioncharged a company from The Nether-lands and one of its foreign executiveswith participating in an internationalcartel in marine construction servicesand a company from Belgium, its U.S.subsidiary, and two of its foreign execu-tives with participating in a separateinternational cartel in marine transporta-tion services. The three related firms,which have a common parent, agreed toplead guilty and to pay a total of $65million in criminal fines.

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In the marine construction cartel,the conspirators reached an agreementto allocate customers and agree onpricing for heavy-lift derrick barge andrelated marine construction services inthe major oil and gas production regionsof the world. Heavy-lift derrick bargesare floating crane vessels with a capacityto lift heavy structures, such as the decksof offshore oil and gas drilling andproduction platforms, in a marineenvironment. The conspirators originallytargeted marine construction contractsin the North Sea. The conspiracy thengrew to include projects in the Gulf ofMexico and next expanded to includethe Far East. Members of the cartel metin the United States, The Netherlands,Italy, Turkey, and elsewhere to carry outtheir conspiracy. Worldwide revenues onthe fixed contracts were in excess of $1billion.

In the marine transportation cartel,the conspirators colluded on semisub-mersible heavy-lift transport services to

customers in the United States andthroughout the world. Semisubmersibleheavy-lift transport ships are ocean-going vessels that partially submerge tocarry extremely large cargo, most com-monly oil rigs and other ships, acrosslong distances in the open ocean. Itscustomers include drilling contractorsand the U.S. Navy. The conspiratorsmet in a number of locations in Europe,the United States, and elsewhere andagreed to share information aboutupcoming jobs, prices quoted to cus-tomers, fleet positions, and other aspectsof their internal operations. The partiesthen would agree on which jobs eachwould service, pool the revenues fromall customers, and then divide up theprofits according to a complex formuladeveloped by the cartel. Bids on con-tracts let by the U.S. Navy were riggedby the conspirators as part of theiragreement, and these contracts wereincluded in the pool of revenues andprofits divided by the cartel. In connec-tion with the guilty pleas, the U.S.

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Navy was paid civil damages for therigged contracts.

The marine construction and trans-portation cases brought thus far are asfollows:

· United States v. HeereMac, v.o.f. andJan Meek, (N.D. Ill. 1997) (Dutchfirm, $49 million fine; Dutch citi-zen, $100,000 fine)

· United States v. Dockwise, N.V.,Dockwise U.S.A. Inc., ChristiaanBernardus van der Zwan, andBastiaan Albertus de Jong, (N.D. Ill.1997) (Belgian firm, $15 millionfine; U.S. subsidiary of Belgian firm,$1 million fine; Dutch citizen,$150,000 fine; Dutch citizen,$75,000 fine)

· United States v. Vincent Oliveri, (S.D.Tex. 1999) (Italian citizen, trialpending)

· United States v. Littleton E. Walker,(S.D. Tex. 1999) (U.S. citizen,awaiting sentencing)

Explosives

This investigation of regional andnational conspiracies to fix prices forcertain commercial explosives, such asdynamite, ammonium nitrate, andblasting agents, has resulted in guiltypleas by 14 corporations and 3 individu-als and total fines of nearly $40 million.The commercial explosives subject tothese conspiracies are those used in coaland metal mining, quarry operations,construction, and oil and gas productionand account for about $1 billion in salesannually. (An asterisk after the casename denotes prosecutions filed prior tothe reporting period.)

• United States v. ICI Explosives USA,Inc., (N.D. Tex. 1995) ($10 millionfine)*

• United States v. Withers WallerCaldwell, (N.D. Tex. 1995)($50,000 fine)*

• United States v. Dyno Nobel, Inc.,(N.D. Tex. 1995) ($15 millionfine)*

• United States v. Mine Equipment andMill Supply, Inc., (N.D. Tex. 1995)($1.9 million fine)*

• United States v. Explosives TechnologiesInternational, Inc., (N.D. Tex. 1996)($950,000 fine)*

• United States v. Amos Dolby Co.,(W.D. Pa. 1996) ($90,000 fine)

• United States v. DC Guelich ExplosiveCo., (W.D. Pa. 1996)($200,000 fine)

• United States v. Douglas Explosive,Inc., (W.D. Pa. 1996)($70,000 fine)

• United States v. Hilltop Energy, Inc.,(W.D. Pa. 1996) ($330,000 fine)

• United States v. Kesco, Inc., (W.D. Pa.1996) ($100,000 fine)

• United States v. Ren-Loi, Inc., (W.D.Pa. 1996) ($112,000 fine)

• United States v. Austin Powder Co.,(N.D. Tex. 1996) ($7 million fine)

• United States v. Thomas Mechtenberg,(N.D. Tex. 1996) ($20,000 fine)

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• United States v. LaRoche Industries,Inc., (W.D. Pa. 1997) ($1.5 millionfine)

• United States v. Donald J. Westmaas,(N.D. Tex. 1997) ($44,580 fine)

• United States v. Nutrite Corporation,(W.D. Pa. 1997) ($1.5 million fine)

• United States v. David P. True, (W.D.Ky. 1997) (acquitted at trial)

• United States v. Joseph H. Longmire,(W.D. Ky. 1997) ($50,000 fine,4 months house arrest)

Point-of-Purchase DisplayMaterials

The Division’s New York and Chi-cago Field Offices are conductingparallel investigations and prosecutionsof bid-rigging by suppliers of point-of-purchase (POP) display materials, suchas plastic and neon signs, lamps, lights,or other promotional equipment used inbars, liquor stores, and restaurants. Inaddition to the bid-rigging offenses, theinvestigations have uncovered commer-cial bribery, income tax evasion, fraud,and money laundering violations. (Anasterisk after the case name denotesprosecutions filed prior to the reportingperiod.)

New York. The New York FieldOffice investigation thus far has resultedin the filing of 29 cases against 24individuals and 9 corporations. Seven-teen individuals and seven corporationshave been sentenced to date resulting infines totaling over $5 million, court-ordered restitution in excess of $1million, and individual jail sentences ofup to 30 months. In addition, roughly$5 million in back taxes have been

recovered and private restitution agree-ments have totaled over $10 million.The investigation, which is being con-ducted in cooperation with the UnitedStates Attorney’s Office for the SouthernDistrict of New York and with substan-tial assistance from agents of the FBIand the IRS, is continuing.

Chicago. The Division’s ChicagoField Office, with the assistance of theFBI, has filed six criminal cases againsttwo corporate and five individual defen-dants arising out of an investigation ofantitrust and related federal offenses inthe sale of point-of-purchase displays totwo U.S. breweries, Anheuser-BuschCo., Inc. and Miller Brewing Company.The Chicago investigation exposed twoconspiracies to fix prices, rig bids, andallocate customers involving three of thefour major producers of point-of-pur-chase display materials beginning in themid-1980s and ending in 1996. Thevolume of commerce affected by theselong-running illegal agreements ex-ceeded $75 million. The largest of theconspiring POP producers, Everbrite,Inc., pled guilty to participating in bothconspiracies and paid a $9 million fine.Two Everbrite executives also pled guiltyand were sentenced to 12 months and13 months incarceration, respectively. Inaddition, two of the four individualdefendants were sentenced to pay thestatutory maximum fine of $350,000.The investigation also uncovered aconspiracy to defraud Miller BrewingCompany by one of its purchasingagents who received kickbacks fromPOP display vendors over a multiyearperiod. The purchasing agent pled guiltyto conspiring to commit wire fraud inconnection with the request and receiptof those payments.

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New York Cases

· United States v. Jomar Displays, Inc.,(S.D.N.Y. 1993) ($175,000 fine)*

· United States v. Louis Cappelli,(S.D.N.Y. 1994) (6 months incar-ceration, 6 months communityconfinement, $296,000 fine)*

· United States v. Bert Levine,(S.D.N.Y. 1994) (6 months incar-ceration, $5,000 fine)*

· United States v. Richard T. Billies andSidney Rothenberg, (S.D.N.Y. 1994)(6 months house arrest each,$100,000 fine each)*

· United States v. Robert Berger,(S.D.N.Y. 1994) (10 months housearrest, $3,000 fine)*

· United States v. John Clemence,(S.D.N.Y. 1995) (4 months housearrest, $100,000 fine)*

· United States v. Eugene Veltri,(S.D.N.Y. 1995) (3 months housearrest)*

· United States v. Richard Sanislo,(S.D.N.Y. 1995) ($2,500 fine)*

· United States v. Richard Rituno andConsumer Displays, Inc., (S.D.N.Y.1995) (Rituno: 6 months incarcera-tion, $10,000 fine; ConsumerDisplays: $175,000 fine)*

· United States v. Harvey Shayew,(S.D.N.Y. 1995) (4 months housearrest, $75,000 fine)*

· United States v. Southern ContainerCorp., (S.D.N.Y. 1996) ($2.5 mil-lion fine)

· United States v. Dani Siegel, VisartM&F Corp., and Genetra Affil.,(S.D.N.Y. 1996) (awaiting sentenc-ing)

· United States v. Michael Heinrich,(S.D.N.Y. 1996) (6 months housearrest)

· United States v. Winko, Inc.,(S.D.N.Y. 1996) ($1.1 million fine)

· United States v. Manufacturers Corru-gated Box Co., (S.D.N.Y. 1996)($400,000 fine)

· United States v. Irwin Englander,(S.D.N.Y. 1997) (awaiting sentenc-ing)

· United States v. Leslie Sutorius,(S.D.N.Y. 1997) (2 months housearrest, $5,000 fine)

· United States v. Grinnell LithographicCo., (S.D.N.Y. 1997) ($55,000 fine)

· United States v. Gabriel Sagaz,(S.D.N.Y. 1998) (awaiting sentenc-ing)

· United States v. Peter Zanone,(S.D.N.Y. 1998) (4 months incar-ceration)

· United States v. Brian McCormack,(S.D.N.Y. 1998) (30 months incar-ceration, $750,000 restitution)

· United States v. Target Graphics, Inc.,(S.D.N.Y. 1998) ($100,000 fine)

· United States v. Bruce Schwartz,(S.D.N.Y. 1998) (12 months incar-ceration)

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· United States v. Edward Lundberg,(S.D.N.Y. 1999) (12 months incar-ceration)

· United States v. Mary Burke,(S.D.N.Y. 1999) (9 months homeconfinement, $275,000 restitution)

· United States v. John Mavros,(S.D.N.Y. 1999) (awaiting sentenc-ing)

· United States v. Peter Lanigan,(S.D.N.Y. 1999) (awaiting sentenc-ing)

· United States v. Leslie Schneiderman,(S.D.N.Y. 1999) (awaiting sentenc-ing)

· United States v. Martin Cohen,(S.D.N.Y. 1999) (awaiting sentenc-ing)

Chicago Cases

· United States v. Ronald Harrison,(E.D. Wis. 1996) (5 months housearrest, $2,500 fine)

· United States v. Zelman Levine, (E.D.Wis. 1996) (4 months house arrest,$350,000 fine)

· United States v. Schutz International,Inc. and Richard Machas, (E.D. Wis.1997) (Schutz: $500,000 fine;Machas: 4 months house arrest,$150,000 fine)

· United States v. Everbrite, Inc., (E.D.Wis. 1997) ($9 million fine)

· United States v. Jon S. Wamser, (E.D.Wis. 1997) (13 months incarcera-tion, $350,000 fine)

· United States v. Henry C. Zeni, (E.D.Wis. 1997) (12 months incarcera-tion, $180,000 fine)

Real Estate Foreclosure Auctions

The Division’s New York FieldOffice and Litigation I Section inWashington, D.C. helped crack separatebid-rigging conspiracies designed toartificially lower public auction prices atreal estate foreclosure auctions inQueens, New York, and NorthernVirginia, respectively. The conspiracies,both of which existed for at least adecade, operated in a similar fashion.Real estate brokers and investors secretlyagreed not to compete against eachother at real estate foreclosure auctions.Instead, one member of a conspiracywould bid the lowest price possible towin the property. Then, after the formalauction, the conspirators would hold asecond private or “knockout” auction atwhich the conspirators would activelybid against each other for the foreclosedproperty. The winner of this second,secret auction would make illicit “com-mission” or “premium” payoffs to theothers to compensate them for notbidding at the public auction. TheQueens conspirators often used harass-ment, intimidation, and distractiontactics to scare off outside bidders, thusensuring that they would get the lowestpossible price for the property. Amongthe victims of these conspiracies weremany lower-middle-class individualswho had lost their homes and weredenied competitive bidding for theirhomes at the foreclosure auction. (Anasterisk after the case name denotesprosecutions filed prior to the reportingperiod.)

Queens, New York. The prosecutionof the Queens bid-rigging conspiracy

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has been jointly conducted by theDivision’s New York Field Office andthe U.S. Attorney’s Office for theEastern District of New York, withsubstantial assistance provided by FBIand IRS agents. The investigationuncovered a conspiracy beginning in themid-1980s and continuing until searchwarrants were executed in February1997. Over 400 properties were affectedby this conspiracy. The investigationthus far has resulted in the filing of casesagainst 35 individuals, including 26cases filed on the same day. Most of thedefendants were charged with felony taxoffenses in addition to the bid-riggingcounts. All 35 defendants pled guilty.Over half of the defendants sentenced todate received some period of incarcera-tion. As a result of this investigation,public foreclosure auctions in Queensare now conducted in a courtroominside the Queens County Courthousewith strict rules governing the auctionprocess. Moreover, it has been reportedthat there are more bidders today thanever and that houses are being auctionedoff at record high prices. The investiga-tion also provided leads to a similar bid-rigging scheme in Brooklyn, New York,which has already led to 14 additionalcases.

Northern Virginia. Eight individualshave pled guilty and three individualshave been convicted at jury trials thusfar in the Northern Virginia investiga-tion. The crimes charged against theconspirators have included bid-rigging,wire fraud, bank fraud, conspiracy todefraud the United States, and mailfraud. Eight of the individuals have beensentenced to date, with jail sentencesranging from 7 months to 60 monthsincarceration. The convictions of two ofthe defendants have been upheld by the

Fourth Circuit, and the Supreme Courtrecently denied their petition for certio-rari. The continuing investigation isbeing conducted with the assistance ofthe FBI.

Queens, New York Cases

· United States v. Danny Abrishamian,(E.D.N.Y. 1998) (12 month proba-tion, $20,000 fine)

· United States v. Ted Adeli, (E.D.N.Y.1998) (24 months probation,$5,000 fine)

· United States v. Joseph Attarian,(E.D.N.Y. 1998) (3 months incar-ceration, 3 months house arrest,$20,000 fine)

· United States v. Albert Babajanian,(E.D.N.Y. 1998) (1 month incar-ceration, 3 months house arrest,$5,000 fine)

· United States v. Glen Bakhshi,(E.D.N.Y. 1998) (3 months incar-ceration, 3 months house arrest,$20,000 fine)

· United States v. Ramin Baratian,(E.D.N.Y. 1998) (1 month incar-ceration, $20,000 fine)

· United States v. Steve Bloor, (E.D.N.Y.1998) (3 months incarceration, 3months house arrest, $20,000 fine)

· United States v. Yoram Eliyahu,(E.D.N.Y. 1998) (24 months proba-tion, $20,000 fine)

· United States v. Farshad Haghi,(E.D.N.Y. 1998) (24 months proba-tion, $20,000 fine)

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· United States v. Henry Khani,(E.D.N.Y. 1998) (2 months incar-ceration, 2 months house arrest,$5,000 fine)

· United States v. John Khani,(E.D.N.Y. 1998) (4 months incar-ceration, 4 months house arrest,$20,000 fine)

· United States v. Kevin Khani,(E.D.N.Y. 1998) (2 months incar-ceration, 2 months house arrest,$5,000 fine)

· United States v. Daniel Kimia,(E.D.N.Y. 1998) (2 months incar-ceration, 2 months house arrest,$20,000 fine)

· United States v. David Kimia,(E.D.N.Y. 1998) (2 months incar-ceration, 2 months house arrest,$20,000 fine)

· United States v. Maurice Kohan,(E.D.N.Y. 1998) (4 months housearrest, $20,000 fine)

· United States v. Joseph Makhani,(E.D.N.Y. 1998) (2 months incar-ceration, 2 months house arrest,$20,000 fine)

· United States v. Mike Makhani,(E.D.N.Y. 1998) (3 months incar-ceration, 3 months house arrest,$20,000 fine)

· United States v. David Manesh,(E.D.N.Y. 1998) (4 months incar-ceration, 4 months house arrest,$20,000 fine)

· United States v. Steve Manesh,(E.D.N.Y. 1998) (24 months proba-tion, $20,000 fine)

· United States v. Cyrus Niknamfard,(E.D.N.Y. 1998) (12 months proba-tion, $20,000 fine)

· United States v. Lisa Parvin,(E.D.N.Y. 1998) (12 months proba-tion, $20,000 fine)

· United States v. Joseph Rastegar,(E.D.N.Y. 1998) (1 months incar-ceration, 2 months house arrest,$20,000 fine)

· United States v. Kamran Shahkohi,(E.D.N.Y. 1998) (4 months housearrest, $20,000 fine)

· United States v. Firooz Tehranchipour,(E.D.N.Y. 1998) (12 months proba-tion, $20,000 fine)

· United States v. Akbar Yasrabi,(E.D.N.Y. 1998) (3 months housearrest, $20,000 fine)

· United States v. Itzchak Zivari,(E.D.N.Y. 1998) (3 months housearrest, $20,000 fine)

· United States v. Alfred Basal,(E.D.N.Y. 1998) (awaiting sentenc-ing)

· United States v. David Dilmanian,(E.D.N.Y. 1998) (awaiting sentenc-ing)

· United States v. Albert Basal,(E.D.N.Y. 1998) (awaiting sentenc-ing)

· United States v. Joseph Davoudzadeh,(E.D.N.Y. 1998) (awaiting sentenc-ing)

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· United States v. Allen Shahipour,(E.D.N.Y. 1998) (12 months proba-tion, $20,000 fine)

· United States v. Mansour Mehizadeh,(E.D.N.Y. 1998) (12 months proba-tion, $20,000 fine)

· United States v. Nicholas Cola,(E.D.N.Y. 1998) (12 months proba-tion, $20,000 fine)

Northern Virginia Cases

· United States v. Alexander Giap,(E.D. Va. 1995) (60 months incar-ceration, $100,000 restitution)*

· United States v. Donald Kotowicz,(E.D. Va. 1995) (7 months incar-ceration, $20,000 fine, $15,000restitution)*

· United States v. Leo Gulley, (E.D. Va.1995) (7 months incarceration,$20,000 fine, $12,000 restitution)*

· United States v. Frank Stinnett, (E.D.Va. 1996) (36 months probation)

· United States v. Mija Romer, (E.D.Va. 1997) (18 months incarceration,$20,000 fine, $7,200 restitution)

· United States v. Khem Batra, (E.D.Va. 1997) (6 months house arrest,$8,377 restitution)

· United States v. Patricia Remele,(E.D. Va. 1998) ($16,800 restitu-tion, 12 months probation)

· United States v. Lawrence Rosen,(E.D. Va. 1998) (4 months incar-ceration, 4 months house arrest;$20,000 fine, $33,978 restitution)

· United States v. Alan Shams, (E.D.Va. 1999) (4 months house arrest,$20,000 fine, $3,682 restitution)

· United States v. Kenneth Arnold,(E.D. Va. 1999) (5 months incar-ceration, 5 months house arrest,$20,000 fine, $54,624 restitution)

· United States v. Edgar C. Dove, Jr.,(E.D. Va. 1999) (awaiting sentenc-ing)

Metal Buildings Installation

The Division, with the assistance ofthe FBI, uncovered a conspiracy to fixprices on insulation sold to metal build-ing contractors and manufacturers. Atthe heart of the conspiracy was anagreement among national and regionalinsulation companies to adhere to aseries of published price increases. Metalbuildings are widely used for schools,churches, and synagogues, as well as forcommercial structures, including facto-ries and warehouses. To date, the Divi-sion has obtained convictions in five ofthe six cases in this investigation, in-cluding a guilty verdict after trial of oneof the leaders of the conspiracy for pricefixing and conspiracy to commit wirefraud. This individual received a sen-tence of 30 months incarceration and a$30,000 fine.

The metal buildings installationcases brought thus far are as follows:

· United States v. Huber WallaceRhodes, Jr., (S.D. Tex. 1996) (defen-dant agreed to sentence of 4 monthsincarceration in plea agreement)

· United States v. Jerrold WarrenKillingsworth, (S.D. Tex. 1996)(awaiting sentencing)

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· United States v. Yun Lung Yueh a/k/aPeter Yueh, (S.D. Tex. 1996) (await-ing sentencing)

· United States v. Hiplax InternationalCorp. d/b/a Brite Insulation (S.D.Tex. 1996) (defendant agreed to$100,000 fine in plea agreement)

· United States v. Mark Albert Maloof,(S.D. Tex. 1997) (convicted at trial;sentenced to 30 months incarcera-tion, $30,000 fine)

· United States v. Danny Two-ShengFong, (S.D. Tex. 1999) (acquitted attrial)

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Antitrust Division Merger Challenges

Union Pacific Corp./South-ern Pacific Rail Corp.(4/12/96)

In comments filed withthe Surface TransportationBoard, the Division expressedits competitive concernsregarding the merger betweenUnion Pacific Corp. andSouthern Pacific Rail Corp.The Division noted that in alarge number of marketsthroughout the westernUnited States, the number ofpossible rail carrier competitors woulddecline from two to one or from threeto two, which would likely result inprice increases to shippers and consum-ers of approximately $800 million.Thereafter, on July 3, 1996, the SurfaceTransportation Board approved the $5.4billion merger.

United States v. Titan Wheel Interna-tional, Inc.,(5/7/96)

The Division filed a complaintwhich alleged that Titan Wheel Interna-tional violated the premerger notifica-tion reporting requirements of the Hart-Scott-Rodino Act in connection with its$41 million acquisition of a PirelliArmstrong Tire Corp. plant in DesMoines, Iowa. According to the com-plaint, Titan took control of the Pirelli

assets, including the inventory, machin-ery, equipment, and customer andsupplier lists, before the companiesnotified federal antitrust agencies aboutthe acquisition. The Hart-Scott-RodinoAct of 1976 imposes notification andwaiting period requirements on indi-viduals and companies before they canconsummate acquisitions of stock orassets over a certain value or ownershippercentage. Titan was in continuousviolation of the law until the purchaseagreement in the acquisition wasamended and control of the plant re-turned to Pirelli Armstrong—a total of13 days. A proposed final judgment wasfiled simultaneously settling the suit,under which Titan agreed to pay a civilpenalty in the amount of $130,000. Thefinal judgment was entered by the Courton May 10, 1996.

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Darling International, Inc./ModestoTallow Company(5/23/96)

In response to the Division’s com-petitive concerns, Darling abandoned itsproposed acquisition of Modesto TallowCompany, a small rendering companylocated in Modesto, California andabout thirty miles from Turlock. Hadthe merger gone forward, it could haveresulted in increased prices in the tallow/rendering industry.

UNC, Inc./CFC Aviation(5/29/96)

The Division did not oppose UNC’sproposed $150 million purchase ofPhoenix-based CFC Aviation Services,L.P. after UNC divested one of its jetengine heavy maintenance businesses toSabreliner. As originally structured, theacquisition would have lessened compe-tition in the $100 million market forheavy repair of Allied Signal’s TFE 731turbofan engines, the premier businessjet engine in the United States. Themerger would have combined the onlyindependent service centers authorizedby Allied Signal to perform heavymaintenance on the TFE 731.

Smith International, Inc./AnchorDrilling Fluids(6/5/96)

The Division agreed to a modifica-tion of a 1994 consent decree allowingSmith International to purchase AnchorDrilling Fluids, provided that Smithdivested Anchor’s U.S. drilling fluidsbusiness. Drilling fluids are used invarious drilling applications: they arepumped through drill pipes to cool andlubricate the cutting tools on the pipe,remove cuttings from the drill hole, and

control down hole pressure to preventan explosion of the drill site. Smith wasthe majority owner of M-I, the largestdrilling fluids company in the UnitedStates, and Anchor Drilling Fluids wasthe fourth largest producer and distribu-tor of drilling fluids in the UnitedStates.

Sinclair Broadcast Group, Inc./RiverCity Broadcasting L.P.(6/6/96)

In response to the Division’s con-cerns that the transaction posed seriousantitrust concerns in the sale of radioadvertising in the Columbus, Ohiomarket, Sinclair and River City agreedto restructure the transaction by amend-ing their purchase agreement to excludethe Columbus station.

ConAgra/Mrs. Smith’s, Inc.(6/7/96)

ConAgra abandoned its plans toacquire 100 percent of Mrs. Smith’s, awholly-owned subsidiary of J.M.Smucker Company, after the Divisionexpressed concern that the acquisitionwould have anticompetitive effects inthe frozen pie market. Mrs. Smith’s wasthe largest competitor in that market.

United States v. American SkiingCompany and S-K-I Limited(6/11/96)

The Division challenged the $137million acquisition of S-K-I Limited byAmerican Skiing Company, and chargedthat the acquisition would raise pricesand eliminate discounts for day skiingtrips for Maine residents and weekendski excursions for residents of Maine,eastern Massachusetts, eastern Connecti-

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cut, and Rhode Island. A proposed finaljudgment was filed simultaneously withthe complaint, requiring divestiture ofNew Hampshire ski resorts at WatervilleValley and Mount Cranmore. Withoutthe divestiture, American Skiing wouldhave controlled eight of the largest skiresorts serving skiers residing in theeastern portions of New England.

Cooper Cameron Corp./IngramCactus Co.(6/13/96)

In response to the Division’s con-cerns that Cooper Cameron’s $98million acquisition of Ingram Cactuswould lessen competition in the U.S.market for geothermal wellheads andvalves, Cooper Cameron agreed tolicense and supply certain oil wellequipment and technology to a thirdcompany, Daniel Valve Co. Without thisresolution, the merger would havecombined the two largest suppliers ofgeothermal wellheads and valves andwould have lessened competition forcustomers of important oil well equip-ment in the United States.

Park Corp./Johnstown Corp. (6/17/96)

In response to the prospect of anantitrust suit by the Division, ParkCorp., the nation’s largest producer ofcast steel industrial equipment, aban-doned its bid to buy Johnstown Corp.at a bankruptcy auction. Had Park beenallowed to acquire Johnstown, it wouldhave controlled a monopoly share of themarkets for both cast steel work rollsand large slag pots, which could haveresulted in increased prices for consum-ers.

Bank of Boston/BayBanks(6/18/96)

In response to the Division’s con-cerns that the $2 billion merger betweenBank of Boston and BayBanks wouldlessen competition for banking servicesavailable to small and medium-sizedbusinesses, the parties agreed to sell 20bank branches located in the Bostonmetropolitan area, with total deposits ofapproximately $860 million, to USTrust.The Division had conducted a jointinvestigation with the Office of theMassachusetts Attorney General.

United States, State of California,State of Connecticut, State of Illi-nois, Commonwealth of Massachu-setts, State of New York, State ofWashington, and State of Wisconsinv. The Thomson Corp. and WestPublishing Company(6/19/96)

The Division challenged the $3.4billion merger of two of the nation’slargest legal publishers, Thomson Cor-poration and West Publishing, allegingthat the acquisition would lessen compe-tition in 9 markets for enhanced primarylaw products (legal publications ofstatutes or court decisions in whichcommentary is offered) and in morethan 50 markets for secondary lawproducts (treatises and legal guides), aswell as in the online services market. Aproposed final judgment, filed simulta-neously with the complaint, settled thesuit. The final judgment required thedivestiture of more than 40 products byThomson, guaranteed access to impor-tant databases, required Thomson tolicense openly (for a capped fee) otherlaw publishers the right to use thepagination of individual pages in West’sNational Reporter System in their

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products, and gave options to threestates to reopen bidding for certaincontracts.

Genencor International, Inc./Solvay,S.A.(7/1/96)

The Division announced that after itraised concerns that Genencor Inter-national’s acquisition of Solvay’s world-wide industrial enzyme business wouldlessen competition in U.S. markets forthe sale of alpha amylase and gluco-amylase enzymes, the transaction wasrestructured. Genencor agreed to licenseand supply technology relating tocertain enzymes used to process starchto a third company, Nagase Biochemi-cals, Ltd. These enzymes are used forprocessing starch-containing raw materi-als (usually corn) into sugar-containingsyrups (such as high-fructose cornsyrup) and fuel alcohol.

United States v. Jacor Communica-tions, Inc. and Citicasters, Inc.(8/5/96)

The Division challenged the $770million merger between Jacor andCiticasters, two of the nation’s largestradio station owners. The complaintalleged that the combination wouldcontrol more than 50 percent of thesales of radio advertising time in Cincin-nati and could enable the companies toincrease prices to advertisers and sub-stantially reduce competition in the $80million Cincinnati radio advertisingmarket. A proposed final judgment, filedsimultaneously with the complaint,settled the suit. Jacor and Citicastersagreed to divest WKRQ-FM, a leadingCincinnati contemporary music station,to an independent buyer. The Jacor/Citicasters acquisition was one of thefirst of many radio industry transactionsannounced following passage of theTelecommunications Reform Act of1996, which relaxed previous limits onradio ownership.

Outdoor Systems, Inc./Gannett Co.(8/12/96)

The Division announced that after itraised competitive concerns with Out-door Systems’ acquisition of the Out-door Division of Gannett, OutdoorSystems agreed to sell its Denver bill-board operations to another party. Bothcompanies were leading competitors inthe billboard advertising business innumerous areas across the country, butDenver was the only city in which bothcompanies operated competitive bill-board businesses.

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United States v. Foodmaker, Inc.(8/13/96)

The Division filed a compliantcharging Foodmaker, of San Diego,California, with violating the Hart-Scott-Rodino premerger notificationreporting requirements for acquiring allof the voting securities of Consul Res-taurant Corporation without notifyingfederal antitrust authorities. Consul,which had operated 26 franchised Chi-Chi’s restaurants, was acquired by Chi-Chi’s, Inc., then a subsidiary ofFoodmaker. Foodmaker was in violationof the law for a total of 471 days, fromOctober 23, 1992 until February 5,1994. Foodmaker agreed to pay a $1.45million civil penalty to settle thecharges. The final judgment was enteredby the Court on August 20, 1996.

Ingersoll-Rand Company/Zimmerman International, Corp.(8/29/96)

In order to resolve the Division’scompetitive concerns with Ingersoll-Rand’s acquisition of Zimmerman, amanufacturer of air balancers equipmentprimarily used to lift and move heavyobjects on assembly lines, Ingersoll-Rand agreed to end its exclusive licens-ing agreement with another manufac-turer, Knight Industries. The licensingagreement allowed Ingersoll-Rand toproduce air balancers under its ownbrand name using Knight’s technology.Eliminating the exclusive licensingagreement that allowed Knight tolicense others that wished to enter theindustry ensured that competition wasmaintained in the manufacture and saleof air balancers.

United States, State of Texas, andCommonwealth of Pennsylvania v.USA Waste Services, Inc. andSanifill, Inc.(8/30/96)

The Division challenged the $1.5billion proposed merger between USAWaste and Sanifill, two of the largestwaste hauling and disposal companies inNorth America. The complaint allegedthat the acquisition would substantiallylessen competition in the markets forsmall containerized hauling and disposalin Houston, Texas, and small container-ized hauling in Johnstown, Pennsylva-nia. A proposed final judgment, filedsimultaneously with the complaint,settled the suit. The decree requiredcertain divestitures and included otherprovisions, including requiring munici-pal solid waste landfill capacity inHouston and Johnstown to be madeavailable to independent haulers for aten-year period.

Westinghouse Air Brake Company/Vapor Corp.(8/30/96)

The Division announced that itwould not oppose Westinghouse AirBrake Company’s acquisition of VaporCorp., a subway car door system sup-plier, after Westinghouse Air Brakeagreed to sell its 50 percent interest inWestcode, another subway car doorsystem supplier. Because Vapor Corp.and Westcode were the only U.S. sub-way and rail car door suppliers, thespin-off of Westcode ensured that therail car door systems market in theUnited States would remain competi-tive.

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United States and State of Con-necticut v. Oldcastle Northeast, Inc.,CRH, plc, Tilcon, Inc., and BTR, plc(9/3/96)

The Division challenged the $270million deal between two companiesthat competed in the production ofasphalt concrete, which is also known asblacktop and is used mainly for con-structing or resurfacing roads, drive-ways, and parking lots. A proposedconsent decree, filed simultaneouslywith the complaint, required Oldcastleto divest a quarry (East Granby, Con-necticut) and two of the three asphaltplants located at the quarry. The transac-tion, as originally proposed, would haveallowed Oldcastle Northeast to becomethe dominant asphalt concrete companyin the greater Hartford area market withthe power to increase prices.

Fairmont Tamper/Pandrol Jackson’sTamper Business(9/10/96)

Fairmont Tamper, a subsidiary ofHarsco Corporation, abandoned itsplans to acquire Pandrol Jackson, for-merly Jackson Jordan, after the Divisionexpressed concerns that the acquisitionwould be anticompetitive and result in ahigh concentration in the automatictamper market. Automatic tampers aremaintenance-of-way-equipment used torealign a railroad track after the align-ment is altered as a result of train traffic.

Archer Daniels Midland Co./GrumaS.A. de C.V.(9/13/96)

The Division and the Texas AttorneyGeneral’s Office announced that theywould not oppose a $280 million dealbetween America’s two largest tortilla

flour manufacturers—Archer DanielsMidland Co. (ADM) and GrummanS.A.—after the companies agreed todivest a masa flour mill in the Texaspanhandle. ADM was acquiring 22percent of Gruma stock and forming apartnership with Gruma to combine thecompanies’ U.S. masa flour mill opera-tions. Masa flour is produced by themilling of cooked whole-kernel corn andis the primary ingredient in corn torti-llas, taco shells, and tortilla chips. Asoriginally structured, ADM and Grumawould have merged the six domesticmasa flour mills of the two firms,creating a single dominant firm. Thesale of the Texas mill ensured that themasa flour market in the United Statesremained competitive.

United States and the State of NewYork v. American Radio SystemsCorp., The Lincoln Group L.P., andGreat Lakes Wireless Talking Ma-chine LLC(10/24/96)

The Division challenged the pro-posed acquisition of three Rochester,New York, radio stations by AmericanRadio Systems (ARS) from The LincolnGroup L.P. and a joint sales agreementbetween ARS and Great Lakes WirelessTalking Machine. The complaint allegedthe acquisition was likely to raise radioadvertising prices. A proposed finaljudgment, filed simultaneously with thecomplaint, allowed ARS to acquire twoRochester radio stations from TheLincoln Group, provided it divested theWHAM-AM, WVOR-FM, and WCMF-AM stations. The final judgment alsorequired dissolution of the joint salesagreement, under which ARS had thesole right to sell all the advertising timeof another station. This was theDivision’s first challenge ever to a radiojoint sales agreement.

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United States v. US West, Inc. andContinental Cablevision, Inc.(11/5/96)

The Division challenged the acquisi-tion of Continental Cablevision, thethird largest cable system operator in thenation, by US WEST, one of the sevenRegional Bell Operating Companies.The complaint alleged that the partialacquisition would have resulted in asubstantial lessening of competition inthe market for dedicated telephoneservices, which include special access(dedicated lines linking high-volumebusiness users with their chosenlong-distance carriers) and local privateline services (dedicated lines connectingmultiple locations of an end-user withina given metropolitan area). At the sametime, a proposed final judgment wasfiled that settled the case. As part of theproposed settlement, US WEST and theBoston-based Continental agreed todivest Continental’s interest in TeleportCommunications by December 31,1998. The final judgment also prohib-ited the parties from appointing mem-bers to or participating in meetings ofTeleport Communications’ Board ofDirectors. In each of the relevant cities(Denver, Phoenix, Seattle, and Omaha,Nebraska), US WEST was the dominantprovider of dedicated services, andTeleport Communications was one ofonly a small number of firms challeng-ing US WEST’s dominance.

United States v. WestinghouseElectric Corp. and Infinity Broad-casting Corp.(11/13/96)

The Division challenged the approxi-mately $4.9 billion acquisition of Infin-ity Broadcasting by WestinghouseElectric, a subsidiary of CBS, Inc. The

complaint alleged that the acquisitionwould have lessened competition sub-stantially for radio advertising in thePhiladelphia, Pennsylvania, and Boston,Massachusetts, markets, givingWestinghouse over 40 percent of theradio advertising revenues in each city,and would have eliminated competitionfor radio advertisers trying to reachparticular demographic groups. A finaljudgment, filed simultaneously with thecomplaint, settled the suit. The decreerequired the divestiture of two radiostations: WMMR-FM in Philadelphiaand WBOS-FM in Boston.

Andersen Area Medical Center/Greenville Hospital/SpartanburgHospital(12/9/96)

Three northwestern South Carolinahospital systems—Andersen Area Medi-cal Center, Greenville Hospital Systemand Spartanburg Hospital System(collectively AGS)—abandoned plans toconsolidate their operations after theDivision expressed concerns that themerged hospitals would be able to forcemanaged care plans to exclude otherhospitals from their plans if they were toinclude any of the AGS hospitals intheir panels. If the merger had beenconsummated, the merging partieswould have had 60 to 70 percent of thearea’s hospital beds.

StarKist Food, Inc./H.J. Heinz, Co./Bumble Bee Seafoods/UnicordPublic Company and Questor Part-ners(12/10/96)

Unicord abandoned its plans to sellits Bumble Bee brand tuna to QuestorPartners and to sell three Bumble Bee

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plants in Puerto Rico, Ecuador, andCalifornia to StarKist after the Divisionnoted its concerns to the parties.StarKist, a subsidiary of H.J. HeinzCompany, and Bumble Bee, were thenumber one and two sellers of cannedtuna respectively and major competitorsin a highly concentrated market.

United Security Bank/First Bankand Trust(12/12/96)

After the Division expressed con-cerns that the merger between UnitedSecurity Bank and First Bank and Trustwould lessen competition for businessbanking services, the parties agreed todivest the Grove Hill, Clark County,Alabama branch, which alleviatedDivision concerns and preserved bank-ing services. The merger, had it goneforward as originally structured, wouldhave resulted in a monopoly in the townof Grove Hill.

United States and State of Coloradov. Vail Resorts, Inc., Ralston Re-sorts, Inc., and Ralston Foods, Inc.(1/3/97)

The Division challengedVail Resorts’ $310 millionacquisition of Ralston Resortsand simultaneously filed aproposed final judgmentrequiring that Ralston’s Arapa-hoe Basin Ski Resort be sold toa third party in order for thedeal to go forward. The com-plaint alleged that, without theproposed divestiture, themerger would have lessenedcompetition substantially in theFront Range skier market,likely resulting in higher prices

to skiers who live in Colorado’s FrontRange and ski at the resorts on day andovernight trips. The Front Range is thearea east of the Rocky Mountains in-cluding the Colorado cities of Denver,Fort Collins, Boulder, and ColoradoSprings. Vail Resorts owned the Vail,Beaver Creek, and Arrowhead Mountainski resorts, and Ralston Resorts ownedthe Breckenridge, Keystone, and Arapa-hoe Basin ski resorts. The deal, asoriginally structured, would have re-sulted in the merged firm having morethat 38 percent of the Front Rangemarket.

United States v. Signature FlightSupport Corp.(2/5/97)

The Division challenged SignatureFlight Support’s acquisition of Interna-tional Aviation Palm Beach, Inc., alleg-ing that the transaction, as proposed,would have reduced competition in themarket for the provision of fixed baseoperation services at Palm Beach Inter-national Airport. Fixed base operationsare facilities located at airports thatprovide flight support services, such asfueling and ramp and hanger space

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rental to charter, private, and corporateaircraft operators. The complaint allegedthat the acquisition, as originally struc-tured, would likely have led to higherprices by creating a duopoly in the saleof jet fuel to aviation customers usingthe Palm Beach Airport. A proposedfinal judgment, filed simultaneouslywith the complaint, required Signatureto divest certain assets and leaseholds ofits fixed base operations business atPalm Beach International Airport.

United States v. Figgie International,Inc. and Harry E. Figgie, Jr.(2/13/97)

The Division’s complaint alleged aviolation of the premerger notificationand waiting period requirements of theHart-Scott-Rodino Act and sought civilpenalty of $150,000. The complaintcharged that Figgie International ofWilloughby, Ohio, a manufacturer ofindustrial and consumer products and itsfounder, Harry E. Figgie, were inviolation of the reporting requirementswhen Mr. Figgie acquired more than 15percent of the voting securities of FiggieInternational. A proposed final judg-ment, filed simultaneously with thecomplaint, required each of the defen-dants to pay $75,000 in civil penalties.The final judgment was entered by theCourt on February 14, 1997.

United States v. American RadioSystems Corp. and EZ Communica-tions, Inc.(2/27/97)

The Division challenged the $655million acquisition of EZ Communica-tions by American Radio Systems(ARS). The complaint alleged that theacquisition would have lessened compe-

tition substantially in the Sacramento,California radio advertising market andwould have given ARS control over sixof the 12 class B FM radio signals—thestrongest and most competitively signifi-cant radio broadcasting signals—operat-ing in the area and would have givenARS 36 percent of Sacramento’s radioadvertising revenues. A proposed finaljudgment, filed simultaneously with thecomplaint, required ARS to divestKSSJ-FM, a new age contemporarystation in the process of being upgradedto class B status.

United States v. EZ Communica-tions, Inc. and Evergreen MediaCorp.(2/27/97)

In a case related to the AmericanRadio Systems case (see above) filed thesame day, the Division challenged EZ’sacquisition of six radio stations inCharlotte, North Carolina, from Ever-green Media Corporation. The com-plaint alleged that the acquisition wouldhave lessened competition substantiallyin the Charlotte, North Carolina, radioadvertising market. This was one of aseries of transactions involving ARS andEZ that, without restructuring, wouldhave resulted in ARS having 55 percentof Charlotte’s radio advertising revenues.A proposed final judgment, filed simul-taneously with the complaint, requireddivestiture of the largest rock formatstation in Charlotte, WRFX-FM. Fol-lowing consummation of the mergerbetween ARS and EZ, ARS (as EZ’ssuccessor) would become a party to theEZ/Evergreen action and would berequired to fulfill EZ’s divestitureobligation.

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Gulfstar Communications Inc./Demaree Media, Inc(3/6/97)

Gulfstar Communications aban-doned its efforts to acquire three Arkan-sas radio stations from Demaree Mediaafter the Division expressed concernsthat the deal would lead to higheradvertising prices in Northwest Arkan-sas. Acquisition of the Demaree stations,together with other acquisitions byGulfstar, would have given Gulfstarmore than 62 percent of the 1995advertising revenues in the NorthwestArkansas radio market.

First Virginia Banks, Inc./PremierBankshares Corp.(3/18/97)

The Division required First VirginiaBanks and Premier Bankshares to sellthree branch offices in southwesternVirginia before going forward with theirproposal merger. The divestitures,designed to preserve competition forloans and other banking services pro-vided to individuals and small busi-nesses, resulted from a joint investiga-tion by the Division and the Office ofthe Virginia Attorney General.

Pike Industries/Frank F. WhitcombConstruction Company(3/28/97)

Pike Industries, a New Hampshire-based aggregate and asphalt concretecompany, abandoned its efforts toacquire a quarry and two asphalt plantsfrom a New Hampshire highway con-struction company after the Divisionexpressed concerns that the deal wouldreduce competition and lead to higherprices for aggregate and asphalt concrete

in Vermont and New Hampshire.Aggregate is used in the production ofboth asphalt concrete and ready-mixconcrete. Asphalt concrete, also knownas blacktop, is used principally forconstructing and resurfacing roads,driveways, and parking lots.

United States and Commonwealthof Pennsylvania, State of New York,and State of Ohio, v. Cargill, Inc.,Akzo Nobel, N.V., Akzo Nobel, Inc.,and Akzo Nobel Salt, Inc.(4/21/97)

The Division challenged the $160million merger between two of thenation’s largest salt producers. Thecomplaint alleged that the merger, asoriginally structured, would have less-ened competition substantially in thebulk deicing salt market in the northeastinterior of the country and in the food-grade evaporated salt market east of theRocky Mountains. Deicing salt is me-dium or coarse grade rock salt boughtin bulk by state and municipal govern-ments for use in melting snow and iceon public roads. Cargill and Akzo weretwo of only four producers of bulkdeicing salt in the $100 million north-east interior market, an area whichincludes Rochester, Syracuse, and Buf-falo, New York; Erie, Pennsylvania; andBurlington, Vermont. Food gradeevaporated salt is a highly refined,extremely pure salt (meeting Food andDrug Administration standards forhuman consumption) that is addedduring food processing as a preservativeand flavor-enhancing ingredient for avariety of baked, frozen, and cannedfoods. Cargill and Akzo were the secondand third leading producers of foodgrade evaporated salt in the $200 mil-lion market east of the Rocky Moun-tains. A proposed final judgment, filed

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simultaneously with the complaint,required Cargill to sell several key assetsto American Salt Company, a prospec-tive new entrant. The assets included astockpile of bulk deicing salt in Retsof,New York, a four-year salt supply con-tract from the Cargill and Akzo mines,and numerous salt depots for storageand transshipment of salt to customers.Cargill was also required to divestAkzo’s Watkins Glen, New York, plantto alleviate competitive effects in thefood-grade salt market.

Southern National Corp./UnitedCarolina Bancshares(4/29/97)

Southern National and UnitedCarolina Bancshares agreed to sell 20North Carolina bank branch offices withtotal deposits of about $488 million inorder to address Division concerns thatthe merger would have lessened compe-

tition for banking services in 10 differ-ent geographic areas of North Carolina.

Northern States Power Company/Wisconsin Energy Company(5/16/97)

Northern States Power Companyand Wisconsin Energy terminated theirmerger agreement and abandoned theirplans to consolidate after the Divisionstated its concerns and the FederalEnergy Regulatory Commission disap-proved the merger as proposed. TheDivision was concerned about possibleanticompetitive effects in Wisconsinresulting from Northern’s control over atransmission line at the Minneapolis-Wisconsin state border, which was anexclusive gateway into Wisconsin.

Absent the merger, Northern had theincentive to keep the transmission lineopen and sell its cheaper power in

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Wisconsin, where it would competewith Wisconsin Energy. With themerger, it would sell its cheap powerelsewhere and use its control overtransmission to maintain WisconsinEnergy’s market power and ability tosell at high prices.

First Bank of Grants/Grants StateBank(5/27/97)

First Bank of Grants and GrantsState Bank terminated their plans tomerge after the Division expressedconcerns about the transaction. Themerger would have eliminated competi-tion in Cibola County, New Mexico, forbusiness banking services.

United States v. Martin MariettaMaterials, Inc., CSR Limited, CSRAmerica, Inc., and American Aggre-gates, Inc.(5/27/97)

The Division challenged the $234.5million acquisition of American Aggre-gates Corporation by Martin MariettaMaterials, Inc. American Aggregates wasa subsidiary of CSR America, a Geor-gia-based company owned by CSRLimited of Australia. The complaintalleged that the acquisition, as originallystructured, would have allowed MartinMarietta to become the dominantsupplier of aggregate in Marion County,Indiana, with the power to increaseprices. Aggregate is used to manufactureasphalt concrete and ready-mix concrete,which are used to build roads andhighways. The Indiana Department ofTransportation, through its highwaycontracts, was the largest purchaser ofaggregate in Marion County. A pro-posed final judgment, filed simulta-neously with the complaint, required

Martin Marietta to divest AmericanAggregates’ Harding Street Quarry inIndianapolis.

Lamar Advertising Co./HedrickOutdoor, Inc.(6/2/97)

The Division announced that itwould not oppose Lamar Advertising’sacquisition of Hedrick Outdoor oncondition that Lamar divest 170 bill-boards located in four metropolitanareas in Mississippi, Louisiana, andFlorida. Without the divestitures, Lamarwould have controlled more than 50percent of the available billboards ineach of the communities involved andwould have had more than 70 percent ofthe billboards along the most heavilytraveled highways in the area.

United States v. Long Island JewishMedical Center and North ShoreHealth System, Inc.(6/11/97)

The Division sued to block thecombination of two flagship hospitalson Long Island: North Shore HealthSystem and Long Island Jewish MedicalCenter (LIJMC). The complaint allegedthat North Shore’s flagship hospital,North Shore Manhasset, and LIJMCwere each other’s principal competitorby virtue of their premier reputations,comparable full range of services, andstrategic location. They competed head-to-head to be the “flagship” or “anchor”hospital in the networks of hospitalsassembled by managed care plans onLong Island to be able to offer a choiceof health care options to area employers,families, and individuals throughoutNassau and Queens Counties. TheDivision contended that if the proposedtransaction were permitted to go

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through, North Shore and LIJMCwould cease to compete for the businessof managed care plans, and managedcare plans would have only a singleentity to negotiate with, eliminating thebargaining that has benefitted consum-ers of health care services. The districtcourt denied the government’s requestfor a permanent injunction and enteredjudgment in favor of the defendants(983 F. Supp. 121 (E.D.N.Y. 1997)).

AlliedSignal Truck Brake SystemsCo./Midland Brake, Inc.(6/13/97)

AlliedSignal Truck Brake SystemsCo., a subsidiary of AlliedSignal, aban-doned its proposed acquisition of theassets of Midland Brake, Inc., a subsid-iary of Echlin, Inc., after the Divisionexpressed concerns that the deal, asoriginally structured, would have elimi-nated competition in brake componentsfor trucks, trailers, and other types ofvehicles, possibly resulting in higherprices for consumers.

United States v. Mahle GmbH,Mahle, Inc., Mabeg E.V. Metal Leve,S.A., and Metal Leve, Inc.(6/19/97)

The Division filed a complaintagainst Mahle GmbH, a German pistonmanufacturer, and Metal Leve, S.A., aBrazilian competitor, that alleged aviolation of the premerger notificationand waiting period requirements of theHart-Scott-Rodino Act and sought acivil penalty of $5.6 million. The com-plaint charged the parties with failing tonotify federal officials of Mahle’s pro-posed acquisition of a controllinginterest in Metal Leve. Mahle acquired50.1 percent of the voting securities of

Metal Leve for about $40 million onJune 26, 1996, without notifying theFederal Trade Commission and theDepartment of Justice. The parties werein violation of the Act from June 26,1996 through at least March 20, 1997.Defendant Mahle GmbH and MetalLevee each agreed to pay a penalty of$2,801,000 for a total of $5,602,000. Aproposed final judgment, filed simulta-neously with the complaint, settled thesuit. The consent decree was entered bythe Court on June 24, 1997. The civilpenalty was paid on July 23, 1997.

Waste Management of Ohio/USAWaste Services, Inc.(6/30/97)

USA Waste Services abandoned itsefforts to acquire the WMX operationsof Waste Management of Ohio after theDivision expressed concerns about thedecrease in competition in the solidwaste hauling business in the Allentown,Pennsylvania market.

GKN, plc/Weasler Holdings, Inc.(6/30/97)

GKN, plc abandoned its plan toacquire the $48 million Weasler Hold-ings Inc, whose only asset was 100percent of the stock of Weasler Engi-neering, Inc., from Code, Hennessy &Simmons after the Division expressed itsconcerns that the transaction wouldlikely raise prices for consumers of thedriveline systems for agricultural imple-ments. Weasler manufactured drivelinesystems (also referred to as powertakeoff driveshafts) and related compo-nents for agricultural implements. GKNand its subsidiaries, operating under thename of Walterscheid, was one of theworld’s leading manufacturers of driv-

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eline systems for a broad range ofvehicles. GKN manufactured agricul-tural driveline systems that competed inthe North American market withWeasler. Weasler was the North Ameri-can market leader in the highly engi-neered agricultural driveline marketwhile GKN had the second largestmarket share.

United States v. Raytheon Companyand Texas Instruments(7/2/97)

The Division challenged the pro-posed $2.9 billion acquisition of TexasInstruments’ Defense System and Elec-tronics Unit by Raytheon Company. Theacquisition, as originally structured,would have resulted in higher pricespaid by the Department of Defense—and ultimately by the taxpayers—foradvanced military radars used in majorweapons systems. The Division simulta-neously filed a proposed final judgmentrequiring Raytheon to sell Texas Instru-ments’ monolithic microwave integratedchips (MMICs) business, which pro-duced a key component for radar sys-tems, in order for the deal to go for-ward. MMICs extend the power andrange of radars, enabling them to scanairspace quickly and efficiently, with alower probability of detection by en-emies. The complaint alleged thatRaytheon and Texas Instruments com-peted aggressively to develop leadingedge high power amplifiers and thattheir research and development effortshad positioned them as the only firmsable to supply competitive MMICs forfuture Defense Department radar pro-grams. The required divestiture, at thattime the largest since the post Cold Wareffort to consolidate the defense industry

began, ensured that there would be aviable competitor to Raytheon in aposition to provide the MMICs neces-sary for the next generation of DefenseDepartment radar systems.

British Telecom/MCI Communica-tions Corp.(7/7/97)

The Division moved, in the U.S.District Court for the District of Co-lumbia, to modify and extend the 1994settlement involving British Telecomand MCI to ensure that BritishTelecom’s then-proposed acquisition toobtain 100 percent of MCI would notdisadvantage competitors and raiseprices for consumers. The 1994 consentdecree had settled Division allegationsthat British Telecom’s acquisition of aninitial 20 percent interest in MCI wouldhave violated the antitrust laws. Theoriginal 1994 settlement containedprovisions designed to prevent BritishTelecom from using its market power inthe United Kingdom to discriminate infavor of MCI or in favor of a BritishTelecom/MCI joint venture at theexpense of others competing in themarket for international telecommunica-tions services between the United Statesand the United Kingdom and aroundthe world. The proposed modified finaljudgment retained and, in some cases,strengthened those protections to takeinto account the full integration ofBritish Telecom and MCI, as well aschanged market conditions. Specifically,it required the newly formed companyto increase the amount of informationreported to the Division to facilitate thedetection of specific instances of dis-crimination, and to enable the Divisionto monitor whether BT is engaged in

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discrimination. MCI was ultimatelyacquired by WorldCom, Inc., not BritishTelecom, and British Telecom sold its 20percent interest.

Jacor Communications/VillageCommunications(7/11/97)

The Division did not oppose JacorCommunications’ acquisition of radiostations from Village Communicationsin the Lexington-Fayette, Kentucky,market after Jacor agreed to divest itsWXZZ-FM station to Regent Commu-nications. The deal, as originally struc-tured, would have resulted in themerged entity controlling 52 percent ofthe radio advertising market.

United States and State of Texas v.Allied Waste Industries, Inc. andUSA Waste Services(7/14/97)

The Division challenged a proposedTexas landfill acquisition involvingAllied Waste and USA Waste Services,two of the largest waste hauling anddisposal companies in North America.

The complaint alleged that theacquisition would have lessenedcompetition substantially in theTarrant County area of Texas(where Fort Worth is located) byconcentrating the landfill capac-ity in that area into the hands ofonly three companies, resultingin higher prices for waste dis-posal and hauling. A proposedfinal judgment, filed simulta-neously with the complaint,required the divestiture of morethan 1.4 million cubic yards of

landfill space over a five- to ten-yearperiod at the two landfills in the TarrantCounty area Allied would own after theacquisition. Additional divestiture oflandfill space would be required if Alliedexpanded its capacity at USA Waste’sCrow Landfill or developed a newlandfill nearby. In addition, the decreerequired the acceptance of waste atAllied’s two Tarrant County area land-fills from haulers not affiliated withAllied on nonprice terms and conditionsidentical to those provided Allied.

Outdoor Systems, Inc./3M(8/15/97)

The Division did not oppose Out-door Systems’ acquisition of 3M’ssubsidiary, National Advertising Com-pany, after Outdoor Systems agreed tosell billboards in 10 metropolitan areas.Without the divestiture, the transactionwould have given Outdoor Systemsmarket shares above 50 percent in manymarkets and limited advertisers to onlyone remaining billboard provider as analternative to the merged company.

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United States and Commonwealthof Pennsylvania v. USA Waste Ser-vices, Inc., United Waste Systems,Inc., and Riviera Acquisition Corp.(8/22/97)

The Division challenged the acquisi-tion of United Waste Systems by USAWaste Services, two of the nation’slargest waste hauling companies. Thecomplaint alleged that the acquisitionwould lessen competition substantiallyfor municipal solid waste disposal andhauling services in Allegheny County,Pennsylvania, by giving USA Wastecontrol over about 60 percent of thedisposal services offered to haulers ofmunicipal solid waste generated there.This would have resulted in higherprices for municipal solid waste disposaland hauling services in that area. Mu-nicipal solid waste includes residentialand commercial trash and garbage. Aproposed final judgment, filed simulta-neously with the complaint, required thedivestiture of a Pittsburgh-area landfillowned by a subsidiary of United Waste.

Tyco International Ltd./KeystoneInternational(8/22/97)

The Division did not oppose TycoInternational’s acquisition of KeystoneInternational after Keystone agreed tosell its waterworks butterfly valve assetsand business to a third party. Butterflyvalves are used in waterworks applica-tions, such as waste-water treatment.Without the spin-off, the transactionwould have significantly increasedconcentration among producers of thesevalves and would have left only twoproviders of such valves in sizes below24 inches. The divestiture was designed

to ensure that municipalities, the largestconsumers of butterfly valves for water-works, would continue to have viablechoices for this essential waterworksconstruction component.

United States v. Mid-America Dairy-men, Inc., Southern Foods GroupLP and Milk Products LLC(9/3/97)

The Division challenged the acquisi-tion of Borden/Meadows Gold DairiesHoldings, Inc. by Mid-America Dairy-men, the largest dairy cooperative in theUnited States. The complaint allegedthat the acquisition would have lessenedcompetition substantially for the sale ofmilk to public schools throughouteastern Texas and Louisiana. Through-out much of Texas and Louisiana,Southern Foods Group LP, in which

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Mid-America had a partial ownershipinterest, and Borden were the only twobidders for school milk contracts. Aproposed final judgment, filed simulta-neously with the complaint, settled thesuit. The decree required divestiture ofnine plants: five in Texas, three inLouisiana, and one in New Mexico. Anewly formed firm, Milk Products LLC,would be allowed to buy the divesteddairies under certain conditions set outin the decree. The transaction, as origi-nally proposed, would have had Mid-America finance most of the purchaseprice to be paid by Milk Products, butthe complaint alleged that this wouldhave left Mid-America with the abilityto influence the operations of MilkProducts. The decree placed limits onthe terms and duration of Mid-Americaloans to Milk Products and placed strictlimits on Mid-America’s access toinformation about Milk Products.

United States v. Raytheon Company,General Motors Corp., and HEHoldings, Inc.(10/16/97)

The Division challenged Raytheon’s$5.1 billion acquisition of GeneralMotors’ Hughes Aircraft subsidiary. Thecomplaint alleged that the acquisitionwould have lessened competition sub-stantially in infrared sensors used inboth ground and aviation weaponssystems, and in electro-optical systemsfor ground vehicles. A proposed finaljudgment, filed simultaneously with thecomplaint, required divestiture of twodefense electronics businesses in order topreserve competition in sophisticatedtechnology for U.S. weapons systems.The divestiture was, at the time, thelargest divestiture since the end of theCold War.

Wachovia Corp./Central FidelityBanks, Inc.(10/17/97)

The Division did not opposeWachovia Corporation’s and CentralFidelity Banks’ merger after Wachoviaagreed to divest nine branches, withtotal deposits of about $218 million, inorder to resolve the Division’s concernsthat the merger would lessen competi-tion for banking services in certain areasof Virginia. The agreement resultedfrom a joint investigation conducted bythe Division and the Office of theVirginia Attorney General.

Connoisseur Communications/Lincoln Group L.P.(10/23/97)

The Division did not oppose Con-noisseur Communications’ $13.5 millionacquisition of two Youngstown, Ohio,radio stations from the Lincoln Groupafter Connoisseur sold two other Young-stown area radio stations. Connoisseursold the stations after the Division andthe Ohio Attorney General expressedconcerns that the acquisition ofLincoln’s stations would lessen competi-tion in the Youngstown radio advertis-ing market. Without the divestiture,Connoisseur’s acquisition of stationsfrom Lincoln would have given Con-noisseur 55 percent of the radio adver-tising revenues in Youngstown.

United States v. Chancellor MediaCorp. and SFX Broadcasting, Inc.(11/6/97)

The Division challenged Chancellor’sacquisition of four Long Island, NewYork, radio stations, alleging that theacquisition would result in local busi-

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nesses’ owned by SFX Broadcastingpaying higher radio advertising prices.Chancellor and SFX were the twolargest radio groups on Long Island,and the merger would have created adominant Long Island radio group withmore than 65 percent of the market. Thesuit, which was the first contested courtchallenge to a radio station merger sincepassage of the Telecommunications Actof 1996, was resolved when Chancelloragreed to enter into a final judgmentrequiring it to abandon its plan toacquire SFX’s Long Island stations. Thejudgment also required Chancellor andSFX to terminate a local marketingagreement under which Chancellor hadbeen operating SFX’s Long Island radiostations in anticipation of the acquisi-tion.

American Information Systems/Business Records Corp.(11/19/97)

The Division did not oppose themerger between American InformationSystems and Business Records Corp.,two voting machine manufacturers, afterBusiness Records agreed to sell itsoptical scan vote tabulation business to athird party. The deal, as originallystructured, raised significant antitrustconcerns that consumers of the opticalscan vote tabulation equipment (stateand local governments that run elec-tions) would likely sufferanticompetitive price increases anddecreased services. American Informa-tion Systems and Business Records weretwo of only three manufacturers ofoptical scan vote tabulation equipmentin the U.S. Attorneys General fromeight states participated in the investiga-tion.

NationsBank Corp./Barnett Banks(12/9/97)

The Division did not oppose theproposed merger of NationsBank withBarnett Banks after NationsBank di-vested approximately 124 branch offices,with total assets of approximately $4.1billion, in 15 areas of Florida. At thetime, this divestiture was the largestbank divestiture in a single state and thesecond largest bank divestiture. TheDivision’s investigation was conductedjointly with the Florida AttorneyGeneral’s Office.

United States v. Aluminum Com-pany of America and ReynoldsMetals Company(12/29/97)

The Division challenged Alcoa’sacquisition of Reynolds’ aluminumrolling mill and other related assets inMuscle Shoals, Alabama. As part of theacquisition, Alcoa planned to close theReynolds facility. The complaint allegedthat the acquisition would have resultedin higher prices for aluminum used toproduce cans and higher prices toconsumers who purchase canned bever-ages. Alcoa and Reynolds were, respec-tively, the largest and third largestmakers of aluminum can stock in theUnited States. The two firms togetherhad more than 60 percent of U.S.aluminum can stock capacity in a busi-ness that had only two other majorplayers. On December 30, 1997, Alcoaabandoned the transaction.

General Electric Corp./Stewart &Stevenson Services, Inc.(12/30/97)

The Division did not oppose Gen-eral Electric’s proposed $600 million

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purchase of Stewart & Stevenson Ser-vices’ Gas Turbine Division after GEagreed to license a newly formed jointventure, TransCanada Turbines, toperform maintenance and overhauls ofcertain GE-manufactured marine andindustrial equipment. Stewart &Stevenson was GE’s largest competitorworldwide in the provision of mainte-nance and overhaul services and was theonly North American company licensedto service certain GE engines.

Perkin-Elmer Corp./PerSeptiveBioSystems, Inc.(1/15/98)

The Division did not oppose Perkin-Elmer’s $360 million purchase ofPerSeptive BioSystems after Perkin-Elmer agreed to sell the entire bundle ofPerSeptive’s DNA synthesis patentrights to NeXstar Pharmaceuticals, Inc.The divestiture, which would enableNeXstar to make the instruments andchemicals used in the synthesis of DNAmolecules, resolved concerns that theacquisition would stifle competition forthese products. Perkin-Elmer andPerSeptive were the only two companiesthat held patents necessary for produc-tion of certain DNA molecules, whichare used in the research and develop-ment of certain medical treatments.

Capstar Broadcasting Partners/Patterson Broadcasting(1/29/98)

The Division did not opposeCapstar’s acquisition of Patterson Broad-casting after Capstar agreed to sell thetwo Allentown, Pennsylvania, radiostations acquired in the transaction. Thetransaction, as originally structured,would have increased concentration and

lessened competition for radio advertis-ing in Allentown, Pennsylvania.

KPMG Peat Marwick/Ernst & Young(2/13/98)

KPMG Peat Marwick and Ernst &Young, two of the big six accountingfirms, abandoned their plans to mergeafter the Division expressed concernsthat the merger would have adverselyaffected competition by reducing thealready limited number of firms provid-ing auditing services to Fortune 1000companies.

United States v. Pacific Enterprisesand Enova Corp.(3/3/98)

The Division challenged the pro-posed $6 billion merger of PacificEnterprises, a California natural gasutility, and Enova Corporation, a Cali-fornia electric utility company. This wasthe Division’s first challenge to a mergerbetween a gas and electric utility. Thecomplaint alleged that, as a result of themerger of Pacific’s natural gas pipelinewith Enova’s electric power business,the combined company would have hadboth the incentive and the ability tolessen competition in the market forelectricity in California and that themerger likely would have resulted inconsumers in California paying higherprices for electricity. The complaintfurther stated that, in early 1998, theCalifornia electric market experiencedsignificant changes as a result of legisla-tively mandated restructuring. In thisnew competitive electric market, gas-fired plants, which were the most costlygenerating plants to operate, set theprice that all sellers received for electric-ity in California in peak demand peri-

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ods. Thus, if a firm could increase thecost of gas-fired plants by raising fuelprices, it could raise the price chargedby all sellers of electricity and increasethe profits of owners of lower costsources of electricity. In this way, theacquisition of Enova’s low-cost electricgenerating plants gave Pacific a meansto benefit from any increase in electricprices. A proposed final judgment, filedsimultaneously with the complaint,required Enova to sell its two largestlow-cost electric power plants in orderto complete its merger with Pacific.

Haynes Holdings, Inc./Inco AlloysInternational(3/3/98)

The Division announced thatBlackstone Capital Partners II MerchantBanking Fund, L.P. and Haynes Hold-ings abandoned their attempt to pur-chase Inco Alloys International, thealloys division of Inco Limited, after theDivision announced its intention tochallenge the proposed acquisition. TheDivision said that the acquisition wouldlikely have resulted in higher prices toconsumers purchasing certain high-performance nickel-based alloy products.High-performance nickel-based alloysare sold in various forms and designedto be used in high temperature andhighly corrosive environments, such asin the aerospace, chemical processing,land-based gas turbine, and oil and gasindustries.

Peoples Heritage Financial Group,Inc./CFX Corp.(3/9/98)

The Division did not oppose PeoplesHeritage’s purchase of CFX after theparties agreed to divest three branch

offices in New Hampshire. The agree-ment resolved Division concerns thatthe merger would lessen competition forbusiness banking services in NewHampshire.

Reed Elsevier Business Informa-tion/Wolters Kluwer NV(3/9/98)

Reed Elsevier and Wolters Kluwerabandoned their $7.8 billion merger,which would have combined ReedElsevier, a worldwide publisher ofscientific and business information, withWolters, a leading publisher participat-ing in such segments as business, medi-cal, and legal publishing, after theDivision and the European Unionexpressed concerns about the merger.The Division was concerned that themerger would have likely resulted inhigher prices for consumers for certainpublications, such as scientific, technical,and medical publications. The Divisionand the European Union conductedindependent investigations of the pro-posed transactions, but there was signifi-cant cooperation between the agencies.

Andrew Taitz/Harley Davidson(3/20/98)

Union City Body Company aban-doned plans to acquire the assets ofUtilmaster, a division of Holiday Ram-bler, LLC (a subsidiary of HarleyDavidson), after the Division expressedconcerns that the deal would likelyresult in higher prices for consumers.Union City and Utilmaster were directcompetitors in the market for walk-invan assembly and had combined sales ofabout 67 percent of the walk-in vanmarket. There was only one othercompetitor.

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United States v. LockheedMartin Corp. and NorthropGrumman Corp.(3/23/98)

The Division challenged theproposed acquisition of NorthropGrumman by Lockheed Martin,an $11.6 billion merger that wasthe single largest ever challengedby a federal antitrust agency. Thecomplaint alleged that the mergerwould have resulted in unprec-edented vertical and horizontal concen-tration in the defense industry, whichwould substantially lessened, and inseveral cases eliminated, competition inmajor product markets critical to thenational defense. The merger wouldhave resulted in Lockheed Martin’sobtaining a monopoly position inairborne early warning radar, electro-optical missile warning systems, directedinfrared countermeasures systems, theSQQ-89 antisubmarine warfare combatsystem, and fiber-optic towed decoys,which would likely have led to highercosts, higher prices, and less innovationfor systems required by the U.S. mili-tary. In addition, the merger would havereduced competition in the sale ofadvanced tactical and strategic aircraft,airborne early warning radar systems,sonar systems, and several types ofcountermeasure systems that are de-signed to alert aircraft pilots to threatsand to help them respond to thosethreats. On July 16, 1998, the partiesabandoned the transaction.

United States v. Lehman BrothersHoldings, Inc. and L-3 Communica-tions Holdings, Inc.(3/27/98)

The Division challenged L-3 Com-munications’ (L-3) proposed acquisition

of Allied Signal’s Ocean Systems Busi-ness and Allied Signal ELAC NautikGmbH (Ocean Systems) and simulta-neously filed a proposed final judgmentrequiring L-3 to put into place proce-dures to ensure Ocean Systems’ indepen-dence as a competitor for a futuresubmarine detector known as a towedsonar array. Ocean Systems andLockheed Martin Corporation(Lockheed Martin) were the leadingproviders of submarine detectors usedon U.S. Navy surface combat vesselsand submarines. Lockheed Martinowned 34 percent of the common stockof L-3 and controlled three of 10 seatson L-3’s Board of Directors. The com-plaint alleged that the proposed acquisi-tion would have lessened competitionsubstantially because there was a stronglikelihood that competitively sensitiveinformation concerning L-3’s design,production, and bid plans for towedarrays would be shared with LockheedMartin.

United States v. Loewen Group, Inc.and Loewen Group International,Inc.(3/31/98)

The Division filed a complaintagainst Loewen Group and Loewen

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Group International alleging a violationof the premerger reporting requirementsof the Hart-Scott-Rodino Act. Theviolation was a result of LoewenGroup’s $16 million acquisition of thevoting securities of Prime SuccessionInc., an Indiana-based owner and opera-tor of funeral homes and cemeteries,before notifying the nation’s two federalantitrust agencies. A proposed finaljudgment, filed simultaneously with thecomplaint, settled the suit, and on May14, 1998, the defendants paid a civilpenalty totaling $500,000. The finaljudgment was entered by the Court onApril 15, 1998.

United States v. CBS Corp. andAmerican Radio Systems Corp.(3/31/98)

The Division challenged the $1.6billion acquisition of American RadioSystems by CBS. The complaint allegedthat the acquisition would likely haveresulted in higher radio advertisingprices in Boston, Massachusetts; St.Louis, Missouri; and Baltimore, Mary-land. The acquisition would have re-sulted in CBS having 59 percent ofBoston’s radio advertising revenues, 49percent in St. Louis, and 46 percent inBaltimore. A proposed final judgment,filed simultaneously with the complaint,required CBS to divest seven radiostations: four in Boston (WEEI-AM,WAAF-FM, WEGQ-FM, and WRKO-AM), two in St. Louis (KSD-FM andKLOU-FM), and one in Baltimore(WOCT-FM). The divestiture reducedCBS’s share of radio advertising rev-enues in each of the three cities to lessthan 40 percent.

United States v. Hicks, Muse, Tate &Furst, Inc., Capstar BroadcastingPartners, Inc., and SFX Broadcast-ing, Inc.(3/31/98)

The Division challenged the $2.1billion acquisition of SFX Broadcastingby Capstar Broadcasting Partners, Inc.The complaint alleged that the acquisi-tion would likely have resulted in higherradio advertising prices in Greenville,South Carolina; Houston, Texas; Pitts-burgh, Pennsylvania; Jackson, Missis-sippi; and Suffolk County, New York.The acquisition would have resulted inCapstar and its related entities (Hicks,Muse, Tate & Furst Inc. and ChancellorMedia Corporation) having 74 percentof radio advertising revenues inGreenville, 43 percent in Houston, 44percent in Pittsburgh, 57 percent inJackson, and 65 percent in SuffolkCounty, New York. A proposed finaljudgment, filed simultaneously with thecomplaint, required Capstar to divest 11radio stations: four in Greenville(WESC-FM and AM, WJMZ-FM, andWTPT-FM), one in Houston (KKPN-FM), one in Pittsburgh (WTAE-AM),one in Jackson (WJDX-FM), and fourSFX stations in Long Island, New York(WBLI-FM, WBAB-FM, WHFM-FM,and WGBB-AM).

Clear Channel Communications,Inc./Universal Outdoor Holdings,Inc.(4/1/98)

The Division did not oppose ClearChannel Communications’ $1.1 billionacquisition of Universal Outdoor Hold-ings after Clear Channel agreed toresolve the Division’s competitiveconcerns by selling billboard assets inthree markets: Milwaukee, Wisconsin;

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Orlando, Florida; and Pinellas County,Florida. The deal, as originally struc-tured, would have reduced competitionin billboard advertising in these threemarkets. The transaction would have leftMilwaukee with only one significantbillboard provider, and in the twoFlorida markets, consumers would havelost a significant competitor.

Sungard Data Systems, Inc./Rolfe &Nolan, plc(4/3/98)

Sungard abandoned its $120 millionplan to purchase Rolfe & Nolan afterthe Division expressed concerns aboutthe transaction. Sungard and Rolfe werethe only two providers of clearing andsettlement software for use by banks,trading firms, and exchanges. Themerger would have given the combinedfirm a monopoly in the clearing andsettlement software market.

First Union Corp./CoreStates Finan-cial Corp.(4/10/98)

The Division did not oppose the$16.6 billion merger of First Unionwith CoreStates Financial after anagreement was reached to divest 32branch offices in Pennsylvania. Thedivestitures ensured that consumerswould continue to receive the mostcompetitive loan rates and the bestbanking services in those markets. The32 CoreState branches required to bedivested were located in Philadelphia,Delaware, and Montgomery Countiesand Lehigh Valley, and had total depos-its of approximately $1.1 billion. TheDivision’s investigation was conductedjointly with the Pennsylvania AttorneyGeneral’s Office.

United States, State of New York,and State of Illinois v. Sony Corp. ofAmerica, LTM Holdings Inc. d/b/aLoews Theatres Cineplex OdeonCorp., and J.E. Seagram(4/16/98)

The Division challenged the pro-posed merger between Loews Theatres,a subsidiary of Sony Corp., andCineplex Odeon Corp. The complaintalleged that the merger of these twomovie theater chains would lessencompetition substantially in the Manhat-tan and metro-Chicago markets, leadingto higher ticket prices and reducedtheater quality for first-run movies. Themerged firm would have had marketshares, by revenues, of 67 percent inManhattan and 77 percent in Chicago. Aproposed consent decree, filed simulta-neously with the complaint, required thedivestiture of 14 theaters in Manhattanand 11 theaters in Chicago. In bothManhattan and Chicago, the divestituresrepresented slightly more than theleading firm would have acquired interms of both number of screens andrevenues.

Banc One Corp./First CommerceCorp.(5/4/98)

The Division did not oppose BancOne’s $3.1 billion merger with FirstCommerce after the banks agreed toresolve the Division’s antitrust concernsby selling off 25 branch offices inLouisiana. The Division stated that,with the divestiture of those branches,with total deposits of $614 million,small and medium-sized business con-sumers would continue to receivecompetitive loan rates and bankingservices.

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United States v. Primestar, Inc.,Tele-Communications, Inc., TCISatellite Entertainment, Inc., TimeWarner Entertainment Company,L.P., MediaOne Group, ComcastCorp., Cox Communications, Inc.,GE American Communications, Inc.,Newhouse Broadcasting Corp., TheNews Corp. Limited, MCI Communi-cations Corp., and Keith RupertMurdoch(5/12/98)

The Division challenged Primestar’sacquisition of the direct broadcastsatellite (DBS) assets of News Corp.Limited and MCI, alleging that it wouldallow five of the largest cable companiesin the United States, which controlledPrimestar, to protect their monopoliesand keep out new competitors. Thecomplaint alleged that the proposed$1.1 billion acquisition would lessencompetition substantially and enhancemonopoly power in multichannel videoprogramming distribution, whichincludes cable, DBS, and a few othertypes of video programming distribu-tion, denying consumers the benefits ofcompetition, including lower prices,higher quality, greater choice, andincreased innovation. The proposedtransaction called for News Corp./MCIto transfer authorization to operate 28satellite transponders at the 110 westlongitude orbital slot and two high-power DBS satellites under constructionto Primestar. The 110 slot was one ofthree that could be used to providehigh-power DBS service, which custom-ers could receive using dishes as small as18 inches in diameter, to the entirecontinental United States, and was thelast position available for use or expan-sion by independent DBS firms. Thecomplaint alleged that the transactionwould prevent an independent firm fromusing the assets to compete directly andvigorously with the Primestar owners’

cable systems and would eliminate thecable companies’ most significant poten-tial competitor, News Corp.’s ASkyBsatellite venture. On October 14, 1998,Primestar abandoned its acquisition ofNews Corp.’s and MCI’s DBS assets.

Star Bank, N.A./Bank One, N.A./Bank One Wheeling-Steubenville(5/15/98)

The Division did not oppose StarBank N.A.’s acquisition of 53 Ohiobranches of Bank One subsidiaries inOhio (48 branches of Bank One, N.A.,Columbus, Ohio, and five Ohiobranches of Bank One Wheeling-Steubenville, N.A., Wheeling, WestVirginia) after the parties agreed torestructure the proposed acquisition toalleviate Division concerns regardingStar Bank’s acquisition of four branchesin Scioto County: Portsmouth, Ports-mouth Auto-Bank, Wheelersburg, andLucasville. Star Bank agreed to amendits application to exclude these fourbranches, thereby preserving competi-tion for retail and small business lendingin these markets.

Sinclair Broadcast Group, Inc./Heritage Media Corp. and Phase IIBroadcasting(5/28/98)

The Division did not opposeSinclair’s acquisition of five radio sta-tions in New Orleans from HeritageMedia and Phase II after Sinclair agreedto sell three stations to CentennialBroadcasting LLC. The acquisition ofthe five stations would have givenSinclair control of nine radio stations inNew Orleans, accounting for about 55percent of the radio advertising rev-enues.

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Capstar Acquisition Company Inc./KRNA, Inc.(6/8/98)

The Division did not opposeCapstar’s acquisition of a Cedar Rapids,Iowa radio station from KRNA, Inc.after Capstar terminated a contract toacquire an additional Cedar Rapids arearadio station from KRNA. Had Capstaracquired both radio stations, it wouldhave had five of the 12 radio stations inthe Cedar Rapids radio market andapproximately 49 percent of the radioadvertising revenues in that market.

Bangor Savings Bank/Fleet Bank ofMaine(6/10/98)

The Division did not opposeBangor’s acquisition of several branchesfrom Fleet Bank of Maine after BangorSavings Bank amended the transactionto remove three branches, with totaldeposits of $36 million, located withinthe Guilford market. The transaction, asoriginally structured, would have had asignificantly adverse effect on competi-tion in the market for business bankingservices in Guilford, Maine.

Thermo Environmental Instruments,Inc./Smiths Industries, plc(6/11/98)

The Division did not opposeThermo Environmental’s acquisition ofSmiths Industries, plc’s Graseby, plcproduct-monitoring and environmental-monitoring groups after the acquisitionwas restructured. Under the restructuredmerger, Thermo Environmental agreednot to acquire Graseby Specac Limited,which manufactured accessories essentialto test various substances in a spectrom-

eter. A spectrometer is a device thatdetermines the chemical composition ofsubstances. Graseby Specac remainedpart of Smiths Industries, plc. GrasebySpecac and Thermo Environmental’sSpectraTech were the only full-linemanufacturers of sample holding acces-sories for use with spectrometers. Thusthe transaction, as originally structured,would have combined the number oneand the number two worldwide manu-facturers of spectrometer accessoriesrespectively. The restructured deal wouldmaintain competition and would pro-vide low prices and effective services forthese accessories, helping to ensure thepurity and quality of many goods.

United States v. Aluminum Com-pany of America and Alumax, Inc.(6/15/98)

The Division challenged the pro-posed $3.8 billion acquisition of Alumaxby Alcoa. The complaint alleged that theacquisition likely would have resulted inhigher prices for customers of aluminumcast plate. Alcoa and Alumax were thetwo largest producers of aluminum castplate and together controlled approxi-mately 90 percent of the worldwidemarket for cast plate. Cast plate is a flataluminum product that resists warpingand is used in machinery that makesproducts for packaging frozen foods andaircraft and automotive parts. A pro-posed final judgment, filed simulta-neously with the complaint, requiredAlcoa to sell its cast plate operations,including its Vernon, California, plantthat makes cast plate, to a firm thatwould continue to manufacture and sellcast plate.

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National City Corp./First ofAmerica Bank Corp.(6/30/98)

The Division did not opposethe acquisition by National CityCorporation of First of AmericaBank Corporation after FirstAmerica agreed to divest twobranch offices in the Anderson,Indiana, banking market (withtotal deposits of $31.9 million).Without this divestiture, theacquisition would have likelyresulted in higher loan prices forbusiness banking services in the Ander-son, Indiana, banking market.

Capstar Broadcasting Partners/Paxson Communications(6/30/98)

Capstar Broadcasting Partnersabandoned its acquisition of WYCL-FMfrom Paxson Communications in re-sponse to Division concerns that theacquisition would have resulted inincreased radio advertising prices forconsumers in the Pensacola, Florida,radio market. At the time of the pro-posed acquisition, Capstar operated twostations in the Pensacola, Florida mar-ket: WMEZ-FM and WXBM-FM.

American Airlines/AerolineasArgentinas(7/8/98)

The Division did not oppose Ameri-can Airlines’ proposed acquisition ofabout 8.5 percent of AerolineasArgentinas, Argentina’s major airline,after American agreed to restructure theacquisition. American and Aerolineas,along with United Airlines, were theonly carriers serving the United States-Argentina market, including the New

York-Buenos Aires and Miami-BuenosAires routes. Entry and expansion onthese routes was limited by a restrictivebilateral aviation treaty between Argen-tina and the United States. Under therestructured transaction, Americanwould have no representatives on theAerolineas Board of Directors andwould relinquish its right to vote itsshares to influence competitive decisionsby Aerolineas.

United States v. General ElectricCompany and InnoServ Technolo-gies, Inc.(7/14/98)

The Division challenged the acquisi-tion of InnoServ by General ElectricCompany (GE). The complaint allegedthat the acquisition would lessen compe-tition substantially in the markets forservicing certain models of GE medicalimaging equipment and in local areasthroughout the United States formultivendor service, in which somehospitals contract with a single providerto service most or all of a hospital’sequipment. GE was the world’s largestmanufacturer of medical imaging equip-ment and a leading provider of servicefor all types and brands of medicalequipment, and InnoServ’s PREVU

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software was one of a very few pro-grams available to service some modelsof imaging equipment. A proposed finaljudgment, filed simultaneously with thecomplaint, required GE to sellInnoServ’s PREVU software to a thirdparty.

WorldCom, Inc./MCI Communica-tions Corp.(7/15/98)

The Division did not opposeWorldCom’s $44 billion purchase ofMCI after MCI agreed to divest itsInternet business. MCI agreed to sellinternetMCI to Cable & Wireless, plcfor an estimated $1.75 billion, making itthe largest divestiture of a company atthat date in merger history. Without thatdivestiture, the WorldCom/MCI mergerwould have combined the two leadingproviders of nationwide Internet back-bone service, a service that connectsvarious high-capacity computer net-works carrying Internet traffic. Themerger, as originally proposed, wouldhave given WorldCom/MCI a significantproportion of the nation’s Internettraffic, giving the company the ability tocut off or reduce the quality of Internetservices that it provided to its rivals, andharming customers using the services ofthose rivals. Customers of backboneservices include Internet service provid-ers and private and public institutionsand corporations. The Division and theEuropean Union conducted independentinvestigations of the proposed transac-tions, but there was a high degree ofcooperation between the agencies.Attorneys General from ten states alsoparticipated in the investigation.

United States and States of Ohio,Arizona, California, Colorado,Florida, Commonwealth of Ken-tucky, States of Maryland, Michigan,New York, Commonwealth of Penn-sylvania, States of Texas, Washing-ton, and Wisconsin v. USA WasteServices, Inc., Dome Merger Sub-sidiary, and Waste Management, Inc.(7/16/98)

The Division and 13 states chal-lenged the $13.5 billion acquisition ofWaste Management, Inc. (WMI) byUSA Waste Services, Inc. (USA Waste).WMI and USA Waste were two of thenation’s largest waste collection anddisposal companies. The complaintalleged that the acquisition would lessencompetition substantially for wastecollection and disposal services in 21geographic areas across the UnitedStates. A proposed final judgment, filedsimultaneously with the complaint,required USA Waste to divest wastecollection and/or disposal operations in13 states, covering 21 metropolitanareas: Tucson, Arizona; Los Angeles,California; Denver, Colorado;Gainesville and Miami, Florida; Louis-ville, Kentucky; Baltimore, Maryland;Detroit, Flint, and Northeast, Michigan;New York, New York; Akron, Cleveland,Canton and Columbus, Ohio; Portland,Oregon; Allentown, Philadelphia, andPittsburgh, Pennsylvania; Houston,Texas; and Milwaukee, Wisconsin.

Specialty Teleconstructors, Inc./Stainless, Inc.(7/17/98)

Specialty Teleconstructors aban-doned its proposed acquisition of 100percent of the stock of Stainless andcertain related assets of Stainless Enter-prises of Pennsylvania, Inc., through its33 percent ownership of Kline Iron &

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Steel Company, after the Divisionexpressed concerns about theanticompetitive effects of the transactionin the market for the construction oftowers for television broadcasting,which require tremendous expertise.Stainless was a key competitor of Klinein the highly concentrated market of talltelevision broadcast tower construction.

United States v. Citicorp, Inc.,Citicorp Services, Inc., GTECHHoldings Corp., and TransactiveCorp.(7/27/98)

The Division challenged the acquisi-tion of the electronic benefit transfer(EBT) system business of TransactiveCorporation (Transactive), a subsidiaryof GTECH Holdings Corporation, byCiticorp Services, Inc. (Citicorp), asubsidiary of Citicorp, Inc. The com-plaint alleged that the acquisition wouldlessen competition substantially in theprovision of EBT services to state andlocal governments. EBT services areused by state and local agencies toprovide food stamps and cash benefits toAmericans who qualify for welfarepayments. Federal law requires all statesto use EBT systems to deliver foodstamp benefits by the year 2002. In thechallenged transaction, Citicorp wouldhave acquired from Transactive thecontracts to deliver EBT services to thestates of Texas, Illinois, and Indiana andSacramento County in California, aswell as certain computer hardware andsoftware used to provide processingservices in these states. In addition tothe acquisition of these contracts, therewas also a noncompete provision in theagreement that would have preventedTransactive from competing withCiticorp for new EBT contracts or fromlicensing its processing system to an-

other vendor for use in delivering EBTsystems. The complaint alleged that theacquisition would have eliminatedcompetition for EBT contracts, resultingin higher prices and lower qualityservices for state and local agencies andlower quality services for recipients ofwelfare benefits. On January 29, 1999,the parties abandoned the transaction.

Capstar Broadcasting Partners/BigChief Broadcasting Company(7/27/98)

As a result of Division concerns,Capstar Broadcasting abandoned itsproposed acquisition of KTCS-FM andKTCS-AM radio stations from Big ChiefBroadcasting Company. If the transac-tion had been consummated as planned,Capstar would have controlled approxi-mately 62 percent of the Ft. Smith,Arkansas, radio market and would haveowned four of the 12 Class stationslicensed in the market.

Cape Fear Broadcasting/Sea Com-munications(8/10/98)

Cape Fear Broadcasting and SeaCommunications abandoned theirproposed merger plan after the Divisionexpressed concerns that the mergerwould have anticompetitive effects inthe Wilmington, North Carolina, marketfor radio advertising. Cape Fear Broad-casting, at the time of the proposedmerger, owned WMNX-FM, WGNI-FM, and WSFM-FM, and those stationscontrolled about 39 percent of theadvertising revenues in the market. SeaCommunications owned WMNX-FM,which controlled about 27 percent ofthe advertising revenues. The combinedentity would have controlled approxi-

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mately 66 percent of the radio advertis-ing revenues and controlled four of thenine Class stations licensed.

Jacor Communications, Inc./Nation-wide Communications, Inc.(8/10/98)

The Division did not oppose JacorCommunications’ $620 million acquisi-tion of Nationwide Communicationsafter Jacor agreed to sell eight radiostations: two in San Diego, California;one in Cleveland, Ohio; and five inColumbus, Ohio. Without the divesti-tures, the acquisition would have signifi-cantly reduced competition in thosecities. If the deal were approved asoriginally proposed, Jacor would havehad control of 12 stations in San Diego,accounting for 42 percent of radioadvertising revenues. In Cleveland, Jacorwould have owned six radio stationswith 43 percent of radio advertisingrevenues. In Columbus, with nine radiostations, Jacor would have had 58percent of radio advertising revenues.The Division and the Ohio AttorneyGeneral’s Office conducted a jointinvestigation.

Dean Foods Company/Barber Dair-ies, Inc.(8/11/98)

The Division did not oppose theacquisition of Barber Dairies, Inc. byDean Foods Company after the partiesagreed to sell a Barber Dairies plant inHuntsville, Alabama, to Southern FoodsGroup, L.P. The deal, as initially struc-tured, could have lessened competitionin bidding to supply milk to schooldistricts in at least 18 counties in Ala-bama.

NationsBank Corp./BankAmericaCorp.(8/14/98)

The Division did not opposeNationsBank’s proposed merger withBankAmerica after NationsBank agreedto sell off 17 branch offices with totaldeposits of approximately $491.6 mil-lion located in New Mexico (15 branchoffices in Albuquerque, one in Clovis,and one in McKinley) in order toresolve the Division’s concerns that themerger would lessen competition forloans to small and medium-sized busi-nesses. The Division’s investigation wasconducted jointly with the offices of theNew Mexico and Texas Attorney Gen-eral.

Capstar Broadcasting Partners/KATQ Radio, Inc.(9/2/98)

Capstar Broadcasting abandoned itsacquisition of KATQ Radio after theDivision expressed concerns that theacquisition would have reduced compe-tition and increased prices in theTexarkana, Arkansas-Texas, radio adver-tising market. By purchasing KATQRadio, Capstar would have acquired tworadio stations that competed withCapstar stations in that market andwould have had a 62 percent share ofadvertising revenues.

Banc One Corp./First Chicago NBDCorp.(9/8/98)

The Division did not oppose the$29 billion merger of Banc One withFirst Chicago after the banks agreed todivest 39 branch offices in Indiana withtotal deposits of approximately $1.47billion. In addition, the banks offered to

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sell certain middle-market commercialloan operations in Indiana and associ-ated middle market commercial loans.The divestiture ensured that small andmedium-sized business consumers wouldcontinue to have the benefits of compe-tition. The Division’s investigation wasconducted jointly with the IndianaAttorney General’s Office.

West Virginia Radio Corp./FantasiaBroadcasting(9/16/98)

West Virginia Radio Corporationabandoned its proposed acquisition ofone Morgantown, West Virginia, radiostation, WFGM-FM, from FantasiaBroadcasting after the Division ex-pressed concerns that the transactionwould have resulted in higher prices forconsumers in the Morgantown, WestVirginia, radio advertising market.

Meredith Corp./First Media Televi-sion, L.P.(9/16/98)

The Division did not opposeMeredith Corporation’s acquisition ofFirst Media Television after the partiesagreed to restructure the transaction.The transaction, as originally structured,would have resulted in anticompetitiveeffects in the television advertisingmarket in Orlando, Florida, by combin-ing the parties’ competing televisionstations. The parties agreed to restruc-ture the transaction by divesting one ofthe Orlando area television stations.

Talleyrand Broadcasting, Inc./Cita-del Broadcasting Company(9/24/98)

Talleyrand Broadcasting abandonedits efforts to purchase radio stationsfrom Citadel Broadcasting, after theDivision expressed concerns that theacquisition likely would have resulted ina loss of competition in the State Col-lege, Pennsylvania, radio advertisingmarket, where both companies ownedradio stations. If the deal had goneforward, Talleyrand would have con-trolled approximately 46 percent of theradio advertising revenues in the StateCollege market.

United States v. Halliburton Com-pany and Dresser Industries, Inc.(9/29/98)

The Division challenged the pro-posed merger of Halliburton andDresser. The complaint alleged that themerger would result in increased pricesand decreased quality for logging-while-

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drilling (LWD) tools and services for oiland natural gas drilling projects, as wellas decreased competition in the develop-ment and improvement of LWD tools.LWD services provide information to oiland gas companies about the formationsthrough which the companies are drill-ing, whether there is oil in the forma-tion, and the ease with which oil can beextracted. A proposed final judgment,filed simultaneously with the complaint,required Halliburton to divest its entireLWD business, including its manufac-turing, research and development, andsales and service capabilities. Separately,Halliburton also agreed to sell its 36percent interest in M-I Drilling to SmithInternational, Inc. Without that divesti-ture, Halliburton would have acquiredone of its principal competitors,Dresser’s Baroid Division. M-I andBaroid were the two largest drillingfluids competitors in a $3 billion indus-try. Halliburton sold this interest onAugust 31, 1998. Drilling fluids, whichare a combination of chemical com-pounds and minerals, are the secondlargest cost of drilling for oil and naturalgas after rental of the rig. They arecritical for cooling and lubricating thedrill bit and controlling downholepressure. The decree was entered by theCourt on February 22, 1999.

Lamar Advertising Company/Out-door Communications, Inc.(10/2/98)

The Division did not oppose LamarAdvertising’s $148.2 million acquisitionof Outdoor Communications after theparties agreed to divest billboard assetsin six counties in Alabama, Mississippi,and Tennessee. The deal, as originallystructured, would have resulted inLamar controlling approximately 50

percent or more of the available bill-boards in these markets. The divestituresensured that competition would remainin the billboard market, protecting smallbusiness customers who rely on bill-board advertising as a cost-effective wayto promote their businesses.

U.S. Bancorp/NorthwestBancshares, Inc.(10/9/98)

The Division did not oppose themerger of U.S. Bancorp and NorthwestBancshares after U.S. Bancorp agreed todivest a bank branch in Clark County,Washington. The Division stated thatthe deal, as originally proposed, wouldhave lessened competition for bankingservices in Clark County. The divestitureensured that local customers wouldcontinue to have competitively pricedbanking services.

Norwest Corp./Wells Fargo & Com-pany(10/13/98)

The Division did not oppose the$34 billion merger of Norwest Corpora-tion with Wells Fargo & Company afterthe banks agreed to sell 26 bank branchoffices in Arizona and Nevada withdeposits totaling approximately $1.18billion. The divestiture was designed toensure that local customers, particularlysmall businesses, had access to competi-tively priced banking services.

United States v. Northwest AirlinesCorp. and Continental Airlines, Inc.(10/23/98)

The Division filed suit to blockNorthwest Airlines from buying acontrolling stake in Continental Airlines.

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Northwest and Continental are thefourth and fifth largest U.S. airlinesrespectively and compete to provide airtransportation services on thousands ofroutes across the country. The proposedacquisition would allow Northwest toacquire voting control over Continental,as well as to share in Continental’sprofits, diminishing substantially bothNorthwest’s and Continental’s incentivesto compete against each other. Thecomplaint alleged that Northwest andContinental are each other’s mostsignificant competitor—if not the onlycompetitor—for nonstop airline servicebetween the cities where they operatehubs. According to the complaint,Northwest plans to acquire stock repre-senting 14 percent of Continental’sequity but carrying 51 percent of itsvoting rights. Although a related agree-ment with Continental required North-west to place its stock in a “votingtrust” for six years, the complaintalleged that the voting trust would notprevent the competitive harm likely toresult from the acquisition. Northwesthas gone ahead with its acquisition, andlitigation is pending in U.S. DistrictCourt in Detroit, Michigan. Trial isscheduled to commence September 19,2000.

United States v. Chancellor MediaCorp. and Kunz & Company(11/12/98)

The Division challenged ChancellorMedia’s $39.5 million acquisition ofKunz & Company. Chancellor and Kunzwere head-to-head competitors in thebusiness of selling outdoor advertising,such as billboard space, to businesscustomers. The complaint alleged thatthe acquisition would substantially

lessen competition for outdoor advertis-ing in Kern, Kings, and Inyo Counties,California, and Mojave County, Arizona,giving Chancellor a virtual monopoly insome areas and more than 60 percent ofthe market in others. A proposed finaljudgment was filed simultaneously withthe complaint that required Chancellorto divest outdoor advertising assetsvalued at more than $5 million in thosefour counties.

United States and States of NewYork and Florida and Common-wealth of Pennsylvania v. WasteManagement, Inc., Ocho Acquisi-tion, Corp., and Eastern Environ-mental Services, Inc.(11/17/98)

The Division, joined by three states,sued to block the nation’s largest wastecollection and disposal firm, WasteManagement, from acquiring a largeregional rival, Eastern EnvironmentalServices. The complaint alleged that the$1.2 billion merger would reducecompetition on a multibillion dollarcontract to dispose of New York City’sresidential solid waste and would alsoreduce competition for other solid wastecollection and disposal services in NewYork, Pennsylvania, and Florida. Aproposed final judgment that wouldsettle the suit was filed December 31,1998. It required the companies todivest waste collection and/or disposaloperations in nine markets in those threestates. In addition, Eastern was requiredto sell its pending proposal to beawarded part of a $6 billion contract todispose of New York City’s residentialwaste.

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United States v. Pearson, plc,Pearson, Inc., and Viacom Interna-tional, Inc.(11/23/98)

The Division challenged Pearson’s$4.6 billion acquisition of educational,professional, and reference publishingbusinesses from Viacom. The complaintalleged that the acquisition would havelessened competition, and a proposedfinal judgment, filed simultaneouslywith the complaint, required Pearson tosell off an elementary school sciencetextbook program and textbooks used in32 college courses. Pearson and Viacomwere two of only four publishers ofmajor comprehensive elementary schoolscience programs (which include text-books and related materials and services)and two of only a few publishers oftextbooks and educational materials forover 30 college courses.

United States v. Chancellor MediaCorp., Whiteco Industries, Inc., andMetro Management Associates(11/25/98)

The Division challenged ChancellorMedia’s $930 million acquisition ofWhiteco Industries. Chancellor andWhiteco were head-to-head competitorsin the business of selling outdoor adver-tising, such as billboard space. Thecomplaint alleged that the acquisitionwould have reduced competition inseven counties located in Kansas, Penn-sylvania, Connecticut, and Texas. Thecombined entity would have had amonopoly in Hartford County, Con-necticut, and market shares rangingbetween 48 percent to 88 percent in theremaining markets. A proposed finaljudgment was filed that required divesti-ture of billboard assets in those sevencounties.

City Holding Company/HorizonBancorp, Inc.(11/30/98)

The Division did not oppose CityHolding Company’s acquisition ofHorizon Bancorp after the partiesagreed to divest two branch offices inWest Virginia with deposits totalingapproximately $94.8 million. Withoutthe divestitures, the deal would havereduced competition for consumers ofbusiness banking services in GreenbrierCounty and Hinton, West Virginia.

Monsanto Company/DeKalb Genet-ics Corp.(11/30/98)

The Division did not opposeMonsanto’s $2.3 billion acquisition ofDeKalb Genetics after Monsanto agreedto modify the deal. The Division’sconcerns focused on maintaining compe-

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tition in biotechnology developments incorn. Monsanto agreed to spin off itsclaims to a recently developed technol-ogy used to introduce new genetic traitsinto corn seed (agrobacterium-mediatedtransformation technology) to theUniversity of California at Berkeley.Monsanto also entered into bindingcommitments to license its Holden’scorn germplasm, the type of geneticmaterial that is used by biotech compa-nies to introduce new transgenic traitsin corn to breed the hybrid seed thatfarmers plant. Transgenic corn is cornthat has been genetically altered so thatit has certain traits, such as insectresistance or herbicide tolerance.

United States v. AT&T Corp. andTele-Communications, Inc.(12/30/98)

The Division challenged the $48billion merger between AT&T and TCIand simultaneously filed a proposed finaljudgment that would settle the suit. Thedecree required complete divestiture ofTCI’s interests in Sprint PCS over afive-year period. AT&T was the largestprovider of mobile wireless telephoneservices in the United States, and TCIowned approximately 23.5 percent ofthe stock of Sprint’s mobile wirelesstelephone business, Sprint PCS. BothAT&T and Sprint operated wirelessnetworks that offered nearly completenationwide geographic coverage. Underthe terms of the settlement, the partieswere required to transfer the Sprint PCSstock to an independent trustee beforeclosing their merger. The trustee wouldthen have approximately five years tocomplete the sale. The settlement wasstructured to minimize any risk that thedivestiture of Sprint PCS stock wouldharm competition by interfering with

Sprint’s ability to issue new stock orotherwise raise capital in order tocontinue to construct its wireless net-work.

Southeast Missouri Hospital/St.Francis Memorial Hospital(1/8/99)

Southeast Missouri and St. FrancisMemorial abandoned their proposedmerger after the Division expressedconcerns that the merger could haveinhibited the development of cost-effective health care in the southeastMissouri region. Southeast and St.Francis are the only two hospitals inCape Girardeau, Missouri, which is thelargest city south of St. Louis, Missouri.Had the merger gone forward, patientswould have lost their only nearby choiceof hospitals for routine services.

Formica Corp./International PaperCompany(1/15/99)

The Division announced that itwould challenge the proposed acquisi-tion by Formica Corp. of the decorativehigh-pressure laminate (HPL) businessof International Paper Company becausethe transaction would result in higherprices for HPL. HPL is used to makedurable and impact-resistant decorativesurfacing products, such as kitchen andbath countertops, eating surfaces, doors,lavatory dividers, desktops, and worksurfaces. The Division said that theproposed acquisition would remove akey competitor from the approximately$1 billion HPL market in the UnitedStates and would substantially increasethe opportunity for the two dominantplayers to coordinate their prices. Therisk of this coordinated interaction was

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especially pronounced where the com-petitors had timely access to pricingannouncements and other competitivelysensitive information. On January 19,1999, the transaction was abandoned.

Capstar Broadcasting Company/Radio of Vero, Inc.(1/19/99)

As a result of Division concerns,Capstar abandoned its proposed acquisi-tion of WPAW-FM from Radio of Vero,Inc. At the time of the proposed acquisi-tion, Capstar owned five radio stationsin Vero Beach. Those stations controlledalmost 60 percent of the advertisingrevenues in the market. Had the acquisi-tion gone forward, Capstar would havecontrolled about 64 percent of theadvertising revenues and controlled sixof the eight C licensed stations, whichwould likely have resulted in higherprices for radio advertising.

Capstar Broadcasting Company/Powell Broadcasting(1/25/99)

Capstar abandoned its proposedacquisition of KTBT-FM from PowellBroadcasting because of concerns ex-pressed by the Division about themerger and its effect on the BatonRouge, Louisiana, radio market. At thetime of the proposed acquisition,Capstar owned WYNK-A/F, WLSS-FM,KRVE-FM, WJBO-AM, and WBIU-AMin Baton Rouge. These stations repre-sented 49 percent of the advertisingrevenues in the market. Powell ownedKTBT-FM, which controlled about 1percent of the market. Post-merger,Capstar would have controlled abouthalf of the radio advertising revenues inBaton Rouge.

Media One Group-Erie, Ltd./Rambaldo Communications, Inc.(1/27/99)

Media One Group-Erie abandonedits efforts to purchase two Erie, Pennsyl-vania, radio stations from RambaldoCommunications after the Divisionexpressed concerns that the acquisitionlikely would have resulted in higherprices to businesses in the Erie radioadvertising market.

United States v. Signature FlightSupport Corp., AMR Combs, Inc.,and AMR Corp.(3/1/99)

The Division challenged SignatureFlight Support Corp.’s proposed acqui-sition of AMR Combs, Inc., and simul-taneously filed a proposed final judg-ment that would settle the suit. Thedecree required Signature to sell flightsupport businesses at Palm Springs,Bradley International (Hartford, CT)and Denver Centennial Airports. Signa-ture and Combs were head-to-headcompetitors in the business of providingflight support services, such as fueling,ramp, and hangar space rentals, at PalmSprings and Bradley InternationalAirports. At Denver Centennial Airport,Signature had agreed to become theoperator of a flight support facility,which upon completion in the year2000 would have put it in direct compe-tition with Combs.

United States v. Central ParkingCorp. and Allright Holdings, Inc.(3/16/99)

The Division challenged the $585million merger between Central Parkingand Allright Holdings and simulta-neously filed a proposed final judgment

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that required the companies to sell orterminate their interests in certain off-street parking facilities in 18 cities in 10states. Central and Allright were the twolargest parking management companiesin the United States. Without thedivestitures required under the decree,Central would have been given a domi-nant market share of off-street parkingfacilities in certain areas of each of the18 cities and would have had the abilityto control the prices and the type ofservices offered to motorists. The StateAttorney General Offices of Maryland,Ohio, Illinois, Texas, Tennessee, andMinnesota assisted in the investigation.

United States v. Suiza Foods Corp.and Broughton Foods Company(3/18/99)

The Division filed suit to blockSuiza Foods’ acquisition of BroughtonFoods because the transaction wouldresult in higher prices for milk sold toschool districts in Kentucky. Suiza andBroughton were head-to-head competi-tors for school milk contracts in dozensof school districts in south centralKentucky. According to the complaint,in more than 20 of those districts, themerger would have created a monopolyon bids to supply milk, and in at least30 other districts, it would have reducedthe number of bidders from three totwo. The Division noted that the mergerwas set to occur in an industry that hadbeen plagued by a history of collusion,with the Division having prosecutedmore than 100 criminal cases involvingbid rigging on school milk contractsincluding Kentucky. The complaintstated that the proposed merger couldrecreate the anticompetitive effects of aprior bid-rigging conspiracy. The Divi-sion sought—and the defendants agreed

not to oppose—entry of a temporaryrestraining order to prevent the compa-nies from closing the deal until resolu-tion of a preliminary injunction motion.Thereafter, a proposed final judgmentwas filed on April 28, 1999, requiringthe divestiture of Southern Bell Dairy.

United States v. SBC Communica-tions, Inc. and Ameritech Corp.(3/23/99)

The Division challenged SBC’s $62billion acquisition of Ameritech Corpo-ration and Comcast Cellular Corpora-tion. The acquisitions, as originallyproposed, would have led to a loss ofhead-to-head competition in wirelessmobile telephone service in 17 marketsin Illinois, Indiana, and Missouri. Aproposed final judgment, filed simulta-neously with the complaint, requiredAmeritech to divest its cellular telephonesystems in St. Louis and other marketsin Missouri, as well as its cellular tele-phone systems in three markets inIllinois where it competed withComcast.

Reilly Industries, Inc./AlliedSignal,Inc.(3/29/99)

The Division did not oppose ReillyIndustries’ $44 million acquisition ofAlliedSignal’s pitch and coal tar refiningbusiness after the parties agreed torestructure the transaction to resolve theDivision’s antitrust concerns. Reilly andAlliedSignal were two of the foursignificant producers of binder pitchsold to U.S. consumers. Binder pitch isan essential raw material in the manufac-ture of carbon anodes used for alumi-num production and carbon graphite

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electrodes used in steel production. Thedeal, as originally structured, wouldhave reduced competition in the binderpitch market and would have likely leadto a price increase in aluminum andgraphite products. The parties restruc-tured the deal by: (1) precluding Reillyfrom implementing a planned strategicalliance with competitor VfT, whichwould have tied up additional binderpitch supplies to be sold in the UnitedStates; (2) limiting Reilly’s contractualrights to use AlliedSignal’s Ironton,Ohio pitch melter so that this meltingcapacity would be available to otherbinder pitch competitors; and (3)continuing to investigate the proposedtolling agreement entered into by Reillyand competitor Koppers to insure thatthe impact of the tolling agreement wasprocompetitive.

United States v. Blackstone CapitalPartners II Merchant Banking FundL.P. and Howard Andrew Lipson(3/30/99)

The Division filed a complaintagainst Blackstone Capital Partners IIMerchant Banking Fund L.P. for aviolation of Hart-Scott-Rodinopremerger notification requirements.The violation was a result of its failureto produce a key document beforeundertaking its acquisition of more than$15 million in voting securities fromPrime Succession, Inc., an owner andoperator of funeral homes and cemeter-ies. Under the proposed final judgment,filed simultaneously with the complaint,the defendants agreed to pay a civilpenalty. Blackstone paid $2,785,000 andHoward Andrew Lipson paid a $50,000penalty. The final judgment was enteredby the Court on March 31, 1999.

United States and States of Illinoisand Missouri v. Allied Waste Indus-tries, Inc. and Browning FerrisIndustries, Inc.(4/8/99)

The Division challenged the $210million acquisition of Allied WasteIndustries from Browning Ferris Indus-tries (BFI) of certain assets, includingnine hauling companies, three transferstations, and one landfill. According tothe complaint, the proposed acquisitionwould substantially lessen competitionfor commercial solid waste haulingservices in the St. Louis market. Alliedand Browning-Ferris were two of onlythree major competitors providing smallcontainer commercial hauling services inthe St. Louis market, which includedthe City of St. Louis and St. LouisCounty in Missouri and the Illinoiscounties of St. Clair, Madison, andMonroe. Commercial waste hauling isthe collection and transportation to adisposal site of trash and garbage storedin small metal containers or dumpsters,generally by specialized front-end loadtrucks, from such establishments asoffice and apartment buildings and retailbusinesses, such as stores and restau-rants. A final judgment, filed simulta-neously with the complaint, requiredAllied and BFI to divest certain wastecollection routes in the St. Louis metro-politan area.

United States v. Input/Output, Inc.and The Laitram Corp.(4/12/99)

The Division filed a complaintagainst Input/Output and The LaitramCorp. alleging a violation of Hart-Scott-Rodino premerger notification require-ments. The violation was a result of theparties’ failure to observe the required

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antitrust premerger waiting periodbefore consummating the acquisition.The complaint alleged that Input/Output obtained beneficial ownership ofDigiCOURSE, a Laitram subsidiary,when it took operational control ofDigiCOURSE when under contract toacquire the company. A proposed finaljudgment, filed simultaneously with thecomplaint, settled the suit. Input/Outputand Laitram each agreed to pay a civilpenalty of $225,000 for a total of$450,000. The final judgment wasentered on May 13, 1999.

United States v. Interstate BakeriesCorp. and Continental Baking Com-pany(4/13/99)

The Division filed a civil petition inU.S. District Court in Chicago, Illinois,to find Interstate Bakeries in civil con-tempt for violating a 1996 judgement ofthe Court, entered on January 9, 1996,in United States v. Interstate BakeriesCorp., et al., (7/20/95). That civil suitwas filed to block the merger of Inter-state Bakeries Corp. (IBC) and Conti-nental Baking. At that time, IBC andContinental were two of the threelargest producers of white pan bread.Pursuant to the 1996 final judgment,IBC licensed its Weber’s label to Four-SBaking Company for production andsale of Weber’s brand bread in theSouthern California area. On March 29,1999, Four-S was purchased by BimboBakeries USA, Inc., which became thesole stockholder of Four-S. The finaljudgment required IBC to grant “aperpetual, royalty-free, assignable,transferable, exclusive license” to use theWeber’s label. Despite the clear languageof the order, IBC had demanded thatFour-S return the formulas and produc-tion processes for the baking of Weber’s

bread. The petition stated that the IBC’sactions were in civil contempt of thefinal judgment. A civil contempt is asanction to enforce compliance with anorder of the court, and a court mayorder a fine to coerce a defendant intocompliance with the court’s order. TheDivision requested that the Court findIBC in contempt and fine IBC for eachday it was in violation of the order tocomply. After defendants withdrew theirletter to Bimbo and agreed to authorizeassignment of know-how rights, theDivision withdrew its contempt motion.

General Dynamics/Newport NewsShipyard(4/14/99)

General Dynamics abandoned its $2billion proposed acquisition of NewportNews Shipyard after the Division ex-pressed concerns about the transaction.At the time of the proposed acquisition,General Dynamics already owned threeof the six shipyards that built newvessels for the U.S. Navy, including onefor building submarines and one fornuclear vessels. If it had acquired New-port News Shipyard, it would havecontrolled four of the six yards doingNavy construction, including the onlytwo yards that construct submarines andthe only two yards capable of buildingnuclear vessels. The Division coordi-nated its investigation with the Depart-ment of Defense.

United States v. Capstar Broadcast-ing Corp. and Triathlon Broadcast-ing Company(4/21/99)

The Division challenged Capstar’s$190 million acquisition of TriathlonBroadcasting Company. At the time of

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the proposed acquisition, Capstar ownedabout 309 stations in 76 markets.Triathlon owned 31 radio stations in sixmarkets. In order for the acquisition togo forward, Capstar was required to sellfive radio stations in Wichita, Kansas. Aproposed final judgment, filed simulta-neously with the complaint, requiredCapstar to sell five radio stations:KEYN-FM, KWSJ-FM, KNSS-AM,KFH-AM, and KQAM-AM. The trans-action, as originally structured, wouldhave allowed Capstar to control morethan 45 percent of the Wichita radioadvertising market and would likely haveallowed it to raise prices for advertisingon radio stations in the Wichita metro-politan area.

Clear Channel Communication, Inc./Jacor Communications(4/22/99)

The Division did not oppose ClearChannel’s $3.8 billion acquisition ofJacor after both parties agreed to sell 18radio stations in four cities: Cleveland,Ohio; Dayton, Ohio; Louisville, Ken-tucky; and Tampa, Florida. Without thedivestitures, the acquisition would havesignificantly reduced competition inthose cities in the radio advertisingmarket.

United States v. Imetal, DBK Miner-als, Inc., English China Clays, plc,and English China Clays, Inc.(4/26/99)

The Division challenged Imetal SA’s$1.24 billion acquisition of EnglishChina Clays, plc. The complaint allegedthat the acquisition, as originally struc-tured, would have substantially lessenedcompetition in four markets: water-washed kaolin, calcine kaolin, ground

calcium carbonate, and fused silica.Imetal and English China Clays weretwo of only five producers of water-washed kaolin and calcined kaolin andwere the dominant producers of fusedsilica in the United States. Water-washedkaolin is a type of clay used as a pig-ment for coating paper and as a filler inthe body of paper. Calcined kaolin isused in paper-making when the paperrequires a greater opacity. Groundcalcium carbonate (GCC) is a mineralused as a pigment in paper-making.Fused silica is used in such applicationsas investment castings, high-grade glass,and refractory applications, such as thepreparation of ceramics. A proposedfinal judgment, filed simultaneouslywith the complaint, required that Imetaldivest assets and operations in each ofthe four product areas.

United States v. Citadel Communi-cations Corp., Triathlon Broadcast-ing Company, and Capstar Broad-casting Corp.(4/28/99)

The Division challenged the pro-posed acquisition by Capstar Broadcast-ing Corporation of Triathlon, includingradio broadcast stations in ColoradoSprings and Spokane, Washington. Thecomplaint also sought to terminate aJoint Sales Agreement between CitadelCommunications Corporation andTriathlon Broadcasting Company thateliminated competition in the sale ofradio advertising on certain radio sta-tions in Colorado Springs and Spokane.A proposed final judgment, filed simul-taneously with the complaint, requiredthe termination of the joint sales agree-ment, and in the Colorado market,Capstar was to transfer KSPZ-FM,KVOR-AM, and KTWK-AM to Citadel,while Citadel agreed to transfer KKLI-

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FM to Capstar. In Spokane, Capstaragreed to transfer KEYF-FM andKEYF-AM to Citadel, and Citadelentered into an agreement with a thirdparty to acquire KNJY-FM.

United States v. Bell Atlantic Corp.and GTE Corp.(5/7/99)

The Division’s complaint challengedBell Atlantic’s merger with GTE andalleged that the merger, as originallystructured, would have led to a loss ofhead-to-head competition in wirelessmobile telephone services in 65 marketsin nine states. A proposed final judg-ment, filed simultaneously with thecomplaint, settled the suit. Under thedecree, the parties agreed to sell one oftheir two interests in overlapping wire-less telephone systems. At the time, thiswas one of the largest divestiture pack-ages involving a merger ever required bythe Division and the second largesttelecommunications merger in history.

Fox Paine Capital Fund L.P./CenturyTelephone(5/7/99)

Fox Paine restructured its proposedacquisition of the cellular operations ofCentury Telephone in Fairbanks, Alaska,in order to resolve concerns expressedby the Division that the acquisition, asoriginally planned, would have resultedin a loss of head-to-head competition inmobile wireless telephone services inFairbanks. As a result of Fox Paine’srestructuring, Fox was able to go for-ward with its acquisition of ATU Com-munications Inc. and the local telephoneassets of the Municipality of Anchorage.Under the restructured agreement,Century Telephone continued to own

and operate the Fairbanks cellularsystem as it had prior to entering intothe PTI deal with Fox.

Chittenden Corp./Vermont FinancialServices Corp.(5/12/99)

The Division did not oppose themerger of Chittenden Corporation withVermont Financial Services Corp. afterthe parties agreed to divest 17 branchoffices and one ATM in Vermont withdeposits totaling about $480 million.The divested branch offices were locatedin eight Vermont banking markets:Barre-Montpelier, Bennington,Brattleboro, Burlington-St Albans,Middlebury, Rutland, Springfield, andVergennes. With these divestitures, localcustomers and small businesses wereassured of having competitively pricedbanking services.

United States v. Computer Associ-ates International, Inc. and PlatinumTechnology International, Inc.(5/25/99)

This complaint challenged theacquisition of Platinum TechnologyInternational by Computer AssociatesInternational and alleged that the pro-posed transaction, as originally struc-tured, would have reduced competitionin five mainframe systems managementproduct markets. Computer Associateswas the dominant competitor in the jobaccounting products software business.Platinum was a major competitor inmainframe systems management prod-ucts and had been one of the few sub-stantial competitors to Computer Asso-ciates in a number of markets. A pro-posed final judgment, filed simulta-neously with the complaint, settled the

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suit. Under the decree, ComputerAssociates was required to sell sixPlatinum mainframe systems manage-ment software products and relatedassets.

United States v. Florida Rock Indus-tries, Inc., Harper Bros., Inc., Com-mercial Testing, Inc., and Daniel R.Harper, Inc.(5/26/99)

The Division filed a complaint thatchallenged Florida Rock Industries $60million merger with Harper Bros. andCommercial Testing and alleged that theacquisition would substantially lessencompetition in the aggregate and silicasand markets in southwest Florida.Aggregate is used to manufacture as-phalt concrete and ready mix concrete.Silica sand is used to manufacturespecific types of ready mix concrete. Aproposed final judgment, filed simulta-neously with the complaint, settled thesuit. Under the terms of the decree,Florida Rock was required to divest theAlico Road Quarry in Fort Myers,Florida, and the Palmdale Sand Mine inPalmdale, Florida.

Lamar Advertising Company/Vivid,Inc.(5/28/99)

The Division did not oppose LamarAdvertising Company’s $22.5 millionacquisition of Vivid after the partiesagreed to restructure the deal. As origi-nally structured, Vivid would have soldto Lamar all of its billboard operationsthroughout Wisconsin, Indiana, andIllinois, which would have led to a lossof competition between Vivid andLamar for the sale of outdoor advertis-ing in the two counties and fewer

choices for local businesses in connec-tion with their billboard advertisingrequirements. Under the modifiedagreement, Vivid would retained certainbillboards in Walworth County, Wiscon-sin, and Winnebago County, Illinois.

Chancellor Media Corp./Petry MediaCorp.(6/9/99)

Chancellor Media abandoned itsproposed acquisition of Petry Media, atelevision representative firm, after theDivision expressed concerns that thetransaction would have decreased com-petition in the television representativemarket, which would have affectedadvertisers and owners of radio ortelevision stations in the form of highercommissions paid to representativefirms. Television representative firms acton behalf of client television or radiostations by selling time on those stationsto advertisers located outside a station’slocal geographic area.

Capstar Broadcasting Partners/James L. Gibbons(6/14/99)

Capstar Broadcasting Partnersterminated its proposed acquisition oftwo radio stations, WPVR-FM andWFIR-AM, from James L. Gibbons inthe Roanoke-Lynchburg, Virginia, radiomarket after the Division expressedconcerns that the transaction would havereduced competition and raised pricesfor radio advertising. Had the mergeroccurred, Capstar would have operatednine of the top eleven stations in thismarket and controlled almost 64 percentof advertising revenues.

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United States and the State of Texasv. Aetna, Inc. and The PrudentialInsurance Company of America(6/21/99)

The Division challenged the $1billion proposed acquisition of ThePrudential Insurance Company ofAmerica’s health care business by Aetna.The complaint alleged that the proposedtransaction would have made Aetna thedominant provider of health mainte-nance organization (HMO) and HMO-based point-of-service (POS) plans inHouston and Dallas-Fort Worth, Texas.The transaction, as originally structured,would have also resulted in increasedprices or reduced quality of those healthcare plans. HMO plans generally com-pete in local areas on the basis of thebreadth and quality of their physicianand hospital networks, their benefitsstructure, and their prices. A proposedfinal judgment, filed simultaneouslywith the complaint, settled the suit. Thedecree required Aetna to divest its

NYLCare Health Maintenance Organi-zation (HMO) businesses in Houstonand Dallas-Fort Worth.

Consolidated Edison, Inc./Orange &Rockland Utilities, Inc.(7/2/99)

The Division did not oppose Con-solidated Edison’s (ConEd) $800 mil-lion merger with Orange & RocklandUtilities after the latter company agreedto divest its electric generating plantsand a plant co-owned by the companiesto Southern Energy, Inc. Without thedivestitures, ConEd would have owned50 percent or more of the capacity ofelectric generation plants available tosupply electricity in eastern New Yorkduring peak periods. The divestiturespreserved competition for electricity inNew York and ensured that electricityproduced by Orange & Rockland’selectric generation facilities remained anindependent source for electricity.

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United States v. Cargill Incorporatedand Continental Grain Company(7/8/99)

The Division filed suit challengingCargill Incorporated’s acquisition ofContinental Grain Company’s Commod-ity Marketing Group. Cargill and Conti-nental operated nationwide distributionnetworks that annually move millions oftons of grain and soybeans to customersthroughout the United States andaround the world. The transaction, asoriginally structured, would have de-creased competition for the purchase ofgrain (such as wheat and corn) andsoybeans from farmers and other suppli-ers, resulting in American farmers’getting less money for major crops theyproduced. The complaint alleged thatthe combination of the merging firms’competing port elevators in the PacificNorthwest, Central California, and theTexas Gulf would have harmed competi-tion, and that the combination of theircompeting river elevators and railterminals in Midwestern states, such asIllinois, Iowa, Kansas, Missouri, andOhio, would have been anticompetitive.In addition, the consolidation of Cargilland Continental river elevators along theIllinois River would have concentratedownership of delivery points authorizedby the Chicago Board of Trade (CBOT)for settlement of corn and soybeanfutures contracts under the control ofCargill and one other firm. This concen-tration would have increased the riskthat prices for CBOT corn and soybeanfutures contracts could be manipulated.A proposed final judgment, filed simul-taneously with the complaint, settled thesuit. The decree required Cargill todivest grain and soybean facilities invarious states.

Litton/Newport News(7/9/99)

Litton abandoned its proposedacquisition of Newport News Shipyardafter the Division expressed concernsthat this and a related transaction wouldreduce competition in the constructionof naval ships. If this acquisition andLitton’s acquisition of Avondale hadbeen permitted to go forward, therewould have been only two remainingcompanies building such ships for theNavy, and for some kinds of ships(auxilary ships and amphibious crafts),there may have been no other closealternatives. At the time of this pro-posed transaction, there were six U.S.shipyards doing construction for theU.S. Navy, three of which were ownedby General Dynamics and one byLitton.

Abry Broadcast Partners/BastetBroadcasting Corp.(7/16/99)

Abry Broadcast Partners abandonedits proposed agreement with BastetBroadcasting to sell advertising oncompeting television stations and pur-chase Bastet after the Division expressedconcerns about the transaction. At thetime of the proposed acquisition, Abryowned WBRE-TV (the NBC affiliate)and Bastet owned WYOU-TV (the CBSaffiliate), both of which where inWilkes-Barre/Scranton, Pennsylvania,market. The transaction would havereduced competition in the sales oftelevision advertising in the Wilkes-Barre/Scranton market, and businesseswould have likely paid higher prices toadvertise on the local broadcast stations.

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United States v. Allied Waste Indus-tries, Inc. and Browning-FerrisIndustries, Inc.(7/20/99)

The Division challenged AlliedWaste Industries’ proposed $9.4 billionacquisition of Browning-Ferris Indus-tries (BFI). Allied and BFI were directcompetitors in many geographic marketsfor both waste collection and wastedisposal services, and the transaction, asoriginally structured, would have sub-stantially lessened competition for wastecollection and disposal services in 18markets. In most of the markets, thecombination of Allied and BFI wouldhave left only two or three major com-petitors. As a result, those competitorswould have been able to coordinate theirpricing, causing consumers (residents,businesses, and government entities) topay higher prices. A proposed finaljudgment, filed simultaneously with thecomplaint, settled the suit. The finaljudgment required divestitures in everymarket in which there was a significantcompetitive overlap in the companies’waste or waste disposal operations.Waste collection firms, like Allied andBFI, contract to collect municipal solidwaste (garbage and trash) from residen-tial and commercial customers. Theytransport the waste to disposal facilities,such as transfer stations, incinerators,and landfills, which for a fee will processand legally dispose of waste.

United States v. Smith International,Inc. and Schlumberger, Ltd.(7/27/99)

On July 27, 1999, in its first crimi-nal antitrust contempt petition caseinvolving a merger decree in more than15 years, the Division filed civil andcriminal contempt papers against Smith

International and Schlumberger. TheDivision petitioned the U.S. DistrictCourt for an Order to Show Cause whyrespondents Smith International andSchlumberger should not be found incriminal and civil contempt for violatinga Final Judgment entered by the Courton April 12, 1994, in United States v.Baroid, et al., Civil Action No. 93-262(1993), as modified, by the Court’sSeptember 19, 1996 order. The FinalJudgment was the result of a civil suit,filed December 23, 1993 by the Divi-sion, to block the merger of DresserIndustries, Inc. and Baroid Corporation.At that time, M-I Drilling Fluids, acompany in which Dresser had a 64percent interest, and Baroid were thetwo largest producers of drilling fluidsin the United States. The court ordersettling the suit required Dresser to selleither its interest in M-I or Baroid’sdrilling fluids subsidiary. To complywith the Court’s order, Dresser sold itsM-I interest to Smith, and Smith agreedto be bound by the Final Judgment. TheFinal Judgment also barred Smith fromselling the divested drilling fluid busi-ness to, or combining that businesswith, the drilling fluid operations ofcertain companies, including Schlumber-ger. According to the petitions, despitethe clear language of the Court’s order,Smith violated the Final Judgment byselling Schlumberger a 40 percentinterest in the joint venture and combin-ing M-I with Schlumberger’s drillingfluid operations. The petitions allegedthat Smith’s actions were in willfulviolation of the Final Judgment towhich it was bound and requested thatthe Court require both companies to paya fee for each day that the were inviolation of the order to comply andimpose criminal penalties. On December9, 1999 the Court found the companiesin civil and criminal contempt and

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imposed criminal fines of $1.5 million.The parties also agreed to pay $13.1million to settle the civil contempt case.

Thomas E. and James D. Ingstad/MSB, Inc.(8/17/99)

The Division did not oppose Tho-mas and James Ingstads’ proposedacquisition of KFGO, Inc. after theIngstad’s agreed to divest five radiobroadcast stations (KQWB-AM/FM,KPFX-FM, KLTA-FM, and KVOX-FM)to Triad Broadcasting, a new marketentrant. Thomas and James Ingstad hadproposed to purchase six radio broadcaststations (KFGO-AM/FM, KPTH-FM,KFGX-FM, and KVOX-AM/FM) fromKFGO in the Fargo-Moorehead, NorthDakota, radio market. At the time of theproposed acquisition, the Ingstadsowned five stations. Under the restruc-tured agreement, the Ingstads wouldretain ownership of KFGO-AM/FM,KVOX-AM, KFGX-FM, KPHT-FM, andWDAY-FM. Had the deal gone forwardas originally structured, the Ingstadswould have controlled nearly 93 percentof the radio advertising revenues andwould have operated 11 of the top 14stations in the Fargo-Moorehead market.

AK Steel Corp/Armco, Inc.(8/26/99)

AK Steel Corp. agreed to licensepatents relating to the manufacture andsale of aluminized stainless steel toWheeling-Nisshin, in order to resolvethe Division’s concerns that the pro-posed acquisition would lessen competi-tion in the United States for the sale ofaluminized 409 stainless steel. Alumi-nized 409 stainless steel is used prima-

rily in automobile exhaust systems. AKSteel was the only U.S. producer ofaluminized 409 stainless steel and heldtwo process patents for making theproduct, as well as the licenses on otherproduct and process patents relating tothe product. Armco, which was prepar-ing to manufacture aluminized 409stainless steel, held four patents, includ-ing the product patents, and had licensesfor the two process patents owned byAK Steel. As originally structured, theproposed acquisition would have re-duced competition by combining theonly U.S. producer of aluminized 409stainless steel with the only other U.S.company that had the rights to makeand sell the product under the patentsheld by AK Steel and Armco. With thelicense agreement, Wheeling-Nisshinwould have the ability to become along-term, viable competitor in themanufacture and sale of aluminizedstainless steel, preserving competitionfor the benefit of consumers of alumi-nized stainless steel.

Marathon Media L.P./Citadel Com-munications Corp.(9/1/99)

The Division did not oppose Mara-thon Media’s acquisition of radio sta-tions from Citadel after Marathonagreed to sell three radio stations toNew Northwest Broadcasters II, Inc.The deal, as originally structured, wouldhave likely increased concentration andlessened competition for radio advertis-ing in the Billings, Montana, market,given Marathon almost 65 percent ofadvertising revenues, and allowed Mara-thon to operate nine of the 16 stationsin that market. Under the restructuredagreement, Marathon would sell itsthree Billings radio stations (KIDX-FM,

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KRSQ-FM, and KGHL-AM) to NewNorthwest, a new entrant to the Billingsmarket. In addition, Marathon agreed toterminate its time brokerage agreementwith another station in the market,KBEX-FM, and to abandon its contrac-tual option to purchase the station.Under a time brokerage agreement, aradio station will sell blocks of time to abroker, who then supplies the program-ming to fill that time and sells commer-cial advertising to support that broker.

Fleet Financial Group/BankBostonCorp.(9/2/99)

The Division did not oppose FleetFinancial’s merger with BankBostonafter the parties agreed to sell $13.2billion in deposits in 306 branch officesin Massachusetts, New Hampshire,Rhode Island, and Connecticut in orderto resolve concerns about the proposedmerger for numerous banking customersin New England. This was the largestbank divestiture in history, exceeding the$8.5 billion divestiture in the 1992 Bankof America/Security Pacific merger. Therestructured agreement called for Fleet

to divest 204 branches with about $816billion in deposits in Massachusetts, 13branches with about $543.5 million indeposits in New Hampshire, 50branches with approximately $2.3billion in deposits in Rhode Island, and39 branches with approximately $1.8billion in deposits in Connecticut. Thebulk of the divestitures were to go to aprimary buyer, while 28 branches andabout $810 million in deposits were tobe sold to Massachusetts banks.

Lamar Advertising Company/Chan-cellor Media Company(9/15/99)

The Division did not opposeLamar’s acquisition of Chancellor Mediaafter Lamar agreed to divest billboardassets valued at over $30 million in 31markets across 13 states. The divesti-tures resolved the Division’s concernsthat Lamar’s $2.6 billion acquisitionwould have led to a significant loss ofcompetition in the outdoor advertisingmarket. These divestitures provided localbusinesses with greater choices for theiroutdoor advertising needs and preservedcompetition in the 31 markets.

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June 1, 1996 through September 30, 1999

Antitrust Division Civil Non-Merger Cases

United States v. Women’sHospital Foundation andWomen’s Physician HealthOrganization(4/23/96)

This complaint alleged that aBaton Rouge hospital authorizedits affiliated physician organiza-tion to develop a minimum feeschedule for its member doctorsand to negotiate with managedcare plans on behalf of the hospi-tal and the doctors. In so doing,the hospital was trying to prevent otherBaton Rouge area hospitals from beingable to offer lower cost inpatient obstet-rical services, while the doctors weretrying to protect their fee structure.Together with the complaint, the Divi-sion filed a proposed consent decree thatprohibited the defendants from fixingcompensation levels or exchanginginformation about current or prospectivecompensation, except in carefully limitedcircumstances. The U.S. District Courtfor the Middle District of Louisianaentered that decree on September 16,1996.

United States v. City of Stilwell,Oklahoma and Stilwell Area Devel-opment Authority(4/25/96)

In the first antitrust case brought bythe Department of Justice against amunicipal utility system, the Division

challenged the “all-or-none” utilitypolicy of the Stilwell Area DevelopmentAuthority as an unlawful tying arrange-ment and as monopolization. The Cityof Stilwell refused to provide water andsewer services to certain area residentsand businesses that did not agree also tobuy electricity from the city. Stilwell hasa legal monopoly over water and sewerservice, but faces competition in theelectricity market in some areas fromOzarks Rural Electrical Cooperative.The City of Stilwell enforced its “all-or-none” policy by cutting off water serviceto Ozarks’ customers and refusing toissue building permits to real estatedevelopers who did not agree to choosecity-supplied electricity for new con-struction. Some months after the filingof the complaint, the City entered into asettlement that prohibits the City fromconditioning the purchase of water andsewer services on the purchase of elec-tricity, requires the City to inform

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potential water and sewer customersthat their purchase of such service is notrelated to their choice of electric serviceprovider, and requires the City to estab-lish an antitrust compliance program.This decree was entered by the U.S.District Court for the Eastern Districtof Oklahoma on November 5, 1998.

United States v. Association ofFamily Practice Residency Direc-tors(5/28/96)

A trade association representingapproximately 95 percent of all U. S.family practice residency programsadopted “ethical” rules that preventedhospitals from competing to attractprospective residents. The rules pre-vented residency programs from offeringindividualized economic inducements tocandidates and from attempting topersuade those already in their first yearof residency training to transfer to acompeting program. At the same timeas the Complaint was filed, the Divisionfiled a proposed consent decree requir-ing the Association to withdraw thechallenged guidelines. The U.S. DistrictCourt in Kansas City, Missouri, enteredthe decree on August 15, 1996.

United States v. A&L Mayer Associ-ates, Inc., A&L Mayer, Inc. andFibras Saltillo, S.A. De C.V.(5/30/96)

United States v. Brush Fibers, Inc.(8/29/96)

United States v. Ixtlera, S.A. andMFC Corp.(9/26/96)

The Division filed companion civiland criminal charges concerning aconspiracy to fix wholesale and resale

prices of tampico fiber, a vegetable fibergrown in Mexico and used to makebristles in such items as household scrubbrushes and brooms. Three related caseswere brought against (1) a tampicowholesaler and two affiliated companies,(2) a tampico distributor, and (3) theother wholesaler and its affiliated dis-tributor. The firms had conspired to fixthe wholesale price of tampico and toenhance and preserve the price fix at thewholesale level by setting resale prices tobe charged by their exclusive U.S.distributors. The cases were each settledby consent decrees, entered by the U.S.District Court in Philadelphia on Au-gust 16, November 19, and December10, 1996.

United States v. AnchorShade, Inc.(6/20/96)

In this case, the Division filed acomplaint alleging resale price mainte-nance in the sale of boat umbrellas. TheDivision alleged that AnchorShade, Inc.,conspired to fix the price of outdoorboat umbrellas that it sold to dealersthroughout the United States. Dealersagreed to maintain the minimum resaleprice as a condition of receiving addi-tional umbrellas from AnchorShade andto discount only in order to meet com-petition and only if they obtainedwritten approval in advance fromAnchorShade. Under the terms of theconsent decree, filed at the same time asthe complaint, AnchorShade may notenter into retail price maintenanceagreements with its dealers or threatento terminate any dealer for pricingbelow AnchorShade’s resale price. Thedecree was entered by the District Courtfor the Southern District of Florida onOctober 8, 1996.

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United States v. American NationalCan Co. and KMK Maschinen AG(6/25/96)

This case charged that the AmericanNational Can Co. (ANC) and KMKMaschinen AG, a Swiss firm, violatedSection 1 of the Sherman Act when theyagreed that KMK would stop making orselling in the United States laminatedtubes like those used for toothpaste, thatKMK would grant ANC an exclusivelicense to KMK’s laminated tube-makingtechnology in North America, and thatANC would stop making tube-manufac-turing equipment. The consent decree,filed the same day as the complaint,allows KMK to reenter the NorthAmerican laminated tubes market byterminating this exclusive deal, makesANC’s license non-exclusive, and pro-hibits future market allocation agree-ments between the firms. The decreewas entered by the U.S. District Courtfor the District of Columbia on Febru-ary 12, 1997.

United States v. AlexBrown & Sons, Inc., et al.(Nasdaq market makers)(7/17/96)

In this civil action, theDivision filed suit against24 market-making Nasdaqsecurities firms. Nasdaq is acomputerized public marketin which investors can buyand sell over-the-counterstocks. The complaintcharged these Nasdaqmarket makers with inflat-ing the quoted “inside

spread” in certain Nasdaq stocks. The24 firms adhered to and enforced a“quoting convention” which updated theprices they quoted by a quarter (25cents) rather than an eighth (12.5 cents)whenever an individual dealer’s spread(the difference between the price atwhich an individual market-maker offersto buy a stock and the price at which itoffers to sell the same stock, on a pershare basis) was 75 cents or more.Consequently, spreads were kept artifi-cially wide and investors paid highertrading costs for buying and sellingstocks on the Nasdaq market. Theconsent decree, filed simultaneouslywith the complaint, prohibits the marketmakers from agreeing with other marketmakers to adhere to the quoting conven-tion or to in any way fix prices. Thesettlement includes an enforcementmechanism that requires the settlingfirms to monitor and tape record 3.5percent (or 70 hours per week) of theirNasdaq traders’ telephone calls andpermits an unannounced Divisionrepresentative to listen in on traderconversations as they occur. The decreewas entered April 24, 1997 by the U.S.District Court for the Southern Districtof New York. Entry of the decree was

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appealed by an intervenor, but entry ofthe judgment was upheld by the SecondCircuit on August 6, 1998.

United States v. General ElectricCompany(8/1/96)

In this case, the Division allegedthat the General Electric Company’slicenses for medical imaging equipmentsoftware violated Sections 1 and 2 of theSherman Act by restricting licenseehospitals from competing with GE inthe servicing of third-party medicalequipment. For each type of advancedimaging equipment GE makes (such asCT scanners, X-ray machines, and MRIsystems), it designs specialized softwarethat improves the speed of any neededmaintenance or repair work. GE re-quired hospitals seeking to license thissoftware in order to service their ownequipment in-house to agree not tocompete with GE in servicing medicalequipment of any kind or manufactureowned by other hospitals, clinics, ordoctors. The restriction applied eventhough the licensed GE software couldnot be used with the other equipment tobe serviced. This license term forcedhospitals to choose between licensingthe specialized software and continuingto offer medical equipment service tonearby medical facilities. In May 1996,in response to the Department’s investi-gation, GE relaxed some of these restric-tions. In its complaint, however, theDepartment alleged that the new li-censes still unreasonably limited compe-tition in servicing some equipment andrestricted competition in some marketsfor medical imaging equipment as well.In response to GE’s motion to dismiss,the court dismissed the Section 2 claimbut denied the motion as to the Section

1 claim. Subsequently GE agreed tosettle the case and cease obtaining orenforcing the restrictive licensing provi-sions. The U.S. District Court for theDistrict of Montana entered the decreeon January 11, 1999.

United States and the State of NewYork v. American Radio Systems,Inc.,The Lincoln Group, L.P., andGreat Lakes Wireless Talking Ma-chine LLC(10/24/96)

The case challenged a proposedradio merger along with an existingjoint sales agreement (JSA) between oneof the merging parties and a third-partyradio station. American Radio Systems(ARS), a large radio station owner andoperator, owned three stations in Roch-ester, New York, and had a joint salesagreement with a fourth station ownedby Great Lakes, giving ARS controlover the sale of advertising on thatstation. In the merger, ARS sought toacquire four additional Rochester radiostations from the Lincoln Group. Themerger was likely to substantially lessencompetition, and the JSA had alreadyeliminated price competition betweenthe ARS stations and the Great Lakesstation without accomplishing anyprocompetitive efficiencies. The Divi-sion challenged the merger as a violationof Section 7 of the Clayton Act andchallenged the JSA as a violation ofSection 1 of the Sherman Act. Theproposed consent decree required ARSto divest three stations and terminate theJSA with the Great Lakes station. TheU.S. District Court for the District ofColumbia entered the final judgment onJanuary 31, 1997.

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State of Oregon, State of Washing-ton, State of California, UnitedStates v. Jeff Mulkey, Jerry Hampel,Todd Whaley, Brad Pettinger, Jo-seph Speir, Thomas Timmer, Rich-ard Sheldon, Dennis Sturgell, AllenGann, and Russell Smotherman(2/11/97)

In this case, the Division, along withthe states of California, Oregon, andWashington, charged ten West Coastcommercial crab fishermen with leadinga conspiracy to raise the sale pricecharged by fishermen to crab processorsand boycotting all processors until theyagreed to pay the fixed price for crab.The defendants agreed to raise the pricethey charged to processors and securedsimilar commitments from competingfishermen, using threats, intimidation,and coercion where necessary. In further-ance of the conspiracy, the fishermen setup a group boycott, known as a “tie-up”in the industry, in which they refused tofish for crab until all commercial sea-food fishermen in every major Califor-nia, Oregon, and Washington port werereceiving at least the fixed minimumprice. As a result of the agreement,prices to consumers rose, and the supplyof crab available to processors wassignificantly reduced during the courseof the boycott. The complaint chargedthe defendants with violating state lawsas well as Section 1 of the Sherman Act.The consent decree enjoins the defen-dants from entering into or enforcingany agreement to fix prices or restrictthe supply of seafood or engaging in anyconduct in furtherance of such anagreement. The U.S. District Court inPortland, Oregon, entered the FinalJudgment on June 16, 1997.

United States v. Seminole FertilizerCorp.(6/18/97)

United States v. Norsk Hydro USAInc., et al.(2/19/98)

These cases charged Seminole Fertil-izer Corporation, formerly a majorfertilizer manufacturer, Norsk HydroUSA, Inc., and Farmland Industrieswith colluding to restrain competitivebidding for the purchase at bankruptcyauction of a Tampa, Florida, facilityused to store ammonia, a primary rawmaterial used for the production ofdiammonium phosphate fertilizer. TheDivision alleged that Seminole and twoof its competitors, Norsk Hydro USAInc. and Farmland Industries Inc., metin March 1992 and agreed that Seminolewould withdraw from the storagefacility auction, eliminating Norsk’schief rival as a viable competing bidder.The Division filed a separate complaintagainst Norsk Hydro and FarmlandIndustries. The Division filed proposedconsent decrees simultaneously with thecomplaints pursuant to which thedefendants agreed not to enter intoagreements with others illegally settingthe price of assets used in the produc-tion and distribution of fertilizer andbeing sold under the auspices of a courtor federal agency. The defendants alsoagreed not to submit joint bids forfertilizer assets without first notifyingthe seller of the asset and the personadministering the sale of the asset thatthe bid was jointly proposed. TheSeminole decree was entered by the U.S.District Court for the Middle District ofFlorida in September 1997, and theNorsk/Farmland decree was entered bythe same court on May 18, 1998.

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United States v. Rochester Gas &Electric Corp.(6/24/97)

This contested case challenged anagreement between RG&E and theUniversity of Rochester designed tolimit competition in the Rochesterelectricity market. The University hadbeen planning to build a “cogeneration”plant, which would have producedelectricity as a byproduct of producingsteam for heating and cooling campusbuildings. The Division alleged thatRG&E threatened to cut off researchgrants to the University if it built theplant and promised to give the Univer-sity hundreds of thousands of dollars fora conservation program if it did not.The Division also alleged that RG&Eagreed to give the University an excep-tionally low electricity rate. The Univer-sity agreed not to participate or evenstudy participation in any other projectthat would provide other current RG&Ecustomers with energy from anyoneother than RG&E, and it agreed not tobuild the new plant. Instead, it contin-ued to produce steam using a coal plantbuilt in 1929. Both the United Statesand RG&E moved for summary judg-ment. On February 17, 1998, the Courtgranted partial summary judgment forthe United States, ruling that RG&Ewas not protected by the state actiondefense. This decision precipitated asettlement that bars RG&E from enforc-ing this agreement or entering into asimilar one with another actual orpotential competitor. The consentjudgment was entered on June 18,1998. Subsequent to announcement ofthe settlement, the University of Roch-ester issued requests for proposal tobuild a new and efficient cogenerationplant.

United States v. AIG Trading Corp.,BP Exploration & Oil, Inc., andCargill International, S.A.(7/18/97)

The Division filed suit against threemajor oil trading firms, AIG TradingCorp., BP Exploration, and CargillInternational, alleging that they ex-changed information in order to facili-tate an agreement to lower the commis-sions they paid to brokers in the UnitedStates for certain Brent crude oil con-tracts. Brent crude oil is produced in theNorth Sea. A Brent spread contract isthe simultaneous purchase and sale oftwo contracts, for different monthsforward, for Brent crude oil. A BrentCFD is a commercial transaction basedon the difference between the currentpublished price for Brent crude oil thatis already loaded or available to beloaded on a specific day and the futureprice for Brent crude oil to be loaded inthe next month forward. The trading

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firms had been paying separate fullcommissions to brokers for both sides ofthe paired contracts and wanted toreduce the amount they paid. Thecomplaint alleges that from July 1992through May 1993, AIG, BP, Cargill,and others conspired to exchange cur-rent and prospective brokerage commis-sion information on Brent spread con-tracts and CFDs and lowered the bro-kerage commissions they paid to brokersin the United States. The proposedorder, filed at the same time as thecomplaint, prohibits AG, BP, and Cargillfrom agreeing with any other trader tofix, lower, raise, stabilize, or maintainany brokerage commission for Brentspread contracts and CFDs or to ex-change any information for these pur-poses. The proposed settlement alsoprohibits these companies from request-ing or advising other traders to lower,raise, or change any brokerage commis-sions for Brent spread contracts andCFDs. The final order was entered onOctober 10, 1997, in the U.S. DistrictCourt for the Southern District of NewYork.

United States v. Microsoft Corp.(Contempt Petition)(10/20/97)

The Division alleged that by bun-dling its Internet Explorer browser withits Windows 95 operating system,Microsoft had violated the consentdecree entered in 1995. The DistrictCourt entered a preliminary injunctionprohibiting the practice, and Microsoftappealed. On June 23, 1998, the D.C.Court of Appeals reversed the lowercourt’s decision and lifted the injunc-tion. The three-judge panel held that thedistrict court judge had deniedMicrosoft certain procedural rights and

that it was inappropriate for it to haveappointed a “special master” to advisethe court on technical issues. The Courtof Appeals remanded the case, whichwas then supplanted by the subsequentcomplaint alleging violations of theSherman Act.

United States v. Tom Paige CateringCo. and Valley Foods, Inc.(12/16/97)

The Division alleged that two Ohiofood service contractors had establisheda joint venture in order illegally toeliminate competition between them forbids on food service contracts with theCleveland Head Start Program. HeadStart, a program funded by the U.S.government, provides comprehensivedevelopmental services, including freelunches, for low-income preschoolchildren. According to the complaint,lunch prices for Head Start programs inCleveland rose by 50 percent after thejoint venture began in 1994. The pro-posed Stipulation and Order, filed withthe complaint in the United StatesDistrict Court for the Northern Districtof Ohio, requires the two companies todissolve their joint venture and prohibitsthem from engaging in similar activitieswith each other or other food servicecontractors. The Final Judgment wasentered on May 15, 1998.

United States v. International Busi-ness Machines Corporation andStorage Technology Corporation(12/18/97)

The Division charged that a 1996distribution agreement between Interna-tional Business Machines Corporation(IBM) and Storage Technology Corpo-ration (STK) restrained competition

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between the two companies in themultibillion dollar market for mainframecomputer disk storage subsystems. IBMand STK are two of only four majorindependent competitors worldwide inthe development, production, andmarketing of mainframe disk storagesubsystems, which store and provideultrafast access to data. The complaintchallenged a 1996 agreement thatimposed substantial financial penaltieson STK if it sold its mainframe diskstorage systems to anyone other thanIBM and imposed financial penalties onIBM if it did not buy a fixed quantity ofdisk storage subsystems products fromSTK. According to the complaint, theseand other anticompetitive terms effec-

tively eliminated STK as anindependent competitor in themarket. On March 20, 1998, theUnited States District Court forthe District of Columbia enteredthe proposed Stipulation andOrder, which prohibits IBM andSTK from maintaining contractprovisions that would financiallypenalize STK for marketingmainframe disk storage sub-systems to customers other thanIBM. The settlement also limits,after 1998, the amount ofmainframe disk storage sub-systems that STK may sellthrough IBM, unless STK alsomakes substantial sales to cus-tomers other than IBM.

United States v. MicrosoftCorp. (Monopolization)(5/18/98)

The Division challenged avariety of practices by Microsoftdesigned to monopolize theInternet browser market in

order to protect Microsoft’s monopolyposition in the personal computeroperating systems market. The com-plaint alleged that, among other things,Microsoft illegally bundled its Internetbrowser with its Windows operatingsystem, attempted to divide marketswith its competitors, and imposedexclusionary terms and conditions in itscontracts with various customers andvendors in violation of Sections 1 and 2of the Sherman Act. The court consoli-dated a parallel action of 20 state attor-neys general with the federal action, andalso consolidated trial on the meritswith the preliminary injunction hearing.Trial began on October 19, 1998. TheDivision and Microsoft each submitted

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the direct testimony of 12 witnesses inwritten form as directed by the court.Cross-examination of these witnesseswas heard in open court. On rebuttal,each side presented three witnesses. Theparties have submitted proposed find-ings of fact to the court, which heardoral argument on the proposed findingson September 21, 1999. On November5, 1999, Judge Jackson issued hisfindings of fact. On December 6, 1999the Division filed Plaintiffs’ Joint Pro-posed Conclusions of Law.

Oral argument on the collateralissues of public access to depositionstook place on October 20, 1998, beforethe United States Court of Appeals forthe D.C. Circuit. On January 29, 1999,the Court of Appeals upheld the districtcourt’s holding, supported by the De-partment, that the Publicity in TakingEvidence Act requires public access todepositions in government Sherman Actcases, subject to reasonable protectionsto be imposed by the district court.

United States v. Federation of Phy-sicians and Dentists, Inc.(8/12/98)

The Division seeks to prohibit thedefendant Federation of Physicians andDentists, Inc. (the Federation), whosemembers include nearly all of the inde-pendent orthopedic surgeons in Dela-ware, from continuing its Section 1conspiracy with its member physiciansto negotiate jointly with various man-aged care plans to obtain higher fees forthe Federation’s otherwise competingorthopedic surgeons. The complaintalleges that the Federation’s representa-tives and its member orthopedic sur-geons reached an understanding that themembers would negotiate only through

the Federation and would resist theefforts of BlueCross BlueShield ofDelaware (BC/BS) to reduce the fees itpaid orthopedic surgeons in Delaware tothe level of fees it paid to other medicalspecialists in Delaware and to orthope-dic surgeons in nearby states. Thecomplaint further alleges that, pursuantto that understanding, nearly all of themembers of the Federation rejected aBC/BS fee proposal and terminated theirindividual provider services contractswith BC/BS. Trial has been set for April2000.

United States v. Medical Mutual ofOhio(9/23/98)

Medical Mutual of Ohio, Ohio’slargest health care insurer, discourageddiscounting and price competitionamong health plans in the Clevelandarea by use of a most favorable rate orMFR (sometimes referred to as most-favored-nation or MFN) contract provi-sion. The MFR provision requiredhospitals contracting with MedicalMutual to charge other health plans 15to 30 percent more than they chargedMedical Mutual. Its purpose was to raisehospital costs for competing healthplans, thereby limiting their ability tocompete with Medical Mutual. MedicalMutual aggressively enforced the provi-sion with well over 100 hospital audits,resulting in millions of dollars in penal-ties paid by the hospitals over the years.After Medical Mutual was notified thatthe Division’s suit was imminent, itannounced that it would stop enforcingits MFR provision. This announcementdid not adequately protect consumers,since there was a risk that, absent adecree, Medical Mutual would reinstatethe MFR provision or implement other

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policies with similar anticompetitiveeffects. Medical Mutual then agreed toentry of a consent decree, which wasentered by the U.S. District Court forthe Northern District of Ohio on Janu-ary 29, 1999.

United States v. Visa U.S.A. Inc.,Visa International Corp., andMasterCard International Incorpo-rated(10/7/98)

On October 7, 1998 the AntitrustDivision filed a complaint in the South-ern District of New York alleging thatVisa and MasterCard, the nation’s twolargest credit card networks, haveadopted rules and practices that limitcompetition in the credit card networkmarket. The complaint identifies twoseparate, but interrelated, competitiveproblems. First, Visa and MasterCardare jointly owned and controlled by thesame group of large banks; as a result,those two networks, which account for75 percent of the market, do not com-pete vigorously against each other.Second, Visa and MasterCard haveadopted rules that restrict the ability oftheir member banks to do business withother credit card networks. In particular,both networks prohibit their memberbanks from issuing American Expressand Discover cards, while allowing thebanks to issue cards on both banknetworks. Trial is set for the summer of2000.

United States v. Mercury PCS II,LLCUnited States v. Omnipoint Corp.United States v. 21st Century Bid-ding Corp.(11/10/98)

The Division filed civil complaintsin U.S. District Court in Washington,D.C., charging Mercury PCS II, LLC,of Jackson, Mississippi; OmnipointCorp. of Bethesda, Maryland; and 21st

Century Bidding Corp. of NewportBeach, California, with using coded bidsduring FCC auctions to negotiateagreements among bidders eliminatingcompetition for licenses to certainbandwidth. According to the com-plaints, the FCC conducted an auctionfor more than 1000 personal communi-cations services (PCS) radio spectrumlicenses to be used to provide digitalwireless telephone services similar tocellular phone service, covering 493cities or regions, from August 1996 toJanuary 1997. On occasion, each of thedefendants coded the final three digits ofits bid to correspond with the FCCnumber for a particular city or regionfor which the defendant wanted alicense. Each defendant used the codesto highlight the license it wanted and toinvite firms that had been competing forthat license to agree to cease bidding forit, in exchange for an agreement that thedefendant would not to bid againstthem in other markets they wanted. Inits complaints, the Division alleged that,as a result of these agreements, thegovernment received less money than itotherwise would have for licenses inIndianapolis, Indiana; Toledo, Ohio; andLubbock, Texas. A proposed consentdecree was filed along with each com-plaint. The final judgments for 21st

Century and Omnipoint were entered onFebruary 24, 1999; the final judgment

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for Mercury PCS was entered on April29, 1999.

United States v. Dentsply Interna-tional, Inc.(1/5/99)

The complaint alleged that DentsplyInternational, Inc., has unlawfullymaintained a monopoly in the marketfor artificial teeth in the United Statesby entering into restrictive dealingarrangements with more than 80 percentof the nation’s tooth distributors, pre-venting them from selling productsmade by Dentsply’s competitors.Dentsply’s efforts to deprive rivals of aneffective distribution network haveresulted in increased prices for artificialteeth, reduced innovation, preventedother firms from competing effectively,and deterred entry into the market.Litigation is pending in the U.S. Dis-trict Court for the District of Delaware.Trial is expected in 2000.

United States v. Federation of Certi-fied Surgeons and Specialists, Inc.and Pershing Yoakley & Associates,P.C.(1/26/99)

On January 26, 1999, the Divisionfiled suit to stop a large number ofgeneral and vascular surgeons in Tampa,Florida, from increasing their fees toartificially high levels through illegaljoint contract negotiations and boycotts.The complaint named as defendants theFederation of Certified Surgeons andSpecialists, Inc. (FCSSI), a corporationformed by 29 competing general andvascular surgeons to obtain higher feesfor their services from managed careplans, and Pershing Yoakley and Associ-ates, P.C. (PYA), an accounting and

consulting firm that represented FCSSIin negotiations. The FCSSI surgeonsmade up the vast majority of the generaland vascular surgeons with operatingprivileges at five Tampa hospitals; in1996, they performed 87 percent of thegeneral and vascular surgeries at thehospitals. The complaint, filed inTampa, alleges that PYA approachedhealth plans on behalf of FCSSI sur-geons to negotiate higher fees andinformed each of them that the surgeonswould terminate their contracts andrefuse to participate in the plan’s net-work unless it contracted with all FCSSIsurgeons under terms proposed by PYA.In one instance, 28 FCSSI surgeonsterminated their contracts with a healthplan before the plan capitulated to PYA’sdemands. A final judgment was enteredon June 1, 1999, which prohibits illegalcontract negotiations and boycotts.

United States v. Citadel Communi-cations Corp., Triathlon Broadcast-ing Company, and Capstar Broad-casting Corporation(4/28/99)

On Wednesday April 28, 1999, theAntitrust Division filed a civil antitrustaction in United States District Court inWashington, D.C., to terminate a jointsales agreement (JSA) between CitadelCommunications Corporation andTriathlon Broadcasting Company. Underthe JSA, Citadel set prices and soldradio advertising time for not only itsown radio stations in Colorado Springs,Colorado, and Spokane, Washington,but also for competing stations ownedby Triathlon. In both markets, Citadeland Triathlon had been direct competi-tors, and the JSA between them endedcompetition to the detriment of adver-tisers. In Colorado Springs, the Com-plaint alleges that Citadel set prices for

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stations constituting 58 percent of theradio advertising market and also at-tempted to eliminate certain discountsby agreements with its remaining com-petitors. In Spokane, the Complaintalleges that Citadel set prices for 44percent of the radio advertising marketunder the JSA with Triathlon. In addi-tion, Triathlon then bought more sta-tions, representing an additional 26percent of the market. Competitionbetween these new Triathlon stationsand the Citadel/Triathlon JSA wassubstantially diminished because ofTriathlon’s common ownership andbecause Triathlon received part of therevenue from the JSA. When the Divi-sion filed the action, it also filed anegotiated final judgment requiringCitadel and Capstar Broadcasting Cor-poration (Triathlon’s successor) toterminate the JSA and requiring Capstarto divest one station in Spokane. Underthe terms of the final judgment, neitherCitadel nor Capstar will own stationsrepresenting more than approximately40 percent of the radio advertisingmarket in either Colorado Springs orSpokane. The final judgment also pre-vents both Citadel and Capstar fromacquiring additional stations or enteringJSAs in either market without notice tothe Division. The Judgment was enteredon August 26, 1999.

United States v. AMR Corporation,American Airlines Inc., and AMREagle Holding Corporation(5/13/99)

On May 13, 1999, the AntitrustDivision filed suit in Wichita, Kansas,against American Airlines Inc., thesecond largest airline in the UnitedStates, for monopolizing and attemptingto monopolize airline passenger serviceto and from Dallas/Ft. Worth Interna-tional Airport (DFW). American domi-nates DFW, the third largest airport inthe United States, flying more than 70percent of all nonstop passengers whouse the airport. The complaint chargesthat American repeatedly sought todrive small, start-up airlines out ofDFW by saturating their routes withadditional flights and cutting fares. Afterit drove out a new entrant, Americanreestablished high fares and reduced itsservice. The complaint describes onAmerican’s responses to VanguardAirlines, Sun Jet, and Western Pacific infour DFW spoke routes: Wichita,Kansas, and Kansas City, Missouri(Vanguard); Long Beach, California(Sun Jet); and Colorado Springs, Colo-rado (Western Pacific). The complaintalleges that American’s conduct waspredatory because the costs of some ofthe flights it added exceeded the rev-enues they generated. American ex-pected to recoup those temporary losses,however, by charging higher fares afteran entrant left the market.


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Antitrust DivisionOrganization Directory

Mailing Address:Office of the Assistant Attorney GeneralAntitrust DivisionU.S. Department of Justice, Room 310910th Street and Constitution Avenue, NWWashington, D.C. 20530-0001

Assistant Attorney GeneralJoel I. Klein 514-2401

Deputy Assistant Attorneys GeneralA. Douglas Melamed 514-2410Timothy F. Bresnahan 514-2408James M. Griffin 514-3543John M. Nannes 514-1157Donna Patterson 307-2032

Chief of StaffAdam M. Golodner 514-8251

Office of Operations/Director of EnforcementConstance Robinson 514-3544

Directors of EnforcementScott D. Hammond 514-4590Mary Jane Moltenbrey 514-2562Marius Schwartz 305-3055

Appellate SectionCatherine O’Sullivan 514-2413Robert Nicholson 514-2489John Powers 514-2414

Civil Task ForceSusan Edelheit, Acting 616-5935

Competition Policy SectionKenneth Heyer 307-6665Andrew R. Dick 307-6341

Computers and Finance SectionNancy Goodman 514-5634N. Scott Sacks 307-6132

Economic Litigation SectionNorman Familant 307-6323Elizabeth A. Reardon 307-6332

Economic Regulatory SectionGeorge Rozanski 307-6591W. Robert Majure 307-6603

Executive OfficeThomas King 514-2421Katherine Crump-Wiesner 514-2421Carl Anderson (ISSG) 633-1413

Foreign Commerce SectionCharles Stark 514-2464Edward Hand 514-2488

Health Care Task ForceGail Kursh 307-5799David Jordan 307-6693

Legal Policy SectionRobert Potter 214-2512Howard Blumenthal 214-2513

Litigation I SectionAnthony Nanni 307-6694David Blotner 307-6695

Litigation II SectionJ. Robert Kramer 307-0924Willie Hudgins 307-0207Mark J. Botti 307-0827Anne M. Purcell 514-5803

Telecommunications Task ForceDonald Russell 514-5621Laury Bobbish 514-5709

Transportation, Energy & AgricultureSectionRoger Fones 307-6351Donna Kooperstein 307-6349

Atlanta Field OfficeJohn Orr 404-331-7100Nezida Davis 404-331-7100

Chicago Field OfficeMarvin Price 312-353-7530

Cleveland Field OfficeScott M. Watson 216-522-4070Michael F. Wood 216-522-2085

Dallas Field OfficeAlan Pason 214-880-9401Duncan Currie 214-880-9401

New York Field OfficeRalph Giordano 212-264-0390Philip Cody 212-264-0390

Philadelphia Field OfficeRobert Connolly 215-597-7405Joseph Muoio 215-597-7405

San Francisco Field OfficeChristopher Crook 415-436-6660Phillip Warren 415-436-6660

Internet AccessFor additional information on the AntitrustDivision, visit our website:www.usdoj.gov/atrSend all Internet correspondence to:[email protected]

All phone numbers listed are in the 202area code, unless otherwise noted.

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