United States v. Martin Marietta Materials, Inc. et al.; Proposed Final Judgment and Competitive Impact Statement, 19822-19836 [2018-09458]
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19822
Federal Register / Vol. 83, No. 87 / Friday, May 4, 2018 / Notices
Nintendo of America, Inc., 4600 150th
Avenue NE, Redmond, WA 98052
(3) For the investigation so instituted,
the Chief Administrative Law Judge,
U.S. International Trade Commission,
shall designate the presiding
Administrative Law Judge.
The Office of Unfair Import
Investigations will not participate as a
party in this investigation.
Responses to the complaint and the
notice of investigation must be
submitted by the named respondents in
accordance with section 210.13 of the
Commission’s Rules of Practice and
Procedure, 19 CFR 210.13. Pursuant to
19 CFR 201.16(e) and 210.13(a), such
responses will be considered by the
Commission if received not later than 20
days after the date of service by the
Commission of the complaint and the
notice of investigation. Extensions of
time for submitting responses to the
complaint and the notice of
investigation will not be granted unless
good cause therefor is shown.
Failure of a respondent to file a timely
response to each allegation in the
complaint and in this notice may be
deemed to constitute a waiver of the
right to appear and contest the
allegations of the complaint and this
notice, and to authorize the
administrative law judge and the
Commission, without further notice to
the respondent, to find the facts to be as
alleged in the complaint and this notice
and to enter an initial determination
and a final determination containing
such findings, and may result in the
issuance of an exclusion order or a cease
and desist order or both directed against
the respondent.
By order of the Commission.
Issued: April 30, 2018.
Lisa Barton,
Secretary to the Commission.
BILLING CODE 7020–02–P
INTERNATIONAL TRADE
COMMISSION
[USITC SE–18–022]
Government in the Sunshine Act
Meeting Notice
United
States International Trade Commission.
TIME AND DATE: May 10, 2018 at 11:00
a.m.
PLACE: Room 101, 500 E Street SW,
Washington, DC 20436, Telephone:
(202) 205–2000.
STATUS: Open to the public.
MATTERS TO BE CONSIDERED:
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AGENCY HOLDING THE MEETING:
18:16 May 03, 2018
By order of the Commission.
Issued: May 1, 2018.
William Bishop,
Supervisory Hearings and Information
Officer.
[FR Doc. 2018–09585 Filed 5–2–18; 11:15 am]
BILLING CODE 7020–02–P
INTERNATIONAL TRADE
COMMISSION
[Investigation No. 731–TA–1359 (Final)]
Carton-Closing Staples From China
Jkt 244001
On the basis of the record 1 developed
in the subject investigation, the United
States International Trade Commission
(‘‘Commission’’) determines, pursuant
to the Tariff Act of 1930 (‘‘the Act’’),
that an industry in the United States is
materially injured by reason of imports
of carton-closing staples from China that
have been found by the U.S. Department
of Commerce (‘‘Commerce’’) to be sold
in the United States at less than fair
value (‘‘LTFV’’).2 3
The Commission, pursuant to section
735(b) of the Act (19 U.S.C. 1673d(b)),
instituted this investigation effective
March 31, 2017, following receipt of a
petition filed with the Commission and
Commerce by North American Steel &
Wire, Inc./ISM Enterprises. The
Commission scheduled the final phase
of the investigation following
notification of a preliminary
determination by Commerce that
imports of carton-closing staples from
China were being sold at LTFV within
1 The record is defined in sec. 207.2(f) of the
Commission’s Rules of Practice and Procedure (19
CFR 207.2(f)).
2 Carton-Closing Staples From the People’s
Republic of China: Final Affirmative Determination
of Sales at Less Than Fair Value, 83 FR 13236
(March 28, 2018).
3 Commissioner Kearns not participating.
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the meaning of section 733(b) of the Act
(19 U.S.C. 1673b(b)). Notice of the
scheduling of the final phase of the
Commission’s investigation and of a
public hearing to be held in connection
therewith was given by posting copies
of the notice in the Office of the
Secretary, U.S. International Trade
Commission, Washington, DC, and by
publishing the notice in the Federal
Register of November 15, 2017 (82 FR
52939). The hearing was held in
Washington, DC, on Tuesday, March 13,
2018, and all persons who requested the
opportunity were permitted to appear in
person or by counsel.
The Commission made this
determination pursuant to section
735(b) of the Act (19 U.S.C. 1673d(b)).
It completed and filed its determination
in this investigation on Monday, April
30, 2018. The views of the Commission
are contained in USITC Publication
4778 (April 2018), entitled CartonClosing Staples from China:
Investigation No. 731–TA–1359 (Final).
By order of the Commission.
Issued: April 30, 2018.
Lisa Barton,
Secretary to the Commission.
[FR Doc. 2018–09422 Filed 5–3–18; 8:45 am]
BILLING CODE 7020–02–P
Determination
Background
[FR Doc. 2018–09464 Filed 5–3–18; 8:45 am]
VerDate Sep<11>2014
1. Agendas for future meetings: None.
2. Minutes.
3. Ratification List.
4. Vote in Inv. Nos. 701–TA–602 and
731–TA–1412 (Preliminary) (Steel
Wheels from China). The Commission is
currently scheduled to complete and file
its determinations on May 11, 2018;
views of the Commission are currently
scheduled to be completed and filed on
May 18, 2018.
5. Outstanding action jackets: None.
In accordance with Commission
policy, subject matter listed above, not
disposed of at the scheduled meeting,
may be carried over to the agenda of the
following meeting.
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Martin Marietta
Materials, Inc. et al.; Proposed Final
Judgment and Competitive Impact
Statement
Notice is hereby given pursuant to the
Antitrust Procedures and Penalties Act,
15 U.S.C. 16(b)–(h), that a proposed
Final Judgment, 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.
Martin Marietta Materials, Inc. et al.,
Civil Action No. 1:18–cv–00973. On
April 25, 2018, the United States filed
a Complaint alleging that Martin
Marietta Materials, Inc.’s proposed
acquisition of Panadero Corp. and
Panadero Aggregates Holdings, LLC,
including subsidiary Bluegrass
Materials Company, 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 that Defendants divest the lease
to Martin Marietta’s Forsyth Quarry,
located in Suwanee, Georgia, and
Bluegrass’s Beaver Creek quarry, located
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in Hagerstown, Maryland, and related
assets.
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
Maryland, Attorney General’s Office, 200
St. Paul Place, 19th Floor, Baltimore,
Maryland 21202, Plaintiffs, v. Martin
Marietta Materials, Inc., 2710 Wycliff Road,
Raleigh, North Carolina 27607; LG
Panadero, L.P., 630 Fifth Avenue, 30th
Floor, New York, New York 10111;
Panadero Corp., 200 W. Forsyth Street,
12th Floor, Jacksonville, Florida 32202;
Panadero Aggregates Holdings, LLC, 200
W. Forsyth Street, 12th Floor, Jacksonville,
Florida 32202; and Bluegrass Materials
Company, LLC, 200 W. Forsyth Street, 12th
Floor, Jacksonville, Florida 32202,
Defendants.
Civil Action No.: 1:18–cv–00973
Judge: Randolph Moss
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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
Maryland, acting by and through the
Attorney General of Maryland, bring
this civil antitrust action against
Defendants to enjoin Martin Marietta
Materials, Inc.’s (‘‘Martin Marietta’’)
proposed acquisition of Bluegrass
Materials Company, LLC (‘‘Bluegrass’’).
Plaintiffs allege as follows:
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I. INTRODUCTION
1. On June 26, 2017, Martin Marietta
and Bluegrass announced a definitive
agreement under which Martin Marietta
would acquire Bluegrass for $1.625
billion. The merger would expand the
reach of one of the largest aggregate
producers in the United States and
create a combined firm with annual
total revenues of approximately $4
billion.
2. Aggregate is a key input in asphalt
and ready mix concrete and is used to
build roads, highways, bridges, and
other construction projects. The
proposed acquisition would eliminate
head-to-head competition between
Martin Marietta and Bluegrass in
supplying aggregate to customers in and
immediately around Forsyth and north
Fulton County, Georgia, and in and
immediately around Washington
County, Maryland. For a significant
number of customers in these areas,
Martin Marietta and Bluegrass are two
of only three competitive sources of
aggregate qualified by the respective
states’ Departments of Transportation
(‘‘DOT’’). Elimination of competition
between Martin Marietta and Bluegrass
in these areas likely would give Martin
Marietta the ability to raise prices or
decrease the quality of service provided
to these customers.
3. As a result, Martin Marietta’s
proposed acquisition of Bluegrass likely
would substantially lessen competition
for DOT-qualified aggregate in and
immediately around Forsyth and north
Fulton County, Georgia, and in and
immediately around Washington
County, Maryland, in violation of
Section 7 of the Clayton Act, 15 U.S.C.
§ 18.
II. THE PARTIES AND THE PROPOSED
TRANSACTION
4. Defendant Martin Marietta is a
North Carolina corporation with its
headquarters in Raleigh, North Carolina.
Martin Marietta is a leading supplier of
aggregate and heavy building materials
in the United States, with operations in
26 states. In 2017, Martin Marietta had
net sales of $3.9 billion.
5. Defendant Bluegrass is a Delaware
limited liability company with its
headquarters in Jacksonville, Florida.
Bluegrass operates 17 rock quarries, one
sand plant, and two concrete
manufacturing plants across Kentucky,
Tennessee, South Carolina, Georgia,
Pennsylvania, and Maryland.
6. Defendant Panadero Aggregates
Holdings, LLC (‘‘Panadero Aggregates’’)
is a Delaware limited liability company
with its headquarters in Jacksonville,
Florida. Panadero Aggregates was
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formed to acquire, develop, and operate
aggregate and other construction
materials businesses. Panadero
Aggregates is the owner of Bluegrass.
7. Defendant Panadero Corp.
(‘‘Panadero’’) is a Delaware corporation
with its headquarters in Jacksonville,
Florida. Panadero is a wholly-owned
subsidiary of LG Panadero and is the
majority owner of Panadero Aggregates.
Panadero, which reported consolidated
net sales of $199.5 million in 2016, was
formed to acquire, develop, and operate
aggregate and other construction
materials businesses.
8. Defendant LG Panadero, L.P. (‘‘LG
Panadero’’) is a Delaware limited
partnership headquartered in New York,
New York. LG Panadero is the owner of
Panadero.
9. Pursuant to the Securities Purchase
Agreement dated June 23, 2017, Martin
Marietta would acquire Panadero and
Panadero Aggregates, including
Bluegrass, from LG Panadero for $1.625
billion.
III. JURISDICTION AND VENUE
10. 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.
11. The State of Maryland brings this
action under Section 16 of the Clayton
Act, 15 U.S.C. § 26, to prevent and
restrain Defendants from violating
Section 7 of the Clayton Act, as
amended, 15 U.S.C. § 18. The State of
Maryland, by and through the Attorney
General of Maryland, brings this action
as parens patriae on behalf of the
citizens, general welfare, and the
general economy of the State of
Maryland.
12. Defendants produce and sell
aggregate in the flow of interstate
commerce. Defendants’ activity in the
production and sale of aggregate
substantially affects interstate
commerce. The Court has subject matter
jurisdiction over this action pursuant to
Section 15 of the Clayton Act, 15 U.S.C.
§ 25, and 28 U.S.C. §§ 1331, 1337(a), and
1345.
13. 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. Aggregate Is an Essential Input for
Many Road and Construction Projects
14. Aggregate is a category of material
used for road and construction projects.
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Produced in quarries, mines, and gravel
pits, aggregate is predominantly
limestone, granite, or other dark-colored
igneous rock. Different types and sizes
of rock are needed to meet different
specifications for use in asphalt
concrete, ready mix concrete, industrial
processes, and other products. Asphalt
concrete consists of approximately 95
percent aggregate, and ready mix
concrete is made of up of approximately
75 percent aggregate. Aggregate thus is
an integral input for road and other
construction projects.
15. For each construction project, a
customer establishes specifications that
must be met for each application for
which aggregate is used. For example,
state DOTs, including the Georgia and
Maryland DOTs, set specifications for
aggregate used to produce asphalt
concrete, ready mix concrete, and road
base for state DOT projects. State DOTs
specify characteristics such as hardness,
durability, size, polish value, and a
variety of other characteristics. The
specifications are intended to ensure the
longevity and safety of the roads,
bridges and other projects for which
aggregate is used.
16. State DOTs qualify quarries
according to the end uses of the
aggregate, to ensure that the stone used
in an application meets the necessary
specifications. In addition, state DOTs
test the aggregate at various points: at
the quarry before it is shipped; when the
aggregate is sent to the purchaser to
produce an end product such as asphalt
concrete; and after the end product has
been produced. Many cities, counties,
commercial entities, and individuals in
Georgia and Maryland have adopted
their respective state DOT-qualified
aggregate specifications when building
roads, bridges, and other construction
projects in order to optimize the
longevity of their projects.
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B. Transportation Is a Significant
Component of the Cost of Aggregate
17. 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 aggregate. For small volumes,
aggregate often is sold according to a
posted price. For large volumes,
customers typically either negotiate
prices for a particular job or negotiate
yearly requirements contracts, seeking
bids from multiple aggregate suppliers.
18. In areas where aggregate is locally
available, it is transported from quarries
to customers by truck. Truck
transportation is expensive, and
transportation costs can become a
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significant portion of the total cost of
aggregate.
C. Relevant Markets
1. State DOT-Qualified Aggregate Is a
Relevant Product Market
19. Within the broad category of
aggregate, different types and sizes of
stone are used for different purposes.
For instance, aggregate qualified for use
as road base may not be the same size
and type of rock as aggregate qualified
for use in asphalt concrete. Accordingly,
aggregate types and sizes are not
interchangeable with one another and
demand for each is separate. Thus, each
type and size of aggregate likely is a
separate line of commerce and a
relevant product market within the
meaning of Section 7 of the Clayton Act.
20. State DOTs qualify aggregate for
use in road construction and other
projects in that particular state. DOTqualified aggregate meets particular
standards for size, physical
composition, functional characteristics,
end uses, and availability. A customer
whose job specifies aggregate qualified
by a particular state’s DOT cannot
substitute aggregate or other materials
that have not been so qualified.
21. Although numerous narrower
product markets exist, the competitive
dynamic for most types of state DOTqualified aggregate is nearly identical, as
a quarry can typically produce all, or
nearly all, types of DOT-qualified
aggregate for a particular state.
Therefore, most types of DOT-qualified
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.
22. A small but significant increase in
the price of state DOT-qualified
aggregate would not cause a sufficient
number of customers to substitute to
another type of aggregate or another
material so as to make such a price
increase unprofitable. Accordingly, the
production and sale of Georgia DOTQualified Aggregate and Maryland DOTQualified Aggregate (hereinafter ‘‘DOTQualified 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
23. Aggregate is a relatively low-cost
product that is bulky and heavy. As a
result, the cost of transporting aggregate
is high compared to the value of the
product.
24. When customers seek price quotes
or bids, the distance from the quarry to
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the project site or plant location will
have a considerable impact on the
selection of a supplier, due to the high
cost of transporting aggregate relative to
the low value of the product. Suppliers
know the importance of transportation
costs to a potential customer’s selection
of an aggregate supplier; they know the
locations of their competitors, and they
often will factor the cost of
transportation from other suppliers into
the price or bid that they submit.
25. The primary factor that
determines the area a supplier will serve
is the location of competing quarries.
When quoting prices or submitting bids,
aggregate suppliers will account for the
location of the project site or plant, the
cost of transporting aggregate to the
project site or plant, and the locations
of the competitors that might bid on a
job. Therefore, depending on the
location of the project site or plant,
suppliers are able to adjust their bids to
account for the distance other
competitors are from a job.
a. The Forsyth and North Fulton
County Area Is a Relevant Geographic
Market
26. Martin Marietta operates the
Forsyth quarry in Suwanee, Georgia,
and Bluegrass owns and operates the
Cumming quarry in Cumming, Georgia.
Customers in and immediately around
Forsyth County and Fulton County
north of the Chattahoochee River
(hereinafter referred to as the ‘‘Forsyth
and North Fulton County Area’’) are
served by both the Forsyth and
Cumming quarries. Customers with
plants or jobs in the Forsyth and North
Fulton County Area may, depending on
the location of their plant or job sites,
economically procure Georgia DOTQualified Aggregate from the Forsyth
and Cumming quarries, or from quarries
operated by a third firm located in
Norcross, Buford, and Ball Ground,
Georgia. Other more distant quarries
cannot compete successfully on a
regular basis for a significant number of
customers with plants or jobs in the
Forsyth and North Fulton County Area
because they are too far away and
transportation costs are too great.
27. Customers likely would be unable
to switch to suppliers outside the
Forsyth and North Fulton County Area
to defeat a small but significant price
increase. Accordingly, the Forsyth and
North Fulton County Area is a relevant
geographic market for the production
and sale of Georgia DOT-Qualified
Aggregate within the meaning of Section
7 of the Clayton Act.
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b. The Washington County Area Is a
Relevant Geographic Market
28. Martin Marietta owns and
operates the Boonsboro quarry in
Boonsboro, Maryland, and the
Pinesburg quarry in Williamsport,
Maryland, and Bluegrass owns and
operates the Beaver Creek quarry in
Hagerstown, Maryland. The Boonsboro,
Pinesburg, and Beaver Creek quarries
each serve customers in and
immediately around Washington
County, Maryland (hereinafter referred
to as the ‘‘Washington County Area’’).
Customers with plants or jobs in the
Washington County Area may,
depending on the location of their plant
or job site, economically procure
Maryland DOT-Qualified Aggregate
from the Boonsboro, Pinesburg, or
Beaver Creek quarries, or from a quarry
operated by a third firm located in
nearby Chambersburg, Pennsylvania.
Other more distant quarries cannot
compete successfully on a regular basis
for customers with plants or jobs in the
Washington County Area because they
are too far away and transportation costs
are too great.
29. Customers likely would be unable
to switch to more distant suppliers
outside of the Washington County Area
to defeat a small but significant price
increase. Accordingly, the Washington
County Area is a relevant geographic
market for the production and sale of
Maryland DOT-Qualified Aggregate
within the meaning of Section 7 of the
Clayton Act.
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D. Martin Marietta’s Acquisition of
Bluegrass Is Anticompetitive
E. Difficulty of Entry
30. Vigorous competition between
Martin Marietta and Bluegrass on price
and customer service in the production
and sale of DOT-Qualified Aggregate has
benefitted customers in the Forsyth and
North Fulton County Area and in the
Washington County Area.
31. In each of these areas, the
competitors that constrain Martin
Marietta and Bluegrass from raising
prices on DOT-Qualified Aggregate are
limited to those who are qualified by the
Georgia and Maryland DOTs to supply
aggregate and can economically
transport the aggregate into these areas.
As alleged above, for a significant
number of customers in each area, there
is only one other firm that produces
DOT-Qualified Aggregate and can
economically serve customers at their
plants or job sites. The proposed
acquisition will eliminate the
competition between Martin Marietta
and Bluegrass and reduce from three to
two the number of suppliers of DOT-
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Qualified Aggregate for a significant
number of customers in each area.
32. For a significant number of
customers in each area, a combined
Martin Marietta and Bluegrass will have
the ability to increase prices for DOTQualified Aggregate and decrease
service by limiting availability or
delivery options. DOT-Qualified
Aggregate producers know the distance
from their own quarries 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
Martin Marietta and Bluegrass quarries
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.
33. The response of other suppliers of
DOT-Qualified Aggregate will not be
sufficient to constrain a unilateral
exercise of market power by Martin
Marietta after the acquisition.
34. The proposed acquisition will
therefore substantially lessen
competition in the market for DOTQualified Aggregate in the Forsyth and
North Fulton County Area and in the
Washington County Area and will likely
lead to higher prices and reduced
customer service for consumers of such
products, in violation of Section 7 of the
Clayton Act.
35. Timely, likely, and sufficient entry
in the production and sale of DOTQualified Aggregate in the Forsyth and
North Fulton County Area and in the
Washington County Area 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 challenging
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
site must be close to customer plants
and likely job sites given the high cost
of transporting aggregate.
37. Second, once a suitable 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
altogether or make the process of
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19825
opening it much more time-consuming
and costly.
38. Third, even after a site is acquired
and permitted, the owner must spend
significant time and resources to
prepare the land for quarry operations
and purchase and install the necessary
equipment.
39. Because of the cost and difficulty
of establishing a quarry, entry will not
be timely, likely or sufficient to mitigate
the anticompetitive effects of Martin
Marietta’s proposed acquisition of
Bluegrass.
V. VIOLATION ALLEGED
40. Martin Marietta’s proposed
acquisition of Bluegrass likely will
substantially lessen competition in the
production and sale of DOT-Qualified
Aggregate in the Forsyth and North
Fulton County Area and in the
Washington County Area, in violation of
Section 7 of the Clayton Act, 15 U.S.C.
§ 18.
41. Unless enjoined, the proposed
acquisition likely will have the
following anticompetitive effects,
among others:
(a) actual and potential competition
between Martin Marietta and Bluegrass
in the production and sale of DOTQualified Aggregate in the Forsyth and
North Fulton County Area and in the
Washington County Area will be
eliminated; and
(b) prices for DOT-Qualified
Aggregate in the Forsyth and North
Fulton County Area and in the
Washington County Area likely will
increase and customer service likely
will decrease.
VI. REQUESTED RELIEF
42. Plaintiffs request that this Court:
(a) adjudge and decree that Martin
Marietta’s acquisition of Bluegrass
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 Bluegrass by Martin Marietta, or from
entering into or carrying out any other
contract, agreement, plan, or
understanding, the effect of which
would be to combine Martin Marietta
with Bluegrass;
(c) award Plaintiffs their costs for this
action; and
(d) award Plaintiffs such other and
further relief as the Court deems just
and proper.
Dated: April 25, 2018
For Plaintiff United States of America
lllllllllllllllllllll
Makan Delrahim (D.C. Bar #457795)
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Assistant Attorney General
lllllllllllllllllllll
Andrew C. Finch (D.C. Bar #494992)
Principal Deputy Assistant Attorney General
lllllllllllllllllllll
Bernard A. Nigro, Jr. (D.C. Bar #412357)
Deputy Assistant Attorney General
lllllllllllllllllllll
Patricia A. Brink
Director of Civil Enforcement
lllllllllllllllllllll
Maribeth Petrizzi (D.C. Bar #435204)
Chief Defense, Industrials, and Aerospace
Section
lllllllllllllllllllll
Stephanie A. Fleming
Assistant Chief Defense, Industrials, and
Aerospace Section
lllllllllllllllllllll
David E. Altschuler (D.C. Bar #983023)
Assistant Chief Defense, Industrials, and
Aerospace Section
lllllllllllllllllllll
Kerrie J. Freeborn* (D.C. Bar #503143)
James K. Foster
Stephen A. Harris
John M. Lynch (D.C. Bar #418313)
Jay D. Owen
Angela Y. Ting (D.C. Bar #449576)
Attorneys, United States Department of
Justice, Antitrust Division, Defense,
Industrials, and Aerospace Section, 450 Fifth
Street NW, Suite 8700, Washington, D.C.
20530, Tel.: (202) 598–2300; Fax: (202) 514–
9033; Email: kerrie.freeborn@usdoj.gov,
*Attorney of Record.
For Plaintiff State of Maryland
Brian E. Frosh
Maryland Attorney General
lllllllllllllllllllll
John R. Tennis
Assistant Attorney General
Chief, Antitrust Division
lllllllllllllllllllll
Gary Honick
Senior Assistant Attorney General, 200 St.
Paul Place, 19th Floor, Baltimore, MD 21202,
Tel: (410) 576–6470; Fax: (410) 576–7830;
Email: jtennis@oag.state.md.us; Email:
ghonick@oag.state.md.us.
amozie on DSK3GDR082PROD with NOTICES
United States District Court for the District
of Columbia
United States of America and State of
Maryland, Plaintiffs, v. Martin Marietta
Materials, Inc., LG Panadero, L.P., Panadero
Corp., Panadero Aggregates Holdings, LLC
and Bluegrass Materials Company, LLC,
Defendants.
Civil Action No.: 1:18–cv–00973
Judge: Randolph Moss
PROPOSED FINAL JUDGMENT
WHEREAS, Plaintiffs, United States of
America and the State of Maryland,
filed their Complaint on April 25, 2018,
Plaintiffs and Defendants, Martin
Marietta Materials, Inc., LG Panadero,
L.P., Panadero Corp, Panadero
Aggregates Holdings, LLC, and
Bluegrass Materials Company, LLC, by
their respective attorneys, have
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consented to the entry of this Final
Judgment without trial or adjudication
of any issue of fact or law, and without
this Final Judgment constituting any
evidence against or admission by any
party regarding any issue of fact or law;
AND WHEREAS, Defendants agree to
be bound by the provisions of this Final
Judgment pending its approval by the
Court;
AND WHEREAS, the essence of this
Final Judgment is the prompt and
certain divestiture of certain rights or
assets by Defendants to assure that
competition is not substantially
lessened;
AND WHEREAS, Plaintiffs require
Defendants to make certain divestitures
for the purpose of remedying the loss of
competition alleged in the Complaint;
AND WHEREAS, Defendants have
represented to Plaintiffs that the
divestitures required below can and will
be made and that Defendants will later
raise no claim of hardship or difficulty
as grounds for asking the Court to
modify any of the divestiture provisions
contained below;
NOW THEREFORE, before any
testimony is taken, without trial or
adjudication of any issue of fact or law,
and upon consent of the parties, it is
ORDERED, ADJUDGED, AND
DECREED:
I. JURISDICTION
This Court has jurisdiction over the
subject matter of and each of the parties
to this action. The Complaint states a
claim upon which relief may be granted
against Defendants under Section 7 of
the Clayton Act, as amended (15 U.S.C.
§ 18).
II. DEFINITIONS
As used in this Final Judgment:
A. ‘‘Acquirer’’ or ‘‘Acquirers’’ means
the entity or entities to whom
Defendants divest the Divestiture
Assets.
B. ‘‘Acquirer of the Georgia
Divestiture Assets’’ means Midsouth
Paving, Inc., or another entity to which
Defendants divest the Georgia
Divestiture Assets.
C. ‘‘Acquirer of the Maryland
Divestiture Assets’’ means the entity to
which Defendants divest the Maryland
Divestiture Assets.
D. ‘‘Closing’’ means the
consummation of the divestiture of all
the Divestiture Assets pursuant to either
Section IV or Section V of this Final
Judgment.
E. ‘‘Completion of the Transaction’’
means the closing of Martin Marietta’s
acquisition of Panadero Corp. and
Panadero Aggregates Holdings, LLC,
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Fmt 4703
Sfmt 4703
including Bluegrass Materials Company,
LLC.
F. ‘‘Martin Marietta’’ means
Defendant Martin Marietta Materials,
Inc., a North Carolina corporation with
its headquarters in Raleigh, North
Carolina, its successors and assigns, and
its subsidiaries, divisions, groups,
affiliates, partnerships, and joint
ventures, and their directors, officers,
managers, agents, and employees.
G. ‘‘LG Panadero’’ means Defendant
LG Panadero, L.P., a Delaware limited
partnership with its headquarters in
New York, New York, its successors and
assigns, and its subsidiaries, divisions,
groups, affiliates, partnerships, and joint
ventures, and their directors, officers,
managers, agents, and employees.
H. ‘‘Panadero’’ means Defendant
Panadero Corp., a Delaware corporation
with its headquarters in Jacksonville,
Florida, its successors and assigns, and
its subsidiaries, divisions, groups,
affiliates, partnerships, and joint
ventures, and their directors, officers,
managers, agents, and employees.
I. ‘‘Panadero Aggregates’’ means
Defendant Panadero Aggregates
Holdings, LLC, a Delaware limited
liability company with its headquarters
in Jacksonville, Florida, its successors
and assigns, and its subsidiaries,
divisions, groups, affiliates,
partnerships, and joint ventures, and
their directors, officers, managers,
agents, and employees.
J. ‘‘Bluegrass’’ means Defendant
Bluegrass Materials Company, LLC, a
Delaware limited liability company with
its headquarters in Jacksonville, Florida,
its successors and assigns, and its
subsidiaries, divisions, groups,
affiliates, partnerships, and joint
ventures, and their directors, officers,
managers, agents, and employees.
K. ‘‘Bluegrass Entities’’ means LG
Panadero, Panadero, Panadero
Aggregates, and Bluegrass.
L. ‘‘Midsouth’’ means Midsouth
Paving, Inc., a Delaware corporation
with its headquarters 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.
Midsouth is a subsidiary of CRH plc and
CRH Americas Materials, Inc.
M. ‘‘Forsyth Quarry’’ means Martin
Marietta’s quarry located at 3561
Peachtree Pkwy., Suwanee, Georgia
30024.
N. ‘‘Beaver Creek Quarry’’ means
Bluegrass’s quarry located at 10101
Mapleville Rd., Hagerstown, Maryland
21740.
O. ‘‘Georgia Divestiture Assets’’
means:
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1. Martin Marietta’s lease to the
Forsyth Quarry;
2. all tangible assets used at the
Forsyth Quarry, 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 offsite warehouses or storage facilities, and
all other tangible property and assets
used in connection with the Forsyth
Quarry; all licenses, permits, and
authorizations issued by any
governmental organization relating to
the Forsyth Quarry; all contracts,
agreements, teaming arrangements,
leases (including renewal rights),
commitments, certifications and
understandings, including sales
agreements and supply agreements
relating to the Forsyth Quarry, except
for regional or national service
agreements; all customer lists, contracts,
accounts, and credit records relating to
the Forsyth Quarry; all repair and
performance records and all other
records relating to the Forsyth Quarry;
and
3. all intangible assets used in the
production and sale of aggregate at the
Forsyth Quarry, including but not
limited to, all contractual rights,
patents, licenses and sublicenses,
intellectual property, copyrights,
trademarks, trade names, service marks,
service names (provided, however, that
such marks and names shall not include
the term ‘‘Martin Marietta’’), technical
information, computer software
(including dispatch software and
management information systems) and
related documentation (provided,
however, that the Acquirer may elect to
acquire extracted data relating to the
Forsyth Quarry without the
accompanying software), 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 Martin Marietta provides to
its own employees, customers,
suppliers, agents, or licensees, and all
data (including aggregate reserve testing
information) concerning the Forsyth
Quarry.
P. ‘‘Maryland Divestiture Assets’’
means:
1. the Beaver Creek Quarry;
2. all tangible assets used at the
Beaver Creek Quarry, including, but not
limited to, all manufacturing
equipment, tooling, and fixed assets,
mining equipment, aggregate reserves,
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18:16 May 03, 2018
Jkt 244001
personal property, inventory, office
furniture, materials, supplies, on- or offsite warehouses or storage facilities, and
all other tangible property and assets
used in connection with the Beaver
Creek Quarry; all licenses, permits, and
authorizations issued by any
governmental organization relating to
the Beaver Creek Quarry; all contracts,
agreements, teaming arrangements,
leases (including renewal rights),
commitments, certifications and
understandings, including sales
agreements and supply agreements,
except for regional or national service
agreements; all customer lists, contracts,
accounts, and credit records relating to
the Beaver Creek Quarry; all repair and
performance records and all other
records relating to the Beaver Creek
Quarry; and
3. all intangible assets used in the
production and sale of aggregate at the
Beaver Creek Quarry, including but not
limited to, all contractual rights,
patents, licenses and sublicenses,
intellectual property, copyrights,
trademarks, trade names, service marks,
service names (provided, however, that
such marks and names shall not include
the word ‘‘Bluegrass’’), technical
information, computer software
(including dispatch software and
management information systems) and
related documentation (provided,
however, that the Acquirer may elect to
acquire extracted data relating to the
Beaver Creek Quarry without the
accompanying software), 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 Bluegrass provides to its
own employees, customers, suppliers,
agents, or licensees, and all data
(including aggregate reserve testing
information) concerning the Beaver
Creek Quarry.
Q. ‘‘Divestiture Assets’’ means the
Georgia Divestiture Assets and the
Maryland Divestiture Assets.
III. APPLICABILITY
A. This Final Judgment applies to
Martin Marietta and the Bluegrass
Entities, 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
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19827
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 twenty-one (21)
calendar days after the Court’s signing
of the Hold Separate Stipulation and
Order in this matter, to divest the
Georgia Divestiture Assets in a manner
consistent with this Final Judgment to
Midsouth or another Acquirer of the
Georgia Divestiture Assets acceptable to
the United States, in its sole discretion.
The United States, in its sole discretion,
may agree to one or more extensions of
this time period not to exceed sixty (60)
calendar days in total, and shall notify
the Court in such circumstances.
Defendants agree to use their best efforts
to divest the Georgia Divestiture Assets
as expeditiously as possible.
B. Defendants are ordered and
directed, within ninety (90) calendar
days after the filing of the Complaint in
this matter, or five (5) calendar days
after notice of the entry of this Final
Judgment by the Court, whichever is
later, to divest the Maryland Divestiture
Assets in a manner consistent with this
Final Judgment to an Acquirer of the
Maryland Divestiture Assets acceptable
to the United States, in its sole
discretion, after consultation with the
State of Maryland. 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 Maryland
Divestiture Assets as expeditiously as
possible.
C. In the event Defendants are
attempting to divest the Georgia
Divestiture Assets to an Acquirer other
than Midsouth, and in accomplishing
the divestiture of the Maryland
Divestiture Assets ordered by this Final
Judgment, Defendants promptly shall
make known, by usual and customary
means, the availability of the Divestiture
Assets. Defendants shall inform any
person making 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. Defendants shall offer
to furnish to all prospective Acquirers,
subject to customary confidentiality
assurances, all information and
documents relating to the Divestiture
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Assets customarily provided in a due
diligence process except such
information or documents subject to the
attorney-client privilege or workproduct 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(s) and the United States
information relating to the personnel
involved in the operation of the
Divestiture Assets to enable the
Acquirer(s) to make offers of
employment. Defendants will not
interfere with any negotiations by the
Acquirer(s) 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 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(s) that each Divestiture 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(s) that (1) there are no material
defects in the environmental, zoning, or
other permits pertaining to the
operation of each Divestiture 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 Maryland with respect to the
Maryland Divestiture Assets, that the
Divestiture Assets can and will be used
by the Acquirer(s) as part of a viable,
ongoing business in the production and
sale of Georgia and Maryland
Department of Transportation-qualified
aggregate (‘‘State DOT-Qualified
Aggregate’’). The divestitures, whether
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Jkt 244001
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
Maryland with respect to the
Maryland Divestiture Assets, has
the intent and capability (including
the necessary managerial,
operational, technical, and financial
capability) of competing effectively
in the business of producing and
selling State DOT-Qualified
Aggregate; and
(2) shall be accomplished so as to satisfy
the United States, in its sole
discretion, after consultation with
the State of Maryland with respect
to the Maryland Divestiture Assets,
that none of the terms of any
agreement between an Acquirer and
Defendants give Defendants the
ability unreasonably to raise the
Acquirer’s or Acquirers’ costs, to
lower the Acquirer’s or Acquirers’
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 all
of the Divestiture Assets within the time
periods specified in Paragraphs IV(A)
and IV(B), Defendants shall notify the
United States, and the State of Maryland
with respect to the Maryland Divestiture
Assets, 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 remaining Divestiture
Assets.
B. After the appointment of a
Divestiture Trustee becomes effective,
only the Divestiture Trustee shall have
the right to sell the remaining
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 Maryland with respect to the
Maryland Divestiture Assets, 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
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Fmt 4703
Sfmt 4703
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 fourteen (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
the Divestiture Trustee shall have full
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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 report contains
information that the Divestiture Trustee
deems confidential, such report 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
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19829
or failed to act diligently or in a
reasonably cost-effective manner, it may
recommend the Court appoint a
substitute Divestiture Trustee.
Defendants under Paragraph V(C), the
divestitures proposed under Section V
shall not be consummated unless
approved by the Court.
VI. NOTICE OF PROPOSED
DIVESTITURE
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 Maryland with
respect to the Maryland Divestiture
Assets, 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 Maryland
with respect to the Maryland Divestiture
Assets, may request from Defendants,
the proposed Acquirer(s), any other
third party, or the Divestiture Trustee, if
applicable, additional information
concerning the proposed divestitures,
the proposed Acquirer(s), 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(s),
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(s) or upon objection by the
United States, the divestitures proposed
under Section IV or Section V shall not
be consummated. Upon objection by
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.
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VIII. HOLD SEPARATE
Until the divestitures required by this
Final Judgment have been
accomplished, the Bluegrass Entities
shall until the Completion of the
Transaction, and Martin Marietta shall
until Closing, 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, the Bluegrass Entities shall
until the Completion of the Transaction,
and Martin Marietta shall until Closing,
deliver to the United States an affidavit,
which shall describe the fact and
manner of Defendants’ compliance with
Section IV or Section V of this Final
Judgment. Affidavits provided by
Martin Marietta must be signed by its
Chief Financial Officer and General
Counsel; each affidavit provided by the
Bluegrass Entities must be signed by the
highest ranking officer of each
Defendant included in the Bluegrass
Entities; and affidavits provided by
Bluegrass Materials Co., LLC must also
be signed by its CFO. 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
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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 the Bluegrass Entities shall until
the Completion of the Transaction, and
Martin Marietta shall until Closing,
deliver to the United States an affidavit
that describes in reasonable detail all
actions Defendants have taken and all
steps Defendants have implemented on
an ongoing basis to comply with Section
VIII of this Final Judgment. Defendants
shall deliver to the United States an
affidavit describing any changes to the
efforts and actions outlined in
Defendants’ earlier affidavits filed
pursuant to this Section within fifteen
(15) calendar days after the change is
implemented.
C. Defendants shall keep all records of
all efforts made to preserve and divest
the Divestiture Assets until one year
after such divestitures have been
completed.
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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 legallyrecognized 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
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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 Maryland 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. NO REACQUISITION
Defendants may not reacquire any
part of the Divestiture Assets during the
term of this Final Judgment.
XII. RETENTION OF
JURISDICTION
This Court retains jurisdiction to
enable any party to this Final Judgment
to apply to this Court at any time for
further orders and directions as may be
necessary or appropriate to carry out or
construe this Final Judgment, to modify
any of its provisions, to enforce
compliance, and to punish violations of
its provisions.
XIII. 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
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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. In
connection with any successful effort by
the United States to enforce this Final
Judgment against a Defendant, whether
litigated or resolved prior to litigation,
that Defendant agrees to reimburse the
United States for any attorneys’ fees,
experts’ fees, and costs incurred in
connection with that enforcement effort,
including the investigation of the
potential violation.
XIV. 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 the Defendants
that the divestitures have been
completed and that the continuation of
the Final Judgment no longer is
necessary or in the public interest.
XV. 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 responses to comments
filed with the Court, entry of this Final
Judgment is in the public interest.
Date: llllllllllllllll
Court approval subject to procedures of
Antitrust Procedures and Penalties Act,
15 U.S.C. § 16
llllllllllllllllll
l
United States District Judge
United States District Court for the
District of Columbia
United States of America and State of
Maryland, Plaintiffs, v. Martin Marietta
Materials, Inc., LG Panadero, L.P., Panadero
Corp., Panadero Aggregates Holdings, LLC,
and Bluegrass Materials Company, LLC,
Defendants.
Civil Action No.: 1:18–cv–00973
Judge: Randolph Moss
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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.
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I. NATURE AND PURPOSE OF THE
PROCEEDING
On June 26, 2017, Martin Marietta
Materials, Inc. (‘‘Martin Marietta’’) and
Bluegrass Materials Company, LLC
(‘‘Bluegrass’’) announced a definitive
agreement under which Martin Marietta
would acquire Bluegrass for
approximately $1.625 billion. The
United States and the State of Maryland
(‘‘Plaintiffs’’) filed a civil antitrust
Complaint on April 25, 2018, seeking to
enjoin the proposed acquisition. The
Complaint alleges that the likely effect
of the proposed acquisition would be to
substantially lessen competition in the
production and sale of Department of
Transportation (‘‘DOT’’)-qualified
aggregate in and immediately around
Forsyth and north Fulton County,
Georgia and in and immediately around
Washington County, Maryland, 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 to divest the lease to Martin
Marietta’s Forsyth quarry and all of the
quarry’s assets to Midsouth Paving, Inc.,
a subsidiary of CRH, plc and CRH
Americas Materials, Inc., and to divest
Bluegrass’s Beaver Creek quarry and all
of the quarry’s assets to a yet-to-be
determined purchaser that must be
approved by the United States
(collectively, the ‘‘Divestiture Assets’’).
Under the terms of the Hold Separate,
Defendants will take certain steps to
ensure that prior to their divestiture the
Divestiture Assets are operated as
competitively independent,
economically viable and ongoing
business concerns, that they will remain
independent and uninfluenced by the
consummation of the acquisition, and
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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 Martin Marietta is a North
Carolina corporation with its
headquarters in Raleigh, North Carolina.
Martin Marietta is a leading supplier of
aggregates and heavy building
operations, with operations in 26 states.
In 2017, Martin Marietta had net sales
of $3.9 billion.
Defendant Bluegrass is a Delaware
limited liability company with its
headquarters in Jacksonville, Florida.
Bluegrass operates 17 rock quarries, one
sand plant, and two concrete
manufacturing plants across Kentucky,
Tennessee, South Carolina, Georgia,
Pennsylvania, and Maryland.
Defendant Panadero Aggregates
Holdings, LLC (‘‘Panadero Aggregates’’)
is a Delaware limited liability company
with its headquarters in Jacksonville,
Florida. Panadero Aggregates was
formed to acquire, develop, and operate
aggregate and other construction
materials businesses, and is the owner
of Bluegrass.
Defendant Panadero Corp.
(‘‘Panadero’’) is a Delaware corporation
with its headquarters in Jacksonville,
Florida. Panadero is a wholly-owned
subsidiary of LG Panadero and is the
majority owner of Panadero Aggregates.
Panadero, which reported consolidated
net sales of $199.5 million in 2016, was
formed to acquire, develop, and operate
aggregate and other construction
materials businesses.
Defendant LG Panadero, L.P. (‘‘LG
Panadero’’) is a Delaware limited
partnership headquartered in New York,
New York. LG Panadero is the owner of
Panadero.
Pursuant to a Securities Purchase
Agreement dated June 23, 2017, Martin
Marietta would acquire Panadero and
Panadero Aggregates, including
Bluegrass, from LG Panadero for $1.625
billion. The proposed transaction, as
initially agreed to by Defendants on
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June 23, 2017, would lessen competition
substantially in the production and sale
of DOT-qualified aggregate in and
immediately around Forsyth and north
Fulton County, Georgia and in and
immediately around the Washington
County, Maryland Area. This
acquisition is the subject of the
Complaint and proposed Final
Judgment that Plaintiffs filed today.
B. Industry Overview
Aggregate is a category of material
used for road and construction projects.
Produced in quarries, mines, and gravel
pits, aggregate is predominantly
limestone, granite, or other dark-colored
igneous rock. Different types and sizes
of rock are needed to meet different
specifications for use in asphalt
concrete, ready mix concrete, industrial
processes, and other products. Asphalt
concrete consists of approximately 95
percent aggregate, and ready mix
concrete is made of up of approximately
75 percent aggregate. Aggregate thus is
an integral input for road and other
construction projects.
For each construction project, a
customer establishes specifications that
must be met for each application for
which aggregate is used. For example,
state DOTs, including the Georgia and
Maryland DOTs, set specifications for
aggregate used to produce asphalt
concrete, ready mix concrete, and road
base for state DOT projects. State DOTs
specify characteristics such as hardness,
durability, size, polish value, and a
variety of other characteristics. The
specifications are intended to ensure the
longevity and safety of the roads,
bridges and other projects for which
aggregate is used.
State DOTs qualify quarries according
to the end uses of the aggregate, to
ensure that the stone used in an
application meets the necessary
specifications. In addition, state DOTs
test the aggregate at various points: at
the quarry before it is shipped; when the
aggregate is sent to the purchaser to
produce an end product such as asphalt
concrete; and after the end product has
been produced. Many cities, counties,
commercial entities, and individuals in
Georgia and Maryland have adopted
their respective state DOT-qualified
aggregate specifications when building
roads, bridges, and other construction
projects in order to help ensure the
longevity of their projects.
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 aggregate. For small volumes,
aggregate often is sold according to a
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posted price. For large volumes,
customers typically either negotiate
prices for a particular job or negotiate
yearly requirements contracts, seeking
bids from multiple aggregate suppliers.
In areas where aggregate is locally
available, it is transported from quarries
to customers by truck. Truck
transportation is expensive relative to
the cost of the product itself, and
transportation costs can become a
significant portion of the total cost of
aggregate.
C. Relevant Markets
amozie on DSK3GDR082PROD with NOTICES
1. State DOT-Qualified Aggregate Is a
Relevant Product Market
According to the Complaint, within
the broad category of aggregate, different
types and sizes of stone are used for
different purposes. For instance,
aggregate qualified for use as road base
may not be the same size and type of
rock as aggregate qualified for use in
asphalt concrete. Accordingly, aggregate
types and sizes are not interchangeable
for one another and demand for each is
separate. Thus, the Complaint alleges
that each type and size of aggregate
likely is a separate line of commerce
and a relevant product market within
the meaning of Section 7 of the Clayton
Act.
State DOTs qualify aggregate for use
in road construction and other projects
in that particular state. DOT-qualified
aggregate meets particular standards for
size, physical composition, functional
characteristics, end uses, and
availability. A customer whose job
specifies aggregate qualified by a
particular state’s DOT cannot substitute
aggregate or other materials that have
not been so qualified.
The Complaint alleges that although
numerous narrower product markets
exist, the competitive dynamic for most
types of state DOT-qualified aggregate is
nearly identical, as a quarry can
typically produce all, or nearly all, types
of DOT-qualified aggregate for a
particular state. Therefore, most types of
DOT-qualified 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.
According to the Complaint, a small
but significant increase in the price of
state DOT-qualified aggregate would not
cause a sufficient number of customers
to substitute to another type of aggregate
or another material so as to make such
a price increase unprofitable.
Accordingly, the Complaint alleges that
the production and sale of Georgia DOTQualified Aggregate and Maryland DOT-
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Qualified Aggregate (hereinafter ‘‘DOTQualified 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
When customers seek price quotes or
bids for aggregate, 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 aggregate
relative to the low value of the product.
Suppliers know the importance of
transportation costs to a potential
customer’s selection of an aggregate
supplier; they know the locations of
their competitors, and they often will
factor the cost of transportation from
other suppliers into the price or bid that
they submit. For these reasons, the
primary factor that determines the area
a supplier will serve is the location of
competing quarries.
a. The Forsyth and North Fulton
County Area Is a Relevant Geographic
Market
According to the Complaint, Martin
Marietta operates the Forsyth quarry in
Suwanee, Georgia, and Bluegrass owns
and operates the Cumming quarry in
Cumming, Georgia. Customers in and
immediately around Forsyth County
and Fulton County north of the
Chattahoochee River (hereinafter
referred to as the ‘‘Forsyth and North
Fulton County Area’’) are served by both
the Forsyth and Cumming quarries.
Customers with plants or jobs in the
Forsyth and North Fulton County Area
may, depending on the location of their
plant or job sites, economically procure
Georgia DOT-Qualified Aggregate from
the Forsyth and Cumming quarries, or
from quarries operated by a third firm
located in Norcross, Buford, and Ball
Ground, Georgia. Other more distant
quarries cannot compete successfully on
a regular basis for a significant number
of customers with plants or jobs in the
Forsyth and North Fulton County Area
because they are too far away and
transportation costs are too great.
According to the Complaint,
customers likely would be unable to
switch to suppliers outside the Forsyth
and North Fulton County Area to defeat
a small but significant price increase.
The Complaint therefore alleges that the
Forsyth and North Fulton County Area
is a relevant geographic market for the
production and sale of Georgia DOTQualified Aggregate within the meaning
of Section 7 of the Clayton Act.
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b. The Washington County Area Is a
Relevant Geographic Market
According to the Complaint, Martin
Marietta owns and operates the
Boonsboro quarry in Boonsboro,
Maryland, and the Pinesburg quarry in
Williamsport, Maryland, and Bluegrass
owns and operates the Beaver Creek
quarry in Hagerstown, Maryland. The
Boonsboro, Pinesburg, and Beaver Creek
quarries each serve customers in and
immediately around Washington
County, Maryland (hereinafter referred
to as the ‘‘Washington County Area’’).
Customers with plants or jobs in the
Washington County Area may,
depending on the location of their plant
or job site, economically procure
Maryland DOT-Qualified Aggregate
from the Boonsboro, Pinesburg, or
Beaver Creek quarries, or from a quarry
operated by a third firm located in
nearby Chambersburg, Pennsylvania.
Other more distant quarries cannot
compete successfully on a regular basis
for customers with plants or jobs in the
Washington County Area because they
are too far away and transportation costs
are too great.
According to the Complaint,
customers likely would be unable to
switch to more distant suppliers outside
of the Washington County Area to defeat
a small but significant price increase.
The Complaint therefore alleges that the
Washington County Area is a relevant
geographic market for the production
and sale of Maryland DOT-Qualified
Aggregate within the meaning of Section
7 of the Clayton Act.
D. Martin Marietta’s Acquisition of
Bluegrass Is Anticompetitive
According to the Complaint, vigorous
competition between Martin Marietta
and Bluegrass on price and customer
service in the production and sale of
DOT-Qualified Aggregate has benefitted
customers in the Forsyth and North
Fulton County Area and in the
Washington County Area.
The Complaint alleges that in each of
these areas, the competitors that
constrain Martin Marietta and Bluegrass
from raising prices on DOT-Qualified
Aggregate are limited to those who are
qualified by the Georgia and Maryland
DOTs to supply aggregate and can
economically transport the aggregate
into these areas. According to the
Complaint, for a significant number of
customers in each area, there is only one
other firm that produces DOT-Qualified
Aggregate and can economically serve
customers at their plants or job sites.
The proposed acquisition will eliminate
the competition between Martin
Marietta and Bluegrass and reduce from
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three to two the number of suppliers of
DOT-Qualified Aggregate for a
significant number of customers in each
area.
According to the Complaint, for a
significant number of customers in each
area, a combined Martin Marietta and
Bluegrass will have the ability to
increase prices for DOT-Qualified
Aggregate and decrease service by
limiting availability or delivery options.
DOT-Qualified Aggregate producers
know the distance from their own
quarries 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 Martin Marietta and Bluegrass
quarries 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 Complaint alleges that the
response of other suppliers of DOTQualified Aggregate will not be
sufficient to constrain a unilateral
exercise of market power by Martin
Marietta after the acquisition. For all of
these reasons, the Complaint alleges that
the proposed acquisition will therefore
substantially lessen competition in the
market for DOT-Qualified Aggregate in
the Forsyth and North Fulton County
Area and in the Washington County
Area and likely lead to higher prices
and reduced customer service for
consumers of such products, in
violation of Section 7 of the Clayton
Act.
E. Barriers to Entry
The Complaint alleges that entry in
the production and sale of DOTQualified Aggregate in the Forsyth and
North Fulton County Area and in the
Washington County Area is unlikely to
be timely or sufficient to offset the
anticompetitive effects of the
acquisition, given the substantial time
and cost required to open a quarry.
According to the Complaint, quarries
are particularly difficult to locate and
permit. First, securing the proper site for
a quarry is challenging and timeconsuming. 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
site must be close to customer plants
and likely job sites given the high cost
of transporting aggregate. Second, once
a suitable location is chosen, obtaining
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Jkt 244001
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 altogether or make the
process of opening it much more timeconsuming and costly. Finally, even
after a site is acquired and permitted,
the owner must spend significant time
and resources to prepare the land for
quarry operations and purchase and
install the necessary equipment.
For all of these reasons, the Complaint
alleges that entry will not be timely,
likely or sufficient to mitigate the
anticompetitive effects of the
acquisition.
III. EXPLANATION OF THE
PROPOSED FINAL JUDGMENT
The divestiture requirement of the
proposed Final Judgment will eliminate
the anticompetitive effects of the
acquisition in the production and sale of
DOT-qualified aggregate in the Forsyth
and North Fulton County Area and the
Washington County Area by
establishing a new, independent, and
economically viable competitor in each
area.
A. Divestiture
In the Forsyth and North Fulton
County Area, Paragraph IV(A) of the
proposed Final Judgment requires
Defendants to divest the lease to Martin
Marietta’s Forsyth quarry and all
tangible and intangible assets related to
the quarry (the ‘‘Georgia Divestiture
Assets’’) to Midsouth Paving, Inc.
(‘‘Midsouth’’), or an alternative Acquirer
acceptable to the United States, in its
sole discretion, within twenty-one (21)
days after the Court’s signing of the
Hold Separate. The United States
required an upfront buyer for the
divestiture of the Georgia Divestiture
Assets because of the unique nature of
the short-term lease being divested and
the accompanying need to minimize the
time before an Acquirer assumed
control of the Forsyth quarry’s
operations. Midsouth, which is a
subsidiary of CRH plc and CRH
Americas Materials, Inc. (commonly
known in the industry as ‘‘Oldcastle’’),
is an experienced operator of quarries in
the region, with locations in Georgia,
Alabama, and Tennessee.
In the Washington County Area,
Paragraph IV(B) of the proposed Final
Judgment requires the Defendants to
divest Bluegrass’s Beaver Creek quarry
and all tangible and intangible assets
related to the quarry (the ‘‘Maryland
Divestiture Assets’’) to an Acquirer
acceptable to the United States, in its
sole discretion, after consultation with
the State of Maryland. Defendants must
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19833
complete the divestiture within ninety
(90) days after the filing of the
Complaint, or five (5) days after notice
of entry of the Final Judgment by the
Court, whichever is later.
With respect to the divestiture of both
the Georgia and Maryland Divestiture
Assets, Defendants must take all
reasonable steps necessary to
accomplish the divestitures quickly and
shall cooperate with prospective
purchasers. Paragraph IV(I) of the
proposed Final Judgment further
provides that Defendants must
accomplish the divestitures in such a
way as to satisfy the United States in its
sole discretion, after consultation with
the State of Maryland with respect to
the Maryland Divestiture Assets, that
the Divestiture Assets can and will be
operated by the respective purchasers as
viable, ongoing businesses that can
compete effectively in the production
and sale of State DOT-Qualified
Aggregate.
The proposed Final Judgment also
contains provisions intended to
facilitate the respective purchasers’
efforts to hire the employees involved in
the operation of the Divestiture Assets.
Paragraph IV(D) of the proposed Final
Judgment requires Defendants to
provide the Acquirers of the Divestiture
Assets with information relating to the
personnel involved in the operation of
the Divestiture Assets to enable the
Acquirers to make offers of
employment, and provides that
Defendants will not interfere with any
negotiations by the Acquirers to hire
these employees.
In the event that Defendants do not
accomplish the divestitures within the
periods 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 divestiture of
any remaining Divestiture Assets. If a
trustee is appointed, the proposed Final
Judgment provides that Defendants will
pay all costs and expenses of the trustee.
The trustee’s commission will be
structured so as to provide an incentive
for the trustee based on the price
obtained and the speed with which the
divestiture is accomplished. 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
divestiture. Paragraph V(G) of the
proposed Final Judgment requires that,
at the end of six months, if the
divestiture has not been accomplished,
the trustee and the United States will
make recommendations to the Court,
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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.
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B. Compliance Affidavits
The proposed Final Judgment
requires, in Paragraph IX(A), that the
Defendants inform the United States of
their compliance with the divestiture
requirements of the proposed Final
Judgment by delivering affidavits to the
United States 20 days after the filing of
the Complaint, and every 30 days
thereafter until the divestitures have
been completed. Martin Marietta’s
affidavits must be signed by its Chief
Financial Officer and General Counsel.
Defendants LG Panadero, Panadero, and
Panadero Aggregates lack both a General
Counsel and a Chief Financial Officer,
so those entities must submit affidavits
from each company’s highest ranking
officer. Bluegrass also is not represented
by a General Counsel, but will submit
affidavits from both its highest ranking
officer and Chief Financial Officer.
C. Enforcement and Expiration of the
Final Judgment
The proposed Final Judgment
contains provisions designed to promote
compliance and make enforcement of
Division consent decrees as effective as
possible. Paragraph XIII(A) provides
that the United States retains and
reserves all rights to enforce the
provisions of the proposed Final
Judgment, including its right 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
the 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 XIII(B) of the proposed
Final Judgment further provides that
should the Court find in an enforcement
proceeding that the Defendants have
violated the Final Judgment, the United
States may apply to the Court for a onetime 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
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and enforcement of violations of the
proposed Final Judgment, Paragraph
XIII(B) provides that in any successful
effort by the United States to enforce
this Final Judgment against a Defendant,
whether litigated or resolved prior to
litigation, that Defendant agrees to
reimburse the United States for any
attorneys’ fees, experts’ fees, or costs
incurred in connection with any
enforcement effort, including the
investigation of the potential violation.
Finally, Section XIV 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
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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, D.C. 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 Martin
Marietta’s acquisition of Bluegrass.
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 Aggregate in the
Forsyth and North Fulton County and
Washington County 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 sixtyday comment period, after which the
court shall determine whether entry of
the proposed Final Judgment ‘‘is in the
public interest.’’ 15 U.S.C. § 16(e)(1). In
making that determination, the court, in
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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) (explaining that the
‘‘court’s inquiry is limited’’ in Tunney
Act settlements); United States v. InBev
N.V./S.A., No. 08–1965 (JR), 2009–2
Trade Cas. (CCH) ¶ 76,736, 2009 U.S.
Dist. LEXIS 84787, at *3, (D.D.C. Aug.
11, 2009) (noting that the court’s review
of a consent judgment is limited and
only inquires ‘‘into whether the
government’s determination that the
proposed remedies will cure the
antitrust violations alleged in the
complaint was reasonable, and whether
the mechanism to enforce the final
judgment are clear and manageable.’’).1
As the United States Court of Appeals
for the District of Columbia Circuit has
held, under the APPA a court considers,
among other things, the relationship
between the remedy secured and the
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).
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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
2 Cf. BNS, 858 F.2d at 464 (holding that the
court’s ‘‘ultimate authority under the [APPA] is
limited to approving or disapproving the consent
decree’’); United States v. Gillette Co., 406 F. Supp.
713, 716 (D. Mass. 1975) (noting that, in this way,
the court is constrained to ‘‘look at the overall
picture not hypercritically, nor with a microscope,
but with an artist’s reducing glass’’). See generally
Microsoft, 56 F.3d at 1461 (discussing whether ‘‘the
remedies [obtained in the decree are] so
inconsonant with the allegations charged as to fall
outside of the ‘reaches of the public interest’’’).
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19835
of proposed remedies, its perception of
the market structure, and its views of
the nature of the case).
Courts have greater flexibility in
approving proposed consent decrees
than in crafting their own decrees
following a finding of liability in a
litigated matter. ‘‘[A] proposed decree
must be approved even if it falls short
of the remedy the court would impose
on its own, as long as it falls within the
range of acceptability or is ‘within the
reaches of public interest.’ ’’ United
States v. Am. Tel. & Tel. Co., 552 F.
Supp. 131, 151 (D.D.C. 1982) (citations
omitted) (quoting United States v.
Gillette Co., 406 F. Supp. 713, 716 (D.
Mass. 1975)), aff’d sub nom. Maryland
v. United States, 460 U.S. 1001 (1983);
see also U.S. Airways, 38 F. Supp. 3d at
74 (noting that room must be made for
the government to grant concessions in
the negotiation process for settlements
(citing Microsoft, 56 F.3d at 1461);
United States v. Alcan Aluminum Ltd.,
605 F. Supp. 619, 622 (W.D. Ky. 1985)
(approving the consent decree even
though the court would have imposed a
greater remedy). To meet this standard,
the United States ‘‘need only provide a
factual basis for concluding that the
settlements are reasonably adequate
remedies for the alleged harms.’’ SBC
Commc’ns, 489 F. Supp. 2d at 17.
Moreover, the court’s role under the
APPA is limited to reviewing the
remedy in relationship to the violations
that the United States has alleged in its
Complaint, and does not authorize the
court to ‘‘construct [its] own
hypothetical case and then evaluate the
decree against that case.’’ Microsoft, 56
F.3d at 1459; see also U.S. Airways, 38
F. Supp. 3d at 74 (noting that the court
must simply determine whether there is
a factual foundation for the
government’s decisions such that its
conclusions regarding the proposed
settlements are reasonable); InBev, 2009
U.S. Dist. LEXIS 84787, at *20 (‘‘the
‘public interest’ is not to be measured by
comparing the violations alleged in the
complaint against those the court
believes could have, or even should
have, been alleged’’). Because the
‘‘court’s authority to review the decree
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 confirmed in SBC
Communications, courts ‘‘cannot look
beyond the complaint in making the
public interest determination unless the
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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
response to public comments alone.
U.S. Airways, 38 F. Supp. 3d at 75.
VIII. DETERMINATIVE
DOCUMENTS
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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: April 25, 2018
Respectfully submitted,
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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Antitrust Division
No other changes have been made in
either the membership or planned
activity of the group research project.
Membership in this group research
project remains open, and ODPi intends
to file additional written notifications
disclosing all changes in membership.
On November 23, 2015, ODPi filed its
original notification pursuant to Section
6(a) of the Act. The Department of
Justice published a notice in the Federal
Register pursuant to Section 6(b) of the
Act on December 23, 2015 (80 FR
79930).
The last notification was filed with
the Department on March 7, 2017. A
notice was published in the Federal
Register pursuant to Section 6(b) of the
Act on March 27, 2017 (82 FR 15239).
Notice Pursuant to the National
Cooperative Research and Production
Act of 1993—ODPi, Inc.
Patricia A. Brink,
Director of Civil Enforcement, Antitrust
Division.
FOR PLAINTIFF UNITED STATES OF
AMERICA
Kerrie J. Freeborn* (D.C. Bar #503143)
United States Department of Justice
Antitrust Division
Defense, Industrials, and Aerospace
Section
450 Fifth Street, N.W., Suite 8700
Washington, D.C. 20530
Tel: (202) 598–2300
Fax: (202) 514–9033
Email: kerrie.freeborn@usdoj.gov
*Attorney of Record
[FR Doc. 2018–09458 Filed 5–3–18; 8:45 am]
BILLING CODE 4410–11–P
DEPARTMENT OF JUSTICE
Notice is hereby given that, on April
6, 2018, pursuant to Section 6(a) of the
National Cooperative Research and
Production Act of 1993, 15 U.S.C. 4301
et seq. (‘‘the Act’’), ODPi, Inc. (‘‘ODPi’’)
has filed written notifications
simultaneously with the Attorney
General and the Federal Trade
Commission disclosing changes in its
membership. The notifications were
filed for the purpose of extending the
Act’s provisions limiting the recovery of
antitrust plaintiffs to actual damages
under specified circumstances.
Specifically, Attunity, Burlington, MA;
ING, Amsterdam, NETHERLANDS; and
SAP SE, Walldorf, GERMANY, have
been added as parties to this venture.
Also, Pivotal Software, Inc., Palo Alto,
CA; Altiscale, Inc., Palo Alto, CA; Squid
Solutions, Inc., San Francisco, CA;
TOSHIBA Corporation/Industrial ICT
Solutions Company, Kanagawa, JAPAN;
Z Data Inc., Newark, DE; Zettaset, Inc.,
Mountain View, CA; SAS Institute Inc.,
Cary, NC; Capgemini Service SAS, Paris,
FRANCE; NEC Corporation, Tokyo,
JAPAN; Philippine Long Distance
Telephone Company, Makati City,
PHILIPPINES; Cask Data, Inc., Palo Alto,
CA; Splunk Inc., San Francisco, CA;
Xavient Information System, Herndon,
VA; DriveScale, Inc., Sunnyvale, CA;
Redoop, Beijing, PEOPLE’S REPUBLIC
OF CHINA; China Mobile
Communication Company Ltd., Beijing,
PEOPLE’S REPUBLIC OF CHINA; High
Octane SPRL, Bierges, BELGIUM; and
Innovyt LLC, Edison, NJ, have
withdrawn as parties to this venture.
In addition, Beijing AsiaInfo Smart
Big Data Co, Ltd. has changed its name
to AsiaInfo Technologies (H.K.) Limited,
Beijing, PEOPLE’S REPUBLIC OF
CHINA.
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[FR Doc. 2018–09459 Filed 5–3–18; 8:45 am]
BILLING CODE 4410–11–P
DEPARTMENT OF JUSTICE
Antitrust Division
Notice Pursuant to the National
Cooperative Research and Production
Act of 1993—Node.js Foundation
Notice is hereby given that, on April
6, 2018, pursuant to Section 6(a) of the
National Cooperative Research and
Production Act of 1993, 15 U.S.C. 4301
et seq. (‘‘the Act’’), Node.js Foundation
(‘‘Node.js Foundation’’) has filed written
notifications simultaneously with the
Attorney General and the Federal Trade
Commission disclosing changes in its
membership. The notifications were
filed for the purpose of extending the
Act’s provisions limiting the recovery of
antitrust plaintiffs to actual damages
under specified circumstances.
Specifically, Cars.com, Chicago, IL, has
withdrawn as a party to this venture.
No other changes have been made in
either the membership or planned
activity of the group research project.
Membership in this group research
project remains open, and Node.js
Foundation intends to file additional
written notifications disclosing all
changes in membership.
On August 17, 2015, Node.js
Foundation filed its original notification
pursuant to Section 6(a) of the Act. The
Department of Justice published a notice
in the Federal Register pursuant to
Section 6(b) of the Act on September 28,
2015 (80 FR 58297).
The last notification was filed with
the Department on January 25, 2018. A
notice was published in the Federal
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[Federal Register Volume 83, Number 87 (Friday, May 4, 2018)]
[Notices]
[Pages 19822-19836]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-09458]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Martin Marietta Materials, Inc. et al.; Proposed
Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
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. Martin Marietta Materials, Inc. et al., Civil
Action No. 1:18-cv-00973. On April 25, 2018, the United States filed a
Complaint alleging that Martin Marietta Materials, Inc.'s proposed
acquisition of Panadero Corp. and Panadero Aggregates Holdings, LLC,
including subsidiary Bluegrass Materials Company, 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 that
Defendants divest the lease to Martin Marietta's Forsyth Quarry,
located in Suwanee, Georgia, and Bluegrass's Beaver Creek quarry,
located
[[Page 19823]]
in Hagerstown, Maryland, and related assets.
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 Maryland, Attorney General's Office, 200 St. Paul
Place, 19th Floor, Baltimore, Maryland 21202, Plaintiffs, v. Martin
Marietta Materials, Inc., 2710 Wycliff Road, Raleigh, North Carolina
27607; LG Panadero, L.P., 630 Fifth Avenue, 30th Floor, New York,
New York 10111; Panadero Corp., 200 W. Forsyth Street, 12th Floor,
Jacksonville, Florida 32202; Panadero Aggregates Holdings, LLC, 200
W. Forsyth Street, 12th Floor, Jacksonville, Florida 32202; and
Bluegrass Materials Company, LLC, 200 W. Forsyth Street, 12th Floor,
Jacksonville, Florida 32202, Defendants.
Civil Action No.: 1:18-cv-00973
Judge: Randolph Moss
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 Maryland, acting by and through the Attorney
General of Maryland, bring this civil antitrust action against
Defendants to enjoin Martin Marietta Materials, Inc.'s (``Martin
Marietta'') proposed acquisition of Bluegrass Materials Company, LLC
(``Bluegrass''). Plaintiffs allege as follows:
I. INTRODUCTION
1. On June 26, 2017, Martin Marietta and Bluegrass announced a
definitive agreement under which Martin Marietta would acquire
Bluegrass for $1.625 billion. The merger would expand the reach of one
of the largest aggregate producers in the United States and create a
combined firm with annual total revenues of approximately $4 billion.
2. Aggregate is a key input in asphalt and ready mix concrete and
is used to build roads, highways, bridges, and other construction
projects. The proposed acquisition would eliminate head-to-head
competition between Martin Marietta and Bluegrass in supplying
aggregate to customers in and immediately around Forsyth and north
Fulton County, Georgia, and in and immediately around Washington
County, Maryland. For a significant number of customers in these areas,
Martin Marietta and Bluegrass are two of only three competitive sources
of aggregate qualified by the respective states' Departments of
Transportation (``DOT''). Elimination of competition between Martin
Marietta and Bluegrass in these areas likely would give Martin Marietta
the ability to raise prices or decrease the quality of service provided
to these customers.
3. As a result, Martin Marietta's proposed acquisition of Bluegrass
likely would substantially lessen competition for DOT-qualified
aggregate in and immediately around Forsyth and north Fulton County,
Georgia, and in and immediately around Washington County, Maryland, in
violation of Section 7 of the Clayton Act, 15 U.S.C. Sec. 18.
II. THE PARTIES AND THE PROPOSED TRANSACTION
4. Defendant Martin Marietta is a North Carolina corporation with
its headquarters in Raleigh, North Carolina. Martin Marietta is a
leading supplier of aggregate and heavy building materials in the
United States, with operations in 26 states. In 2017, Martin Marietta
had net sales of $3.9 billion.
5. Defendant Bluegrass is a Delaware limited liability company with
its headquarters in Jacksonville, Florida. Bluegrass operates 17 rock
quarries, one sand plant, and two concrete manufacturing plants across
Kentucky, Tennessee, South Carolina, Georgia, Pennsylvania, and
Maryland.
6. Defendant Panadero Aggregates Holdings, LLC (``Panadero
Aggregates'') is a Delaware limited liability company with its
headquarters in Jacksonville, Florida. Panadero Aggregates was formed
to acquire, develop, and operate aggregate and other construction
materials businesses. Panadero Aggregates is the owner of Bluegrass.
7. Defendant Panadero Corp. (``Panadero'') is a Delaware
corporation with its headquarters in Jacksonville, Florida. Panadero is
a wholly-owned subsidiary of LG Panadero and is the majority owner of
Panadero Aggregates. Panadero, which reported consolidated net sales of
$199.5 million in 2016, was formed to acquire, develop, and operate
aggregate and other construction materials businesses.
8. Defendant LG Panadero, L.P. (``LG Panadero'') is a Delaware
limited partnership headquartered in New York, New York. LG Panadero is
the owner of Panadero.
9. Pursuant to the Securities Purchase Agreement dated June 23,
2017, Martin Marietta would acquire Panadero and Panadero Aggregates,
including Bluegrass, from LG Panadero for $1.625 billion.
III. JURISDICTION AND VENUE
10. The United States brings this action pursuant to Section 15 of
the Clayton Act, 15 U.S.C. Sec. Sec. 4 and 25, as amended, to prevent
and restrain Defendants from violating Section 7 of the Clayton Act, 15
U.S.C. Sec. 18.
11. The State of Maryland brings this action under Section 16 of
the Clayton Act, 15 U.S.C. Sec. 26, to prevent and restrain Defendants
from violating Section 7 of the Clayton Act, as amended, 15 U.S.C.
Sec. 18. The State of Maryland, by and through the Attorney General of
Maryland, brings this action as parens patriae on behalf of the
citizens, general welfare, and the general economy of the State of
Maryland.
12. Defendants produce and sell aggregate in the flow of interstate
commerce. Defendants' activity in the production and sale of aggregate
substantially affects interstate commerce. The Court has subject matter
jurisdiction over this action pursuant to Section 15 of the Clayton
Act, 15 U.S.C. Sec. 25, and 28 U.S.C. Sec. Sec. 1331, 1337(a), and
1345.
13. 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. Sec. 22, and 28 U.S.C.
Sec. 1391(c).
IV. TRADE AND COMMERCE
A. Aggregate Is an Essential Input for Many Road and Construction
Projects
14. Aggregate is a category of material used for road and
construction projects.
[[Page 19824]]
Produced in quarries, mines, and gravel pits, aggregate is
predominantly limestone, granite, or other dark-colored igneous rock.
Different types and sizes of rock are needed to meet different
specifications for use in asphalt concrete, ready mix concrete,
industrial processes, and other products. Asphalt concrete consists of
approximately 95 percent aggregate, and ready mix concrete is made of
up of approximately 75 percent aggregate. Aggregate thus is an integral
input for road and other construction projects.
15. For each construction project, a customer establishes
specifications that must be met for each application for which
aggregate is used. For example, state DOTs, including the Georgia and
Maryland DOTs, set specifications for aggregate used to produce asphalt
concrete, ready mix concrete, and road base for state DOT projects.
State DOTs specify characteristics such as hardness, durability, size,
polish value, and a variety of other characteristics. The
specifications are intended to ensure the longevity and safety of the
roads, bridges and other projects for which aggregate is used.
16. State DOTs qualify quarries according to the end uses of the
aggregate, to ensure that the stone used in an application meets the
necessary specifications. In addition, state DOTs test the aggregate at
various points: at the quarry before it is shipped; when the aggregate
is sent to the purchaser to produce an end product such as asphalt
concrete; and after the end product has been produced. Many cities,
counties, commercial entities, and individuals in Georgia and Maryland
have adopted their respective state DOT-qualified aggregate
specifications when building roads, bridges, and other construction
projects in order to optimize the longevity of their projects.
B. Transportation Is a Significant Component of the Cost of Aggregate
17. 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
aggregate. For small volumes, aggregate often is sold according to a
posted price. For large volumes, customers typically either negotiate
prices for a particular job or negotiate yearly requirements contracts,
seeking bids from multiple aggregate suppliers.
18. In areas where aggregate is locally available, it is
transported from quarries to customers by truck. Truck transportation
is expensive, and transportation costs can become a significant portion
of the total cost of aggregate.
C. Relevant Markets
1. State DOT-Qualified Aggregate Is a Relevant Product Market
19. Within the broad category of aggregate, different types and
sizes of stone are used for different purposes. For instance, aggregate
qualified for use as road base may not be the same size and type of
rock as aggregate qualified for use in asphalt concrete. Accordingly,
aggregate types and sizes are not interchangeable with one another and
demand for each is separate. Thus, each type and size of aggregate
likely is a separate line of commerce and a relevant product market
within the meaning of Section 7 of the Clayton Act.
20. State DOTs qualify aggregate for use in road construction and
other projects in that particular state. DOT-qualified aggregate meets
particular standards for size, physical composition, functional
characteristics, end uses, and availability. A customer whose job
specifies aggregate qualified by a particular state's DOT cannot
substitute aggregate or other materials that have not been so
qualified.
21. Although numerous narrower product markets exist, the
competitive dynamic for most types of state DOT-qualified aggregate is
nearly identical, as a quarry can typically produce all, or nearly all,
types of DOT-qualified aggregate for a particular state. Therefore,
most types of DOT-qualified 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.
22. A small but significant increase in the price of state DOT-
qualified aggregate would not cause a sufficient number of customers to
substitute to another type of aggregate or another material so as to
make such a price increase unprofitable. Accordingly, the production
and sale of Georgia DOT-Qualified Aggregate and Maryland DOT-Qualified
Aggregate (hereinafter ``DOT-Qualified 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
23. Aggregate is a relatively low-cost product that is bulky and
heavy. As a result, the cost of transporting aggregate is high compared
to the value of the product.
24. 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 aggregate relative to the low value of the product.
Suppliers know the importance of transportation costs to a potential
customer's selection of an aggregate supplier; they know the locations
of their competitors, and they often will factor the cost of
transportation from other suppliers into the price or bid that they
submit.
25. The primary factor that determines the area a supplier will
serve is the location of competing quarries. When quoting prices or
submitting bids, aggregate suppliers will account for the location of
the project site or plant, the cost of transporting aggregate to the
project site or plant, and the locations of the competitors that might
bid on a job. Therefore, depending on the location of the project site
or plant, suppliers are able to adjust their bids to account for the
distance other competitors are from a job.
a. The Forsyth and North Fulton County Area Is a Relevant Geographic
Market
26. Martin Marietta operates the Forsyth quarry in Suwanee,
Georgia, and Bluegrass owns and operates the Cumming quarry in Cumming,
Georgia. Customers in and immediately around Forsyth County and Fulton
County north of the Chattahoochee River (hereinafter referred to as the
``Forsyth and North Fulton County Area'') are served by both the
Forsyth and Cumming quarries. Customers with plants or jobs in the
Forsyth and North Fulton County Area may, depending on the location of
their plant or job sites, economically procure Georgia DOT-Qualified
Aggregate from the Forsyth and Cumming quarries, or from quarries
operated by a third firm located in Norcross, Buford, and Ball Ground,
Georgia. Other more distant quarries cannot compete successfully on a
regular basis for a significant number of customers with plants or jobs
in the Forsyth and North Fulton County Area because they are too far
away and transportation costs are too great.
27. Customers likely would be unable to switch to suppliers outside
the Forsyth and North Fulton County Area to defeat a small but
significant price increase. Accordingly, the Forsyth and North Fulton
County Area is a relevant geographic market for the production and sale
of Georgia DOT-Qualified Aggregate within the meaning of Section 7 of
the Clayton Act.
[[Page 19825]]
b. The Washington County Area Is a Relevant Geographic Market
28. Martin Marietta owns and operates the Boonsboro quarry in
Boonsboro, Maryland, and the Pinesburg quarry in Williamsport,
Maryland, and Bluegrass owns and operates the Beaver Creek quarry in
Hagerstown, Maryland. The Boonsboro, Pinesburg, and Beaver Creek
quarries each serve customers in and immediately around Washington
County, Maryland (hereinafter referred to as the ``Washington County
Area''). Customers with plants or jobs in the Washington County Area
may, depending on the location of their plant or job site, economically
procure Maryland DOT-Qualified Aggregate from the Boonsboro, Pinesburg,
or Beaver Creek quarries, or from a quarry operated by a third firm
located in nearby Chambersburg, Pennsylvania. Other more distant
quarries cannot compete successfully on a regular basis for customers
with plants or jobs in the Washington County Area because they are too
far away and transportation costs are too great.
29. Customers likely would be unable to switch to more distant
suppliers outside of the Washington County Area to defeat a small but
significant price increase. Accordingly, the Washington County Area is
a relevant geographic market for the production and sale of Maryland
DOT-Qualified Aggregate within the meaning of Section 7 of the Clayton
Act.
D. Martin Marietta's Acquisition of Bluegrass Is Anticompetitive
30. Vigorous competition between Martin Marietta and Bluegrass on
price and customer service in the production and sale of DOT-Qualified
Aggregate has benefitted customers in the Forsyth and North Fulton
County Area and in the Washington County Area.
31. In each of these areas, the competitors that constrain Martin
Marietta and Bluegrass from raising prices on DOT-Qualified Aggregate
are limited to those who are qualified by the Georgia and Maryland DOTs
to supply aggregate and can economically transport the aggregate into
these areas. As alleged above, for a significant number of customers in
each area, there is only one other firm that produces DOT-Qualified
Aggregate and can economically serve customers at their plants or job
sites. The proposed acquisition will eliminate the competition between
Martin Marietta and Bluegrass and reduce from three to two the number
of suppliers of DOT-Qualified Aggregate for a significant number of
customers in each area.
32. For a significant number of customers in each area, a combined
Martin Marietta and Bluegrass will have the ability to increase prices
for DOT-Qualified Aggregate and decrease service by limiting
availability or delivery options. DOT-Qualified Aggregate producers
know the distance from their own quarries 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 Martin Marietta and
Bluegrass quarries 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.
33. The response of other suppliers of DOT-Qualified Aggregate will
not be sufficient to constrain a unilateral exercise of market power by
Martin Marietta after the acquisition.
34. The proposed acquisition will therefore substantially lessen
competition in the market for DOT-Qualified Aggregate in the Forsyth
and North Fulton County Area and in the Washington County Area and will
likely 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 Aggregate in the Forsyth and North Fulton County Area
and in the Washington County Area 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 challenging 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 site must be close to customer plants and likely job sites
given the high cost of transporting aggregate.
37. Second, once a suitable 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 altogether or make the process of opening it much
more time-consuming and costly.
38. Third, even after a site is acquired and permitted, the owner
must spend significant time and resources to prepare the land for
quarry operations and purchase and install the necessary equipment.
39. Because of the cost and difficulty of establishing a quarry,
entry will not be timely, likely or sufficient to mitigate the
anticompetitive effects of Martin Marietta's proposed acquisition of
Bluegrass.
V. VIOLATION ALLEGED
40. Martin Marietta's proposed acquisition of Bluegrass likely will
substantially lessen competition in the production and sale of DOT-
Qualified Aggregate in the Forsyth and North Fulton County Area and in
the Washington County Area, in violation of Section 7 of the Clayton
Act, 15 U.S.C. Sec. 18.
41. Unless enjoined, the proposed acquisition likely will have the
following anticompetitive effects, among others:
(a) actual and potential competition between Martin Marietta and
Bluegrass in the production and sale of DOT-Qualified Aggregate in the
Forsyth and North Fulton County Area and in the Washington County Area
will be eliminated; and
(b) prices for DOT-Qualified Aggregate in the Forsyth and North
Fulton County Area and in the Washington County Area likely will
increase and customer service likely will decrease.
VI. REQUESTED RELIEF
42. Plaintiffs request that this Court:
(a) adjudge and decree that Martin Marietta's acquisition of
Bluegrass would be unlawful and violate Section 7 of the Clayton Act,
15 U.S.C. Sec. 18;
(b) preliminarily and permanently enjoin and restrain the
Defendants and all persons acting on their behalf from consummating the
proposed acquisition of Bluegrass by Martin Marietta, or from entering
into or carrying out any other contract, agreement, plan, or
understanding, the effect of which would be to combine Martin Marietta
with Bluegrass;
(c) award Plaintiffs their costs for this action; and
(d) award Plaintiffs such other and further relief as the Court
deems just and proper.
Dated: April 25, 2018
For Plaintiff United States of America
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Makan Delrahim (D.C. Bar #457795)
[[Page 19826]]
Assistant Attorney General
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Andrew C. Finch (D.C. Bar #494992)
Principal Deputy Assistant Attorney General
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Bernard A. Nigro, Jr. (D.C. Bar #412357)
Deputy Assistant Attorney General
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Patricia A. Brink
Director of Civil Enforcement
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Maribeth Petrizzi (D.C. Bar #435204)
Chief Defense, Industrials, and Aerospace Section
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Stephanie A. Fleming
Assistant Chief Defense, Industrials, and Aerospace Section
-----------------------------------------------------------------------
David E. Altschuler (D.C. Bar #983023)
Assistant Chief Defense, Industrials, and Aerospace Section
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Kerrie J. Freeborn* (D.C. Bar #503143)
James K. Foster
Stephen A. Harris
John M. Lynch (D.C. Bar #418313)
Jay D. Owen
Angela Y. Ting (D.C. Bar #449576)
Attorneys, United States Department of Justice, Antitrust Division,
Defense, Industrials, and Aerospace Section, 450 Fifth Street NW,
Suite 8700, Washington, D.C. 20530, Tel.: (202) 598-2300; Fax: (202)
514-9033; Email: [email protected], *Attorney of Record.
For Plaintiff State of Maryland
Brian E. Frosh
Maryland Attorney General
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John R. Tennis
Assistant Attorney General
Chief, Antitrust Division
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Gary Honick
Senior Assistant Attorney General, 200 St. Paul Place, 19th Floor,
Baltimore, MD 21202, Tel: (410) 576-6470; Fax: (410) 576-7830;
Email: [email protected]; Email: [email protected].
United States District Court for the District of Columbia
United States of America and State of Maryland, Plaintiffs, v.
Martin Marietta Materials, Inc., LG Panadero, L.P., Panadero Corp.,
Panadero Aggregates Holdings, LLC and Bluegrass Materials Company,
LLC, Defendants.
Civil Action No.: 1:18-cv-00973
Judge: Randolph Moss
PROPOSED FINAL JUDGMENT
WHEREAS, Plaintiffs, United States of America and the State of
Maryland, filed their Complaint on April 25, 2018, Plaintiffs and
Defendants, Martin Marietta Materials, Inc., LG Panadero, L.P.,
Panadero Corp, Panadero Aggregates Holdings, LLC, and Bluegrass
Materials Company, 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 Defendants to assure
that competition is not substantially lessened;
AND WHEREAS, Plaintiffs require Defendants to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
AND WHEREAS, Defendants have represented to Plaintiffs that the
divestitures required below can and will be made and that Defendants
will later raise no claim of hardship or difficulty as grounds for
asking the Court to modify any of the divestiture provisions contained
below;
NOW THEREFORE, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is ORDERED, ADJUDGED, AND DECREED:
I. JURISDICTION
This Court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states a claim upon which
relief may be granted against Defendants under Section 7 of the Clayton
Act, as amended (15 U.S.C. Sec. 18).
II. DEFINITIONS
As used in this Final Judgment:
A. ``Acquirer'' or ``Acquirers'' means the entity or entities to
whom Defendants divest the Divestiture Assets.
B. ``Acquirer of the Georgia Divestiture Assets'' means Midsouth
Paving, Inc., or another entity to which Defendants divest the Georgia
Divestiture Assets.
C. ``Acquirer of the Maryland Divestiture Assets'' means the entity
to which Defendants divest the Maryland Divestiture Assets.
D. ``Closing'' means the consummation of the divestiture of all the
Divestiture Assets pursuant to either Section IV or Section V of this
Final Judgment.
E. ``Completion of the Transaction'' means the closing of Martin
Marietta's acquisition of Panadero Corp. and Panadero Aggregates
Holdings, LLC, including Bluegrass Materials Company, LLC.
F. ``Martin Marietta'' means Defendant Martin Marietta Materials,
Inc., a North Carolina corporation with its headquarters in Raleigh,
North Carolina, its successors and assigns, and its subsidiaries,
divisions, groups, affiliates, partnerships, and joint ventures, and
their directors, officers, managers, agents, and employees.
G. ``LG Panadero'' means Defendant LG Panadero, L.P., a Delaware
limited partnership with its headquarters in New York, New York, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships, and joint ventures, and their directors,
officers, managers, agents, and employees.
H. ``Panadero'' means Defendant Panadero Corp., a Delaware
corporation with its headquarters in Jacksonville, Florida, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships, and joint ventures, and their directors,
officers, managers, agents, and employees.
I. ``Panadero Aggregates'' means Defendant Panadero Aggregates
Holdings, LLC, a Delaware limited liability company with its
headquarters in Jacksonville, Florida, its successors and assigns, and
its subsidiaries, divisions, groups, affiliates, partnerships, and
joint ventures, and their directors, officers, managers, agents, and
employees.
J. ``Bluegrass'' means Defendant Bluegrass Materials Company, LLC,
a Delaware limited liability company with its headquarters in
Jacksonville, Florida, its successors and assigns, and its
subsidiaries, divisions, groups, affiliates, partnerships, and joint
ventures, and their directors, officers, managers, agents, and
employees.
K. ``Bluegrass Entities'' means LG Panadero, Panadero, Panadero
Aggregates, and Bluegrass.
L. ``Midsouth'' means Midsouth Paving, Inc., a Delaware corporation
with its headquarters 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. Midsouth is a subsidiary of CRH plc
and CRH Americas Materials, Inc.
M. ``Forsyth Quarry'' means Martin Marietta's quarry located at
3561 Peachtree Pkwy., Suwanee, Georgia 30024.
N. ``Beaver Creek Quarry'' means Bluegrass's quarry located at
10101 Mapleville Rd., Hagerstown, Maryland 21740.
O. ``Georgia Divestiture Assets'' means:
[[Page 19827]]
1. Martin Marietta's lease to the Forsyth Quarry;
2. all tangible assets used at the Forsyth Quarry, 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 all other tangible property and assets used in
connection with the Forsyth Quarry; all licenses, permits, and
authorizations issued by any governmental organization relating to the
Forsyth Quarry; all contracts, agreements, teaming arrangements, leases
(including renewal rights), commitments, certifications and
understandings, including sales agreements and supply agreements
relating to the Forsyth Quarry, except for regional or national service
agreements; all customer lists, contracts, accounts, and credit records
relating to the Forsyth Quarry; all repair and performance records and
all other records relating to the Forsyth Quarry; and
3. all intangible assets used in the production and sale of
aggregate at the Forsyth Quarry, including but not limited to, all
contractual rights, patents, licenses and sublicenses, intellectual
property, copyrights, trademarks, trade names, service marks, service
names (provided, however, that such marks and names shall not include
the term ``Martin Marietta''), technical information, computer software
(including dispatch software and management information systems) and
related documentation (provided, however, that the Acquirer may elect
to acquire extracted data relating to the Forsyth Quarry without the
accompanying software), 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 Martin
Marietta provides to its own employees, customers, suppliers, agents,
or licensees, and all data (including aggregate reserve testing
information) concerning the Forsyth Quarry.
P. ``Maryland Divestiture Assets'' means:
1. the Beaver Creek Quarry;
2. all tangible assets used at the Beaver Creek Quarry, 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 all other tangible property and
assets used in connection with the Beaver Creek Quarry; all licenses,
permits, and authorizations issued by any governmental organization
relating to the Beaver Creek Quarry; all contracts, agreements, teaming
arrangements, leases (including renewal rights), commitments,
certifications and understandings, including sales agreements and
supply agreements, except for regional or national service agreements;
all customer lists, contracts, accounts, and credit records relating to
the Beaver Creek Quarry; all repair and performance records and all
other records relating to the Beaver Creek Quarry; and
3. all intangible assets used in the production and sale of
aggregate at the Beaver Creek Quarry, including but not limited to, all
contractual rights, patents, licenses and sublicenses, intellectual
property, copyrights, trademarks, trade names, service marks, service
names (provided, however, that such marks and names shall not include
the word ``Bluegrass''), technical information, computer software
(including dispatch software and management information systems) and
related documentation (provided, however, that the Acquirer may elect
to acquire extracted data relating to the Beaver Creek Quarry without
the accompanying software), 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 Bluegrass provides to its own employees,
customers, suppliers, agents, or licensees, and all data (including
aggregate reserve testing information) concerning the Beaver Creek
Quarry.
Q. ``Divestiture Assets'' means the Georgia Divestiture Assets and
the Maryland Divestiture Assets.
III. APPLICABILITY
A. This Final Judgment applies to Martin Marietta and the Bluegrass
Entities, 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 twenty-one (21)
calendar days after the Court's signing of the Hold Separate
Stipulation and Order in this matter, to divest the Georgia Divestiture
Assets in a manner consistent with this Final Judgment to Midsouth or
another Acquirer of the Georgia Divestiture Assets acceptable to the
United States, in its sole discretion. The United States, in its sole
discretion, may agree to one or more extensions of this time period not
to exceed sixty (60) calendar days in total, and shall notify the Court
in such circumstances. Defendants agree to use their best efforts to
divest the Georgia Divestiture Assets as expeditiously as possible.
B. Defendants are ordered and directed, within ninety (90) calendar
days after the filing of the Complaint in this matter, or five (5)
calendar days after notice of the entry of this Final Judgment by the
Court, whichever is later, to divest the Maryland Divestiture Assets in
a manner consistent with this Final Judgment to an Acquirer of the
Maryland Divestiture Assets acceptable to the United States, in its
sole discretion, after consultation with the State of Maryland. 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 Maryland Divestiture
Assets as expeditiously as possible.
C. In the event Defendants are attempting to divest the Georgia
Divestiture Assets to an Acquirer other than Midsouth, and in
accomplishing the divestiture of the Maryland Divestiture Assets
ordered by this Final Judgment, Defendants promptly shall make known,
by usual and customary means, the availability of the Divestiture
Assets. Defendants shall inform any person making 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. Defendants shall offer to furnish to all
prospective Acquirers, subject to customary confidentiality assurances,
all information and documents relating to the Divestiture
[[Page 19828]]
Assets customarily provided in a due diligence process except such
information or documents subject to the attorney-client privilege or
work-product doctrine. Defendants shall make available such information
to the United States at the same time that such information is made
available to any other person.
D. Defendants shall provide the Acquirer(s) and the United States
information relating to the personnel involved in the operation of the
Divestiture Assets to enable the Acquirer(s) to make offers of
employment. Defendants will not interfere with any negotiations by the
Acquirer(s) 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 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(s) that each
Divestiture 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(s) that (1) there are
no material defects in the environmental, zoning, or other permits
pertaining to the operation of each Divestiture 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 Maryland with respect to the Maryland
Divestiture Assets, that the Divestiture Assets can and will be used by
the Acquirer(s) as part of a viable, ongoing business in the production
and sale of Georgia and Maryland Department of Transportation-qualified
aggregate (``State DOT-Qualified 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 Maryland with respect to
the Maryland Divestiture Assets, has the intent and capability
(including the necessary managerial, operational, technical, and
financial capability) of competing effectively in the business of
producing and selling State DOT-Qualified Aggregate; and
(2) shall be accomplished so as to satisfy the United States, in its
sole discretion, after consultation with the State of Maryland with
respect to the Maryland Divestiture Assets, that none of the terms of
any agreement between an Acquirer and Defendants give Defendants the
ability unreasonably to raise the Acquirer's or Acquirers' costs, to
lower the Acquirer's or Acquirers' 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 all of the Divestiture Assets
within the time periods specified in Paragraphs IV(A) and IV(B),
Defendants shall notify the United States, and the State of Maryland
with respect to the Maryland Divestiture Assets, 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 remaining Divestiture Assets.
B. After the appointment of a Divestiture Trustee becomes
effective, only the Divestiture Trustee shall have the right to sell
the remaining 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
Maryland with respect to the Maryland Divestiture Assets, 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 fourteen (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 the Divestiture Trustee shall have full
[[Page 19829]]
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 report contains information that the Divestiture
Trustee deems confidential, such report 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 DIVESTITURE
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 Maryland with respect
to the Maryland Divestiture Assets, 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 Maryland with respect to the Maryland Divestiture Assets, may
request from Defendants, the proposed Acquirer(s), any other third
party, or the Divestiture Trustee, if applicable, additional
information concerning the proposed divestitures, the proposed
Acquirer(s), 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(s), 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(s) 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, the Bluegrass Entities shall until the Completion of the
Transaction, and Martin Marietta shall until Closing, 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, the
Bluegrass Entities shall until the Completion of the Transaction, and
Martin Marietta shall until Closing, deliver to the United States an
affidavit, which shall describe the fact and manner of Defendants'
compliance with Section IV or Section V of this Final Judgment.
Affidavits provided by Martin Marietta must be signed by its Chief
Financial Officer and General Counsel; each affidavit provided by the
Bluegrass Entities must be signed by the highest ranking officer of
each Defendant included in the Bluegrass Entities; and affidavits
provided by Bluegrass Materials Co., LLC must also be signed by its
CFO. 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
[[Page 19830]]
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 the Bluegrass Entities shall until the Completion of the
Transaction, and Martin Marietta shall until Closing, deliver to the
United States an affidavit that describes in reasonable detail all
actions Defendants have taken and all steps Defendants have implemented
on an ongoing basis to comply with Section VIII of this Final Judgment.
Defendants shall deliver to the United States an affidavit describing
any changes to the efforts and actions outlined in Defendants' earlier
affidavits filed pursuant to this Section within fifteen (15) calendar
days after the change is implemented.
C. Defendants shall keep all records of all efforts made to
preserve and divest the Divestiture Assets until one year after such
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 Maryland 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. NO REACQUISITION
Defendants may not reacquire any part of the Divestiture Assets
during the term of this Final Judgment.
XII. RETENTION OF JURISDICTION
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
XIII. 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. In connection
with any successful effort by the United States to enforce this Final
Judgment against a Defendant, whether litigated or resolved prior to
litigation, that Defendant agrees to reimburse the United States for
any attorneys' fees, experts' fees, and costs incurred in connection
with that enforcement effort, including the investigation of the
potential violation.
XIV. 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 the
Defendants that the divestitures have been completed and that the
continuation of the Final Judgment no longer is necessary or in the
public interest.
XV. PUBLIC INTEREST DETERMINATION
Entry of this Final Judgment is in the public interest. The parties
have complied with the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. Sec. 16, including making copies available to
the public of this Final Judgment, the Competitive Impact Statement,
and any comments thereon and the United States' responses to comments.
Based upon the record before the Court, which includes the Competitive
Impact Statement and any comments and responses to comments filed with
the Court, entry of this Final Judgment is in the public interest.
Date:------------------------------------------------------------------
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. Sec. 16
-----------------------------------------------------------------------
United States District Judge
United States District Court for the District of Columbia
United States of America and State of Maryland, Plaintiffs, v.
Martin Marietta Materials, Inc., LG Panadero, L.P., Panadero Corp.,
Panadero Aggregates Holdings, LLC, and Bluegrass Materials Company,
LLC, Defendants.
Civil Action No.: 1:18-cv-00973
Judge: Randolph Moss
[[Page 19831]]
COMPETITIVE IMPACT STATEMENT
Plaintiff United States of America (``United States''), pursuant to
Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or
``Tunney Act''), 15 U.S.C. Sec. 16(b)-(h), files this Competitive
Impact Statement relating to the proposed Final Judgment submitted for
entry in this civil antitrust proceeding.
I. NATURE AND PURPOSE OF THE PROCEEDING
On June 26, 2017, Martin Marietta Materials, Inc. (``Martin
Marietta'') and Bluegrass Materials Company, LLC (``Bluegrass'')
announced a definitive agreement under which Martin Marietta would
acquire Bluegrass for approximately $1.625 billion. The United States
and the State of Maryland (``Plaintiffs'') filed a civil antitrust
Complaint on April 25, 2018, seeking to enjoin the proposed
acquisition. The Complaint alleges that the likely effect of the
proposed acquisition would be to substantially lessen competition in
the production and sale of Department of Transportation (``DOT'')-
qualified aggregate in and immediately around Forsyth and north Fulton
County, Georgia and in and immediately around Washington County,
Maryland, in violation of Section 7 of the Clayton Act, 15 U.S.C. Sec.
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 to divest the lease
to Martin Marietta's Forsyth quarry and all of the quarry's assets to
Midsouth Paving, Inc., a subsidiary of CRH, plc and CRH Americas
Materials, Inc., and to divest Bluegrass's Beaver Creek quarry and all
of the quarry's assets to a yet-to-be determined purchaser that must be
approved by the United States (collectively, the ``Divestiture
Assets''). Under the terms of the Hold Separate, Defendants will take
certain steps to ensure that prior to their divestiture the Divestiture
Assets are operated as competitively independent, economically viable
and ongoing business concerns, 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 Martin Marietta is a North Carolina corporation with its
headquarters in Raleigh, North Carolina. Martin Marietta is a leading
supplier of aggregates and heavy building operations, with operations
in 26 states. In 2017, Martin Marietta had net sales of $3.9 billion.
Defendant Bluegrass is a Delaware limited liability company with
its headquarters in Jacksonville, Florida. Bluegrass operates 17 rock
quarries, one sand plant, and two concrete manufacturing plants across
Kentucky, Tennessee, South Carolina, Georgia, Pennsylvania, and
Maryland.
Defendant Panadero Aggregates Holdings, LLC (``Panadero
Aggregates'') is a Delaware limited liability company with its
headquarters in Jacksonville, Florida. Panadero Aggregates was formed
to acquire, develop, and operate aggregate and other construction
materials businesses, and is the owner of Bluegrass.
Defendant Panadero Corp. (``Panadero'') is a Delaware corporation
with its headquarters in Jacksonville, Florida. Panadero is a wholly-
owned subsidiary of LG Panadero and is the majority owner of Panadero
Aggregates. Panadero, which reported consolidated net sales of $199.5
million in 2016, was formed to acquire, develop, and operate aggregate
and other construction materials businesses.
Defendant LG Panadero, L.P. (``LG Panadero'') is a Delaware limited
partnership headquartered in New York, New York. LG Panadero is the
owner of Panadero.
Pursuant to a Securities Purchase Agreement dated June 23, 2017,
Martin Marietta would acquire Panadero and Panadero Aggregates,
including Bluegrass, from LG Panadero for $1.625 billion. The proposed
transaction, as initially agreed to by Defendants on June 23, 2017,
would lessen competition substantially in the production and sale of
DOT-qualified aggregate in and immediately around Forsyth and north
Fulton County, Georgia and in and immediately around the Washington
County, Maryland Area. This acquisition is the subject of the Complaint
and proposed Final Judgment that Plaintiffs filed today.
B. Industry Overview
Aggregate is a category of material used for road and construction
projects. Produced in quarries, mines, and gravel pits, aggregate is
predominantly limestone, granite, or other dark-colored igneous rock.
Different types and sizes of rock are needed to meet different
specifications for use in asphalt concrete, ready mix concrete,
industrial processes, and other products. Asphalt concrete consists of
approximately 95 percent aggregate, and ready mix concrete is made of
up of approximately 75 percent aggregate. Aggregate thus is an integral
input for road and other construction projects.
For each construction project, a customer establishes
specifications that must be met for each application for which
aggregate is used. For example, state DOTs, including the Georgia and
Maryland DOTs, set specifications for aggregate used to produce asphalt
concrete, ready mix concrete, and road base for state DOT projects.
State DOTs specify characteristics such as hardness, durability, size,
polish value, and a variety of other characteristics. The
specifications are intended to ensure the longevity and safety of the
roads, bridges and other projects for which aggregate is used.
State DOTs qualify quarries according to the end uses of the
aggregate, to ensure that the stone used in an application meets the
necessary specifications. In addition, state DOTs test the aggregate at
various points: at the quarry before it is shipped; when the aggregate
is sent to the purchaser to produce an end product such as asphalt
concrete; and after the end product has been produced. Many cities,
counties, commercial entities, and individuals in Georgia and Maryland
have adopted their respective state DOT-qualified aggregate
specifications when building roads, bridges, and other construction
projects in order to help ensure the longevity of their projects.
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
aggregate. For small volumes, aggregate often is sold according to a
[[Page 19832]]
posted price. For large volumes, customers typically either negotiate
prices for a particular job or negotiate yearly requirements contracts,
seeking bids from multiple aggregate suppliers.
In areas where aggregate is locally available, it is transported
from quarries to customers by truck. Truck transportation is expensive
relative to the cost of the product itself, and transportation costs
can become a significant portion of the total cost of aggregate.
C. Relevant Markets
1. State DOT-Qualified Aggregate Is a Relevant Product Market
According to the Complaint, within the broad category of aggregate,
different types and sizes of stone are used for different purposes. For
instance, aggregate qualified for use as road base may not be the same
size and type of rock as aggregate qualified for use in asphalt
concrete. Accordingly, aggregate types and sizes are not
interchangeable for one another and demand for each is separate. Thus,
the Complaint alleges that each type and size of aggregate likely is a
separate line of commerce and a relevant product market within the
meaning of Section 7 of the Clayton Act.
State DOTs qualify aggregate for use in road construction and other
projects in that particular state. DOT-qualified aggregate meets
particular standards for size, physical composition, functional
characteristics, end uses, and availability. A customer whose job
specifies aggregate qualified by a particular state's DOT cannot
substitute aggregate or other materials that have not been so
qualified.
The Complaint alleges that although numerous narrower product
markets exist, the competitive dynamic for most types of state DOT-
qualified aggregate is nearly identical, as a quarry can typically
produce all, or nearly all, types of DOT-qualified aggregate for a
particular state. Therefore, most types of DOT-qualified 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.
According to the Complaint, a small but significant increase in the
price of state DOT-qualified aggregate would not cause a sufficient
number of customers to substitute to another type of aggregate or
another material so as to make such a price increase unprofitable.
Accordingly, the Complaint alleges that the production and sale of
Georgia DOT-Qualified Aggregate and Maryland DOT-Qualified Aggregate
(hereinafter ``DOT-Qualified 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
When customers seek price quotes or bids for aggregate, 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 aggregate relative to the low value of the
product. Suppliers know the importance of transportation costs to a
potential customer's selection of an aggregate supplier; they know the
locations of their competitors, and they often will factor the cost of
transportation from other suppliers into the price or bid that they
submit. For these reasons, the primary factor that determines the area
a supplier will serve is the location of competing quarries.
a. The Forsyth and North Fulton County Area Is a Relevant Geographic
Market
According to the Complaint, Martin Marietta operates the Forsyth
quarry in Suwanee, Georgia, and Bluegrass owns and operates the Cumming
quarry in Cumming, Georgia. Customers in and immediately around Forsyth
County and Fulton County north of the Chattahoochee River (hereinafter
referred to as the ``Forsyth and North Fulton County Area'') are served
by both the Forsyth and Cumming quarries. Customers with plants or jobs
in the Forsyth and North Fulton County Area may, depending on the
location of their plant or job sites, economically procure Georgia DOT-
Qualified Aggregate from the Forsyth and Cumming quarries, or from
quarries operated by a third firm located in Norcross, Buford, and Ball
Ground, Georgia. Other more distant quarries cannot compete
successfully on a regular basis for a significant number of customers
with plants or jobs in the Forsyth and North Fulton County Area because
they are too far away and transportation costs are too great.
According to the Complaint, customers likely would be unable to
switch to suppliers outside the Forsyth and North Fulton County Area to
defeat a small but significant price increase. The Complaint therefore
alleges that the Forsyth and North Fulton County Area is a relevant
geographic market for the production and sale of Georgia DOT-Qualified
Aggregate within the meaning of Section 7 of the Clayton Act.
b. The Washington County Area Is a Relevant Geographic Market
According to the Complaint, Martin Marietta owns and operates the
Boonsboro quarry in Boonsboro, Maryland, and the Pinesburg quarry in
Williamsport, Maryland, and Bluegrass owns and operates the Beaver
Creek quarry in Hagerstown, Maryland. The Boonsboro, Pinesburg, and
Beaver Creek quarries each serve customers in and immediately around
Washington County, Maryland (hereinafter referred to as the
``Washington County Area''). Customers with plants or jobs in the
Washington County Area may, depending on the location of their plant or
job site, economically procure Maryland DOT-Qualified Aggregate from
the Boonsboro, Pinesburg, or Beaver Creek quarries, or from a quarry
operated by a third firm located in nearby Chambersburg, Pennsylvania.
Other more distant quarries cannot compete successfully on a regular
basis for customers with plants or jobs in the Washington County Area
because they are too far away and transportation costs are too great.
According to the Complaint, customers likely would be unable to
switch to more distant suppliers outside of the Washington County Area
to defeat a small but significant price increase. The Complaint
therefore alleges that the Washington County Area is a relevant
geographic market for the production and sale of Maryland DOT-Qualified
Aggregate within the meaning of Section 7 of the Clayton Act.
D. Martin Marietta's Acquisition of Bluegrass Is Anticompetitive
According to the Complaint, vigorous competition between Martin
Marietta and Bluegrass on price and customer service in the production
and sale of DOT-Qualified Aggregate has benefitted customers in the
Forsyth and North Fulton County Area and in the Washington County Area.
The Complaint alleges that in each of these areas, the competitors
that constrain Martin Marietta and Bluegrass from raising prices on
DOT-Qualified Aggregate are limited to those who are qualified by the
Georgia and Maryland DOTs to supply aggregate and can economically
transport the aggregate into these areas. According to the Complaint,
for a significant number of customers in each area, there is only one
other firm that produces DOT-Qualified Aggregate and can economically
serve customers at their plants or job sites. The proposed acquisition
will eliminate the competition between Martin Marietta and Bluegrass
and reduce from
[[Page 19833]]
three to two the number of suppliers of DOT-Qualified Aggregate for a
significant number of customers in each area.
According to the Complaint, for a significant number of customers
in each area, a combined Martin Marietta and Bluegrass will have the
ability to increase prices for DOT-Qualified Aggregate and decrease
service by limiting availability or delivery options. DOT-Qualified
Aggregate producers know the distance from their own quarries 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 Martin
Marietta and Bluegrass quarries 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 Complaint alleges that the response of other suppliers of DOT-
Qualified Aggregate will not be sufficient to constrain a unilateral
exercise of market power by Martin Marietta after the acquisition. For
all of these reasons, the Complaint alleges that the proposed
acquisition will therefore substantially lessen competition in the
market for DOT-Qualified Aggregate in the Forsyth and North Fulton
County Area and in the Washington County Area and likely lead to higher
prices and reduced customer service for consumers of such products, in
violation of Section 7 of the Clayton Act.
E. Barriers to Entry
The Complaint alleges that entry in the production and sale of DOT-
Qualified Aggregate in the Forsyth and North Fulton County Area and in
the Washington County Area is unlikely to be timely or sufficient to
offset the anticompetitive effects of the acquisition, given the
substantial time and cost required to open a quarry.
According to the Complaint, quarries are particularly difficult to
locate and permit. First, securing the proper site for a quarry is
challenging 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 site must be close to customer plants
and likely job sites given the high cost of transporting aggregate.
Second, once a suitable 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 altogether or make the process of 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 for quarry operations and purchase and install the
necessary equipment.
For all of these reasons, the Complaint alleges that entry will not
be timely, likely or sufficient to mitigate the anticompetitive effects
of the acquisition.
III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT
The divestiture requirement of the proposed Final Judgment will
eliminate the anticompetitive effects of the acquisition in the
production and sale of DOT-qualified aggregate in the Forsyth and North
Fulton County Area and the Washington County Area by establishing a
new, independent, and economically viable competitor in each area.
A. Divestiture
In the Forsyth and North Fulton County Area, Paragraph IV(A) of the
proposed Final Judgment requires Defendants to divest the lease to
Martin Marietta's Forsyth quarry and all tangible and intangible assets
related to the quarry (the ``Georgia Divestiture Assets'') to Midsouth
Paving, Inc. (``Midsouth''), or an alternative Acquirer acceptable to
the United States, in its sole discretion, within twenty-one (21) days
after the Court's signing of the Hold Separate. The United States
required an upfront buyer for the divestiture of the Georgia
Divestiture Assets because of the unique nature of the short-term lease
being divested and the accompanying need to minimize the time before an
Acquirer assumed control of the Forsyth quarry's operations. Midsouth,
which is a subsidiary of CRH plc and CRH Americas Materials, Inc.
(commonly known in the industry as ``Oldcastle''), is an experienced
operator of quarries in the region, with locations in Georgia, Alabama,
and Tennessee.
In the Washington County Area, Paragraph IV(B) of the proposed
Final Judgment requires the Defendants to divest Bluegrass's Beaver
Creek quarry and all tangible and intangible assets related to the
quarry (the ``Maryland Divestiture Assets'') to an Acquirer acceptable
to the United States, in its sole discretion, after consultation with
the State of Maryland. Defendants must complete the divestiture within
ninety (90) days after the filing of the Complaint, or five (5) days
after notice of entry of the Final Judgment by the Court, whichever is
later.
With respect to the divestiture of both the Georgia and Maryland
Divestiture Assets, Defendants must take all reasonable steps necessary
to accomplish the divestitures quickly and shall cooperate with
prospective purchasers. Paragraph IV(I) of the proposed Final Judgment
further provides that Defendants must accomplish the divestitures in
such a way as to satisfy the United States in its sole discretion,
after consultation with the State of Maryland with respect to the
Maryland Divestiture Assets, that the Divestiture Assets can and will
be operated by the respective purchasers as viable, ongoing businesses
that can compete effectively in the production and sale of State DOT-
Qualified Aggregate.
The proposed Final Judgment also contains provisions intended to
facilitate the respective purchasers' efforts to hire the employees
involved in the operation of the Divestiture Assets. Paragraph IV(D) of
the proposed Final Judgment requires Defendants to provide the
Acquirers of the Divestiture Assets with information relating to the
personnel involved in the operation of the Divestiture Assets to enable
the Acquirers to make offers of employment, and provides that
Defendants will not interfere with any negotiations by the Acquirers to
hire these employees.
In the event that Defendants do not accomplish the divestitures
within the periods 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 divestiture of any
remaining Divestiture Assets. If a trustee is appointed, the proposed
Final Judgment provides that Defendants will pay all costs and expenses
of the trustee. The trustee's commission will be structured so as to
provide an incentive for the trustee based on the price obtained and
the speed with which the divestiture is accomplished. 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 divestiture. Paragraph V(G) of the proposed Final Judgment requires
that, at the end of six months, if the divestiture has not been
accomplished, the trustee and the United States will make
recommendations to the Court,
[[Page 19834]]
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. Compliance Affidavits
The proposed Final Judgment requires, in Paragraph IX(A), that the
Defendants inform the United States of their compliance with the
divestiture requirements of the proposed Final Judgment by delivering
affidavits to the United States 20 days after the filing of the
Complaint, and every 30 days thereafter until the divestitures have
been completed. Martin Marietta's affidavits must be signed by its
Chief Financial Officer and General Counsel. Defendants LG Panadero,
Panadero, and Panadero Aggregates lack both a General Counsel and a
Chief Financial Officer, so those entities must submit affidavits from
each company's highest ranking officer. Bluegrass also is not
represented by a General Counsel, but will submit affidavits from both
its highest ranking officer and Chief Financial Officer.
C. Enforcement and Expiration of the Final Judgment
The proposed Final Judgment contains provisions designed to promote
compliance and make enforcement of Division consent decrees as
effective as possible. Paragraph XIII(A) provides that the United
States retains and reserves all rights to enforce the provisions of the
proposed Final Judgment, including its right 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 the 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 XIII(B) of the proposed Final Judgment further provides
that should the Court find in an enforcement proceeding that the
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 XIII(B) provides that in any successful effort by
the United States to enforce this Final Judgment against a Defendant,
whether litigated or resolved prior to litigation, that Defendant
agrees to reimburse the United States for any attorneys' fees, experts'
fees, or costs incurred in connection with any enforcement effort,
including the investigation of the potential violation.
Finally, Section XIV 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. Sec. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
Sec. 16(a), the proposed Final Judgment has no prima facie effect in
any subsequent private lawsuit that may be brought against Defendants.
V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT
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, D.C. 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 Martin Marietta's acquisition of
Bluegrass. 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 Aggregate in
the Forsyth and North Fulton County and Washington County 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. Sec. 16(e)(1). In making that
determination, the court, in
[[Page 19835]]
accordance with the statute as amended in 2004, is required to
consider:
(A) the competitive impact of such judgment, including termination of
alleged violations, provisions for enforcement and modification,
duration of relief sought, anticipated effects of alternative remedies
actually considered, whether its terms are ambiguous, and any other
competitive considerations bearing upon the adequacy of such judgment
that the court deems necessary to a determination of whether the
consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and individuals
alleging specific injury from the violations set forth in the complaint
including consideration of the public benefit, if any, to be derived
from a determination of the issues at trial.
15 U.S.C. Sec. 16(e)(1)(A) & (B). In considering these statutory
factors, the court's inquiry is necessarily a limited one as the
government is entitled to ``broad discretion to settle with the
defendant within the reaches of the public interest.'' United States v.
Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally
United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007)
(assessing public interest standard under the Tunney Act); United
States v. U.S. Airways Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014)
(explaining that the ``court's inquiry is limited'' in Tunney Act
settlements); United States v. InBev N.V./S.A., No. 08-1965 (JR), 2009-
2 Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, at *3,
(D.D.C. Aug. 11, 2009) (noting that the court's review of a consent
judgment is limited and only inquires ``into whether the government's
determination that the proposed remedies will cure the antitrust
violations alleged in the complaint was reasonable, and whether the
mechanism to enforce the final judgment are clear and
manageable.'').\1\
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\1\ The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for court to consider and amended the
list of factors to focus on competitive considerations and to
address potentially ambiguous judgment terms. Compare 15 U.S.C.
Sec. 16(e) (2004), with 15 U.S.C. Sec. 16(e)(1) (2006); see also
SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004
amendments ``effected minimal changes'' to Tunney Act review).
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As the United States Court of Appeals for the District of Columbia
Circuit has held, under the APPA a court considers, among other things,
the relationship between the remedy secured and the specific
allegations set forth in the government's complaint, whether the decree
is sufficiently clear, whether enforcement mechanisms are sufficient,
and whether the decree may positively harm third parties. See
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the
relief secured by the decree, a court may not ``engage in an
unrestricted evaluation of what relief would best serve the public.''
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (quoting
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152
F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787,
at *3. Courts have held that:
[t]he balancing of competing social and political interests affected by
a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's role
in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to the
decree. The court is required to determine not whether a particular
decree is the one that will best serve society, but whether the
settlement is ``within the reaches of the public interest.'' More
elaborate requirements might undermine the effectiveness of antitrust
enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\ In
determining whether a proposed settlement is in the public interest, a
district court ``must accord deference to the government's predictions
about the efficacy of its remedies, and may not require that the
remedies perfectly match the alleged violations.'' SBC Commc'ns, 489 F.
Supp. 2d at 17; see also U.S. Airways, 38 F. Supp. 3d at 75 (noting
that a court should not reject the proposed remedies because it
believes others are preferable); Microsoft, 56 F.3d at 1461 (noting the
need for courts to be ``deferential to the government's predictions as
to the effect of the proposed remedies''); United States v. Archer-
Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that
the court should grant due respect to the United States' prediction as
to the effect of proposed remedies, its perception of the market
structure, and its views of the nature of the case).
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\2\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); United States v. Gillette Co.,
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the
court is constrained to ``look at the overall picture not
hypercritically, nor with a microscope, but with an artist's
reducing glass''). See generally Microsoft, 56 F.3d at 1461
(discussing whether ``the remedies [obtained in the decree are] so
inconsonant with the allegations charged as to fall outside of the
`reaches of the public interest''').
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Courts have greater flexibility in approving proposed consent
decrees than in crafting their own decrees following a finding of
liability in a litigated matter. ``[A] proposed decree must be approved
even if it falls short of the remedy the court would impose on its own,
as long as it falls within the range of acceptability or is `within the
reaches of public interest.' '' United States v. Am. Tel. & Tel. Co.,
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also U.S.
Airways, 38 F. Supp. 3d at 74 (noting that room must be made for the
government to grant concessions in the negotiation process for
settlements (citing Microsoft, 56 F.3d at 1461); United States v. Alcan
Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving the
consent decree even though the court would have imposed a greater
remedy). To meet this standard, the United States ``need only provide a
factual basis for concluding that the settlements are reasonably
adequate remedies for the alleged harms.'' SBC Commc'ns, 489 F. Supp.
2d at 17.
Moreover, the court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its Complaint, and does not authorize the court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways,
38 F. Supp. 3d at 74 (noting that the court must simply determine
whether there is a factual foundation for the government's decisions
such that its conclusions regarding the proposed settlements are
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``the `public
interest' is not to be measured by comparing the violations alleged in
the complaint against those the court believes could have, or even
should have, been alleged''). Because the ``court's authority to review
the decree depends entirely on the government's exercising its
prosecutorial discretion by bringing a case in the first place,'' it
follows that ``the court is only authorized to review the decree
itself,'' and not to ``effectively redraft the complaint'' to inquire
into other matters that the United States did not pursue. Microsoft, 56
F.3d at 1459-60. As this Court confirmed in SBC Communications, courts
``cannot look beyond the complaint in making the public interest
determination unless the
[[Page 19836]]
complaint is drafted so narrowly as to make a mockery of judicial
power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
In its 2004 amendments, Congress made clear its intent to preserve
the practical benefits of utilizing consent decrees in antitrust
enforcement, adding the unambiguous instruction that ``[n]othing in
this section shall be construed to require the court to conduct an
evidentiary hearing or to require the court to permit anyone to
intervene.'' 15 U.S.C. Sec. 16(e)(2); see also U.S. Airways, 38 F.
Supp. 3d at 75 (indicating that a court is not required to hold an
evidentiary hearing or to permit intervenors as part of its review
under the Tunney Act). The language wrote into the statute what
Congress intended when it enacted the Tunney Act in 1974, as Senator
Tunney explained: ``[t]he court is nowhere compelled to go to trial or
to engage in extended proceedings which might have the effect of
vitiating the benefits of prompt and less costly settlement through the
consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of
Sen. Tunney). Rather, the procedure for the public interest
determination is left to the discretion of the court, with the
recognition that the court's ``scope of review remains sharply
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC
Commc'ns, 489 F. Supp. 2d at 11.\3\ A court can make its public
interest determination based on the competitive impact statement and
response to public comments alone. U.S. Airways, 38 F. Supp. 3d at 75.
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\3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the
court to make its public interest determination on the basis of the
competitive impact statement and response to comments alone'');
United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1
Trade Cas. (CCH) ] 61,508, at 71,980, *22 (W.D. Mo. 1977) (``Absent
a showing of corrupt failure of the government to discharge its
duty, the Court, in making its public interest finding, should . . .
carefully consider the explanations of the government in the
competitive impact statement and its responses to comments in order
to determine whether those explanations are reasonable under the
circumstances.''); S. Rep. No. 93-298, at 6 (1973) (``Where the
public interest can be meaningfully evaluated simply on the basis of
briefs and oral arguments, that is the approach that should be
utilized.'').
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VIII. DETERMINATIVE DOCUMENTS
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Dated: April 25, 2018
Respectfully submitted,
FOR PLAINTIFF UNITED STATES OF AMERICA
Kerrie J. Freeborn* (D.C. Bar #503143)
United States Department of Justice
Antitrust Division
Defense, Industrials, and Aerospace Section
450 Fifth Street, N.W., Suite 8700
Washington, D.C. 20530
Tel: (202) 598-2300
Fax: (202) 514-9033
Email: [email protected]
*Attorney of Record
[FR Doc. 2018-09458 Filed 5-3-18; 8:45 am]
BILLING CODE 4410-11-P