United States v. Learfield Communications, LLC; IMG College, LLC; and A-L Tier I LLC: Response to Public Comment, 7593-7605 [2020-02586]

Download as PDF Federal Register / Vol. 85, No. 27 / Monday, February 10, 2020 / Notices response and the public comment have been published in the Federal Register, pursuant to 15 U.S.C. 16(d). DEPARTMENT OF JUSTICE Antitrust Division United States v. Learfield Communications, LLC; IMG College, LLC; and A–L Tier I LLC: Response to Public Comment Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)–(h), the United States hereby publishes below the Response to Public Comment on the Proposed Final Judgment in United States v. Learfield Communications, LLC; IMG College, LLC; and A–L Tier I LLC, Civil Action No. 1:19–cv–00389–EGS, which was filed in the United States District Court for the District of Columbia on February 3, 2020, together with a copy of the comment received by the United States. Copies of the comment and the United States’ Response 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 also be obtained from the Antitrust Division upon request and payment of the copying fee set by Department of Justice regulations. Amy R. Fitzpatrick, Counsel to the Senior Director for Investigations and Litigation. United States District Court for the District of Columbia jbell on DSKJLSW7X2PROD with NOTICES United States of America, Plaintiff, v. Learfield Communications, LLC, IMG College, LLC and A–L Tier I LLC, Defendants. CASE: 1:19–cv–00389–EGS Response of Plaintiff United States to Public Comment on the Proposed Final Judgment As required by the Antitrust Procedures and Penalties Act (the ‘‘APPA’’ or ‘‘Tunney Act’’), 15 U.S.C. 16(b)–(h), the United States hereby responds to the public comment received by the United States regarding the proposed Final Judgment in this case. After careful consideration, the United States continues to believe that the proposed remedy will address the harm alleged in the Complaint and is therefore in the public interest. The proposed Final Judgment will ensure that the Defendants and their employees and agents will not impede competition by agreeing not to compete, entering into joint ventures that reduce competition, or sharing competitively sensitive information with their competitors. The United States will move the Court for entry of the proposed Final Judgment after this VerDate Sep<11>2014 16:58 Feb 07, 2020 Jkt 250001 I. Procedural History On October 5, 2017, Learfield Communications, LLC (‘‘Learfield’’) and IMG College, LLC (‘‘IMG’’) announced a proposed merger. After investigating whether the merger would violate Section 7 of the Clayton Act, 15 U.S.C. 18, by substantially lessening competition, the United States did not challenge the transaction. On December 27, 2018, the United States informed the parties of this decision, and the Defendants became free to close their proposed merger. During the course of the merger investigation, however, the United States discovered evidence of a potential separate violation of the antitrust laws. This evidence indicated that the parties, during a prior period of conduct, had agreed or otherwise coordinated with one another, as well as between themselves and other competitors, in a manner that denied their college customers the benefits of competition in violation of Section 1 of the Sherman Act, 15 U.S.C. 1. Following an investigation of that separate conduct, on February 14, 2019, the United States filed a civil antitrust complaint alleging that the Defendants agreed or otherwise coordinated to limit competition, resulting in an unlawful restraint of trade in the multimedia rights (‘‘MMR’’) management market under Section 1 of the Sherman Act. The Complaint seeks injunctive relief to enjoin the Defendants from engaging in similar conduct in the future. Simultaneously with the filing of the Complaint, the United States filed a proposed Final Judgment, a Stipulation signed by the parties that consents to entry of the proposed Final Judgment after compliance with the requirements of the Tunney Act, and a Competitive Impact Statement describing the events giving rise to the alleged violation and the proposed Final Judgment. The proposed Final Judgment prohibits sharing of competitively sensitive information, agreeing not to bid or agreeing to jointly bid, and, absent approval from the United States, entering into or extending MMR joint ventures. It also requires the Defendants to implement antitrust compliance training programs. The United States caused the Complaint, the proposed Final Judgment, and the Competitive Impact Statement to be published in the Federal Register on February 28, 2019, see 84 FR 6,824, and caused notice regarding the same, together with PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 7593 directions for the submission of written comments relating to the proposed Final Judgment, to be published in The Washington Post for seven days beginning on February 27, 2019 and ending on March 5, 2019. The 60-day period for public comment ended on May 6, 2019. During the public comment period, the United States received the comment described below in Section IV and attached as Exhibit A. II. Standard of Judicial Review 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. 16(e)(1). In making that determination, the Court, in accordance with the statute as amended in 2004, is required to consider: (A) The competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration of relief sought, anticipated effects of alternative remedies actually considered, whether its terms are ambiguous, and any other competitive considerations bearing upon the adequacy of such judgment that the court deems necessary to a determination of whether the consent judgment is in the public interest; and (B) the impact of entry of such judgment upon competition in the relevant market or markets, upon the public generally and individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, if any, to be derived from a determination of the issues at trial. 15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors, the Court’s inquiry is necessarily a limited one as the government is entitled to ‘‘broad discretion to settle with the defendant within the reaches of the public interest.’’ United States v. Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); United States v. U.S. Airways Grp., 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 a court’s review of a consent judgment is limited and only inquires ‘‘into whether the government’s determination that the proposed remedies will cure the antitrust violations alleged in the complaint was reasonable, and whether E:\FR\FM\10FEN1.SGM 10FEN1 jbell on DSKJLSW7X2PROD with NOTICES 7594 Federal Register / Vol. 85, No. 27 / Monday, February 10, 2020 / Notices the mechanism to enforce the final judgment are clear and manageable’’). As the U.S. 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 proposed Final Judgment is sufficiently clear, whether its enforcement mechanisms are sufficient, and whether it may positively harm third parties. See Microsoft, 56 F.3d at 1458–62. With respect to the adequacy of the relief secured by the proposed Final Judgment, a court may ‘‘not to make de novo determination of facts and issues.’’ United States v. W. Elec. Co., 993 F.2d 1572, 1577 (D.C. Cir. 1993) (quotation marks omitted); see also Microsoft, 56 F.3d at 1460–62; United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001); United States v. Enova Corp., 107 F. Supp. 2d 10, 16 (D.D.C. 2000); 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.’’ W. Elec. Co., 993 F.2d at 1577 (quotation marks omitted). ‘‘The court should bear in mind the flexibility of the public interest inquiry: The court’s function is not to determine whether the resulting array of rights and liabilities is one that will best serve society, but only to confirm that the resulting settlement is within the reaches of the public interest.’’ Microsoft, 56 F.3d at 1460 (quotation marks omitted). More demanding requirements would ‘‘have enormous practical consequences for the government’s ability to negotiate future settlements,’’ contrary to congressional intent. Id. at 1456. ‘‘The Tunney Act was not intended to create a disincentive to the use of the consent decree.’’ Id. The United States’ predictions about the efficacy of the remedy are to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at 1461 (recognizing courts should give ‘‘due respect to the Justice Department’s . . . view of the nature of its case’’); United States v. Iron Mountain, Inc., 217 F. Supp. 3d 146, 152–53 (D.D.C. 2016) (‘‘In evaluating objections to settlement agreements under the Tunney Act, a court must be mindful that [t]he government need not prove that the settlements will perfectly remedy the alleged antitrust harms[;] it need only provide a factual basis for concluding that the settlements are reasonably adequate remedies for the alleged harms.’’) (internal citations omitted); VerDate Sep<11>2014 16:58 Feb 07, 2020 Jkt 250001 United States v. Republic Servs., Inc., 723 F. Supp. 2d 157, 160 (D.D.C. 2010) (noting ‘‘the deferential review to which the government’s proposed remedy is accorded’’); United States v. ArcherDaniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (‘‘A district court must accord due respect to the government’s prediction as to the effect of proposed remedies, its perception of the market structure, and its view of the nature of the case’’). The ultimate question is whether ‘‘the remedies [obtained by the Final Judgment 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 W. Elec. Co., 900 F.2d at 309). 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. In its 2004 amendments to the APPA, Congress made clear its intent to preserve the practical benefits of using consent judgments proposed by the United States in antitrust enforcement, Public Law 108–237 § 221, and added 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 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 PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 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). ‘‘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 (citing Enova Corp., 107 F. Supp. 2d at 17). III. The Section 1 Investigation, the Harm Alleged in the Complaint, and the Proposed Final Judgment The proposed Final Judgment is the culmination of a thorough, comprehensive investigation conducted by the Antitrust Division of the U.S. Department of Justice into the Defendants’ conduct involving the Defendants’ joint ventures with each other to service specific universities which sought to outsource the management of their MMR as well as the Defendants’ similar joint ventures with other competitors. The Complaint alleges that, under the guise of legitimate business arrangements, these joint ventures denied universities the benefits of competition between the competitors. The Complaint further alleges that the Defendants have used, or attempted to use, joint ventures as a way to co-opt smaller competitors and remove them from submitting competitive bids and that the Defendants’ non-compete agreements have had similar effects. By using and enforcing non-compete agreements, for example, Defendant Learfield prevented Defendant IMG from competing on a school’s MMR contract when it came up for renewal. Based on the evidence gathered, the United States concluded that the Defendants’ use of joint ventures and non-compete agreements were anticompetitive and violated Section 1 of the Sherman Act, 15 U.S.C. 1, because they had detrimental effects on competition among MMR providers. The Defendants’ use of joint ventures and non-compete agreements harmed the competitive process by suppressing or eliminating competition, reduced the revenues received by universities for licensing their MMR, and caused the quality of MMR management to decrease. The United States seeks the proposed Final Judgment to restore and protect competition. The Defendants have agreed to abide by the provisions of the proposed Final Judgment during the pendency of the Tunney Act proceedings (Dkt. No. 2.1 at 2). E:\FR\FM\10FEN1.SGM 10FEN1 jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 27 / Monday, February 10, 2020 / Notices The proposed Final Judgement provides an effective and appropriate remedy for this competitive harm by enjoining the Defendants from: (1) Directly or indirectly communicating competitively sensitive information related to bidding for an MMR contract; and (2) agreeing with any MMR competitor not to bid, or to bid jointly, on an MMR contract. The Defendants, for example, may not discuss their negotiating strategies or proposed prices relating to any particular university’s MMR business with any other MMR competitor. Invitations or suggestions to jointly bid are also prohibited. The proposed Final Judgment also creates a mechanism for joint ventures involving the Defendants to continue or be created if the collaboration will not reduce the number of competitors bidding on a university’s MMR business. Pursuant to the proposed Final Judgment, the Defendants may apply to the United States for authorization to continue a joint venture that is about to expire or create a new joint venture to service a university’s MMR needs. The United States will undertake a case-by-case analysis of any such application to determine whether the joint venture is likely to eliminate or enhance competition. Under some circumstances, joint ventures may be efficient and procompetitive. See, e.g., U.S. Dept. of Justice & FTC, Antitrust Guidelines for Collaborations Among Competitors, at 6 (2000) (‘‘A collaboration may allow its participants to better use existing assets, or may provide incentives for them to make output-enhancing investments that would not occur absent the collaboration.’’). However, ‘‘labeling an arrangement a ‘joint venture’ will not protect what is merely a device to raise price or restrict output; the nature of the conduct, not its designation, is determinative.’’ Id. at 9 (internal citations omitted). The United States routinely investigates joint arrangements between competitors to determine whether they violate the antitrust laws. Pursuant to the proposed Final Judgment, the Defendants have consented to the United States making that determination in its sole discretion without requiring the United States to prove to a Court that a proposed new or continuing collaboration involving a Defendant violates Section 1 of the Sherman Act. Finally, the proposed Final Judgment includes robust mechanisms that will allow the United States and the Court to monitor the effectiveness of the relief and to enforce compliance. • The proposed Final Judgment requires each Defendant to designate an VerDate Sep<11>2014 16:58 Feb 07, 2020 Jkt 250001 Antitrust Compliance Officer who will be responsible for implementing training and compliance programs and ensuring compliance with the Final Judgment. Among other duties, the Antitrust Compliance Officer will be required to distribute copies of the Final Judgment and ensure that training on the requirements of the Final Judgment and the antitrust laws is provided to the Defendants’ management. Moreover, each Defendant, through its CEO, General Counsel, or Chief Legal Officer, must certify annual compliance with the Final Judgment. • The proposed Final Judgment requires each Defendant to establish an antitrust whistleblower policy and to remedy and report violations of the Final Judgment. • The proposed Final Judgment provides that the United States retains and reserves all rights to enforce the provisions of the proposed Final Judgment, including its rights to seek an order of contempt from the Court. The 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. • The proposed Final Judgment provides additional clarification regarding the interpretation of the provisions of the proposed Final Judgment. The Defendants agree that they will abide by the proposed Final Judgment, and that they may be held in contempt of this Court for failing to comply with any provision of the proposed Final Judgment that is stated specifically and in reasonable detail, whether or not it is clear and unambiguous on its face, and as interpreted in light of its procompetitive purpose. • Should the Court find in an enforcement proceeding that one or more Defendants violated the Final Judgment, the proposed Final Judgment permits the United States to 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 PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 7595 proposed Final Judgment, the proposed Final Judgment provides that in any successful effort by the United States to enforce the Final Judgment against one or more Defendants, whether litigated or resolved before litigation, the Defendants agree 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. IV. Summary of Public Comment and the United States’ Response The United States received a comment concerning the proposed Final Judgment from JMI Sports, LLC (‘‘JMIS’’). JMIS competes against the Defendants to offer MMR services to universities and at times has partnered with the Defendants or their predecessors. JMIS does not claim that the provisions of the proposed Final Judgment are insufficient to enjoin the unlawful restraints of trade alleged in the Complaint. JMIS, however, states that it believes uncertainty exists regarding the scope of the relief the United States secured from the Defendants in ways that affect its position as a competitor. JMIS, therefore, seeks clarification regarding the settlement’s scope, particularly ‘‘the process through which [the United States] will vet proposed extensions or expansions to existing joint ventures involving’’ the Defendants. See Attachment A at 2. JMIS also requests that the United States fully disclose the settlement’s terms, and that any settlement provisions that are not currently part of the proposed Final Judgment be incorporated into it before entry by the Court. It also asks for clarification of terms that are not part of the proposed Final Judgment. A. The Proposed Final Judgment Appropriately Authorizes the United States To Make Case-by-Case Determinations of Proposed Joint Ventures JMIS seeks additional guidance on how under the proposed Final Judgment the United States will conduct its analysis of joint ventures proposed by the Defendants. JMIS also asks whether it and other non-parties may seek permission under the proposed Final Judgment to form or continue joint ventures with the Defendants. It also mistakenly complains that the proposed Final Judgment prohibits communications between it and the Defendants that are necessary to form or continue joint ventures. See Attachment A at 4. E:\FR\FM\10FEN1.SGM 10FEN1 jbell on DSKJLSW7X2PROD with NOTICES 7596 Federal Register / Vol. 85, No. 27 / Monday, February 10, 2020 / Notices Additional guidance on how the United States will evaluate joint ventures pursuant to Paragraph IV.C. of the proposed Final Judgment is not necessary. As noted above, the United States routinely investigates joint arrangements between competitors to determine whether those arrangements violate the U.S. antitrust laws and has published guidance on this subject. See U.S. DOJ & FTC, Antitrust Guidelines for Collaborations Among Competitors (2000). If a proposed joint venture is not the type of agreement that would tend to raise price or to reduce output such that it would be condemned as per se illegal, the United States conducts a fact-specific inquiry to determine its legality. By its nature, such an analysis ‘‘entails a flexible inquiry and varies in focus and detail depending on the nature of the agreement and the market circumstances.’’ See id. at 10 (internal citations omitted). Because these analyses require a case-by-case approach, there is no additional guidance that the United States could provide to JMIS at this time. JMIS and others seeking to form joint ventures with the Defendants in order to pursue MMR contracts, however, should consider whether they need to form a joint venture in order to compete for an MMR contract or whether the joint venture would merely eliminate a competitor. The proposed Final Judgment permits the Defendants to make an application to the United States for authorization to enter into, renew, or extend a joint venture. See Proposed Final Judgment at Paragraph IV.C. This provision will not hinder JMIS’s ability to form joint ventures with the Defendants. Because joint ventures are voluntary business arrangements, the Defendants must first be willing to enter into, renew, or extend a joint venture with JMIS or other competitors. As a willing participant, it would be in a Defendant’s interest to apply for the required permission from the United States, and it would be unnecessary for the proposed Final Judgment to provide a mechanism for non-parties such as JMIS or others to make the application instead. Finally, contrary to JMIS’s assertation, the proposed Final Judgment already provides an exception to the provisions in Section IV prohibiting the Defendants from directly or indirectly communicating with competitors concerning bids or bidding. To continue or form a joint venture that may enhance competition, the proposed Final Judgment at Paragraph V.D. permits the Defendants, after securing advice of counsel and in consultation VerDate Sep<11>2014 16:58 Feb 07, 2020 Jkt 250001 with an Antitrust Compliance Officer, to communicate with a competitor concerning the formation of a joint venture. Therefore, the proposed Final Judgment already incorporates the exception to the prohibition on communications between competitors that JMIS seeks. litigation risk for seeking to enjoin the transaction. The United States understands that JMIS seeks, through its comment, to incorporate the commitments made in Defendant Learfield’s letter into the proposed Final Judgment in this matter. Those commitments, however, do not relate to the allegations in the B. The Proposed Final Judgment Complaint that the United States Embodies All Relief Obtained To brought in this matter, which challenges Resolve the Complaint’s Obligations and the Defendants’ agreements between No Amendments Are Warranted themselves and with other smaller MMR competitors as unlawful restraints of The United States, as requested by trade in violation of Section 1. The JMIS, confirms that the proposed Final commitments relate to an ease-of-entry Judgment embodies the entirety of its defense that the Defendants could have settlement with the Defendants to resolve the allegations in the Complaint, made if the United States had brought a Section 7 challenge to their merger. and there are no settlement provisions Because the commitments made in that are not embodied in the proposed Defendant Learfield’s letter, including Final Judgment. The United States those relating to employees and early alleged the Defendants unlawfully termination of certain customer restrained trade in violation of Section contracts, are unrelated to the 1 of the Sherman Act, 15 U.S.C. 1, by allegations in the Complaint and agreeing or otherwise coordinating to because the proposed Final Judgment limit competition between themselves already encompasses all of the relief and between themselves and smaller necessary to remedy the Defendants’ competitors. As discussed above in Section III, the proposed Final Judgment Section 1 violations, no amendments to the proposed Final Judgment are effectively enjoins the Defendants from warranted or justified. unlawfully restraining trade by As noted above, the D.C. Circuit prohibiting agreements not to bid or to explained in Microsoft, 56 F.3d at 1459– bid jointly, by barring the sharing of 60, that the ‘‘court’s authority to review competitive sensitive information, and the decree depends entirely on the by prohibiting joint ventures with MMR government’s exercising its competitors that reduce competition. prosecutorial discretion by bringing a The United States separately case in the first place.’’ Because the investigated whether the merger of IMG United States did not bring a Section 7 and Learfield would violate Section 7 of case, the modifications proposed by the Clayton Act. After consideration of JMIS fall outside the scope of this the facts, evidence, and chances of Tunney Act review. Expanding the prevailing at trial, the United States did public interest review to encompass not challenge that merger. Near the relief related to an uncharged allegation, conclusion of the investigation into that would amount to ‘‘effectively merger, but before the United States had redraft[ing] the complaint’’ to inquire made its enforcement decision, into matters the United States did not Defendant Learfield informed the pursue. Id. The Tunney Act process United States that Learfield and IMG does not empower the district court ‘‘to had unilaterally implemented several review the actions or behavior of the irrevocable changes to certain business Department of Justice; the court is only practices affecting the contractual rights authorized to review the decree itself.’’ of their employees and customers that Id. It is unnecessary to include the would be implemented upon closing of commitments made in Defendant the merger. See Exhibit B.1 These Learfield’s letter in the proposed Final commitments were presented to the Judgment, in part because the commitments are not related to United States. The making of these commitments additionally increased the addressing the Defendants’ anticompetitive joint ventures and non1 Because Learfield and IMG notified their compete agreements or preventing employees and customers of their new contractual future anticompetitive arrangements rights resulting from the commitments, all industry with their competitors. The participants directly impacted by the commitments commitments, therefore, are not were fully informed. JMIS and other MMR required to remedy the Section 1 competitors were not notified, because they are not customers or employees of Learfield or IMG. violation alleged in the Complaint and Learfield’s letter is now being made public. JMIS consideration of whether to amend the and other competitors, therefore, will not need to proposed Final Judgment to include rely on information gathered from other industry them falls outside the scope of the participants to learn about the irrevocable changes undertaken by Learfield and IMG. Tunney Act public interest inquiry. PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 E:\FR\FM\10FEN1.SGM 10FEN1 Federal Register / Vol. 85, No. 27 / Monday, February 10, 2020 / Notices V. Conclusion jbell on DSKJLSW7X2PROD with NOTICES After careful consideration of the public comment, the United States continues to believe that the proposed Final Judgment, as drafted, provides an effective and appropriate remedy for the antitrust violations alleged in the VerDate Sep<11>2014 16:58 Feb 07, 2020 Jkt 250001 Complaint, and is therefore in the public interest. The United States will move this Court to enter the proposed Final Judgment after the comment and this response are published as required by 15 U.S.C. 16(d). Dated: February 3, 2020. PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 7597 Respectfully submitted, Owen M. Kendler, U.S. Department of Justice, Antitrust Division, 450 Fifth Street NW, Suite 4000, Washington, DC 20530, Tel.: (202) 305–8376, Fax: (202) 514–7308, Email: Owen.Kendler@ usdoj.gov. BILLING CODE 4410–11–P E:\FR\FM\10FEN1.SGM 10FEN1 VerDate Sep<11>2014 Federal Register / Vol. 85, No. 27 / Monday, February 10, 2020 / Notices 16:58 Feb 07, 2020 Jkt 250001 PO 00000 Frm 00073 Fmt 4703 Sfmt 4725 E:\FR\FM\10FEN1.SGM 10FEN1 EN10FE20.000</GPH> jbell on DSKJLSW7X2PROD with NOTICES 7598 VerDate Sep<11>2014 16:58 Feb 07, 2020 Jkt 250001 PO 00000 Frm 00074 Fmt 4703 Sfmt 4725 E:\FR\FM\10FEN1.SGM 10FEN1 7599 EN10FE20.001</GPH> jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 27 / Monday, February 10, 2020 / Notices VerDate Sep<11>2014 Federal Register / Vol. 85, No. 27 / Monday, February 10, 2020 / Notices 16:58 Feb 07, 2020 Jkt 250001 PO 00000 Frm 00075 Fmt 4703 Sfmt 4725 E:\FR\FM\10FEN1.SGM 10FEN1 EN10FE20.002</GPH> jbell on DSKJLSW7X2PROD with NOTICES 7600 VerDate Sep<11>2014 16:58 Feb 07, 2020 Jkt 250001 PO 00000 Frm 00076 Fmt 4703 Sfmt 4725 E:\FR\FM\10FEN1.SGM 10FEN1 7601 EN10FE20.003</GPH> jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 27 / Monday, February 10, 2020 / Notices VerDate Sep<11>2014 Federal Register / Vol. 85, No. 27 / Monday, February 10, 2020 / Notices 16:58 Feb 07, 2020 Jkt 250001 PO 00000 Frm 00077 Fmt 4703 Sfmt 4725 E:\FR\FM\10FEN1.SGM 10FEN1 EN10FE20.004</GPH> jbell on DSKJLSW7X2PROD with NOTICES 7602 VerDate Sep<11>2014 16:58 Feb 07, 2020 Jkt 250001 PO 00000 Frm 00078 Fmt 4703 Sfmt 4725 E:\FR\FM\10FEN1.SGM 10FEN1 7603 EN10FE20.005</GPH> jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 27 / Monday, February 10, 2020 / Notices VerDate Sep<11>2014 Federal Register / Vol. 85, No. 27 / Monday, February 10, 2020 / Notices 16:58 Feb 07, 2020 Jkt 250001 PO 00000 Frm 00079 Fmt 4703 Sfmt 4725 E:\FR\FM\10FEN1.SGM 10FEN1 EN10FE20.006</GPH> jbell on DSKJLSW7X2PROD with NOTICES 7604 [FR Doc. 2020–02586 Filed 2–7–20; 8:45 am] BILLING CODE 4410–11–C DEPARTMENT OF JUSTICE jbell on DSKJLSW7X2PROD with NOTICES Antitrust Division Notice Pursuant to the National Cooperative Research and Production Act of 1993—IMS Global Learning Consortium, Inc. Notice is hereby given that, on January 28, 2020, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, VerDate Sep<11>2014 16:58 Feb 07, 2020 Jkt 250001 15 U.S.C. 4301 et seq. (‘‘the Act’’), IMS Global Learning Consortium, Inc. (‘‘IMS Global’’) 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, Convergence, Markham, CANADA; Curriki, Chicago, IL; EdGate Correlation Service, LLC, Gig Harbor, WA; Kentucky Department of Education, Frankfort, KY; State PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 7605 University of New York, Albany, NY; VidGrid, Saint Paul, MN; and Xtremelabs LLC, Redmond, WA; have been added as parties to this venture. Also, Motivis Learning, Salem, NH; BNED LoudCloud, LLC, New York, NY; Colorado State University Online, Fort Collins, CO; New York City Department of Education, Brooklyn, NY; Trinity Education Group, Highland, MD; and Brigham Young University-Idaho, Rexburg, ID, have withdrawn as parties to this venture. No other changes have been made in either the membership or planned activity of the group research project. E:\FR\FM\10FEN1.SGM 10FEN1 EN10FE20.007</GPH> Federal Register / Vol. 85, No. 27 / Monday, February 10, 2020 / Notices

Agencies

[Federal Register Volume 85, Number 27 (Monday, February 10, 2020)]
[Notices]
[Pages 7593-7605]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-02586]



[[Page 7593]]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Learfield Communications, LLC; IMG College, LLC; 
and A-L Tier I LLC: Response to Public Comment

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b)-(h), the United States hereby publishes below the Response to 
Public Comment on the Proposed Final Judgment in United States v. 
Learfield Communications, LLC; IMG College, LLC; and A-L Tier I LLC, 
Civil Action No. 1:19-cv-00389-EGS, which was filed in the United 
States District Court for the District of Columbia on February 3, 2020, 
together with a copy of the comment received by the United States. 
Copies of the comment and the United States' Response 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 also be obtained from the Antitrust Division upon request and 
payment of the copying fee set by Department of Justice regulations.

Amy R. Fitzpatrick,
Counsel to the Senior Director for Investigations and Litigation.

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Learfield 
Communications, LLC, IMG College, LLC and A-L Tier I LLC, 
Defendants.

CASE: 1:19-cv-00389-EGS

Response of Plaintiff United States to Public Comment on the Proposed 
Final Judgment

    As required by the Antitrust Procedures and Penalties Act (the 
``APPA'' or ``Tunney Act''), 15 U.S.C. 16(b)-(h), the United States 
hereby responds to the public comment received by the United States 
regarding the proposed Final Judgment in this case. After careful 
consideration, the United States continues to believe that the proposed 
remedy will address the harm alleged in the Complaint and is therefore 
in the public interest. The proposed Final Judgment will ensure that 
the Defendants and their employees and agents will not impede 
competition by agreeing not to compete, entering into joint ventures 
that reduce competition, or sharing competitively sensitive information 
with their competitors. The United States will move the Court for entry 
of the proposed Final Judgment after this response and the public 
comment have been published in the Federal Register, pursuant to 15 
U.S.C. 16(d).

I. Procedural History

    On October 5, 2017, Learfield Communications, LLC (``Learfield'') 
and IMG College, LLC (``IMG'') announced a proposed merger. After 
investigating whether the merger would violate Section 7 of the Clayton 
Act, 15 U.S.C. 18, by substantially lessening competition, the United 
States did not challenge the transaction. On December 27, 2018, the 
United States informed the parties of this decision, and the Defendants 
became free to close their proposed merger.
    During the course of the merger investigation, however, the United 
States discovered evidence of a potential separate violation of the 
antitrust laws. This evidence indicated that the parties, during a 
prior period of conduct, had agreed or otherwise coordinated with one 
another, as well as between themselves and other competitors, in a 
manner that denied their college customers the benefits of competition 
in violation of Section 1 of the Sherman Act, 15 U.S.C. 1.
    Following an investigation of that separate conduct, on February 
14, 2019, the United States filed a civil antitrust complaint alleging 
that the Defendants agreed or otherwise coordinated to limit 
competition, resulting in an unlawful restraint of trade in the 
multimedia rights (``MMR'') management market under Section 1 of the 
Sherman Act. The Complaint seeks injunctive relief to enjoin the 
Defendants from engaging in similar conduct in the future. 
Simultaneously with the filing of the Complaint, the United States 
filed a proposed Final Judgment, a Stipulation signed by the parties 
that consents to entry of the proposed Final Judgment after compliance 
with the requirements of the Tunney Act, and a Competitive Impact 
Statement describing the events giving rise to the alleged violation 
and the proposed Final Judgment.
    The proposed Final Judgment prohibits sharing of competitively 
sensitive information, agreeing not to bid or agreeing to jointly bid, 
and, absent approval from the United States, entering into or extending 
MMR joint ventures. It also requires the Defendants to implement 
antitrust compliance training programs.
    The United States caused the Complaint, the proposed Final 
Judgment, and the Competitive Impact Statement to be published in the 
Federal Register on February 28, 2019, see 84 FR 6,824, and caused 
notice regarding the same, together with directions for the submission 
of written comments relating to the proposed Final Judgment, to be 
published in The Washington Post for seven days beginning on February 
27, 2019 and ending on March 5, 2019. The 60-day period for public 
comment ended on May 6, 2019. During the public comment period, the 
United States received the comment described below in Section IV and 
attached as Exhibit A.

II. Standard of Judicial Review

    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. 16(e)(1). In making that determination, 
the Court, in accordance with the statute as amended in 2004, is 
required to consider:
    (A) The competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration of relief sought, anticipated effects of alternative remedies 
actually considered, whether its terms are ambiguous, and any other 
competitive considerations bearing upon the adequacy of such judgment 
that the court deems necessary to a determination of whether the 
consent judgment is in the public interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and individuals 
alleging specific injury from the violations set forth in the complaint 
including consideration of the public benefit, if any, to be derived 
from a determination of the issues at trial.
    15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory 
factors, the Court's inquiry is necessarily a limited one as the 
government is entitled to ``broad discretion to settle with the 
defendant within the reaches of the public interest.'' United States v. 
Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); United States v. 
U.S. Airways Grp., 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 a 
court's review of a consent judgment is limited and only inquires 
``into whether the government's determination that the proposed 
remedies will cure the antitrust violations alleged in the complaint 
was reasonable, and whether

[[Page 7594]]

the mechanism to enforce the final judgment are clear and 
manageable'').
    As the U.S. 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 proposed Final Judgment is 
sufficiently clear, whether its enforcement mechanisms are sufficient, 
and whether it may positively harm third parties. See Microsoft, 56 
F.3d at 1458-62. With respect to the adequacy of the relief secured by 
the proposed Final Judgment, a court may ``not to make de novo 
determination of facts and issues.'' United States v. W. Elec. Co., 993 
F.2d 1572, 1577 (D.C. Cir. 1993) (quotation marks omitted); see also 
Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F. 
Supp. 2d 37, 40 (D.D.C. 2001); United States v. Enova Corp., 107 F. 
Supp. 2d 10, 16 (D.D.C. 2000); 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.'' W. 
Elec. Co., 993 F.2d at 1577 (quotation marks omitted). ``The court 
should bear in mind the flexibility of the public interest inquiry: The 
court's function is not to determine whether the resulting array of 
rights and liabilities is one that will best serve society, but only to 
confirm that the resulting settlement is within the reaches of the 
public interest.'' Microsoft, 56 F.3d at 1460 (quotation marks 
omitted). More demanding requirements would ``have enormous practical 
consequences for the government's ability to negotiate future 
settlements,'' contrary to congressional intent. Id. at 1456. ``The 
Tunney Act was not intended to create a disincentive to the use of the 
consent decree.'' Id.
    The United States' predictions about the efficacy of the remedy are 
to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at 
1461 (recognizing courts should give ``due respect to the Justice 
Department's . . . view of the nature of its case''); United States v. 
Iron Mountain, Inc., 217 F. Supp. 3d 146, 152-53 (D.D.C. 2016) (``In 
evaluating objections to settlement agreements under the Tunney Act, a 
court must be mindful that [t]he government need not prove that the 
settlements will perfectly remedy the alleged antitrust harms[;] it 
need only provide a factual basis for concluding that the settlements 
are reasonably adequate remedies for the alleged harms.'') (internal 
citations omitted); United States v. Republic Servs., Inc., 723 F. 
Supp. 2d 157, 160 (D.D.C. 2010) (noting ``the deferential review to 
which the government's proposed remedy is accorded''); United States v. 
Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (``A 
district court must accord due respect to the government's prediction 
as to the effect of proposed remedies, its perception of the market 
structure, and its view of the nature of the case''). The ultimate 
question is whether ``the remedies [obtained by the Final Judgment 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 W. Elec. Co., 900 F.2d at 309).
    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.
    In its 2004 amendments to the APPA, Congress made clear its intent 
to preserve the practical benefits of using consent judgments proposed 
by the United States in antitrust enforcement, Public Law 108-237 Sec.  
221, and added 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 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) (statement of 
Sen. Tunney). ``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 (citing Enova 
Corp., 107 F. Supp. 2d at 17).

III. The Section 1 Investigation, the Harm Alleged in the Complaint, 
and the Proposed Final Judgment

    The proposed Final Judgment is the culmination of a thorough, 
comprehensive investigation conducted by the Antitrust Division of the 
U.S. Department of Justice into the Defendants' conduct involving the 
Defendants' joint ventures with each other to service specific 
universities which sought to outsource the management of their MMR as 
well as the Defendants' similar joint ventures with other competitors.
    The Complaint alleges that, under the guise of legitimate business 
arrangements, these joint ventures denied universities the benefits of 
competition between the competitors. The Complaint further alleges that 
the Defendants have used, or attempted to use, joint ventures as a way 
to co-opt smaller competitors and remove them from submitting 
competitive bids and that the Defendants' non-compete agreements have 
had similar effects. By using and enforcing non-compete agreements, for 
example, Defendant Learfield prevented Defendant IMG from competing on 
a school's MMR contract when it came up for renewal.
    Based on the evidence gathered, the United States concluded that 
the Defendants' use of joint ventures and non-compete agreements were 
anticompetitive and violated Section 1 of the Sherman Act, 15 U.S.C. 1, 
because they had detrimental effects on competition among MMR 
providers. The Defendants' use of joint ventures and non-compete 
agreements harmed the competitive process by suppressing or eliminating 
competition, reduced the revenues received by universities for 
licensing their MMR, and caused the quality of MMR management to 
decrease. The United States seeks the proposed Final Judgment to 
restore and protect competition. The Defendants have agreed to abide by 
the provisions of the proposed Final Judgment during the pendency of 
the Tunney Act proceedings (Dkt. No. 2.1 at 2).

[[Page 7595]]

    The proposed Final Judgement provides an effective and appropriate 
remedy for this competitive harm by enjoining the Defendants from: (1) 
Directly or indirectly communicating competitively sensitive 
information related to bidding for an MMR contract; and (2) agreeing 
with any MMR competitor not to bid, or to bid jointly, on an MMR 
contract. The Defendants, for example, may not discuss their 
negotiating strategies or proposed prices relating to any particular 
university's MMR business with any other MMR competitor. Invitations or 
suggestions to jointly bid are also prohibited.
    The proposed Final Judgment also creates a mechanism for joint 
ventures involving the Defendants to continue or be created if the 
collaboration will not reduce the number of competitors bidding on a 
university's MMR business. Pursuant to the proposed Final Judgment, the 
Defendants may apply to the United States for authorization to continue 
a joint venture that is about to expire or create a new joint venture 
to service a university's MMR needs. The United States will undertake a 
case-by-case analysis of any such application to determine whether the 
joint venture is likely to eliminate or enhance competition.
    Under some circumstances, joint ventures may be efficient and 
procompetitive. See, e.g., U.S. Dept. of Justice & FTC, Antitrust 
Guidelines for Collaborations Among Competitors, at 6 (2000) (``A 
collaboration may allow its participants to better use existing assets, 
or may provide incentives for them to make output-enhancing investments 
that would not occur absent the collaboration.''). However, ``labeling 
an arrangement a `joint venture' will not protect what is merely a 
device to raise price or restrict output; the nature of the conduct, 
not its designation, is determinative.'' Id. at 9 (internal citations 
omitted). The United States routinely investigates joint arrangements 
between competitors to determine whether they violate the antitrust 
laws. Pursuant to the proposed Final Judgment, the Defendants have 
consented to the United States making that determination in its sole 
discretion without requiring the United States to prove to a Court that 
a proposed new or continuing collaboration involving a Defendant 
violates Section 1 of the Sherman Act.
    Finally, the proposed Final Judgment includes robust mechanisms 
that will allow the United States and the Court to monitor the 
effectiveness of the relief and to enforce compliance.
     The proposed Final Judgment requires each Defendant to 
designate an Antitrust Compliance Officer who will be responsible for 
implementing training and compliance programs and ensuring compliance 
with the Final Judgment. Among other duties, the Antitrust Compliance 
Officer will be required to distribute copies of the Final Judgment and 
ensure that training on the requirements of the Final Judgment and the 
antitrust laws is provided to the Defendants' management. Moreover, 
each Defendant, through its CEO, General Counsel, or Chief Legal 
Officer, must certify annual compliance with the Final Judgment.
     The proposed Final Judgment requires each Defendant to 
establish an antitrust whistleblower policy and to remedy and report 
violations of the Final Judgment.
     The proposed Final Judgment provides that the United 
States retains and reserves all rights to enforce the provisions of the 
proposed Final Judgment, including its rights to seek an order of 
contempt from the Court. The 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.
     The proposed Final Judgment provides additional 
clarification regarding the interpretation of the provisions of the 
proposed Final Judgment. The Defendants agree that they will abide by 
the proposed Final Judgment, and that they may be held in contempt of 
this Court for failing to comply with any provision of the proposed 
Final Judgment that is stated specifically and in reasonable detail, 
whether or not it is clear and unambiguous on its face, and as 
interpreted in light of its procompetitive purpose.
     Should the Court find in an enforcement proceeding that 
one or more Defendants violated the Final Judgment, the proposed Final 
Judgment permits the United States to 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, the proposed Final Judgment 
provides that in any successful effort by the United States to enforce 
the Final Judgment against one or more Defendants, whether litigated or 
resolved before litigation, the Defendants agree 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.

IV. Summary of Public Comment and the United States' Response

    The United States received a comment concerning the proposed Final 
Judgment from JMI Sports, LLC (``JMIS''). JMIS competes against the 
Defendants to offer MMR services to universities and at times has 
partnered with the Defendants or their predecessors. JMIS does not 
claim that the provisions of the proposed Final Judgment are 
insufficient to enjoin the unlawful restraints of trade alleged in the 
Complaint. JMIS, however, states that it believes uncertainty exists 
regarding the scope of the relief the United States secured from the 
Defendants in ways that affect its position as a competitor. JMIS, 
therefore, seeks clarification regarding the settlement's scope, 
particularly ``the process through which [the United States] will vet 
proposed extensions or expansions to existing joint ventures 
involving'' the Defendants. See Attachment A at 2. JMIS also requests 
that the United States fully disclose the settlement's terms, and that 
any settlement provisions that are not currently part of the proposed 
Final Judgment be incorporated into it before entry by the Court. It 
also asks for clarification of terms that are not part of the proposed 
Final Judgment.

A. The Proposed Final Judgment Appropriately Authorizes the United 
States To Make Case-by-Case Determinations of Proposed Joint Ventures

    JMIS seeks additional guidance on how under the proposed Final 
Judgment the United States will conduct its analysis of joint ventures 
proposed by the Defendants. JMIS also asks whether it and other non-
parties may seek permission under the proposed Final Judgment to form 
or continue joint ventures with the Defendants. It also mistakenly 
complains that the proposed Final Judgment prohibits communications 
between it and the Defendants that are necessary to form or continue 
joint ventures. See Attachment A at 4.

[[Page 7596]]

    Additional guidance on how the United States will evaluate joint 
ventures pursuant to Paragraph IV.C. of the proposed Final Judgment is 
not necessary. As noted above, the United States routinely investigates 
joint arrangements between competitors to determine whether those 
arrangements violate the U.S. antitrust laws and has published guidance 
on this subject. See U.S. DOJ & FTC, Antitrust Guidelines for 
Collaborations Among Competitors (2000). If a proposed joint venture is 
not the type of agreement that would tend to raise price or to reduce 
output such that it would be condemned as per se illegal, the United 
States conducts a fact-specific inquiry to determine its legality. By 
its nature, such an analysis ``entails a flexible inquiry and varies in 
focus and detail depending on the nature of the agreement and the 
market circumstances.'' See id. at 10 (internal citations omitted). 
Because these analyses require a case-by-case approach, there is no 
additional guidance that the United States could provide to JMIS at 
this time. JMIS and others seeking to form joint ventures with the 
Defendants in order to pursue MMR contracts, however, should consider 
whether they need to form a joint venture in order to compete for an 
MMR contract or whether the joint venture would merely eliminate a 
competitor.
    The proposed Final Judgment permits the Defendants to make an 
application to the United States for authorization to enter into, 
renew, or extend a joint venture. See Proposed Final Judgment at 
Paragraph IV.C. This provision will not hinder JMIS's ability to form 
joint ventures with the Defendants. Because joint ventures are 
voluntary business arrangements, the Defendants must first be willing 
to enter into, renew, or extend a joint venture with JMIS or other 
competitors. As a willing participant, it would be in a Defendant's 
interest to apply for the required permission from the United States, 
and it would be unnecessary for the proposed Final Judgment to provide 
a mechanism for non-parties such as JMIS or others to make the 
application instead.
    Finally, contrary to JMIS's assertation, the proposed Final 
Judgment already provides an exception to the provisions in Section IV 
prohibiting the Defendants from directly or indirectly communicating 
with competitors concerning bids or bidding. To continue or form a 
joint venture that may enhance competition, the proposed Final Judgment 
at Paragraph V.D. permits the Defendants, after securing advice of 
counsel and in consultation with an Antitrust Compliance Officer, to 
communicate with a competitor concerning the formation of a joint 
venture. Therefore, the proposed Final Judgment already incorporates 
the exception to the prohibition on communications between competitors 
that JMIS seeks.

B. The Proposed Final Judgment Embodies All Relief Obtained To Resolve 
the Complaint's Obligations and No Amendments Are Warranted

    The United States, as requested by JMIS, confirms that the proposed 
Final Judgment embodies the entirety of its settlement with the 
Defendants to resolve the allegations in the Complaint, and there are 
no settlement provisions that are not embodied in the proposed Final 
Judgment. The United States alleged the Defendants unlawfully 
restrained trade in violation of Section 1 of the Sherman Act, 15 
U.S.C. 1, by agreeing or otherwise coordinating to limit competition 
between themselves and between themselves and smaller competitors. As 
discussed above in Section III, the proposed Final Judgment effectively 
enjoins the Defendants from unlawfully restraining trade by prohibiting 
agreements not to bid or to bid jointly, by barring the sharing of 
competitive sensitive information, and by prohibiting joint ventures 
with MMR competitors that reduce competition.
    The United States separately investigated whether the merger of IMG 
and Learfield would violate Section 7 of the Clayton Act. After 
consideration of the facts, evidence, and chances of prevailing at 
trial, the United States did not challenge that merger. Near the 
conclusion of the investigation into that merger, but before the United 
States had made its enforcement decision, Defendant Learfield informed 
the United States that Learfield and IMG had unilaterally implemented 
several irrevocable changes to certain business practices affecting the 
contractual rights of their employees and customers that would be 
implemented upon closing of the merger. See Exhibit B.\1\ These 
commitments were presented to the United States. The making of these 
commitments additionally increased the litigation risk for seeking to 
enjoin the transaction.
---------------------------------------------------------------------------

    \1\ Because Learfield and IMG notified their employees and 
customers of their new contractual rights resulting from the 
commitments, all industry participants directly impacted by the 
commitments were fully informed. JMIS and other MMR competitors were 
not notified, because they are not customers or employees of 
Learfield or IMG. Learfield's letter is now being made public. JMIS 
and other competitors, therefore, will not need to rely on 
information gathered from other industry participants to learn about 
the irrevocable changes undertaken by Learfield and IMG.
---------------------------------------------------------------------------

    The United States understands that JMIS seeks, through its comment, 
to incorporate the commitments made in Defendant Learfield's letter 
into the proposed Final Judgment in this matter. Those commitments, 
however, do not relate to the allegations in the Complaint that the 
United States brought in this matter, which challenges the Defendants' 
agreements between themselves and with other smaller MMR competitors as 
unlawful restraints of trade in violation of Section 1. The commitments 
relate to an ease-of-entry defense that the Defendants could have made 
if the United States had brought a Section 7 challenge to their merger. 
Because the commitments made in Defendant Learfield's letter, including 
those relating to employees and early termination of certain customer 
contracts, are unrelated to the allegations in the Complaint and 
because the proposed Final Judgment already encompasses all of the 
relief necessary to remedy the Defendants' Section 1 violations, no 
amendments to the proposed Final Judgment are warranted or justified.
    As noted above, the D.C. Circuit explained in Microsoft, 56 F.3d at 
1459-60, that 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.'' Because the United States did not 
bring a Section 7 case, the modifications proposed by JMIS fall outside 
the scope of this Tunney Act review. Expanding the public interest 
review to encompass relief related to an uncharged allegation, would 
amount to ``effectively redraft[ing] the complaint'' to inquire into 
matters the United States did not pursue. Id. The Tunney Act process 
does not empower the district court ``to review the actions or behavior 
of the Department of Justice; the court is only authorized to review 
the decree itself.'' Id. It is unnecessary to include the commitments 
made in Defendant Learfield's letter in the proposed Final Judgment, in 
part because the commitments are not related to addressing the 
Defendants' anticompetitive joint ventures and non-compete agreements 
or preventing future anticompetitive arrangements with their 
competitors. The commitments, therefore, are not required to remedy the 
Section 1 violation alleged in the Complaint and consideration of 
whether to amend the proposed Final Judgment to include them falls 
outside the scope of the Tunney Act public interest inquiry.

[[Page 7597]]

V. Conclusion

    After careful consideration of the public comment, the United 
States continues to believe that the proposed Final Judgment, as 
drafted, provides an effective and appropriate remedy for the antitrust 
violations alleged in the Complaint, and is therefore in the public 
interest. The United States will move this Court to enter the proposed 
Final Judgment after the comment and this response are published as 
required by 15 U.S.C. 16(d).

    Dated: February 3, 2020.

    Respectfully submitted,

Owen M. Kendler,

U.S. Department of Justice, Antitrust Division, 450 Fifth Street NW, 
Suite 4000, Washington, DC 20530, Tel.: (202) 305-8376, Fax: (202) 
514-7308, Email: [email protected].
BILLING CODE 4410-11-P

[[Page 7598]]

[GRAPHIC] [TIFF OMITTED] TN10FE20.000


[[Page 7599]]


[GRAPHIC] [TIFF OMITTED] TN10FE20.001


[[Page 7600]]


[GRAPHIC] [TIFF OMITTED] TN10FE20.002


[[Page 7601]]


[GRAPHIC] [TIFF OMITTED] TN10FE20.003


[[Page 7602]]


[GRAPHIC] [TIFF OMITTED] TN10FE20.004


[[Page 7603]]


[GRAPHIC] [TIFF OMITTED] TN10FE20.005


[[Page 7604]]


[GRAPHIC] [TIFF OMITTED] TN10FE20.006


[[Page 7605]]


[GRAPHIC] [TIFF OMITTED] TN10FE20.007

[FR Doc. 2020-02586 Filed 2-7-20; 8:45 am]
 BILLING CODE 4410-11-C


This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.