United States v. George's Foods, LLC, et. al.; Proposed Final Judgment and Competitive Impact Statement, 38419-38427 [2011-16354]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 76, Number 126 (Thursday, June 30, 2011)]
[Notices]
[Pages 38419-38427]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-16354]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. George's Foods, LLC, et. al.; Proposed Final 
Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Stipulation and Competitive Impact Statement have been filed with the 
United States District Court for the Western District of Virginia in 
United States of America v. George's Foods, LLC, et. al., Civil Action 
No. 5:11-cv-00043. On May 10, 2011, the United States filed a Complaint 
alleging that George's Foods, LLC; George's Family Farms, LLC; and 
George's, Inc. (collectively, ``George's'') acquisition of Tyson Foods, 
Inc.'s (``Tyson's'') Harrisonburg, Virginia chicken processing complex, 
consummated May 7, 2011, violated Section 7 of the Clayton Act, 15 
U.S.C. 18. The proposed Final Judgment, filed on June 23, 2011, 
requires the Defendants to make certain capital improvements to the 
Harrisonburg facility.
    Copies of the Complaint, proposed Final Judgment and Competitive 
Impact Statement are available for inspection at the Department of 
Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth 
Street, NW., Suite 1010, Washington, DC 20530 (telephone: 202-514-
2481), on the Department of Justice's Web site at https://www.usdoj.gov/atr, and at the Office of the Clerk of the United States District Court 
for the Western District of Virginia. 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, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to William H. Stallings, Chief, Transportation, Energy and Agriculture 
Section, Antitrust Division, Department of Justice, Washington, DC 
20530 (telephone: 202-514-9323).

Patricia A. Brink,
Director of Civil Enforcement.

United States District Court for the Western District of Virginia, 
Harrisonburg Division

    United States of America, Department of Justice, Antitrust 
Division, 450 Fifth Street, NW., Suite 8000, Washington, DC 20530, 
Plaintiff, v. George's Foods, LLC, P.O. Drawer G, Springdale, 
Arkansas 72765, George's Family Farms, LLC, P.O. Drawer G, 
Springdale, Arkansas 72765, and George's, Inc, 402 West Robinson 
Avenue, Springdale, Arkansas 72764, Defendants.
Civil Action No.: 5:11-cv-00043

Complaint

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil antitrust 
action for equitable relief against George's Foods, LLC; George's 
Family Farms, LLC; and George's, Inc. (collectively, ``George's'') for 
violating Section 7 of the Clayton Act, 15 U.S.C. 18. This lawsuit 
challenges George's acquisition of Tyson Foods, Inc.'s (``Tyson's'') 
Harrisonburg, Virginia chicken processing complex, consummated May 7, 
2011 (the ``Transaction''). The Transaction violates Section 7 of the 
Clayton Act because its effect may be substantially to lessen 
competition for the services of broiler growers operating in and around 
the Shenandoah Valley area of Virginia and West Virginia. The United 
States alleges as follows:

I. Nature of Action

    1. The United States learned about the Transaction on or about 
March 18, 2011, when Tyson and George's publicly announced George's 
intent to buy Tyson's Harrisonburg chicken processing complex. The 
United States subsequently opened an investigation into the proposed 
deal, and issued Civil Investigative Demands (``CIDs'') on April 18, 
2011, seeking information on the potential competitive effects of the 
acquisition and George's proposed business justifications for 
purchasing the plant. After serving the CIDs, the United States engaged 
in numerous discussions with the parties to seek the production of 
relevant information as quickly as possible. These discussions were 
continuing at the close of business on Friday, May 6, 2011. On 
Saturday, May 7, 2011, without any notice to the United States and 
before responding to the CIDs, George's and Tyson entered into an asset 
purchase agreement and simultaneously closed the Transaction. The 
parties undertook this action even though they knew that the United 
States had serious concerns about the Transaction and had requested to 
be notified prior to the parties' closing the Transaction.
    2. George's and Tyson are competing chicken processors, each 
operating facilities involved in the production, processing, and 
distribution of ``broilers,'' which are chickens raised for meat 
products. George's and Tyson vigorously compete with each other not 
only in the sale of chicken products, but also for the services of 
farmers, called ``growers,'' who care for and raise chicks from the 
time they are hatched until the time they are ready for slaughter.
    3. Processors compete for growers in areas where the processors' 
plants are close together. Prior to consummation of the Transaction, 
the Shenandoah Valley region of Virginia and West Virginia was one such 
area where George's and Tyson competed head-to-head for broiler grower 
services. There, George's and Tyson operated facilities about 30 miles 
away from each other--George's with a processing facility in Edinburg, 
Virginia and a feed mill in Harrisonburg, Virginia; and Tyson with a 
processing facility in Harrisonburg, Virginia and a feed mill in Mount 
Jackson, Virginia (between Harrisonburg and Edinburg). Transportation 
costs are such that processors typically contract with growers within 
limited geographic areas surrounding their facilities. Because of their 
close proximity, the area from which Tyson and George's recruit growers 
for their respective Shenandoah Valley facilities overlap 
substantially. For growers in that region, Tyson and George's are two 
of only three processors to whom growers can sell their services.
    4. On May 7, 2011, George's entered into an agreement with Tyson 
under which George's acquired Tyson's Harrisonburg, Virginia chicken 
processing complex. The complex is capable of processing approximately 
32 million chickens per year. Tyson contracted with over 120 area 
growers to support this facility. As a result of the Transaction, 
George's controls approximately 43% of chicken processing capacity in 
the Shenandoah Valley, with only one other remaining

[[Page 38420]]

competitor, Pilgrim's Pride Corporation (``Pilgrim's Pride'').
    5. Competition among processors is critical to ensure that the 
hundreds of Shenandoah Valley-area growers receive competitive prices 
and contract terms for their services. There are nearly 500 broiler 
growers in the Virginia portion of the Shenandoah Valley alone, and in 
2007, processors paid growers in the region about $40 million to raise 
approximately 160 million chickens.
    6. The growers' ability to switch to a competing processor has been 
an important competitive restraint on processors. Elimination of Tyson 
as an alternative buyer will allow George's unilaterally to decrease 
prices or degrade contract terms to farmers for grower services in that 
region. Although there is one other competing processor in the area, 
Pilgrim's Pride, that processor does not have sufficient capacity to 
take on significant numbers of growers if George's were to depress 
payments to growers. The Transaction also makes it more likely that 
George's and Pilgrim's Pride will engage in anticompetitive 
coordination to depress prices for broiler grower services.
    7. The Transaction therefore violates Section 7 of the Clayton Act, 
as amended, 15 U.S.C. 18.

II. Jurisdiction and Venue

    8. The United States brings this action under Section 15 of the 
Clayton Act, as amended, 15 U.S.C. 25, in order to prevent and restrain 
George's from continuing to violate Section 7 of the Clayton Act, as 
amended, 15 U.S.C. 18.
    9. Defendants purchase broiler grower services in the flow of 
interstate commerce, and their activities substantially affect 
interstate commerce. The Court has subject matter jurisdiction over 
this action and jurisdiction over the parties pursuant to 15 U.S.C. 25 
and 28 U.S.C. 1331 and 1337.
    10. Defendants transact business and are found within the Western 
District of Virginia. Venue is proper in this district under 15 U.S.C. 
22 and 28 U.S.C. 1391(b) and (c).

III. Defendants

    11. George's Foods, LLC is a limited liability company organized 
and existing under the laws of the Commonwealth of Virginia. George's 
Family Farms, LLC is a limited liability company organized and existing 
under the laws of the Commonwealth of Virginia. George's, Inc. is a 
corporation organized and existing under the laws of the State of 
Arkansas. George's Foods, LLC and George's Family Farms, LLC were joint 
purchasers of Tyson's Harrisonburg complex. Related George's entities 
operate production facilities in Springdale, Arkansas; Cassville, 
Missouri; and Edinburg, Virginia.

IV. Trade and Commerce

A. The Broiler Growing Industry

    12. Chicken processors produce a variety of fresh, frozen, further 
processed, and ready to eat chicken products for retail, institutional, 
big-box, and food-service outlets. George's and Tyson are each 
vertically integrated, i.e., both run in-house breeding operations, 
hatcheries, feed-mills, slaughtering plants, and further processing 
plants staffed with company employees. This type of chicken producer is 
commonly referred to as an ``integrator.'' The one significant 
operation not performed in-house is actually raising the chickens from 
the time they are hatched until the time they are ready for slaughter, 
which takes about thirty-five to sixty days. This task is contracted 
out to hundreds of small, independent farmers, called ``growers.''
    13. Growers work under production contracts with a nearby 
processor. The processor typically provides the chicks, feed, and any 
necessary medicine. The processor also transports the chicks and feed 
to the farms, and transports the chickens to the processing plant. The 
grower typically provides the chicken houses, equipment, labor, and 
other miscellaneous expenses related to chicken care. The processor 
maintains ownership of the birds throughout the process.
    14. Caring for chickens requires regular deliveries of feed from 
the processor, which bears the associated transportation costs. In 
addition, when delivering mature birds for processing, the greater the 
distance between the grower and the processor, the greater the chicken 
mortality, chicken weight loss, and labor costs. For these reasons, 
processors value having growers located close to the processing 
facilities.
    15. There is no cash market for the purchase of broilers, so 
farmers who want to raise broilers must contract with a nearby 
integrator to raise chicks owned by that integrator.
    16. Processors typically compensate growers through a competitive 
``tournament'' system, which includes a base payment and a performance 
component. Growers with premium housing typically receive a higher base 
rate. Relative performance can also be a significant factor in how much 
a grower is paid: growers will receive greater payments if their 
broilers have lower mortality rates and more efficient feed conversion 
than other growers also delivering to the integrator at the same 
period. As a result, a grower's pay can fluctuate greatly from flock to 
flock.
    17. When a grower enters the business, he or she must build houses 
to shelter the chickens. Chicken houses typically cost between $100,000 
and $300,000 depending on their size and features. In some instances, 
growers have been able to convert existing turkey houses to chicken 
houses, but such conversions still require significant investment.
    18. Despite the growers' long-term investment in real-estate, 
facilities and equipment, contracts for grower services are often very 
short-term--sometimes just a single flock. Processors do not typically 
guarantee growers a specific number or flocks per year, nor do they 
guarantee growers a certain number of birds per flock.
    19. Growers, by regulation under the Packers and Stockyards Act, 
can terminate their relationship with a processor by giving 90 days 
notice. Growers' primary source of bargaining power when negotiating 
with integrators is the ability to switch to another integrator. Prior 
to the Transaction, there were three integrators in the Shenandoah 
Valley--Tyson, George's, and Pilgrim's Pride. Now, growers in the 
Shenandoah Valley have just two alternatives, George's and Pilgrim's 
Pride.

B. Relevant Market

    20. The purchase of broiler grower services from chicken farmers in 
the Shenandoah Valley and nearby areas is a line of commerce and a 
relevant market within the meaning of Section 7 of the Clayton Act.
    21. In order to enter the chicken growing business, growers make 
significant investments that are highly specific to broiler production. 
They must build chicken houses that may cost from $100,000 to $300,000, 
and have a 30-year economic life. Many growers take out substantial 
loans in order to make these investments. Chicken houses have no 
practical alternative use. If a grower were to stop raising chickens, 
his or her best option would likely be to raze the chicken-raising 
facilities because converting a chicken house to a house suitable for 
another use involves substantial expense. For instance, converting a 
chicken house to one suitable for turkey growing can cost more than 
$100,000. Most chicken farmers would not abandon their investments in 
chicken houses in response to small decreases in the prices and other 
contract terms they receive for their services. The relevant

[[Page 38421]]

product market is the purchase of broiler grower services.
    22. Processors typically contract with growers who are located 
close to their processing complexes. The processors must bear the cost 
of transporting feed and live birds to the grower. Due to storage 
constraints, processors deliver feed to growers several times a week. 
Indeed, processors often offer incentives to encourage growers to build 
houses near the processing complex. In the Shenandoah Valley, 
processors rarely contract with growers who are located more than fifty 
to seventy-five miles from the processor's feed mill and processing 
plant. The geographic area within which a chicken processor contracts 
with growers (i.e., the area within which the processor delivers chicks 
and feed and picks up mature broilers) is known as the ``draw area'' 
for the facility. The overlapping draw areas of Tyson and George's, 
consisting of the Shenandoah Valley area within a commercially 
reasonable range of their processing facilities, is a relevant 
geographic market within the meaning of Section 7 of the Clayton Act.
    23. In response to a small but significant, non-transitory price 
decrease by processors, growers within fifty to seventy-five miles of 
the Edinburg and/or Harrisonburg facilities would not switch to 
processors outside the Shenandoah Valley region, switch to providing 
any other service, or cease growing chickens, in sufficient numbers to 
render such a price decrease unprofitable.

C. Anticompetitive Effects

    24. The Transaction will likely lessen competition for purchases of 
grower services in the relevant geographic market. As a result of the 
Transaction, George's controls approximately 43% of chicken processing 
capacity in the Shenandoah Valley. Using a measure of market 
concentration called the Herfindahl-Hirschman Index (``HHI''), the 
post-acquisition HHIs increased by approximately 700 points, resulting 
in a post-acquisition HHI of over 5,000 points. As defined and 
explained in Appendix A, where, as here, changes in HHIs establish that 
an acquisition significantly increases concentration resulting in a 
highly concentrated market, such acquisitions are presumed likely to 
enhance market power. See Horizontal Merger Guidelines Sec.  5.3. By 
reducing the number of purchasers of broiler grower services from three 
to two in the Shenandoah Valley, the Transaction will likely result in 
reduced competition, with likely effects including depressed prices 
paid and less attractive contract terms offered to farmers.
    25. Prior to the Transaction, the only competitive buyers for 
grower services in the Shenandoah Valley were George's, Tyson, and 
Pilgrim's Pride. Tyson's former facility in Harrisonburg is capable of 
processing about 32 million chickens per year. George's facility in 
Edinburg is about 30 miles north of Harrisonburg and is capable of 
processing about 88 million chickens per year. Pilgrim's Pride operates 
two facilities in the region: one in Timberville, which lies between 
Harrisonburg and Edinburg, and is capable of processing 18 million 
chickens per year, and one in Moorefield, West Virginia, approximately 
40 miles from Harrisonburg (about 125 million chickens per year). 
Alternative processors are too far away to be viable economic 
alternatives.
    26. Farmers have benefited from competition between Tyson, 
George's, and Pilgrim's Pride in a variety of respects. In addition to 
the base rate offered to growers, there are a number of other factors 
that affect the total compensation offered to farmers. The contracts 
offered by the three processors are to some degree different, and 
farmers consider these differences when choosing an integrator or 
deciding to switch. These differences illustrate the various ways in 
which processors compete. For example:
    a. Integrators may differ greatly in the extent to which they share 
various costs with the growers. For instance, George's pays the full 
cost of treating the chickens' bedding (a necessary step to prepare a 
house for a new flock), while Tyson only pays half.
    b. Integrators also compete for grower services in the number of 
flocks they provide growers per year, a factor which greatly affects a 
farmer's income. In recent times, ``lay-outs,'' or the time between 
flocks, for some growers in the Shenandoah Valley have stretched from 
ten to twelve days to three or four weeks for some growers, leaving 
growers with fewer flocks per year. If a grower cannot shift to another 
integrator when lay-outs increase, his or her only choice is to let 
houses sit idle.
    c. Another point of differentiation is the extent to which 
processors encourage (or require) growers to make substantial 
investments to upgrade their houses. For example, an integrator may 
insist that all growers convert their chicken houses from the standard 
``curtain'' ventilation to the more efficient ``tunnel'' ventilation. 
If a grower prefers not to make such an investment, he or she may 
refuse to upgrade the facilities and move to another integrator that 
does not require tunnel ventilation, if one is available.
    d. Similarly, processors differ in the extent to which they support 
grower investment in upgrades to their houses. When Tyson's recently 
sought new houses for its Edinburg plant, it offered interested growers 
the option of entering into a longer-term contract with a set number of 
flocks and price per pound.
    27. Switching to another processor is the grower's only practicable 
recourse in the face of unfavorable contract terms. Farmers make 
substantial sunk investments in specialized chicken-raising facilities, 
often going deep into debt. It is prohibitively costly to convert those 
facilities to other uses. Growers do not have a cash market to turn to, 
nor can they feasibly turn to processors outside the Shenandoah Valley.
    28. The Transaction eliminated one of only three alternative 
outlets for farmers in the Shenandoah Valley. As a result of the 
transaction, many George's and former Tyson growers no longer have an 
alternative to turn to, and have no choice but to contract with 
George's. Pilgrim's Pride does not have sufficient capacity to take on 
growers in sufficient numbers to thwart an exercise of market power by 
George's. Likewise, Pilgrim's Pride growers in the region will be 
harmed because they will lose one of their only two alternative sources 
for selling their services.
    29. If a grower cannot switch or threaten to switch to another 
integrator when any of the terms of his or her contract deteriorate, he 
or she would likely choose to accept inferior terms rather than to have 
no contract at all. The Transaction is therefore likely to enhance 
George's incentive and ability to force growers to accept lower prices 
and less favorable contractual terms for grower services. This loss of 
competition could take the form of lower base prices, fewer allowances 
for miscellaneous expenses, longer layouts between broiler growing 
services, or other unfavorable adjustments to growers' contracts. In 
addition, the Transaction likely will enable easier and more durable 
coordinated interaction between George's and its only remaining 
competitor, Pilgrim's Pride.

V. Absence of Countervailing Factors

    30. New entry into the production and sale of broiler chickens is 
costly and time consuming. Construction of a large-scale chicken 
processing facility would require investment of at least $35 million 
and take two or more years to obtain necessary permits, plan, design, 
and build. In addition, there are significant costs and inefficiencies

[[Page 38422]]

associated with the start-up period of a new chicken processing 
facility. Repositioning by firms or facilities that slaughter primarily 
turkeys would require additional capital investment. Moreover, a turkey 
processor seeking to add chicken products to its offering would first 
need to find customers for its output prior to contracting with 
growers. Entry or repositioning into broiler chicken production would 
therefore not be timely, likely, or sufficient to defeat a small but 
significant, non-transitory decrease in the price of broiler grower 
services.

VI. Cause of Action

    31. The United States incorporates the allegations of paragraphs 1 
through 30 above.
    32. George's acquisition of Tyson's Harrisonburg, Virginia chicken 
complex will substantially lessen competition for the purchase of 
broiler grower services in the Shenandoah Valley in violation of 
Section 7 of the Clayton Act, 15 U.S.C. 18. The Transaction would 
likely have the following effects, among others:
    a. Actual and potential competition between George's and Tyson in 
the procurement of broiler grower services in the Shenandoah Valley 
will be eliminated;
    b. Competition generally in the procurement of broiler grower 
services in the Shenandoah Valley will be substantially lessened; and
    c. Suppliers of broiler growing services will receive less than 
competitive prices or less competitive contract terms for their 
services.

VII. Requested Relief

    33. The United States requests that:
    a. The acquisition of Tyson's Harrisonburg, Virginia poultry 
complex by George's be adjudged to violate Section 7 of the Clayton 
Act, 15 U.S.C. 18;
    b. Divestiture of such assets and interests sufficient to restore 
competition in the Shenandoah Valley be ordered;
    c. George's be permanently enjoined from further ownership and 
operation of the assets acquired as part of the Transaction;
    d. The United States be awarded their costs of this action; and
    e. The United States be awarded such other and further relief as 
the case requires and the Court deems just and proper.

Dated: May 10, 2011.

Respectfully submitted,
For Plaintiff United States:

Christine A. Varney,
Assistant Attorney General for Antitrust.

Sharis A. Pozen,
Deputy Assistant Attorney General.

Joseph F. Wayland,
Deputy Assistant Attorney General.

Patricia A. Brink,
Director of Civil Enforcement.

William H. Stallings,
Acting Chief, Transportation, Energy, and Agriculture Section.

Jill A. Ptacek (WA Bar  18756)
Attorney, Transportation, Energy and Agriculture Section, Antitrust 
Division, U.S. Department of Justice, 450 Fifth Street, NW., Suite 
8000, Washington, DC 20530, Telephone: (202) 307-6607, Facsimile: 
(202) 307-2784, E-mail: jill.ptacek@usdoj.gov.

Timothy J. Heaphy, United States Attorney, Western District of 
Virginia

Rick A. Mountcastle, Assistant United States Attorney, VSB 19786, 
P.O. Box 1709, Roanoke, VA 24008-1709, Telephone: ( 540) 857-2254, 
Facsimile: (540) 857-2283, E-mail: rick.mountcastle@usdoj.gov, 
Attorneys for the United States.

United States District Court for the Western District of Virginia, 
Harrisonburg Division

    United States of America, Plaintiff, v. George's Foods, LLC, 
George's Family Farms, LLC, and GEORGE'S, INC., Defendants.
Civil Action No. 5:11-cv-00043
By: Glen E. Conrad, Chief United States District Judge

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.

I. Nature and Purpose of the Proceeding

    The Complaint in this case alleges that the acquisition by George's 
Foods, LLC; George's Family Farms, LLC; and George's, Inc. 
(collectively, ``Defendants'' or ``George's'') of the Harrisonburg, 
Virginia chicken processing complex from Tyson Foods, Inc., Tyson 
Farms, Inc. and Tyson Breeders, Inc. (``Tyson'') likely would 
substantially lessen competition for the services of broiler growers 
operating in and around the Shenandoah Valley area of Virginia and West 
Virginia, in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
    On June 23, 2011, the United States filed a proposed Final Judgment 
designed to remedy the effect of the competitive harm caused by 
George's acquisition of the Harrisonburg facility (``the 
Transaction''). The proposed Final Judgment, which is explained more 
fully below, requires George's to make certain capital improvements and 
modifications at the Harrisonburg complex.
    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. Events Giving Rise to the Alleged Violation

A. Defendants and the Transaction

    George's Foods, LLC is a limited liability company organized and 
existing under the laws of the Commonwealth of Virginia. George's 
Family Farms, LLC is a limited liability company organized and existing 
under the laws of the Commonwealth of Virginia. George's, Inc. is a 
corporation organized and existing under the laws of the State of 
Arkansas. Related George's entities operate production facilities in 
Springdale, Arkansas; Cassville, Missouri; and Edinburg, Virginia.
    On March 18, 2011, Tyson and George's publicly announced George's 
intent to buy Tyson's Harrisonburg processing complex and related 
assets (including a feed mill and hatchery). The Antitrust Division of 
the United States Department of Justice opened an investigation of the 
potential competitive effects of the proposed acquisition. On May 7, 
2011, George's closed the acquisition, for a purchase price of 
approximately $3.1 million for the facilities and an additional amount 
for equipment and current inventory. On May 10, 2011, the United States 
filed this lawsuit, challenging the acquisition as a violation of 
Section 7 of the Clayton Act.\1\
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    \1\ After notifying the parties of the Antitrust Division's 
concerns regarding the Transaction, the parties failed to provide 
the Division the information it requested to fully examine the 
Transaction.
---------------------------------------------------------------------------

B. Background

    George's and Tyson are competing chicken processors, each operating 
facilities involved in the production, processing, and distribution of 
``broilers,'' which are chickens raised for meat products. Chicken 
processors, such as George's and Tyson, rely on the services of 
farmers, called ``growers,'' to care for and raise chicks from the time 
they are hatched until the time they are ready for slaughter.
    Growers work under production contracts with a nearby processor. 
The

[[Page 38423]]

processor usually provides the chicks, feed, and any necessary 
medicine. The processor also transports the chicks and feed to the 
farms, and transports the chickens to the processing plant. The grower 
typically provides the chicken houses, equipment, labor, and other 
miscellaneous expenses related to chicken care. The processor maintains 
ownership of the birds throughout the process.
    There is no cash market for the purchase of broilers, so farmers 
who want to raise broilers must contract with a nearby processor to 
raise chicks owned by that processor.
    Transportation costs (in particular, for the regular deliveries by 
the processors of feed to their growers) are such that processors 
typically contract with growers within a limited geographic area 
surrounding their facilities. Thus, broiler processors compete with 
each other for growers in geographic areas where the processors' plants 
are close together. Prior to the Transaction, the Shenandoah Valley 
region of Virginia and West Virginia was one such area where George's 
and Tyson competed head-to-head for broiler grower services.
    Tyson's Harrisonburg, Virginia facility has the capacity to process 
approximately 625,000 birds per week. The plant is relatively small by 
industry standards, and is located on a site that prevents expansion to 
increase its overall processing capacity. Prior to the Transaction, 
Tyson consistently had been operating the plant at a level of 
approximately 450,000 birds per week, well below its capacity. Tyson 
had contracts with approximately 120 growers located in the Shenandoah 
Valley region to supply birds to the Harrisonburg facility.
    George's Edinburg, Virginia facility has the capacity to process 
approximately 1,650,000 birds per week. George's has contracts with 
approximately 190 growers located in the Shenandoah Valley region to 
supply birds to the Edinburg facility.
    JBS/Pilgrim's Pride also operates facilities in the Shenandoah 
Valley region. It has a processing plant in Timberville, Virginia with 
an approximate capacity of 660,000 birds per week and a processing 
plant in Moorefield, West Virginia, with an approximate capacity of 
2,400,000 birds per week.
    George's facility in Edinburg and the Tyson facility in 
Harrisonburg that George's acquired are approximately 30 miles away 
from each other. Because of the close proximity of the two facilities, 
the area from which Tyson and George's recruited growers for their 
respective facilities overlapped substantially.

C. The Relevant Market

    The purchase of broiler grower services from chicken farmers in the 
Shenandoah Valley region is a line of commerce and a relevant market 
within the meaning of Section 7 of the Clayton Act. In response to a 
small but significant, non-transitory price decrease by processors, 
growers within fifty to seventy-five miles of the Edinburg and/or 
Harrisonburg facilities would not switch to processors outside the 
Shenandoah Valley region, switch to providing any other service, or 
cease growing chickens, in sufficient numbers to render such a price 
decrease unprofitable.
    The purchase of broiler grower services is a relevant product 
market. To enter the chicken growing business, growers make significant 
investments that are highly specific to broiler production. They must 
build chicken houses that may cost from $100,000 to $300,000 and often 
take out substantial loans to make those investments. Chicken houses 
have no practical alternative use and most growers would not abandon 
their investments in chicken houses in response to small decreases in 
the prices (or degradations of other contract terms) they receive for 
their services.
    Processors typically contract with growers who are located close to 
their processing complexes as processors must bear the cost of 
transporting feed and live birds to the grower. In the Shenandoah 
Valley region, processors rarely contract with growers located more 
than fifty to seventy-five miles from the processor's feed mill and 
processing plant. The overlapping draw areas of Tyson and George's in 
the Shenandoah Valley region (i.e., the areas within which the 
companies deliver chicks and feed and pick up mature broilers for their 
processing facilities) is a relevant geographic market within the 
meaning of Section 7 of the Clayton Act and growers would not switch to 
processors outside the overlapping draw areas in response to small 
decreases in the prices (or degradations of other contract terms) they 
receive for their services.

D. Competitive Effects of the Transaction

    The Complaint alleges that the Transaction would likely lessen 
competition for purchases of grower services in the relevant geographic 
market. Prior to the Transaction, George's, Tyson and JBS/Pilgrims' 
Pride competed against each other for grower services in the Shenandoah 
Valley region. The transaction will reduce the number of competitors in 
the relevant market from three to two and will leave George's with 
approximately 40% of the processing capacity in the market. The 
Complaint alleges that the reduction in the number of processors 
resulting from the Transaction would likely have the effect of 
enhancing George's incentive and ability to force growers to accept 
lower prices and less favorable contractual terms for grower services; 
in short, the Transaction would lead George's to exercise monopsony 
power.\2\
---------------------------------------------------------------------------

    \2\ This loss of competition could take the form of lower base 
prices, fewer allowances for miscellaneous expenses, longer layouts 
between broiler growing services, or other unfavorable adjustments 
to growers' contracts.
---------------------------------------------------------------------------

E. Entry Into Chicken Processing

    New entry into the processing of broiler chickens is costly and 
time consuming. Entry or repositioning into broiler chicken processing 
in the Shenandoah Valley region would therefore not be timely, likely, 
or sufficient to counteract a reduction in demand for grower services 
resulting from the Transaction.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment requires George's to acquire and 
install certain assets and improvements for its Shenandoah Valley 
poultry processing facilities. As explained below, requiring the 
described improvements will enhance George's ability and financial 
incentive to operate the Harrisonburg facility acquired from Tyson at a 
greater scale than occurred pre-Transaction. Requiring these 
improvements gives the United States confidence that George's will have 
an increased demand for chickens and, consequently, an increased demand 
for grower services that will benefit growers in the Shenandoah Valley 
region.

A. Terms of the Proposed Final Judgment

    Specifically, Section IV of the proposed Final Judgment requires 
George's within 60 days following entry of the proposed Final Judgment 
(subject to two 30-day extensions at the discretion of the United 
States) to enter into contracts to implement the following 
improvements:
    First, George's must install at the Harrisonburg plant an 
individually frozen (``IF'') freezer with a rated capacity of 5,000 
pounds per hour. Installation of the IF freezer will be made as soon as 
practicable after the signing of the purchase contract, but no later 
than twelve months following the date on which the contract is 
executed.

[[Page 38424]]

IF freezers are highly specialized equipment designed for the uniform 
individual freezing of small food items, such as chicken wings and 
other parts, at a high rate of throughput. The freezers typically cost 
in excess of $1.5 million and require significant expense for 
installation. George's will be able to use the IF freezer to process 
chicken that it slaughters at both its Harrisonburg and Edinburg 
facilities.
    Second, George's must purchase and install at either the 
Harrisonburg or Edinburg complex a whole leg or thigh deboning line 
with the capacity to debone a minimum of fifty legs per minute or new 
automated lines with similar capacities. Installation of this equipment 
will be made as soon as practicable after the signing of the purchase 
contract, but no later than twelve months following the date on which 
the contract is executed. George's will be able to use the deboning 
equipment to enhance the mix of the types of chicken products that are 
processed at both its Harrisonburg and Edinburg facilities.
    Third, George's will make significant repairs to the roof of the 
processing plant at the Harrisonburg complex. Completion of the roof 
repairs will be made as soon as practicable after the signing of the 
repair contract, but no later than six months following the date on 
which the contract is executed.
    Section V of the proposed Final Judgment grants the United States 
access, upon reasonable notice, to Defendants' records and documents 
(including relevant contracts) relating to matters contained in the 
proposed Final Judgment. Defendants also, upon request, must make their 
employees available for interviews or depositions and answer 
interrogatories and prepare written reports relating to matters 
contained in the proposed Final Judgment.
    The Final Judgment will remain in effect until notification by the 
United States, or motion by the Defendants, to the Court of Defendants' 
completion of all of the improvements and modifications required to be 
made by the Final Judgment.

B. The Proposed Final Judgment Is in the Public Interest

    The improvements required by the proposed Final Judgment serve the 
public interest by ensuring that George's has the ability and incentive 
to increase production at its Shenandoah Valley poultry processing 
facilities. This will increase George's demand for grower services and 
thereby benefit Shenandoah Valley growers.
    The key aspects of the remedy are the installation of the IF 
freezer, which will allow George's to produce higher margin items at 
both of its Shenandoah Valley facilities, and the deboning equipment, 
which will allow George's to alter the mix of products produced at 
these facilities. Together, these improvements will allow George's to 
produce products more highly valued in the marketplace and thereby earn 
higher margins. The improvements also will reduce the variable costs 
George's incurs in its Shenandoah Valley operations. The improvements 
are merger-specific in that an alternative purchaser of the 
Harrisonburg plant would not likely have been able to justify the 
equipment's high cost without the ability to spread the overhead cost 
across the output of two plants, as George's can.
    These improvements likely will result in the following 
procompetitive effects: \3\ The additions of the IF freezer and the 
deboning line will provide George's with an incentive to maintain high 
production levels at both plants so as to spread the Harrisonburg 
plant's increased fixed costs over a greater volume. For George's to 
fully realize the cost savings from the Transaction and to maximize its 
return on the investments required by the Final Judgment, George's will 
need to operate the plant at capacity--something Tyson had only rarely 
done in the past few years. The significant cost of the improvements 
(as well as the roofing repairs to the Harrisonburg facility) thus 
provides a substantial economic incentive that is consistent with 
George's public commitment to keeping the Harrisonburg plant open and 
fully operational.\4\
---------------------------------------------------------------------------

    \3\ George's also estimates that area-specific synergies between 
its two Shenandoah Valley plants--such as rationalizing feed 
deliveries in the draw areas and combining product from both plants 
to fill customer orders in a single shipment--will lead to 
significant annual savings.
    \4\ Altogether, the cost for the improvements will likely exceed 
George's purchase price for the Harrisonburg facility.
---------------------------------------------------------------------------

    The increases in output from the improvements will in turn lead to 
a significant increase in total number of chickens George's must 
procure from area growers.\5\ This increased demand for chickens will 
increase demand for grower services in the Shenandoah Valley region 
beyond the level demanded when Tyson owned the Harrisonburg plant.
---------------------------------------------------------------------------

    \5\ George's has already assumed the contracts of all the 
broiler growers with whom Tyson had written agreements at the time 
of the Transaction and has offered those growers a contractual 
addendum extending the contract terms to 2018. Tyson only had 
contracts in place sufficient to increase the Harrisonburg plant 
output to 525,000 head per week.
---------------------------------------------------------------------------

    The remedy called for in the proposed Final Judgment does not re-
create an independent competitor. The remedy is, however, an effective 
one given the particular facts and circumstances of this matter because 
George's increased demand for grower services is likely to be 
sufficient to counteract potential adverse effects from the 
Transaction. The Horizontal Merger Guidelines (``the Guidelines'') 
state that incremental cost reductions flowing from ``merger-generated 
efficiencies'' may ``reduce or reverse any increases in the merged 
firm's incentive to elevate price'' post transaction.\6\ Horizontal 
Merger Guidelines Sec.  10. The Guidelines instruct that in analyzing 
the competitive effects of a transaction, the United States can 
consider whether verifiable, transaction-specific efficiencies ``would 
be sufficient to reverse the [transaction's] potential harm to 
[growers] in the relevant market, e.g., by preventing price [decreases] 
in that market.'' Id. As discussed above, the improvements required by 
the proposed Final Judgment give the United States confidence that the 
resulting increased output will serve to counteract any potential 
competitive harm.
---------------------------------------------------------------------------

    \6\ The Guidelines' reference to price elevation relates to 
acquisitions causing effects on the selling side (i.e., downstream). 
In the instant case, the focus is on the buying side with the 
concern that the Transaction will enhance George's incentive to 
decrease prices paid to growers.
---------------------------------------------------------------------------

    Moreover, there were significant concerns associated with the 
viability of the Harrisonburg processing plant. With a capacity of 
625,000 birds per week, the Harrisonburg plant is relatively small 
compared to other industry slaughter plants (other than plants 
typically used to process birds for narrow specialty markets). The 
Harrisonburg plant has operated at a loss over the past few years, with 
Tyson losing more than $10 million in the three years preceding the 
sale to George's. For well over half of that time, output at the plant 
was under 525,000 birds per week.
    Taking all the facts and circumstances into consideration, 
including the likely benefits resulting from the required improvements, 
the proposed Final Judgment is an effective remedy that is in the 
public interest.

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

[[Page 38425]]

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 George's.

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 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 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 and published in the Federal Register.
    Written comments should be submitted to:
    William H. Stallings, Chief, Transportation, Energy and Agriculture 
Section, Antitrust Division, United States Department of Justice, 450 
Fifth Street, NW., Suite 8000, 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, incurring the time, expense, and risk of a full trial 
on the merits in order to force George's to divest the Harrisonburg 
processing complex. The United States is satisfied, however, that the 
improvements and modification George's will implement at the 
Harrisonburg complex pursuant to the Final Judgment will ensure 
continued, and increasing, demand for grower services in the Shenandoah 
Valley region.

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 60-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. InBev N.V./
S.A., 2009-2 Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, 
No. 08-1965 (JR), 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 mechanisms to enforce the final 
judgment are clear and manageable'').\7\
---------------------------------------------------------------------------

    \7\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for a 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).
---------------------------------------------------------------------------

    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 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) (citing 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).\8\ 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

[[Page 38426]]

Commc'ns, 489 F. Supp. 2d at 17; see also 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).
---------------------------------------------------------------------------

    \8\ 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''').
---------------------------------------------------------------------------

    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 
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.
    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). 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 Senator 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.\9\
---------------------------------------------------------------------------

    \9\ 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., 1977-1 Trade Cas. (CCH) ] 
61,508, at 71,980 (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, 93d Cong., 1st Sess., 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.'').
---------------------------------------------------------------------------

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.

Respectfully submitted,

Dated: June 23, 2011.

Jill A. Ptacek, Attorney, Transportation, Energy and Agriculture 
Section, Antitrust Division, U.S. Department of Justice, 450 Fifth 
Street, NW., Suite 8000, Washington, DC 20530, Telephone: (202) 307-
6607, Facsimile: (202) 307-2784, E-mail: jill.ptacek@usdoj.gov, 
Attorney for the United States.

United States District Court for the Western District of Virginia, 
Harrisonburg Division

    United States of America, Plaintiff, v. George's Foods, LLC, 
George's Family Farms, LLC, and George's, Inc., Defendants.
Civil Action No. 5:11-cv-00043
By: Glen E. Conrad, Chief United States District Judge,

Proposed Final Judgment

    Whereas, Plaintiff, United States of America, filed its Complaint 
on May 10, 2011, and the United States and Defendants George's Foods, 
LLC; George's Family Farms, LLC; and George's, Inc. (collectively, 
``Defendants''), 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, this Final Judgment requires the prompt and certain 
acquisition and installation of certain assets, and modification of 
other assets, by Defendants at the Harrisonburg, Virginia, chicken 
processing complex;
    And Whereas, Defendants have represented to the United States that 
the asset acquisitions, installations and modifications required below 
can and will be made, that Defendants will abide by the obligations 
required below, and that Defendants will later raise no claim of 
hardship or difficulty as grounds for asking the Court to modify any of 
the 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.

II. Definitions

    As used in this Final Judgment:
    A. The term ``George's'' means George's, Inc., its domestic and 
foreign parents, predecessors, divisions, subsidiaries, affiliates, 
partnerships and joint ventures, and all directors, officers, 
employees, agents, and representatives of the foregoing, including 
George's Foods, LLC and George's Family Farms, LLC. The terms 
``subsidiary,'' ``affiliate,'' and ``joint venture'' refer to any 
person in which the company holds at least a 25 percent interest, 
regardless of how the company's interest is measured (e.g., number of 
shares, degree of control, board seats or votes).
    B. The term ``Edinburg complex'' means the chicken processing plant 
owned by George's located in Edinburg, Virginia, and any real property 
specifically used to support growers that produce for that plant, 
including feed mills or hatcheries.
    C. The term ``Harrisonburg complex'' means the chicken processing 
plant formerly owned by Tyson Foods, Inc., located in Harrisonburg, 
Virginia, and any real property specifically used to support growers 
that raise chickens for that plant, including feed mills or hatcheries.
    D. The term ``relating to'' means in whole or in part constituting, 
containing, concerning, discussing, describing, analyzing, identifying, 
or stating.

III. Applicability

    This Final Judgment applies to Defendants, as defined above, and 
all other persons in active concert or participation with them who 
receive

[[Page 38427]]

actual notice of this Final Judgment by personal service or otherwise.

IV. Relief

    A. Defendants shall, no later than 60 days following entry of this 
Final Judgment, subject to two additional extensions of 30 days each at 
the reasonable discretion of the United States, deliver to the United 
States Department of Justice Antitrust Division (``Antitrust 
Division'') executed contracts providing for the following improvements 
or modifications:
    1. The purchase and installation at the Harrisonburg complex of an 
approximately 5,000 pound per hour rated capacity (for disjointed 
wings) individually frozen (IF) freezer. Completion of installation of 
the IF freezer will be made as soon as practicable after the signing of 
the purchase contract, but no later than twelve months following the 
date on which the contract is executed.
    2. The purchase and installation at either the Harrisonburg or 
Edinburg complex of a whole leg or thigh deboning line with the 
capacity to debone a minimum of fifty legs per minute and/or new 
automated lines with similar capacities. Completion of installation of 
the whole leg or thigh deboning line will be made as soon as 
practicable after the signing of the purchase contract, but no later 
than twelve months following the date on which the contract is 
executed.
    3. The repair of approximately 13,300 square feet of roofing of the 
processing plant at the Harrisonburg complex, including removal of an 
existing ballasted roof and replacement with a non-ballasted roof 
system. The new roof system will be suitable for a poultry processing 
plant. Completion of the roof repairs will be made as soon as 
practicable after the signing of the repair contract, but no later than 
six months following the date on which the contract is executed.
    B. Defendants shall notify the United States within two business 
days of entering each such contract and shall provide the United States 
with a copy of any purchase, installation or construction agreements 
entered into by the Defendants relating to implementing the improvement 
or modification within seven days of entering each such contract.
    C. Defendants shall notify the United States within two business 
days of the completion of each improvement or modification required by 
Section VI.A and shall within seven days provide the United States with 
written verification that the improvement or modification was 
completed.
    D. All documents required to be produced to the United States under 
Paragraph IV(B) shall be delivered by certified mail to the following 
address: Chief, Transportation, Energy and Agriculture Section, 
Antitrust Division, Department of Justice, 450 Fifth St., NW., 
Washington, DC 20530.

V. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment, 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 Antitrust Division (``Antitrust Division''), 
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 Defendant, 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 copies 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.