United States v. Novelis Inc., et al., No. 1:10-cv-02033 (CAB); Proposed Final Judgment and Competitive Impact Statement, 31212-31227 [2020-11073]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 85, Number 100 (Friday, May 22, 2020)]
[Notices]
[Pages 31212-31227]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11073]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Novelis Inc., et al., No. 1:10-cv-02033 (CAB); 
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 Northern District of Ohio in 
United States of America v. Novelis Inc., et al., Civil Action No. 
1:19-cv-02033 (CAB). On September 4, 2019, the United States filed a 
Complaint alleging that Novelis Inc.'s proposed acquisition of Aleris 
Corporation's North American aluminum automotive body sheet (``ABS'') 
business would violate Section 7 of the Clayton Act, 15 U.S.C. 18. The 
proposed Final Judgment, filed on May 12, 2020, requires Novelis Inc. 
to divest Aleris Corporation's North American aluminum ABS operations 
in their entirety. The divestiture includes two facilities: One 
production facility in Lewisport, Kentucky, and one technical service 
center located in Madison Heights, Michigan; and all other tangible and 
intangible assets related to or used in connection with the Lewisport, 
Kentucky facility.
    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 Northern District 
of Ohio. 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 Katrina Rouse, 
Chief, Defense, Industrials and Aerospace Section, Antitrust Division, 
Department of Justice, 450 Fifth Street NW, Suite

[[Page 31213]]

8700, Washington, DC 20530 (telephone: 202-598-2459).

Suzanne Morris,
Chief, Premerger and Division Statistics.

United States District Court for the Northern District of Ohio

    United States of America, Plaintiff, v. Novelis Inc. and Aleris 
Corporation, Defendants.

Case No.: 1:19-cv-02033-CAB

Complaint

    The United States of America brings this civil antitrust action 
pursuant to Section 7 of the Clayton Act, 15 U.S.C. 18, to enjoin 
Novelis Inc.'s (``Novelis'') proposed acquisition of its new and 
disruptive rival, Aleris Corporation (``Aleris''). The United States 
alleges as follows:

I. Introduction

    1. Automakers are turning to aluminum to make vehicles lighter, so 
they can satisfy consumer demand for larger vehicles while enhancing 
fuel efficiency, safety, and performance. As a result, demand for 
rolled aluminum sheet for automotive applications (commonly referred to 
as ``automotive body sheet'' or ``ABS'') is growing.
    2. Novelis and Aleris are two of only four aluminum ABS suppliers 
in North America. If permitted to proceed, the transaction would 
concentrate approximately 60 percent of total production capacity and 
the majority of uncommitted (open) capacity with Novelis. Novelis has 
long been one of only a few aluminum ABS suppliers in North America, 
while Aleris is a relatively new competitor that--in Novelis's own 
words--is ``poised for transformational growth.'' By acquiring Aleris, 
Novelis would lock up a large share of available aluminum ABS capacity 
for the foreseeable future, which would immediately and negatively 
impact competition in this market. Novelis's own deal documents reveal 
an anticompetitive motivation behind this acquisition: Preventing 
rivals from acquiring a disruptive competitor, Aleris, so that Novelis 
can maintain its current high prices.
    3. The transaction likely would lessen competition substantially in 
the market for aluminum ABS sold to North American customers in 
violation of Section 7 of the Clayton Act and, unless enjoined, 
automakers and American consumers will be harmed through higher prices, 
reduced innovation, and less favorable terms of service.

II. Industry Overview

A. Background on Aluminum ABS

    4. The North American automotive industry is a vital sector of the 
American economy. The industry represents the single largest 
manufacturing sector in the United States, accounting for about three 
percent of gross domestic product. In 2017, over 11 million vehicles 
were produced in the United States. For decades, automakers used flat-
rolled steel almost exclusively in the construction of automotive 
bodies.
    5. Growing consumer demand for larger vehicles loaded with safety 
and performance features has led automakers to pursue light-weight 
designs. Automakers have turned to aluminum ABS, which is 30 to 40 
percent lighter than traditional steel, as the material of choice for 
light-weighting the next generation of vehicles.
    6. Although aluminum is substantially more expensive than steel, 
aluminum has distinct and superior physical properties. Vehicles made 
with aluminum are lighter and more fuel-efficient. Aluminum ABS is also 
safer and more durable, absorbing substantially more energy than 
traditional steel upon impact. Light-weight vehicles also have 
significant performance advantages including faster acceleration, 
better handling, shorter braking distance, and increased payload and 
towing capabilities. In addition to aluminum ABS's significant light-
weighting advantages, aluminum ABS is also highly formable, resists 
breaking, and provides more styling options for automobile designers 
than traditional steel.
    7. Automakers recognize that aluminum ABS offers light-weighting, 
physical, and performance benefits over traditional steel such that the 
two materials are not close substitutes for many important design and 
engineering features, even though traditional steel still comprises the 
majority of the material used in cars. Some automakers, such as the 
Ford Motor Company, have adopted an aluminum-intensive design for 
certain vehicle models (e.g., the F-150 pickup truck), achieving 
significant weight-savings and performance benefits. Other automakers 
are pursuing light-weight designs using an incremental ``multi-
material'' approach, in which automakers use the best material for each 
particular part or application. Under the multi-material approach, 
aluminum ABS is being used to replace traditional steel in large 
automotive panels, such as the hood, liftgates, doors and fenders 
(i.e., the vehicle's ``skin''). By doing so, automakers can 
substantially reduce the weight of vehicles, meet regulatory emissions 
targets, and achieve safety and performance benefits that could not be 
done using steel.
    8. Light-weighting designs are also critical for the next 
generation of electric vehicles. Aluminum ABS can reduce electric 
vehicle weight by up to 20 percent, allowing an electric vehicle to run 
farther on a single charge.
    9. Aluminum ABS is recognized as a critical input in automakers' 
light-weighting strategies. As automakers continue to build the bigger-
yet-more-efficient vehicles that consumers demand, more and more 
aluminum ABS will be incorporated into automobile models.
    10. Aluminum ABS demand is increasing. An industry-wide study 
conducted by Ducker Worldwide predicts that the total aluminum content 
in vehicles will increase 37 percent from about 400 pounds per vehicle 
in 2015 to more than 550 pounds by 2028.
    11. Supply is tight. Suppliers have limited capacity to produce 
aluminum ABS. In North America, much of the aluminum ABS production 
capacity is already committed to fulfilling automaker orders. A 
supplier must have sufficient uncommitted capacity to satisfy the 
automaker's aluminum ABS quantity requirements in order to bid or 
compete for new vehicle models. A supplier that cannot meet those 
requirements because it has little or no uncommitted capacity cannot 
effectively compete for the business.
    12. Based on Ducker's projections and their own market 
intelligence, Novelis and Aleris each independently has determined that 
the demand for aluminum ABS in North America will soon outgrow market 
supply. The majority of aluminum ABS production capacity is already 
committed to fulfilling existing automakers' orders, leaving the bulk 
of uncommitted capacity with Novelis and, its target, Aleris.
    13. Additional capacity cannot be readily brought online to meet 
growing demand. Barriers to entry are high and expansion of existing 
production facilities is costly and takes years to complete. Moreover, 
steel suppliers cannot readily shift to production of aluminum ABS 
because aluminum ABS is produced using a distinct process on 
specialized equipment.
    14. Due to transportation costs and supply chain risks, importing 
aluminum ABS is not a primary sourcing strategy for most automakers in 
North America. Imports, therefore, make up only a marginal volume of 
supply.

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B. Novelis Is Seeking To Eliminate an Emerging Competitive Threat 
Through This Acquisition

    15. For years, North American aluminum ABS production was dominated 
by just two firms, Novelis and another large domestic rival. By its own 
account, Novelis enjoyed this ``favorable industry structure'' because 
it allowed Novelis to embark on a ``price leadership strategy'' and 
realize ``substantial market-based pricing movement.'' Novelis took 
advantage of this industry structure to increase prices to certain 
automaker customers by up to 30 percent.
    16. In 2016, Aleris, an aluminum ABS producer in the European 
market, established facilities in the United States. Aleris's entry had 
an immediate impact on pricing in North America, forcing Novelis to 
lower its prices. For instance, internal documents confirm that 
``Novelis reduced [its] base price by up to 5%'' for one automaker in 
order to compete with Aleris's lower prices. Fearing lower prices from 
Aleris for another automaker customer, Novelis dropped its bid by about 
five percent to ``be in the range of Aleris.'' New capacity from Aleris 
threatened Novelis's ``premium pricing,'' and in turn, Novelis's high 
profit margins.
    17. Aleris's entry into North America not only undercut Novelis's 
prices and margins, but it also resulted in vigorous head-to-head 
competition with Novelis on customer service and support. Based on its 
experience in Europe, Aleris immediately established a technical 
support center in the Detroit area to work closely with automaker 
design engineers to expand the use of aluminum ABS solutions. Novelis's 
CEO, Steve Fisher, testified that Aleris ``actually was in front of 
[Novelis] a little bit . . . with the customer solution center.'' In 
response, Novelis copied Aleris's efforts, starting its own solution 
center less than 30 miles from Aleris's facility.
    18. Even before Aleris began producing aluminum ABS coils in the 
United States, Novelis tried to buy Aleris as a way to preserve the 
``favorable industry structure'' that enabled Novelis's ``premium 
pricing.'' Aleris's private equity owners had, however, already agreed 
to sell Aleris to a foreign buyer. When Aleris's deal with the foreign 
buyer unraveled in the fall of 2017, Novelis aggressively moved to 
acquire Aleris.
    19. Novelis was particularly concerned that in the hands of another 
buyer, Aleris would further erode Novelis's prices and margins. In 
documents setting forth Novelis's strategic analysis of the 
transaction, the Novelis due diligence team expressed concern that if 
Novelis were not the acquirer, Aleris could be sold to a ``[n]ew market 
entrant in the US with lower pricing discipline'' than Novelis, and 
that an ``[a]lternative buyer [was] likely to bid aggressively and 
negatively impact pricing'' in the market. A ``key takeaway'' of this 
analysis was that, by acquiring Aleris itself, Novelis ``[p]revents 
competitors from acquiring assets and driving less disciplined 
pricing.''
    20. This same anticompetitive rationale was repeated in numerous 
internal analyses of the deal that were generated by, or presented to, 
top Novelis executives and/or the Novelis Board of Directors. These 
analyses of the deal state:
     ``[A]n acquisition by us as the market leader will help 
preserve the industry structure versus a new player . . . coming into 
our growth markets and disturbing the industry structure to create 
space for himself, while hurting us the most.''
     Novelis should buy Aleris because an ``alternative buyer 
[is] likely to bid aggressively and negatively impact pricing.''
     Another buyer of Aleris likely would be a ``[n]ew market 
entrant in the US with lower pricing discipline'' that would create the 
``potential for accelerated price declines as they seek to fill 
capacity.'' If not Novelis, an alternative buyer might have ``lower 
pricing discipline.''

Novelis conducted a ``build or buy'' analysis of Aleris that concluded 
as ``key takeaways'' that Novelis should acquire Aleris because there 
is a ``disincentive for market leader [i.e., Novelis] to add capacity 
and contribute to a price drop'' and an acquisition of Aleris 
``prevents competitors from acquiring assets and driving less 
disciplined pricing.''

III. Defendants and the Proposed Transaction

    21. Novelis is a global manufacturer of semi-finished aluminum 
products with global revenues of approximately $12.3 billion for the 
fiscal year ending March 31, 2019. The company is incorporated in 
Canada and headquartered in Atlanta, Georgia. It operates 23 production 
facilities in North America, South America, Europe and Asia. Eight 
facilities are located in North America, including two (Oswego, New 
York, and Kingston, Ontario) that currently produce aluminum ABS. 
Another aluminum ABS finishing line is under construction in Guthrie, 
Kentucky. Novelis supplies flat-rolled aluminum products in three 
segments: beverage can, specialty and automotive.
    22. Novelis is a wholly-owned subsidiary of Hindalco Industries, 
Ltd., an Indian company headquartered in Mumbai, India.
    23. Aleris also is a global manufacturer of semi-finished aluminum 
products, generating global revenues of approximately $3.4 billion in 
2018. Aleris is a Delaware corporation, headquartered in Cleveland, 
Ohio and operates 13 production facilities in North America, South 
America, Europe, and Asia. Aleris supplies flat-rolled aluminum 
products to the automotive, aerospace and building and construction 
industries, among others. Aleris has been a producer of aluminum ABS in 
Europe since 2002, and recently expanded ABS production into the North 
America market with new ABS production lines in Lewisport, Kentucky.
    24. Novelis and Aleris entered into a definitive Agreement and Plan 
of Merger, dated July 26, 2018. Under this agreement, Novelis will 
acquire 100 percent of the voting securities of Aleris for an estimated 
enterprise value of $2.6 billion.

IV. The Relevant Market Threatened by the Acquisition

    25. Aluminum ABS sold to automakers in North America constitutes a 
relevant antitrust market and line of commerce under Section 7 of the 
Clayton Act. A well-accepted methodology for determining a relevant 
market for antitrust analysis is to ask whether a hypothetical 
monopolist over all products in the proposed market could profitably 
impose at least a small but significant and non-transitory increase in 
price, or SSNIP. See Fed. Trade Comm'n & U.S. Dep't of Justice 
Horizontal Merger Guidelines (2010) (``Horizontal Merger Guidelines''); 
accord Fed. Trade Comm'n v. Whole Foods Market, 548 F.3d 1028, 1038 (DC 
Cir. 2008). A hypothetical monopolist of aluminum ABS sold to 
automakers in North America could profitably increase prices by at 
least a SSNIP because North American automakers are unlikely to 
substitute away from aluminum ABS in sufficient quantities to make that 
price increase unprofitable. Therefore, the sale of aluminum ABS to 
North American automakers is a relevant antitrust market.

A. Relevant Product Market

    26. An automaker can make a car part out of aluminum, steel, or 
other material, but there are substantial differences in the physical 
properties of aluminum (as compared to steel), such

[[Page 31215]]

that an automotive engineer designing a car with particular weight, 
performance, safety specifications, and target retail price is unlikely 
to view steel and other materials as full functional substitutes for 
aluminum for the various car parts being designed. Nor is any other 
material likely to significantly impact the pricing of aluminum ABS for 
most car parts, or vice-versa. Aluminum ABS is a distinct line of 
commerce and constitutes a relevant product market even if a broader 
market for automotive materials may also exist.
    27. Aluminum ABS is different from other materials used in 
automotive applications and meets many of the practical indicia that 
courts rely on to define a relevant product market. As an initial 
matter, Novelis and Aleris and other industry participants recognize 
aluminum ABS as a distinct product with its own market dynamics. 
Novelis and Aleris describe themselves as ``leaders'' in the aluminum 
ABS market, and they calculate market share for the automotive business 
by looking to sales of aluminum ABS alone. In strategic planning 
documents commenting on the competitive landscape in aluminum ABS, 
Novelis boasted that it is the ``[m]arket leader with ~60% share'' of 
the ``[a]utomotive business in North America.'' Similarly, in the 
defendants' ordinary course of business documents, the defendants refer 
predominantly to the supply, demand, and competitiveness of other 
aluminum ABS suppliers when discussing competitive dynamics in the 
automotive industry.
    28. Aluminum ABS also has physical properties that are distinctive 
from other automotive materials. Compared to steel, for instance, 
aluminum has a higher strength-to-weight ratio, higher strength in 
large panels, and superior corrosion resistance. These qualities are 
highly sought after by auto designers and engineers. Alternative 
materials, such as steel, generally do not share these attributes and 
therefore, these materials are not reasonable substitutes for aluminum 
ABS for automakers when designing and engineering the technical and 
performance specifications of vehicles.
    29. Steel companies are developing lighter, high strength steel 
varieties for the auto industry. But as Novelis has observed, high 
strength steel ``is largely replacing existing mild steel'' and 
``cannibalizing the existing material'' (i.e., traditional steel). The 
threat of substitution from aluminum to high strength steel is, as 
Aleris confirms, ``limited.''
    30. The price of aluminum ABS is also distinct from other ABS 
materials, including steel. Aluminum ABS is about three to four times 
more expensive than traditional steel per pound, but North American 
automakers continue to adopt aluminum ABS in place of steel because of 
its superior light-weighting qualities and performance and safety 
benefits. As a result of those qualities, even as aluminum commodity 
pricing rose in 2018, Novelis prepared to tell its investors that 
``[w]e are not seeing demand destruction in our markets.'' Moreover, 
while aluminum ABS prices are sensitive to price changes of aluminum 
ABS from other aluminum ABS suppliers, they are not sensitive to price 
changes in other materials, such as steel.
    31. Further, from the automaker's perspective, the use of aluminum 
ABS requires a different tooling and joining process than the default 
production process of steel automotive parts. Automakers continue to 
invest millions of dollars to upgrade their production plants as they 
move towards greater adoption of aluminum.

B. Relevant Geographic Market

    32. The relevant geographic market in which to assess the 
competitive harm from the proposed transaction is North America. When a 
supplier can price differently based on customer location, the 
Horizonal Merger Guidelines provide that the relevant geographic market 
may be defined based on the locations of targeted customers. Such 
pricing is possible in aluminum ABS as evidenced by the different 
prices charged by suppliers across geographic regions. For example, 
Novelis has observed that ``North America enjoys the highest regional 
pricing'' with Novelis's pricing several hundred dollars per ton higher 
in North America than in Europe. Because of transportation costs, 
import tariffs and duties, the limited shelf life of most types of 
aluminum ABS, and supply chain risks, customers of aluminum ABS in 
North America are unlikely to be able to defeat a price increase 
through arbitrage from outside North America.
    33. This price gap between North America and other geographic 
regions has persisted over many years, supporting the conclusion that 
North America is a relevant geographic market.

V. Anticompetitive Effects of the Acquisition

    34. The proposed acquisition is likely to lead to anticompetitive 
effects. As an initial matter, this transaction is presumptively 
anticompetitive. The Supreme Court has held that mergers that 
significantly increase concentration in concentrated markets are 
presumptively anticompetitive and, therefore, unlawful. See United 
States v. Phila. Nat'l Bank, 374 U.S. 321, 363-65 (1963). To measure 
market concentration, courts often use the Herfindahl-Hirschman Index 
(``HHI'') as described in the Horizontal Merger Guidelines. Mergers 
that increase the HHI by more than 200 and result in an HHI above 2,500 
in any market are presumed to be anticompetitive.
    35. The North American aluminum ABS market is already highly 
concentrated. By Novelis's own assessment, post-merger, Novelis could 
control more than 60 percent of the North American aluminum ABS market. 
Based on current sales estimates--which includes a marginal volume of 
imports--if Novelis were allowed to acquire Aleris, the HHI would 
increase by almost 500 points to a post-transaction HHI reaching almost 
4,000. Thus, this merger is presumed to be anticompetitive under 
Supreme Court precedent.
    36. Beyond the presumption provided under Supreme Court precedent, 
the facts establish the probable anticompetitive effect of the merger. 
First, Aleris's expansion into the North American market had an 
immediate positive impact on competition and pricing. Novelis reduced 
its pricing to some of the industry's largest and most significant 
automakers in order to meet customer ``targets (as set by Aleris),'' or 
to ``be in the range of Aleris.'' With uncommitted production capacity 
and its recent $425 million aluminum ABS expansion at its facility in 
Lewisport, Kentucky, Aleris is poised to continue to compete vigorously 
with Novelis by offering lower prices in an effort to steal share.
    37. Through this acquisition, however, Novelis would seize control 
of Aleris's uncommitted capacity, eliminating a rival it described as 
``poised for transformational growth.'' Aleris and Novelis are the only 
two firms expected to have sizable uncommitted North American capacity 
over the next few years. If the merger is enjoined, head-to-head 
competition between Aleris and Novelis would likely intensify as they 
fight to fill their production lines. As Novelis's own documents 
reveal, this competition would have disrupted Novelis's ``premium 
pricing'' strategy, resulting in lower prices to automakers.
    38. In addition, the proposed acquisition likely would reduce 
quality and innovation in aluminum ABS. For example, Novelis copied 
Aleris's establishment of a technical support center in the Detroit 
area, which was developed to work directly with

[[Page 31216]]

automakers. The merger would eliminate this type of competition between 
the two firms.
    39. If allowed to proceed, the proposed acquisition would reduce 
the number of North American aluminum ABS suppliers from 4 to 3. This 
consolidation would concentrate more than half of the domestic aluminum 
ABS sales, 60 percent of projected total domestic capacity, and the 
majority of uncommitted domestic capacity under the control of one 
firm.
    40. Post-transaction, no other firms would have the incentive and 
ability to constrain Novelis. The transaction would result in higher 
prices, as well as reduced innovation and technical support for 
automakers that rely on this critical input.

VI. Absence of Countervailing Factors

    41. New entry or expansion by existing competitors is unlikely to 
prevent or remedy the transaction's likely anticompetitive effects in 
the market for aluminum ABS.
    42. The aluminum ABS market has significant barriers to entry. 
Barriers include the high cost and long-time frame needed to build 
production facilities. For example, to compete in the automotive 
market, aluminum companies generally must build a specialized ``heat-
treat'' finishing line to make aluminum sheet for automotive 
applications. These heat-treat finishing lines take years to build and 
cost hundreds of millions of dollars to construct, and require 
sophisticated technological know-how to operate.
    43. In addition to heat-treat finishing lines, aluminum ABS 
suppliers need aluminum coils that are wide enough for automotive 
applications. These aluminum coils are produced at hot mills, and there 
are only a few hot mills in North America. Building a new hot mill 
takes several years and requires a significant capital investment of 
well over a billion dollars. Meanwhile, expanding or re-outfitting an 
existing facility to have auto-capable hot mill capacity could also 
require several hundred million dollars.
    44. As a result of these barriers, entry into the market for 
aluminum ABS would not be timely, likely, or sufficient to defeat the 
substantial lessening of competition that is likely to result from 
Novelis's acquisition of Aleris.
    45. Moreover, because of supply chain risks and other factors, 
customers of the merged firm (i.e., North American automakers) are 
unlikely to turn to foreign suppliers of aluminum ABS in sufficient 
volume to mitigate the anticompetitive effects of the merger.

VII. Jurisdiction and Venue

    46. The United States brings this civil antitrust action against 
defendants Novelis and Aleris under Section 15 of the Clayton Act, 15 
U.S.C. 25, as amended, to prevent and restrain defendants from 
violating Section 7 of the Clayton Act, 15 U.S.C. 18.
    47. This Court has subject matter jurisdiction over this action 
pursuant to Section 15 of the Clayton Act, 15 U.S.C. 25, and 28 U.S.C. 
1331, 1337(a) and 1345. Novelis and Aleris develop, manufacture, and 
sell aluminum ABS in the flow of interstate commerce. The activities of 
Novelis and Aleris in developing, manufacturing, and selling these 
products substantially affect interstate commerce.
    48. This Court has personal jurisdiction over Novelis and Aleris. 
Both parties have significant contacts with this judicial district: 
Novelis is registered to do business in the State of Ohio and transacts 
business in this District; Aleris is headquartered in Cleveland, Ohio 
and also transacts business in this District. Moreover, Novelis's 
proposed acquisition of Aleris will have effects throughout the United 
States, including in this District.
    49. Venue is proper in this District pursuant to Section 12 of the 
Clayton Act, 15 U.S.C. 22, and under 28 U.S.C. 1391(b) and (c).

VIII. Violation Alleged

    50. Novelis's acquisition of Aleris is likely to lessen 
substantially competition in the relevant market in violation of 
Section 7 of the Clayton Act, 15 U.S.C. 18.
    51. The transaction will have the following effects, among others:
    a. Eliminate head-to-head competition between Novelis and Aleris in 
the development, manufacture and sale of aluminum ABS;
    b. Likely reduce competition between and among Novelis and the 
remaining suppliers of aluminum ABS; and
    c. Likely cause prices of the relevant product to increase, 
delivery times to lengthen, terms of service to become less favorable, 
and innovation to be reduced.

IX. Request for Relief

    52. The United States requests that this Court:
    a. adjudge and decree the acquisition of Aleris by defendant 
Novelis to violate Section 7 of the Clayton Act, 15 U.S.C. 18;
    b. preliminarily and permanently enjoin and restrain the defendants 
from carrying out the proposed acquisition of Aleris by Novelis or any 
other transaction that would combine the two companies and further 
enjoin the defendants from taking any steps towards completing the 
acquisition of Aleris by Novelis;
    c. award such temporary and preliminary injunctive and ancillary 
relief as may be necessary to avert the dissipation of Aleris's 
tangible and intangible assets during the pendency of this action and 
to preserve the possibility of effective permanent relief;
    d. award the United States the cost of this action; and
    e. grant the United States such other and further relief as the 
Court deems just and proper.

Respectfully submitted,

September 4, 2019

FOR PLAINTIFF UNITED STATES OF AMERICA,

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Makan Delrahim
Assistant Attorney General
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Kathleen O'neill
Senior Director of Investigations and Litigation
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Craig W. Conrath
Director of Litigation
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Patricia A. Brink
Director of Civil Enforcement
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Julia A. Schiller
Counsel to the Assistant Attorney General
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John Read
Acting Chief, Defense, Industrials, and Aerospace Section
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Stephanie A. Fleming
Assistant Chief, Defense, Industrials, and Aerospace Section
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Samer M. Musallam (OH #0078472)

Lowell R. Stern

Blake W. Rushforth

Bashiri Wilson

Angela Ting

James Foster

Siddarth Dadhich

Thomas Dematteo

Ethan Stevenson

Trial Attorneys,
Antitrust Division, United States Department of Justice,
450 Fifth Street NW, Washington, DC 20530, Telephone: (202) 598-
2990, Facsimile: (202) 514-9033, [email protected].

United States District Court for the Northern District of Ohio

    United States of America, Plaintiff, v. Novelis Inc. and Aleris 
Corporation, Defendants.

Case.: 1:19-cv-02033-CAB

[[Page 31217]]

[Proposed] Final Judgment

    Whereas, Plaintiff, United States of America, filed its complaint 
on September 4, 2019, and the United States and Defendants, Novelis 
Inc. and Aleris Corporation, by their respective attorneys, have 
consented to entry of this Final Judgment, without this Final Judgment 
constituting any evidence against or admission by a party regarding any 
issue of fact or law;
    And whereas, Defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    And whereas, the essence of this Final Judgment is the prompt and 
certain divestiture of certain rights or assets by Defendants to assure 
that competition is not substantially lessened;
    And whereas, Defendants agree to make a divestiture for the purpose 
of remedying the loss of competition alleged in the Complaint;
    And whereas, Defendants represent that the divestiture and other 
relief required by this Final Judgment can and will be made and that 
Defendants will not later raise a claim of hardship or difficulty as 
grounds for asking the Court to modify any provision of this Final 
Judgment;
    Now therefore, upon consent of the parties, it is ordered, 
adjudged, and decreed:

I. Jurisdiction

    The Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states a claim upon which 
relief may be granted against Defendants under Section 7 of the Clayton 
Act, as amended (15 U.S.C. 18).

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' means the entity to whom Defendants divest the 
Divestiture Assets.
    B. ``Aluminum ABS'' means aluminum automotive body sheet, a rolled 
aluminum sheet product used for automotive applications.
    C. ``Novelis'' means Defendant Novelis Inc., a Canadian corporation 
with its headquarters in Atlanta, Georgia, its successors and assigns, 
and its subsidiaries, divisions, groups, affiliates, partnerships, and 
joint ventures, and their directors, officers, managers, agents, and 
employees.
    D. ``Aleris'' means Defendant Aleris Corporation, a Delaware 
corporation with its headquarters in Cleveland, Ohio, its successors 
and assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    E. ``Divestiture Assets'' means:
    1. All of Defendants' rights, title, and interests, wherever 
located, in and relating to the manufacturing and support facilities 
located at:
    a. 1372 State Route 1957, Lewisport, Kentucky 42351 (the 
``Lewisport Rolling Mill''); and
    b. 1450 East Avis Drive, Madison Heights, Michigan 48071 (the 
``Innovation Center'');
    2. All tangible assets, wherever located, related to or used in 
connection with the operation of the Lewisport Rolling Mill, including, 
but not limited to: Research and development activities; all 
manufacturing equipment, tooling and fixed assets, personal property, 
inventory, office furniture, materials, supplies, and all other 
tangible property and assets; all licenses, permits, and authorizations 
issued by any governmental organization; all contracts, teaming 
arrangements, agreements, leases, commitments, certifications, and 
understandings, including supply agreements; all customer lists, 
contracts, accounts, and credit records; all repair and performance 
records and all other records; and
    3. All intangible assets related to or used in connection with the 
operation of the Lewisport Rolling Mill, including, but not limited to: 
All patents; licenses and sublicenses; intellectual property; 
copyrights; trademarks; trade names; service marks; service names; 
technical information; computer software (including software developed 
by third parties) and related documentation; know-how; trade secrets; 
drawings; blueprints; designs; design protocols; specifications for 
materials; specifications for parts and devices; safety procedures for 
the handling of materials and substances; quality assurance and control 
procedures; design tools and simulation capability; all manuals and 
technical information Aleris provides to its own employees, customers, 
suppliers, agents, or licensees; and all research data concerning 
historic and current research and development efforts, including, but 
not limited to, designs of experiments, and the results of successful 
and unsuccessful designs and experiments.
    F. ``Operational'' means capable of operating at full capacity, and 
in a state of (i) current operation or (ii) readiness to operate.
    G. ``Regulatory Approvals'' means (i) any approvals or clearances 
pursuant to filings with the Committee on Foreign Investment in the 
United States (``CFIUS''), or under antitrust or competition laws 
required for the Transaction to proceed; and (ii) any approvals or 
clearances pursuant to filings with CFIUS, or under antitrust, 
competition, or other U.S. or international laws, or any local 
regulatory approvals by the City of Lewisport, Kentucky or the City of 
Madison Heights, Michigan, required for Acquirer's acquisition of the 
Divestiture Assets to proceed.
    H. ``Relevant Employees'' means all full-time, part-time, or 
contract employees who supported or whose job responsibilities related 
to the Divestiture Assets at any time between July 26, 2018 and the 
date on which the Divestiture Assets are divested to an Acquirer, 
including but not limited to all employees located at the Lewisport 
Rolling Mill, the Innovation Center, and all other personnel involved 
in the design, manufacture, or sale of any products produced at the 
Lewisport Rolling Mill, including engineering and support employees, 
wherever such employees are located.
    I. ``Transaction'' means the proposed acquisition of Aleris by 
Novelis.

III. Applicability

    A. This Final Judgment applies to Novelis and Aleris, as defined 
above, and all other persons, in active concert or participation with 
any Defendant, who receive actual notice of this Final Judgment.
    B. If, prior to complying with Section IV and Section V of this 
Final Judgment, Defendants sell or otherwise dispose of all or 
substantially all of their assets or of lesser business units that 
include the Divestiture Assets, Defendants must require the purchaser 
to be bound by the provisions of this Final Judgment. Defendants need 
not obtain such an agreement from Acquirer.

IV. Divestiture

    A. Defendants are ordered and directed, within the later of ninety 
(90) calendar days after the Court's entry of the Order Stipulating to 
Modification of the Order to Hold Separate Assets in this matter, or 
thirty (30) calendar days after all Regulatory Approvals have been 
received, to divest the Divestiture Assets in a manner consistent with 
this Final Judgment to an Acquirer acceptable to the United States, in 
its sole discretion. The United States, in its sole discretion, may 
agree to one or more extensions of this time period not to exceed one 
hundred eighty (180) calendar days in total, and will notify the Court 
of any extensions. Defendants agree to use their best efforts to divest 
the Divestiture Assets as expeditiously as possible.

[[Page 31218]]

    B. In accomplishing the divestiture ordered by this Final Judgment, 
Defendants promptly must make known, by usual and customary means, the 
availability of the Divestiture Assets. Defendants must inform any 
person making an inquiry regarding a possible purchase of the 
Divestiture Assets that the Divestiture Assets are being divested in 
accordance with this Final Judgment and must provide that person with a 
copy of this Final Judgment. Defendants must offer to furnish to all 
prospective Acquirers, subject to customary confidentiality assurances, 
all information and documents relating to the Divestiture Assets 
customarily provided in a due-diligence process; provided, however, 
that Defendants need not provide information or documents subject to 
the attorney-client privilege or work-product doctrine. Defendants must 
make this information available to the United States at the same time 
that the information is made available to any other person.
    C. Defendants must cooperate with and assist Acquirer in 
identifying and hiring all Relevant Employees, including:
    1. Within ten (10) business days following receipt of a request by 
the Acquirer of the Divestiture Assets or the United States, Defendants 
must identify all Relevant Employees to Acquirer and the United States, 
including by providing organization charts covering all Relevant 
Employees.
    2. Within ten (10) business days following receipt of a request by 
Acquirer or the United States, Defendants must provide to Acquirer and 
the United States the following additional information related to 
Relevant Employees: Name; job title; current salary and benefits 
including most recent bonus paid, aggregate annual compensation, 
current target or guaranteed bonus, if any, and any other payments due 
to or promises made to the employee; descriptions of reporting 
relationships, past experience, responsibilities, and training and 
educational histories; lists of all certifications; and all job 
performance evaluations. If Defendants are barred by any applicable 
laws from providing any of this information, within ten (10) business 
days following receipt of the request, Defendants must provide the 
requested information to the full extent permitted by law and also must 
provide a written explanation of Defendants' inability to provide the 
remaining information.
    3. At the request of Acquirer, Defendants must promptly make 
Relevant Employees available for private interviews with Acquirer 
during normal business hours at a mutually agreeable location.
    4. Defendants must not interfere with any efforts by Acquirer to 
employ any Relevant Employees. Interference includes but is not limited 
to offering to increase the salary or improve the benefits of Relevant 
Employees unless the offer is part of a company-wide increase in salary 
or benefits that was announced prior to July 26, 2018, or has been 
approved by the United States, in its sole discretion. Defendants' 
obligations under this paragraph will expire six (6) months after the 
divestiture of the Divestiture Assets pursuant to this Final Judgment.
    5. For Relevant Employees who elect employment with Acquirer within 
six (6) months of the date on which the Divestiture Assets are divested 
to Acquirer, Defendants must waive all non-compete and non-disclosure 
agreements, vest all unvested pension and other equity rights, and 
provide all benefits that those Relevant Employees otherwise would have 
been provided had the Relevant Employees continued employment with 
Defendants, including but not limited to any retention bonuses or 
payments. Defendants may maintain reasonable restrictions on disclosure 
by Relevant Employees of Defendants' proprietary non-public information 
that is unrelated to the Divestiture Assets and not otherwise required 
to be disclosed by this Final Judgment.
    6. For a period of twelve (12) months from the date on which the 
Divestiture Assets are divested to Acquirer, Defendants may not solicit 
to rehire Relevant Employees who were hired by Acquirer within six (6) 
months of the date on which the Divestiture Assets are divested to 
Acquirer unless (a) an individual is terminated or laid off by Acquirer 
or (b) Acquirer agrees in writing that Defendants may solicit to rehire 
that individual. Nothing in this paragraph prohibits Defendants from 
advertising employment openings using general solicitations or 
advertisements and hiring individuals who respond to such solicitations 
or advertisements.
    D. Defendants must permit prospective Acquirers of the Divestiture 
Assets to have reasonable access to make inspections of the physical 
facilities and access to all environmental, zoning, and other permit 
documents and information, and all financial, operational, or other 
documents and information customarily provided as part of a due 
diligence process.
    E. Defendants must warrant to Acquirer that each asset to be 
divested will be Operational and without material defect on the date of 
sale.
    F. Defendants must not take any action that will impede in any way 
the permitting, operation, or divestiture of the Divestiture Assets.
    G. Defendants must make best efforts to assign, subcontract, or 
otherwise transfer all contracts related to the Divestiture Assets, 
including all supply and sales contracts, to Acquirer. Defendants must 
not interfere with any negotiations between Acquirer and a contracting 
party.
    H. At the option of Acquirer, and subject to approval by the United 
States in its sole discretion, on or before the date on which the 
Divestiture Assets are divested to Acquirer, Defendants must enter into 
a contract to provide transition services for back office, human 
resource, and information technology services and support for the 
Divestiture Assets for a period of up to twelve (12) months on terms 
and conditions reasonably related to market conditions for the 
provision of the transition services. The United States, in its sole 
discretion, may approve one or more extensions of this contract for 
transition services, for a total of up to an additional six (6) months. 
If Acquirer seeks an extension of the term of this contract for 
transition services, Defendants must notify the United States in 
writing at least three (3) months prior to the date the contract 
expires. Acquirer may terminate a contract for transition services 
without cost or penalty at any time upon commercially reasonable 
notice. The employee(s) of Defendants tasked with providing these 
transition services must not share any competitively sensitive 
information of Acquirer with any other employee of Defendants.
    I. Defendants must warrant to Acquirer that there are no material 
defects in the environmental, zoning, or other permits pertaining to 
the operation of the Divestiture Assets. Following the sale of the 
Divestiture Assets, Defendants must not undertake, directly or 
indirectly, any challenges to the environmental, zoning, or other 
permits relating to the operation of the Divestiture Assets.
    J. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section IV or by a Divestiture Trustee 
appointed pursuant to Section V of this Final Judgment must include the 
entire Divestiture Assets, and must be accomplished in such a way as to 
satisfy the United States, in its sole discretion, that the Divestiture 
Assets can and will be used by Acquirer as part of a viable, ongoing 
business of the development, manufacture, and sale of Aluminum ABS, and 
will remedy the competitive harm alleged in the

[[Page 31219]]

Complaint. The divestiture, whether pursuant to Section IV or Section V 
of this Final Judgment,
    (1) must be made to an Acquirer that, in the United States' sole 
judgment, has the intent and capability (including the necessary 
managerial, operational, technical, and financial capability) of 
competing effectively in the business of the design, manufacture, and 
sale of Aluminum ABS; and
    (2) must be accomplished so as to satisfy the United States, in its 
sole discretion, that none of the terms of any agreement between an 
Acquirer and Defendants give Defendants the ability unreasonably to 
raise Acquirer's costs, to lower Acquirer's efficiency, or otherwise to 
interfere in the ability of Acquirer to compete effectively.
    K. If any term of an agreement between Defendants and Acquirer to 
effectuate the divestiture required by this Final Judgment varies from 
a term of this Final Judgment then, to the extent that Defendants 
cannot fully comply with both, this Final Judgment determines 
Defendants' obligations.

V. Appointment of Divestiture Trustee

    A. If Defendants have not divested the Divestiture Assets within 
the period specified in Paragraph IV(A), Defendants must immediately 
notify the United States of that fact in writing. Upon application of 
the United States, the Court will appoint a Divestiture Trustee 
selected by the United States and approved by the Court to effect the 
divestiture of the Divestiture Assets.
    B. After the appointment of a Divestiture Trustee by the Court, 
only the Divestiture Trustee will have the right to sell the 
Divestiture Assets. The Divestiture Trustee will have the power and 
authority to accomplish the divestiture to an Acquirer acceptable to 
the United States, in its sole discretion, at a price and on terms as 
are then obtainable upon reasonable effort by the Divestiture Trustee, 
subject to the provisions of Sections IV, V, and VI of this Final 
Judgment, and will have other powers as the Court deems appropriate. 
Subject to Paragraph V(D) of this Final Judgment, the Divestiture 
Trustee may hire at the cost and expense of Defendants any agents or 
consultants, including, but not limited to, investment bankers, 
attorneys, and accountants, who will be solely accountable to the 
Divestiture Trustee, reasonably necessary in the Divestiture Trustee's 
judgment to assist in the divestiture. Any such agents or consultants 
will serve on such terms and conditions as the United States approves, 
including confidentiality requirements and conflict of interest 
certifications.
    C. Defendants may not object to a sale by the Divestiture Trustee 
on any ground other than malfeasance by the Divestiture Trustee. 
Objections by Defendants must be conveyed in writing to the United 
States and the Divestiture Trustee within ten (10) calendar days after 
the Divestiture Trustee has provided the notice required under Section 
VI.
    D. The Divestiture Trustee will serve at the cost and expense of 
Defendants pursuant to a written agreement, on such terms and 
conditions as the United States approves, including confidentiality 
requirements and conflict of interest certifications. The Divestiture 
Trustee will account for all monies derived from the sale of the assets 
sold by the Divestiture Trustee and all costs and expenses so incurred. 
After approval by the Court of the Divestiture Trustee's accounting, 
including fees for any of its services yet unpaid and those of any 
agents and consultants retained by the Divestiture Trustee, all 
remaining money will be paid to Defendants and the trust will then be 
terminated. The compensation of the Divestiture Trustee and any agents 
or consultants retained by the Divestiture Trustee must be reasonable 
in light of the value of the Divestiture Assets and based on a fee 
arrangement that provides the Divestiture Trustee with incentives based 
on the price and terms of the divestiture and the speed with which it 
is accomplished, but the timeliness of the divestiture is paramount. If 
the Divestiture Trustee and Defendants are unable to reach agreement on 
the Divestiture Trustee's or any agents' or consultants' compensation 
or other terms and conditions of engagement within fourteen (14) 
calendar days of the appointment of the Divestiture Trustee, the United 
States may, in its sole discretion, take appropriate action, including 
making a recommendation to the Court. Within three (3) business days of 
hiring any agent or consultant, the Divestiture Trustee must provide 
written notice of the hiring and rate of compensation to Defendants and 
the United States.
    E. Defendants must use their best efforts to assist the Divestiture 
Trustee in accomplishing the required divestiture. The Divestiture 
Trustee and any agents or consultants retained by the Divestiture 
Trustee must have full and complete access to the personnel, books, 
records, and facilities of the business to be divested, and Defendants 
must provide or develop financial and other information relevant to 
such business as the Divestiture Trustee may reasonably request, 
subject to reasonable protection for trade secrets; other confidential 
research, development, or commercial information; or any applicable 
privileges. Defendants may not take any action to interfere with or 
impede the Divestiture Trustee's accomplishment of the divestiture.
    F. After appointment, the Divestiture Trustee will file monthly 
reports with the United States setting forth the Divestiture Trustee's 
efforts to accomplish the divestiture ordered by this Final Judgment. 
Reports must include the name, address, and telephone number of each 
person who, during the preceding month, made an offer to acquire, 
expressed an interest in acquiring, entered into negotiations to 
acquire, or was contacted or made an inquiry about acquiring, any 
interest in the Divestiture Assets and will describe in detail each 
contact with any such person. The Divestiture Trustee will maintain 
full records of all efforts made to divest the Divestiture Assets.
    G. If the Divestiture Trustee has not accomplished the divestiture 
ordered by this Final Judgment within six (6) months of appointment, 
the Divestiture Trustee must promptly file with the Court a report 
setting forth: (1) The Divestiture Trustee's efforts to accomplish the 
required divestiture; (2) the reasons, in the Divestiture Trustee's 
judgment, why the required divestiture has not been accomplished; and 
(3) the Divestiture Trustee's recommendations. To the extent such 
report contains information that the Divestiture Trustee deems 
confidential, such report will not be filed in the public docket of the 
Court. The Divestiture Trustee will at the same time furnish such 
report to the United States, which will have the right to make 
additional recommendations to the Court consistent with the purpose of 
the trust. The Court thereafter may enter such orders as it deems 
appropriate to carry out the purpose of this Final Judgment, which, if 
necessary, may include extending the trust and the term of the 
Divestiture Trustee's appointment by a period requested by the United 
States.
    H. If the United States determines that the Divestiture Trustee is 
not acting diligently or in a reasonably cost-effective manner, the 
United States may recommend that the Court appoint a substitute 
Divestiture Trustee.

VI. Notice of Proposed Divestiture

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, Defendants or the Divestiture Trustee, whichever 
is then responsible for effecting the divestiture

[[Page 31220]]

required herein, must notify the United States of a proposed 
divestiture required by this Final Judgment. If the Divestiture Trustee 
is responsible for effecting the divestiture, the Divestiture Trustee 
also must notify Defendants. The notice must set forth the details of 
the proposed divestiture and list the name, address, and telephone 
number of each person not previously identified who offered or 
expressed an interest in or desire to acquire any ownership interest in 
the Divestiture Assets, together with full details of the same.
    B. Within fifteen (15) calendar days of receipt by the United 
States of this notice, the United States may request from Defendants, 
the proposed Acquirer, other third parties, or the Divestiture Trustee, 
if applicable, additional information concerning the proposed 
divestiture, the proposed Acquirer and other prospective Acquirer. 
Defendants and the Divestiture Trustee must furnish the additional 
information requested within fifteen (15) calendar days of the receipt 
of the request, unless the United States provides written agreement to 
a different period.
    C. Within forty-five (45) calendar days after receipt of the notice 
or within twenty (20) calendar days after the United States has been 
provided the additional information requested from Defendants, the 
proposed Acquirer, other third parties, and the Divestiture Trustee, 
whichever is later, the United States must provide written notice to 
Defendants and the Divestiture Trustee, if there is one, stating 
whether or not the United States, in its sole discretion, objects to 
the proposed Acquirer or any other aspect of the proposed divestiture. 
If the United States provides written notice that it does not object, 
the divestiture may be consummated, subject only to Defendants' limited 
right to object to the sale under Paragraph V(C) of this Final 
Judgment. Absent written notice that the United States does not object 
or upon objection by the United States, a divestiture may not be 
consummated. Upon objection by Defendants pursuant to Paragraph V(C), a 
divestiture by the Divestiture Trustee may not be consummated unless 
approved by the Court.
    D. No information or documents obtained pursuant to Section VI may 
be divulged by the United States to any person other than an authorized 
representative of the executive branch of the United States, except in 
the course of legal proceedings to which the United States is a party 
(including grand-jury proceedings), for the purpose of evaluating a 
proposed Acquirer or securing compliance with this Final Judgment, or 
as otherwise required by law.
    E. In the event of a request by a third party for disclosure of 
information under the Freedom of Information Act, 5 U.S.C. 552, the 
Antitrust Division will act in accordance with that statute, and the 
Department of Justice regulations at 28 CFR part 16, including the 
provision on confidential commercial information, at 28 CFR 16.7. 
Persons submitting information to the Antitrust Division should 
designate the confidential commercial information portions of all 
applicable documents and information under 28 CFR 16.7. Designations of 
confidentiality expire ten years after submission, ``unless the 
submitter requests and provides justification for a longer designation 
period.'' See 28 CFR 16.7(b).
    F. If at the time a person furnishes information or documents to 
the United States pursuant to Section VI, that person represents and 
identifies in writing information or documents for which a claim of 
protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules 
of Civil Procedure, and marks each pertinent page of such material, 
``Subject to claim of protection under Rule 26(c)(1)(G) of the Federal 
Rules of Civil Procedure,'' the United States must give that person ten 
calendar days' notice before divulging the material in any legal 
proceeding (other than a grand-jury proceeding).

VII. Financing

    Defendants may not finance all or any part of Acquirer's purchase 
of all or part of the Divestiture Assets made pursuant to this Final 
Judgment.

VIII. Hold Separate

    Until the divestiture required by this Final Judgment has been 
accomplished, Defendants must take all steps necessary to comply with 
the Hold Separate Stipulation and Order entered by the Court on January 
9, 2020, or any superseding Order. Defendants will take no action that 
would jeopardize the divestiture ordered by the Court.

IX. Affidavits

    A. Within twenty (20) calendar days of the filing of the Order 
Stipulating to Modification of the Order to Hold Separate Assets and 
proposed Final Judgment in this matter, and every thirty (30) calendar 
days thereafter until the divestiture required by this Final Judgment 
has been completed, Defendants must deliver to the United States an 
affidavit, signed by Defendants' Vice President, Strategy and 
Sustainability and General Counsel, describing the fact and manner of 
Defendants' compliance with this Final Judgment. Each affidavit must 
include the name, address, and telephone number of each person who, 
during the preceding thirty (30) calendar days, made an offer to 
acquire, expressed an interest in acquiring, entered into negotiations 
to acquire, or was contacted or made an inquiry about acquiring, an 
interest in the Divestiture Assets, and must describe in detail each 
contact with such persons during that period. Each affidavit also must 
include a description of the efforts Defendants have taken to solicit 
buyers for and complete the sale of the Divestiture Assets, and to 
provide required information to prospective Acquirers. Each affidavit 
also must include a description of any limitations placed by Defendants 
on information provided to prospective Acquirers. If the information 
set forth in the affidavit is true and complete, objection by the 
United States to information provided by Defendants to prospective 
Acquirers must be made within fourteen (14) calendar days of receipt of 
the affidavit.
    B. Within twenty (20) calendar days of the filing of the Order 
Stipulating to Modification of the Order to Hold Separate Assets and 
proposed Final Judgment in this matter, Defendants must deliver to the 
United States an affidavit that describes in reasonable detail all 
actions Defendants have taken and all steps Defendants have implemented 
on an ongoing basis to comply with Section VIII of this Final Judgment. 
Defendants must deliver to the United States an affidavit describing 
any changes to the efforts and actions outlined in Defendants' earlier 
affidavits filed pursuant to Section IX within fifteen (15) calendar 
days after the change is implemented.
    C. Defendants must keep all records of all efforts made to preserve 
and divest the Divestiture Assets until one year after the divestiture 
has been completed.

X. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of related orders such as a Hold Separate 
Stipulation and Order, or of determining whether this Final Judgment 
should be modified or vacated, and subject to any legally-recognized 
privilege, from time to time authorized representatives of the United 
States, including agents retained by the United States, must, upon 
written request of an authorized representative of the Assistant 
Attorney General in charge of the Antitrust Division, and reasonable 
notice to Defendants, be permitted:

[[Page 31221]]

    (1) Access during Defendants' office hours to inspect and copy, or 
at the option of the United States, to require Defendants to provide 
electronic copies of all books, ledgers, accounts, records, data, and 
documents in the possession, custody, or control of Defendants, 
relating to any matters contained in this Final Judgment; and
    (2) to interview, either informally or on the record, Defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews must be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by Defendants.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
Defendants must submit written reports or respond to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment.
    C. No information or documents obtained pursuant to Section X may 
be divulged by the United States to any person other than an authorized 
representative of the executive branch of the United States, except in 
the course of legal proceedings to which the United States is a party 
(including grand jury proceedings), for the purpose of securing 
compliance with this Final Judgment, or as otherwise required by law.
    D. In the event of a request by a third party for disclosure of 
information under the Freedom of Information Act, 5 U.S.C. 552, the 
Antitrust Division will act in accordance with that statute, and the 
Department of Justice regulations at 28 CFR part 16, including the 
provision on confidential commercial information, at 28 CFR 16.7. 
Defendants submitting information to the Antitrust Division should 
designate the confidential commercial information portions of all 
applicable documents and information under 28 CFR 16.7. Designations of 
confidentiality expire ten years after submission, ``unless the 
submitter requests and provides justification for a longer designation 
period.'' See 28 CFR 16.7(b).
    E. If at the time that Defendants furnish information or documents 
to the United States pursuant to Section X, Defendants represent and 
identify in writing information or documents for which a claim of 
protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules 
of Civil Procedure, and Defendants mark each pertinent page of such 
material, ``Subject to claim of protection under Rule 26(c)(1)(G) of 
the Federal Rules of Civil Procedure,'' the United States must give 
Defendants ten (10) calendar days' notice before divulging the material 
in any legal proceeding (other than a grand jury proceeding).

XI. Limitations on Reacquisition

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

XII. Retention of Jurisdiction

    The Court retains jurisdiction to enable any party to this Final 
Judgment to apply to the Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XIII. Enforcement of Final Judgment

    A. The United States retains and reserves all rights to enforce the 
provisions of this Final Judgment, including the right to seek an order 
of contempt from the Court. Defendants agree that in a civil contempt 
action, a motion to show cause, or a similar action brought by the 
United States regarding an alleged violation of this Final Judgment, 
the United States may establish a violation of this Final Judgment and 
the appropriateness of a remedy therefor by a preponderance of the 
evidence, and Defendants waive any argument that a different standard 
of proof should apply.
    B. This Final Judgment should be interpreted to give full effect to 
the procompetitive purposes of the antitrust laws and to restore the 
competition the United States alleged was harmed by the challenged 
conduct. Defendants agree that they may be held in contempt of, and 
that the Court may enforce, any provision of this Final Judgment that, 
as interpreted by the Court in light of these procompetitive principles 
and applying ordinary tools of interpretation, is stated specifically 
and in reasonable detail, whether or not it is clear and unambiguous on 
its face. In any such interpretation, the terms of this Final Judgment 
should not be construed against either party as the drafter.
    C. In an enforcement proceeding in which the Court finds that 
Defendants have violated this Final Judgment, the United States may 
apply to the Court for a one-time extension of this Final Judgment, 
together with other relief that may be appropriate. In connection with 
a successful effort by the United States to enforce this Final Judgment 
against a Defendant, whether litigated or resolved before litigation, 
that Defendant agrees to reimburse the United States for the fees and 
expenses of its attorneys, as well as all other costs, including 
experts' fees, incurred in connection with that enforcement effort, 
including in the investigation of the potential violation.
    D. For a period of four (4) years following the expiration of this 
Final Judgment, if the United States has evidence that a Defendant 
violated this Final Judgment before it expired, the United States may 
file an action against that Defendant in this Court requesting that the 
Court order: (1) Defendant to comply with the terms of this Final 
Judgment for an additional term of at least four years following the 
filing of the enforcement action; (2) all appropriate contempt 
remedies; (3) additional relief needed to ensure the Defendant complies 
with the terms of this Final Judgment; and (4) fees or expenses as 
called for by Section X.

XIV. Expiration of Final Judgment

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

XV. Public Interest Determination

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16, including by making available to the 
public copies of this Final Judgment, the Competitive Impact Statement, 
comments thereon, and the United States' responses to comments. Based 
upon the record before the Court, which includes the Competitive Impact 
Statement and any comments and responses to comments filed with the 
Court, entry of this Final Judgment is in the public interest.

Date:------------------------------------------------------------------

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

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

United States District Court for the Northern District of Ohio

    United States of America, Plaintiff, v. Novelis Inc. and Aleris 
Corporation, Defendants.

Case No.: 1:19-cv-02033-CAB

[[Page 31222]]

Competitive Impact Statement

    The United States of America, under Section 2(b) of the Antitrust 
Procedures and Penalties Act, 15 U.S.C. 16(b)-(h) (the ``APPA'' or 
``Tunney Act''), 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 July 26, 2018, Defendant Novelis Inc. (``Novelis'') agreed to 
acquire Defendant Aleris Corporation (``Aleris'') for approximately 
$2.6 billion, which would have made the combined company the largest 
supplier of aluminum automotive body sheet (``ABS'') in the United 
States. The United States filed a civil antitrust Complaint on 
September 4, 2019, seeking to enjoin the proposed acquisition. The 
Complaint alleges that the likely effect of this acquisition would be 
to substantially lessen competition for the development, manufacture, 
and sale of aluminum ABS in North America, in violation of Section 7 of 
the Clayton Act, 15 U.S.C. 18.
    Before the United States initiated this lawsuit, the United States 
and Defendants agreed that the lawfulness of the transaction under 
Section 7 of the Clayton Act (15 U.S.C. 18) hinged on whether aluminum 
ABS constitutes a relevant product market under the antitrust laws. As 
set forth in more detail in Plaintiff United States' Explanation of 
Plan to Refer this Matter to Arbitration (Dkt. 11), the United States, 
using its authority under the Administrative Dispute Resolution Act of 
1996 (``ADRA''), 5 U.S.C. 571 et seq., reached an agreement with 
Defendants to refer this matter to binding arbitration following fact 
discovery should the parties be unable to reach a resolution that 
resolved the United States' competitive concerns with the Defendants' 
transaction within a certain period of time. Per the arbitration 
agreement, binding arbitration would resolve a single dispositive 
issue: whether aluminum ABS constitutes a relevant product market under 
the antitrust laws. Further, the United States and Defendants agreed 
that if the United States prevailed in arbitration, the United States 
would then file a proposed Final Judgment requiring Defendants to 
divest Aleris's Lewisport Rolling Mill in Lewisport, Kentucky and 
related assets, which constitute Aleris's entire aluminum ABS 
operations in North America. The arbitration agreement recognized that 
the Court would retain jurisdiction to determine whether entry of the 
proposed Final Judgment is in the public interest. See 15 U.S.C. 16(b)-
(h). Had Defendants prevailed in arbitration, the arbitration agreement 
would have required the United States to seek to voluntarily dismiss 
the Complaint.
    To preserve the Divestiture Assets pending the outcome of the 
arbitration, the Court entered a Hold Separate Stipulation and Order on 
January 9, 2020, requiring Novelis to hold separate, preserve, and 
maintain the Divestiture Assets as set forth in the proposed Final 
Judgment. (Dkt. 41). Under the terms of that Order, Novelis took 
certain steps to ensure that the Divestiture Assets were preserved and 
operated in such a way as to ensure that the Divestiture Assets 
continue to be ongoing, economically viable business units.
    On January 21, 2020, following the completion of fact discovery, 
the Court entered an Order staying proceedings and referring the matter 
to binding arbitration pursuant to the ADRA, 5 U.S.C. 571, et seq. 
(Dkt. 44). On March 9, 2020, the United States prevailed in arbitration 
with the arbitrator determining that aluminum ABS is a relevant product 
market under the antitrust laws. See Arbitration Decision, March 9, 
2020 (public version) (available at https://www.justice.gov/atr/case-document/file/1257031/download).
    The United States has therefore filed a proposed Modified Hold 
Separate Stipulation and Order (``Modified Stipulation and Order'') and 
a proposed Final Judgment, which are designed to address the 
anticompetitive effects of the acquisition. Under the proposed Final 
Judgment, which is explained more fully below, Defendants are required 
to divest the Divestiture Assets, which include the Lewisport Rolling 
Mill in Lewisport, Kentucky and Aleris's Innovation Center in Madison 
Heights, Michigan.
    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment will terminate this action, except that the 
Court will retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. Description of Events Giving Rise to the Alleged Violation

A. The Defendants and the Proposed Transaction

    Novelis is a global manufacturer of semi-finished aluminum products 
with global revenues of approximately $12.3 billion for the fiscal year 
ending March 31, 2019. The company is incorporated in Canada and 
headquartered in Atlanta, Georgia. It operates 23 production facilities 
in North America, South America, Europe, and Asia. Eight facilities are 
located in North America, including two (Oswego, New York, and 
Kingston, Ontario) that currently produce aluminum ABS. Another 
aluminum ABS finishing line is being commissioned in Guthrie, Kentucky. 
Novelis supplies flat-rolled aluminum products in three segments: 
beverage can, specialty, and automotive. Novelis is a wholly-owned 
subsidiary of Hindalco Industries, Ltd., an Indian company 
headquartered in Mumbai, India.
    Aleris also is a global manufacturer of semi-finished aluminum 
products. It generated global revenues of approximately $3.4 billion in 
2018. Aleris is a Delaware corporation, headquartered in Cleveland, 
Ohio, and operates 13 production facilities in North America, South 
America, Europe, and Asia. Aleris supplies flat-rolled aluminum 
products to the automotive, aerospace, and building and construction 
industries, among others. Aleris has been a producer of aluminum ABS in 
Europe since 2002 and exported small volumes of aluminum ABS to North 
America from its European facility. In 2017, following significant 
financial and capital investments in its Lewisport, Kentucky facility, 
Aleris began developing, manufacturing, and selling aluminum ABS from 
its Lewisport facility to meet growing North American customer demand. 
Lewisport is a fully integrated manufacturing facility that includes a 
cast house, as well as cold and hot mill operations. In addition to its 
hot mill used to manufacture heat-treated aluminum ABS, the Lewisport 
facility's cold mill continues to produce non-heat-treated aluminum 
alloys for ``specialty'' products used in the construction industry. 
The entire Lewisport facility will be divested.
    Novelis and Aleris entered into a definitive Agreement and Plan of 
Merger, dated July 26, 2018, for Novelis to acquire 100 percent of the 
voting securities of Aleris for an estimated enterprise value of $2.6 
billion. As permitted under the terms of the Arbitration Agreement 
(Dkt. 11-1 at ] 5) and the Hold Separate Stipulation and Order entered 
by the Court on January 9, 2020 (Dkt. 41), Defendants consummated their 
transaction on April 14, 2020.

B. Industry Background

    The North American automotive industry is a vital sector of the

[[Page 31223]]

American economy. The industry represents the single largest 
manufacturing sector in the United States, accounting for about three 
percent of gross domestic product. For decades, automakers used flat-
rolled steel almost exclusively in the construction of automotive 
bodies. Growing consumer demand for larger vehicles loaded with safety 
and performance features and increasing fuel economy regulations have 
led automakers to pursue light-weight designs.
    Automakers have turned to aluminum ABS, which is 30 to 40 percent 
lighter than traditional steel, as the material of choice for light-
weighting the next generation of vehicles. Aluminum is more expensive 
than steel, but has distinct and superior physical properties for 
automotive use. Vehicles made with aluminum are lighter and more fuel-
efficient. Light-weight vehicles also have significant performance 
advantages including faster acceleration, better handling, shorter 
braking distance, and increased payload and towing capabilities. Light-
weighting designs are also critical for the next generation of electric 
vehicles. Aluminum ABS can reduce electric vehicle weight 
substantially, allowing an electric vehicle to run farther on a single 
charge.

C. Relevant Product Market

    As alleged in the Complaint, aluminum ABS is different from other 
materials used in automotive body sheet applications. Steel and other 
materials are not practical substitutes for aluminum ABS in many 
applications. The Complaint alleges that in the event of a small but 
significant non-transitory price increase, automakers would not 
substitute away from aluminum ABS in a sufficient volume to make the 
price increase unprofitable. Therefore, the Complaint alleges that the 
development, manufacture, and sale of aluminum ABS is a relevant 
product market and line of commerce within the meaning of Section 7 of 
the Clayton Act, 15 U.S.C. 18.
    Following the completion of fact discovery, the Court referred the 
matter to arbitration to adjudicate the issue of relevant product 
market. On March 9, 2020, the arbitrator issued a decision in which he 
determined that aluminum ABS is a relevant product market under the 
antitrust laws. See Arbitration Decision, March 9, 2020 (public 
version) (available at https://www.justice.gov/atr/case-document/file/1257031/download). As the arbitrator explained, an automaker can make a 
car part out of aluminum, steel, or other material, but there are 
substantial differences in the physical properties of aluminum (as 
compared to steel), such that an automotive engineer designing a car 
with particular weight, performance, safety specifications, and target 
retail price is unlikely to view steel and other materials as full 
functional substitutes for aluminum for the various car parts being 
designed. Nor is any other material likely to significantly impact the 
pricing of aluminum ABS for most car parts, or vice-versa. The 
development, manufacture, and sale of aluminum ABS is a distinct line 
of commerce and constitutes a relevant product market.

D. Geographic Market

    The Complaint alleges that the relevant geographic market in which 
to assess the competitive harm from the proposed transaction is North 
America. When a supplier can price differently based on customer 
location, the Horizontal Merger Guidelines provide that the relevant 
geographic market may be defined based on the locations of targeted 
customers. Such pricing is possible in aluminum ABS as evidenced by the 
different prices charged by suppliers across geographic regions. 
Because of transportation costs, import tariffs and duties, the limited 
shelf life of most types of aluminum ABS, and supply chain risks, 
customers of aluminum ABS in North America are unlikely to be able to 
defeat a price increase through arbitrage from outside North America. 
Pricing differences among suppliers in the various geographic regions 
in which aluminum ABS is sold has persisted over many years, supporting 
the conclusion that North America is a relevant geographic market.
    The Complaint alleges that, in the event of a small but significant 
non-transitory increase in the price of the aluminum ABS, customers in 
North America would not procure these products from suppliers located 
outside North America in a sufficient volume to make such a price 
increase unprofitable. Accordingly, the Complaint alleges that North 
America is a relevant geographic market within the meaning of Section 7 
of the Clayton Act.

E. Anticompetitive Effects

    The Complaint alleges that Novelis, Aleris, and two other firms are 
the only producers of aluminum ABS located in North America. Through 
this acquisition, however, Novelis would gain control of Aleris's 
uncommitted capacity, eliminating a rival Novelis described as ``poised 
for transformational growth.'' Aleris and Novelis are the only two 
firms expected to have sizable uncommitted North American capacity to 
produce aluminum ABS over the next few years. This consolidation would 
concentrate more than half of the domestic aluminum ABS production and 
sales, 60 percent of projected total domestic capacity, and the 
majority of uncommitted domestic capacity under the control of one 
firm.
    The Complaint alleges that, post-transaction, no other firms would 
have the incentive and ability to constrain Novelis. The transaction 
would result in higher prices, as well as reduced innovation and 
technical support for automakers that rely on this critical input. 
According to the Complaint, the proposed acquisition, therefore, would 
likely substantially lessen competition in the development, 
manufacture, and sale of aluminum ABS in North America in violation of 
Section 7 of the Clayton Act.

F. Absence of Countervailing Factors: Entry

    The Complaint alleges that entry or expansion by existing 
competitors is unlikely to prevent or remedy the transaction's likely 
anticompetitive effects in the market for the development, manufacture, 
and sale of aluminum ABS in North America. The North American aluminum 
ABS market has significant barriers to entry. Barriers include the high 
cost and long time-frame needed to build production facilities. For 
example, to compete in the automotive market, aluminum companies 
generally must build a specialized ``heat-treat'' finishing line to 
make aluminum sheet for automotive applications. These heat-treat 
finishing lines take years to build and cost hundreds of millions of 
dollars to construct, and require sophisticated technological know-how 
to operate. In addition to heat-treat finishing lines, aluminum ABS 
suppliers need aluminum coils that are wide enough for automotive 
applications. These aluminum coils are produced at hot mills, and there 
are only a few hot mills in North America. Building a new hot mill 
takes several years and requires a significant capital investment of 
well over a billion dollars. Meanwhile, expanding or re-outfitting an 
existing facility to have auto-capable hot mill capacity could also 
require several hundred million dollars. Moreover, because of supply 
chain risks and other factors, the Complaint alleges that customers of 
the merged firm (i.e., North American automakers) are unlikely to turn 
to foreign suppliers of aluminum

[[Page 31224]]

ABS in sufficient volume to mitigate the anticompetitive effects of the 
merger.

III. Explanation of the Proposed Final Judgment

    The divestiture required by the proposed Final Judgment addresses 
the United States' concerns with the merger and will fully remedy the 
loss of competition threatened by this merger by requiring the merged 
firm to divest Aleris's North American aluminum ABS operations in their 
entirety. In doing so, the divestiture will establish an independent 
and economically viable competitor with the scale and scope to compete 
effectively and preserve competition in the market for the development, 
manufacture, and sale of aluminum ABS in North America.
    Paragraph IV(A) of the proposed Final Judgment requires Defendants 
to divest the Divestiture Assets within the later of ninety (90) 
calendar days of the filing of the Modified Stipulation and Order, or 
thirty (30) days after the Regulatory Approvals have been received, to 
an acquirer acceptable to the United States, in its sole discretion. 
Paragraph IV(A) provides that the United States, in its sole 
discretion, may grant one or more extensions of the divestiture period, 
up to a total of 180 days. The proposed Final Judgment includes the 
possibility of an additional 180 days to accomplish the divestiture due 
to the current business climate and the potential impact of the COVID-
19 pandemic on Defendants' ability to accomplish the divestiture within 
the specified period.
    The divestiture includes two facilities (one production facility in 
Lewisport, Kentucky (``the Lewisport Rolling Mill'') and one technical 
service center located in Madison Heights, Michigan (``the Innovation 
Center'')); and all other tangible and intangible assets related to or 
used in connection with the Lewisport Rolling Mill. Paragraph IV(J) of 
the proposed Final Judgment requires that the Divestiture Assets must 
be divested in such a way as to satisfy the United States, in its sole 
discretion, that the Divestiture Assets can and will be operated by the 
purchaser as part of a viable, ongoing business that can compete 
effectively in the development, manufacture, and sale of aluminum ABS.
    The proposed Final Judgment contains provisions to facilitate the 
immediate use of the Divestiture Assets by the acquirer. Paragraph 
IV(H) of the proposed Final Judgment requires Defendants, at the 
acquirer's option, to enter into a transition services agreement on or 
before the date on which the Divestiture Assets are divested to the 
acquirer for service and support relating to the Divestiture Assets for 
a period of up to twelve (12) months. That paragraph further provides 
that the United States, in its sole discretion, may approve one or more 
extensions of this transition services agreement for up to a total of 
an additional six (6) months. Paragraph IV(H) also provides that 
employees of Defendants tasked with providing any transition services 
must not share any competitively sensitive information of the acquirer 
with any other employee of Defendants.
    The proposed Final Judgment also contains provisions intended to 
facilitate the acquirer's efforts to hire employees engaged in the 
Divestiture Assets. Paragraph IV(C) of the proposed Final Judgment 
requires Defendants to provide the acquirer with organization charts 
and information relating to these employees and to make them available 
for interviews, and it provides that Defendants must not interfere with 
any negotiations by the acquirer to hire them. In addition, Paragraph 
IV(C)(5) provides that, for employees who elect employment with the 
acquirer, Defendants must waive all non-compete and non-disclosure 
agreements, vest all unvested pension and other equity rights, and 
provide all benefits that the employees would generally be provided if 
transferred to a buyer of an ongoing business. This paragraph further 
provides that, for a period of twelve (12) months from the filing of 
the Complaint, Defendants may not solicit to hire or hire any employee 
engaged in the Divestiture Assets who was hired by the acquirer, unless 
that individual is terminated or laid off by the acquirer or the 
acquirer agrees in writing that Defendants may solicit or hire that 
individual.
    If Defendants do not accomplish the divestiture within the period 
prescribed in the proposed Final Judgment, Section V of the proposed 
Final Judgment provides that the Court will appoint a divestiture 
trustee selected by the United States to effect the divestiture. If a 
divestiture trustee is appointed, the proposed Final Judgment provides 
that Defendants will pay all costs and expenses of the trustee. The 
divestiture trustee's commission will be structured so as to provide an 
incentive for the trustee based on the price obtained and the speed 
with which the divestiture is accomplished. After the divestiture 
trustee's appointment becomes effective, the trustee will provide 
periodic reports to the United States setting forth his or her efforts 
to accomplish the divestiture. At the end of six (6) months, if the 
divestiture has not been accomplished, the divestiture trustee and the 
United States will make recommendations to the Court, which will enter 
such orders as appropriate, in order to carry out the purpose of the 
trust, including by extending the trust or the term of the divestiture 
trustee's appointment.
    The proposed Final Judgment also contains provisions designed to 
promote compliance and make the enforcement of the Final Judgment as 
effective as possible. Paragraph XIV(A) provides that the United States 
retains and reserves all rights to enforce the provisions of the Final 
Judgment, including its rights to seek an order of contempt from the 
Court. Under the terms of this paragraph, Defendants have agreed that 
in any civil contempt action, any motion to show cause, or any similar 
action brought by the United States regarding an alleged violation of 
the Final Judgment, the United States may establish the violation and 
the appropriateness of any remedy by a preponderance of the evidence 
and that Defendants have waived any argument that a different standard 
of proof should apply. This provision aligns the standard for 
compliance obligations with the standard of proof that applies to the 
underlying offense that the compliance commitments address.
    Paragraph XIV(B) provides additional clarification regarding the 
interpretation of the provisions of the proposed Final Judgment. The 
proposed Final Judgment is intended to restore competition the United 
States alleged would otherwise be harmed by the transaction. 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, as interpreted in light of this 
procompetitive purpose.
    Paragraph XIV(C) of the proposed Final Judgment provides that if 
the Court finds in an enforcement proceeding that Defendants have 
violated the Final Judgment, the United States may apply to the Court 
for a one-time extension of the Final Judgment, together with such 
other relief as may be appropriate. In addition, to compensate American 
taxpayers for any costs associated with investigating and enforcing 
violations of the Final Judgment, Paragraph XIV(C) provides that in any 
successful effort by the United States to enforce the Final Judgment 
against a Defendant, whether litigated or resolved before litigation, 
that Defendant will reimburse the United States for attorneys' fees, 
experts' fees, and other costs incurred in connection with any 
enforcement effort,

[[Page 31225]]

including the investigation of the potential violation.
    Paragraph XIV(D) states that the United States may file an action 
against a Defendant for violating the Final Judgment for up to four (4) 
years after the Final Judgment has expired or been terminated. This 
provision is meant to address circumstances such as when evidence that 
a violation of the Final Judgment occurred during the term of the Final 
Judgment is not discovered until after the Final Judgment has expired 
or been terminated or when there is not sufficient time for the United 
States to complete an investigation of an alleged violation until after 
the Final Judgment has expired or been terminated. This provision, 
therefore, makes clear that, for four (4) years after the Final 
Judgment has expired or been terminated, the United States may still 
challenge a violation that occurred during the term of the Final 
Judgment.
    Finally, Section XV of the proposed Final Judgment provides that 
the Final Judgment will expire ten (10) years from the date of its 
entry, except that after five (5) years from the date of its entry, the 
Final Judgment may be terminated upon notice by the United States to 
the Court and Defendants that the divestiture has been completed and 
that the continuation of the Final Judgment is no longer necessary or 
in the public interest.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment neither impairs 
nor assists the bringing of any private antitrust damage action. Under 
the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the 
proposed Final Judgment has no prima facie effect in any subsequent 
private lawsuit that may be brought against Defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least 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 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 U.S. 
Department of Justice, which remains free to withdraw its consent to 
the proposed Final Judgment at any time before the Court's entry of the 
Final 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:
    Katrina Rouse, Chief, Defense, Industrials, and Aerospace Section, 
Antitrust Division, U.S. Department of Justice, 450 Fifth Street NW, 
Suite 8700, Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    As an alternative to the binding arbitration on the issue of 
relevant product market definition and the proposed Final Judgment, the 
United States considered a full trial on the merits against Defendants. 
The United States could have sought preliminary and permanent 
injunctions against Novelis's acquisition of Aleris. The United States 
is satisfied, however, that the divestiture of assets described in the 
proposed Final Judgment will remedy the anticompetitive effects alleged 
in the Complaint, preserving competition for the development, 
manufacture, and sale of aluminum ABS in North America. Thus, the 
proposed Final Judgment achieves all or substantially all of the relief 
the United States would have obtained through litigation, but avoids 
the time, expense, and uncertainty of a full trial on the merits of the 
Complaint.

VII. Standard of Review Under the APPA For the Proposed Final Judgment

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a 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); see also United States, et al. v. 
Hillsdale Community Health Ctr., No. 15-12311 (JEL), 2015 WL 10013774 
at *1 (E.D. Mich. Oct. 21, 2015) (``[T]he Court's review is limited to 
deciding whether the proposed final judgment is in the ``public 
interest;'' the Court is without authority to modify it.'') (citations 
omitted); 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 the mechanism to enforce the 
final judgment are clear and manageable'').

[[Page 31226]]

    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 ``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); see also United States v. Deutsche Telekom AG, No. 19-2232 
(TJK), 2020 WL 1873555, at *7 (D.D.C. Apr. 14, 2020). 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 (``[T]he 
`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.''); United States v. Alcan Aluminum 
Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving the consent 
decree even though the court would have imposed a greater remedy). 
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, Pubic 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).

VIII. Determinative Documents

    In formulating the proposed Final Judgment, the United States 
considered the Arbitration Agreement (Exhibit A to Plaintiff United 
States' Explanation of Plan to Refer this Matter to Arbitration (Dkt. 
11-1)), and the Arbitration Decision (available at https://www.justice.gov/atr/case-document/file/1257031/download). Under the 
Tunney Act, the United States must provide copies of documents it 
considered determinative in formulating its remedy proposal. (See 15 
U.S.C. 16(b)). The Arbitration Agreement is a determinative document 
because it (a) establishes that the parties agree to file a proposed 
Final Judgment requiring Defendants to divest Aleris's Lewisport 
Rolling Mill in Lewisport, Kentucky should the United States prevail in 
arbitration and (b) establishes that the arbitration addresses one 
dispositive legal issue: Whether aluminum ABS is a relevant product 
market. The Arbitration Decision is a determinative document because it 
provides the reasoning for the arbitrator's decision, after hearing 
evidence, that aluminum ABS is a relevant product market. There are no 
other determinative materials or documents within the meaning of the 
APPA that were considered by the United States in formulating the 
proposed Final Judgment.

    Dated: May 12, 2020

Respectfully submitted,

FOR PLAINTIFF UNITED STATES OF AMERICA
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Samer M. Musallam (Ohio #0070472)

Lowell R. Stern

United States Department of Justice, Antitrust Division, DIA 
Section, 450 Fifth Street NW, Suite 8700, Washington, DC 20530, 
Tel.: (202) 598-2990, Email:

[[Page 31227]]

[email protected], Email: [email protected].

Attorneys for Plaintiff United States

[FR Doc. 2020-11073 Filed 5-21-20; 8:45 am]
 BILLING CODE 4410-11-P