Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Notices 14987 

Land Management, HC 33 Box 33500, 

Ely, Nevada 89301. The ROD is also 

available at the following Web site: 

http://www.blm.gov/nv/st/en/fo/ 

ely_field_office. Printed copies of the 

ROD are available for public inspection 

at several locations listed in the 

SUPPLEMENTARY INFORMATION section of 

this notice. 

A limited number of copies of the 

document will be available at the 

following BLM offices: 

—Las Vegas District Office, 4701 North 

Torrey Pines, Las Vegas, Nevada; 

—Ely District Office, 702 North 

Industrial Way, Ely, Nevada; and 

—Nevada State Office, 1340 Financial 

Boulevard, Reno, Nevada. 

FOR FURTHER INFORMATION CONTACT: 

Doris Metcalf, telephone: (775) 289– 

1852, or e-mail: doris_metcalf@blm.gov. 

SUPPLEMENTARY INFORMATION: Printed 

copies of the ROD are available for 

public inspection at the following 

locations: 

—University of Nevada-Reno, Getchell 

Library, Government Publication 

Dept., Reno, Nevada; 

—Washoe County Library, 301 South 

Center Street, Reno, Nevada; 

—White Pine County Library, 950 

Campton Street, Ely, Nevada; 

—Nye County Library, 167 S. Central 

Street, Tonopah, Nevada; 

—Lincoln County Library, 63 Main 

Street, Pioche, Nevada; and 

—Clark County Library, 1401 E. 

Flamingo Rd., Las Vegas, Nevada. 

The main issues addressed in the 

Final EIS were visual resources, 

biological resources, lands with 

wilderness characteristics, and 

socioeconomic effects. Three 

alternatives were analyzed in the Final 

EIS: (1) The Proposed Action, in which 

the power line would be located largely 

within West-Wide Energy Corridors; (2) 

an alternative alignment within the 

corridors; and (3) no Action, which 

would be to not authorize the ROW. 

After careful consideration of many 

factors, including the need to provide 

electricity to the Western United States 

and strengthening and stabilizing the 

economies of White Pine, Nye, Lincoln, 

and Clark Counties, and balancing those 

factors with the need to protect air, 

visual and biological resources, the BLM 

has selected the agency preferred 

alternative. The BLM’s preferred 

alternative will approve all of the 

facilities described in the Proposed 

Action, including the transmission-line 

route, except the R–SS–Site B subalternative, including the access road 

and Falcon-Gondor loop-ins will replace 

the Robinson Summit Substation 

components. Various site-specific 

applicant-committed mitigation 

measures will be implemented at the 

development stage to protect other 

resources and uses. 

Comments on the ON Line Draft 

Supplemental EIS received from the 

public, cooperating agencies and 

internal BLM reviewers were 

incorporated into the Final EIS. The 

comments resulted in corrections, 

clarifying text, and the addition of new 

text used in the analysis of impacts. The 

ON Line Final EIS addresses impacts of 

the power line on private lands and 

those administered by the BLM. 

This decision is subject to appeal to 

the Interior Board of Land Appeals 

(IBLA) as provided in 43 CFR part 4, 

within 30 days from the date of 

publication of this Notice of Availability 

in the Federal Register. The ROD 

contains instructions for filing an appeal 

with the IBLA. 

The ROD for this project addresses 

only BLM’s decisions for public lands 

and resources administered by BLM. 

Rosemary Thomas, 

District Manager, Ely District Office. 

[FR Doc. 2011–6461 Filed 3–17–11; 8:45 am] 

BILLING CODE 4310–HC–P 

DEPARTMENT OF JUSTICE 

Antitrust Division 

United States v. Graftech International 

Ltd. and Seadrift Coke, L.P.; Public 

Comments and Response on Proposed 

Final Judgment 

Pursuant to the Antitrust Procedures 

and Penalties Act, 15 U.S.C. 16(b)–(h), 

the United States hereby publishes 

below the comment received on the 

proposed Final Judgment in United 

States v. GrafTech International Ltd. 

and Seadrift Coke, L.P., Civil Action No. 

1:10–CV–02039, which was filed in the 

United States District Court for the 

District of Columbia on March 3, 2011, 

together with the response of the United 

States to the comment. 

Copies of the comments and the 

response are available for inspection at 

the Department of Justice Antitrust 

Division, 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, 333 Constitution Avenue, 

NW., Washington, DC 20001. Copies of 

any of these materials may be obtained 

upon request and payment of a copying 

fee. 

Patricia A. Brink, 

Director of Civil Enforcement. 

UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLUMBIA 

UNITED STATES OF AMERICA, 

Plaintiff, 

v. 

GRAFTECH INTERNATIONAL LTD. 

and 

SEADRIFT COKE L.P. 

Defendants. 

CASE NO.: 1:10-cv-02039 

JUDGE: Collyer, Rosemary M. 

DECK TYPE: Antitrust 

DATE STAMP: March 3, 2011 

Response of Plaintiff United States to 

Public Comment on the Proposed Final 

Judgment 

Pursuant to the requirements of the 

Antitrust Procedures and Penalties Act, 

15 U.S.C. 16(b)–(h) (‘‘APPA’’ or ‘‘Tunney 

Act’’), the United States hereby responds 

to the public comment received 

regarding the proposed Final Judgment 

in this case. After careful consideration 

of the comment submitted, the United 

States continues to believe that the 

proposed Final Judgment will provide 

an effective and appropriate remedy for 

the antitrust violations alleged in the 

Complaint. The United States will move 

the Court for entry of the proposed Final 

Judgment after the public comment and 

this response have been published in 

the Federal Register, pursuant to 15 

U.S.C. 16(d). 

The United States filed a civil 

antitrust complaint on November 29, 

2010, seeking to enjoin GrafTech 

International Ltd.’s (‘‘GrafTech’’) 

proposed acquisition of Seadrift Coke 

L.P. (‘‘Seadrift’’). The Complaint alleged 

that the acquisition likely would 

substantially lessen competition in the 

worldwide sale of petroleum needle 

coke used to manufacture graphite 

electrodes, in violation of Section 7 of 

the Clayton Act, 15 U.S.C. 18. That loss 

of competition likely would result in 

higher prices, reduced output and less 

favorable terms of sale in the global 

petroleum needle coke market. 

Simultaneously with the filing of the 

Complaint, the United States filed a 

proposed Final Judgment, which is 

designed to remedy the expected 

anticompetitive effects of the 

acquisition, and a Stipulation signed by 

the plaintiffs and the defendants, 

consenting to the entry of the proposed 

Final Judgment after compliance with 

the requirements of the Tunney Act, 15 

U.S.C. 16. Pursuant to those 


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14988 Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Notices 

requirements, the United States filed its 

Competitive Impact Statement (‘‘CIS’’) 

with the Court on November 29, 2010; 

the proposed Final Judgment and CIS 

were published in the Federal Register 

on December 7, 2010, see United States 

v. Graftech international Ltd. and 

Seadrift L.P., 75 FR 76026; and 

summaries of the terms of the proposed 

Final Judgment and CIS, together with 

directions for the submission of written 

comments relating to the proposed Final 

Judgment, were published in The 

Washington Post for seven (days 

beginning on December 3, 2010 and 

ending on December 9, 2010. The sixtyday period for public comment ended 

on February 7, 2011; one comment was 

received as described below and 

attached hereto. 

I. The Investigation and Proposed 

Resolution 

A. The Investigation 

On April 1, 2010, Defendants 

GrafTech and Seadrift entered into an 

Agreement and Plan of Merger, pursuant 

to which GrafTech agreed to acquire the 

81.1 percent of Seadrift stock it does not 

already own for about $308.1 million. 

Immediately following the 

announcement of the merger, the United 

States Department of Justice 

(‘‘Department’’) opened an investigation 

into the likely competitive effects of the 

transaction that spanned more than 

seven months. As part of this detailed 

investigation, the Department issued 

Second Requests to the merging parties 

and several Civil Investigative Demands 

(‘‘CIDs’’) to third parties. The 

Department considered more than a 

million documents submitted by the 

merging parties in response the Second 

Requests and by third parties in 

response to CIDs. The Department also 

took oral testimony from eight 

executives from the merging parties, and 

conducted over 100 interviews with 

customers, competitors and other 

market participants. The investigative 

staff carefully analyzed the information 

provided and thoroughly considered all 

of the issues presented. The Department 

considered the potential competitive 

effects of the transaction on the 

production and sale of petroleum needle 

coke used to manufacture graphite 

electrodes, and concluded that the 

merger likely would result in higher 

prices, reduced output and less 

favorable terms of sale in the global 

petroleum needle coke market. 

As part of its investigation, the 

Department considered the potential 

competitive effects of the merger on the 

markets for numerous products and 

services and on a variety of customer 

groups. The Department concluded, as 

explained more fully in the Complaint 

and CIS, the acquisition of Seadrift by 

GrafTech could substantially lessen 

competition in the international 

petroleum needle coke market. Seadrift 

is a producer of petroleum needle coke, 

a product purchased by GrafTech and 

its competitors to make graphite 

electrodes which are, in turn, sold to 

steel producers to melt scrap in electric 

arc furnaces. Petroleum needle coke is 

a key input in large-diameter (18- to 32- 

inch) electrodes, in particular, because 

they are often used in high intensity 

applications, where petroleum needle 

coke’s needle-like structure, low 

coefficient of thermal expansion, and 

low impurity rate are critical to efficient 

conduction of strong current without 

costly shutdowns to replace broken or 

exhausted graphite electrodes. 

Petroleum needle coke is available from 

four producers: ConocoPhillips 

Company (‘‘Conoco’’), Seadrift and two 

other competitors located in Japan. 

Sales typically are negotiated annually, 

with price terms and volume targets 

memorialized in formal contracts. 

At the time of the proposed merger, 

GrafTech received a substantial portion 

of its petroleum needle coke supply 

from Conoco, pursuant to a multi-year 

agreement (‘‘Supply Agreement’’), which 

also included a provision that either 

GrafTech or Conoco could ‘‘audit’’ the 

books and records of the other. On 

September 27, 2010, in response to the 

proposed merger, Conoco activated the 

‘‘termination clause’’ of that agreement, 

which effectively locked in volume 

targets and imposed most-favorednation (‘‘MFN’’) pricing for three years, 

while leaving the audit right intact. By 

operation of the merger, the audit clause 

would extend to Seadrift the 

information provided to GrafTech from 

Conoco. Should the audit clause be used 

in conjunction with the MFN, for 

example, to verify that GrafTech was, in 

fact, receiving the lowest price, Seadrift 

potentially would have access to its 

largest competitor’s production and 

pricing to all other customers. By 

facilitating the exchange of customerspecific, real-time, competitor pricing 

information, the merger was likely to 

facilitate coordination. 

Therefore, the Department concluded, 

as a result of its investigation, that 

GrafTech’s acquisition of Seadrift likely 

would substantially lessen competition 

in the development, production and sale 

of petroleum needle coke in the United 

States, leading to higher prices, reduced 

output and less favorable terms of sale 

in the worldwide petroleum needle coke 

market, in violation of Section 7 of the 

Clayton Act. The proposed Final 

Judgment is designed to address the 

threat of information exchange created 

by the merger, by removing the 

opportunity and means for Seadrift and 

Conoco to engage in anticompetitive 

activity under cover of the Supply 

Agreement, and possibly future supply 

arrangements. 

B. Proposed Final Judgment 

The proposed Final Judgment 

contains several layers of prohibited and 

required conduct to eliminate the 

anticompetitive effects that otherwise 

would result from GrafTech’s 

acquisition of Seadrift. First, the terms 

of the proposed Final Judgment require 

GrafTech and Seadrift immediately to 

abrogate, amend or otherwise alter the 

current petroleum needle coke Supply 

Agreement between GrafTech and 

Conoco to remove the terms related to 

the ongoing audit rights, sharing of nonpublic or proprietary information, and 

MFN pricing. Had these clauses 

persisted, they might have allowed 

GrafTech and Seadrift access to 

Conoco’s customer-specific pricing, 

production and other commercial terms. 

GrafTech also is prohibited from adding 

similar terms to future contracts with 

Conoco for the ten-year period term of 

the proposed Final Judgment. Second, 

to enforce this prohibition, GrafTech 

must produce copies of each petroleum 

needle coke supply agreement to the 

United States on an annual basis. As an 

additional safeguard against any 

informal exchange of pricing or output 

information between GrafTech, Seadrift 

and Conoco, the proposed Final 

Judgment also mandates that GrafTech 

strictly segregate employees who 

negotiate terms with Conoco from those 

who make decisions about pricing and 

production at Seadrift, and vice versa. 

Finally, so that the United States can 

detect any changes in capacity, 

production or sales that might suggest 

coordination, GrafTech must report 

capacity, sales and production 

information on a quarterly basis. 

These layers of protection prevent 

harm without imperiling the efficiencies 

that GrafTech expects from the merger. 

GrafTech anticipates substantial, 

merger-specific efficiencies by internal 

consumption of Seadrift petroleum 

needle coke, which would allow the 

elimination of double margins. Should 

this result in lower GrafTech prices for 

graphite electrode customers, it not only 

would benefit those customers directly, 

but it also likely would incentivize 

other graphite electrode competitors to 

reduce prices in response to that 

competition. Verified plans to improve 

the quality of Seadrift petroleum needle 

coke likely will benefit Seadrift’s 


Emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Notices 14989 

1Cf 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’ ’’). 

2The 2004 amendments substituted the word 

‘‘shall’’ for ‘‘may’’ when directing the courts to 

consider the enumerated factors and amended the 

list of factors to focus on competitive considerations 

and address potentially ambiguous judgment terms. 

Compare 15 U.S.C. 16(e) (2004), with 15 U.S.C. 

16(e)(1) (2006); see also SBC Commc’ns, 489 F. 

Continued 

graphite electrode customers, as well as 

the downstream consumers of finished 

graphite electrodes, in the future. Thus, 

the source of potential harm is 

eliminated without depriving 

consumers of the procompetitive 

efficiencies that GrafTech and Seadrift 

expect their merger to generate. 

II. Standard of Judicial Review 

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. 16(e)(l). In making that 

determination in accordance with the 

statute, the court 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 (DC 

Cir. 1995); see generally United States v. 

SBC Commc’ns, Inc., 489 F. Supp. 2d 1 

(D.DC 2007) (assessing public interest 

standard under the Tunney Act); United 

States v. InBev N. V./S.A., 2009–2 Trade 

Cas. (CCH) ¶76,736, No. 08–1965 (JR), 

2009 U.S. Dist. LEXIS 84787, at *3 

(D.DC 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 mechanisms to enforce the Final 

Judgment are clear and manageable’’). 

As the United States Court of Appeals 

for the District of Columbia Circuit has 

held, under the APPA, a court 

considers, among other things, the 

relationship between the remedy 

secured and the specific allegations 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) (citing 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.DC 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).1 In 

determining whether a proposed 

settlement is in the public interest, the 

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-DanielsMidland Co., 272 F. Supp. 2d 1, 6 (D.DC 

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). 

Courts have greater flexibility in 

approving proposed consent decrees 

than in crafting their own decrees 

following a finding of liability in a 

litigated matter. ‘‘[A] proposed decree 

must be approved even if it falls short 

of the remedy the court would impose 

on its own, as long as it falls within the 

range of acceptability or is ‘within the 

reaches of public interest.’ ’’ United 

States v. Am. Tel. & Tel. Co., 552 F. 

Supp. 131, 151 (D.DC 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). As this 

Court has previously recognized, to 

meet this standard ‘‘[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.’’ United States v. 

Abitibi-Consolidated Inc., 584 F. Supp. 

2d 162, 165 (D.DC 2008) (citing 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, rather than to ‘‘construct [its] 

own hypothetical case and then 

evaluate the decree against that case.’’ 

Microsoft, 56 F.3d at 1459. 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. 

Id. 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 to the 

Tunney Act,2 Congress made clear its 


Emcdonald on DSK2BSOYB1PROD with NOTICES
14990 Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Notices 

Supp. 2d at 11 (concluding that the 2004 

amendments effected minimal changes’’ to Tunney 

Act review). 

3See United States v. Enova Corp., 107 F. Supp. 

2d 10, 17 (D.DC 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., 1977–1 Trade Cas. (CCH) ¶61,508, 

at 71,980 (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, 93d Cong., 1st Sess., at 6 (1973) (‘‘Where 

the public interest can be meaningfully evaluated 

simply on the basis of briefs and oral arguments, 

that is the approach that should be utilized.’’). 

4Energoprom also argues that GrafTech has failed 

to abide by Russian competition agency reporting 

requirements, a complaint that is beyond the scope 

of this review. 

5Energoprom Comment at 2. 

6 Id. 

7 Id. 

8 Id. at 3. 

9 Id. at 4 

10 Id. 

11 Id. 

12 In fact, GrafTech has already complied with 

this provision in the proposed Final Judgment. 

intent to preserve the practical benefits 

of utilizing consent decrees in antitrust 

enforcement, stating ‘‘[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). 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 Senator Tunney). Rather, the 

procedure for the public-interest 

determination is left to the discretion of 

the court, with the recognition that the 

court’s ‘‘scope of review remains sharply 

proscribed by precedent and the nature 

of Tunney Act proceedings.’’ SBC 

Commc’ns, 489 F. Supp. 2d at 11.3

III. Summary of Public Comment and 

The United States’s Response 

During the sixty-day comment period, 

the United States received only one 

comment, from a Russian graphite 

electrode competitor, Energoprom. 

Energoprom’s comment, which objected 

to the scope of the remedy described in 

the proposed Final Judgment, is 

attached hereto. As explained in detail 

below, after careful review, the United 

States continues to believe that the 

proposed Final Judgment is in the 

public interest. 

A. Summary of the Public Comment 

Energoprom, a competitor of 

GrafTech’s, is the largest producer of 

graphite electrodes in the Russian 

Federation, with facilities in the Rostov 

and Novosibirsk regions of Russia. 

Energoprom argues first that the 

proposed Final Judgment should be 

expanded to require more thorough 

monitoring to protect competition in the 

petroleum needle coke market and, in 

the alternative, asserts that no 

settlement could be crafted that would 

prevent anticompetitive effects from the 

merger of GrafTech and Seadrift.4

Energoprom first argues that the 

proposed Final Judgment does not 

require sufficient monitoring to prevent 

anticompetitive effects arising from 

coordination. The company contends 

that GrafTech’s acquisition of Seadrift, 

in combination with GrafTech’s supply 

agreement with Conoco, increases the 

likelihood of price fixing, output 

coordination, and other anticompetitive 

agreements between Seadrift and 

Conoco.5 To prevent such coordination, 

Energoprom submits that it is necessary 

to collect and analyze basic economic 

indicators regarding these companies 

and the market as a whole.6 Energoprom 

further objects to the ten-year duration 

of the proposed Final Judgment, and 

questions whether competition will 

continue after its expiration.7

Second, Energoprom argues that 

neither the Complaint nor the proposed 

Final Judgment addresses the possibility 

that unilateral effects may result from 

the acquisition of Seadrift by Graftech. 

Energoprom argues that Seadrift has ‘‘a 

dominant market position’’ in the 

petroleum needle coke industry.8

Acquiring Seadrift, in the company’s 

view, would allow GrafTech to 

determine the production volume and 

terms of sale to GrafTech’s competitors 

in the sale of graphite electrodes, 

creating the potential for abuse.9

Energoprom argues that unilateral 

anticompetitive effects may include a 

reduction of Seadrift’s output to 

GrafTech’s competitors and less 

favorable terms of sale to GrafTech’s 

competitors, either of which may cause 

Energoprom and other graphite 

electrode competitors to lose customers 

because of reduced Seadrift output or 

because competitors ‘‘couldn’t provide 

consumers as low [a] price for 

electrodes as GrafTech did.’’ 10

B. The United States’s Response 

Energoprom’s allegations are not new; 

in fact, the company expressed its 

concerns to the United States on several 

occasions during the investigation of the 

proposed acquisition. The United States 

is confident that Energoprom’s 

suggestions for additional remedial 

measures are unnecessary to serve the 

public interest. Further, the United 

States’s exercise of its discretion not to 

allege in the complaint potential 

unilateral effects from the acquisition is 

beyond the scope of Tunney Act review. 

1. Additional Monitoring Requirements 

Energoprom asserts that, to prevent 

anticompetitive effects from potential 

coordination between GrafTech, Seadrift 

and Conoco, the Final Judgment must 

compel the ‘‘systematic’’ production of 

more information than the proposed 

Final Judgment currently requires, 

including ‘‘the conditions of contracts 

entered into by each producer with 

consumers,’’ each company’s price lists, 

and ‘‘other documents’’ that reveal ‘‘basic 

economic indicators.’’ 11 Energoprom 

suggests this information should be 

compared with similar information from 

the ‘‘market on the whole.’’ 

The additional documents and 

information that Energoprom suggests 

should be required, at best, would be 

unnecessary supplements to the 

comprehensive remedy included in the 

proposed Final Judgment and, at worst, 

would impose a significant burden on 

GrafTech as well as other competitors 

and customers in this industry. The 

proposed Final Judgment already 

provides several layers of protection 

against potential anticompetitive effects, 

whether they manifest as price increases 

or output reductions, including 

significant reporting requirements. First, 

the proposed Final Judgment removes 

the mechanism likely to facilitate 

coordination on price and input by 

requiring that GrafTech amend its 

supply agreement with Conoco to 

remove the audit and MFN provisions 

prior to consummating the merger.12

The proposed Final Judgment likewise 

prohibits GrafTech from adding similar 

provisions for ten years. Second, the 

proposed Final Judgment requires that 

GrafTech produce copies of all of its 

contracts with Conoco, so the United 

States may monitor compliance with 

this prohibition and detect any variation 

of the audit and MFN provisions that 

might suggest a price-fixing or output 

restriction arrangement. Third, the 

proposed Final Judgment requires that 

GrafTech erect a firewall that separates 

those GrafTech employees negotiating 

prices and terms with Conoco from 

those making decisions about price and 

output for Seadrifi. Finally, GrafTech 

must produce information revealing 


Emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Notices 14991 

13Energoprom Comment at 2. 

14 Id. 

Seadrift’s projected output and external 

sales on a quarterly basis. Any 

significant change in production or sales 

levels immediately would reveal 

changes in production volume that 

might suggest output coordination, but 

also likely would provide a clear signal 

of the attendant output effects of an 

anticompetitive price-fixing agreement. 

In addition, Energoprom’s proposal 

that the proposed Final Judgment 

should require the ‘‘systematic 

collection, storage and processing’’ of 

information regarding customer 

contracts, price lists and other 

‘‘economic indicators’’ ignores the 

significant administrative burden such a 

requirement would impose on the 

Defendants, without any attendant 

enforcement benefit. Moreover, 

Energoprom suggests this 

comprehensive collection of data would 

be useful only in an effort to measure 

‘‘divergence’’ of Seadrift sales from ‘‘the 

market as a whole,’’ 13 which suggests a 

similar collection effort would have to 

be made of third parties; such a 

requirement not only would be 

burdensome, but also is beyond the 

scope of a settlement to a Clayton Act 

action brought by the United States. 

Energoprom also objects to the tenyear duration of the requirements in the 

proposed Final Judgment, arguing that 

‘‘[i]t is not clear’’ what the competitive 

environment will be like in ten years.14

However, it is precisely because it is 

difficult to foresee competitive 

conditions more than ten years into the 

future that the proposed Final Judgment 

is limited in duration. Ten years is the 

standard term of most Department 

consent decrees, and reflects 

Department experience about the most 

appropriate period for ensuring the 

prevention of harm posed by most 

mergers. Upon expiration of the Final 

Judgment, the Defendants will remain 

fully subject to the Sherman Act and the 

Division will remain able to investigate 

any potential anticompetitive conduct. 

In sum, the carefully constructed 

layers of requirements and prohibitions 

included in the proposed Final 

Judgment are more than sufficient to 

remedy the harm alleged in the 

Complaint, and Energoprom’s suggested 

additions merely would impose an 

unnecessary burden without providing 

any commensurate benefit to 

consumers. 

2. Expansion of the Complaint To Allege 

Unilateral Effects 

Energoprom also argues that the 

United States should have alleged that 

the merger likely would lead to 

unilateral anticompetitive effects. 

Energoprom asserts that, even absent 

coordination with Conoco, the 

acquisition of Seadrift would be 

sufficient to allow GrafTech the ability 

to impose anticompetitive price 

increases or output restrictions on 

downstream customers of graphite 

electrodes. This argument, however, is 

not a valid basis for the Court to reject 

a proposed remedy during Tunney Act 

review. As discussed above, in a 

Tunney Act proceeding the Court must 

evaluate the adequacy of the remedy 

only for the antitrust violations alleged 

in the complaint. See United States v. 

Microsoft Corp., 56 F.3d 1448, 1459 (DC 

Cir. 1995). The Tunney Act does not 

usurp the United States’s prosecutorial 

discretion to choose the type of case to 

bring; courts ‘‘cannot look beyond the 

complaint. . . unless the complaint is 

drafted so narrowly as to make a 

mockery of judicial power.’’ SBC 

Commc ’ns, 489 F. Supp. 2d at 15. 

Energoprom, however, seeks to 

‘‘construct fits] own hypothetical case 

and then evaluate the decree against 

that case’’—precisely the approach 

specifically forbidden in Tunney Act 

proceedings by the DC Circuit. See 

Microsoft, 56 F.3d at 1459. In this case, 

the United States did not allege that the 

acquisition of Seadrift was likely to 

generate a unilateral anticompetitive 

effect, and it is improper for 

Energoprom to measure the sufficiency 

of the remedy against such a 

hypothetical case. 

Accordingly, the United States 

continues to believe that the proposed 

Final Judgment will remedy the 

competitive harm likely to result from 

GrafTech’s acquisition of Seadrift and 

that entry of the proposed Final 

Judgment is in the public interest. 

IV. Conclusion 

The issues raised in the public 

comment were among the many 

considered by the United States when it 

evaluated the sufficiency of the 

proposed remedy. The United States has 

determined that the proposed Final 

Judgment, as drafted, provides an 

effective and appropriate remedy for the 

antitrust violations alleged in the 

Complaint and is therefore in the public 

interest. The United States will move 

this Court to enter the proposed Final 

Judgment after the comment and this 

response are published in the Federal 

Register. 

Dated: March 3, 2011 

Respectfully submitted, 

Stephanie A. Fleming, Esq., United 

States Department of Justice, Antitrust 

Division, Litigation II Section, 450 5th 

Street, NW., Suite 8700, Washington, 

DC 20530, Phone: (202) 514–9228, 

Fax: (202) 514–9033, 

stephanie.fleming@usdoj.gov. 

CERTIFICATE OF SERVICE 

I, Stephanie A. Fleming, hereby 

certify that on March 3, 2011, I caused 

a copy of the foregoing Response of 

Plaintiff United States to Public 

Comment on the Proposed Final 

Judgment to be served upon defendants 

GrafTech and Seadrift, mailing the 

documents electronically to their duly 

authorized legal representatives as 

follows: 

Counsel for Defendant GrafTech: 

Jonathan Gleklen, Esq., Arnold & 

Porter LLP, 555 12111 Street, NW., 

Washington, DC 20004; 

Counsel for Defendant Seadrift: Craig 

Seebald, Esq., Joel Grosberg, Esq., 

McDermott, Will & Emery, 600 13th 

Street, NW., Washington, DC 20006; 

/s/ 

Stephanie A. Fleming, Esq., United 

States Department of Justice, Antitrust 

Division, Litigation II Section, 450 

Fifth Street, NW., Suite 8700, 

Washington, DC 20530, Phone: (202) 

514–9228, Fax: (202) 514–9033, 

stephanie.fleming@usdoj.gov; 

To: 450 Fifth Street, NW., Suite 8700, 

Washington DC., 20530. 

Letter No: 9091–TM–01–2011 

Date: January 25, 2011. 

Attn.: Maribeth Petrizzi, Chief, 

Litigation II Section, Antitrust 

Division United States Department of 

Justice 

Fax: 

Re: Comments to the proposed Final 

Judgment regarding acquisition of 

Seadrift Coke L.P. by GrafTech 

International Ltd. 

Dear Ms Petrizzi: 

In connection with filing a Complaint 

on 29.11.2010 by the United States of 

America, represented by Antitrust 

Division of the U.S. Department of 

Justice to the U.S. District Court, District 

of Columbia vs. GrafTech International 

Ltd. company (‘‘GrafTech’’) and Seadrift 

Coke LP company (‘‘Seadrift’’), relating 

to the proposed acquisition of Seadrift 

by GrafTech, together with proposed 

Final Judgment and Competitive Impact 

Statement (published in the U.S. 

Federal Register dated December 7, 

2010 Vol. 75 No. 234), being guided by 

Section 15 U.S.C. 16(d), Closed Joint 

Stock Company ‘‘ENERGOPROM 

MANAGEMENT’’ (Moscow, Russia), 

hereinafter—the Company, being the 

management company of electrode 

plants—JSC ENERGOPROM— 


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14992 Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Notices 

1Such provision was activated on September 27, 

2010 and valid from 2011 until the end of 2013. 

Novocherkassk Electrode Plant’’ (Rostov 

region, Russia), JSC ‘‘ENERGOPROM— 

Chelyabinsk Electrode Plant’’ 

(Chelyabinsk, Russia), JSC 

‘‘ENERGOPROM—Novosibirsk 

Electrode Plant’’ (Novosibirsk region, 

Russia), all these companies together 

form ENERGOPROM Group, hereby 

presents commentary to Final Judgment. 

The above Complaint was filed by the 

United States of America in the 

announcement of GrafTech—the world’s 

largest manufacturer of graphite 

electrode UHP, used in electric arc 

furnaces for electric steel smelting, 

about the proposed acquisition of 

Seadrift—the second largest world 

producer of petroleum needle coke—a 

key raw material used to produce 

graphite electrode UHP. The Complaint 

seeks to reduce the expected 

anticompetitive effect of the acquisition 

due to taking by the parties to the 

transaction a number of measures listed 

in the proposed Final Judgment. 

ENERGOPROM Group is Russia’s 

largest producer of graphite electrodes 

UHP, supplies the goods to Europe and 

the USA and uses petroleum needle 

coke in the production. ENERGOPROM 

Group considers that the 

aforementioned transaction is contrary 

to the basic principles of antitrust laws, 

which might result in substantial harm 

to the competition not only on the 

world petroleum needle coke market, 

but also as a consequence—on the 

market of graphite electrodes UHP and 

electric steel market. 

According to subsection 2 of section 

II of the Competitive Impact Statement 

the alleged acquisition of Seadrift by 

GrafTech may substantially lessen 

competition in the worldwide sale of 

petroleum needle coke because it will 

allow Seadrift to be involved in the 

scope of the long-term petroleum needle 

coke supply agreements (‘‘Supply 

Agreements’’) between GrafTech and 

Conoco Philips Company (hereinafter— 

‘‘Conoco’’)—a competitor of Seadrift, the 

world’s largest producer of needle coke, 

under which Conoco must provide 

petroleum needle coke to GrafTech with 

the most-favored-nation (‘‘MFN’’) basis 

meaning that prices to GrafTech may 

not exceed the lowest price charged by 

Conoco to its other customers; 1 to 

ensure compliance with this MFN 

guarantee, GrafTech could demand to 

audit Conoco documents reflecting the 

company’s costs, pricing to specific 

customers, volume of production to each 

customer and other commercially 

sensitive terms of sale. As a result of 

GrafTech and Seadrift merger Seadrift 

will be entitled to audit, which will 

allow it to monitor online prices charged 

by its direct competitor from the 

electrode producers and petroleum 

needle coke volume of sales to each 

customer. 

However, even under the 

circumstances of absence of the MFN 

regime and rights to audit, acting 

between GrafTech and Conoco in 

respect of supply may provide GrafTech 

(and hence Seadrift) with inappropriate, 

in this situation, competitive 

information with respect to pricing, 

supply and production. 

This situation creates the possibility 

of price fixing plot, coordination of 

industrial production volume and other 

anticompetitive agreements of Seadrift 

with its competitor—Conoco. 

Sections IV and V of the proposed 

Final Judgment provide measures (the 

required conduct and prohibited 

conduct of parties to the transaction), 

which are designed to neutralize 

damage to the competition, which is 

applied by the acquisition in question. 

In accordance with these sections of 

the proposed Final Judgment GrafTech 

and Seadrift shall: 

—Amend the Supply Agreement in 

order to remove the most favorednation basis price clause and audit 

rights clause; 

—Provide the Antitrust Division of the 

U.S. Department of Justice with a 

copy of any agreements relating to the 

supply of petroleum needle coke, 

formed between defendants and 

Conoco for the duration of the 

proposed Final Judgment (10 years), 

as well as ordinary course of business 

documents, which provide 

information on the quantity of output 

and sales of Seadrift; 

—Separate employees who are 

negotiating terms with Conoco from 

those who make decisions about 

pricing and production at Seadrift. 

Similarly, employees of Seadrift, who 

are negotiating agreements with 

competitors of GrafTech, will be 

prevented from sharing any 

competitively sensitive information 

thus obtained. 

These provisions in the opinion of the 

Antitrust Division of the U.S. 

Department of Justice help to ensure 

that defendants comply with the 

proposed Final Judgment, as well as 

ensure that Conoco and Seadrift do not 

coordinate their actions in terms of 

production volumes and prices. 

In our opinion the measures referred 

to in the proposed Final Judgment are 

not sufficient and proportionate to 

damage caused to competition by the 

acquisition. 

In order to prevent coordination of the 

two largest producers of petroleum 

needle coke it is necessary to carry out 

systematic collection, storage and 

processing of information about 

functioning of these companies in the 

product market by analyzing the 

conditions of contracts entered into by 

each producer with consumers, price 

list of each company and other 

documents. In this case, the most 

important condition for determining 

coordination is fixed divergence by the 

dynamics of basic economic indicators 

of the activities of these companies with 

the average data of similar indicators for 

the market on the whole. 

The proposed Final Judgment does 

not stipulate the need to provide by 

companies such documents and 

information. 

In addition, the proposed Final 

Judgment is only valid for 10 years. It 

is not clear how will competitive 

environment be ensured at the end of 

this period. 

Along with this, we would like to 

point out the following. The Complaint 

in question, Competitive Impact 

Statement, the proposed Final Judgment 

analyzes only one aspect of the anticompetitive acquisitions—possibility of 

action coordination of two 

competitors—Seadrift and Conoco 

companies. Another important aspect of 

the transaction is not touched upon. 

Before point it out, it is necessary to 

give a brief description of the world 

petroleum needle coke market. 

World petroleum needle coke market 

is characterized by several features: 

(1) A limited number of producers. 

Only four companies work on the 

world petroleum needle coke market, 

including Conoco and Seadrift. The 

number and composition of producers 

did not change for a long time. 

(2) High barriers to entry the market. 

Specificity of petroleum needle coke 

market stipulates: 

• Large capital-construction facility 

for the production of petroleum needle 

coke, and in case of the existing setup— 

a significant change in the organization 

of the refinery; 

• High quality requirements for raw 

materials or need to prepare raw 

materials by its desulphurization. 

• Use of the closed technologies that 

require long-term, debugging. 

• Availability of skills and experience 

in technical and laboratory staff. 

• Strict requirements for the quality 

of the original product. 

• Limited sales market—only the 

electrode industry. 

Thus, the market for petroleum needle 

coke is capital intensive and niche, and 

barriers to entry are high. 


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Federal Register / Vol. 76, No. 53 / Friday, March 18, 2011 / Notices 14993 

2Reducing the price of petroleum needle coke, 

and consequently reducing the volume of its sales 

in 2009 is not indicative, because it is caused by 

the global financial crisis. 

3The Competitive Impact Statement states that 

the Seadrift world market share is 19%. 

(3) Lack of substitute products to 

petroleum needle coke. 

Neither pitch needle coke nor anode 

coke can neither be mixed with the 

petroleum needle coke, nor less serve as 

a complete substitute for petroleum 

needle coke. It is fully described in 

paragraphs 12–14, Section IV of the 

Complaint. 

(4) Low-elasticity of demand for the 

goods, which means that increasing the 

price for the goods does not entail 

reducing the demand for it, which in 

turn is caused by the fact that the 

volume of demand exceeds the supply 

of goods on the market.2

All the above indicates that the world 

petroleum needle coke market is 

oligopolistic (market of collective 

dominance), so that each participant of 

the market, including the Seadrift 

company, occupies a dominant position 

and has a large market weight, 

regardless of the size of its market 

share.3

This fact in itself is a cause for 

heightened attention to the behavior of 

each such entity on the market because 

abuse by such entity a dominant 

position leads to serious negative 

consequences for competition. 

In this situation Seadrift—a company 

with a dominant market position of the 

petroleum needle coke is acquired by 

the company, which is the world’s 

largest producer of graphite electrode 

UHP. 

This acquisition creates a situation 

where the production volume of 

petroleum needle coke and sales policy 

of this raw material to the producers of 

graphite electrodes is determined by 

another producer of graphite 

electrodes—their direct competitor. This 

situation creates a wide field for abuse 

and may lead to a significant 

deterioration of competition not only in 

the petroleum needle coke, but also in 

the market of graphite electrode UHP. 

Section III of the Competitive Impact 

Statement states: ‘‘GrafTech anticipates 

substantial, merger-specific efficiencies 

by internal consumption of Seadrift 

petroleum needle coke, which would 

allow the elimination of double 

margins. Should this result in lower 

GrafTech prices for graphite electrodes 

downstream, it likely would incentivize 

other graphite electrodes competitors to 

reduce prices in response of that 

competition’’. 

We do not believe that these 

conclusions are correct and, on the 

contrary, we would like to indicate the 

following possible ways to abuse by 

GrafTech and Seadrift companies: 

(1) GrafTech may use the control over 

the supply of petroleum needle coke 

produced by Seadrift company to 

reduce the production of petroleum 

needle coke and higher prices for 

graphite electrodes. 

By limiting the supply of petroleum 

needle coke GrafTech may interfere 

other producers of graphite electrodes to 

deliver the required amount of graphite 

electrodes to maintain the same level of 

production in industry. 

(2) Prices for needle coke produced by 

Seadrift for other customers may be 

raised; so GrafTech may increase its 

market share at the expense of other 

producers of graphite electrodes because 

they couldn’t provide consumers as low 

price for electrodes as GrafTech did. 

(3) GrafTech may use the methods of 

unfair competition, forcing Seadrift 

waive or deviate without good reason to 

conclude contracts with particular 

buyers, to set different prices for coke 

for different customers, to impose 

needle coke consumers contract terms 

not profitable for them. This creates a 

situation where market players will be 

in different conditions and products of 

some may become uncompetitive. 

In conclusion, we would like to draw 

attention to one point. 

The market of petroleum needle coke 

and graphite electrodes UHP market are 

global and the Russian market is its 

integral part. 

According to Russian law, if the 

transaction made outside the territory of 

the Russian Federation may have an 

impact on the state of competition in the 

Russian Federation it is subject to 

agreement with the Federal 

Antimonopoly Service of the Russian 

Federation. To our knowledge, Seadrift 

and GrafTech companies did not receive 

such approval, and therefore violated 

the laws of the Russian Federation. 

Summarizing up the above said in its 

Complaint, the United States 

represented by Antitrust Division of the 

U.S. Department of Justice do not cover 

all the negative effects of the acquisition 

in question, but analyze only one aspect 

of it. But even in this aspect the 

measures stipulated by the proposed 

Final Judgment are not adequate and 

sufficient to prevent damage by the 

competition. 

Public interests are to create 

maximum favorable conditions for the 

functioning of free market economy 

with there are separate, independent 

entities. The acquisition of Seadrift by 

GrafTech is inherently anticompetitive—GrafTech—the largest 

consumer of petroleum needle coke 

acquires the largest producer of 

petroleum needle coke, which forms the 

basis for discrimination of all other 

customers of this raw material in the 

whole world, which will negatively 

affect not only producers of graphite 

electrodes, but also producers of electric 

steel. In this connection the proposed 

Final Judgment by definition does not 

and can not be in the public interest, 

since the transaction should not be 

performed and approved under any 

circumstances, and therefore any 

proposed measures do not compensate 

for the damage which will be caused to 

competition in the petroleum needle 

coke market as well as and graphite 

electrodes market UHP that will 

negatively impact the electric steel 

market. 

Based on the foregoing, 

ENERGOPROM Group requests 

Antitrust Division of the U.S. 

Department of Justice to withdraw its 

consent to the proposed Final Judgment. 

Attachments: 

—Articles of Association of CJSC 

‘‘ENERGOPROM MANAGEMENT’’; 

—Certificate of state registration of CJSC 

‘‘ENERGOPROM MANAGEMENT’’; 

—Decision of the sole shareholder on 

the appointment of the General 

Director of the company. 

All documents are appostilled and 

translated into English. 

Contacts: Closed Joint Stock Company 

<<ENERGOPROM MANAGEMENT>> 

123001, Russia, Moscow, SadovayaKudrinskaya, 32/1, Tel +7 495 789 96 

46, fax +7 495 789 96 47, Web-site: 

www.energoprom.ru, Contact e-mail: 

nproskurdina@energoprom.ru. 

Sincerely yours, 

General Director Nadtochy A. 

[FR Doc. 2011–6182 Filed 3–17–11; 8:45 am] 

BILLING CODE 4410–11–M 

DEPARTMENT OF JUSTICE 

Drug Enforcement Administration 

[OMB Number 1117–0009] 

Agency Information Collection 

Activities: Proposed Collection; 

Comments Requested: Controlled 

Substances Import/Export 

Declaration—DEA Form 236 

ACTION: 60-Day Notice of Information 

Collection Under Review. 

The Department of Justice (DOJ), Drug 

Enforcement Administration (DEA), will 

be submitting the following information 

collection request to the Office of 

Management and Budget (OMB) for 

review and approval in accordance with 


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