[Federal Register Volume 82, Number 74 (Wednesday, April 19, 2017)]
[Notices]
[Pages 18468-18482]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-07924]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States V. Danone S.A. and the Whitewave Foods Company;
Proposed Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States of America v.
[[Page 18469]]
Danone S.A. and The WhiteWave Foods Company, Civil Action No. 00592. On
April 3, 2017, the United States filed a Complaint alleging that Danone
S.A.'s proposed acquisition of The WhiteWave Foods Company would
violate Section 7 of the Clayton Act, 15 U.S.C. 18. The proposed Final
Judgment, filed at the same time as the Complaint, requires Danone S.A.
to divest its Stonyfield Farms, Inc. subsidiary, including
manufacturing, administrative, storage, and distribution facilities in
Londonderry, New Hampshire; trademarks to Stonyfield Farms brands,
including Stonyfield and Brown Cow; and certain other tangible and
intangible assets.
Copies of the Complaint, proposed Final Judgment and Competitive
Impact Statement are available for inspection on the Antitrust
Division's Web site at http://www.justice.gov/atr and at the Office of
the Clerk of the United States District Court for the District of
Columbia. Copies of these materials may be obtained from the Antitrust
Division upon request and payment of the copying fee set by Department
of Justice regulations.
Public comment is invited within 60 days of the date of this
notice. Such comments, including the name of the submitter, and
responses thereto, will be posted on the Antitrust Division's Web site,
filed with the Court, and, under certain circumstances, published in
the Federal Register. Comments should be directed to Maribeth Petrizzi,
Chief, Litigation II Section, Antitrust Division, Department of
Justice, 450 Fifth Street NW., Suite 8700, Washington, DC 20530
(telephone: 202-307-0924).
Patricia A. Brink,
Director of Civil Enforcement.
United States District Court for the District of Columbia
United States of America, Department of Justice, Antitrust
Division, 450 5th Street NW., Suite 8700, Washington, D.C. 20530,
Plaintiff, v. Danone S.A., 17, Boulevard Haussmann, Paris, France,
75009, and The Whitewave Foods Company, 1225 Seventeenth Street,
Suite 1000, Denver, Colorado 80202, Defendants.
Case No.: 17-cv-00592 (KBJ)
Judge: Ketanji Brown Jackson
COMPLAINT
The United States of America (``United States''), acting under the
direction of the Attorney General of the United States, brings this
civil antitrust action for equitable relief against defendants Danone
S.A. (``Danone'') and The WhiteWave Foods Company (``WhiteWave''), for
violating Section 7 of the Clayton Act, 15 U.S.C. 18. The United States
alleges as follows:
I. NATURE OF THE ACTION
1. On July 6, 2016, Danone, the leading U.S. manufacturer of
organic yogurt, agreed to acquire WhiteWave, the leading U.S.
manufacturer of fluid organic milk, for approximately $12.5 billion.
Danone has participated in the raw organic milk and fluid organic milk
markets for the past two decades through a strategic partnership with
WhiteWave's closest competitor, CROPP Cooperative (``CROPP''). As a
result, Danone's acquisition of WhiteWave effectively brings together
WhiteWave and CROPP, the top purchasers of raw organic milk in the
northeast United States and the producers of the three leading brands
of fluid organic milk in the United States.
2. Danone is invested in CROPP's success through two agreements,
pursuant to which CROPP supplies almost all organic milk requirements
for Danone's market-leading Stonyfield organic yogurt brand (``Supply
Agreement'') and licenses from Danone the exclusive right to produce
Stonyfield-branded fluid organic milk (``License Agreement''). The two
companies have cooperated with each other to bring Stonyfield products
to market and to compete against WhiteWave. WhiteWave is CROPP's
closest competitor, and competes to contract with farmers for the
purchase of raw organic milk in the northeast United States, and to
manufacture and sell fluid organic milk to retail customers nationwide.
3. Post merger, the entanglements between the merged entity
(``Danone-WhiteWave'') and CROPP would provide incentives and
opportunities for the two companies to interact, strategize, coordinate
marketing, and exchange confidential information. As the only two major
purchasers of raw organic milk in the northeast United States, and the
two primary sellers of fluid organic milk nationwide, post-merger
Danone-WhiteWave and CROPP would have the incentive to compete less
aggressively to recruit and retain organic farmers and customer
accounts. This would likely result in less favorable contract terms for
northeast farmers for raw organic milk, and higher prices for fluid
organic milk consumers. Given the entanglements between Danone and
CROPP, the merger between Danone and WhiteWave likely would
substantially lessen competition in the purchase of raw organic milk in
the northeast and the manufacture and sale of fluid organic milk in the
United States in violation of Section 7 of the Clayton Act, 15 U.S.C.
18.
II. DEFENDANTS
4. Danone S.A., a soci[eacute]t[eacute] anonyme organized under the
laws of France, is the ultimate parent company of Stonyfield Farms,
Inc. (``Stonyfield''), the leading U.S. manufacturer of organic yogurt,
and one of the largest consumers of raw and processed organic milk in
the nation. Danone's 2015 annual sales were approximately $24.3
billion. Stonyfield is Danone's U.S. organic dairy subsidiary. It is a
Delaware corporation that manufactures yogurt at a facility in
Londonderry, New Hampshire.
5. The WhiteWave Foods Company is a Delaware corporation
headquartered in Denver, Colorado. WhiteWave's premium dairy division
is one of the largest purchasers of raw organic milk in the northeast
United States, and sells fluid organic milk, organic yogurt, and other
organic dairy products nationwide through its Horizon dairy and Wallaby
organic yogurt food businesses. WhiteWave's 2015 annual sales were
$3.86 billion.
III. JURISDICTION AND VENUE
6. The United States brings this action under Section 15 of the
Clayton Act, 15 U.S.C. 25, to prevent and restrain defendants from
violating Section 7 of the Clayton Act, 15 U.S.C. 18.
7. Defendants purchase raw organic milk in the northeast United
States and sell organic dairy products nationwide. They are engaged in
the regular and continuous flow of interstate commerce, and their
activities in organic dairy procurement and manufacturing have had a
substantial effect upon interstate commerce. The Court has subject
matter jurisdiction over this action under Section 15 of the Clayton
Act, 15 U.S.C. 25, and 28 U.S.C. 1331, 1337(a), and 1345.
8. Venue for Danone and WhiteWave is proper in this district under
Section 12 of the Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1391(c).
Defendants have consented to venue and personal jurisdiction in the
District of Columbia.
IV. BACKGROUND
A. Industry Overview
9. Milk collected from a cow that has not been pasteurized and
processed is called raw milk. Conventional raw milk comes from non-
organic cows. Raw organic milk is milk collected from organic cows on
organic farms that must meet rigorous USDA regulations governing
grazing practices, hauling, handling, and processing.
[[Page 18470]]
10. Individual farmers typically sell their raw organic milk either
in affiliation with a cooperative, which negotiates a sales price for
its farmers, or through a contract, at a specified price. Farmers
choose to affiliate with purchasers on the basis of service, price, and
other financial incentives. Purchasers strive to form networks of
farmers that meet their needs for raw organic milk and that permit
efficient hauling routes. Raw organic milk purchasers compete to
attract farmers to their networks.
11. Purchasers arrange for raw organic milk to be picked up from
farms and transported to milk processing plants. Raw organic milk will
spoil if not processed within 72 hours of collection from a cow. At the
processing plant, raw organic milk is separated into fat and skim milk,
pasteurized to kill bacteria, and homogenized to reduce the size of the
remaining milk fat particles. The final result of this process is fluid
organic milk. Most raw organic milk becomes fluid organic milk, and
most fluid organic milk is packaged for retail sale as branded or
private-label products that can be shipped to retail customers
nationally. Some fluid organic milk is transported by bulk tanker to a
manufacturer for conversion into another product, such as organic
yogurt.
12. Fluid organic milk is packaged and sold directly to consumers
in a variety of retail outlets. Most retailers prefer to carry at least
one brand of packaged fluid organic milk in addition to their own
private-label fluid organic milk. By monitoring retail shelves, fluid
organic milk competitors can track which rival brands are carried by
particular retail customers.
B. Pre-Acquisition Relationships Between WhiteWave, Danone, and CROPP
1. Danone/CROPP Agreements
13. For more than twenty years, Danone's Stonyfield subsidiary has
cultivated a strategic partnership with CROPP. Stonyfield, the leading
manufacturer of organic yogurt in the United States, relies on CROPP
for the supply of almost all of its organic milk requirements. CROPP,
in turn, relies on the revenue stream from Stonyfield's organic milk
purchases to retain and compensate its farmer members, as Stonyfield
has been CROPP's largest customer for the same period of time.
Presently, CROPP supplies Danone with at least 90 percent of
Stonyfield's requirements for raw organic milk, fluid organic milk, and
milk equivalents (e.g., cream, condensed, or powdered organic milk) in
the United States.
14. This longstanding Supply Agreement is critical to the viability
of each of Danone and CROPP's businesses, and this dependence over the
years has forged a strong relationship. This relationship includes the
sharing of competitively sensitive information regarding, for example,
costs, sales, products, and customers.
15. Danone's strategic partnership with CROPP deepened in 2009,
when it granted CROPP an exclusive license allowing CROPP to produce
and sell Stonyfield branded fluid organic milk, in exchange for a
royalty payment. This License Agreement has allowed CROPP to expand its
sales in the northeast, and to add the well-known Stonyfield trademark
to a portfolio that already included the cooperative's own Organic
Valley fluid organic milk brand.
16. As a result of the License Agreement, Danone and CROPP share
the Stonyfield brand, which competes with WhiteWave's market-leading
Horizon brand. The Stonyfield brand-sharing allowed under the License
Agreement necessitates frequent meetings between Danone and CROPP to
discuss marketing and to collaborate on promotions, which have required
the sharing of confidential and competitively sensitive business
information. CROPP's Stonyfield fluid organic milk benefits from
Danone's investments in the Stonyfield organic yogurt brand. Danone, in
turn, receives a royalty payment while also benefitting from the
perception of a broader Stonyfield portfolio, without requiring an
investment in the production of Stonyfield fluid organic milk.
2. WhiteWave and CROPP
17. WhiteWave and CROPP are the first- and second-largest
purchasers of raw organic milk in the northeast United States,
respectively. To supply its needs, WhiteWave contracts with
approximately 600 farms in the northeast and 800 farms in total
nationwide. To supply Danone and its own needs, CROPP contracts with
500 northeast farms and 1,500 farms in total nationwide.
18. WhiteWave and CROPP compete to offer farmers the best price for
their raw organic milk, the highest quality service, and the most
attractive incentives to convert from conventional to organic dairy
farming. Farmers, in turn, request concessions from WhiteWave based on
CROPP's offers, and vice versa.
19. WhiteWave's Horizon brand is the only nationwide competitor to
CROPP's Organic Valley brand and Danone-CROPP's Stonyfield brand for
the sale of fluid organic milk to retailers.
V. RELEVANT MARKETS
A. The Purchase of Raw Organic Milk in the Northeast
20. The purchase of raw organic milk is a relevant product market
and line of commerce under Section 7 of the Clayton Act. Although raw
organic milk could be sold by farmers as conventional milk, the milk
would typically be sold at a loss because conventional milk prices do
not cover the organic farmer's production costs. Therefore, farmers who
sell raw organic milk cannot economically switch to supplying
purchasers of conventional milk.
21. Transporting raw organic milk produced by northeast farmers
beyond the northeast United States is expensive, risks spoilage of the
raw organic milk, and stretches the outer bounds of regulatory
requirements that raw organic milk be processed within 72 hours of its
collection. Most raw organic milk is processed within several hundred
miles of the location where it is produced. Indeed, the relevant
geographic market for the purchase of raw organic milk is referred to
in the dairy industry as ``the northeast,'' because the farmers who
sell raw organic milk to WhiteWave and to Danone (through CROPP) are
located in the northeast United States. For these purposes, the
northeast includes Connecticut, Delaware, Maine, Massachusetts, New
Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont,
and Maryland. A hypothetical monopsonist purchaser of raw organic milk
from farmers in the northeast would profitably impose a reduction in
the price of raw organic milk paid to farmers by at least a small but
significant and non-transitory amount (e.g., five percent).
B. The Sale of Fluid Organic Milk in the United States
22. Fluid organic milk is a relevant product market and line of
commerce under Section 7 of the Clayton Act. Consumers do not
significantly switch away from fluid organic milk, for example to
conventional milk, when the price increases by a significant non-
transitory amount. The relevant geographic market for the sale of fluid
organic milk is no larger than the United States. Fluid organic milk is
pasteurized using methods that allow for a longer shelf life than most
conventional milk, allowing it to be shipped long distances when
necessary. A hypothetical monopolist seller of fluid organic milk in
the United States would profitably impose at least a small but
significant and non-transitory price increase.
[[Page 18471]]
VI. ANTICOMPETITIVE EFFECTS
23. Given the strategic partnership between Danone and CROPP, this
transaction gives Danone the incentive and ability to limit the
existing competition between WhiteWave and CROPP for both farmer
contracts and retail customer accounts. Danone and CROPP are linked
together by the Supply Agreement, the License Agreement, and years of
operational cooperation. They are dependent on each other for supply
and revenue, respectively, and they share the Stonyfield brand. Their
aligned interests and mutual dependence make it unlikely, therefore,
that CROPP would continue to compete fiercely with Danone-WhiteWave
post merger.
24. Concentrated markets, coupled with the entanglements created by
these agreements, increase the likelihood of anticompetitive effects.
WhiteWave and CROPP collectively purchase approximately 70 percent of
the available northeast raw organic milk supply. The small, regional
dairies that make up the remaining 30 percent cannot expand their
farmer networks (thereby increasing their own purchases) without access
to the fluid organic milk customers currently supplied by WhiteWave and
CROPP.
25. In retail fluid organic milk sales, Horizon, Organic Valley,
and Stonyfield account for 41 percent, 10 percent, and 5 percent of
shares, respectively. For branded fluid organic milk, specifically,
Horizon, Organic Valley, and Stonyfield represent 67 percent, 16
percent, and 8 percent of national retail sales, respectively. The
merger links these three firms, which together control almost 56
percent of all fluid organic milk sales, and 91 percent of all branded
fluid organic milk sales.
26. CROPP and WhiteWave generally can identify when and where they
are competing against each other for farmers or retail customers.
Affiliations between farmers and purchasers are well known because
there are relatively few purchasers and one can readily observe which
farmers are in a given purchaser's network. Relationships between fluid
organic milk sellers and their retail customers are also well known
because it is easy to observe which brands are available in each retail
store. These highly transparent supply and customer relationships allow
market participants to identify their particular rival in most
competitive interactions. Given the transparency of these markets, the
merger would curtail competition between the Danone-CROPP partnership
and WhiteWave.
27. The merger reduces the incentives for the combined Danone-
WhiteWave to compete aggressively against CROPP, and the supply and
license relationships linking the merged entity to CROPP will provide
opportunities for WhiteWave and CROPP to interact, strategize,
coordinate marketing, and exchange confidential and competitively
sensitive information.
28. The only way for CROPP to continue to compete aggressively
against WhiteWave post merger is by severing its Supply Agreement and
License Agreement with Danone. This would have significant costs and
risks. In light of these costs and risks, and as CROPP's ability to
compete with WhiteWave is undermined by the merger, it will likely find
it more profitable to remain in the partnership than to abandon it. The
result is a likely lessening of competition in the purchase of raw
organic milk from farmers and in the sale of fluid organic milk to
retailers.
VII. ABSENCE OF COUNTERVAILING FACTORS
29. New entry and expansion by existing competitors are unlikely to
prevent or remedy the acquisition's likely anticompetitive effects.
Barriers to entry and expansion in the raw organic and fluid organic
milk markets include: (1) the substantial time and expense required to
build a brand reputation sufficient to provide an outlet for raw
organic milk purchases and fluid organic milk sales; (2) substantial
sunk costs to be able to sell fluid organic milk in wholesale and
retail outlets; (3) the expense of capital investments necessary to
manufacture fluid organic milk; and (4) the investments necessary to
develop raw organic milk hauling, fluid organic milk distributor
relationships, and fluid organic milk delivery routes.
VIII. VIOLATIONS ALLEGED
30. The acquisition of WhiteWave by Danone likely would
substantially lessen competition in each of the relevant markets in
violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
31. Unless enjoined, the transaction will have the following
anticompetitive effects, among others:
a. Competition generally in the relevant markets would be
substantially reduced; and
b. Prices and commercial terms for the relevant products would be
less favorable.
IX. REQUEST FOR RELIEF
32. The United States requests that this Court:
a. adjudge and decree Danone's proposed acquisition of WhiteWave to
be unlawful and in violation of Section 7 of the Clayton Act, 15 U.S.C.
18;
b. preliminarily and permanently enjoin and restrain defendants and
all persons acting on their behalf from consummating Danone's proposed
acquisition of WhiteWave or from entering into or carrying out any
contract, agreement, plan, or understanding, the effect of which would
be to combine Danone and WhiteWave;
c. award the United States its costs of this action; and
d. award the United States such other relief as the Court deems
just and proper.
Dated: April 3, 2017.
Respectfully submitted,
FOR PLAINTIFF UNITED STATES:
/s/--------------------------------------------------------------------
Brent C. Snyder,
Acting Assistant Attorney General, Antitrust Division.
/s/--------------------------------------------------------------------
Patricia A. Brink,
Director of Civil Enforcement, Antitrust Division.
/s/--------------------------------------------------------------------
Maribeth Petrizzi (D.C. Bar #435204),
Chief, Litigation II Section, Antitrust Division.
/s/--------------------------------------------------------------------
Stephanie A. Fleming,
Assistant Chief, Litigation II Section, Antitrust Division.
/s/--------------------------------------------------------------------
Suzanne Morris* (D.C. Bar #450208)
Rebecca Valentine (D.C. Bar #989607)
Jeremy Cline (D.C. Bar #1011073),
United States Department of Justice, Antitrust Division Litigation
II Section, 450 Fifth Street NW., Suite 8700, Washington, DC 20530,
Telephone: (202) 307-1188, Facsimile: (202) 514-9033,
[email protected].
*LEAD ATTORNEY TO BE NOTICED
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Danone S.A. and The
WhiteWave Foods Company, Defendants.
Case No.: 17-cv-00592 (KBJ)
Judge: Ketanji Brown Jackson
COMPETITIVE IMPACT STATEMENT
Plaintiff, United States of America (``United States''), pursuant
to Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA''
or ``Tunney Act''), 15 U.S.C. 16(b)-(h), files this Competitive Impact
Statement relating to the proposed Final Judgment submitted for entry
in this civil antitrust proceeding.
[[Page 18472]]
I. NATURE AND PURPOSE OF THE PROCEEDING
Pursuant to an Agreement and Plan of Merger dated July 6, 2016,
Danone S.A. (``Danone'') has agreed to purchase The WhiteWave Foods
Company (``WhiteWave'') for approximately $12.5 billion. Danone has
participated in the raw organic milk and fluid organic milk markets for
the past two decades through a strategic partnership with WhiteWave's
closest competitor, CROPP Cooperative (``CROPP''). As a result,
Danone's acquisition of WhiteWave effectively brings together WhiteWave
and CROPP, the top purchasers of raw organic milk in the northeast
United States and the producers of the three leading brands of fluid
organic milk in the United States.
The United States filed a civil antitrust Complaint on April 3,
2017, seeking to enjoin the proposed acquisition. The Complaint alleges
that the acquisition likely would substantially lessen competition in
violation of Section 7 of the Clayton Act, 15 U.S.C. 18, in the
purchase of raw organic milk in the northeast United States and in the
manufacture and sale of fluid organic milk in the United States. That
loss of competition likely would result in less favorable contract
terms for northeast farmers for raw organic milk and higher prices for
fluid organic milk consumers in the United States.
At the same time the Complaint was filed, the United States filed a
Hold Separate Stipulation and Order and proposed Final Judgment, which
are designed to eliminate the anticompetitive effects of Danone's
acquisition of WhiteWave. Under the proposed Final Judgment, which is
explained more fully below, the defendants are required to divest
Stonyfield Farm, Inc. (``Stonyfield''), including its headquarters,
facility and warehouse in Londonderry, New Hampshire; certain classes
of tangible property used exclusively by Stonyfield; all other tangible
property relating to Stonyfield; and all of the intangible assets
(i.e., intellectual property and know-how) owned, licensed, controlled,
maintained or used primarily by the business. Under the terms of the
Hold Separate Stipulation and Order, defendants will take certain steps
to ensure that Stonyfield is operated as a competitively independent,
economically viable and ongoing business concern; that it will remain
independent and uninfluenced by the consummation of the acquisition,
and that competition is maintained during the pendency of the ordered
divestiture.
The United States and defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA. Entry of
the proposed Final Judgment would terminate this action, except that
the Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II. DESCRIPTION OF THE EVENTS GIVING RISE TO THE ALLEGED VIOLATION
A. Defendants
Danone S.A., a soci[eacute]t[eacute] anonyme organized under the
laws of France, is the ultimate parent company of Stonyfield Farms,
Inc., the leading U.S. manufacturer of organic yogurt, and one of the
largest consumers of raw and processed organic milk in the nation.
Danone's 2015 annual sales were approximately $24.3 billion. Stonyfield
is Danone's U.S. organic dairy subsidiary. It is a Delaware corporation
that manufactures yogurt at a facility in Londonderry, New Hampshire.
The WhiteWave Foods Company is a Delaware corporation headquartered
in Denver, Colorado. WhiteWave's premium dairy division is one of the
largest purchasers of raw organic milk in the northeast, and sells
fluid organic milk, organic yogurt, and other organic dairy products
nationwide through its Horizon dairy and Wallaby organic yogurt food
businesses. WhiteWave's 2015 annual sales were $3.86 billion.
B. The Markets
1. Industry Background
Milk that has been collected from a cow but not pasteurized and
processed is called raw milk. Conventional raw milk comes from non-
organic cows. Raw organic milk is collected from organic cows on
organic farms that must meet rigorous USDA regulations governing
grazing practices, hauling, handling, and processing.
Individual farmers typically sell their raw organic milk either in
affiliation with a cooperative, which negotiates a sales price for its
farmers, or through a contract, at a specified price. Farmers choose to
affiliate with purchasers on the basis of service, price, and other
financial incentives. Purchasers strive to form networks of farmers
that meet their needs for raw organic milk and that permit efficient
hauling routes. Raw organic milk purchasers compete to attract farmers
to their networks.
Purchasers arrange for raw organic milk to be picked up from farms
and transported to milk processing plants. Raw organic milk will spoil
if not processed within 72 hours of collection from a cow. At the
processing plant, raw organic milk is separated into fat and skim milk,
pasteurized to kill bacteria, and homogenized to reduce the size of the
remaining milk fat particles. The final result of this process is fluid
organic milk. Most raw organic milk becomes fluid organic milk, and
most fluid organic milk is packaged for retail sale as branded or
private-label products that can be shipped to retail customers
nationally. Some fluid organic milk is transported by bulk tanker to a
manufacturer for conversion into another product, such as organic
yogurt.
Fluid organic milk is packaged and sold directly to consumers in a
variety of retail outlets. Most retailers prefer to carry at least one
brand of packaged fluid organic milk in addition to their own private-
label fluid organic milk. By monitoring retail shelves, fluid organic
milk competitors can track which rival brands are carried by particular
retail customers.
2. Pre-Acquisition Relationships Between WhiteWave, Danone, and CROPP
a. Danone and CROPP
For more than twenty years, Danone's Stonyfield subsidiary has
cultivated a strategic partnership with CROPP. Stonyfield, the leading
manufacturer of organic yogurt in the United States, relies on CROPP
for the supply of almost all of its organic milk requirements. CROPP,
in turn, relies on the revenue stream from Stonyfield's organic milk
purchases to retain and compensate its farmer members, as Stonyfield
has been CROPP's largest customer for the same period of time.
Presently, CROPP supplies Danone with at least 90 percent of
Stonyfield's requirements for raw organic milk, fluid organic milk, and
milk equivalents (e.g., cream, condensed, or powdered organic milk) in
the United States.
This supply relationship, memorialized in a longstanding ``Supply
Agreement'' is critical to the viability of both Danone and CROPP's
businesses, and this dependence over the years has forged a strong
relationship. This relationship includes the sharing of competitively
sensitive information regarding, for example, costs, sales, products,
and customers.
Danone's strategic partnership with CROPP deepened in 2009, when it
granted CROPP an exclusive license allowing CROPP to produce and sell
Stonyfield branded fluid organic milk, in exchange for a royalty
payment (``License Agreement''). This License
[[Page 18473]]
Agreement has allowed CROPP to expand its sales in the northeast, and
to add the well-known Stonyfield trademark to a portfolio that already
included the cooperative's own Organic Valley fluid organic milk brand.
As a result of the License Agreement, Danone and CROPP share the
Stonyfield brand, which competes with WhiteWave's market-leading
Horizon brand. The Stonyfield brand-sharing allowed under the License
Agreement necessitates frequent meetings between Danone and CROPP to
discuss marketing and to collaborate on promotions, which have required
the sharing of confidential and competitively sensitive business
information. CROPP's Stonyfield fluid organic milk benefits from
Danone's investments in the Stonyfield organic yogurt brand. Danone, in
turn, receives a royalty payment while also benefitting from the
perception of a broader Stonyfield portfolio, without requiring an
investment in the production of Stonyfield fluid organic milk.
b. WhiteWave and CROPP
WhiteWave and CROPP are the first- and second-largest purchasers of
raw organic milk in the northeast, respectively. To supply its needs,
WhiteWave contracts with approximately 600 farms in the northeast and
800 farms in total nationwide. To supply Danone and its own needs,
CROPP contracts with 500 northeast farms and 1,500 farms in total
nationwide.
WhiteWave and CROPP compete to offer farmers the best price for
their raw organic milk, the highest quality service, and the most
attractive incentives to convert from conventional to organic dairy
farming. Farmers, in turn, request concessions from WhiteWave based on
CROPP's offers, and vice versa.
WhiteWave's Horizon brand is the only nationwide competitor to
CROPP's Organic Valley brand and Danone-CROPP's Stonyfield brand for
the sale of fluid organic milk to retailers.
3. The Purchase of Raw Organic Milk in the Northeast
The purchase of raw organic milk is a relevant product market and
line of commerce under Section 7 of the Clayton Act. Although raw
organic milk could be sold by farmers as conventional milk, the milk
would typically be sold at a loss because conventional milk prices do
not cover the organic farmer's production costs. Therefore, farmers who
sell raw organic milk cannot economically switch to supplying
purchasers of conventional milk.
Transporting raw organic milk produced by northeast farmers beyond
the northeast is expensive, risks spoilage of the raw organic milk, and
stretches the outer bounds of regulatory requirements that raw organic
milk be processed within 72 hours of its collection. Most raw organic
milk is processed within several hundred miles of the location where it
is produced. Indeed, the relevant geographic market for the purchase of
raw organic milk is referred to in the dairy industry as ``the
northeast,'' because the farmers who sell raw organic milk to WhiteWave
and to Danone (through CROPP) are located in the northeast. For these
purposes, the northeast includes Connecticut, Delaware, Maine,
Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode
Island, Vermont, and Maryland. A hypothetical monopsonist purchaser of
raw organic milk from farmers in the northeast would profitably impose
a reduction in the price of raw organic milk paid to farmers by at
least a small but significant and non-transitory amount (e.g., five
percent).
4. The Sale of Fluid Organic Milk in the United States
Fluid organic milk is a relevant product market and line of
commerce under Section 7 of the Clayton Act. Consumers do not
significantly switch away from fluid organic milk, for example to
conventional milk, when the price increases by a significant non-
transitory amount. The relevant geographic market for the sale of fluid
organic milk is no larger than the United States. Fluid organic milk is
pasteurized using methods that allow for a longer shelf life than most
conventional milk, allowing it to be shipped long distances when
necessary. A hypothetical monopolist seller of fluid organic milk in
the United States would profitably impose at least a small but
significant and non-transitory price increase.
5. Anticompetitive Effects
Given the strategic partnership between Danone and CROPP, this
transaction gives Danone the incentive and ability to limit the
existing competition between WhiteWave and CROPP for both farmer
contracts and retail customer accounts. Danone and CROPP are linked
together by the Supply Agreement, the License Agreement, and years of
operational cooperation. They are dependent on each other for supply
and revenue, respectively, and they share the Stonyfield brand. Their
aligned interests and mutual dependence make it unlikely, therefore,
that CROPP would continue to compete fiercely with Danone-WhiteWave
post merger.
Concentrated markets, coupled with the entanglements created by
these agreements, increase the likelihood of anticompetitive effects.
WhiteWave and CROPP collectively purchase approximately 70 percent of
the available northeast raw organic milk supply. The small, regional
dairies that make up the remaining 30 percent cannot expand their
farmer networks (thereby increasing their own purchases) without access
to the fluid organic milk customers currently supplied by WhiteWave and
CROPP.
In retail fluid organic milk sales, Horizon, Organic Valley, and
Stonyfield account for 41 percent, 10 percent, and 5 percent of shares,
respectively. For branded fluid organic milk, specifically, Horizon,
Organic Valley, and Stonyfield represent 67 percent, 16 percent, and 8
percent of national retail sales, respectively. The merger links these
three firms, which together control almost 56 percent of all fluid
organic milk sales, and 91 percent of all branded fluid organic milk
sales.
CROPP and WhiteWave generally can identify when and where they are
competing against each other for farmers or retail customers.
Affiliations between farmers and purchasers are well known because
there are relatively few purchasers and one can readily observe which
farmers are in a given purchaser's network. Relationships between fluid
organic milk sellers and their retail customers are also well known
because it is easy to observe which brands are available in each retail
store. These highly transparent supply and customer relationships allow
market participants to identify their particular rival in most
competitive interactions. Given the transparency of these markets, the
merger would curtail competition between the Danone-CROPP partnership
and WhiteWave.
The merger would have reduced the incentives for the combined
Danone-WhiteWave to compete aggressively against CROPP, and the supply
and license relationships linking the merged entity to CROPP would have
provided opportunities for WhiteWave and CROPP to interact, strategize,
coordinate marketing, and exchange confidential and competitively
sensitive information.
The only way for CROPP to continue to compete aggressively against
WhiteWave post merger would have been to sever its Supply Agreement and
License Agreement with Danone. This would have had significant costs
and risks. In light of these costs and risks, and as CROPP's ability to
compete with WhiteWave is undermined by the
[[Page 18474]]
merger, it likely would have found it more profitable to remain in the
partnership than to abandon it. The result would have been a likely
lessening of competition in the purchase of raw organic milk from
farmers and in the sale of fluid organic milk to retailers.
6. Difficulty of Entry or Expansion
New entry and expansion by existing competitors are unlikely to
prevent or remedy the acquisition's likely anticompetitive effects.
Barriers to entry and expansion in the raw organic and fluid organic
milk markets include: (1) the substantial time and expense required to
build a brand reputation sufficient to provide an outlet for raw
organic milk purchases and fluid organic milk sales; (2) substantial
sunk costs to be able to sell fluid organic milk in wholesale and
retail outlets; (3) the expense of capital investments necessary to
manufacture fluid organic milk; and (4) the investments necessary to
develop raw organic milk hauling, fluid organic milk distributor
relationships, and fluid organic milk delivery routes.
III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT
The divestiture requirement of the proposed Final Judgment will
eliminate the anticompetitive effects of the acquisition in the markets
for the purchase of raw organic milk in the northeast and the
manufacture and sale of fluid organic milk nationwide by establishing a
new, independent, and economically viable competitor. The divestiture
of Stonyfield effectively eliminates both the entanglements between
Danone and CROPP and the increased incentive to reduce competition
between the major brands of fluid organic milk, which otherwise would
have resulted from the transaction. Pursuant to Paragraph IV(A) of the
proposed Final Judgment, the defendants are required to divest
Stonyfield within ninety (90) days after the filing of the Complaint,
or five (5) days after notice of the entry of the Final Judgment by the
Court, whichever is later. The assets must be divested in such a way as
to satisfy the United States in its sole discretion that the operations
can and will be operated by the purchaser as a viable, ongoing business
that can compete effectively in the production and sale of Stonyfield
products. Defendants must take all reasonable steps necessary to
accomplish the divestiture quickly and shall cooperate with prospective
purchasers.
Post merger, Danone's long-term Supply and License Agreements with
CROPP would have connected CROPP with WhiteWave, its primary pre-merger
competitor. These entanglements between the merged entity and CROPP
would have provided incentives and opportunities for the two companies
to interact, strategize, coordinate marketing and exchange confidential
information. As a result of these incentives and opportunities, the
companies would likely have competed less aggressively to recruit and
retain organic farmers and customer accounts post merger. Consequently,
organic farmers in the northeast would likely have received less
favorable contract terms, and fluid organic milk customers nationwide
would likely have paid higher prices. The Final Judgment requires the
divestiture of the entire Stonyfield business, which will sever
Danone's contractual relationships with CROPP and reduce the likelihood
of anticompetitive effects in the markets for the purchase of raw
organic milk in the northeast and the manufacture and sale of fluid
organic milk in the United States.
A. Divestiture Assets
The Divestiture Assets, as defined in Paragraph II(M), encompass
the entire Stonyfield business, including its headquarters, facility
and warehouse in Londonderry, New Hampshire. Stonyfield manufactures
and sells organic yogurt to customers throughout the United States and
raw and fluid organic milk are its key ingredients. Stonyfield's
facility in Londonderry has an established record as a high-quality,
efficient production facility with sufficient capacity to meet current
and future demand for its products.
Pursuant to Paragraph II(M)(2), the proposed Final Judgment
requires the divestiture of certain tangible assets used exclusively by
Stonyfield and other tangible assets relating to Stonyfield. For the
tangible assets shared by Danone and Stonyfield, Danone and Stonyfield
will each be entitled to retain that portion of the asset that relates
to its respective business.
The proposed Final Judgment also requires the divestiture of all
intangible assets owned, licensed, controlled, maintained or used
primarily by Stonyfield. For all other intangible assets that
Stonyfield uses in connection with the development, production,
manufacture or sale of any Stonyfield product, but does not own or have
specific rights to (including intangible assets related to the design
and manufacture of certain plastic bottles), the Divestiture Assets
include non-exclusive, perpetual, royalty-free licenses in accordance
with Paragraphs II(M)(3)(c) and II(M)(3)(d). If Danone's consent or
waiver of exclusive rights is required for the Acquirer to access or
utilize these licenses, Danone will take all steps necessary to remove
any impediments that could prevent the Acquirer from utilizing these
licenses. The Divestiture Assets do not include the intellectual
property rights to the Oikos and Activia brands. Stonyfield does not
currently manufacture any products under these brands, but Danone
manufactures two successful product lines under these trademarks.
Accordingly, in an effort to minimize future entanglements between
Danone and the Acquirer, the Acquirer will not receive the rights to
use the Oikos and Activia trademarks.
Paragraph II(M)(3)(b) of the proposed Final Judgment includes a
conditional non-exclusive, perpetual, royalty-free license for the
Acquirer to use Danone's intellectual property relating to the formula,
recipe, and specifications for the production of Stonyfield's
conventional Greek yogurt products manufactured under the Brown Cow
trademark (or ``Brown Cow Greek Formula,'' as defined in Paragraph
II(H) of the proposed Final Judgment). This license is conditioned on
Stonyfield's continued use of the Brown Cow Greek Formula. If prior to
the divestiture Stonyfield elects to produce its Brown Cow conventional
Greek yogurts at its Londonderry facility, and no longer uses the Brown
Cow Greek Formula, the condition will not have been met.
These tangible and intangible assets that comprise the Divestiture
Assets will provide the Acquirer with the physical tools, knowledge and
rights needed to develop, produce, manufacture and sell any product
produced by Stonyfield.
B. Transition Services and Co-Packing Agreements
The Acquirer may require a transition services agreement for back
office and information technology services to ensure the continuity of
the operations of the Stonyfield business. The proposed Final Judgment,
Paragraph IV(G), provides the Acquirer with the option of a transition
services agreement for one (1) year, with one or more possible
extensions of the term for not more than an additional twelve (12)
months.
Additionally, Danone currently provides to Stonyfield certain raw
materials and services related to operations, quality control and
design to assist with its production and regulatory compliance. The
Acquirer initially may require a ready supply of raw materials and the
ability to access these
[[Page 18475]]
specialized services. Therefore, Paragraph IV(H) of the proposed Final
Judgment provides that, at the option of the Acquirer, Danone shall
enter into one or more transition services agreements with the Acquirer
to meet all or part of the Acquirer's needs for a period of up to six
(6) months. Those agreements may relate to raw material purchases; the
operation of Stonyfield's facilities; and/or quality control and design
services for production and regulatory compliance. The United States,
in its sole discretion, may approve extensions of these agreements for
a period totaling not more than twelve (12) months.
Stonyfield currently manufactures certain yogurt products at
Danone's manufacturing facilities in Fort Worth, Texas and Minster,
Ohio, facilities that are not being divested. The Acquirer may need
some time to contract with a third-party co-packer for the manufacture
of these products or to move them to Londonderry. Accordingly,
Paragraph IV(I) of the proposed Final Judgment provides that, at the
option of the Acquirer, Danone shall enter into one or more co-packing
contracts with the Acquirer for a period of up to (1) one year for the
continued production of Stonyfield products at the Fort Worth Facility
and/or the Minster Facility. The United States, in its sole discretion,
may approve one or more extensions of these agreements for a period
totaling not more than six (6) months. The proposed Final Judgement
also sets weekly volume and notice requirements to facilitate the
smooth operation of any such co-packing agreements.
C. Appointment of a Monitoring Trustee
By providing for the possibility of transition services, co-packing
agreements and other obligations, the proposed Final Judgment
contemplates an ongoing relationship between defendants and the
Acquirer for a period of time. Should the United States conclude that
it would benefit from the assistance of a Monitoring Trustee, Section X
of the proposed Final Judgment provides for the appointment of a
Monitoring Trustee with the power and authority to investigate and
report on the parties' compliance with the terms of the Final Judgment
and the Hold Separate during the pendency of the divestiture, including
but not limited to the terms and implementation of the transition
services and co-packing agreements with Danone. The Monitoring Trustee
would not have any responsibility or obligation for the operation of
the parties' businesses. The Monitoring Trustee will serve at
defendants' expense, on such terms and conditions as the United States
approves, and defendants must assist the trustee in fulfilling its
obligations. The Monitoring Trustee will file monthly reports and will
serve until the divestitures are complete. The Monitoring Trustee shall
serve until the divestiture of all the Divestiture Assets is finalized
pursuant to either Section IV or Section V of the Final Judgment.
In the event that defendants do not accomplish the divestiture
within the periods prescribed in the proposed Final Judgment, Section V
of the proposed Final Judgment provides that the Court will appoint a
trustee selected by the United States to effect the divestiture. If a
trustee is appointed, the proposed Final Judgment provides that
defendants will pay all costs and expenses of the trustee. The
trustee's commission will be structured so as to provide an incentive
for the trustee based on the price obtained and the speed with which
the divestiture is accomplished. After his or her appointment becomes
effective, the trustee will file monthly reports with the Court and the
United States setting forth his or her efforts to accomplish the
divestiture. At the end of six (6) months, if the divestiture has not
been accomplished, the trustee and the United States will make
recommendations to the Court, which shall enter such orders as
appropriate, in order to carry out the purpose of the trust, including
extending the trust or the term of the trustee's appointment.
The divestiture provisions of the proposed Final Judgment will
eliminate the anticompetitive effects that likely would result if
Danone acquired WhiteWave, because they will establish a new,
independent, and economically viable competitor in the markets for the
purchase of raw organic milk in the northeast, and the sale of fluid
organic milk nationwide.
IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
16(a), the proposed Final Judgment has no prima facie effect in any
subsequent private lawsuit that may be brought against defendants.
V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT
The United States and defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to the United States written comments regarding the
proposed Final Judgment. Any person who wishes to comment should do so
within sixty (60) days of the date of publication of this Competitive
Impact Statement in the Federal Register, or the last date of
publication in a newspaper of the summary of this Competitive Impact
Statement, whichever is later. All comments received during this period
will be considered by the United States Department of Justice, which
remains free to withdraw its consent to the proposed Final Judgment at
any time prior to the Court's entry of judgment. The comments and the
response of the United States will be filed with the Court. In
addition, comments will be posted on the U.S. Department of Justice,
Antitrust Division's Internet Web site and, under certain
circumstances, published in the Federal Register.
Written comments should be submitted to: Maribeth Petrizzi, Chief,
Litigation II Section, Antitrust Division, United States Department of
Justice, 450 Fifth Street NW., Suite 8700, Washington, DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT
The United States considered, as an alternative to the proposed
Final Judgment, a full trial on the merits against defendants. The
United States could have continued the litigation and sought
preliminary and permanent injunctions against Danone's acquisition of
WhiteWave. The United States is satisfied, however, that the
divestiture of assets described in the proposed Final Judgment will
preserve competition for the purchase of raw
[[Page 18476]]
organic milk in the northeast and the manufacture and sale of fluid
organic milk in the United States. Thus, the proposed Final Judgment
would achieve all or substantially all of the relief the United States
would have obtained through litigation, but avoids the time, expense,
and uncertainty of a full trial on the merits of the Complaint.
VII. STANDARD OF REVIEW UNDER THE APPA FOR THE PROPOSED FINAL JUDGMENT
The Clayton Act, as amended by the APPA, requires that proposed
consent judgments in antitrust cases brought by the United States be
subject to a sixty-day comment period, after which the court shall
determine whether entry of the proposed Final Judgment ``is in the
public interest.'' 15 U.S.C. 16(e)(1). In making that determination,
the court, in accordance with the statute as amended in 2004, is
required to consider:
(A) the competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration of relief sought, anticipated effects of
alternative remedies actually considered, whether its terms are
ambiguous, and any other competitive considerations bearing upon the
adequacy of such judgment that the court deems necessary to a
determination of whether the consent judgment is in the public
interest; and
(B) the impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and
individuals alleging specific injury from the violations set forth
in the complaint including consideration of the public benefit, if
any, to be derived from a determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory
factors, the court's inquiry is necessarily a limited one as the
government is entitled to ``broad discretion to settle with the
defendant within the reaches of the public interest.'' United States v.
Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally
United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007)
(assessing public interest standard under the Tunney Act); United
States v. U.S. Airways Group, Inc., No. 13-cv-1236 (CKK), 2014-1 Trade
Cas. (CCH) ] 78, 748, 2014 U.S. Dist. LEXIS 57801, at *7 (D.D.C. Apr.
25, 2014) (noting the court has broad discretion of the adequacy of the
relief at issue); United States v. InBev N.V./S.A., No. 08-1965 (JR),
2009-2 Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, at *3,
(D.D.C. Aug. 11, 2009) (noting that the court's review of a consent
judgment is limited and only inquires ``into whether the government's
determination that the proposed remedies will cure the antitrust
violations alleged in the complaint was reasonable, and whether the
mechanism to enforce the final judgment are clear and
manageable.'').\1\
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\1\ The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for court to consider and amended the
list of factors to focus on competitive considerations and to
address potentially ambiguous judgment terms. Compare 15 U.S.C.
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns,
489 F. Supp. 2d at 11 (concluding that the 2004 amendments
``effected minimal changes'' to Tunney Act review).
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As the United States Court of Appeals for the District of Columbia
Circuit has held, under the APPA a court considers, among other things,
the relationship between the remedy secured and the specific
allegations set forth in the government's complaint, whether the decree
is sufficiently clear, whether enforcement mechanisms are sufficient,
and whether the decree may positively harm third parties. See
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the
relief secured by the decree, a court may not ``engage in an
unrestricted evaluation of what relief would best serve the public.''
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (quoting
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152
F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787,
at *3. Courts have held that:
[t]he balancing of competing social and political interests
affected by a proposed antitrust consent decree must be left, in the
first instance, to the discretion of the Attorney General. The
court's role in protecting the public interest is one of insuring
that the government has not breached its duty to the public in
consenting to the decree. The court is required to determine not
whether a particular decree is the one that will best serve society,
but whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\
In determining whether a proposed settlement is in the public interest,
a district court ``must accord deference to the government's
predictions about the efficacy of its remedies, and may not require
that the remedies perfectly match the alleged violations.'' SBC
Commc'ns, 489 F. Supp. 2d at 17; see also U.S. Airways, 2014 U.S. Dist.
LEXIS 57801, at *16 (noting that a court should not reject the proposed
remedies because it believes others are preferable); Microsoft, 56 F.3d
at 1461 (noting the need for courts to be ``deferential to the
government's predictions as to the effect of the proposed remedies'');
United States v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6
(D.D.C. 2003) (noting that the court should grant due respect to the
United States' prediction as to the effect of proposed remedies, its
perception of the market structure, and its views of the nature of the
case).
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\2\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); United States v. Gillette Co.,
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the
court is constrained to ``look at the overall picture not
hypercritically, nor with a microscope, but with an artist's
reducing glass''). See generally Microsoft, 56 F.3d at 1461
(discussing whether ``the remedies [obtained in the decree are] so
inconsonant with the allegations charged as to fall outside of the
`reaches of the public interest' '').
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Courts have greater flexibility in approving proposed consent
decrees than in crafting their own decrees following a finding of
liability in a litigated matter. ``[A] proposed decree must be approved
even if it falls short of the remedy the court would impose on its own,
as long as it falls within the range of acceptability or is `within the
reaches of public interest.' '' United States v. Am. Tel. & Tel. Co.,
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also U.S.
Airways, 2014 U.S. Dist. LEXIS 57801, at *8 (noting that room must be
made for the government to grant concessions in the negotiation process
for settlements (citing Microsoft, 56 F.3d at 1461); United States v.
Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving
the consent decree even though the court would have imposed a greater
remedy). To meet this standard, the United States ``need only provide a
factual basis for concluding that the settlements are reasonably
adequate remedies for the alleged harms.'' SBC Commc'ns, 489 F. Supp.
2d at 17.
Moreover, the court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its Complaint, and does not authorize the court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways,
2014 U.S. Dist. LEXIS 57801, at *9 (noting that the court must simply
determine whether there is a factual foundation for the government's
decisions such that its conclusions regarding the proposed settlements
are reasonable; InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``the
`public interest' is
[[Page 18477]]
not to be measured by comparing the violations alleged in the complaint
against those the court believes could have, or even should have, been
alleged''). Because the ``court's authority to review the decree
depends entirely on the government's exercising its prosecutorial
discretion by bringing a case in the first place,'' it follows that
``the court is only authorized to review the decree itself,'' and not
to ``effectively redraft the complaint'' to inquire into other matters
that the United States did not pursue. Microsoft, 56 F.3d at 1459-60.
As this Court confirmed in SBC Communications, courts ``cannot look
beyond the complaint in making the public interest determination unless
the complaint is drafted so narrowly as to make a mockery of judicial
power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
In its 2004 amendments, Congress made clear its intent to preserve
the practical benefits of utilizing consent decrees in antitrust
enforcement, adding the unambiguous instruction that ``[n]othing in
this section shall be construed to require the court to conduct an
evidentiary hearing or to require the court to permit anyone to
intervene.'' 15 U.S.C. 16(e)(2); see also U.S. Airways, 2014 U.S. Dist.
LEXIS 57801, at *9 (indicating that a court is not required to hold an
evidentiary hearing or to permit intervenors as part of its review
under the Tunney Act). The language wrote into the statute what
Congress intended when it enacted the Tunney Act in 1974, as Senator
Tunney explained: ``[t]he court is nowhere compelled to go to trial or
to engage in extended proceedings which might have the effect of
vitiating the benefits of prompt and less costly settlement through the
consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of
Sen. Tunney). Rather, the procedure for the public interest
determination is left to the discretion of the court, with the
recognition that the court's ``scope of review remains sharply
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC
Commc'ns, 489 F. Supp. 2d at 11.\3\ A court can make its public
interest determination based on the competitive impact statement and
response to public comments alone. U.S. Airways, 2014 U.S. Dist. LEXIS
57801, at *9.
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\3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the
court to make its public interest determination on the basis of the
competitive impact statement and response to comments alone'');
United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1
Trade Cas. (CCH) ] 61,508, at 71,980, *22 (W.D. Mo. 1977) (``Absent
a showing of corrupt failure of the government to discharge its
duty, the Court, in making its public interest finding, should . . .
carefully consider the explanations of the government in the
competitive impact statement and its responses to comments in order
to determine whether those explanations are reasonable under the
circumstances.''); S. Rep. No. 93-298, at 6 (1973) (``Where the
public interest can be meaningfully evaluated simply on the basis of
briefs and oral arguments, that is the approach that should be
utilized.'').
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VIII. DETERMINATIVE DOCUMENTS
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Dated: April 13, 2017.
Respectfully submitted,
Suzanne Morris,
United States Department of Justice, Antitrust Division,
Litigation II Section, Liberty Square Building, 450 Fifth Street
NW., Suite 8700, Washington, DC 20530, Telephone: (202) 307-1188,
Facsimile: (202) 514-9033, [email protected].
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Danone S.A. and The
WhiteWave Foods Company, Defendants.
Case No.: 17-cv-00592 (KBJ)
JUDGE: Ketanji Brown Jackson
PROPOSED FINAL JUDGMENT
Whereas, Plaintiff United States of America, filed its Complaint on
April 3, 2017, the United States and defendants, Danone S.A.
(``Danone'') and The WhiteWave Foods Company (``WhiteWave''), by their
respective attorneys, have consented to the entry of this Final
Judgment without trial or adjudication of any issue of fact or law, and
without this Final Judgment constituting any evidence against or
admission by any party regarding any issue of fact or law;
And whereas, defendants agree to be bound by the provisions of this
Final Judgment pending its approval by the Court;
And whereas, the essence of this Final Judgment is the prompt and
certain divestiture of certain rights or assets by the defendants to
assure that competition is not substantially lessened;
And whereas, the United States requires defendants to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
And whereas, defendants have represented to the United States that
the divestiture required below can and will be made and that defendants
will later raise no claim of hardship or difficulty as grounds for
asking the Court to modify any of the divestiture provisions contained
below;
Now therefore, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is ordered, adjudged and decreed:
I. JURISDICTION
This Court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states a claim upon which
relief may be granted against defendants under Section 7 of the Clayton
Act, 15 U.S.C. 18, as amended.
II. DEFINITIONS
As used in this Final Judgment:
A. ``Acquirer'' means the entity to whom defendants divest the
Divestiture Assets.
B. ``Danone'' means defendant Danone S.A., a soci[eacute]t[eacute]
anonyme organized under the laws of France, its successors and assigns,
and its subsidiaries, divisions, groups, affiliates, partnerships and
joint ventures, and their directors, officers, managers, agents, and
employees.
C. ``WhiteWave'' means defendant The WhiteWave Foods Company, a
Delaware corporation with its headquarters in Denver, Colorado, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, and their directors,
officers, managers, agents, and employees.
D. ``Stonyfield'' means Stonyfield Farm, Inc., a Delaware
corporation with its headquarters in Londonderry, New Hampshire, its
successors and assigns, and its subsidiaries and divisions, and their
respective directors, officers, managers, agents and employees, but
does not include Stonyfield's minority interest in Stonyfield Europe
Ltd.
E. ``Oikos Brands'' means all Oikos trademarks, service marks,
trade names, trade dress, logos and domain names, corporate names, and
goodwill.
F. ``Oikos Schreiber'' means Danone's conventional Greek yogurt
products manufactured under the Oikos trademark at the Schreiber Foods,
Inc. facility in Shippensburg, Pennsylvania as of the date of the
Complaint filed in this matter.
G. ``Brown Cow Schreiber'' means Stonyfield's conventional Greek
yogurt products manufactured under the Brown Cow trademark at the
Schreiber Foods, Inc. facility in Shippensburg, Pennsylvania as of the
date of the Complaint filed in this matter.
H. ``Brown Cow Greek Formula'' means the intellectual property
relating to the formula, recipe, and
[[Page 18478]]
specifications used as of the date of the Complaint filed in this
matter for the production of the Oikos Schreiber and Brown Cow
Schreiber conventional Greek yogurt products.
I. ``Centralized Business Services'' means Danone's internal
provider of back office functions.
J. ``DanTrade'' means DanTrade B.V., Danone's global purchasing
entity.
K. ``Fort Worth Facility'' means Danone's manufacturing facility in
Fort Worth, Texas.
L. ``Minster Facility'' means Danone's manufacturing facility in
Minster, Ohio.
M. ``Divestiture Assets'' means Stonyfield, including:
1. Stonyfield's headquarters, facility, and warehouse located at 10
Burton Drive, Londonderry, New Hampshire 03053;
2. The following tangible assets that comprise the Stonyfield
business including but not limited to:
(a) all manufacturing equipment, tooling and fixed assets, personal
property, warehouses (leased and owned), trucks and other vehicles,
inventory, office furniture, materials, supplies, and other tangible
property and all assets used exclusively in connection with Stonyfield;
and
(b) all licenses, permits and authorizations issued by any
governmental organization relating to Stonyfield; all contracts,
teaming arrangements, agreements, leases, commitments, certifications,
and understandings, relating to Stonyfield, including supply
agreements; all customer lists, routes, contracts, accounts, and credit
records relating to Stonyfield; all repair and performance records
relating to Stonyfield; and all other records relating to Stonyfield.
Notwithstanding the above, for any tangible asset in this subsection
that is shared between Danone and Stonyfield, Danone and Stonyfield
shall each be entitled to retain that portion of the asset that relates
to their respective business. To the extent Danone's consent or waiver
of exclusive rights is required for Stonyfield to renegotiate or modify
the terms of any shared asset in this subsection, Danone shall take all
steps necessary to remove any impediments that would prevent Stonyfield
from renegotiating or modifying the terms of the shared asset.
3. The following intangible assets:
(a) all intangible assets owned, licensed, controlled, or used
primarily by Stonyfield (except the Oikos Brands), including, but not
limited to, all patents, licenses and sublicenses, intellectual
property, copyrights, trademarks, trade names, service marks, service
names, formulas, recipes, proprietary cultures, technical information,
computer software and related documentation, know-how, trade secrets,
drawings, artwork, blueprints, designs, design protocols,
specifications for materials, specifications for production and
packaging, specifications for parts and devices, safety procedures for
the handling of materials and substances, quality assurance and control
procedures, design tools and simulation capability, all manuals and
technical information defendants provide to their own employees,
customers, suppliers, agents or licensees, and all research data
concerning historic and current research and development efforts
relating to Stonyfield, including, but not limited to, designs of
experiments, and the results of successful and unsuccessful designs and
experiments;
(b) a non-exclusive, perpetual, royalty-free license, transferable
among Stonyfield and its subsidiaries, to use the Brown Cow Greek
Formula to produce all Stonyfield products that use the Brown Cow Greek
Formula as of the date of the Complaint; provided that if prior to the
divestiture ordered by this Final Judgment, Stonyfield ceases the use
of the Brown Cow Greek Formula, this license will not be included as a
Divestiture Asset;
(c) a non-exclusive, perpetual, royalty-free license, transferable
among Stonyfield and its subsidiaries, to use any intangible assets
(except the Brown Cow Greek Formula and Activia trademarks) that are
not included in paragraph II(M)(3)(a) above, and were used in
connection with the development, production, manufacture, or sale of
any Stonyfield product. To the extent Danone's consent or waiver of
exclusive rights is required for Stonyfield to access or utilize a
license, Danone will take all steps necessary to provide Stonyfield
with the license and remove any impediments that would prevent
Stonyfield from utilizing the license. Any improvements or
modifications to these intangible assets developed by the Acquirer of
Stonyfield shall be owned solely by that Acquirer; and
(d) a non-exclusive, perpetual, royalty-free license, transferable
among Stonyfield and its subsidiaries, to use Danone's intangible
assets related to the design and manufacture of the 3.1 oz plastic
bottles used to package Stonyfield products at the Minster Facility as
of the date of the Complaint.
N. ``Competitively Sensitive Information'' means information that
is not public and could be used by a competitor or supplier to make
development, production, pricing, or marketing decisions including, but
not limited to, information relating to costs, capacity, distribution,
marketing, supply, market territories, customer relationships, the
terms of dealing with any particular customer (including the identity
of individual customers and the quantity sold to any particular
customer), and current and future prices, including discounts, slotting
allowances, bids, or price lists. ``Competitively Sensitive
Information'' does not include information that must be disclosed in
the ordinary course of business in order to implement a transition
services or co-packing arrangement.
III. APPLICABILITY
A. This Final Judgment applies to Danone and WhiteWave, as defined
above, and all other persons in active concert or participation with
any of them who receive actual notice of this Final Judgment by
personal service or otherwise.
B. If, prior to complying with Sections IV and V of this Final
Judgment, defendants sell or otherwise dispose of all or substantially
all of their assets or of lesser business units that include the
Divestiture Assets, they shall require the purchaser to be bound by the
provisions of this Final Judgment. Defendants need not obtain such an
agreement from the Acquirer of the assets divested pursuant to this
Final Judgment.
IV. DIVESTITURE
A. Defendants are ordered and directed, within ninety (90) calendar
days after the filing of the Complaint in this matter, or five (5)
calendar days after notice of the entry of this Final Judgment by the
Court, whichever is later, to divest the Divestiture Assets in a manner
consistent with this Final Judgment to an Acquirer acceptable to the
United States, in its sole discretion. The United States, in its sole
discretion, may agree to one or more extensions of this time period not
to exceed sixty (60) calendar days in total, and shall notify the Court
in such circumstances. Defendants agree to use their best efforts to
divest the Divestiture Assets as expeditiously as possible.
B. In accomplishing the divestiture ordered by this Final Judgment,
defendants promptly shall make known, by usual and customary means, the
availability of the Divestiture Assets. Defendants shall inform any
person making an inquiry regarding a possible purchase of the
Divestiture Assets that they are being divested pursuant to this Final
Judgment and provide that person with a copy of this Final Judgment.
Defendants shall offer to furnish to all prospective Acquirers, subject
to
[[Page 18479]]
customary confidentiality assurances, all information and documents
relating to the Divestiture Assets customarily provided in a due
diligence process except such information or documents subject to the
attorney-client privileges or work-product doctrine. Defendants shall
make available such information to the United States at the same time
that such information is made available to any other person.
C. Defendants shall provide the Acquirer and the United States
information relating to the personnel involved in the development,
production, marketing and sale of any product produced or sold by
Stonyfield to enable the Acquirer to make offers of employment.
Defendants will not interfere with any negotiations by the Acquirer to
employ any defendant employee whose primary responsibility is the
development, production, marketing and sale of any product produced or
sold by Stonyfield.
D. Defendants shall permit prospective Acquirers of the Divestiture
Assets to have reasonable access to Stonyfield personnel and to make
inspections of the physical facilities included in the Divestiture
Assets; access to any and all environmental, zoning, and other permit
documents and information; and access to any and all financial,
operational, or other documents and information customarily provided as
part of a due diligence process.
E. Defendants shall warrant to the Acquirer that each asset will be
operational on the date of sale.
F. Defendants shall not take any action that will impede in any way
the permitting, operation, or divestiture of the Divestiture Assets.
G. At the option of the Acquirer, Danone's Centralized
BusinessServices division will provide back office and information
technology services and support for Stonyfield for a period of up to
one (1) year. The United States, in its sole discretion, may approve
one or more extensions of this agreement for a total of up to an
additional twelve (12) months. If the Acquirer seeks an extension of
the term of this transition services agreement, it shall so notify the
United States in writing at least three (3) months prior to the date
the transition services contract expires. If the United States approves
such an extension, it shall so notify the Acquirer in writing at least
two (2) months prior to the date the transition services contract
expires. The terms and conditions of any contractual arrangement
intended to satisfy this provision must be reasonably related to the
market value of the expertise of the personnel providing any needed
assistance. The Danone employee(s) tasked with providing these
transitional services may not share Stonyfield's Competitively
Sensitive Information with any other Danone or WhiteWave employee.
H. At the option of the Acquirer, Danone shall enter into one or
more transition services agreements with the Acquirer for raw material
purchases through DanTrade at Danone's internal transfer pricing rate;
services relating to the operation of Stonyfield's facilities; and
quality control and design services for production and regulatory
compliance; to meet all or part of the Acquirer's needs for a period of
up to six (6) months. The United States, in its sole discretion, may
approve one or more extensions of this agreement for a total of up to
an additional twelve (12) months. The terms and conditions of any
contractual arrangement intended to satisfy this provision must be
reasonably related to the market value of the expertise of the
personnel providing any needed assistance.
I. At the option of the Acquirer, Danone shall enter into one or
more co-packing contracts with the Acquirer for a period of up to one
(1) year for the continued production of Stonyfield products produced
at the Fort Worth Facility and/or the Minster Facility as of the date
of the Complaint. Danone will produce up to 100 percent of the average
2016 weekly volume of these Stonyfield products for the Acquirer each
week upon receipt of seven (7) days' notice. The Acquirer may increase
the weekly volume by 20 percent by providing Danone notice no later
than three (3) days prior to production. The Acquirer may increase the
weekly production volume by 100 percent with four (4) weeks' notice.
The terms and conditions of any contractual arrangement to satisfy this
provision must be reasonably related to market conditions for co-
packing yogurt products. The United States, in its sole discretion, may
approve one or more extensions of these agreements for a total of up to
an additional six (6) months. If the Acquirer seeks an extension of the
term of these co-packing agreements, it shall so notify the United
States in writing at least three (3) months prior to the date the co-
packing agreement(s) expires. If the United States approves such an
extension, it shall so notify the Acquirer in writing at least two (2)
months prior to the date the co-packing agreement(s) expires. Danone
employees at the Fort Worth and Minster Facilities may not share
Stonyfield's Competitively Sensitive Information with other Danone or
WhiteWave employees.
J. Defendants shall warrant to the Acquirer that there are no
material defects in the environmental, zoning or other permits
pertaining to the operation of each asset, and that following the sale
of the Divestiture Assets, defendants will not undertake, directly or
indirectly, any challenges to the environmental, zoning, or other
permits relating to the operation of the Divestiture Assets.
K. Unless the United States otherwise consents in writing, the
divestiture pursuant to Section IV, or by Divestiture Trustee appointed
pursuant to Section V, of this Final Judgment, shall include the entire
Divestiture Assets, and shall be accomplished in such a way as to
satisfy the United States, in its sole discretion, that the Divestiture
Assets can and will be used by the Acquirer as part of a viable,
ongoing business in the production and sale of Stonyfield products.
Specifically, the United States must be satisfied, in its sole
discretion, that the Divestiture Assets can and will remain viable, and
that the divestiture will remedy the competitive harm alleged in the
Complaint. The divestiture, whether pursuant to Section IV or Section V
of this Final Judgment,
1. shall be made to an Acquirer that, in the United States' sole
judgment, has the intent and capability (including the necessary
managerial, operational, technical and financial capability) of
competing effectively in the markets for products produced or sold by
Stonyfield; and
2. shall be accomplished so as to satisfy the United States, in its
sole discretion, that none of the terms of any agreement between an
Acquirer and defendants give defendants the ability unreasonably to
raise the Acquirer's costs, to lower the Acquirer's efficiency, or
otherwise to interfere in the ability of the Acquirer to compete
effectively.
V. APPOINTMENT OF DIVESTITURE TRUSTEE
A. If defendants have not divested the Divestiture Assets within
the time period specified in Section IV(A), defendants shall notify the
United States of that fact in writing. Upon application of the United
States, the Court shall appoint a Divestiture Trustee selected by the
United States and approved by the Court to effect the divestiture of
the Divestiture Assets.
B. After the appointment of a Divestiture Trustee becomes
effective, only the Divestiture Trustee shall have the right to sell
the Divestiture Assets. The Divestiture Trustee shall have the power
and authority to accomplish the divestiture to an Acquirer acceptable
to the United States at such price and on
[[Page 18480]]
such terms as are then obtainable upon reasonable effort by the
Divestiture Trustee, subject to the provisions of Sections IV, V, and
VI of this Final Judgment, and shall have such other powers as this
Court deems appropriate. Subject to Section V(D) of this Final
Judgment, the Divestiture Trustee may hire at the cost and expense of
defendants any investment bankers, attorneys, or other agents, who
shall be solely accountable to the Divestiture Trustee, reasonably
necessary in the Divestiture Trustee's judgment to assist in the
divestiture. Any such investment bankers, attorneys, or other agents
shall serve on such terms and conditions as the United States approves
including confidentiality requirements and conflict of interest
certifications.
C. Defendants shall not object to a sale by the Divestiture Trustee
on any ground other than the Divestiture Trustee's malfeasance. Any
such objections by defendants must be conveyed in writing to the United
States and the Divestiture Trustee within ten (10) calendar days after
the Divestiture Trustee has provided the notice required under Section
VI.
D. The Divestiture Trustee shall serve at the cost and expense of
defendants pursuant to a written agreement, on such terms and
conditions as the United States approves including confidentiality
requirements and conflict of interest certifications. The Divestiture
Trustee shall account for all monies derived from the sale of the
assets sold by the Divestiture Trustee and all costs and expenses so
incurred. After approval by the Court of the Divestiture Trustee's
accounting, including fees for its services yet unpaid and those of any
professionals and agents retained by the Divestiture Trustee, all
remaining money shall be paid to defendants and the trust shall then be
terminated. The compensation of the Divestiture Trustee and any
professionals and agents retained by the Divestiture Trustee shall be
reasonable in light of the value of the Divestiture Assets and based on
a fee arrangement providing the Divestiture Trustee with an incentive
based on the price and terms of the divestiture and the speed with
which it is accomplished, but timeliness is paramount. If the
Divestiture Trustee and defendants are unable to reach agreement on the
Divestiture Trustee's or any agents' or consultants' compensation or
other terms and conditions of engagement within fourteen (14) calendar
days of appointment of the Divestiture Trustee, the United States may,
in its sole discretion, take appropriate action, including making a
recommendation to the Court. The Divestiture Trustee shall, within
three (3) business days of hiring any other professionals or agents,
provide written notice of such hiring and the rate of compensation to
defendants and the United States.
E. Defendants shall use their best efforts to assist the
Divestiture Trustee in accomplishing the required divestiture. The
Divestiture Trustee and any consultants, accountants, attorneys, and
other agents retained by the Divestiture Trustee shall have full and
complete access to the personnel, books, records, and facilities of the
business to be divested, and defendants shall develop financial and
other information relevant to such business as the Divestiture Trustee
may reasonably request, subject to reasonable protection for trade
secret or other confidential research, development, or commercial
information or any applicable privileges. Defendants shall take no
action to interfere with or to impede the Divestiture Trustee's
accomplishment of the divestiture.
F. After its appointment, the Divestiture Trustee shall file
monthly reports with the United States and, as appropriate, the Court
setting forth the Divestiture Trustee's efforts to accomplish the
divestiture ordered under this Final Judgment. To the extent such
reports contain information that the Divestiture Trustee deems
confidential, such reports shall not be filed in the public docket of
the Court. Such reports shall include the name, address, and telephone
number of each person who, during the preceding month, made an offer to
acquire, expressed an interest in acquiring, entered into negotiations
to acquire, or was contacted or made an inquiry about acquiring, any
interest in the Divestiture Assets, and shall describe in detail each
contact with any such person. The Divestiture Trustee shall maintain
full records of all efforts made to divest the Divestiture Assets.
G. If the Divestiture Trustee has not accomplished the divestiture
ordered under this Final Judgment within six months after its
appointment, the Divestiture Trustee shall promptly file with the Court
a report setting forth (1) the Divestiture Trustee's efforts to
accomplish the required divestiture, (2) the reasons, in the
Divestiture Trustee's judgment, why the required divestiture has not
been accomplished, and (3) the Divestiture Trustee's recommendations.
To the extent such report contains information that the Divestiture
Trustee deems confidential, such report shall not be filed in the
public docket of the Court. The Divestiture Trustee shall at the same
time furnish such report to the United States which shall have the
right to make additional recommendations consistent with the purpose of
the trust. The Court thereafter shall enter such orders as it shall
deem appropriate to carry out the purpose of the Final Judgment, which
may, if necessary, include extending the trust and the term of the
Divestiture Trustee's appointment by a period requested by the United
States.
H. If the United States determines that the Divestiture Trustee has
ceased to act or failed to act diligently or in a reasonably cost-
effective manner, it may recommend the Court appoint a substitute
Divestiture Trustee.
VI. NOTICE OF PROPOSED DIVESTITURE
A. Within two (2) business days following execution of a definitive
divestiture agreement, defendants or the Divestiture Trustee, whichever
is then responsible for effecting the divestiture required herein,
shall notify the United States of any proposed divestiture required by
Section IV or V of this Final Judgment. If the Divestiture Trustee is
responsible, it shall similarly notify defendants. The notice shall set
forth the details of the proposed divestiture and list the name,
address, and telephone number of each person not previously identified
who offered or expressed an interest in or desire to acquire any
ownership interest in the Divestiture Assets, together with full
details of the same.
B. Within fifteen (15) calendar days of receipt by the United
States of such notice, the United States may request from defendants,
the proposed Acquirer, any other third party, or the Divestiture
Trustee, if applicable, additional information concerning the proposed
divestiture, the proposed Acquirer, and any other potential Acquirer.
Defendants and the Divestiture Trustee shall furnish any additional
information requested within fifteen (15) calendar days of the receipt
of the request, unless the parties shall otherwise agree.
C. Within thirty (30) calendar days after receipt of the notice or
within twenty (20) calendar days after the United States has been
provided the additional information requested from defendants, the
proposed Acquirer, any third party, and the Divestiture Trustee,
whichever is later, the United States shall provide written notice to
defendants and the Divestiture Trustee, if there is one, stating
whether or not it objects to the proposed divestiture. If the United
States provides written notice that it does not object, the divestiture
may be consummated, subject only to defendants' limited right
[[Page 18481]]
to object to the sale under Section V(C) of this Final Judgment. Absent
written notice that the United States does not object to the proposed
Acquirer or upon objection by the United States, a divestiture proposed
under Section IV or Section V shall not be consummated. Upon objection
by defendants under Section V(C), a divestiture proposed under Section
V shall not be consummated unless approved by the Court.
VII. FINANCING
Defendants shall not finance all or any part of any purchase made
pursuant to Section IV or V of this Final Judgment.
VIII. HOLD SEPARATE
Until the divestiture required by this Final Judgment has been
accomplished, defendants shall take all steps necessary to comply with
the Hold Separate Stipulation and Order entered by this Court.
Defendants shall take no action that would jeopardize the divestiture
ordered by this Court.
IX. AFFIDAVITS
A. Within twenty (20) calendar days of the filing of the Complaint
in this matter, and every thirty (30) calendar days thereafter until
the divestiture has been completed under Section IV or V, defendants
shall deliver to the United States an affidavit as to the fact and
manner of its compliance with Section IV or V of this Final Judgment.
Each such affidavit shall include the name, address, and telephone
number of each person who, during the preceding thirty (30) calendar
days, made an offer to acquire, expressed an interest in acquiring,
entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring, any interest in the Divestiture Assets, and
shall describe in detail each contact with any such person during that
period. Each such affidavit shall also include a description of the
efforts defendants have taken to solicit buyers for the Divestiture
Assets, and to provide required information to prospective Acquirers,
including the limitations, if any, on such information. Assuming the
information set forth in the affidavit is true and complete, any
objection by the United States to information provided by defendants,
including limitation on information, shall be made within fourteen (14)
calendar days of receipt of such affidavit.
B. Within twenty (20) calendar days of the filing of the Complaint
in this matter, defendants shall deliver to the United States an
affidavit that describes in reasonable detail all actions defendants
have taken and all steps defendants have implemented on an ongoing
basis to comply with Section VIII of this Final Judgment. Defendants
shall deliver to the United States an affidavit describing any changes
to the efforts and actions outlined in defendants' earlier affidavits
filed pursuant to this section within fifteen (15) calendar days after
the change is implemented.
C. Defendants shall keep all records of all efforts made to
preserve and divest the Divestiture Assets until one (1) year after
such divestiture has been completed.
X. APPOINTMENT OF MONITORING TRUSTEE
A. Upon application of the United States, the Court shall appoint a
Monitoring Trustee selected by the United States and approved by the
Court.
B. The Monitoring Trustee shall have the power and authority to
monitor defendants' compliance with the terms of this Final Judgment
and the Hold Separate Stipulation and Order entered by this Court, and
shall have such other powers as this Court deems appropriate. The
Monitoring Trustee shall be required to investigate and report on the
Defendants' compliance with this Final Judgment and the Hold Separate
Stipulation and Order and the defendants' progress toward effectuating
the purposes of this Final Judgment, including but not limited to the
terms and implementation of the transition services and co-packing
agreements with Danone contemplated by Paragraphs IV(G), (H), and (I).
C. Subject to Paragraph X(E) of this Final Judgment, the Monitoring
Trustee may hire at the cost and expense of defendants any consultants,
accountants, attorneys, or other agents, who shall be solely
accountable to the Monitoring Trustee, reasonably necessary in the
Monitoring Trustee's judgment. Any such consultants, accountants,
attorneys, or other agents shall serve on such terms and conditions as
the United States approves including confidentiality requirements and
conflict of interest certifications.
D. Defendants shall not object to actions taken by the Monitoring
Trustee in fulfillment of the Monitoring Trustee's responsibilities
under any Order of this Court on any ground other than the Monitoring
Trustee's malfeasance. Any such objections by defendants must be
conveyed in writing to the United States and the Monitoring Trustee
within ten (10) calendar days after the action taken by the Monitoring
Trustee giving rise to the defendants' objection.
E. The Monitoring Trustee shall serve at the cost and expense of
defendants pursuant to a written agreement with defendants and on such
terms and conditions as the United States approves including
confidentiality requirements and conflict of interest certifications.
The compensation of the Monitoring Trustee and any consultants,
accountants, attorneys, and other agents retained by the Monitoring
Trustee shall be on reasonable and customary terms commensurate with
the individuals' experience and responsibilities. If the Monitoring
Trustee and defendants are unable to reach agreement on the Monitoring
Trustee's or any agents' or consultants' compensation or other terms
and conditions of engagement within fourteen (14) calendar days of
appointment of the Monitoring Trustee, the United States may, in its
sole discretion, take appropriate action, including making a
recommendation to the Court. The Monitoring Trustee shall, within three
(3) business days of hiring any consultants, accountants, attorneys, or
other agents, provide written notice of such hiring and the rate of
compensation to defendants and the United States.
F. The Monitoring Trustee shall have no responsibility or
obligation for the operation of defendants' businesses.
G. Defendants shall use their best efforts to assist the Monitoring
Trustee in monitoring defendants' compliance with their individual
obligations under this Final Judgment and under the Hold Separate
Stipulation and Order. The Monitoring Trustee and any consultants,
accountants, attorneys, and other agents retained by the Monitoring
Trustee shall have full and complete access to the personnel, books,
records, and facilities relating to compliance with this Final
Judgment, subject to reasonable protection for trade secret or other
confidential research, development, or commercial information or any
applicable privileges. Defendants shall take no action to interfere
with or to impede the Monitoring Trustee's accomplishment of its
responsibilities.
H. After its appointment, the Monitoring Trustee shall file reports
monthly, or more frequently as needed, with the United States, and, as
appropriate, the Court setting forth defendants' efforts to comply with
its obligations under this Final Judgment and under the Hold Separate
Stipulation and Order. To the extent such reports contain information
that the Monitoring Trustee deems confidential, such reports shall not
be filed in the public docket of the Court.
[[Page 18482]]
I. The Monitoring Trustee shall serve until the divestiture of all
the Divestiture Assets is finalized pursuant to either Section IV or
Section V of this Final Judgment and the transition services and co-
packing agreements with Danone contemplated by Paragraphs IV(G), (H),
and (I) have expired or been terminated.
J. If the United States determines that the Monitoring Trustee has
ceased to act or failed to act diligently or in a reasonably cost-
effective manner, it may recommend the Court appoint a substitute
Monitoring Trustee.
XI. COMPLIANCE INSPECTION
A. For the purposes of determining or securing compliance with this
Final Judgment, or of any related orders such as the Hold Separate
Stipulation and Order, or of determining whether the Final Judgment
should be modified or vacated, and subject to any legally recognized
privilege, from time to time authorized representatives of the United
States Department of Justice, including consultants and other persons
retained by the United States, shall, upon written request of an
authorized representative of the Assistant Attorney General in charge
of the Antitrust Division, and on reasonable notice to defendants, be
permitted:
1. access during defendants' office hours to inspect and copy, or
at the option of the United States, to require defendants to provide
hard copy or electronic copies of, all books, ledgers, accounts,
records, data, and documents in the possession, custody, or control of
defendants, relating to any matters contained in this Final Judgment;
and
2. to interview, either informally or on the record, defendants'
officers, employees, or agents, who may have their individual counsel
present, regarding such matters. The interviews shall be subject to the
reasonable convenience of the interviewee and without restraint or
interference by defendants.
B. Upon the written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division,
defendants shall submit written reports or response to written
interrogatories, under oath if requested, relating to any of the
matters contained in this Final Judgment as may be requested.
C. No information or documents obtained by the means provided in
this section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States, except in the course of legal proceedings to which the United
States is a party (including grand jury proceedings), or for the
purpose of securing compliance with this Final Judgment, or as
otherwise required by law.
D. If at the time information or documents are furnished by
defendants to the United States, defendants represent and identify in
writing the material in any such information or documents to which a
claim of protection may be asserted under Rule 26(c)(1)(g) of the
Federal Rules of Civil Procedure, and defendants mark each pertinent
page of such material, ``Subject to claim of protection under Rule
26(c)(1)(g) of the Federal Rules of Civil Procedure,'' then the United
States shall give defendants ten (10) calendar days' notice prior to
divulging such material in any legal proceeding (other than a grand
jury proceeding).
XII. NO REACQUISITION
Defendants may not reacquire any part of the Divestiture Assets
during the term of this Final Judgment.
XIII. RETENTION OF JURISDICTION
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
XIV. EXPIRATION OF FINAL JUDGMENT
Unless this Court grants an extension, this Final Judgment shall
expire ten (10) years from the date of its entry.
XV. PUBLIC INTEREST DETERMINATION
Entry of this Final Judgment is in the public interest. The parties
have complied with the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. Sec. 16, including making copies available to
the public of this Final Judgment, the Competitive Impact Statement,
and any comments thereon and the United States' responses to comments.
Based upon the record before the Court, which includes the Competitive
Impact Statement and any comments and response to comments filed with
the Court, entry of this Final Judgment is in the public interest.
Date:
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. Sec. 16
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United States District Judge
[FR Doc. 2017-07924 Filed 4-18-17; 8:45 am]
BILLING CODE P