United States, et al. v. The Dow Chemical Co., et al., Proposed Final Judgment and Competitive Impact Statement, 28887-28906 [2017-13326]

Download as PDF Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices Plaintiffs, v. The Dow Chemical Company, 2030 Dow Center, Midland, MI 48674 and E.I. Du Pont de Nemours and Company, 974 Centre Road, Wilmington, DE 19805, Defendants. Case No.: 1:17–cv–01176 Judge: Amit Mehta DEPARTMENT OF JUSTICE Antitrust Division United States, et al. v. The Dow Chemical Co., et al., Proposed Final Judgment and Competitive Impact Statement COMPLAINT Notice is hereby given pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)–(h), that a proposed Final Judgment, Asset Preservation Stipulation and Order, and Competitive Impact Statement have been filed with the United States District Court for the District of Columbia in United States, et al. v. The Dow Chemical Co., et al., Civil Action No. 1:17–cv–01176. On June 15, 2017, the United States filed a Complaint alleging that the proposed merger of The Dow Chemical Company (‘‘Dow’’) and E.I. DuPont de Nemours and Company (‘‘DuPont’’) would violate Section 7 of the Clayton Act, 15 U.S.C. 18. The proposed Final Judgment, filed at the same time as the Complaint, requires the defendants to divest DuPont’s Finesse herbicides business and Rynaxypyr insecticides business, and Dow’s acid copolymers and ionomers business. Copies of the Complaint, proposed Final Judgment, and Competitive Impact Statement are available for inspection on the Department of Justice’s Web site at http://www.justice.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 Antitrust Division’s 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). sradovich on DSK3GMQ082PROD with NOTICES Patricia A. Brink, Director of Civil Enforcement. United States District Court for The District of Columbia United States of America, U.S. Department of Justice, Antitrust Division, 450 Fifth Street NW., Suite 8700, Washington, DC 20530, State of Iowa, 1305 East Walnut Street, Des Moines, IA 50319, State of Mississippi, 550 High Street, Jackson, MS 39201, State of Montana, 555 Fuller Ave., Helena, MT 59601, VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 The United States of America, acting under the direction of the Attorney General of the United States, the State of Iowa, the State of Mississippi, and the State of Montana (collectively, ‘‘Plaintiff States’’), acting by and through their respective Offices of the Attorney General, bring this civil action to enjoin the proposed merger of The Dow Chemical Company (‘‘Dow Chemical’’) and E.I. du Pont de Nemours and Company (‘‘DuPont’’). I. INTRODUCTION 1. In December 2015, Dow Chemical and DuPont announced that they had agreed to a merger of equals in a transaction with an estimated value exceeding $130 billion. Both Dow Chemical and DuPont are among the largest chemical companies in the world. 2. Dow Chemical and DuPont each make a wide variety of innovative crop protection chemicals used by farmers across the United States. Each company also manufactures a number of petrochemicals, including high-pressure ethylene derivatives that are crucial inputs to a number of important products and industries. 3. The agricultural sector is a large and vital part of the American economy. American farmers grow crops to feed consumers in the United States and abroad, to sustain livestock, and to produce alternative energy to power homes, vehicles, and industries. Every year, American farmers plant tens of millions of acres of corn, soybeans, wheat, and specialty crops, such as fruits, nuts, and vegetables. To meet the needs of a growing population, American farmers rely on a variety of effective crop protection chemical products, including herbicides and insecticides, which protect crops from weeds and insects that damage crops and reduce yield. 4. Dow Chemical and DuPont are two of only a handful of chemical companies that manufacture certain types of crop protection chemicals. Vigorous competition between Dow Chemical’s and DuPont’s crop protection chemicals has benefitted farmers through lower prices, more effective solutions to certain pest and weed problems, and superior service. In particular, Dow Chemical and DuPont PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 28887 compete in the U.S. sales of broadleaf herbicides for winter wheat and insecticides for chewing pests. That competition would be lost if the merger is consummated. Accordingly, the proposed acquisition likely would substantially lessen competition in the markets for certain crop protection chemicals in the United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. 5. Dow Chemical and DuPont also compete in the manufacture and sale of two types of high-pressure ethylene derivative products called acid copolymers and ionomers, which are used in the production of flexible food packaging and other industrial applications. The combination of Dow Chemical and DuPont would result in a merger to monopoly in the production of acid copolymers and ionomers in the United States. Accordingly, the proposed transaction likely would substantially lessen competition in the markets for acid copolymers and ionomers in the United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. II. DEFENDANTS AND THE TRANSACTION 6. Dow Chemical, founded in 1897, is headquartered in Midland, Michigan, operates in approximately 180 countries, and employs over 50,000 people worldwide. In 2016, Dow Chemical had revenues of approximately $48 billion. Dow Chemical’s primary lines of business are chemical, plastic, and agricultural products and services. Dow Chemical’s products are used in various industries, ranging from agriculture to consumer goods. 7. DuPont, founded in 1802, is headquartered in Wilmington, Delaware, operates in approximately 90 countries, and employs more than 60,000 people worldwide. In 2016, DuPont reported revenues of $24.5 billion. DuPont’s primary products include crop protection chemicals and performance products, such as plastics and polymers. 8. Pursuant to a December 11, 2015 agreement, Dow Chemical and DuPont have agreed to an all-stock merger of equals. At the time of the merger announcement, the combined market capitalization of the companies was $130 billion. The merger plan contemplates spinning off the firms’ combined assets into three separate, publicly-traded companies as soon as feasible. One of those companies would focus on agriculture products (with approximately $18 billion in revenue), another on material sciences E:\FR\FM\26JNN1.SGM 26JNN1 28888 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices (approximately $51 billion in revenue), and a third on ‘‘specialty’’ products, such as organic light-emitting diodes and building wrap (approximately $13 billion in revenue). III. JURISDICTION AND VENUE 9. The United States brings this action under Section 15 of the Clayton Act, 15 U.S.C. 25, to prevent and restrain defendants from violating Section 7 of the Clayton Act, 15 U.S.C. 18. 10. The Plaintiff States bring this action under Section 16 of the Clayton Act, 15 U.S.C. 26, to prevent and restrain the defendants from violating Section 7 of the Clayton Act, 15 U.S.C. 18. The Plaintiff States, by and through their respective Attorneys General, bring this action as parens patriae on behalf of and to protect the health and welfare of their citizens and the general economy of each of their states. 11. Defendants Dow Chemical and DuPont sell crop protection chemicals, including herbicides and insecticides, and acid copolymers and ionomers throughout the United States. They are engaged in the regular, continuous, and substantial flow of interstate commerce, and their sales of crop protection chemicals and acid copolymers and ionomers have had a substantial effect on interstate commerce. This Court has subject matter jurisdiction over this action under Section 15 of the Clayton Act, 15 U.S.C. 25, and 28 U.S.C. 1331, 1337(a), and 1345. 12. Defendants have consented to venue and personal jurisdiction in this judicial district. Venue is therefore proper in this district under Section 12 of the Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1391(c). IV. CROP PROTECTION CHEMICALS sradovich on DSK3GMQ082PROD with NOTICES A. Background 13. Crop protection chemicals are used to protect crops from damage or loss from other biological organisms such as weeds, insects, or disease (e.g., fungus). Crop protection chemicals are critical to protecting crop yield—the total amount of a crop produced at each harvest—which benefits farmers and American consumers. 14. Crop protection chemicals can be separated into three broad categories that have different qualities and attributes: herbicides (to combat weeds); insecticides (to combat insect pests); and fungicides (to combat microbial disease). 15. The key component of any particular crop protection chemical is the ‘‘active ingredient,’’ which is the chemical molecule that produces the desired effect against the targeted weed VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 or insect pest. Crop protection chemicals are typically sold as ‘‘formulated products’’ that contain the active ingredient and also inactive ingredients such as solvents, fillers, and adjuvants used to stabilize the active ingredient and facilitate its effective use on the intended crops. 16. Both active ingredients and formulated products must be registered with the U.S. Environmental Protection Agency (‘‘EPA’’) and approved for use. In order to gain approval, products must meet stringent toxicity and efficacy standards. Approvals are granted on a crop-by-crop basis and contain strict dosage requirements. A farmer wishing to control a certain pest on his or her farm can use only the products and dose-rates that the EPA has approved for the particular crops to which the product will be applied. 17. The crop protection industry includes a handful of large integrated research and development firms (including Dow Chemical and DuPont) that develop, manufacture, and sell crop protection chemicals. While the large research and development firms sometimes sell directly to farmers, their primary customers are large distributors and farmer co-ops that resell products to farmers. 1. Broadleaf Herbicides for Winter Wheat 18. Both Dow Chemical and DuPont produce herbicides for winter wheat. Winter wheat is a type of grass that is planted in autumn and produces an edible grain. In the United States, winter wheat is grown primarily in the Great Plains states, including Kansas, Nebraska, and Texas. 19. Herbicides are chemicals used to combat weeds that harm crops. They can be selective (killing only certain types of plants) or non-selective. Nonselective herbicides kill all plant matter, including weeds and the crop. Because of this, non-selective herbicides are typically used after the crop is harvested, to clear the field of remaining weeds. Selective herbicides target only weeds, and are applied ‘‘postemergence,’’ or during the growth of the crop. 20. There are three common types of selective herbicide products: broadleaf, grass, and cross-spectrum. Broadleaf herbicides primarily eliminate or suppress broadleaf weeds. Grass herbicides primarily eliminate or suppress grass weeds. Cross-spectrum herbicides are effective on both grass and broadleaf weeds. Each herbicide formulation has a different spectrum of weeds on which it is effective, so a farmer chooses an herbicide based on PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 the particular kinds of weeds threatening the crop. 21. Herbicides are registered with the EPA for use on particular crops. Because crop choices and weed threats vary from farm to farm, the options available to farmers may vary from location to location, depending on the specific crop/weed combinations a farmer faces. 22. Dow Chemical and DuPont both offer herbicides that are labeled and registered for the control of broadleaf weeds in winter wheat crops. DuPont’s Finesse product is the top broadleaf herbicide used to combat the weed spectrum that typically threatens winter wheat crops. Dow Chemical recently introduced a new broadleaf herbicide for winter wheat, called Quelex. 2. Insecticides for Chewing Pests 23. Dow Chemical and DuPont also sell insecticides for chewing pests. Insecticides are used to suppress or eliminate insect infestations in crops. There are three main classes of insect pests: (1) chewing insects (e.g., moth larvae and beetles); (2) sucking insects (e.g., aphids and stink bugs); and (3) thrips (i.e., thunder flies), which have attributes of both chewing and sucking pests. 24. Insecticide use is particularly important for specialty crop farmers of tree fruit, tree nuts, and other fruits and vegetables (‘‘specialty crops’’). Any damage to specialty crops, no matter how slight, can result in the fruit or nut being rejected for sale. Thus, specialty crop farmers are particularly averse to the risk of insect damage when choosing an insecticide. Specialty crop farmers also value selective chemistry insecticides because they are less harmful to beneficial insects (such as bees and parasitic wasps) that not only pollinate fruit, but also help to control damaging insects, such as mites. In contrast, broad spectrum chemistries, such as pyrethroids, kill most of the insects in a field, including beneficial ones. Farmers therefore either minimize their use and/or use them towards the end of a growing season. 25. DuPont produces the active ingredient chlorantraniliprole, which DuPont markets under the trade name, Rynaxypyr. Rynaxypyr is one of the best selling and most effective active ingredients used to combat chewing pests on the market. Rynaxypyr is patent-protected until 2022. In the United States, Rynaxypyr is marketed and sold in formulations under the brand names Altacor, Coragen, and Prevathon. DuPont’s 2015 U.S. insecticides sales totaled $118 million; of that total, Rynaxypyr sales accounted for $73 million. E:\FR\FM\26JNN1.SGM 26JNN1 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices 26. Dow Chemical manufactures and sells two active ingredients which are also effective against chewing pests: (1) methoxyfenozide, sold under the brand name Intrepid, and (2) spinetoram, sold under the brand names Delegate and Radiant. In 2015, Dow Chemical had a total of $165 million in U.S. insecticides sales. Of that total, spinetoram sales accounted for $57 million and methoxyfenozide sales accounted for $34 million. B. Relevant Markets sradovich on DSK3GMQ082PROD with NOTICES 1. Broadleaf Herbicides for Winter Wheat Sold in the United States 27. To combat broadleaf weeds in winter wheat, particularly in the central plains of the United States, farmers need broadleaf herbicides that are labeled and registered for use on winter wheat. Farmers of winter wheat cannot use grass herbicides to combat broadleaf weeds because they are ineffective. Farmers would not use cross-spectrum herbicides to combat broadleaf weeds, as cross-spectrum herbicides are significantly more expensive and, thus, it would not be cost-justified to use cross-spectrum herbicides for broadleaf weeds alone. Farmers would not forgo using broadleaf herbicides altogether, because doing so would risk significant wheat yield losses. 28. All herbicides sold in the United States must be registered and approved by the EPA. Similar products available in other countries cannot be offered to United States customers due to EPA regulations, so they are not competitive constraints. 29. A small but significant increase in the price of broadleaf herbicides sold in the United States labeled and registered for use on winter wheat would not cause customers of those herbicides to substitute to grass or cross-spectrum herbicides, nor would farmers forgo using herbicides altogether and risk weed damage to their crops. As a result, customers are unlikely to switch away from broadleaf herbicides sold in the United States in volumes sufficient to defeat such a price increase. Accordingly, the development, manufacture, and sale of broadleaf herbicides sold in the United States labeled and registered for use on winter wheat is a line of commerce and relevant market within the meaning of Section 7 of the Clayton Act. 2. Insecticides for Chewing Pests Sold in the United States 30. Insecticides for chewing pests are targeted to combat a particular type of pest, and insecticides for other types of pests cannot, in general, be used as VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 substitutes. While there are broadspectrum insecticides which are effective on more than one type of pest, those insecticides tend to kill indiscriminately, including beneficial insects. Specialty crop farmers in California, Washington and elsewhere need beneficial insects such as bees to pollinate their crops. These farmers would not, however, choose to forgo managing the insect pests which attack their crops, because even slight damage can result in an entire harvest being rejected for sale. 31. All insecticides sold in the United States must be registered and approved by the EPA. Similar products available in other countries cannot be offered to United States customers due to EPA regulations, so they are not competitive constraints. 32. A small but significant increase in the price of chewing pest insecticides sold in the United States would not cause customers of those insecticides to substitute to broad-spectrum insecticides, nor would farmers forgo using insecticides altogether and risk severe pest damage to their whole crop, in volumes sufficient to defeat such a price increase. Accordingly, the development, manufacture, and sale of chewing pest insecticides sold in the United States is a line of commerce and relevant market within the meaning of Section 7 of the Clayton Act. C. Anticompetitive Effects of the Proposed Acquisition 1. Broadleaf Herbicides for Winter Wheat 33. Dow Chemical and DuPont are two of the four largest suppliers of broadleaf herbicides for winter wheat crops in the United States. Together they account for over forty percent of the total market, with combined annual sales of $81 million in 2015. Dow Chemical and DuPont compete head-tohead for the development, manufacture, and sale of broadleaf herbicides for winter wheat. That competition, which would be lost if the merger is consummated, has benefited farmers through lower prices, more effective solutions, and superior service. 34. Competition between Dow Chemical and DuPont has also spurred research, development, and marketing of new and improved broadleaf herbicides for winter wheat. For example, Dow Chemical intends to market its Quelex herbicide, which was recently introduced into the market, to farmers of winter wheat that currently use DuPont’s market-leading Finesse product. DuPont considered adopting competitive responses, including price PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 28889 reductions, to protect its market share from Dow Chemical’s Quelex herbicide. 35. The proposed merger, therefore, likely would substantially lessen competition for the development, manufacture, and sale of broadleaf herbicides for winter wheat, in violation of Section 7 of the Clayton Act. This likely would lead to higher prices, less favorable contractual terms, and a reduced incentive to spend significant resources in developing new products. 2. Insecticides for Chewing Pests 36. Dow Chemical and DuPont are the two largest suppliers of insecticides used on chewing pests in the United States. Together they account for $238 million in annual sales. The merger of Dow Chemical and DuPont likely would substantially lessen competition in the market for the development, manufacture, and sale of chewing pest insecticides. 37. If the merger between Dow Chemical and DuPont is consummated, the combined company will control nearly seventy-five percent of the market for chewing pest insecticides in the United States. Additionally, Dow Chemical and DuPont’s closest competitor sells competing products that are mixed with DuPont’s Rynaxypyr, for which the competitor has a license. As a result, specialty crop farmers would have little alternative but to accept increased prices post merger. 38. Competition between Dow Chemical and DuPont has benefited customers of chewing pest insecticides through lower prices, more effective solutions, and superior service. Customers also have benefited from the competition between Dow Chemical and DuPont by obtaining more favorable contract terms, such as financing and priority in product shipments to coincide with crop growing seasons. A combined Dow Chemical and DuPont would have the incentive and ability to eliminate or restrict financial and other incentives to customers, extinguishing this competition and those tangible and valuable benefits to customers. 39. The proposed merger, therefore, likely would substantially lessen competition for the development, manufacture, and sale of chewing pest insecticides, in violation of Section 7 of the Clayton Act. This likely would lead to higher prices, less favorable contractual terms, and less innovation. D. Difficulty of Entry 40. The discovery, development, testing, registration, and commercial launch of a new herbicide or insecticide can take ten to fifteen years and can cost well over $150 million dollars. Given E:\FR\FM\26JNN1.SGM 26JNN1 28890 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices the lengthy development cycle, the high hurdles and substantial cost of regulatory approval, entry of additional competitors in the market for either broadleaf herbicides for winter wheat or chewing pest insecticides is not likely to be timely or sufficient to defeat a postmerger price increase. sradovich on DSK3GMQ082PROD with NOTICES V. ACID COPOLYMERS AND IONOMERS 41. High-pressure ethylene derivatives (‘‘HiPEDs’’) are plastic resins produced by ‘‘cracking,’’ or breaking down, petrochemicals into their constituent parts and combining them with various molecules to produce polymer resins. The resulting resins, such as low density polyethylene, ethylene vinyl acetate, acrylate copolymers, grafted polyolefins, acid copolymers, and ionomers, have different performance characteristics, such as hardness, corrosion resistance or scratch resistance, depending on the materials used in their construction. 42. HiPED resins are mixed with other plastic resins to manufacture numerous plastic products, such as films, bottles, coatings, and packaging. Customers source particular HiPED resins that meet their specific needs and requirements and build their manufacturing process around specific resin combinations that give the final product the desired performance characteristics. 43. Unlike most HiPED resins, where there is substitution possible for both the supply and demand of the products, neither customers nor manufacturers can easily switch between acid copolymers and ionomers (two specific types of HiPED resins) and other HiPED resins. A. Acid Copolymers 44. Acid copolymers are a specific type of HiPED resin manufactured using highly acidic input products. In order to handle inputs with high acid content, HiPED resin manufacturers must install specific corrosion-resistant equipment that is not used for the manufacture of other HiPED resins. Such equipment can cost millions of dollars. 45. Acidic inputs make acid copolymers both highly adhesive and very durable. As a result, acid copolymers are used to create strong seals between substrates, or ‘‘tie layers,’’ of flexible packaging. Their increased adhesive ability is particularly necessary in applications where packaging will be exposed to challenging environments, such as high levels of grease, oil, acid, or dust. 46. Because of these characteristics, packaging films made using acid copolymers are ideal for use in the food VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 and beverage industry. Indeed, this industry consumes the vast majority of acid copolymers produced, for use in products such as juice boxes, toothpaste tubes, and meat and cheese wrap, among others. Unlike other plastic films, food and beverage packaging must adhere to strict food safety guidelines, and significant deviations from approved formulas must undergo a rigorous requalification process that can take significant time and expense. 47. Both Dow Chemical and DuPont manufacture acid copolymers in the United States. Dow Chemical manufactures acid copolymers in a dedicated corrosion-resistant facility that is part of its larger chemical complex in Freeport, Texas. DuPont manufactures acid copolymers and other HiPED resins on corrosionresistant manufacturing lines within facilities located in Sabine, Texas and Victoria, Texas. B. Ionomers 48. Ionomers are another specific type of HiPED resin. They are directly derived from acid copolymers and are produced by neutralizing acid copolymers with sodium, zinc, magnesium, or other salts. As a result of this process, ionomers are hard and durable. When added to a plastic coating, ionomers make the resulting product more impact- and cut-resistant. 49. Ionomers are used in a multitude of applications, such as decking and automotive parts. Ionomers are preferred for these end uses because their superior toughness and impact resistance protect the underlying product from the repeated blows it is subjected to. 50. Both Dow Chemical and DuPont produce ionomers in the United States. DuPont manufactures ionomers in-line with its acid copolymer production in Sabine, Texas. Dow Chemical manufactures acid copolymers in its Freeport, Texas facility and then ships them to Odessa, Texas, where a third party converts them to ionomers. C. Relevant Markets 1. Acid Copolymers 51. Food and beverage packaging manufacturers purchase the majority of acid copolymers produced in the United States. These customers rely upon the superior sealant and adhesive characteristics acid copolymers provide as compared to other HiPED resins. Additionally, because food and beverage packaging must adhere to strict food safety guidelines, significant deviations from approved formulas must undergo a rigorous qualification process that can PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 take significant time and incur additional costs. Most customers therefore would not switch to another product if faced with a significant and non-transitory increase in the price of acid copolymers. 52. Customers have consistently reported that purchasing acid copolymers abroad is not a realistic option for domestic purchasers, due to taxes, tariffs, logistical costs, and the longer lead times associated with importing acid copolymers. Most customers report that it would take considerably more than a small, significant, and non-transitory increase in price to make European suppliers a viable alternative to Dow Chemical and DuPont. 53. A small but significant increase in price for acid copolymers sold in the United States would not cause customers to turn to another product in sufficient numbers to defeat such a price increase. Thus, the development, manufacture, and sale of acid copolymers in the United States constitutes a relevant product market and line of commerce under Section 7 of the Clayton Act. 2. Ionomers 54. Customers purchase ionomers for the superior impact- and cut-resistance characteristics that are not available in other HiPED resins. These customers rely on the hardness and resilience that an ionomer-based coating provides as compared to other coatings. Customers cannot switch to other, less resilient, coatings and cannot forgo the use of protective coatings altogether, as either choice would significantly decrease the useful lifespan of the underlying products. Most customers therefore would not switch to another product if faced with a small but significant and non-transitory increase in the price of ionomers. 55. U.S. customers cannot turn to ionomer suppliers abroad due to taxes, tariffs, logistical costs, and longer lead times associated with importing ionomers. Most customers report that it would take considerably more than a small, significant, and non-transitory increase in price to make European suppliers a viable alternative to Dow Chemical and DuPont. 56. A small but significant increase in price for ionomers sold in the United States would not cause customers to turn to another product in sufficient numbers to defeat such a price increase. Thus, the development, manufacture, and sale of ionomers in the United States constitutes a relevant product market and line of commerce under Section 7 of the Clayton Act. E:\FR\FM\26JNN1.SGM 26JNN1 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices D. Anticompetitive Effects of the Proposed Transaction sradovich on DSK3GMQ082PROD with NOTICES 1. Acid Copolymers 57. Dow Chemical and DuPont are the only two manufacturers of acid copolymers in the United States. Dow Chemical controls over 80 percent of the U.S. market and DuPont is responsible for 19 percent of sales (less than one tenth of one percent of acid copolymers are imported). The merger of the only U.S. manufacturers of these products would leave customers with little alternative but to accept increased prices post merger. 58. As a result of head-to-head competition between Dow Chemical and DuPont, customers have obtained better pricing, service, and contract terms. In some cases, customers report that Dow Chemical and DuPont have competed to assist customers with the development of new uses for existing acid copolymer products, allowing customers to expand sales and better serve their own consumers. Customers also have benefited from the development of new acid copolymer products, which has been spurred on by competition between Dow Chemical and DuPont. 59. The proposed merger would likely substantially lessen competition for the development, manufacture, and sale of acid copolymers in violation of Section 7 of the Clayton Act. The U.S. market for acid copolymers is highly concentrated and would become significantly more concentrated as a result of the proposed merger to monopoly: Dow Chemical and DuPont will control over 99 percent of the acid copolymers market in the United States post merger, leading to higher prices and reduced innovation. 2. Ionomers 60. Dow Chemical and DuPont are the only two manufacturers of ionomers in the United States, where the two companies collectively are responsible for all sales. Dow Chemical and DuPont are each other’s only competitor for ionomers and customers would have no alternative but to accept increased prices post merger. 61. Customers have benefited from the competition between Dow Chemical and DuPont. Dow Chemical is the only company contesting DuPont’s nearmonopoly in ionomers. Its presence has resulted in better pricing and contract terms for customers, who otherwise would have no choice but to purchase from DuPont. Customers also have benefited from competition between Dow Chemical and DuPont to develop new products from ionomers and new uses for existing ionomer products. VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 62. The proposed merger would likely substantially lessen competition for the development, manufacture, and sale of ionomers in violation of Section 7 of the Clayton Act. The market for ionomers is highly concentrated and the proposed merger would result in a monopoly, leading to higher prices and reduced innovation. E. Difficulty of Entry 1. Acid Copolymers 63. In addition to the specialized equipment required to produce ethylene derivatives generally, acid copolymer manufacturing requires a high-pressure autoclave and all equipment surfaces must be coated with a corrosionresistant material. Only Dow Chemical and DuPont have both high-pressure autoclaves and corrosion-resistant equipment. The cost associated with upgrading an existing ethylene derivative manufacturing operation to produce acid copolymers is estimated to be in the millions of dollars. If the merged firm were to raise prices, timely and sufficient entry is unlikely to deter or counteract competitive harm. 2. Ionomers 64. The manufacturing of ionomers requires specialized know-how as well as ready and reliable access to acid copolymers, a key input into ionomer manufacturing. Post merger, Dow Chemical and DuPont will effectively control the entire U.S. market for acid copolymers. As such, even if a third party has the technical capability to manufacture ionomers, it would be limited by the amount of acid copolymers it could obtain on the open market—a market primarily controlled by the merged entity. Because of the specialized know-how and the likely foreclosure of access to a key ingredient, if the merged firm were to raise prices, timely and sufficient entry would be unlikely to deter or counteract competitive harm. VI. VIOLATIONS ALLEGED 65. If allowed to proceed, Dow Chemical and DuPont’s proposed merger would likely reduce or eliminate competition in the markets for broadleaf herbicides for winter wheat and chewing pest insecticides, and tend to create a monopoly in the markets for acid copolymers and ionomers, in the United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. 66. Among other things, the transaction would: (a) eliminate significant present and future head-to-head competition between Dow Chemical and DuPont in PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 28891 the markets for broadleaf herbicides for winter wheat, chewing pest insecticides, acid copolymers, and ionomers; (b) likely raise prices for broadleaf herbicides for winter wheat, chewing pest insecticides, acid copolymers, and ionomers; (c) likely eliminate innovation rivalry by two of the leading developers of new crop protection chemicals; (d) consolidate the supply of acid copolymers and ionomers under the control of a single firm; and (e) likely cause the number and quality of advances in acid copolymers and ionomers to decrease. VII. REQUESTED RELIEF 67. Plaintiffs request that the Court: (a) adjudge and decree that the proposed merger between Dow Chemical and DuPont is unlawful and in violation of Section 7 of the Clayton Act, 15 U.S.C. 18; (b) preliminarily and permanently enjoin and restrain defendants and all persons acting on their behalf from entering into any agreement, understanding, or plan whereby Dow Chemical and DuPont would merge or combine; (c) award Plaintiffs the costs of this action; and (d) grant Plaintiffs such other and further relief as the Court may deem just and proper. Dated: June 15, 2017 Respectfully submitted, For Plaintiff United States of America: /s/ lllllllllllllllllll Andrew C. Finch (DC Bar #494992) Acting Assistant Attorney General /s/ lllllllllllllllllll Patricia A. Brink Director of Civil Enforcement /s/ lllllllllllllllllll Maribeth Petrizzi (DC Bar #435204) Chief, Litigation II Section /s/ lllllllllllllllllll Stephanie A. Fleming Assistant Chief, Litigation II Section /s/ lllllllllllllllllll Lowell R. Stern (DC Bar #440487) Don P. Amlin (DC Bar # 978349) Jeremy W. Cline Tracy L. Fisher Michael K. Hammaker Steve A. Harris Jay D. Owen Blake W. Rushforth Tara M. Shinnick (DC Bar #501462) James L. Tucker United States Department of Justice, Antitrust Division, Litigation II Section, 450 Fifth Street NW., Suite 8700, Washington, DC 20530, (202) 514–3676, (202) 514–9033 (Facsimile), lowell.stern@usdoj.gov For Plaintiff State of Iowa Thomas J. Miller Attorney General E:\FR\FM\26JNN1.SGM 26JNN1 28892 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices /s/ lllllllllllllllllll Layne M. Lindebak Assistant Attorney General, Iowa Department of Justice, Hoover Office Building—Second Floor, 1305 East Walnut Street, Des Moines, IA 50319, Phone: 515–281–7054, Fax: 515– 281–4902, Layne.Lindebak@Iowa.gov For Plaintiff State of Mississippi Jim Hood Attorney General /s/ lllllllllllllllllll Crystal Utley Secoy Special Assistant Attorney General, Consumer Protection Division, Mississippi Attorney General’s Office, Post Office Box 22947, Jackson, Mississippi 39225, Phone: 601–359–4213, Fax: 601–359–4231, cutle@ ago.state.ms.us For Plaintiff State of Montana Timothy C. Fox Attorney General /s/ lllllllllllllllllll Chuck Munson Assistant Attorney General, Montana Department of Justice, Office of Consumer Protection, 555 Fuller Avenue, Helena, Montana, Phone: 406–444–9637, Fax: 406– 442–1874, cmunson@mt.gov sradovich on DSK3GMQ082PROD with NOTICES CERTIFICATE OF SERVICE I, Lowell Stern, hereby certify that on June 15, 2017, I caused a copy of the foregoing Complaint, Asset Preservation Stipulation and Order, proposed Final Judgment, Competitive Impact Statement, and Explanation of Consent Decree Procedures, to be served upon defendants The Dow Chemical Company and E.I. du Pont de Nemours and Company by mailing the documents electronically to their duly authorized legal representatives, as follows: Counsel for The Dow Chemical Company: George Cary, Cleary Gottlieb Steen & Hamilton LLP, 2000 Pennsylvania Avenue, NW., Washington, DC 20006, gcary@cgsh.com Counsel for E.I. du Pont de Nemours and Company: Clifford Aronson, Skadden, Arps, Slate, Meagher & Flom, LLP, 4 Times Square, New York, NY 10036, Clifford.Aronson@ skadden.com /s/ lllllllllllllllll Lowell R. Stern (DC Bar #440487) United States Department of Justice, Antitrust Division, Litigation II Section, 450 Fifth Street NW., Suite 8700, Washington, DC 20530, Phone: 202– 514–3676, Fax: 202–514–9033, lowell.stern@usdoj.gov UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA United States of America, State of Iowa, State of Mississippi, and State of Montana, Plaintiffs, v. The Dow Chemical Company and E.I DuPont De Nemours and Company Defendents. VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 Case No.: 1:17–cv–01176 Judge: Amit Mehta PROPOSED FINAL JUDGMENT WHEREAS, plaintiffs United States of America and the States of Iowa, Mississippi, and Montana (collectively, ‘‘Plaintiff States’’), filed their Complaint on June 15, 2017, plaintiffs and defendants, The Dow Chemical Company and E.I. du Pont de Nemours and Company, 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 and assets by defendants to assure that 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 hardship or difficulty as grounds for asking the Court to modify any of the divestiture 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, 15 U.S.C. 18. II. DEFINITIONS As used in this Final Judgment: A. ‘‘Acquirer’’ or ‘‘Acquirers’’ means the entity or entities to which defendants divest the Divestiture Assets. B. ‘‘Acquirer of the Crop Protection Divestiture Assets’’ means the entity to which defendants divest the Crop Protection Divestiture Assets. C. ‘‘Acquirer of the Material Science Divestiture Assets’’ means the entity to which defendants divest the Material Science Divestiture Assets. PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 D. ‘‘DuPont’’ means defendant E.I. du Pont de Nemours and Company, a Delaware corporation with its headquarters in Wilmington, Delaware, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures, and their directors, officers, managers, agents, and employees. E. ‘‘Dow Chemical’’ means defendant The Dow Chemical Company, a Delaware corporation with its headquarters in Midland, Michigan, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures, and their directors, officers, managers, agents, and employees. F. ‘‘Calgary Facility’’ means DuPont’s interest in the facility located at 4444 72nd Avenue SE., Calgary, Alberta, Canada T2C 2C1. G. ‘‘Freeport Facility’’ means Dow Chemical’s dedicated acid copolymer production facility located within the B–7700 Block and B–7800 Block of Dow Chemical’s integrated chemical site at 2301 Brazosport Blvd., APB Building, Freeport, Texas 77541, including a ground lease to the real property underlying the Freeport Facility, but not including ownership of any underlying real property. H. ‘‘Manati Manufacturing Unit’’ means the manufacturing unit within DuPont’s industrial complex at Km 2⁄3 Rr 686, Tierras Nuevas Salientes Ward, Manati, Puerto Rico 00674. I. ‘‘Mobile Facility’’ means DuPont’s facility located at 12650 Highway 43 N, Axis, Alabama 36505. J. ‘‘DuPont’s Finesse-formulated products’’ means all products (including Finesse) packaged at the Calgary Facility and containing the active ingredients Metsulfuron Methyl and Chlorsulfuron Methyl produced at the Manati Manufacturing Unit. K. ‘‘DuPont’s Rynaxypyr-formulated products’’ means all products manufactured at the Mobile Facility that contain the active ingredient Chlorantraniliprole (including Altacor, Coragen, and Prevathon), except seed treatment applications. L. The ‘‘Finesse Business’’ means: 1. the Manati Manufacturing Unit; 2. the lease to the Calgary Facility; 3. all tangible assets primarily relating to DuPont’s Finesse-formulated products, including, but not limited to, manufacturing equipment, tooling and fixed assets, personal property, inventory, office furniture, materials, supplies, and other tangible property and all assets at the Manati Manufacturing Unit and at the Calgary Facility used in connection with DuPont’s Finesse-formulated products; E:\FR\FM\26JNN1.SGM 26JNN1 sradovich on DSK3GMQ082PROD with NOTICES Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices all licenses, permits and authorizations issued by any governmental organization primarily relating to DuPont’s Finesse-formulated products (to the extent such licenses, permits, and authorizations are capable of assignment or transfer); all contracts (or portions thereof), teaming arrangements, agreements (or portions thereof), leases, commitments, certifications, and understandings, primarily relating to DuPont’s Finesse-formulated products, including supply agreements; all customer lists, contracts, accounts, and credit records primarily relating to DuPont’s Finesse-formulated products; all repair and performance records and all other records primarily relating to DuPont’s Finesse-formulated products; except that defendants may retain copies of or access to any tangible assets primarily relating to DuPont’s Finesseformulated products that are necessary in order to perform any services pursuant to their agreements with the Acquirer of the Crop Protection Divestiture Assets, provided, however, that defendants may not otherwise use any such tangible assets in connection with the development, manufacture, and/or sale of broadleaf herbicides for winter wheat; and 4. all intangible assets owned, licensed, controlled, or used by DuPont, wherever located, primarily relating to DuPont’s Finesse-formulated products, including, but not limited to, all patents, licenses and sublicenses, intellectual property, copyrights, trademarks (including Finesse), trade names, service marks, service names, technical information, computer software 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 DuPont provides to its own employees, customers, suppliers, agents or licensees, and all research data concerning historic and current research and development efforts primarily relating to DuPont’s Finesse-formulated products, including, but not limited to, designs of experiments, and the results of successful and unsuccessful designs and experiments; except that defendants may retain copies of or access to any intangible assets primarily relating to DuPont’s Finesse-formulated products that are necessary in order to perform any services pursuant to their agreements with the Acquirer of the Crop Protection Divestiture Assets, VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 provided, however, that defendants may not otherwise use any such intangible assets in connection with the development, manufacture, and/or sale of broadleaf herbicides for winter wheat. M. The ‘‘Rynaxypyr Business’’ means: 1. the Mobile Facility; 2. all tangible assets primarily relating to DuPont’s Rynaxypyr-formulated products, including, but not limited to, manufacturing equipment, tooling and fixed assets, personal property, inventory, office furniture, materials, supplies, and other tangible property and all assets at the Mobile Facility used in connection with DuPont’s Rynaxypyr-formulated products; all licenses, permits, and authorizations issued by any governmental organization primarily relating to DuPont’s Rynaxypyr-formulated products (to the extent such licenses, permits, and authorizations are capable of assignment or transfer); all contracts (or portions thereof), teaming arrangements, agreements (or portions thereof), leases, commitments, certifications, and understandings, primarily relating to DuPont’s Rynaxypyr-formulated products, including supply agreements; all customer lists, contracts, accounts, and credit records primarily relating to DuPont’s Rynaxypyr-formulated products; all repair and performance records and all other records primarily relating to DuPont’s Rynaxypyrformulated products; except that defendants (i) may retain copies of or access to any tangible assets used by DuPont primarily relating to the Rynaxypyr-formulated products that are necessary in order to perform any services pursuant to their agreements with the Acquirer of the Crop Protection Divestiture Assets and (ii) may retain seed treatment assets, provided, however, that defendants may not otherwise use any such tangible assets in connection with the development, manufacture, and/or sale of insecticides for chewing pests; and 3. all intangible assets owned, licensed, controlled, or used by DuPont, wherever located, primarily relating to DuPont’s Rynaxypyr-formulated products, including, but not limited to, all patents, licenses and sublicenses, intellectual property, copyrights, trademarks (including Altacor, Coragen, and Prevathon), trade names, service marks, service names, technical information, computer software 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, PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 28893 quality assurance and control procedures, design tools and simulation capability, all manuals and technical information DuPont provides to its own employees, customers, suppliers, agents or licensees; and all research data concerning historic and current research and development efforts primarily relating to DuPont’s Rynaxypyrformulated products, including, but not limited to, designs of experiments, and the results of successful and unsuccessful designs and experiments; except that defendants (i) may retain copies of or access to any intangible assets used by DuPont relating to DuPont’s Rynaxypyr-formulated products that are necessary in order to perform any services pursuant to their agreements with the Acquirer of the Crop Protection Divestiture Assets and (ii) may retain seed treatment assets, provided, however, that defendants may not otherwise use any such intangible assets in connection with the development, manufacture, and/or sale of insecticides for chewing pests. N. ‘‘Crop Protection Divestiture Assets’’ means: 1. the Finesse Business; and 2. the Rynaxypyr Business. O. ‘‘Material Science Divestiture Assets’’ means: 1. the Freeport Facility; 2. all tangible assets located at the Freeport Facility and primarily used by Dow Chemical’s acid copolymer and ionomers business in the United States, including, but not limited to, research and development assets, manufacturing equipment, tooling and fixed assets, personal property, inventory, office furniture, materials, supplies, and other tangible property, except that the Material Science Divestiture Assets do not include (i) information technology, equipment, and tools (e.g., servers, network equipment, and enterprise workstations) connected to Dow Chemical’s network or (ii) tangible assets that will be used by defendants to perform any services pursuant to their agreements with the Acquirer of the Material Science Divestiture Assets, provided, however, that defendants may not use any such tangible assets to develop, manufacture, and/or sell acid copolymers and ionomers; all licenses, permits, and authorizations issued by any governmental organization primarily for the benefit of the acid copolymer and ionomers business in the United States (to the extent such licenses, permits, and authorizations are capable of assignment or transfer); all contracts, teaming arrangements, agreements, including supply agreements, leases, commitments, certifications, and understandings E:\FR\FM\26JNN1.SGM 26JNN1 sradovich on DSK3GMQ082PROD with NOTICES 28894 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices primarily relating to Dow Chemical’s acid copolymer and ionomers business in the United States (collectively ‘‘Contracts’’), in each case to the extent relating to the acid copolymer and ionomers business, provided that to the extent transfer of any Contract requires the consent of another party, Dow Chemical shall satisfy its obligation by using reasonable best efforts to obtain such consent; all customer lists, accounts, and credit records, in each case to the extent relating to the acid copolymer and ionomers business; all records primarily relating to the acid copolymer and ionomers business in the United States, including repair and performance records, 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, manuals and technical information Dow Chemical provides to its own employees, customers, suppliers, agents or licensees of such acid copolymer and ionomers business, and research data concerning historic and current research and development efforts, including but not limited to, designs of experiments, and the results of successful and unsuccessful designs and experiments, in each case to the extent relating to the acid copolymer and ionomers business, except that defendants may retain copies of or access to (i) any such records used by defendants’ retained businesses other than Dow Chemical’s acid copolymer and ionomers business and (ii) any such records used in connection with an OSA or to perform any services pursuant to their agreements with the Acquirer of the Material Science Divestiture Assets, provided, however, that defendants may not use any such records to develop, manufacture, and/or sell acid copolymers and ionomers; and 3. all intangible assets primarily used by Dow Chemical in connection with the development, manufacture, and/or sale of acid copolymers and ionomers in the United States, including, but not limited to, patents, licenses and sublicenses, intellectual property, copyrights, trademarks (including Primacor), trade names, service marks, service names, technical information, know-how, and trade secrets, except that, to the extent any intangible assets primarily used by Dow Chemical’s acid copolymer and ionomers business in the United States are also used by other Dow Chemical businesses or are necessary to perform any services VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 pursuant to defendants’ agreements with the Acquirer of the Material Science Divestiture Assets, defendants will receive a license to use such intangible assets from the Acquirer of the Material Science Divestiture Assets, provided, however, that defendants may not use any such intangible assets to develop, manufacture, and/or sell acid copolymers and ionomers. P. ‘‘Divestiture Assets’’ means the Crop Protection Divestiture Assets and the Material Science Divestiture Assets. III. APPLICABILITY A. This Final Judgment applies to DuPont and Dow Chemical, 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 Sections IV, V, and VI of this Final Judgment, defendants sell or otherwise dispose of all or substantially all of their assets or lesser business units that include the Divestiture Assets, they shall require the purchaser or purchasers to be bound by the provisions of this Final Judgment. Defendants need not obtain such an agreement from the Acquirers of the assets divested pursuant to this Final Judgment. IV. CROP PROTECTION DIVESTITURE A. Defendants are ordered and directed, within thirty (30) calendar days after the consummation of the merger of Dow Chemical and DuPont, or sixty (60) calendar days after notice of the entry of this Final Judgment by the Court, whichever is later, to divest the Crop Protection 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 Plaintiff States. The United States, in its sole discretion, may agree to one or more extensions of this time period not to exceed sixty (60) calendar days in total, and shall notify the Court in such circumstances. Defendants agree to use their best efforts to divest the Crop Protection Divestiture Assets as expeditiously as possible. B. In accomplishing the divestiture ordered by Section IV of this Final Judgment, to the extent they have not done so prior to the filing of the Complaint, defendants promptly shall make known, by usual and customary means, the availability of the Crop Protection Divestiture Assets. Defendants shall inform any person making an inquiry regarding a possible purchase of the Crop Protection Divestiture Assets that they are being PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 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 of the Crop Protection Divestiture Assets, subject to customary confidentiality assurances, all information and documents relating to the Crop Protection Divestiture Assets customarily provided in a due diligence process except such information or documents subject to the attorney-client privilege or work-product doctrine. Defendants shall make available such information to plaintiffs at the same time that such information is made available to any other person. C. To the extent they have not done so prior to the filing of the Complaint, defendants shall provide to the prospective Acquirer of the Crop Protection Divestiture Assets and the United States information relating to the personnel involved in the development, manufacture, and/or sale of the Crop Protection Divestiture Assets to enable the Acquirer to make offers of employment. Defendants will not interfere with any negotiations by the Acquirer of the Crop Protection Divestiture Assets to employ any defendant employee whose primary responsibility is the development, manufacture, and/or sale of the Crop Protection Divestiture Assets. D. Defendants shall permit the Acquirer of the Crop Protection Divestiture Assets to have reasonable access to personnel and to make inspections of the Manati Manufacturing Unit, the Calgary Facility, and the Mobile Facility; 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. E. Defendants shall warrant to the Acquirer of the Crop Protection Divestiture Assets that each asset will be operational in all material respects on the date of sale. F. Defendants shall not take any action that will impede in any material way the permitting, operation, or divestiture of the Crop Protection Divestiture Assets. G. At the option of the Acquirer of the Crop Protection Divestiture Assets, defendants shall enter into a contract for formulation services for the Finesseformulated products at DuPont’s El Paso, Illinois facility and the Rynaxypyr-formulated products at DuPont’s Valdosta, Georgia facility. The formulation services agreement shall be in effect for one year after all necessary E:\FR\FM\26JNN1.SGM 26JNN1 sradovich on DSK3GMQ082PROD with NOTICES Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices regulatory approvals for a new formulation site have been granted by jurisdictions where the Finesseformulated products and the Rynaxypyr-formulated products are currently registered (or such lesser period of time as mutually expected by the defendants and the Acquirer of the Crop Protection Divestiture Assets). At the request of the Acquirer, the United States in its sole discretion may approve an extension of the term of the formulation services agreement not to exceed two (2) years, provided that the Acquirer of the Crop Protection Divestiture Assets notifies the United States in writing at least four (4) months prior to the date the agreement expires. The United States shall respond to any such request for extension in writing at least three (3) months prior to the date the formulation services agreement expires. The terms and conditions of any contractual arrangement meant to satisfy this provision must be reasonably related to market conditions for formulation services. H. Defendants shall warrant to the Acquirer of the Crop Protection Divestiture Assets 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 Crop Protection Divestiture Assets, defendants will not undertake, directly or indirectly, any challenges to the environmental, zoning, or other permits relating to the operation of the Crop Protection Divestiture Assets. I. Unless the United States otherwise consents in writing, the divestiture pursuant to Section IV, or by Divestiture Trustee appointed pursuant to Section VI, of this Final Judgment, shall include the entire Crop Protection Divestiture Assets, and shall be accomplished in such a way as to satisfy the United States, in its sole discretion, after consultation with the Plaintiff States, that the Crop Protection Divestiture Assets can and will be used by the Acquirer as part of a viable, ongoing business in the development, manufacture, and sale in the United States of (1) broadleaf herbicides for winter wheat and (2) insecticides for chewing pests. The divestiture, whether pursuant to Section IV or Section VI of this Final Judgment, (1) shall be made to an Acquirer that, in the United States’ sole judgment, after consultation with the Plaintiff States, has the intent and capability (including the necessary managerial, operational, technical and financial capability) of competing effectively in the businesses of developing, manufacturing, and selling (a) broadleaf VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 herbicides for winter wheat and (b) insecticides for chewing pests; and (2) shall be accomplished so as to satisfy the United States, in its sole discretion, after consultation with the Plaintiff States, that none of the terms of any agreement between the 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. MATERIAL SCIENCE DIVESTITURE A. Defendants are ordered and directed, within thirty (30) calendar days after the consummation of the merger of Dow Chemical and DuPont, or sixty (60) calendar days after notice of the entry of this Final Judgment by the Court, whichever is later, to divest the Material Science Divestiture Assets in a manner consistent with this Final Judgment to an Acquirer acceptable to the United States, in its sole discretion. The United States, in its sole discretion, may agree to one or more extensions of this time period not to exceed sixty (60) calendar days in total, and shall notify the Court in such circumstances. Defendants agree to use their best efforts to divest the Material Science Divestiture Assets as expeditiously as possible. B. In accomplishing the divestiture ordered by Section V of this Final Judgment, to the extent they have not done so prior to the filing of the Complaint, defendants promptly shall make known, by usual and customary means, the availability of the Material Science Divestiture Assets. Defendants shall inform any person making an inquiry regarding a possible purchase of the Material Science 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 of the Material Science Divestiture Assets, subject to customary confidentiality assurances, all information and documents relating to the Material Science Divestiture Assets customarily provided in a due diligence process except such information or documents subject to the attorney-client privilege or work-product doctrine. Defendants shall make available such information to plaintiffs at the same time that such information is made available to any other person. C. To the extent they have not done so prior to the filing of the Complaint, defendants shall provide the Acquirer of the Material Science Divestiture Assets and the United States information PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 28895 relating to personnel whose primary responsibility is the development, manufacture, and/or sale of the Material Science Divestiture Assets, excluding Dow Chemical employees who will provide services under the OSA, to enable the Acquirer to make offers of employment. Defendants will not interfere with any negotiations by the Acquirer of the Material Science Divestiture Assets to employ any defendant employee whose primary responsibility is the development, manufacture, and/or sale of the Material Science Divestiture Assets, excluding Dow Chemical employees who will provide services under the OSA. D. Defendants shall permit the Acquirer of the Material Science Divestiture Assets to have reasonable access to personnel and to make inspections of the Freeport Facility; access to any and all environmental, zoning, and other permit documents and information related to the Freeport Facility; and access to any and all financial, operational, or other documents and information related to the Freeport Facility; in each case as customarily provided as part of a due diligence process. E. Defendants shall warrant to the Acquirer of the Material Science Divestiture Assets that such assets will be in substantially the same operating condition on the date of sale as they were on February 1, 2017. F. Defendants shall not take any action that will impede in any way the permitting, operation, or divestiture of the Material Science Divestiture Assets. G. At the option of the Acquirer of the Material Science Divestiture Assets, defendants shall enter into an operating services agreement (‘‘OSA’’) with the Acquirer sufficient to meet the Acquirer’s needs for assistance in matters relating to the operation of the Material Science Divestiture Assets. If the Acquirer elects to self-operate the Material Science Divestiture Assets, defendants may require the written execution of an agreement by the Acquirer to indemnify defendants for breaches of any environmental permits that result from the operation of the Material Science Divestiture Assets by an operator other than defendants. H. Defendants shall warrant to the Acquirer of the Material Science Divestiture Assets 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 Material Science Divestiture Assets, defendants will not undertake, directly or indirectly, any challenges to the environmental, zoning, or other permits E:\FR\FM\26JNN1.SGM 26JNN1 28896 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES relating to the operation of the Material Science Divestiture Assets. I. Unless the United States otherwise consents in writing, the divestiture pursuant to Section V, or by Divestiture Trustee(s) appointed pursuant to Section VI, of this Final Judgment, shall include the entire Material Science Divestiture Assets, and shall be accomplished in such a way as to satisfy the United States, in its sole discretion, that the Material Science Divestiture Assets can and will be used by the Acquirer of the Material Science Divestiture Assets as part of a viable, ongoing business in the development, manufacture, and sale of acid copolymers and ionomers in the United States. The divestiture, whether pursuant to Section V or Section VI of this Final Judgment, (1) shall be made to an Acquirer that, in the United States’ sole judgment, has the intent and capability (including the necessary managerial, operational, technical and financial capability) of competing effectively in the business of developing, manufacturing, and selling acid copolymers and ionomers; and (2) shall be accomplished so as to satisfy the United States, in its sole discretion, that none of the terms of any agreement between the 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. VI. APPOINTMENT OF DIVESTITURE TRUSTEE(S) A. If defendants have not divested the Crop Protection or Material Science Divestiture Assets within the time periods specified in Paragraphs IV(A) and V(A), defendants shall notify plaintiffs of that fact in writing. Upon application of the United States, the Court shall appoint a Divestiture Trustee or Trustees selected by the United States and approved by the Court to effect the divestiture of the remaining Divestiture Asset(s). B. After the appointment of Divestiture Trustee(s) becomes effective, only the Divestiture Trustee(s) shall have the right to sell the relevant Divestiture Assets. The Divestiture Trustee(s) shall have the power and authority to accomplish the divestitures to Acquirer(s) acceptable to the United States, after consultation with the Plaintiff States, at such price and on such terms as are then obtainable upon reasonable effort by the Divestiture Trustee(s), subject to the provisions of Sections IV, V, VI, and VII of this Final Judgment, and shall have such other powers as this Court deems appropriate. VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 Subject to Paragraph VI(D) of this Final Judgment, the Divestiture Trustee(s) may hire at the cost and expense of defendants any investment bankers, attorneys, or other agents, who shall be solely accountable to the Divestiture Trustee(s), and are reasonably necessary in the Divestiture Trustee(s)’ judgment to assist in the divestiture(s). Any such investment bankers, attorneys, or other agents shall serve on such terms and conditions as the United States approves including confidentiality requirements and conflict of interest certifications. C. Defendants shall not object to a sale by the Divestiture Trustee(s) on any ground other than the Divestiture Trustee(s)’ malfeasance. Any such objections by defendants must be conveyed in writing to United States and the Divestiture Trustee(s) within ten (10) calendar days after the Divestiture Trustee(s) have provided the notice required under Section VII. D. The Divestiture Trustee(s) shall serve at the cost and expense of defendants pursuant to a written agreement, on such terms and conditions as the United States approves, including confidentiality requirements and conflict of interest certifications. The Divestiture Trustee(s) shall account for all monies derived from the sale of the assets sold by the Divestiture Trustee(s) and all costs and expenses so incurred. After approval by the Court of the Divestiture Trustee(s)’ accounting, including fees for their services yet unpaid and those of any professionals and agents retained by the Divestiture Trustee(s), all remaining money shall be paid to defendants and the trust shall then be terminated. The compensation of the Divestiture Trustee(s) and any professionals and agents retained by the Divestiture Trustee(s) shall be reasonable in light of the value of the relevant Divestiture Asset(s) and based on a fee arrangement providing the Divestiture Trustee(s) with an incentive based on the price and terms of the divestitures and the speed with which they are accomplished, but timeliness is paramount. If the Divestiture Trustee(s) and defendants are unable to reach agreement on the Divestiture Trustee(s)’ or any agents’ or consultants’ compensation or other terms and conditions of engagement within fourteen (14) calendar days of appointment of the Divestiture Trustee(s), the United States may, in its sole discretion, take appropriate action, including making a recommendation to the Court. The Divestiture Trustee(s) shall, within three (3) business days of hiring any other professionals or agents, PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 provide written notice of such hiring and the rate of compensation to defendants and the United States. E. Defendants shall use their best efforts to assist the Divestiture Trustee(s) in accomplishing the required divestiture(s). The Divestiture Trustee(s) and any consultants, accountants, attorneys, and other agents retained by the Divestiture Trustee(s) shall have full and complete access to the personnel, books, records, and facilities of the Divestiture Asset(s), and defendants shall develop financial and other information relevant to the Divestiture Asset(s) as the Divestiture Trustee(s) may reasonably request, subject to reasonable protection for trade secret or other confidential research, development, or commercial information or any applicable privileges. Defendants shall take no action to interfere with or to impede the Divestiture Trustee(s)’ accomplishment of the divestiture(s). F. After their appointment, the Divestiture Trustee(s) shall file monthly reports with the United States and, as appropriate, the Court setting forth the Divestiture Trustee(s)’ efforts to accomplish the divestitures ordered under this Final Judgment. To the extent such reports contain information that the Divestiture Trustee(s) deem 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 Asset(s), and shall describe in detail each contact with any such person. The Divestiture Trustee(s) shall maintain full records of all efforts made to divest the Divestiture Asset(s). G. If the Divestiture Trustee(s) have not accomplished the divestitures ordered under this Final Judgment within six months after their appointment, the Divestiture Trustee(s) shall promptly file with the Court a report setting forth (1) the Divestiture Trustee(s)’ efforts to accomplish the required divestiture(s), (2) the reasons, in the Divestiture Trustee(s)’ judgment, why the required divestiture(s) have not been accomplished, and (3) the Divestiture Trustee(s)’ recommendations. To the extent such report contains information that the Divestiture Trustee(s) deem confidential, such report shall not be filed in the public docket of the Court. The Divestiture Trustee(s) shall at the same time furnish such report to the E:\FR\FM\26JNN1.SGM 26JNN1 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES 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 Divestiture Trustee(s)’ appointment by a period requested by the United States. H. If the United States determines that the Divestiture Trustee(s) have ceased to act or failed to act diligently or in a reasonably cost-effective manner, it may recommend the Court appoint substitute Divestiture Trustee(s). stating whether or not it objects to the proposed divestiture. If the United States provides written notice that it does not object, a divestiture may be consummated, subject only to defendants’ limited right to object to the sale under Paragraph VI(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, divestiture proposed under Section IV, V, or VI shall not be consummated. Upon objection by defendants under Paragraph VI(C), a divestiture proposed under Section VI shall not be consummated unless approved by the Court. VII. NOTICE OF PROPOSED DIVESTITURES A. Within two (2) business days following execution of any definitive divestiture agreement, defendants or the Divestiture Trustee(s), whichever is then responsible for effecting the divestitures required herein, shall notify plaintiffs of any proposed divestiture required by Section IV, V, or VI of this Final Judgment. If the Divestiture Trustee(s) are responsible, they shall similarly notify defendants. The notice shall set forth the details of the proposed divestitures 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 Asset(s), together with full details of the same. B. Within fifteen (15) calendar days of receipt by plaintiffs of such notice, the United States, after consultation with the Plaintiff States, may request from defendants, the proposed Acquirer, any other third party, or the Divestiture Trustee(s), if applicable, additional information concerning the proposed divestiture, the proposed Acquirer, and any other potential Acquirer. Defendants and the Divestiture Trustee(s) shall furnish any additional information requested, except such information or documents subject to the attorney-client privilege or workproduct doctrine, 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 Divestiture Trustee(s), whichever is later, the United States shall provide written notice to defendants and the Divestiture Trustee(s), if there is one or more, VIII. FINANCING Defendants shall not finance all or any part of any purchase made pursuant to Section IV, V or VI of this Final Judgment. VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 IX. ASSET PRESERVATION Until the divestitures required by this Final Judgment have been accomplished, defendants shall take all steps necessary to comply with the Asset Preservation Stipulation and Order entered by this Court. Defendants shall take no action that would jeopardize the divestitures ordered by this Court. X. 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 divestitures have been completed under Section IV, V, and/or VI, defendants shall deliver to the United States an affidavit as to the fact and manner of its compliance with Section IV, V, and/or VI 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) PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 28897 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 IX 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 divestitures have been completed. XI. APPOINTMENT OF MONITORING TRUSTEE(S) A. Upon application of the United States, the Court shall appoint a Monitoring Trustee or Trustees selected by the United States and approved by the Court. B. The Monitoring Trustee(s) shall have the power and authority to monitor defendants’ compliance with the terms of this Final Judgment and the Asset Preservation Stipulation and Order entered by this Court, and shall have such other powers as this Court deems appropriate. The Monitoring Trustee(s) shall be required to investigate and report on the defendants’ compliance with this Final Judgment and the Asset Preservation Stipulation and Order and the defendants’ progress toward effectuating the purposes of this Final Judgment. C. Subject to Paragraph XI(E) of this Final Judgment, the Monitoring Trustee(s) may hire at the cost and expense of defendants any consultants, accountants, attorneys, or other agents, who shall be solely accountable to the Monitoring Trustee(s), as reasonably necessary in the Monitoring Trustee(s)’ judgment. Any such consultants, accountants, attorneys, or other agents shall serve on such terms and conditions as the United States approves, including confidentiality requirements and conflict of interest certifications. D. Defendants shall not object to actions taken by the Monitoring Trustee(s) in fulfillment of the Monitoring Trustee(s)’ responsibilities under any Order of this Court on any ground other than the Monitoring Trustee(s)’ malfeasance. Any such objections by defendants must be conveyed in writing to the United States E:\FR\FM\26JNN1.SGM 26JNN1 sradovich on DSK3GMQ082PROD with NOTICES 28898 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices and the Monitoring Trustee(s) within ten (10) calendar days after the action taken by the Monitoring Trustee(s) giving rise to the defendants’ objection. E. The Monitoring Trustee(s) shall serve at the cost and expense of defendants pursuant to a written agreement with defendants and on such terms and conditions as the United States approves, including confidentiality requirements and conflict of interest certifications. The compensation of the Monitoring Trustee(s) and any consultants, accountants, attorneys, and other agents retained by the Monitoring Trustee(s) shall be on reasonable and customary terms commensurate with the individuals’ experience and responsibilities. If the Monitoring Trustee(s) and defendants are unable to reach agreement on the Monitoring Trustee(s)’ or any agents’ or consultants’ compensation or other terms and conditions of engagement within fourteen (14) calendar days of appointment of the Monitoring Trustee(s), the United States may, in its sole discretion, take appropriate action, including making a recommendation to the Court. The Monitoring Trustee(s) shall, within three (3) business days of hiring any consultants, accountants, attorneys, or other agents, provide written notice of such hiring and the rate of compensation to defendants and the United States. F. The Monitoring Trustee(s) shall have no responsibility or obligation for the operation of defendants’ businesses. G. Defendants shall use their best efforts to assist the Monitoring Trustee(s) in monitoring defendants’ compliance with their individual obligations under this Final Judgment and under the Asset Preservation Stipulation and Order. The Monitoring Trustee(s) and any consultants, accountants, attorneys, and other agents retained by the Monitoring Trustee(s) shall have full and complete access to the personnel, books, records, and facilities relating to compliance with this Final Judgment, subject to reasonable protection for trade secret or other confidential research, development, or commercial information or any applicable privileges. Defendants shall take no action to interfere with or to impede the Monitoring Trustee(s)’ accomplishment of their responsibilities. H. After their appointment, the Monitoring Trustee(s) shall file reports monthly, or more frequently as needed, with the United States and, as appropriate, the Court setting forth defendants’ efforts to comply with their obligations under this Final Judgment VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 and under the Asset Preservation Stipulation and Order. To the extent such reports contain information that the Monitoring Trustee(s) deem confidential, such reports shall not be filed in the public docket of the Court. I. The Monitoring Trustee(s) shall serve for at least six (6) months after the divestiture of the Divestiture Assets is finalized pursuant to either Section IV, V and/or VI of this Final Judgment. The United States, in its sole discretion, may extend this time period. J. If the United States determines that the Monitoring Trustee(s) have ceased to act or failed to act diligently or in a reasonably cost-effective manner, it may recommend the Court appoint substitute Monitoring Trustee(s). XII. COMPLIANCE INSPECTION A. For the purposes of determining or securing compliance with this Final Judgment, or of any related orders such as any Asset Preservation Stipulation and 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 PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 authorized representative of the executive branch of the United States, or of the Plaintiff States, except in the course of legal proceedings to which the United States is a party (including grand jury proceedings), or for the purpose of securing compliance with this Final Judgment, or as otherwise required by law. D. If at 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)(1)(G) 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)(1)(G) 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). XIII. NO REACQUISITION Defendants may not reacquire any part of the Divestiture Assets during the term of this Final Judgment. XIV. 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. XV. EXPIRATION OF FINAL JUDGMENT Unless this Court grants an extension, this Final Judgment shall expire ten years from the date of its entry. XVI. 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. 16, including making copies available to the public of this Final Judgment, the Competitive Impact Statement, and any comments thereon and the United States’ 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: llllllllllllllllll E:\FR\FM\26JNN1.SGM 26JNN1 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices Court approval subject to procedures of Antitrust Procedures and Penalties Act, 15 U.S.C. § 16 lllllllllllllllllllll United States District Judge United States District Court for The District of Columbia United States of America, State of Iowa, State of Mississippi and State of Montana, Plaintiffs, v. The Dow Chemical Company and E.I. Du Pont de Nemours and Company, Defendants. Case No.: 1:17–cv–01176 Judge: Amit Mehta sradovich on DSK3GMQ082PROD with NOTICES COMPETITIVE IMPACT STATEMENT Plaintiff United States of America (‘‘United States’’), pursuant to Section 2(b) of the Antitrust Procedures and Penalties Act (‘‘APPA’’ or ‘‘Tunney Act’’), 15 U.S.C. 16(b)–(h), files this Competitive Impact Statement relating to the proposed Final Judgment submitted for entry in this civil antitrust proceeding. I. NATURE AND PURPOSE OF THE PROCEEDING In December 2015, The Dow Chemical Company (‘‘Dow Chemical’’) and E.I. du Pont de Nemours and Company (‘‘DuPont’’) announced that they had agreed to a merger of equals in a deal estimated to be valued at over $130 billion. If consummated, the merged entity would be one of the largest chemical companies in the world. Plaintiffs filed a civil antitrust Complaint on June 15, 2017, seeking to enjoin the proposed acquisition. The Complaint alleges that the acquisition would likely reduce or eliminate competition in the markets for broadleaf herbicides for winter wheat and chewing pest insecticides, and tend to create a monopoly in the markets for acid copolymers and ionomers, in the United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. That loss of competition likely would result in increased prices and a reduction in service and innovation for the customers who rely upon these products. At the same time the Complaint was filed, the Plaintiffs filed a proposed Final Judgment and an Asset Preservation Stipulation and Order which, together, are designed to eliminate the anticompetitive effects of the acquisition. Under the proposed Final Judgment, which is explained more fully below, DuPont is required to divest its Finesse-formulated herbicide products (active ingredients Metsulfuron Methyl and Chlorsulfuron Methyl), and its Rynaxypyr-formulated insecticide products, along with the assets used to develop, manufacture, VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 and sell those products. Dow Chemical is required to divest its Freeport, Texas acid copolymers and ionomers manufacturing unit and associated assets. Under the terms of the Asset Preservation Stipulation and Order, DuPont and Dow Chemical will also take certain steps to ensure that the divestiture assets are operated as competitively independent, economically viable, and ongoing business concerns; that they remain uninfluenced by the consummation of the acquisition; and that competition is maintained during the pendency of the ordered divestiture. The 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 Proposed Transaction Dow Chemical, founded in 1897, is headquartered in Midland, Michigan, operates in approximately 180 countries, and employs over 50,000 people worldwide. In 2016, Dow Chemical had revenues of approximately $48 billion. Dow Chemical’s primary lines of business are chemical, plastic, and agricultural products and services. Dow Chemical’s products are used in various industries, ranging from agriculture to consumer goods. DuPont, founded in 1802, is headquartered in Wilmington, Delaware, operates in approximately 90 countries, and employs more than 60,000 people worldwide. In 2016, DuPont reported revenues of $24.5 billion. DuPont’s primary products include crop protection chemicals and performance products, such as plastics and polymers. Pursuant to a December 11, 2015 agreement, Dow Chemical and DuPont have agreed to an all-stock merger of equals. At the time of the merger announcement, the combined market capitalization of the companies was $130 billion. The merger plan contemplates spinning off the firms’ combined assets into three separate, publicly-traded companies as soon as feasible. One of those companies would focus on agriculture products (with PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 28899 approximately $18 billion in revenue), another on material sciences (approximately $51 billion in revenue), and a third on ‘‘specialty’’ products, such as organic light-emitting diodes and building wrap (approximately $13 billion in revenue). B. Crop Protection Chemicals 1. Background Crop protection chemicals are used to protect crops from damage or loss from other biological organisms such as weeds, insects, or disease (e.g., fungus). Crop protection chemicals are critical to protecting crop yield—the total amount of a crop produced at each harvest— which benefits farmers and American consumers. Crop protection chemicals can be separated into three broad categories that have different qualities and attributes: Herbicides (to combat weeds); insecticides (to combat insect pests); and fungicides (to combat microbial disease). The key component of any particular crop protection chemical is the ‘‘active ingredient,’’ which is the chemical molecule that produces the desired effect against the targeted weed or insect pest. Crop protection chemicals are typically sold as ‘‘formulated products’’ that contain the active ingredient and also inactive ingredients such as solvents, fillers, and adjuvants used to stabilize the active ingredient and facilitate its effective use on the intended crops. Both active ingredients and formulated products must be registered with the U.S. Environmental Protection Agency (‘‘EPA’’) and approved for use. In order to gain approval, products must meet stringent toxicity and efficacy standards. Approvals are granted on a crop-by-crop basis and contain strict dosage requirements. A farmer wishing to control a certain pest on his or her farm can use only the products and dose-rates that the EPA has approved for the particular crops to which the product will be applied. The crop protection industry includes a handful of large integrated research and development firms (including Dow Chemical and DuPont) that develop, manufacture, and sell crop protection chemicals. While the large research and development firms sometimes sell directly to farmers, their primary customers are large distributors and farmer co-ops that resell products to farmers. a. Broadleaf Herbicides for Winter Wheat Both Dow Chemical and DuPont produce herbicides for winter wheat. E:\FR\FM\26JNN1.SGM 26JNN1 28900 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES Winter wheat is a type of grass that is planted in autumn and produces an edible grain. In the United States, winter wheat is grown primarily in the Great Plains states, including Kansas, Nebraska, and Texas. Herbicides are chemicals used to combat weeds that harm crops. They can be selective (killing only certain types of plants) or non-selective. Nonselective herbicides kill all plant matter, including weeds and the crop. Because of this, non-selective herbicides are typically used after the crop is harvested, to clear the field of remaining weeds. Selective herbicides target only weeds, and are applied ‘‘postemergence,’’ or during the growth of the crop. There are three common types of selective herbicide products: Broadleaf, grass, and cross-spectrum. Broadleaf herbicides primarily eliminate or suppress broadleaf weeds. Grass herbicides primarily eliminate or suppress grass weeds. Cross-spectrum herbicides are effective on both grass and broadleaf weeds. Each herbicide formulation has a different spectrum of weeds on which it is effective, so a farmer chooses an herbicide based on the particular kinds of weeds threatening the crop. Herbicides are registered with the EPA for use on particular crops. Because crop choices and weed threats vary from farm to farm, the options available to farmers may vary from location to location, depending on the specific crop/weed combinations a farmer faces. Dow Chemical and DuPont both offer herbicides that are labeled and registered for the control of broadleaf weeds in winter wheat crops. DuPont’s Finesse product is the top broadleaf herbicide used to combat the weed spectrum that typically threatens winter wheat crops. Dow Chemical recently introduced a new broadleaf herbicide for winter wheat, called Quelex. b. Insecticides for Chewing Pests Dow Chemical and DuPont also sell insecticides for chewing pests. Insecticides are used to suppress or eliminate insect infestations in crops. There are three main classes of insect pests: (1) Chewing insects (e.g., moth larvae and beetles); (2) sucking insects (e.g., aphids and stink bugs); and (3) thrips (i.e., thunder flies), which have attributes of both chewing and sucking pests. Insecticide use is particularly important for specialty crop farmers of tree fruit, tree nuts, and other fruits and vegetables (‘‘specialty crops’’). Any damage to specialty crops, no matter how slight, can result in the fruit or nut VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 being rejected for sale. Thus, specialty crop farmers are particularly averse to the risk of insect damage when choosing an insecticide. Specialty crop farmers also value selective chemistry insecticides because they are less harmful to beneficial insects (such as bees and parasitic wasps) that not only pollinate fruit, but also help to control damaging insects, such as mites. In contrast, broad spectrum chemistries, such as pyrethroids, kill most of the insects in a field, including beneficial ones. Farmers therefore either minimize their use and/or use them towards the end of a growing season. DuPont produces the active ingredient chlorantraniliprole, which DuPont markets under the trade name, Rynaxypyr. Rynaxypyr is one of the best selling and most effective active ingredients used to combat chewing pests on the market. Rynaxypyr is patent-protected until 2022. In the United States, Rynaxypyr is marketed and sold in formulations under the brand names Altacor, Coragen, and Prevathon. DuPont’s 2015 U.S. insecticides sales totaled $118 million; of that total, Rynaxypyr sales accounted for $73 million. Dow Chemical manufactures and sells two active ingredients which are also effective against chewing pests: (1) Methoxyfenozide, sold under the brand name Intrepid, and (2) spinetoram, sold under the brand names Delegate and Radiant. In 2015, Dow Chemical had a total of $165 million in U.S. insecticides sales. Of that total, spinetoram sales accounted for $57 million and methoxyfenozide sales accounted for $34 million. 2. Relevant Markets a. Broadleaf Herbicides for Winter Wheat Sold in the United States To combat broadleaf weeds in winter wheat, particularly in the central plains of the United States, farmers need broadleaf herbicides that are labeled and registered for use on winter wheat. Farmers of winter wheat cannot use grass herbicides to combat broadleaf weeds because they are ineffective. Farmers would not use cross-spectrum herbicides to combat broadleaf weeds, as cross-spectrum herbicides are significantly more expensive and, thus, it would not be cost-justified to use cross-spectrum herbicides for broadleaf weeds alone. Farmers would not forgo using broadleaf herbicides altogether, because doing so would risk significant wheat yield losses. All herbicides sold in the United States must be registered and approved by the EPA. Similar products available PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 in other countries cannot be offered to United States customers due to EPA regulations, so they are not competitive constraints. A small but significant increase in the price of broadleaf herbicides sold in the United States labeled and registered for use on winter wheat would not cause customers of those herbicides to substitute to grass or cross-spectrum herbicides, nor would farmers forgo using herbicides altogether and risk weed damage to their crops. As a result, customers are unlikely to switch away from broadleaf herbicides sold in the United States in volumes sufficient to defeat such a price increase. Accordingly, the development, manufacture, and sale of broadleaf herbicides sold in the United States labeled and registered for use on winter wheat is a line of commerce and relevant market within the meaning of Section 7 of the Clayton Act. b. Insecticides for Chewing Pests Sold in the United States Insecticides for chewing pests are targeted to combat a particular type of pest, and insecticides for other types of pests cannot, in general, be used as substitutes. While there are broadspectrum insecticides which are effective on more than one type of pest, those insecticides tend to kill indiscriminately, including beneficial insects. Specialty crop farmers in California, Washington and elsewhere need beneficial insects such as bees to pollinate their crops. These farmers would not, however, choose to forgo managing the insect pests which attack their crops, because even slight damage can result in an entire harvest being rejected for sale. All insecticides sold in the United States must be registered and approved by the EPA. Similar products available in other countries cannot be offered to United States customers due to EPA regulations, so they are not competitive constraints. A small but significant increase in the price of chewing pest insecticides sold in the United States would not cause customers of those insecticides to substitute to broad-spectrum insecticides, nor would farmers forgo using insecticides altogether and risk severe pest damage to their whole crop, in volumes sufficient to defeat such a price increase. Accordingly, the development, manufacture, and sale of chewing pest insecticides sold in the United States is a line of commerce and relevant market within the meaning of Section 7 of the Clayton Act. E:\FR\FM\26JNN1.SGM 26JNN1 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices 3. Anticompetitive Effects of the Proposed Acquisition sradovich on DSK3GMQ082PROD with NOTICES a. Broadleaf Herbicides for Winter Wheat Dow Chemical and DuPont are two of the four largest suppliers of broadleaf herbicides for winter wheat crops in the United States. Together they account for over forty percent of the total market, with combined annual sales of $81 million in 2015. Dow Chemical and DuPont compete head-to-head for the development, manufacture, and sale of broadleaf herbicides for winter wheat. That competition, which would be lost if the merger is consummated, has benefited farmers through lower prices, more effective solutions, and superior service. Competition between Dow Chemical and DuPont has also spurred research, development, and marketing of new and improved broadleaf herbicides for winter wheat. For example, Dow Chemical intends to market its Quelex herbicide, which was recently introduced into the market, to farmers of winter wheat that currently use DuPont’s market-leading Finesse product. DuPont considered adopting competitive responses, including price reductions, to protect its market share from Dow Chemical’s Quelex herbicide. The proposed merger, therefore, likely would substantially lessen competition for the development, manufacture, and sale of broadleaf herbicides for winter wheat, in violation of Section 7 of the Clayton Act. This likely would lead to higher prices, less favorable contractual terms, and a reduced incentive to spend significant resources in developing new products. b. Insecticides for Chewing Pests Dow Chemical and DuPont are the two largest suppliers of insecticides used on chewing pests in the United States. Together they account for $238 million in annual sales. The merger of Dow Chemical and DuPont likely would substantially lessen competition in the market for the development, manufacture, and sale of chewing pest insecticides. If the merger between Dow Chemical and DuPont is consummated, the combined company will control nearly seventy-five percent of the market for chewing pest insecticides in the United States. Additionally, Dow Chemical and DuPont’s closest competitor sells competing products that are mixed with DuPont’s Rynaxypyr, for which the competitor has a license. As a result, specialty crop farmers would have little alternative but to accept increased prices post merger. VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 Competition between Dow Chemical and DuPont has benefited customers of chewing pest insecticides through lower prices, more effective solutions, and superior service. Customers also have benefited from the competition between Dow Chemical and DuPont by obtaining more favorable contract terms, such as financing and priority in product shipments to coincide with crop growing seasons. A combined Dow Chemical and DuPont would have the incentive and ability to eliminate or restrict financial and other incentives to customers, extinguishing this competition and those tangible and valuable benefits to customers. The proposed merger, therefore, likely would substantially lessen competition for the development, manufacture, and sale of chewing pest insecticides, in violation of Section 7 of the Clayton Act. This likely would lead to higher prices, less favorable contractual terms, and less innovation. 4. Difficulty of Entry The discovery, development, testing, registration, and commercial launch of a new herbicide or insecticide can take ten to fifteen years and can cost well over $150 million dollars. Given the lengthy development cycle, the high hurdles and substantial cost of regulatory approval, entry of additional competitors in the market for either broadleaf herbicides for winter wheat or chewing pest insecticides is not likely to be timely or sufficient to defeat a postmerger price increase. C. Acid Copolymers and Ionomers High-pressure ethylene derivatives (‘‘HiPEDs’’) are plastic resins produced by ‘‘cracking,’’ or breaking down, petrochemicals into their constituent parts and combining them with various molecules to produce polymer resins. The resulting resins, such as low density polyethylene, ethylene vinyl acetate, acrylate copolymers, grafted polyolefins, acid copolymers, and ionomers, have different performance characteristics, such as hardness, corrosion resistance or scratch resistance, depending on the materials used in their construction. HiPED resins are mixed with other plastic resins to manufacture numerous plastic products, such as films, bottles, coatings, and packaging. Customers source particular HiPED resins that meet their specific needs and requirements and build their manufacturing process around specific resin combinations that give the final product the desired performance characteristics. Unlike most HiPED resins, where there is substitution possible for both PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 28901 the supply and demand of the products, neither customers nor manufacturers can easily switch between acid copolymers and ionomers (two specific types of HiPED resins) and other HiPED resins. 1. Acid Copolymers Acid copolymers are a specific type of HiPED resin manufactured using highly acidic input products. In order to handle inputs with high acid content, HiPED resin manufacturers must install specific corrosion-resistant equipment that is not used for the manufacture of other HiPED resins. Such equipment can cost millions of dollars. Acidic inputs make acid copolymers both highly adhesive and very durable. As a result, acid copolymers are used to create strong seals between substrates, or ‘‘tie layers,’’ of flexible packaging. Their increased adhesive ability is particularly necessary in applications where packaging will be exposed to challenging environments, such as high levels of grease, oil, acid, or dust. Because of these characteristics, packaging films made using acid copolymers are ideal for use in the food and beverage industry. Indeed, this industry consumes the vast majority of acid copolymers produced, for use in products such as juice boxes, toothpaste tubes, and meat and cheese wrap, among others. Unlike other plastic films, food and beverage packaging must adhere to strict food safety guidelines, and significant deviations from approved formulas must undergo a rigorous requalification process that can take significant time and expense. Both Dow Chemical and DuPont manufacture acid copolymers in the United States. Dow Chemical manufactures acid copolymers in a dedicated corrosion-resistant facility that is part of its larger chemical complex in Freeport, Texas. DuPont manufactures acid copolymers and other HiPED resins on corrosionresistant manufacturing lines within facilities located in Sabine, Texas and Victoria, Texas. 2. Ionomers Ionomers are another specific type of HiPED resin. They are directly derived from acid copolymers and are produced by neutralizing acid copolymers with sodium, zinc, magnesium, or other salts. As a result of this process, ionomers are hard and durable. When added to a plastic coating, ionomers make the resulting product more impact- and cutresistant. Ionomers are used in a multitude of applications, such as decking and automotive parts. Ionomers are preferred for these end uses because E:\FR\FM\26JNN1.SGM 26JNN1 28902 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices their superior toughness and impact resistance protect the underlying product from the repeated blows it is subjected to. Both Dow Chemical and DuPont produce ionomers in the United States. DuPont manufactures ionomers in-line with its acid copolymer production in Sabine, Texas. Dow Chemical manufactures acid copolymers in its Freeport, Texas facility and then ships them to Odessa, Texas, where a third party converts them to ionomers. 3. Relevant Markets a. Acid Copolymers Food and beverage packaging manufacturers purchase the majority of acid copolymers produced in the United States. These customers rely upon the superior sealant and adhesive characteristics acid copolymers provide as compared to other HiPED resins. Additionally, because food and beverage packaging must adhere to strict food safety guidelines, significant deviations from approved formulas must undergo a rigorous qualification process that can take significant time and incur additional costs. Most customers therefore would not switch to another product if faced with a significant and non-transitory increase in the price of acid copolymers. Customers have consistently reported that purchasing acid copolymers abroad is not a realistic option for domestic purchasers, due to taxes, tariffs, logistical costs, and the longer lead times associated with importing acid copolymers. Most customers report that it would take considerably more than a small, significant, and non-transitory increase in price to make European suppliers a viable alternative to Dow Chemical and DuPont. A small but significant increase in price for acid copolymers sold in the United States would not cause customers to turn to another product in sufficient numbers to defeat such a price increase. Thus, the development, manufacture, and sale of acid copolymers in the United States constitutes a relevant product market and line of commerce under Section 7 of the Clayton Act. sradovich on DSK3GMQ082PROD with NOTICES b. Ionomers Customers purchase ionomers for the superior impact- and cut-resistance characteristics that are not available in other HiPED resins. These customers rely on the hardness and resilience that an ionomer-based coating provides as compared to other coatings. Customers cannot switch to other, less resilient, coatings and cannot forgo the use of VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 protective coatings altogether, as either choice would significantly decrease the useful lifespan of the underlying products. Most customers therefore would not switch to another product if faced with a small but significant and non-transitory increase in the price of ionomers. U.S. customers cannot turn to ionomer suppliers abroad due to taxes, tariffs, logistical costs, and longer lead times associated with importing ionomers. Most customers report that it would take considerably more than a small, significant, and non-transitory increase in price to make European suppliers a viable alternative to Dow Chemical and DuPont. A small but significant increase in price for ionomers sold in the United States would not cause customers to turn to another product in sufficient numbers to defeat such a price increase. Thus, the development, manufacture, and sale of ionomers in the United States constitutes a relevant product market and line of commerce under Section 7 of the Clayton Act. 4. Anticompetitive Effects of the Proposed Transaction a. Acid Copolymers Dow Chemical and DuPont are the only two manufacturers of acid copolymers in the United States. Dow Chemical controls over 80 percent of the U.S. market and DuPont is responsible for 19 percent of sales (less than one tenth of one percent of acid copolymers are imported). The merger of the only U.S. manufacturers of these products would leave customers with little alternative but to accept increased prices post merger. As a result of head-to-head competition between Dow Chemical and DuPont, customers have obtained better pricing, service, and contract terms. In some cases, customers report that Dow Chemical and DuPont have competed to assist customers with the development of new uses for existing acid copolymer products, allowing customers to expand sales and better serve their own consumers. Customers also have benefited from the development of new acid copolymer products, which has been spurred on by competition between Dow Chemical and DuPont. The proposed merger would likely substantially lessen competition for the development, manufacture, and sale of acid copolymers in violation of Section 7 of the Clayton Act. The U.S. market for acid copolymers is highly concentrated and would become significantly more concentrated as a result of the proposed merger to PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 monopoly: Dow Chemical and DuPont will control over 99 percent of the acid copolymers market in the United States post merger, leading to higher prices and reduced innovation. b. Ionomers Dow Chemical and DuPont are the only two manufacturers of ionomers in the United States, where the two companies collectively are responsible for all sales. Dow Chemical and DuPont are each other’s only competitor for ionomers and customers would have no alternative but to accept increased prices post merger. Customers have benefited from the competition between Dow Chemical and DuPont. Dow Chemical is the only company contesting DuPont’s nearmonopoly in ionomers. Its presence has resulted in better pricing and contract terms for customers, who otherwise would have no choice but to purchase from DuPont. Customers also have benefited from competition between Dow Chemical and DuPont to develop new products from ionomers and new uses for existing ionomer products. The proposed merger would likely substantially lessen competition for the development, manufacture, and sale of ionomers in violation of Section 7 of the Clayton Act. The market for ionomers is highly concentrated and the proposed merger would result in a monopoly, leading to higher prices and reduced innovation. 5. Difficulty of Entry a. Acid Copolymers In addition to the specialized equipment required to produce ethylene derivatives generally, acid copolymer manufacturing requires a high-pressure autoclave and all equipment surfaces must be coated with a corrosionresistant material. Only Dow Chemical and DuPont have both high-pressure autoclaves and corrosion-resistant equipment. The cost associated with upgrading an existing ethylene derivative manufacturing operation to produce acid copolymers is estimated to be in the millions of dollars. If the merged firm were to raise prices, timely and sufficient entry is unlikely to deter or counteract competitive harm. b. Ionomers The manufacturing of ionomers requires specialized know-how as well as ready and reliable access to acid copolymers, a key input into ionomer manufacturing. Post merger, Dow Chemical and DuPont will effectively control the entire U.S. market for acid copolymers. As such, even if a third party has the technical capability to E:\FR\FM\26JNN1.SGM 26JNN1 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES manufacture ionomers, it would be limited by the amount of acid copolymers it could obtain on the open market—a market primarily controlled by the merged entity. Because of the specialized know-how and the likely foreclosure of access to a key ingredient, if the merged firm were to raise prices, timely and sufficient entry would be unlikely to deter or counteract competitive harm. III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT The divestitures required by the proposed Final Judgment will eliminate the anticompetitive effects of the merger between Dow Chemical and DuPont by establishing two new, independent, and economically viable competitors. The Crop Protection Divestiture Assets include DuPont’s Finesse-formulated herbicide products, which contain the active ingredients Metsulfuron Methyl and Chlorsulfuron Methyl, and its Rynaxypyr-formulated insecticide products, along with the assets which facilitate the development, manufacture, and sale of those products. The Material Science Divestiture Assets include Dow’s Freeport, Texas acid copolymers and ionomers manufacturing unit and associated assets. Both of these divestitures must be sold as viable ongoing businesses. Prior to divestiture, defendants must maintain the Crop Protection Divestiture Assets and Material Science Divestiture Assets under an Asset Preservation Stipulation and Order (‘‘APSO’’). Under the APSO, defendants must preserve, maintain, and continue to operate both sets of assets as ongoing, economically viable competitive product lines. This includes the requirement that defendants appoint a person or persons to oversee the Crop Protection and Material Science Divestiture Assets. This person or persons shall have complete managerial responsibility for each asset package, subject to the provisions of the proposed Final Judgment, and shall make all business decisions relating to the operation of the assets, including all production, sale, pricing, and discounting decisions, independent of defendants. The assets must also be divested in such a way as to satisfy the United States in its sole discretion, that each business can and will be operated by the Acquirers as viable, ongoing businesses that can compete effectively in the relevant markets (in the case of the Crop Protection Divestiture Assets, the United States will exercise its discretion after consultation with the Plaintiff States). Defendants must take all reasonable steps necessary to VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 accomplish the divestitures quickly and shall cooperate with prospective purchasers. Pursuant to Paragraphs IV(A) and V(A) of the proposed Final Judgment, both the Crop Protection Divestiture and Material Science Divestiture must be completed within thirty (30) days after the consummation of the merger of Dow Chemical and DuPont, or sixty (60) days after notice of the entry of the Final Judgment by the Court, whichever is later. Each divestiture package remedies a separate competitive harm alleged in the complaint and must be sold to an Acquirer that will operate the business as a viable, ongoing business. The two asset packages relate to different industries with different customers, market conditions, and required expertise. In order to ensure that the each divestiture package is operated as a viable, ongoing business, the Crop Protection and Material Science Divestiture Assets will likely be sold to different Acquirers. These divestiture periods are longer than those often found in Antitrust Division consent decrees, but are warranted in this case. Transfer of the Crop Protection Divestiture Assets and the Material Science Divestiture Assets are both subject to numerous government approvals, including approvals from authorities outside the United States. The longer divestiture period allows defendants and the Acquirer(s) to obtain these regulatory approvals, but still ensures that the divestitures are made as quickly as possible, thus reducing the risk that the assets will decrease in value. Paragraph IV(G) provides that the Acquirer of the Crop Protection Divestiture Assets may contract with the defendants for the provision of formulation services for a transitional period. Formulation is the process of adding inert chemicals to the active ingredients that provide the efficacy of crop protection products. Providers of crop protection products routinely use third parties for formulation services in order to optimize supply chains and minimize shipping costs on completed products. However, formulation services must be provided at a facility that has received the appropriate regulatory approvals in the United States (through the United States Environmental Protection Agency) and abroad, a process that may be time-consuming. So, the Acquirer of the Crop Protection Divestiture Assets may choose to enter a formulation services agreement with the defendants prior to being in a position to formulate the acquired products at an approved facility of its own choosing. The formulation services PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 28903 agreement shall be in effect for one (1) year after all necessary regulatory approvals have been granted by jurisdictions where the Finesseformulated products and the Rynaxypyr-formulated products are currently registered. During the term of the formulation services agreement, defendants shall implement and maintain procedures to preclude the sharing of information between defendants and the Acquirer. The United States, in its sole discretion, may approve an extension of the formulation services agreement for a period not to exceed two (2) years. Paragraph V(G) provides that the Acquirer of the Material Science Divestiture Assets may contract with the defendants for the provision of operating services that include the operation of process controls at the acid copolymer production facility under the management and supervision of the Acquirer. The Acquirer of the Material Science Divestiture Assets may choose to enter an operating services agreement with the defendants because the Material Science Divestiture Assets are located within a significantly larger chemical complex in Freeport, Texas where such services can be more efficiently provided across multiple facilities. Dow offers similar services on an arms-length basis to other firms that own manufacturing assets within the larger chemical complex in Freeport, Texas. During the term of the operating services agreement, defendants shall implement and maintain procedures to preclude the sharing of information between defendants and the Acquirer. Given the complexity of these industries, Section XI of the proposed Final Judgment also provides that the United States may appoint a Monitoring Trustee(s). Because of the size and complexity of the divestitures, separate Monitoring Trustees are required for the Crop Protection Divestiture Assets and Material Science Divestiture Assets. The Monitoring Trustees will have the power and authority to investigate and report on the defendants’ compliance with the terms of the proposed Final Judgment and the APSO during the pendency of the divestiture, including the ability to hire at the cost and expense of defendants any consultants, accountants, attorneys, or other agents necessary in the Monitoring Trustees’ judgment. The Monitoring Trustees would not have any responsibility or obligation for the operation of the parties’ businesses. The Monitoring Trustees will serve at defendants’ expense, on such terms and conditions as the United States approves, and defendants must assist the trustees in E:\FR\FM\26JNN1.SGM 26JNN1 28904 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES fulfilling their obligations. The Monitoring Trustees will file monthly reports and will serve for at least six (6) months following the divestiture of all Divestiture Assets, a period which may be extended by the United States, in its sole discretion. Finally, in the event that defendants do not accomplish the divestiture within the periods prescribed in Paragraphs IV(A) and V(A) of the proposed Final Judgment, Section VI of the proposed 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 (6) months, if 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 provision of broadleaf herbicides for winter wheat, insecticides for chewing pests, acid copolymers, and ionomers in the United States. IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any person who has been injured as a result of conduct prohibited by the antitrust laws may bring suit in federal court to recover three times the damages the person has suffered, as well as costs and reasonable attorneys’ fees. Entry of the proposed Final Judgment will neither impair nor assist the bringing of any private antitrust damage action. Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the proposed Final Judgment has no prima facie effect in any subsequent private lawsuit that may be brought against defendants. V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT The plaintiffs and defendants have stipulated that the proposed Final VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 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 the merger between Dow Chemical and DuPont. The plaintiffs are satisfied, however, that the divestiture of assets described in the proposed Final Judgment will preserve competition in the markets for broadleaf herbicides for winter wheat, insecticides for chewing pests, acid copolymers, and ionomers. Thus, the proposed Final Judgment would achieve all or PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 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 sixtyday comment period, after which the court shall determine whether entry of the proposed Final Judgment ‘‘is in the public interest.’’ 15 U.S.C. 16(e)(1). In making that determination, the court, in accordance with the statute as amended in 2004, is required to consider: (A) the competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration of relief sought, anticipated effects of alternative remedies actually considered, whether its terms are ambiguous, and any other competitive considerations bearing upon the adequacy of such judgment that the court deems necessary to a determination of whether the consent judgment is in the public interest; and (B) the impact of entry of such judgment upon competition in the relevant market or markets, upon the public generally and individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, if any, to be derived from a determination of the issues at trial. 15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors, the court’s inquiry is necessarily a limited one as the government is entitled to ‘‘broad discretion to settle with the defendant within the reaches of the public interest.’’ United States v. Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally United States v. SBC Commc’ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public interest standard under the Tunney Act); United States v, U.S. Airways Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (noting the court has broad discretion of the adequacy of the relief at issue); United States v. InBev N.V./S.A., No. 08–1965 (JR), 2009–2 Trade Cas. (CCH) ¶ 76,736, 2009 U.S. Dist. LEXIS 84787, 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 E:\FR\FM\26JNN1.SGM 26JNN1 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices the mechanism to enforce the final judgment are clear and manageable.’’).1 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) (quoting United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d at 1460–62; United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, at *3. Courts have held that: [t]he balancing of competing social and political interests affected by a proposed antitrust consent decree must be left, in the first instance, to the discretion of the Attorney General. The court’s role in protecting the public interest is one of insuring that the government has not breached its duty to the public in consenting to the decree. The court is required to determine not whether a particular decree is the one that will best serve society, but whether the settlement is ‘‘within the reaches of the public interest.’’ More elaborate requirements might undermine the effectiveness of antitrust enforcement by consent decree. sradovich on DSK3GMQ082PROD with NOTICES 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 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. 16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc’ns, 489 F. Supp. 2d at 11 (concluding that the 2004 amendments ‘‘effected minimal changes’’ to Tunney Act review). 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’ ’’). VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 Commc’ns, 489 F. Supp. 2d at 17; see also U.S. Airways, 38 F. Supp. 3d at 75 (noting that a court should not reject the proposed remedies because it believes others are preferable); 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). 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 U.S. Airways, 38 F. Supp. 3d at 74 (noting that room must be made for the government to grant concessions in the negotiation process for settlements (citing Microsoft, 56 F.3d at 1461); 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 U.S. Airways, 38 F. Supp. 3d at 74 (noting that the court must simply determine whether there is a factual foundation for the government’s decisions such that its conclusions regarding the proposed settlements are reasonable; 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 PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 28905 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. § 16(e)(2); see also U.S. Airways, 38 F. Supp. 3d at 75 (indicating that a court is not required to hold an evidentiary hearing or to permit intervenors as part of its review under the Tunney Act). 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 Sen. 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 A court can make its public interest determination based on the competitive impact statement and 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., No. 73–CV–681–W–1, 1977–1 Trade Cas. (CCH) ¶ 61,508, at 71,980, *22 (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, 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.’’). E:\FR\FM\26JNN1.SGM 26JNN1 28906 Federal Register / Vol. 82, No. 121 / Monday, June 26, 2017 / Notices —Evaluate whether the proposed collection of information is necessary for the proper performance of the VIII. DETERMINATIVE DOCUMENTS functions of the Bureau of Justice There are no determinative materials Statistics, including whether the or documents within the meaning of the information will have practical utility; APPA that were considered by the —Evaluate the accuracy of the agency’s United States in formulating the estimate of the burden of the proposed Final Judgment. proposed collection of information, including the validity of the Dated: June 15, 2017 methodology and assumptions used; Respectfully submitted, —Evaluate whether and if so how the /s/ lllllllllllllllllll quality, utility, and clarity of the Lowell R. Stern (DC Bar #440487) information to be collected can be United States Department of Justice, enhanced; and Antitrust Division, Litigation II Section, 450 Fifth Street NW., Suite 8700, Washington, DC —Minimize the burden of the collection of information on those who are to 20530, (202) 514–3676, (202) 514–9033 (Facsimile), lowell.stern@usdoj.gov. respond, including through the use of appropriate automated, electronic, [FR Doc. 2017–13326 Filed 6–23–17; 8:45 am] mechanical, or other technological BILLING CODE P collection techniques or other forms of information technology, e.g., permitting electronic submission of DEPARTMENT OF JUSTICE responses. response to public comments alone. U.S. Airways, 38 F. Supp. 3d at 75. [OMB Number 1125–0005] Agency Information Collection Activities; Proposed Collection; Comments Requested; Request To Be Included on the List of Pro Bono Legal Service Providers for Individuals in Immigration Proceedings (Form EOIR– 56) Executive Office for Immigration Review, Department of Justice. ACTION: 60-day notice. AGENCY: The Department of Justice (DOJ), Executive Office for Immigration Review (EOIR), will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. DATES: Comments are encouraged and will be accepted for 60 days until August 25, 2017. FOR FURTHER INFORMATION CONTACT: If you have additional comments especially on the estimated public burden or associated response time, suggestions, or need a copy of the proposed information collection instrument with instructions or additional information, please contact Jean King, General Counsel, USDOJ– EOIR–OGC, Suite 2600, 5107 Leesburg Pike, Falls Church, Virginia, 20530; telephone: (703) 305–0470. SUPPLEMENTARY INFORMATION: Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address one or more of the following four points: sradovich on DSK3GMQ082PROD with NOTICES SUMMARY: VerDate Sep<11>2014 17:04 Jun 23, 2017 Jkt 241001 Overview of This Information Collection: 1. Type of Information Collection: Revision of a currently approved collection. 2. The Title of the Form/Collection: Request to be Included on the List of Pro Bono Legal Service Providers for Individuals in Immigration Proceedings. 3. The agency form number: EOIR–56 (OMB #1125–0015). 4. Affected public who will be asked or required to respond, as well as a brief abstract: Primary: Legal service providers seeking to be included on the List of Pro Bono Legal Service Providers (‘‘List’’), a list of persons who have indicated their availability to represent aliens on a pro bono basis. Abstract: EOIR seeks to replace the current paper version of the EOIR Forms-56, with an electronic system to make an initial application and apply for continued participation in the List. Form EOIR–56 will be mandatory, and is intended to elicit, in a uniform manner, all of the required information for EOIR to determine whether an applicant meets the eligibility requirements for inclusion on the List. 5. An estimate of the total number of respondents and the amount of time estimated for an average respondent to respond: It is estimated that 161 respondents will complete each form within approximately 30 minutes. 6. An estimate of the total public burden (in hours) associated with the collection: 80.5 annual burden hours. If additional information is required contact: Melody D. Braswell, Department Clearance Officer, United States Department of Justice, Justice PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 Management Division, Policy and Planning Staff, Two Constitution Square, 145 N Street NE., 3E.405B, Washington, DC 20530. Dated: June 21, 2017. Melody D. Braswell, Department Clearance Officer for PRA, U.S. Department of Justice. [FR Doc. 2017–13251 Filed 6–23–17; 8:45 am] BILLING CODE 4410–30–P DEPARTMENT OF LABOR Office of the Secretary Agency Information Collection Activities; Submission for OMB Review; Comment Request; Report on Occupational Employment and Wages ACTION: Notice. The Department of Labor (DOL) is submitting the Bureau of Labor Statistics (BLS) sponsored information collection request (ICR) revision titled, ‘‘Report on Occupational Employment and Wages,’’ to the Office of Management and Budget (OMB) for review and approval for use in accordance with the Paperwork Reduction Act (PRA) of 1995. Public comments on the ICR are invited. DATES: The OMB will consider all written comments that agency receives on or before July 26, 2017. ADDRESSES: A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the RegInfo.gov Web site at http:// www.reginfo.gov/public/do/ PRAViewICR?ref_nbr=201705-1220-003 (this link will only become active on the day following publication of this notice) or by contacting Michel Smyth by telephone at 202–693–4129, TTY 202– 693–8064, (these are not toll-free numbers) or sending an email to DOL_ PRA_PUBLIC@dol.gov. Submit comments about this request by mail to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL–BLS, Office of Management and Budget, Room 10235, 725 17th Street NW., Washington, DC 20503; by Fax: 202–395–5806 (this is not a toll-free number); or by email: OIRA_submission@omb.eop.gov. Commenters are encouraged, but not required, to send a courtesy copy of any comments by mail or courier to the U.S. Department of Labor-OASAM, Office of the Chief Information Officer, Attn: Departmental Information Compliance SUMMARY: E:\FR\FM\26JNN1.SGM 26JNN1

Agencies

[Federal Register Volume 82, Number 121 (Monday, June 26, 2017)]
[Notices]
[Pages 28887-28906]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-13326]



[[Page 28887]]

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DEPARTMENT OF JUSTICE

Antitrust Division


United States, et al. v. The Dow Chemical Co., et al., Proposed 
Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Asset Preservation Stipulation and Order, and Competitive Impact 
Statement have been filed with the United States District Court for the 
District of Columbia in United States, et al. v. The Dow Chemical Co., 
et al., Civil Action No. 1:17-cv-01176. On June 15, 2017, the United 
States filed a Complaint alleging that the proposed merger of The Dow 
Chemical Company (``Dow'') and E.I. DuPont de Nemours and Company 
(``DuPont'') would violate Section 7 of the Clayton Act, 15 U.S.C. 18. 
The proposed Final Judgment, filed at the same time as the Complaint, 
requires the defendants to divest DuPont's Finesse herbicides business 
and Rynaxypyr insecticides business, and Dow's acid copolymers and 
ionomers business.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Department of 
Justice's Web site at http://www.justice.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 Antitrust Division's 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, U.S. Department of Justice, Antitrust 
Division, 450 Fifth Street NW., Suite 8700, Washington, DC 20530, 
State of Iowa, 1305 East Walnut Street, Des Moines, IA 50319, State 
of Mississippi, 550 High Street, Jackson, MS 39201, State of 
Montana, 555 Fuller Ave., Helena, MT 59601, Plaintiffs, v. The Dow 
Chemical Company, 2030 Dow Center, Midland, MI 48674 and E.I. Du 
Pont de Nemours and Company, 974 Centre Road, Wilmington, DE 19805, 
Defendants.

Case No.: 1:17-cv-01176
Judge: Amit Mehta

COMPLAINT

    The United States of America, acting under the direction of the 
Attorney General of the United States, the State of Iowa, the State of 
Mississippi, and the State of Montana (collectively, ``Plaintiff 
States''), acting by and through their respective Offices of the 
Attorney General, bring this civil action to enjoin the proposed merger 
of The Dow Chemical Company (``Dow Chemical'') and E.I. du Pont de 
Nemours and Company (``DuPont'').

I. INTRODUCTION

    1. In December 2015, Dow Chemical and DuPont announced that they 
had agreed to a merger of equals in a transaction with an estimated 
value exceeding $130 billion. Both Dow Chemical and DuPont are among 
the largest chemical companies in the world.
    2. Dow Chemical and DuPont each make a wide variety of innovative 
crop protection chemicals used by farmers across the United States. 
Each company also manufactures a number of petrochemicals, including 
high-pressure ethylene derivatives that are crucial inputs to a number 
of important products and industries.
    3. The agricultural sector is a large and vital part of the 
American economy. American farmers grow crops to feed consumers in the 
United States and abroad, to sustain livestock, and to produce 
alternative energy to power homes, vehicles, and industries. Every 
year, American farmers plant tens of millions of acres of corn, 
soybeans, wheat, and specialty crops, such as fruits, nuts, and 
vegetables. To meet the needs of a growing population, American farmers 
rely on a variety of effective crop protection chemical products, 
including herbicides and insecticides, which protect crops from weeds 
and insects that damage crops and reduce yield.
    4. Dow Chemical and DuPont are two of only a handful of chemical 
companies that manufacture certain types of crop protection chemicals. 
Vigorous competition between Dow Chemical's and DuPont's crop 
protection chemicals has benefitted farmers through lower prices, more 
effective solutions to certain pest and weed problems, and superior 
service. In particular, Dow Chemical and DuPont compete in the U.S. 
sales of broadleaf herbicides for winter wheat and insecticides for 
chewing pests. That competition would be lost if the merger is 
consummated. Accordingly, the proposed acquisition likely would 
substantially lessen competition in the markets for certain crop 
protection chemicals in the United States in violation of Section 7 of 
the Clayton Act, 15 U.S.C. 18.
    5. Dow Chemical and DuPont also compete in the manufacture and sale 
of two types of high-pressure ethylene derivative products called acid 
copolymers and ionomers, which are used in the production of flexible 
food packaging and other industrial applications. The combination of 
Dow Chemical and DuPont would result in a merger to monopoly in the 
production of acid copolymers and ionomers in the United States. 
Accordingly, the proposed transaction likely would substantially lessen 
competition in the markets for acid copolymers and ionomers in the 
United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 
18.

II. DEFENDANTS AND THE TRANSACTION

    6. Dow Chemical, founded in 1897, is headquartered in Midland, 
Michigan, operates in approximately 180 countries, and employs over 
50,000 people worldwide. In 2016, Dow Chemical had revenues of 
approximately $48 billion. Dow Chemical's primary lines of business are 
chemical, plastic, and agricultural products and services. Dow 
Chemical's products are used in various industries, ranging from 
agriculture to consumer goods.
    7. DuPont, founded in 1802, is headquartered in Wilmington, 
Delaware, operates in approximately 90 countries, and employs more than 
60,000 people worldwide. In 2016, DuPont reported revenues of $24.5 
billion. DuPont's primary products include crop protection chemicals 
and performance products, such as plastics and polymers.
    8. Pursuant to a December 11, 2015 agreement, Dow Chemical and 
DuPont have agreed to an all-stock merger of equals. At the time of the 
merger announcement, the combined market capitalization of the 
companies was $130 billion. The merger plan contemplates spinning off 
the firms' combined assets into three separate, publicly-traded 
companies as soon as feasible. One of those companies would focus on 
agriculture products (with approximately $18 billion in revenue), 
another on material sciences

[[Page 28888]]

(approximately $51 billion in revenue), and a third on ``specialty'' 
products, such as organic light-emitting diodes and building wrap 
(approximately $13 billion in revenue).

III. JURISDICTION AND VENUE

    9. The United States brings this action under Section 15 of the 
Clayton Act, 15 U.S.C. 25, to prevent and restrain defendants from 
violating Section 7 of the Clayton Act, 15 U.S.C. 18.
    10. The Plaintiff States bring this action under Section 16 of the 
Clayton Act, 15 U.S.C. 26, to prevent and restrain the defendants from 
violating Section 7 of the Clayton Act, 15 U.S.C. 18. The Plaintiff 
States, by and through their respective Attorneys General, bring this 
action as parens patriae on behalf of and to protect the health and 
welfare of their citizens and the general economy of each of their 
states.
    11. Defendants Dow Chemical and DuPont sell crop protection 
chemicals, including herbicides and insecticides, and acid copolymers 
and ionomers throughout the United States. They are engaged in the 
regular, continuous, and substantial flow of interstate commerce, and 
their sales of crop protection chemicals and acid copolymers and 
ionomers have had a substantial effect on interstate commerce. This 
Court has subject matter jurisdiction over this action under Section 15 
of the Clayton Act, 15 U.S.C. 25, and 28 U.S.C. 1331, 1337(a), and 
1345.
    12. Defendants have consented to venue and personal jurisdiction in 
this judicial district. Venue is therefore proper in this district 
under Section 12 of the Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 
1391(c).

IV. CROP PROTECTION CHEMICALS

A. Background

    13. Crop protection chemicals are used to protect crops from damage 
or loss from other biological organisms such as weeds, insects, or 
disease (e.g., fungus). Crop protection chemicals are critical to 
protecting crop yield--the total amount of a crop produced at each 
harvest--which benefits farmers and American consumers.
    14. Crop protection chemicals can be separated into three broad 
categories that have different qualities and attributes: herbicides (to 
combat weeds); insecticides (to combat insect pests); and fungicides 
(to combat microbial disease).
    15. The key component of any particular crop protection chemical is 
the ``active ingredient,'' which is the chemical molecule that produces 
the desired effect against the targeted weed or insect pest. Crop 
protection chemicals are typically sold as ``formulated products'' that 
contain the active ingredient and also inactive ingredients such as 
solvents, fillers, and adjuvants used to stabilize the active 
ingredient and facilitate its effective use on the intended crops.
    16. Both active ingredients and formulated products must be 
registered with the U.S. Environmental Protection Agency (``EPA'') and 
approved for use. In order to gain approval, products must meet 
stringent toxicity and efficacy standards. Approvals are granted on a 
crop-by-crop basis and contain strict dosage requirements. A farmer 
wishing to control a certain pest on his or her farm can use only the 
products and dose-rates that the EPA has approved for the particular 
crops to which the product will be applied.
    17. The crop protection industry includes a handful of large 
integrated research and development firms (including Dow Chemical and 
DuPont) that develop, manufacture, and sell crop protection chemicals. 
While the large research and development firms sometimes sell directly 
to farmers, their primary customers are large distributors and farmer 
co-ops that resell products to farmers.
1. Broadleaf Herbicides for Winter Wheat
    18. Both Dow Chemical and DuPont produce herbicides for winter 
wheat. Winter wheat is a type of grass that is planted in autumn and 
produces an edible grain. In the United States, winter wheat is grown 
primarily in the Great Plains states, including Kansas, Nebraska, and 
Texas.
    19. Herbicides are chemicals used to combat weeds that harm crops. 
They can be selective (killing only certain types of plants) or non-
selective. Non-selective herbicides kill all plant matter, including 
weeds and the crop. Because of this, non-selective herbicides are 
typically used after the crop is harvested, to clear the field of 
remaining weeds. Selective herbicides target only weeds, and are 
applied ``post-emergence,'' or during the growth of the crop.
    20. There are three common types of selective herbicide products: 
broadleaf, grass, and cross-spectrum. Broadleaf herbicides primarily 
eliminate or suppress broadleaf weeds. Grass herbicides primarily 
eliminate or suppress grass weeds. Cross-spectrum herbicides are 
effective on both grass and broadleaf weeds. Each herbicide formulation 
has a different spectrum of weeds on which it is effective, so a farmer 
chooses an herbicide based on the particular kinds of weeds threatening 
the crop.
    21. Herbicides are registered with the EPA for use on particular 
crops. Because crop choices and weed threats vary from farm to farm, 
the options available to farmers may vary from location to location, 
depending on the specific crop/weed combinations a farmer faces.
    22. Dow Chemical and DuPont both offer herbicides that are labeled 
and registered for the control of broadleaf weeds in winter wheat 
crops. DuPont's Finesse product is the top broadleaf herbicide used to 
combat the weed spectrum that typically threatens winter wheat crops. 
Dow Chemical recently introduced a new broadleaf herbicide for winter 
wheat, called Quelex.
2. Insecticides for Chewing Pests
    23. Dow Chemical and DuPont also sell insecticides for chewing 
pests. Insecticides are used to suppress or eliminate insect 
infestations in crops. There are three main classes of insect pests: 
(1) chewing insects (e.g., moth larvae and beetles); (2) sucking 
insects (e.g., aphids and stink bugs); and (3) thrips (i.e., thunder 
flies), which have attributes of both chewing and sucking pests.
    24. Insecticide use is particularly important for specialty crop 
farmers of tree fruit, tree nuts, and other fruits and vegetables 
(``specialty crops''). Any damage to specialty crops, no matter how 
slight, can result in the fruit or nut being rejected for sale. Thus, 
specialty crop farmers are particularly averse to the risk of insect 
damage when choosing an insecticide. Specialty crop farmers also value 
selective chemistry insecticides because they are less harmful to 
beneficial insects (such as bees and parasitic wasps) that not only 
pollinate fruit, but also help to control damaging insects, such as 
mites. In contrast, broad spectrum chemistries, such as pyrethroids, 
kill most of the insects in a field, including beneficial ones. Farmers 
therefore either minimize their use and/or use them towards the end of 
a growing season.
    25. DuPont produces the active ingredient chlorantraniliprole, 
which DuPont markets under the trade name, Rynaxypyr. Rynaxypyr is one 
of the best selling and most effective active ingredients used to 
combat chewing pests on the market. Rynaxypyr is patent-protected until 
2022. In the United States, Rynaxypyr is marketed and sold in 
formulations under the brand names Altacor, Coragen, and Prevathon. 
DuPont's 2015 U.S. insecticides sales totaled $118 million; of that 
total, Rynaxypyr sales accounted for $73 million.

[[Page 28889]]

    26. Dow Chemical manufactures and sells two active ingredients 
which are also effective against chewing pests: (1) methoxyfenozide, 
sold under the brand name Intrepid, and (2) spinetoram, sold under the 
brand names Delegate and Radiant. In 2015, Dow Chemical had a total of 
$165 million in U.S. insecticides sales. Of that total, spinetoram 
sales accounted for $57 million and methoxyfenozide sales accounted for 
$34 million.

B. Relevant Markets

1. Broadleaf Herbicides for Winter Wheat Sold in the United States
    27. To combat broadleaf weeds in winter wheat, particularly in the 
central plains of the United States, farmers need broadleaf herbicides 
that are labeled and registered for use on winter wheat. Farmers of 
winter wheat cannot use grass herbicides to combat broadleaf weeds 
because they are ineffective. Farmers would not use cross-spectrum 
herbicides to combat broadleaf weeds, as cross-spectrum herbicides are 
significantly more expensive and, thus, it would not be cost-justified 
to use cross-spectrum herbicides for broadleaf weeds alone. Farmers 
would not forgo using broadleaf herbicides altogether, because doing so 
would risk significant wheat yield losses.
    28. All herbicides sold in the United States must be registered and 
approved by the EPA. Similar products available in other countries 
cannot be offered to United States customers due to EPA regulations, so 
they are not competitive constraints.
    29. A small but significant increase in the price of broadleaf 
herbicides sold in the United States labeled and registered for use on 
winter wheat would not cause customers of those herbicides to 
substitute to grass or cross-spectrum herbicides, nor would farmers 
forgo using herbicides altogether and risk weed damage to their crops. 
As a result, customers are unlikely to switch away from broadleaf 
herbicides sold in the United States in volumes sufficient to defeat 
such a price increase. Accordingly, the development, manufacture, and 
sale of broadleaf herbicides sold in the United States labeled and 
registered for use on winter wheat is a line of commerce and relevant 
market within the meaning of Section 7 of the Clayton Act.
2. Insecticides for Chewing Pests Sold in the United States
    30. Insecticides for chewing pests are targeted to combat a 
particular type of pest, and insecticides for other types of pests 
cannot, in general, be used as substitutes. While there are broad-
spectrum insecticides which are effective on more than one type of 
pest, those insecticides tend to kill indiscriminately, including 
beneficial insects. Specialty crop farmers in California, Washington 
and elsewhere need beneficial insects such as bees to pollinate their 
crops. These farmers would not, however, choose to forgo managing the 
insect pests which attack their crops, because even slight damage can 
result in an entire harvest being rejected for sale.
    31. All insecticides sold in the United States must be registered 
and approved by the EPA. Similar products available in other countries 
cannot be offered to United States customers due to EPA regulations, so 
they are not competitive constraints.
    32. A small but significant increase in the price of chewing pest 
insecticides sold in the United States would not cause customers of 
those insecticides to substitute to broad-spectrum insecticides, nor 
would farmers forgo using insecticides altogether and risk severe pest 
damage to their whole crop, in volumes sufficient to defeat such a 
price increase. Accordingly, the development, manufacture, and sale of 
chewing pest insecticides sold in the United States is a line of 
commerce and relevant market within the meaning of Section 7 of the 
Clayton Act.

C. Anticompetitive Effects of the Proposed Acquisition

1. Broadleaf Herbicides for Winter Wheat
    33. Dow Chemical and DuPont are two of the four largest suppliers 
of broadleaf herbicides for winter wheat crops in the United States. 
Together they account for over forty percent of the total market, with 
combined annual sales of $81 million in 2015. Dow Chemical and DuPont 
compete head-to-head for the development, manufacture, and sale of 
broadleaf herbicides for winter wheat. That competition, which would be 
lost if the merger is consummated, has benefited farmers through lower 
prices, more effective solutions, and superior service.
    34. Competition between Dow Chemical and DuPont has also spurred 
research, development, and marketing of new and improved broadleaf 
herbicides for winter wheat. For example, Dow Chemical intends to 
market its Quelex herbicide, which was recently introduced into the 
market, to farmers of winter wheat that currently use DuPont's market-
leading Finesse product. DuPont considered adopting competitive 
responses, including price reductions, to protect its market share from 
Dow Chemical's Quelex herbicide.
    35. The proposed merger, therefore, likely would substantially 
lessen competition for the development, manufacture, and sale of 
broadleaf herbicides for winter wheat, in violation of Section 7 of the 
Clayton Act. This likely would lead to higher prices, less favorable 
contractual terms, and a reduced incentive to spend significant 
resources in developing new products.
2. Insecticides for Chewing Pests
    36. Dow Chemical and DuPont are the two largest suppliers of 
insecticides used on chewing pests in the United States. Together they 
account for $238 million in annual sales. The merger of Dow Chemical 
and DuPont likely would substantially lessen competition in the market 
for the development, manufacture, and sale of chewing pest 
insecticides.
    37. If the merger between Dow Chemical and DuPont is consummated, 
the combined company will control nearly seventy-five percent of the 
market for chewing pest insecticides in the United States. 
Additionally, Dow Chemical and DuPont's closest competitor sells 
competing products that are mixed with DuPont's Rynaxypyr, for which 
the competitor has a license. As a result, specialty crop farmers would 
have little alternative but to accept increased prices post merger.
    38. Competition between Dow Chemical and DuPont has benefited 
customers of chewing pest insecticides through lower prices, more 
effective solutions, and superior service. Customers also have 
benefited from the competition between Dow Chemical and DuPont by 
obtaining more favorable contract terms, such as financing and priority 
in product shipments to coincide with crop growing seasons. A combined 
Dow Chemical and DuPont would have the incentive and ability to 
eliminate or restrict financial and other incentives to customers, 
extinguishing this competition and those tangible and valuable benefits 
to customers.
    39. The proposed merger, therefore, likely would substantially 
lessen competition for the development, manufacture, and sale of 
chewing pest insecticides, in violation of Section 7 of the Clayton 
Act. This likely would lead to higher prices, less favorable 
contractual terms, and less innovation.

D. Difficulty of Entry

    40. The discovery, development, testing, registration, and 
commercial launch of a new herbicide or insecticide can take ten to 
fifteen years and can cost well over $150 million dollars. Given

[[Page 28890]]

the lengthy development cycle, the high hurdles and substantial cost of 
regulatory approval, entry of additional competitors in the market for 
either broadleaf herbicides for winter wheat or chewing pest 
insecticides is not likely to be timely or sufficient to defeat a post-
merger price increase.

V. ACID COPOLYMERS AND IONOMERS

    41. High-pressure ethylene derivatives (``HiPEDs'') are plastic 
resins produced by ``cracking,'' or breaking down, petrochemicals into 
their constituent parts and combining them with various molecules to 
produce polymer resins. The resulting resins, such as low density 
polyethylene, ethylene vinyl acetate, acrylate copolymers, grafted 
polyolefins, acid copolymers, and ionomers, have different performance 
characteristics, such as hardness, corrosion resistance or scratch 
resistance, depending on the materials used in their construction.
    42. HiPED resins are mixed with other plastic resins to manufacture 
numerous plastic products, such as films, bottles, coatings, and 
packaging. Customers source particular HiPED resins that meet their 
specific needs and requirements and build their manufacturing process 
around specific resin combinations that give the final product the 
desired performance characteristics.
    43. Unlike most HiPED resins, where there is substitution possible 
for both the supply and demand of the products, neither customers nor 
manufacturers can easily switch between acid copolymers and ionomers 
(two specific types of HiPED resins) and other HiPED resins.

A. Acid Copolymers

    44. Acid copolymers are a specific type of HiPED resin manufactured 
using highly acidic input products. In order to handle inputs with high 
acid content, HiPED resin manufacturers must install specific 
corrosion-resistant equipment that is not used for the manufacture of 
other HiPED resins. Such equipment can cost millions of dollars.
    45. Acidic inputs make acid copolymers both highly adhesive and 
very durable. As a result, acid copolymers are used to create strong 
seals between substrates, or ``tie layers,'' of flexible packaging. 
Their increased adhesive ability is particularly necessary in 
applications where packaging will be exposed to challenging 
environments, such as high levels of grease, oil, acid, or dust.
    46. Because of these characteristics, packaging films made using 
acid copolymers are ideal for use in the food and beverage industry. 
Indeed, this industry consumes the vast majority of acid copolymers 
produced, for use in products such as juice boxes, toothpaste tubes, 
and meat and cheese wrap, among others. Unlike other plastic films, 
food and beverage packaging must adhere to strict food safety 
guidelines, and significant deviations from approved formulas must 
undergo a rigorous requalification process that can take significant 
time and expense.
    47. Both Dow Chemical and DuPont manufacture acid copolymers in the 
United States. Dow Chemical manufactures acid copolymers in a dedicated 
corrosion-resistant facility that is part of its larger chemical 
complex in Freeport, Texas. DuPont manufactures acid copolymers and 
other HiPED resins on corrosion-resistant manufacturing lines within 
facilities located in Sabine, Texas and Victoria, Texas.

B. Ionomers

    48. Ionomers are another specific type of HiPED resin. They are 
directly derived from acid copolymers and are produced by neutralizing 
acid copolymers with sodium, zinc, magnesium, or other salts. As a 
result of this process, ionomers are hard and durable. When added to a 
plastic coating, ionomers make the resulting product more impact- and 
cut-resistant.
    49. Ionomers are used in a multitude of applications, such as 
decking and automotive parts. Ionomers are preferred for these end uses 
because their superior toughness and impact resistance protect the 
underlying product from the repeated blows it is subjected to.
    50. Both Dow Chemical and DuPont produce ionomers in the United 
States. DuPont manufactures ionomers in-line with its acid copolymer 
production in Sabine, Texas. Dow Chemical manufactures acid copolymers 
in its Freeport, Texas facility and then ships them to Odessa, Texas, 
where a third party converts them to ionomers.

C. Relevant Markets

1. Acid Copolymers
    51. Food and beverage packaging manufacturers purchase the majority 
of acid copolymers produced in the United States. These customers rely 
upon the superior sealant and adhesive characteristics acid copolymers 
provide as compared to other HiPED resins. Additionally, because food 
and beverage packaging must adhere to strict food safety guidelines, 
significant deviations from approved formulas must undergo a rigorous 
qualification process that can take significant time and incur 
additional costs. Most customers therefore would not switch to another 
product if faced with a significant and non-transitory increase in the 
price of acid copolymers.
    52. Customers have consistently reported that purchasing acid 
copolymers abroad is not a realistic option for domestic purchasers, 
due to taxes, tariffs, logistical costs, and the longer lead times 
associated with importing acid copolymers. Most customers report that 
it would take considerably more than a small, significant, and non-
transitory increase in price to make European suppliers a viable 
alternative to Dow Chemical and DuPont.
    53. A small but significant increase in price for acid copolymers 
sold in the United States would not cause customers to turn to another 
product in sufficient numbers to defeat such a price increase. Thus, 
the development, manufacture, and sale of acid copolymers in the United 
States constitutes a relevant product market and line of commerce under 
Section 7 of the Clayton Act.
2. Ionomers
    54. Customers purchase ionomers for the superior impact- and cut-
resistance characteristics that are not available in other HiPED 
resins. These customers rely on the hardness and resilience that an 
ionomer-based coating provides as compared to other coatings. Customers 
cannot switch to other, less resilient, coatings and cannot forgo the 
use of protective coatings altogether, as either choice would 
significantly decrease the useful lifespan of the underlying products. 
Most customers therefore would not switch to another product if faced 
with a small but significant and non-transitory increase in the price 
of ionomers.
    55. U.S. customers cannot turn to ionomer suppliers abroad due to 
taxes, tariffs, logistical costs, and longer lead times associated with 
importing ionomers. Most customers report that it would take 
considerably more than a small, significant, and non-transitory 
increase in price to make European suppliers a viable alternative to 
Dow Chemical and DuPont.
    56. A small but significant increase in price for ionomers sold in 
the United States would not cause customers to turn to another product 
in sufficient numbers to defeat such a price increase. Thus, the 
development, manufacture, and sale of ionomers in the United States 
constitutes a relevant product market and line of commerce under 
Section 7 of the Clayton Act.

[[Page 28891]]

D. Anticompetitive Effects of the Proposed Transaction

1. Acid Copolymers
    57. Dow Chemical and DuPont are the only two manufacturers of acid 
copolymers in the United States. Dow Chemical controls over 80 percent 
of the U.S. market and DuPont is responsible for 19 percent of sales 
(less than one tenth of one percent of acid copolymers are imported). 
The merger of the only U.S. manufacturers of these products would leave 
customers with little alternative but to accept increased prices post 
merger.
    58. As a result of head-to-head competition between Dow Chemical 
and DuPont, customers have obtained better pricing, service, and 
contract terms. In some cases, customers report that Dow Chemical and 
DuPont have competed to assist customers with the development of new 
uses for existing acid copolymer products, allowing customers to expand 
sales and better serve their own consumers. Customers also have 
benefited from the development of new acid copolymer products, which 
has been spurred on by competition between Dow Chemical and DuPont.
    59. The proposed merger would likely substantially lessen 
competition for the development, manufacture, and sale of acid 
copolymers in violation of Section 7 of the Clayton Act. The U.S. 
market for acid copolymers is highly concentrated and would become 
significantly more concentrated as a result of the proposed merger to 
monopoly: Dow Chemical and DuPont will control over 99 percent of the 
acid copolymers market in the United States post merger, leading to 
higher prices and reduced innovation.
2. Ionomers
    60. Dow Chemical and DuPont are the only two manufacturers of 
ionomers in the United States, where the two companies collectively are 
responsible for all sales. Dow Chemical and DuPont are each other's 
only competitor for ionomers and customers would have no alternative 
but to accept increased prices post merger.
    61. Customers have benefited from the competition between Dow 
Chemical and DuPont. Dow Chemical is the only company contesting 
DuPont's near-monopoly in ionomers. Its presence has resulted in better 
pricing and contract terms for customers, who otherwise would have no 
choice but to purchase from DuPont. Customers also have benefited from 
competition between Dow Chemical and DuPont to develop new products 
from ionomers and new uses for existing ionomer products.
    62. The proposed merger would likely substantially lessen 
competition for the development, manufacture, and sale of ionomers in 
violation of Section 7 of the Clayton Act. The market for ionomers is 
highly concentrated and the proposed merger would result in a monopoly, 
leading to higher prices and reduced innovation.

E. Difficulty of Entry

1. Acid Copolymers
    63. In addition to the specialized equipment required to produce 
ethylene derivatives generally, acid copolymer manufacturing requires a 
high-pressure autoclave and all equipment surfaces must be coated with 
a corrosion-resistant material. Only Dow Chemical and DuPont have both 
high-pressure autoclaves and corrosion-resistant equipment. The cost 
associated with upgrading an existing ethylene derivative manufacturing 
operation to produce acid copolymers is estimated to be in the millions 
of dollars. If the merged firm were to raise prices, timely and 
sufficient entry is unlikely to deter or counteract competitive harm.
2. Ionomers
    64. The manufacturing of ionomers requires specialized know-how as 
well as ready and reliable access to acid copolymers, a key input into 
ionomer manufacturing. Post merger, Dow Chemical and DuPont will 
effectively control the entire U.S. market for acid copolymers. As 
such, even if a third party has the technical capability to manufacture 
ionomers, it would be limited by the amount of acid copolymers it could 
obtain on the open market--a market primarily controlled by the merged 
entity. Because of the specialized know-how and the likely foreclosure 
of access to a key ingredient, if the merged firm were to raise prices, 
timely and sufficient entry would be unlikely to deter or counteract 
competitive harm.

VI. VIOLATIONS ALLEGED

    65. If allowed to proceed, Dow Chemical and DuPont's proposed 
merger would likely reduce or eliminate competition in the markets for 
broadleaf herbicides for winter wheat and chewing pest insecticides, 
and tend to create a monopoly in the markets for acid copolymers and 
ionomers, in the United States in violation of Section 7 of the Clayton 
Act, 15 U.S.C. 18.
    66. Among other things, the transaction would:
    (a) eliminate significant present and future head-to-head 
competition between Dow Chemical and DuPont in the markets for 
broadleaf herbicides for winter wheat, chewing pest insecticides, acid 
copolymers, and ionomers;
    (b) likely raise prices for broadleaf herbicides for winter wheat, 
chewing pest insecticides, acid copolymers, and ionomers;
    (c) likely eliminate innovation rivalry by two of the leading 
developers of new crop protection chemicals;
    (d) consolidate the supply of acid copolymers and ionomers under 
the control of a single firm; and
    (e) likely cause the number and quality of advances in acid 
copolymers and ionomers to decrease.

VII. REQUESTED RELIEF

    67. Plaintiffs request that the Court:
    (a) adjudge and decree that the proposed merger between Dow 
Chemical and DuPont is unlawful and in violation of Section 7 of the 
Clayton Act, 15 U.S.C. 18;
    (b) preliminarily and permanently enjoin and restrain defendants 
and all persons acting on their behalf from entering into any 
agreement, understanding, or plan whereby Dow Chemical and DuPont would 
merge or combine;
    (c) award Plaintiffs the costs of this action; and
    (d) grant Plaintiffs such other and further relief as the Court may 
deem just and proper.

Dated: June 15, 2017

Respectfully submitted,

For Plaintiff United States of America:

/s/--------------------------------------------------------------------
Andrew C. Finch (DC Bar #494992)
Acting Assistant Attorney General

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

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

/s/--------------------------------------------------------------------
Stephanie A. Fleming
Assistant Chief, Litigation II Section

/s/--------------------------------------------------------------------
Lowell R. Stern (DC Bar #440487)
Don P. Amlin (DC Bar # 978349)
Jeremy W. Cline
Tracy L. Fisher
Michael K. Hammaker
Steve A. Harris
Jay D. Owen
Blake W. Rushforth
Tara M. Shinnick (DC Bar #501462)
James L. Tucker
United States Department of Justice, Antitrust Division, Litigation 
II Section, 450 Fifth Street NW., Suite 8700, Washington, DC 20530, 
(202) 514-3676, (202) 514-9033 (Facsimile), lowell.stern@usdoj.gov

For Plaintiff State of Iowa

Thomas J. Miller
Attorney General


[[Page 28892]]


/s/--------------------------------------------------------------------
Layne M. Lindebak
Assistant Attorney General, Iowa Department of Justice, Hoover 
Office Building--Second Floor, 1305 East Walnut Street, Des Moines, 
IA 50319, Phone: 515-281-7054, Fax: 515-281-4902, 
Layne.Lindebak@Iowa.gov

For Plaintiff State of Mississippi

Jim Hood
Attorney General

/s/--------------------------------------------------------------------
Crystal Utley Secoy
Special Assistant Attorney General, Consumer Protection Division, 
Mississippi Attorney General's Office, Post Office Box 22947, 
Jackson, Mississippi 39225, Phone: 601-359-4213, Fax: 601-359-4231, 
cutle@ago.state.ms.us

For Plaintiff State of Montana

Timothy C. Fox
Attorney General

/s/--------------------------------------------------------------------
Chuck Munson
Assistant Attorney General, Montana Department of Justice, Office of 
Consumer Protection, 555 Fuller Avenue, Helena, Montana, Phone: 406-
444-9637, Fax: 406-442-1874, cmunson@mt.gov

CERTIFICATE OF SERVICE

    I, Lowell Stern, hereby certify that on June 15, 2017, I caused a 
copy of the foregoing Complaint, Asset Preservation Stipulation and 
Order, proposed Final Judgment, Competitive Impact Statement, and 
Explanation of Consent Decree Procedures, to be served upon defendants 
The Dow Chemical Company and E.I. du Pont de Nemours and Company by 
mailing the documents electronically to their duly authorized legal 
representatives, as follows:

Counsel for The Dow Chemical Company:
George Cary, Cleary Gottlieb Steen & Hamilton LLP, 2000 Pennsylvania 
Avenue, NW., Washington, DC 20006, gcary@cgsh.com

Counsel for E.I. du Pont de Nemours and Company:
Clifford Aronson, Skadden, Arps, Slate, Meagher & Flom, LLP, 4 Times 
Square, New York, NY 10036, Clifford.Aronson@skadden.com

/s/--------------------------------------------------------------------
Lowell R. Stern (DC Bar #440487)
United States Department of Justice, Antitrust Division, Litigation II 
Section, 450 Fifth Street NW., Suite 8700, Washington, DC 20530, Phone: 
202-514-3676, Fax: 202-514-9033, lowell.stern@usdoj.gov

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    United States of America, State of Iowa, State of Mississippi, 
and State of Montana, Plaintiffs, v. The Dow Chemical Company and 
E.I DuPont De Nemours and Company Defendents.

Case No.: 1:17-cv-01176
Judge: Amit Mehta

PROPOSED FINAL JUDGMENT

    WHEREAS, plaintiffs United States of America and the States of 
Iowa, Mississippi, and Montana (collectively, ``Plaintiff States''), 
filed their Complaint on June 15, 2017, plaintiffs and defendants, The 
Dow Chemical Company and E.I. du Pont de Nemours and Company, 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 and assets by defendants to 
assure that 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 hardship or difficulty as grounds for 
asking the Court to modify any of the divestiture 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, 15 U.S.C. 18.

II. DEFINITIONS

    As used in this Final Judgment:
    A. ``Acquirer'' or ``Acquirers'' means the entity or entities to 
which defendants divest the Divestiture Assets.
    B. ``Acquirer of the Crop Protection Divestiture Assets'' means the 
entity to which defendants divest the Crop Protection Divestiture 
Assets.
    C. ``Acquirer of the Material Science Divestiture Assets'' means 
the entity to which defendants divest the Material Science Divestiture 
Assets.
    D. ``DuPont'' means defendant E.I. du Pont de Nemours and Company, 
a Delaware corporation with its headquarters in Wilmington, Delaware, 
its successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships and joint ventures, and their directors, 
officers, managers, agents, and employees.
    E. ``Dow Chemical'' means defendant The Dow Chemical Company, a 
Delaware corporation with its headquarters in Midland, Michigan, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships and joint ventures, and their directors, 
officers, managers, agents, and employees.
    F. ``Calgary Facility'' means DuPont's interest in the facility 
located at 4444 72nd Avenue SE., Calgary, Alberta, Canada T2C 2C1.
    G. ``Freeport Facility'' means Dow Chemical's dedicated acid 
copolymer production facility located within the B-7700 Block and B-
7800 Block of Dow Chemical's integrated chemical site at 2301 
Brazosport Blvd., APB Building, Freeport, Texas 77541, including a 
ground lease to the real property underlying the Freeport Facility, but 
not including ownership of any underlying real property.
    H. ``Manati Manufacturing Unit'' means the manufacturing unit 
within DuPont's industrial complex at Km \2/3\ Rr 686, Tierras Nuevas 
Salientes Ward, Manati, Puerto Rico 00674.
    I. ``Mobile Facility'' means DuPont's facility located at 12650 
Highway 43 N, Axis, Alabama 36505.
    J. ``DuPont's Finesse-formulated products'' means all products 
(including Finesse) packaged at the Calgary Facility and containing the 
active ingredients Metsulfuron Methyl and Chlorsulfuron Methyl produced 
at the Manati Manufacturing Unit.
    K. ``DuPont's Rynaxypyr-formulated products'' means all products 
manufactured at the Mobile Facility that contain the active ingredient 
Chlorantraniliprole (including Altacor, Coragen, and Prevathon), except 
seed treatment applications.
    L. The ``Finesse Business'' means:
    1. the Manati Manufacturing Unit;
    2. the lease to the Calgary Facility;
    3. all tangible assets primarily relating to DuPont's Finesse-
formulated products, including, but not limited to, manufacturing 
equipment, tooling and fixed assets, personal property, inventory, 
office furniture, materials, supplies, and other tangible property and 
all assets at the Manati Manufacturing Unit and at the Calgary Facility 
used in connection with DuPont's Finesse-formulated products;

[[Page 28893]]

all licenses, permits and authorizations issued by any governmental 
organization primarily relating to DuPont's Finesse-formulated products 
(to the extent such licenses, permits, and authorizations are capable 
of assignment or transfer); all contracts (or portions thereof), 
teaming arrangements, agreements (or portions thereof), leases, 
commitments, certifications, and understandings, primarily relating to 
DuPont's Finesse-formulated products, including supply agreements; all 
customer lists, contracts, accounts, and credit records primarily 
relating to DuPont's Finesse-formulated products; all repair and 
performance records and all other records primarily relating to 
DuPont's Finesse-formulated products; except that defendants may retain 
copies of or access to any tangible assets primarily relating to 
DuPont's Finesse-formulated products that are necessary in order to 
perform any services pursuant to their agreements with the Acquirer of 
the Crop Protection Divestiture Assets, provided, however, that 
defendants may not otherwise use any such tangible assets in connection 
with the development, manufacture, and/or sale of broadleaf herbicides 
for winter wheat; and
    4. all intangible assets owned, licensed, controlled, or used by 
DuPont, wherever located, primarily relating to DuPont's Finesse-
formulated products, including, but not limited to, all patents, 
licenses and sublicenses, intellectual property, copyrights, trademarks 
(including Finesse), trade names, service marks, service names, 
technical information, computer software 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 DuPont 
provides to its own employees, customers, suppliers, agents or 
licensees, and all research data concerning historic and current 
research and development efforts primarily relating to DuPont's 
Finesse-formulated products, including, but not limited to, designs of 
experiments, and the results of successful and unsuccessful designs and 
experiments; except that defendants may retain copies of or access to 
any intangible assets primarily relating to DuPont's Finesse-formulated 
products that are necessary in order to perform any services pursuant 
to their agreements with the Acquirer of the Crop Protection 
Divestiture Assets, provided, however, that defendants may not 
otherwise use any such intangible assets in connection with the 
development, manufacture, and/or sale of broadleaf herbicides for 
winter wheat.
    M. The ``Rynaxypyr Business'' means:
    1. the Mobile Facility;
    2. all tangible assets primarily relating to DuPont's Rynaxypyr-
formulated products, including, but not limited to, manufacturing 
equipment, tooling and fixed assets, personal property, inventory, 
office furniture, materials, supplies, and other tangible property and 
all assets at the Mobile Facility used in connection with DuPont's 
Rynaxypyr-formulated products; all licenses, permits, and 
authorizations issued by any governmental organization primarily 
relating to DuPont's Rynaxypyr-formulated products (to the extent such 
licenses, permits, and authorizations are capable of assignment or 
transfer); all contracts (or portions thereof), teaming arrangements, 
agreements (or portions thereof), leases, commitments, certifications, 
and understandings, primarily relating to DuPont's Rynaxypyr-formulated 
products, including supply agreements; all customer lists, contracts, 
accounts, and credit records primarily relating to DuPont's Rynaxypyr-
formulated products; all repair and performance records and all other 
records primarily relating to DuPont's Rynaxypyr-formulated products; 
except that defendants (i) may retain copies of or access to any 
tangible assets used by DuPont primarily relating to the Rynaxypyr-
formulated products that are necessary in order to perform any services 
pursuant to their agreements with the Acquirer of the Crop Protection 
Divestiture Assets and (ii) may retain seed treatment assets, provided, 
however, that defendants may not otherwise use any such tangible assets 
in connection with the development, manufacture, and/or sale of 
insecticides for chewing pests; and
    3. all intangible assets owned, licensed, controlled, or used by 
DuPont, wherever located, primarily relating to DuPont's Rynaxypyr-
formulated products, including, but not limited to, all patents, 
licenses and sublicenses, intellectual property, copyrights, trademarks 
(including Altacor, Coragen, and Prevathon), trade names, service 
marks, service names, technical information, computer software 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 DuPont 
provides to its own employees, customers, suppliers, agents or 
licensees; and all research data concerning historic and current 
research and development efforts primarily relating to DuPont's 
Rynaxypyr-formulated products, including, but not limited to, designs 
of experiments, and the results of successful and unsuccessful designs 
and experiments; except that defendants (i) may retain copies of or 
access to any intangible assets used by DuPont relating to DuPont's 
Rynaxypyr-formulated products that are necessary in order to perform 
any services pursuant to their agreements with the Acquirer of the Crop 
Protection Divestiture Assets and (ii) may retain seed treatment 
assets, provided, however, that defendants may not otherwise use any 
such intangible assets in connection with the development, manufacture, 
and/or sale of insecticides for chewing pests.
    N. ``Crop Protection Divestiture Assets'' means:
    1. the Finesse Business; and
    2. the Rynaxypyr Business.
    O. ``Material Science Divestiture Assets'' means:
    1. the Freeport Facility;
    2. all tangible assets located at the Freeport Facility and 
primarily used by Dow Chemical's acid copolymer and ionomers business 
in the United States, including, but not limited to, research and 
development assets, manufacturing equipment, tooling and fixed assets, 
personal property, inventory, office furniture, materials, supplies, 
and other tangible property, except that the Material Science 
Divestiture Assets do not include (i) information technology, 
equipment, and tools (e.g., servers, network equipment, and enterprise 
workstations) connected to Dow Chemical's network or (ii) tangible 
assets that will be used by defendants to perform any services pursuant 
to their agreements with the Acquirer of the Material Science 
Divestiture Assets, provided, however, that defendants may not use any 
such tangible assets to develop, manufacture, and/or sell acid 
copolymers and ionomers; all licenses, permits, and authorizations 
issued by any governmental organization primarily for the benefit of 
the acid copolymer and ionomers business in the United States (to the 
extent such licenses, permits, and authorizations are capable of 
assignment or transfer); all contracts, teaming arrangements, 
agreements, including supply agreements, leases, commitments, 
certifications, and understandings

[[Page 28894]]

primarily relating to Dow Chemical's acid copolymer and ionomers 
business in the United States (collectively ``Contracts''), in each 
case to the extent relating to the acid copolymer and ionomers 
business, provided that to the extent transfer of any Contract requires 
the consent of another party, Dow Chemical shall satisfy its obligation 
by using reasonable best efforts to obtain such consent; all customer 
lists, accounts, and credit records, in each case to the extent 
relating to the acid copolymer and ionomers business; all records 
primarily relating to the acid copolymer and ionomers business in the 
United States, including repair and performance records, 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, manuals and 
technical information Dow Chemical provides to its own employees, 
customers, suppliers, agents or licensees of such acid copolymer and 
ionomers business, and research data concerning historic and current 
research and development efforts, including but not limited to, designs 
of experiments, and the results of successful and unsuccessful designs 
and experiments, in each case to the extent relating to the acid 
copolymer and ionomers business, except that defendants may retain 
copies of or access to (i) any such records used by defendants' 
retained businesses other than Dow Chemical's acid copolymer and 
ionomers business and (ii) any such records used in connection with an 
OSA or to perform any services pursuant to their agreements with the 
Acquirer of the Material Science Divestiture Assets, provided, however, 
that defendants may not use any such records to develop, manufacture, 
and/or sell acid copolymers and ionomers; and
    3. all intangible assets primarily used by Dow Chemical in 
connection with the development, manufacture, and/or sale of acid 
copolymers and ionomers in the United States, including, but not 
limited to, patents, licenses and sublicenses, intellectual property, 
copyrights, trademarks (including Primacor), trade names, service 
marks, service names, technical information, know-how, and trade 
secrets, except that, to the extent any intangible assets primarily 
used by Dow Chemical's acid copolymer and ionomers business in the 
United States are also used by other Dow Chemical businesses or are 
necessary to perform any services pursuant to defendants' agreements 
with the Acquirer of the Material Science Divestiture Assets, 
defendants will receive a license to use such intangible assets from 
the Acquirer of the Material Science Divestiture Assets, provided, 
however, that defendants may not use any such intangible assets to 
develop, manufacture, and/or sell acid copolymers and ionomers.
    P. ``Divestiture Assets'' means the Crop Protection Divestiture 
Assets and the Material Science Divestiture Assets.

III. APPLICABILITY

    A. This Final Judgment applies to DuPont and Dow Chemical, 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 Sections IV, V, and VI of this Final 
Judgment, defendants sell or otherwise dispose of all or substantially 
all of their assets or lesser business units that include the 
Divestiture Assets, they shall require the purchaser or purchasers to 
be bound by the provisions of this Final Judgment. Defendants need not 
obtain such an agreement from the Acquirers of the assets divested 
pursuant to this Final Judgment.

IV. CROP PROTECTION DIVESTITURE

    A. Defendants are ordered and directed, within thirty (30) calendar 
days after the consummation of the merger of Dow Chemical and DuPont, 
or sixty (60) calendar days after notice of the entry of this Final 
Judgment by the Court, whichever is later, to divest the Crop 
Protection 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 Plaintiff States. The United 
States, in its sole discretion, may agree to one or more extensions of 
this time period not to exceed sixty (60) calendar days in total, and 
shall notify the Court in such circumstances. Defendants agree to use 
their best efforts to divest the Crop Protection Divestiture Assets as 
expeditiously as possible.
    B. In accomplishing the divestiture ordered by Section IV of this 
Final Judgment, to the extent they have not done so prior to the filing 
of the Complaint, defendants promptly shall make known, by usual and 
customary means, the availability of the Crop Protection Divestiture 
Assets. Defendants shall inform any person making an inquiry regarding 
a possible purchase of the Crop Protection 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 of the Crop Protection Divestiture 
Assets, subject to customary confidentiality assurances, all 
information and documents relating to the Crop Protection Divestiture 
Assets customarily provided in a due diligence process except such 
information or documents subject to the attorney-client privilege or 
work-product doctrine. Defendants shall make available such information 
to plaintiffs at the same time that such information is made available 
to any other person.
    C. To the extent they have not done so prior to the filing of the 
Complaint, defendants shall provide to the prospective Acquirer of the 
Crop Protection Divestiture Assets and the United States information 
relating to the personnel involved in the development, manufacture, 
and/or sale of the Crop Protection Divestiture Assets to enable the 
Acquirer to make offers of employment. Defendants will not interfere 
with any negotiations by the Acquirer of the Crop Protection 
Divestiture Assets to employ any defendant employee whose primary 
responsibility is the development, manufacture, and/or sale of the Crop 
Protection Divestiture Assets.
    D. Defendants shall permit the Acquirer of the Crop Protection 
Divestiture Assets to have reasonable access to personnel and to make 
inspections of the Manati Manufacturing Unit, the Calgary Facility, and 
the Mobile Facility; 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.
    E. Defendants shall warrant to the Acquirer of the Crop Protection 
Divestiture Assets that each asset will be operational in all material 
respects on the date of sale.
    F. Defendants shall not take any action that will impede in any 
material way the permitting, operation, or divestiture of the Crop 
Protection Divestiture Assets.
    G. At the option of the Acquirer of the Crop Protection Divestiture 
Assets, defendants shall enter into a contract for formulation services 
for the Finesse-formulated products at DuPont's El Paso, Illinois 
facility and the Rynaxypyr-formulated products at DuPont's Valdosta, 
Georgia facility. The formulation services agreement shall be in effect 
for one year after all necessary

[[Page 28895]]

regulatory approvals for a new formulation site have been granted by 
jurisdictions where the Finesse-formulated products and the Rynaxypyr-
formulated products are currently registered (or such lesser period of 
time as mutually expected by the defendants and the Acquirer of the 
Crop Protection Divestiture Assets). At the request of the Acquirer, 
the United States in its sole discretion may approve an extension of 
the term of the formulation services agreement not to exceed two (2) 
years, provided that the Acquirer of the Crop Protection Divestiture 
Assets notifies the United States in writing at least four (4) months 
prior to the date the agreement expires. The United States shall 
respond to any such request for extension in writing at least three (3) 
months prior to the date the formulation services agreement expires. 
The terms and conditions of any contractual arrangement meant to 
satisfy this provision must be reasonably related to market conditions 
for formulation services.
    H. Defendants shall warrant to the Acquirer of the Crop Protection 
Divestiture Assets 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 Crop Protection 
Divestiture Assets, defendants will not undertake, directly or 
indirectly, any challenges to the environmental, zoning, or other 
permits relating to the operation of the Crop Protection Divestiture 
Assets.
    I. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section IV, or by Divestiture Trustee appointed 
pursuant to Section VI, of this Final Judgment, shall include the 
entire Crop Protection Divestiture Assets, and shall be accomplished in 
such a way as to satisfy the United States, in its sole discretion, 
after consultation with the Plaintiff States, that the Crop Protection 
Divestiture Assets can and will be used by the Acquirer as part of a 
viable, ongoing business in the development, manufacture, and sale in 
the United States of (1) broadleaf herbicides for winter wheat and (2) 
insecticides for chewing pests. The divestiture, whether pursuant to 
Section IV or Section VI of this Final Judgment,
    (1) shall be made to an Acquirer that, in the United States' sole 
judgment, after consultation with the Plaintiff States, has the intent 
and capability (including the necessary managerial, operational, 
technical and financial capability) of competing effectively in the 
businesses of developing, manufacturing, and selling (a) broadleaf 
herbicides for winter wheat and (b) insecticides for chewing pests; and
    (2) shall be accomplished so as to satisfy the United States, in 
its sole discretion, after consultation with the Plaintiff States, that 
none of the terms of any agreement between the 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. MATERIAL SCIENCE DIVESTITURE

    A. Defendants are ordered and directed, within thirty (30) calendar 
days after the consummation of the merger of Dow Chemical and DuPont, 
or sixty (60) calendar days after notice of the entry of this Final 
Judgment by the Court, whichever is later, to divest the Material 
Science Divestiture Assets in a manner consistent with this Final 
Judgment to an Acquirer acceptable to the United States, in its sole 
discretion. The United States, in its sole discretion, may agree to one 
or more extensions of this time period not to exceed sixty (60) 
calendar days in total, and shall notify the Court in such 
circumstances. Defendants agree to use their best efforts to divest the 
Material Science Divestiture Assets as expeditiously as possible.
    B. In accomplishing the divestiture ordered by Section V of this 
Final Judgment, to the extent they have not done so prior to the filing 
of the Complaint, defendants promptly shall make known, by usual and 
customary means, the availability of the Material Science Divestiture 
Assets. Defendants shall inform any person making an inquiry regarding 
a possible purchase of the Material Science 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 of the Material Science 
Divestiture Assets, subject to customary confidentiality assurances, 
all information and documents relating to the Material Science 
Divestiture Assets customarily provided in a due diligence process 
except such information or documents subject to the attorney-client 
privilege or work-product doctrine. Defendants shall make available 
such information to plaintiffs at the same time that such information 
is made available to any other person.
    C. To the extent they have not done so prior to the filing of the 
Complaint, defendants shall provide the Acquirer of the Material 
Science Divestiture Assets and the United States information relating 
to personnel whose primary responsibility is the development, 
manufacture, and/or sale of the Material Science Divestiture Assets, 
excluding Dow Chemical employees who will provide services under the 
OSA, to enable the Acquirer to make offers of employment. Defendants 
will not interfere with any negotiations by the Acquirer of the 
Material Science Divestiture Assets to employ any defendant employee 
whose primary responsibility is the development, manufacture, and/or 
sale of the Material Science Divestiture Assets, excluding Dow Chemical 
employees who will provide services under the OSA.
    D. Defendants shall permit the Acquirer of the Material Science 
Divestiture Assets to have reasonable access to personnel and to make 
inspections of the Freeport Facility; access to any and all 
environmental, zoning, and other permit documents and information 
related to the Freeport Facility; and access to any and all financial, 
operational, or other documents and information related to the Freeport 
Facility; in each case as customarily provided as part of a due 
diligence process.
    E. Defendants shall warrant to the Acquirer of the Material Science 
Divestiture Assets that such assets will be in substantially the same 
operating condition on the date of sale as they were on February 1, 
2017.
    F. Defendants shall not take any action that will impede in any way 
the permitting, operation, or divestiture of the Material Science 
Divestiture Assets.
    G. At the option of the Acquirer of the Material Science 
Divestiture Assets, defendants shall enter into an operating services 
agreement (``OSA'') with the Acquirer sufficient to meet the Acquirer's 
needs for assistance in matters relating to the operation of the 
Material Science Divestiture Assets. If the Acquirer elects to self-
operate the Material Science Divestiture Assets, defendants may require 
the written execution of an agreement by the Acquirer to indemnify 
defendants for breaches of any environmental permits that result from 
the operation of the Material Science Divestiture Assets by an operator 
other than defendants.
    H. Defendants shall warrant to the Acquirer of the Material Science 
Divestiture Assets 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 Material Science 
Divestiture Assets, defendants will not undertake, directly or 
indirectly, any challenges to the environmental, zoning, or other 
permits

[[Page 28896]]

relating to the operation of the Material Science Divestiture Assets.
    I. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section V, or by Divestiture Trustee(s) 
appointed pursuant to Section VI, of this Final Judgment, shall include 
the entire Material Science Divestiture Assets, and shall be 
accomplished in such a way as to satisfy the United States, in its sole 
discretion, that the Material Science Divestiture Assets can and will 
be used by the Acquirer of the Material Science Divestiture Assets as 
part of a viable, ongoing business in the development, manufacture, and 
sale of acid copolymers and ionomers in the United States. The 
divestiture, whether pursuant to Section V or Section VI of this Final 
Judgment,
    (1) shall be made to an Acquirer that, in the United States' sole 
judgment, has the intent and capability (including the necessary 
managerial, operational, technical and financial capability) of 
competing effectively in the business of developing, manufacturing, and 
selling acid copolymers and ionomers; and
    (2) shall be accomplished so as to satisfy the United States, in 
its sole discretion, that none of the terms of any agreement between 
the 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.

VI. APPOINTMENT OF DIVESTITURE TRUSTEE(S)

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

[[Page 28897]]

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 Divestiture Trustee(s)' 
appointment by a period requested by the United States.
    H. If the United States determines that the Divestiture Trustee(s) 
have ceased to act or failed to act diligently or in a reasonably cost-
effective manner, it may recommend the Court appoint substitute 
Divestiture Trustee(s).

VII. NOTICE OF PROPOSED DIVESTITURES

    A. Within two (2) business days following execution of any 
definitive divestiture agreement, defendants or the Divestiture 
Trustee(s), whichever is then responsible for effecting the 
divestitures required herein, shall notify plaintiffs of any proposed 
divestiture required by Section IV, V, or VI of this Final Judgment. If 
the Divestiture Trustee(s) are responsible, they shall similarly notify 
defendants. The notice shall set forth the details of the proposed 
divestitures 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 
Asset(s), together with full details of the same.
    B. Within fifteen (15) calendar days of receipt by plaintiffs of 
such notice, the United States, after consultation with the Plaintiff 
States, may request from defendants, the proposed Acquirer, any other 
third party, or the Divestiture Trustee(s), if applicable, additional 
information concerning the proposed divestiture, the proposed Acquirer, 
and any other potential Acquirer. Defendants and the Divestiture 
Trustee(s) shall furnish any additional information requested, except 
such information or documents subject to the attorney-client privilege 
or work-product doctrine, 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 Divestiture Trustee(s), 
whichever is later, the United States shall provide written notice to 
defendants and the Divestiture Trustee(s), if there is one or more, 
stating whether or not it objects to the proposed divestiture. If the 
United States provides written notice that it does not object, a 
divestiture may be consummated, subject only to defendants' limited 
right to object to the sale under Paragraph VI(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, 
divestiture proposed under Section IV, V, or VI shall not be 
consummated. Upon objection by defendants under Paragraph VI(C), a 
divestiture proposed under Section VI shall not be consummated unless 
approved by the Court.

VIII. FINANCING

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

IX. ASSET PRESERVATION

    Until the divestitures required by this Final Judgment have been 
accomplished, defendants shall take all steps necessary to comply with 
the Asset Preservation Stipulation and Order entered by this Court. 
Defendants shall take no action that would jeopardize the divestitures 
ordered by this Court.

X. 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 divestitures have been completed under Section IV, V, and/or VI, 
defendants shall deliver to the United States an affidavit as to the 
fact and manner of its compliance with Section IV, V, and/or VI 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 IX 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 
divestitures have been completed.

XI. APPOINTMENT OF MONITORING TRUSTEE(S)

    A. Upon application of the United States, the Court shall appoint a 
Monitoring Trustee or Trustees selected by the United States and 
approved by the Court.
    B. The Monitoring Trustee(s) shall have the power and authority to 
monitor defendants' compliance with the terms of this Final Judgment 
and the Asset Preservation Stipulation and Order entered by this Court, 
and shall have such other powers as this Court deems appropriate. The 
Monitoring Trustee(s) shall be required to investigate and report on 
the defendants' compliance with this Final Judgment and the Asset 
Preservation Stipulation and Order and the defendants' progress toward 
effectuating the purposes of this Final Judgment.
    C. Subject to Paragraph XI(E) of this Final Judgment, the 
Monitoring Trustee(s) may hire at the cost and expense of defendants 
any consultants, accountants, attorneys, or other agents, who shall be 
solely accountable to the Monitoring Trustee(s), as reasonably 
necessary in the Monitoring Trustee(s)' judgment. Any such consultants, 
accountants, attorneys, or other agents shall serve on such terms and 
conditions as the United States approves, including confidentiality 
requirements and conflict of interest certifications.
    D. Defendants shall not object to actions taken by the Monitoring 
Trustee(s) in fulfillment of the Monitoring Trustee(s)' 
responsibilities under any Order of this Court on any ground other than 
the Monitoring Trustee(s)' malfeasance. Any such objections by 
defendants must be conveyed in writing to the United States

[[Page 28898]]

and the Monitoring Trustee(s) within ten (10) calendar days after the 
action taken by the Monitoring Trustee(s) giving rise to the 
defendants' objection.
    E. The Monitoring Trustee(s) shall serve at the cost and expense of 
defendants pursuant to a written agreement with defendants and on such 
terms and conditions as the United States approves, including 
confidentiality requirements and conflict of interest certifications. 
The compensation of the Monitoring Trustee(s) and any consultants, 
accountants, attorneys, and other agents retained by the Monitoring 
Trustee(s) shall be on reasonable and customary terms commensurate with 
the individuals' experience and responsibilities. If the Monitoring 
Trustee(s) and defendants are unable to reach agreement on the 
Monitoring Trustee(s)' or any agents' or consultants' compensation or 
other terms and conditions of engagement within fourteen (14) calendar 
days of appointment of the Monitoring Trustee(s), the United States 
may, in its sole discretion, take appropriate action, including making 
a recommendation to the Court. The Monitoring Trustee(s) shall, within 
three (3) business days of hiring any consultants, accountants, 
attorneys, or other agents, provide written notice of such hiring and 
the rate of compensation to defendants and the United States.
    F. The Monitoring Trustee(s) shall have no responsibility or 
obligation for the operation of defendants' businesses.
    G. Defendants shall use their best efforts to assist the Monitoring 
Trustee(s) in monitoring defendants' compliance with their individual 
obligations under this Final Judgment and under the Asset Preservation 
Stipulation and Order. The Monitoring Trustee(s) and any consultants, 
accountants, attorneys, and other agents retained by the Monitoring 
Trustee(s) shall have full and complete access to the personnel, books, 
records, and facilities relating to compliance with this Final 
Judgment, subject to reasonable protection for trade secret or other 
confidential research, development, or commercial information or any 
applicable privileges. Defendants shall take no action to interfere 
with or to impede the Monitoring Trustee(s)' accomplishment of their 
responsibilities.
    H. After their appointment, the Monitoring Trustee(s) shall file 
reports monthly, or more frequently as needed, with the United States 
and, as appropriate, the Court setting forth defendants' efforts to 
comply with their obligations under this Final Judgment and under the 
Asset Preservation Stipulation and Order. To the extent such reports 
contain information that the Monitoring Trustee(s) deem confidential, 
such reports shall not be filed in the public docket of the Court.
    I. The Monitoring Trustee(s) shall serve for at least six (6) 
months after the divestiture of the Divestiture Assets is finalized 
pursuant to either Section IV, V and/or VI of this Final Judgment. The 
United States, in its sole discretion, may extend this time period.
    J. If the United States determines that the Monitoring Trustee(s) 
have ceased to act or failed to act diligently or in a reasonably cost-
effective manner, it may recommend the Court appoint substitute 
Monitoring Trustee(s).

XII. COMPLIANCE INSPECTION

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of any related orders such as any Asset Preservation 
Stipulation and 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 of the Plaintiff States, except in the course of legal 
proceedings to which the United States is a party (including grand jury 
proceedings), or for the purpose of securing compliance with this Final 
Judgment, or as otherwise required by law.
    D. If at 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)(1)(G) 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)(1)(G) 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).

XIII. NO REACQUISITION

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

XIV. 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.

XV. EXPIRATION OF FINAL JUDGMENT

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

XVI. 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. 16, including making copies available to the 
public of this Final Judgment, the Competitive Impact Statement, and 
any comments thereon and the United States' 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:------------------------------------------------------------------

[[Page 28899]]

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

-----------------------------------------------------------------------
United States District Judge

United States District Court for The District of Columbia

    United States of America, State of Iowa, State of Mississippi 
and State of Montana, Plaintiffs, v. The Dow Chemical Company and 
E.I. Du Pont de Nemours and Company, Defendants.

Case No.: 1:17-cv-01176
Judge: Amit Mehta

COMPETITIVE IMPACT STATEMENT

    Plaintiff United States of America (``United States''), pursuant to 
Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or 
``Tunney Act''), 15 U.S.C. 16(b)-(h), files this Competitive Impact 
Statement relating to the proposed Final Judgment submitted for entry 
in this civil antitrust proceeding.

I. NATURE AND PURPOSE OF THE PROCEEDING

    In December 2015, The Dow Chemical Company (``Dow Chemical'') and 
E.I. du Pont de Nemours and Company (``DuPont'') announced that they 
had agreed to a merger of equals in a deal estimated to be valued at 
over $130 billion. If consummated, the merged entity would be one of 
the largest chemical companies in the world.
    Plaintiffs filed a civil antitrust Complaint on June 15, 2017, 
seeking to enjoin the proposed acquisition. The Complaint alleges that 
the acquisition would likely reduce or eliminate competition in the 
markets for broadleaf herbicides for winter wheat and chewing pest 
insecticides, and tend to create a monopoly in the markets for acid 
copolymers and ionomers, in the United States in violation of Section 7 
of the Clayton Act, 15 U.S.C. 18. That loss of competition likely would 
result in increased prices and a reduction in service and innovation 
for the customers who rely upon these products.
    At the same time the Complaint was filed, the Plaintiffs filed a 
proposed Final Judgment and an Asset Preservation Stipulation and Order 
which, together, are designed to eliminate the anticompetitive effects 
of the acquisition. Under the proposed Final Judgment, which is 
explained more fully below, DuPont is required to divest its Finesse-
formulated herbicide products (active ingredients Metsulfuron Methyl 
and Chlorsulfuron Methyl), and its Rynaxypyr-formulated insecticide 
products, along with the assets used to develop, manufacture, and sell 
those products. Dow Chemical is required to divest its Freeport, Texas 
acid copolymers and ionomers manufacturing unit and associated assets. 
Under the terms of the Asset Preservation Stipulation and Order, DuPont 
and Dow Chemical will also take certain steps to ensure that the 
divestiture assets are operated as competitively independent, 
economically viable, and ongoing business concerns; that they remain 
uninfluenced by the consummation of the acquisition; and that 
competition is maintained during the pendency of the ordered 
divestiture.
    The 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 Proposed Transaction

    Dow Chemical, founded in 1897, is headquartered in Midland, 
Michigan, operates in approximately 180 countries, and employs over 
50,000 people worldwide. In 2016, Dow Chemical had revenues of 
approximately $48 billion. Dow Chemical's primary lines of business are 
chemical, plastic, and agricultural products and services. Dow 
Chemical's products are used in various industries, ranging from 
agriculture to consumer goods.
    DuPont, founded in 1802, is headquartered in Wilmington, Delaware, 
operates in approximately 90 countries, and employs more than 60,000 
people worldwide. In 2016, DuPont reported revenues of $24.5 billion. 
DuPont's primary products include crop protection chemicals and 
performance products, such as plastics and polymers.
    Pursuant to a December 11, 2015 agreement, Dow Chemical and DuPont 
have agreed to an all-stock merger of equals. At the time of the merger 
announcement, the combined market capitalization of the companies was 
$130 billion. The merger plan contemplates spinning off the firms' 
combined assets into three separate, publicly-traded companies as soon 
as feasible. One of those companies would focus on agriculture products 
(with approximately $18 billion in revenue), another on material 
sciences (approximately $51 billion in revenue), and a third on 
``specialty'' products, such as organic light-emitting diodes and 
building wrap (approximately $13 billion in revenue).

B. Crop Protection Chemicals

1. Background
    Crop protection chemicals are used to protect crops from damage or 
loss from other biological organisms such as weeds, insects, or disease 
(e.g., fungus). Crop protection chemicals are critical to protecting 
crop yield--the total amount of a crop produced at each harvest--which 
benefits farmers and American consumers. Crop protection chemicals can 
be separated into three broad categories that have different qualities 
and attributes: Herbicides (to combat weeds); insecticides (to combat 
insect pests); and fungicides (to combat microbial disease).
    The key component of any particular crop protection chemical is the 
``active ingredient,'' which is the chemical molecule that produces the 
desired effect against the targeted weed or insect pest. Crop 
protection chemicals are typically sold as ``formulated products'' that 
contain the active ingredient and also inactive ingredients such as 
solvents, fillers, and adjuvants used to stabilize the active 
ingredient and facilitate its effective use on the intended crops.
    Both active ingredients and formulated products must be registered 
with the U.S. Environmental Protection Agency (``EPA'') and approved 
for use. In order to gain approval, products must meet stringent 
toxicity and efficacy standards. Approvals are granted on a crop-by-
crop basis and contain strict dosage requirements. A farmer wishing to 
control a certain pest on his or her farm can use only the products and 
dose-rates that the EPA has approved for the particular crops to which 
the product will be applied.
    The crop protection industry includes a handful of large integrated 
research and development firms (including Dow Chemical and DuPont) that 
develop, manufacture, and sell crop protection chemicals. While the 
large research and development firms sometimes sell directly to 
farmers, their primary customers are large distributors and farmer co-
ops that resell products to farmers.
a. Broadleaf Herbicides for Winter Wheat
    Both Dow Chemical and DuPont produce herbicides for winter wheat.

[[Page 28900]]

Winter wheat is a type of grass that is planted in autumn and produces 
an edible grain. In the United States, winter wheat is grown primarily 
in the Great Plains states, including Kansas, Nebraska, and Texas.
    Herbicides are chemicals used to combat weeds that harm crops. They 
can be selective (killing only certain types of plants) or non-
selective. Non-selective herbicides kill all plant matter, including 
weeds and the crop. Because of this, non-selective herbicides are 
typically used after the crop is harvested, to clear the field of 
remaining weeds. Selective herbicides target only weeds, and are 
applied ``post-emergence,'' or during the growth of the crop.
    There are three common types of selective herbicide products: 
Broadleaf, grass, and cross-spectrum. Broadleaf herbicides primarily 
eliminate or suppress broadleaf weeds. Grass herbicides primarily 
eliminate or suppress grass weeds. Cross-spectrum herbicides are 
effective on both grass and broadleaf weeds. Each herbicide formulation 
has a different spectrum of weeds on which it is effective, so a farmer 
chooses an herbicide based on the particular kinds of weeds threatening 
the crop.
    Herbicides are registered with the EPA for use on particular crops. 
Because crop choices and weed threats vary from farm to farm, the 
options available to farmers may vary from location to location, 
depending on the specific crop/weed combinations a farmer faces.
    Dow Chemical and DuPont both offer herbicides that are labeled and 
registered for the control of broadleaf weeds in winter wheat crops. 
DuPont's Finesse product is the top broadleaf herbicide used to combat 
the weed spectrum that typically threatens winter wheat crops. Dow 
Chemical recently introduced a new broadleaf herbicide for winter 
wheat, called Quelex.
b. Insecticides for Chewing Pests
    Dow Chemical and DuPont also sell insecticides for chewing pests. 
Insecticides are used to suppress or eliminate insect infestations in 
crops. There are three main classes of insect pests: (1) Chewing 
insects (e.g., moth larvae and beetles); (2) sucking insects (e.g., 
aphids and stink bugs); and (3) thrips (i.e., thunder flies), which 
have attributes of both chewing and sucking pests.
    Insecticide use is particularly important for specialty crop 
farmers of tree fruit, tree nuts, and other fruits and vegetables 
(``specialty crops''). Any damage to specialty crops, no matter how 
slight, can result in the fruit or nut being rejected for sale. Thus, 
specialty crop farmers are particularly averse to the risk of insect 
damage when choosing an insecticide. Specialty crop farmers also value 
selective chemistry insecticides because they are less harmful to 
beneficial insects (such as bees and parasitic wasps) that not only 
pollinate fruit, but also help to control damaging insects, such as 
mites. In contrast, broad spectrum chemistries, such as pyrethroids, 
kill most of the insects in a field, including beneficial ones. Farmers 
therefore either minimize their use and/or use them towards the end of 
a growing season.
    DuPont produces the active ingredient chlorantraniliprole, which 
DuPont markets under the trade name, Rynaxypyr. Rynaxypyr is one of the 
best selling and most effective active ingredients used to combat 
chewing pests on the market. Rynaxypyr is patent-protected until 2022. 
In the United States, Rynaxypyr is marketed and sold in formulations 
under the brand names Altacor, Coragen, and Prevathon. DuPont's 2015 
U.S. insecticides sales totaled $118 million; of that total, Rynaxypyr 
sales accounted for $73 million.
    Dow Chemical manufactures and sells two active ingredients which 
are also effective against chewing pests: (1) Methoxyfenozide, sold 
under the brand name Intrepid, and (2) spinetoram, sold under the brand 
names Delegate and Radiant. In 2015, Dow Chemical had a total of $165 
million in U.S. insecticides sales. Of that total, spinetoram sales 
accounted for $57 million and methoxyfenozide sales accounted for $34 
million.
2. Relevant Markets
a. Broadleaf Herbicides for Winter Wheat Sold in the United States
    To combat broadleaf weeds in winter wheat, particularly in the 
central plains of the United States, farmers need broadleaf herbicides 
that are labeled and registered for use on winter wheat. Farmers of 
winter wheat cannot use grass herbicides to combat broadleaf weeds 
because they are ineffective. Farmers would not use cross-spectrum 
herbicides to combat broadleaf weeds, as cross-spectrum herbicides are 
significantly more expensive and, thus, it would not be cost-justified 
to use cross-spectrum herbicides for broadleaf weeds alone. Farmers 
would not forgo using broadleaf herbicides altogether, because doing so 
would risk significant wheat yield losses.
    All herbicides sold in the United States must be registered and 
approved by the EPA. Similar products available in other countries 
cannot be offered to United States customers due to EPA regulations, so 
they are not competitive constraints.
    A small but significant increase in the price of broadleaf 
herbicides sold in the United States labeled and registered for use on 
winter wheat would not cause customers of those herbicides to 
substitute to grass or cross-spectrum herbicides, nor would farmers 
forgo using herbicides altogether and risk weed damage to their crops. 
As a result, customers are unlikely to switch away from broadleaf 
herbicides sold in the United States in volumes sufficient to defeat 
such a price increase. Accordingly, the development, manufacture, and 
sale of broadleaf herbicides sold in the United States labeled and 
registered for use on winter wheat is a line of commerce and relevant 
market within the meaning of Section 7 of the Clayton Act.
b. Insecticides for Chewing Pests Sold in the United States
    Insecticides for chewing pests are targeted to combat a particular 
type of pest, and insecticides for other types of pests cannot, in 
general, be used as substitutes. While there are broad-spectrum 
insecticides which are effective on more than one type of pest, those 
insecticides tend to kill indiscriminately, including beneficial 
insects. Specialty crop farmers in California, Washington and elsewhere 
need beneficial insects such as bees to pollinate their crops. These 
farmers would not, however, choose to forgo managing the insect pests 
which attack their crops, because even slight damage can result in an 
entire harvest being rejected for sale.
    All insecticides sold in the United States must be registered and 
approved by the EPA. Similar products available in other countries 
cannot be offered to United States customers due to EPA regulations, so 
they are not competitive constraints.
    A small but significant increase in the price of chewing pest 
insecticides sold in the United States would not cause customers of 
those insecticides to substitute to broad-spectrum insecticides, nor 
would farmers forgo using insecticides altogether and risk severe pest 
damage to their whole crop, in volumes sufficient to defeat such a 
price increase. Accordingly, the development, manufacture, and sale of 
chewing pest insecticides sold in the United States is a line of 
commerce and relevant market within the meaning of Section 7 of the 
Clayton Act.

[[Page 28901]]

3. Anticompetitive Effects of the Proposed Acquisition
a. Broadleaf Herbicides for Winter Wheat
    Dow Chemical and DuPont are two of the four largest suppliers of 
broadleaf herbicides for winter wheat crops in the United States. 
Together they account for over forty percent of the total market, with 
combined annual sales of $81 million in 2015. Dow Chemical and DuPont 
compete head-to-head for the development, manufacture, and sale of 
broadleaf herbicides for winter wheat. That competition, which would be 
lost if the merger is consummated, has benefited farmers through lower 
prices, more effective solutions, and superior service.
    Competition between Dow Chemical and DuPont has also spurred 
research, development, and marketing of new and improved broadleaf 
herbicides for winter wheat. For example, Dow Chemical intends to 
market its Quelex herbicide, which was recently introduced into the 
market, to farmers of winter wheat that currently use DuPont's market-
leading Finesse product. DuPont considered adopting competitive 
responses, including price reductions, to protect its market share from 
Dow Chemical's Quelex herbicide.
    The proposed merger, therefore, likely would substantially lessen 
competition for the development, manufacture, and sale of broadleaf 
herbicides for winter wheat, in violation of Section 7 of the Clayton 
Act. This likely would lead to higher prices, less favorable 
contractual terms, and a reduced incentive to spend significant 
resources in developing new products.
b. Insecticides for Chewing Pests
    Dow Chemical and DuPont are the two largest suppliers of 
insecticides used on chewing pests in the United States. Together they 
account for $238 million in annual sales. The merger of Dow Chemical 
and DuPont likely would substantially lessen competition in the market 
for the development, manufacture, and sale of chewing pest 
insecticides.
    If the merger between Dow Chemical and DuPont is consummated, the 
combined company will control nearly seventy-five percent of the market 
for chewing pest insecticides in the United States. Additionally, Dow 
Chemical and DuPont's closest competitor sells competing products that 
are mixed with DuPont's Rynaxypyr, for which the competitor has a 
license. As a result, specialty crop farmers would have little 
alternative but to accept increased prices post merger.
    Competition between Dow Chemical and DuPont has benefited customers 
of chewing pest insecticides through lower prices, more effective 
solutions, and superior service. Customers also have benefited from the 
competition between Dow Chemical and DuPont by obtaining more favorable 
contract terms, such as financing and priority in product shipments to 
coincide with crop growing seasons. A combined Dow Chemical and DuPont 
would have the incentive and ability to eliminate or restrict financial 
and other incentives to customers, extinguishing this competition and 
those tangible and valuable benefits to customers.
    The proposed merger, therefore, likely would substantially lessen 
competition for the development, manufacture, and sale of chewing pest 
insecticides, in violation of Section 7 of the Clayton Act. This likely 
would lead to higher prices, less favorable contractual terms, and less 
innovation.
4. Difficulty of Entry
    The discovery, development, testing, registration, and commercial 
launch of a new herbicide or insecticide can take ten to fifteen years 
and can cost well over $150 million dollars. Given the lengthy 
development cycle, the high hurdles and substantial cost of regulatory 
approval, entry of additional competitors in the market for either 
broadleaf herbicides for winter wheat or chewing pest insecticides is 
not likely to be timely or sufficient to defeat a post-merger price 
increase.

C. Acid Copolymers and Ionomers

    High-pressure ethylene derivatives (``HiPEDs'') are plastic resins 
produced by ``cracking,'' or breaking down, petrochemicals into their 
constituent parts and combining them with various molecules to produce 
polymer resins. The resulting resins, such as low density polyethylene, 
ethylene vinyl acetate, acrylate copolymers, grafted polyolefins, acid 
copolymers, and ionomers, have different performance characteristics, 
such as hardness, corrosion resistance or scratch resistance, depending 
on the materials used in their construction.
    HiPED resins are mixed with other plastic resins to manufacture 
numerous plastic products, such as films, bottles, coatings, and 
packaging. Customers source particular HiPED resins that meet their 
specific needs and requirements and build their manufacturing process 
around specific resin combinations that give the final product the 
desired performance characteristics.
    Unlike most HiPED resins, where there is substitution possible for 
both the supply and demand of the products, neither customers nor 
manufacturers can easily switch between acid copolymers and ionomers 
(two specific types of HiPED resins) and other HiPED resins.
1. Acid Copolymers
    Acid copolymers are a specific type of HiPED resin manufactured 
using highly acidic input products. In order to handle inputs with high 
acid content, HiPED resin manufacturers must install specific 
corrosion-resistant equipment that is not used for the manufacture of 
other HiPED resins. Such equipment can cost millions of dollars.
    Acidic inputs make acid copolymers both highly adhesive and very 
durable. As a result, acid copolymers are used to create strong seals 
between substrates, or ``tie layers,'' of flexible packaging. Their 
increased adhesive ability is particularly necessary in applications 
where packaging will be exposed to challenging environments, such as 
high levels of grease, oil, acid, or dust.
    Because of these characteristics, packaging films made using acid 
copolymers are ideal for use in the food and beverage industry. Indeed, 
this industry consumes the vast majority of acid copolymers produced, 
for use in products such as juice boxes, toothpaste tubes, and meat and 
cheese wrap, among others. Unlike other plastic films, food and 
beverage packaging must adhere to strict food safety guidelines, and 
significant deviations from approved formulas must undergo a rigorous 
requalification process that can take significant time and expense.
    Both Dow Chemical and DuPont manufacture acid copolymers in the 
United States. Dow Chemical manufactures acid copolymers in a dedicated 
corrosion-resistant facility that is part of its larger chemical 
complex in Freeport, Texas. DuPont manufactures acid copolymers and 
other HiPED resins on corrosion-resistant manufacturing lines within 
facilities located in Sabine, Texas and Victoria, Texas.
2. Ionomers
    Ionomers are another specific type of HiPED resin. They are 
directly derived from acid copolymers and are produced by neutralizing 
acid copolymers with sodium, zinc, magnesium, or other salts. As a 
result of this process, ionomers are hard and durable. When added to a 
plastic coating, ionomers make the resulting product more impact- and 
cut-resistant. Ionomers are used in a multitude of applications, such 
as decking and automotive parts. Ionomers are preferred for these end 
uses because

[[Page 28902]]

their superior toughness and impact resistance protect the underlying 
product from the repeated blows it is subjected to.
    Both Dow Chemical and DuPont produce ionomers in the United States. 
DuPont manufactures ionomers in-line with its acid copolymer production 
in Sabine, Texas. Dow Chemical manufactures acid copolymers in its 
Freeport, Texas facility and then ships them to Odessa, Texas, where a 
third party converts them to ionomers.
3. Relevant Markets
a. Acid Copolymers
    Food and beverage packaging manufacturers purchase the majority of 
acid copolymers produced in the United States. These customers rely 
upon the superior sealant and adhesive characteristics acid copolymers 
provide as compared to other HiPED resins. Additionally, because food 
and beverage packaging must adhere to strict food safety guidelines, 
significant deviations from approved formulas must undergo a rigorous 
qualification process that can take significant time and incur 
additional costs. Most customers therefore would not switch to another 
product if faced with a significant and non-transitory increase in the 
price of acid copolymers.
    Customers have consistently reported that purchasing acid 
copolymers abroad is not a realistic option for domestic purchasers, 
due to taxes, tariffs, logistical costs, and the longer lead times 
associated with importing acid copolymers. Most customers report that 
it would take considerably more than a small, significant, and non-
transitory increase in price to make European suppliers a viable 
alternative to Dow Chemical and DuPont.
    A small but significant increase in price for acid copolymers sold 
in the United States would not cause customers to turn to another 
product in sufficient numbers to defeat such a price increase. Thus, 
the development, manufacture, and sale of acid copolymers in the United 
States constitutes a relevant product market and line of commerce under 
Section 7 of the Clayton Act.
b. Ionomers
    Customers purchase ionomers for the superior impact- and cut-
resistance characteristics that are not available in other HiPED 
resins. These customers rely on the hardness and resilience that an 
ionomer-based coating provides as compared to other coatings. Customers 
cannot switch to other, less resilient, coatings and cannot forgo the 
use of protective coatings altogether, as either choice would 
significantly decrease the useful lifespan of the underlying products. 
Most customers therefore would not switch to another product if faced 
with a small but significant and non-transitory increase in the price 
of ionomers.
    U.S. customers cannot turn to ionomer suppliers abroad due to 
taxes, tariffs, logistical costs, and longer lead times associated with 
importing ionomers. Most customers report that it would take 
considerably more than a small, significant, and non-transitory 
increase in price to make European suppliers a viable alternative to 
Dow Chemical and DuPont.
    A small but significant increase in price for ionomers sold in the 
United States would not cause customers to turn to another product in 
sufficient numbers to defeat such a price increase. Thus, the 
development, manufacture, and sale of ionomers in the United States 
constitutes a relevant product market and line of commerce under 
Section 7 of the Clayton Act.
4. Anticompetitive Effects of the Proposed Transaction
a. Acid Copolymers
    Dow Chemical and DuPont are the only two manufacturers of acid 
copolymers in the United States. Dow Chemical controls over 80 percent 
of the U.S. market and DuPont is responsible for 19 percent of sales 
(less than one tenth of one percent of acid copolymers are imported). 
The merger of the only U.S. manufacturers of these products would leave 
customers with little alternative but to accept increased prices post 
merger.
    As a result of head-to-head competition between Dow Chemical and 
DuPont, customers have obtained better pricing, service, and contract 
terms. In some cases, customers report that Dow Chemical and DuPont 
have competed to assist customers with the development of new uses for 
existing acid copolymer products, allowing customers to expand sales 
and better serve their own consumers. Customers also have benefited 
from the development of new acid copolymer products, which has been 
spurred on by competition between Dow Chemical and DuPont.
    The proposed merger would likely substantially lessen competition 
for the development, manufacture, and sale of acid copolymers in 
violation of Section 7 of the Clayton Act. The U.S. market for acid 
copolymers is highly concentrated and would become significantly more 
concentrated as a result of the proposed merger to monopoly: Dow 
Chemical and DuPont will control over 99 percent of the acid copolymers 
market in the United States post merger, leading to higher prices and 
reduced innovation.
b. Ionomers
    Dow Chemical and DuPont are the only two manufacturers of ionomers 
in the United States, where the two companies collectively are 
responsible for all sales. Dow Chemical and DuPont are each other's 
only competitor for ionomers and customers would have no alternative 
but to accept increased prices post merger.
    Customers have benefited from the competition between Dow Chemical 
and DuPont. Dow Chemical is the only company contesting DuPont's near-
monopoly in ionomers. Its presence has resulted in better pricing and 
contract terms for customers, who otherwise would have no choice but to 
purchase from DuPont. Customers also have benefited from competition 
between Dow Chemical and DuPont to develop new products from ionomers 
and new uses for existing ionomer products.
    The proposed merger would likely substantially lessen competition 
for the development, manufacture, and sale of ionomers in violation of 
Section 7 of the Clayton Act. The market for ionomers is highly 
concentrated and the proposed merger would result in a monopoly, 
leading to higher prices and reduced innovation.
5. Difficulty of Entry
a. Acid Copolymers
    In addition to the specialized equipment required to produce 
ethylene derivatives generally, acid copolymer manufacturing requires a 
high-pressure autoclave and all equipment surfaces must be coated with 
a corrosion-resistant material. Only Dow Chemical and DuPont have both 
high-pressure autoclaves and corrosion-resistant equipment. The cost 
associated with upgrading an existing ethylene derivative manufacturing 
operation to produce acid copolymers is estimated to be in the millions 
of dollars. If the merged firm were to raise prices, timely and 
sufficient entry is unlikely to deter or counteract competitive harm.
b. Ionomers
    The manufacturing of ionomers requires specialized know-how as well 
as ready and reliable access to acid copolymers, a key input into 
ionomer manufacturing. Post merger, Dow Chemical and DuPont will 
effectively control the entire U.S. market for acid copolymers. As 
such, even if a third party has the technical capability to

[[Page 28903]]

manufacture ionomers, it would be limited by the amount of acid 
copolymers it could obtain on the open market--a market primarily 
controlled by the merged entity. Because of the specialized know-how 
and the likely foreclosure of access to a key ingredient, if the merged 
firm were to raise prices, timely and sufficient entry would be 
unlikely to deter or counteract competitive harm.

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

    The divestitures required by the proposed Final Judgment will 
eliminate the anticompetitive effects of the merger between Dow 
Chemical and DuPont by establishing two new, independent, and 
economically viable competitors. The Crop Protection Divestiture Assets 
include DuPont's Finesse-formulated herbicide products, which contain 
the active ingredients Metsulfuron Methyl and Chlorsulfuron Methyl, and 
its Rynaxypyr-formulated insecticide products, along with the assets 
which facilitate the development, manufacture, and sale of those 
products. The Material Science Divestiture Assets include Dow's 
Freeport, Texas acid copolymers and ionomers manufacturing unit and 
associated assets. Both of these divestitures must be sold as viable 
ongoing businesses.
    Prior to divestiture, defendants must maintain the Crop Protection 
Divestiture Assets and Material Science Divestiture Assets under an 
Asset Preservation Stipulation and Order (``APSO''). Under the APSO, 
defendants must preserve, maintain, and continue to operate both sets 
of assets as ongoing, economically viable competitive product lines. 
This includes the requirement that defendants appoint a person or 
persons to oversee the Crop Protection and Material Science Divestiture 
Assets. This person or persons shall have complete managerial 
responsibility for each asset package, subject to the provisions of the 
proposed Final Judgment, and shall make all business decisions relating 
to the operation of the assets, including all production, sale, 
pricing, and discounting decisions, independent of defendants.
    The assets must also be divested in such a way as to satisfy the 
United States in its sole discretion, that each business can and will 
be operated by the Acquirers as viable, ongoing businesses that can 
compete effectively in the relevant markets (in the case of the Crop 
Protection Divestiture Assets, the United States will exercise its 
discretion after consultation with the Plaintiff States). Defendants 
must take all reasonable steps necessary to accomplish the divestitures 
quickly and shall cooperate with prospective purchasers.
    Pursuant to Paragraphs IV(A) and V(A) of the proposed Final 
Judgment, both the Crop Protection Divestiture and Material Science 
Divestiture must be completed within thirty (30) days after the 
consummation of the merger of Dow Chemical and DuPont, or sixty (60) 
days after notice of the entry of the Final Judgment by the Court, 
whichever is later. Each divestiture package remedies a separate 
competitive harm alleged in the complaint and must be sold to an 
Acquirer that will operate the business as a viable, ongoing business. 
The two asset packages relate to different industries with different 
customers, market conditions, and required expertise. In order to 
ensure that the each divestiture package is operated as a viable, 
ongoing business, the Crop Protection and Material Science Divestiture 
Assets will likely be sold to different Acquirers.
    These divestiture periods are longer than those often found in 
Antitrust Division consent decrees, but are warranted in this case. 
Transfer of the Crop Protection Divestiture Assets and the Material 
Science Divestiture Assets are both subject to numerous government 
approvals, including approvals from authorities outside the United 
States. The longer divestiture period allows defendants and the 
Acquirer(s) to obtain these regulatory approvals, but still ensures 
that the divestitures are made as quickly as possible, thus reducing 
the risk that the assets will decrease in value.
    Paragraph IV(G) provides that the Acquirer of the Crop Protection 
Divestiture Assets may contract with the defendants for the provision 
of formulation services for a transitional period. Formulation is the 
process of adding inert chemicals to the active ingredients that 
provide the efficacy of crop protection products. Providers of crop 
protection products routinely use third parties for formulation 
services in order to optimize supply chains and minimize shipping costs 
on completed products. However, formulation services must be provided 
at a facility that has received the appropriate regulatory approvals in 
the United States (through the United States Environmental Protection 
Agency) and abroad, a process that may be time-consuming. So, the 
Acquirer of the Crop Protection Divestiture Assets may choose to enter 
a formulation services agreement with the defendants prior to being in 
a position to formulate the acquired products at an approved facility 
of its own choosing. The formulation services agreement shall be in 
effect for one (1) year after all necessary regulatory approvals have 
been granted by jurisdictions where the Finesse-formulated products and 
the Rynaxypyr-formulated products are currently registered. During the 
term of the formulation services agreement, defendants shall implement 
and maintain procedures to preclude the sharing of information between 
defendants and the Acquirer. The United States, in its sole discretion, 
may approve an extension of the formulation services agreement for a 
period not to exceed two (2) years.
    Paragraph V(G) provides that the Acquirer of the Material Science 
Divestiture Assets may contract with the defendants for the provision 
of operating services that include the operation of process controls at 
the acid copolymer production facility under the management and 
supervision of the Acquirer. The Acquirer of the Material Science 
Divestiture Assets may choose to enter an operating services agreement 
with the defendants because the Material Science Divestiture Assets are 
located within a significantly larger chemical complex in Freeport, 
Texas where such services can be more efficiently provided across 
multiple facilities. Dow offers similar services on an arms-length 
basis to other firms that own manufacturing assets within the larger 
chemical complex in Freeport, Texas. During the term of the operating 
services agreement, defendants shall implement and maintain procedures 
to preclude the sharing of information between defendants and the 
Acquirer.
    Given the complexity of these industries, Section XI of the 
proposed Final Judgment also provides that the United States may 
appoint a Monitoring Trustee(s). Because of the size and complexity of 
the divestitures, separate Monitoring Trustees are required for the 
Crop Protection Divestiture Assets and Material Science Divestiture 
Assets. The Monitoring Trustees will have the power and authority to 
investigate and report on the defendants' compliance with the terms of 
the proposed Final Judgment and the APSO during the pendency of the 
divestiture, including the ability to hire at the cost and expense of 
defendants any consultants, accountants, attorneys, or other agents 
necessary in the Monitoring Trustees' judgment. The Monitoring Trustees 
would not have any responsibility or obligation for the operation of 
the parties' businesses. The Monitoring Trustees will serve at 
defendants' expense, on such terms and conditions as the United States 
approves, and defendants must assist the trustees in

[[Page 28904]]

fulfilling their obligations. The Monitoring Trustees will file monthly 
reports and will serve for at least six (6) months following the 
divestiture of all Divestiture Assets, a period which may be extended 
by the United States, in its sole discretion.
    Finally, in the event that defendants do not accomplish the 
divestiture within the periods prescribed in Paragraphs IV(A) and V(A) 
of the proposed Final Judgment, Section VI of the proposed 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 (6) months, if 
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 
provision of broadleaf herbicides for winter wheat, insecticides for 
chewing pests, acid copolymers, and ionomers in the United States.

IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
16(a), the proposed Final Judgment has no prima facie effect in any 
subsequent private lawsuit that may be brought against 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 the merger between Dow Chemical and 
DuPont. The plaintiffs are satisfied, however, that the divestiture of 
assets described in the proposed Final Judgment will preserve 
competition in the markets for broadleaf herbicides for winter wheat, 
insecticides for chewing pests, acid copolymers, and ionomers. 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. 16(e)(1). In making that determination, 
the court, in accordance with the statute as amended in 2004, is 
required to consider:

    (A) the competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration of relief sought, anticipated effects of 
alternative remedies actually considered, whether its terms are 
ambiguous, and any other competitive considerations bearing upon the 
adequacy of such judgment that the court deems necessary to a 
determination of whether the consent judgment is in the public 
interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and 
individuals alleging specific injury from the violations set forth 
in the complaint including consideration of the public benefit, if 
any, to be derived from a determination of the issues at trial.

15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors, 
the court's inquiry is necessarily a limited one as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448, 1461 (D.C. Cir. 1995); see generally United States v. SBC 
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public 
interest standard under the Tunney Act); United States v, U.S. Airways 
Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (noting the court has 
broad discretion of the adequacy of the relief at issue); United States 
v. InBev N.V./S.A., No. 08-1965 (JR), 2009-2 Trade Cas. (CCH) ] 76,736, 
2009 U.S. Dist. LEXIS 84787, 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

[[Page 28905]]

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. 
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns, 
489 F. Supp. 2d at 11 (concluding that the 2004 amendments 
``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------

    As the United States Court of Appeals for the District of Columbia 
Circuit has held, under the APPA a court considers, among other things, 
the relationship between the remedy secured and the 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) (quoting 
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see 
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 
F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, 
at *3. Courts have held that:

[t]he balancing of competing social and political interests affected 
by a proposed antitrust consent decree must be left, in the first 
instance, to the discretion of the Attorney General. The court's 
role in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to 
the decree. The court is required to determine not whether a 
particular decree is the one that will best serve society, but 
whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\ In 
determining whether a proposed settlement is in the public interest, a 
district court ``must accord deference to the government's predictions 
about the efficacy of its remedies, and may not require that the 
remedies perfectly match the alleged violations.'' SBC Commc'ns, 489 F. 
Supp. 2d at 17; see also U.S. Airways, 38 F. Supp. 3d at 75 (noting 
that a court should not reject the proposed remedies because it 
believes others are preferable); Microsoft, 56 F.3d at 1461 (noting the 
need for courts to be ``deferential to the government's predictions as 
to the effect of the proposed remedies''); United States v. Archer-
Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that 
the court should grant due respect to the United States' prediction as 
to the effect of proposed remedies, its perception of the market 
structure, and its views of the nature of the case).
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    \2\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest' '').
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    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be approved 
even if it falls short of the remedy the court would impose on its own, 
as long as it falls within the range of acceptability or is `within the 
reaches of public interest.' '' United States v. Am. Tel. & Tel. Co., 
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also U.S. 
Airways, 38 F. Supp. 3d at 74 (noting that room must be made for the 
government to grant concessions in the negotiation process for 
settlements (citing Microsoft, 56 F.3d at 1461); 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 U.S. Airways, 
38 F. Supp. 3d at 74 (noting that the court must simply determine 
whether there is a factual foundation for the government's decisions 
such that its conclusions regarding the proposed settlements are 
reasonable; 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); see also U.S. Airways, 38 F. 
Supp. 3d at 75 (indicating that a court is not required to hold an 
evidentiary hearing or to permit intervenors as part of its review 
under the Tunney Act). 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 
Sen. 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\ A court can make its public 
interest determination based on the competitive impact statement and

[[Page 28906]]

response to public comments alone. U.S. Airways, 38 F. Supp. 3d at 75.
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    \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., No. 73-CV-681-W-1, 1977-1 
Trade Cas. (CCH) ] 61,508, at 71,980, *22 (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, 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.'').
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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 15, 2017

Respectfully submitted,

/s/--------------------------------------------------------------------
Lowell R. Stern (DC Bar #440487)
United States Department of Justice, Antitrust Division, Litigation 
II Section, 450 Fifth Street NW., Suite 8700, Washington, DC 20530, 
(202) 514-3676, (202) 514-9033 (Facsimile), lowell.stern@usdoj.gov.

[FR Doc. 2017-13326 Filed 6-23-17; 8:45 am]
 BILLING CODE P