United States, et al. v. Martin Marietta Materials, Inc., and Texas Industries, Inc.; Proposed Final Judgment and Competitive Impact Statement, 38949-38960 [2014-15959]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 79, Number 131 (Wednesday, July 9, 2014)]
[Notices]
[Pages 38949-38960]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-15959]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States, et al. v. Martin Marietta Materials, Inc., and 
Texas Industries, Inc.; Proposed Final Judgment and Competitive Impact 
Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Stipulation and Competitive Impact Statement have been filed with the 
United States District Court for the District of Columbia in United 
States of America, et al. v. Martin Marietta Materials, Inc., and Texas 
Industries, Inc., Civil Action No. 1:14-cv-01079. On June 26, 2014, the 
United States and the State of Texas filed a Complaint alleging that 
the proposed acquisition by Martin Marietta Materials of the aggregate 
business assets of Texas Industries, Inc. would violate Section 7 of 
the Clayton Act, 15 U.S.C. 18. The proposed Final Judgment, filed the 
same time as the Complaint, requires the defendants to divest the North 
Troy quarry in Mill Creek, Oklahoma; one rail yard in Dallas, Texas; 
and one rail yard in Frisco, Texas. All of these assets serve parts of 
the Dallas, Texas area.
    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 District of Columbia. Copies of these materials may be obtained 
from the Antitrust Division upon request and payment of the copying fee 
set by Department of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, including the name of the submitter, and 
responses thereto, will be posted on the U.S. Department of Justice, 
Antitrust Division's internet Web site, filed with the Court and, under 
certain circumstances, published in the Federal Register. Comments 
should be directed to Maribeth Petrizzi, Chief, Litigation II Section, 
Antitrust Division, Department of Justice, 450 Fifth Street NW., Suite 
8700, Washington, DC 20530 (telephone: 202-307-0924).

Patricia A. Brink,
 Director of Civil Enforcement.

United States District Court for the District of Columbia

    United States of America, United States Department of Justice, 
Antitrust Division, 450 Fifth Street NW., Suite 8700, Washington, DC 
20530 and State of Texas, Office of the Attorney General, Consumer 
Protection Division, Antitrust Section, 300 W. 15th Street, 7th Floor, 
Austin, TX 78701, Plaintiffs, v. Martin Marietta Materials, Inc., 2710 
Wycliff Road, Raleigh, North Carolina 27607 and Texas Industries, Inc., 
1503 LBJ Freeway, Suite 400, Dallas, Texas 75234, Defendants.
Case No.: 1:14-cv-01079
Judge: Hon. John Bates
Filed: 06/26/2014

COMPLAINT

    Plaintiffs, the United States of America (``United States''), 
acting under the direction of the Attorney General of the United 
States, and the State of Texas, acting by and through the Attorney 
General of Texas, bring this civil antitrust action against Defendants 
Martin Marietta Materials, Inc. (``Martin Marietta'') to enjoin Martin 
Marietta's proposed acquisition of Texas Industries, Inc. (``Texas 
Industries''). Plaintiffs complain and allege as follows:

I. INTRODUCTION

    1. On January 28, 2014, Martin Marietta and Texas Industries 
announced a definitive merger agreement valued at approximately $2.7 
billion. The merger would create the largest aggregate producer in the 
United States, with annual net sales of nearly $3 billion.
    2. The proposed acquisition would eliminate real and potential 
head-to-head competition between Martin Marietta and Texas Industries 
on price and service in supplying aggregate in the Dallas, Texas area. 
For a significant number of customers in the Dallas area, Martin 
Marietta and Texas Industries are two of the three best sources of 
Texas DOT-qualified aggregate. Elimination of competition between 
Martin Marietta and Texas Industries likely would give Martin Marietta 
the ability to raise prices or decrease the quality of service provided 
to these customers. As a result, the proposed acquisition likely would 
substantially lessen competition in the production and sale of 
aggregate in the Dallas area, in violation of Section 7 of the Clayton 
Act, 15 U.S.C. Sec.  18.

II. THE PARTIES TO THE PROPOSED TRANSACTION

    3. Defendant Martin Marietta is incorporated in North Carolina with 
its headquarters in Raleigh, North Carolina. Martin Marietta produces, 
distributes, and/or markets aggregate for the construction industry in 
29 states. Martin Marietta also produces aggregate in Nova Scotia, 
Canada, and the Bahamas, which it distributes and sells at numerous 
terminals and yards along the East Coast of the United States. In 2013, 
Martin Marietta had net sales of $2.1 billion.
    4. Defendant Texas Industries is incorporated in Delaware with its 
headquarters in Texas. Texas Industries produces, distributes, and/or 
markets aggregate in five states; Texas, Oklahoma, Louisiana, Arkansas 
and California. Texas Industries also produces asphalt concrete, ready 
mix concrete, and has significant cement production capabilities in 
California and Texas. In 2013, Texas Industries had net sales of $800 
million.

III. JURISDICTION AND VENUE

    5. The United States brings this action pursuant to Section 15 of 
the Clayton Act, 15 U.S.C. Sec. Sec.  4 and 25, as amended, to prevent 
and restrain Defendants from violating Section 7 of the Clayton Act, 15 
U.S.C. Sec.  18.
    6. The State of Texas brings this action under Section 16 of the 
Clayton Act, 15 U.S.C. Sec.  26, to prevent and restrain Martin 
Marietta and Texas Industries from violating Section 7 of the Clayton 
Act, as amended, 15 U.S.C. Sec.  18. The State of Texas, by and through 
the Attorney General of Texas, brings this action as parens patriae on 
behalf of the citizens, general welfare, and economy of the State of 
Texas.
    7. Defendants produce and sell aggregate in the flow of interstate 
commerce. Defendants' activity in the production and sale of aggregate 
substantially affects interstate commerce. The Court has subject matter 
jurisdiction over this action pursuant to Section 15 of the Clayton 
Act, 15 U.S.C. Sec.  25, and 28 U.S.C. Sec. Sec.  1331, 1337(a), and 
1345.

[[Page 38950]]

    8. Defendants have consented to venue and personal jurisdiction in 
this judicial district.

IV. TRADE AND COMMERCE

A. Aggregate is an Essential Input for Many Construction Projects

    9. Aggregate is stone, produced at mines, quarries, and gravel 
pits, that is used for construction projects and in various industrial 
processes. The aggregate produced in quarries and mines is 
predominantly limestone, granite, or trap rock. Different types and 
sizes of rock are needed to meet different specifications for use in 
asphalt concrete, ready mix concrete, industrial processes, and other 
products. Asphalt concrete consists of approximately 95 percent 
aggregate, and ready mix concrete is made of up of approximately 75 
percent aggregate. Aggregate thus is an integral input for road and 
other construction projects.
    10. The customer on each construction project establishes 
specifications that the aggregate must meet for each application for 
which it is used. State Departments of Transportation (``state DOTs''), 
including the Texas DOT, set specifications for aggregate used to 
produce asphalt concrete, ready mix concrete, and road base for state 
DOT projects. State DOTs specify characteristics such as hardness and 
durability, size, polish value, and a variety of other characteristics. 
The specifications are intended to ensure the longevity and safety of 
the projects that use aggregate.
    11. For Texas DOT projects, the Texas DOT tests the aggregate to 
ensure that the stone for an application meets proper specifications at 
the quarry before it is shipped, when the aggregate is sent to the 
purchaser to produce an end product such as asphalt concrete, and often 
after the end product has been produced. In addition, the Texas DOT 
pre-qualifies quarries according to the end uses for the aggregate. 
Many city, county, and commercial entities in Texas use the Texas DOT 
aggregate specifications when building roads, bridges, and parking lots 
to optimize project longevity.

B. Transportation is a Significant Component of the Cost of Aggregate

    12. Aggregate is priced by the ton and is a relatively inexpensive 
product. Prices range from approximately five to twenty dollars per 
ton. A variety of approaches are used to price aggregate. For small 
volumes, aggregate often is sold according to a posted price. For 
larger volumes, customers either negotiate prices for a particular job 
or seek bids from multiple aggregate suppliers.
    13. In areas where aggregate is locally available, it is 
transported from quarries to customers by truck. On a per-mile basis, 
trucking is the most expensive option for transporting aggregate over 
longer distances.
    14. Aggregate is also shipped by rail from quarries to yards. It is 
then transported by truck from the yards to customers in the area. The 
rail yards, which typically are supplied by quarries that are 100 to 
200 miles away, frequently are large operations that can handle 75- to 
100-car unit trains and are served by large quarries located on rail 
lines that have automated aggregate rail-loading operations. Over 
longer distances, the cost of transporting aggregate by rail is 
significantly cheaper, on a per-mile basis, than by truck.

C. Relevant Markets

1. Texas DOT-Qualified Aggregate is a Relevant Product Market

    15. Within the broad category of aggregate, different types of 
stone are used for different purposes. For instance, aggregate used as 
road base is not the same as aggregate used in asphalt concrete. 
Accordingly, they are not interchangeable or substitutable for one 
another and demand for each is separate. Thus, each type of aggregate 
likely is a separate line of commerce and a relevant product market 
within the meaning of Section 7 of the Clayton Act.
    16. Texas DOT-qualified aggregate is aggregate qualified by Texas 
DOT for use in road construction. Aggregate that meets the standards 
for Texas DOT qualification differs from other aggregate in its size, 
physical composition, functional characteristics, customary uses, 
consistent availability, and pricing. A customer whose job specifies 
Texas DOT-qualified aggregate cannot substitute non-Texas DOT-qualified 
aggregate or other materials.
    17. Although numerous narrower product markets exist, the 
competitive dynamic for each type of Texas DOT-qualified aggregate is 
nearly identical. Therefore, they all may be combined for analytical 
convenience into a single relevant product market for the purpose of 
evaluating the competitive impact of the acquisition.
    18. A small but significant increase in the price of Texas DOT-
qualified aggregate would not cause a sufficient number of customers to 
substitute to another type of aggregate or another material so as to 
make such a price increase unprofitable. Accordingly, the production 
and sale of Texas DOT-qualified aggregate is a line of commerce and a 
relevant product market within the meaning of Section 7 of the Clayton 
Act.

2. Dallas, Texas is a Relevant Geographic Market

    19. Aggregate is a relatively low-cost product that is bulky and 
heavy. As a result, the cost of transporting aggregate is high compared 
to the value of the product.
    20. When customers seek price quotes or bids, the distance from the 
project site or plant location will have a considerable impact on the 
selection of a supplier, due to the high cost of transporting aggregate 
relative to the low value of the product. Suppliers know the importance 
of transportation cost to a potential customer's selection of an 
aggregate supplier; they know the locations of their competitors, and 
they often will factor the cost of transportation from other suppliers 
into the price or bid that they submit.
    21. The primary factor that determines the area a supplier can 
serve is the location of competing quarries and rail yards. When 
quoting prices or submitting bids, aggregate suppliers will account for 
the location of the project site or plant, the cost of transporting 
aggregate to the project site or plant, and the locations of the 
competitors that might bid on a job. Therefore, depending on the 
location of the project site or plant, suppliers are able to adjust 
their bids to account for the distance other competitors are from a 
job.
    22. The size of a geographic market also can depend on whether 
aggregate is being transported in an urban or rural setting and on 
specific characteristics of the road network. Where there are multiple 
quarries in a region, urban traffic congestion may greatly reduce the 
distance aggregate can be economically transported. In such cases, 
geographic markets can be very small. The closest quarry or rail yard 
to a customer also may have higher delivery costs than a more distant 
quarry because of local traffic patterns that increase fuel costs. 
Consequently, in large cities, local markets can be small and multiple 
geographic markets may exist.
    23. Martin Marietta owns and operates two rail yards that serve 
Dallas County and portions of surrounding counties (hereinafter 
referred to as the ``Dallas area''). Customers with plants or jobs in 
the Dallas area may, depending on the location of their plant or job 
sites, also economically procure Texas DOT-qualified aggregate from two 
rail yards operated by Texas Industries and from one competitor's 
quarry located in

[[Page 38951]]

Bridgeport, Texas. Other quarries cannot compete successfully on a 
regular basis for customers with plants or jobs in the Dallas area 
because they are too far away and transportation costs are too great.
    24. Customers likely would be unable to switch to suppliers outside 
the Dallas area to defeat a small but significant price increase. 
Accordingly, the Dallas area is a relevant geographic market for the 
production and sale of Texas DOT-qualified aggregate within the meaning 
of Section 7 of the Clayton Act.

D. Martin Marietta's Acquisition of Texas Industries is Anticompetitive

    25. Vigorous competition between Martin Marietta and Texas 
Industries on price and customer service in the production and sale of 
Texas DOT-qualified aggregate has benefitted customers in the Dallas 
area.
    26. The competitors that could constrain Martin Marietta and Texas 
Industries from raising prices on Texas DOT-qualified aggregate in the 
Dallas area are limited to those who are qualified by the Texas DOT to 
supply aggregate and can economically rail or truck the aggregate into 
the Dallas area. Currently only one other supplier of Texas DOT-
qualified aggregate consistently can sell aggregate into the Dallas 
area on a cost-competitive basis with Martin Marietta or Texas 
Industries.
    27. The proposed acquisition will eliminate the competition between 
Martin Marietta and Texas Industries and reduce from three to two the 
number of suppliers of Texas DOT-qualified aggregate in the Dallas 
area. Further, the proposed acquisition will substantially increase the 
likelihood that Martin Marietta will unilaterally increase the price of 
Texas DOT-qualified aggregate to a significant number of customers in 
the Dallas area.
    28. The response of other suppliers of Texas DOT-qualified 
aggregate will not be sufficient to constrain a unilateral exercise of 
market power by Martin Marietta after the acquisition.
    29. For certain customers, a combined Martin Marietta and Texas 
Industries will have the ability to increase prices for Texas DOT-
qualified aggregate. The combined firm could also decrease service for 
these same customers by limiting availability or delivery options. 
Texas DOT-qualified aggregate producers know the distance from their 
own quarries or yards and their competitors' yards or quarries to a 
customer's job site. Generally, because of transportation costs, the 
farther a supplier's closest competitor is from a job site, the higher 
the price and margin that supplier can expect for that project. Post-
acquisition, in instances where Martin Marietta and Texas Industries 
quarries or yards are the closest locations to a customer's project, 
the combined firm, using the knowledge of its competitors' locations, 
will be able to charge such customers higher prices or decrease the 
level of customer service.
    30. Further, Martin Marietta's elimination of Texas Industries as 
an independent competitor in the production and sale of Texas DOT-
qualified aggregate in the Dallas area likely will facilitate 
anticompetitive coordination among the remaining suppliers. Texas DOT-
qualified aggregate that meets a specific standard is relatively 
standard and homogenous, and producers often estimate competitors' 
output, capacity, reserves, and costs. Given these market conditions, 
eliminating one of the few Texas DOT-qualified aggregate suppliers is 
likely to further increase the ability of the remaining competitors to 
coordinate successfully.
    31. The transaction will substantially lessen competition in the 
market for Texas DOT-qualified aggregate in the Dallas area, which is 
likely to lead to higher prices and reduced customer service for 
consumers of such products, in violation of Section 7 of the Clayton 
Act.

E. Difficulty of Entry

    32. Timely, likely, and sufficient entry in the production and sale 
of Texas DOT-qualified aggregate in the Dallas area is unlikely, given 
the substantial time and cost required to open a quarry or rail yard.
    33. Quarries are particularly difficult to locate and permit. 
Locating a quarry may take as long as four years, particularly when 
seeking suitable sites with rail access. Once a location is chosen, 
obtaining a permit to open a new quarry in Texas is difficult and time-
consuming. Aggregate producers have spent over two years successfully 
obtaining permits and also have failed to obtain quarry permits on 
multiple occasions.
    34. Location is also essential for a rail-served quarry, so that 
the aggregate can be directly loaded on the trains for transportation 
to the rail yard. If the quarry is not located on a rail line, the 
aggregate must be transported by truck, which can eliminate the 
transportation cost advantage of using rail. Additionally, if the haul 
from the quarry to the rail yard is not a ``single line'' haul, with 
only one railroad carrier, the cost of the multi-line haul can diminish 
some of the cost advantage associated with moving aggregate by rail.
    35. Establishing a rail yard is difficult and may take several 
years in addition to the time necessary to locate, permit and open a 
quarry. To achieve the economies necessary to be competitive in the 
Dallas area, rail yards must be large and able to handle large amounts 
of aggregate. Obtaining the large parcels of land and permits necessary 
to locate a rail yard in the Dallas area is difficult, and the cost of 
obtaining the land and building the rail yard would be considerable. 
The combined cost of permitting and opening both a new rail-served 
quarry and a new rail yard in the Dallas area could exceed $50 million.
    36. Because of the cost and difficulty of establishing a quarry and 
a rail yard, entry will not be timely, likely or sufficient to mitigate 
the anticompetitive effects of Martin Marietta's proposed acquisition 
of Texas Industries.

V. VIOLATION ALLEGED

    37. Martin Marietta's proposed acquisition of Texas Industries 
likely will substantially lessen competition in the production and sale 
of Texas DOT-qualified aggregate in the Dallas area, in violation of 
Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.
    38. Unless enjoined, the proposed acquisition likely will have the 
following anticompetitive effects, among others:
    (a) actual and potential competition between Martin Marietta and 
Texas Industries in the market for the production and sale of Texas 
DOT-qualified aggregate in the Dallas area will be eliminated;
    (b) prices for Texas DOT-qualified aggregate likely will increase 
and customer service likely would decrease;
    (c) the potential for unlawful anticompetitive coordination between 
remaining competitors in the Dallas area likely will be increased.

VI. REQUESTED RELIEF

    39. Plaintiffs request that this Court:
    (a) adjudge and decree that Martin Marietta's acquisition of Texas 
Industries would be unlawful and violate Section 7 of the Clayton Act, 
15 U.S.C. Sec.  18;
    (b) preliminarily and permanently enjoin and restrain the 
Defendants and all persons acting on their behalf from consummating the 
proposed acquisition of Texas Industries by Martin Marietta, or from 
entering into or carrying out any other contract, agreement, plan, or 
understanding, the effect of which would be to combine Martin Marietta 
with Texas Industries;
    (c) award Plaintiffs their costs for this action; and

[[Page 38952]]

    (d) award Plaintiffs such other and further relief as the Court 
deems just and proper.

FOR PLAINTIFF UNITED STATES OF AMERICA:

/s/ William J. Baer
William J. Baer
Assistant Attorney General

/s/ David I. Gelfand
David I. Gelfand
Deputy Assistant Attorney General

/s/ Patricia A. Brink
Patricia A. Brink
Director of Civil Enforcement

/s/ Maribeth Petrizzi
Maribeth Petrizzi (DC Bar 435204)
Chief, Litigation II Section

/s/ Dorothy B. Fountain
Dorothy B. Fountain (DC Bar 439469)
Assistant Chief, Litigation II Section

/s/ Jay D. Owen
Jay D. Owen
Frederick H. Parmenter
James L. Tucker
Attorneys, United States Department of Justice, Antitrust Division, 450 
Fifth Street NW., Suite 8700, Washington, DC 20530, (202) 307-0620

Dated: June 26, 2014

FOR PLAINTIFF STATE OF TEXAS:

Greg Abbott
Attorney General

Daniel Hodge
First Assistant Attorney General

John B. Scott
Deputy Attorney General for Civil Litigation

John T. Prud'homme
Chief, Consumer Protection Division

Kim Van Winkle
Chief, Antitrust Section, Consumer Protection Division

/s/ Mark A. Levy
Mark A. Levy
Assistant Attorney General, Texas Bar No. 24014555, 300 W. 15th Street, 
7th Floor, Austin, Texas 78701, Ph: 512-936-1847, Fax: 512-320-0975, 
Mark.Levy@texasattorneygeneral.gov

Dated: June 26, 2014

United States District Court for the District of Columbia

    United States of America and State of Texas Plaintiffs, v. Martin 
Marietta Materials, Inc. and Texas Industries, Inc. Defendants.
Case No.: 1:14-cv-01079
Judge: Hon. John Bates
Filed: 06/26/2014

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. Sec.  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

    On January 28, 2014, Martin Marietta Materials, Inc. (``Martin 
Marietta'') and Texas Industries, Inc. (``Texas Industries'') announced 
a definitive merger agreement valued at approximately $2.7 billion. 
After investigating the competitive impact of that acquisition, the 
Plaintiffs filed a civil antitrust Complaint on June 26, 2014. The 
Complaint alleges that the acquisition likely will substantially lessen 
competition in the production and sale of aggregate qualified by the 
Texas Department of Transportation (``Texas DOT'') to customers in the 
Dallas, Texas area, in violation of Section 7 of the Clayton Act, 15 
U.S.C. Sec.  18. As a result of the acquisition, prices for Texas DOT-
qualified aggregate likely will increase and customer service likely 
will be reduced.
    At the same time the Complaint was filed, Plaintiffs also filed a 
Hold Separate Stipulation and Order (``Hold Separate'') and a proposed 
Final Judgment. These filings are designed to eliminate the 
anticompetitive effects of Martin Marietta's acquisition of Texas 
Industries. The proposed Final Judgment, which is explained more fully 
below, requires Defendants, among other things, to divest Martin 
Marietta's rail yards located in Frisco, Texas and Dallas, Texas, and 
the quarry located in Mill Creek, Oklahoma. The terms of the Hold 
Separate ensure that the Divestiture Assets will be operated as a 
competitively independent, economically viable and ongoing business 
concern that will remain independent and uninfluenced by the 
consummation of the acquisition, and that competition is maintained 
during the pendency of the ordered divestiture.
    Plaintiffs and Defendants have stipulated that the proposed Final 
Judgment may be entered after compliance with the APPA. Entry of the 
proposed Final Judgment would terminate this action, except that the 
Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. DESCRIPTION OF THE EVENTS GIVING RISE TO THE ALLEGED VIOLATION

A. The Defendants and the Transaction

    Defendant Martin Marietta is incorporated in North Carolina with 
its headquarters in Raleigh, North Carolina. Martin Marietta produces, 
distributes, and/or markets aggregate for the construction industry in 
29 states. Martin Marietta also produces aggregate in Nova Scotia, 
Canada, and the Bahamas, for distribution and sale at numerous 
terminals and yards along the East Coast of the United States. In 2013, 
Martin Marietta had net sales of $2.1 billion.
    Defendant Texas Industries is incorporated in Delaware with its 
headquarters in Dallas, Texas. Texas Industries produces, distributes, 
and/or markets aggregate in; Texas, Oklahoma, Louisiana, Arkansas and 
California. Texas Industries also produces asphalt concrete, ready mix 
concrete, and cement. In 2013, Texas Industries had net sales of $800 
million.
    The merger would create the largest aggregate producer in the 
United States, with annual net sales of nearly $3 billion. The proposed 
transaction, as initially agreed by Defendants likely will lessen 
competition substantially. This acquisition is the subject of the 
Complaint and proposed Final Judgment filed by the United States on 
June 26, 2014.

B. Industry Background

    Aggregate is stone, produced at mines, quarries, and gravel pits, 
that is used for construction projects and in various industrial 
processes. The aggregate produced in quarries and mines is 
predominantly limestone, granite, or trap rock. Different types and 
sizes of rock are needed to meet different specifications for use in 
asphalt concrete, ready mix concrete, industrial processes, and other 
products. Asphalt concrete consists of approximately 95 percent 
aggregate, and ready mix concrete is made of up of approximately 75 
percent aggregate. Aggregate thus is an integral input for road and 
other construction projects.
    The customer on each construction project establishes 
specifications that the aggregate must meet for each application for 
which it is used. State Departments of Transportation (``state DOTs''), 
including the Texas DOT, set specifications for aggregate used to 
produce asphalt concrete, ready mix concrete, and road base for state 
DOT projects. State DOTs specify characteristics such as hardness and 
durability, size, polish value, and a

[[Page 38953]]

variety of other characteristics. The specifications are intended to 
ensure the longevity and safety of the projects that use aggregate.
    For Texas DOT projects, the Texas DOT tests the aggregate to ensure 
that the stone for an application meets proper specifications at the 
quarry before it is shipped, when the aggregate is sent to the 
purchaser to produce an end product such as asphalt concrete, and often 
after the end product has been produced. In addition, the Texas DOT 
pre-qualifies quarries according to the end uses for the aggregate. 
Many city, county, and commercial entities in Texas use the Texas DOT 
aggregate specifications when building roads, bridges, and parking lots 
to optimize project longevity.
    Aggregate is priced by the ton and is a relatively inexpensive 
product. Prices range from approximately five to twenty dollars per 
ton. A variety of approaches are used to price aggregate. For small 
volumes, aggregate often is sold according to a posted price. For 
larger volumes, customers either negotiate prices for a particular job 
or seek bids from multiple aggregate suppliers.
    In areas where aggregate is locally available, it is transported 
from quarries to customers by truck. On a per-mile basis, trucking is 
the most expensive option for transporting aggregate over longer 
distances. Aggregate is also shipped by rail from quarries to yards. It 
is then transported by truck from the yards to customers in the area. 
The rail yards, which typically are supplied by quarries that are 100 
to 200 miles away, frequently are large operations that can handle 75- 
to 100-car unit trains and are served by large quarries located on rail 
lines that have automated aggregate rail-loading operations. Over 
longer distances, the cost of transporting aggregate by rail is 
significantly cheaper, on a per-mile basis, than by truck.

C. Texas DOT-Qualified Aggregate is a Relevant Product Market

    Within the broad category of aggregate, different types of stone 
are used for different purposes. For instance, aggregate used as road 
base is not the same as aggregate used in asphalt concrete. 
Accordingly, they are not interchangeable or substitutable for one 
another and demand for each is separate. Thus, each type of aggregate 
likely is a separate line of commerce and a relevant product market 
within the meaning of Section 7 of the Clayton Act.
    Texas DOT-qualified aggregate is aggregate qualified by Texas DOT 
for use in road construction. Aggregate that meets the standards for 
Texas DOT qualification differs from other aggregate in its size, 
physical composition, functional characteristics, customary uses, 
consistent availability, and pricing. A customer whose job specifies 
Texas DOT-qualified aggregate cannot substitute non-Texas DOT-qualified 
aggregate or other materials.
    Although numerous narrower product markets exist, the competitive 
dynamic for each type of Texas DOT-qualified aggregate is nearly 
identical. Therefore, they all may be combined for analytical 
convenience into a single relevant product market for the purpose of 
evaluating the competitive impact of the acquisition.
    A small but significant increase in the price of Texas DOT-
qualified aggregate would not cause a sufficient number of customers to 
substitute to another type of aggregate or another material so as to 
make such a price increase unprofitable. Accordingly, the production 
and sale of Texas DOT-qualified aggregate is a line of commerce and a 
relevant product market within the meaning of Section 7 of the Clayton 
Act.

D. Dallas, Texas is a Relevant Geographic Market

    Aggregate is a relatively low-cost product that is bulky and heavy. 
As a result, the cost of transporting aggregate is high compared to the 
value of the product.
    When customers seek price quotes or bids, the distance from the 
project site or plant location will have a considerable impact on the 
selection of a supplier, due to the high cost of transporting aggregate 
relative to the low value of the product. Suppliers know the importance 
of transportation cost to a potential customer's selection of an 
aggregate supplier; they know the locations of their competitors; and 
they often will factor the cost of transportation from other suppliers 
into the price or bid that they submit.
    The primary factor that determines the area a supplier can serve is 
the location of competing quarries and rail yards. When quoting prices 
or submitting bids, aggregate suppliers will account for the location 
of the project site or plant, the cost of transporting aggregate to the 
project site or plant, and the locations of the competitors that might 
bid on a job. Therefore, depending on the location of the project site 
or plant, suppliers are able to adjust their bids to account for the 
distance other competitors are from a job.
    The size of a geographic market also can depend on whether 
aggregate is being transported in an urban or rural setting and on 
specific characteristics of the road network. Where there are multiple 
quarries in a region, urban traffic congestion may greatly reduce the 
distance aggregate can be economically transported. In such cases, 
geographic markets can be very small. The closest quarry or rail yard 
to a customer also may have higher delivery costs than a more distant 
quarry because of local traffic patterns that increase fuel costs. 
Consequently, in large cities, local markets can be small and multiple 
geographic markets may exist.
    Martin Marietta owns and operates two rail yards that serve Dallas 
County and portions of surrounding counties (hereinafter referred to as 
the ``Dallas area''). Customers with plants or jobs in the Dallas area 
may, depending on the location of their plant or job sites, also 
economically procure Texas DOT-qualified aggregate from two rail yards 
operated by Texas Industries and from one competitor's quarry located 
in Bridgeport, Texas. Other quarries cannot compete successfully on a 
regular basis for customers with plants or jobs in the Dallas area 
because they are too far away and transportation costs are too great.
    Customers likely would be unable to switch to suppliers outside the 
Dallas area to defeat a small but significant price increase. 
Accordingly, the Dallas area is a relevant geographic market for the 
production and sale of Texas DOT-qualified aggregate within the meaning 
of Section 7 of the Clayton Act.

E. The Competitive Effects of Martin Marietta's Acquisition of Texas 
Industries

    Customers in the Dallas area have benefited from vigorous 
competition between Martin Marietta and Texas Industries on price and 
customer service in the production and sale of Texas DOT-qualified 
aggregate.
    The competitors that could constrain Martin Marietta and Texas 
Industries from raising prices on Texas DOT-qualified aggregate in the 
Dallas area are limited to those who are qualified by the Texas DOT to 
supply aggregate and can economically rail or truck the aggregate into 
the Dallas area. Currently only one other supplier of Texas DOT-
qualified aggregate consistently can sell aggregate into the Dallas 
area on a cost-competitive basis with Martin Marietta or Texas 
Industries.
    The proposed acquisition will eliminate the competition between 
Martin Marietta and Texas Industries and reduce from three to two the 
number of suppliers of Texas DOT-qualified aggregate in the Dallas 
area. Further, the proposed acquisition will substantially increase the 
likelihood that Martin Marietta will unilaterally

[[Page 38954]]

increase the price of Texas DOT-qualified aggregate to a significant 
number of customers in the Dallas area. The response of other suppliers 
of Texas DOT-qualified aggregate will not be sufficient to constrain a 
unilateral exercise of market power by Martin Marietta after the 
acquisition.
    For certain customers, a combined Martin Marietta and Texas 
Industries will have the ability to increase prices for Texas DOT-
qualified aggregate. The combined firm could also decrease service for 
these same customers by limiting availability or delivery options. 
Texas DOT-qualified aggregate producers know the distance from their 
own quarries or yards and their competitors' yards or quarries to a 
customer's job site. Generally, because of transportation costs, the 
farther a supplier's closest competitor is from a job site, the higher 
the price and margin that supplier can expect for that project. Post-
acquisition, in instances where Martin Marietta and Texas Industries 
quarries or yards are the closest locations to a customer's project, 
the combined firm, using the knowledge of its competitors' locations, 
will be able to charge such customers higher prices or decrease the 
level of customer service.
    Further, Martin Marietta's elimination of Texas Industries as an 
independent competitor in the production and sale of Texas DOT-
qualified aggregate in the Dallas area likely will facilitate 
anticompetitive coordination among the remaining suppliers. Texas DOT-
qualified aggregate that meets a specific standard is relatively 
standard and homogenous, and producers often estimate competitors' 
output, capacity, reserves, and costs. Given these market conditions, 
eliminating one of the few Texas DOT-qualified aggregate suppliers is 
likely to further increase the ability of the remaining competitors to 
coordinate successfully.
    The transaction will substantially lessen competition in the market 
for Texas DOT-qualified aggregate in the Dallas area, which is likely 
to lead to higher prices and reduced customer service for consumers of 
such products, in violation of Section 7 of the Clayton Act. The likely 
anticompetitive effects of the transaction in the Dallas area will not 
be mitigated by entry, given the substantial time and cost required to 
open a quarry or rail yard. Quarries are particularly difficult to 
locate and permit. Locating a quarry may take as long as four years, 
particularly when seeking suitable sites with rail access. Once a 
location is chosen, obtaining a permit to open a new quarry in Texas is 
difficult and time-consuming. Aggregate producers have spent over two 
years successfully obtaining permits and also have failed to obtain 
quarry permits on multiple occasions.
    Location is also essential for a rail-served quarry, so that the 
aggregate can be directly loaded on the trains for transportation to 
the rail yard. If the quarry is not located on a rail line, the 
aggregate must be transported by truck, which can eliminate the 
transportation cost advantage of using rail. Additionally, if the haul 
from the quarry to the rail yard is not a ``single line'' haul, with 
only one railroad carrier, the cost of the multi-line haul can diminish 
some of the cost advantage associated with moving aggregate by rail.
    Establishing a rail yard is difficult and may take several years in 
addition to the time necessary to locate, permit and open a quarry. To 
achieve the economies necessary to be competitive in the Dallas area, 
rail yards must be large and able to handle large amounts of aggregate. 
Obtaining the large parcels of land and permits necessary to locate a 
rail yard in the Dallas area is difficult, and the cost of obtaining 
the land and building the rail yard would be considerable. The combined 
cost of permitting and opening both a new rail-served quarry and a new 
rail yard in the Dallas area could exceed $50 million.
    Because of the cost and difficulty of establishing a quarry and a 
rail yard, entry will not be timely, likely or sufficient to counteract 
the anticompetitive effects of Martin Marietta's proposed acquisition 
of Texas Industries.

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

    The divestiture requirement of the proposed Final Judgment will 
eliminate the anticompetitive effects of the acquisition in the Dallas, 
Texas area by establishing a new, independent, and economically viable 
competitor. The proposed Final Judgment requires Defendants, within 90 
days after the filing of the Complaint, or five days after notice of 
the entry of the Final Judgment by the Court, whichever is later, to 
divest Martin Marietta's rail yards located in Dallas, Texas and 
Frisco, Texas as well as its North Troy Quarry located in Mill Creek, 
Oklahoma (the ``Divestiture Assets''). The Dallas yard primarily serves 
downtown Dallas, while the Frisco yard serves northern Dallas County 
and portions of the surrounding counties. The North Troy quarry serves 
as a source for aggregate that is distributed through the two rail 
yards. These assets constitute all of the assets that Martin Marietta 
currently uses to supply aggregate to the Dallas area, so the acquirer 
of these assets will be able to compete with Defendants.
    While Defendants must make all of the Divestiture Assets available 
for purchase, Paragraph IV(B) of the proposed Final Judgment allows the 
acquirer to exclude from the Divestiture Assets any portion that the 
acquirer elects not to acquire, subject to the written approval of the 
United States, in its sole discretion, after consultation with the 
State of Texas. In this case, the rail yards are the source of direct 
competition between Defendants in the Dallas area; however, the rail 
yards cannot operate as an aggregate distribution facility without a 
source of aggregate, which the acquirer of the Divestiture Assets may 
not currently own. Paragraph IV(B) allows the acquirer of the 
Divestiture Assets not to purchase the North Troy quarry if it already 
owns or operates an aggregate source that could ship aggregate to the 
divested rail yards. The assets must be divested in such a way as to 
satisfy the United States in its sole discretion, after consultation 
with Texas, that the operations can and will be operated by the 
purchaser as a viable, ongoing business that can compete effectively in 
the relevant market. Defendants must take all reasonable steps 
necessary to accomplish the divestiture quickly and shall cooperate 
with prospective purchasers.
    The terms of the proposed Final Judgment require Defendants to 
divest the Divestiture Assets within 90 days. If Defendants are unable 
to accomplish the divestiture within this period the United States, in 
its sole discretion, may grant Defendants one or more extensions of 
this time period not to exceed 90 days in total. The 90-day potential 
extension will permit the proposed acquirer to complete any testing and 
drilling that it may choose to conduct as part of its due diligence 
process. In the event that Defendants do not accomplish the divestiture 
within the periods prescribed in the proposed Final Judgment, the Final 
Judgment provides that the Court will appoint a trustee selected by the 
United States to effect the divestiture. If a trustee is appointed, the 
proposed Final Judgment provides that Defendants will pay all costs and 
expenses of the trustee. The trustee's commission will be structured so 
as to provide an incentive for the trustee based on the price obtained 
and the speed with which the divestiture is accomplished. After his or 
her appointment becomes effective, the trustee will file monthly 
reports with the Court and the United States setting forth his or her 
efforts to accomplish the divestiture. At the end of six months, if

[[Page 38955]]

the divestiture has not been accomplished, the trustee and the United 
States will make recommendations to the Court, which shall enter such 
orders as appropriate, in order to carry out the purpose of the trust, 
including extending the trust or the term of the trustee's appointment.
    The divestiture provisions of the proposed Final Judgment will 
eliminate the anticompetitive effects of the acquisition in the 
production and sale of Texas DOT-qualified aggregate in the Dallas 
area.

IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS

    Section 4 of the Clayton Act, 15 U.S.C. Sec.  15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
Sec.  16(a), the proposed Final Judgment has no prima facie effect in 
any subsequent private lawsuit that may be brought against Defendants.

V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT

    The Plaintiffs and Defendants have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register, or the last date of 
publication in a newspaper of the summary of this Competitive Impact 
Statement, whichever is later. All comments received during this period 
will be considered by the United States Department of Justice, which 
remains free to withdraw its consent to the proposed Final Judgment at 
any time prior to the Court's entry of judgment. The comments and the 
response of the United States will be filed with the Court. In 
addition, comments will be posted on the U.S. Department of Justice, 
Antitrust Division's internet Web site and, under certain 
circumstances, published in the Federal Register.
    Written comments should be submitted to: Maribeth Petrizzi, Chief, 
Litigation II Section, Antitrust Division, United States Department of 
Justice, 450 Fifth Street NW., Suite 8700, Washington, DC 20530.

The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT

    The Plaintiffs considered, as an alternative to the proposed Final 
Judgment, a full trial on the merits against Defendants. The Plaintiffs 
could have continued the litigation and sought preliminary and 
permanent injunctions against Martin Marietta's acquisition of Texas 
Industries. The Plaintiffs are satisfied, however, that the divestiture 
of assets described in the proposed Final Judgment will preserve 
competition for the production and sale Texas DOT-qualified aggregate 
in the Dallas area. Thus, the proposed Final Judgment would achieve all 
or substantially all of the relief the Plaintiffs would have obtained 
through litigation, but avoids the time, expense, and uncertainty of a 
full trial on the merits of the Complaint.

VII. STANDARD OF REVIEW UNDER THE APPA FOR THE PROPOSED FINAL JUDGMENT

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a sixty-day comment period, after which the court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. 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 
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 mechanism to enforce the 
final judgment are clear and manageable.'').\1\
---------------------------------------------------------------------------

    \1\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for court to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
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).
---------------------------------------------------------------------------

    As the United States Court of Appeals for the District of Columbia 
Circuit has held, under the APPA a court considers, among other things, 
the relationship between the remedy secured and the specific 
allegations set forth in the government's complaint, whether the decree 
is sufficiently clear, whether enforcement mechanisms are sufficient, 
and whether the decree may positively harm third parties. See 
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the 
relief secured by the decree, a court may not ``engage in an 
unrestricted evaluation of what relief would best serve the public.'' 
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (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:


[[Page 38956]]


[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).
---------------------------------------------------------------------------

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

    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.
    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,'' 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, 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. Sec.  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.\3\
---------------------------------------------------------------------------

    \3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., 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.

Dated: June 26, 2014

Respectfully submitted,

/s/ Jay D. Owen
Jay D. Owen

U.S. Department of Justice, Antitrust Division, Litigation II Section, 
Liberty Square Building, 450 5th Street NW., Suite 8700, Washington, DC 
20530, Tel.: (202) 598-2987, Email: jay.owen@usdoj.gov

*Attorney of Record

United States District Court for the District Of Columbia

    United States of America, and State of Texas, Plaintiffs, v. Martin 
Marietta Materials, Inc., and Texas Industries, Inc. Defendants.
Case No.: 1:14-cv-01079
Judge: Hon. John Bates
Date Filed: 06/26/2014

PROPOSED FINAL JUDGMENT

    WHEREAS, Plaintiffs, the United States of America and the State of 
Texas, filed their Complaint on June 26, 2014, Plaintiffs and 
Defendants, Martin Marietta Materials, Inc. (``Martin Marietta'') and 
Texas Industries, Inc. (``Texas Industries''), by their respective 
attorneys, have consented to the entry of this Final Judgment without 
trial or adjudication of any issue of fact or law, and without this 
Final Judgment constituting any evidence against or admission by any 
party regarding any issue of fact or law;
    AND WHEREAS, Defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    AND WHEREAS, the essence of this Final Judgment is the prompt and 
certain divestiture of certain rights or assets by Defendants to assure 
that

[[Page 38957]]

competition is not substantially lessened;
    AND WHEREAS, Plaintiffs require Defendants to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    AND WHEREAS, Defendants have represented to Plaintiffs that the 
divestitures required below can and will be made and that Defendants 
will later raise no claim of mistake, hardship or difficulty of 
compliance 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. The Complaint states a claim upon which 
relief may be granted against Defendants under Section 7 of the Clayton 
Act, as amended (15 U.S.C. Sec.  18).

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' means the entity to whom Defendants divest the 
Divestiture Assets.
    B. ``Martin Marietta'' means Defendant Martin Marietta Materials, 
Inc., a North Carolina corporation with its headquarters in Raleigh, 
North Carolina, its successors and assigns, and its subsidiaries, 
divisions, groups, affiliates, partnerships and joint ventures, and 
their directors, officers, managers, agents, and employees.
    C. ``Texas Industries'' means Defendant Texas Industries, Inc., a 
Delaware corporation with its headquarters in Dallas, Texas, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships and joint ventures, and their directors, 
officers, managers, agents, and employees.
    D. ``Divestiture Assets'' means:
    1. the aggregate quarry, including the portable plant, located at 
12310 W. Holder Road, Mill Creek, Oklahoma 74856 (the ``North Troy 
Quarry'');
    2. the rail yard located at 1760 Z Street Office, Dallas, Texas 
75229 (the ``Dallas Yard'');
    3. the rail yard located at 6601 Eubanks Street, Frisco, Texas 
75034 (the ``Frisco Yard'');
    4. all tangible assets used at or for the North Troy Quarry and the 
Dallas and Frisco Yards, including, but not limited to, all 
manufacturing equipment, tooling, and fixed assets, real property 
(leased or owned), mining equipment, aggregate reserves, personal 
property, inventory, office furniture, materials, supplies, and on- or 
off-site warehouses or storage facilities; all licenses, permits, and 
authorizations issued by any governmental organization; all contracts, 
agreements, leases (including renewal rights), commitments, and 
understandings, including sales agreements and supply agreements; all 
customer lists, contracts, accounts, and credit records; all other 
records; and, at the option of the Acquirer, a number of trucks, rail 
cars, and other vehicles usable at each of the North Troy Quarry and 
the Dallas and Frisco Yards, (limited, with respect to rail cars, to 
those that are used to serve the Dallas and Frisco Yards from the North 
Troy Quarry), equal to the average number of vehicles of each type used 
at the North Troy Quarry and the Dallas and Frisco Yards per month 
during the months of operation between January 1, 2013, and December 
31, 2013 (calculated by averaging the number of each type of vehicle 
that was used at the North Troy Quarry and the Dallas and Frisco Yards 
at any time during each month of operation); and
    5. all intangible assets used in the production and sale of 
aggregate produced at the North Troy Quarry or related to the Dallas 
and Frisco Yards, including, but not limited to, all contractual 
rights, patents, licenses and sublicenses, intellectual property, 
technical information, computer software (including dispatch software 
and management information systems) and related documentation, know-
how, trade secrets, drawings, blueprints, designs, design protocols, 
specifications for materials, specifications for parts and devices, 
safety procedures for the handling of materials and substances, quality 
assurance and control procedures, design tools and simulation 
capability, all manuals and technical information provided by 
Defendants to their own employees, customers, suppliers, agents, or 
licensees, and all data (including aggregate reserve testing 
information) concerning the North Troy Quarry and the Dallas and Frisco 
Yards; provided, however, that with respect to any intellectual 
property, software, and systems used primarily for assets other than 
the Dallas and Frisco Yards and the North Troy Quarry, the Divestiture 
Assets shall include instead a perpetual royalty-free, non-exclusive 
license to all such intellectual property, software, and systems.

III. Applicability

    A. This Final Judgment applies to Martin Marietta and Texas 
Industries, as defined above, and all other persons in active concert 
or participation with any of them who receive actual notice of this 
Final Judgment by personal service or otherwise.
    B. If, prior to complying with Section IV and V of this Final 
Judgment, Defendants sell or otherwise dispose of all or substantially 
all of their assets or of lesser business units that include the 
Divestiture Assets, they shall require the purchaser to be bound by the 
provisions of this Final Judgment. Defendants need not obtain such an 
agreement from the acquirer of the assets divested pursuant to this 
Final Judgment.

IV. Divestitures

    A. Defendants are ordered and directed, within 90 calendar days 
after the filing of the Complaint in this matter, or five (5) calendar 
days after notice of the entry of this Final Judgment by the Court, 
whichever is later, to divest the Divestiture Assets in a manner 
consistent with this Final Judgment to an Acquirer acceptable to the 
United States, in its sole discretion after consultation with the State 
of Texas. The United States, in its sole discretion, may agree to one 
or more extensions of this time period not to exceed 90 calendar days 
in total, and shall notify the Court in such circumstances. Defendants 
agree to use their best efforts to divest the Divestiture Assets as 
expeditiously as possible.
    B. Notwithstanding the provisions of Paragraph IV(A), upon written 
request of Defendants, the United States, in its sole discretion, after 
consultation with the State of Texas, may agree, in writing, to exclude 
from the Divestiture Assets any portion thereof that the Acquirer, at 
its option, elects not to acquire.
    C. In accomplishing the divestiture ordered by this Final Judgment, 
Defendants promptly shall make known, by usual and customary means, the 
availability of the Divestiture Assets. Defendants shall inform any 
person making inquiry regarding a possible purchase of the Divestiture 
Assets that they are being divested pursuant to this Final Judgment and 
provide that person with a copy of this Final Judgment. Defendants 
shall offer to furnish to all prospective Acquirers, subject to 
customary confidentiality assurances, all information and documents 
relating to the Divestiture Assets customarily provided in a due 
diligence process. Defendants shall make available such information to 
Plaintiffs at the same time that such information is made available to 
any other person.
    D. Defendants shall provide the Acquirer and the United States with 
information relating to the personnel

[[Page 38958]]

involved in the operation of the Divestiture Assets to enable the 
Acquirer to make offers of employment. Defendants will not interfere 
with any negotiations by the Acquirer to employ any Defendant employee 
whose primary responsibility is the operation of the Divestiture 
Assets.
    E. Defendants shall permit prospective Acquirers of the Divestiture 
Assets to have reasonable access to personnel and to make inspections 
of the physical facilities of the Divestiture Assets; access to any and 
all environmental, zoning, and other permit documents and information; 
and access to any and all financial, operational, or other documents 
and information customarily provided as part of a due diligence 
process.
    F. Defendants shall warrant to the Acquirer that each asset will be 
operational on the date of sale.
    G. Defendants shall not take any action that will impede in any way 
the permitting, operation, or divestiture of the Divestiture Assets.
    H. Defendants shall warrant to the Acquirer that there are no 
material defects in the environmental, zoning or other permits 
pertaining to the operation of each asset, and that following the sale 
of the Divestiture Assets, Defendants will not undertake, directly or 
indirectly, any challenges to the environmental, zoning, or other 
permits relating to the operation of the Divestiture Assets.
    I. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section IV, or by trustee appointed pursuant to 
Section V, of this Final Judgment, shall include the entire Divestiture 
Assets, and shall be accomplished in such a way as to satisfy the 
United States, in its sole discretion, after consultation with the 
State of Texas, that the Divestiture Assets can and will be used by the 
Acquirer as part of a viable, ongoing business in the production and 
sale of aggregate. The divestitures, whether pursuant to Section IV or 
Section V of this Final Judgment,
    (1) shall be made to an Acquirer that, in the United States's sole 
judgment, after consultation with the State of Texas, has the intent 
and capability (including the necessary managerial, operational, 
technical and financial capability) of competing effectively in the 
business of producing and selling aggregate; and
    (2) shall be accomplished so as to satisfy the United States, in 
its sole discretion, after consultation with the State of Texas, that 
none of the terms of any agreement between an Acquirer and Defendants 
give Defendants the ability unreasonably to raise the Acquirer's costs, 
to lower the Acquirer's efficiency, or otherwise to interfere in the 
ability of the Acquirer to compete effectively.

V. Appointment of Trustee

    A. If Defendants have not divested the Divestiture Assets within 
the time period specified in Paragraph IV(A), Defendants shall notify 
the United States and the State of Texas of that fact in writing. Upon 
application of the United States, the Court shall appoint a trustee 
selected by the United States and approved by the Court to effect the 
divestiture of the Divestiture Assets.
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the Divestiture Assets. The 
trustee shall have the power and authority to accomplish the 
divestiture to an Acquirer acceptable to the United States, after 
consultation with the State of Texas, at such price and on such terms 
as are then obtainable upon reasonable effort by the trustee, subject 
to the provisions of Sections IV, V, and VI of this Final Judgment, and 
shall have such other powers as this Court deems appropriate. Subject 
to Paragraph V(D) of this Final Judgment, the trustee may hire at the 
cost and expense of Defendants any investment bankers, attorneys, or 
other agents, who shall be solely accountable to the trustee, 
reasonably necessary in the trustee's judgment to assist in the 
divestiture.
    C. Defendants shall not object to a sale by the trustee on any 
ground other than the trustee's malfeasance. Any such objections by 
Defendants must be conveyed in writing to the United States and the 
trustee no later than ten (10) calendar days after the trustee has 
provided the notice required under Section VI.
    D. The trustee shall serve at the cost and expense of Defendants, 
on such terms and conditions as the United States approves, including 
confidentiality requirements and conflict of interest certifications. 
The trustee shall account for all monies derived from the sale of the 
assets sold by the trustee and all costs and expenses so incurred. 
After approval by the Court of the trustee's accounting, including fees 
for its services yet unpaid and those of any professionals and agents 
retained by the trustee, all remaining money shall be paid to 
Defendants and the trust shall be terminated. The compensation of the 
trustee and any professionals and agents retained by the trustee shall 
be reasonable in light of the value of the Divestiture Assets and based 
on a fee arrangement providing the trustee with an incentive based on 
the price and terms of the divestiture and the speed with which it is 
accomplished, but timeliness is paramount. If the trustee and 
Defendants are unable to reach agreement on the trustee's compensation 
or other terms and conditions of sale within fourteen (14) calendar 
days of appointment of the trustee, the United States may, in its sole 
discretion, take appropriate action, including making a recommendation 
to the Court.
    E. Defendants shall use their best efforts to assist the trustee in 
accomplishing the required divestiture. The trustee and any 
consultants, accountants, attorneys, and other agents retained by the 
trustee shall have full and complete access to the personnel, books, 
records, and facilities of the assets to be divested, and Defendants 
shall develop financial and other information relevant to such business 
as the trustee may reasonably request, subject to reasonable protection 
for trade secret or other confidential research, development, or 
commercial information. Defendants shall take no action to interfere 
with or to impede the trustee's accomplishment of the divestiture.
    F. After its appointment, the trustee shall file monthly reports 
with the United States and, as appropriate, the Court setting forth the 
trustee's efforts to accomplish the divestiture ordered under this 
Final Judgment. To the extent such reports contain information that the 
trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. Such reports shall include the name, 
address, and telephone number of each person who, during the preceding 
month, made an offer to acquire, expressed an interest in acquiring, 
entered into negotiations to acquire, or was contacted or made an 
inquiry about acquiring, any interest in the Divestiture Assets, and 
shall describe in detail each contact with any such person. The trustee 
shall maintain full records of all efforts made to divest the 
Divestiture Assets.
    G. If the trustee has not accomplished the divestiture ordered 
under this Final Judgment within six (6) months after the trustee's 
appointment, the trustee shall promptly file with the Court a report 
setting forth (1) the trustee's efforts to accomplish the required 
divestiture, (2) the reasons, in the trustee's judgment, why the 
required divestiture has not been accomplished, and (3) the trustee's 
recommendations. To the extent such report contains information that 
the trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. The trustee shall at the same time furnish 
such report to the

[[Page 38959]]

United States, which shall have the right to make additional 
recommendations consistent with the purpose of the trust. The Court 
thereafter shall enter such orders as it shall deem appropriate to 
carry out the purpose of the Final Judgment, which may, if necessary, 
include extending the trust and the term of the trustee's appointment 
by a period requested by the United States.
    H. If the United States determines that the trustee has ceased to 
act or failed to act diligently or in a reasonably cost-effective 
manner, it may recommend the Court appoint a substitute trustee.

VI. Notice of Proposed Divestiture

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, Defendants or the trustee, whichever is then 
responsible for effecting the divestiture required herein, shall notify 
the United States and the State of Texas of any proposed divestiture 
required by Section IV or V of this Final Judgment. If the trustee is 
responsible, it shall similarly notify Defendants. The notice shall set 
forth the details of the proposed divestiture and list the name, 
address, and telephone number of each person not previously identified 
who offered or expressed an interest in or desire to acquire any 
ownership interest in the Divestiture Assets, together with full 
details of the same.
    B. Within fifteen (15) calendar days of receipt by the United 
States of such notice, the United States, after consultation with the 
State of Texas, may request from Defendants, the proposed Acquirer, any 
other third party, or the trustee, if applicable, additional 
information concerning the proposed divestiture, the proposed Acquirer, 
and any other potential Acquirer. Defendants and the trustee shall 
furnish any additional information requested within fifteen (15) 
calendar days of the receipt of the request, unless the parties shall 
otherwise agree.
    C. Within thirty (30) calendar days after receipt of the notice or 
within twenty (20) calendar days after the United States has been 
provided the additional information requested from Defendants, the 
proposed Acquirer, any third party, and the trustee, whichever is 
later, the United States shall provide written notice to Defendants and 
the trustee, if there is one, stating whether or not it objects to the 
proposed divestiture. If the United States provides written notice that 
it does not object, the divestiture may be consummated, subject only to 
Defendants' limited right to object to the sale under Section V(C) of 
this Final Judgment. Absent written notice that the United States does 
not object to the proposed Acquirer or upon objection by the United 
States, a divestiture proposed under Section IV or Section V shall not 
be consummated. Upon objection by Defendants under Section V(C), a 
divestiture proposed under Section V shall not be consummated unless 
approved by the Court.

VII. Financing

    Defendants shall not finance all or any part of any purchase made 
pursuant to Section IV or V of this Final Judgment.

VIII. Hold Separate

    Until the divestiture required by this Final Judgment has been 
accomplished, Defendants shall take all steps necessary to comply with 
the Hold Separate Stipulation and Order entered by this Court. 
Defendants shall take no action that would jeopardize the divestiture 
ordered by this Court.

IX. Affidavits

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestiture has been completed under Section IV or V, Defendants 
shall deliver to the United States an affidavit as to the fact and 
manner of its compliance with Section IV or V of this Final Judgment. 
Each such affidavit shall include the name, address, and telephone 
number of each person who, during the preceding thirty (30) calendar 
days, made an offer to acquire, expressed an interest in acquiring, 
entered into negotiations to acquire, or was contacted or made an 
inquiry about acquiring, any interest in the Divestiture Assets, and 
shall describe in detail each contact with any such person during that 
period. Each such affidavit shall also include a description of the 
efforts Defendants have taken to solicit buyers for the Divestiture 
Assets, and to provide required information to prospective Acquirers, 
including the limitations, if any, on such information. Assuming the 
information set forth in the affidavit is true and complete, any 
objection by the United States to information provided by Defendants, 
including limitation on information, shall be made within fourteen (14) 
calendar days of receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, Defendants shall deliver to the United States an 
affidavit that describes in reasonable detail all actions Defendants 
have taken and all steps Defendants have implemented on an ongoing 
basis to comply with Section VIII of this Final Judgment. Defendants 
shall deliver to the United States an affidavit describing any changes 
to the efforts and actions outlined in Defendants' earlier affidavits 
filed pursuant to this section within fifteen (15) calendar days after 
the change is implemented.
    C. Defendants shall keep all records of all efforts made to 
preserve and divest the Divestiture Assets until one year after such 
divestiture has been completed.

X. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of any related orders such as any Hold Separate 
Order, or of determining whether the Final Judgment should be modified 
or vacated, and subject to any legally recognized privilege, from time 
to time authorized representatives of the United States Department of 
Justice, including consultants and other persons retained by the United 
States, shall, upon written request of an authorized representative of 
the Assistant Attorney General in charge of the Antitrust Division, and 
on reasonable notice to Defendants, be permitted:
    (1) access during Defendants' office hours to inspect and copy, or 
at the option of the United States, to require Defendants to provide 
hard copy or electronic copies of, all books, ledgers, accounts, 
records, data, and documents in the possession, custody, or control of 
Defendants, relating to any matters contained in this Final Judgment; 
and
    (2) to interview, either informally or on the record, Defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews shall be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by Defendants.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
Defendants shall submit written reports or response to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, or the Texas Attorney General's Office, except in the course of 
legal proceedings to which the United States is a party

[[Page 38960]]

(including grand jury proceedings), or for the purpose of securing 
compliance with this Final Judgment, or as otherwise required by law.
    D. If at the time information or documents are furnished by 
Defendants to the United States, Defendants represent and identify in 
writing the material in any such information or documents to which a 
claim of protection may be asserted under Rule 26(c)(7) of the Federal 
Rules of Civil Procedure, and Defendants mark each pertinent page of 
such material, ``Subject to claim of protection under Rule 26(c)(7) of 
the Federal Rules of Civil Procedure,'' then the United States shall 
give Defendants ten (10) calendar days notice prior to divulging such 
material in any legal proceeding (other than a grand jury proceeding).

XI. No Reacquisition

    Defendants may not reacquire any part of the Divestiture Assets 
during the term of this Final Judgment.

XII. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XIII. Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire ten years from the date of its entry.

XIV. Public Interest Determination

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16, including making copies available to 
the public of this Final Judgment, the Competitive Impact Statement, 
and any comments thereon and the United States's responses to comments. 
Based upon the record before the Court, which includes the Competitive 
Impact Statement and any comments and response to comments filed with 
the Court, entry of this Final Judgment is in the public interest.

Date:------------------------------------------------------------------

Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16

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United States District Judge

[FR Doc. 2014-15959 Filed 7-8-14; 8:45 am]
BILLING CODE 4410-11-P