United States v. Grupo Bimbo, S.A.B. de C.V., et al.; Public Comment and Response on Proposed Final Judgment, 5574-5576 [2012-2332]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 77, Number 23 (Friday, February 3, 2012)]
[Notices]
[Pages 5574-5576]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-2332]



[[Page 5574]]

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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Grupo Bimbo, S.A.B. de C.V., et al.; Public 
Comment and Response on Proposed Final Judgment

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b)-(h), the United States hereby publishes below the comment 
received on the proposed Final Judgment in United States v. Grupo 
Bimbo, S.A.B. de C. V., et al., Civil Action No. 1:11-cv-01857, which 
was filed in the United States District Court for the District of 
Columbia on January 23, 2012, together with the response of the United 
States to the comment.
    Copies of the comment and the response are available for inspection 
at the U.S. 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 District of Columbia. Copies of any of 
these materials may be obtained upon request and payment of a copying 
fee.

Patricia A. Brink,
Director of Civil Enforcement.

United States District Court for the District Of Columbia

    United States of America, Plaintiff, v. Grupo Bimbo, S.A.B. de 
C.V., et al. Defendants.

CASE NO.: 1:11-cv-01857 (EGS) FILED: January 23, 2012



Response of Plaintiff United States to Public Comment on the Proposed 
Final Judgment

    Pursuant to the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16(b)-(h) (``APPA'' or ``Tunney Act''), 
plaintiff, the United States of America (``United States'') hereby 
files the public comment concerning the proposed Final Judgment in this 
case and the United States' response to that comment. After careful 
consideration of the comment submitted, the United States continues to 
believe that the proposed Final Judgment will provide an effective and 
appropriate remedy for the antitrust violations alleged in the 
Complaint. The United States will move the Court for entry of the 
proposed Final Judgment after the public comment and this response have 
been published in the Federal Register, pursuant to 15 U.S.C. Sec.  
16(d).

I. Procedural History

    On October 21, 2011, the United States filed a civil antitrust 
lawsuit against Defendants Grupo Bimbo S.A.B. de C.V., BBU, Inc., and 
Sara Lee Corporation to enjoin Grupo Bimbo and BBU's proposed 
acquisition of Sara Lee's North American Fresh Bakery business. The 
Complaint alleged that the acquisition would substantially lessen 
competition in the market for sliced bread in eight geographic markets 
in the United States in violation of Section 7 of the Clayton Act, 15 
U.S.C. Sec.  18, and result in higher prices for consumers in these 
markets.
    Simultaneously with the filing of the Complaint, the United States 
filed a proposed Final Judgment and Stipulation signed by the United 
States, Grupo Bimbo, BBU, and Sara Lee consenting to entry of the 
proposed Final Judgment after compliance with the requirements of the 
APPA, 15 U.S.C. Sec.  16. The United States filed an Amended 
Stipulation signed by the United States, Grupo Bimbo, BBU, and Sara Lee 
on November 17, 2011.\1\ Pursuant to the requirements of the APPA, the 
United States (1) filed its Competitive Impact Statement (``CIS'') with 
the Court on October 21, 2011; (2) published the proposed Final 
Judgment and CIS in the Federal Register on October 31, 2011 (see 76 
Fed. Reg. 67209); and (3) had summaries of the terms of the proposed 
Final Judgment and CIS, together with directions for the submission of 
written comments relating to the proposed Final Judgment, published in 
The Washington Post on October 28, 2011, and for six days beginning on 
October 31, 2011, and ending on November 5, 2011. The Defendants filed 
the statement required by 15 U.S.C. Sec.  16(g) on October 31, 2011. 
The sixty-day public comment period ended on January 4, 2012. One 
comment was received, as described below and attached hereto.
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    \1\ On November 17, 2011, the United States filed a Notice of 
Amended Hold Separate Stipulation and Order to correct an 
inadvertent clerical error relating to the definition of ``Central 
Pennsylvania Area'' in the Hold Separate Stipulation and Order 
originally filed on October 21, 2011. The Court entered the Amended 
Hold Separate Stipulation and Order on November 30, 2011.
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II. The Investigation and Proposed Resolution

    On November 9, 2010, Grupo Bimbo and BBU (collectively ``BBU'') 
agreed to acquire the North American Fresh Bakery business of Sara Lee. 
The United States Department of Justice (the ``Department'') conducted 
an extensive, detailed investigation into the competitive effects of 
the proposed transaction. As part of this investigation, the Department 
obtained and considered more than 30,000 documents. The Department 
deposed officials of BBU and Sara Lee and interviewed retail store 
customers, sliced bread manufacturers, and other individuals with 
knowledge of the sliced bread industry.
    After conducting a detailed analysis of the acquisition, the 
Department concluded that the combination of BBU and Sara Lee likely 
would substantially lessen competition for the sale of sliced bread in 
the metropolitan and surrounding areas of San Francisco, San Diego, 
Sacramento, and Los Angeles, California; Harrisburg/Scranton, 
Pennsylvania; Kansas City, Kansas; Omaha, Nebraska; and Oklahoma City, 
Oklahoma.
    As more fully explained in the CIS, the Amended Stipulation and 
proposed Final Judgment in this case are designed to preserve 
competition in the sale of sliced bread in the eight geographic areas 
set forth in the Complaint by requiring BBU to divest the following 
assets (``Divestiture Assets''). In Los Angeles, San Diego, San 
Francisco, and Sacramento, California, BBU is required to divest the 
Sara Lee family of brands of sliced bread (which includes Sara Lee, 
Sara Lee Classic, Sara Lee Soft & Smooth, Sara Lee Hearty & Delicious, 
and Sara Lee Delightful) and the EarthGrains brand of sliced bread. In 
Harrisburg/Scranton, Pennsylvania, BBU is required to divest the Holsum 
and Milano brands of sliced bread. In Kansas City, Kansas, BBU is 
required to divest the EarthGrains and Mrs Baird's brands of sliced 
bread. In Omaha, Nebraska, BBU is required to divest the EarthGrains 
and Healthy Choice brands of sliced bread. In Oklahoma City, Oklahoma, 
BBU is required to divest the EarthGrains brand of sliced bread. See 
Sections II.E, H, and K of the Proposed Final Judgment.
    In addition to a perpetual, royalty-free, assignable, transferable, 
exclusive license to use the particular brands of sliced bread, the 
proposed Final Judgment requires with respect to each relevant 
geographic market the divestiture of related tangible assets, including 
records, customer information, and other assets related to the divested 
brands. Id. at II.D, G, and J. It also requires the divestiture of 
related intangible assets, including the rights to trade dress, 
trademarks, trade secrets, and other intellectual property used in the 
research, development,

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production, marketing, servicing, distribution, or sale of the brands 
being divested. Id. The proposed Final Judgment additionally requires 
the divestiture of brand-related plants and plant-related assets, but 
it also provides that BBU need not divest those assets in the event 
that (1) the acquirer does not want those assets, and (2) the United 
States determines in its sole discretion that a divestiture of some or 
all of such assets is not reasonably necessary to enable the acquirer 
to replace the competition that otherwise would have been lost pursuant 
to BBU's acquisition of Sara Lee's fresh bakery business. Id.
    In the Department's judgment, the divestiture of the Divestiture 
Assets, along with the other requirements contained in the Amended 
Stipulation and proposed Final Judgment, are sufficient to remedy the 
anticompetitive effects identified in the Complaint.

III. Standard of Judicial Review

    The Tunney Act 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. 
Sec.  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. Sec.  16(e)(1)(A) & (B). In considering these statutory 
factors, the court's inquiry is necessarily a limited one as the United 
States 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 (DC Cir. 1995). See also 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 
mechanism to enforce the final judgment are clear and manageable.'').
    As the United States Court of Appeals for the District of Columbia 
Circuit has held, a court considers under the APPA, among other things, 
the relationship between the remedy secured and the specific 
allegations set forth in the United States' 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).\2\ 
In determining whether a proposed settlement is in the public interest, 
a district court ``must accord deference to the government's 
predictions about the efficacy of its remedies, and may not require 
that the remedies perfectly match the alleged violations.'' SBC 
Commc'ns, 489 F. Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461 
(noting the need for courts to be ``deferential to the government's 
predictions as to the effect of the proposed remedies''); United States 
v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) 
(noting that the court should grant due respect to the United States' 
``prediction as to the effect of proposed remedies, its perception of 
the market structure, and its views of the nature of the case'').
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    \2\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''); see generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
'reaches of the public interest'').
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    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be approved 
even if it falls short of the remedy the court would impose on its own, 
as long as it falls within the range of acceptability or is `within the 
reaches of public interest.' '' United States v. Am. Tel & Tel. Co., 
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also 
United States v. Akan 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.'' United States 
v. Abitibi-Consolidated, Inc., 584 F. Supp. 2d 162, 165 (D.D.C. 2008) 
(citing SBC Commc'ns, 489 F. Supp. 2d at 17).
    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its complaint, and does not authorize the court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also InBev, 2009 
U.S. Dist. LEXIS 84787, at *20 (``the `public interest' is not to be 
measured by comparing the violations alleged in the complaint against 
those the court believes could have, or even should have, been 
alleged''). Because the ``court's authority to review the decree 
depends entirely on the government's exercising its prosecutorial 
discretion by bringing a case in the first place,'' it follows that 
``the court is only authorized to review the decree itself,''

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and not to ``effectively redraft the complaint'' to inquire into other 
matters that the United States did not pursue. Microsoft, 56 F.3d at 
1459-60. As this court recently confirmed in SBC Communications, courts 
cannot look beyond the complaint in making the public interest 
determination unless the complaint is drafted so narrowly as to make a 
mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
    In its 2004 amendments,\3\ Congress made clear its intent to 
preserve the practical benefits of utilizing consent decrees in 
antitrust enforcement, stating 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. Sec.  
16(e)(2). This clause reflects 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.
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    \3\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for the 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. 
Sec.  16(e) (2004), with 15 U.S.C. Sec.  16(e)(1) (2006); see also 
SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004 
amendments ``effected minimal changes'' to Tunney Act review).
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IV. Summary of Public Comment and the United States' Response

    During the 60-day comment period, the United States received one 
public comment, from Donald Steinhauer, a current BBU, and former Sara 
Lee, employee in Central California.\4\
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    \4\ Pursuant to a specific request, the Department has redacted 
Mr. Steinhauer's mailing address from his comment.
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A. Summary of Comment
    Mr. Steinhauer argues that requiring the divestiture of the Sara 
Lee and EarthGrains brands of sliced bread in Central California will 
result in job losses, and that concern for lost jobs should outweigh 
any concerns the Department has about the anticompetitive effects of 
BBU's acquisition of Sara Lee's fresh bakery business.
B. The United States' Response
    This action was brought in order to prevent a potential violation 
of Section 7 of the Clayton Act, which protects consumers from the 
economic consequences of anticompetitive mergers and acquisitions. The 
Clayton Act seeks to prevent the higher prices, lower quality, or 
reduced innovation that may result from such transactions.
    The Tunney Act, as amended in 2004, requires the Court to evaluate 
the effect of the proposed Final Judgment ``upon competition'' as 
alleged in the Complaint. The purpose of this Tunney Act proceeding is 
to determine whether the proposed divestiture of the brands of sliced 
bread and related assets resolves the violation identified in the 
Complaint in a manner that is within the reaches of the public 
interest. In his comment, Mr. Steinhauer does not criticize the 
efficacy of the relief contained in the proposed Final Judgment to 
remedy the competitive harm alleged in the Complaint. Accordingly, Mr. 
Steinhauer's letter does not provide an appropriate rationale for 
rejecting the proposed Final Judgment.

V. Conclusion

    After careful consideration of the public comment, the United 
States concludes that entry of the proposed Final Judgment will provide 
an effective and appropriate remedy for the antitrust violations 
alleged in the Complaint and is therefore in the public interest. 
Accordingly, after the comment and this Response are published, the 
United States will move this Court to enter the proposed Final 
Judgment.
Dated: January 23, 2012.

Respectfully submitted,
United States of America
/s/Michelle R. Seltzer
Michelle R. Seltzer (DC Bar #475482), Attorney.
Litigation I Section
Antitrust Division
U.S. Department of Justice, 450 Fifth Street NW., Suite 4100, 
Washington, DC 20530.
Telephone: (202) 353-3865
Facsimile: (202) 307-5802
Email: Michelle.Seltzer@usdoj.gov.

Certificate of Service

    I, Michelle R. Seltzer, hereby certify that on January 23, 2012, I 
electronically filed the Response of Plaintiff United States to Public 
Comment on the Proposed Final Judgment and the attached Public Comment 
with the Clerk of the Court using the CM/ECF system, which will send a 
notice of electronic filing to the following counsel:

For Defendants Grupo Bimbo S.A.B. de C.V. and BBU Inc.:
Jaime M. Crowe, Esq., White & Case LLP, Washington, DC 20005.
Telephone: (202) 626-3640
Facsimile: (202) 639-9355
Email: jcrowe@whitecase.com.

For Defendant Sara Lee Corporation:
Marimichael O'Halloran Skubel, Esq., Kirkland & Ellis LLP 655 
Fifteenth Street, NW Washington, DC 20005-5793.
Telephone: (202) 879-5034
Facsimile: (202) 879-5200
Email: mskubel@kirkland.com.

/s/Michelle R. Seltzer
Michelle R. Seltzer (DC Bar #475482), Attorney.
Litigation I Section
Antitrust Division
U.S. Department of Justice, 450 Fifth Street NW., Suite 4100, 
Washington, DC 20530.
Telephone: (202) 353-3865
Facsimile: (202) 307-5802
Email: michelle.seltzer@usdoj.gov.

November 16, 2011
To Whom It May Concern:
    On your ruling over the Grupo Bimbo buyout of Sara Lee, I was 
stunned at this ruling that requires Bimbo to divest the Sara Lee and 
Earthgrains products in our area, Central California Do you realize the 
job loss that will occur from this ruling over what you call ``higher 
prices'' that people will pay for bread in the stores? If the consumer 
feels that specific bread is too high they will buy another brand and 
would still have other choices.
    Knowing that this letter by no means will change the outcome of 
this ruling, I thought that jobs were the focal point of a lot 
decisions that are being made in this administration. I hope for my 
family's well-being that I won't be one that loses out after being 
employed with Sara Lee for 20+ years. In respect for what the 
Department of Justice does to stop immorality in American businesses 
and individuals, in this case, job loss that will occur outweighs the 
concerns that you have about Bimbo monopolizing. I hope in the coming 
months I could write you another letter apologizing to you about this 
letter.

Respectfully, Donald Steinhauer.

    Redacted.
[FR Doc. 2012-2332 Filed 2-2-12; 8:45 am]
BILLING CODE 4410-11-M