FTC Docket No. 9356 ORIGlr~AL

UNITED STATES OF AMRICA

BEFORE THE FEDERA TRAE COMMSSION

OFFICE OF ADMINISTRATIVE LAW JUDGES

In the Matter of )

)

)

)

)

)

) PUBLIC VERSION

)

)

) DOCKET NO. 9356

)

)

Ardagh Group S.A.,

a public limited liabilty company, and

Compagnie de Saint-Gobain,

a corporation, and

Saint-Gobain Containers, Inc.,

a corporation.

Public

RESPONDENTS' MEMORADUM OF LAW IN SUPPORT OF THEIR

UNOPPOSED MOTION FOR IN CAMERA TREATMENT

OF PROPOSED TRIAL EXHBITS

Respondents Ardagh Group S.A., Compagnie de Saint-Gobain, and Saint-Gobain

Containers, Inc. respectfully submit this memorandum oflaw in support of their unopposed

motion for in camera treatment of certain proposed trial exhibits.

I. Introduction

Respondents have produced over two milion documents in response to Complaint

Counsel's request for documents during its investigation of the proposed merger between Ardagh

and Saint-Gobain Containers, as well as during discovery in this action and the related federal

action (FTC v. Ardagh Group s.A., et al., 13-CV-I021 (BJR) (D.D.C.)). A subset of these

documents contains highly sensitive, confidential information about Respondents' customer

contracts and negotiations, core business practices, financial performance, and internal

production capabilities. Accordingly, Respondents now move for an order granting in camera

treatment to 548 proposed trial exhibits and related testimony that, if made public, would result

1
FTC Docket No. 9356 Public

in a clearly defined, serious competitive injury to Respondents. i These exhibits and testimony

are listed in Appendix A and Appendix B to Respondents' motion and are grouped into three

categories?

Category 1 ("Contracts and Related Negotiations") includes proposed trial exhibits and

deposition testimony related to Respondents' contracts, bids, and negotiations with customers

and suppliers. The customer-related information is highly confidential because it contains

competitively sensitive terms (e.g., price, volume, rebates, price adjustment formulas, payment

schedules) that are submitted confidentially to prospective customers and ultimately

memorialized in confidential supply contracts. Declaration of Jim Warner ("Warner Decl.") ir 4;

Declaration of David W. Knight ("Knight Decl.") ir 4. Respondents' supplier-related

information is confidential because it directly relates to Respondents' production costs and their

efforts to improve the procurement process, which gives Respondents a competitive advantage in

the industry. Warner Decl. ir 12; Knight Decl. ir 11.

Category 2 ("Plant Capabilties and Operations") includes proposed trial exhibits and

deposition testimony related to individual plant capabilities (e.g., plant configuration, plant

capacity, furnace lines, furnace rebuild schedules, and color change schedules) and operational

know-how. On a plant by plant level, this information is competitively sensitive because it

would provide competitors with a roadmap of Respondent's ability to compete for specific

business from specific plants. Warner DecL. ir 19; Knight Decl. ir 18. In addition, this category

i To the extent that the Court grants in camera treatment to any confidential part or third part

information contained in the expert reports of Dr. Chetan Sanghvi, Rob Wallace, Mike

Kallenberger, or Dr. Ray Bourque, Respondents wil submit two versions ofthe expert reports in

accordance with Paragraph 8 of the Court's Scheduling Order. '

2 Respondent Saint-Gobain has also identified a fourth category of documents that include

proprietary bottle designs that Saint-Gobain has developed for specific customers. Knight Decl.

ir 19.

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FTC Docket No. 9356 Public

of materials contains highly sensitive information about Ardagh's internal process for reducing

soda ash, which is an ongoing process and the result of over three years of invested time.

Declaration of Eamon King ("King Decl.") ir 8.

Category 3 ("Financial Terms and Current/uture Business Strategy") includes proposed

trial exhibits and deposition testimony containing Respondents' sensitive financial data and

current and future business strategy. Like Category 2, some of this information is broken down

on a plant-by-plant level, which would provide competitors with an understanding of the

performance of Respondents' specific plants and their ability to compete for business. Warner

Decl. ir 26; Knight Decl. ir 23. The information also includes specific business opportunities that

Respondents are intending to target in the near-future, as well as long-range plans for improving

Respondents' businesses on a micro and macro leveL. King Decl. ir 13; Knight Decl. ir 24.

II. Applicable Legal Standard

Under 16 C.F.R. § 3.45(b), a part may obtain in camera treatment of materials to be

offered into evidence by showing that "the public disclosure (of the documentary evidence) wil

result in a clearly defined, serious injury" to the corporation requesting in camera treatment.

That showing can be made by establishing that the proposed evidence is "sufficiently secret and

sufficiently material to (the applicant's) business that disclosure would result in serious

competitive injury." In the Matter of General Foods Corp., 1980 F.T.C. LEXIS 99, at *3 (Mar.

10, 1980); In the Matter of Union Oil Company of California, 2004 WL 3142853, at *1 (F.T.C.

Nov, 22, 2004). "The likely loss of a business advantages is a good example of a clearly defined,

serious injury." In re Dura Lube, 1999 F.T.C. LEXIS 255, at *7 (Dec. 23, 1999). In

determining whether an applicant has made a sufficient showing of secrecy and materiality, this

Court has considered six factors: (1) the extent to which the information is known outside of the

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FTC Docket No. 9356 Public

applicant's business; (2) the extent to which it is known by employees and others involved in the

business; (3) the extent of measures taken by the applicant to guard the secrecy of the

information; (4) the value of the information to the applicant and its competitors; (5) the amount

of effort or money expended by the applicant in developing the information; and (6) the ease or

diffculty with which the information could be properly acquired or duplicated by others. See In

the Matter of Bristol-Myers Co., 90 F.T.C. 455, at *5-6 (Nov. 11, 1977). The Commission has

recognized that it may be appropriate to provide in camera treatment for business records to be

introduced as evidence. In re Champion Spark Plug Co., 1982 F.T.C. LEXIS 85, at *2 (April 5,

1982); see Hood, 58 F.T.C. at 1188-89; In the Matter of Kaiser Aluminum & Chemical

Corporation, 103 F.T.C. 500, 500 (1984).3

III. The Proposed Trial Exhibits and Testimony Meet the Clearly Defined, Serious

Injury Standard

The information contained in the proposed trial exhibits and testimony is both secret and

material to Respondents' business. As detailed more thoroughly in the accompany declarations

of Eamon King, Jim Warner, and David W. Knight, the six Bristol-Myers factors all support

granting in camera treatment for the proposed trial exhibits and testimony identified in Appendix

A and Appendix B.

First, the information is not known outside of the Respondents' respective business.

Respondents' contracts with their customers and suppliers contain confidentiality clauses and

this information is not disclosed to the public. Warner Decl. ir 4; Knight Decl. ir 4. Information

about the production capabilities and financial performance of Respondents' specific plants is

3 The Court may grant in camera treatment for documents more than three years old if the

material is suffciently secret and sufficiently material to the part's business that disclosure

would cause serious competitive injury. In re North Texas Specialty Physicians, 2004 F.T.C.

LEXIS 109, at *2-3 (Apr. 23, 2004).

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FTC Docket No. 9356 Public

not shared publicly or disclosed in public fiings. Warner Decl. irir 19, 25, 28; Knight Decl.

irir 18,23. Further, Respondents do not share - and indeed, closely guard - highly sensitive

manufacturing processes that improve plant performance and efficiency. Warner Decl. ir 25;

Knight Decl. ir .

Second, Respondents limit access to this information internally. Much of the information

is restricted to senior level executives and shared only with employees who require the

information to perform their job responsibilities. Warner Decl. irir 8, 13, 18,27; Knight Decl.

irir7, 12, 17,22.

Third, Respondents have guarded the secrecy of this information and have disclosed it

only in response to requests from Complaint CounseL. They have requested confidential

treatment of all documents produced during the Complaint Counsel's investigation, and have

taken precautions to keep any of this confidential information from being publicly disclosed

throughout this litigation and the related federal proceeding.

Fourth, the information is of significant value to Respondents, and their competitors

would benefit greatly were they to acquire the information. Contractual information reflects

internal pricing decisions made by Respondents, and if publicly disclosed, would give

competitors a competitive advantage in bidding for customer business. Warner Decl. ir 11;

Knight Decl. ir 10. Competitors would also gain a competitive advantage over Respondents were

they privy to plant-specific operational information and financial data that would reveal

Respondents' plant capabilities and ability to compete for business. Warner Decl. ir 19, 28;

Knight Decl. ir 23. Likewise, Respondents' manufacturing know-how would be highly valuable

to any competitor because it would allow competitors to implement more effcient manufacturing

processes without investing the time and effort to develop them internally. Warner DecL. ir 25;

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FTC Docket No. 9356 Public

King DecL. irir 10, 12. Another example of highly sensitive information is Respondents' current

and future business plans, which would allow a competitor to identify Respondents' business

opportnities and understand the companies' plant-level performance. King DecL. irir 13, 14;

Knight Decl. irir 24,25. If any of this secret and highly sensitive information is disclosed, it

would cause serious competitive injury to Respondents. Warner Decl. irir 11, 14, 19,25,28;

King DecL. irir 6, 10, 12, 14; Knight DecL. ir 25.

Fifh, Respondents have spent significant time and effort to develop their sensitive

business information. For example, Ardagh's soda ash reduction process has taken over three

years and remains an ongoing project for the company. Warner Decl. ir 22; King Decl. ir 8. This

information is not easily acquirable, and would cause serious competitive injury to Ardagh if

publicly disclosed. Warner Decl. ir 25; King Decl. ir1O. In addition, Ardagh's management

teams has invested significant time and effort into developing manufacturing processes that

allow each specific plant to run as efficiently as possible. Warner Decl. ir 24.

Sixth, for much of the reasons discussed above, the information contained in these

documents is difficult to acquire by industry participants. Respondents' contracts have

confidentiality clauses and contractual terms are submitted confidentially during the bidding

process. Warner Decl. irir 4-5; Knight Decl. ir 4. Respondents do not publicly disclose their

plant-specific operational and financial information, nor do they publicly disclose their

performance metrics. Warner Decl. irir 16,21,26; King DecL. ir 11; Knight Decl. ir 18.

Therefore, industry participants are unable to acquire this information.

Finally, Complaint Counsel and Respondents have designated portions of deposition

testimony from a number of part and third-party witnesses that cover the same confidential and

highly sensitive information discussed above. Further, Respondents expect that several

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FTC Docket No. 9356 Public

witnesses wil testify at the hearing about the same sensitive information. Respondents

respectfully request that the designated testimony and any live testimony at the hearing related

thereto be given the same in camera treatment afforded to the proposed trial éxhibits.

iv. Expiration Date

Respondents seek in camera treatment of differing lengths for the highly sensitive

information identified in Appendix A and Appendix B.

A. Twenty Year In Camera Treatment

Respondents respectfully request in camera treatment of twenty years for proposed trial

exhibits and deposition testimony related to Contracts and Related Negotiations. Respondents'

customer contracts are multi-year contracts, and the sensitive nature of the information wil not

diminish during the life of the contract. Warner Decl. ir 10; Knight Decl. ir 9.

(Redacted -In Camera Treatment Requested)

Respondents'

supplier contracts are also multi-year contracts, and the terms of these agreements remain

sensitive throughout because they are indicative of Respondents' production input costs during

the life of the contract. Warner Decl. ir 12. As this Court has recognized, extended in camera

treatment, even for an indefinite period of time, may be warranted where the competitive

sensitivity of the information wil not diminish with the passage of time. In the Matter of Union

Oil Co. of CaL., 2004 WL 2458849, at *1 (F.T.C. Oct. 7, 2004); see also 16 C.F.R. § 3.45(b)(3)

(order granting indefinite in camera treatment for material other than sensitive personal

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FTC Docket No. 9356 Public

information shall state "why the need for confidentiality of the material, or portion thereof at

issue is not likely to decrease over time").

B. Five Year In Camera Treatment

F or materials relating to Plant Capabilities and Operations, Respondents request that in

camera treatment be extended for a period of five years. In the Matter of Union Oil Co. of Cal.,

2004 WL 2458853, at *2 (F.T.C. Oct. 12,2004) (granting in camera treatment for period often

years to proprietary information regarding non-part's "supply needs and production

capabilties"). Five year in camera treatment is necessary to protect the confidential information

contained in these documents. Respondents do not regularly reconfigure their glass plants, and

so a plant's product-specific capabilities are consistent over a several-year period. Warner Decl.

ir 17; Knight Decl. ir 16. Moreover, Ardagh's manufacturing know-how, such as its soda ash

reduction process, provides the company with a competitive advantage by reducing production

costs. King DecL. ir 8. Because the process to-date has taken over three years to achieve (and is

an ongoing process), releasing this information within the next five years would allow

competitors to replicate Ardagh's internal manufacturing work product without investing any of

the time required. King Decl. ir 10.

C. Three Year In Camera Treatment

For information related to Respondents' Financial Terms and Current/uture Business

Strategy, Respondents request that in camera treatment extend for a period of three years. As

this Court has repeatedly noted, in camera treatment for business records, such as business

strategies, marketing plans, pricing policies, or sales documents, is typically extended for two to

five years. E.g., In re Union Oil Co. of Cal., 2004 F.T.C. LEXIS 223, at *2 (Nov. 22, 2004); In

re Int'l Ass'n of Conference Interpreters, 1996 F.T.C. LEXIS 298, at *13-14 (June 26, 1996);

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FTC Docket No. 9356 Public

Champion Spark Plug, 1982 F.T.C. LEXIS 85 at *2 and 1982 F.T.C. LEXIS 92, at *2 (March 4,

1982). The information in these documents includes identifying future business opportunities

and financial performance projections that remains relevant, material, and confidential for the

entire three year period.

v. Conclusion

For the foregoing reasons, Respondents respectfully request that the Court grant their

motion for in camera treatment of the proposed trial exhibits identified in Appendix A and

Appendix B to the Motion.

Dated: December 9,2013 Respectfully submitted,

SHEARN & STERLING LLP

By: lsi Richard F Schwed

Richard F. Schwed

Alan S. Goudiss

Wayne Dale Collns

Lisl Joanne Dunlop

SHEARMN & STERLING LLP

599 Lexington Avenue

New York, NY 10022

Telephone: (212) 8484000

Facsimile: (212) 8484173

agoudiss@shearman.com

rschwed@shearman.com

wcollins@shearman.com

ldunlop@shearman.com

Heather L. Kafele

SHEARMAN & STERLING LLP

801 Pennsylvania Avenue N.W.

Washington, DC 20004

Telephone: (202) 508 8000

Facsimile: (202) 5088100

hkafele@shearman.com

Counsel for Respondent Ardagh Group

s.A.

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FTC Docket No. 9356 Public

CRA VATH, SWAIN & MOORE LLP,

by

lsi Yonatan Even

Christine A. Varney

Sandra C. Goldstein

Y onatan Even

Members of the Firm

Attorney for Defendants

Worldwide Plaza

825 Eighth A venue

New York, NY 10019

(212) 474-1000

cvarney@cravath.com

Counsel for Respondents Compagnie

de Saint-Gobain and Saint-Gobain

Containers, Inc.

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FTC Docket No. 9356 Public

CERTIFICATE OF SERVICE

I, Jason M. Swergold, an associate at Shearman & Sterling LLP, hereby certify that on December

9,2013, I caused the foregoing document to be fied using the FTC's E-Filing System, which

wil send notifications of such fiing to:

I

Donald S. Clark

Secretary

Federal Trade Commission

600 Pennsylvania Ave., NW, Rm. H-l13

Washington, DC 20580

I also certify that I delivered via electronic mail and hand delivery a copy of the foregoing

document to:

The Honorable D. Michael Chappell

Administrative Law Judge

Federal Trade Commission

600 Pennsylvania Ave., NW, Rm. H-110

Washington, DC 20580

I further certify that I delivered via electronic mail a copy of the foregoing document to:

Edward D. Hassi

Catharine M. Moscatelli

Brendan J. McNamara

Sebastian Lorigo

Victoria Lippincott

Meredith Robinson

Devon Kelly

James Abell

Teresa Martin

Amanda Hamilton

U.S. Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, DC 20580

ehassi@ftc.gov

cmoscatell@ftc.gov

bmcnamara@ftc.gov

slorgio@ftc.gov

vlippincott@ftc.gov

mrobinson@ftc.gov

dkelly2@ftc.gov

jabell@ftc.gov

tmartin@ftc.gov

ahamilton1@ftc.gov

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FTC Docket No. 9356 Public

Complaint Counsel

December 9, 2013 By: lsi Jason M Swergold

Jason M. Swergold

. !

I

!

CERTIFICATE FOR ELECTRONIC FILING

I certify that the electronic copy sent to the Secretary of the Commission is a tre and correct

copy of the paper original and that I possess a paper original of the signed document that is

available for review by the parties and the adjudicator.

December 9, 2013 By: lsi Jason M Swergold

Jason M. Swergold

12
UNITED STATES OF AMRICA

BEFORE THE FEDERA TRAE COMMSSION

OFFICE OF ADMINISTRATIVE LAW JUDGES

In the Matter of )

)

)

)

)

)

) PUBLIC

)

) DOCKET NO. 9356

)

)

)

Ardagh Group S.A.,

a public limited liabilty company, and

Compagnie de Saint-Gobain,

a corporation, and

Saint-Gobain Containers, Inc.,

a corporation.

STATEMENT REGARING MEET AND CONFER

On December 8, 2013, Respondents' counsel, Jason M. Swergold, conferred with

Complaint Counsel, Amanda Hamilton, regarding Respondents' Unopposed Motion for In

Camera Treatment of Proposed Trial Exhibits. Complaint Counsel has indicated that they do not

oppose Respondents' motion.

Dated: December 9, 2013 Respectfully submitted,

SHEARN & STERLING LLP

By: lsi Richard F Schwed

Richard F. Schwed

Alan S. Goudiss

Wayne Dale Collns

Lisl Joanne Dunlop

SHEARMAN & STERLING LLP

599 Lexington Avenue

New York, NY 10022

Telephone: (212) 8484000

Facsimile: (212) 8484173

agoudiss@shearman.com

rschwed@shearman.com

wcollins@shearman.com

ldunlop@shearman.com

1
Heather L. Kafele

SHEARMAN & STERLING LLP

801 Pennsylvania Avenue N.W.

Washington, DC 20004

Telephone: (202) 508 8000

Facsimile: (202) 508 8100

hkafele@shearman.com

Counsel for Respondent Ardagh Group

SA.

CRAVATH, SWAIN & MOORE LLP,

by

lsi Yonatan Even

Christine A. Varney

Sandra C. Goldstein

Y onatan Even

Members of the Firm

Attorney for Defendants

Worldwide Plaza

825 Eighth Avenue

New York, NY 10019

(212) 474-1000

cvarney@cravath.com

Counsel for Respondent Compagnie

de Saint-Gobain and Saint-Gobain

Containers, Inc.

2
UNITED STATES OF AMRICA

BEFORE THE FEDERA TRAE COMMSSION

OFFICE OF ADMINISTRATIVE LAW JUGES

In the Matter of )

)

)

)

)

)

) PUBLIC VERSION

)

)

) DOCKET NO. 9356

)

)

Ardagh Group S.A.,

a public limited liabilty company, and

Compagnie de Saint-Gobain,

a corporation, and

Saint-Gobain Containers, Inc.,

a corporation.

(PROPOSED) ORDER GRATING RESPONDENTS' UNOPPOSED MOTION

FOR IN CAMERA TREATMENT OF PROPOSED TRIAL EXHIBITS

Upon consideration of Respondents' Unopposed Motion For In Camera Treatment of

Proposed Trial Exhibits, it is hereby ordered that the Motion is GRATED and in camera

treatment wil be given to the exhibits and testimony listed in Appendix A and Appendix B to

Respondents' Motion for the time period indicated therein.

Dated: December _' 2013

Honorable D. Michael Chappell

Chief Administrative Law Judge
UNITED STATES OF AMRICA

BEFORE THE FEDERA TRAE COMMSSION

OFFICE OF ADMINISTRATIVE LAW JUDGES

In the Matter of )

)

)

)

)

)

) PUBLIC

)

)

) DOCKET NO. 9356

)

)

Ardagh Group S.A.,

a public limited liabilty company, and

Compagnie de Saint-Gobain,

a corporation, and

Saint-Gobain Containers, Inc.,

a corporation.

DECLARTION OF DAVID W. KNIGHT

I, David W. Knight, declare under penalty of perjury, pursuant to 28 U.S.C. § 1746, as

follows:

(REDACTED - IN CAMERA TREATMENT

REQUESTED)
UNITED STATES OF AMRICA

BEFORE THE FEDERA TRAE COMMSSION

OFFICE OF ADMINISTRATIVE LAW JUDGES

In the Matter of )

)

)

)

)

)

) PUBLIC

)

)

) DOCKET NO. 9356

)

)

Ardagh Group S.A.,

a public limited liabilty company, and

Compagnie de Saint-Gobain,

a corporation, and

Saint-Gobain Containers, Inc.,

a corporation.

DECLARTION OF DAVID W. KNIGHT

I, David W. Knight, declare under penalty of perjury, pursuant to 28 U.S.C. § 1746, as

follows:

(REDACTED - IN CAMERA TREATMENT

REQUESTED)
UNITED STATES OF AMRICA

BEFORE THE FEDERA TRAE COMMSSION

OFFICE OF ADMINISTRATIVE LAW JUDGES

In the Matter of )

)

)

)

)

)

) PUBLIC VERSION

)

)

) DOCKET NO. 9356

)

)

Ardagh Group S.A.,

a public limited liabilty company, and

Compagnie de Saint-Gobain,

a corporation, and

Saint-Gobain Containers, Inc.,

a corporation.

.1i

DECLARTION OF PATRICK EAMON KING

I, Patrick Eamon King, declare under penalty of perjury, pursuant to 28 U.S.C. § 1746, as

follows:

(REDACTED - IN CAMERA TREATMENT

REQUESTED)

1
FTC Docket No. 9356 Public

UNITED STATES OF AMRICA

BEFORE THE FEDERA TRAE COMMSSION

OFFICE OF ADMINISTRATIVE LAW JUDGES

In the Matter of )

)

)

)

)

)

) Public

)

)

) DOCKET NO. 9356

)

)

Ardagh Group S.A.,

a public limited liabilty company, and

Compagnie de Saint-Gobain,

a corporation, and

Saint-Gobain Containers, Inc.,

a corporation.

DECLARTION OF JIM WARER

I, Jim Warner, declare under penalty of perjury, pursuant to 28 U.S.C. § 1746, as follows:

(REDACTED - IN CAMERA TREATMENT

REQUESTED)

1