[Federal Register Volume 79, Number 171 (Thursday, September 4, 2014)]
[Notices]
[Pages 52751-52762]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-21102]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States, State of Illinois, State of Iowa, and State of
Missouri v. Tyson Foods, Inc. and The Hillshire Brands Company;
Proposed Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States of America, State of Illinois, State of Iowa, and State of
Missouri v. Tyson Foods, Inc. and
[[Page 52752]]
The Hillshire Brands Company, Civil Action No. 1:14-cv-01474-JEB. On
August 27, 2014, the United States and the States of Illinois, Iowa,
and Missouri filed a Complaint alleging that the proposed acquisition
by Tyson Foods, Inc. (``Tyson'') of The Hillshire Brands Company
(``Hillshire'') would violate Section 7 of the Clayton Act, 15 U.S.C.
18. The proposed Final Judgment, filed the same time as the Complaint,
requires Tyson to divest Heinold Hog Markets, its division that
purchases sows.
Copies of the Complaint, proposed Final Judgment and Competitive
Impact Statement are available for inspection at the Department of
Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth
Street NW., Suite 1010, Washington, DC 20530 (telephone: 202-514-2481),
on the Department of Justice's Web site at http://www.usdoj.gov/atr,
and at the Office of the Clerk of the United States District Court for
the District of Columbia. Copies of these materials may be obtained
from the Antitrust Division upon request and payment of the copying fee
set by Department of Justice regulations.
Public comment is invited within 60 days of the date of this
notice. Such comments, including the name of the submitter, and
responses thereto, will be posted on the U.S. Department of Justice,
Antitrust Division's internet Web site, filed with the Court and, under
certain circumstances, published in the Federal Register. Comments
should be directed to William H. Stallings, Chief, Transportation,
Energy, and Agriculture Section, Antitrust Division, Department of
Justice, Washington, DC 20530, (telephone: 202-514-9323).
Patricia A. Brink,
Director of Civil Enforcement.
United States District Court for the District of Columbia
United States of America, U.S. Department of Justice, Antitrust
Division, 450 Fifth Street NW., Suite 8000, Washington, D.C. 20530,
State of Illinois, by its Attorney General, Lisa Madigan, 100 West
Randolph Street, Chicago, Illinois 60601, State of Iowa, Iowa
Department of Justice, Special Litigation Division, Hoover Office
Building-Second Floor, 1305 East Walnut Street, Des Moines, Iowa
50319, and State of Missouri, Office of the Attorney General,
Consumer Protection Division, Post Office Box 899, Jefferson City,
Missouri 65102, Plaintiffs, v. Tyson Foods, Inc., 2200 Don Tyson
Parkway, Springdale, Arkansas 72762-6999, and The Hillshire Brands
Company, 400 South Jefferson Street, Chicago, Illinois 60607,
Defendants.
Case: 1:14-cv-01474-JEB
Judge: Hon. James Boasberg
Filed: 08/27/2014
Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, and the States of Illinois,
Iowa, and Missouri (collectively, ``Plaintiffs'') bring this civil
antitrust action to enjoin the proposed acquisition by Tyson Foods,
Inc. (``Tyson'') of The Hillshire Brands Company (``Hillshire'')
(collectively, ``Defendants'') and to obtain other equitable relief.
Plaintiffs allege as follows:
I.
Nature of the Action
1. Tyson and Hillshire compete against each other and against
others to procure sows from farmers in the United States. Farmers earn
approximately $700 million annually from sales of sows and rely on
competition among purchasers to ensure competitive prices. Tyson's
proposed acquisition of Hillshire would eliminate head-to-head
competition between the companies and create a firm that would account
for over a third of all sows purchased from farmers in the United
States.
2. Sows are female pigs that are raised for the purpose of breeding
hogs. At the end of their productive breeding lives, sows are sold for
slaughter. Packers such as Hillshire use the meat from sows in the
production of pork sausage. In contrast, hogs are swine raised solely
for the purpose of slaughter; their meat is typically used for pork
products other than sausage.
3. Tyson, through its Heinold Hog Markets division (``Heinold''),
purchases sows from farmers and re-sells them to packers, including
Hillshire. Tyson has buying stations located throughout the Midwest
that procure sows directly from local farmers, sort the sows according
to different characteristics, and ship them to packers according to
each packer's particular requirements. Packers overwhelmingly use
marketers such as Heinold to procure sows rather than purchase directly
from farmers due to the efficiencies marketers offer in terms of
sorting, shipping, and other services. Hillshire is one of the few
packers that purchases sows directly from farmers; as such, it competes
directly against Heinold to procure sows from farmers.
4. On July 1, 2014, Tyson and Hillshire entered into a definitive
agreement under which Tyson will acquire Hillshire. Unless enjoined,
the proposed acquisition is likely to lessen competition substantially
in the market for the purchase of sows from farmers in the United
States in violation of Section 7 of the Clayton Act, 15 U.S.C. Sec.
18.
II.
Jurisdiction and Venue
5. The United States brings this action under Section 15 of the
Clayton Act, 15 U.S.C. Sec. 25, and the Plaintiff States bring this
action under Section 16 of the Clayton Act, 15 U.S.C. Sec. 26, to
prevent and restrain Defendants from violating Section 7 of the Clayton
Act, 15 U.S.C. Sec. 18. The Plaintiff States, by and through their
respective Attorneys General, bring this action as parens patriae on
behalf of the citizens, general welfare, and economy of each of their
states.
6. Defendants are engaged in interstate commerce and in activities
substantially affecting interstate commerce. Tyson, through Heinold,
and Hillshire purchase sows from farmers located throughout the United
States. This Court has subject matter jurisdiction over this action and
jurisdiction over the parties pursuant to 15 U.S.C. Sec. 25, and 28
U.S.C. Sec. Sec. 1331, 1337(a), and 1345.
7. Defendants have consented to venue and personal jurisdiction in
this District.
III.
Defendants and the Proposed Transaction
8. Tyson Foods, Inc. is a Delaware corporation with its principal
place of business in Springdale, Arkansas. In 2013, Tyson had total
revenues of approximately $34.4 billion. Tyson is one of the world's
largest meat companies. It produces, distributes, and markets chicken,
beef, pork, and prepared food products. Tyson Hog Markets, Inc., a
subsidiary of Tyson and Tyson Fresh Meats, Inc., purchases hogs for
Tyson's hog processing facilities. Tyson does not process sows. Tyson
does, however, buy and resell sows through Heinold. In 2013, Heinold
had overall revenues of approximately $270 million.
9. The Hillshire Brands Company is a Maryland corporation with its
principal place of business in Chicago, Illinois. Hillshire is a
manufacturer and marketer of brand name food products for the retail
and foodservice markets, including sausage, hot dogs, and luncheon
meats. Its brand names include Jimmy Dean, Ball Park, and Hillshire
Farm. Hillshire's total revenues were approximately $3.9 billion for
the year ended June 29, 2013.
10. On July 1, 2014, Tyson and Hillshire entered into a definitive
agreement for the acquisition by Tyson
[[Page 52753]]
of Hillshire. On July 16, 2014, Tyson commenced a tender offer to
purchase all of Hillshire's outstanding shares. The tender offer is
conditioned on the valid tendering, without a valid withdrawal, of at
least two-thirds of Hillshire's outstanding stock prior to expiration
of the offer. As of August 12, over 70% of Hillshire's outstanding
shares had been validly tendered and not validly withdrawn.
IV.
Trade and Commerce
A. The Sow Packing Industry
11. Sausage producers primarily buy sows from marketers such as
Heinold. Marketers purchase sows from individual farmers and assemble
truck loads (with approximately 100 sows per load) for delivery to
sausage plants. Marketers utilize buying stations to procure sows from
farmers. A buying station includes space for offloading and loading
sows, pens for holding the sows, scales, and administrative space. Sows
are usually kept at a buying station no longer than three days and may
be shipped out to a slaughterer the same day they arrive from a farm.
12. Larger marketers have multiple buying stations. Heinold
operates eight buying stations located in Atkinson, Illinois;
Burlington, Indiana; Randall and Sioux City, Iowa; Jones, Michigan;
Windom, Minnesota; Monroe City, Missouri, and St. Paul, Nebraska.
Heinold buys sows from more than 2,400 farmers located throughout the
United States. In 2013, Heinold purchased about 660,000 sows from
farmers in the United States, paying more than $150 million to farmers.
13. Hillshire slaughters sows and produces sausage at a facility in
Newbern, Tennessee. Whereas most other sausage producers purchase
nearly all of their sows from marketers, Hillshire is unique among
major sausage manufacturers in that it purchases over half of its sows
directly from farmers. The sows that Hillshire purchases from farmers
are usually transported directly by truck from the farm to Hillshire's
Tennessee facility. Hillshire purchases sows from approximately 100
farmers located throughout the United States. In 2013, it purchased
more than 250,000 sows from farmers in the United States, paying
approximately $80 million to farmers.
14. The frequency and number of a particular farmer's sales of sows
depends on the size of its breeding operations. Larger operations sell
sows every week; smaller operations sell sows much less frequently.
Some operations are of a sufficient size to be able to sell sows by the
truckload whereas many farms sell lots of smaller sizes.
B. The Relevant Market
15. There are no economic uses for slaughtered sows other than for
the production of pork sausage. It is highly unlikely that a small
decrease in the prices paid for sows would be rendered unprofitable by
a switch of the sale of sows to other purchasers for any other use.
16. The purchase of sows from farmers is a relevant antitrust
product market. In part because income from sow sales represents a
small percentage of the overall revenues of a hog breeding operation, a
small decrease in the prices farmers receive for sows typically would
not affect farmers' decisions about when to slaughter sows, the size of
their breeding operations, or whether to abandon their investments in
hog breeding altogether. Although the sale of sows constitutes a small
percentage of overall revenues, farmers rely on this source of income
as an important contribution to their earnings.
17. Hog breeding operations are concentrated in the central area of
the United States, including Iowa, Illinois, and Missouri, and in North
Carolina. All else equal, farmers prefer to transport sows as short a
distance as possible, unless the price that the farmer receives
justifies shipping the sows farther. For instance, Hillshire sometimes
fully compensates the farmer for transportation costs, which makes it
economical for farmers located hundreds of miles away from the
Hillshire plant to sell to Hillshire. Sows are commonly shipped
throughout the central area of the United States where the purchasing
facilities of the merging parties are located and where a major portion
of sow sales and slaughter take place. The overwhelming majority of sow
purchases occur within this region. As sows are also shipped even
farther distances to slaughter facilities throughout the nation, the
United States is the outer bounds of a relevant geographic market.
18. Thus, the purchase of sows from farmers in the United States is
a relevant market (i.e., a line of commerce and a section of the
country) under Section 7 of the Clayton Act, 15 U.S.C. Sec. 18.
C. Anticompetitive Effects
19. The acquisition of Hillshire by Tyson will combine two of the
major purchasers of sows from farmers in the United States and create a
company that would account for approximately 35% of all purchases in
this market. Using the Herfindahl-Hirschman Index (HHI), a standard
measure of concentration, the post-acquisition HHI would increase by
more than 500 points, resulting in a post-acquisition HHI of
approximately 2100.
20. Farmers have benefited from competition between Tyson and
Hillshire in a variety of respects. Farmers track offering prices from
sow purchasers. For many farmers, at particular points in time, the
merging parties constitute their two best alternatives. The purchasing
facilities of the merging parties are two of a small number of
potential buyers from whom farmers seek or receive quotes. As the
transaction eliminates a significant competing bidder, bidding is
likely to be less aggressive and farmers are likely to receive lower
prices for sows. As the prices offered decrease, farmers may ship sows
to more distant purchasers. This additional shipping time and cost
constitute an economic inefficiency that would follow from the
elimination of competition between Hillshire and Tyson.
21. Tyson's acquisition of Hillshire would eliminate actual and
potential competition between Heinold Hog Markets and Hillshire,
leaving farmers with fewer outlets for their sows and lower prices in
violation of Section 7 of the Clayton Act, 15 U.S.C. Sec. 18.
D. Absence of Countervailing Factors
22. Successful entry or repositioning into the market for the
purchase of sows from farmers would not be timely, likely, or
sufficient to deter the anticompetitive effects resulting from this
transaction. Slaughterers that do not currently purchase sows directly
from farmers are unlikely to begin to do so because they value the
sorting and weighing services performed by marketers at their buying
stations. Entry by new marketers or expansion by existing marketers
sufficient to replace the market impact of the loss of competition
resulting from the transaction is also unlikely. The process of
locating and acquiring land, obtaining permits, and constructing buying
stations would require an extensive period of time and would be
unlikely to occur in response to anticompetitive price decreases
resulting from the merger.
V.
Violation Alleged
23. Plaintiffs hereby incorporate paragraphs 1 through 22.
24. Unless enjoined, Tyson's proposed acquisition of Hillshire is
likely to substantially lessen competition and restrain trade in the
purchase of sows from farmers in the
[[Page 52754]]
United States in violation of Section 7 of the Clayton Act, 15 U.S.C.
Sec. 18, in the following ways:
a. actual and potential competition between Tyson and Hillshire in
the purchase of sows from farmers in the United States will be
eliminated;
b. competition in the purchase of sows from farmers in the United
States will be substantially lessened; and
c. prices paid to farmers in the United States for sows will likely
decrease.
VI.
Request for Relief
25. Plaintiffs request that:
a. Tyson's proposed acquisition of Hillshire be adjudged and
decreed to be unlawful and in violation of Section 7 of the Clayton
Act, 15 U.S.C. Sec. 18;
b. Defendants and all persons acting on their behalf be
preliminarily and permanently enjoined and restrained from consummating
the proposed transaction or from entering into or carrying out any
contract, agreement, plan, or understanding, the effect of which would
be to combine Tyson and Hillshire;
c. Plaintiffs be awarded its costs for this action; and
d. Plaintiffs receive such other and further relief as the Court
deems just and proper.
Dated this 27th day of August, 2014.
Respectfully submitted,
For Plaintiff United States:
/s/--------------------------------------------------------------------
William J. Baer (D.C. Bar #324723)
Assistant Attorney General for Antitrust
/s/--------------------------------------------------------------------
David I. Gelfand (D.C. BAR #416596)
Deputy Assistant Attorney General
/s/--------------------------------------------------------------------
Patricia A. Brink
Director of Civil Enforcement
/s/--------------------------------------------------------------------
William H. Stallings (D.C. BAR #444924)
Chief
Transportation, Energy & Agriculture Section
/s/--------------------------------------------------------------------
Caroline E. Laise
Assistant Chief
Transportation, Energy & Agriculture Section
/s/--------------------------------------------------------------------
Angela L. Hughes (D.C. Bar #303420)*,
Katherine A. Celeste,
Jill A. Ptacek,
Attorneys
Antitrust Division,
U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8000,
Washington, DC 20530, Telephone: (202) 307-6410, Facsimile: (202)
307-2784, E-mail: [email protected]
Attorneys for the United States
*Attorney of Record
For Plaintiff State of Illinois
Lisa Madigan
Attorney General
Cara Hendrickson
Chief, Public Interest Division
Robert Pratt
Chief, Antitrust Bureau
Public Interest Division
/s/--------------------------------------------------------------------
Blake Harrop
Senior Assistant Attorney General, Illinois Bar No. 99000, 100 West
Randolph Street, Chicago, Illinois 60601, Ph: 312-814-1004, Fax:
312-814-4209, [email protected]
For Plaintiff State of Iowa:
Thomas J. Miller
Attorney General
/s/--------------------------------------------------------------------
Layne M. Lindebak (IA Bar AT0004755)
Assistant Attorney General, Special Litigation Division, Hoover
Office Building--Second Floor, 1305 East Walnut Street, Des Moines,
IA 50319, Tel: (515) 281-7054, Fax: (515) 281-4902;
[email protected].
Dated: August 26, 2014
For Plaintiff State of Missouri:
Chris Koster
Attorney General
/s/--------------------------------------------------------------------
Anne E. Schneider
Assistant Attorney General/Antitrust Counsel
Kyle A. Poelker
Assistant Attorney General
Office of the Missouri Attorney General, P.O. Box 899, Jefferson
City, MO 65102, Phone: (573) 751-7445, Fax: (573) 751-2041, Email:
[email protected], Email: [email protected]
Certificate of Service
I, Angela L. Hughes, hereby certify that on August 27, 2014, I
caused a copy of the foregoing Complaint, Proposed Final Judgment, Hold
Separate Stipulation and Order, Competitive Impact Statement, and
United States' Explanation of Consent Decree Procedures to be served on
Defendants Tyson Foods, Inc. and The Hillshire Brands Company by
electronic mail to their duly authorized legal representatives of the
Defendants, as follows:
For Defendants
Tyson Foods, Inc.
Ronan P. Harty
Davis Polk & Wardwell LLP, 450 Lexington Avenue, New York, NY 10017,
Telephone: (212) 450-4870, Facsimile: (202) 701-5870, Email:
[email protected]
The Hillshire Brands Company
Clifford H. Aronson
(D.C. Bar #335182)
Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New
York, NY 10036-6522, Telephone: 212.735.2644, Facsimile:
917.777.2644, Email: [email protected]
/s/--------------------------------------------------------------------
Angela L Hughes*
Attorney, Antitrust Division, U.S. Department of Justice, 450 Fifth
Street, N.W., Suite 8000, Washington, DC 20530, Telephone: (202)
307-6410, Facsimile: (202) 307-2784, Email: [email protected]
United States District Court for the District of Columbia
United States of America, State of Illinois, State of Iowa, and
State of Missouri, Plaintiffs, v. Tyson Foods, Inc., and The
Hillshire Brands Company, Defendants.
Case: 1:14-cv-01474-JEB
Judge: Hon. James Boasberg
Filed: 08/27/2014
Competitive Impact Statement
Plaintiff United States of America, pursuant to Section 2(b) of the
Antitrust Procedures and Penalties Act (``APPA'' or ``Tunney Act''), 15
U.S.C. Sec. 16(b)-(h), files this Competitive Impact Statement
relating to the proposed Final Judgment submitted for entry in this
civil antitrust proceeding.
I.
Nature and Purpose of the Proceeding
Defendant Tyson Foods, Inc. (``Tyson'') and Defendant The Hillshire
Brands Company (``Hillshire'') (collectively, ``Defendants'') entered
into an agreement on July 1, 2014, pursuant to which Tyson will acquire
all of the outstanding shares of Hillshire. The all-cash transaction,
which includes Hillshire's outstanding net debt, is valued at
approximately $8.55 billion. The United States filed a civil antitrust
Complaint on August 27, 2014, seeking to enjoin the proposed
acquisition. The Complaint alleges that the likely effect of this
acquisition would be to lessen competition substantially in the market
for the purchase of sows from farmers in the United States in violation
of Section 7 of the Clayton Act, 15 U.S.C. Sec. 18.
At the same time the Complaint was filed, Plaintiffs also filed a
Hold Separate Stipulation and Order (``Hold Separate'') and proposed
Final Judgment, which are designed to eliminate the anticompetitive
effects of the acquisition. Under the proposed Final Judgment, which is
explained more fully below, Defendants are to divest Tyson's sow
purchasing business, also known as Heinold Hog Markets (the
``Divestiture Assets''). Under the terms of the Hold Separate, the
Defendants will take certain steps to ensure that Tyson Hog Markets,
Inc., a subsidiary of Tyson that includes the Divestiture Assets, is
operated as a competitively independent, economically viable and
ongoing business concern that will remain independent of Hillshire's
sow purchasing operation and will be uninfluenced by the consummation
of the acquisition, and that competition between Tyson and Hillshire in
the purchase of sows from farmers is maintained during the pendency of
the ordered divestiture.
[[Page 52755]]
Plaintiffs and Defendants have stipulated that the proposed Final
Judgment may be entered after compliance with the APPA. Entry of the
proposed Final Judgment would terminate this action, except that the
Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II.
Description of the Events Giving Rise to the Alleged Violation
A. The Defendants and the Proposed Transaction
Defendant Tyson is a Delaware corporation with its headquarters in
Springdale, Arkansas. In 2013, Tyson had total revenues of
approximately $34.4 billion. Tyson is one of the world's largest meat
companies, producing, distributing, and marketing chicken, beef, pork,
and prepared foods. Tyson's subsidiary Tyson Fresh Meats, Inc. is
responsible for the purchase of hogs and cattle for Tyson's processing
facilities; hog purchases are handled by Tyson Hog Markets, Inc., a
subsidiary of Tyson Fresh Meats. In addition to buying hogs for Tyson's
processing facilities, Tyson Hog Markets' subsidiary Heinold Hog
Markets (``Heinold''), buys and resells sows.\1\ In 2013, Heinold had
revenues of approximately $270 million.
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\1\ Sows are female hogs that have produced at least one litter
and will no longer be used for breeding. Heinold also purchases
boars and outs (runts or deformed hogs) from farmers.
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Defendant Hillshire is a Maryland corporation headquartered in
Chicago, Illinois. Hillshire is a manufacturer and marketer of brand
name food products for the retail and foodservice markets, including
sausage, hot dogs, and luncheon meats. Its brand names include Jimmy
Dean, Ball Park, and Hillshire Farm. Hillshire's total revenues were
approximately $3.9 billion for the year ended June 29, 2013.
On July 1, 2014, Tyson and Hillshire entered into a definitive
agreement for the acquisition by Tyson of Hillshire. On July 16, 2014,
Tyson commenced a tender offer to purchase all of Hillshire's
outstanding shares. The tender offer is conditioned on the valid
tendering, without a valid withdrawal, of at least two-thirds of
Hillshire's outstanding stock prior to expiration of the offer. As of
August 12, over 70% of Hillshire's outstanding shares had been validly
tendered and not validly withdrawn.
B. Industry Background
Sows are female pigs raised for the purpose of breeding hogs. Sows
are sold for slaughter at the end of their productive breeding lives.
Packers use the meat from sows in the production of pork sausage. In
contrast, hogs are swine raised solely for the purpose of slaughter;
their meat is typically used for pork products other than sausage.
Sausage producers, other than Hillshire, primarily buy sows from
marketers such as Heinold. Marketers purchase sows from individual
farmers and assemble truck loads (with approximately 100 sows per load)
for delivery to sausage plants. Marketers utilize buying stations to
procure sows from farmers. The frequency and number of a particular
farmer's sales of sows depends on the size of its breeding operations.
Larger operations sell sows every week; smaller operations sell sows
much less frequently. Some operations are of a sufficient size to be
able to sell sows by the truckload whereas many farms sell lots of
smaller sizes.
Heinold operates eight buying stations located in Atkinson,
Illinois; Burlington, Indiana; Randall and Sioux City, Iowa; Jones,
Michigan; Windom, Minnesota; Monroe City, Missouri, and St. Paul,
Nebraska. Heinold buys sows from more than 2,400 farmers located
throughout the United States. In 2013, Heinold purchased about 660,000
sows from farmers in the United States, paying more than $150 million
to farmers.
Hillshire slaughters sows and produces sausage at a facility in
Newbern, Tennessee. Whereas most other sausage producers purchase
nearly all of their sows from marketers, Hillshire is unique in that it
purchases over half of its sows directly from farmers. The sows that
Hillshire purchases from farmers are usually transported directly by
truck from the farm to Hillshire's Tennessee facility. Hillshire
purchases sows from approximately 100 farmers located throughout the
United States. In 2013, it purchased more than 250,000 sows from
farmers in the United States, paying approximately $80 million to
farmers.
C. Relevant Markets
There are no economic uses for slaughtered sows other than for the
production of pork sausage. It is highly unlikely that a small decrease
in the prices paid for sows would be rendered unprofitable by farmers
switching to selling sows to other purchasers for any other uses.
The purchase of sows from farmers is a relevant antitrust product
market. In part because income from sow sales represents a small
percentage of the overall revenues of a hog breeding operation, a small
decrease in the prices farmers receive for sows typically would not
affect farmers' decisions about when to slaughter sows, the size of
their breeding operations, or whether to abandon their investments in
hog breeding altogether. Although the sale of sows constitutes a small
percentage of overall revenues, farmers rely on this source of income
as an important contribution to their earnings.
Hog breeding operations are concentrated in the central area of the
United States, including Iowa, Illinois, and Missouri, and in North
Carolina. All else equal, farmers prefer to transport sows as short a
distance as possible, unless the price that the farmer receives
justifies shipping the sows farther. For instance, Hillshire sometimes
fully compensates the farmer for transportation costs, which makes it
economical for farmers located hundreds of miles away from the
Hillshire plant to sell to Hillshire. Sows are commonly shipped
throughout the central area of the United States where the purchasing
facilities of the merging parties are located and where a major portion
of sow sales and slaughter take place. The overwhelming majority of sow
purchases occur within this region. As sows are also shipped even
farther distances to slaughter facilities throughout the nation, the
United States is the outer bounds of a relevant geographic market.
Thus, the purchase of sows from farmers in the United States is a
relevant market (i.e., a line of commerce and a section of the country)
under Section 7 of the Clayton Act, 15 U.S.C. Sec. 18.
D. Anticompetitive Effects of Tyson's Acquisition of Hillshire
The market for the purchase of sows from farmers is concentrated.
The acquisition of Hillshire by Tyson will combine two of the major
purchasers of sows from farmers in the United States and would create a
company that accounts for approximately 35% of all purchases in this
market. Using the Herfindahl-Hirschman Index, the post-acquisition HHI
would increase by more than 500 points, resulting in a post-acquisition
HHI of approximately 2100.
Farmers have benefited from competition between Tyson and Hillshire
in a variety of ways. Farmers track prices offered by sow purchasers.
For many farmers, at particular points in time, the merging parties
constitute their two best alternatives. The purchasing facilities of
the merging parties are two of a small number of potential buyers from
whom farmers
[[Page 52756]]
seek or receive quotes. As the transaction eliminates a significant
competing bidder, bidding is likely to be less aggressive and farmers
are likely to receive lower prices for sows. As the prices offered
decrease, farmers may need to ship sows to more distant purchasers.
This additional shipping time and cost constitute an economic
inefficiency that would follow from the elimination of competition
between Hillshire and Tyson.\2\
---------------------------------------------------------------------------
\2\ Mergers of competing buyers can enhance market power on the
buying side of a market, raising significant antitrust concerns. See
U.S. Dep't of Justice and Federal Trade Commission, Horizontal
Merger Guidelines (2010), Sec. 12.
---------------------------------------------------------------------------
Successful entry or repositioning into the market for the purchase
of sows from farmers would not be timely, likely, or sufficient to
deter the anticompetitive effects resulting from this transaction.
Slaughterers that do not currently purchase sows directly from farmers
are unlikely to begin to do so because they value the sorting and
weighing services performed by marketers at their buying stations.
Entry by new marketers or expansion by existing marketers sufficient to
replace the market impact of the loss of competition resulting from the
transaction is also unlikely. The process of locating and acquiring
land, obtaining permits, and constructing buying stations would require
an extensive period of time and would be unlikely to occur in response
to anticompetitive price decreases resulting from the merger.
Tyson's acquisition of Hillshire would eliminate actual and
potential competition between Tyson and Hillshire, leaving farmers with
fewer outlets for their sows and lower prices in violation of Section 7
of the Clayton Act, 15 U.S.C. Sec. 18.
III.
Explanation of the Proposed Final Judgment
The divestiture requirement of the proposed Final Judgment will
eliminate the anticompetitive effects of the acquisition in the market
for purchases of sows from U.S. farmers by establishing a new,
independent, and economically viable competitor. The proposed Final
Judgment requires the Defendants, within 90 days after the filing of
the Complaint, or five days after notice of entry of the Final
Judgment, whichever is later, to divest all of Heinold (``the
Divestiture Assets''), which constitute all the assets Tyson currently
uses to compete against Hillshire for sow purchases from U.S. farmers.
Defendants must take all reasonable steps necessary to accomplish the
divestiture quickly and shall cooperate with prospective purchasers.
The terms of the proposed Final Judgment require the Defendants to
divest the Divestiture Assets within 90 days. If Defendants are unable
to accomplish the divestiture within this period, the United States,
after consultation with the Plaintiff States, may extend this period up
to 60 days and shall notify the Court in such circumstances. A prompt
divestiture has the benefits of restoring competition lost as a result
of the acquisition and reducing the possibility that the value of the
assets will be diminished.
Section V(B) of the Hold Separate Stipulation and Order specifies
that the Divestiture Assets will be maintained as a viable business and
that Hillshire employees will not gain access to customer or supplier
lists specific to the Divestiture Assets prior to divestiture.
Section IV(B) of the proposed Final Judgment requires the
Defendants to furnish information to prospective acquirers in an
attempt to sell the divestiture assets.
Section X of the proposed Final Judgment provides that the United
States may appoint a Monitoring Trustee with the power and authority to
investigate and report on the parties' compliance with the terms of the
Final Judgment and the Hold Separate during the pendency of the
divestiture, including keeping Tyson Hog Markets separate from the sow
purchasing operations of Hillshire. The Monitoring Trustee would not
have any responsibility or obligation for the operation of the parties'
businesses. The Monitoring Trustee will serve at Defendants' expense,
on such terms and conditions as the United States approves, and
Defendants must assist the trustee in fulfilling its obligations. The
Monitoring Trustee will file monthly reports and will serve until the
divestitures are complete. The Monitoring Trustee shall serve until the
divestiture of all the Divestiture Assets is finalized pursuant to
either Section IV or Section V of the Final Judgment.
In the event that Defendants do not accomplish the divestiture
within the periods 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 sale of
the Divestiture Assets. If a Divestiture Trustee is appointed, the
proposed Final Judgment provides that Defendant Tyson will pay all
costs and expenses of the Divestiture Trustee. The Divestiture
Trustee's commission will be structured so as to incentivize the
Divestiture Trustee to complete the divestiture as quickly as possible
while trying to obtain the highest possible price for the Divestiture
Assets. After his or her appointment becomes effective, the Divestiture
Trustee will file monthly reports with the Court and the United States
which set 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 shall enter such orders as
appropriate, in order to carry out the purpose of the trust, including
extending the trust or the term of the Divestiture Trustee's
appointment.
The divestiture provisions of the proposed Final Judgment will
eliminate the anticompetitive effects of the acquisition in the market
for the purchase of sows from U.S. farmers.
IV.
Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. Sec. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
Sec. 16(a), the proposed Final Judgment has no prima facie effect in
any subsequent private lawsuit that may be brought against Defendants.
V.
Procedures Available for Modification of the Proposed Final Judgment
Plaintiffs and Defendants have stipulated that the proposed Final
Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to the United States written comments regarding the
proposed Final Judgment. Any person who wishes to comment should do so
within sixty (60) days of the date of publication of this Competitive
Impact Statement in the
[[Page 52757]]
Federal Register, or the last date of publication in a newspaper of the
summary of this Competitive Impact Statement, whichever is later. All
comments received during this period will be considered by the United
States Department of Justice, which remains free to withdraw its
consent to the proposed Final Judgment at any time prior to the Court's
entry of judgment. The comments and the response of the United States
will be filed with the Court. In addition, comments will be posted on
the U.S. Department of Justice, Antitrust Division's internet Web site
and, under certain circumstances, published in the Federal Register.
Written comments should be submitted to: William H. Stallings,
Chief, Transportation, Energy, and Agriculture Section, Antitrust
Division, United States Department of Justice, 450 5th St. NW., Suite
8000, 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
The United States considered, as an alternative to the proposed
Final Judgment, a full trial on the merits against Defendants. The
United States could have continued the litigation and sought
preliminary and permanent injunctions against Tyson's acquisition of
Hillshire. The United States is satisfied, however, that the
divestiture of assets described in the proposed Final Judgment will
preserve competition in the market for the purchase of sows from U.S.
farmers. Thus, the proposed Final Judgment would achieve 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 sixty-day comment period, after which the court shall
determine whether entry of the proposed Final Judgment ``is in the
public interest.'' 15 U.S.C. Sec. 16(e)(1). In making that
determination, the court, in accordance with the statute as amended in
2004, is required to consider:
(A) the competitive impact of such judgment, including termination
of alleged violations, provisions for enforcement and modification,
duration of relief sought, anticipated effects of alternative remedies
actually considered, whether its terms are ambiguous, and any other
competitive considerations bearing upon the adequacy of such judgment
that the court deems necessary to a determination of whether the
consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and individuals
alleging specific injury from the violations set forth in the complaint
including consideration of the public benefit, if any, to be derived
from a determination of the issues at trial.
15 U.S.C. Sec. 16(e)(1)(A) & (B). In considering these statutory
factors, the court's inquiry is necessarily a limited one, as the
government is entitled to ``broad discretion to settle with the
defendant within the reaches of the public interest.'' United States v.
Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally
United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007)
(assessing public interest standard under the Tunney Act); United
States v. InBev N.V./S.A., No. 08-1965 (JR), 2009-2 Trade Cas. (CCH) ]
76,736, 2009 U.S. Dist. LEXIS 84787, at *3, (D.D.C. Aug. 11, 2009)
(noting that the court's review of a consent judgment is limited and
only inquires ``into whether the government's determination that the
proposed remedies will cure the antitrust violations alleged in the
complaint was reasonable, and whether the mechanism to enforce the
final judgment are clear and manageable.'').\3\
---------------------------------------------------------------------------
\3\ The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for court to consider and amended the
list of factors to focus on competitive considerations and to
address potentially ambiguous judgment terms. Compare 15 U.S.C.
Sec. 16(e) (2004), with 15 U.S.C. Sec. 16(e)(1) (2006); see also
SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004
amendments ``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------
As the United States Court of Appeals for the District of Columbia
Circuit has held, under the APPA a court considers, among other things,
the relationship between the remedy secured and the specific
allegations set forth in the government's complaint, whether the decree
is sufficiently clear, whether enforcement mechanisms are sufficient,
and whether the decree may positively harm third parties. See
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the
relief secured by the decree, a court may not ``engage in an
unrestricted evaluation of what relief would best serve the public.''
United States v. BNS Inc., 858 F.2d 456, 462 (9th Cir. 1988) (quoting
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152
F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787,
at *3. Courts have held that:
[t]he balancing of competing social and political interests affected by
a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's role
in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to the
decree. The court is required to determine not whether a particular
decree is the one that will best serve society, but whether the
settlement is ``within the reaches of the public interest.'' More
elaborate requirements might undermine the effectiveness of antitrust
enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\4\ In
determining whether a proposed settlement is in the public interest, a
district court ``must accord deference to the government's predictions
about the efficacy of its remedies, and may not require that the
remedies perfectly match the alleged violations.'' SBC Commc'ns, 489 F.
Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461 (noting the need
for courts to be ``deferential to the government's predictions as to
the effect of the proposed remedies''); United States v. Archer-
Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that
the court should grant due respect to the United States' prediction as
to the effect of proposed remedies, its perception of the market
structure, and its views of the nature of the case).
---------------------------------------------------------------------------
\4\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); United States v. Gillette Co.,
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the
court is constrained to ``look at the overall picture not
hypercritically, nor with a microscope, but with an artist's
reducing glass''). See generally Microsoft, 56 F.3d at 1461
(discussing whether ``the remedies [obtained in the decree are] so
inconsonant with the allegations charged as to fall outside of the
`reaches of the public interest''').
---------------------------------------------------------------------------
Courts have greater flexibility in approving proposed consent
decrees than in crafting their own decrees following a finding of
liability in a litigated matter. ``[A] proposed decree must be approved
even if it falls short
[[Page 52758]]
of the remedy the court would impose on its own, as long as it falls
within the range of acceptability or is `within the reaches of public
interest.''' United States v. Am. Tel. & Tel. Co., 552 F. Supp. 131,
151 (D.D.C. 1982) (citations omitted) (quoting United States v.
Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd sub nom.
Maryland v. United States, 460 U.S. 1001 (1983); see also United States
v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985)
(approving the consent decree even though the court would have imposed
a greater remedy). To meet this standard, the United States ``need only
provide a factual basis for concluding that the settlements are
reasonably adequate remedies for the alleged harms.'' SBC Commc'ns, 489
F. Supp. 2d at 17.
Moreover, the court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its Complaint, and does not authorize the court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459; see also InBev, 2009
U.S. Dist. LEXIS 84787, at *20 (``the `public interest' is not to be
measured by comparing the violations alleged in the complaint against
those the court believes could have, or even should have, been
alleged.''). Because the ``court's authority to review the decree
depends entirely on the government's exercising its prosecutorial
discretion by bringing a case in the first place,'' it follows that
``the court is only authorized to review the decree itself,'' and not
to ``effectively redraft the complaint'' to inquire into other matters
that the United States did not pursue. Microsoft, 56 F.3d at 1459-60.
As this Court recently confirmed in SBC Communications, courts ``cannot
look beyond the complaint in making the public interest determination
unless the complaint is drafted so narrowly as to make a mockery of
judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
In its 2004 amendments, Congress made clear its intent to preserve
the practical benefits of utilizing consent decrees in antitrust
enforcement, adding the unambiguous instruction that ``[n]othing in
this section shall be construed to require the court to conduct an
evidentiary hearing or to require the court to permit anyone to
intervene.'' 15 U.S.C. Sec. 16(e)(2). The language wrote into the
statute what Congress intended when it enacted the Tunney Act in 1974,
as Senator Tunney explained: ``[t]he court is nowhere compelled to go
to trial or to engage in extended proceedings which might have the
effect of vitiating the benefits of prompt and less costly settlement
through the consent decree process.'' 119 Cong. Rec. 24,598 (1973)
(statement of Sen. John Tunney). Rather, the procedure for the public
interest determination is left to the discretion of the court, with the
recognition that the court's ``scope of review remains sharply
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC
Commc'ns, 489 F. Supp. 2d at 11.\5\
---------------------------------------------------------------------------
\5\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the
court to make its public interest determination on the basis of the
competitive impact statement and response to comments alone'');
United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1
Trade Cas. (CCH) ] 61,508, at 71,980, at *22 (W.D. Mo. 1977)
(``Absent a showing of corrupt failure of the government to
discharge its duty, the Court, in making its public interest
finding, should . . . carefully consider the explanations of the
government in the competitive impact statement and its responses to
comments in order to determine whether those explanations are
reasonable under the circumstances.''); S. Rep. No. 93-298, at 6
(1973) (``Where the public interest can be meaningfully evaluated
simply on the basis of briefs and oral arguments, that is the
approach that should be utilized.'').
---------------------------------------------------------------------------
VIII.
Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Dated: August 27, 2014
Respectfully submitted,
/s/--------------------------------------------------------------------
Angela L. Hughes (D.C. Bar #303420)*
Katherine A. Celeste
Jill A. Ptacek
Attorneys, Antitrust Division, U.S. Department of Justice, 450 Fifth
Street, N.W., Suite 8000, Washington, DC 20530, Telephone: (202) 307-
6410, Facsimile: (202) 307-2784, Email: [email protected]
*Attorney of Record
United States District Court for the District of Columbia
United States of America, State of Illinois, State of Iowa, and
State of Missouri, Plaintiffs, v. Tyson Foods, INC., and The
Hillshire Brands Company, Defendants.
Case: 1:14-cv-01474-JEB
Judge: Hon. James Boasberg
Filed: 08/27/2014
Proposed Final Judgment
WHEREAS, Plaintiffs, United States of America and the States of
Illinois, Iowa, and Missouri (collectively ``Plaintiffs''), filed
their Complaint on August 27, 2014, and Plaintiffs and Defendants
Tyson Foods, Inc. (``Tyson'') and The Hillshire Brands Company
(``Hillshire'') by their respective attorneys, have consented to the
entry of this Final Judgment without trial or adjudication of any
issue of fact or law, and without this Final Judgment constituting
any evidence against or admission by any party regarding any issue
of fact or law;
AND WHEREAS, Defendants agree to be bound by the provisions of
this Final Judgment pending its approval by the Court;
AND WHEREAS, the essence of this Final Judgment is the prompt
and certain divestiture of certain rights or assets by Defendants to
assure that competition is not substantially lessened;
AND WHEREAS, Plaintiffs require Defendants to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
AND WHEREAS, Defendants have represented to Plaintiffs that the
divestitures required below can and will be made and that Defendants
will later raise no claim of hardship or difficulty as grounds for
asking the Court to modify any of the divestiture provisions
contained below;
NOW THEREFORE, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is ORDERED, ADJUDGED AND DECREED:
I. Jurisdiction
This Court has jurisdiction over the subject matter of and each
of the parties to this action. The Complaint states a claim upon
which relief may be granted against Defendants under Section 7 of
the Clayton Act, as amended (15 U.S.C. Sec. 18).
II. Definitions
As used in this Final Judgment:
A. ``Acquirer'' means the entity to which Defendant Tyson
divests the Divestiture Assets.
B. ``Tyson'' means Defendant Tyson Foods, Inc., a Delaware
corporation with its headquarters in Springdale, Arkansas, its
successors and assigns, and its subsidiaries, including Tyson Fresh
Meats, Inc., divisions, groups, affiliates, partnerships and joint
ventures, and their directors, officers, managers, agents, and
employees.
C. ``Tyson Fresh Meats, Inc.'' means Tyson Fresh Meats, Inc, a
subsidiary of Tyson.
D. ``Hillshire'' means Defendant The Hillshire Brands Company, a
Maryland corporation with its headquarters in Chicago, Illinois, 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 the entire business of Heinold
Hog Markets, including any and all of the tangible or intangible
assets used primarily in connection with Heinold Hog Markets,
including but not limited to, all leasehold and real property rights
associated with the buying stations located at 700 East Henry,
Atkinson, Illinois 61235; 3125 So St Rd 29, Burlington, Indiana
46915; 3069 380th St, Story City, Iowa 50248; 624 Cunningham Dr,
Sioux City, Iowa 51106; 12760 M60 West, Jones, Michigan 49061; 401
Route W, Monroe City, Missouri 63456; 954 14th Ave, St. Paul,
[[Page 52759]]
Nebraska 68873; and 2720 Hwy 60, Windom, Minnesota 56101; any
inventory, office furniture, materials, supplies, livestock pens,
scales and other tangible property and assets used primarily in
connection with operating the BOS purchasing business; all licenses,
permits, and authorizations issued by any governmental organization
relating to operating the BOS purchasing business, subject to
licensor's approval or consent; all contracts, teaming arrangements,
agreements, leases, commitments, certifications, and understandings
relating to operating the BOS purchasing business, including supply
agreements and employee contracts; all customer and Producer lists,
specifications, contracts, accounts, and credit records; all records
relating to the business of operating BOS buying stations including
repairs; all intangible assets used in the development, production,
and operation of the BOS purchasing business, including, but not
limited to, exclusive use of the Heinold Hog Markets name and
trademark, all the licenses and sublicenses, technical information,
computer software and related documentation, know-how, drawings,
blueprints, designs, design protocols, specifications for materials,
specifications for parts and devices, and safety procedures for the
handling of materials, substances and BOS.
F. ``Heinold Hog Markets'' means Heinold Hog Markets, Tyson's
BOS purchasing business that is part of Tyson Hog Markets, Inc., a
subsidiary of Tyson Fresh Meats, Inc.
G. ``BOS'' means boars (un-castrated male hogs), outs (runts or
deformed hogs), and sows (female hogs that have produced at least
one litter).
H. ``Buying station'' means those facilities identified in II.E.
above at which BOS are purchased from Producers, sorted, weighed,
and subsequently sold and shipped to processors or packers.
I. ``Plaintiff States'' means the States of Illinois, Iowa, and
Missouri.
J. ``Producers'' means owners or operators of facilities at
which hogs are bred or farrowed.
K. ``Proposed Transaction'' means Tyson's proposed acquisition
of Hillshire pursuant to the Agreement and Plan of Merger entered
into by Tyson and Hillshire dated July 1, 2014.
III. Applicability
A. This Final Judgment applies to Tyson and Hillshire, as
defined above, and all other persons in active concert or
participation with any of them who receive actual notice of this
Final Judgment by personal service or otherwise.
B. If, prior to complying with Section IV and V of this Final
Judgment, Defendant Tyson sells or otherwise disposes of all or
substantially all of their assets or of lesser business units that
include the Divestiture Assets, they shall require the purchaser to
be bound by the provisions of this Final Judgment. Defendant Tyson
need not obtain such an agreement from the acquirer of the assets
divested pursuant to this Final Judgment.
IV. Divestitures
A. Defendants are ordered and directed, within 90 calendar days
after the filing of the Complaint in this matter, or five (5)
calendar days after notice of the entry of this Final Judgment by
the Court, whichever is later, to divest the Divestiture Assets in a
manner consistent with this Final Judgment to an Acquirer acceptable
to the United States, in its sole discretion after consultation with
the Plaintiff States. Defendants agree to use their best efforts to
divest the Divestiture Assets as expeditiously as possible. The
United States, in its sole discretion, may agree to one or more
extensions of this time period not to exceed 60 calendar days in
total, and shall notify the Court in such circumstances.
B. In accomplishing the divestiture ordered by this Final
Judgment, Defendants promptly shall make known, by usual and
customary means, the availability of the Divestiture Assets.
Defendants shall inform any person making inquiry regarding a
possible purchase of the Divestiture Assets that they are being
divested pursuant to this Final Judgment and provide that person
with a copy of this Final Judgment. Defendants shall offer to
furnish to all prospective Acquirers, subject to customary
confidentiality assurances, all information and documents relating
to the Divestiture Assets customarily provided in a due diligence
process except such information or documents subject to the
attorney-client privileges or work-product doctrine. Defendants
shall make available such information to the United States at the
same time that such information is made available to any other
person.
C. Defendants shall provide the Acquirer and the United States
information relating to the personnel involved in the operation and
management of the Divestiture Assets to enable the Acquirer to make
offers of employment. Defendants will not interfere with any
negotiations by the Acquirer to employ any Defendant employee whose
primary responsibility is the operation and management of the
Divestiture Assets. For a period of twelve (12) months following
entry of the Final Judgment, the Defendants shall not solicit to
hire, or hire, any Tyson employee hired by the Acquirer unless (1)
such individual is terminated or laid off by the Acquirer, or (2)
the Acquirer agrees in writing that Defendants may solicit or hire
that individual.
D. Defendants shall permit prospective Acquirers of the
Divestiture Assets to have reasonable access to personnel and to
make inspections of the physical facilities of the Divestiture
Assets; access to any and all environmental, zoning, and other
permit documents and information; and access to any and all
financial, operational, or other documents and information
customarily provided as part of a due diligence process.
E. Defendants shall warrant to the Acquirer that each asset will
be operational on the date of sale.
F. Defendants shall warrant to the Acquirer that there are no
material defects in the environmental, zoning, or other permits
pertaining to the operation of each asset.
G. Defendants shall not take any action that will impede in any
way the permitting, operation, or divestiture of the Divestiture
Assets. Following the sale of the Divestiture Assets, Defendants
will not undertake, directly or indirectly, any challenges to the
environmental, zoning, or other permits relating to the operation of
the Divestiture Assets.
H. Unless the United States otherwise consents in writing, the
divestiture pursuant to Section IV, or by Divestiture Trustee
appointed pursuant to Section V, of this Final Judgment, shall
include the entire Divestiture Assets, and shall be accomplished in
such a way as to satisfy the United States, in its sole discretion,
after consultation with the Plaintiff States, that the Divestiture
Assets can and will be used by the Acquirer as part of a viable,
ongoing business purchasing BOS. Divestiture of the Divestiture
Assets may be made to one or more Acquirers, provided that in each
instance it is demonstrated to the sole satisfaction of the United
States that the Divestiture Assets will remain viable and the
divestiture of such assets will remedy the competitive harm alleged
in the Complaint. The divestitures, whether pursuant to Section IV
or Section V of this Final Judgment,
(1) shall be made to an Acquirer that, in the United States's
sole judgment after consultation with the Plaintiff States, has the
intent and capability (including the necessary managerial,
operational, technical and financial capability) of competing
effectively in the business of purchasing of BOS; and
(2) shall be accomplished so as to satisfy the United States, in
its sole discretion, after consultation with the Plaintiff States,
that none of the terms of any agreement between an Acquirer and
Defendants give Defendants the ability unreasonably to raise the
Acquirer's costs, to lower the Acquirer's efficiency, or otherwise
to interfere in the ability of the Acquirer to compete effectively.
V. Appointment of Divestiture Trustee
A. If Defendant Tyson has not divested the Divestiture Assets
within the time period specified in Section IV(A), Defendants shall
notify the United States and the Plaintiff States of that fact in
writing. Upon application of the United States, the Court shall
appoint a Divestiture Trustee selected by the United States and
approved by the Court to effect the divestiture of the Divestiture
Assets.
B. After the appointment of a Divestiture Trustee becomes
effective, only the Divestiture Trustee shall have the right to sell
the Divestiture Assets. The Divestiture Trustee shall have the power
and authority to accomplish the divestiture to an Acquirer
acceptable to the United States, after consultation with the
Plaintiff States, at such price and on such terms as are then
obtainable upon reasonable effort by the Divestiture Trustee,
subject to the provisions of Sections IV, V, and VI of this Final
Judgment, and shall have such other powers as this Court deems
appropriate. Subject to Section V(D) of this Final Judgment, the
Divestiture Trustee may hire at the cost and expense of Defendants
any investment bankers, attorneys, or other agents, who shall be
solely accountable to the Divestiture
[[Page 52760]]
Trustee, reasonably necessary in the Divestiture Trustee's judgment
to assist in the divestiture. Any such investment bankers,
attorneys, or other agents shall serve on such terms and conditions
as the United States approves including confidentiality requirements
and conflict of interest certifications.
C. Defendants shall not object to a sale by the Divestiture
Trustee on any ground other than the Divestiture Trustee's
malfeasance. Any such objections by Defendants must be conveyed in
writing to the United States and the Divestiture Trustee within ten
(10) calendar days after the Divestiture Trustee has provided the
notice required under Section VI.
D. The Divestiture Trustee shall serve at the cost and expense
of Defendant Tyson, on such terms and conditions as the United
States approves, including confidentiality requirements and conflict
of interest certifications. The Divestiture Trustee shall account
for all monies derived from the sale of the assets sold by the
Divestiture Trustee and all costs and expenses so incurred. After
approval by the Court of the Divestiture Trustee's accounting,
including fees for its services yet unpaid and those of any
professionals and agents retained by the Divestiture Trustee, all
remaining money shall be paid to Defendant Tyson and the trust shall
then be terminated. The compensation of the Divestiture Trustee and
any professionals and agents retained by the Divestiture Trustee
shall be reasonable in light of the value of the Divestiture Assets
and based on a fee arrangement providing the Divestiture Trustee
with an incentive based on the price and terms of the divestiture
and the speed with which it is accomplished, but timeliness is
paramount. If the Divestiture Trustee and Defendant Tyson are unable
to reach agreement on the Divestiture Trustee's or any agents' or
consultants' compensation or other terms and conditions of
engagement within fourteen (14) calendar days of appointment of the
Divestiture Trustee, the United States may, in its sole discretion,
take appropriate action, including making a recommendation to the
Court. The Divestiture Trustee shall, within three (3) business days
of hiring any other professionals or agents, provide written notice
of such hiring and the rate of compensation to the Defendants and
the United States.
E. Defendants shall use their best efforts to assist the
Divestiture Trustee in accomplishing the required divestiture. The
Divestiture Trustee and any consultants, accountants, attorneys, and
other agents retained by the Divestiture Trustee shall have full and
complete access to the personnel, books, records, and facilities of
the business to be divested, and Defendants shall develop financial
and other information relevant to such business as the Divestiture
Trustee may reasonably request, subject to reasonable protection for
trade secret or other confidential research, development, or
commercial information, or any applicable privilege for any of the
forgoing. Defendants shall take no action to interfere with or to
impede the Divestiture Trustee's accomplishment of the divestiture.
F. After its appointment, the Divestiture Trustee shall file
monthly reports with the United States and, as appropriate, the
Court setting forth the Divestiture Trustee's efforts to accomplish
the divestiture ordered under this Final Judgment. To the extent
such reports contain information that the Divestiture Trustee deems
confidential, such reports shall not be filed in the public docket
of the Court. Such reports shall include the name, address, and
telephone number of each person who, during the preceding month,
made an offer to acquire, expressed an interest in acquiring,
entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring, any interest in the Divestiture Assets, and
shall describe in detail each contact with any such person. The
Divestiture Trustee shall maintain full records of all efforts made
to divest the Divestiture Assets.
G. If the Divestiture Trustee has not accomplished the
divestiture ordered under this Final Judgment within six (6) months
after its appointment, the Divestiture Trustee shall promptly file
with the Court a report setting forth (1) the Divestiture Trustee's
efforts to accomplish the required 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 reports contains information
that the Divestiture Trustee deems confidential, such reports shall
not be filed in the public docket of the Court. The Divestiture
Trustee shall at the same time furnish such report to the United
States which shall have the right to make additional recommendations
consistent with the purpose of the trust. The Court thereafter shall
enter such orders as it shall deem appropriate to carry out the
purpose of the Final Judgment, which may, if necessary, include
extending the trust and the term of the Divestiture Trustee's
appointment by a period requested by the United States.
H. If the United States determines that the Divestiture Trustee
has ceased to act or failed to act diligently or in a reasonably
cost-effective manner, it may recommend the Court appoint a
substitute Divestiture Trustee.
VI. Notice of Proposed Divestiture
A. Within two (2) business days following execution of a
definitive divestiture agreement, Defendant Tyson or the Divestiture
Trustee, whichever is then responsible for effecting the divestiture
required herein, shall notify the United States and the Plaintiff
States of any proposed divestiture required by Section IV or V of
this Final Judgment. If the Divestiture Trustee is responsible, it
shall similarly notify Defendants. The notice shall set forth the
details of the proposed 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 such notice, the United States, after consultation with
the Plaintiff States, may request from Defendants, the proposed
Acquirer, any other third party, or the Divestiture Trustee, if
applicable, additional information concerning the proposed
divestiture, the proposed Acquirer, and any other potential
Acquirer. Defendants and the Divestiture Trustee shall furnish any
additional information requested of them within fifteen (15)
calendar days of the receipt of the request, unless the parties
shall otherwise agree.
C. Within thirty (30) calendar days after receipt of the notice
or within twenty (20) calendar days after the United States has been
provided the additional information requested from Defendants, the
proposed Acquirer, any third party, and the Divestiture Trustee,
whichever is later, the United States shall provide written notice
to Defendants and the Divestiture Trustee, if there is one, stating
whether or not it objects to the proposed 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 Section V(C) of this Final
Judgment. Absent written notice that the United States does not
object to the proposed Acquirer or upon objection by the United
States, a divestiture proposed under Section IV or Section V shall
not be consummated. Upon objection by Defendants under Section V(C),
a divestiture proposed under Section V shall not be consummated
unless approved by the Court.
VII. Financing
Defendants shall not finance all or any part of any purchase
made pursuant to Section IV or V of this Final Judgment.
VIII. Hold Separate
Until the divestiture required by this Final Judgment has been
accomplished, Defendants shall take all steps necessary to comply
with the Hold Separate Stipulation and Order entered by this Court.
Defendants shall take no action that would jeopardize the
divestiture ordered by this Court.
IX. Affidavits
A. Within twenty (20) calendar days of the filing of the
Complaint in this matter, and every thirty (30) calendar days
thereafter until the divestiture has been completed under Section IV
or V, Defendants shall deliver to the United States an affidavit as
to the fact and manner of its compliance with Section IV or V of
this Final Judgment. Each such affidavit shall include the name,
address, and telephone number of each person who, during the
preceding thirty (30) calendar days, made an offer to acquire,
expressed an interest in acquiring, entered into negotiations to
acquire, or was contacted or made an inquiry about acquiring, any
interest in the Divestiture Assets, and shall describe in detail
each contact with any such person during that period. Each such
affidavit shall also include a description of the efforts Defendants
have taken to solicit buyers for the Divestiture Assets, and to
provide required information to prospective Acquirers, including the
limitations, if any, on such information. Assuming the information
set forth in the affidavit is true and complete, any objection by
the United
[[Page 52761]]
States to information provided by Defendants, including limitation
on information, shall be made within fourteen (14) calendar days of
receipt of such affidavit.
B. Within twenty (20) calendar days of the filing of the
Complaint in this matter, Defendants shall deliver to the United
States an affidavit that describes in reasonable detail all actions
Defendants have taken and all steps Defendants have implemented on
an ongoing basis to comply with Section VIII of this Final Judgment.
Defendants shall deliver to the United States an affidavit
describing any changes to the efforts and actions outlined in
Defendants' earlier affidavits filed pursuant to this section within
fifteen (15) calendar days after the change is implemented.
C. Defendants shall keep all records of all efforts made to
preserve and divest the Divestiture Assets until one year after such
divestiture has been completed.
X. Appointment of Monitoring Trustee
A. Upon application of the United States, the Court shall
appoint a Monitoring Trustee selected by the United States and
approved by the Court.
B. The Monitoring Trustee shall have the power and authority to
monitor Defendants' compliance with the terms of this Final Judgment
and the Hold Separate Stipulation and Order entered by this Court,
and shall have such other powers as this Court deems appropriate.
The Monitoring Trustee shall be required to investigate and report
on the Defendants' compliance with this Final Judgment and the Hold
Separate Stipulation and Order and the Defendants' progress toward
effectuating the purposes of this Final Judgment, including but not
limited to: keeping Tyson Fresh Meats, Inc. separate from the sow
purchasing operations of Defendant Hillshire.
C. Subject to Section X(E) of this Final Judgment, the
Monitoring Trustee may hire at the cost and expense of Defendants
any consultants, accountants, attorneys, or other agents, who shall
be solely accountable to the trustee, reasonably necessary in the
trustee's judgment. Any such consultants, accountants, attorneys, or
other agents shall serve on such terms and conditions as the United
States approves including confidentiality requirements and conflict
of interest certifications.
D. Defendants shall not object to actions taken by the
Monitoring Trustee in fulfillment of the Monitoring Trustee's
responsibilities under any Order of this Court on any ground other
than the trustee's malfeasance. Any such objections by Defendants
must be conveyed in writing to the United States and the Monitoring
Trustee within ten (10) calendar days after the action taken by the
Monitoring Trustee giving rise to the Defendants' objection.
E. The Monitoring Trustee shall serve at the cost and expense of
Defendants pursuant to a written agreement with Defendants and on
such terms and conditions as the United States approves including
confidentiality requirements and conflict of interest
certifications. The compensation of the Monitoring Trustee and any
consultants, accountants, attorneys, and other agents retained by
the Monitoring Trustee shall be on reasonable and customary terms
commensurate with the individuals' experience and responsibilities.
If the Monitoring Trustee and Defendants are unable to reach
agreement on the trustee's or any agents' or consultants'
compensation or other terms and conditions of engagement within 14
calendar days of appointment of the trustee, the United States may,
in its sole discretion, take appropriate action, including making a
recommendation to the Court. The Monitoring Trustee shall, within
three (3) business days of hiring any consultants, accountants,
attorneys, or other agents, provide written notice of such hiring
and the rate of compensation to Defendants and the United States.
F. The Monitoring Trustee shall have no responsibility or
obligation for the operation of Defendants' businesses.
G. Defendants shall use their best efforts to assist the
Monitoring Trustee in monitoring Defendants' compliance with their
individual obligations under this Final Judgment and under the Hold
Separate Stipulation and Order. The Monitoring Trustee and any
consultants, accountants, attorneys, and other agents retained by
the Monitoring Trustee shall have full and complete access to the
personnel, books, records, and facilities relating to compliance
with this Final Judgment, subject to reasonable protection for trade
secret or other confidential research, development, or commercial
information or any applicable privileges. Defendants shall take no
action to interfere with or to impede the Monitoring Trustee's
accomplishment of its responsibilities.
H. After its appointment, the Monitoring Trustee shall file
reports monthly, or more frequently as needed, with the United
States, and, as appropriate, the Court setting forth Defendants'
efforts to comply with its obligations under this Final Judgment and
under the Hold Separate Stipulation and Order. To the extent such
reports contain information that the Monitoring Trustee deems
confidential, such reports shall not be filed in the public docket
of the Court.
I. The Monitoring Trustee shall serve until the divestiture of
all the Divestiture Assets is finalized pursuant to either Section
IV or Section V of this Final Judgment.
J. If the United States determines that the Monitoring Trustee
has ceased to act or failed to act diligently or in a reasonably
cost-effective manner, it may recommend the Court appoint a
substitute Monitoring Trustee.
XI. Compliance Inspection
A. For the purposes of determining or securing compliance with
this Final Judgment, or of any related orders such as any Hold
Separate Order, or of determining whether the Final Judgment should
be modified or vacated, and subject to any legally recognized
privilege, from time to time authorized representatives of the
United States Department of Justice, including consultants and other
persons retained by the United States, shall, upon written request
of an authorized representative of the Assistant Attorney General in
charge of the Antitrust Division, and on reasonable notice to
Defendants, be permitted:
(1) access during Defendants' office hours to inspect and copy,
or at the option of the United States, to require Defendants to
provide hard copy or electronic copies of, all books, ledgers,
accounts, records, data, and documents in the possession, custody,
or control of Defendants, relating to any matters contained in this
Final Judgment; and
(2) to interview, either informally or on the record,
Defendants' officers, employees, or agents, who may have their
counsel present (individual and/or Defendant's counsel), regarding
such matters. The interviews shall be subject to the reasonable
convenience of the interviewee and without restraint or interference
by Defendants.
B. Upon the written request of an authorized representative of
the Assistant Attorney General in charge of the Antitrust Division,
Defendants shall submit written reports or response to written
interrogatories, under oath if requested, relating to any of the
matters contained in this Final Judgment as may be requested.
C. No information or documents obtained by the means provided in
this section shall be divulged by the United States to any person
other than an authorized representative of (i) the executive branch
of the United States, or (ii) the Plaintiff States, except in the
course of legal proceedings to which the United States is a party
(including grand jury proceedings), or for the purpose of securing
compliance with this Final Judgment, or as otherwise required by
law.
D. If at the time information or documents are furnished by
Defendants to the United States, Defendants represent and identify
in writing the material in any such information or documents to
which a claim of protection may be asserted under Rule 26(c)(1)(G)
of the Federal Rules of Civil Procedure, and Defendants mark each
pertinent page of such material, ``Subject to claim of protection
under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure,''
then the United States shall give Defendants ten (10) calendar days
notice prior to divulging such material in any legal proceeding
(other than a grand jury proceeding).
XII. No Reacquisition
Defendants may not reacquire any part of the Divestiture Assets
during the term of this Final Judgment.
XIII. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this
Final Judgment to apply to this Court at any time for further orders
and directions as may be necessary or appropriate to carry out or
construe this Final Judgment, to modify any of its provisions, to
enforce compliance, and to punish violations of its provisions.
XIV. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire ten years from the date of its entry.
XV. Public Interest Determination
Entry of this Final Judgment is in the public interest. The
parties have complied with the requirements of the Antitrust
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Procedures and Penalties Act, 15 U.S.C. Sec. 16, including making
copies available to the public of this Final Judgment, the
Competitive Impact Statement, and any comments thereon and the
United States's responses to comments. Based upon the record before
the Court, which includes the Competitive Impact Statement and any
comments and response to comments filed with the Court, entry of
this Final Judgment is in the public interest.
Date:------------------------------------------------------------------
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. Sec. 16.
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United States District Judge
[FR Doc. 2014-21102 Filed 9-3-14; 8:45 am]
BILLING CODE 4410-11-P