Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Notices 55415 

Informational and Public Meetings 

Informational meetings and public 

hearings will be scheduled in Alaska at 

the following locations: Anchorage, 

Fairbanks, Wasilla, Susitna Valley, and 

McKinley Village. The specific dates 

and times of the meetings and public 

hearings will be announced in local 

media. It is the practice of the National 

Park Service to make comments, 

including names and addresses of 

respondents, available for public 

review. An individual respondent may 

request that we withhold his or her 

address from the record, which we will 

honor to the extent allowable by law. If 

you wish to have NPS withhold your 

name and/or address, you must state 

this prominently at the beginning of 

your comments. NPS will make all 

submissions from organizations or 

businesses, and from individuals 

identifying themselves as 

representatives or officials of 

organizations or businesses, available 

for public inspection in their entirety. 

Dated: August 18, 2005. 

Judy Gottlieb, 

Acting Regional Director, Alaska. 

[FR Doc. 05–18819 Filed 9–20–05; 8:45 am] 

BILLING CODE 4310–70–P 

DEPARTMENT OF JUSTICE 

Antitrust Division 

United States v. Professional 

Consultants Insurance Company, Inc.; 

Proposed Final Judgment and 

Competitive Impact Statement 

Notice is hereby given pursuant to the 

Antitrust Procedures and Penalties Act, 

15 U.S.C. 16(b)–(h), that a proposed 

Final Judgment, Stipulation and 

Competitive Impact Statement have 

been filed with the United States 

District Court for the District of 

Columbia in United States v. 

Professional Consultants Insurance 

Company, Inc., Civil Action No. 

1:05CV01272. On June 28, 2005, the 

United States filed a Complaint alleging 

that Professional Consultants Insurance 

Company, Inc., violated Section 1 of the 

Sherman Act, 15 U.S.C. 1. The proposed 

Final Judgment, filed the same time as 

the Complaint, requires Professional 

Consultants Insurance Company, Inc., to 

end its illegal information sharing 

activities and create a program to 

monitor its compliance with the 

antitrust laws. A proposed Amended 

Final Judgment was filed in substitution 

of, and to correct a drafting error in, the 

originally filed proposed Final 

Judgment. Copies of the Complaint, 

proposed Amended Final Judgment and 

Competitive Impact Statement are 

available for inspection at the U.S. 

Department of Justice, Antitrust 

Division, 325 Seventh Street, NW., 

Room 200, Washington, DC 20530 and 

at the Office of the Clerk of the United 

States District Court for the District of 

Columbia, 333 Constitution Avenue, 

NW., Washington, D.C. 20001. 

Public comment is invited within 60 

days of the date of this notice. Such 

comments, and responses thereto, will 

be published in the Federal Register 

and filed with the Court. Comments 

should be directed to Mark Botti, Chief, 

Litigation I Section, United States 

Department of Justice, 1401 H Street, 

NW., Suite 4000, Washington, DC 20530 

(telephone: 202–307–0001). 

Dorothy B. Fountain, 

Deputy Director of Operations, Antitrust 

Division. 

United States District Court for the 

District of Columbia 

United States of America, Plaintiff, v. 

Professional Consultants Insurance 

Company, Inc., Defendant 

Case Number 1:05CV01272 

Judge: Gladys Kessler 

Deck Type: Antitrust 

Date Stamp: 06/24/2005 

Complaint 

The United States of America, by its 

attorneys and acting under the direction 

of the Attorney General of the United 

States, brings this civil antitrust action 

to obtain equitable relief against 

Defendant Professional Consultants 

Insurance Company, Inc. to prevent and 

restrain violations of Section 1 of the 

Sherman Act, 15 U.S.C. 1. The United 

States alleges as follows: 

I. Jurisdiction and Venue 

1. The United States brings this action 

to prevent and restrain violations of 

Section 1 of the Sherman Act, 15 U.S.C. 

1. The Court has jurisdiction over the 

parties to this action and of the subject 

matter pursuant to 15 U.S.C. 4 and 28 

U.S.C. 1331, 1337 and 1345. Venue is 

proper in this District because 

Defendant has so stipulated. 

II. Defendant 

2. Defendant Professional Consultants 

Insurance Company, Inc. (‘‘PCIC’’) is a 

professional liability insurance 

company incorporated under the laws of 

Vermont. PCIC’s principal business is to 

provide errors and omissions insurance 

coverage to its three shareholders, 

which PCIC calls, and hereafter will be 

referred to as, its ‘‘members.’’ Each of 

PCIC’s three members is a major 

actuarial consulting firm doing business 

throughout the United States. 

3. At all times relevant to this 

Complaint, PCIC has been managed and 

operated by directors, officers, and 

providers of professional services who 

concurrently served as directors, 

officers, or employees of its members. 

4. The PCIC members each employ 

hundreds of professional actuaries 

throughout the country to serve, on a 

nationwide basis, clients that require 

actuarial consulting services. Actuarial 

consultants are professionals trained 

and skilled in mathematical and 

statistical analysis and management of 

financial and economic risks. Their 

clients are firms and organizations that 

require risk analysis and management in 

various financial and other contexts, 

including pension plans and other 

employee benefit plans organized to 

serve public or government employees, 

private corporate employees, and 

members of labor unions. 

5. Apart from their joint ownership 

and management of PCIC, the three 

PCIC members operate actuarial 

consulting businesses separately and 

independently of, and in competition 

with, each other. Each of the three PCIC 

members is a major competitor of the 

others in the provision of actuarial 

consulting services to employee benefit 

plans. 

III. Trade and Commerce 

6. At all times relevant to this 

Complaint, PCIC has provided 

professional liability insurance coverage 

for claims against its members arising 

from actuarial consulting businesses 

conducted by its members, including 

the provision of actuarial consulting 

services to employee benefit plans, 

throughout the United States. These 

activities of PCIC and its members have 

been within the flow of, and have 

substantially affected, interstate 

commerce. 

7. Employee benefit plans engage 

PCIC’s members and other actuarial 

consulting firms to prepare actuarial 

risk valuations. Employee benefit plans 

rely on the work of actuarial consultants 

to determine employee benefit levels 

and employer contributions needed to 

fund the benefits. An error or omission 

in the work performed by an actuarial 

consultant can result in substantial 

monetary losses or other damages to the 

employee benefit client. 

8. To cover exposure to liability 

claims of clients arising out of mistakes 

made in their actuarial work, PCIC 

members historically obtained 

professional errors and omissions 

liability insurance. Since the late 1980s 

and continuing to the present, PCIC has 

55416 Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Notices 

annually provided each of its members 

with several millions of dollars of such 

coverage. In addition, the members have 

individually purchased substantial 

amounts of additional insurance 

coverage from commercial insurance 

companies. 

IV. Claim for Relief 

9. Until recently, the PCIC members 

generally provided actuarial consulting 

services to employee benefit clients 

under terms that did not limit a client’s 

rights to recover damages suffered as a 

result of actuarial errors or omissions. 

Beginning in as early as the 1999–2000 

time frame, PCIC, its members, and 

other actuarial consulting competitors 

began to experience increasing severity 

and frequency of liability claims arising 

out of their respective actuarial 

consulting business. To address the 

increasing claims experience, the PCIC 

members considered various ways to 

mitigate their exposure to liability 

claims, including instituting or 

improving professional peer review and 

other quality control procedures, as well 

as the use of contractual limitations of 

liability, or ‘‘LOL,’’ in client engagement 

agreements. 

10. Clients that accept LOL in their 

actuarial consulting engagements are 

contractually bound to limitations on 

the amounts or types of damages that 

may be recoverable as a result of 

actuarial errors or omissions. Various 

formulations of LOL include liability 

‘‘caps’’ precluding damages beyond a 

specified dollar amount, limitations 

based on a multiple of fees charged to 

clients, and limitations to ‘‘direct 

damages,’’ potentially precluding claims 

for consequential or other types of 

damages. 

11. In marketplace rivalry among 

actuarial consulting firms, LOL is a 

significant basis of the firms’

competition for clients and prospective 

clients. All else equal, a firm that does 

not require LOL can be at a significant 

competitive advantage in seeking a 

client’s business over a competing firm 

that does require LOL. To the extent 

clients not disposed to accepting LOL 

can choose to engage actuarial 

consulting firms that do not require 

LOL, firms that might otherwise require 

LOL can be competitively disciplined or 

constrained from doing so by the 

potential loss of clients to non-LOL 

firms. 

12. When the PCIC members began to 

consider implementing LOL, they 

recognized that unless and until LOL 

became a matter of widespread usage 

throughout the actuarial consulting 

profession, firms implementing LOL 

would face client resistance and 

potential loss of business to firms that 

had not implemented LOL. A senior 

official of one PCIC member noted that 

‘‘What I don’t want to do is get so far 

ahead of the market openly, without 

specific calculation that ‘now’ is the 

time, that we become a competitive 

target.’’ Another PCIC member was 

‘‘worried that they are way ahead * * * 

and fear that they are now at a 

competitive disadvantage.’’ Employees 

of the third PCIC member had 

‘‘reservations about adopting these 

procedures [LOL] too quickly * * * 

[and] we don’t want to lose clients by 

acting before our competitors do.’’

13. The PCIC members also 

recognized that efforts on their part to 

implement LOL would be less exposed 

to client resistance and competitive loss 

of business if other actuarial 

competitors also began to implement 

LOL. To avoid being too far ‘‘in front of 

the competition’’ in implementing LOL, 

they needed to obtain information about 

what other actuarial consulting firms 

were doing or planning to do. Thus, for 

example, employees of one PCIC 

member urged restraint in implementing 

LOL, at least until the competitive 

situation could be determined: ‘‘We 

respectfully do not wish to be the first 

* * * to adopt stringent limitations at 

the risk of losing our national 

prominence, let alone a significant 

amount of business. The losses could be 

devastating for some practices. 

Therefore, the [proposed] effective date 

is left open until further information 

about our competitors is known.’’

14. Beginning as early as in 1999, the 

PCIC members discussed among 

themselves their respective 

consideration and implementation of 

plans to require LOL of their clients. 

These discussions took place on many 

occasions and in several contexts, 

including at meetings of PCIC’s board of 

directors (comprised of senior officials 

of each of the PCIC members), at various 

‘‘PCIC owners meetings’’ (also attended 

by senior officials of the PCIC members), 

in connection with a PCIC working 

group called the ‘‘PCIC Malpractice 

Avoidance Committee,’’ and other 

formal and informal communications 

among themselves. 

15. In addition to enabling and 

facilitating LOL discussions among the 

three PCIC members, PCIC sponsored, 

organized, and conducted a series of 

profession-wide actuarial meetings, in 

March 2000, June 2001, and January 

2003. These profession-wide meetings 

were attended by senior representatives 

not only of the PCIC members but also 

of five other actuarial firms that 

competed for employee benefit clients 

on a nationwide basis. At or in 

connection with each of these meetings, 

the attendees exchanged information 

about plans or efforts to implement LOL 

among actuarial consulting firms, 

including but not limited to the 

following: 

a. At the March 2000 profession-wide 

meeting, a number of LOL 

implementation issues were discussed, 

including the use of dollar-based limits 

or multiples of fees, and possible ways 

of dealing with clients that resist the 

limitations. The use of LOL was 

described by one attendee as a ‘‘best 

practice’’ that certain of the actuarial 

consulting firms had begun using. 

Another attendee noted that ‘‘there was 

an argument made for inclusion of a 

standard [LOL] clause [in client 

engagements]’’ and that ‘‘if more and 

more firms use this sort of approach, it 

will become standard.’’

b. At the June 2001 profession-wide 

meeting, ‘‘a member of firms discussed 

their own use of contractual safeguards 

and the clients’ acceptance.’’ One of the 

attendees recounted: ‘‘Most firms have 

either begun implementing * * * or are 

actively considering [use of contractual 

safeguards] * * * One firm stated that 

it had made a firm-wide decision that it 

will no longer accept unlimited liability 

* * * We also discussed some ideas 

about implementing contractual 

safeguards, such as immediately 

requiring limitations for new clients and 

phasing in the requirements for existing 

clients * * * There seemed to be a 

consensus that * * * actuarial clients 

may complain about contractual 

safeguards but will accept them as they 

become more widespread.’’

c. Shortly after the June 2001 

profession-wide meeting, a senior 

official of one of the non-PCIC 

competitors at the meeting caused his 

firm to begin considering LOL 

implementation. This official, as part of 

the firm’s consideration of LOL, 

requested and received from a PCIC 

official sample LOL language to help the 

firm develop LOL terms for its own 

client contracts. 

16. In addition to the PCIC professionwide meetings, PCIC and its members 

engaged in numerous other LOL 

discussions with representatives of 

other non-PCIC competitors, including 

but not limited to the following: 

a. In October 2001, a PCIC official 

communicated with an official for one 

of the non-PCIC competitors that was 

represented at the PCIC profession-wide 

meetings but had not begun to 

implement LOL. The PCIC official 

advised that ‘‘some consulting firms are 

beginning to implement limits of 

liability’’ and encouraged the non-PCIC 

firm to do likewise: ‘‘a strong argument 

Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Notices 55417 

can be made that it is not in any firms’

individual best interest to avoid 

implementing reasonable contractual 

safeguards.’’ The official of the nonPCIC firm subsequently observed that 

the PCIC official ‘‘feels strongly about 

the limits of liability and was upset that 

we were not seeking them,’’ and 

thereafter the non-PCIC firm itself 

considered its own implementation of 

LOL. 

b. In late 2001, one of the PCIC 

members was in the process of 

considering a proposed corporate policy 

to implement LOL, which it went on to 

adopt in February 2002. In December 

2001, to facilitate adoption of the policy 

and acceptance among the firm’s 

employees, a PCIC official circulated to 

the firm’s employees a memorandum 

providing ‘‘HIGHLY CONFIDENTIAL’’

information about competitor’s use of 

LOL and prospective plans to use LOL. 

The memorandum disclosed that the 

two other PCIC members had already 

begun to require LOL of their clients; 

that one of the non-PCIC competitors 

had plans to begin implementing LOL; 

that another competitor was attempting 

to implement LOL; and that yet another 

was ‘‘strongly considering’’

implementing LOL. 

c. In early 2002, an employee benefit 

client of one of the PCIC members 

refused to accept proffered LOL terms 

and decided to seek competitive bids 

from other actuarial consulting firms in 

which LOL would not be required. After 

one of the non-PCIC competitors that 

attended the PCIC profession-wide 

meetings submitted a bid without LOL, 

a PCIC official found out about the 

firm’s bid, was unhappy that the bid did 

not require LOL, and contacted a 

representative of the firm to express his 

displeasure. 

d. In April 2002, a PCIC official 

discussed profession-wide LOL 

implementation with an official of a 

non-PCIC competitor. The PCIC official 

apprised the non-PCIC competitor of 

ongoing LOL implementation activities 

not only of the three PCIC members, but 

also those of two other competitors. In 

return, the official of the non-PCIC 

competitor disclosed LOL activities of 

his firm to the PCIC official. 

e. At a professional association 

conference in September 2003, senior 

officials of two of the PCIC members 

and that of a non-PCIC competitor 

updated each other on the progress of 

their respective LOL implementation 

efforts. In the wake of this conversation, 

the non-PCIC official apprised a 

colleague at his firm of his discussions 

with the PCIC competitors, and urged 

his colleague to ‘‘push hard to get 

liability limiting agreements wherever 

we can.’’

17. Within the framework of the 

meetings and other communications 

alleged above, PCIC, its members, and 

other actuarial consulting competitors 

agreed among themselves to share 

competitively sensitive information 

about each others’ plans and efforts to 

implement LOL. The sharing of this 

information eliminated or reduced 

competitive uncertainties and concerns 

about the potential for losing clients to 

firms not using LOL, and thus facilitated 

decisions of PCIC members and other 

competitors to begin implementing LOL. 

18. The agreement to share LOL 

information alleged above has resulted 

in, among other things, the following 

effects: 

a. Significant competition among 

PCIC members and other actuarial 

consulting firms with respect to liability 

terms of contracting with employee 

benefit clients has been restrained; 

b. Employee benefit plan clients that 

have accepted LOL terms with PCIC 

members or other actuarial consulting 

firms have been deprived of the benefits 

of unrestrained competition in the 

setting of actuarial consulting contract 

terms; 

c. The use of LOL terms in actuarial 

consulting contracts with employee 

benefit plans has been significantly 

more prevalent than would have been 

the case in the presence of unrestrained 

competition among the PCIC members 

and other actuarial consulting firms. 

19. Unless permanently restrained 

and enjoined, PCIC and its members are 

free to continue, maintain, or renew the 

above-described sharing of 

competitively sensitive LOL information 

among themselves and other actuarial 

consulting competitors, in violation of 

Section 1 of the Sherman Act, 15 U.S.C. 

1. 

VI. Prayer for Relief 

Wherefore, the Plaintiff United States 

of America prays: 

1. Adjudge the Defendant PCIC and its 

members as constituting and having 

engaged in an unlawful combination, or 

conspiracy in unreasonable restraint of 

interstate trade and commerce in 

violation of Section 1 of the Sherman 

Act, 15 U.S.C. 1; 

2. Order that the Defendant PCIC, its 

members, and their respective officers, 

directors, employees, successors, and 

assigns, and all other persons acting or 

claiming to act on their behalf, be 

permanently enjoined from engaging in, 

carrying out, renewing, or attempting to 

engage in, carry out, or renew the 

combination and conspiracy alleged 

herein, or any other combination or 

conspiracy having a similar purpose or 

effect in violation of Section 1 of the 

Sherman Act, 15 U.S.C. 1; 

3. Award to plaintiff its costs of this 

action and such other and further relief 

as may be required and the Court may 

deem just and proper. 

Dated: June 24, 2005. 

Respectfully Submitted, 

For Plaintiff United States of America 

lllllllllllllllllllll

R. Hewitt Pate, 

Assistant Attorney General, 

Antitrust Division. 

lllllllllllllllllllll

J. Bruce McDonald, 

Deputy Assistant Attorney General, 

Antitrust Division. 

lllllllllllllllllllll

Dorothy B. Fountain, 

Deputy Director of Operations, 

Antitrust Division. 

lllllllllllllllllllll

Mark J. Botti (D.C. Bar # 416948), 

Chief, Litigation I Section, 

Assistant Attorney General 

lllllllllllllllllllll

Weeun Wage, 

Jonathan B. Jacobs, 

John P. Lohrer, 

Michael A. Bishop (D.C. Bar #468693), 

Barry L. Creech, 

Barry J. Joyce, 

Nicole S. Gordon, 

Ryan J. Danks. 

Litigation I Section, 

Antitrust Division, 

U.S. Department of Justice, 

City Center Building, 

1401 H Street, NW., Suite 4000, 

Washington, DC 20530. 

(202) 307–0001. 

Facsimile: (202) 307–5802. 

United States District Court for the District 

of Columbia 

United States of America, Plaintiff v. 

Professional Consultants Insurance 

Company, Inc., Defendant 

Civil No. 1:05CV01272 

Filed: 

Amended Final Judgment 

Whereas, Plaintiff, United States of 

America, filed its Complaint on June 24, 

2005, alleging Defendant’s violation of 

Section 1 of the Sherman Act, and 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, and without the Final 

Judgment constituting any evidence against 

or admission by Defendant, or any other 

entity, as to any issue of fact or law; 

And Whereas, Defendant agrees to be 

bound by the provisions of this Final 

Judgment pending its approval by the Court; 

And Whereas, the essence of this Final 

Judgment is the prohibition of certain alleged 

information exchanging activities; 

Now Therefore, before any testimony is 

taken, without trial or adjudication of any 

55418 Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Notices 

issue of fact or law, and upon consent of the 

parties, it is ordered, adjudged and decreed: 

I. Jurisdiction 

This Court has jurisdiction over the subject 

matter of and the parties to this action. For 

purposes of this Final Judgment only, 

Defendant stipulates that the Complaint 

states a claim upon which relief may be 

granted against Defendant under Section 1 of 

the Sherman Act, as amended (15 U.S.C. 1). 

II. Definitions 

A. ‘‘PCIC’’ means Professional Consultants 

Insurance Company, Inc., any of its 

successors and assigns, subsidiaries, 

divisions, affiliates, partnerships, and joint 

ventures, and any of their directors, officers, 

managers, agents, and employees when 

serving in such capacity. 

B. ‘‘PCIC member’’ or ‘‘member’’ means 

any current shareholder of PCIC, any 

shareholder added to PCIC membership at 

any time during the term of this Final 

Judgment, any of such shareholders’

successors and assigns, any of their 

subsidiaries, divisions, partnerships, and any 

of their directors, officers, managers, agents, 

and employees when serving in such 

capacity. 

C. ‘‘PCIC business requirements’’ means 

rating, assessing, or underwriting 

professional liability insurance for current 

PCIC members or firms under consideration 

for PCIC membership; allowing PCIC board 

members to make informed decisions about 

whether to accept or deny membership as to 

prospective members; preparing reinsurance 

submissions and responding to reinsurers’

requests for information; allowing PCIC 

board members to evaluate PCIC’s risk 

profile, the risk profile of firms under 

consideration for PCIC membership and 

otherwise meet fiduciary obligations to PCIC; 

allowing PCIC members to make informed 

decisions about continued participation in 

PCIC or potential members to make informed 

decisions about participating in PCIC; and 

responding to requests for information by 

auditors and regulatory agencies. 

D. ‘‘Actuarial consulting services’’ means 

any actuarial services provided by actuarial 

consulting firms to any clients of such firms, 

including but not limited to any such 

services relating to employee benefit plans. 

E. ‘‘Aggregated information’’ means 

information that reflects aggregation of 

information as to different clients, 

transactions, or service offerings. 

‘‘Aggregated information’’ does not include 

information that is specific to individual 

identifiable clients or transactions. 

F. ‘‘Agreement’’ means any agreement or 

understanding, formal or informal, oral or 

written. 

G. ‘‘Communicate’’ means to provide, 

disclose, disseminate, solicit, share, or 

exchange information in any manner or form, 

including by oral, written, or electronic 

means. 

H. ‘‘LOL’’ means contractual limitations of 

liability in the provision of actuarial 

consulting services. 

I. ‘‘LOL information’’ means information 

about an actuarial consulting firm’s use of 

LOL and information regrading an actuarial 

consulting firm’s plans, policies or practices 

relating to its use of LOL. 

J. ‘‘Prohibited LOL Information’’ means 

current, client specific information about an 

actuarial firm’s use of LOLs and information 

regarding an actuarial firm’s current or future 

plans, policies or practices relating to its use 

of LOLs. 

III. Applicability 

A. This Final Judgment applies to PCIC, as 

defined above each consenting PCIC member 

individually, and all other persons in active 

concert or participation with PCIC who 

receive actual notice of this Final Judgment 

by personal service or otherwise. 

B. PCIC shall require, as a condition of 

membership in PCIC, that each PCIC member 

consent to be bound by the Judgment, 

throughout the term of the Judgment, 

regardless of whether the member continues 

or discontinues PCIC membership or whether 

PCIC continues or ceases to exist as an entity. 

IV. LOL Provisions 

A. PCIC shall not communicate LOL 

information to any PCIC member or other 

representative of PCIC, or to any 

representative of any PCIC member, except as 

limited to the following extent: 

1. PCIC’s Antitrust Compliance Office, to 

be established by PCIC pursuant to ¶ V.A. of 

this Final Judgment, and/or an independent 

third party working with PCIC’s Antitrust 

Compliance Office, and in a format approved 

by PCIC’s Antitrust Compliance Office, may 

communicate historical and aggregated LOL 

information to members of PCIC’s board of 

directors (including alternate directors), 

professional and administrative service 

providers working for PCIC, and the 

respective senior management of PCIC’s 

members regularly involved in decisionmaking with respect to PCIC’s business 

requirements, solely for purposes of an only 

as reasonably necessary to accomplish PCIC 

business requirements. PCIC’s Antitrust 

compliance Office may also communicate 

historical and aggregated LOL information to 

a prospective member of PCIC if requested by 

the prospective member for the purpose of 

making an informed decision about 

participating in PCIC. 

2. LOL information communicated 

pursuant to ¶ IV.A.1. of this Final Judgment 

shall be labeled ‘‘Confidential; Disclosure 

and Usage Subject to PCIC’s Antitrust 

Compliance Office,’’ and shall be preserved 

and maintained by PCIC’s Antitrust 

Compliance Office ready for possible 

inspection by or production to the United 

States. 

3. Except to serve a purpose for which the 

information was communicated pursuant to 

¶ IV.A.1., recipients of LOL information 

communicated pursuant to ¶ IV.A.1 shall not 

further communicate any such information to 

any other PCIC member or to any 

representative of any other provider of 

actuarial consulting services, and shall not 

further communicate or use any such 

information in any manner. 

B. A PCIC member may communicate to 

PCIC’s Antitrust compliance Office and/or 

the independent third party, not more than 

twice per calendar year, historical and 

aggregated information about its usage of 

LOLs, solely for purposes of and only as 

reasonably necessary to accomplish PCIC’s 

business requirements. 

C. PCIC shall not require any member to 

adopt, implement, maintain, or engage in any 

policies, plans, or practices relating to LOL 

usage, except that: 

1. PCIC may use historical and aggregated 

LOL information to accomplish PCIC’s 

business requirements. 

2. PCIC may deny or exclude a member as 

to professional liability insurance coverage in 

excess of $15 million, but only if: 

(a) Reinsurance to be obtained by PCIC for 

the denied or excluded coverage is 

conditioned upon usage of LOL and the 

member does not satisfy the conditions, 

(b) Reinsurance to be obtained by PCIC for 

the denied for excluded coverage is not 

otherwise reasonably commercially available 

at a reasonable price, 

(c) At the members’ request, PCIC will 

continue to provide the member with 

primary coverage of not less than $15 

million, 

(d) PCIC provides the United States with 

written notice of the facts and circumstances 

of such denial or exclusion within ten 

business days of the denial or exclusion to 

the member, and 

(e) PCIC preserves and maintains ready for 

possible inspection or production all PCIC 

communications with reinsurers or members 

and other records relating to the exclusion or 

denial. 

D. PCIC and its members shall not: 

1. Enter into or participate in any 

agreement between or among any of 

themselves with respect to any actual or 

potential usage of LOL, provided that the 

United States will not assert a violation of 

this provision based solely on parallel 

conduct of the PCIC members. 

2. Enter into or participate in any 

agreement with any representatives of any 

non-member providers of actuarial 

consulting services with respect to any actual 

or potential usage of LOL. 

3. Communicate with any representatives 

of any member or non-member providers of 

actuarial consulting services with respect to 

any Prohibited LOL Information. 

E. Notwithstanding any provisions of this 

Final Judgment: 

1. PCIC may obtain client-specific LOL 

information from a PCIC member to the 

extent reasonably necessary to discuss a 

specific actual or threatened professional 

liability claim against the member, even if 

the LOL information is Prohibited LOL 

Information. 

2. PCIC members are not prohibited from 

unilaterally disclosing LOL information, 

including Prohibited LOL Information, to 

clients or prospective clients, to the press or 

news media, and in connection with SEC or 

other regulatory filings, or LOL information 

that is in the public domain. Moreover, PCIC 

members are not prohibited from disclosing 

or receiving LOL information, including 

Prohibited LOL Information, when 

conducting business with another actuarial 

consulting firm in a vendor-vendee 

relationship, or when communicating with 

affiliated actuarial consulting firms based in 

other countries. 

Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Notices 55419 

3. PCIC and its members are not prohibited 

from engaging in conduct protected under 

the Noerr-Pennington doctrine. 

4. PCIC members are not prohibited from 

conducting due diligence with respect to 

LOLs in connection with an actual or 

contemplated (a) acquisition of another 

actuarial consulting firm; (b) purchase of an 

actuarial consulting business from another 

actuarial consulting firm; or (c) sale of an 

actuarial consulting business to another 

actuarial consulting firm. Moreover, to the 

extent reasonably necessary, PCIC members 

are not prohibited from conducting due 

diligence with respect to LOLs in connection 

with an evaluation of whether to become a 

shareholder or member of an insurance 

company (captive or not) other than PCIC. 

F. Nothing in this Final Judgment shall 

prohibit or interfere with PCIC’s right to grant 

or deny coverage, or admit or deny new 

members, for any reason unrelated to a 

current or prospective PCIC member’s use of 

LOLs. 

V. Antitrust Compliance and Notification 

A. PCIC shall establish an Antitrust 

Compliance Office, including appointment of 

an Antitrust Compliance Officer, within 30 

days of entry of this Final Judgment, as 

follows: 

1. The Antitrust Compliance Office 

established by PCIC shall be staffed and 

maintained independently of PCIC’s 

members. 

2. Each PCIC Antitrust Compliance Officer 

appointed pursuant to ¶ V.A. shall be an 

attorney with substantial experience with the 

antitrust laws and shall not have any other 

responsibilities with respect to PCIC’s 

operations. 

B. Each Antitrust Compliance Officer 

appointed pursuant to ¶ V.A. shall be 

responsible for establishing and 

implementing an antitrust compliance 

program for PCIC and ensuring PCIC’s 

compliance with this Final Judgment, 

including the following: 

1. The PCIC Compliance Officer shall 

furnish a copy of this Final Judgment (a) 

within thirty (30) days of entry of this Final 

Judgment to each director or officer of PCIC, 

each representative of a PCIC member 

working with PCIC, and each individual who 

receives LOL information pursuant to 

¶ IV.A.1, and (b) within thirty (30) days to 

each person who succeeds to any such 

position. 

2. The PCIC Compliance Officer shall 

obtain from each person designated in 

¶ V.B.1. of this Final Judgment a signed 

certification that the person has read, 

understands, and agrees to comply with the 

provisions of this Final Judgment, to the best 

of his/her knowledge at the time the 

certification is made is not aware of any 

violation of this Final Judgment by PCIC that 

has not already been reported to the PCIC 

Compliance Officer, and understands that 

failure to comply with this Final Judgment 

may result in conviction for criminal 

contempt of court. 

3. Upon learning of any potential violation 

of any provision of this Final Judgment, the 

PCIC Compliance Officer shall forthwith take 

appropriate action to terminate or modify the 

activity so as to comply with this Final 

Judgment. Any such action shall be reported 

in the annual compliance report required by 

¶ V.B.4. of this Final Judgment. 

4. For each year during the term of this 

Final Judgment, on or before the anniversary 

date of this Final Judgment, the PCIC 

Compliance Officer shall file with the United 

States a report as to the fact and manner of 

its compliance with the provisions of this 

Final Judgment. In addition, the report must 

identify any individual who received LOL 

information pursuant to ¶ IV.A.1. 

C. PCIC shall require, as a condition of 

membership in PCIC, that each PCIC member 

agree to establish an antitrust compliance 

program within 90 days of the entry of this 

Final Judgment, or with respect to a new 

PCIC member within 90 days of membership. 

Each PCIC member’s antitrust compliance 

program must include the policies and 

procedures described in ¶ V.B.1–4. 

D. PCIC shall cause to be published a 

written notice in the form attached an 

Appendix to this Final Judgment, in Pensions 

& Investments and in Pensions & Investments 

Online, within sixty (60) days of the entry of 

this Final Judgment. 

VI. Compliance Inspection 

A. For purposes of determining or securing 

compliance with this Final Judgment, or of 

determining whether this Final Judgment 

should be modified or vacated, and subject 

to any legally recognized privilege, from time 

to time duly authorized representatives of the 

United States Department of Justice, 

including consultants and other persons 

retained by the United States shall, upon 

written request of a duly authorized 

representative of the Assistant Attorney 

General in charge of the Antitrust Division, 

and on reasonable notice to the PCIC and its 

members, be permitted: 

1. Access during PCIC’s and its members’

office hours to inspect and copy, or at the 

United States’ option, to require PCIC and its 

members to provide copies of all books, 

ledgers, accounts, records, and documents in 

their possession, custody, or control, relating 

to any matters contained in this Final 

Judgment; and 

2. To interview, either informally or on the 

record, PCIC’s and its members’ officers, 

employees, or other representatives, who 

may have their individual counsel present, 

regarding such matters. The interviews shall 

be subject to the reasonable convenience of 

the interviewee and without restraint or 

interference by PCIC or its members. 

B. Upon the written request of a duly 

authorized representative of the Assistant 

Attorney General in charge of the Antitrust 

Division, PCIC and its members shall submit 

written reports and interrogatory responses, 

under oath if requested, relating to any of the 

matters contained in this Final Judgment as 

may be requested. 

C. No information or documents obtained 

by the means provided in this section shall 

be divulged by the United States to any 

person other than an authorized 

representative of the executive branch of the 

United States, except in the course of legal 

proceedings to which the United States is a 

party (including grand jury proceedings), or 

for the purpose of securing compliance with 

this Final Judgment, or as otherwise required 

by law. 

D. If at this time information or documents 

are furnished by PCIC or a PCIC member to 

the United States, PCIC or the member 

represents and identifies in writing the 

material in any such information or 

documents to which a claim of protection 

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

Federal Rules of Civil Procedure, and PCIC 

or the member marks each pertinent page of 

such material, ‘‘Subject to claim of protection 

under Rule 26(c)(7) of the Federal Rules of 

Civil Procedure,’’ then the United States shall 

give ten (10) calendar days notice prior to 

divulging such material in any legal 

proceeding (other than a grand jury 

proceeding). 

VII. Retention of Jurisdiction 

This Court retains jurisdiction to enable 

any party or any PCIC member that consents 

to be bound by this Final Judgment to apply 

to this Court at any time for further orders 

and directions as may be necessary or 

appropriate to carry out or construe this Final 

Judgment, to modify any of its provisions, to 

enforce compliance, and punish violations of 

its provisions. 

VIII. Public Interest Determination 

Entry of this Final Judgment is in the 

public interest. 

IX. Term 

This Final Judgment shall expire ten (10) 

years after the day of its entry. 

Dated: lllllllllllllllll

Court approval subject to procedures of 

Antitrust Procedures and Penalties Act, 15 

U.S.C. 16. 

lllllllllllllllllllll

United States District Judge 

Appendix 

On June 24, 2005, the United States 

Department of Justice filed a civil suit 

alleging that Professional Consultants 

Insurance Company (‘‘PCIC’’) has engaged in 

certain practices in violation of Section 1 of 

the Sherman Act. PCIC is a Vermont-based 

captive insurance company that provides 

professional liability insurance to three 

actuarial consulting firms (hereafter referred 

to as ‘‘PCIC‘‘). PCIC has agreed to entry of a 

civil consent decree to settle this matter. The 

consent decree does not constitute evidence 

or admission by any party with respect to any 

issue of fact or law. The consent decree 

applies to PCIC and its consenting members, 

as well as their directors, officers, managers, 

agents, and employees. 

The Justice Department’s suit alleges that 

PCIC and its members engaged in the sharing 

of competitively sensitive information 

relating to the use of contractual limitations 

of liability (or ‘‘LOL’’) in actuarial consulting 

engagements with pension funds and other 

employee benefit plans. The consent decree 

is aimed at prohibiting PCIC and its members 

from sharing LOL information among 

themselves, or with other providers of 

actuarial consulting services. 

Among other things, the consent decree 

prohibits PCIC and its members from 

55420 Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Notices 

1At the same time the Complaint was filed, the 

United States also filed a Stipulation and a 

proposed Final Judgment. In substitution of, and to 

correct a drafting error in, the originally filed 

proposed Final Judgment, the United States and 

PCIC jointly filed a proposed Amended Final 

Judgment concurrently with the filing of the 

Competitive Impact Statement. 

communicating among themselves with 

respect to LOL information, except to a 

specified extent and subject to safeguards 

reflecting PCIC’s reasonable need for use of 

LOL information to provide its members with 

professional liability insurance coverage. The 

consent decree also prohibits PCIC and its 

members from entering into or participating 

in any agreement, among themselves or with 

any other providers of actuarial consulting 

services, with respect to any actual or 

potential use of LOL; and it prohibits PCIC 

and its members from communicating with 

other providers of actuarial consulting 

services with respect to any firm’s current or 

future plans, policies, or practices relating to 

the use of LOLs. Under the consent decree, 

PCIC must require, as a condition of PCIC 

membership, that its members be fully bound 

by the terms of the decree. In addition, the 

consent decree also requires PCIC and its 

members to establish antitrust compliance 

programs and notification procedures. 

Interested persons may address comments 

to Mark J. Botti, Chief, Litigation I Section, 

Antitrust Division, U.S. Department of 

Justice, 1401 H Street, NW., Suite 4000, 

Washington, DC 20530, within 60 days of the 

date of this notice. 

United States District Court for the District 

of Columbia 

United States of America, Plaintiff v. 

Professional Consultants Insurance 

Company, Inc., Defendant 

CASE NUMBER: 1:05CV01272 

JUDGE: Gladys Kessler 

DECK TYPE: Antitrust 

DATE STAMP: 

Competitive Impact Statement 

Plaintiff United States of America (‘‘United 

States’’), pursuant to the Antitrust Procedures 

and Penalties Act (‘‘APPA’’), 15 U.S.C. 16(b)–

(h), files this Competitive Impact Statement 

relating to the proposed Amended Final 

Judgment submitted for entry in this civil 

antitrust proceeding. 

I. Nature and Purpose of the Proceeding 

On June 24, 2005, the United States filed 

a civil antitrust Complaint against 

Professional Consultants Insurance 

Company, Inc. (‘‘PCIC’’), alleging that PCIC, 

three actuarial consulting firms that own and 

manage PCIC, and other actuarial consulting 

firms agreed among themselves to share 

competitively sensitive information about 

their use of contractual limitations of liability 

in violation of Section 1 of the Sherman Act. 

The United States has also filed a proposed 

Amended Final Judgment,1 designed to 

prevent the continuation and eliminate the 

anticompetitive effects of the violation 

alleged in the Complaint. The proposed 

Amended Final Judgment, which is 

explained more fully below, aims to prevent 

PCIC and its members from sharing 

limitations of liability information among 

themselves, or with other providers of 

actuarial consulting services, in a manner 

that may significantly lessen competition. 

The United States and PCIC have 

stipulated that the proposed Amended Final 

Judgment may be entered after compliance 

with the APPA. Entry of the proposed 

Amended Final Judgment would terminate 

this action, except that the Court would 

retain jurisdiction to construe, modify, or 

enforce the provisions of the proposed 

Amended Final Judgment and to punish 

violations thereof. 

II. Description of the Events Giving Rise to 

the Alleged Violation 

A. PCIC, Its Members, and the Actuarial 

Consulting Marketplace 

PCIC is a professional liability insurance 

company owned and managed jointly by 

three actuarial consulting firms (which call 

themselves, and are hereinafter referred to as, 

PCIC ‘‘members’’). PCIC’s principal business 

is to provide errors and omissions insurance 

coverage to its members, each of which is a 

major nationwide provider of actuarial 

consulting services. The clients of PCIC’s 

members are firms and organizations that 

require actuarial financial risk analysis and 

management, including pension funds and 

other employee benefit plans serving public 

or government employees, private corporate 

employees, and members of labor unions. 

Apart from their joint ownership and 

management of PCIC, the three PCIC 

members are major competitors of each other, 

particularly in the provision of actuarial 

consulting services to employee benefit 

plans. In addition to the PCIC members, six 

other actuarial consulting firms compete on 

a nationwide basis to provide actuarial 

services to employee benefit plans. Actuarial 

consulting firms gauge their competitive 

positions based on their shares of clients 

among industry-published lists of the 1,001 

largest U.S. employee benefit plans. Based on 

recent data obtained by the United States, the 

three PCIC members’ combined share of the 

top 1,000 plans is about 35 percent, and the 

combined share of all nine national 

competitors is about 96 percent. 

The actuarial consulting firms also 

evaluate their market positions with 

reference to three distinct types of employee 

benefit clients: plans established by 

corporations or private companies (referred 

to as ‘‘corporate plans’’); plans of public or 

government entities (‘‘public plans’’); and 

plans established by labor organizations and 

funded by multiple employers (‘‘multiemployer plans’’). Recent data indicates that 

the PCIC members collectively account for 

about 40 percent of all corporate plans among 

the top 1,000 plans, and that the combined 

share of PCIC members and three other firms 

exceeds 90 percent. One PCIC member and 

four other firms have about 92 percent of the 

top 1,000 public plans. Two PCIC members 

and three other firms have about 91 percent 

of the top 1,000 multiemployer plans. 

B. Anticompetitive Exchange of Information 

on Limitations of Liability 

As alleged in the Complaint, the work 

performed by actuarial consulting firms for 

employee benefit clients include risk 

valuations used to determine employee 

benefit levels and employer contributions 

needed to fund the benefits. In such cases, an 

actuarial error or omission can result in 

substantial monetary losses or other damages 

to the client. Until recently, PCIC’s members 

generally served their clients under terms 

that did not limit a client’s right to recover 

damages suffered as a result of actuarial 

errors or omissions. To cover exposure to 

liability claims of clients arising out of 

mistakes made in their actuarial work, the 

members historically obtained professional 

errors and omissions liability insurance. 

As actuarial consulting firms began to 

experience increasing severity and frequency 

of liability claims in 1999–2000, the PCIC 

members considered ways to mitigate their 

exposure to liability claims. Among other 

things, they considered instituting or 

improving professional peer review and other 

quality control procedures, and they 

considered using contractual limitations of 

liability, or ‘‘LOL,’’ in client engagement 

agreements. Clients accepting LOL are 

contractually bound to limitations on the 

amounts or types of damages that may be 

recoverable as a result of actuarial errors or 

omissions. 

The Complaint alleges that the PCIC 

members recognized that it made a difference 

whether they implemented LOL unilaterally 

or collectively, and whether they did so with 

or without a broad profession-wide 

movement toward LOL. They understood 

that unless and until LOL became a matter 

of widespread usage throughout the actuarial 

consulting profession, firms implementing 

LOL would face client resistance and 

potential loss of business to firms that had 

not implemented LOL. They also recognized 

that efforts on their part to implement LOL 

would be less exposed to client resistance 

and competitive loss of business if other 

actuarial competitors also began to 

implement LOL. 

To avoid being ‘‘in front of the 

competition,’’ the PCIC members sought to 

obtain information about their competitors’

plans with respect to LOL. To facilitate the 

use of LOL by other competitors, they also 

sought to make others aware of their own 

LOL implementation efforts. Accordingly, 

beginning as early as in 1999, the PCIC 

members engaged in numerous discussions 

among themselves and with non-PCIC 

competitors, including at a series of PCICsponsored profession-wide meetings, at 

which the firms disclosed to each other their 

respective ongoing and prospective LOL 

implementation policies, plans, and 

practices. This widespread sharing of LOL 

information was not motivated by any 

purpose of improving marketplace efficiency 

in the provision of actuarial consulting 

services, and in fact provided actuarial 

clients with no procompetitive benefits in 

their purchase of actuarial consulting 

services. 

As alleged in the Complaint, PCIC, its 

members, and other actuarial consulting 

competitors unlawfully agreed among 

themselves to share competitively sensitive 

information about each other’s plans and 

efforts to implement LOL. The challenged 

Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Notices 55421 

exchange of LOL information facilitated at 

least tacit coordination of competitor’s 

decisions to implement LOL. The major 

actuarial consulting firms have tended to 

concentrate their businesses among three 

client categories—corporate, public, and 

multi-employer—in a way that has resulted 

in extremely high concentrations of sales 

among just a few consulting firms in each of 

those categories. Moreover, competitive turnover of clients occurred relatively 

infrequently, and the consulting firms do not 

appear to have competed broadly or 

vigorously to take established clients away 

from each other. Given these conditions, 

unilateral attempts to implement LOL by any 

of the firms would have been competitively 

disruptive, prompting clients to seek 

competitive alternatives and potentially 

leading to abandonment of established clientconsultant relationships. Such competitive 

disruption, from the consulting firms’

perspective, would have been undesirable in 

causing erosion or shifting of the historical 

patterns of concentration and stability within 

the client categories, which could lead to 

increased price competition. Indeed, one 

purpose of the challenged conduct was to 

facilitate the use of LOL as a profession-wide 

‘‘standard’’ while avoiding this competitive 

response, and its actual effect was to induce 

numerous clients to accept LOL that 

otherwise would not have done so. 

III. Explanation of the Proposed Amended 

Final Judgment 

The purpose of the proposed Amended 

Final Judgment is to prevent PCIC and its 

members from sharing LOL information 

among themselves, or with other providers of 

actuarial consulting services, in a manner 

that may significantly lessen competition. 

Application of the proposed Amended Final 

Judgment extends not only to PCIC but also 

to its members, through a requirement that 

PCIC obtain consent of its members to be 

bound by the proposed Amended Final 

Judgment as a condition of PCIC 

membership. The term of the proposed 

Amended Final Judgment is ten years from 

the date of its entry. 

The proposed Amended Final Judgment 

Final Judgment seeks to prevent PCIC and its 

members from engaging in anticompetitive 

communications and uses of LOL 

information while at the same time allowing 

certain PCIC business requirements for LOL 

information that do not raise significant 

competitive concerns. PCIC and its members 

are thus constrained from communicating 

about their usage of LOL to the extent of and 

subject to specified limitations and 

safeguards as to allow PCIC’s continued 

operation as a provider of professional 

liability insurance. PCIC is prohibited from 

requiring its members to implement LOL, 

also subject to limited allowances for PCIC to 

engage in reasonable business activities as a 

professional liability insurer. 

The proposed Amended Final Judgment 

prohibits PCIC and its members from 

entering into or participating in any 

agreements among themselves or with any 

other provider of actuarial consulting 

services, as to any actual or potential use of 

LOL. In addition, PCIC and its members are 

barred from communicating with other 

providers of actuarial consulting services as 

to any firm’s current or future plans, policies, 

or practices relating to the use of LOL. Other 

provisions of the proposed Amended Final 

Judgment require PCIC and its members to 

institute antitrust compliance programs, and 

to follow specified antitrust compliance and 

notification policies and procedures. 

IV. Remedies Available to Potential Private 

Litigants 

Section 4 of the Clayton Act, 15 U.S.C. 15, 

provides that any person who has been 

injured as a result of conduct prohibited by 

the antitrust laws may bring suit in federal 

court to recover three times the damages the 

person has suffered, as well as costs and 

reasonable attorneys’ fees. Entry of the 

proposed Amended Final Judgment will 

neither impair nor assist the bringing of any 

private antitrust damage action. Under the 

provisions of Section 5(a) of the Clayton Act, 

15 U.S.C. 16(a), the proposed Final Judgment 

has no prima facie effect in any subsequent 

private lawsuit that may be brought against 

the Defendants. 

V. Procedures Available for Modification of 

the Proposed Amended Final Judgment 

The United States and Defendants have 

stipulated that the proposed Amended Final 

Judgment may be entered by the Court after 

compliance with the provisions of the APPA, 

provided that the United States has not 

withdrawn its consent. The APPA conditions 

entry upon the Court’s determination that the 

proposed Amended Final Judgment is in the 

public interest. 

The APPA provides a period of at least 

sixty days preceding the effective date of the 

proposed Amended Final Judgment within 

which any person may submit to the United 

States written comments regarding the 

proposed Amended Final Judgment. Any 

person who wishes to comment should do so 

within sixty days of the date of publication 

of this Competitive Impact Statement in the 

Federal Register. All comments received 

during this period will be considered by the 

Department of Justice, which remains free to 

withdraw its consent to the proposed 

Amended Final Judgment at any time prior 

to the Court’s entry of judgment. The 

comments and the response of the United 

States will be filed with the Court and 

published in the Federal Register. Written 

comments should be submitted to: 

Mark J. Botti, 

Chief, Litigation I Section, 

Antitrust Division, 

United States Department of Justice, 

1401 H Street, NW., Suite 4000, 

Washington, DC 20530. 

The proposed Amended Final 

Judgment provides that the Court retains 

jurisdiction over this action, and the 

parties may apply to the Court for any 

order necessary or appropriate for the 

modification, interpretation, or 

enforcement of the proposed Amended 

Final Judgment. 

VI. Alternatives to the Proposed 

Amended Final Judgment 

The United States considered, as an 

alternative to the proposed Amended 

Final Judgment, proceeding to a full 

trial on the merits of its Complaint. The 

United States is satisfied, however, that 

the relief contained in the proposed 

Amended Final Judgment will 

reestablish and maintain competition 

among actuarial consulting firms with 

respect to liability terms of contracting 

with clients. In so doing, entry of the 

proposed Amended Final Judgment will 

avoid the time, expense and uncertainty 

of a full trial on the merits of the 

government’s Complaint. 

The United States considered, but did 

not require as an element of the 

negotiated settlement, prohibiting PCIC 

members from enforcing LOL terms that 

they have already obtained from clients. 

The United States concluded that 

barring the PCIC members from 

enforcing existing LOL terms is not 

necessary to remediate anticompetitive 

effects of the challenged conduct. In this 

respect, the harm to clients resulting 

from anticompetitive imposition of LOL 

is prospective and uncertain, and as the 

great majority of actuarial clients do not 

experience faulty actuarial work, would 

arise only infrequently. Rather than 

seeking broadly to prohibit the 

enforcement of existing LOL terms, the 

United States believes it sufficient that 

clients against whom LOL terms may 

ultimately be advanced will then have 

the opportunity to assert invalidation of 

the terms as having been unlawfully 

imposed. 

The United States also considered but 

did not require the PCIC members to be 

barred from prospectively implementing 

LOL in new client engagements for a 

period of time, as a means of restoring 

market conditions pre-dating the 

conduct challenged in the Complaint. 

The United States determined such a 

measure to be unnecessary because at 

the present time significant competitive 

alternatives continue to exist for clients 

seeking to avoid LOL. One non-PCIC 

competitor, the largest actuarial 

consulting firm serving multi-employer 

clients, has to date chosen not to 

implement LOL. Another of the nonPCIC firms, which is the second leading 

competitor as to public clients and the 

third leading competitor as to corporate 

clients, has implemented a relatively 

less onerous form of LOL that purports 

to confine recovery to direct damages, 

rather than the more commonly used 

limitation to a fixed dollar amount or 

multiple of fees. Certain other firms that 

have begun implementing LOL have 

done so under policies that make 

55422 Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Notices 

2See United States v. Gillette Co., 406 F. Supp. 

713, 716 (D. Mass. 1975) (recognizing it was not the 

court’s duty to settle; rather, the court must only 

answer ‘‘whether the settlement achieved [was] 

within the reaches of the public interest).’’ A 

‘‘public interest’’ determination can be made 

properly on the basis of the Competitive Impact 

Statement and Response to Comments filed by the 

Department of Justice pursuant to the APPA. 

Although the APPA authorizes the use of additional 

procedures, 15 U.S.C. 16(f), those procedures are 

discretionary. A court need not invoke any of them 

unless it believes that the comments have raised 

significant issues and that further proceedings 

would aid the court in resolving those issues. See 

H.R. Rep. No 93–1463, 93rd Cong., 2d Sess. 8–9 

(1974), reprinted in 1974 U.S.C.C.A.N. 6535, 6538. 

3Cf. BNS, 858 F.2d at 464 (holding that the 

court’s ‘‘ultimate authority under the [APPA] is 

limited to approving or disapproving the consent 

decree’’); Gillette, 406 F. Supp. at 716 (noting that, 

in this way, the court is constrained to ‘‘look at the 

overall picture not hypercritically, nor with a 

microscope, but with an artist’s reducing glass’’). 

See generally Microsoft, 56 F.3d at 1461 (discussing 

whether ‘‘the remedies [obtained in the decree are] 

so inconsonant with the allegations charged as to 

fall outside of the ‘reaches of the public interest’ ’’). 

allowances for clients to avoid LOL in 

their contract negotiations. 

VII. Standard of Review Under APPA for 

the Proposed Amended Final Judgment 

The APPA requires that proposed 

consent judgments in antitrust cases 

brought by the United States be subject 

to a sixty-day comment period, after 

which the Court shall determine 

whether entry of the proposed Final 

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

U.S.C. 16(e)(1). In making that 

determination, the Court shall consider: 

(A) the competitive impact of such 

judgment, including termination of alleged 

violations, provisions for enforcement and 

modification, duration of relief sought, 

anticipated effects of alternative remedies 

actually considered, whether its terms are 

ambiguous, and any other competitive 

considerations bearing upon the adequacy of 

such judgment that the court deems 

necessary to a determination of whether the 

consent judgment is in the public interest; 

and 

(B) the impact of entry of such judgment 

upon a competition in the relevant market or 

markets, upon the public generally and 

individuals alleging specific injury from the 

violations set forth in the complaint 

including consideration of the public benefit, 

if any, to be derived from a determination of 

the issues at trial. 

15 U.S.C. 16(e)(1)(A) and (B). As the 

United States Court of Appeals for the 

District of Columbia Circuit has held, 

the APPA permits a court to consider, 

among other things, the relationship 

between the remedy secured and the 

specific allegations set forth in the 

government’s complaint, whether the 

decree is sufficiently clear, whether 

enforcement mechanisms are sufficient, 

and whether the decree may positively 

harm third parties. See United States v. 

Microsoft Corp., 56 F.3d 1448, 1458–62 

(D.C. Cir. 1995). 

‘‘Nothing in this section shall be 

construed to require the court to 

conduct an evidentiary hearing or to 

require the court to permit anyone to 

intervene.’’ 15 U.S.C. 16(e)(2). Thus, in 

conducting this inquiry, ‘‘[t]he court is 

nowhere compelled to go to trial or to 

engage in extended proceedings which 

might have the effect of vitiating the 

benefits of prompt and less costly 

settlement through the consent decree 

process.’’ 119 Cong. Rec. 24,598 (1973) 

(statement of Senator Tunney.2 Rather: 

[a]bsent a showing of corrupt failure of the 

government to discharge its duty, the Court, 

in making it public interest finding, 

should* * * carefully consider the 

explanations of the government in the 

competitive impact statement and its 

responses to comments in order to determine 

whether those explanations are reasonable 

under the circumstances. 

United States v. Mid-America 

Dairymen, Inc., 1977–1 Trade Cas. 

(CCH) ¶ 61,508, at 71,980 (W.D. Mo. 

1977). 

Accordingly, with respect to the 

adequacy of the relief secured by the 

decree, a court may not ‘‘engage in an 

unrestricted evaluation of what relief 

would best serve the public.’’ United 

States v. BNS, Inc., 858 F.2d 456, 462 

(9th Cir. 1988) (citing United States v. 

Bechtel Corp., 648 F.2d 660, 666 (9th 

Cir. 1981)); see also Microsoft, 56 F.3d 

at 1460–62. Courts have held that: 

[t]he balancing of competing social and 

political interests affected by a proposed 

antitrust consent decree must be left, in the 

first instance, to the discretion of the 

Attorney General. The court’s role in 

protecting the public interest is one of 

insuring that the government has not 

breached its duty to the public in consenting 

to the decree. The court is required to 

determine not whether a particular decree is 

the one that will best serve society, but 

whether the settlement is ‘‘within the reaches 

of the public interest.’’ More elaborate 

requirements might undermine the 

effectiveness of antitrust enforcement by 

consent decree. 

Bechtel, 648 F.2d at 666 (emphasis 

added) (citations omitted).3

The proposed Final Judgment, 

therefore, should not be reviewed under 

a standard of whether it is certain to 

eliminate every anticompetitive effect of 

a particular practice or whether it 

mandates certainty of free competition 

in the future. Court approval of a final 

judgment requires a standard more 

flexible and less strict than the standard 

required for a finding of liability. ‘‘[A] 

proposed decree must be approved even 

if it falls short of the remedy the court 

would impose on its own, as long as it 

falls within the range of acceptability or 

is ‘within the reaches of public 

interest.’ ’’ United States v. AT&T, 552 

F. Supp. 131, 151 (D.D.C. 1982) 

(citations omited) (quoting Gillette, 406 

F. Supp. at 716), aff’d sub nom. 

Maryland v. United States, 460 U.S. 

1001 (1983); see also United States v. 

Alcan Aluminum Ltd., 605 F. Supp. 619, 

622 (W.D. Ky. 1985) (approving the 

consent decree even though the court 

would have imposed a greater remedy). 

Moreover, the Court’s role under the 

APPA is limited to reviewing the 

remedy in relationship to the violations 

that the United States has alleged in its 

Complaint; the APPA does not authorize 

the Court to ‘‘construct [its] own 

hypothetical case and then evaluate the 

decree against that cast.’’ Microsoft, 56 

F.3d at 1459. Because the ‘‘court’s 

authority to review the decree depends 

entirely on the government’s exercising 

its prosecutorial discretion by bringing 

a case in the first place,’’ it follows that 

‘‘the court is only authorized to review 

the decree itself,’’ and not to ‘‘effectively 

redraft the complaint’’ to inquire into 

other matters that the United States did 

not pursue. Id. at 1459–60. 

VIII. Determinative Documents 

There are no determinative materials 

or documents within the meaning of the 

APPA that were considered by the 

United States in formulating the 

proposed Final Judgment. 

Dated: September l, 2005. 

Washington, DC. 

Respectfully submitted, 

Mark J. Botti, 

Chief, Litigation I Section. 

lllllllllllllllllllll

Weeun Wang, 

Ryan Danks, 

U.S. Department of Justice, Antitrust 

Division, Litiation I Section, 1401 H Street, 

NW., Suite 4000, Washington, DC 20530, 

202–307–0001. 

Certificate of Service 

I hereby certify that I served a copy 

of the foregoing Competitive Impact 

Statement via facsimile and first class 

United States mail, this 12th day of 

September, 2005, on: Paul C. Cuomo, 

Esq., Howrey LLP, 1299 Pennsylvania 

Avenue, NW., Washington, DC 20004–

2402, Fax (202) 383–6610, Attorney for 

Defendant PCIC. 

/s/ lllllllllllllllllll

Ryan J. Danks, 

Attorney, United States Department of 

Justice. 

[FR Doc. 05–18703 Filed 9–20–05; 8:45 am] 

BILLING CODE 4410–11–M