United States v. Professional Consultants Insurance Company, Inc.; Proposed Final Judgment and Competitive Impact Statement, 55415-55422 [05-18703]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 70, Number 182 (Wednesday, September 21, 2005)]
[Notices]
[Pages 55415-55422]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-18703]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Professional Consultants Insurance Company, 
Inc.; 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 v. Professional Consultants Insurance Company, Inc., Civil 
Action No. 1:05CV01272. On June 28, 2005, the United States filed a 
Complaint alleging that Professional Consultants Insurance Company, 
Inc., violated Section 1 of the Sherman Act, 15 U.S.C. 1. The proposed 
Final Judgment, filed the same time as the Complaint, requires 
Professional Consultants Insurance Company, Inc., to end its illegal 
information sharing activities and create a program to monitor its 
compliance with the antitrust laws. A proposed Amended Final Judgment 
was filed in substitution of, and to correct a drafting error in, the 
originally filed proposed Final Judgment. Copies of the Complaint, 
proposed Amended Final Judgment and Competitive Impact Statement are 
available for inspection at the U.S. Department of Justice, Antitrust 
Division, 325 Seventh Street, NW., Room 200, Washington, DC 20530 and 
at the Office of the Clerk of the United States District Court for the 
District of Columbia, 333 Constitution Avenue, NW., Washington, D.C. 
20001.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to Mark Botti, Chief, Litigation I Section, United States Department of 
Justice, 1401 H Street, NW., Suite 4000, Washington, DC 20530 
(telephone: 202-307-0001).

Dorothy B. Fountain,
Deputy Director of Operations, Antitrust Division.

United States District Court for the District of Columbia

United States of America, Plaintiff, v. Professional Consultants 
Insurance Company, Inc., Defendant

Case Number 1:05CV01272
Judge: Gladys Kessler
Deck Type: Antitrust
Date Stamp: 06/24/2005

Complaint

    The United States of America, by its attorneys and acting under the 
direction of the Attorney General of the United States, brings this 
civil antitrust action to obtain equitable relief against Defendant 
Professional Consultants Insurance Company, Inc. to prevent and 
restrain violations of Section 1 of the Sherman Act, 15 U.S.C. 1. The 
United States alleges as follows:

I. Jurisdiction and Venue

    1. The United States brings this action to prevent and restrain 
violations of Section 1 of the Sherman Act, 15 U.S.C. 1. The Court has 
jurisdiction over the parties to this action and of the subject matter 
pursuant to 15 U.S.C. 4 and 28 U.S.C. 1331, 1337 and 1345. Venue is 
proper in this District because Defendant has so stipulated.

II. Defendant

    2. Defendant Professional Consultants Insurance Company, Inc. 
(``PCIC'') is a professional liability insurance company incorporated 
under the laws of Vermont. PCIC's principal business is to provide 
errors and omissions insurance coverage to its three shareholders, 
which PCIC calls, and hereafter will be referred to as, its 
``members.'' Each of PCIC's three members is a major actuarial 
consulting firm doing business throughout the United States.
    3. At all times relevant to this Complaint, PCIC has been managed 
and operated by directors, officers, and providers of professional 
services who concurrently served as directors, officers, or employees 
of its members.
    4. The PCIC members each employ hundreds of professional actuaries 
throughout the country to serve, on a nationwide basis, clients that 
require actuarial consulting services. Actuarial consultants are 
professionals trained and skilled in mathematical and statistical 
analysis and management of financial and economic risks. Their clients 
are firms and organizations that require risk analysis and management 
in various financial and other contexts, including pension plans and 
other employee benefit plans organized to serve public or government 
employees, private corporate employees, and members of labor unions.
    5. Apart from their joint ownership and management of PCIC, the 
three PCIC members operate actuarial consulting businesses separately 
and independently of, and in competition with, each other. Each of the 
three PCIC members is a major competitor of the others in the provision 
of actuarial consulting services to employee benefit plans.

III. Trade and Commerce

    6. At all times relevant to this Complaint, PCIC has provided 
professional liability insurance coverage for claims against its 
members arising from actuarial consulting businesses conducted by its 
members, including the provision of actuarial consulting services to 
employee benefit plans, throughout the United States. These activities 
of PCIC and its members have been within the flow of, and have 
substantially affected, interstate commerce.
    7. Employee benefit plans engage PCIC's members and other actuarial 
consulting firms to prepare actuarial risk valuations. Employee benefit 
plans rely on the work of actuarial consultants to determine employee 
benefit levels and employer contributions needed to fund the benefits. 
An error or omission in the work performed by an actuarial consultant 
can result in substantial monetary losses or other damages to the 
employee benefit client.
    8. To cover exposure to liability claims of clients arising out of 
mistakes made in their actuarial work, PCIC members historically 
obtained professional errors and omissions liability insurance. Since 
the late 1980s and continuing to the present, PCIC has

[[Page 55416]]

annually provided each of its members with several millions of dollars 
of such coverage. In addition, the members have individually purchased 
substantial amounts of additional insurance coverage from commercial 
insurance companies.

IV. Claim for Relief

    9. Until recently, the PCIC members generally provided actuarial 
consulting services to employee benefit clients under terms that did 
not limit a client's rights to recover damages suffered as a result of 
actuarial errors or omissions. Beginning in as early as the 1999-2000 
time frame, PCIC, its members, and other actuarial consulting 
competitors began to experience increasing severity and frequency of 
liability claims arising out of their respective actuarial consulting 
business. To address the increasing claims experience, the PCIC members 
considered various ways to mitigate their exposure to liability claims, 
including instituting or improving professional peer review and other 
quality control procedures, as well as the use of contractual 
limitations of liability, or ``LOL,'' in client engagement agreements.
    10. Clients that accept LOL in their actuarial consulting 
engagements are contractually bound to limitations on the amounts or 
types of damages that may be recoverable as a result of actuarial 
errors or omissions. Various formulations of LOL include liability 
``caps'' precluding damages beyond a specified dollar amount, 
limitations based on a multiple of fees charged to clients, and 
limitations to ``direct damages,'' potentially precluding claims for 
consequential or other types of damages.
    11. In marketplace rivalry among actuarial consulting firms, LOL is 
a significant basis of the firms' competition for clients and 
prospective clients. All else equal, a firm that does not require LOL 
can be at a significant competitive advantage in seeking a client's 
business over a competing firm that does require LOL. To the extent 
clients not disposed to accepting LOL can choose to engage actuarial 
consulting firms that do not require LOL, firms that might otherwise 
require LOL can be competitively disciplined or constrained from doing 
so by the potential loss of clients to non-LOL firms.
    12. When the PCIC members began to consider implementing LOL, they 
recognized that unless and until LOL became a matter of widespread 
usage throughout the actuarial consulting profession, firms 
implementing LOL would face client resistance and potential loss of 
business to firms that had not implemented LOL. A senior official of 
one PCIC member noted that ``What I don't want to do is get so far 
ahead of the market openly, without specific calculation that `now' is 
the time, that we become a competitive target.'' Another PCIC member 
was ``worried that they are way ahead * * * and fear that they are now 
at a competitive disadvantage.'' Employees of the third PCIC member had 
``reservations about adopting these procedures [LOL] too quickly * * * 
[and] we don't want to lose clients by acting before our competitors 
do.''
    13. The PCIC members also recognized that efforts on their part to 
implement LOL would be less exposed to client resistance and 
competitive loss of business if other actuarial competitors also began 
to implement LOL. To avoid being too far ``in front of the 
competition'' in implementing LOL, they needed to obtain information 
about what other actuarial consulting firms were doing or planning to 
do. Thus, for example, employees of one PCIC member urged restraint in 
implementing LOL, at least until the competitive situation could be 
determined: ``We respectfully do not wish to be the first * * * to 
adopt stringent limitations at the risk of losing our national 
prominence, let alone a significant amount of business. The losses 
could be devastating for some practices. Therefore, the [proposed] 
effective date is left open until further information about our 
competitors is known.''
    14. Beginning as early as in 1999, the PCIC members discussed among 
themselves their respective consideration and implementation of plans 
to require LOL of their clients. These discussions took place on many 
occasions and in several contexts, including at meetings of PCIC's 
board of directors (comprised of senior officials of each of the PCIC 
members), at various ``PCIC owners meetings'' (also attended by senior 
officials of the PCIC members), in connection with a PCIC working group 
called the ``PCIC Malpractice Avoidance Committee,'' and other formal 
and informal communications among themselves.
    15. In addition to enabling and facilitating LOL discussions among 
the three PCIC members, PCIC sponsored, organized, and conducted a 
series of profession-wide actuarial meetings, in March 2000, June 2001, 
and January 2003. These profession-wide meetings were attended by 
senior representatives not only of the PCIC members but also of five 
other actuarial firms that competed for employee benefit clients on a 
nationwide basis. At or in connection with each of these meetings, the 
attendees exchanged information about plans or efforts to implement LOL 
among actuarial consulting firms, including but not limited to the 
following:
    a. At the March 2000 profession-wide meeting, a number of LOL 
implementation issues were discussed, including the use of dollar-based 
limits or multiples of fees, and possible ways of dealing with clients 
that resist the limitations. The use of LOL was described by one 
attendee as a ``best practice'' that certain of the actuarial 
consulting firms had begun using. Another attendee noted that ``there 
was an argument made for inclusion of a standard [LOL] clause [in 
client engagements]'' and that ``if more and more firms use this sort 
of approach, it will become standard.''
    b. At the June 2001 profession-wide meeting, ``a member of firms 
discussed their own use of contractual safeguards and the clients' 
acceptance.'' One of the attendees recounted: ``Most firms have either 
begun implementing * * * or are actively considering [use of 
contractual safeguards] * * * One firm stated that it had made a firm-
wide decision that it will no longer accept unlimited liability * * * 
We also discussed some ideas about implementing contractual safeguards, 
such as immediately requiring limitations for new clients and phasing 
in the requirements for existing clients * * * There seemed to be a 
consensus that * * * actuarial clients may complain about contractual 
safeguards but will accept them as they become more widespread.''
    c. Shortly after the June 2001 profession-wide meeting, a senior 
official of one of the non-PCIC competitors at the meeting caused his 
firm to begin considering LOL implementation. This official, as part of 
the firm's consideration of LOL, requested and received from a PCIC 
official sample LOL language to help the firm develop LOL terms for its 
own client contracts.
    16. In addition to the PCIC profession-wide meetings, PCIC and its 
members engaged in numerous other LOL discussions with representatives 
of other non-PCIC competitors, including but not limited to the 
following:
    a. In October 2001, a PCIC official communicated with an official 
for one of the non-PCIC competitors that was represented at the PCIC 
profession-wide meetings but had not begun to implement LOL. The PCIC 
official advised that ``some consulting firms are beginning to 
implement limits of liability'' and encouraged the non-PCIC firm to do 
likewise: ``a strong argument

[[Page 55417]]

can be made that it is not in any firms' individual best interest to 
avoid implementing reasonable contractual safeguards.'' The official of 
the non-PCIC firm subsequently observed that the PCIC official ``feels 
strongly about the limits of liability and was upset that we were not 
seeking them,'' and thereafter the non-PCIC firm itself considered its 
own implementation of LOL.
    b. In late 2001, one of the PCIC members was in the process of 
considering a proposed corporate policy to implement LOL, which it went 
on to adopt in February 2002. In December 2001, to facilitate adoption 
of the policy and acceptance among the firm's employees, a PCIC 
official circulated to the firm's employees a memorandum providing 
``HIGHLY CONFIDENTIAL'' information about competitor's use of LOL and 
prospective plans to use LOL. The memorandum disclosed that the two 
other PCIC members had already begun to require LOL of their clients; 
that one of the non-PCIC competitors had plans to begin implementing 
LOL; that another competitor was attempting to implement LOL; and that 
yet another was ``strongly considering'' implementing LOL.
    c. In early 2002, an employee benefit client of one of the PCIC 
members refused to accept proffered LOL terms and decided to seek 
competitive bids from other actuarial consulting firms in which LOL 
would not be required. After one of the non-PCIC competitors that 
attended the PCIC profession-wide meetings submitted a bid without LOL, 
a PCIC official found out about the firm's bid, was unhappy that the 
bid did not require LOL, and contacted a representative of the firm to 
express his displeasure.
    d. In April 2002, a PCIC official discussed profession-wide LOL 
implementation with an official of a non-PCIC competitor. The PCIC 
official apprised the non-PCIC competitor of ongoing LOL implementation 
activities not only of the three PCIC members, but also those of two 
other competitors. In return, the official of the non-PCIC competitor 
disclosed LOL activities of his firm to the PCIC official.
    e. At a professional association conference in September 2003, 
senior officials of two of the PCIC members and that of a non-PCIC 
competitor updated each other on the progress of their respective LOL 
implementation efforts. In the wake of this conversation, the non-PCIC 
official apprised a colleague at his firm of his discussions with the 
PCIC competitors, and urged his colleague to ``push hard to get 
liability limiting agreements wherever we can.''
    17. Within the framework of the meetings and other communications 
alleged above, PCIC, its members, and other actuarial consulting 
competitors agreed among themselves to share competitively sensitive 
information about each others' plans and efforts to implement LOL. The 
sharing of this information eliminated or reduced competitive 
uncertainties and concerns about the potential for losing clients to 
firms not using LOL, and thus facilitated decisions of PCIC members and 
other competitors to begin implementing LOL.
    18. The agreement to share LOL information alleged above has 
resulted in, among other things, the following effects:
    a. Significant competition among PCIC members and other actuarial 
consulting firms with respect to liability terms of contracting with 
employee benefit clients has been restrained;
    b. Employee benefit plan clients that have accepted LOL terms with 
PCIC members or other actuarial consulting firms have been deprived of 
the benefits of unrestrained competition in the setting of actuarial 
consulting contract terms;
    c. The use of LOL terms in actuarial consulting contracts with 
employee benefit plans has been significantly more prevalent than would 
have been the case in the presence of unrestrained competition among 
the PCIC members and other actuarial consulting firms.
    19. Unless permanently restrained and enjoined, PCIC and its 
members are free to continue, maintain, or renew the above-described 
sharing of competitively sensitive LOL information among themselves and 
other actuarial consulting competitors, in violation of Section 1 of 
the Sherman Act, 15 U.S.C. 1.

VI. Prayer for Relief

    Wherefore, the Plaintiff United States of America prays:
    1. Adjudge the Defendant PCIC and its members as constituting and 
having engaged in an unlawful combination, or conspiracy in 
unreasonable restraint of interstate trade and commerce in violation of 
Section 1 of the Sherman Act, 15 U.S.C. 1;
    2. Order that the Defendant PCIC, its members, and their respective 
officers, directors, employees, successors, and assigns, and all other 
persons acting or claiming to act on their behalf, be permanently 
enjoined from engaging in, carrying out, renewing, or attempting to 
engage in, carry out, or renew the combination and conspiracy alleged 
herein, or any other combination or conspiracy having a similar purpose 
or effect in violation of Section 1 of the Sherman Act, 15 U.S.C. 1;
    3. Award to plaintiff its costs of this action and such other and 
further relief as may be required and the Court may deem just and 
proper.

Dated: June 24, 2005.

 Respectfully Submitted,

For Plaintiff United States of America

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R. Hewitt Pate,
Assistant Attorney General,
Antitrust Division.

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J. Bruce McDonald,
Deputy Assistant Attorney General,
Antitrust Division.

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Dorothy B. Fountain,
Deputy Director of Operations,
Antitrust Division.

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Mark J. Botti (D.C. Bar  416948),
Chief, Litigation I Section,
Assistant Attorney General

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Weeun Wage,
Jonathan B. Jacobs,
John P. Lohrer,
Michael A. Bishop (D.C. Bar 468693),
Barry L. Creech,
Barry J. Joyce,
Nicole S. Gordon,
Ryan J. Danks.
Litigation I Section,
Antitrust Division,
U.S. Department of Justice,
City Center Building,
1401 H Street, NW., Suite 4000,
Washington, DC 20530.
(202) 307-0001.
Facsimile: (202) 307-5802.

United States District Court for the District of Columbia

United States of America, Plaintiff v. Professional Consultants 
Insurance Company, Inc., Defendant

Civil No. 1:05CV01272
Filed:

Amended Final Judgment

    Whereas, Plaintiff, United States of America, filed its 
Complaint on June 24, 2005, alleging Defendant's violation of 
Section 1 of the Sherman Act, and Plaintiff and Defendant, 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 the Final Judgment constituting any evidence against or 
admission by Defendant, or any other entity, as to any issue of fact 
or law;
    And Whereas, Defendant agrees 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 
prohibition of certain alleged information exchanging activities;
    Now Therefore, before any testimony is taken, without trial or 
adjudication of any

[[Page 55418]]

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 the 
parties to this action. For purposes of this Final Judgment only, 
Defendant stipulates that the Complaint states a claim upon which 
relief may be granted against Defendant under Section 1 of the 
Sherman Act, as amended (15 U.S.C. 1).

II. Definitions

    A. ``PCIC'' means Professional Consultants Insurance Company, 
Inc., any of its successors and assigns, subsidiaries, divisions, 
affiliates, partnerships, and joint ventures, and any of their 
directors, officers, managers, agents, and employees when serving in 
such capacity.
    B. ``PCIC member'' or ``member'' means any current shareholder 
of PCIC, any shareholder added to PCIC membership at any time during 
the term of this Final Judgment, any of such shareholders' 
successors and assigns, any of their subsidiaries, divisions, 
partnerships, and any of their directors, officers, managers, 
agents, and employees when serving in such capacity.
    C. ``PCIC business requirements'' means rating, assessing, or 
underwriting professional liability insurance for current PCIC 
members or firms under consideration for PCIC membership; allowing 
PCIC board members to make informed decisions about whether to 
accept or deny membership as to prospective members; preparing 
reinsurance submissions and responding to reinsurers' requests for 
information; allowing PCIC board members to evaluate PCIC's risk 
profile, the risk profile of firms under consideration for PCIC 
membership and otherwise meet fiduciary obligations to PCIC; 
allowing PCIC members to make informed decisions about continued 
participation in PCIC or potential members to make informed 
decisions about participating in PCIC; and responding to requests 
for information by auditors and regulatory agencies.
    D. ``Actuarial consulting services'' means any actuarial 
services provided by actuarial consulting firms to any clients of 
such firms, including but not limited to any such services relating 
to employee benefit plans.
    E. ``Aggregated information'' means information that reflects 
aggregation of information as to different clients, transactions, or 
service offerings. ``Aggregated information'' does not include 
information that is specific to individual identifiable clients or 
transactions.
    F. ``Agreement'' means any agreement or understanding, formal or 
informal, oral or written.
    G. ``Communicate'' means to provide, disclose, disseminate, 
solicit, share, or exchange information in any manner or form, 
including by oral, written, or electronic means.
    H. ``LOL'' means contractual limitations of liability in the 
provision of actuarial consulting services.
    I. ``LOL information'' means information about an actuarial 
consulting firm's use of LOL and information regrading an actuarial 
consulting firm's plans, policies or practices relating to its use 
of LOL.
    J. ``Prohibited LOL Information'' means current, client specific 
information about an actuarial firm's use of LOLs and information 
regarding an actuarial firm's current or future plans, policies or 
practices relating to its use of LOLs.

III. Applicability

    A. This Final Judgment applies to PCIC, as defined above each 
consenting PCIC member individually, and all other persons in active 
concert or participation with PCIC who receive actual notice of this 
Final Judgment by personal service or otherwise.
    B. PCIC shall require, as a condition of membership in PCIC, 
that each PCIC member consent to be bound by the Judgment, 
throughout the term of the Judgment, regardless of whether the 
member continues or discontinues PCIC membership or whether PCIC 
continues or ceases to exist as an entity.

IV. LOL Provisions

    A. PCIC shall not communicate LOL information to any PCIC member 
or other representative of PCIC, or to any representative of any 
PCIC member, except as limited to the following extent:
    1. PCIC's Antitrust Compliance Office, to be established by PCIC 
pursuant to ] V.A. of this Final Judgment, and/or an independent 
third party working with PCIC's Antitrust Compliance Office, and in 
a format approved by PCIC's Antitrust Compliance Office, may 
communicate historical and aggregated LOL information to members of 
PCIC's board of directors (including alternate directors), 
professional and administrative service providers working for PCIC, 
and the respective senior management of PCIC's members regularly 
involved in decision-making with respect to PCIC's business 
requirements, solely for purposes of an only as reasonably necessary 
to accomplish PCIC business requirements. PCIC's Antitrust 
compliance Office may also communicate historical and aggregated LOL 
information to a prospective member of PCIC if requested by the 
prospective member for the purpose of making an informed decision 
about participating in PCIC.
    2. LOL information communicated pursuant to ] IV.A.1. of this 
Final Judgment shall be labeled ``Confidential; Disclosure and Usage 
Subject to PCIC's Antitrust Compliance Office,'' and shall be 
preserved and maintained by PCIC's Antitrust Compliance Office ready 
for possible inspection by or production to the United States.
    3. Except to serve a purpose for which the information was 
communicated pursuant to ] IV.A.1., recipients of LOL information 
communicated pursuant to ] IV.A.1 shall not further communicate any 
such information to any other PCIC member or to any representative 
of any other provider of actuarial consulting services, and shall 
not further communicate or use any such information in any manner.
    B. A PCIC member may communicate to PCIC's Antitrust compliance 
Office and/or the independent third party, not more than twice per 
calendar year, historical and aggregated information about its usage 
of LOLs, solely for purposes of and only as reasonably necessary to 
accomplish PCIC's business requirements.
    C. PCIC shall not require any member to adopt, implement, 
maintain, or engage in any policies, plans, or practices relating to 
LOL usage, except that:
    1. PCIC may use historical and aggregated LOL information to 
accomplish PCIC's business requirements.
    2. PCIC may deny or exclude a member as to professional 
liability insurance coverage in excess of $15 million, but only if:
    (a) Reinsurance to be obtained by PCIC for the denied or 
excluded coverage is conditioned upon usage of LOL and the member 
does not satisfy the conditions,
    (b) Reinsurance to be obtained by PCIC for the denied for 
excluded coverage is not otherwise reasonably commercially available 
at a reasonable price,
    (c) At the members' request, PCIC will continue to provide the 
member with primary coverage of not less than $15 million,
    (d) PCIC provides the United States with written notice of the 
facts and circumstances of such denial or exclusion within ten 
business days of the denial or exclusion to the member, and
    (e) PCIC preserves and maintains ready for possible inspection 
or production all PCIC communications with reinsurers or members and 
other records relating to the exclusion or denial.
    D. PCIC and its members shall not:
    1. Enter into or participate in any agreement between or among 
any of themselves with respect to any actual or potential usage of 
LOL, provided that the United States will not assert a violation of 
this provision based solely on parallel conduct of the PCIC members.
    2. Enter into or participate in any agreement with any 
representatives of any non-member providers of actuarial consulting 
services with respect to any actual or potential usage of LOL.
    3. Communicate with any representatives of any member or non-
member providers of actuarial consulting services with respect to 
any Prohibited LOL Information.
    E. Notwithstanding any provisions of this Final Judgment:
    1. PCIC may obtain client-specific LOL information from a PCIC 
member to the extent reasonably necessary to discuss a specific 
actual or threatened professional liability claim against the 
member, even if the LOL information is Prohibited LOL Information.
    2. PCIC members are not prohibited from unilaterally disclosing 
LOL information, including Prohibited LOL Information, to clients or 
prospective clients, to the press or news media, and in connection 
with SEC or other regulatory filings, or LOL information that is in 
the public domain. Moreover, PCIC members are not prohibited from 
disclosing or receiving LOL information, including Prohibited LOL 
Information, when conducting business with another actuarial 
consulting firm in a vendor-vendee relationship, or when 
communicating with affiliated actuarial consulting firms based in 
other countries.

[[Page 55419]]

    3. PCIC and its members are not prohibited from engaging in 
conduct protected under the Noerr-Pennington doctrine.
    4. PCIC members are not prohibited from conducting due diligence 
with respect to LOLs in connection with an actual or contemplated 
(a) acquisition of another actuarial consulting firm; (b) purchase 
of an actuarial consulting business from another actuarial 
consulting firm; or (c) sale of an actuarial consulting business to 
another actuarial consulting firm. Moreover, to the extent 
reasonably necessary, PCIC members are not prohibited from 
conducting due diligence with respect to LOLs in connection with an 
evaluation of whether to become a shareholder or member of an 
insurance company (captive or not) other than PCIC.
    F. Nothing in this Final Judgment shall prohibit or interfere 
with PCIC's right to grant or deny coverage, or admit or deny new 
members, for any reason unrelated to a current or prospective PCIC 
member's use of LOLs.

V. Antitrust Compliance and Notification

    A. PCIC shall establish an Antitrust Compliance Office, 
including appointment of an Antitrust Compliance Officer, within 30 
days of entry of this Final Judgment, as follows:
    1. The Antitrust Compliance Office established by PCIC shall be 
staffed and maintained independently of PCIC's members.
    2. Each PCIC Antitrust Compliance Officer appointed pursuant to 
] V.A. shall be an attorney with substantial experience with the 
antitrust laws and shall not have any other responsibilities with 
respect to PCIC's operations.
    B. Each Antitrust Compliance Officer appointed pursuant to ] 
V.A. shall be responsible for establishing and implementing an 
antitrust compliance program for PCIC and ensuring PCIC's compliance 
with this Final Judgment, including the following:
    1. The PCIC Compliance Officer shall furnish a copy of this 
Final Judgment (a) within thirty (30) days of entry of this Final 
Judgment to each director or officer of PCIC, each representative of 
a PCIC member working with PCIC, and each individual who receives 
LOL information pursuant to ] IV.A.1, and (b) within thirty (30) 
days to each person who succeeds to any such position.
    2. The PCIC Compliance Officer shall obtain from each person 
designated in ] V.B.1. of this Final Judgment a signed certification 
that the person has read, understands, and agrees to comply with the 
provisions of this Final Judgment, to the best of his/her knowledge 
at the time the certification is made is not aware of any violation 
of this Final Judgment by PCIC that has not already been reported to 
the PCIC Compliance Officer, and understands that failure to comply 
with this Final Judgment may result in conviction for criminal 
contempt of court.
    3. Upon learning of any potential violation of any provision of 
this Final Judgment, the PCIC Compliance Officer shall forthwith 
take appropriate action to terminate or modify the activity so as to 
comply with this Final Judgment. Any such action shall be reported 
in the annual compliance report required by ] V.B.4. of this Final 
Judgment.
    4. For each year during the term of this Final Judgment, on or 
before the anniversary date of this Final Judgment, the PCIC 
Compliance Officer shall file with the United States a report as to 
the fact and manner of its compliance with the provisions of this 
Final Judgment. In addition, the report must identify any individual 
who received LOL information pursuant to ] IV.A.1.
    C. PCIC shall require, as a condition of membership in PCIC, 
that each PCIC member agree to establish an antitrust compliance 
program within 90 days of the entry of this Final Judgment, or with 
respect to a new PCIC member within 90 days of membership. Each PCIC 
member's antitrust compliance program must include the policies and 
procedures described in ] V.B.1-4.
    D. PCIC shall cause to be published a written notice in the form 
attached an Appendix to this Final Judgment, in Pensions & 
Investments and in Pensions & Investments Online, within sixty (60) 
days of the entry of this Final Judgment.

VI. Compliance Inspection

    A. For purposes of determining or securing compliance with this 
Final Judgment, or of determining whether this Final Judgment should 
be modified or vacated, and subject to any legally recognized 
privilege, from time to time duly authorized representatives of the 
United States Department of Justice, including consultants and other 
persons retained by the United States shall, upon written request of 
a duly authorized representative of the Assistant Attorney General 
in charge of the Antitrust Division, and on reasonable notice to the 
PCIC and its members, be permitted:
    1. Access during PCIC's and its members' office hours to inspect 
and copy, or at the United States' option, to require PCIC and its 
members to provide copies of all books, ledgers, accounts, records, 
and documents in their possession, custody, or control, relating to 
any matters contained in this Final Judgment; and
    2. To interview, either informally or on the record, PCIC's and 
its members' officers, employees, or other representatives, 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 PCIC or its 
members.
    B. Upon the written request of a duly authorized representative 
of the Assistant Attorney General in charge of the Antitrust 
Division, PCIC and its members shall submit written reports and 
interrogatory responses, 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 this time information or documents are furnished by 
PCIC or a PCIC member to the United States, PCIC or the member 
represents and identifies in writing the material in any such 
information or documents to which a claim of protection may be 
asserted under Rule 26(c)(7) of the Federal Rules of Civil 
Procedure, and PCIC or the member marks each pertinent page of such 
material, ``Subject to claim of protection under Rule 26(c)(7) of 
the Federal Rules of Civil Procedure,'' then the United States shall 
give ten (10) calendar days notice prior to divulging such material 
in any legal proceeding (other than a grand jury proceeding).

VII. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party or any PCIC 
member that consents to be bound by 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 punish violations of its provisions.

VIII. Public Interest Determination

    Entry of this Final Judgment is in the public interest.

IX. Term

    This Final Judgment shall expire ten (10) years after the day of 
its entry.

Dated:-----------------------------------------------------------------

Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16.
-----------------------------------------------------------------------
United States District Judge

Appendix

    On June 24, 2005, the United States Department of Justice filed 
a civil suit alleging that Professional Consultants Insurance 
Company (``PCIC'') has engaged in certain practices in violation of 
Section 1 of the Sherman Act. PCIC is a Vermont-based captive 
insurance company that provides professional liability insurance to 
three actuarial consulting firms (hereafter referred to as 
``PCIC``). PCIC has agreed to entry of a civil consent decree to 
settle this matter. The consent decree does not constitute evidence 
or admission by any party with respect to any issue of fact or law. 
The consent decree applies to PCIC and its consenting members, as 
well as their directors, officers, managers, agents, and employees.
    The Justice Department's suit alleges that PCIC and its members 
engaged in the sharing of competitively sensitive information 
relating to the use of contractual limitations of liability (or 
``LOL'') in actuarial consulting engagements with pension funds and 
other employee benefit plans. The consent decree is aimed at 
prohibiting PCIC and its members from sharing LOL information among 
themselves, or with other providers of actuarial consulting 
services.
    Among other things, the consent decree prohibits PCIC and its 
members from

[[Page 55420]]

communicating among themselves with respect to LOL information, 
except to a specified extent and subject to safeguards reflecting 
PCIC's reasonable need for use of LOL information to provide its 
members with professional liability insurance coverage. The consent 
decree also prohibits PCIC and its members from entering into or 
participating in any agreement, among themselves or with any other 
providers of actuarial consulting services, with respect to any 
actual or potential use of LOL; and it prohibits PCIC and its 
members from communicating with other providers of actuarial 
consulting services with respect to any firm's current or future 
plans, policies, or practices relating to the use of LOLs. Under the 
consent decree, PCIC must require, as a condition of PCIC 
membership, that its members be fully bound by the terms of the 
decree. In addition, the consent decree also requires PCIC and its 
members to establish antitrust compliance programs and notification 
procedures.
    Interested persons may address comments to Mark J. Botti, Chief, 
Litigation I Section, Antitrust Division, U.S. Department of 
Justice, 1401 H Street, NW., Suite 4000, Washington, DC 20530, 
within 60 days of the date of this notice.

United States District Court for the District of Columbia

United States of America, Plaintiff v. Professional Consultants 
Insurance Company, Inc., Defendant

CASE NUMBER: 1:05CV01272
JUDGE: Gladys Kessler
DECK TYPE: Antitrust
DATE STAMP:

Competitive Impact Statement

    Plaintiff United States of America (``United States''), pursuant 
to the Antitrust Procedures and Penalties Act (``APPA''), 15 U.S.C. 
16(b)-(h), files this Competitive Impact Statement relating to the 
proposed Amended Final Judgment submitted for entry in this civil 
antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On June 24, 2005, the United States filed a civil antitrust 
Complaint against Professional Consultants Insurance Company, Inc. 
(``PCIC''), alleging that PCIC, three actuarial consulting firms 
that own and manage PCIC, and other actuarial consulting firms 
agreed among themselves to share competitively sensitive information 
about their use of contractual limitations of liability in violation 
of Section 1 of the Sherman Act.
    The United States has also filed a proposed Amended Final 
Judgment,\1\ designed to prevent the continuation and eliminate the 
anticompetitive effects of the violation alleged in the Complaint. 
The proposed Amended Final Judgment, which is explained more fully 
below, aims to prevent PCIC and its members from sharing limitations 
of liability information among themselves, or with other providers 
of actuarial consulting services, in a manner that may significantly 
lessen competition.
---------------------------------------------------------------------------

    \1\ At the same time the Complaint was filed, the United States 
also filed a Stipulation and a proposed Final Judgment. In 
substitution of, and to correct a drafting error in, the originally 
filed proposed Final Judgment, the United States and PCIC jointly 
filed a proposed Amended Final Judgment concurrently with the filing 
of the Competitive Impact Statement.
---------------------------------------------------------------------------

    The United States and PCIC have stipulated that the proposed 
Amended Final Judgment may be entered after compliance with the 
APPA. Entry of the proposed Amended Final Judgment would terminate 
this action, except that the Court would retain jurisdiction to 
construe, modify, or enforce the provisions of the proposed Amended 
Final Judgment and to punish violations thereof.

II. Description of the Events Giving Rise to the Alleged Violation

A. PCIC, Its Members, and the Actuarial Consulting Marketplace

    PCIC is a professional liability insurance company owned and 
managed jointly by three actuarial consulting firms (which call 
themselves, and are hereinafter referred to as, PCIC ``members''). 
PCIC's principal business is to provide errors and omissions 
insurance coverage to its members, each of which is a major 
nationwide provider of actuarial consulting services. The clients of 
PCIC's members are firms and organizations that require actuarial 
financial risk analysis and management, including pension funds and 
other employee benefit plans serving public or government employees, 
private corporate employees, and members of labor unions.
    Apart from their joint ownership and management of PCIC, the 
three PCIC members are major competitors of each other, particularly 
in the provision of actuarial consulting services to employee 
benefit plans. In addition to the PCIC members, six other actuarial 
consulting firms compete on a nationwide basis to provide actuarial 
services to employee benefit plans. Actuarial consulting firms gauge 
their competitive positions based on their shares of clients among 
industry-published lists of the 1,001 largest U.S. employee benefit 
plans. Based on recent data obtained by the United States, the three 
PCIC members' combined share of the top 1,000 plans is about 35 
percent, and the combined share of all nine national competitors is 
about 96 percent.
    The actuarial consulting firms also evaluate their market 
positions with reference to three distinct types of employee benefit 
clients: plans established by corporations or private companies 
(referred to as ``corporate plans''); plans of public or government 
entities (``public plans''); and plans established by labor 
organizations and funded by multiple employers (``multi-employer 
plans''). Recent data indicates that the PCIC members collectively 
account for about 40 percent of all corporate plans among the top 
1,000 plans, and that the combined share of PCIC members and three 
other firms exceeds 90 percent. One PCIC member and four other firms 
have about 92 percent of the top 1,000 public plans. Two PCIC 
members and three other firms have about 91 percent of the top 1,000 
multiemployer plans.

B. Anticompetitive Exchange of Information on Limitations of Liability

    As alleged in the Complaint, the work performed by actuarial 
consulting firms for employee benefit clients include risk 
valuations used to determine employee benefit levels and employer 
contributions needed to fund the benefits. In such cases, an 
actuarial error or omission can result in substantial monetary 
losses or other damages to the client. Until recently, PCIC's 
members generally served their clients under terms that did not 
limit a client's right to recover damages suffered as a result of 
actuarial errors or omissions. To cover exposure to liability claims 
of clients arising out of mistakes made in their actuarial work, the 
members historically obtained professional errors and omissions 
liability insurance.
    As actuarial consulting firms began to experience increasing 
severity and frequency of liability claims in 1999-2000, the PCIC 
members considered ways to mitigate their exposure to liability 
claims. Among other things, they considered instituting or improving 
professional peer review and other quality control procedures, and 
they considered using contractual limitations of liability, or 
``LOL,'' in client engagement agreements. Clients accepting LOL are 
contractually bound to limitations on the amounts or types of 
damages that may be recoverable as a result of actuarial errors or 
omissions.
    The Complaint alleges that the PCIC members recognized that it 
made a difference whether they implemented LOL unilaterally or 
collectively, and whether they did so with or without a broad 
profession-wide movement toward LOL. They understood that unless and 
until LOL became a matter of widespread usage throughout the 
actuarial consulting profession, firms implementing LOL would face 
client resistance and potential loss of business to firms that had 
not implemented LOL. They also recognized that efforts on their part 
to implement LOL would be less exposed to client resistance and 
competitive loss of business if other actuarial competitors also 
began to implement LOL.
    To avoid being ``in front of the competition,'' the PCIC members 
sought to obtain information about their competitors' plans with 
respect to LOL. To facilitate the use of LOL by other competitors, 
they also sought to make others aware of their own LOL 
implementation efforts. Accordingly, beginning as early as in 1999, 
the PCIC members engaged in numerous discussions among themselves 
and with non-PCIC competitors, including at a series of PCIC-
sponsored profession-wide meetings, at which the firms disclosed to 
each other their respective ongoing and prospective LOL 
implementation policies, plans, and practices. This widespread 
sharing of LOL information was not motivated by any purpose of 
improving marketplace efficiency in the provision of actuarial 
consulting services, and in fact provided actuarial clients with no 
procompetitive benefits in their purchase of actuarial consulting 
services.
    As alleged in the Complaint, PCIC, its members, and other 
actuarial consulting competitors unlawfully agreed among themselves 
to share competitively sensitive information about each other's 
plans and efforts to implement LOL. The challenged

[[Page 55421]]

exchange of LOL information facilitated at least tacit coordination 
of competitor's decisions to implement LOL. The major actuarial 
consulting firms have tended to concentrate their businesses among 
three client categories--corporate, public, and multi-employer--in a 
way that has resulted in extremely high concentrations of sales 
among just a few consulting firms in each of those categories. 
Moreover, competitive turn-over of clients occurred relatively 
infrequently, and the consulting firms do not appear to have 
competed broadly or vigorously to take established clients away from 
each other. Given these conditions, unilateral attempts to implement 
LOL by any of the firms would have been competitively disruptive, 
prompting clients to seek competitive alternatives and potentially 
leading to abandonment of established client-consultant 
relationships. Such competitive disruption, from the consulting 
firms' perspective, would have been undesirable in causing erosion 
or shifting of the historical patterns of concentration and 
stability within the client categories, which could lead to 
increased price competition. Indeed, one purpose of the challenged 
conduct was to facilitate the use of LOL as a profession-wide 
``standard'' while avoiding this competitive response, and its 
actual effect was to induce numerous clients to accept LOL that 
otherwise would not have done so.

III. Explanation of the Proposed Amended Final Judgment

    The purpose of the proposed Amended Final Judgment is to prevent 
PCIC and its members from sharing LOL information among themselves, 
or with other providers of actuarial consulting services, in a 
manner that may significantly lessen competition. Application of the 
proposed Amended Final Judgment extends not only to PCIC but also to 
its members, through a requirement that PCIC obtain consent of its 
members to be bound by the proposed Amended Final Judgment as a 
condition of PCIC membership. The term of the proposed Amended Final 
Judgment is ten years from the date of its entry.
    The proposed Amended Final Judgment Final Judgment seeks to 
prevent PCIC and its members from engaging in anticompetitive 
communications and uses of LOL information while at the same time 
allowing certain PCIC business requirements for LOL information that 
do not raise significant competitive concerns. PCIC and its members 
are thus constrained from communicating about their usage of LOL to 
the extent of and subject to specified limitations and safeguards as 
to allow PCIC's continued operation as a provider of professional 
liability insurance. PCIC is prohibited from requiring its members 
to implement LOL, also subject to limited allowances for PCIC to 
engage in reasonable business activities as a professional liability 
insurer.
    The proposed Amended Final Judgment prohibits PCIC and its 
members from entering into or participating in any agreements among 
themselves or with any other provider of actuarial consulting 
services, as to any actual or potential use of LOL. In addition, 
PCIC and its members are barred from communicating with other 
providers of actuarial consulting services as to any firm's current 
or future plans, policies, or practices relating to the use of LOL. 
Other provisions of the proposed Amended Final Judgment require PCIC 
and its members to institute antitrust compliance programs, and to 
follow specified antitrust compliance and notification policies and 
procedures.

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 Amended 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 the Defendants.

V. Procedures Available for Modification of the Proposed Amended 
Final Judgment

    The United States and Defendants have stipulated that the 
proposed Amended 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 Amended Final Judgment 
is in the public interest.
    The APPA provides a period of at least sixty days preceding the 
effective date of the proposed Amended Final Judgment within which 
any person may submit to the United States written comments 
regarding the proposed Amended Final Judgment. Any person who wishes 
to comment should do so within sixty days of the date of publication 
of this Competitive Impact Statement in the Federal Register. All 
comments received during this period will be considered by the 
Department of Justice, which remains free to withdraw its consent to 
the proposed Amended 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 and published in the Federal 
Register. Written comments should be submitted to:
Mark J. Botti,
Chief, Litigation I Section,
Antitrust Division,
United States Department of Justice,
1401 H Street, NW., Suite 4000,
Washington, DC 20530.
    The proposed Amended 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 proposed Amended Final Judgment.

VI. Alternatives to the Proposed Amended Final Judgment

    The United States considered, as an alternative to the proposed 
Amended Final Judgment, proceeding to a full trial on the merits of its 
Complaint. The United States is satisfied, however, that the relief 
contained in the proposed Amended Final Judgment will reestablish and 
maintain competition among actuarial consulting firms with respect to 
liability terms of contracting with clients. In so doing, entry of the 
proposed Amended Final Judgment will avoid the time, expense and 
uncertainty of a full trial on the merits of the government's 
Complaint.
    The United States considered, but did not require as an element of 
the negotiated settlement, prohibiting PCIC members from enforcing LOL 
terms that they have already obtained from clients. The United States 
concluded that barring the PCIC members from enforcing existing LOL 
terms is not necessary to remediate anticompetitive effects of the 
challenged conduct. In this respect, the harm to clients resulting from 
anticompetitive imposition of LOL is prospective and uncertain, and as 
the great majority of actuarial clients do not experience faulty 
actuarial work, would arise only infrequently. Rather than seeking 
broadly to prohibit the enforcement of existing LOL terms, the United 
States believes it sufficient that clients against whom LOL terms may 
ultimately be advanced will then have the opportunity to assert 
invalidation of the terms as having been unlawfully imposed.
    The United States also considered but did not require the PCIC 
members to be barred from prospectively implementing LOL in new client 
engagements for a period of time, as a means of restoring market 
conditions pre-dating the conduct challenged in the Complaint. The 
United States determined such a measure to be unnecessary because at 
the present time significant competitive alternatives continue to exist 
for clients seeking to avoid LOL. One non-PCIC competitor, the largest 
actuarial consulting firm serving multi-employer clients, has to date 
chosen not to implement LOL. Another of the non-PCIC firms, which is 
the second leading competitor as to public clients and the third 
leading competitor as to corporate clients, has implemented a 
relatively less onerous form of LOL that purports to confine recovery 
to direct damages, rather than the more commonly used limitation to a 
fixed dollar amount or multiple of fees. Certain other firms that have 
begun implementing LOL have done so under policies that make

[[Page 55422]]

allowances for clients to avoid LOL in their contract negotiations.

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

    The APPA requires that proposed consent judgments in antitrust 
cases brought by the United States be subject to a sixty-day comment 
period, after which the Court shall determine whether entry of the 
proposed Final Judgment ``is in the public interest.'' 15 U.S.C. 
16(e)(1). In making that determination, the Court shall 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 a 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) and (B). As the United States Court of Appeals 
for the District of Columbia Circuit has held, the APPA permits a court 
to consider, among other things, the relationship between the remedy 
secured and the specific allegations set forth in the government's 
complaint, whether the decree is sufficiently clear, whether 
enforcement mechanisms are sufficient, and whether the decree may 
positively harm third parties. See United States v. Microsoft Corp., 56 
F.3d 1448, 1458-62 (D.C. Cir. 1995).
    ``Nothing 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). Thus, in conducting this 
inquiry, ``[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 Senator 
Tunney.\2\ Rather:

    \2\ See United States v. Gillette Co., 406 F. Supp. 713, 716 (D. 
Mass. 1975) (recognizing it was not the court's duty to settle; 
rather, the court must only answer ``whether the settlement achieved 
[was] within the reaches of the public interest).'' A ``public 
interest'' determination can be made properly on the basis of the 
Competitive Impact Statement and Response to Comments filed by the 
Department of Justice pursuant to the APPA. Although the APPA 
authorizes the use of additional procedures, 15 U.S.C. 16(f), those 
procedures are discretionary. A court need not invoke any of them 
unless it believes that the comments have raised significant issues 
and that further proceedings would aid the court in resolving those 
issues. See H.R. Rep. No 93-1463, 93rd Cong., 2d Sess. 8-9 (1974), 
reprinted in 1974 U.S.C.C.A.N. 6535, 6538.
---------------------------------------------------------------------------

    [a]bsent a showing of corrupt failure of the government to 
discharge its duty, the Court, in making it 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.

United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. (CCH) ] 
61,508, at 71,980 (W.D. Mo. 1977).
    Accordingly, with respect to the adequacy of the relief secured by 
the decree, a court may not ``engage in an unrestricted evaluation of 
what relief would best serve the public.'' United States v. BNS, Inc., 
858 F.2d 456, 462 (9th Cir. 1988) (citing United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d 
at 1460-62. 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).\3\
---------------------------------------------------------------------------

    \3\ 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''); Gillette, 406 F. Supp. at 716 
(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' '').
---------------------------------------------------------------------------

    The proposed Final Judgment, therefore, should not be reviewed 
under a standard of whether it is certain to eliminate every 
anticompetitive effect of a particular practice or whether it mandates 
certainty of free competition in the future. Court approval of a final 
judgment requires a standard more flexible and less strict than the 
standard required for a finding of liability. ``[A] proposed decree 
must be approved even if it falls short of the remedy the court would 
impose on its own, as long as it falls within the range of 
acceptability or is `within the reaches of public interest.' '' United 
States v. AT&T, 552 F. Supp. 131, 151 (D.D.C. 1982) (citations omited) 
(quoting Gillette, 406 F. Supp. at 716), aff'd sub nom. Maryland v. 
United States, 460 U.S. 1001 (1983); see also 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).
    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; the APPA does not authorize the Court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that cast.'' Microsoft, 56 F.3d at 1459. 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. Id. 
at 1459-60.

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: September --, 2005.

Washington, DC.

 Respectfully submitted,

Mark J. Botti,
Chief, Litigation I Section.
-----------------------------------------------------------------------
Weeun Wang,
Ryan Danks,
U.S. Department of Justice, Antitrust Division, Litiation I Section, 
1401 H Street, NW., Suite 4000, Washington, DC 20530, 202-307-0001.

Certificate of Service

    I hereby certify that I served a copy of the foregoing Competitive 
Impact Statement via facsimile and first class United States mail, this 
12th day of September, 2005, on: Paul C. Cuomo, Esq., Howrey LLP, 1299 
Pennsylvania Avenue, NW., Washington, DC 20004-2402, Fax (202) 383-
6610, Attorney for Defendant PCIC.

/s/--------------------------------------------------------------------
Ryan J. Danks,
Attorney, United States Department of Justice.
[FR Doc. 05-18703 Filed 9-20-05; 8:45 am]
BILLING CODE 4410-11-M