United States v. James Dolan; Proposed Final Judgment and Competitive Impact Statement, 64359-64364 [2018-27055]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 83, Number 240 (Friday, December 14, 2018)]
[Notices]
[Pages 64359-64364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27055]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. James Dolan; 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. James Dolan, Civil Action No. 1:18-cv-02858. On 
December 6, 2018, the United States filed a Complaint alleging that 
James Dolan violated the notice and waiting period requirements of the 
Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. 18a, 
with respect to his acquisition of voting securities of Madison Square 
Garden Company. The proposed Final Judgment, filed at the same time as 
the Complaint, requires James Dolan to pay a civil penalty of $609,810.
    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 Roberta S. Baruch, 
Special Attorney, United States, c/o Federal Trade Commission, 600 
Pennsylvania Avenue NW, CC-8416, Washington, DC 20580 (telephone: 202-
326-2861; e-mail: [email protected]).

Patricia A. Brink,
Director of Civil Enforcement.

United States District Court for the District of Columbia

    United States of America, c/o Department of Justice, Washington, 
D.C. 20530, Plaintiff, v. James L. Dolan, c/o The Madison Square 
Garden Company, Two Penn Plaza, New York, NY 10121, Defendant.

Civil Action No. 1:18-cv-02858

COMPLAINT FOR CIVIL PENALTIES FOR FAILURE TO COMPLY WITH THE PREMERGER 
REPORTING AND WAITING REQUIREMENTS OF THE HART-SCOTT RODINO ACT

    The United States of America, Plaintiff, by its attorneys, acting 
under the direction of the Attorney General of the United States and at 
the request of the Federal Trade Commission, brings this civil 
antitrust action to obtain monetary relief in the form of civil 
penalties against Defendant James L. Dolan (``Dolan''). Plaintiff 
alleges as follows:

NATURE OF THE ACTION

    1. Dolan violated the notice and waiting period requirements of the 
Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. Sec.  
18a (``HSR Act'' or ``Act''), with respect to the acquisition of voting 
securities of the Madison Square Garden Company (``MSG'') in 2017.

JURISDICTION AND VENUE

    2. This Court has jurisdiction over the subject matter of this 
action pursuant to Section 7A(g) of the Clayton Act, 15 U.S.C. Sec.  
18a(g), and pursuant to 28 U.S.C. Sec. Sec.  1331, 1337(a), 1345, and 
1355 and over the Defendant by virtue of Defendant's consent, in the 
Stipulation relating hereto, to the maintenance of this action and 
entry of the Final Judgment in this District.
    3. Venue is properly based in this District by virtue of 
Defendant's consent, in the Stipulation relating hereto, to the 
maintenance of this action and entry of the Final Judgment in this 
District.

THE DEFENDANT

    4. Defendant Dolan is a natural person with his principal office 
and place of business at Two Penn Plaza, New York, NY 10121. Dolan is 
engaged in commerce, or in activities affecting commerce, within the 
meaning of Section 1 of the Clayton Act, 15 U.S.C. Sec.  12, and 
Section 7A(a)(1) of the Clayton Act, 15 U.S.C. Sec.  18a(a)(1). At all 
times relevant to this complaint, Dolan had sales or assets in excess 
of $161.5 million.

OTHER ENTITY

    5. MSG is a corporation organized under the laws of Delaware with 
its principal place of business at Two Penn Plaza, New York, NY 10121. 
MSG is engaged in commerce, or in activities affecting commerce, within 
the meaning of Section 1 of the Clayton Act, 15 U.S.C. Sec.  12, and 
Section 7A(a)(1) of the Clayton Act, 15 U.S.C. Sec.  18a(a)(1). At all 
times relevant to this complaint, MSG had sales or assets in excess of 
$16.6 million.

THE HART-SCOTT-RODINO ACT AND RULES

    6. The HSR Act requires certain acquiring persons and certain 
persons whose voting securities or assets are acquired to file 
notifications with the Department of Justice and the Federal Trade 
Commission (collectively, the ``federal antitrust agencies'') and to 
observe a waiting period before consummating certain acquisitions of 
voting securities or assets. 15 U.S.C. Sec.  18a(a) and (b). These 
notification and waiting period requirements apply to acquisitions that 
meet the HSR Act's thresholds, which have been adjusted annually since 
2004. The size of transaction threshold is $50 million, as adjusted 
($80.8 million for most of 2017). In addition, there is a separate 
filing requirement for transactions in which the acquirer will hold 
voting securities in excess of $100 million, as adjusted ($161.5 
million in 2017), and for transactions in which the acquirer will hold 
voting securities in excess of $500 million, as adjusted ($807.5 
million in 2017). With respect to the size of person thresholds, the 
HSR Act requires one person involved in the transaction to have sales 
or assets in excess of $10 million, as adjusted ($16.6 million in 
2017), and the other person to have sales or assets in excess of $100 
million, as adjusted ($161.5 million in 2017).
    7. The HSR Act's notification and waiting period requirements are

[[Page 64360]]

intended to give the federal antitrust agencies prior notice of, and 
information about, proposed transactions. The waiting period is also 
intended to provide the federal antitrust agencies with an opportunity 
to investigate a proposed transaction and to determine whether to seek 
an injunction to prevent the consummation of a transaction that may 
violate the antitrust laws.
    8. Pursuant to Section (d)(2) of the HSR Act, 15 U.S.C. Sec.  
18a(d)(2), rules were promulgated to carry out the purposes of the HSR 
Act. 16 C.F.R. Sec. Sec.  801-03 (``HSR Rules''). The HSR Rules, among 
other things, define terms contained in the HSR Act.
    9. Pursuant to section 801.13(a)(1) of the HSR Rules, 16 C.F.R. 
Sec.  801.13(a)(1), ``all voting securities of [an] issuer which will 
be held by the acquiring person after the consummation of an 
acquisition''--including any held before the acquisition--are deemed 
held ``as a result of'' the acquisition at issue.
    10. Pursuant to sections 801.13(a)(2) and 801.10(c)(1) of the HSR 
Rules, 16 C.F.R. Sec.  801.13(a)(2) and Sec.  801.10(c)(1), the value 
of voting securities already held is the market price, defined to be 
the lowest closing price within 45 days prior to the subsequent 
acquisition.
    11. Section 802.21 of the HSR Rules, 16 C.F.R. Sec.  802.21, 
provides that once a person has filed under the HSR Act and the waiting 
period has expired, the person can acquire additional voting securities 
of the issuer without making a new filing for five years from the 
expiration of the waiting period, so long as the holdings do not exceed 
a higher threshold than was indicated in the filing.
    12. Section 7A(g)(1) of the Clayton Act, 15 U.S.C. Sec.  18a(g)(1), 
provides that any person, or any officer, director, or partner thereof, 
who fails to comply with any provision of the HSR Act is liable to the 
United States for a civil penalty for each day during which such person 
is in violation. Pursuant to the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015, Pub. L. 114-74, Sec.  701 
(further amending the Federal Civil Penalties Inflation Adjustment Act 
of 1990), and Federal Trade Commission Rule 1.98, 16 C.F.R. Sec.  1.98, 
83 Fed. Reg. 2902 (January 22, 2018), the maximum amount of civil 
penalty is currently $41,484 per day.

DEFENDANT'S PRIOR VIOLATION OF THE HSR ACT

    13. On March 10, 2010, Dolan acquired voting securities of 
Cablevision Systems Corporation (``CVC'') that resulted in holdings 
exceeding the adjusted $50 million threshold then in effect under the 
HSR Act. Although he was required to do so, Dolan did not file under 
the HSR Act prior to acquiring CVC voting securities on March 10, 2010.
    14. Subsequently, Dolan made additional acquisitions of CVC voting 
securities such that on November 30, 2010 his holdings exceeded the 
adjusted $100 million threshold then in effect under the HSR Act. 
Although he was required to do so, Dolan did not file under the HSR Act 
prior to making the acquisition of CVC voting securities on November 
30, 2010.
    15. On February 24, 2012, Dolan made a corrective filing under the 
HSR Act for the acquisitions of CVC voting securities. In a letter 
accompanying the corrective filing, Dolan acknowledged that the 
transactions were reportable under the HSR Act, but asserted that the 
failure to file and observe the waiting period was inadvertent.
    16. On May 4, 2012, the Premerger Notification Office of the 
Federal Trade Commission sent a letter to Dolan indicating that it 
would not recommend a civil penalty action regarding the March 10, 
2010, and November 30, 2010, CVC acquisitions. The letter advised, 
however, that Dolan ``still must bear responsibility for compliance 
with the Act'' and was ``accountable for instituting an effective 
program to ensure full compliance with the Act's requirements.''

DEFENDANT'S VIOLATION OF THE HSR ACT

    17. Dolan is the Executive Chairman and a Director of MSG and, as a 
result of holding these positions, frequently receives restricted stock 
units (``RSUs'') as a part of his compensation package. On August 16, 
2016, due to vesting RSUs, Dolan filed an HSR Notification for an 
acquisition of MSG voting securities that would result in holdings 
exceeding the $50 million threshold as adjusted. Early termination of 
the HSR Act's waiting period was granted on this filing on September 6, 
2016, and Dolan completed the acquisition three days later. Dolan was 
permitted under the HSR Act to acquire additional voting securities of 
MSG without making another HSR Act filing so long as he did not exceed 
the $100 million threshold, as adjusted. As of February 27, 2017, the 
adjusted $100 million threshold was $161.5 million.
    18. On September 11, 2017, Dolan acquired 591 shares of MSG due to 
vesting RSUs. As a result of this acquisition, Dolan held voting 
securities of MSG valued in excess of the $161.5 million threshold then 
in effect.
    19. Although required to do so, Dolan did not file under the HSR 
Act or observe the HSR Act's waiting period prior to completing the 
September 11, 2017, transaction.
    20. On November 24, 2017, Dolan made a corrective filing and the 
waiting period expired on December 26, 2017. Dolan was in continuous 
violation of the HSR Act from September 11, 2017, when he acquired the 
MSG voting securities valued in excess of the HSR Act's then applicable 
$100 million filing threshold, as adjusted ($161.5 million), through 
December 26, 2017, when the waiting period expired on his corrective 
filing.

REQUESTED RELIEF

WHEREFORE, Plaintiff requests:

    a. That the Court adjudge and decree that Defendant's acquisition 
of MSG voting securities on September 11, 2017, was a violation of the 
HSR Act, 15 U.S.C. Sec.  18a; and that Defendant was in violation of 
the HSR Act each day from September 11, 2017, through December 26, 
2017;
    b. That the Court order Defendant to pay to the United States an 
appropriate civil penalty as provided by the HSR Act, 15 U.S.C. Sec.  
18a(g)(1), and the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015, Pub. L. 114-74, Sec.  701 (further amending 
the Federal Civil Penalties Inflation Adjustment Act of 1990), and 
Federal Trade Commission Rule 1.98, 16 C.F.R. Sec.  1.98, 83 Fed. Reg. 
2902 (January 22, 2018);
    c. That the Court order such other and further relief as the Court 
may deem just and proper; and
    d. That the Court award Plaintiff its costs of this suit.

Dated:
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FOR THE PLAINTIFF UNITED STATES OF AMERICA:

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Makin Delrahim, D.C. Bar No. 457795, Assistant Attorney General,
Department of Justice,
Antitrust Division,
Washington, D.C. 20530

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Roberta S. Baruch, D.C. Bar No. 269266,
Special Attorney.

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Kenneth A. Libby, Special Attorney.

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Jennifer Lee, Special Attorney,
Federal Trade Commission,

[[Page 64361]]

Washington, D.C. 20530,
(202) 326-2694.

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. James L. Dolan, 
Defendant.

Civil Action No. 1:18-cv-02858

[PROPOSED] FINAL JUDGMENT

    Plaintiff, the United States of America, having commenced this 
action by filing its Complaint herein for violation of Section 7A of 
the Clayton Act, 15 U.S.C. Sec.  18a, commonly known as the 
Hart[dash]Scott[dash]Rodino Antitrust Improvements Act of 1976, and 
Plaintiff and Defendant James L. Dolan, by their respective attorneys, 
having consented to the entry of this Final Judgment without trial or 
adjudication of any issue of fact or law herein, and without this Final 
Judgment constituting any evidence against or an admission by the 
Defendant with respect to any such issue:
    NOW, THEREFORE, before the taking of any testimony and without 
trial or adjudication of any issue of fact or law herein, and upon the 
consent of the parties hereto, it is hereby
    ORDERED, ADJUDGED, AND DECREED:
    The Court has jurisdiction of the subject matter of this action and 
of the Plaintiff and the Defendant. The Complaint states a claim upon 
which relief can be granted against the Defendant under Section 7A of 
the Clayton Act, 15 U.S.C. Sec.  18a.

II.

    Judgment is hereby entered in this matter in favor of Plaintiff and 
against Defendant, and, pursuant to Section 7A(g)(1) of the Clayton 
Act, 15 U.S.C. Sec.  18a(g)(1), the Debt Collection Improvement Act of 
1996, Pub. L. 104[dash]134 Sec.  31001(s) (amending the Federal Civil 
Penalties Inflation Adjustment Act of 1990, 28 U.S.C. Sec.  2461), the 
Federal Civil Penalties Inflation Adjustment Act Improvements Act of 
2015, Pub. L. 114-74 Sec.  701 (further amending the Federal Civil 
Penalties Inflation Adjustment Act of 1990), and Federal Trade 
Commission Rule 1.98, 16 C.F.R. Sec.  1.98, 82 Fed. Reg. 8135 (January 
24, 2017), Defendant is hereby ordered to pay a civil penalty in the 
amount of six hundred nine thousand eight hundred and ten dollars 
($609,810). Payment of the civil penalty ordered hereby shall be made 
by wire transfer of funds or cashier's check. If the payment is made by 
wire transfer, Defendant shall contact Janie Ingalls of the Antitrust 
Division's Antitrust Documents Group at (202) 514-2481 for instructions 
before making the transfer. If the payment is made by cashier's check, 
the check shall be made payable to the United States Department of 
Justice and delivered to: Janie Ingalls, United States Department of 
Justice, Antitrust Division, Antitrust Documents Group, 450 5th Street, 
NW, Suite 1024, Washington, D.C. 20530
    Defendant shall pay the full amount of the civil penalty within 
thirty (30) days of entry of this Final Judgment. In the event of a 
default or delay in payment, interest at the rate of eighteen (18) 
percent per annum shall accrue thereon from the date of the default or 
delay to the date of payment.

III.

    Each party shall bear its own costs of this action.

IV.

    This Final Judgment shall expire upon payment in full by the 
Defendant of the civil penalty required by Section II of this Final 
Judgment.

V.

    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 response to comments filed with 
the Court, entry of this Final Judgment is in the public interest.
Dated:
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United States District Judge

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

United States of America, Plaintiff, v. James L. Dolan, Defendant.

Civil Action No. 1:18-cv-02858

COMPETITIVE IMPACT STATEMENT

    Plaintiff United States of America (``United States''), pursuant to 
Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA''), 
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 December 6, 2018, the United States filed a Complaint against 
Defendant James L. Dolan (``Dolan''), related to Dolan's acquisitions 
of voting securities of the Madison Square Garden Company (``MSG'') in 
September 2017. The Complaint alleges that Dolan violated Section 7A of 
the Clayton Act, 15 U.S.C. Sec.  18a, commonly known as the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 (the ``HSR Act''). The HSR 
Act provides that ``no person shall acquire, directly or indirectly, 
any voting securities of any person'' exceeding certain thresholds 
until that person has filed pre-acquisition notification and report 
forms with the Department of Justice and the Federal Trade Commission 
(collectively, the ``federal antitrust agencies'' or ``agencies'') and 
the post-filing waiting period has expired. 15 U.S.C. Sec.  18a(a). A 
key purpose of the notification and waiting period requirements is to 
protect consumers and competition from potentially anticompetitive 
transactions by providing the agencies an opportunity to conduct an 
antitrust review of proposed transactions before they are consummated.
    The Complaint alleges that Dolan acquired voting securities of MSG 
in excess of then-applicable statutory threshold ($161.5 million at the 
time of acquisition) without making the required pre-acquisition HSR 
Act filings with the agencies and without observing the waiting period, 
and that Dolan and MSG met the applicable statutory size of person 
thresholds.
    At the same time the Complaint was filed in the present action, the 
United States also filed a Stipulation and proposed Final Judgment that 
eliminates the need for a trial in this case. The proposed Final 
Judgment is designed to address the violation alleged in the Complaint 
and deter Dolan's HSR Act violations. Under the proposed Final 
Judgment, Dolan must pay a civil penalty to the United States in the 
amount of $609,810.
    The United States and the Defendant have stipulated that the 
proposed Final Judgment may be entered after compliance with the APPA, 
unless the United States first withdraws its consent. Entry of the 
proposed Final Judgment would terminate this case, except that the 
Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and punish violations 
thereof.

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

    Dolan is the Executive Chairman and a Director of MSG and an 
investor. At all times relevant to the Complaint,

[[Page 64362]]

Dolan had sales or assets in excess of $161.5 million. At all times 
relevant to the Complaint, MSG had sales or assets in excess of $16.6 
million.
    In his roles as Executive Chairman and Director of MSG, Dolan 
frequently receives restricted stock units (``RSUs'') as a part of his 
compensation package. On August 16, 2016, due to the imminent vesting 
of RSUs, Dolan made an HSR filing for an acquisition of MSG voting 
securities that would result in holdings exceeding the adjusted $50 
million threshold then in effect. The Premerger Notification Office 
granted early termination on this filing on September 6, 2016, and 
Dolan completed the acquisition three days later. For a period of five 
years, Dolan was permitted under the HSR Act to acquire additional 
voting securities of MSG without making another HSR Act filing so long 
as he did not exceed the $100 million threshold, as adjusted. As of 
February 27, 2017, the adjusted $100 million threshold was $161.5 
million.
    On September 11, 2017, Dolan acquired 591 shares of MSG due to 
vesting RSUs. As a result of this acquisition, Dolan held voting 
securities of MSG valued in excess of the $161.5 million threshold then 
in effect. Although he was required to do so, Dolan did not file under 
the HSR Act or observe the HSR Act's waiting period prior to completing 
the September 11, 2017, transaction.
    Dolan made a corrective HSR Act filing on November 27, 2017, after 
learning that this acquisition was subject to the HSR Act's 
requirements and that he was obligated to file. The waiting period for 
that corrective filing expired on December 26, 2017.
    The Complaint further alleges that Dolan's September 2017 HSR Act 
violation was not the first time Dolan had failed to observe the HSR 
Act's notification and waiting period requirements. On March 10, 2010, 
Dolan acquired voting securities of Cablevision Systems Corporation 
(``CVC'') that resulted in holdings exceeding the adjusted $50 million 
threshold then in effect under the HSR Act. Although he was required to 
do so, Dolan did not file under the HSR Act prior to acquiring CVC 
voting securities on March 10, 2010. Subsequently, Dolan made 
additional acquisitions of CVC voting securities such that on November 
30, 2010 his holdings exceeded the adjusted $100 million threshold then 
in effect under the HSR Act. Although he was required to do so, Dolan 
did not file under the HSR Act prior to making the acquisition of CVC 
voting securities on November 30, 2010. On February 24, 2012, Dolan 
made a corrective filing under the HSR Act for the acquisitions of CVC 
voting securities, and explained in a letter accompanying the 
corrective filing that his failure to file was inadvertent. On May 4, 
2012, the Premerger Notification Office of the Federal Trade Commission 
notified Dolan by letter that it would not recommend a civil penalty 
for the violations, but advised Dolan that he was ``accountable for 
instituting an effective program to ensure full compliance with the 
Act's requirements.''

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

    The proposed Final Judgment imposes a $609,810 civil penalty 
designed to address the violation alleged in the Complaint and deter 
the Defendant and others from violating the HSR Act. The United States 
adjusted the penalty downward from the maximum permitted under the HSR 
Act because the violation was inadvertent, the Defendant promptly self-
reported the violation after discovery, and the Defendant is willing to 
resolve the matter by consent decree and avoid prolonged investigation 
and litigation. The relief will have a beneficial effect on competition 
because the agencies will be properly notified of future acquisitions, 
in accordance with the law. At the same time, the penalty will not have 
any adverse effect on competition.

IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS

    There is no private antitrust action for HSR Act violations; 
therefore, entry of the proposed Final Judgment will neither impair nor 
assist the bringing of any private antitrust action.

V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT

    The United States and the Defendant 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: Roberta S. Baruch, Special Attorney, United States, c/o Federal 
Trade Commission, 600 Pennsylvania Avenue, NW, CC-8407, Washington, DC 
20580, Email: [email protected]
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT

    The United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits against the Defendant. The 
United States is satisfied, however, that the proposed relief is an 
appropriate remedy in this matter. Given the facts of this case, 
including the Defendant's self-reporting of the violation and 
willingness to promptly settle this matter, the United States is 
satisfied that the proposed civil penalty is sufficient to address the 
violation alleged in the Complaint and to deter violations by similarly 
situated entities in the future, without the time, expense, and 
uncertainty of a full trial on the merits.

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 60-day comment period, after which the court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. Sec.  16(e)(1). In making that 
determination, the court, in accordance with the statute as amended in 
2004, is required to consider:
    (A) the competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration

[[Page 64363]]

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 
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'').
    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 in the government's complaint, whether the decree is 
sufficiently clear, whether its 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. Instead:

    [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).\1\

    \1\ See also 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'').
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    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 74-75 (noting that a court should not reject the proposed remedies 
because it believes others are preferable and that room must be made 
for the government to grant concessions in the negotiation process for 
settlements); 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 government's prediction as to the effect of 
proposed remedies, its perception of the market structure, and its 
views of the nature of the case''). The ultimate question is 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.''' Microsoft, 56 F.3d at 1461 (quoting United States v. 
Western Elec. Co., 900 F.2d 283, 309 (D.C. Cir. 1990)). 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 75 (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 a court in this district confirmed in SBC 
Communications, courts ``cannot look beyond the complaint in making the 
public interest determination unless the complaint is drafted so 
narrowly as to make a mockery of judicial power.'' SBC Commc'ns, 489 F. 
Supp. 2d at 15.
    In its 2004 amendments,\2\ 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 76 (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). This language explicitly wrote into the statute 
what Congress intended when it first 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)

[[Page 64364]]

(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. 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 76. See also 
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''); S. Rep. No. 93-298 93d 
Cong., 1st Sess., at 6 (1973) (``Where the public interest can be 
meaningfully evaluated simply on the basis of briefs and oral 
arguments, that is the approach that should be utilized.'').
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    \2\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for a 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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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.
Date: December 6, 2018 Respectfully submitted,
    _____
    Kenneth A. Libby
    Special Attorney
    U.S. Department of Justice
    Antitrust Division
    c/o Federal Trade Commission
    600 Pennsylvania Avenue, NW
    Washington, DC 20580
    Phone: (202) 326-2694
    Email: [email protected]

[FR Doc. 2018-27055 Filed 12-13-18; 8:45 am]
 BILLING CODE 6750-01-P