United States v. Apple, Inc., et al.; Public Comments and Response on Proposed Final Judgment, 33437-33440 [2013-13133]

Download as PDF tkelley on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 78, No. 107 / Tuesday, June 4, 2013 / Notices Magruder Road, Middletown, NJ 07732. Please check www.forthancock21stcentury.org for additional information. Agenda: Committee meeting will consist of the following: 1. Welcome and Introductory Remarks 2. Update on Working Group Progress 3. Assessment of Committee Needs 4. Potential Frameworks and Reuse Scenarios 5. Development of Committee Work Plan 6. Future Committee Activities, Meeting Schedule, 7. Public Comment 8. Adjournment The final agenda will be posted on www.forthancock21stcentury.org prior to each meeting. FOR FURTHER INFORMATION CONTACT: Further information concerning the meeting may be obtained from John Warren, Gateway National Recreation Area, 210 New York Avenue, Staten Island, NY 10305, at (718) 354–4608 or email: forthancock21stcentury@yahoo. com, or visit the Advisory Committee Web site at www.forthancock21st century.org. SUPPLEMENTARY INFORMATION: Under section 10(a)(2) of the Federal Advisory Committee Act (5 U.S.C. App.). The purpose of the committee is to provide advice to the Secretary of the Interior, through the Director of the National Park Service, on the development of a reuse plan and on matters relating to future uses of certain buildings at Fort Hancock within Gateway National Recreation Area. The meeting is open to the public. Interested members of the public may present, either orally or through written comments, information for the committee to consider during the public meeting. Attendees and those wishing to provide comment are strongly encouraged to preregister through the contact information provided. The public will be able to comment on from 4:00 p.m. to 4:45 p.m. Written comments will be accepted prior to, during or after the meeting. Due to time constraints during the meeting, the committee is not able to read written public comments submitted into the record. 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[FR Doc. 2013–13259 Filed 6–3–13; 8:45 am] BILLING CODE 4310–WV–P DEPARTMENT OF JUSTICE Notice of Lodging of Proposed Consent Decree Under the Comprehensive Environmental Response, Compensation and Liability Act On May 23, 2013, the Department of Justice lodged a proposed Consent Decree (‘‘Decree’’) with the United States District Court for the Southern District of West Virginia in the action entitled United States v. Cooper Industries, LLC, Civil Action No. 1:13– cv–12064. The Consent Decree is being filed simultaneously with a Complaint alleging claims against Defendant under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9607(a), for costs of past response actions in connection with the release of hazardous substances at the Lin-Electric Superfund Site (the ‘‘Site’’) in Bluefield, West Virginia. The Consent Decree requires Cooper Industries LLC to pay $340,000 in reimbursement of these response costs, which were incurred during an EPA removal action at the Site in 2008–2009. The publication of this notice opens a period for public comment on the Decree. Comments should be addressed to the Assistant Attorney General, Environment and Natural Resources Division, and should refer to United States v. Cooper Industries LLC, D.J. Ref. No. 90–11–3–10604. All comments must be submitted no later than thirty (30) days after the publication date of this notice. Comments may be submitted either by email or by mail: To submit comments: Send them to: By e-mail pubcommentees.enrd@usdoj.gov. Assistant Attorney General, U.S. DOJ—ENRD, P.O. Box 7611, Washington, DC 20044–7611. By mail ..... PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 33437 During the public comment period, the Consent Decree may be examined and downloaded at this Justice Department Web site: https:// www.justice.gov/enrd/ Consent_Decrees.htm. We will provide a paper copy of the Consent Decree upon written request and payment of reproduction costs. Please mail your request and payment to: Consent Decree Library, U.S. DOJ—ENRD, P.O. Box 7611, Washington, DC 20044–7611. Please enclose a check or money order for $5.00 (25 cents per page reproduction cost) payable to the United States Treasury. Robert Brook, Assistant Section Chief, Environmental Enforcement Section, Environment and Natural Resources Division. [FR Doc. 2013–13102 Filed 6–3–13; 8:45 am] BILLING CODE 4410–15–P DEPARTMENT OF JUSTICE Antitrust Division United States v. Apple, Inc., et al.; Public Comments 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 United States’ Response to Public Comments on the proposed Final Judgment as to Defendants Verlagsgruppe Georg von Holtzbrinck GmbH and Holtzbrinck Publishers, LLC d/b/a Macmillan in United States v. Apple, Inc., et al., Civil Action No. 12– CV–2826 (DLC), which was filed in the United States District Court for the Southern District of New York on May 24, 2013, along with copies of the one comment received by the United States. Copies of the comment and the response are available for inspection at the Department of Justice Antitrust Division, 450 Fifth Street NW., Suite 1010, Washington, DC 20530 (telephone: 202–514–2481), on the Department of Justice’s Web site at https://www.justice.gov/atr/cases/apple/ index-2.html, and at the Office of the Clerk of the United States District Court for the Southern District of New York, Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, NY 10007–1312. Copies of any of these E:\FR\FM\04JNN1.SGM 04JNN1 33438 Federal Register / Vol. 78, No. 107 / Tuesday, June 4, 2013 / Notices materials may also be obtained upon request and payment of a copying fee. Patricia A. Brink, Director of Civil Enforcement. United States District Court for the Southern District of New York UNITED STATES OF AMERICA, Plaintiff, v. APPLE, INC., et al., Defendants. Civil Action No. 12–CV–2826 (DLC) ECF Case Response by Plaintiff United States to Public Comments on the Proposed Final Judgment as to the Macmillan Defendants Pursuant to the requirements of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)–(h) (‘‘APPA’’ or ‘‘Tunney Act’’), the United States hereby responds to the single public comment received regarding the proposed Final Judgment as to Defendants Verlagsgruppe Georg von Holtzbrinck GmbH and Holtzbrinck Publishers, LLC d/b/a Macmillan (collectively, ‘‘Macmillan’’). After careful consideration of the comment submitted, the United States continues to believe that the proposed Final Judgment as to Macmillan (‘‘proposed Macmillan Final Judgment’’) will provide an effective and appropriate remedy for the antitrust violations alleged in the Complaint. The comment submitted to the United States, along with a copy of this Response to Comments, are posted publicly at https://www.justice.gov/atr/ cases/apple/index-2.html, in accordance with 15 U.S.C. 16(d) and the Court’s May 22, 2013 Order (Docket No. 260). The United States will publish this Internet location and this Response to Comments in the Federal Register, see 15 U.S.C. 16(d), and will then, pursuant to the Court’s February 19, 2013 Order (Docket No. 180), move for entry of the proposed Macmillan Final Judgment by no later than June 13, 2013. tkelley on DSK3SPTVN1PROD with NOTICES I. Procedural History On April 11, 2012, the United States filed a civil antitrust Complaint alleging that Apple, Inc. (‘‘Apple’’) and five of the six largest publishers in the United States (‘‘Publisher Defendants’’) conspired to raise prices of electronic books (‘‘e-books’’) in the United States in violation of Section 1 of the Sherman Act, 15 U.S.C. 1. On the same day, the United States filed a proposed Final Judgment (‘‘Original Final Judgment’’) as to three of the Publisher Defendants: Hachette Book Group, Inc., HarperCollins Publishers L.L.C., and Simon & Schuster, Inc. (collectively, ‘‘Original Settling Defendants’’). During VerDate Mar<15>2010 18:33 Jun 03, 2013 Jkt 229001 the Tunney Act process concerning the Original Final Judgment, the United States received and responded to 868 public comments (Docket No. 81) (‘‘Original Response to Comments’’), and this Court entered the Original Final Judgment on September 6, 2012 (Docket No. 119). On December 18, 2012, the United States filed a proposed Final Judgment as to Penguin. The United States responded on April 5, 2013 to the three public comments it received concerning the proposed Penguin Final Judgment (‘‘Penguin Response to Comments’’) (Docket No. 201), moved for entry of the proposed Penguin Final Judgment on April 18, 2013 (Docket No. 211), and this Court granted the United States’ motion on May 17, 2013 (Docket No. 257). The United States reached a settlement with Macmillan and, on February 8, 2013, filed a proposed Final Judgment and a Stipulation signed by the United States and Macmillan consenting to the entry of the proposed Macmillan Final Judgment after compliance with the requirements of the Tunney Act, 15 U.S.C. 16 (Docket No. 174). Pursuant to those requirements, the United States filed its Competitive Impact Statement (‘‘CIS’’) with the Court on February 8, 2013 (Docket No. 175); the proposed Final Judgment and CIS were published in the Federal Register on February 25, 2013, see United States v. Apple, Inc., et al., 78 FR 12874; and 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, were published in the Washington Post and the New York Post for seven consecutive days beginning on February 21, 2013 and ending on February 27, 2013. The sixty-day period for public comment ended on April 28, 2013. The United States received only one comment, which is described below and attached hereto.1 1 The United States has described the allegations in the Complaint and summarized the standard of review applicable to Tunney Act proceedings in several previous submissions. See, e.g., Original Response to Comments (Docket No. 81; 77 FR 44271); Penguin Response to Comments (Docket No. 201; 78 FR 22298). This Court also articulated the standard of review in its Opinion and Order finding that the Original Final Judgment satisfied the requirements of the Tunney Act. See United States v. Apple, Inc., 889 F. Supp. 2d 623, 630–32 (S.D.N.Y. 2012). Bob Kohn, the lone commenter on the proposed Macmillan Final Judgment, asserts that United States v. American Cyanamid Co., 719 F.2d 558 (2d Cir. 1983), and United States v. International Business Machines Corporation, 163 F.3d 737 (2d Cir. 1998) require the Court to apply a more stringent standard of review than the one the Court applied in its evaluation of the Original Final Judgment. Those cases, however, involved petitions by the parties to terminate consent decrees. See PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 II. The Proposed Macmillan Final Judgment The language and relief contained in the proposed Macmillan Final Judgment is largely identical to the terms included in the Original Final Judgment and the Penguin Final Judgment. As explained in more detail in the CIS, the requirements and prohibitions included in the proposed Macmillan Final Judgment will eliminate Macmillan’s illegal conduct, prevent recurrence of the same or similar conduct, and establish a robust antitrust compliance program. The proposed Macmillan Final Judgment requires that Macmillan immediately cease enforcing any terms in its contracts with e-book retailers that restrict retailer discounting, see proposed Macmillan Final Judgment, §§ IV.A & V.A, and forbids Macmillan until December 18, 2014 from entering new contracts that restrict retailers from discounting its e-books. See id. § V.B. These provisions will help ensure that new contracts will not be set under the same collusive conditions that produced the unlawful Apple agency agreements. The proposed Macmillan Final Judgment permits Macmillan, however, in new agreements with e-book retailers, to agree to terms that prevent the retailer from selling Macmillan’s entire catalog of e-books at a sustained loss. See id. § VI.B. To prevent a recurrence of the alleged conspiracy, the proposed Macmillan Final Judgment prohibits Macmillan from entering into new agreements with other publishers under which prices are fixed or coordinated, see id. § V.E, and also forbids communications between Macmillan and other publishers about competitively sensitive subjects. See id. § V.F. Banning such communications is critical here, where communications among publishing competitors were a common practice and led directly to the collusive agreement alleged in the Complaint. As outlined in Section VII, Macmillan also must designate an Antitrust Compliance Officer, who is required to distribute copies of the Macmillan Final Judgment; ensure training related to the Macmillan Final Judgment and the antitrust laws; certify compliance with the Macmillan Final Judgment; maintain a log of all communications between Macmillan and employees of other Publisher Defendants; and conduct an annual antitrust compliance audit. This compliance program is necessary considering the extensive American Cyanamid, 719 F.2d at 559; IBM, 163 F.3d at 738. Neither evaluated whether a proposed final judgment met the Tunney Act’s requirements. E:\FR\FM\04JNN1.SGM 04JNN1 Federal Register / Vol. 78, No. 107 / Tuesday, June 4, 2013 / Notices communication among competitors’ CEOs that led to the Publisher Defendants’ conspiracy with Apple. tkelley on DSK3SPTVN1PROD with NOTICES III. Summary of the Public Comment and the Response of the United States The United States received only a single comment concerning the proposed Macmillan Final Judgment. The comment was submitted by Bob Kohn, who also provided similar comments on the Original Final Judgment and the Penguin Final Judgment, as well as in a number of submissions to the Court in this case.2 Mr. Kohn’s comments again suggest no basis on which this Court should find that entry of the proposed Macmillan Final Judgment would not be in the public interest. Mr. Kohn once again asserts that the proposed relief as to Macmillan cannot be in the public interest because it allows e-book retailers to discount Macmillan’s e-books. Mr. Kohn believes that Macmillan’s agency contracts with Amazon and other retailers, which blocked such discounting, served the procompetitive purpose of addressing predatory pricing or monopolization by Amazon. Kohn Comment at 6–7, 13–15. Again, as the United States stated in its Original Response to Comments and in its Penguin Response to Comments, and as this Court observed in finding that the Original Final Judgment satisfied the requirements of the Tunney Act, even if evidence existed to support Mr. Kohn’s claims concerning Amazon’s predatory pricing or monopolization, ‘‘this is no excuse for unlawful price-fixing. Congress ‘has not permitted the age-old cry of ruinous competition and competitive evils to be a defense to price-fixing conspiracies.’ . . . The familiar mantra regarding ‘two wrongs’ would seem to offer guidance in these circumstances.’’ United States v. Apple, Inc., 889 F. Supp. 2d 623, 642 (S.D.N.Y. 2012) (quoting United States v. Socony2 See Mem. in Supp. of Mot. of Bob Kohn for Leave to Participate as Amicus Curiae (Aug. 13, 2012) (Docket No. 97); Br. of Bob Kohn as Amicus Curiae (Sept. 4, 2012) (Docket No. 110); Mem. in Supp. of Bob Kohn’s Mot. to Stay Final J. Pending Appeal (Sept. 7, 2012) (Docket No. 117); Mem. . . . In Supp. of Mot. by Bob Kohn for Leave to Intervene for the Sole Purpose of Appeal (Sept. 7, 2012) (Docket No. 115); Mem. of Law in Reply to Opp’n of the United States to Mot. by Bob Kohn for Leave to Intervene for the Sole Purpose of Appeal (September 20, 2012) (Docket No. 130); Mem. in Supp. of Mot. of Amicus Curiae Bob Kohn to Submit a 5-Page Br. Amicus Curiae Solely to Reply to Government’s Resp. to Public Comments on the Proposed Final J. with the Penguin Defs. (Apr. 29, 2013) (Docket No. 214–1). On March 26, 2013, the Second Circuit affirmed this Court’s denial of Mr. Kohn’s motion to intervene for purposes of appealing the Court’s entry of the Original Final Judgment. See Bob Kohn v. United States, No. 12– 4017 (2d Cir. Mar. 26, 2013). VerDate Mar<15>2010 18:33 Jun 03, 2013 Jkt 229001 Vacuum Oil Co., 310 U.S. 150, 221 (1940)). Mr. Kohn, however, argues that his allegations concerning Amazon’s predatory pricing now deserve a fresh look because he believes the United States, in its Penguin Response to Comments, ‘‘has now finally conceded that Amazon’s e-book prices as a whole were below marginal cost.’’ Kohn Comment at 11. Mr. Kohn, however, misunderstood the United States’ statements in its Penguin Response to Comments. The United States explained there that the Penguin Final Judgment, like the proposed Macmillan Final Judgment, allows the publisher to enter a contract with a retailer under which aggregate discounting of the publisher’s e-books by the retailer is limited to the retailer’s commissions under the contract. Penguin Response to Comments at 12–13. This provision will allow the publisher to ensure that the retailer does not sell its entire catalog of e-books at a sustained loss—while still allowing the retailer to compete on the price at which it sells the publisher’s ebooks. Contrary to Mr. Kohn’s suggestion that this provision would permit ‘‘Amazon to resume selling ebooks at below marginal costs,’’ this provision allows the publisher to ensure that Amazon remains margin positive on the sale of its catalog of e-books. Under such a contract, the retailer’s ebook prices overall would be above its marginal costs, as Mr. Kohn desires, but also closer to the retailer’s marginal costs (and thus more ‘‘efficient,’’ as Mr. Kohn also desires) than would be the case under the contracts publishers imposed after establishing their pricefixing conspiracy with Apple, which guaranteed a 30 percent commission to the retailer. Finally, Mr. Kohn once again asserts that, under the ‘‘determinative’’ materials requirement of 15 U.S.C. 16(b), the United States must disclose materials concerning the profitability of Amazon’s e-book business. Kohn Comment at 21–23. However, information concerning Amazon’s pricing practices is not only, as discussed above, irrelevant to the question of whether Apple and the Publisher Defendants can be held liable for conspiring to raise retail prices of and eliminate retail price competition for e-books, it also has no bearing on whether the proposed Macmillan Final Judgment adequately addresses the harms to competition alleged by the United States in the Complaint. As this Court previously determined with respect to the Original Final Judgment, the United States has provided ‘‘ample factual foundation for [its] decisions PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 33439 regarding the proposed Final Judgment.’’ Apple, Inc., 889 F. Supp. 2d at 638–39. IV. Conclusion The United States continues to believe that the proposed Macmillan Final Judgment, as drafted, provides an effective and appropriate remedy for the antitrust violations alleged in the Complaint and that it is therefore in the public interest. Pursuant to the Court’s February 19, 2013 Order (Docket No. 180), the United States will move for entry of the proposed Macmillan Final Judgment after this Response to Comments is published in the Federal Register (along with the Internet location where Mr. Kohn’s comment is posted) and by no later than June 13, 2013. Dated: May 24, 2013. Respectfully submitted, s/Mark W. Ryan Mark W. Ryan Lawrence E. Buterman Stephen T. Fairchild Attorneys for the United States, United States Department of Justice, Antitrust Division, 450 Fifth Street NW., Suite 4000, Washington, DC 20530. (202) 532–4753. Mark.W.Ryan@usdoj.gov. Certificate of Service I, Stephen T. Fairchild, hereby certify that on May 24, 2013, I caused a copy of the Response of Plaintiff United States to Public Comments on the Proposed Final Judgment as to the Macmillan Defendants to be served by the Electronic Case Filing System, which included the individuals listed below. For Apple: Daniel S. Floyd, Gibson, Dunn & Crutcher LLP, 333 S. Grand Avenue, Suite 4600, Los Angeles, CA 90070, (213) 229–7148, dfloyd@gibsondunn.com. For Macmillan and Verlagsgruppe Georg Von Holtzbrinck GMBH: Joel M. Mitnick, Sidley Austin LLP, 787 Seventh Avenue, New York, NY 10019, (212) 839–5300, jmitnick@sidley.com. For Penguin U.S.A. and the Penguin Group: Daniel F. McInnis, Akin Gump Strauss Hauer & Feld, LLP, 1333 New Hampshire Avenue NW., Washington, DC 20036, (202) 887–4000, dmcinnis@akingump.com. For Hachette: Walter B. Stuart, IV, Freshfields Bruckhaus Deringer LLP, 601 Lexington Avenue, New York, NY 10022, (212) 277–4000, walter.stuart@freshfields.com. For HarperCollins: E:\FR\FM\04JNN1.SGM 04JNN1 33440 Federal Register / Vol. 78, No. 107 / Tuesday, June 4, 2013 / Notices Paul Madison Eckles, Skadden, Arps, Slate, Meagher & Flom, Four Times Square, 42nd Floor, New York, NY 10036, (212) 735–2578, pmeckles@skadden.com. For Simon & Schuster: Yehudah Lev Buchweitz, Weil, Gotshal & Manges LLP (NYC), 767 Fifth Avenue, 25th Fl., New York, NY 10153, (212) 310–8000 x8256, yehudah.buchweitz@weil.com. Additionally, courtesy copies of this Response to Comments have been provided to the following: For the State of Connecticut: W. Joseph Nielsen, Assistant Attorney General, Antitrust Division, Office of the Attorney General, 55 Elm Street, Hartford, CT 06106, (860) 808–5040, Joseph.Nielsen@ct.gov. For the State of Texas: Gabriel R. Gervey, Assistant Attorney General, Antitrust Division, Office of the Attorney General of Texas, 300 W. 15th Street, Austin, Texas 78701, (512) 463– 1262, gabriel.gervey@oag.state.tx.us. For the Private Plaintiffs: Jeff D. Friedman, Hagens Berman, 715 Hearst Ave., Suite 202, Berkeley, CA 94710, (510) 725–3000, jefff@hbsslaw.com. s/Stephen T. Fairchild Stephen T. Fairchild Attorney for the United States, United States Department of Justice, Antitrust Division, 450 Fifth Street NW., Suite 4000, Washington, DC 20530, (202) 532–4925, stephen.fairchild@usdoj.gov. [FR Doc. 2013–13133 Filed 6–3–13; 8:45 am] BILLING CODE 4410–11–P DEPARTMENT OF JUSTICE Drug Enforcement Administration tkelley on DSK3SPTVN1PROD with NOTICES Importer of Controlled Substances, Notice of Application; Watson Pharma, Inc. Pursuant to Title 21 Code of Federal Regulations 1301.34 (a), this is notice that on May 3, 2013, Watson Pharma, Inc., 2455 Wardlow Road, Corona, California 92880–2882, made application by renewal to the Drug Enforcement Administration (DEA) for registration as an importer of the following basic classes of controlled substances: Drug Schedule Amphetamine (1100) .................... Methylphenidate (1724) ................ Oxycodone (9143) ........................ Hydromorphone (9150) ................ VerDate Mar<15>2010 18:33 Jun 03, 2013 The company plans to import the listed controlled substances for analytical testing and clinical trials. The import of the above listed basic classes of controlled substances will be granted only for analytical testing and clinical trials. This authorization does not extend to the import of a finished FDA approved or non-approved dosage form for commercial distribution in the United States. Any bulk manufacturer who is presently, or is applying to be, registered with DEA to manufacture such basic classes of controlled substances listed in schedules I or II, which fall under the authority of section 1002(a)(2)(B) of the Act 21 U.S.C. 952 (a)(2)(B) may, in the circumstances set forth in 21 U.S.C. 958(i), file comments or objections to the issuance of the proposed registration and may, at the same time, file a written request for a hearing on such application pursuant to 21 CFR 1301.43 and in such form as prescribed by 21 CFR 1316.47. Any such written comments or objections should be addressed, in quintuplicate, to the Drug Enforcement Administration, Office of Diversion Control, Federal Register Representative (ODL), 8701 Morrissette Drive, Springfield, Virginia 22152; and must be filed no later than July 5, 2013. This procedure is to be conducted simultaneously with, and independent of, the procedures described in 21 CFR 1301.34(b), (c), (d), (e), and (f). As noted in a previous notice published in the Federal Register on September 23, 1975, 40 FR 43745–46, all applicants for registration to import a basic class of any controlled substance in schedules I or II are, and will continue to be, required to demonstrate to the Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration, that the requirements for such registration pursuant to 21 U.S.C. 958(a); 21 U.S.C. 823(a); and 21 CFR 1301.34(b), (c), (d), (e), and (f) are satisfied. Dated: May 24, 2013. Joseph T. Rannazzisi, Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration. [FR Doc. 2013–13177 Filed 6–3–13; 8:45 am] BILLING CODE 4410–09–P II II II II Jkt 229001 DEPARTMENT OF JUSTICE Drug Enforcement Administration Importer of Controlled Substances, Notice of Registration; Rhodes Technologies By a Notice dated April 10, 2013, and published in the Federal Register on April 19, 2013, 78 FR 23594, Rhodes Technologies, 498 Washington Street, Coventry, Rhode Island 02816, made application by renewal to the Drug Enforcement Administration (DEA) to be registered as an importer of the following basic classes of controlled substances: Drug Opium Raw (9600) ....................... Poppy Straw Concentrate (9670) Schedule II II The company plans to import the listed controlled substances in order to bulk manufacture controlled substances in Active Pharmaceutical Ingredient (API) form. The company distributes the manufactured API’s in bulk to its customers. Comments and requests for hearings on applications to import narcotic raw material are not appropriate. 72 FR 3417 (2007). DEA has considered the factors in 21 U.S.C. 823(a) and 952(a), and determined that the registration of Rhodes Technologies to import the basic classes of controlled substances is consistent with the public interest, and with United States obligations under international treaties, conventions, or protocols in effect on May 1, 1971. DEA has investigated Rhodes Technologies to ensure that the company’s registration is consistent with the public interest. The investigation has included inspection and testing of the company’s physical security systems, verification of the company’s compliance with state and local laws, and a review of the company’s background and history. Therefore, pursuant to 21 U.S.C. 952(a) and 958(a), and in accordance with 21 CFR 1301.34, the above named company is granted registration as an importer of the basic classes of controlled substances listed. Dated: May 24, 2013. Joseph T. Rannazzisi, Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration. [FR Doc. 2013–13178 Filed 6–3–13; 8:45 am] BILLING CODE 4410–09–P PO 00000 Frm 00116 Fmt 4703 Sfmt 9990 E:\FR\FM\04JNN1.SGM 04JNN1

Agencies

[Federal Register Volume 78, Number 107 (Tuesday, June 4, 2013)]
[Notices]
[Pages 33437-33440]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-13133]

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DEPARTMENT OF JUSTICE

Antitrust Division

United States v. Apple, Inc., et al.; Public Comments 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 United States'
Response to Public Comments on the proposed Final Judgment as to
Defendants Verlagsgruppe Georg von Holtzbrinck GmbH and Holtzbrinck
Publishers, LLC d/b/a Macmillan in United States v. Apple, Inc., et
al., Civil Action No. 12-CV-2826 (DLC), which was filed in the United
States District Court for the Southern District of New York on May 24,
2013, along with copies of the one comment received by the United
States.
Copies of the comment and the response are available for inspection
at the Department of Justice Antitrust Division, 450 Fifth Street NW.,
Suite 1010, Washington, DC 20530 (telephone: 202-514-2481), on the
Department of Justice's Web site at https://www.justice.gov/atr/cases/apple/index-2.html, and at the Office of the Clerk of the United States
District Court for the Southern District of New York, Daniel Patrick
Moynihan United States Courthouse, 500 Pearl Street, New York, NY
10007-1312. Copies of any of these

[[Page 33438]]

materials may also be obtained upon request and payment of a copying
fee.

Patricia A. Brink,
Director of Civil Enforcement.

United States District Court for the Southern District of New York

UNITED STATES OF AMERICA, Plaintiff, v. APPLE, INC., et al.,
Defendants.

Civil Action No. 12-CV-2826 (DLC) ECF Case

Response by Plaintiff United States to Public Comments on the Proposed
Final Judgment as to the Macmillan Defendants

Pursuant to the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h) (``APPA'' or ``Tunney Act''), the
United States hereby responds to the single public comment received
regarding the proposed Final Judgment as to Defendants Verlagsgruppe
Georg von Holtzbrinck GmbH and Holtzbrinck Publishers, LLC d/b/a
Macmillan (collectively, ``Macmillan''). After careful consideration of
the comment submitted, the United States continues to believe that the
proposed Final Judgment as to Macmillan (``proposed Macmillan Final
Judgment'') will provide an effective and appropriate remedy for the
antitrust violations alleged in the Complaint.
The comment submitted to the United States, along with a copy of
this Response to Comments, are posted publicly at https://www.justice.gov/atr/cases/apple/index-2.html, in accordance with 15
U.S.C. 16(d) and the Court's May 22, 2013 Order (Docket No. 260). The
United States will publish this Internet location and this Response to
Comments in the Federal Register, see 15 U.S.C. 16(d), and will then,
pursuant to the Court's February 19, 2013 Order (Docket No. 180), move
for entry of the proposed Macmillan Final Judgment by no later than
June 13, 2013.

I. Procedural History

On April 11, 2012, the United States filed a civil antitrust
Complaint alleging that Apple, Inc. (``Apple'') and five of the six
largest publishers in the United States (``Publisher Defendants'')
conspired to raise prices of electronic books (``e-books'') in the
United States in violation of Section 1 of the Sherman Act, 15 U.S.C.
1. On the same day, the United States filed a proposed Final Judgment
(``Original Final Judgment'') as to three of the Publisher Defendants:
Hachette Book Group, Inc., HarperCollins Publishers L.L.C., and Simon &
Schuster, Inc. (collectively, ``Original Settling Defendants''). During
the Tunney Act process concerning the Original Final Judgment, the
United States received and responded to 868 public comments (Docket No.
81) (``Original Response to Comments''), and this Court entered the
Original Final Judgment on September 6, 2012 (Docket No. 119).
On December 18, 2012, the United States filed a proposed Final
Judgment as to Penguin. The United States responded on April 5, 2013 to
the three public comments it received concerning the proposed Penguin
Final Judgment (``Penguin Response to Comments'') (Docket No. 201),
moved for entry of the proposed Penguin Final Judgment on April 18,
2013 (Docket No. 211), and this Court granted the United States' motion
on May 17, 2013 (Docket No. 257).
The United States reached a settlement with Macmillan and, on
February 8, 2013, filed a proposed Final Judgment and a Stipulation
signed by the United States and Macmillan consenting to the entry of
the proposed Macmillan Final Judgment after compliance with the
requirements of the Tunney Act, 15 U.S.C. 16 (Docket No. 174). Pursuant
to those requirements, the United States filed its Competitive Impact
Statement (``CIS'') with the Court on February 8, 2013 (Docket No.
175); the proposed Final Judgment and CIS were published in the Federal
Register on February 25, 2013, see United States v. Apple, Inc., et
al., 78 FR 12874; and 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, were
published in the Washington Post and the New York Post for seven
consecutive days beginning on February 21, 2013 and ending on February
27, 2013. The sixty-day period for public comment ended on April 28,
2013. The United States received only one comment, which is described
below and attached hereto.\1\
---------------------------------------------------------------------------

\1\ The United States has described the allegations in the
Complaint and summarized the standard of review applicable to Tunney
Act proceedings in several previous submissions. See, e.g., Original
Response to Comments (Docket No. 81; 77 FR 44271); Penguin Response
to Comments (Docket No. 201; 78 FR 22298). This Court also
articulated the standard of review in its Opinion and Order finding
that the Original Final Judgment satisfied the requirements of the
Tunney Act. See United States v. Apple, Inc., 889 F. Supp. 2d 623,
630-32 (S.D.N.Y. 2012). Bob Kohn, the lone commenter on the proposed
Macmillan Final Judgment, asserts that United States v. American
Cyanamid Co., 719 F.2d 558 (2d Cir. 1983), and United States v.
International Business Machines Corporation, 163 F.3d 737 (2d Cir.
1998) require the Court to apply a more stringent standard of review
than the one the Court applied in its evaluation of the Original
Final Judgment. Those cases, however, involved petitions by the
parties to terminate consent decrees. See American Cyanamid, 719
F.2d at 559; IBM, 163 F.3d at 738. Neither evaluated whether a
proposed final judgment met the Tunney Act's requirements.
---------------------------------------------------------------------------

II. The Proposed Macmillan Final Judgment

The language and relief contained in the proposed Macmillan Final
Judgment is largely identical to the terms included in the Original
Final Judgment and the Penguin Final Judgment. As explained in more
detail in the CIS, the requirements and prohibitions included in the
proposed Macmillan Final Judgment will eliminate Macmillan's illegal
conduct, prevent recurrence of the same or similar conduct, and
establish a robust antitrust compliance program.
The proposed Macmillan Final Judgment requires that Macmillan
immediately cease enforcing any terms in its contracts with e-book
retailers that restrict retailer discounting, see proposed Macmillan
Final Judgment, Sec. Sec. IV.A & V.A, and forbids Macmillan until
December 18, 2014 from entering new contracts that restrict retailers
from discounting its e-books. See id. Sec. V.B. These provisions will
help ensure that new contracts will not be set under the same collusive
conditions that produced the unlawful Apple agency agreements. The
proposed Macmillan Final Judgment permits Macmillan, however, in new
agreements with e-book retailers, to agree to terms that prevent the
retailer from selling Macmillan's entire catalog of e-books at a
sustained loss. See id. Sec. VI.B.
To prevent a recurrence of the alleged conspiracy, the proposed
Macmillan Final Judgment prohibits Macmillan from entering into new
agreements with other publishers under which prices are fixed or
coordinated, see id. Sec. V.E, and also forbids communications between
Macmillan and other publishers about competitively sensitive subjects.
See id. Sec. V.F. Banning such communications is critical here, where
communications among publishing competitors were a common practice and
led directly to the collusive agreement alleged in the Complaint.
As outlined in Section VII, Macmillan also must designate an
Antitrust Compliance Officer, who is required to distribute copies of
the Macmillan Final Judgment; ensure training related to the Macmillan
Final Judgment and the antitrust laws; certify compliance with the
Macmillan Final Judgment; maintain a log of all communications between
Macmillan and employees of other Publisher Defendants; and conduct an
annual antitrust compliance audit. This compliance program is necessary
considering the extensive

[[Page 33439]]

communication among competitors' CEOs that led to the Publisher
Defendants' conspiracy with Apple.

III. Summary of the Public Comment and the Response of the United
States

The United States received only a single comment concerning the
proposed Macmillan Final Judgment. The comment was submitted by Bob
Kohn, who also provided similar comments on the Original Final Judgment
and the Penguin Final Judgment, as well as in a number of submissions
to the Court in this case.\2\ Mr. Kohn's comments again suggest no
basis on which this Court should find that entry of the proposed
Macmillan Final Judgment would not be in the public interest.
---------------------------------------------------------------------------

\2\ See Mem. in Supp. of Mot. of Bob Kohn for Leave to
Participate as Amicus Curiae (Aug. 13, 2012) (Docket No. 97); Br. of
Bob Kohn as Amicus Curiae (Sept. 4, 2012) (Docket No. 110); Mem. in
Supp. of Bob Kohn's Mot. to Stay Final J. Pending Appeal (Sept. 7,
2012) (Docket No. 117); Mem. . . . In Supp. of Mot. by Bob Kohn for
Leave to Intervene for the Sole Purpose of Appeal (Sept. 7, 2012)
(Docket No. 115); Mem. of Law in Reply to Opp'n of the United States
to Mot. by Bob Kohn for Leave to Intervene for the Sole Purpose of
Appeal (September 20, 2012) (Docket No. 130); Mem. in Supp. of Mot.
of Amicus Curiae Bob Kohn to Submit a 5-Page Br. Amicus Curiae
Solely to Reply to Government's Resp. to Public Comments on the
Proposed Final J. with the Penguin Defs. (Apr. 29, 2013) (Docket No.
214-1). On March 26, 2013, the Second Circuit affirmed this Court's
denial of Mr. Kohn's motion to intervene for purposes of appealing
the Court's entry of the Original Final Judgment. See Bob Kohn v.
United States, No. 12-4017 (2d Cir. Mar. 26, 2013).
---------------------------------------------------------------------------

Mr. Kohn once again asserts that the proposed relief as to
Macmillan cannot be in the public interest because it allows e-book
retailers to discount Macmillan's e-books. Mr. Kohn believes that
Macmillan's agency contracts with Amazon and other retailers, which
blocked such discounting, served the procompetitive purpose of
addressing predatory pricing or monopolization by Amazon. Kohn Comment
at 6-7, 13-15. Again, as the United States stated in its Original
Response to Comments and in its Penguin Response to Comments, and as
this Court observed in finding that the Original Final Judgment
satisfied the requirements of the Tunney Act, even if evidence existed
to support Mr. Kohn's claims concerning Amazon's predatory pricing or
monopolization, ``this is no excuse for unlawful price-fixing. Congress
`has not permitted the age-old cry of ruinous competition and
competitive evils to be a defense to price-fixing conspiracies.' . . .
The familiar mantra regarding `two wrongs' would seem to offer guidance
in these circumstances.'' United States v. Apple, Inc., 889 F. Supp. 2d
623, 642 (S.D.N.Y. 2012) (quoting United States v. Socony-Vacuum Oil
Co., 310 U.S. 150, 221 (1940)).
Mr. Kohn, however, argues that his allegations concerning Amazon's
predatory pricing now deserve a fresh look because he believes the
United States, in its Penguin Response to Comments, ``has now finally
conceded that Amazon's e-book prices as a whole were below marginal
cost.'' Kohn Comment at 11. Mr. Kohn, however, misunderstood the United
States' statements in its Penguin Response to Comments. The United
States explained there that the Penguin Final Judgment, like the
proposed Macmillan Final Judgment, allows the publisher to enter a
contract with a retailer under which aggregate discounting of the
publisher's e-books by the retailer is limited to the retailer's
commissions under the contract. Penguin Response to Comments at 12-13.
This provision will allow the publisher to ensure that the retailer
does not sell its entire catalog of e-books at a sustained loss--while
still allowing the retailer to compete on the price at which it sells
the publisher's e-books. Contrary to Mr. Kohn's suggestion that this
provision would permit ``Amazon to resume selling e-books at below
marginal costs,'' this provision allows the publisher to ensure that
Amazon remains margin positive on the sale of its catalog of e-books.
Under such a contract, the retailer's e-book prices overall would be
above its marginal costs, as Mr. Kohn desires, but also closer to the
retailer's marginal costs (and thus more ``efficient,'' as Mr. Kohn
also desires) than would be the case under the contracts publishers
imposed after establishing their price-fixing conspiracy with Apple,
which guaranteed a 30 percent commission to the retailer.
Finally, Mr. Kohn once again asserts that, under the
``determinative'' materials requirement of 15 U.S.C. 16(b), the United
States must disclose materials concerning the profitability of Amazon's
e-book business. Kohn Comment at 21-23. However, information concerning
Amazon's pricing practices is not only, as discussed above, irrelevant
to the question of whether Apple and the Publisher Defendants can be
held liable for conspiring to raise retail prices of and eliminate
retail price competition for e-books, it also has no bearing on whether
the proposed Macmillan Final Judgment adequately addresses the harms to
competition alleged by the United States in the Complaint. As this
Court previously determined with respect to the Original Final
Judgment, the United States has provided ``ample factual foundation for
[its] decisions regarding the proposed Final Judgment.'' Apple, Inc.,
889 F. Supp. 2d at 638-39.

IV. Conclusion

The United States continues to believe that the proposed Macmillan
Final Judgment, as drafted, provides an effective and appropriate
remedy for the antitrust violations alleged in the Complaint and that
it is therefore in the public interest.
Pursuant to the Court's February 19, 2013 Order (Docket No. 180),
the United States will move for entry of the proposed Macmillan Final
Judgment after this Response to Comments is published in the Federal
Register (along with the Internet location where Mr. Kohn's comment is
posted) and by no later than June 13, 2013.
Dated: May 24, 2013.

Respectfully submitted,

s/Mark W. Ryan
Mark W. Ryan
Lawrence E. Buterman
Stephen T. Fairchild
Attorneys for the United States, United States Department of
Justice, Antitrust Division, 450 Fifth Street NW., Suite 4000,
Washington, DC 20530. (202) 532-4753. Mark.W.Ryan@usdoj.gov.

Certificate of Service

I, Stephen T. Fairchild, hereby certify that on May 24, 2013, I
caused a copy of the Response of Plaintiff United States to Public
Comments on the Proposed Final Judgment as to the Macmillan Defendants
to be served by the Electronic Case Filing System, which included the
individuals listed below.
For Apple:

Daniel S. Floyd, Gibson, Dunn & Crutcher LLP, 333 S. Grand Avenue,
Suite 4600, Los Angeles, CA 90070, (213) 229-7148,
dfloyd@gibsondunn.com.

For Macmillan and Verlagsgruppe Georg Von Holtzbrinck GMBH:

Joel M. Mitnick, Sidley Austin LLP, 787 Seventh Avenue, New York, NY
10019, (212) 839-5300, jmitnick@sidley.com.

For Penguin U.S.A. and the Penguin Group:

Daniel F. McInnis, Akin Gump Strauss Hauer & Feld, LLP, 1333 New
Hampshire Avenue NW., Washington, DC 20036, (202) 887-4000,
dmcinnis@akingump.com.

For Hachette:

Walter B. Stuart, IV, Freshfields Bruckhaus Deringer LLP, 601 Lexington
Avenue, New York, NY 10022, (212) 277-4000,
walter.stuart@freshfields.com.

For HarperCollins:

[[Page 33440]]

Paul Madison Eckles, Skadden, Arps, Slate, Meagher & Flom, Four Times
Square, 42nd Floor, New York, NY 10036, (212) 735-2578,
pmeckles@skadden.com.

For Simon & Schuster:

Yehudah Lev Buchweitz, Weil, Gotshal & Manges LLP (NYC), 767 Fifth
Avenue, 25th Fl., New York, NY 10153, (212) 310-8000 x8256,
yehudah.buchweitz@weil.com.

Additionally, courtesy copies of this Response to Comments have
been provided to the following:
For the State of Connecticut:

W. Joseph Nielsen, Assistant Attorney General, Antitrust Division,
Office of the Attorney General, 55 Elm Street, Hartford, CT 06106,
(860) 808-5040, Joseph.Nielsen@ct.gov.

For the State of Texas:

Gabriel R. Gervey, Assistant Attorney General, Antitrust Division,
Office of the Attorney General of Texas, 300 W. 15th Street, Austin,
Texas 78701, (512) 463-1262, gabriel.gervey@oag.state.tx.us.

For the Private Plaintiffs:

Jeff D. Friedman, Hagens Berman, 715 Hearst Ave., Suite 202, Berkeley,
CA 94710, (510) 725-3000, jefff@hbsslaw.com.

s/Stephen T. Fairchild
Stephen T. Fairchild
Attorney for the United States, United States Department of Justice,
Antitrust Division, 450 Fifth Street NW., Suite 4000, Washington, DC
20530, (202) 532-4925, stephen.fairchild@usdoj.gov.
[FR Doc. 2013-13133 Filed 6-3-13; 8:45 am]
BILLING CODE 4410-11-P

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