United States v. Vulcan Materials Company, SPO Partners II, L.P., and Aggregates USA, LLC, Proposed Final Judgment and Competitive Impact Statement, 2187-2200 [2018-00578]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 83, Number 10 (Tuesday, January 16, 2018)]
[Notices]
[Pages 2187-2200]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-00578]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Vulcan Materials Company, SPO Partners II, L.P., 
and Aggregates USA, LLC, Proposed Final Judgment and Competitive Impact 
Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Stipulation, and Competitive Impact Statement have been filed with the 
United States District Court for the District of Columbia in United 
States of America v. Vulcan Materials Company, SPO Partners, II, L.P., 
and Aggregates USA, LLC, Civil Action No. 1:17-cv-02761. On December 
22, 2017, the United States and the State of Tennessee filed a 
Complaint alleging that Vulcan Material Company's proposed acquisition 
of Aggregates USA, LLC 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 Defendants to divest all of Aggregates USA's active 
quarries, plants, and yards in the Knoxville, Tennessee, Tri-Cities, 
Tennessee, and Abingdon, Virginia areas. These divestitures include 
seventeen Aggregates USA facilities.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's website at https://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 website, 
filed with the Court, and, under certain circumstances, published in 
the Federal Register. Comments should be directed to Maribeth Petrizzi, 
Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, 
Department of Justice, 450 Fifth Street NW, Suite 8700, Washington, DC 
20530 (telephone: (202) 307-0924).

Patricia A. Brink,
Director of Civil Enforcement.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    United States of America, United States Department of Justice, 
Antitrust Division, 450 Fifth Street NW, Suite 8700, Washington, DC 
20530 and State of Tennessee, Attorney General's Office, 500 
Charlotte Avenue, Nashville, Tennessee 37202 Plaintiffs, v. Vulcan 
Materials Company, 1200 Urban Center Drive, Birmingham, Alabama 
35242, SPO Partners II, L.P., 591 Redwood Highway, Suite 3215, Mill 
Valley, California 94941, and Aggregates USA, LLC, 3300 Cahaba Road, 
Suite 320, Birmingham, Alabama 35223 Defendants.

Civil Action No: 1:17-cv-02761
Judge: Amit Mehta

COMPLAINT

    Plaintiffs, the United States of America (``United States''), 
acting under the direction of the Attorney General of the United 
States, and the State of Tennessee, acting by and through the Attorney 
General of Tennessee, bring this civil antitrust action against 
Defendants to enjoin Vulcan Materials Company's (``Vulcan'') proposed 
acquisition of Aggregates USA, LLC (``Aggregates USA'') from SPO 
Partners II, L.P. (``SPO Partners''). Plaintiffs complain and allege as 
follows:

I. INTRODUCTION

    1. Vulcan's proposed acquisition of Aggregate USA's quarries would 
secure Vulcan's control over the supply of coarse aggregate necessary 
to complete various construction projects in parts of east Tennessee 
and southwest Virginia. Coarse aggregate is one of the primary 
materials used to build, pave, and repair roads and is used widely in 
other types of construction. Coarse aggregate is an essential input in 
asphalt concrete, which is used to pave roads, and ready mix concrete, 
which is used to create bridges and is a structural element of many 
buildings. Coarse aggregate is also needed for other phases of 
construction, such as the base layer of rock that provides a foundation 
for paved roads and large buildings. Vulcan currently supplies coarse 
aggregate in east Tennessee and southwest Virginia and already holds a 
significant market share in each region.
    2. Vulcan and Aggregates USA are the primary suppliers of coarse 
aggregate for projects in parts of east Tennessee and southwest 
Virginia, together supplying nearly all of the coarse aggregate 
purchased directly by the Tennessee and Virginia Departments of 
Transportation (``DOT'') or purchased by contractors for use in 
Tennessee and Virginia DOT projects. Vulcan and Aggregates USA are also 
the two leading suppliers of coarse aggregate used in private 
construction projects in parts of east Tennessee and southwest 
Virginia. The proposed acquisition would eliminate the head-to-head 
competition between Vulcan and Aggregates USA.

[[Page 2188]]

As a result, prices for coarse aggregate would likely increase 
significantly if the acquisition is consummated.
    3. The states of Tennessee and Virginia spend hundreds of millions 
of dollars on new construction and road maintenance projects each year. 
Without competing suppliers for the necessary inputs for road 
construction and other building projects, individuals, the states of 
Tennessee and Virginia, as well as federal and state taxpayers, would 
pay the price for Vulcan's control over these important markets. In 
light of these market conditions, Vulcan's acquisition of Aggregates 
USA's quarries would cause significant anticompetitive effects in the 
markets for coarse aggregate in parts of east Tennessee and southwest 
Virginia. Therefore, the proposed acquisition violates Section 7 of the 
Clayton Act, 15 U.S.C. 18, and should be enjoined.

II. THE PARTIES AND THE PROPOSED TRANSACTION

    4. Defendant Vulcan is incorporated in New Jersey with its 
headquarters in Birmingham, Alabama. Vulcan produces and sells coarse 
aggregate for the construction industry in 20 states as well as the 
District of Columbia. Vulcan also produces coarse aggregate in Mexico, 
which it distributes and sells at numerous terminals and yards along 
the Gulf Coast of the United States. In 2016, Vulcan reported net sales 
of $3.5 billion.
    5. Defendant SPO Partners is a Delaware limited partnership 
headquartered in Mill Valley, California. With more than $7 billion in 
assets under management, SPO Partners invests in a wide range of 
industries, including industrial materials, media, telecommunications, 
energy, power and real estate. SPO Partners acquired Aggregates USA in 
2010.
    6. Defendant Aggregates USA is headquartered in Birmingham, 
Alabama. Aggregates USA produces and sells coarse aggregate in four 
states: Florida, Georgia, Tennessee and Virginia. In 2016, Aggregates 
USA reported net sales of approximately $124 million.
    7. On May 25, 2017, Vulcan announced a definitive agreement with 
SPO Partners to acquire Aggregates USA for approximately $900 million. 
The primary assets acquired are Aggregates USA's 13 active quarries, 
including nine quarries in east Tennessee and one quarry in southwest 
Virginia, the equipment used to operate those quarries, and several 
inactive quarries in east Tennessee.

III. JURISDICTION AND VENUE

    8. The United States brings this action pursuant to Section 15 of 
the Clayton Act, 15 U.S.C. 4 and 25, as amended, to prevent and 
restrain Defendants from violating Section 7 of the Clayton Act, 15 
U.S.C. 18.
    9. The State of Tennessee brings this action under Section 16 of 
the Clayton Act, 15 U.S.C. 26, to prevent and restrain Vulcan and 
Aggregates USA from violating Section 7 of the Clayton Act, as amended, 
15 U.S.C. 18. The State of Tennessee, by and through the Attorney 
General of Tennessee, brings this action as parens patriae on behalf of 
the citizens, general welfare, and the general economy of the State of 
Tennessee.
    10. Defendants produce and sell coarse aggregate in the flow of 
interstate commerce. Defendants' activity in the production and sale of 
coarse aggregate substantially affects interstate commerce. The Court 
has subject matter jurisdiction over this action pursuant to Section 15 
of the Clayton Act, 15 U.S.C. 25, and 28 U.S.C. 1331, 1337(a), and 
1345.
    11. 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. TRADE AND COMMERCE

A. Coarse Aggregate is an Essential Input for Many Construction 
Projects

    12. Coarse aggregate is a category of material used for 
construction projects and in various industrial processes. Produced in 
quarries, mines, and gravel pits, coarse aggregate is predominantly 
limestone, granite, or trap rock. Different types and sizes of rock are 
needed to meet different specifications for use in asphalt concrete, 
ready mix concrete, industrial processes, and other products. Asphalt 
concrete consists of approximately 95 percent coarse aggregate, and 
ready mix concrete is made of up of approximately 75 percent coarse 
aggregate. Coarse aggregate thus is an integral input for road and 
other construction projects.
    13. For each construction project, a customer establishes 
specifications that must be met for each application for which coarse 
aggregate is used. For example, state DOTs, including the Tennessee and 
Virginia DOTs, set specifications for coarse aggregate used to produce 
asphalt concrete, ready mix concrete, and road base for state DOT 
projects. State DOTs specify characteristics such as hardness and 
durability, size, polish value, and a variety of other characteristics. 
The specifications are intended to ensure the longevity and safety of 
the projects that use coarse aggregate.
    14. For Tennessee and Virginia DOT projects, to ensure that the 
stone for an application meets proper specifications, the respective 
DOTs qualify quarries according to the end uses of the coarse 
aggregate. In addition, the Tennessee and Virginia DOTs test the coarse 
aggregate at various points: At the quarry before it is shipped; when 
the coarse aggregate is sent to the purchaser to produce an end product 
such as asphalt concrete; and after the end product has been produced. 
Many cities, counties, commercial entities, and individuals in 
Tennessee and Virginia use their respective state DOT-qualified coarse 
aggregate specifications when building roads, bridges, and other 
construction projects in order to optimize longevity.

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

    15. Coarse aggregate is priced by the ton and is a relatively 
inexpensive product, with prices typically ranging from approximately 
five to twenty dollars per ton. A variety of approaches are used to 
price coarse aggregate. For small volumes, coarse aggregate often is 
sold according to a posted price. For large volumes, customers 
typically either negotiate prices for a particular job or seek bids 
from multiple coarse aggregate suppliers.
    16. In areas where coarse aggregate is locally available, it is 
transported from quarries to customers by truck. Truck transportation 
is expensive and, for construction projects located more than a few 
miles from a quarry, transportation costs can become a significant 
portion of the total cost of coarse aggregate.

C. Relevant Markets

1. State DOT-Qualified Coarse Aggregate is a Relevant Product Market

    17. Within the broad category of coarse aggregate, different types 
and sizes of stone are used for different purposes. For instance, 
coarse aggregate qualified for use as road base may not be the same 
size and type of rock as coarse aggregate qualified for use in asphalt 
concrete. Accordingly, they are not interchangeable for one another and 
demand for each is separate. Thus, each type and size of coarse 
aggregate likely is a separate line of commerce and a relevant product 
market within the meaning of Section 7 of the Clayton Act.
    18. State DOT-qualified coarse aggregate is coarse aggregate 
qualified

[[Page 2189]]

by the state DOT for use in road construction in that particular state. 
State DOT-qualified coarse aggregate meets particular standards for 
size, physical composition, functional characteristics, end uses, and 
availability. A customer whose job specifies state DOT-qualified coarse 
aggregate cannot substitute non-DOT-qualified coarse aggregate or other 
materials, including coarse aggregate qualified by a different state 
DOT.
    19. Although numerous narrower product markets exist, the 
competitive dynamic for most types of state DOT-qualified coarse 
aggregate is nearly identical, as a quarry can typically produce all, 
or nearly all, types of state DOT-qualified coarse aggregate for a 
particular state. Therefore, most types of state DOT-qualified coarse 
aggregate for a particular state may be combined for analytical 
convenience into a single relevant product market for the purpose of 
evaluating the competitive impact of the acquisition.
    20. A small but significant increase in the price of state DOT-
qualified coarse aggregate would not cause a sufficient number of 
customers to substitute to another type of coarse aggregate or another 
material so as to make such a price increase unprofitable. Accordingly, 
the production and sale of Tennessee DOT-qualified coarse aggregate and 
Virginia DOT-qualified coarse aggregate (hereinafter ``DOT-qualified 
coarse aggregate'') are distinct lines of commerce and relevant product 
markets within the meaning of Section 7 of the Clayton Act.

2. The Relevant Geographic Markets are Local

    21. Coarse aggregate is a relatively low-cost product that is bulky 
and heavy. As a result, the cost of transporting coarse aggregate is 
high as compared to the value of the product.
    22. When customers seek price quotes or bids, the distance from the 
quarry to the project site or plant location will have a considerable 
impact on the selection of a supplier, due to the high cost of 
transporting coarse aggregate relative to the low value of the product. 
Suppliers know the importance of transportation cost to a potential 
customer's selection of a coarse aggregate supplier; they know the 
locations of their competitors, and they often will factor the cost of 
transportation from other suppliers into the price or bid that they 
submit.
    23. The primary factor that determines the area a supplier can 
serve is the location of competing quarries. When quoting prices or 
submitting bids, coarse aggregate suppliers will account for the 
location of the project site or plant, the cost of transporting coarse 
aggregate to the project site or plant, and the locations of the 
competitors that might bid on a job. Therefore, depending on the 
location of the project site or plant, suppliers are able to adjust 
their bids to account for the distance other competitors are from a 
job.

a. The Knoxville area is a Relevant Geographic Market

    24. Vulcan owns and operates eleven quarries that serve Knox, 
Loudon, Jefferson, and Grainger Counties in Tennessee as well as 
portions of surrounding counties (hereinafter referred to as the 
``Knoxville area''). Customers with plants or jobs in the Knoxville 
area may, depending on the location of their plant or job sites, also 
economically procure Tennessee DOT-qualified coarse aggregate from four 
quarries operated by Aggregates USA. Other more distant quarries cannot 
compete successfully on a regular basis for customers with plants or 
jobs in the Knoxville area because they are too far away and 
transportation costs are too great.
    25. A small but significant post-acquisition increase in the price 
of Tennessee DOT-qualified coarse aggregate to customers with plants or 
job sites in the Knoxville area would not cause those customers to 
procure coarse aggregate from suppliers other than Vulcan and 
Aggregates USA in sufficient quantities so as to make such a price 
increase unprofitable. Accordingly, the Knoxville area is a relevant 
geographic market for the production and sale of Tennessee DOT-
qualified coarse aggregate within the meaning of Section 7 of the 
Clayton Act.

b. The Tri-Cities area is a Relevant Geographic Market

    26. Vulcan owns and operates four quarries that serve Washington, 
Sullivan, Carter and Unicoi Counties in Tennessee as well as portions 
of surrounding counties (hereinafter referred to as the ``Tri-Cities 
area''). Customers with plants or jobs in the Tri-Cities area may, 
depending on the location of their plant or job site, also economically 
procure Tennessee DOT-qualified coarse aggregate from five quarries 
operated by Aggregates USA. Other more distant quarries cannot compete 
successfully on a regular basis for customers with plants or jobs in 
the Tri-Cities area because they are too far away and transportation 
costs are too great.
    27. A small but significant post-acquisition increase in the price 
of Tennessee DOT-qualified coarse aggregate to customers with plants or 
job sites in the Tri-Cities area would not cause those customers to 
procure coarse aggregate from suppliers other than Vulcan and 
Aggregates USA in sufficient quantities so as to make such a price 
increase unprofitable. Accordingly, the Tri-Cities area is a relevant 
geographic market for the production and sale of Tennessee DOT-
qualified coarse aggregate within the meaning of Section 7 of the 
Clayton Act.

c. The Abingdon area is a Relevant Geographic Market

    28. Vulcan owns and operates one quarry that serves parts of 
Washington County in Virginia and portions of surrounding counties 
(hereinafter referred to as the ``Abingdon area''). Customers with 
plants or jobs in the Abingdon area may, depending on the location of 
their plant or job sites, also economically procure Virginia DOT-
qualified coarse aggregate from a quarry operated by Aggregates USA. 
Other more distant quarries cannot compete successfully on a regular 
basis for customers with plants or jobs in the Abingdon area because 
they are too far away and transportation costs are too great.
    29. A small but significant post-acquisition increase in the price 
of Virginia DOT-qualified coarse aggregate to customers with plants or 
job sites in the Abingdon area would not cause those customers to 
procure coarse aggregate from suppliers other than Vulcan and 
Aggregates USA in sufficient quantities so as to make such a price 
increase unprofitable. Accordingly, the Abingdon area is a relevant 
geographic market for the production and sale of Virginia DOT-qualified 
coarse aggregate within the meaning of Section 7 of the Clayton Act.

D. Vulcan's Acquisition of Aggregates USA is Anticompetitive

    30. Vigorous competition between Vulcan and Aggregates USA on price 
and customer service in the production and sale of DOT-qualified coarse 
aggregate has benefitted customers in the Knoxville, Tri-Cities, and 
Abingdon areas (the ``Relevant Areas''), all of which face similar 
competitive conditions.
    31. The competitors that could constrain Vulcan and Aggregates USA 
from raising prices on DOT-qualified coarse aggregate in the Relevant 
Areas are limited to those who are qualified by the Tennessee and 
Virginia DOTs to supply coarse aggregate and can economically transport 
the coarse aggregate into these areas.

[[Page 2190]]

    32. Since the Relevant Areas are each exclusively served today by 
Vulcan and Aggregates USA, the proposed acquisition will reduce from 
two to one the number of suppliers of DOT-qualified coarse aggregate in 
each of those areas. Further, the proposed acquisition will 
substantially increase the likelihood that Vulcan will unilaterally 
increase the price of DOT-qualified coarse aggregate to a significant 
number of customers in the Relevant Areas.
    33. For many customers, a combined Vulcan and Aggregates USA will 
have the ability to increase prices for DOT-qualified coarse aggregate. 
The combined firm could also decrease service for these same customers 
by limiting availability or delivery options. DOT-qualified coarse 
aggregate producers know the distance from their own quarries or yards 
and their competitors' quarries to a customer's job site. Generally, 
because of transportation costs, the farther a supplier's closest 
competitor is from a job site, the higher the price and margin that 
supplier can expect for that project. Post-acquisition, in instances 
where Vulcan and Aggregates USA quarries or yards are the closest 
locations to a customer's project, the combined firm, using the 
knowledge of its competitors' locations, will be able to charge such 
customers higher prices or decrease the level of customer service.
    34. The proposed acquisition will substantially lessen competition 
in the market for the production and sale of DOT-qualified coarse 
aggregate in the Relevant Areas, which is likely to lead to higher 
prices and reduced customer service for consumers of such products, in 
violation of Section 7 of the Clayton Act.

E. Difficulty of Entry

    35. Timely, likely, and sufficient entry in the production and sale 
of DOT-qualified coarse aggregate in the Relevant Areas is unlikely, 
given the substantial time and cost required to open a quarry.
    36. Quarries are particularly difficult to locate and permit. 
First, securing the proper site for a quarry is difficult and time-
consuming. Finding land with the correct rock composition requires 
extensive investigation and testing of candidate sites, as well as the 
negotiation of necessary land transfers, leases, and/or easements. 
Further, the location of a quarry close to likely job sites is 
extremely important due to the high cost of transporting coarse 
aggregate. Once a location is chosen, obtaining the necessary permits 
is difficult and time-consuming. Attempts to open a new quarry often 
face fierce public opposition, which can prevent a quarry from opening 
or make opening it much more time-consuming and costly. Finally, even 
after a site is acquired and permitted, the owner must spend 
significant time and resources to prepare the land and purchase and 
install the necessary equipment.
    37. Because of the cost and difficulty of establishing a quarry, 
entry will not be timely, likely or sufficient to mitigate the 
anticompetitive effects of Vulcan's proposed acquisition of Aggregates 
USA.

V. VIOLATION ALLEGED

    38. Vulcan's proposed acquisition of Aggregates USA likely will 
substantially lessen competition in the production and sale of DOT-
qualified coarse aggregate in the Relevant Areas, in violation of 
Section 7 of the Clayton Act, 15 U.S.C. 18.
    39. Unless enjoined, the proposed acquisition likely will have the 
following anticompetitive effects, among others:
    (a) actual and potential competition between Vulcan and Aggregates 
USA in the market for the production and sale of DOT-qualified coarse 
aggregate in the Relevant Areas will be eliminated; and
    (b) prices for DOT-qualified coarse aggregate likely will increase 
and customer service likely will decrease.

VI. REQUESTED RELIEF

    40. Plaintiffs request that this Court:
    (a) adjudge and decree that Vulcan's acquisition of Aggregates USA 
would be unlawful and violate Section 7 of the Clayton Act, 15 U.S.C. 
18;
    (b) preliminarily and permanently enjoin and restrain the 
Defendants and all persons acting on their behalf from consummating the 
proposed acquisition of Aggregates USA by Vulcan, or from entering into 
or carrying out any other contract, agreement, plan, or understanding, 
the effect of which would be to combine Vulcan with Aggregates USA;
    (c) award Plaintiffs their costs for this action; and
    (d) award Plaintiffs such other and further relief as the Court 
deems just and proper.

FOR PLAINTIFF UNITED STATES OF AMERICA:

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Makan Delrahim

Assistant Attorney General.

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Andrew C. Finch

Principal Deputy Assistant Attorney General.

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Maribeth Petrizzi (DC Bar #435204)

Chief, Defense, Industrials, and Aerospace Section.

/s/--------------------------------------------------------------------

Stephanie A. Fleming

Assistant Chief, Defense, Industrials, and Aerospace Section.

/s/--------------------------------------------------------------------

Bernard A. Nigro Jr. (DC Bar #412357)
Deputy Assistant Attorney General.

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Patricia A. Brink

Director of Civil Enforcement.

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Jay D. Owen

Stephen A. Harris
Christine A. Hill (DC Bar #461048), 

Attorneys, United States Department of Justice, Antitrust Division, 
Defense, Industrials, and Aerospace Section, 450 Fifth Street NW, 
Suite 8700, Washington, DC 20530, (202) 598-2987, 
[email protected].

Dated: December 22, 2017.

FOR PLAINTIFF STATE OF TENNESSEE:

Herbert H. Slatery III
Attorney General and Reporter.

/s/--------------------------------------------------------------------

Victor J. Domen Jr.

Senior Counsel, Tennessee Attorney General's Office, 500 Charlotte 
Avenue, Nashville, TN 37202, Phone: 615-(253)-3327, 
[email protected].

Dated: December 22, 2017.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    United States of America and State of Tennessee, Plaintiffs, v. 
Vulcan Materials Company, SPO Partners II, L.P., and Aggregates USA, 
LLC, Defendants.

Civil Action No: 1:17-cv-02761

Judge: Amit Mehta

PROPOSED FINAL JUDGMENT

    WHEREAS, Plaintiffs, United States of America and the State of 
Tennessee, filed their Complaint on December 22, Plaintiffs and 
Defendants, VulCan Materials Company, SPO Partners II, LP., and 
Aggregates USA, LLC, by their respective attorneys, have consented to 
the entry of this Final Judgment without trial or adjudication of any 
issue of fact or law, and without this Final Judgment constituting any 
evidence against or admission by any party regarding any issue of fact 
or law;
    AND WHEREAS, Defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    AND WHEREAS, the essence of this Final Judgment is the prompt and 
certain divestiture of certain rights or assets by the Defendants to 
assure that competition is not substantially lessened;
    AND WHEREAS, Plaintiffs require Defendants to make certain 
divestitures

[[Page 2191]]

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, as amended (15 U.S.C. 18).

II. DEFINITIONS

    As used in this Final Judgment:
    A. ``Acquirer'' means Blue Water Industries or another entity to 
which Defendants divest the Divestiture Assets.
    B. ``Vulcan'' means Defendant Vulcan Materials Company, a 
corporation headquartered in Birmingham, Alabama, its successors and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    C. ``Aggregates USA'' means Defendant Aggregates USA, LLC, a 
corporation headquartered in Indianapolis, Indiana, its successors and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    D. ``Blue Water Industries'' means Blue Water Industries LLC, a 
wholly owned subsidiary of Blue Water Industries Holdings LLC, 
headquartered in Palm Beach, Florida, its successors and assigns, and 
its subsidiaries, divisions, groups, affiliates, partnerships, and 
joint ventures, and their directors, officers, managers, agents, and 
employees.
    E. ``Divestiture Assets'' means:
    1. Abingdon, Virginia Area
    Aggregates USA's quarry located at 21339 & 21490 Gravel Lake Rd., 
Abingdon, Virginia 24210;
    2. Tri-Cities, Tennessee Area
    a. Aggregates USA's quarry located at 350 W. Fourth Ave., Watauga, 
Tennessee 37694;
    b. Aggregates USA's quarry located at 210 Judger Ben Allen Rd., 
Elizabethton, Tennessee 37643;
    c. Aggregates USA's quarry located at 4175 Marbleton Rd., Unicoi, 
Tennessee 37692;
    d. Aggregates USA's quarry located at 164 Asphalt Plant Rd., 
Jonesborough, Tennessee 37659; and
    e. Aggregates USA's quarry located at 736 Centenary Rd., 
Blountville, Tennessee 37617;
    3. Knoxville, Tennessee Area
    a. Aggregates USA's quarry at 2107 Big Hill Road, Lenoir City, 
Tennessee 37772;
    b. Aggregates USA's quarry at 2303 Gov. John Sevier Hwy., 
Knoxville, Tennessee 37914;
    c. Aggregates USA's quarry at 9600 Mascot Rd., Mascot, Tennessee 
37806;
    d. Aggregates USA's quarry at 1949 E Raccoon Valley Rd., Heiskell, 
Tennessee 37754;
    e. Aggregates USA's quarry at 605 Cherokee Explosives Rd., 
Rutledge, Tennessee 37861;
    f. Aggregates USA's quarry at 450 and 461 Rocktown Road, Jefferson 
City, Tennessee 37760;
    g. Aggregates USA's quarry at 1001 Park St., New Market, Tennessee 
37820;
    h. Aggregates USA's quarry at 1550 Quarry Road, New Market, 
Tennessee 37820;
    i. Aggregates USA's Coy Stone Plant at 345 E. Broadway Blvd., 
Jefferson City, Tennessee 37760;
    j. Aggregates USA's Coster Yard at 224 Heiskell Ave., Knoxville, 
Tennessee 37917; and
    k. Aggregates USA's Young Yard at 1977 West Andrew Johnson Highway, 
Strawberry Plains, Tennessee 37871.
    4. all tangible assets used at the quarries and yards listed in 
Paragraphs II(E)(1)-(3), including, but not limited to, all 
manufacturing equipment, tooling, and fixed assets, mining equipment, 
aggregate reserves, personal property, inventory, office furniture, 
materials, supplies, on- or off-site warehouses or storage facilities, 
and other tangible property and all assets used in connection with the 
facilities listed in Paragraphs II(E)(1)-(3); all licenses, permits, 
and authorizations issued by any governmental organization relating to 
the facilities listed in Paragraphs II(E)(1)-(3); all contracts, 
agreements, teaming arrangements, leases (including renewal rights), 
commitments, certifications and understandings, including sales 
agreements and supply agreements relating to the facilities listed in 
Paragraphs II(E)(1)-(3); all customer lists, contracts, accounts, and 
credit records; all repair and performance records and all other 
records relating to the facilities listed in Paragraphs II(E)(1)-(3); 
and
    5. all intangible assets used in the production and sale of 
aggregate at the quarries and yards listed in Paragraphs II(E)(1)-(3), 
including but not limited to, all contractual rights, patents, licenses 
and sublicenses, intellectual property, copyrights, trademarks, trade 
names, service marks, service names, technical information, computer 
software (including dispatch software and management information 
systems) and related documentation, know-how, trade secrets, drawings, 
blueprints, designs, design protocols, specifications for materials, 
specifications for parts and devices, safety procedures for the 
handling of materials and substances, quality assurance and control 
procedures, design tools and simulation capability, all manuals and 
technical information Defendants provide to their own employees, 
customers, suppliers, agents, or licensees, and all data (including 
aggregate reserve testing information) concerning the facilities listed 
in Paragraphs II(E)(1)-(3).

III. APPLICABILITY

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

IV. DIVESTITURES

    A. Defendants are ordered and directed, within 45 calendar days 
after the Court's signing of the Hold Separate Stipulation and Order in 
this matter, to divest the Divestiture Assets in a manner consistent 
with this Final Judgment to Blue Water Industries or an alternative 
Acquirer acceptable to the United States, in its sole discretion, after 
consultation with the State of Tennessee. 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 Divestiture Assets as expeditiously as 
possible.
    B. In the event Defendants are attempting to divest the Divestiture

[[Page 2192]]

Assets to an Acquirer other than Blue Water Industries, Defendants 
promptly shall make known, by usual and customary means (to the extent 
Defendants have not already done so), the availability of the 
Divestiture Assets. Defendants shall inform any person making an 
inquiry regarding a possible purchase of the Divestiture Assets that 
they are being divested pursuant to this Final Judgment and provide 
that person with a copy of this Final Judgment.
    C. In accomplishing the divestitures ordered by this Final 
Judgment, Defendants shall offer to furnish to all prospective 
Acquirers, subject to customary confidentiality assurances, all 
information and documents relating to the Divestiture Assets 
customarily provided in a due diligence process except such information 
or documents subject to the attorney-client privileges or work-product 
doctrine. Defendants shall make available such information to the 
United States at the same time that such information is made available 
to any other person.
    D. Defendants shall provide the Acquirer and the United States with 
information relating to the personnel involved in the operation of the 
Divestiture Assets to enable the Acquirer to make offers of employment. 
Defendants will not interfere with any negotiations by the Acquirer to 
employ any Defendant employee whose primary responsibility is the 
operation of the Divestiture Assets.
    E. Defendants shall permit prospective Acquirers of the Divestiture 
Assets to have reasonable access to personnel and to make inspections 
of the physical facilities of the Divestiture Assets; access to any and 
all environmental, zoning, and other permit documents and information; 
and access to any and all financial, operational, or other documents 
and information customarily provided as part of a due diligence 
process.
    F. Defendants shall warrant to the Acquirer that each asset will be 
operational on the date of sale.
    G. Defendants shall not take any action that will impede in any way 
the permitting, operation, or divestiture of the Divestiture Assets.
    H. Defendants shall warrant to the Acquirer that (1) there are no 
material defects in the environmental, zoning, or other permits 
pertaining to the operation of each asset, and (2) following the sale 
of the Divestiture Assets, Defendants will not undertake, directly or 
indirectly, any challenges to the environmental, zoning, or other 
permits relating to the operation of the Divestiture Assets.
    I. Unless the United States otherwise consents in writing, the 
divestitures pursuant to Section IV, or by Divestiture Trustee 
appointed pursuant to Section V, of this Final Judgment, shall include 
the entire Divestiture Assets, and shall be accomplished in such a way 
as to satisfy the United States, in its sole discretion, after 
consultation with the State of Tennessee, that the Divestiture Assets 
can and will be used by the Acquirer as part of a viable, ongoing 
business in the production and sale of DOT-qualified coarse aggregate. 
The divestitures, whether pursuant to Section IV or Section V of this 
Final Judgment,

    (1) shall be made to an Acquirer that, in the United States' 
sole judgment, after consultation with the State of Tennessee, has 
the intent and capability (including the necessary managerial, 
operational, technical, and financial capability) of competing 
effectively in the business of producing and selling DOT-qualified 
coarse aggregate; and
    (2) shall be accomplished so as to satisfy the United States, in 
its sole discretion, after consultation with the State of Tennessee, 
that none of the terms of any agreement between an Acquirer and 
Defendants give Defendants the ability unreasonably to raise the 
Acquirer's costs, to lower the Acquirer's efficiency, or otherwise 
to interfere in the ability of the Acquirer to compete effectively.

V. APPOINTMENT OF DIVESTITURE TRUSTEE

    A. If Defendants have not divested the Divestiture Assets within 
the time period specified in Paragraph IV(A), Defendants shall notify 
the United States and the State of Tennessee of that fact in writing. 
Upon application of the United States, the Court shall appoint a 
Divestiture Trustee selected by the United States and approved by the 
Court to effect the divestiture of the Divestiture Assets.
    B. After the appointment of a Divestiture Trustee becomes 
effective, only the Divestiture Trustee shall have the right to sell 
the Divestiture Assets. The Divestiture Trustee shall have the power 
and authority to accomplish the divestitures to an Acquirer acceptable 
to the United States, after consultation with the State of Tennessee, 
at such price and on such terms as are then obtainable upon reasonable 
effort by the Divestiture Trustee, subject to the provisions of 
Sections IV, V, and VI of this Final Judgment, and shall have such 
other powers as this Court deems appropriate. Subject to Paragraph V(D) 
of this Final Judgment, the Divestiture Trustee 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, 
reasonably necessary in the Divestiture Trustee's judgment to assist in 
the divestitures. 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 
on any ground other than the Divestiture Trustee's malfeasance. Any 
such objections by Defendants must be conveyed in writing to the United 
States and the Divestiture Trustee within ten (10) calendar days after 
the Divestiture Trustee has provided the notice required under Section 
VI.
    D. The Divestiture Trustee 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 shall account for all monies derived from the sale of the 
assets sold by the Divestiture Trustee and all costs and expenses so 
incurred. After approval by the Court of the Divestiture Trustee's 
accounting, including fees for its services yet unpaid and those of any 
professionals and agents retained by the Divestiture Trustee, all 
remaining money shall be paid to Defendants and the trust shall then be 
terminated. The compensation of the Divestiture Trustee and any 
professionals and agents retained by the Divestiture Trustee shall be 
reasonable in light of the value of the Divestiture Assets and based on 
a fee arrangement providing the Divestiture Trustee with an incentive 
based on the price and terms of the divestitures and the speed with 
which it is accomplished, but timeliness is paramount. If the 
Divestiture Trustee 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 14 calendar days of 
appointment of the Divestiture Trustee, the United States may, in its 
sole discretion, take appropriate action, including making a 
recommendation to the Court. The Divestiture Trustee 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 in accomplishing the required divestitures. The 
Divestiture Trustee and any consultants, accountants, attorneys, and 
other agents retained by

[[Page 2193]]

the Divestiture Trustee shall have full and complete access to the 
personnel, books, records, and facilities of the business to be 
divested, and Defendants shall develop financial and other information 
relevant to such business as the Divestiture Trustee 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 
divestitures.
    F. After its appointment, the Divestiture Trustee 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 deems 
confidential, such reports shall not be filed in the public docket of 
the Court. Such reports shall include the name, address, and telephone 
number of each person who, during the preceding month, made an offer to 
acquire, expressed an interest in acquiring, entered into negotiations 
to acquire, or was contacted or made an inquiry about acquiring, any 
interest in the Divestiture Assets, and shall describe in detail each 
contact with any such person. The Divestiture Trustee shall maintain 
full records of all efforts made to divest the Divestiture Assets.
    G. If the Divestiture Trustee has not accomplished the divestitures 
ordered under this Final Judgment within six months after its 
appointment, the Divestiture Trustee shall promptly file with the Court 
a report setting forth (1) the Divestiture Trustee's efforts to 
accomplish the required divestitures, (2) the reasons, in the 
Divestiture Trustee's judgment, why the required divestitures have not 
been accomplished, and (3) the Divestiture Trustee's recommendations. 
To the extent such reports contain information that the Divestiture 
Trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. The Divestiture Trustee shall at the same 
time furnish such report to the 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 has 
ceased to act or failed to act diligently or in a reasonably cost-
effective manner, it may recommend the Court appoint a substitute 
Divestiture Trustee.

VI. NOTICE OF PROPOSED DIVESTITURES

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

VII. FINANCING

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

VIII. HOLD SEPARATE

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

IX. AFFIDAVITS

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestitures have been completed under Section IV or Section V, 
Defendants shall deliver to the United States an affidavit, signed by 
each Defendant's Chief Financial Officer and General Counsel, which 
shall describe the fact and manner of Defendants' compliance with 
Section IV or Section V of this Final Judgment. Each such affidavit 
shall include the name, address, and telephone number of each person 
who, during the preceding thirty (30) calendar days, made an offer to 
acquire, expressed an interest in acquiring, entered into negotiations 
to acquire, or was contacted or made an inquiry about acquiring, any 
interest in the Divestiture Assets, and shall describe in detail each 
contact with any such person during that period. Each such affidavit 
shall also include a description of the efforts Defendants have taken 
to solicit buyers for the Divestiture Assets, and to provide required 
information to prospective Acquirers, including the limitations, if 
any, on such information. Assuming the information set forth in the 
affidavit is true and complete, any objection by the United States to 
information provided by Defendants, including limitation on 
information, shall be made within fourteen (14) calendar days of 
receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, Defendants shall deliver to the United States an 
affidavit that describes in reasonable detail all actions Defendants 
have taken and all steps Defendants have implemented on an ongoing 
basis to comply with Section VIII of this Final Judgment. Defendants 
shall deliver to the United States an

[[Page 2194]]

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.

X. COMPLIANCE INSPECTION

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of any related orders such as any Hold Separate 
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 the Tennessee Attorney General's Office, 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).

XI. NOTIFICATION

    Unless such transaction is otherwise subject to the reporting and 
waiting period requirements of the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''), 
Defendants, without providing advance notification to the United 
States, shall not directly or indirectly acquire any assets of or any 
interest, including any financial, security, loan, equity, or 
management interest, related to the production and sale of DOT-
qualified coarse aggregate in Knox, Loudon, Jefferson, Grainger, 
Washington, Sullivan, Carter, and Unicoi Counties in Tennessee, or 
Washington County, Virginia, during the term of this Final Judgment.
    Such notification shall be provided to the Antitrust Division of 
the U.S. Department of Justice in the same format as, and per the 
instructions relating to, the Notification and Report Form set forth in 
the Appendix to Part 803 of Title 16 of the Code of Federal Regulations 
as amended, except that the information requested in Items 5 through 9 
of the instructions must be provided only about the production and sale 
of DOT-qualified coarse aggregate. Notification shall be provided at 
least thirty (30) calendar days prior to acquiring any such interest, 
and shall include, beyond what may be required by the applicable 
instructions, the names of the principal representatives of the parties 
to the agreement who negotiated the agreement, and any management or 
strategic plans discussing the proposed transaction. If within the 30-
day period after notification, representatives of the Antitrust 
Division make a written request for additional information, Defendants 
shall not consummate the proposed transaction or agreement until thirty 
(30) calendar days after submitting all such additional information. 
Early termination of the waiting periods in this paragraph may be 
requested and, where appropriate, granted in the same manner as is 
applicable under the requirements and provisions of the HSR Act and 
rules promulgated thereunder. This Section shall be broadly construed 
and any ambiguity or uncertainty regarding the filing of notice under 
this Section shall be resolved in favor of filing notice.

XII. NO REACQUISITION

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

XIII. 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.

XIV. ENFORCEMENT OF FINAL JUDGMENT

    A. The United States retains and reserves all rights to enforce the 
provisions of this Final Judgment, including its right to seek an order 
of contempt from this Court. Defendants agree that in any civil 
contempt action, any motion to show cause, or any similar action 
brought by the United States regarding an alleged violation of this 
Final Judgment, the United States may establish a violation of the 
decree and the appropriateness of any remedy therefor by a 
preponderance of the evidence, and they waive any argument that a 
different standard of proof should apply.
    B. In any enforcement proceeding in which the Court finds that the 
Defendants have violated this Final Judgment, the United States may 
apply to the Court for a one-time extension of this Final Judgment, 
together with such other relief as may be appropriate. Defendants agree 
to reimburse the United States for any attorneys' fees, experts' fees, 
and costs incurred in connection with any effort to enforce this Final 
Judgment.

XV. EXPIRATION OF FINAL JUDGMENT

    Unless this Court grants an extension, this Final Judgment shall 
expire ten (10) years from the date of its entry, except that after 
five (5) years from the date of its entry, this Final Judgment may be 
terminated upon notice by the United States to the Court and Defendants 
that the divestitures have been completed and that the continuation of 
the Final Judgment no longer is necessary or in the public interest.

[[Page 2195]]

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:

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

-----------------------------------------------------------------------

United States District Judge.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    United States of America and State of Tennessee, Plaintiffs, v. 
Vulcan Materials Company, SPO PARTNERS II, L.P., and Aggregates USA, 
LLC, Defendants.

Civil Action No: 1:17-cv-02761

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

    Defendant Vulcan Materials Company (``Vulcan'') and Defendant SPO 
Partners II, L.P. (``SPO'') entered into an agreement, dated May 25, 
2017, pursuant to which Vulcan would acquire SPO's aggregates business, 
Aggregates USA, LLC (``Aggregates USA''), for approximately $900 
million. The United States and the State of Tennessee filed a civil 
antitrust Complaint on December 22, 2017, seeking to enjoin the 
proposed acquisition. The Complaint alleges that the likely effect of 
this proposed acquisition would be to substantially lessen competition 
in the production and sale of Department of Transportation (``DOT'')-
qualified coarse aggregate in the Knoxville, Tri-Cities and Abingdon 
areas (the `Relevant Areas''), in violation of Section 7 of the Clayton 
Act, 15 U.S.C. 18. This loss of competition likely would result in 
increased prices and decreased customer service for customers in those 
areas.
    At the same time the Complaint was filed, Plaintiffs also filed a 
Hold Separate Stipulation and Order (``Hold Separate'') and proposed 
Final Judgment, which are designed to eliminate the anticompetitive 
effects of the acquisition. Under the proposed Final Judgment, which is 
explained more fully below, Defendants are required, among other 
things, to divest Aggregates USA's active quarries and yards in the 
Relevant Areas. Under the terms of the Hold Separate, Defendants will 
take certain steps to ensure that the quarries and yards are operated 
as a competitively independent, economically viable and ongoing 
business concern, that they will remain independent and uninfluenced by 
the consummation of the acquisition, and that competition is maintained 
during the pendency of the ordered divestitures.
    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

    Defendant Vulcan is incorporated in New Jersey with its 
headquarters in Birmingham, Alabama. Vulcan produces and sells coarse 
aggregate for the construction industry in 20 states as well as the 
District of Columbia. Vulcan also produces coarse aggregate in Mexico, 
which it distributes and sells at numerous terminals and yards along 
the Gulf Coast of the United States. In 2016, Vulcan reported net sales 
of $3.5 billion.
    Defendant SPO Partners is a Delaware limited partnership 
headquartered in Mill Valley, California. With more than $7 billion in 
assets under management, SPO Partners invests in a wide range of 
industries, including industrial materials, media, telecommunications, 
energy, power and real estate. SPO Partners acquired Aggregates USA in 
2010.
    Defendant Aggregates USA is headquartered in Birmingham, Alabama. 
Aggregates USA produces and sells coarse aggregate in four states: 
Florida, Georgia, Tennessee and Virginia. In 2016, Aggregates USA 
reported net sales of approximately $124 million.
    The proposed transaction, as initially agreed to by Defendants on 
May 25, 2017, would lessen competition substantially as a result of 
Vulcan owning nearly all of the quarries and yards that supply DOT-
qualified aggregate to the Relevant Areas. This acquisition is the 
subject of the Complaint and proposed Final Judgment filed by 
Plaintiffs on December 22, 2017.

B. Coarse Aggregate is an Essential Input for Many Construction 
Projects

    Coarse aggregate is a category of material used for construction 
projects and in various industrial processes. Produced in quarries, 
mines, and gravel pits, coarse aggregate is predominantly limestone, 
granite, or trap rock. Different types and sizes of rock are needed to 
meet different specifications for use in asphalt concrete, ready mix 
concrete, industrial processes, and other products. Asphalt concrete 
consists of approximately 95 percent coarse aggregate, and ready mix 
concrete is made of up of approximately 75 percent coarse aggregate. 
Coarse aggregate thus is an integral input for road and other 
construction projects.
    For each construction project, a customer establishes 
specifications that must be met for each application for which coarse 
aggregate is used. For example, state DOTs, including the Tennessee and 
Virginia DOTs, set specifications for coarse aggregate used to produce 
asphalt concrete, ready mix concrete, and road base for state DOT 
projects. State DOTs specify characteristics such as hardness and 
durability, size, polish value, and a variety of other characteristics. 
The specifications are intended to ensure the longevity and safety of 
the projects that use coarse aggregate.
    For Tennessee and Virginia DOT projects, to ensure that the stone 
for an application meets proper specifications, the respective DOTs 
qualify quarries according to the end uses of the coarse aggregate. In 
addition, the Tennessee and Virginia DOTs test the coarse aggregate at 
various points: at the quarry before it is shipped; when the coarse 
aggregate is sent to the purchaser to produce an end product such as 
asphalt concrete; and after the end product has been produced. Many 
cities, counties, commercial entities, and individuals in Tennessee and 
Virginia use their respective state DOT-qualified coarse aggregate 
specifications when building

[[Page 2196]]

roads, bridges, and other construction projects in order to optimize 
longevity.

C. Transportation is a Significant Component of the Cost of Coarse 
Aggregate

    Coarse aggregate is priced by the ton and is a relatively 
inexpensive product, with prices typically ranging from approximately 
five to twenty dollars per ton. A variety of approaches are used to 
price coarse aggregate. For small volumes, coarse aggregate often is 
sold according to a posted price. For large volumes, customers 
typically either negotiate prices for a particular job or seek bids 
from multiple coarse aggregate suppliers.
    In areas where coarse aggregate is locally available, it is 
transported from quarries to customers by truck. Truck transportation 
is expensive and, for construction projects located more than a few 
miles from a quarry, transportation costs can become a significant 
portion of the total cost of coarse aggregate.

D. Relevant Markets

1. State DOT-Qualified Coarse Aggregate is a Relevant Product Market

    Within the broad category of coarse aggregate, different types and 
sizes of stone are used for different purposes. For instance, coarse 
aggregate qualified for use as road base may not be the same size and 
type of rock as coarse aggregate qualified for use in asphalt concrete. 
Accordingly, they are not interchangeable for one another and demand 
for each is separate. Thus, each type and size of coarse aggregate 
likely is a separate line of commerce and a relevant product market 
within the meaning of Section 7 of the Clayton Act.
    State DOT-qualified coarse aggregate is coarse aggregate qualified 
by the state DOT for use in road construction in that particular state. 
State DOT-qualified coarse aggregate meets particular standards for 
size, physical composition, functional characteristics, end uses, and 
availability. A customer whose job specifies state DOT-qualified coarse 
aggregate cannot substitute non-DOT-qualified coarse aggregate or other 
materials, including coarse aggregate qualified by a different state 
DOT.
    Although numerous narrower product markets exist, the competitive 
dynamic for most types of state DOT-qualified coarse aggregate is 
nearly identical, as a quarry can typically produce all, or nearly all, 
types of state DOT-qualified coarse aggregate for a particular state. 
Therefore, most types of state DOT-qualified coarse aggregate for a 
particular state may be combined for analytical convenience into a 
single relevant product market for the purpose of evaluating the 
competitive impact of the acquisition.
    A small but significant increase in the price of state DOT-
qualified coarse aggregate would not cause a sufficient number of 
customers to substitute to another type of coarse aggregate or another 
material so as to make such a price increase unprofitable. Accordingly, 
the production and sale of Tennessee DOT-qualified coarse aggregate and 
Virginia DOT-qualified coarse aggregate (hereinafter ``DOT-qualified 
coarse aggregate'') are distinct lines of commerce and relevant product 
markets within the meaning of Section 7 of the Clayton Act.

2. The Relevant Geographic Markets are Local

    Coarse aggregate is a relatively low-cost product that is bulky and 
heavy. As a result, the cost of transporting coarse aggregate is high 
as compared to the value of the product.
    When customers seek price quotes or bids, the distance from the 
quarry to the project site or plant location will have a considerable 
impact on the selection of a supplier, due to the high cost of 
transporting coarse aggregate relative to the low value of the product. 
Suppliers know the importance of transportation cost to a potential 
customer's selection of a coarse aggregate supplier; they know the 
locations of their competitors, and they often will factor the cost of 
transportation from other suppliers into the price or bid that they 
submit.
    The primary factor that determines the area a supplier can serve is 
the location of competing quarries. When quoting prices or submitting 
bids, coarse aggregate suppliers will account for the location of the 
project site or plant, the cost of transporting coarse aggregate to the 
project site or plant, and the locations of the competitors that might 
bid on a job. Therefore, depending on the location of the project site 
or plant, suppliers are able to adjust their bids to account for the 
distance other competitors are from a job.

a. The Knoxville area is a Relevant Geographic Market

    Vulcan owns and operates eleven quarries that serve Knox, Loudon, 
Jefferson, and Grainger Counties in Tennessee as well as portions of 
surrounding counties (hereinafter referred to as the ``Knoxville 
area''). Customers with plants or jobs in the Knoxville area may, 
depending on the location of their plant or job sites, also 
economically procure Tennessee DOT-qualified coarse aggregate from four 
quarries operated by Aggregates USA. Other more distant quarries cannot 
compete successfully on a regular basis for customers with plants or 
jobs in the Knoxville area because they are too far away and 
transportation costs are too great.
    A small but significant post-acquisition increase in the price of 
Tennessee DOT-qualified coarse aggregate to customers with plants or 
job sites in the Knoxville area would not cause those customers to 
procure coarse aggregate from suppliers other than Vulcan and 
Aggregates USA in sufficient quantities so as to make such a price 
increase unprofitable. Accordingly, the Knoxville area is a relevant 
geographic market for the production and sale of Tennessee DOT-
qualified coarse aggregate within the meaning of Section 7 of the 
Clayton Act.

b. The Tri-Cities area is a Relevant Geographic Market

    Vulcan owns and operates four quarries that serve Washington, 
Sullivan, Carter and Unicoi Counties in Tennessee as well as portions 
of surrounding counties (hereinafter referred to as the ``Tri-Cities 
area''). Customers with plants or jobs in the Tri-Cities area may, 
depending on the location of their plant or job site, also economically 
procure Tennessee DOT-qualified coarse aggregate from five quarries 
operated by Aggregates USA. Other more distant quarries cannot compete 
successfully on a regular basis for customers with plants or jobs in 
the Tri-Cities area because they are too far away and transportation 
costs are too great.
    A small but significant post-acquisition increase in the price of 
Tennessee DOT-qualified coarse aggregate to customers with plants or 
job sites in the Tri-Cities area would not cause those customers to 
procure coarse aggregate from suppliers other than Vulcan and 
Aggregates USA in sufficient quantities so as to make such a price 
increase unprofitable. Accordingly, the Tri-Cities area is a relevant 
geographic market for the production and sale of Tennessee DOT-
qualified coarse aggregate within the meaning of Section 7 of the 
Clayton Act.

c. The Abingdon area is a Relevant Geographic Market

    Vulcan owns and operates one quarry that serves parts of Washington 
County in Virginia and portions of surrounding counties (hereinafter 
referred to as the ``Abingdon area''). Customers with plants or jobs in 
the Abingdon area may, depending on the location of their plant or job 
sites, also economically procure

[[Page 2197]]

Virginia DOT-qualified coarse aggregate from a quarry operated by 
Aggregates USA. Other more distant quarries cannot compete successfully 
on a regular basis for customers with plants or jobs in the Abingdon 
area because they are too far away and transportation costs are too 
great.
    A small but significant post-acquisition increase in the price of 
Virginia DOT-qualified coarse aggregate to customers with plants or job 
sites in the Abingdon area would not cause those customers to procure 
coarse aggregate from suppliers other than Vulcan and Aggregates USA in 
sufficient quantities so as to make such a price increase unprofitable. 
Accordingly, the Abingdon area is a relevant geographic market for the 
production and sale of Virginia DOT-qualified coarse aggregate within 
the meaning of Section 7 of the Clayton Act.

E. Vulcan's Acquisition of Aggregates USA is Anticompetitive

    Vigorous competition between Vulcan and Aggregates USA on price and 
customer service in the production and sale of DOT-qualified coarse 
aggregate has benefitted customers in the Relevant Areas, all of which 
face similar competitive conditions.
    The competitors that could constrain Vulcan and Aggregates USA from 
raising prices on DOT-qualified coarse aggregate in the Relevant Areas 
are limited to those who are qualified by the Tennessee and Virginia 
DOTs to supply coarse aggregate and can economically transport the 
coarse aggregate into these areas.
    Since the Relevant Areas are each exclusively served today by 
Vulcan and Aggregates USA, the proposed acquisition will reduce from 
two to one the number of suppliers of DOT-qualified coarse aggregate in 
each of those areas. Further, the proposed acquisition will 
substantially increase the likelihood that Vulcan will unilaterally 
increase the price of DOT-qualified coarse aggregate to a significant 
number of customers in the Relevant Areas.
    For many customers, a combined Vulcan and Aggregates USA will have 
the ability to increase prices for DOT-qualified coarse aggregate. The 
combined firm could also decrease service for these same customers by 
limiting availability or delivery options. DOT-qualified coarse 
aggregate producers know the distance from their own quarries or yards 
and their competitors' quarries to a customer's job site. Generally, 
because of transportation costs, the farther a supplier's closest 
competitor is from a job site, the higher the price and margin that 
supplier can expect for that project. Post-acquisition, in instances 
where Vulcan and Aggregates USA quarries or yards are the closest 
locations to a customer's project, the combined firm, using the 
knowledge of its competitors' locations, will be able to charge such 
customers higher prices or decrease the level of customer service.
    The proposed acquisition will substantially lessen competition in 
the market for the production and sale of DOT-qualified coarse 
aggregate in the Relevant Areas, which is likely to lead to higher 
prices and reduced customer service for consumers of such products, in 
violation of Section 7 of the Clayton Act.

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

A. Divestiture Provisions

    The divestiture requirement of the proposed Final Judgment will 
eliminate the anticompetitive effects of the acquisition in the 
production and sale of DOT-qualified coarse aggregate in the Knoxville, 
Tri-Cities and Abingdon areas by establishing a new, independent, and 
economically viable competitor. Paragraph IV(A) of the proposed Final 
Judgment requires Defendants to divest, as a viable, ongoing business, 
Aggregates USA's active quarries and yards in the Relevant Areas to 
Blue Water Industries LLC or an alternative Acquirer acceptable to the 
United States, in its sole discretion, after consultation with the 
State of Tennessee, within forty-five (45) days after the signing of 
the Hold Separate. The assets must be divested in such a way as to 
satisfy the United States in its sole discretion, after consultation 
with the State of Tennessee, that the operations can and will be 
operated by the purchaser as a viable, ongoing business that can 
compete effectively in the relevant markets. Defendants must take all 
reasonable steps necessary to accomplish the divestitures quickly and 
shall cooperate with prospective purchasers.
    The proposed Final Judgment also contains provisions intended to 
facilitate the Acquirer's efforts to hire the employees involved with 
the Aggregates USA business. Paragraph IV(D) of the proposed Final 
Judgment requires Defendants to provide the Acquirer with information 
relating to the personnel involved in the operation of the Divestiture 
Assets to enable the Acquirer to make offers of employment, and 
provides that Defendants will not interfere with any negotiations by 
the Acquirer to hire these employees.
    In the event that Defendants do not accomplish the divestitures 
within the period prescribed in the proposed Final Judgment, Paragraph 
V(A) of the Final Judgment provides that the Court will appoint a 
trustee selected by the United States to effect the divestitures. If a 
trustee is appointed, Paragraph V(D) of 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 divestitures are accomplished. Paragraph V(F) of the 
proposed Final Judgment requires that, 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 divestitures. Paragraph V(G) of the proposed Final Judgment 
requires that, at the end of six months, if the divestitures have 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.

B. Notification

    Section XI of the proposed Final Judgment requires Defendants to 
provide notification to the Antitrust Division of certain proposed 
acquisitions not otherwise subject to filing under the Hart-Scott-
Rodino Act, 15 U.S.C 18a (the ``HSR Act''), and in the same format as, 
and per the instructions relating to the notification required under 
that statute. The notification requirement applies in the case of any 
direct or indirect acquisitions of any assets related to the production 
and sale of DOT-qualified coarse aggregate in Knox, Loudon, Jefferson, 
Grainger, Washington, Sullivan, Carter, and Unicoi Counties in 
Tennessee, or Washington County, Virginia, during the term of the 
proposed Final Judgment. Section XI further provides for waiting 
periods and opportunities for the United States to obtain additional 
information similar to the provisions of the HSR Act before such 
acquisitions can be consummated.

C. Enforcement and Expiration of the Final Judgment

    The proposed Final Judgment contains provisions designed to promote 
compliance and make the enforcement of Division consent decrees as 
effective as possible. Paragraph XIV(A) provides

[[Page 2198]]

that the United States retains and reserves all rights to enforce the 
provisions of the proposed Final Judgment, including its rights to seek 
an order of contempt from the Court. Under the terms of this paragraph, 
Defendants have agreed that in any civil contempt action, any motion to 
show cause, or any similar action brought by the United States 
regarding an alleged violation of the Final Judgment, the United States 
may establish the violation and the appropriateness of any remedy by a 
preponderance of the evidence and that Defendants have waived any 
argument that a different standard of proof should apply. This 
provision aligns the standard for compliance obligations with the 
standard of proof that applies to the underlying offense that the 
compliance commitments address.
    Paragraph XIV(B) of the proposed Final Judgment further provides 
that should the Court find in an enforcement proceeding that Defendants 
have violated the Final Judgment, the United States may apply to the 
Court for a one-time extension of the Final Judgment, together with 
such other relief as may be appropriate. In addition, in order to 
compensate American taxpayers for any costs associated with the 
investigation and enforcement of violations of the proposed Final 
Judgment, Paragraph XIV(B) requires Defendants to reimburse the United 
States for attorneys' fees, experts' fees, or costs incurred in 
connection with any enforcement effort.
    Finally, Section XV of the proposed Final Judgment provides that 
the Final Judgment shall expire ten (10) years from the date of its 
entry, except that after five (5) years from the date of its entry, the 
Final Judgment may be terminated upon notice by the United States to 
the Court and Defendants that the divestitures have been completed and 
that the continuation of the Final Judgment is no longer necessary or 
in the public interest.

IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover 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

    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 website and, under certain circumstances, 
published in the Federal Register.
    Written comments should be submitted to:

Maribeth Petrizzi, Chief, Defense, Industrials, and Aerospace 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

    Plaintiffs considered, as an alternative to the proposed Final 
Judgment, a full trial on the merits against Defendants. Plaintiffs 
could have continued the litigation and sought preliminary and 
permanent injunctions against Vulcan's acquisition of Aggregates USA. 
Plaintiffs are satisfied, however, that the divestiture of assets 
described in the proposed Final Judgment will preserve competition for 
the production and sale of DOT-qualified coarse aggregate in the 
Relevant Areas. Thus, the proposed Final Judgment would achieve all or 
substantially all of the relief 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

[[Page 2199]]

complaint was reasonable, and whether the mechanism to enforce the 
final judgment are clear and manageable.'').\1\
---------------------------------------------------------------------------

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

    \2\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest' '').
---------------------------------------------------------------------------

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be approved 
even if it falls short of the remedy the court would impose on its own, 
as long as it falls within the range of acceptability or is `within the 
reaches of public interest.' '' United States v. Am. Tel. & Tel. Co., 
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also 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. 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 2200]]

response to public comments alone. U.S. Airways, 38 F. Supp. 3d at 75.
---------------------------------------------------------------------------

    \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: December 22, 2017.

    Respectfully Submitted,
/s/--------------------------------------------------------------------

Jay D. Owen,

United States Department of Justice, Antitrust Division, Defense, 
Industrials, and Aerospace Section, 450 Fifth Street NW, Suite 8700, 
Tel.: (202) 598-2987, Washington, DC 20530, Fax: (202) 514-9033, Email: 
[email protected].

[FR Doc. 2018-00578 Filed 1-12-18; 8:45 am]
 BILLING CODE 4410-11-P