28168 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Notices

1 Under 49 CFR 1180.4(g), a verified notice of

exemption must be filed with the Commission at

least one week before the transaction is

consummated. Because the notice of exemption was

not filed until May 10, 1995, consummation should

take place on or after May 17, 1995, rather than May

15, 1995, as indicated in the verified notice of

exemption. Applicant’s representative has

confirmed that the correct consummation date is on

or after May 17, 1995.

Final Rules of Practice and Procedure,

59 FR 39020, 39043 (August 1, 1994).

Scope of Investigation

Having considered the complaint, the

U.S. International Trade Commission,

on May 22, 1995, ordered that—

(1) Pursuant to subsection (b) of

section 337 of the Tariff Act of 1930, as

amended, an investigation be instituted

to determine whether there is a

violation of section 337(a)(1)(B) of

section 337 in the importation into the

United States, the sale for importation,

or the sale within the United States after

importation of certain variable speed

wind turbines and components thereof,

by reason of alleged infringement of

claim 131 of U.S. Letters Patent

5,083,039 or claim 51 of U.S. Letters

Patent 5,225,712, and whether there

exists an industry in the United States

as required by subsection (a)(2) of

section 337.

(2) For the purpose of the

investigation so instituted, the following

are hereby named as parties upon which

this notice of investigation shall be

served:

(a) The complainant is—

Kenetech Windpower, Inc., 6952

Preston Avenue, Livermore, California

94550.

(b) The respondents are the following

companies alleged to be in violation of

section 337, and are the parties upon

which the complaint is to be served:

Enercon GmbH, Dreekamp 5, D–26605,

Aurich, Germany

The New World Power Corporation, 558

Lime Rock Road, Lime Rock,

Connecticut 06039.

(c) Thomas S. Fusco, Esq., Office of

Unfair Import Investigations, U.S.

International Trade Commission, 500 E

Street, SW, Room 401–O, Washington,

DC 20436, who shall be the Commission

investigative attorney, party to this

investigation; and

(3) For the investigation so instituted,

Janet D. Saxon, Chief Administrative

Law Judge, U.S. International Trade

Commission, shall designate the

presiding Administrative Law Judge.

Responses to the complaint and the

notice of investigation must be

submitted by the named respondents in

accordance with § 210.13 of the

Commission’s Final Rules of Practice

and Procedure, 59 FR 39022, August 1,

1994. Pursuant to 19 CFR 201.16(d) and

§ 210.13(a) of the Commission’s Final

Rules, 59 FR 39022, August 1, 1994,

such responses will be considered by

the Commission if received no later than

20 days after the date of service of the

complaint. Extensions of time for

submitting responses to the complaint

will not be granted unless good cause

therefor is shown.

Failure of a respondent to file a timely

response to each allegation in the

complaint and in this notice may be

deemed to constitute a waiver of the

right to appear and contest the

allegations of the complaint and this

notice, and to authorize the

administrative law judge and the

Commission, without further notice to

the respondents, to find the facts to be

as alleged in the complaint and this

notice and to enter both an initial

determination and a final determination

containing such findings, and may

result in the issuance of a limited

exclusion order or a cease and desist

order or both directed against such

respondent.

Issued: May 23, 1995.

By order of the Commission.

Donna R. Koehnke,

Secretary.

[FR Doc. 95–13150 Filed 5–26–95; 8:45 am]

BILLING CODE 7020–02–P

INTERSTATE COMMERCE

COMMISSION

[Finance Docket No. 32695]

CSX Transportation, Inc.—Trackage

Rights Exemption—Vaughan Railroad

Company

Vaughan Railroad Company

(Vaughan) has agreed to grant

nonexclusive trackage rights to CSX

Transportation, Inc. (CSXT) over

approximately 14.63 miles of its rail line

between Rich Creek Junction and

Vaughan, WV. The trackage rights begin

at Rich Creek Junction, V.S. 364+32,

extend to the station of Vaughan, V.S.

643+00=0+00, and continue to the end

of Vaughan’s ownership at V.S. 482+00.

The trackage rights were scheduled to

become effective on or after May 17,

1995.1

This notice is filed under 49 CFR

1180.2(d)(7). If the notice contains false

or misleading information, the

exemption is void ab initio. Petitions to

revoke the exemption under 49 U.S.C.

10505(d) may be filed at any time. The

filing of a petition to revoke will not

stay the transaction. Pleadings must be

filed with the Commission and served

on: Charles M. Rosenberger, 500 Water

Street J150, Jacksonville, FL 32202.

As a condition to the use of this

exemption, any employees adversely

affected by the trackage rights will be

protected under Norfolk and Western

Ry. Co.—Trackage Rights—BN, 354

I.C.C. 605 (1978), as modified in

Mendocino Coast Ry., Inc.—Lease and

Operate, 360 I.C.C. 653 (1980).

Decided: May 23, 1995.

By the Commission, David M. Konschnik,

Director, Office of Proceedings.

Vernon A. Williams,

Secretary.

[FR Doc. 95–13159 Filed 5–26–95; 8:45 am]

BILLING CODE 7035–01–P

DEPARTMENT OF JUSTICE

Antitrust Division

United States v. Topa Equities (V.I.),

Ltd.; Public Comments and Response

on Proposed Final Judgment

Pursuant to the Antitrust Procedures

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

the United States publishes below the

comments received on the proposed

Final Judgment in United States v. Topa

Equities (V.I.), Ltd, Civil Action No.

1994–179, United States District Court

for the District of the Virgin Islands St.

Thomas/St. John Division, together with

the response of the United States to the

comments.

Copies of the response and the public

comments are available on request for

inspection and copying in room 3233 of

the Antitrust Division, U.S. Department

of Justice, Tenth Street and

Pennsylvania Avenue, NW, Washington,

DC 20530, and for inspection at the

Office of the Clerk of the United States

District Court for the District of the

Virgin Islands, United States

Courthouse, Federal Building and U.S.

Courthouse, 5500 Veterans Drive, St.

Thomas, United States Virgin Islands

00802.

Rebecca P. Dick,

Acting Deputy Director of Operations,

Antitrust Division.

United States’ Response to Public

Comments

[Civil No: 1994–179]

Introduction

Pursuant to section 2(d) of the

Antitrust Procedures and Penalties Act

(‘‘APPA’’), 15 U.S.C. 16(d), the United

States responds to public comments on

the proposed Final Judgment submitted

for entry in this civil antitrust

proceeding.
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Notices 28169

This action began on December 7,

1994, when the United States filed a

Complaint alleging that Topa Equities

(V.I.), Ltd. (hereinafter ‘‘Topa’’) had

violated section 3 of the Sherman Act

(15 U.S.C. 3). The Complaint alleges that

through a series of exclusive

distribution agreements with all major

suppliers of distilled spirits, Topa holds

a monopoly on the wholesale

distribution in the Virgin Islands of

almost every major brand of distilled

spirits. The Complaint further alleges

that these exclusive distribution rights,

taken together, are contracts in restraint

of trade within the meaning of the

Sherman Act.

Simultaneously with the filing of the

Complaint, the United States filed a

proposed Final Judgment, a Competitive

Impact Statement (‘‘CIS’’), and a

Stipulation signed by Topa for entry of

the proposal Final Judgment. The

proposed Final Judgment resolves the

antitrust violation alleged in the

Complaint by enjoining Topa from

taking any action to prevent its

suppliers of distilled spirits from

canceling their distribution

arrangements with Topa and appointing

new wholesalers instead. The proposed

Final Judgment also imposes a number

of restrictions on Topa’s business

practices in order to prevent Topa from

unreasonably interfering with the

operations of a competitor.

A summary of the terms of the

proposed Final Judgment and CIS and

directions for the submission of written

comments relating to the proposal were

published in The Washington Post for

seven consecutive days beginning

December 25, 1994, and in The Virgin

Islands Daily News on December 21–24

and December 27–29, 1994. The

proposed Final Judgment and CIS were

published in the Federal Register on

December 30, 1994. 59 FR 67728 (1994).

The 60-day period for public

comments commenced on December 30,

1994, and expired on March 2, 1995.

The United States received two

comments on the proposed Final

Judgment, from St. Thomas Food

Products Corp. (‘‘St. Thomas Foods’’)

and IPV, Inc. trading as A.H. Riise

Liquor Stores (‘‘A.H. Riise’’). Those

comments are being filed with the Court

along with this response. Upon careful

consideration of these comments, as

fully explained below, the United States

urges that the proposed Final Judgment

be entered as originally submitted to the

Court.

I. Legal Standards Governing the

Court’s Public Interest Determination

The procedural requirements of the

APPA are intended to eliminate secrecy

from the consent decree process, to

ensure that the Justice Department has

access to public comments bearing on

the consent decree, and to create a

public record of the reasoning behind

the government’s consent to the decree.

Hearings on H.R. 9203, H.R. 9947, and

S. 782, Consent Decree Bills Before the

Subcomm. on Monopolies and

Commercial Law of the House Judiciary

Committee, 93rd Cong. 1st. Sess. 39–40

(1973) (Statement of Senator Tunney).

See also United States v. American Tel.

and Tel. Co., 552 F. Supp. 131, 148

(D.D.C. 1982), aff’d sub nom. Maryland

v. United States, 460 U.S. 1001 (1983).

The APPA requires the Court to

determine whether the entry of the

decree is ‘‘in the public interest.’’ 15

U.S.C. 16(e). The Court’s role is not to

make a de novo determination of facts

and issues, but ‘‘to determine whether

the Department of Justice’s explanations

were reasonable under the

circumstances,’’ for ‘‘[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.’’ United States v. Western

Electric Co., 993 F.2d 1572, 1577

(D.C.Cir.), cert. denied, 114 S.Ct. 487

(1993), quoting United States v. Bechtel

Corp., 648 F.2d 660, 666 (9th Cir.), cert.

denied, 544 U.S. 1083 (1981). Thus, the

‘‘court is required to determine not

whether a particular decree is the one

that will best serve society, but whether

the settlement is ‘within the reaches of

the public interest.’ ’’ Bechtel Corp., 648

F.2d at 666.

Congress did not intend to require the

courts to follow elaborate procedures in

making the public interest

determination under the APPA. To the

contrary, Congress was concerned that

unduly protracted proceedings might

interfere with the consent decree

process. Thus, ‘‘the court is adjured to

adopt ‘the least complicated and least

time-consuming means possible.’ ’’

United States v. Gillette Co., 406

F.Supp. 713, 715 (D.Mass. 1975),

(quoting S. Rep. No. 93–298, 93d Cong.,

1st Sess. 6 (1973); H. Rep. No. 93–1463,

93d Cong., 2d Sess. 8 (1974)).

The Court’s public interest inquiry

must be conducted in light of the

‘‘violations set forth in the complaint.’’

15 U.S.C. 16(e)(2). The enforcement

agency’s decision about what charges to

bring in its complaint is a matter

generally ‘‘committed to the agency’s

absolute discretion.’’ Heckler v. Chaney,

470 U.S. 821, 831 (1985).

II. Public Comments

A. Comment of St. Thomas Foods

St. Thomas Foods, a Virgin Island

wholesaler of beer, wine, distilled

spirits, and other products, commented

that the proposed Final Judgment

should be rejected because it does not

address the wine and beer markets, in

which St. Thomas Foods alleges that

Topa also has a monopoly, and because

it does not require Topa to abandon all

rights to distribute certain brands of

distilled spirits. The proposed Final

Judgment should not be amended in

response to this comment.

The Complaint alleges that Topa

maintained, through an anticompetitive

series of contracts, a monopoly in the

wholesale distribution of distilled

spirits in the Virgin Islands, but it does

not allege maintenance of a monopoly

in the wholesale distribution of beer or

wine. The United States fully reviewed

all of Topa’s distribution businesses and

determined to challenge only conduct

relating to its distribution of distilled

spirits. The determination of what

conduct to challenge and the scope of

any complaint is a matter solely within

the discretion of the United States. Thus

St. Thomas Foods’ initial comment falls

outside the scope of Tunney Act review.

St. Thomas also questions the relief

the United States has negotiated with

Topa relating to the wholesale market

for distilled spirits. This is a matter

properly before this Court under the

Tunney Act. As noted in the CIS filed

with the Complaint and proposed Final

Judgment, the United States considered

whether to pursue litigation in order to

win structural relief terminating some of

Topa’s exclusive distribution

arrangements with suppliers of distilled

spirits. The United States concluded

that this alternative would place an

unacceptably large burden on some

suppliers, which are among the victims

of Topa’s conduct. The competitive

problem in this case arises from the fact

that Topa has had exclusive distribution

agreements with all major suppliers of

distilled spirits. If some suppliers shift

to other distributors, exclusive contracts

between Topa and remaining suppliers

would not be anticompetitive;

competition among brands would

mitigate the lack of intra-brand

competition in brands sold exclusively

through a single wholesaler. The Untied

States did not have a basis for

determining which suppliers should be

shifted to other distributors, nor for

urging a court to single out certain

suppliers for such treatment. Thus the

United States concluded that the better

course would be to permit each supplier

to determine, for itself, whether to
28170 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Notices

continue to deal through Topa

exclusively. The relief imposed by the

proposed Final Judgment presents an

effective means to invigorate

competition in the wholesale

distribution of distilled spirits in the

Virgin Islands without establishing

unnecessary regulatory constraints that

would interfere with free market forces.

B. Comment of A.H. Riise

A.H. Riise owns four retail liquor

stores in the Virgin Islands and probably

is the largest retailer of distilled spirits

in the territory. The defendant, Topa, is

A.H. Riise’s principal source for

distilled spirits. A.H. Riise objected that

the proposed remedies do not bar Topa

from interfering with suppliers that

want to sell directly to retailers. Thus,

A.H. Riise urges adoption of a provision

prohibiting Topa from communicating

with any supplier for the purpose, or

with the effect, of urging, compelling, or

coercing the supplier to refrain from

bypassing the wholesale level of

distribution altogether and selling

directly to a retailer. This suggested

provision would allow suppliers to

violate their exclusive distribution

arrangements with Topa in order to sell

directly to retailers. In addition, A.H.

Riise suggests that price regulation be

imposed, forcing Topa to offer lower

prices to A.H. Riise and thus enabling

A.H. Riise to compete more effectively

in the tourist duty-free market. Finally,

A.H. Riise wants to extend the term of

the Final Judgment form five years to

ten.

A.H. Riise may be the only retailer

large enough to attract direct sales from

even a small supplier. Conceivably, a

supplier might want to deal directly

with A.H. Riise while distributing

through a wholesaler to other retailers.

Nothing in the proposed Final Judgment

impedes this type of arrangement, and

the provisions A.H. Riise proposes are

not needed to achieve the full relief in

this action of enabling distillers to break

free of their exclusive agreements with

Topa.

There is no reason to provide for

special relief for the duty-free market.

The interbrand competition that will

result from the relief in this case will

benefit the duty-free market as well as

the retail market for Virgin Islands

consumers.

A.H. Riise has also urged that the term

of the proposed Final Judgment be

changed to ten years. The five-year

duration of the proposed Final

Judgment is adequate to accomplish its

objective. The time needed for a

supplier of distilled spirits to switch

wholesalers is limited, probably no

more than thirty to sixty days. All that

is necessary to accomplish the switch is

the transfer of existing inventory from

one warehouse to another. In

wholesaling as opposed to

manufacturing, start-up times are short.

In wholesaling, there is no need to build

a factory, assemble complicated

machinery, or arrange for supplies of

raw materials; basically, all that is

needed is a warehouse and a truck.

Thus, even a new-entrant wholesaler

could have its business up and running

quickly. Sufficient capital to finance

inventory is necessary, of course. But

the necessary level of capital, while not

trivial, is far from prohibitive. Also, the

proposed Final Judgment provides that

Topa must furnish a copy of the

Judgment to each supplier, so its term

will be well-known in the industry

within days of its entry by the Court.

For these reasons, the term of the

proposed Final Judgment need be no

longer than five years.

The United States also notes

statements, cited by A.H. Riise and

attributed to the defendant and its

counsel in this action, stating that the

decree is ineffective. This talk is more

wishful than accurate: The decree is

carefully designed to ensure full and

effective relief. Moreover, the United

States assures the Court, the people of

the Virgin Islands, and the defendant

that we will vigorously enforce this

decree and monitor its success. Should

competitive problems in the distribution

of alcoholic beverages in the Virgin

Islands recur, the United States stands

ready to address them.

The proposed Final Judgment will

make it attractive for certain suppliers to

find new wholesalers that will more

vigorously promote their products in the

Virgin Islands, thereby correcting the

competitive harms resulting from Topa’s

past conduct and increasing

competition in the local wholesale

distilled spirits market. Therefore, the

proposed Final Judgment should be

entered as proposed by the parties.

Conclusion

For the reasons set forth above, entry

of the decree as submitted by the parties

to the Court is in the public interest. St.

Thomas Foods’ comment, A.H. Riise’s

comment, and this response will be

published in the Federal Register.

Dated: May 5, 1995.

Respectfully submitted,

Anne K. Bingaman,

Assistant Attorney General.

John T. Orr,

Justin M. Nicholson,

James L. Weis,

Attorneys, Antitrust Division, Department of

Justice, Richard B. Russell Building, Suite

1176, 75 Spring Street, SW., Atlanta, GA

30303, (404) 331–7100.

Certificate of Service

I hereby certify that I have caused a

copy of the foregoing UNITED STATES’

RESPONSE TO PUBLIC COMMENTS to

be served upon Ernest Gellhorn, 2907

Normanstone Lane NW., Suite 100,

Washington, DC 20008–2725, by first

class mail, postage prepaid.

Dated: May 5, 1995.

Justin M. Nicholson,

Antitrust Division, U.S. Department of Justice,

Richard B. Russell Building, Suite 1176, 75

Spring Street, SW., Atlanta, GA 30303, (404)

331–7100.

January 19, 1995

Mr. John T. Orr,

Chief, Atlanta Field Office,

Antitrust Division, Dept. of Justice,

Richard B. Russell Federal Building,

75 Spring Street, SW.,—Suite 1176,

Atlanta, Georgia 30303.

Re: U.S. v. Topa Equities (V.I.), Civil No.

1994–179

Dear Mr. Orr: I have read with great

interest the Complaint, Stipulation and

proposed Final Judgment in the above

referenced case, which was provided to me

by Mr. James L. Weis of your office. This

letter is being written to give you my

comments on the proposed Final Judgment.

To say the least I am simply amazed at the

conclusion of this case. Justice has

accomplished absolutely nothing after many

years of investigation and I am sure the

expenditure of several hundreds of

thousands of dollars.

The Topa Equities (V.I.), Ltd., monopoly

remains intact. There is no provision in the

proposed Final Judgment for any kind of

divestiture of liquor brands where Topa has

an exclusive agency arrangement. Therefore

Topa remains is full control of 90% plus of

all the liquor imported and sold in the Virgin

Islands. This leaves Topa with the same

monopoly position they enjoyed prior to the

extensive investigation of the Dept. of Justice.

The fact that the Final Judgment precludes

Topa from interfering with a supplier moving

liquor brands from Topa to another agent is

simply a joke. Topa being fully aware of their

mononuclear position in the liquor market

never would have sued or interfered with a

supplier moving brands because they are

fearful of their monopolistic practices

becoming public in open court.

Another observation I have on the

proposed Final Judgment is that it does not

address the Wine and Beer business in the

Virgin Islands. I am sure that your

investigation revealed that Topa also controls

and monopolizes the Wine and Beer
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Notices 28171

1Unless otherwise noted, the defined terms from

Section III of the Complaint are utilized in these

comments.

importing/distributing business in the Virgin

Islands. Topa has the exclusive agency rights

for all the major brands of United States

beers, Anheuser Busch, Coors and Miller

Brewing. Topa also represents many of the

major brands of imported beers, Becks,

Corona, Carlsberg, Caribe, Guiness, Tennants,

and Red Stripe. This then gives Topa 85%

market share of all beers of U.S. manufacturer

and 70% market share of all imported beers.

Yet your Final Judgment makes no mention

of the beer business in the Virgin Islands.

The same is true of the Wine importing/

distribution business in the Virgin Islands.

Topa owned companies have control of over

80% of this business and again the Final

Judgment makes no provisions to address

this monopoly.

In my opinion the proposed Final

Judgment should not be accepted by the

District Court of the Virgin Islands. The

Judgment should be sent back to the Dept. of

Justice and the investigation reopened to

address the oversights that I have made

above. Topa should be forced to divest itself

of brands it controls to once and for all end

the monopoly it has enjoyed for all these

years. These brands should not only be liquor

agencies but should include beer as well as

wine. Further Topa should be assessed

money damages to at least cover the costs of

the investigation and whatever fines the

Court deems appropriate.

All in all I am very dissatisfied with the

results of your investigation and the

proposed Final Judgment. I feel that your

investigation was a waste of your time, my

time and great deal of tax payer money.

Sincerely.

St. THOMAS FOOD PRODUCT CORP.

Bruce Kimelman.

President

BK/lf

cc. District Court of the Virgin Islands,

Division of St. Thomas-St. John

February 24, 1995

John T. Orr, Chief, Atlanta Field Office,

Antitrust Division, U.S. Department of

Justice, Richard B. Russell Federal

Building, Suite 1176, 75 Spring Street,

Atlanta, GA 30303

Re: United States of America v. Topa Equities

(V.I.), Ltd., D.V.I. Civil No. 1994–179

Dear Chief Orr: In response to the Notice

published in the Federal Register on

December 30, 1994 (59 FR 67728), I am

submitting herewith, on behalf of my client

IPV, Inc. trading as A.H. Riise Liquor Stores,

the enclosed ‘‘Comments of A.H. Riise Liquor

Stores on Proposed Final Judgment’’ in the

above case.

Very truly yours,

Samuel H. Seymour.

SHS/ced

Enclosures

cc: Justin M. Nicholson, Esq., James L. Weis,

Esq.

Comments of A.H. Riise Liquor Stores

on Proposed Final Judgment

Moore & Bruce

Samuel H. Seymour, Jonathon R. Moore, 1627

Eye Street, NW., Suite 880, Washington, DC

20006, Tel: (202) 775–5980, Counsel for IPV,

Inc., trading as A.H. RIISE LIQUOR SHOPS

Table of Contents

I. The defendant’s own comments

demonstrate that the proposed final

judgment is not in the public interest.

II. A.H. Riise is an interested party.

III. The court has the authority to reject the

proposed final judgment if competition

will not be restored.

IV. The proposed final judgment is not in the

public interest.

A. The Proposed Final Judgment Is

Premised on a Complaint that Overlooks

Material Factors in the Relevant Markets.

1. The proposed Final Judgment Defines

Away the Most Immediate Prospect for

Restoring Competition.

2. The Complaint, Proposed Final

Judgment and CIS Overlook the

Significance of the Tourist Submarket to

the Public Interest.

3. It Is Contrary to the Public Interest to

Permit Defendant’s Monopolistic Pricing

to Continue.

B. The Remedies in the Proposed Final

Judgment Do Not Adequately Address

the Competitive Harm Identified.

V. At a minimum, any final judgment should

expressly recognize and protect retailers’

rights to deal directly with suppliers,

without interference from defendant.

VI. The five year duration for the proposed

final judgment is patently inadequate.

Conclusion.

Exhibits

TOPA Press Release.

‘‘Red-lined’’ Proposed Final Judgment

Showing Recommended Revisions to be

in the Public Interest.

Comments of A.H. Riise Liquor Stores

on Proposed Final Judgment

IPV, Inc., trading as A.H. Riise Liquor

Stores, P.O. Box 6280, St. Thomas, U.S.

Virgin Islands 00804–6280 (‘‘A.H.

Riise’’), through its attorneys, hereby

responds to the Federal Register notice

soliciting public comments on the

Proposed Final Judgment and

Competitive Impact Statement (‘‘CIS’’)

in the above-captioned case, 59 FR

67728 (Dec. 30, 1994). A.H. Riise

respectfully submits that adoption of the

Final Judgment in the form proposed is

not in the public interest, because the

remedies proposed provide no tangible

or immediate prospect for achieving the

goals set forth in the CIS: The

restoration of competition in the

wholesale market for distilled spirits in

the Virgin Islands.

I. The Defendant’s Own Comments

Demonstrate That the Proposed Final

Judgment Is Not in the Public Interest

As a threshold matter, before we

describe A.H. Riise or analyze the

Proposed Final Judgment, it is

incumbent upon us to bring to the

attention of the Court and the

Department the contemptuous manner

in which the Defendant holds the

Proposed Final Judgment. A Press

Release issued by Defendant Topa upon

the announcement of the settlement

with the Department states:

According to Ernest Gellhorn, an antitrust

lawyer from Washington, D.C. retained by

Topa, ‘‘the proposed remedy is all bark and

no bite.’’ Pointing to the decree’s

‘‘meaningless provisions that would modify

contract terms written by suppliers or would

make supposed scarce warehouse space

available to new entrants,’’ Gellhorn called

‘‘this probably the weakest consent decree

ever negotiated by the Department of

Justice.’’ (Emphasis added.)

A copy of Defendant’s Press release is

attached hereto as Exhibit 1.

Significantly, the Defendant

distributed this Press Release to its

suppliers two days before the

Department filed the Complaint and the

Proposed Final Judgment with the

Court. The message is clear: Nothing

will change.

The Court—and the Department—

should scrutinize the motives and

substance behind Defendant’s Press

Release. It is a red flare. It sends a vivid

warning: something is seriously wrong

with the Proposed Final Judgment. The

Press Release belies any assertion in the

CIS that the Proposed Final Judgment is

in the public interest.

Under the circumstances, the only

proper course is for the Department to

withdraw its consent to the Proposed

Final Judgment. Should it fail to do so,

the Court should not rubber stamp the

apparent oversights or miscalculations

that have brought this case to the brink

of approval, lest it, too, be the subject

of Defendant’s derision.

II. A.H. Riise is an Interested Party

A.H. Riise owns and operates four

retail stores for distilled spirits 1 in St.

Thomas, Virgin Islands. It is among the

class of retailers of distilled spirits in

the Virgin Islands which has ‘‘been

deprived of the benefits of free and open

competition’’ by Defendant’s actions.

Complaint, ¶ 19(c). A.H. Riise is a

family-owned business, whose current

owners are the third and fourth

generations of the family to be involved
28172 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Notices

in the ownership and management of

retail liquor businesses in the Virgin

Islands.

Defendant Topa is A.H. Riise’s major

source of supply of distilled spirits.

Based upon the description of

Defendant’s business in Paragraph 3 of

the Complaint, A.H. Riise purchases

represent at least 20% of Defendant’s

sales in the Virgin Islands. As such,

A.H. Riise is a significant participant in

the market which is the subject of the

Complaint in this action.

A.H. Riise is also a major factor in the

tourist market for distilled spirits in the

Virgin Islands. Although conspicuously

omitted from the Complaint, the

Proposed Final Judgment and the CIS,

the tourist submarket for duty-free

distilled spirits in the Virgin Islands

may represent as much as 60% of the

relevant market. On information and

belief, A.H. Riise’s sales constitute more

than half of the sales of distilled spirits

to this submarket. A.H. Riise is among

the class of retailers most adversely

effected by Defendant’s monopolistic

pricing practices and anti-competitive

efforts to dissuade suppliers from

selling directly to retailers.

III. The Court Has the Authority To

Reject the Proposed Final Judgment if

Competition Will Not Be Restored

The Antitrust Procedures and

Penalties Act (the ‘‘Tunney Act’’)

provides in pertinent part that ‘‘before

entering any consent judgment

proposed by the United States * * *,

the court shall determine that entry of

such judgment is in the public interest.’’

15 U.S.C. 16(e). The power of the courts

in connection with determining the

public interest and the legal standard of

review to be applied is comprehensively

set forth in United States v. American

Tel. & Tel. Co., 552 F. Supp. 131, 147–

153 (D.D.C. 1982), aff’d sub nom

Maryland v. United States, 460 U.S.

1001 (1983).

In reviewing the purposes of the

Tunney Act, the AT&T Court referred to

the legislative history, which asserted

that previously ‘‘consent decrees often

fail(ed) to provide appropriate relief,

either because of miscalculations by the

Justice Department or because of the

‘great influence and economic power’

wielded by antitrust violators.’’ Id at

148. In support, the Court cited Senator

Tunney: ‘‘Regardless of the ability and

negotiating skill of the Government’s

attorneys, they are neither omniscient

nor infallible.’’ Id at 148, note 70, citing

119 Cong. Rec. 3452 (1973). In response,

the public comment procedure was

added to the antitrust laws, along with

judicial review based on the public

interest standard. The express purpose

of such review is to ‘‘eliminate judicial

rubber-stamping’’ of proposed consent

orders submitted to courts by the

Department. Id at 149.

Senator Tunney’s comments are

particularly appropriate in this case. As

discussed below, it is apparent that the

Complaint, the Proposed Final

Judgment and the CIS overlook highly

relevant and significant facts relating to

the Defendant’s anti-competitive

practices. The legislative history makes

it clear that the Court here, as the Court

did in the recent decision in the United

States v. Microsoft Corporation, C.A.

No. 94–1564 (Memorandum Order dated

Feb. 14, 1995), can and should look

beyond the four corners of the

complaint in determining whether the

public interest is being served by the

Proposed Final Judgment.

In examining the legal standard to be

applied in determining the public

interest, the AT&T Court stated that

antitrust ‘‘decisions granting relief after

a finding of liability form the most

relevant yardstick for determining

whether the proposed consent decree

will further antitrust policies.’’ After

noting that the purpose of antitrust

remedies is to restore competition and

end monopoly power, the Court stated

that proposed decrees ‘‘must leave the

Defendant without the ability to resume

the action which constituted the

antitrust violation in the first place. For

these reasons, the decree should not be

limited to past violations; it must also

effectively foreclose the possibility that

antitrust violations will occur or

reoccur.’’ Id at 150. As discussed below,

the Proposed Final Judgment is

particularly deficient in addressing

restoration of competition in the future.

When evaluated under the standards

articulated by the AT&T Court, the

Proposed Final Judgment will be found

to be inconsistent with the public

interest.

The AT&T Court premised its analysis

upon the fundamental purpose of the

Tunney Act to ‘‘fully promote the goals

of the antitrust laws and further public

confidence in their fair enforcement.’’

The Court noted that the consent order

procedure prior to the enactment of the

Tunney Act was essentially secret, and

thereby ‘‘undermin(ed) confidence in

the legal system.’’ It is submitted that

the Defendant’s arrogant and

disparaging characterizations of the

Proposed Final Judgment should be the

catalyst that brings these fundamental

concerns into sharp focus in the Court’s

determination of the public interest.

IV. The Proposed Final Judgment Is Not

in the Public Interest

A. The Proposed Final Judgment Is

Premised on a Complaint That

Overlooks Material Factors in the

Relevant Markets

Both the Complaint and the Proposed

Final Judgment are based on an

incorrect view of the market for distilled

spirits in the Virgin Islands. The

Department apparently has

misunderstood or overlooked important

facts concerning the channels of

distribution in the Virgin Islands

market, the important of the submarket

for distilled spirits sold to tourists, and,

most importantly, the Defendant’s

monopolistic pricing practices.

Accordingly, the Complaint and

Proposed Final Judgment overlook the

only way in which existing market

forces can be used to restore

competition: By permitting suppliers

and retailers to deal directly with each

other without interference from the

Defendant.

1. The Proposed Final Judgment Defines

Away the Most Immediate Prospect for

Restoring Competition

Deficiencies in the Proposed Final

Judgment’s analysis are first evident in

the definitional provisions in the

Complaint and the Proposed Final

Judgment. The term ‘‘retailer’’ is defined

in Paragraph 7 of the Complaint and

Paragraph IID of the Proposed Final

Judgment to mean ‘‘any person engaged

in the business of purchasing distilled

spirits from wholesalers as defined

herein, and reselling them to consumers

in establishments located in the Virgin

Islands * * * (Emphasis added.)

Significantly, however, some retailers,

including A.H. Riise, purchase directly

from suppliers, and would do so to a

greater extent if it were not for the

Defendant’s active interference. Yet the

possibility that retailers can purchase

from suppliers is not even recognized by

this definition. Accordingly, the one

present and tangible means by which

Defendant’s monopoly power can be

reduced under existing competitive

conditions is obviated definitionally.

The definition of ‘‘supplier’’ in

Paragraph 8 of the Complaint and

Paragraph IIE of the Proposed Final

Judgment is similarly deficient. This

definition provides that supplier means

‘‘any licensed manufacturer, distiller, or

importer of distilled spirits from which

Defendant or any other licensed

wholesaler, as defined herein, purchases

or has purchased distilled spirits.’’

(Emphasis added.) Again, the Complaint

and the Proposed Final Judgment do not

even recognize that suppliers do sell
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Notices 28173

2Persons returning to the United States mainland

from the Virgin Islands are exempted from duty on

four liters (the equivalent of five fifths) of distilled

spirits, plus an additional liter of any such product

produced in the Virgin Islands. Heading 9804.00.70,

Harmonized Tariff Schedule of the United States

(1995).

3The impact of Defendant’s monopolistic

practices is far more significant in the tourist

market for distilled spirits than in the local market.

This is because residents of the Virgin Islands have

no choice but to purchase locally, whereas tourists

can buy distilled spirits on board cruise ships, on

other Caribbean Islands or on the U.S. mainland.

directly to retailers and would do so to

a greater extent if Defendant’s

interference were eliminated. Although

Virgin Islands law does not permit

vertical integration of retailers and

wholesalers, Complaint ¶ 10 and ¶ CIS

II, there is no prohibition against

retailers dealing directly with suppliers.

In fact, Defendant’s monopoly power

has enabled it to prevent most retailers

from obtaining distilled spirits directly

from suppliers. This interference occurs

particularly where Defendant has

exclusive arrangements with suppliers,

and even where it does not. The

Proposed Final Judgment, as drafted,

could be understood by the Defendant

to sanction its activities in this regard,

which could well intensify as a result.

Failure to recognize that retailers can

purchase directly from suppliers, and

that such arrangements require

protection from Defendant’s monopoly

power, are glaring deficiencies in the

Complaint.

2. The Complaint, Proposed Final

Judgment and CIS Overlook the

Significance of the Tourist Submarket to

the Public Interest

The Complaint, the Proposed Final

Judgment and the CIS also

conspicuously omit any mention of the

tourist market for distilled spirits.

Tourism is a significant part of the

Virgin Islands economy. The duty-free

rules, which allow visitors from the

United States mainland to enter up to

five bottles per person duty-free into the

United States from the Virgin Islands,2

are important enhancements for tourism

in the Virgin Islands and, indeed, are a

substantial feature of the competitive

landscape of the market defined by the

Complaint. Tourists, however, will only

purchase distilled spirits ‘‘duty-free’’ in

the Virgin Islands if they are priced

competitively with products that they

can purchase on cruise ships and at

other Caribbean destinations, and, of

course, in the continental United States.

Defendant’s monopolistic pricing

practices have had a material adverse

impact on commerce in distilled spirits

in the Virgin Islands in the tourist

market, but no one would ever know

this from the Complaint, the Proposed

Final Judgment and the CIS.3 Without

any competition at the wholesale level,

Defendant Topa is able to take far larger

wholesale mark-ups than are customary.

Retailers like A.H. Riise have had no

alternative other than to accept

Defendant’s monopolistic pricing,

except in instances where they have

been able to by-pass Topa and purchase

directly from suppliers. Even after

cutting their margins to the bone,

retailers often cannot compete with

prices of distilled spirits on cruise

ships, other Caribbean Islands and, even

sometimes on the U.S. mainland, since

monopolistic margins are exacted by

Defendant at the wholesale level. Thus,

A.H. Riise’s sales—and those of other

retailers—are far lower than they

otherwise would be. Accordingly,

tourists buy less in the Virgin Islands,

and the Virgin Islands economy loses

substantial excise and gross receipts tax

revenues, as well as lost employment

opportunities for retailers and others

who serve the tourists trade.

3. It is Contrary to the Public Interest To

Permit Defendant’s Monopolistic

Pricing to Continue

Since the Complaint does not allege

anti-competitive pricing practices on the

part of Defendant, it is hardly surprising

that such practices are not remedied in

the Proposed Final Judgment. It is

remarkable that after citing injury to

suppliers and retailers, Complaint ¶ 19

(c) and (d), CIS ¶ IIB, there is no

mention of injury to consumers. Yet

there is no single factor that has a

greater bearing on the Court’s

determination of the public interest in

this case than Defendant’s pricing

practices. Defendant’s monopolistic

pricing damages consumers—both

Virgin Islands residents and tourists—to

the detriment of the Virgin Islands

economy.

On those occasions when suppliers

have been willing to sell directly to A.H.

Riise, often over interference from the

Defendant, A.H. Riise has been able to

substantially reduce prices offered to

tourists so that they are more

competitive with prices offered by

cruise ship stores, on other Caribbean

islands and in the U.S. As a result, sales

increased dramatically, as did profits.

Further, A.H. Riise was able to spend

considerably more on advertising and

promotion to encourage cruise ship

passengers to purchase distilled spirits

in the Virgin Islands, rather than at

foreign ports.

These results were demonstrated

again recently when A.H. Riise was

finally able to conclude arrangements to

purchase directly from a supplier,

which had previously sold only through

Defendant Topa. Without excessive

wholesale margins, A.H. Riise was able

to lower the per unit price by $5.00,

which increased the gap between its

prices and U.S. mainland prices from

$1–$2 to $6–$7 per unit. In only a two

week period, sales increased 500% and

profits increased 100%. Corresponding

increases were realized in revenues paid

to the Virgin Islands taxing authority.

Conversely, when the prices it

receives from Defendant Topa compel

retail pricing that a higher, the same or

only slightly lower than competing

sources available to tourists, sales

decline, profits are non-existent, and

resources available for promotion are

marginal. In A.H. Riise’s experience,

tourists are generally well-educated on

the subject of distilled spirits prices.

Accordingly, when they can purchase

distilled spirits at substantial savings,

they are inclined to make most of their

duty-free purchases from retailers in the

Virgin Islands. Moreover, once tourists

see that duty-free prices for distilled

spirits are lower, they tend to purchase

greater amounts of other duty-free

merchandise in the Virgin Islands as

well. Thus, it is not difficult to see how

monopolistic pricing at the wholesale

level has an immediate negative and

depressing impact on sales, profits and

promotional activities, with a

corresponding impact on employment,

tax revenues and the Virgin Islands

economy.

In its review of the proposed consent

order in United States v. Microsoft,

supra, the Court recognized that the

failure of the Department to address

significant anti-competitive practices by

the defendant was grounds for a

determination that the proposed order

was not in the public interest.

Notwithstanding the vehement

objections of the defendant and the

Department in that case, the Court

refused to accept an order that was

limited to operating systems software

for X86 microprocessors. There, as here,

the proposed Complaint and relief are

too narrow, and for that reason must be

found not to be in the public interest.

B. The Remedies in the Proposed Final

Judgment Do Not Adequately Address

the Competitive Harm Identified

The Complaint and the CIS correctly

point out that the Defendant has virtual

monopoly in the wholesale distilled

spirits market in the Virgin Islands.

Complaint ¶ 17; CIS ¶II B. Certain

effects of this monopoly are then

identified: (1) Retailers are deprived of

alternative sources for competing

products; and (2) suppliers are deprived
28174 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Notices

4We have deliberately omitted any analysis of the

problem of the scarcity of warehouse space, which

is given inordinate attention. Complaint at ¶ 16,

Proposed Final Judgment ¶ IV E, CIS ¶ II.

Defendant’s reference to this issue as ‘‘supposed

scarce warehouse space’’ in its Press Release,

Exhibit 1, suggests that this issue is be a straw man.

5See CIS ¶ VI. The only reason that unilateral

termination of Defendant’s exclusive arrangements

with suppliers might ‘‘place an unacceptably large

burden’’ on them is if no other wholesaler entered

the market, notwithstanding the proposed relief.

of the benefits of free and open

competition, in part because Defendant

Topa has inherent conflicts of interest in

the representation of competing

products and cannot represent all

competing brands equally. Complaint,

¶ 19 (c) and (d); CIS ¶ II B. The CIS then

states that the purpose of the Proposed

Final Judgment is to remedy these

effects. But not only are the Complaint

and Proposed Final Judgment drafted

too narrowly, the remedies proposed are

also ineffective.

Rather than ordering a breakup of the

Defendant, divestiture of the

acquisitions by which it obtained its

monopoly, Complaint ¶ 17, or unilateral

termination of its distribution

agreements, CIS ¶ VI, the Proposed Final

Judgment merely attempts to establish

new ground rules for the distilled spirits

wholesale market in the Virgin Islands

that purport to make it more likely for

new entrants to dilute the Defendant’s

monopoly power and thereby restore a

competitive environment. There are two

main features of the Proposed Final

Judgment: (1) Permitting suppliers to

break exclusive contracts with

Defendant, but only to deal with another

wholesaler; and (2) enjoining Defendant

from enforcing its rights under Title

12A, Sections 131 and 132, of the Virgin

Islands Code for ‘‘wrongful

termination.’’ Once new entrants

appear, the Defendant would be

enjoined from (1) interfering with any of

the potential new entrants’ employees

and (2) from acquiring any stock or

interest in such new entrants.4 Proposed

Final Judgment ¶¶ IV (b), (c), (f) and (g).

In a moment of candor, the Defendant

characterized the foregoing as

‘‘meaningless provisions’’ that are ‘‘all

bark and no bite.’’ Press Release, Exhibit

1. A.H. Riise agrees.

Rather than providing a mechanism

for existing market forces to restore

competitiveness, the proposed remedies

depend on new entrants coming into the

wholesale distilled spirits business in

the Virgin Islands. The relief proposed,

therefore, is merely hopeful. At best, it

poses a theoretical framework for

competition to develop in the future.

Whether the proposed remedies will in

fact have any immediate and tangible

effect on the competitive environment

in the Virgin Islands must depend

totally on extrinsic factors, the existence

of which are unknown or speculative.

How likely is it that ‘‘new players’’

will arrive to compete on the new

theoretical ‘‘level playing field’’

constructed by the Proposed Final

Judgment? Not likely at all.5 To become

viable, potential entrants will need very

substantial capital for inventory and

warehouse facilities, employees who

know the business, and the ability to

attract suppliers’ business. Each of these

factors is far more significant to entering

the market than the elements of the

proposed remedies. In determining

whether the remedies in the Proposed

Final Judgment have a reasonable

chance of achieving their stated goals,

the Court should not overlook the fact

that every potential entrant that has

tried to come into this market in the last

decade has failed. CIS ¶ 2. At the

present time, A.H. Riise knows of no

company or individual with the

necessary capital, personnel and knowhow that could enter the Virgin Islands

wholesale market for distilled spirits.

Further, based on discussions with

wholesalers outside the Virgin Islands,

little incentive to enter the Virgin

Islands market is perceived.

The lack of confidence that the

proposed remedies will achieve their

stated goals is seen in the CIS. For

example, the CIS states: ‘‘qualified

personnel, with the necessary

connections with the retail trade, are

difficult to find in the Virgin Islands.

Paragraphs IV(b) and IV(c) may help an

entrant to hire and retain qualified

personnel to run a distilled spirits

business in the Virgin Islands without

undue interference from Topa.’’

(Emphasis added.) CIS ¶ III. They also

may not. Indeed, potential entrants will

need substantial capital to succeed

much more than Topa’s noninterference

with their employees.

Moreover, as a practical matter, once

suppliers are freed from exclusive

arrangements with the Defendant, it

does not necessarily follow that

suppliers will switch to new entrants.

Indeed, without a strong track record,

why should a major supplier of distilled

spirits trust a new entrant to develop its

market in the Virgin Islands? The CIS

recognizes this problem: ‘‘Any

disatisfied supplier will be free to find

an alternative distributor if the supplier

chooses to do so* * *’’ (Emphasis

added.) CIS ¶ III. The CIS candidly

admits that suppliers will have to be

dissatisfied with Topa before they

would switch to new, unknown

wholesalers.

Because any decision to switch must

lie with the suppliers, there can be no

guarantee that the model in the

Proposed Final Judgment will restore

competition.

In fact, the ingredients needed to

restore this market to a competitive one

are already in place, but have been

overlooked in the Proposed Final

Judgment. Existing retailers already

know the products, the suppliers, and

the markets. It is the retailers, in their

pricing and promotion, that make

markets for each brand. But for the ongoing interference by the Defendant,

retailers would be in the position now

to restore competition to the distilled

spirits market in the Virgin Islands by

dealing directly with suppliers. It is

therefore contrary to the public interest

to rely solely upon speculative, future,

unknown, external factors to enter the

wholesale market, as posited by the

Proposed Final Judgment. Instead,

suppliers’ and retailers’ rights to deal

with each other need to be recognized—

and protected.

V. At a Minimum, Any Final Judgment

Should Expressly Recognize and

Protect Retailers’ Rights To Deal

Directly With Suppliers, Without

Interference From Defendant

Even though the Proposed Final

Judgment is deficient in its theoretical

approach to restoration of competition,

A.H. Riise does not believe that

divestiture or the termination of

exclusivity arrangements with suppliers

are the only remedies that can help

erode Defendant’s monopoly. With

slight modifications, the Proposed Final

Judgment can be rectified to achieve the

stated goal of providing retailers with

alternative sources and freeing suppliers

from a single wholesaler that also

represents their competitors. That

remedy is to recognize—and protect—

suppliers and retailers’ rights to deal

directly with one another without

interference from the Defendant. We

have attached as Exhibit 2 a ‘‘red-lined’’

copy of the Proposed Final Judgment on

which we have made recommended

revisions that, with minor

modifications, would permit the

Proposed Final Judgment to achieve the

competitive goals set forth in the CIS.

The following language, which could

be added after Paragraph IV A of the

Proposed Final Judgment, would

implement this approach: (Topa is

enjoined and restrained from:)

Communicating with any supplier,

wholesaler or other person for the purpose or

with the effect of urging, compelling, or

coercing any supplier or wholesaler to refrain

from selling distilled spirits to any retailer in

the Virgin Islands. Nothing in this paragraph
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Notices 28175

of Section IV shall be construed to inhibit

Topa from negotiating, entering into and

adhering to a contract dealing with a supplier

on an exclusive basis; provided, that such

designation shall not directly or indirectly

prevent any retailer in the Virgin Islands

from acquiring distilled spirits directly from

any supplier.

The suggested language is derived

from the consent order issued in United

States v. Maryland State Licensed

Beverage Association, Inc., CCH Trade

Reg. Rep. ¶ 69,261 (D. Md., 1958). In

that case, distributors and wholesalers

were charged with collusion in

attempting to keep retailers from dealing

directly with suppliers. The appropriate

remedy to enjoin such anti-competitive

practices was to recognize retailers’ and

suppliers’ rights to deal directly with

each other, while continuing to permit

exclusive arrangements between

wholesalers and suppliers. The same

approach is appropriate here.

In addition, the current Paragraph D

of Section IV of the Proposed Final

Judgment should be amended as

follows:

(Topa is enjoined and restrained from:)

D. Refusing to deal with any retailer

because that retailer deals with another

wholesaler or directly with a supplier.’’

(Suggested revision emphasized.)

In commenting on Paragraph IVD of the

Proposed Final Judgment, the CIS points

out: ‘‘Even if Topa loses some brands to

a new or existing wholesaler, Topa will

retain enormous influence over retailers.

This provision (as drafted) will prevent

Topa from abusing that position in the

retail trade * * *.’’ However, unless

language is added to Paragraph IVD

expressly protecting retailers’ and

suppliers’ rights to deal directly with

each other, the Proposed Final Judgment

could be read by Defendant Topa to

sanction refusals to deal in

circumstances where suppliers deal

directly with retailers.

It is imperative that the Proposed

Final Judgment expressly prohibit

Topa’s interference with efforts on the

part of retailers to deal directly with

suppliers. It is this omission that poses

the greatest threat to competition in the

Virgin Islands. As one of Defendant’s

attorneys points out in the Press

Release, Exhibit 1: ‘‘nor will (the

Proposed Final Judgment) change how

Topa does business ‘because the

company is not being asked to anything

different from what it has been doing

over the past five years.’ ’’ One of the

things Topa has been doing over the

past five years is interfering with direct

supplier-retailer relationships. Unless

Topa’s behavior changes, competition

will not be restored to the wholesale

distilled spirits market in the Virgin

Islands.

Only by recognizing and protecting

suppliers’ and retailers’ rights to deal

directly with each other can the

discipline of competition be restored.

For example, if A.H. Riise is able to

purchase from suppliers, there is

nothing to prevent the Defendant or

other wholesalers from selling to A.H.

Riise if they can provide better price/

service/delivery than can be obtained

from suppliers directly. Presumably the

wholesale prices that Defendant and

other wholesalers can obtain for

providing wholesaler functions will be

lower than the prices retailers will be

able to obtain directly. Therefore, there

will always be a role for the Defendant

to play in the Virgin Islands distilled

spirits wholesale market, provided the

Defendant prices competitively.

VI. The Five Year Duration for the

Proposed Final Judgment Is Patently

Inadequate

There is probably no other area that

more accurately demonstrates

Defendant’s characterization that the

Proposed Final Judgment is the

‘‘weakest * * * ever negotiated by the

Department of Justice’’ than the fiveyear term proposed for the order.

Proposed Final Judgment ¶ VIII.

Defendant has enjoyed its monopoly

power for over a decade. Old habits die

hard. Even if A.H. Riise’s recommended

modifications in the Proposed Final

Judgment were to be adopted, such an

order should remain in effect for a

minimum of ten years to give

competitive forces an opportunity to

develop and become viable and

effective.

Conclusion

The Proposed Final Judgment is not

in the public interest, because it is too

narrowly drawn and its remedies will

not restore competition in the distilled

spirits market in the Virgin Islands. The

Complaint and the proposed remedies

totally overlook Defendant’s

monopolistic pricing practices.

Moreover, the terms of the Proposed

Final Judgment which purport to

provide fertile soil for potential new

entrants to enhance competition, in the

words of the Defendant, are

‘‘meaningless provisions.’’ Topa Press

Release, Exhibit 1.

Price competition will be quickly

restored if suppliers are freed to deal

directly with retailers. Competitive

pricing in this market is in the public

interest, because it will boost tourism

and tourism-related commerce, thereby

enhancing employment and tax

revenues in the Virgin Islands.

Unfortunately, the Proposed Final

Judgment does not promote this goal. It

should therefore be rejected.

Conversely, adoption of the Proposed

Final Judgment as drafted will permit

Defendant’s monopoly power to go

unchecked. Since, as correctly

characterized by Defendant’s Press

Release, Exhibit 1, Defendant is not

required to change its behavior,

adoption of the Proposed Final

Judgment will legitimize and

institutionalize its anti-competitive

practices and monopolistic power. A

continuation of these practices would be

detrimental to suppliers, retailers, the

consuming public, and, more generally,

the economy of the Virgin Islands, and

thus, the public interest. Therefore, the

Proposed Final Judgment should be

withdrawn and modified as suggested in

Exhibit 2.

Respectfully submitted,

Samual H. Seymour

Jonathan R. Moore

Note: Retyped by Department of Justice

TOPA Press Release

Topa Equities (V.I.), Ltd. today

announced that it had reached a

settlement with the Department of

Justice closing down the government’s

drawn out investigation of acquisitions

by Topa of distilled spirits distributors

in the early 1980’s.

‘‘Topa conceded nothing nor did it

acknowledge that these acquisitions had

any effect on competition,’’ said Maria

Hodge, counsel for Topa. ‘‘The case was

settled and a proposed consent decree

was accepted for one reason—to end the

five-year investigation.’’

Hodge further stated that ‘‘the decree

would have no effect on Topa’s business

activities’’ even though the investigation

‘‘had examined all of its on-going

business activities. Apparently they

couldn’t find anything wrong that could

be challenged under the antitrust laws

except some acquisitions over a decade

ago.’’

According to Ernest Gellhorn, an

antitrust lawyer from Washington, DC

retained by Topa, ‘‘the proposed decree

is all bark and no bite.’’ Pointing to the

decree’s ‘‘meaningless provisions that

would modify contract terms written by

suppliers or that would make supposed

scare warehouse space available to new

entrants,’’ Gellhorn called ‘‘this

probably the weakest consent decree

ever negotiated by the Department of

Justice.’’

Gellhorn also said that the reason that

the Department of Justice was willing to

accept this ‘‘moral defeat’’ was that

‘‘after combing through ten years of

Topa’s records and interviewing scores
28176 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Notices

of others, the government could not find

anything to object to about how Topa

conducts its business.’’

Topa’s decision to settle this matter

‘‘involves no finding or

acknowledgment of any wrong-doing,’’

attorney Hodge emphasized. Nor will it

change how Topa does business

‘‘because the Company is not being

asked to do anything different from

what it has been doing over the past five

years.’’

All the government has complained

about is that Topa’s acquisitions

resulted in it being the sole wholesale

distributor for major distilled spirits in

the U.S. Virgin Islands. ‘‘What the

government fails to note,’’ according to

Ms. Hodge, ‘‘is that Topa has been

successful because it has served both its

suppliers and its customers so well.’’

Nonetheless, ‘‘it has accepted this

settlement in order to end what has

been a significant drain on the

company’s resources,’’ Hodge said.

Topa owns West Indies Corp. and

Bellows International, Ltd. in the U.S.

Virgin Islands. ‘‘None of the

acquisitions we have made in the Virgin

Islands have been sought out by us,’’

said Topa Chairman, John Anderson.

‘‘In several cases, we were asked to help

a failing company, which in turn

allowed many employees to keep their

jobs. Our only aim has been to be a good

employer and a good corporate citizen

in the V.I. community and a solid

performer for our many quality brands.’’

Topa employees (sic) over 225

employees in the Territory.

For additional information, please call

Maria Hodge (809–774–6845).

December llll, 1994

Note: Retyped by Department of Justice.

Brackets (‘‘[ ]’’) substituted by Department of

Justice for redlining in the original.

Final Judgment

Plaintiff, United States of America,

filed its Complaint on December 7,

1994. Plaintiff and defendant, by their

respective attorneys, have consented to

the entry of this Final Judgment without

trial or adjudication of any issue of fact

or law. This Final Judgment shall not

constitute any evidence against, or any

admission by, any party with respect to

any issue of fact or law. Defendant has

agreed to be bound by the provisions of

this Final Judgment pending its

approval by the Court. Therefore, before

the taking of any testimony, and without

trial or adjudication of any issue of fact

or law, and upon the consent of the

parties, it is hereby ordered, adjudged

and decreed as follows:

I

This Court has jurisdiction over the

subject matter of this action and each of

the parties consenting to this Final

Judgment. The Complaint states a claim

upon which relief may be granted

against defendant under Section 3 of the

Sherman Act (15 U.S.C. § 3).

II

As used in this Final Judgment:

A. ‘‘Distilled spirits’’ means liquor

products of all types intended for

human consumption, including, but not

limited to, whiskey, gin, vodka, rum,

tequila, brandy, liqueurs and cordials,

but excluding wine and malt beverages

and non-alcoholic beverages.

B. ‘‘Person’’ means any individual,

association, cooperative, partnership,

corporation or other business or legal

entity.

C. ‘‘Virgin Islands’’ means the

Territory of the Virgin Islands of the

United States.

D. ‘‘Retailer’’ means any person

engaged in the business of purchasing

distilled spirits from wholesalers [or

suppliers], as defined herein, and

reselling them to consumers in

establishments located in the Virgin

Islands, including such Virgin Islandslocated establishments as retail liquor

stores, grocery stores, convenience

stores, restaurants and hotels.

E. ‘‘Supplier’’ means any licensed

manufacturer, distiller or importer of

distilled spirits from which defendant

or any other wholesaler [or any retailer],

as defined herein, purchases distilled

spirits or has purchased distilled spirits

within one year prior to this Final

Judgment.

F. ‘‘Wholesaler’’ means any person

holding a wholesaler’s license for

distilled spirits from the government of

the Virgin Islands and who is engaged

in the business of purchasing distilled

spirits from suppliers and reselling

them to other wholesalers or to retailers

located in the Virgin Islands.

G. ‘‘Topa Equities (V.I.), Ltd.’’

(hereinafter referred to as ‘‘Topa’’)

means defendant and its parent (but

only to the extent of its effective

supervision of, or direct involvement in,

defendant’s wholesale distribution of

distilled spirits in the Virgin Islands),

wholesaler subsidiaries, wholesaler

affiliates, successors and assigns

(excluding any independent

purchasers), directors, officers,

managers, agents and employees and

any other person acting for or on behalf

of them.

III

The provisions of this Final Judgment

shall apply to Topa and to all other

persons in active concert or

participation with Topa who shall have

received actual notice of this Final

Judgment by personal service or

otherwise.

IV

Topa is enjoined and restrained from:

A. Taking any action under any

contract or under Title 12A, Sections

131 and 132, of the Virgin Islands Code

to prevent its suppliers from canceling

their distribution arrangements for

distilled spirits, whether written or not,

with Topa upon thirty days’ written

notice and appointing another

wholesaler in its stead. In the event of

such cancellation of distribution

arrangements for distilled spirits by a

supplier, Topa shall, at the supplier’s

request, sell back to the supplier, at the

prices Topa paid to the supplier to

purchase the products, plus storage,

handling and transportation costs, as

well as all taxes and duties paid by

Topa, all distilled spirits that Topa then

has in its possession that were

purchased by Topa from the supplier

and that have not been sold or otherwise

committed, and otherwise assist in the

orderly disposition of such existing

inventory;

[B.] Communicating with any

supplier, wholesaler or other person for

the purpose or with the effect of urging,

compelling, or coercing any supplier or

wholesaler to refrain from selling

distilled spirits to any retailer in the

Virgin Islands. Nothing in this

paragraph of Section IV shall be

construed to inhibit Topa from

negotiating, entering into, and adhering

to a contract dealing with a supplier on

an exclusive basis; provided, that such

designation shall not directly or

indirectly prevent any retailer in the

Virgin Islands from acquiring distilled

spirits directly from any supplier.]

[C.] Entering into with, of enforcing or

attempting to enforce against, any

officer of Topa, any written contract,

agreement or covenant not to compete

in the distilled spirits industry in the

Virgin Islands; and countering an offer

of employment to any officer of Topa

from any wholesaler with which a Topa

supplier has entered into any

arrangement to distribute its distilled

spirits in the Virgin Islands. Otherwise,

Topa may give its officers raises,

bonuses and promotions in the ordinary

course of business, counter offers of

employment from distributors not

engaged in the distribution of distilled

spirits and take action against its former

officers for the unlawful disclosure of

trade secrets;

[D.] Making unsolicited offers of

employment to any executive employee
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Notices 28177

of any wholesaler with which a supplier

has entered into any arrangement to

distribute its distilled spirits in the

Virgin Islands for two years following

the opening for business of such

wholesaler, unless such employee has

previously resigned from or been

terminated by such wholesaler;

[E.] Refusing to deal with any retailer

because that retailer deals with another

wholesaler [or directly with a supplier];

[F.] Intentionally preventing, or

attempting to prevent, any wholesaler

with which a supplier has entered into

any arrangement to distribute its

distilled spirits in the Virgin Islands

from obtaining warehouse space for the

distribution of distilled spirits. Topa

may, in the ordinary course of business,

seek, retain and acquire warehouse

space to meet its ordinary and necessary

business requirements;

[G.] Directly or indirectly merging or

consolidating with, or acquiring

securities of, any other wholesaler

without obtaining the prior written

consent of the Antitrust Division of the

Department of Justice; and

[H.] Acquiring, without obtaining the

prior written consent of the Antitrust

Division of the Department of Justice,

either any quantity in excess of 5% of

a wholesaler’s assets, excluding

inventory, applied to the wholesale

distribution of distilled spirits in the

Virgin Islands, or any quantity in excess

of 30% of a wholesaler’s inventory of

distilled spirits.

Within thirty days of the entry of this

Final Judgment, Topa shall cause to be

delivered to all suppliers who have

contracts then in existence with Topa,

written or otherwise, by certified letter

or its equivalent, a copy of this Final

Judgment.

V

For the purpose of determining or

securing compliance with this Final

Judgment and subject to any recognized

privilege, from time to time:

A. Duly authorized representatives of

the Department of Justice shall, upon

written request by the Attorney General

or by the Assistant Attorney General in

charge of the Antitrust Division, and on

reasonable written notice to defendant

made to its principal office in Los

Angeles, California, be permitted:

1. Access during the office hours of

defendent to inspect and copy all books,

ledgers, accounts, correspondence,

memoranda, and other records and

documents in the possession or under

the control of defendant, which may

have counsel present, relating to any of

the matters contained in the Final

Judgment; and

2. Subject to the reasonable

convenience of defendant and without

restraint or interference from it, to

interview officers, employees and agents

of defendant, any of whom, together

with defendant, may have counsel

present, regarding any such matters.

B. Upon written request by the

Attorney General or the Assistant

Attorney General in charge of the

Antitrust Division made to defendant’s

principal office in Los Angeles,

California, defendant shall submit such

written reports, under oath if requested,

with respect to any of the matters

contained in this Final Judgment, as

may be requested.

C. No information obtained by the

means provided in this Final Judgment

shall be divulged by any representative

of the Department of Justice to any

person other than a duly 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, 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 plaintiff, defendant represents and

identifies in writing the material in any

such information or documents to be

that to which a claim of protection may

be asserted under Rule 26(c)(7) of the

Federal Rules of Civil Procedure or as

otherwise provided by statute, and the

defendant marks each pertinent page of

such material, ‘‘Subject to Claim of

Protection under Rule 26(c)(7) of the

Federal Rules of Civil Procedure,’’ or as

otherwise provided by statute, then ten

days’ notice shall be given by the United

States to defendant prior to divulging

such material in any legal proceeding

(other than a grand jury proceeding) to

which defendant is not a party.

VI

Topa shall:

A. Establish and implement a plan for

monitoring compliance by its officers,

directors, agents, managers and other

employees with the terms of the Final

Judgment; and

B. File with this Court and serve upon

plaintiff, within ninety days after the

date of entry of this Final Judgment, an

affidavit as to the fact and manner of its

compliance with this Final Judgment.

VII

Jurisdiction is retained by this Court

for the purpose of enabling either of the

parties to this Final Judgment to apply

to this Court at any time for such further

orders and directions as may be

necessary or appropriate for the

construction or modification of any of

the provisions hereof, for the

enforcement of compliance herewith

and for the punishment of violations

hereof.

VIII

This Final Judgment will expire on

the [delete ‘‘fifth’’] [tenth] anniversary of

its date of entry.

IX

Entry of this Final Judgment is in the

public interest.

Dated:

lllllllllllllllllllll

United States District Judge, District of the

Virgin Islands.

[FR Doc. 95–12561 Filed 5–26–95; 8:45 am]

BILLING CODE 4410–01–M

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

[Notice (95–032)]

Intent to Grant a Partially Exclusive

License

AGENCY: National Aeronautics and

Space Administration.

ACTION: Notice of intent to grant a patent

license.

SUMMARY: NASA hereby gives notice of

intent to grant ICI Composites Inc., 2055

East Technology Circle, Tempe, AZ

85284; and Imitec, Inc., 990 Maxon

road, Schenectady, NY 12308, a

partially exclusive license to practice

the invention protected by the U.S.

Patent Application Numbers 08/209,512

entitled ‘‘PHENYLETHNYL

TERMINATED IMIDE OLIGOMERS,’’

which was filed on March 3, 1994; and

08/330,773 entitled ‘‘IMIDE

OLIGOMERS ENDCAPPED WITH

PHENYLETHYNYL PHTHALIC

ANHYDRIDES AND POLYMERS

THEREFORM,’’ which was filed on

October 28, 1994, by the United States

of America as represented by the

Administrator of the National

Aeronautics and Space Administration.

The partially exclusive license will

contain appropriate terms and

conditions to be negotiated in

accordance with the Department of

Commerce Licensing Regulations (37

CFR Part 404). NASA will negotiate the

final terms and conditions and grant the

license unless, within 60 days of the

date of this notice, the Director of Patent

Licensing receives written objections to

the grant, together with supporting

documentation. The Director of Patent

Licensing will review all written

responses to the notice and then