[Federal Register Volume 71, Number 164 (Thursday, August 24, 2006)]
[Notices]
[Pages 50084-50097]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-7090]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Mittal Steel Company N.V. 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 Complaint, proposed Final 
Judgment, Hold Separate Stipulation and Order, and Competitive Impact 
Statement were filed with the United States District Court for the 
District of Columbia in United States v.

[[Page 50085]]

Mittal Steel Company N.V. Civil Action No. 1:06CY01360. On August 1, 
2006, the United States filed a Complaint to enjoin Mittal Steel 
Company N.Y. (``Mittal Steel'') from acquiring Arcelor S.A. 
(``Arcelor''). The Complaint alleges that Mittal Steel's acquisition of 
Arcelor would substantially lessen competition in the development, 
manufacture, and sale of Tin Mill Products in violation of Section 7 of 
the Clayton Act, as amended, 15 U.S.C. 18, throughout the United States 
east of the Rocky Mountains (the ``Eastern United States''). The 
proposed Final Judgment, filed August 1, 2006, requires defendant, 
Mittal Steel, to divest one of their three North American tin mills it 
will own after the acquisition to preserve competition in the sale of 
Tin Mill Products. A Hold Separate Stipulation and Order, entered by 
the Court on August 2, 2006, requires defendant to maintain, prior to 
divestiture, the competitive independence and economic viability ofthe 
assets subject to divestiture under the proposed Final Judgment. A 
Competitive Impact Statement filed by the United States describes the 
Complaint, proposed Final Judgment, Hold Separate Stipulation and 
Order, and the remedies available to private litigants who may have 
been injured by the alleged violations.
    Copies of the Complaint, proposed Final Judgment, Hold Separate 
Stipulation and Order, and Competitive Impact Statement are available 
for inspection at the U.S. Department of Justice, Antitrust Division, 
325 Seventh Street, NW., Room 215, Washington, D.C. 20530 (telephone: 
202-514-2481), and at the Clerk's Office of the United States District 
Court for the District of Columbia, Washington, DC. Copies of these 
materials may be obtained upon request and payment of a copying fee set 
by the U.S. Department of Justice regulations.
    Public comment is invited within the statutory 60-day comment 
period. Such comments and responses thereto will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, 
U.S. Department of Justice, 1401 H Street, N.W., Suite 3000, 
Washington, D.C. 20530 (telephone: 202-307-0924).

J. Robert Kramer: II,
Director of Operations.

United States District Court for the District of Columbia

United States of America, U.S. Department of Justice, Antitrust 
Division, 1401 H Street, NW., Suite 3000, Washington, DC 20530. 
Plaintiff, v. Mittal Steel Company N.V., Hofplein 20, 15th Floor, 
Rotterdam, The Netherlands, 3032. Defendant.

    Case No.
    JUDGE:
    DECK TYPE: Antitrust
    DATE STAMP:

Complaint

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil antitrust 
action to obtain equitable and other relief against the defendant, 
Mittal Steel Company N.V. (``Mittal Steel''), to prevent its proposed 
acquisition of Arcelor S.A. (``Arcelor''), and alleges as follows:

I. Nature of the Action

    1. Mittal Steel formally launched a tender offer for Arcelor on May 
19, 2006, and on June 25, 2006 the Arcelor board recommended Mittal's 
offer to Arcelor's shareholders. The acceptance period for Mittal's 
tender offer cJosed on July 13,2006, and Mittal Steel can take 
ownership of the shares beginning on August 1, 2006.
    2. Mittal Steel is an integrated steelmaker that manufactures, 
among other products, finely rolled tin or chrome coated steel sheets 
known as ``Tin Mill Products.'' Tin Mill Products are used in 
manufacturing steel cans for packaging a wide range of food products 
such as soup, fruits, and vegetables, and non-food products such as 
paints, aerosols, and shaving cream. Mittal Steel is the second largest 
supplier of Tin Mill Products to the portion of the United States east 
of the Rocky Mountains (the ``Eastern United States''), accounting for 
about 31 percent of Tin Mill Products tonnage sold in 2005.
    3. Arcelor accounted for about two percent of Tin Mill Products 
tonnage sold in the Eastern United States in 2005. Arcelor acquired its 
subsidiary Dofasco Inc. (``Dofasco'') in February 2006. In 2005 Dofasco 
accounted for an additional four percent of the Tin Mill Products 
tonnage sold in 2005 in the Eastern United States.
    4. Mittal Steel's proposed acquisition of Arcelor would eliminate 
Arcelor, including its subsidiary Dofasco, as an independent competitor 
in the sale of Tin Mill Products in the Eastern United States, further 
consolidating an already highly concentrated market. The largest 
supplier of Tin Mill Products sold in the Eastern United States, 
another integrated steelmaker, accounted for over 44 percent of the 
tons sold in 2005. If this merger were not enjoined, the two largest 
suppliers of Tin Mill Products would account for over 81 percent of 
2005 sales in the Eastern United States.
    5. The acquisition would remove current constraints on coordination 
and increase the incentives of the two largest firms to coordinate 
their behavior. The acquisition would thus substantially increase the 
likelihood of coordination and would likely lead to higher prices, 
lower quality, less innovation, and less favorable delivery terms in 
the Tin Mill Products market in the Eastern United States.
    6. Accordingly, the acquisition would substantially lessen 
competition in Tin Mill Products in the Eastern United States, in 
violation of Section 7 of the Clayton Act.

II. Jurisdiction and Venue

    7. Plaintiff United States brings this action against defendant 
Mittal Steel under Section 15 of the Clayton Act, as amended, 15 U.S.C. 
25, to prevent and restrain the violation by defendant of Section 7 of 
the Clayton Act, 15 U.S.C. 18.
    8. Defendant manufactures and sells Tin Mill Products in the flow 
of interstate commerce. Defendant's activities in developing, 
manufacturing and selling Tin Mill Products substantially affect 
interstate commerce. This Court has subject matter jurisdiction over 
this action and the defendant pursuant to Section 12 of the Clayton 
Act, 15 U.S.C. 22, and 28 U.S.C. 1331, 1337(a), and 1345.
    9. Venue is proper in this District pursuant to 28 U.S.C. 1391(d). 
Furthermore, defendant has consented to venue and personal jurisdiction 
in this judicial district.

III. Parties to the Proposed Transaction

    10. Defendant Mittal Steel is a Netherlands corporation with its 
corporate headquarters and principal place of business in Rotterdam, 
The Netherlands, and operations in sixteen countries on four 
continents. Mittal Steel produces both flat and long steel products for 
all of the major steel consuming sectors, including automotive, 
appliance, machinery, and construction. Mittal Steel's total worldwide 
revenues exceeded $28 billion in 2005, and its total annual steel

[[Page 50086]]

production exceeded 55 million tons. Mittal Steel produces Tin Mill 
Products in Sparrows Point, Maryland and Weirton, West Virginia. In 
2005, Mittal Steel sold over 800,000 tons of Tin Mill Products in the 
Eastern United States.
    11. Arcelor is a Luxembourg corporation with its corporate 
headquarters and principal place of business in the City of Luxembourg. 
Arcelor, with operations primarily in Europe and Brazil, produces flat 
and long products for the automotive, appliance, packaging, and general 
industries. In 2005, Arcelor had approximately $41.5 billion in total 
worldwide revenues and steel production of 46 million tons.
    12. In February 2006 Arcelor acquired Dofasco, a wholly-owned 
Canadian subsidiary with its corporate headquarters and principal place 
of business in Hamilton, Ontario, Canada. Dofasco shipped 4.8 million 
tons of steel and had $3.9 billion in revenues in 2005. Arcelor, which 
shipped Tin Mill Products to the Eastern United States primarily from 
its European facilities, and Dofasco, which shipped Tin Mill Products 
to the Eastern United States from its Canadian facility, sold a 
combined 170,615 tons of Tin Mill Products in the Eastern United States 
in 2005.

IV. The Proposed Transaction

    13. On January 27, 2006, Mittal Steel announced its intention to 
launch a hostile tender offer to acquire Arcelor for approximately $23 
billion in cash and securities. Mittal Steel simultaneously announced 
an agreement to sell Dofasco for approximately $5 billion to a German 
steelmaker, ThyssenKrupp A.G. (``ThyssenKrupp''), if Mittal Steel 
acquired Arcelor. Arcelor initially resisted the hostile takeover. One 
of the steps Arcelor's Board of Directors took to resist the takeover 
was to transfer legal title to the shares of Dofasco to an independent 
Dutch foundation known as a ``stichting.''
    14. Mittal Steel subsequently increased its tender offer to 
approximately $33 billion in cash and securities and formally launched 
its tender offer on May 19, 2006. After Mittal Steel agreed to improve 
the financial, corporate govemance, and other terms of its offer for 
Arcelor, the Arcelor Board agreed on June 25, 2006 to recommend 
Mittal's offer to Arcelor's shareholders. The acceptance period for 
Mittal's initial tender offer, during which 92.6 percent of Arcelor's 
shares were tendered, closed on July 13, 2006. Mittal Steel can take 
ownership of the shares beginning on August 1, 2006.

V. Trade and Commerce

A. Relevant Product Market
    15. Tin Mill Products are finely rolled steel sheets, usually 
coated with a thin protective layer of tin or chrome. Tin Mill Products 
are manufactured using a sequence of processing steps in which steel is 
rolled into successively thinner sheets, then hardened, and finally 
coated with either tin or chrome.
    16. Tin Mill Products are comprised of three types of steel: Black 
plate, electrolytic tin plate (``ETP''), and tin free steel (``TFS''). 
Black plate is a light-gauge cold-rolled bare steel sheet that serves 
as the substrate for production of both ETP and TFS and can be used 
bare for some applications, such as pails or larger containers. Black 
plate is coated with tin to produce ETP and with chrome to produce TFS. 
ETP and TFS are both used for packaging, although each provides 
different advantages and disadvantages (including, inter alia, organic 
coating acceptance, strength, surface finish and formability) that are 
considered by purchasers in making their purchase decisions.
    17. The majority of Tin Mill Products shipments are used to produce 
sanitary cans, often referred to as food cans. Other uses include 
aerosol cans, general line cans, pails, larger containers, metal 
buildings, and oil and fuel filter sheets.
    18. For most Tin Mill Products purchasers, including downstream 
food can customers, there are no close substitutes for Tin Mill 
Products. Packaging alternatives, such as plastic containers, are 
generally not viewed by can customers as replacements for products 
normally packaged in cans because of cost differences and the 
performance advantages associated with cans. Some of the advantages of 
steel cans compared to alternative packaging include their longer shelf 
life and greater durability, familiarity, and security. Alternative 
packaging generally costs at least as much as a steel can and sometimes 
costs as much as eight times as much as a can, and significant 
additional capital investments are necessary to incorporate alternative 
packaging materials into a customer's packaging process.
    19. A small but significant increase in the price of Tin Mill 
Products would not cause can manufacturers or their downstream 
customers to substitute non-Tin Mill Products containers, or otherwise 
to reduce their purchases of Tin Mill Products, in sufficient 
quantities so as to make such a price increase unprofitable. The use of 
alternative packaging containers is driven primarily by capital 
equipment investment considerations and by marketing factors such as 
consumer convenience, rather than by small but significant changes in 
the prices of Tin Mill Products. For example, can customers often use 
alternative packaging in order to extend an existing product line, such 
as using alternative materials for portable microwavable containers for 
soup, while continuing to package the bulk of soup products in steel 
cans.
    20. Accordingly, the development, manufacture, and sale of Tin Mill 
Products is a line of commerce and a relevant product market within the 
meaning of Section 7 of the Clayton Act.
B. Relevant Geographic Market
    21. The Eastern United States is a geographically distinct market 
for the sale of Tin Mill Products. The only Tin Mill Products 
manufacturer in the United States west of the Rocky Mountains (the 
``Western United States'') is located in California, and it does not 
have substantial sales in the Eastern United States due to its distance 
from can manufacturers in that part of the country, which tend to be 
located in proximity to agricultural regions. That California Tin Mill 
Products manufacturer, half owned by one of the two largest Tin Mill 
Products producers in the Eastern United States, accounts for over 84 
percent of the Tin Mill Products sold in the Western United States but 
ships only small quantities to the Eastern United States. Similarly, 
Tin Mill Products producers in the Eastern United States generally do 
not sell significant quantities in the Western United States because 
their treight costs are higher than those of the single manufacturer 
located in the Western United States.
    22. A small but significant increase in the price of Tin Mill 
Products would not cause Tin Mill Products customers in the Eastern 
United States to substitute purchases from outside of the Eastern 
United States in sufficient quantities so as to make such a price 
increase unprofitable.
    23. Accordingly, the Eastern United States is a relevant geographic 
market within the meaning of Section 7 of the Clayton Act.
C. Anticompetitive Effects
    24. Currently, Mittal Steel and its primary competitor account for 
over 75 percent of Tin Mill Products sales in the Eastern United 
States. Were Mittal Steel to acquire ArceJor, the largest two firms 
would account for over 81 percent of such sales. In 2005, Mittal Steel, 
Arcelor, Dofasco, and one other firm sold more than 2.1 million tons of 
Tin

[[Page 50087]]

Mill Products in the Eastern United States.
    25. The market for Tin Mill Products in the Eastern United States 
would thus become substantially more concentrated if Mittal Steel were 
to acquire Arcelor and its Dofasco subsidiary. Using a measure of 
market concentration called the Herfindahl-Hirschman Index (``HHI'') 
(defined and explained in Appendix A), the proposed transaction will 
increase the HHI in the market for Tin Mill Products in the Eastern 
United States by approximately 412 points to a post-acquisition level 
of approximately 3,522, well in excess of levels that raise significant 
antitrust concerns.
    26. Purchasers of Tin Mill Products in the Eastern United States 
have benefitted from competition between Mittal Steel and Arcelor 
through lower prices, higher quality, more innovation, and better 
delivery terms for Tin Mill Products. Arcelor and its subsidiary 
Dofasco are known for high quality and innovation, which forces Mittal 
Steel and other domestic producers to compete on these aspects as well. 
By acquiring Arcelor, Mittal Steel would eliminate that competition.
    27. Mittal Steel's elimination of Arcelor as an independent 
competitor in the manufacture and sale of Tin Mill Products within the 
Eastern United States is likely to facilitate anticompetitive 
coordination among the two major Tin Mill Products manufacturers by 
making such coordination more profitable and harder to defeat. If the 
two largest Tin Mill Products firms in the Eastern United States were 
to seek to raise prices or reduce output today, purchasers of Tin Mill 
Products could purchase Tin Mill Products from Arcelor and its 
subsidiary Dofasco. Arcelor has substantial excess and divertible 
capacity in Europe, and Arcelor's Dofasco subsidiary has significant 
divertible capacity in Canada. Were Arcelor and Dofasco no longer 
available as independent suppliers, the remaining domestic and foreign 
fringe producers would likely not have sufficient capacity and/or 
incentives to increase production enough to defeat an anticompetitive 
price increase or output reduction by the two largest firms. In 
particular, the only other incumbent producer located in the Eastern 
United States does not have the ability to manufacture cold-rolled 
substrate, and its ability to obtain the additional substrate needed to 
increase its output is constrained.
D. Entry and Expansion
    28. De novo entry into the development, manufacture and sale of Tin 
Mill Products is difficult, time-consuming, and costly, and such entry 
would not be timely, likely, or sufficient to defeat coordination by 
the two largest Tin Mill Products firms in the Eastern United States 
post-merger. To produce Tin Mill Products, a firm needs a reliable 
source of cold-rolled substrate and a Tin Mill Products finishing 
facility. A facility to finish cold-rolled substrate into Tin Mill 
Products would likely cost in the range of $60 to $100 million and take 
approximately two years to design and build. In addition, entry by a 
firm that lacks the ability to manufacture cold-rolled substrate or to 
increase its output of cold-rolled substrate would be more risky as it 
may not gain access to sufficient substrate to compete effectively. The 
cost of entry is largely ``sunk,'' i.e., it cannot be recovered or 
converted to other uses, raising the risk to entry, and there is a very 
high risk that a new entrant may not receive any profits from its 
entry.
    29. Significant new foreign entry or expansion of shipments to the 
Eastern United States by existing foreign producers is unlikely due to 
longer delivery lead times occasioned by the need for oceangoing 
transportation, additional shipping costs, trade barriers, the 
possibility of future import restrictions, and the reluctance of 
foreign Tin Mill Products manufacturers to abandon existing markets 
elsewhere in order to enter or expand in the Eastern United States. 
Overseas shipping increases the time between order and delivery by up 
to four months, which is unacceptable for most customers in the Eastern 
United States because their demand requirements fluctuate with hard-to-
predict fruit and vegetable harvests. Capacity constraints also limit 
certain foreign producers from expanding their sales into the Eastern 
United States.
    30. Therefore, entry or expansion by any other finn into the 
Eastern United States Tin Mill Products market would not be timely, 
likely, or sufficient to deter post-acquisition coordination.

VI. Violation Alleged

    31. The effect of the proposed acquisition of Arcelor by Mittal 
Steel would be to substantially lessen competition in interstate trade 
and commerce, in violation of Section 7 of the Clayton Act, 15 U.S.C. 
18.
    32. Unless restrained, the transaction will likely have the 
following effects, among others:
    a. Competition generally in the development, manufacture and sale 
of Tin Mill Products in the Eastern United States would be 
substantially lessened;
    b. Actual and potential competition between Mittal Steel and 
Arcelor in the development, manufacture and sale of Tin Mill Products 
will be eliminated; and
    c. The prices for Tin Mill Products will likely increase, the 
quality of Tin Mill Products will likely decline, innovation relating 
to Tin Mill Products will likely decline, and the delivery terms 
currently offered in the Tin Mill Products market will likely become 
less favorable to customers.

VII. Requested Relief

    33. Plaintiff requests that:
    a. Mittal Steel's proposed acquisition of Arcelor be adjudged and 
decreed to be unlawful and in violation of Section 7 of the Clayton 
Act, 15 U.S.C. 18;
    b. Defendant and all persons acting on its behalf be permanently 
enjoined and restrained from consummating the proposed acquisition or 
from entering into or carrying out any contract, agreement, plan, or 
understanding, the effect of which would be to combine Mittal Steel 
with the operations of Arcelor;
    c. Plaintiff be awarded its costs for this action; and
    d. Plaintiff receive such other and further relief as the case 
requires and the Court deems just and proper.

Dated: August 1, 2006.

Respectfully submitted,

For Plaintiff United States of America:

Thomas O. Barnett,

Assistant Attorney General D.C. Bar #426840.

David L. Meyer,

Deputy Assistant Attorney General, D.C. Bar #414420.

J. Robert Kramer II,

Director of Operations.

Maribeth Petrizzi,

Chief, Litigation II Section, D.C. Bar #435204.

Robert W. Wilder,

Acting Assistant Chief, Litigation II Section.

Kerrie J. Freeborn,
John F. Greaney,
Stephen A. Harris,
Lowell Stern (D.C. Bar #440487), Attorneys, U.S. Department of 
Justice, Antitrust Division, Litigation II Section, 1401 H Street, 
N.W., Suite 3000, Washington, D.C. 20530, (202) 307-0924.

Appendix A--Herfindahl-Hirschman Index Calculations

    ``HHI'' means the Herfindahl-Hirschman Index, a commonly 
accepted measure of market concentration. It is calculated by 
squaring the market share of each firm competing in the market and 
then summing the resulting numbers. For example, for a market 
consisting of four firms with shares of thirty, thirty, twenty, and 
twenty percent, the BBI is 2600 (30 \2\ + 30 \2\ + 20 \2\ + 20 \2\ = 
2600). The HHI takes into account the relative size and distribution 
of the firms in a market and approaches zero when a market consists 
of a

[[Page 50088]]

large number of firms of relatively equal size. The HHI increases 
both as the number of firms in the market decreases and as the 
disparity in size between those firms increases.
    Markets in which the HHI is between 1000 and 1800 points are 
considered to be moderately concentrated and those in which the HHI 
is in excess of 1800 points are considered to be highly 
concentrated. Transactions that increase the HHI by more than 100 
points in highly concentrated markets presumptively raise antitrust 
concerns under the Horizontal Merger Guidelines issued by the U.S. 
Department of Justice and the Federal Trade Commission. See 
Horizontal Merger Guidelines 1.51.

United States District Court for the District of Columbia

United States of America, Plaintiff; v. Mittal Steel Company N.V., 
Defendant

    Case No.
    DECK TYPE: Antitrust
    DATE STAMP:

Final Judgment

    Whereas, plaintiff, United States of America, filed its Complaint 
on August 1, 2006 and plaintiff and defendant, Mittal Steel Company 
N.V., 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, defendant agrees 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 the defendant to 
assure that competition is not substantially lessened;
    And Whereas, plaintiff requires defendant to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    And Whereas, defendant has represented to the United States that 
the divestitures required below can and will be made and that defendant 
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 defendant under Section 7 of the Clayton 
Act, as amended, 15 U.S.C. 18.

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' means the entity or entities to whom defendant 
divests either the Dofasco Business or the Selected Business.
    B. ``Arcelor'' means Arcelor, S.A., a Luxembourg corporation with 
its headquarters in Luxembourg City, Luxembourg, its successors and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, joint ventures, and their directors, officers, managers, 
agents, and employees.
    C. ``Divested Business'' means either the Dofasco Business or the 
Sparrows Point Business or the Weirton Business, whichever is being 
offered for sale by the defendant or by a trustee appointed pursuant to 
Section V of this Final Judgment.
    D. ``Dofasco Business'' means all assets, interests, and rights in 
Dofasco Inc. (``Dofasco''), including any additions, improvements, or 
expansions made by Arcelor after Arcelor's acquisition of Dofasco on or 
about February 20, 2006, and includes but is not limited to:
    1. All tangible assets that comprise Dofasco, including research 
and development activities, all manufacturing equipment, tooling and 
fixed assets, personal property, inventory, office furniture, 
materials, supplies, on- or off-site warehouses or storage facilities 
and other tangible property, and all assets used exclusively in 
connection with the Dofasco business; all licenses, permits and 
authorizations issued by any governmental organization relating to 
Dofasco; all supply agreements relating to Dofasco; all contracts, 
teaming agreements, agreements, leases, certifications, commitments, 
and understandings; all customer contracts, lists, accounts, and credit 
records relating to Dofasco; and all other records relating to Dofasco;
    2. All intangible assets used in the development, production, 
servicing, and sale of products by Dofasco, including but not limited 
to all patents, licenses and sublicenses, intellectual property, 
copyrights, trademarks, trade names, service marks, service names, 
technical information, computer software and related documentation, 
know-how, trade secrets, drawings, blueprints, designs, design 
protocols, specifications for materials, specifications for parts and 
devices, safety procedures for the handling of materials and 
substances, quality assurance and control procedures, design tools and 
simulation capability, and all manuals and technical information 
provided to the employees, customers, suppliers, agents or licensees of 
Dofasco; all research data concerning historic and current research and 
development efforts relating to products produced or sold by Dofasco, 
including but not limited to designs of experiments, and the results of 
successful and unsuccessful designs and experiments, provided, however, 
that Dofasco does not include Dofasco's interest in Sorevco.
    E. ``DoSol Joint Venture'' means DoSol Galva Limited Partnership, 
the hot dip galvanizing facility located in Hamilton, Ontario, Canada, 
that is a joint venture between Dofasco and Arcelor.
    F. ``Mittal Steel'' means defendant Mittal Steel Company, N.V., a 
Netherlands public limited liability company with its headquarters in 
Rotterdam, The Netherlands, its successors and assigns, and its 
subsidiaries, divisions, groups, affiliates, partnerships, joint 
ventures, and their directors, officers, managers, agents, and 
employees.
    G. ``QCM'' means Quebec Cartier Mining Company, a producer of iron 
ore products, headquartered in Montreal, Quebec, Canada.
    H. ``Selected Business'' means whichever of the Sparrows Point 
Business or the Weirton Business is selected by the United States in 
its sole discretion to be offered for sale by the defendant or by a 
trustee appointed pursuant to Section V of this Final Judgment.
    I. ``Sorevco'' mean Sorevco and Company, Limited, the hot dip 
galvanizing operation located in Montreal, Quebec, Canada, that is a 
joint venture between Dofasco and Mittal.
    J. ``Sparrows Point Facility'' means the steel making, rolling, and 
coating facility owned by Mittal Steel and located in or near Sparrows 
Point, Maryland.
    K. ``Sparrows Point Business'' means all assets, interests, and 
rights in the Sparrows Point Facility, and includes but is not limited 
to:
    1. All tangible assets used in the development, production, 
servicing, and sale of all products produced at the Sparrows Point 
Facility, including but not limited to all real property; any 
facilities used for research, development, and engineering support, and 
any real property associated with those facilities; manufacturing and 
sales assets, including all manufacturing equipment, tooling and fixed 
assets, capital equipment, vehicles, supplies, personal property, 
inventory, office

[[Page 50089]]

furniture, fixed assets and fixtures, materials, on-or off-site 
warehouses or storage facilities, and other tangible property or 
improvements; all licenses, permits and authorizations issued by any 
governmental organization relating to the Sparrows Point Business; 
supply agreements; all contracts, teaming agreements, agreements, 
leases, certifications, commitments, and understandings relating to the 
Sparrows Point Business; all customer contracts, lists, accounts, and 
credit records; and all other records maintained by Mittal Steel in 
connection with the operation of the Sparrows Point Business; provided, 
however, that with respect to any assets covered by Section II(K)(1) 
that relate primarily to Mittal's non-divested businesses, but also 
relate in part to the Sparrows Point Business, the defendant shall have 
the option, subject to the written approval of the United States in its 
sole discretion, to substitute equivalent assets or arrangements (a 
substituted asset or arrangement will not be deemed equivalent unless 
it provides the Sparrows Point Business the same benefits, or enables 
the Sparrows Point Business to perform the same function at the same or 
less cost); and further provided, that the Sparrows Point Business does 
not include Mittal Steel's contract to supply hot-rolled steel to the 
The Ford Motor Company, which contract is supplied in part by the 
Sparrows Point Facility;
    2. All intangible assets currently used exclusively or primarily in 
the development, production, servicing, and sale of all products 
produced at the Sparrows Point Facility, including but not limited to 
all patents, licenses and sublicenses, intellectual property, 
copyrights, trademarks, trade names, service marks, service names 
(except to the extent such trademarks, trade names, service marks, or 
service names contain the trademark or name ``Mittal Steel'' or any 
variation thereof), technical information, computer software and 
related documentation, know-how, trade secrets, drawings, blueprints, 
designs, design protocols, specifications for materials, specifications 
for parts and devices, safety procedures for the handling of materials 
and substances, quality assurance and control procedures, design tools 
and simulation capability, and all manuals and technical information 
provided to the employees, customers, suppliers, agents or licensees of 
the Sparrows Point Business;
    3. With respect to any other identified intangible assets that are 
not subject to Section II(K)(2) and that prior to the filing of the 
Complaint were used both in connection with the Sparrows Point Business 
and in connection with Mittal Steel's non-divested businesses, the 
defendant shall provide to the Acquirer a non-exclusive, non-
transferable, fully-paid-up license(s) for such intangible asset(s) to 
the extent and for the period of time that defendant has rights to such 
intangible assets, provided, however, that any such license may be 
transferable to any future purchaser of the Sparrows Point Business; 
and
    4. All research data concerning historic and current research and 
development efforts related to the Sparrows Point Business, including 
but not limited to designs of experiments, and the results of 
successful and unsuccessful designs and experiments. To the extent that 
any such data also relates to historic and current research and 
development efforts related to businesses other than the Sparrows Point 
Business, providing a non-exclusive copy of such data shall fulfill 
defendant's obligations under this provision.
    L. ``ThyssenKrupp'' means ThyssenKrupp AG, a German corporation 
with its headquarters in Dusseldorf, Germany, its successors and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, joint ventures, and their directors, officers, managers, 
agents, and employees.
    M. ``Tin Mill Products'' means collectively black plate, i.e., 
light-gauge cold-rolled bare steel sheet; electrolytic tin plate, i.e., 
black-plate electrolytically coated with tin; and tin free steel, i.e., 
black plate electrolytically coated with chromium.
    N. ``Weirton Facility'' means the steel making, rolling, and 
coating facility owned by Mittal Steel and located in or near Weirton, 
West Virginia.
    O. ``Weirton Business'' means all assets, interests, and rights in 
Weirton Facility, and includes but is not limited to:
    1. All tangible assets used in the development, production, 
servicing, and sale of all products produced at the Weirton Facility, 
including but not limited to all real property; any facilities used for 
research, development, and engineering support, and any real property 
associated with those facilities; manufacturing and sales assets, 
including all manufacturing equipment, tooling and fixed assets, 
capital equipment, vehicles, supplies, personal property, inventory, 
office furniture, fixed assets and fixtures, materials, on-or off-site 
warehouses or storage facilities, and other tangible property or 
improvements, including but not limited to all of defendant's rights 
and interests in the Half Moon tin warehouse and processing facility 
near the Weirton Facility; all licenses, permits and authorizations 
issued by any governmental organization relating to the Weirton 
Facility; supply agreements; all contracts, teaming agreements, 
agreements, leases, certifications, commitments, and understandings 
relating to the Weirton Facility; all customer contracts, lists, 
accounts, and credit records; and all other records maintained by 
Mittal Steel in connection with the operation of the Weirton Business; 
provided, however, that with respect to any assets covered by Section 
II(O)(I) that relate primarily to Mittal's non-divested businesses, but 
also relate in part to the Weirton Business, the defendant shall have 
the option, subject to the written approval of the United States in its 
sole discretion, to substitute equivalent assets or arrangements (a 
substituted asset or arrangement will not be deemed equivalent unless 
it provides the Weirton Business the same benefits, or enables the 
Weirton Business to perform the same function at the same or less 
cost);
    2. All intangible assets currently used exclusively or primarily in 
the development, production, servicing, and sale of all products 
produced at the Weirton Facility, including but not limited to all 
patents, licenses and sublicenses, intellectual property, copyrights, 
trademarks, trade names, service marks, service names (except to the 
extent such trademarks, trade names, service marks, or service names 
contain the trademark or name ``Mittal Steel'' or any variation 
thereof), technical information, computer software and related 
documentation, know-how, trade secrets, drawings, blueprints, designs, 
design protocols, specifications for materials, specifications for 
parts and devices, safety procedures for the handling of materials and 
substances, quality assurance and control procedures, design tools and 
simulation capability, and all manuals and technical information 
provided to the employees, customers, suppliers, agents or licensees of 
the Weirton Business;
    3. With respect to any other identified intangible assets that are 
not subject to Section II(O)(2) and that prior to the filing of the 
Complaint were used both in connection with the Weirton Business and in 
connection with Mittal Steel's non-divested businesses, the defendant 
shall provide to the Acquirer a non-exclusive, non-transferable, fully 
paid-up license(s) for such intangible asset(s) to the extent and for 
the period of the time that defendant has rights to such intangible 
assets, provided, however, that any such license may be

[[Page 50090]]

transferable to any future purchaser of the Weirton Business; and
    4. All research data concerning historic and current research and 
development efforts related to the Weirton Business, including but not 
limited to designs of experiments, and the results of successful and 
unsuccessful designs and experiments. To the extent that any such data 
also relates to historic and current research and development efforts 
related to businesses other than the Weirton Business, providing a non-
exclusive copy of such data shall fulfill defendant's obligations under 
this provision.

III. Applicability

    A. This Final Judgment applies to Mittal Steel, as defined above, 
and all other persons in active concert or participation with Mittal 
Steel who receive actual notice of this Final Judgment by personal 
service or otherwise.
    B. Defendant shall require, as a condition of the sale or other 
disposition of all or substantially all of its assets or of lesser 
business units that includes the Divested Business, that the purchaser 
agrees to be bound by the provisions of this Final Judgment.

IV. Divestiture

    A. In the event defendant acquires Arcelor, defendant is ordered 
and directed to divest the Dofasco Business to ThyssenKrupp within (1) 
120 calendar days after the filing of the Complaint in this matter or 
(2) five (5) days after notice of the entry of this Final Judgment by 
the Court, whichever is later. The United States, in its sole 
discretion, may agree to one or more extensions of this time period, 
not to exceed in total sixty (60) calendar days, and shall notify the 
Court in each such circumstance. At its option, defendant may elect to 
sell Dofasco to an alternative Acquirer acceptable to the United States 
in the sole discretion of the United States. Defendant agrees to use 
its best efforts to divest the Dofasco Business as expeditiously as 
possible.
    B. In the event defendant acquires Arcelor but is unable to 
accomplish the divestiture of the Dofasco Business within the time 
period specified in Section IV(A), then at the option of the United 
States, defendant shall divest either the Sparrows Point Business or 
the Weirton Business. The United States shall provide defendant written 
notice of its selection. Defendant is ordered and directed, within 
ninety (90) calendar days of the receipt of such notice, to divest the 
Selected Business in a manner consistent with this Final Judgment to an 
Acquirer acceptable to the United States in its sole discretion. The 
United States, in its sole discretion, may agree to one or more 
extensions of this time period, not to exceed in total sixty (60) 
calendar days, and shall notify the Court in each such circumstance. 
Defendant agrees to use its best efforts to divest the Selected 
Business as expeditiously as possible. Once the United States has 
provided defendant with written notice of its selection under Section 
IV(B), the defendant will cease to have any obligation under Section 
IV(A) to divest the Dofasco Business.
    C. In accomplishing the divestiture ordered by the Final Judgment, 
defendant promptly shall make known, by usual and customary means, the 
availability of the Divested Business. Defendant shall inform any 
person making inquiry regarding a possible purchase of the Divested 
Business that it will be divested pursuant to this Final Judgment and 
provide that person with a copy of this Final Judgment. Defendant shall 
offer to furnish to all prospective Acquirers, subject to customary 
confidentiality assurances, all information and documents relating to 
the Divested Business that customarily are provided in a due diligence 
process except such information or documents subject to the attorney-
client or work-product privilege. Defendant shall make available such 
information to the United States at the same time that such information 
is made available to any other person.
    D. Defendant shall provide the Acquirer and the United States 
information relating to personnel involved in the research, 
development, production, operation, and sale of the products of the 
Divested Business to enable the Acquirer to make offers of employment. 
Defendant will not interfere with any negotiations by the Acquirer to 
employ any employee of the Divested Business whose primary 
responsibility is the production, operation, development, or sale of 
the products of the Divested Business.
    E. Defendant shall permit prospective Acquirers of the Divested 
Business to have reasonable access to personnel and to make inspections 
of the physical facilities of the Divested Business; access to any and 
all environmental, zoning, and other permit documents and information; 
and access to any and all financial, operational, and other documents 
and information customarily provided as part of a due diligence 
process.
    F. Defendant shall warrant to the Acquirer of the Divested Business 
that each asset of the Divested Business is in a condition and state of 
repair equal to the condition and state of repair as of, (1) in the 
case that the Selected Business is divested, the date the defendant 
publicly announced its intention to acquire Arcelor, i.e., January 27, 
2006, or (2) in the case that the Dofasco Business is divested, the 
date of the filing of the Complaint in this matter.
    G. Defendant shall not take any action that will impede in any way 
the permitting, operation, or divestiture of the Divested Business.
    H. The defendant will not undertake, directly or indirectly, any 
challenges to the environmental, zoning, or other permits relating to 
the operation of the Divested Business. If the Selected Business is 
divested, the defendant shall warrant to the Acquirer of the Selected 
Business that there are no material defects in the environmental, 
zoning, or other permits pertaining to the operation of the Selected 
Business as operated by the defendant.
    I. Nothing in this Final Judgment shall be construed to require the 
Acquirer as a condition of any license granted by defendant pursuant to 
Sections II(K)(3) or II(O)(3) to extend to defendant the right to use 
the Acquirer's improvements to processes used in connection with the 
Selected Business.
    J. Unless the United States otherwise consents in writing, the 
divestiture pursuant to Section IV, or by trustee appointed pursuant to 
Section V, of this Final Judgment, shall include the entire business 
and assets of the Divested Business, and shall be accomplished in such 
a way as to satisfy the United States, in its sole discretion, that the 
Divested Business can and will be used by the Acquirer as a viable, 
ongoing business engaged in producing Tin Mill Products. The 
divestiture, 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, has the intent and capability (including the necessary 
managerial, operational, technical and financial capability) to compete 
effectively in the production and sale of Tin Mill Products; and
    2. Shall be accomplished so as to satisfy the United States, in its 
sole discretion, that none of the terms of any agreement between an 
Acquirer and defendant gives defendant the ability unreasonably to 
raise the Acquirer's costs, to lower the Acquirer's efficiency, or 
otherwise interfere in the ability of the Acquirer to compete 
effectively in the production and sale of Tin Mill Products.

[[Page 50091]]

V. Appointment of Trustee To Effect Divestiture

    A. If the defendant has not divested the Selected Business pursuant 
to Section IV(B) of this Final Judgment within the time period 
specified in that Section, defendant shall notify the United States of 
that fact in writing. Upon application of the United States, the Court 
shall appoint a trustee selected by the United States and approved by 
the Court to effect the divestiture of the Selected Business pursuant 
to Section IV(B).
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the Selected Business. The trustee 
shall have the power and authority to accomplish the divestiture to an 
Acquirer acceptable to the United States at such price and on such 
terms as are then obtainable upon reasonable effort by the 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 
trustee may hire at the cost and expense of defendant any investment 
bankers, attorneys, or other agents, who shall be solely accountable to 
the trustee, reasonably necessary in the trustee's judgment to assist 
in the divestiture.
    C. Defendant shall not object to a sale by the trustee on any 
ground other than the trustee's malfeasance. Any such objection by 
defendant must be conveyed in writing to the United States and the 
trustee within ten (10) calendar days after the trustee has provided 
the notice required under Section VI.
    D. The trustee shall serve at the cost and expense of defendant, on 
such terms and conditions as plaintiff approves, and shall account for 
all monies derived from the sale of the Selected Business all costs and 
expenses so incurred. After approval by the Court of the trustee's 
accounting, including fees for its services and those of any 
professionals and agents retained by the trustee, all remaining money 
shall be paid to defendant and the trust shall then be terminated. The 
compensation of the trustee and any professionals and agents retained 
by the trustee shall be reasonable in light of the value of the 
Selected Business and based on a fee arrangement providing the 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.
    E. Defendant shall use its best efforts to assist the trustee in 
accomplishing the required divestiture. The trustee and any 
consultants, accountants, attorneys, and other persons retained by the 
trustee shall have full and complete access to the personnel, books, 
records, and facilities of the Selected Business, and defendant shall 
develop financial and other information relevant to such business as 
the trustee may reasonably request, subject to customary 
confidentiality protection for trade secret or other confidential 
research, development, or commercial information. Defendant shall take 
no action to interfere with or to impede the trustee's accomplishment 
of the divestiture.
    F. After its appointment, the trustee shall file monthly reports 
with the United States and the Court setting forth the trustee's 
efforts to accomplish the divestiture ordered under this Final 
Judgment. To the extent such reports contain information that the 
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 the Selected Business, and shall describe in 
detail each contact with any such person. The trustee shall maintain 
full records of all efforts made to divest the Selected Business.
    G. If the trustee has not accomplished the divestiture of the 
Selected Business within six months after its appointment, the trustee 
shall promptly file with the Court a report setting forth (1) the 
trustee's efforts to accomplish the required divestiture; (2) the 
reasons, in the trustee's judgment, why the required divestiture has 
not been accomplished; and (3) the trustee's recommendations. To the 
extent such report contains information that the trustee deems 
confidential, such report shall not be filed in the public docket of 
the Court. The trustee shall at the same time furnish such report to 
the plaintiff, who 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 trustee's appointment 
by a period requested by the United States.

VI. Notice of Proposed Divestiture

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, defendant or the trustee, whichever is then 
responsible for effecting the divestiture required herein, shall notify 
the United States of any proposed divestiture required by Section IV or 
V of this Final Judgment. If the trustee is responsible, it shall 
similarly notify defendant. 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 Selected Business.
    B. Within fifteen (15) calendar days of receipt by the United 
States of such notice, the United States may request from defendant, 
the proposed Acquirer, any other third party, or the trustee if 
applicable additional information concerning the proposed divestiture, 
the proposed Acquirer, and any other potential Acquirer. Defendant and 
the trustee shall furnish any additional information requested within 
fifteen (15) calendar days of the receipt of the request, unless the 
parties shall otherwise agree.
    C. Within (a) thirty (30) calendar days after receipt of the notice 
or (b) twenty (20) calendar days after the United States has been 
provided the additional information requested from defendant, the 
proposed Acquirer, any third party, or the trustee, whichever is later, 
the United States shall provide written notice to defendant and the 
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 
defendant's 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 defendant under Section V(C), a 
divestiture proposed under Section V shall not be consummated unless 
approved by the Court.

VII. Financing

    Defendant 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 defendant shall take all steps necessary to comply with 
the Hold Separate Stipulation and Order entered by this Court. 
Defendant shall take no action that would jeopardize the divestiture 
order by this Court.

[[Page 50092]]

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, defendant 
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 Judgement. 
Each such affidavit shall include the name, address, and telephone 
number of each person who, during the preceding thirty 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 Divested Business, 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 defendant has 
taken to solicit buyers for the Divested Business, and to provide 
required information to any prospective Acquirer, 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 States to information provided by defendant, including 
limitations on the 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, defendant shall deliver to the United States an 
affidavit that describes in reasonable detail all actions defendant has 
taken and all steps defendant has implemented on an ongoing basis to 
comply with Section VIII of this Final Judgment. Defendant shall 
deliver to the United States an affidavit describing any changes to the 
efforts and actions outlined in defendant's earlier affidavits filed 
pursuant to this section within fifteen (15) calendar days after the 
change is implemented.
    C. Defendant shall keep all records of all efforts made to preserve 
and divest the Divested Business until one year after a divestiture has 
been completed.

X. Compliance Inspection

    A. For purposes of determining or securing compliance with this 
Final Judgment, or of determining whether the Final Judgment should be 
modified or vacated, and subject to any legally recognized privilege, 
from time to time duly authorized representatives of the United States 
Department of Justice, including consultants and other persons retained 
by the United States, shall, upon written request of a duly authorized 
representative of the Assistant Attorney General in charge of the 
Antitrust Division, and on reasonable notice to defendant, be 
permitted:
    1. Access during defendant's office hours to inspect and copy, or 
at plaintiff's option, to require defendant to provide copies of, all 
books, ledgers, accounts, records and documents in the possession, 
custody, or control of defendant, relating to any matters contained in 
this Final Judgment; and
    2. To interview, either informally or on the record, defendant's 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews shall be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by defendant.
    B. Upon the written request of a duly authorized representative of 
the Assistant Attorney General in charge of the Antitrust Division, 
defendant shall submit written reports, 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 the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (including grand jury proceedings), 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 
defendant to the United States, defendant represents and identifies in 
writing the material in any such information or documents to which a 
claim of protection may be asserted under Rule 26(c)(7) of the Federal 
Rules of Civil Procedure, and defendant mark each pertinent page of 
such material, ``Subject to claim of protection under Rule 26(c)(7) of 
the Federal Rules of Civil Procedure,'' then the United States shall 
give defendant ten (10) calendar days notice prior to divulging such 
material in any legal proceeding (other than a grand jury proceeding).

XI. No Reacquisition

    Defendant may not reacquire any part of any assets divested during 
the term of this Final Judgment, provided, however, that nothing in 
this decree shall prevent defendant from (1) reacquiring any of the 
assets of QCM, subject to the written consent of the United States in 
its sole discretion; or (2) increasing its interest in the DoSol Joint 
Venture to 50 percent.

XII. 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.

XIII. Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire ten years from the date of its entry.

XIV. Public Interest Determination

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

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

Court approval subject to procedures of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16.
----------------------------------------------------------------
United States District Judge

United States District Court for the District of Columbia

United States of America, Plaintiff, v. Mittal Steel Company N.V., 
Defendant

    Case No.
    JUDGE:
    DECK TYPE: Antitrust
    DATE STAMP:

Competitive Impact Statement

    Plaintiff United States of America (``United States''), 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

    The United States filed a civil antitrust Complaint on August 1, 
2006, seeking to obtain equitable and other relief against defendant 
Mittal Steel Company N.V. (``Mittal Steel'') to prevent its proposed 
acquisition of

[[Page 50093]]

Arcelor S.A. (``Arcelor''). Mittal Steel and Arcelor, including its 
Canadian subsidiary Dofasco Inc. (``Dofasco'' or the ``Dofasco 
Business''), are two of only a limited number of suppliers to the 
portion of the United States east of the Rocky Mountains (the ``Eastern 
United States'') of finely rolled tin or chrome coated steel sheets 
(``Tin Mill Products''). Tin Mill Products are used in manufacturing 
steel cans for packaging a wide range of food products, such as soup, 
fruits, and vegetables, and non-food products, such as paints, 
aerosols, and shaving cream. The Complaint alleges that the likely 
effect of this acquisition would be to lessen competition substantially 
in the development, manufacture and sale of Tin Mill Products in the 
Eastern United States, in violation of Section 7 of the Clayton Act. 
This loss of competition would likely result in higher prices, lower 
quality, less innovation, and less favorable delivery terms to 
customers in the Eastern United States Tin Mill Products market.
    At the same time the Complaint was filed, the United States filed a 
Hold Separate Stipulation and Order and a proposed Final Judgment. 
These are designed to remedy the anticompetitive effects of the 
acquisition while permitting Mittal Steel to complete its acquisition 
of Arcelor. Under the proposed Final Judgment, which is explained more 
fully below, the defendants are required to divest certain assets 
including Arcelor's Dofasco subsidiary to ThyssenKrupp AG 
(``ThyssenKrupp''), a German corporation with its headquarters in 
Dusseldorf, Germany, or, if defendant chooses, to another acquirer of 
the divested business (``Acquirer'') acceptable to the United States in 
its sole discretion. If the defendant is unable to sell the Dofasco 
Business to ThyssenKrupp or an alternative acceptable buyer, then the 
defendant is required to divest, at the United States's option, either 
Mittal Steel's Sparrows Point, Maryland, facility (``Sparrows Point 
Business'') or Mittal Steel's Weirton, West Virginia, facility 
(``Weirton Business'') to an Acquirer acceptable to the United States 
in its sole discretion (with the business so selected referred to as 
the ``Selected Business''). The divestiture of either the Dofasco 
Business or the Selected Business is designed to enable the Acquirer to 
become a viable and active competitor in the Eastern United States Tin 
Mill Products market.
    The United States and defendant 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 Defendant and the Proposed Transaction
    Mittal Steel, a Netherlands corporation, has its corporate 
headquarters and principal place of business in Rotterdam, The 
Netherlands, and has operations in sixteen countries, located on four 
continents. As one of the largest steel producers in the world, Mittal 
Steel is primarily engaged in making a variety of steel products for 
all the major steel consuming sectors, including automotive, appliance, 
machinery, and construction. Among its many steel product lines is Tin 
Mill Products. In 2005, Mittal Steel reported total worldwide revenues 
that exceeded $28 billion and total annual steel production that 
exceeded 55 million tons. Mittal Steel maintains seventeen production 
facilities within the United States, and produces Tin Mill Products in 
Sparrows Point and Weirton. Mittal Steel operates in the United States 
through its wholly-owned subsidiary Mittal Steel USA, located in 
Chicago, Illinois, which markets and sells in the United States Tin 
Mill Products and other products manufactured by Mittal Steel. Tin Mill 
Products manufactured at Mittal Steel's U.S. tin mills are shipped 
primarily to customers in the United States. In 2005, Mittal Steel sold 
over 800,000 tons of Tin Mill Products in the Eastern United States.
    Arcelor, a Luxembourg corporation, has its corporate headquarters 
and principal place of business in the City of Luxembourg. Like Mittal 
Steel, Arcelor is one of the world's largest steel producers and makes 
a variety of steel products for the automotive, appliance, packaging, 
and other industries. In 2005, Arcelor reported total worldwide 
revenues of approximately $41.5 billion and steel production of 46 
million tons. In February 2006, Arcelor acquired Dofasco, a wholly-
owned Canadian subsidiary with its principal place of business in 
Hamilton, Ontario, Canada. In 2005, Dofasco shipped 4.8 million tons 
and had $3.9 billion in revenues. Among Arcelor's many steel product 
lines is Tin Mill Products, which it makes at mills in Europe and 
Brazil and at Dofasco's Hamilton mill. In 2005, Arcelor, which shipped 
Tin Mill Products to the Eastern United States primarily from its 
European facilities, and Dofasco, which shipped Tin Mill Products to 
the Eastern United States from its Canadian facility, sold a combined 
170,615 tons of Tin Mill Products in the Eastern United States.
    On January 27, 2006, Mittal Steel announced its intention to launch 
a hostile tender offer to acquire Arcelor for approximately $23 billion 
in cash and securities. Mittal Steel simultaneously announced an 
agreement to sell Dofasco for approximately $5 billion to ThyssenKrupp 
if Mittal Steel acquired Arcelor. Arcelor initially resisted the 
hostile takeover. One of the steps Arcelor's Board of Directors took to 
resist the takeover was to transfer legal title to the shares of 
Dofasco to an independent Dutch foundation known as a ``stichting.''
    Mittal Steel subsequently increased its tender offer to 
approximately $33 billion in cash and securities and formally launched 
its tender offer on May 19, 2006. After Mittal Steel agreed to improve 
the financial, corporate governance, and other terms of its offer for 
Arcelor, the Arcelor Board agreed on June 25, 2006 to recommend Mittal 
Steel's offer to Arcelor's shareholders. The acceptance period for 
Mittal's initial tender offer, during which 92.6 percent of Arcelor's 
shares were tendered, closed on July 13, 2006. Mittal Steel can take 
ownership of the shares beginning on August 1, 2006.
    Mittal Steel's acquisition of Arcelor would, among other things, 
combine the operations of two significant providers of Tin Mill 
Products in the Eastern United States. The United States alleges in its 
Complaint that this proposed transaction would lessen competition 
substantially in the market for Tin Mill Products in the Eastern United 
States, in violation of Section 7 of the Clayton Act.
B. The Competitive Effects of the Transaction on the Tin Mill Products 
Market
1. Relevant Product Market: The Development, Manufacture and Sale of 
Tin Mill Products
    The Complaint alleges that the development, manufacture and sale of 
Tin Mill Products is a relevant product market within the meaning of 
Section 7 of the Clayton Act. Tin Mill Products are finely rolled steel 
sheets, usually coated with a thin protective layer of tin or chrome. 
Tin Mill Products are manufactured using a sequence of processing steps 
in which steel is rolled

[[Page 50094]]

into successively thinner sheets, then hardened, and finally coated 
with either tin or chrome. Tin Mill products are comprised of three 
types of steel: black plate, electrolytic tin plate (``ETP''), and tin 
free steel (``TFS''). Black plate is a light-gauge cold-rolled bare 
steel sheet that serves as the substrate for production of both ETP and 
TFS and can be used bare for some applications such as pails or larger 
containers. Black plate is coated with tin to produce ETP and with 
chrome to produce TFS. ETP and TFS are both used in packaging, although 
each provides different advantages and disadvantages (including, inter 
alia, organic coating acceptance, strength, surface finish, and 
formability) that are considered by purchasers in making their purchase 
decisions. The majority of Tin Mill Products are used to produce 
sanitary cans, often referred to as food cans. Other uses include 
aerosol cans, general line cans, pails, larger containers, metal 
buildings, and oil and fuel filter sheets.
    For most Tin Mill Products purchasers, including downstream food 
can customers, there are no close substitutes for Tin Mill Products. 
Packaging alternatives, such as plastic containers, are generally not 
viewed by can customers as replacements for products normally packaged 
in cans because of cost differences and the performance advantages 
associated with cans. Some of the advantages of steel cans compared to 
alternative packaging include their longer shelf life and greater 
durability, familiarity, and security. Alternative packaging generally 
costs at least as much as a steel can and sometimes costs as much as 
eight times as much as a can, and significant additional capital 
investments are necessary to incorporate alternative packaging 
materials into a customer's packaging process.
    The Complaint alleges that a small but significant increase in the 
price of Tin Mill Products would not cause can manufacturers or their 
downstream customers to substitute non-Tin Mill Products containers or 
otherwise to reduce their purchases of Tin Mill Products in sufficient 
quantities so as to make such a price increase unprofitable. The use of 
alternative packaging containers is driven primarily by capital 
equipment investment considerations and by marketing factors such as 
consumer convenience, rather than by small but significant changes in 
the prices of Tin Mill Products. For example, can customers often use 
alternative packaging in order to extend an existing product line, such 
as using alternative materials to package soup in portable microwavable 
containers, while continuing to package the bulk of their soup products 
in steel cans. Accordingly, the Complaint alleges that the development, 
manufacture, and sale of Tin Mill Products is a line of commerce and a 
relevant product market within the meaning of Section 7 of the Clayton 
Act.
2. Relevant Geographic Market: Eastern United States
    The Complaint also alleges that the Eastern United States is a 
geographically distinct market for the sale of Tin Mill Products. The 
only Tin Mill Products manufacturer in the United States west of the 
Rocky Mountains (the ``Western United States'') is located in 
California, and it does not have substantial sales in the Eastern 
United States due to its distance from can manufacturers in that part 
of the country, which tend to be located in proximity to agricultural 
regions. The California Tin Mill Products manufacturer, which is half 
owned by one of the two largest Tin Mill Products producers in the 
Eastern United States, accounts for more than 84 percent of the Tin 
Mill Products sold in the Western United States but ships only small 
quantities to the Eastern United States. Similarly, Tin Mill Products 
producers in the Eastern United States generally do not sell 
significant quantities in the Western United States because their 
freight costs are higher than those of the single manufacturer located 
in the Western United States.
    Customers are reluctant to rely on offshore suppliers of Tin Mill 
Products for their general production requirements. More than 89 
percent of Tin Mill Products sold in the Eastern United States are 
manufactured by firms located either in the Eastern United States or 
eastern Canada. Among the factors that tend to limit import penetration 
are the longer lead times required for offshore orders, higher shipping 
costs, the inability of some importers to provide the full range of 
product specifications required by some customers, anti-dumping duties 
currently in force against several Japanese producers, and voluntary 
self-restraint by importers who are fearful of prompting additional 
scrutiny of and tariff protection against imports.
    Thus, a small but significant increase in the price of Tin Mill 
Products would not cause Tin Mill Products customers in the Eastern 
United States to substitute purchases from outside of the Eastern 
United States in sufficient quantities so as to make such a price 
increase unprofitable. Accordingly, the Eastern United States is a 
relevant geographic market in which to assess the competitive effects 
of Mittal Steel's proposed acquisition of Arcelor on sales of Tin Mill 
Products.
3. Anticompetitive Effects of the Acquisition
    The complaint alleges that, in this highly concentrated market for 
Tin Mill Products, a combination of Mittal Steel and Arcelor likely 
would: (i) Substantially lessen competition generally in the 
development, manufacture and sale of Tin Mill Products in the Eastern 
United States; (ii) eliminate actual and potential competition between 
Mittal Steel and Arcelor in the development, manufacture and sale of 
Tin Mill Products; and (iii) increase the prices for Tin Mill Products, 
lessen the quality of Tin Mill Products, lessen the innovation relating 
to Tin Mill Products, and adversely affect the delivery terms currently 
offered to the customers in the Tin Mill Products market.
    The market for Tin Mill products in the Eastern United States is 
highly concentrated and is dominated by two firms, Mittal Steel, an 
integrated steelmaker which accounted for 31 percent of the tons sold 
in 2005, and another integrated steelmaker, which accounted for more 
than 44 percent of the tons sold in 2005. Luxembourg-based Arcelor is a 
significant competitor, which accounted for about two percent of tons 
sold in the Eastern United States in 2005. Dofasco, which Arcelor 
acquired in February 2006, accounts for about four percent of the tons 
sold in 2005 in the Eastern United States. Were Mittal Steel to acquire 
Arcelor, the largest two remaining firms would account for more than 81 
percent of Tin Mill Products sales in the Eastern United States. In 
2005, Mittal Steel and one other firm accounted for more than 2.1 
million tons of such sales.
    The acquisition of Arcelor by Mittal would thus substantially 
increase the concentration in the Eastern United States Tin Mill 
Products market. Using a measure of market concentration called the 
Herfindahl-Hirschman Index (``HHI'') (defined and explained in Appendix 
A), the proposed transaction will increase the HHI in the market for 
Tin Mill Products in the Eastern United States by approximately 412 
points to a post-acquisition level of approximately 3,522, well in 
excess of levels that raise significant antitrust concerns.
    Mittal Steel's elimination of Arcelor as an independent competitor 
in the manufacture and sale of Tin Mill Products within the Eastern 
United States is likely to facilitate anticompetitive coordination 
among the two major Tin Mill Products

[[Page 50095]]

manufacturers by making such coordination more profitable and harder to 
defeat. If The two largest Tin Mill Products firms in the Eastern 
United States were to seek to raise prices or reduce output today, 
purchasers of Tin Mill Products could purchase Tin Mill Products from 
Arcelor and its subsidiary Dofasco. Arcelor has substantial excess and 
divertible capacity in Europe, and Arcelor's Dofasco subsidiary has 
significant divertible capacity in Canada. Were Arcelor and Dofasco no 
longer available as independent suppliers, the remaining domestic and 
foreign fringe producers would likely not have sufficient capacity and/
or incentives to increase sales in the Eastern United States enough to 
defeat an anti competitive price increase or output reduction by the 
two largest firms. In particular, the only other incumbent producer 
located in the Eastern United States lacks the ability to manufacture 
cold-rolled substrate, and its ability to obtain the additional 
substrate needed to increase its output is uncertain.
    De novo entry into the development, manufacture and sale of Tin 
Mill Products is difficult, time-consuming, and costly, and such entry 
would not be timely, likely, or sufficient to defeat coordination by 
the two largest Tin Mill Products firms in the Eastern United States 
post-merger. To produce Tin Mill Products, a firm needs a reliable 
source of cold-rolled substrate and a Tin Mill Products finishing 
facility. Entry by a firm that lacks the ability to manufacture cold-
rolled substrate would be extremely difficult. A facility to finish 
cold-rolled substrate into Tin Mill Products would likely cost in the 
range of $60 to $100 million and take approximately two years to design 
and build. The cost of entry is largely ``sunk,'' i.e., it cannot be 
recovered or converted to other uses, raising the risk to entry, and 
there is a very high risk that a new entrant may not receive any 
profits from its entry.
    Significant new foreign entry or expansion of shipments to the 
Eastern United States by existing foreign producers is unlikely due to 
longer delivery lead times occasioned by oceangoing transportation, 
additional shipping costs, trade barriers, the possibility of future 
import restrictions, and the reluctance of foreign Tin Mill Products 
manufacturers to abandon existing markets elsewhere in order to enter 
the Eastern United States market. Overseas shipping increases the time 
between order and delivery by up to four months, which is unacceptable 
for many customers because their demand requirements fluctuate with 
hard-to-predict fruit and vegetable harvests. Capacity constraints also 
limit the ability of certain foreign producers from expanding their 
sales into the Eastern United States. Therefore, entry or expansion by 
any other firm into the Eastern United States Tin Mill Products market 
would not be timely, likely, or sufficient to deter post-acquisition 
coordination.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment will preserve competition in the market 
for Tin Mill Products in the Eastern United States by requiring the 
divestiture of one of the three North American tin mills that Mittal 
Steel will own following its acquisition of Arcelor: (1) The Dofasco 
mill, currently owned by Arcelor; (2) Mittal's Sparrows Point facility; 
or (3) Mittal's Weirton facility. The proposed Final Judgment provides 
for the divestiture of the entire steel mill and not simply the 
finishing lines for Tin Mill Products, and in the case of Dofasco 
requires divesting the entirety of Dofasco's steel business. The 
proposed Final Judgment sets forth a procedure under which Mittal Steel 
is first required to use its best efforts to sell Dofasco to 
ThyssenKrupp or an alternative purchaser approved by the United States. 
If Mittal Steel is unable to sell Dofasco because it proves impossible 
to dissolve the stichting created by Arcelor to hold legal title to its 
Dofasco shares, then the Department of Justice can select either the 
Sparrows Point or Weirton facilities for divestiture.
    The required divestiture of Dofasco will remedy the anticompetitive 
effects of the acquisition alleged in the Complaint, and in the event 
such a divestiture is not possible, the alternate divestiture of either 
Sparrows Point or Weirton (as selected by the United States) would 
likewise be sufficient to remedy those effects. The divestiture of the 
Dofasco Business or a Selected Business would preserve an independent 
competitor with sufficient Tin Mill Products capacity to replace 
Arcelor/Dofasco as an impediment to profitable and successful 
coordination post-merger. In either case, the preserved competitor 
would have modern and efficient facilities located close enough to 
customers in the Eastern United States to compete effectively.
    The proposed Final Judgment provides that for any divestiture to be 
approved, it must be demonstrated to the satisfaction of the United 
States, in its sole discretion, that the Divested Business can and will 
be used by the Acquirer as a viable ongoing business that will remedy 
the competitive harm alleged in the Complaint. The divestiture must be 
made to an Acquirer that in the United States's judgment has the intent 
and capability (including the necessary managerial, operational, 
technical, and financial capability) to compete effectively in the 
development, production and sale of Tin Mill Products; the divestiture 
also must be accomplished in a manner that satisfies the United States, 
in its sole discretion, that none of the terms of any agreement between 
an Acquirer and the defendant gives the defendant the ability 
unreasonably to raise the Acquirer's costs, reduce the Acquirer's 
efficiency, or otherwise interfere in the ability of the Acquirer to 
compete effectively in the development, production and sale of Tin Mill 
Products. Mittal Steel must take all reasonable steps necessary to 
accomplish the divestiture quickly and shall cooperate with prospective 
purchasers.
    The proposed Final Judgment requires Mittal Steel, within one 
hundred and twenty (120) days after the filing of the Complaint, or 
five (5) days after notice of the entry of the Final Judgment by the 
Court, whichever is later, to divest the Dofasco Business to 
ThyssenKrupp. The United States, in its sole discretion, may agree to 
one or more extensions of this time period, not to exceed in total 
sixty (60) calendar days, and shall notify the Court in each such 
circumstance. At its option, defendant may elect to sell the Dofasco 
Business to an alternative Acquirer acceptable to the United States in 
the sole discretion of the United States. Mittal Steel agrees to use 
its best efforts to divest expeditiously the Dofasco Business.\1\
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    \1\ Under the terms of the Hold Separate Stipulation and Order, 
Mittal Steel must maintain and preserve the Dofasco Business, the 
Sparrows Point Business, and the Weirton Business as ongoing, 
economically viable competitive businesses from the date of entry of 
the Hold Separate Stipulation and Order until the divestiture 
required by the proposed Final Judgment is accomplished. In 
addition, the Hold Separate Stipulation and Order requires that 
Mittal Steel ensure that Dofasco operates as an independent, 
economically viable, and ongoing competitive business concern, held 
separate and apart from Mittal Steel's other operations, and that it 
will remain independent and uninfluenced by Mittal Steel while the 
divestiture of Dofasco is pending or until the United States selects 
either the Sparrows Point Business or the Weirton Business for 
divestiture.
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    In the event Mittal Steel is unable by virtue of the stichting to 
accomplish the divestiture of the Dofasco Business within the period 
prescribed by the proposed Final Judgment, then defendant shall divest, 
at the option of the United States, either the Sparrows

[[Page 50096]]

Point Business or the Weirton Business. In the event that defendant 
does not accomplish the divestiture of the Selected Business within 90 
days or within an extension to this time period, not to exceed 60 
calendar days, which may be granted by the United States in its sole 
discretion, the proposed Final Judgment provides that the Court will 
appoint a trustee selected by the United States to effect the 
divestiture of the Selected Business.
    In the event that a trustee is to be appointed, the proposed Final 
Judgment provides that the United States shall select a trustee to be 
approved by the Court. If a trustee is appointed, the proposed Final 
Judgment provides that defendant will pay all costs and expenses of the 
trustee. The trustee's fee arrangement will be structured so as to 
provide an incentive for the trustee based on the price and terms of 
the divestiture and the speed with which the divestiture is 
accomplished. After his or her appointment becomes effective, the 
trustee will file monthly reports with the Court and the United States 
setting forth his or her efforts to accomplish the divestiture. At the 
end of six months after appointment of the trustee, if the divestiture 
has not been accomplished, the 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 trustee's appointment.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act (15 U.S.C. 15) provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment 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. 
16(a)), the proposed Final Judgment has no prima facie effect in any 
subsequent private lawsuit that may be brought against defendant.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and defendant have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least sixty 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 days of the date of publication of this Competitive Impact 
Statement in the Federal Register. All comments received during this 
period will be considered by the 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 and published in the 
Federal Register.
    Written comments should be submitted to: Maribeth Petrizzi, Chief, 
Litigation II Section, U.S. Department of Justice, Antitrust Division, 
1401 H St., NW., Suite 3000, 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 proposed 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 defendant. The 
United States could have continued the litigation and sought 
preliminary and permanent injunctions against Mittal Steel's 
acquisition of Arcelor. The United States is satisfied, however, that 
the divestitures described in the proposed Final Judgment will avoid 
the transaction's anticompetitive effects in the provision of Tin Mill 
Products, and, thus, would achieve all or substantially all of the 
relief the government would have obtained through litigation, but 
without the time and expense of a trial.

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

    The APPA requires that proposed consent judgments in antitrust 
cases brought by the United States be subject to a sixty (60) day 
comment period, after which the Court shall determine whether entry of 
the proposed Final Judgment ``is in the public interest.'' 15 U.S.C. 
16(e)(1). In making that determination, the Court shall 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) and (B).\2\ 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 United States v. Microsoft Corp., 56 
F.3d 1448, 1458-62 (D.C. Cir. 1995).
---------------------------------------------------------------------------

    \2\ In 2004, Congress amended the APPA to ensure that courts 
take into account the above-quoted list of relevant factors when 
making a public interest determination. Compare 15 U.S.C. 16(e) 
(2004) with 15 U.S.C. 16(e)(l) (2006) (substituting ``shall'' for 
``may'' in directing relevant factors for court to consider and 
amending list of factors to focus on competitive considerations and 
to address potentially ambiguous judgment terms). On the points 
discussed herein, the 2004 amendments did not alter the substance of 
the Tunney Act, and the pre-2004 precedents cited below remain 
applicable.
---------------------------------------------------------------------------

    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. 
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 deterrnine 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

[[Page 50097]]

requirements might undermine the effectiveness of antitrust 
enforcement by consent decree.

    Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted) \3\ 
In making its public interest determination, a district court must 
accord due respect to the government's prediction as to the effect of 
proposed remedies, its perception of the market structure, and its 
views of the nature of the case. United States v. Archer-Daniels-
Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003).
---------------------------------------------------------------------------

    \3\ 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' '').
---------------------------------------------------------------------------

    Court approval of a final judgment requires a standard more 
flexible and less strict than the standard required for a finding of 
liability. ``[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.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).
    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. 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.
    In its 2004 amendments to the Tunney Act, Congress made clear its 
intent to preserve the practical benefits of utilizing consent decrees 
in antitrust enforcement, adding the unambiguous instruction 
``[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). This language codified the intent 
of the original 1974 statute, expressed by Senator Tunney in the 
legislative history: ``[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:

    [a]bsent 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.

United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. (CCH) ] 
61,508, at 71,980 (W.D. Mo. 1977).

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 1, 2006.
    Respectfully submitted,
    Kerrie Freeborn,
    John Greaney,
    Stephen Harris,
    Lowell Stern (DC Bar #440487), Attorneys, U.S. Department of 
Justice, Antitrust Division, Litigation II Section, 1401 H Street, 
NW., Suite 3000, Washington, DC 20530, (202) 307-0924.

[FR Doc. 06-7090 Filed 8-24-06; 8:45 am]
BILLING CODE 4410-11-M